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Platform as a service startup Porter aims to become go-to for deploying, managing cloud-based apps

By Christine Hall

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However, while Heroku is still popular, the pair said companies are thinking the platform is getting outdated because it is standing still technology-wise.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.”

Introducing the Open Cap Table Coalition

By Ram Iyer
Aron Solomon Contributor
Aron Solomon, J.D., is the head of Strategy for Esquire Digital and the editor of Today’s Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was the founder of LegalX, a legal technology accelerator.

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.

Craft Aerospace’s novel take on VTOL aircraft could upend local air travel

By Devin Coldewey

Air taxis may still be pie in the sky, but there’s more than one way to move the air travel industry forward. Craft Aerospace aims to do so with a totally new vertical takeoff and landing aircraft that it believes could make city-to-city hops simpler, faster, cheaper and greener.

The aircraft — which, to be clear, is still in small-scale prototype form — uses a new VTOL technique that redirects the flow of air from its engines using flaps rather than turning them (like the well-known, infamously unstable Osprey), making for a much more robust and controllable experience.

Co-founder James Dorris believes that this fast, stable VTOL craft is the key that unlocks a new kind of local air travel, eschewing major airports for minor ones or even heliports. Anyone that’s ever had to take a flight that lasts under an hour knows that three times longer is spent in security lines, gate walks and, of course, getting to and from these necessarily distant major airports.

“We’re not talking about flying wealthy people to the mall — there are major inefficiencies in major corridors,” Dorris told TechCrunch. “The key to shortening that delay is picking people up in cities and dropping them off in cities. So for these short hops, we need to combine the advantages of fixed-wing aircraft and VTOL.”

The technique they arrived at is what’s called a “blown wing” or “deflected slipstream.” It looks a bit like something you’d see on the cover of a vintage science fiction rag, but the unusual geometry and numerous rotors serve a purpose.

The basic principle of a blown wing has been explored before now but never done on a production aircraft. You simply place a set of (obviously extremely robust) flaps directly behind the thrust, where they can be tilted down and into the exhaust stream, directing the airflow downward. This causes the craft to rise upward and forward, and as it gets enough altitude it can retract the flaps, letting the engines operate normally and driving the craft forward to produce ordinary lift.

Image Credits: Craf Aerospace. During takeoff, thrust is redirected downward by extending flaps.

The many rotors are there for redundancy and so that the thrust can be minutely adjusted on each of the four “half-wings.” The shape, called a box wing, is also something that has been tried in a limited fashion (there are drones with it, for example) but ultimately never proved a valid alternative to a traditional swept wing. But Dorris and Craft believe it has powerful advantages, in this case, allowing for a much more stable, adjustable takeoff and landing than the two-engine Osprey. (Or, indeed, many proposed or prototype tilt-rotor aircraft out there.)

Image Credits: Craf Aerospace. During flight, the flaps retract and thrust pushes the plane forward as normal.

“Our tech is a combination of both existing and novel tech,” he said. “The box wing has been built and flown; the high flap aircraft has been built and flown. They’ve never been synthesized like this in a VTOL aircraft.”

To reiterate: The company has demonstrated a limited scale model that shows the principle is sound — they’re not claiming there’s a full-scale craft ready to go. That’s years down the line, but willing partners will help them move forward.

The fifth-generation prototype (perhaps the size of a coffee table) hovers using the blown wing principle, and the sixth, due to fly in a few months, will introduce the transitioning flaps. (I was shown a video of the prototype doing tethered indoor hovering, but the company is not releasing this test footage publicly.)

The design of the final craft is still in flux — it’s not known exactly how many rotors it will have, for instance — but the basic size, shape and capabilities are already penned in.

It’ll carry nine passengers and a pilot, and fly around 35,000 feet or so at approximately 300 knots, or 345 mph. That’s slower than a normal passenger jet, but whatever time you lose in the air ought to be more than regained by skipping the airport. The range of the cleaner hybrid gas-electric engines should be around 1,000 miles, which gives a good amount of flexibility and safety margins. It also covers 45 of the top 50 busiest routes in the world, things like Los Angeles to San Francisco, Seoul to Jeju Island, and Tokyo to Osaka.

Image Credits: Craft Aerospace. It probably wouldn’t be flying at this altitude.

Notably, however, Dorris wants to make it clear that the idea is not “LAX to SFO” but “Hollywood to North Beach.” VTOL aircraft aren’t just for show: Regulations permitting, they can touch down in a much smaller location, though exactly what kind of landing pad and micro-airport is envisioned is, like the aircraft itself, still being worked out.

The team, which just worked its way through Y Combinator’s summer 2021 cohort, is experienced in building sophisticated transport: Dorris was a primary on Virgin Hyperloop’s propulsion system, and his co-founder Axel Radermacher helped build Karma Automotive’s drivetrain. It may not have escaped you that neither of those companies makes aircraft, but Dorris thinks of that as a feature, not a bug.

“You’ve seen what’s come out of traditional aerospace over the last 10, 20 years,” he said, letting the obvious implication speak for itself that the likes of Boeing and Airbus aren’t exactly reinventing the wheel. And companies that partnered with automotive giants hit walls because there’s a mismatch between the scales — a few hundred aircraft is very different from half a million Chevy sedans.

So Craft is relying on partners who have looked to shake things up in aerospace. Among its advisers are Bryan Berthy (once director of engineering at Lockheed Martin), Nikhil Goel (one of Uber Elevate’s co-founders), and Brogan BamBrogan (early SpaceX employee and Hyperloop faithful).

The company also just announced a letter of intent from JSX, a small airline serving low-friction flights on local routes, to purchase 200 aircraft and the option for 400 more if wanted. Dorris believes that with their position and growth curve they could make a perfect early partner when the aircraft is ready, probably around 2025 with flights beginning in 2026.

It’s a risky, weird play with a huge potential payoff, and Craft thinks that their approach, as unusual as it seems today, is just plainly a better way to fly a few hundred miles. Positive noises from the industry, and from investors, seem to back that feeling up. The company has received early-stage investment (of an unspecified total) from Giant Ventures, Countdown Capital, Soma Capital and its adviser Nikhil Goel.

“We’ve demonstrated it, and we’re getting an enormous amount of traction from aerospace people who have seen hundreds of concepts,” said Dorris. “We’re a team of only seven, about to be nine, people. … Frankly, we’re extremely pleased with the level of interest we’re getting.”

Brokrete wants to be the ‘Shopify of construction’, raises $3M seed led by Xploration Capital

By Mike Butcher

With the pandemic affecting every aspect of life and industry, it’s no surprise that digitization is coming to construction fast. Construction suppliers are increasingly under the same pressure as other sectors to perform at a higher level. We’ve seen the rise of companies like Dozer, Reno Run, and Toolbox try to address this, but often the model is closer to a vertical integration one rather than something more open. Even with that, it’s still the case that to order concrete or bricks, construction companies have to negotiate each time, while simultaneously record keeping.

This is the argument of Brokrete, which bills itself as the “Shopify of construction.”

The startup has now raised a $3M seed financing round led by Xploration Capital, which was joined by unnamed new strategic investors and existing investors. The startup graduated from Y Combinator’s winter cohort last year. Other strategic investors include Ronald Richardson, Avlok Kohli (CEO of AngeLlist Ventures) and the MaRS Investment Accelerator Fund (IAF). The funding will be used to expand in North American and European markets. Brokrete also launched an e-commerce platform for suppliers in the construction industry it calls Storefront.

Jordan Latourelle, the company’s founder and CEO said: “Construction today is a largely offline, $1.2 trillion market where legacy commerce is the norm. Brokrete’s Storefront product equips suppliers with the tools required to enhance their operations by orders of magnitude. I founded Brokrete after seeing an industry left behind by e-commerce giants. Now we are becoming the operating system for e-commerce in the construction industry, while staying easy and affordable at the same time.”

Brokrete says its platform is code-free, white-labeled, multi-channel, and industry-specific to sell and manage orders online. Suppliers get an iOS and Android app for e-commerce to receive offline orders from more ‘traditional’ customers. It then provides order management, payouts, dispatching, logistics, and real-time delivery. There are also financial and operational ERP integrations. Brokrete claims to works with 1000+ contractors and to have a 250+ supplier network.

