If you’re trying to develop fluency in a non-native tongue, language immersion is a crucial part of the learning process. Surrounding yourself with native speakers helps with pronunciation, context building, and most of all, confidence.
But what if you’re an eight-year-old kid in Spain learning English and can’t swing a solo trip to the United States for the summer?
Novakid, founded by Maxim Azarov, wants to be your next best option. The San Francisco-based edtech startup offers virtual-only, English language immersion for kids between the ages of four through 12, by combining a mix of different services from live tutors to gamification.
After closing its $4.25 million Series A round last December, Novakid announced today that it is back with a $35 million Series B financing, led by Owl Ventures and Goodwater Capital. Existing investors also participated in the round, including PortfoLion, LearnStart, TMT Investments, Xploration Capital, LETA Capital and BonAngels.
The startup is raising capital in response to an active start to its year. The company’s active client base grew 350% year over year, currently at over 50,000 paying students. The money will be used to get more students into its universe of tools, as well as help Novakid expand into international markets with high populations of speakers who want to learn English.
The company’s suite of services are built around two principles: First, that it can immerse early-age learners into the world of English at scale, and second, that it can actually be fun to use.
When a user signs up, they are first connected to one of Novakid’s 2,000 live tutors for their first class. Tutors must be native English speakers with a B.A. degree or higher, as well as an international teaching certificate such as DELTA, CELTA, TESOL or TEFL.
“One of the things that is really important, even psychologically, is to start listening to the language, start interacting with a live person, and remove being afraid of not understanding something,” Azarov said. The company wants to recreate the conditions of how a kid likely learned their first language.
In the class, the tutors only speak English, and users are encouraged to do the same to slowly build and mistake their way into confidence. While the live, video-based classes are a key part of Novakid’s product, Azarov said it was important that his company “was not just giving you access to a teacher” as its main value proposition.
“Most of the competitors are taking teachers and making them available remotely so you don’t have to travel and you have a bigger selection,” he said. But if you look at the industry in the bigger picture, guys like Oxford, Cambridge, Pearson who provide content for the language learning industry, their product basically sucks. It’s really bad.” So, Novakid puts most of its energy into rebuilding a curriculum that works with better design, and includes games.
Gamified content lives both in and out of classes. Within the classroom, a teacher may take a student on a VR-enhanced tour through famous landmarks and museums to practice vocabulary. Self-paced content could look like a multiplayer “battle” between two students answering questions within a certain time period to get a better score. Novakid has an entire team dedicated to game design and development.
Students are clicking in. Novakid users spend two-thirds of their time on the website with tutors, and one-third with self-paced content that the company built in-house. The company wants to switch those concentrations because more students are spending time with the asynchronous content around grammar and vocabulary, and teachers are reserved for more complex information like speaking and conversation.
Part of the difficulty of scaling up a language learning business is that users need to stay motivated. Gamification helps with engagement, but Novakid’s clientele of children could also be fast to churn compared to adult learners, simply due to priorities. Azarov said that he sees how some would view selling exclusively to children as a disadvantage, but he views their focus as differentiation.
“You get better brand equity when you’re more focused,” he said. “The way kids learn language is vastly different from the way adults learn language, and I don’t think the general players who do ‘everything from everybody’ will be able to do [the former] as well as we are.” Duolingo recently launched Duolingo ABC, a free English literacy app with hundreds of short-form exercises. While the now-public company has strong branding, Novakid’s strategy differs by adding in more services around live learning and speaking.
So far, the company has proven that its strategy is sticking. Its revenue in 2020 was $9 million, and in 2021 it is expected to hit between $36 million to $45 million in revenue. It declined to disclose the specifics around diversity of the team, but plans to kick off a quite intensive recruiting spree going forward. Azarov plans to add 200 people to his 300-person company in the next six months.
Early-stage venture capital fund Newtopia VC launched Monday with $50 million to invest in tech startups based in Latin America.
The fund will invest between $250,000 and $1 million in startups at the seed stage to help them achieve the milestones needed on the path to raising a Series A.
Newtopia is led by five major players in the regional entrepreneurial ecosystem:
The group has already invested in startups in Mexico, Brazil and Argentina, including Aleph (B2B SaaS for e-commerce), Apperto (social commerce), Choiz (healthtech), Exactly (DeFi), Elevva (e-commerce brands), Inipay (fintech), Leef (sustainability), Wibson (e-privacy) and Yerbo (wellness).
Mayer told TechCrunch that he sees a great moment happening in Latin America around global venture capital firms — like Sequoia Capital, Andreessen Horowitz and SoftBank —making bets in the region, especially targeting later-stage investments. There are home-grown venture capital firms doing well, too, citing Kazek’s $1 billion funds.
“However, we see a gap in investments in seed and road to Series A,” he added. “We aim to help entrepreneurs in those stages. Newtopia started with conversations during the pandemic, and now we see a big momentum for transformation of traditional sectors and the talent to make businesses out of these opportunities.”
Newtopia is offering both investment and a hands-on mentorship model to guide startups through the initial stages so they can grow regionally or globally. The fund has already amassed a community of more than 70 founders to invest, advise and be venture partners to the portfolio companies.
The Newtopia 10-Week Program works with companies to find product-market fit, achieve initial goals and set a foundation for further growth. The firm opened the call for applicants and will select 10 startups to receive a spot in the program and $100,000 each.
By taking a lead in early-stage investing, it will feed the rest of the venture capital firms that are doing later-stage investing, Mayer said.
He sees investments growing in Latin America every year, estimating there was a record $4 billion spread across the region, turning some companies into unicorns, including Jutard’s Mural, which raised $50 million in July. That has more than validated that there will be more money in coming years, Mayer added.
Jutard said the fund’s founders were all investing or mentoring companies on their own, but the new funding will enable them to structure that assistance to help hundreds of startups rather than a handful.
“Early-stage companies go through an emotional rollercoaster where they feel alone, encounter times when it is hard to sell their product or recruit, so we are focused on building a community of support,” Jutard added.
With the rise of Open Banking, PSD2 Regulation, insurtech and the whole, general fintech boom, tech investors have realized there is an increasing place for dedicated funds which double down on this ongoing movement. When you look at the rise of banking-as-a-service offerings, payments platforms, insurtech, asset management and infrastructure providers, you realize there is a pretty huge revolution going on.
European fintech companies have raised $12.3 billion in 2021 according to Dealroom, but the market is still wide open for a great deal more funding for B2B fintech startups.
So it’s no surprise that B2B fintech-focused Element Ventures has announced a $130 million fund to double down on this new fintech enterprise trend.
Founded by financial services veterans Stephen Gibson and Michael McFadgen, and joined by Spencer Lake (HSBC’s former vice chairman of Global Banking and Markets), Element is backed by finance-oriented LPs and some 30 founders and executives from the sector.
Element says it will focus on what it calls a “high conviction investment strategy,” which will mean investing in only around a handful of companies a year (15 for the fund in total) but, it says, providing a “high level of support” to its portfolio.
So far it has backed B2B fintech firms across the U.K. and Europe, including Hepster (total raised $10 million), the embedded insurance platform out of Germany which I recently reported on; Billhop (total raised $6.7 million), the B2B payment network out of Sweden; Coincover (total raised $11.6 million), a cryptocurrency recovery service out of the U.K.; and Minna (total raised $25 million), the subscription management platform out of Sweden.
Speaking to me over a call, McFadgen, partner at Element Ventures, said: “Stephen and I have been investing in B2B fintech together for quite a long time. In 2018 we had the opportunity to start element and Spencer came on board in 2019. So Element as an independent venture firm is really a continuation of a strategy we’ve been involved in for a long time.”
Gibson added: “We are quite convinced by the European movement and the breakthrough these fintech and insurtech firms in Europe are having. Insurance has been a desert for innovation and that is changing. And you can see that we’re sort of trying to build a network around companies that have those breakthrough moments and provide not just capital but all the other things we think are part of the story. Building the company from A to C and D is the area that we try and roll our sleeves up and help these firms.”
