With the last year changing how (and where) many of us work, organizations have started to rethink how well they manage their employees, and what tools they use to do that. Today, one of the startups that is building technology to address this challenge is announcing a major round of funding that underscores its traction to date.
Personio — the German startup that targets small and medium-sized businesses (10-2,000 employees) with an all-in-one HR platform covering recruiting and onboarding, payroll, absence tracking and other major HR functions — has picked up $125 million in funding at a $1.7 billion post-money valuation.
The Series D is being co-led by Index Ventures and Meritech, with previous backers Accel, Lightspeed Venture Partners, Northzone, Global Founders Capital and Picus all participating.
The $1.7 billion valuation is a big jump on the company’s $500 million valuation a year ago, and it comes after a year where the startup has doubled its revenues, and was not on the hunt to raise, with much of its previous fundraising still in the bank.
Personio currently counts some 3,000 SMEs in Europe as customers.
In an interview, Hanno Renner, the co-founder and CEO of Personio, said that the startup would be using the funding to continue building out the product — which operates a little like Workday, but built for much smaller organizations — as well as expanding its presence in Europe.
Although SMEs can be a notoriously challenging customer segment, Renner said that a new opportunity has emerged: a new wave of people in the SME sector have started to realise the value of having a modern and integrated HR platform.
“We started Personio in 2016 wanting to become the leading HR platform for mid-market companies, and we knew it could be a great company, but we realize it can be hard to grasp what HR really means,” he said. “But I think what has driven our business in the past year has been the realization that HR is not just an important part, but maybe the most important part, of any business.”
It may take one magic turn to convert users, he said, by providing (as one example) tools to recruit, sign contracts and onboard new employees remotely. Still, he acknowledges that the mid-market — especially those companies not built around technology — has been “lagging for years,” with many still working off Excel spreadsheets, or even more surprisingly, pen and paper. “Supporting them by helping them to digitize in a more efficient way has been driving our business.”
Personio is not the only startup hopeful that the shift in how we work will bring a new appreciation (and appetite) for purchasing HR tools. Others like Hibob have also seen a big boost in their business, and have also been raising money to tap into the opportunity more aggressively.
Hibob is looking to build in more training tools, underscoring the feature race that Personio will also have to run to keep up.
But given the sheer numbers of SMBs in the European market — more than 25 million, and accounting for more than 99% of all enterprises, according to research from the European Union — the fact that many of them have yet to adopt any kind of HR platform at all, there remains a lot of growth for a number of players.
“SMEs are the backbone of the European economy, employing 100 million people across the continent, but it is also a sector that has been neglected by software companies focused predominantly on large enterprises,” Martin Mingot, a partner at Index who sits on Personio’s board, said in a statement. “Personio changes that, having created a set of powerful tools tailored to address the needs of small businesses.”
“We have had the pleasure of working with some of the most successful SaaS companies in the world, and given Personio’s success over the past five years and the immense market potential, we strongly believe in Personio’s ability to build an equally successful and impactful business,” added Alex Clayton, general partner at Meritech Capital, in his own statement. “After many great discussions with Hanno over recent years, we are now excited to be joining the journey.” Clayton is also joining the board with this round.
Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.
The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.
Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.
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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.
Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.
In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.
In a post titled “A theory about the current IPO market”, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!
Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.
If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: Thanks very much for reading Extra Crunch.
Senior Editor, TechCrunch
I'm taking the credit/blame for this headline https://t.co/2KYLsTxeHq
— Walter Thompson (@YourProtagonist) January 12, 2021
After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.
Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.
A sign of the times: This week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.
To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:
“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.
Image Credits: Ezra Shaw (opens in a new window)
For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:
“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.
Bonus: Many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.
Image Credits: Getty Images/Andriy Onufriyenko
If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.
As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.
TL;DR? “Lots of demand, little supply, boom goes the price.”
Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.
In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.
Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.
Image Credits: monsitj/Getty Images
This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.
Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.
Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.
Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”
Image Credits: Sophie Alcorn
I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.
I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.
How will this new process work?