Latourelle told me: “We’re giving the construction industry an opportunity to use it on a Shopify way, and create their own store. It’s like a branded storefront for suppliers.”

Eugene Timko, managing partner at Xploration Capital said: “Construction is one of the few remaining large industries with mostly undigitized supply chains. Historically the key problem was the lack of real-time access to actual stocks which prevented producers and distributors from going online. Now with Brokrete’s end-to-end solution, these businesses can not only sell through Brokrete’s marketplace but can also enable their own direct online channels. Similar to Shopify, this has allowed many thousands of previously offline businesses to start accepting orders online.”

Litnerd streams live actors into the classroom to help kids better connect with reading

By Greg Kumparak

Our kids can’t read. As of 2019, roughly a third of U.S. fourth graders were unable to read at the level expected of them. The scores have barely changed in decades. Something isn’t working here.

Litnerd, a company out of New York City, wants to try something new. They’re writing books and building lesson plans with a twist: professional actors, streamed into the class, to recreate scenes from each book and — hopefully! — help keep students engaged.

Litnerd programs are built as four one-hour, once-a-week sessions. Students read the book between sessions; once a week, an actor is streamed to the class to re-enact scenes, bring everything together and move the story along. Sometimes this actor’s segment is pre-recorded. Other times it’s live, with choose-your-own-adventure elements mixed in to let the students steer the ship.

Something about the whole thing just tugs at my heart strings. It reminds me of “auditorium day” in school; those rare days in which our school brought in a special performer — a singer, a motivational speaker, a puppet show, whatever — to somehow wrangle our collective attention. Those days felt so unique, so special. Even decades later, fond memories of those days stick with me.

While it’s currently basing its lesson plans around existing stories and content, Litnerd has its own publishing operation in the works. The goal is to identify the categories and genres that best catch each age group’s (Pre-K through fifth grade) attention, then write books that, as the team puts it, “help celebrate diversity and inclusion so that all children can see themselves in the stories.”

Litnerd began its life during the pandemic under a different name: TinyBroadway. TinyBroadway shared a lot of its DNA with what would eventually become Litnerd — actors, beamed in through the magic of the internet, work through lessons and crafts with a handful of kids at a time. Litnerd shifts the concept from B2C to B2B; whereas TinyBroadway’s customer was the parent looking to fill their own kid’s schedule, Litnerd dramatically expands its audience (and hopefully deepens its impact as a result) by working with schools.

Image Credits: Litnerd

I asked ( via email) Litnerd CEO and founder Anisa Mirza for her thoughts on the shift:

“The reality is, the majority of Americans, some 95%, cannot afford homeschooling. Especially when it comes to K-5 years. And doubly when it comes to parents of children belonging to Title 1 schools (majority of NYC schools),” she writes. “This isn’t simply because parents can’t pay out of pocket. Rather, because for 95% of Americans, school represents free daycare (if both parents have to work a typical 9-5, they cannot afford to stay home and watch little Anisa, no matter how fabulous the online homeschool teacher is!). This is when I realized that if we truly want to disrupt K-12 (esp K-5) education, we need a solution that works from the outside in – being part of classroom time and funded by schools.”

Working with schools introduces new challenges and processes, varying a bit from city to city and state to state. In many regions, schools can’t just bring in a company like this on a whim — they’ve got to work with pre-approved, contracted vendors. Since becoming an approved vendor with the New York City Department of Education earlier this year, Anisa tells me more than 14,000 students have taken part in Litnerd’s programs. She expects that number to double in the coming months.

Litnerd’s books, workshops and lesson plans are built around the social and emotional learning (or SEL) practices that most U.S. states expect, bringing in topics like self-awareness, responsible decision making and social awareness to help students grow more than just their ability to read.

Each book comes with its own lesson plan, complete with worksheets and activities for the students and suggested dialogue to help teachers identify and highlight the intended learnings from the stories.

Importantly, the company seems quite mindful about how it all plays out from the teacher’s perspective. They know that most teachers already have far too much to do, and design lesson plans with the goal of minimizing the amount of work they’re adding to a teacher’s day.

“We need SEL for the teachers, too,” Mirza tells me. “We need a social and emotional break for them, as well.”

It’s also a pretty dang cool gig for actors, particularly as the live acting industry works to recover from the pandemic. Actors currently perform and record all their sessions from home; as Litnerd grows, the company hopes to open up co-working space-style drop-in studios.

Litnerd is currently focused on expanding to more schools in New York City, growing beyond that as the varying regional processes allow.

Founders: How well do you really understand seed-stage financing?

By Ram Iyer
Yin Wu Contributor
Yin Wu, a three-time YC alum, is founder of Pulley, which offers cap table management tools that help companies better understand and optimize their equity.

I’ve fundraised a lot. Tactically, fundraising is a skill like any other. You get better the more you do it. But practicing gets you nowhere if you don’t have a strong foundation in understanding a fundraising round’s core components.

As a founder, you will understand less than investors when it comes to fundraising. For investors, negotiating with founders is their full-time job. For founders, fundraising is just a small part of building a business. Understanding the basics of venture financing can help founders raise on better terms.

We’ll cover:

  • How financing works: SAFEs versus equity rounds,
  • How much to raise
  • How to arrive at your valuation

How financing works: SAFEs versus equity rounds

Venture financing takes place in rounds. The first stage is the pre-seed or seed round, then a Series A, then a Series B, then a Series C, and so on. You can continue to raise funding until the company is profitable, gets acquired or goes public.

We will focus here on seed-stage funding — your very first funding round.

SAFEs

Post-money SAFEs are the most common way to raise funding. These documents are used by Y Combinator, angel investors, and most early-stage funds. You should raise on post-money SAFEs using standard documents created by YC. Standard documents have consistent terms that have been drafted to be fair to both investors and founders.

By using the standard post-money SAFE, your negotiation can focus on the two terms that matter:

  1. Principal: The amount you want to raise per investor.
  2. Valuation cap: The value of your business.

Colombian on-demand delivery startup Rappi raises ‘over’ $500M at a $5.25B valuation

By Mary Ann Azevedo

Rappi, a Colombian on-demand delivery startup, has raised “over” $500 million at a $5.25 billion valuation in a Series G round led by T. Rowe Price, the company announced late Friday.

Baillie Gifford, Third Point, Octahedron, GIC SoftBank, DST Global, Y Combinator, Andreessen Horowitz and Sequoia Capital and others also participated in the round.

The new financing brings Rappi’s total raised since its 2015 inception to over $2 billion, according to Crunchbase. Today, the country has operations in 9 countries and more than 250 cities across Latin America. Its last raise was a $300 million a Series F funding round in September of 2020.

According to the Latin American Venture Capital and Private Equity Association (LAVCA), Rappi focused on delivering beverages and first, and has since expanded into meals, groceries, tech goods and medicine. The company also offers a cash withdrawal feature, allowing users to pay with credit cards and then receive cash from one of Rappi’s delivery agents. Today, the company says its app allows consumers to “order nearly any good or service.”

In addition to traditional delivery, it says “users can get products delivered in less than 10 minutes, can access financial services, as well as ‘whims,” and “favors.’ Whims allow users to order anything available in their coverage area. Favors offer an array of custom services, such as running an errand, going to the hardware store or picking out and delivering a gift. The two products allow users to connect directly with a courier. 

Simón Borrero, Sebastian Mejia, and Felipe Villamarin launched the company in 2015, graduating from Y Combinator the following year. A16z’s initial investment in July 2016 was the Silicon Valley firm’s first investment in Latin America, according to LAVCA.

Homebrew leads Z1’s effort to bring digital banking to Latin America’s teens

By Mary Ann Azevedo

Z1, a Sao Paulo-based digital bank aimed at Latin American GenZers, has raised $2.5 million in a round led by U.S.-based Homebrew.