Element says it also will be investing in the U.S. and Asia.
BoxGroup has quietly, yet diligently, been funding companies at the early stage for over a decade. The 11-year-old firm in fact was the first investor in Plaid, a fintech company that nearly got sold to Visa last year for billions of dollars.
It has seen a number of impressive exits over the years, proving an eye that can detect winners before the winners themselves may even realize it. In fact, it’s that early faith in companies that partner David Tisch believes has been key to BoxGroup’s success.
“If you’re starting a company and you’re going to raise money, that first yes is the hardest. And it’s that’s the one that gives you the confidence, the excitement – to know that there’s somebody out there that’s going to believe in this and give you money for it,” Partner David Tisch told TechCrunch. “We really do try to pride ourselves on being that first yes on a regular basis. So the earlier we meet companies, the better.”
Today, BoxGroup is announcing it has beefed up its war chest so that it can be that “first yes” to more companies with the closure of two new funds totaling $255 million of capital. BoxGroup Five is the firm’s fifth early stage fund, and is aimed at investing in emerging tech companies at the pre-seed and seed stages. BoxGroup Strive is its second opportunity fund that will back companies in their subsequent follow-on rounds. Each fund amounts to $127.5 million.
Over the years, BoxGroup has made over 300 investments including having invested in the earliest rounds of Ro, Plaid, Airtable, Workrise, Scopely, Bowery Farms, Ramp, Titan, Warby Parker, Classpass, Guideline and Glossier. It has had a number of impressive exits in Flatiron Health, PillPack, Matterport, Oscar, Mirror, Bark, Bread and Trello.
Besides being the first firm to write Plaid a check, BoxGroup was also the first investor in PillPack, which ended up selling to Amazon for just under $1 billion in 2018.
BoxGroup Five – the firm’s early-stage fund – will invest in about 40 to 50 new companies a year with investments ranging from $250,000 to $1 million.
“We want to be the second or third biggest check in a round,” Tisch said.
Image Credits: BoxGroup; Adam Rothenberg (left), Nimi Katragadda (bottom), Greg Rosen (top), David Tisch (right)
The opportunity fund occasionally makes later-stage investments in new companies, but mostly just continues to support companies it invested in at an earlier stage. For example, BoxGroup first invested in id.me in 2010.
“The company is sort of an 11-year overnight success that we’ve been backing for over a decade now,” Tisch said. “It’s an example of us just continuing to support companies through their life cycle.”
BoxGroup also pre-seeded digital healthcare startup Ro, but also funded every round it’s raised since, including its most recent $500 million funding at a $5 billion valuation.
Tisch describes the BoxGroup six-person team as “generalists” in terms of the spaces it invests in, with a portfolio consisting of startups in the consumer, enterprise, fintech, healthcare, marketplace, synthetic biology and climate sectors.
Interestingly, BoxGroup’s last fund closures – which totaled $165 million – marked the first time the firm had accepted outside capital in nine years. Prior to that point, it had been funded with only personal capital. Its LPs are a mixed group of endowments, foundations and family offices.
For BoxGroup, building authentic relationships with founders is at the root of what the firm does, says Partner Nimi Katragadda. That includes taking bets on founders, sometimes more than once, even if one of their companies didn’t work out. It means backing just ideas in some cases, and people.
“This cannot be transactional, it has to be personal,” she said. “We want to go on a journey with someone for a decade as they build their business…. We’re comfortable with what early means, including a lot of assumptions, more vision than traction, and raw product.”
Partner Adam Rothenberg agrees, saying: “Our goal is to be the friend in the room. We believe in honesty, tough love, and transparency in building relationships with founders. We focus on the “how” more than the “what” — how a founder thinks, how they will build product, and how they think about attracting talent.”
With offices in San Francisco and New York, the firm will likely be growing in the near future as BoxGroup is looking to add on some “first-line investors,” Tisch said.
Recently, Greg Rosen was named a partner at the firm. Rosen originally joined BoxGroup in 2015, where he spent three years before leaving to join Benchmark. He re-joined BoxGroup in early 2020 and joins the firm’s three other partners: Tisch, Rothenberg and Katragadda.
While the world of venture is crazy hot right now, Tisch said the firm keeps itself grounded with a wisdom that can only be gained with experience and in time.
“There is seemingly infinite capital waiting to be deployed,” he said. “Without calling the cycle, we know that over time markets go up and down…No matter where we are in a given cycle, smart and determined minds will come together to build important technology companies. Our job is to make sure we are meeting those founders and choosing wisely about which ones to partner with for 10+ year journeys.”
Pet pharmacy Mixlab has developed a digital platform enabling veterinarians to prescribe medications and have them delivered — sometimes on the same day — to pet parents.
The New York-based company raised a $20 million Series A in a round of funding led by Sonoma Brands and including Global Founders Capital, Monogram Capital, Lakehouse Ventures and Brand Foundry. The new investment gives Mixlab total funding of $30 million, said Fred Dijols, co-founder and CEO of Mixlab.
Dijols and Stella Kim, chief experience officer, co-founded Mixlab in 2017 to provide a better pharmacy experience, with the veterinarian at the center.
Dijols’ background is in medical devices as well as healthcare investment banking, where he became interested in the pharmacy industry, following TruePill and PillPack, which he told TechCrunch were “creating a modern pharmacy model.”
As more pharmacy experiences revolved around at-home delivery, he found the veterinary side of pharmacy was not keeping up. He met Kim, a user experience expert, whose family owns a pharmacy, and wanted to bring technology into the industry.
“The pharmacy industry is changing a lot, and technology allows us to personalize the care and experience for the veterinarian, pet parent and the pet,” Kim said. “Customer service is important in healthcare as is dignity and empathy. We kept that in mind when starting Mixlab. Many companies use technology to remove the human element, but we use it to elevate it.”
Mixlab’s technology includes a digital service for veterinarians to streamline their daily medication workflow and gives them back time to spend with patient care. The platform manages the home delivery of medications across branded, generic and over-the-counter medications, as well as reduces a clinic’s on-site pharmacy inventories. Veterinarians can write prescriptions in seconds and track medication progress and therapy compliance.
The company also operates its own compound pharmacy where it specializes in making medications on-demand that are flavored and dosed.
On the pet parent side, they no longer have to wait up to a week for medications nor have to drive over to the clinic to pick them up. Medications come in a personalized care package that includes a note from the pharmacist, clear and easy-to-read instructions and a new toy.
Over the past year, adoptions of pets spiked as more people were at home, also leading to an increase in vet visits. This also caused the global pet care industry to boom, and it is now projected to reach $343 billion by 2030, when it had been valued at $208 billion in 2020.
Pet parents are also spending more on their pets, and a Morgan Stanley report showed that they see pets as part of their family, and as a result, 37% of people said they would take on debt to pay for a pet’s medical expenses, while 29% would put a pet’s needs before their own.
To meet the increased demand in veterinary care, the company will use the new funding to improve its technology and expand into more locations where it can provide same-day delivery. Currently it is shipping to 47 states and Dijols expects to be completely national by the end of the year. He also expects to hire more people on both the sales team and in executive leadership positions.
The company is already operating in New York and Los Angeles and growing 3x year over year, though Dijols admits operating during the pandemic was a bit challenging due to “a massive surge of orders” that came in as veterinarians had to shut down their offices.
As part of the investment, Keith Levy, operating partner at Sonoma Brands and former president of pet food manufacturer Royal Canin USA, will join Mixlab’s board of directors. Sonoma Brands is focused on growth sectors of the consumer economy, and pets was one of the areas that investors were interested in.
Over time, Sonoma found that within the veterinary community, there was space for a lot of players. However, veterinarians want to home in on one company they trust, and Mixlab fit that description for many because they were getting medication out faster, Levy said.
