With Selina Wang �Lizette Chapman, In­no­va­tion Shape-chang­ing Fab­ric

① ② Next Steps Yao says the bi­o­logic team is test­ing wa­ter­proof glues and other ma­te­ri­als to make the fab­ric more durable, with an eye for it to be used at the Tokyo Sum­mer Olympics in 2020. It’s also con­sid­er­ing spin­ning off a startup to com­mer­cial­ize i

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harsh terms. Both raised down rounds, mean­ing they took fresh money at lower val­u­a­tions than in the past. Among other things, this di­min­ished the value of shares owned by em­ploy­ees and ear­lier in­vestors. Both Foursquare and Jaw­bone de­clined to com­ment.

Even grow­ing star­tups are scal­ing back their am­bi­tions. In Septem­ber jobs-list­ings site Thumb­tack set­tled for a $125 mil­lion round of fi­nanc­ing valu­ing the com­pany at $1.3 bil­lion, roughly 40 per­cent less than the orig­i­nal ask­ing price. In Novem­ber on­line re­tailer Jet.com closed new fund­ing at a val­u­a­tion of $1.4 bil­lion, down from $3 bil­lion in a sum­mer sales pitch. In Jan­uary used-car mar­ket­place Beepi said it raised $70 mil­lion, valu­ing the com­pany at about $500 mil­lion—a frac­tion of the $300 mil­lion and $2 bil­lion that CEO Ale Res­nik pre­dicted last year. “What hap­pened to us hap­pened to a lot of com­pa­nies as they were try­ing to raise in the lat­ter part of 2015,” Res­nik told Bloomberg TV in Fe­bru­ary.

Of course, there are al­ways ex­cep­tions. Last month, Chi­nese ride-hail­ing app Didi Kuaidi closed on an over­sub­scribed round of at least $1 bil­lion, rais­ing its val­u­a­tion above $20 bil­lion. Mes­sag­ing startup Slack is ex­pected to close a sig­nif­i­cant fund­ing round at much bet­ter terms than the $2.8 bil­lion val­u­a­tion it com­manded last year. And Uber con­tin­ues to raise money at bet­ter and bet­ter terms. “When you have a fund, there’s a real pres­sure to put the money to work,” says Steve Ka­plan, a pro­fes­sor at the Chicago Booth School of Busi­ness who spe­cial­izes in VC and en­trepreneur­ship.

For smaller com­pa­nies VCS are preach­ing cau­tion and urg­ing them to build rev­enue mod­els sooner rather than later. “There is no mak­ing up on vol­ume when you lose money on ev­ery trans­ac­tion,” says Ben Narasin, a part­ner at Can­vas Ven­tures. “Growth at any cost is not a valid model. There was a time when it was re­warded, but that time is gone.”

Edited by Jeff Muskus Bloomberg.com

1.

Form and func­tion

A new ma­te­rial called bi­o­logic al­ters its shape with changes in hu­mid­ity, so an ath­lete’s shirt, say, can open ven­ti­la­tion ducts in the back when its wearer starts sweat­ing.

Ma­te­rial The bi­o­logic team grows a strain of non­in­fec­tious bacil­lus bac­te­ria in a so­lu­tion and uses a cus­tom ma­chine to print it onto both sides of a piece of la­tex. The bot­tom line Many ven­ture firms are wait­ing for cash-hun­gry star­tups to of­fer bet­ter terms than both sides have been used to of late. Ori­gin Ishii and his stu­dent team, led by PH.D. can­di­date Lin­ing Yao, have been work­ing on the ma­te­rial for about two years. In­no­va­tor Hiroshi Ishii Age Ti­tle Pro­fes­sor and as­so­ciate di­rec­tor of MIT Me­dia Lab, an in­ter­dis­ci­pli­nary re­search group Part­ners The Me­dia Lab group is work­ing with MIT’S chem­i­cal en­gi­neer­ing depart­ment, Lon­don’s Royal Col­lege of Art, and sports­wear maker New Bal­ance to re­fine bi­o­logic.

The bac­te­ria ex­pand or con­tract the fab­ric as much as 15 per­cent in re­sponse to ris­ing or fall­ing hu­mid­ity, which en­ables the ven­ti­la­tion ducts to open or close. Mar­ket Be­yond sports­wear, the tech­nol­ogy could be used in ev­ery­thing from lamp­shades to tea bags to toys, Yao says.

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