A number of other investors also participated in the financing including Clocktower Ventures, Mantis – the VC firm owned by The Chainsmokers, Goodwater, Gaingels, Soma Capital and Rebel Fund. Notably, Mantis has also backed Step, a teen-focused fintech based in the U.S., and Goodwater has also invested in Greenlight, which too has a similar offering as Z1.

Z1 participated in Y Combinator’s Winter ‘21 batch earlier this year, and at the time got $125,000 in funding from the accelerator. Maya Capital led its $700,000 seed round in March of 2020.

Put simply, Z1 is a digital bank app built for teenagers and young adults. The company was founded on the notion that by using its app and linked prepaid card, Brazilian and Latin American teenagers can become more financially independent.

João Pedro Thompson and Thiago Achatz started the company in late 2019 and soon after,  Mateus Craveiro and Sophie Secaf joined as co-founders. In its early days, Z1 is focused on Brazil but the startup has plans to expand into other countries in Latin America over time.

“Z1 is what we’re building to be the go to bank of the next generation, and not just be a digital bank for teens,” Achatz told TechCrunch. “We want to grow with him and one day, be the biggest bank in Brazil and LatAm.” 

Thompson agrees. 

“We’re acquiring users really early and creating brand loyalty with the intention of being their bank for life,” he said. “We will still meet their needs as they grow into adulthood.”

Image Credits: Z1

While Z1’s offering is not completely unlike that of Greenlight here in the U.S. the founders agree that its products have been adapted more to the Brazil-specific cultural and market situation.

For example, points out Thompson, most teenagers in Brazil use cash because they don’t have access to other financial services, whether they be traditional or digital.

“We offer an account where they can deposit money, cash out money via an instant payment system in Brazil or spend through a prepaid credit card,” he said. “Most sites don’t accept debit cards so this is a big step compared to what teens already have.”

Part of the company’s use for the capital is to make its product more robust so they can do things like save money for big purchases such as an iPhone and earn interest on their accounts.

Another big difference between Brazil and the U.S., the company believes, is that many parents in general in Latin America haven’t had a true financial education that they can pass down to their kids.

“We’re not top down like Greenlight,” Achatz said. “That approach doesn’t make sense in Latin America. Here, many are independent from an early age and already work whether it’s through a microbusiness, a side job or selling things on Instagram. They’re much more self-taught and the income they earn is often outside of their parents.”

Z1 has grown 30% per week and 200% per month since launch, spending “very little” on marketing and relying mostly on word-of-mouth. For example, the company is following the lead of its U.S. counterparts and turning to TikTok to spread the word about its offering. 

“Step has around 200,000 followers on TikTok, and we have a little under half of that,” the company says. “We’re well-positioned in terms of branding.”

For lead investor Homebrew, the opportunity to educate and provide financial services to Gen Z in Latin America is even more exciting than the opportunity in the US., notes partner Satya Patel.

Over one third of LatAm Gen Z’ers have a “side hustle,” generating their own income independent from their parents, he said.

“While millennials grew up during an economic boom, Gen Z grew up during recessions – 3 in Brazil over the last decade – and wants to become financially independent as soon as possible. They’re becoming economically educated and active much earlier than previous generations,” Patel added.

He also believes the desire to transact online, for gaming and entertainment in particular, creates a groundswell of GenZ demand in Brazil for credit card and digital payments products.

Kaszek Ventures leads a $15 million round in Chilean asset management startup, Fintual

By Marcella McCarthy

Like other financial sectors in Latin America, the retail investing space is getting a facelift by local tech startups that are cashing in on the untapped potential for democratizing asset management in the region. One of those startups is Chilean-based Fintual, which today announced a $15 million round led by Kaszek Ventures, the largest fund in Latin America.

Fintual is an automated passive investment platform that allows the average person in Chile or Mexico to invest in mutual funds containing ETFs (Exchange Traded Funds), investment vehicles that aren’t as well known, or as readily accessible in Latin America.

“The idea that got to me was that we were allowing people to invest in the long term, we enable them to invest in instruments they didn’t have access to before,” said Pedro Pineda, co-founder and CEO of Fintual.

Before starting Fintual in 2018 with his three co-founders, Pineda was an astronomer and an entrepreneur, who built and sold a Groupon copycat company in Chile called “Queremos Descuentos” (We Want Discounts) for just over $1 million when he was 28. 

After the exit, he admits he was a bit lost in life. 

“One day I decided that I wanted to do only the things that I wanted to do and with the people I wanted to do it with,” he said.

He traveled for a couple of years, and learned to code, among other things, until Omar Larré, Fintual’s current CIO, presented him with the idea for the business. 

Larré had been a portfolio manager at Banco Itau, Brazil’s biggest bank by total assets, and he saw the gap in the market: investing was not set up for the average person. The annual fees were too high, the minimum amount required to invest was too high, and there was a penalty when you removed your money. Additionally, the transaction takes a certain amount of financial know-how that most people don’t possess.

For Pineda, disrupting the financial sector also seemed like a lot of fun, he thought.

“I liked the idea of challenging the financial banks, and you can’t do that without technology. We have this super tool that my parents didn’t have, and you can disrupt an entire industry,” Pineda told TechCrunch.

While traditional mutual funds in Chile and Mexico charge up to 6.45% and 5% annually, Fintual charges 1% annually of assets managed. Additionally, Fintual doesn’t require a minimum investment nor a minimum amount of time invested, and users can take their money out any time with no penalties. 

“It’s different than the U.S.; we invest way less than you do; by a factor of 10 maybe,” Pineda said, comparing the investment rate in Chile.

In 2018, the company was accepted into Y Combinator and became the first Chilean startup to go through the prestigious accelerator. It has been growing exponentially ever since and today it serves 57,000 clients in Chile and Mexico.

Below is a table that shows their growth including money managed and percent growth each year since launch.

Assets Under Management (USD)* Annual Growth
May 2018              1.2 M
May 2019              12.9 M 1075%
May 2020               87.6 M 679%
May 2021               480.7 m 548%

    *Each figure corresponds to the end of each month.

The current raise will be used to grow the company’s operations in Mexico, expand to other countries — namely Colombia and Peru — and grow its tech team. 

In addition to Kaszek, other investors to date include YC, ALLVP, and angel investors such as Plaid’s CTO, Jean-Denis Greze, and Cornershop’s founder Oskar Hjertonsson. To date, the company has raised about $15.2 million.

Fintual’s impressive growth speaks for itself, but Kaszek’s co-founder and managing partner, Nicolas Szekasy, said the fund has been following Fintual since its early days, and he was impressed with the niche market the team identified and even more impressed with the user experience the company had developed which has, in turn, fueled its growth.

Accept.inc secures $90M in debt and equity to scale its digital mortgage lending platform

By Mary Ann Azevedo

A lot of startups were built to help people make all-cash offers on homes with the purpose of gaining an edge against other buyers, especially in ultra-competitive markets. 

Accepti.inc is a Denver-based company that is attempting to create a new category in real estate technology. To help scale its digital mortgage lending platform, the company announced today that it has secured $90 million in debt and equity – with $78 million in debt and $12 million in equity. Signal Fire led the equity portion of its financing, which also included participation from existing seed investors Y Combinator and DN Capital.

Accept.inc describes itself as an iLender, or a “technology-enabled lender” that gives people a way to submit all-cash offers on a home upon qualifying for a mortgage.

Using its platform, a buyer gets qualified first and then can start looking for homes that fall at or under the amount he or she is approved for. They can purchase a more expensive home, but any amount above what they are approved for would have to come out of pocket. Historically, most buyers don’t know that they will have to pay out of pocket until they’ve made an offer on a specific home and an appraisal comes under the amount of the price they are paying for a home. In those cases, the buyer has to cough up the difference out of pocket. With Accept.inc., its execs tout, buyers know upfront how much they are approved for and can spend on a new home “so there are no surprises later.”

SignalFire Founding Partner and CTO Ilya Kirnos describes Accept.inc as “the first and only iLender.”

He points out that since it is a lender, Accept.inc doesn’t make its money by charging buyers fees like some others in the all-cash offer space.