“What Mixlab is doing isn’t completely unique, but they are doing it better,” he added. “When we looked at their customer service metrics, we saw they had a good reputation and were relentlessly focused on providing a better experience.”
Indian online insurance aggregator PolicyBazaar has filed for an initial public offering in which it is seeking to raise $809 million, becoming the fourth startup in the past two months from the South Asian market to explore public markets.
In papers submitted to the market regulator in India, PolicyBazaar said it is looking to raise $504 million by issuing new shares while the rest will be driven by sale of shares by existing investors. Local media reports said the startup is looking to raise at a valuation of up to $6 billion.
The 12-year-old startup — backed by SoftBank, Falcon Edge Capital, Tiger Global, and InfoEdge — said it may consider raising about $100 million in a pre-IPO round.
PolicyBazaar serves as an aggregator that allows users to compare and buy policies — across categories including life, health, travel, auto and property — from dozens of insurers on its website without having to go through conventional agents. It operates in India as well as the Middle East.
In India only a fraction of the nation’s 1.3 billion people currently have access to insurance and some analysts say that digital firms could prove crucial in bringing these services to the masses. According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017.
An average Indian makes about $2,100 in a year, according to World Bank. ICRA estimated that of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017.
In a report early this year, analysts at Bernstein estimated that PolicyBazaar commands 90% of share in the online insurance distribution market. The platform, which competes with Acko as well as Amazon in India, also sells loans, credit cards and mutual funds. The startup says it sells over a million policies a month.
“India has an under-penetrated insurance market. Within the under-penetrated landscape, digital distribution through web-aggregators like Policybazaar forms <1% of the industry. This offers a large headroom for growth,” Bernstein analysts wrote to clients.
Zomato, which had a stellar public debut last month, as well as fintech firms Paytm and MobiKwik have filed for their initial public offerings in recent weeks.
Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.
The tech industry in China has had quite a turbulent week. The government is upending its $100 billion private education sector, wiping billions from the market cap of the industry’s most lucrative players. Meanwhile, the assault on Chinese internet giants continued. Tech stocks tumbled after Tencent suspended user registration, sparking fears over who will be the next target of Beijing’s wrath.
Incisive observers point out that the new wave of stringent regulations against China’s internet and education firms has long been on Beijing’s agenda and there’s nothing surprising. Indeed, the central government has been unabashed about its desires to boost manufacturing and contain the unchecked powers of its service industry, which can include everything from internet platforms, film studios to after-school centers.
A few weeks ago I had an informative conversation with a Chinese venture capitalist who has been investing in industrial robots for over a decade, so I’m including it in this issue as it provides useful context for what’s going on in the consumer tech industry this week.
China is putting robots into factories at an aggressive pace. Huang He, a partner at Northern Light Venture Capital, sees three forces spurring the demand for industrial robots — particularly ones that are made in China.
Over the years, Beijing has advocated for “localization” in a broad range of technology sectors, from enterprise software to production line automation. One may start to see Chinese robots that can rival those of Schneider and Panasonic a few years down the road. CRP, an NLVC-backed industrial robot maker, is already selling across Southeast Asia, Russia and East Europe.
On top of tech localization, it’s also well acknowledged that China is facing a severe demographic crisis. The labor shortage in its manufacturing sector is further compounded by the reluctance of young people to do menial factory work. Factory robots could offer a hand.
“Youngsters these days would rather become food delivery riders than work in a factory. The work that robots replace is the low-skilled type, and those that still can’t be taken up by robots pay well and come with great benefits,” Huang observed.
Large corporations in China still lean toward imported robots due to the products’ proven stability. The problem is that imported robots are not only expensive but also selective about their users.
“Companies need to have deep technical capabilities to be able to operate these [Western] robots, but such companies are rare in China,” said Huang, adding that the overwhelming majority of Chinese enterprises are small and medium size.
With the exceptions of the automotive and semiconductor industries, which still largely rely on sophisticated, imported robots, affordable, easy-to-use Chinese robots can already meet most of the local demand for industrial automation, Huang said.
China currently uses nearly one million six-axis robots a year but only manufactures 20% of them itself. The gap, coupled with a national plan for localization, has led to a frenzy of investments in industrial robotics startups.
The rush isn’t necessarily a good thing, said Huang. “There’s this bizarre phenomenon in China, where the most funded and valuable industrial robotic firms are generating less than 30 million yuan in annual revenue and not really heard of by real users in the industry.”
“This isn’t an industry where giants can be created by burning through cash. It’s not the internet sector.”
Small-and-medium-size businesses are happily welcoming robots onto factory floors. Take welding for example. An average welder costs about 150,000 yuan ($23,200) a year. A typical welding robot, which is sold for 120,000 yuan, can replace up to three workers a year and “doesn’t complain at work,” said the investor. A quality robot can work continuously for six to eight years, so the financial incentive to automate is obvious.
Advanced manufacturing is not just helping local bosses. It will eventually increase foreign enterprises’ dependence on China for its efficiency, making it hard to cut off Chinese supply chains despite efforts to avoid the geopolitical risks of manufacturing in China.
“In electronics, for example, most of the supply chains are in China, so factories outside China end up spending more on logistics to move parts around. Much of the 3C manufacturing is already highly automated, which relies heavily on electricity, but in most emerging economies, the power supply is still quite unstable, which disrupts production,” said Huang.
The shock of antitrust regulations against Alibaba from last year is still reverberating, but another wave of scrutiny has already begun. Shortly after Didi’s blockbuster IPO in New York, the ride-hailing giant was asked to cease user registration and work on protecting user information critical to national security.
On Tuesday, Tencent stocks fell the most in a decade after it halted user signups on its WeChat messenger as it “upgrades” its security technology to align with relevant laws and regulations. The gaming and social media giant is just the latest in a growing list of companies hit by Beijing’s tightening grip on the internet sector, which had been flourishing for two decades under laissez-faire policies.
Underlying the clampdowns is Beijing’s growing unease with the service industry’s unscrutinized accumulation of wealth and power. China is unequivocally determined to advance its tech sector, but the types of tech that Beijing wants are not so much the video games that bring myopia to children and algorithms that get adults hooked to their screens. China makes it clear in its five-year plan, a series of social and economic initiatives, that it will go all-in on “hard tech” like semiconductors, renewable energy, agritech, biotech and industrial automation like factory robotics.
China has also vowed to fight inequality in education and wealth. In the authorities’ eyes, expensive, for-profit after-schools dotting big cities are hindering education attainment for children from poorer areas, which eventually exacerbates the wealth gap. The new regulatory measures have restricted the hours, content, profits and financing of private tutoring institutions, tanking stocks of the industry’s top companies. Again, there have been clear indications from President Xi Jinping’s writings to bring off-campus tutoring “back on the educational track.” All China-focused investors and analysts are now poring over Xi’s thoughts and directives.
Chilean startup Xepelin, which has created a financial services platform for SMEs in Latin America, has secured $30 million in equity and $200 million in credit facilities.
LatAm venture fund Kaszek Ventures led the equity portion of the financing, which also included participation from partners of DST Global and a slew of other firms and founders/angel investors. LatAm- and U.S.-based asset managers and hedge funds — including Chilean pension funds — provided the credit facilities. In total over its lifetime, Xepelin has raised over $36 million in equity and $250 million in asset-backed facilities.
Also participating in the round were Picus Capital; Kayak Ventures; Cathay Innovation; MSA Capital; Amarena; FJ Labs; Gilgamesh and Kavak founder and CEO Carlos Garcia; Jackie Reses, executive chairman of Square Financial Services; Justo founder and CEO Ricardo Weder; Tiger Global Management Partner John Curtius; GGV’s Hans Tung; and Gerry Giacoman, founder and CEO of Clara, among others.
“We want all SMEs in LatAm to have access to financial services and capital in a fair and efficient way,” the pair said.