“Unlike ‘iBuyers’ or ‘alternative iBuyers,’ Accept.inc fronts the cash to buy a house and then makes money off mortgage origination and title, meaning sellers, homebuyers and their agents pay no additional cost for the service,” he told TechCrunch.

IBuyers instead buy homes from sellers who signed up online, make a profit by often fixing up and selling those homes and then helping people purchase a different home with all cash. They also make money by charging transaction fees. A slew of companies operate in the space including established players such as Opendoor and Zillow and newer players such as Homelight.

Image credit: Accept.inc. Left to right: Co-founders Adam Pollack, Nick Friedman and Ian Perrex.

Since its 2016 inception, Accept.inc says it has helped thousands of buyers, agents and sellers close on “hundreds of millions of dollars” in homes. The company saw ”14x” growth in 2020 and from June 2020 to June 2021, it achieved “10x” growth in terms of the size of its team and number of transactions and revenue, according to CEO and co-founder Adam Pollack. Accept.inc wants to use its new capital to build on that momentum and meet demand.

Pollack and Nick Friedman met while in college and started building Accept.inc with the goal of “turning every offer into a cash offer.” The pair essentially “failed for two years,” half-jokes Pollack.

“We basically became an encyclopedia of 1,000 ways the idea of helping people make all-cash offers wouldn’t work,” he said.

The team went through Y Combinator in the winter of 2019 and that’s when they created the iLender concept. In the iLender model, the company uses its cash to buy a house for buyers. Once the loan with Accept.inc is ready to close, the company sells back the house to the buyer “at no additional cost or fees.”

“Basically what we learned through those two years is that you have to vertically integrate all of your core competencies, and you can’t rely on third parties to own or manage your special sauce for you,” Pollack told TechCrunch. “We also realized that if you’re going to build a cash offer for anyone who could afford a mortgage, you’ve got to make it a full bona fide cash offer that closes in three days as opposed to a better version of what existed. And you have to own that, and take the risk that comes with it and be comfortable with that.”

The benefits of their model, the pair say, is that buyers get to be cash buyers, sellers can close in as little as 32 hours, and agents “get a guaranteed commission check.” 

“Our mission is that everyone should have an equal chance at homeownership,” Friedman said. “We not only want to level the playing field, we want to create a new standard.”

Buyers using Accept.inc win 6-7 times more frequently, the company claims. With its new capital, It also plans to double its team of 90 and enter new markets outside of its home base of Denver.

SignalFire Partner Chris Scoggins believes that Accept.inc is different from other lenders in that its focus is on “winning the home, not just servicing the loan, with a business model that’s 10x more capital-efficient than other players in the market.

The team is driven…to level the playing field for homebuyers who today lose out against all-cash offers from home-flippers and wealthy individuals,” he added. “We see an enormous opportunity for Accept.inc to become the backbone of the future of mortgage lending.”

 

Snackpass gobbles up $70M at a $400M+ valuation as its social food ordering platform crosses 500K users

By Ingrid Lunden

While every food delivery company is trying to get an edge on its rivals with discount codes, faster service, and a turn into the realm of spooky with ghost kitchens and dark stores, a startup built on a lighter, social concept — letting people see what their friends are chomping on, making it possible to order food and drinks for each other and group order, with buyers picking it all up for themselves — has just raised a substantial Series B and says that it is already profitable in a number of markets.

Snackpass, which describes itself as a “food meets friends” — essentially a social commerce platform for ordering from restaurants, with “snack,” the CEO tells me, of having a double meaning of eating (of course), and a flirtatious reference to a cutie pie — has picked up a $70 million, a super-sized Series B that it will be using to continue expanding to more markets in the U.S.

Conceived four years ago while Kevin Tan, the CEO who co-founded the company with Jamie Marshall, was still a student at Yale studying physics, Snackpass has grown by remaining true to its higher-ed roots. The startup now has 500,000 users across 13 college towns, and has seen its growth explode 7x in the last three months alone. This round values the startup at over $400 million.

This latest tranche of funding is coming from an interesting group of investors. Led by Craft Ventures, it also includes Andreessen Horowitz (which led its $21 million Series A), General Catalyst, Y Combinator, and a long list of individual backers that speaks to the attention Snackpass is getting and the place it’s carving out for itself as a go-to food platform for millennials and younger users.

That list includes AirAngels, the Airbnb alumni investor syndicate; Bastian Lehmann of the Uber-acquired delivery giant Postmates (et tu, Bastian?); David Grutman, a hospitality entrepreneur; Draymond Green of the Golden State Warriors; Gaingels; HartBeat Ventures, Kevin Hart’s venture fund; musician celebs the Jonas Brothers; Shrug Capital (the VC that says it’s interested in consumer startups that are actually interesting to “non-tech” audiences); Pags Group, the family office of the Boston Celtics co-owner Stephen Pagliuca; hip DJ Steve Aoki; Turner Novak of Banana Capital; William Barnes of Moving Capital; and the Uber alumni investor syndicate.

The vast majority of food-ordering platforms these days are focused on delivery and, in many cases, ways of getting an edge over other platforms in executing on that — a push that often comes at the expense of margins than are thinner than a Roman pizza. Snackpass’s big breakthrough, if you could call it that, was to simply dial back from that one-upmanship, moving away from that premise altogether, aiming to disrupt something much more mundane: the queue.

Tan said Snackpass asked its users what they would do if they weren’t using the app, and they said, “Oh, I just stand in line to order,” he told me in an interview.

“The market share right now is owned by people standing in line at the register, and placing their order. Our vision is that in five years that will no longer exist, like, there will be no more registers. We don’t think it makes any sense.”

He notes that for those who really want delivery, people can opt for that, too — Snackpass integrates with delivery services like UberEats to fulfill that — but 90% of the orders on Snackpass are pickup, meaning that not only does the company then not have to deal with its own fleets of delivery people, and the infrastructure of that, but the operating costs to provide that are also not there.

It turns out that actually a lot of young people seem happy to pop out to get something nice to eat. It means they get to socialise, and take a selfie with their food or drink (boba tea figures strongly) at the venue where it’s being bought. It becomes an experience.

It’s also where the market is in another sense. “What people don’t realize is delivery is only 8% of the restaurant industry,” Tan told me. “And while it’s very much competed for by like big companies, and it’s a huge market, the restaurant industry, is like, much bigger, it’s $800 billion. And 90% of that purchasing is still offline,” he continued, referring to the many people who just queue up, order, buy, and leave. “It’s anonymous, and it’s on the verge of disruption. And we’re focused on that much bigger blue ocean.”

Its formula seems to be working with its target users. Tan said that the service has 80% penetration with students in the markets where it has launched. The average customer orders four and a half times a month, with some customers ordering every day. “You can actually see that it’s like, five to ten times more engagement than the delivery platforms, like UberEats.”

The company’s commissions vary and start at 7% and it’s current suite includes online ordering, self-service kiosks, digital menus, marketing services, and a customer referral program. It’s already profitable (in certain markets) but as it continues to grow (and maybe extend to other demographics) you can imagine it adding and expanding on all of these.

There is something about Snackpass that reminds me a lot of Snapchat, not just that the names have a similar ring to them, and not just that they have resonated with college-aged users (and not just that they both squarely target them). It’s something of the whimsy of the app, and how it takes a light touch in its approach to do something that might otherwise feel cumbersome, or mundane, or what, basically, older people do.

Right now, there isn’t much of a social “user graph” per se on Snackpass, nor does it integrate particularly deeply with any specific social apps, but you could imagine a partnership there down the line, especially considering that Snap is getting a whole lot more involved with commerce now.

“In building a social experience around food through shared rewards, gifting, and a social activity feed, Snackpass has created a dynamic and attractive restaurant ordering system,” says Bryan Rosenblatt, partner, Craft Ventures, in a statement. “The growth of its marketplace and virality of the product coupled with Snackpass’ outstanding  team and vision, make it the ultimate solution for consumers and businesses alike. We are thrilled to help take Snackpass to the next level with this latest round of funding.”