Xepelin is built on a SaaS model designed to give SMEs a way to organize their financial information in real time. Embedded in its software is a way for companies to apply for short-term working capital loans “with just three clicks, and receive the capital in a matter of hours,” the company claimed.
It has developed an AI-driven underwriting engine, which the execs said gives it the ability to make real-time loan approval decisions.
“Any company in LatAm can onboard in just a few minutes and immediately access a free software that helps them organize their information in real time, including cash flow, revenue, sales, tax, bureau info — sort of a free CFO SaaS,” de Camino said. “The circle is virtuous: SMEs use Xepelin to improve their financial habits, obtain more efficient financing, pay their obligations, and collaborate effectively with clients and suppliers, generating relevant impacts in their industries.”
The fintech currently has over 4,000 clients in Chile and Mexico, which currently has a growth rate “four times faster” than when Xepelin started in Chile. Over the past 22 months, it has loaned more than $400 million to SMBs in the two countries. It currently has a portfolio of active loans for $120 million and an asset-backed facility for more than $250 million.
Overall, the company has been seeing a growth rate of 30% per month, the founders said. It has 110 employees, up from 20 a year ago.
“When we talk about creating the largest digital bank for SMEs in LatAm, we are not saying that our goal is to create a bank; perhaps we will never ask for the license to have one, and to be honest, everything we do, we do it differently from the banks, something like a non-bank, a concept used today to exemplify focus,” the founders said.
Both de Camino and Kreis said they share a passion for making financial services more accessible to SMEs all across Latin America and have backgrounds rooted deep in different areas of finance.
“Our goal is to scale a platform that can solve the true pains of all SMEs in LatAm, all in one place that also connects them with their entire ecosystem, and above all, democratized in such a way that everyone can access it,” Kreis said, “regardless of whether you are a company that sells billions of dollars or just a thousand dollars, getting the same service and conditions.”
For now, the company is nearly exclusively focused on the B2B space, but in the future, it believes several of its services “will be very useful for all SMEs and companies in LatAm.”
“Xepelin has developed technology and data science engines to deliver financing to SMBs in Latin America in a seamless way,” Nicolas Szekasy, co-founder and managing partner at Kaszek Ventures, said in a statement. “The team has deep experience in the sector and has proven a perfect fit of their user-friendly product with the needs of the market.”
Chile was home to another large funding earlier this week. NotCo, a food technology company making plant-based milk and meat replacements, closed on a $235 million Series D round that gives it a $1.5 billion valuation.
By the time Porter co-founders Trevor Shim and Justin Rhee decided to build a company around DevOps, the pair were well versed in doing remote development on Kubernetes. And like other users, they were consistently getting burnt by the technology.
They realized that for all of the benefits, the technology was there, but users were having to manage the complexity of hosting solutions as well as incurring the costs associated with a big DevOps team, Rhee told TechCrunch.
They decided to build a solution externally and went through Y Combinator’s Summer 2020 batch, where they found other startup companies trying to do the same.
Today, Porter announced $1.5 million in seed funding from Venrock, Translink Capital, Soma Capital and several angel investors. Its goal is to build a platform as a service that any team can use to manage applications in its own cloud, essentially delivering the full flexibility of Kubernetes through a Heroku-like experience.
Why Heroku? It is the hosting platform that developers are used to, and not just small companies, but also later-stage companies. When they want to move to Amazon Web Services, Google Cloud or DigitalOcean, Porter will be that bridge, Shim said.
However, while Heroku is still popular, the pair said companies are thinking the platform is getting outdated because it is standing still technology-wise. Each year, companies move on from the platform due to technical limitations and cost, Rhee said.
A big part of the bet Porter is taking is not charging users for hosting, and its cost is a pure SaaS product, he said. They aren’t looking to be resellers, so companies can use their own cloud, but Porter will provide the automation and users can pay with their AWS and GCP credits, which gives them flexibility.
A common pattern is a move into Kubernetes, but “the zinger we talk about” is if Heroku was built in 2021, it would have been built on Kubernetes, Shim added.
“So we see ourselves as a successor’s successor,” he said.
To be that bridge, the company will use the new funding to increase its engineering bandwidth with the goal of “becoming the de facto standard for all startups.” Shim said.
Porter’s platform went live in February, and in six months became the sixth-fastest growing open-source platform download on GitHub, said Ethan Batraski, partner at Venrock. He met the company through YC and was “super impressed with Rhee’s and Shim’s vision.
“Heroku has 100,000 developers, but I believe it has stagnated,” Batraski added. “Porter already has 100 startups on its platform. The growth they’ve seen — four or five times — is what you want to see at this stage.”
His firm has long focused on data infrastructure and is seeing the stack get more complex, saying “at the same time, more developers are wanting to build out an app over a week, and scale it to millions of users, but that takes people resources. With Kubernetes it can turn everyone into an expert developer without them knowing it.”
On Tuesday, the Open Cap Table Coalition announced its launch through an inaugural Medium post. The goal of this project is to standardize startup capitalization table data as well as make it far more accessible, transparent and portable.
For those unfamiliar with a cap table, it’s a list of who owns your company’s securities, which includes your company shares, options and more. A clear and simple cap table should quickly indicate who owns what and how much of it they own. For a variety of reasons (sometimes inexperience or bad advice) too many equity holders often find companies’ capitalization information to be opaque and not easily accessible.
This is particularly important for the small percentage of startups that survive in the long term, as growth makes for far more complicated cap tables.
A critical part of good startup hygiene is to always have a clean and updated cap table. Since there is no set format and cap tables are generally not out in the open, they are often siloed rather than collaborative.
Cap tables are near and dear to me as someone who has advised hundreds of startups over the past two decades as the founder of an accelerator, a venture partner and a senior adviser at a government-funded startup launchpad. I have been on the shareholder side of the equation as well and can assure you that pretty much nothing destroys trust between shareholders and startups quicker than poor communication, especially around issues such as the current status of the cap table.
A critical part of good startup hygiene is to always have a clean and updated cap table.
I really like the idea of a cap table being an open corporate record, because the value proposition to the companies is clear. From the time a startup creates a cap table, it’s prone to inaccuracy, friction and mistakes. What this means in practice is that startups may spend money on cap-table-related issues that they should be spending on other things. From a legal process perspective, the law firm that is brought in to help with these issues has to deal with tedious back-end work, so the legal time isn’t high value for either the startup or the law firm.
The value proposition for equity holders is equally clear. All equity holders have a general and legal interest in a company’s capitalization information. They have the right to this information, which they may need for a variety of reasons (including, if things ever get really bad, an aggrieved shareholder action). So making this information clear and easily accessible is a service to equity holders and can also encourage more investment, especially from less experienced investors.
When I imagine what this project could become in the next couple of years, I think back to late 2013, when Y Combinator announced the SAFE (simple agreement for future equity). I think the SAFE is a good analogy here, as no one knew what it was and people wondered if this was a nice-to-have rather than a must-have for startups. But the end result was a dramatic improvement in the early-stage capital-raising process.
While the coalition’s founders include Morgan Stanley’s Shareworks, LTSE Software and Carta, it’s also heavy on Big Law, with Cooley, Goodwin Procter, Wilson Sonsini Goodrich & Rosati, Orrick, Gunderson Dettmer, Latham & Watkins, and Fenwick & West rounding out the group of 10 founding members.
So what’s the real motivation of seven law firms, which together saw revenue of over $10 billion in 2020 to collaborate on an open cap table product for startups? Deal flow.
Big Law has been trying for a couple of decades to build relationships with startups at the stage where it makes no sense for a startup to be dealing with a massive and expensive law firm. Their efforts to build startup programs have often fallen short and received mixed reviews. They have also been far too heavy on the self-serve and too light on the “we’re going to give you our regular Big Law level of services at a small fraction of the costs just in case you make it big and can one day pay our regular fees.” So these firms are trying to separate themselves from the rest of the Big Law pack by building this entrepreneur-friendly tech.
The coalition has already produced its initial version of the open cap table. The real question is whether this is going to be a big deal, as the SAFE was, or whether it’s going to be a vanity solution in search of a real problem. My best guess is that if this coalition gets all the relationships right, doesn’t get greedy and understands that there is a social good component at play here, this could be, reasonably quickly, as impactful as the SAFE was.
Today we’re wrapping our multi-week exploration of the global venture capital market’s second-quarter performance. We’ve gone around the world, working to better understand the geyser of cash flowing into today’s startups. But we’ve saved the best for last: Latin America.
At a glance, the Latin American venture capital and startup market appears similar to what we’ve seen from other growing ecosystems. Like the U.S., Canadian, European, Indian and African startup hubs, Latin America is seeing venture capital activity set records.
The Exchange explores startups, markets and money.
But inside the big numbers is a surprising picture of a startup market in the process of maturing while outside money hunts for breakout opportunities.
To help us in our exploration of Latin America’s epic second quarter, we collected notes and observations from NXTP’s Gonzalo Costa, Magma Partners’ Nathan Lustig and ALLVP’s Federico Antoni. We also have data from Dealroom, CB Insights, the Global Private Capital Association (GPCA) and ALLVP.
Today we’re digging into the data, yes, but also the human potential behind the startup rush. According to Antoni, the Latin American startup market of today “is a story about talent, not about capital.” Echoing the point in a recent piece about “the Latin American startup opportunity,” U.S. venture capital firm Sequoia wrote that it has “been blown away by the quality of founders in the current wave.” So we’ll have to do more than just read charts.
The union of talent and money is what startup markets need to thrive. But there are other reasons why Latin American startups are so frequently in the news today, including structural factors, such as strong digital penetration and quick e-commerce growth.
Those trends could have long lives. NXTP’s Costa made a bullish argument: The portion of “market capitalization from technology companies in Latin America is only 2.5% today compared to 40%+ in the U.S,” and his firm expects the two numbers to “converge in the long-term.” Our read of that set of data points is that there are a host of future Latin American public tech companies being founded — and funded — today.
Let’s talk about Latin American venture capital data, dig into which countries are rising stars in the region, learn how quickly Latin American startups have to go cross-border, and explore how quickly capital is recycling in the ecosystem – always a key test for startup-market longevity.
Latin America is on pace for all-time records in venture capital dollars raised and venture capital rounds in 2021. According to CB Insights data, startups in the region have already raised $9.3 billion in 2021’s first six months from 414 deals. The same data set indicates that in all of 2020, startups in the region raised $5.3 billion across 526 deals. And in case you’re worried that we’re comparing to an unfairly COVID-impacted year, in 2019 the numbers were $5.3 billion (again) from 614 individual deals.
This year is different, and the second quarter of 2021 was simply an outlier event. With some $7.2 billion invested in Latin American startups, Q2 2021’s closest rival in terms of quarterly venture totals was the second quarter of 2017, when $2.6 billion was invested.
Blockchain infrastructure startups are heating up as industry fervor brings more developers and users to a space that still feels extremely young despite a heavy institutional embrace of the crypto space in 2021.
The latest crypto startup to court the attention of venture capitalists is Tenderly, which builds a developer platform for Ethereum devs to monitor and test the smart contracts that power their decentralized apps. Tenderly CEO Andrej Bencic tells TechCrunch his startup has closed a $15.3 million Series A funding round led by Accel with additional participation from existing investors. The Belgrade startup already raised a $3.3 million seed round earlier this year led by Point Nine Capital.
The startup’s aim to date has been ensuring fledgling blockchain developers aren’t left finding out about contract errors when users discover issues and complain, instead allowing users to discover these bugs proactively. While the company’s Visual Debugger is already used by “tens of thousands” of Ethereum developers, Tenderly hopes to continue building out its toolset to help more developers build on Ethereum networks without dealing with the headaches and irregularities that they’ve had to.
“Tenderly, from its inception, has been a solution to one of our own problems,” Bencic tells TechCrunch. “We wanted to make it as easy as possible to observe and extract information from Ethereum and the adjacent networks.”
Bencic hopes the company’s product can help developers get their products out more quickly without compromising on usability.
To date, the majority of Tenderly’s customers have been relatively small startup efforts aiming to tap into the exciting world of blockchain-based computing with a particular focus on decentralized finance. Tenderly itself is a small company with its team of 14 based in Serbia. Bencic says this funding will help the company expand its global footprint and build out engineering and business hires in other geographies.
Climbing cryptocurrency prices have historically aligned pretty closely with developer uptake in the blockchain world so there is some concern that bitcoin and Ethereum’s downward-trending price corrections will lead to less stability in the pipeline of new developers embracing blockchain. That said, volatility is far from unusual to the crypto world and many developers have learned that riding its ebbs and flows is just part of the experience.
“We built most of Tenderly in the bear market, and one thing we saw is that even though you get these concerning prices, people that are excited about the tech are excited about the tech whether the coins are up or down,” Bencic says.
Merqueo, which operates a full-stack, on-demand delivery service in Latin America, has landed $50 million in a Series C round of funding.
IDC Ventures, Digital Bridge and IDB Invest co-led the round, which also included participation from MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital and previous shareholders. The financing brings the Bogota, Colombia-based startup’s total raised to $85 million since its 2017 inception.
Merqueo CEO and co-founder Miguel McAllister knows a thing or two about the delivery space in Latin America, having also co-founded Domicilios.com, a Latin American food delivery company that was bought by Berlin-based Delivery Hero and later merged with Brazil’s iFood.
McAllister describes Merqueo as a “pure-play online supermarket with a fully integrated grocery delivery service” that sources directly from large brands and local suppliers, bypassing intermediaries and “delivering directly from its dark store network.” (Dark stores are traditional retail stores that have been converted to local fulfillment centers.”
Merqueo offers more than 8,000 products, including fresh foods, packaged goods, home essentials, beverages and frozen products. It currently operates in more than 25 cities in Colombia, Mexico and Brazil and has over 600,000 users.
Image Credits: Merqueo
It must be doing something right. The startup is close to $100 million in “run-rate revenue,” according to McAllister, having grown more than 2.5x in 2020. Merqueo also reached positive cash flow in Colombia, its most mature market. Over the last year, large Latin American retail chains and retailers have approached the company about potentially acquiring it, McAllister said.
Part of the company’s success might be attributed to the speed and flexibility it offers. Users can choose how and when to receive their groceries according to their needs, with the startup offering delivery in as little as 10 minutes or three to four hours. Users can also schedule delivery of their groceries in two-hour intervals for the same day or the next day.
Also, owning and controlling the “entire” vertical supply chain gives it the ability to obtain better margins, offer competitive pricing and achieve healthy unit economics, according to McAllister.
Merqueo plans to use its new capital in part to expand geographically. The company is currently in phase one of its expansion to Brazil, entering initially in Sao Paulo later this month. Next year, it expects to launch in other Brazilian cities such as Rio de Janeiro, Fortaleza and Salvador de Bahia.
The market opportunity in Latin America is massive considering that online grocery sales only represent just 1% of the market –– far lower than in the U.S., EU or China, for example. Other players in the increasingly crowded space include GoPuff in the U.S., Getir out of Turkey and Mexico-based Jüsto, which raised $65 million in a Series A led by General Atlantic earlier this year.
“The pandemic accelerated the adoption of online grocery shopping in LatAm,” McAllister told TechCrunch. “The region went from 0.3% share of online groceries to 1%. And after the pandemic, we are seeing a 50% increase in the pace of user adoption.” Overall, the $85 billion e-commerce market in Latin America is growing rapidly, with projections of it reaching $116.2 billion in 2023.
Currently, Merqueo has over 1,300 employees in LatAm, up 60% from last year. It plans to continue hiring with the proceeds from the Series C round as well work “to become the largest and most ambitious dark stores network of Latin America.”