Updated to clarify that Snackpass is profitable in some but not all markets; to correct the spelling and names of some of the investors; and to note that Snackpass currently does not work with DoorDash.

FamPay, a fintech aimed at teens in India, raises $38 million

By Manish Singh

How big is the market in India for a neobank aimed at teenagers? Scores of high-profile investors are backing a startup to find out.

Bangalore-based FamPay said on Wednesday it has raised $38 million in its Series A round led by Elevation Capital. General Catalyst, Rocketship VC, Greenoaks Capital and existing investors Sequoia Capital India, Y Combinator, Global Founders Capital and Venture Highway also participated in the new round, which brings FamPay’s to-date raise to $42.7 million.

The size of the new investment makes it one of the largest Series A rounds in India. TechCrunch reported early this month that FamPay was in talks with Elevation Capital to raise a new round.

Founded by Sambhav Jain and Kush Taneja (pictured above) — both of whom graduated from Indian Institute of Technology, Roorkee in 2019 — FamPay enables teenagers to make online and offline payments.

The thesis behind the startup, said Jain in an interview with TechCrunch, is to provide financial literacy to teenagers, who additionally have limited options to open a bank account in India at a young age. Through gamification, the startup said it’s making lessons about money fun for youngsters.

Unlike in the U.S., where it’s common for teenagers to get jobs at restaurants and other places and understand how to handle money at a young age, a similar tradition doesn’t exist in India.

After gathering the consent from parents, FamPay provides teenagers with an app to make online purchases, as well as plastic cards — the only numberless card of its kind in the country — for offline transactions. Parents credit money to their children’s FamPay accounts and get to keep track of high-ticket spendings.

In other markets, including the U.S., a number of startups including Greenlight, Step and Till Financial are chasing to serve the teenagers, but in India, there currently is no startup looking to solve the financial access problem for teenagers, said Mridul Arora, a partner at Elevation Capital, in an interview with TechCrunch.

It could prove to be a good issue to solve — India has the largest adolescent population in the world.

“If you’re able to serve them at a young age, over a course of time, you stand to become their go-to product for a lot of things,” Arora said. “FamPay is serving a population that is very attractive and at the same time underserved.”

The current offerings of FamPay are just the beginning, said Jain. Eventually the startup wishes to provide a range of services and serve as a neobank for youngsters to retain them with the platform forever, he said, though he didn’t wish to share currently what those services might be.

Image Credits: FamPay

Teens represent the “most tech-savvy generation, as they haven’t seen a world without the internet,” he said. “They adapt to technology faster than any other target audience and their first exposure with the internet comes from the likes of Instagram and Netflix. This leads to higher expectations from the products that they prefer to use. We are unique in approaching banking from a whole new lens with our recipe of community and gamification to match the Gen Z vibe.”

“I don’t look at FamPay just as a payments service. If the team is able to execute this, FamPay can become a very powerful gateway product to teenagers in India and their financial life. It can become a neobank, and it also has the opportunity to do something around social, community and commerce,” said Arora.

During their college life, Jain and Taneja collaborated and built an app and worked at a number of startups, including social network ShareChat, logistics firm Rivigo and video streaming service Hotstar. Jain said their work with startups in the early days paved the idea to explore a future in this ecosystem.

Prior to arriving at FamPay, Jain said the duo had thought about several more ideas for a startup. The early days of FamPay were uniquely challenging to the founders, who had to convince their parents about their decision to do a startup rather than joining firms or startups as had most of their peers from college. Until being selected by Y Combinator, Jain said he didn’t even fully understand a cap table and dilutions.

He credited entrepreneurs such as Kunal Shah (founder of CRED) and Amrish Rau (CEO of Pine Labs) for being generous with their time and guidance. They also wrote some of the earliest checks to the startup.

The startup, which has amassed over 2 million registered users, plans to deploy the fresh capital to expand its user base and product offerings, and hire engineers. It is also looking for people to join its leadership team, said Jain.

Kafene raises $14M to offer buy now, pay later to the subprime consumer

By Mary Ann Azevedo

The buy now, pay later frenzy isn’t going anywhere as more consumers seek alternatives to credit cards to fund purchases.

And those purchases aren’t exclusive to luxuries such as Pelotons (ahem, Affirm) or jewelry someone might be treating themselves to online. A new fintech company is out to help consumers finance big-ticket items that are considered more “must have” than “nice to have.” And it’s just raised $14 million in Series A funding to help it advance on that goal.

Neal Desai (former CFO of Octane Lending) and James Schuler (who participated in Y Combinator’s accelerator program as a high schooler) founded New York City-based Kafene in July 2019. The pair’s goal is to promote financial inclusion by meeting the needs of what it describes as the “consumers that are left behind by traditional lenders.”

More specifically, Kafene is focused on helping consumers with credit scores below 650 purchase retail items such as furniture, appliances and electronics with its buy now, pay later (BNPL) model. Consider it an “Affirm for the subprime,” says Desai.

Global Founders Capital and Third Prime Ventures co-led the round, which also included participation from Valar, Company.co, Hermann Capital, Gaingels, Republic Labs, Uncorrelated Ventures and FJ labs.

“Historically, if you could access credit, you could go to the bank or use a credit card,” Third Prime’s Wes Barton told TechCrunch. “But if you had some unexpected expense, and had to miss a payment with the bank, there would be repercussions and you could fall into a debt trap.”

Kafene’s “flexible ownership” model is designed to not let that happen to a consumer. If for some reason, someone has to forfeit on a payment, Kafene comes to pick up the item and the customer is no longer under obligation to pay for it moving forward.

The way it works is that Kafene buys the product from a merchant on a consumers’ behalf and rents it back to them over 12 months. If they make all payments, they own the item. If they make them earlier, they get a “significant” discount, and if they can’t, Kafene reclaims the item and takes the loan loss.

Image Credits: Kafene

It’s a modern take on Rent-A-Center, which charges more money for inferior products, Desai believes.

“This is also a superior product to credit cards, and the size of that market is massive,” Barton said. “We want to take a huge chunk of credit card business in time, and give consumers the flexibility to quit at any point in time, and fly free, if you will.”

Such flexibility, Kafene claims, helps promote financial inclusion by giving a wider range of consumers options to alternative forms of credit at the point of sale.

It also helps people boost their credit scores, according to Desai, because if they buy out of the loan earlier than the 12-month term, their credit score goes up because Kafene reports them as a positive payer.

“In any situation where they don’t steal the item, their credit score improves,” he said. “Even if they end up returning it because they can’t afford it. In the long run, they can have a better credit score to qualify for a traditional loan product.”

Kafene rolled out a beta of its financing product in December of 2019 and then had to pause in March due to the COVID-19 pandemic. The company essentially “hibernated” from March to June 2020 and re-launched out of beta last July.

By October, Kafene stopped all enrollment with merchants because it had more demand that it could handle — largely fueled by more people being financially strained due to the COVID-19 pandemic. In March 2021, the company was handling about $2 million a month in merchandise volume.

With its new capital, Kafene plans to significantly scale its existing lease-to-own financing business nationally, as well as to launch a direct-to-consumer virtual lease card.

RevenueCat raises $40M Series B for its in-app subscription platform

By Sarah Perez

RevenueCat, a startup offering a series of tools for developers of subscription-based apps, has raised $40 million in Series B funding, valuing its business at $300 million, post-money. Founded by developers who understood the difficulties in scaling a subscription app firsthand, RevenueCat’s software development kit (SDK) solution gives companies the tools they need to build a subscription business, including not just adding subscriptions themselves, but maintaining them over time even as the app stores implement changes. It also aids by sharing subscription data with other tools the business uses, like those for advertising, analytics or attribution.

The funding round was led by Y Combinator’s Continuity Fund and included participation from Index Ventures, SaaStr, Oakhouse, Adjacent and FundersClub, as well as Blinklist CTO Tobias Balling and Algolia CEO Nicolas Dessaigne. With the round, YC Continuity Partner Anu Hariharan is joining RevenueCat’s board, which today includes Index’s Mark Fiorentino in addition to the founders.