Alejandro Rodríguez, managing partner at IDC Ventures, is naturally bullish on Merqueo’s potential.
“From all the opportunities we looked into, Merqueo is undoubtedly the most advanced in the region. … The Merqueo team has proved they know how to scale the business and how to get to profitability,” Rodríguez told TechCrunch.
Online grocery delivery is a business with many technical and operational complexities, he said. In his view, Merqueo’s technology and operational expertise allow it to tackle those issues in a way that has led to “the best customer experience that we have seen in a scalable way.”
“They have the best combination of both great service metrics and healthy unit economics,” Rodríguez added.
La Haus, which has developed an online real estate marketplace operating in Mexico and Colombia, has secured $100 million in additional funding, including $50 million in equity and $50 million in debt financing.
The new capital was obtained as an extension to the company’s Series B, the first tranche of which closed in January. With the latest infusion, Medellin, Colombia-based La Haus has now secured $135 million total for the round and over $158 million in funding since its 2017 inception.
San Francisco Bay Area venture firms Acrew Capital and Renegade Partners co-led the round, which also included participation from Jeff Bezos’ Bezos Expeditions, Endeavor Catalyst, Moore Strategic Ventures, Marc Benioff’s TIME Ventures, Rappi’s Simon Borrero, Maluma, and Gabriel Gilinski. Existing backers who put money in this round include Greenspring Associates, Kaszek, NFX, Spencer Rascoff’s 75 & Sunny Ventures, Hadi Partovi and NuBank’s David Velez.
Jerónimo Uribe (CEO), Rodrigo Sánchez-Ríos (president), Tomás Uribe (chief growth officer) and Santiago Garcia (CTO) founded the company after Jerónimo and Tomas met Sánchez-Ríos at Stanford University. Prior to La Haus they started and ran Jaguar Capital, a Colombian real estate development company with over $350 million of completed retail and residential projects.
The company declined to reveal at what valuation the extension was raised, with Sánchez-Ríos saying only that it was “a significant increase” from January.
The Series B extension follows impressive growth for the startup, which saw the number of transactions conducted on its Mexico portal climb by nearly 10x in the second quarter of 2021 compared to the 2020 second quarter. With over 500 homes selling on its platform (via lahaus.com and lahaus.mx) the company is “the market leader in selling new housing in Spanish-speaking Latam by an order of magnitude,” its execs claim. La Haus expects to have facilitated more than $1 billion in annualized gross sales by the end of the year.
The startup was founded with the mission of making it easier for people to buy homes and helping “solve LatAm’s extreme housing inequality.” Its end goal is to accelerate access to new housing by both generating and curating supply and demand and then matching it with its technology, noted Sánchez-Ríos.
“In the last six months, our chief product officer has built a product that allows this to happen 100% digitally,” he said. “Before it would take a lot of time, people involved and visits. We want to provide people looking for a home a similar experience as to people looking for their next flight at delta.com.”
It has done that by embedding its software to developers’ new projects so that it can bring that digital experience to its users.
“They are able to view the projects on our sites, we match them and then they can see in real time which units of a particular tower are available, and then select, sign and pay for everything digitally,” Sánchez-Río said.
Image credit: La Haus
The need for new housing in the region and other emerging markets in general is acute, they believe. And the pace of building new homes is slow because small and mid-sized developers – who are responsible for building the majority of new homes in Latin America – are cash constrained. At the same time, mortgages are mostly not affordable for consumers, with banks extending only a fraction of the credit to individuals compared to the U.S., and often at far worse terms.
What La Haus is planning to do with its new capital – particularly the debt portion – is go beyond selling homes via its marketplace to helping extend financing to both developers and potential buyers.It plans to take the proprietary data it has been able to glean from the thousands of real estate transactions conducted on it platform to extend capital to developers and consumers “more quickly, with much lower risk and at better terms.”
Already, what the startup has accomplished is notable. Being able to purchase a home 100% digitally is not that easy even in the U.S. Pulling that off in Latin America – which has historically trailed behind in digital adoption – is no easy feat. By year’s end, La Haus intends to be in every major metropolitan area in Mexico and Colombia.
Its ultimate goal is to be able to help new, sustainable homes “to be built faster, alleviating the inequality caused by lack of access to inventory.”
To Acrew Capital’s Lauren Kolodny, La Haus is building a solution specific to the issues of Latin America’s housing market, rather than importing business models – such as iBuying – from the U.S.
“For many people in the United States home equity is their largest asset. In Latin America, however, consumers have been challenged with an impenetrable real estate market stacked against consumers,” she wrote via email. “La Haus is removing barriers to home ownership that stifles millions of people from achieving financial security. Specifically, Latin America has no centralized MLS, very costly interest rates, no transactional transparency, and few online informational tools.”
La Haus, Kolodny added, is breaking down these barriers by consolidating listings online, offering pricing transparency and educating consumers about their financing options.
Acrew first invested in the startup in its $10 million Series A and has been impressed with its growth over time.
“They have a unique focus on new housing — a massive industry worldwide, but especially in emerging markets where new housing is so necessary,” Kolodny said. “The management team…knows real estate in Latin America better than anyone we’ve met.”
For its part, the La Haus team is excited to put its new capital to work. As Sánchez-Río put it, “$50 million goes a lot further in Mexico and Colombia than in the U.S.”
“We are going to be very aggressive in Mexico and Colombia, and plan to go from four to at least 12 markets by the end of the year,” Jeronimo told TechCrunch. “We’re also excited to roll out our financing solution to developers and buyers.”
Talkiatry announced today that it has raised a $20 million Series A to scale a strategy simple in theory yet potentially challenging in execution: bring psychiatry services in-network with insurance providers. The round, led by Left Lane Capital with participation from the founder and former CEO of CityMD, Dr. Richard Park, is an extension of Talkiatry’s previously secured $5 million financing. That check was led by Sikwoo Capital Partners with participation from Relevance Ventures and Park.
Co-founded by Robert Krayn and Dr. Georgia Gaveras, Talkiatry is a digital health startup that helps consumers access in-network appointments with psychiatrists for therapy and medicine management. The company employs an ongoing care model in which it takes a consumer in through a virtual survey, matches them with a psychiatrist based on their needs, and then follows the consumer through the care process from diagnosing symptoms to the actual prescription of medicine.
The startup’s true innovation lies in its plan to make psychiatric services covered by insurance providers for consumers. Many plans today don’t cover mental health services beyond a certain point — and at the same time, many high-quality psychiatrists don’t participate in private insurance plans because of minimal reimbursement and paperwork nightmares. As a result, the psychiatrists that are in-network may be consumed with patients, and the ones at private practices could have a price of up to $300 per session.
“There’s many people who have identified the problem that [psychiatrists are not accessible],” said Krayn. “What the issue comes to next is are they really, really solving the problem, or are they working around it?”
Krayn explained how startups have turned to hiring therapists and nurse practitioners as replacements for psychiatrists, which he thinks decreases the clinical quality of care (the difference between a therapist and psychiatrist is that the latter can prescribe medication). He said his competitors have also focused more on lessening the out-of-pocket costs instead of avoiding them altogether.
“While that does increase access to mental health, we think that that necessarily doesn’t give the most amount of access to solve a real problem, which is that psychiatrists are not accessible,” he said.
Talkiatry has partnered with a number of insurance providers including United Healthcare, Aetna, BlueCross BlueShield and more. While companies like Cerebral, Headway and Uplit have similarly gone in-network, the co-founder argues that it has the least restrictive relationship with providers, meaning that consumers won’t have to pay out of pocket for anything outside of the typical copay.
“Sure, some platforms are offered as an added benefit in addition to a health insurance plan, but may have additional restrictions, i.e., a patient may get access to the platform but still pay a monthly fee to get service. Others may only be allowed a certain number of visits and some may only be available if your employer decides to offer it in addition,” he said. “Talkiatry has none of these restrictions and can be used like any other in-network doctor you typically go to.”