Explains RevenueCat CEO Jacob Eiting, the idea for the company came about after he and co-founder Miguel Carranza Guisado (CTO) struggled to figure out subscription infrastructure while working together at Elevate. After years of untangling a “subscription mess” in order to figure out answers to basic questions like subscriber retention and lifetime value, they realized there was potential in helping solve this problem for other developers.

Apple and Google, Eiting explains, aren’t always up to date with what companies actually need to build subscription businesses. “They’re kind of learning as they go. They just weren’t able to provide us the data we needed, and then also the infrastructure to do that is non-trivial.”

Image Credits: RevenueCat

When Eiting and Guisado sat down to work on RevenueCat in 2017, no one else was even building anything like this. But the demand for the startup’s tools and integrations soon resonated with developers who had faced similar challenges in the growing subsection app market.

Using the service, developers can access a real-time dashboard that display key metrics, like subscription revenue, churn, LTV (lifetime value), subscriber numbers, conversions and more. The data can then be shared through integrations with other tools and services, like Adjust, Amplitude, Apple Search Ads, AppsFlyer, Branch, Facebook Ads, Google Cloud Intercom, Mixpanel, Segment and several others. 

After launching out of Y Combinator’s accelerator the following year, RevenueCat was soon live with 100 apps and had crossed $1 million in tracked revenue by the time it raised its $1.5 million seed round.

Today, RevenueCat has more than 6,000 apps live on its platform, with over $1 billion in tracked subscription revenue being managed by its tools. That’s double the number of apps that were using its service as of its $15 million Series A last August.

With the additional funding, the company will lower its pricing to put its tools in reach of more developers. Previously, it charged $120 per month for its charts and some of its integrations, or $499 per month for access to all integrations. This was affordable for larger companies, but could still be a difficult sell to the long tail of app developers where revenues ranged from $10K to $50K per month.

Now, RevenueCat will charge a small percentage of an app’s sales instead of a flat fee. Developers with up to $10,000 in monthly tracked revenue (MTR) can get started with the service for free and as their demands grow — like needing access to charts, support for web hooks, integrations and others — they can move up to either the Starter or Pro plans as $8/mo or $12/mo per $1,000 in MTR, respectively.

“I’m excited to give those tools to developers, especially on the small end, because it might be what they need to get out of that ‘less than $10K range,’ ” Eiting says. “Also, the beauty of freemium, or having a really generous free tier, is that it makes your tool the de facto — you remove as much friction as possible for providing software services and then, if you get your pricing right — which I think we have — it all kind of pays for itself,” he adds.

The company also plans to use the new funds to further invest in its business, expanding from App Store and Google Play support to include Amazon’s Appstore. It will also grow its team.

As part of its expected growth, RevenueCat recently hired a head of Product, Jens-Fabian Goetzmann, previously a PM at Microsoft and then product head at fitness app 8fit. Currently 30 people, in the year ahead, RevenueCat will grow to 60 people, hiring across design, product, engineering, sales and other roles.

“The world is moving toward subscriptions — and for companies, building out this model translates to weeks of developers’ time,” says YC Continuity’s Hariharan. “RevenueCat helps developers roll out subscriptions in minutes and creates a source of truth for customer data. With developers creating solutions to problems in the world, it’s important that they can find ways to monetize, grow, and support their most committed customers. RevenueCat is doing so by building subscriptions 2.0.”

Cataclysms are a growth industry

By Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

For this week’s deep dive, Alex and Natasha dug into Danny’s latest mega-project: A long, fascinating and deeply reported series into the world of disaster tech. It’s all about the market, startups and their backers, so it was perfect fare for our Wednesday episode, in which we dive deep into a single topic.

Part 1: The most disastrous sales cycle in the world

Part 2: Data was the new oil, until the oil caught fire

Part 3: When the Earth is gone, at least the internet will still be working

Part 4: The human-focused startups of the hellfire

We were super curious why Danny had picked disaster tech to niche into, as we hadn’t heard that much about it, frankly. But past the fact that it’s a world where sales cycles can last as long as House Congressional tenures, there was quite a lot to get into:

The series was fun to mine through, and expect Danny’s byline to be all over the topic in the coming weeks. Talk soon, unless — actually especially, if — all of hell breaks loose!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Insurtech startup Obie raises $10.7M Series A led by Battery Ventures

By Mary Ann Azevedo

Obie, which has developed an insurtech platform for landlords, has raised $10.7 million in a Series A funding round led by Battery Ventures.

Thomvest Ventures, Funders Club, MetaProp and Second Century Ventures also participated in the financing.

If this sounds like a niche offering, that’s because it is. Obie’s software specifically targets small-to-medium size apartment landlords who own single-family rentals and/or larger apartment buildings.  

Chicago-based Obie — which also went through the Y Combinator program — says its platform stands out because it offers instant quotes (by instant, they mean in about three to five minutes). The company also claims to save policyholders up to 25-30% compared to other insurance premiums. Over the past year, Obie has secured insurance for over $3 billion worth of property.

Obie co-founders (and brothers) Aaron and Ryan Letzeiser have taken their respective backgrounds in insurance and real estate private equity to build out the Obie platform. They are operating under the premise that despite being the largest class of real estate investors in the U.S, this group of landlords “is significantly underserved.”

“Generally SMB landlords have been ignored in the market, and there’s 11 million of them,” Aaron said. “And we beat target premiums, on average, by 31.7%.”

The demand appears to be there. According to the pair, Obie saw its premiums climb to about $1 million in its first 12 months of being in business. Over the last 12 months, that number has climbed to about $10 million.

In conjunction with its funding announcement, Obie also announced today the extension of its property and casualty insurance to all 50 states.

Image Credits: Obie

So, how does it work? Landlords and investors answer a series of questions on Obie’s site. The platform extracts a few data points from client responses, which its technology then combines with public and private data points such as the proximity of the landlord to the property. (This can be an indicator of how quickly a landlord can conduct proactive and preventative maintenance and general attentiveness to tenant issues.) 

Once Obie runs its analysis, the platform uses a “proprietary” algorithm to match an application to carriers based on what they describe as “risk-appetite” profiles. For example, some carriers don’t want to cover properties built before a certain year. The platform then provides the landlords and property owners with a quote. If they’re OK with the quote, landlords can be “immediately underwritten,” according to the company. 

At its core, said Ryan, the brothers want to make Obie “the easiest way for landlords to get the insurance that they need.” 

The company plans to use its new capital to expand upon its product and “really try to own the entire vertical.”

“Historically, we’ve been an agency-based business but we are in the process of putting together our own product that is slated to roll out right at the end of the second quarter,” said Aaron. “Very similar to Lemonade and Hippo, and we’re doing it with a large insurer that’s backing us.”

In other words, Obie believes it has validated its brokerage model in the market and is now planning to use the data it’s been able to gather to become its own carrier. The company expects the rollout to take time, so until it gets approval in all 50 states, it will partner with other carriers.

“Our goal at the end of the day is to go from agency to eventually carrier,” said Ryan. “This is a tried and true path. Next has done it. Hippo has done it. Lemonade has done it.” 

The brothers believe their backgrounds allow them “to speak the same language” to their clients. 

“We have lived the pain points of our clients so we can understand how the price of the premium of coverage experience plays into the overall business strategy,” Aaron said.

Battery Ventures’ Michael Brown, who has taken a seat on Obie’s board, agrees the embedded nature of the startup’s offering gives them a competitive advantage.

“Allowing their end customers to buy professional liability or general liability or commercial auto right from the vertical software that is servicing their business is really interesting and a great distribution channel for Obie,” Brown told TechCrunch. “Landlords can go direct or through their channel partners.”

Brown says Battery — as long-term investors in the insurance sector — was also attracted to the fact that Obie is focused on commercial lines rather than personal because the firm believes “they are larger markets, less competitive and can probably drive higher value just given the overall size of the premiums involved.”

Cortex snags $2.25M seed to build services catalog for development teams

By Ron Miller

One thing is clear in the cloud native world. Developers use a lot of services to create applications, and while service meshes define how these services work together, just getting a grip on the services a team uses is usually tracked manually in spreadsheets. That’s where Cortex, a new startup, comes in. It can help engineers create a catalog of services automatically.