Stability among its supply of psychiatrists is key here. Talkiatry has hired psychiatrists as W-2 employees instead of contractors. By not using a contractor model, Talkiatry will have more stability in its services but could struggle with scale. The startup will rapidly and consistently hire psychiatrists with varying backgrounds to serve consumers. Plus, in order to expand into new markets, Talkiatry has to go through the arduous legal process of local licensing requirements, instead of just going to a white-label solution that helps staff similar companies while offloading individual practitioner certification.
While Ginger, a well-capitalized growth stage company, and Lyra Health, a digital health unicorn last valued at $4.6 billion, have recently made waves in the behavioral health space, Talkiatry is confident that it can break into the sector, which continues to attract record amounts of venture capital from investors.
Its competition is paying attention. For example, Ginger has made more efforts to bring in-network mental health solutions to users, recently partnering with AmeriHealth Caritas District of Columbia and Cigna.
“Providing psychiatry in-network is one avenue to ensure people receive care, but it still does not solve the supply-demand imbalance in the mental healthcare space,” said Russell Glass, Ginger CEO and co-founder. He explained how Ginger’s product being on-demand and virtual helps it address the growing shortage of mental health providers, which will be a hurdle that Talkiatry will need to address, too.
Currently, Talkiatry has 44 clinicians on its platform, with 33 as psychiatrists and the remaining as nurse practitioners. It has done 30,000 visits since its launch.
Realm, which aims to help homeowners maximize the value of their property with its data platform, has raised $12 million in Series A funding led by GGV Capital.
Existing backers Primary Venture Partners, Lerer Hippeau and Liberty Mutual Strategic Ventures also participated in the round, bringing the New York-based startup’s total raised to $15 million.
Liz Young founded Realm, launching the platform earlier this year with the goal of providing “a one-stop-shop for accessible, actionable home advice.”
So far, Realm says it has helped over 20,000 homeowners “uncover” an average of $175,000 in property value. Its user base is growing 20% month over month.
What makes the company different from other valuation offerings out there, according to Young, is that rather than telling owners what their homes are worth today, Realm can tell them what their home could be worth after renovations in months and years to come.
“There are a ton of tools and services that make it easier to buy or sell your home, but once you move, it’s a total black box,” she said. “You’re left trying to cobble together advice from fragmented, often biased resources to navigate big, expensive decisions. There’s nowhere else consumers spend so much money, with such little actionable information.”
For example, using data extracted from a variety of sources such as tax assessors and its own users, Realm can do things like tell a homeowner in real time how their property value will change if they do things like make over a bathroom or add a new deck. Its algorithms can assess a property and offer advice on what projects are most likely to add value.
“The public data that we acquire, the data we ingest from users, and the data that we build ourselves has allowed us to build the most robust and unique actionable real estate data set in the U.S.,” Young told TechCrunch.
Realm’s database is free and according to Young, offers insights on over 70 million single family detached homes across the U.S.
Part of that is determined by zoning data, which tells people where they can and cannot build on a property.
“It’s really important because square feet is one of the biggest drivers of home value,” Young said. “So if you’re trying to understand how much a home’s worth or could be worth, you really have to understand the local zoning rules.”
Image Credits: Realm
Realm’s marketplace offering, where an adviser connects owners to contractors, architects and lenders that can carry out the company’s recommendations, is currently only live in California, but will be expanding to new markets over the next 12 months.
“People can digitally consume our free insights but a lot want help interpreting them,” Young said.
The company plans to use its new capital to “improve the quality and sophistication of the platform’s data insights” and toward hiring across its data science, engineering, marketing and operations teams. It will also continue to develop its proprietary data sets and models, which offer homeowners across the country personalized analysis of over 70 million homes.
A lot of Realm’s business is driven by its relationships with agents and word of mouth via its existing user base.
Jeff Richards, GGV managing partner and new Realm board member, said that when his firm backs at the Series A level, its bet is “100% on the founder.”
“I met Liz when she was raising her seed round in July 2020 and was blown away,” he told TechCrunch. “She’s smart, ambitious and has a deep background in the space she’s going after. Although it was early, I could tell she was thinking big.”
Founder and CEO Liz Young. Image Credits: Realm
He points out that GGV Capital, with $2.5 billion in assets under management, is a long-time investor in other proptechs including Opendoor, Divvy Homes, Belong and Airbnb.
“Zillow made it easy for people to find a home to buy. Opendoor made it easy to buy and sell a home,” Richards told TechCrunch. “Airbnb made it easy to rent a home for a short-term vacation. Belong is making it easy to rent a home for the long term.”
Realm, according to Richards, was right in GGV’s “sweet spot.”
“No one has zeroed in on helping the individual homeowner manage their home, and that’s the opportunity area Liz is going after,” he said. “We kept in touch after the seed round, she pinged me to talk about her A, we met up and I gave her a term sheet 48 hours later.”
In general, Richards believes that residential real estate is one of the biggest spend categories in the U.S. and yet is still virtually untouched by technology.
Home sales are over $1.6 trillion annually, home improvement is one of the biggest categories in the U.S. at over $500 billion annually, and the average home renovation project in the U.S. is around $15,000, with many spending over $50,000.
“I’ve owned a home for 17 years and almost everything I do with respect to the home is the same as it was over a decade ago. The only thing that has really changed is I can manage my thermostat and cameras with my phone,” Richards said. “Literally everything else is the same — the way I do renovations, the way I find contractors to do repairs, the way I pay my mortgage, etc. — exactly the same. That’s ridiculous! Liz sees a huge opportunity here, and so do we. The market is enormous. So there will be many, many winners.”
Exo, pronounced “echo,” raised a fresh cash infusion of $220 million in Series C financing aimed at commercializing its handheld ultrasound device and point-of-care workflow platform, Exo Works.
The round was led by RA Capital Management, while BlackRock, Sands Capital, Avidity Partners, Pura Vida Investments and prior investors joined in.
The new funding gives the Redwood City, California-based company over $320 million in total investments since the company was founded in 2015, Exo CEO Sandeep Akkaraju told TechCrunch. This includes a $40 million investment raised in 2020.
Ultrasound machines can cost anywhere from $40,000 to $250,000 for low-end technology and into the millions for high-end machines. Meanwhile, Exo’s device will be around the cost of a laptop.
“It is clear to us that ultrasound is the future — it is nonradiating and has no harmful side effects,” Akkaraju said. “We want to take the technology and put it in the palms of physicians. We also want to bring it down to the patient level. The beauty of having this window into the body is you can immediately see things.”
Using a combination of artificial intelligence, medical imaging and silicon technology, the device enables users to use it in a number of real-world medical environments like evaluating cardiology patients or scanning lungs of a COVID-19 patient. It can also be used by patients at home to provide real-time insight following a surgical procedure or to monitor a certain condition.
Exo then adds in its Exo Works, the workflow platform, that streamlines exam review, documentation and billing in under one minute.
Akkaraju said the immediate focus of the company is commercializing the device, which is where most of the new funding will go. He intends to also build out its informatics platform that is being piloted across the country and to ramp up both production and its sales force.
The global point-of-care ultrasound market is expected to reach $3.1 billion by 2025 and will grow 5% annually over that period. In addition to physicians, Akkaraju is hearing from other hospital workers that they, too, want to use the ultrasound device for some of their daily tasks like finding the right vein for an IV.
Once the company’s device is approved by the U.S. Food and Drug Administration, Exo will move forward with its plan to bring the handheld ultrasound device to market.
Zach Scheiner, principal with RA Capital Management, said he met the Exo team in 2020 and RA made its first investment in the Series B extension later that year.
He was “immediately compelled” by the technology and the opportunity to scale. Scheiner also got to know Akkaraju over the months as well as saw how Exo’s technology was improving.