Today the company announced a $2.25 million seed investment from Sequoia with help from Y Combinator and several individual technology industry executives and some new features.

Company co-founder and CEO Anish Dhar says he experienced the pain of tracking services as a developer at Uber in a former job. He says that his team spent a lot of time and effort trying to keep track of the 200-300 services they were using in Excel, trying to understand who owned the service, while making sure they were built with security and operational best practices. It was a part of the job nobody relished and he decided to build a tool to automate much of this.

“So the combination of the data not being up to date and SRE teams having to bug engineers to keep all this information up to date, it just creates a lot of problems around incident response and engineering velocity. And so I started Cortex late last year to solve some of those problems,” he said. The tool tracks the services by integrating with development tools like Jira and DataDog, pulling this information into a catalog for the team.

Dhar and his two co-founders, Ganesh Datta and Nikhil Unni launched the company in October 2019, and spent the next several months building the product, They launched in March 2020 and spent that winter participating in Y Combinator, a good way to ride out the early part of the pandemic.

In addition to the funding, which actually closed last year, the company has continued to build out the product and today it’s announcing Scorecards, a way for engineering managers to enforce services best practices. It’s also releasing Cortex Query Language (CQL), which lets companies define the rules for building services as mathematical expressions. These rules and how well the owner of the service adheres to them, are the basis of the scores on the scorecards.

Bogomil Balkansky, a partner at Sequoia, who will be joining the Cortex board under the terms of this deal, says that his firm has been bullish on the micro services trend as it has developed over the last five years or so. He liked the fact that the Cortex team was solving a pain point for developers that nobody seems to have looked at before.

“The moment I met the Cortex team it was just so intuitive to me that that a product like this will be needed,” he said.

The team is small right now with just two full time engineers along with the founding team, but it plans to add 10-15 employees before the end of 2021. As he builds his company, Dhar says diversity and inclusion is a big priority for him and his co-founders and he is aiming to build a diverse company.

“It’s so important having a team that comes from different backgrounds. It just leads to building a better product. It’s definitely something we constantly think about, and it’s a part of our hiring process,” he said.

With just five employees, and a company that came of age during the pandemic, it doesn’t have an office right now, and the plan is to remain remote, while possibly opening up a small office in San Francisco later this year.

Equity Monday: Elon Musk Elon Musks the crypto markets, while Indian startups raise huge rounds

By Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

There was lots to get through today, so, in order, here’s the rundown:

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Fresh out of YC, Houm raises $8M to improve the home rental and sales market in LatAm

By Marcella McCarthy

As a longtime real estate developer based in Chile, Benjamin Labra was able to spot gaps in the buying and renting markets in Latin America. To meet demands, he started Houm, an all-in-one platform that helps homeowners rent and sell their properties in the region.

Fresh out of Y Combinator’s W21 cohort, today Houm announced an $8 million seed round. 

If you think the concept sounds like Brazil’s unicorn, QuintoAndar, it’s because Houm is very similar. While QuintoAndar dominates the Brazilian market, Houm operates in Chile, Mexico and Colombia, and aims to capture the rest of Spanish-speaking LatAm.

Think of Houm as a homeowner-run Zillow meets TaskRabbit. The company offers a marketplace run by the property owners themselves and cuts out the realtor by employing 200 freelancers who prepare the property for sale or to manage it.

Houmers, as they are called, go to the owner’s home, take photos and then help possible buyers or renters view the property. For their work, Houmers are compensated each time a home they worked on sells or gets rented.

However, Houm’s selling proposition isn’t just the ease of use it provides; instead, it also serves as a guarantor in my ways, making the buying process more accessible.

“In Colombia and Mexico, for someone to be your guarantor, they have to have a property that’s free of mortgage so it can be used as collateral,” Labra told TechCrunch.

On the flip side, the company also guarantees that renters will get paid every month, and if a tenant falters, Houm covers the cost. “You really have nothing to lose if you use Houm,” Labra said.

You can imagine that a company like Houm now has all sorts of data on the real estate market, especially around sales and rental prices. As a result, Houm uses this data in an algorithm that helps the homeowner determine a fair price for their property, but the listed price remains up to the owner.

The company, which was founded in 2018 and is based in Chile, now has about 200 full-time employees, in addition to their freelance team. While Labra declined to say how many active users it has, he said Houm is now showing a property every eight minutes.

The current funding round had no lead investor but includes Y Combinator, Goodwater Ventures, OneVC, Vast VC, Liquid2 and Myelin. The company plans to use the money to expand within the region, perfect its algorithm and generally speed up growth.

 

Extra Crunch roundup: Selling SaaS to developers, cracking YC after 13 tries, all about Expensify

By Walter Thompson

Before Twilio had a market cap approaching $56 billion and more than 200,000 customers, the cloud-communications platform developed a secret sauce to fuel its growth: a developer-focused model that dispensed with traditional marketing rules.

Software companies that sell directly to end users share a simple framework for managing growth that leverages discoverability, desirability and do-ability — the “aha!” moment where a consumer is able to incorporate a new product into their workflow.

Data show that traditional marketing doesn’t work on developers, and it’s not because they’re impervious to a sales pitch. Builders just want reliable tools that are easy to use.

As a result, companies that are looking to create and sell software to developers at scale must toss their B2B playbooks and meet their customers where they are.


Attorney Sophie Alcorn, our in-house immigration law expert, submitted two columns: On Monday, she analyzed a decision by the U.S. Department of Homeland Security not to cancel the International Entrepreneur Parole program, which potentially allows founders from other countries to stay in the U.S. for as long as 60 months.

On Wednesday, she responded to a question from an entrepreneur who asked whether it made sense to sponsor visas for workers who are working remotely inside the U.S.

Thanks very much for reading Extra Crunch this week, and have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

4 lessons I learned about getting into Y Combinator (after 13 applications)

Image of a chair and a trash can in an office, with the bin surrounded by crumpled paper, representing persistence.

Image Credits: Peter Finch (opens in a new window) / Getty Images

Can you imagine making 13 attempts at something before attaining a successful outcome?

Alex Circei, CEO and co-founder of Git analytics tool Waydev, applied 13 times to Y Combinator before his team was accepted. Each year, the accelerator admits only about 5% of the startups that seek to join.

“Competition may be fierce, but it’s not impossible,” says Circei. “Jumping through some hoops is not only worth the potential payoff but is ultimately a valuable learning curve for any startup.”

In an exclusive exposé for TechCrunch, he shares four key lessons he learned while steering his startup through YC’s stringent selection process.

The first? “Put your business value before your personal vanity.”

The Expensify EC-1

The Expensify EC-1

Image Credits: Illustration by Nigel Sussman, art design by Bryce Durbin

In March, TechCrunch Daily Reporter Anna Heim was interviewing executives at Expensify to learn more about the company’s history and operations when they unexpectedly made themselves less available.

Our suspicions about their change of heart were confirmed on May 3 when the expense report management company confidentially filed to go public.

With a founding team comprised mainly of P2P hackers, it’s perhaps inevitable that Expensify doesn’t look and feel like something an MBA might envision.

“We hire in a super different way. We have a very unusual internal management structure,” said founder and CEO David Barrett. “Our business model itself is very unusual. We don’t have any salespeople, for example.”

Similar to the way companies must file a Form S-1 that describes their operations and how they plan to spend capital, TechCrunch EC-1s are part origin story, part X-ray. We published the first article in a series on Expensify on Monday:

We’ll publish the remainder of Anna’s series on Expensify in the coming weeks, so stay tuned.

As Procore looks to nearly double its private valuation, the IPO market shows signs of life

Construction tech unicorn Procore Technologies this week set a price range for its impending public offering. The news comes after the company initially filed to go public in February of 2020, a move delayed by the pandemic.

In March 2021, Procore filed again for a public offering, but its second shot ran into a cooling IPO market. The company filed another S-1/A in April, and then another in early May. This week’s filing is the first that sets a price for the Carpinteria, California-based software upstart.

But Procore is not the only company that filed and later put on hold an IPO to get back to work on floating. Kaltura, a software company focused on video distribution, also recently got its IPO back on track. Are we seeing a reacceleration of the IPO market? Perhaps.

3 golden rules for health tech entrepreneurs

Family physician Bobbie Kumar lays out the golden rules to ensure your healthcare product, service or innovation is on the right track.

Rule 1: “It’s not enough to develop a ‘new tool’ to use in a health setting,” Dr. Kumar writes. “Maybe it has a purpose, but does it meaningfully address a need, or solve a problem, in a way that measurably improves outcomes? In other words: Does it have value?”

Dear Sophie: How does the International Entrepreneur Parole program work?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’m the founder of an early-stage, two-year-old fintech startup. We really want to move to San Francisco to be near our lead investor.

I heard International Entrepreneur Parole is back. What is it, and how can I apply?

— Joyous in Johannesburg

Digging into digital mortgage lender Better.com’s huge SPAC

If you have heard of Better.com but really had no idea what it does before this moment, welcome to the club. Mortgage tech is like pre-kindergarten applications — it applies to a very specific set of folks at a very particular moment. And they care a lot about it. But the rest of us aren’t really aware of its existence.

Better.com, a venture-backed digital mortgage lender, announced this week that it will combine with a SPAC, taking itself public in the second half of 2021. The unicorn’s news comes as the American IPO market is showing signs of fresh life after a modest April.

As tech offices begin to reopen, the workplace could look very different

Colleagues in the office working while wearing medical face mask during COVID-19

Image Credits: filadendron (opens in a new window) / Getty Images

The pandemic forced many employees to begin working from home, and, in doing so, may have changed the way we think about work. While some businesses have slowly returned to the office, depending on where you live and what you do, many information workers remain at home.

That could change in the coming months as more people get vaccinated and the infection rate begins to drop in the U.S.

Many companies have discovered that their employees work just fine at home. And some workers don’t want to waste time stuck on congested highways or public transportation now that they’ve learned to work remotely. But other employees suffered in small spaces or with constant interruptions from family. Those folks may long to go back to the office.

On balance, it seems clear that whatever happens, for many companies, we probably aren’t going back whole-cloth to the prior model of commuting into the office five days a week.

 

For unicorns, how much does the route to going public really matter?

4 progressively larger balls of US $1 bills, studio shot

Image Credits: PM Images (opens in a new window) / Getty Images

On a recent episode of TechCrunch’s Equity podcast, hosts Natasha Mascarenhas and Alex Wilhelm invited Yext CFO Steve Cakebread and Latch CFO Garth Mitchell on to discuss when companies should go public, the costs and benefits of the process, and when a SPAC can make sense. Yext pursued a traditional IPO a few years back; Latch is now going public via a blank-check company combination.

The chat was more than illustrative, as we got to hear two CFOs share their views on delayed public offerings and when different types of debuts can make the most sense. While the TechCrunch crew has, at times, made light of certain SPAC-led deals, the pair argued that the transactions can make good sense.

Undergirding the conversation was Cakebread’s recent IPO-focused book, which not only posited that companies going public earlier rather than later is good for their internal operations but also because it can provide the public with a chance to participate in a company’s success.

In today’s hypercharged private markets and frothy public domain, his argument is worth considering.

 

The truth about SDK integrations and their impact on developers

Image of three complex light trails converging against a white background to represent integration.

Image Credits: John Lund (opens in a new window) / Getty Images

Ken Harlan, the founder and CEO of Mobile Fuse, writes about the perks and pitfalls of software development kits.

“The digital media industry often talks about how much influence, dominance and power entities like Google and Facebook have,” Harlan writes. “Generally, the focus is on the vast troves of data and audience reach these companies tout. However, there’s more beneath the surface that strengthens the grip these companies have on both app developers and publishers alike.

“In reality, SDK integrations are a critical component of why these monolith companies have such a prominent presence.”

Don’t hate on low-code and no-code

The Exchange caught up with Appian CEO Matt Calkins after his enterprise app software company reported its first-quarter performance to discuss the low-code market and what he’s hearing in customer meetings. To round out our general thesis — and shore up our somewhat bratty headline — we’ve compiled a list of recent low-code and no-code venture capital rounds, of which there are many.

As we’ll show, the pace at which venture capitalists are putting funds into companies that fall into our two categories is pretty damn rapid, which implies that they are doing well as a cohort. We can infer as much because it has become clear in recent quarters that while today’s private capital market is stupendous for some startups, it’s harder than you’d think for others.

Bird’s SPAC filing shows scooter-nomics just don’t fly

A pair of Bird e-scooters parked in Barcelona. Image Credits: Natasha Lomas/TechCrunch

Historically — and based on what we’re seeing in this fantastical filing — Bird proved to be a simply awful business. Its results from 2019 and 2020 describe a company with a huge cost structure and unprofitable revenue, per filings. After posting negative gross profit in both of the most recent full-year periods, Bird’s initial model appears to have been defeated by the market.

What drove the company’s hugely unprofitable revenues and resulting net losses? Unit economics that were nearly comically destructive.

Dear Sophie: Does it make sense to sponsor immigrant talent to work remotely?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My startup is in big-time hiring mode. All of our employees are currently working remotely and will likely continue to do so for the foreseeable future — even after the pandemic ends. We are considering individuals who are living outside of the U.S. for a few of the positions we are looking to fill.

Does it make sense to sponsor them for a visa to work remotely from somewhere in the United States?

— Selective in Silicon Valley

The hamburger model is a winning go-to-market strategy

Follow the Hamburger model for your go-to-market strategy

Image Credits: ivan101 / Getty Images

“Today, we live in a world of product-led growth, where engineers (and the software they have built) are the biggest differentiator,” says Coatue Management general partner Caryn Marooney and investor David Cahn. “If your customers love what you’re building, you’re headed in the right direction. If they don’t, you’re not.

“However, even the most successful product-led growth companies will reach a tipping point, because no matter how good their product is, they’ll need to figure out how to expand their customer base and grow from a startup into a $1 billion+ revenue enterprise.

“The answer is the hamburger model. Why call it that? Because the best go-to-market (GTM) strategies for startups are like hamburgers:

  • The bottom bun: Bottom-up GTM.
  • The burger: Your product.
  • The top bun: Enterprise sales.”

Software subscriptions are eating the world: Solving billing and cash flow woes simultaneously

the recycle logo recreated in folded US currency no visible serial numbers/faces etc.

Image Credits: belterz (opens in a new window) / Getty Images

Krish Subramanian, the co-founder and CEO of Chargebee, writes that while subscription business models are attractive, there are two major pitfalls: First, payment.

“Regardless of company size, there’s an ongoing need to convince customers to sign up long term,” Subramanian writes. “The second issue: How do businesses cover the funding gap between when customers sign up and when they pay?”

Is there a creed in venture capital?

Scott Lenet, the president of Touchdown Ventures, asks how deal-makers should think about how to handle themselves when counter-parties attempt to change an agreement. “When is it OK to modify terms, and when should deal-makers stand firm?” he asks.

“Entrepreneurs and investors should recognize that contracts are worth very little without the ongoing relationship management that keeps all parties aligned. Enforcement is so unusual in the world of startups that I consider it a mostly dead-end path. In my experience, good communication is the only reliable remedy. This is the way.”

 

Even startups on tight budgets can maximize their marketing impact

Maximize the impact of your marketing strategy

Image Credits: Ray Massey / Getty Images

“Search engine optimization, PR, paid marketing, emails, social — marketing and communications is crowded with techniques, channels, solutions and acronyms,” writes Dominik Angerer, CEO and co-founder of Storyblok, which provides best practice guidance for startups on how to build a sustainable approach to marketing their content. “It’s little wonder that many startups strapped for time and money find defining and executing a sustainable marketing campaign a daunting prospect.

“The sheer number of options makes it difficult to determine an effective approach, and my view is that this complexity often obscures the obvious answer: A startup’s best marketing asset is its story.”

❌