“We are seeing an expanding opportunity in healthcare technology as it improves and costs go down,” he added. “The vision Sandeep has of democratizing the ultrasound is not a vision that was possible 15 or 20 years ago. We are seeing the market in its early stage, but we also recognize the potential. Every doctor should want one to see what they were not able to see before. As technology and biology improves, we are going to see this sector grow.”
Despite their rich engineering talent, Blockchain entrepreneurs in the EU often struggle to find backing due to the dearth of large funds and investment expertise in the space. But a big move takes place at an EU level today, as the European Investment Fund makes a significant investment into a blockchain and digital assets venture fund.
Fabric Ventures, a Luxembourg-based VC billed as backing the “Open Economy” has closed $130 million for its 2021 fund, $30 million of which is coming from the European Investment Fund (EIF). Other backers of the new fund include 33 founders, partners, and executives from Ethereum, (Transfer)Wise, PayPal, Square, Google, PayU, Ledger, Raisin, Ebury, PPRO, NEAR, Felix Capital, LocalGlobe, Earlybird, Accelerator Ventures, Aztec Protocol, Raisin, Aragon, Orchid, MySQL, Verifone, OpenOcean, Claret Capital, and more.
This makes it the first EIF-backed fund mandated to invest in digital assets and blockchain technology.
EIF Chief Executive Alain Godard said: “We are very pleased to be partnering with Fabric Ventures to bring to the European market this fund specializing in Blockchain technologies… This partnership seeks to address the need [in Europe] and unlock financing opportunities for entrepreneurs active in the field of blockchain technologies – a field of particular strategic importance for the EU and our competitiveness on the global stage.”
The subtext here is that the EIF wants some exposure to these new, decentralized platforms, potentially as a bulwark against the centralized platforms coming out of the US and China.
And yes, while the price of Bitcoin has yo-yo’d, there is now $100 billion invested in the decentralized finance sector and $1.5 billion market in the NFT market. This technology is going nowhere.
Fabric hasn’t just come from nowhere, either. Various Fabric Ventures team members have been involved in Orchestream, the Honeycomb Project at Sun Microsystems, Tideway, RPX, Automic, Yoyo Wallet, and Orchid.
Richard Muirhead is Managing Partner, and is joined by partners Max Mersch and Anil Hansjee. Hansjee becomes General Partner after leaving PayPal’s Venture Fund, which he led for EMEA. The team has experience in token design, market infrastructure, and community governance.
The same team started the Firestartr fund in 2012, backing Tray.io, Verse, Railsbank, Wagestream, Bitstamp, and others.
Muirhead said: “It is now well acknowledged that there is a need for a web that is user-owned and, consequently, more human-centric. There are astonishing people crafting this digital fabric for the benefit of all. We are excited to support those people with our latest fund.”
On a call with TechCrunch Muirhead added: “The thing to note here is that there’s a recognition at European Commission level, that this area is one of geopolitical significance for the EU bloc. On the one hand, you have the ‘wild west’ approach of North America, and, arguably, on the other is the surveillance state of the Chinese Communist Party.”
He said: “The European Commission, I think, believes that there is a third way for the individual, and to use this new wave of technology for the individual. Also for businesses. So we can have networks and marketplaces of individuals sharing their data for their own benefit, and businesses in supply chains sharing data for their own mutual benefits. So that’s the driving view.”
Cast your mind back to that scene in Minority Report where all those autonomous cars are whizzing through the city. The more practically-minded of you may well have gone: “Yeah, but what about the insurance…?”.
Emerging from an academic project to look at drones, Flock shifted into providing drones insurance then commercial vehicle insurance. The twist is that it hooks into the telematics of cars so that the vehicle only triggers insurance cover when it’s actually moving, not when it’s sitting on the lot, incapable of causing any accidents.
Flock has now raised $17 million in a Series A funding led by Social Capital, the investment vehicle run by Chamath Palihapitiya, best known as a SPAC investor and Chairman of Virgin Galactic. Flock’s existing investors Anthemis and Dig Ventures also participated. This round brings Flock’s total funding to $22 million. Justin Saslaw (Social Capital’s Fintech Partner) joins Flock’s Board of Directors as does Ross Mason (Founder of Dig Ventures & MuleSoft).
Ed Leon Klinger, CEO of Flock said: “Transportation is changing faster than ever, but the traditional insurance industry can’t keep up! The proliferation of electric cars, new business models such as ridesharing, and the emergence of autonomous vehicles pose huge challenges that traditional insurers just aren’t equipped for.”
He added: “Modern fleets need an equally modern insurance company that moves as fast as they do. Commercial motor insurance is a $160Bn market, crying out for disruption. The opportunity ahead of us is enormous.”
In a statement Chamath Palihapitiya, CEO of Social Capital said: “Flock is bridging the gap between today’s insurance industry and tomorrow’s transportation realities. By using real-time data to truly understand vehicle risk, Flock is meeting the demands of our rapidly evolving, hyper-connected world. Flock has the potential to help unlock and enable a truly autonomous world, and even save lives. We’re excited to be a part of their journey.”
Speaking to me over a call, Klinger outlined how the company had hit a sweet spot by hooking into Telematics APIs for cars, or by doing special integrations with existing providers and OEMs: “We’ve built our own integrated approach whereby we partner with some and we build bespoke integrations with them. Often they are not as advanced as others. So we’ll either use our integration platform or or we’ll use their approach. We’re highly flexible. The core value proposition at Flock is its flexibility, so we don’t force our own integration approach.”
When co-founders Songe LaRon and Dave Salvant first began barbershop tech platform Squire in 2016, they leaned in: The duo bought a barbershop in New York City’s Chelsea neighborhood to see firsthand how the business worked. For one year, the co-founders religiously worked at the shop, now owned by a larger barbershop chain, handling every bit of the business (except cutting hair).
Five years later, the co-founders view that experience as a key moment in the history of Squire, now a 175-person company with a tech platform used by over 2,000 shops across three continents. After last raising a Series C in December and tripling its valuation, Squire announced today that it has raised a $60 million round led by Tiger Global.
And, it tripled its valuation, again. Off of 300% year-over-year revenue growth, the New York startup is now valued at $750 million. It’s a massive uptick: A little over a year ago, Squire was valued at $75 million.
Like many startups these days, Squire wasn’t searching for capital when Tiger Global, which participated in its Series B and C rounds, offered to lead its next financing. The startup has only spent 10% of its previous round, a $45 million equity round, and now has tens of millions more in the bank. Ultimately, its decision to bring on more capital is so it can expand in the U.K. and Canada more aggressively — even in the wake of early-stage competitors like Boulevard. Squire’s dry powder also puts the co-founders in a position to acquire companies, a strategy that Salvant is into and plans to be “aggressive about.”
Squire also announced today the official launch of a product that has been in the roadmap since inception: Squire Capital, a money management platform with tools tailored to the needs of barbershop operations, such as instant payments. Squire’s core business has been more around appointments, loyalty programs and the installment of contactless payment. Now, a fintech layer aims to offer a more niche service than current financial services heavyweights like Square or Paypal.
Fintech is a “natural next frontier” for Squire, Salvant said, because the startup already has deep insights into how its businesses operate and how they process sales; now, it wants to add another service so it can offer a more holistic experience to them.
Squire Capital was built with Bond, a venture-backed fintech infrastructure startup that aims to help enterprise operations launch their own banking products. After experimenting with a $15 million debt financing arm around the time of its Series C, Squire isn’t offering loans at this time, hoping to find a better way to scale offerings in the future.
Squire is en route to becoming a historical and unfortunately still rare Black-led unicorn. Salvant talked about the significance of that feat, noting that this was “the optimal outcome” when founding the company. He hopes that VCs and investors will start to invest more in Black founders with Squire as a data point of a success story.
“Let’s face it, we’re not typical founders, we don’t look the same and we don’t act the same,” Salvant said. “I just want to serve as a lighthouse and this is validation for myself, my co-founder, but more importantly, what’s coming after us.”