— Positive in Palo Alto
Image Credits: Ana Maria Serrano/Getty Images
After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:
Image Credits: George Frey/Bloomberg/Getty Images
Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.
Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.
In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.
To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:
Image Credits: MirageC/Getty Images
Growth-stage startups in search of funding have a new option: “flexible VC” investors.
An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”
In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these nontraditional routes.
Image Credits: Anton Petrus (opens in a new window)/Getty Images
For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment and investors took notice.
Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:
The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.
“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.
While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.
The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.
“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.
He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”
GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.
“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.
The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.
Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’
Harness, the startup that wants to create a suite of engineering tools to give every company the kind of technological reach that the biggest companies have, announced an $85 million Series C today on a $1.7 billion valuation.
Today’s round comes after 2019’s $60 million Series B, which had a $500 million valuation, showing a company rapidly increasing in value. For a company that launched just three years ago, this is a fairly remarkable trajectory.
Alkeon Capital led the round with help from new investors Battery Ventures, Citi Ventures, Norwest Venture Partners, Sorenson Capital and Thomvest Ventures. The startup also revealed a previously unannounced $30 million B-1 round raised after the $60 million round, bringing the total raised to date to $195 million.
Company founder and CEO Jyoti Bansal previously founded AppDynamics, which he sold to Cisco in 2017 for $3.7 billion. With his track record, investors came looking for him this round. It didn’t hurt that revenue grew almost 3x last year.
“The business is doing very well, so the investor community has been proactively reaching out and trying to invest in us. We were not actually planning to raise a round until later this year. We had enough capital to get through that, but there were a lot of people wanting to invest,” Bansal told me.
In fact, he said there is so much investor interest that he could have raised twice as much, but didn’t feel a need to take on that much capital at this time. “Overall, the investor community sees the value in developer tools and the DevOps market. There are so many big public companies now in that space that have gone out in the last three to five years and that has definitely created even more validation of this space,” he said.
Bansal says that he started the company with the goal of making every company as good as Google or Facebook when it comes to engineering efficiency. Since most companies lack the engineering resources of these large companies, that’s a tall task, but one he thinks he can solve through software.
The company started by building a continuous delivery module. A cloud cost-efficiency module followed. Last year the company bought open-source continuous integration company Drone.io and they are working on building that into the platform now, with it currently in beta. There are additional modules on the product roadmap coming this year, according to Bansal.
As the company continued to grow revenue and build out the platform in 2020, it also added a slew of new employees, growing from 200 to 300 during the pandemic. Bansal says that he has plans to add another 200 by the end of this year. Harness has a reputation of being a good place to work, recently landing on Glassdoor’s best companies list.
As an experienced entrepreneur, Bansal takes building a diverse company with a welcoming culture very seriously. “Yes, you have to provide equal opportunity and make sure that you are open to hiring people from diverse backgrounds, but you have to be more proactive about it in the sense that you have to make sure that your company environment and company culture feels very welcoming to everyone,” he said.
It’s been a difficult time building a company during the pandemic, adding so many new employees, and finding a way to make everyone feel welcome and included. Bansal says he has actually seen productivity increase during the pandemic, but now has to guard against employee burnout.
He says that people didn’t know how to draw boundaries when working at home. One thing he did was introduce a program to give everyone one Friday a month off to recharge. The company also recently announced it would be a “work from anywhere” company post-COVID, but Bansal still plans on having regional offices where people can meet when needed.
Small enterprises remain one of the most underserved segments of the business market, but the growth of cloud-based services — easier to buy, easier to provision — has helped that change in recent years. Today, one of the more promising startups out of Europe building software to help SMEs run online businesses is announcing some funding to better tap into both the opportunity to build these services, and to meet a growing demand from the SME segment.
Xentral, a German startup that develops enterprise resource planning software covering a variety of back-office functions for the average online small business, has picked up a Series A of $20 million.
The company’s platform today covers services like order and warehouse management, packaging, fulfillment, accounting and sales management, and the majority of its 1,000 customers are in Germany — they include the likes of direct-to-consumer brands like YFood, KoRo, the Nu Company and Flyeralarm.
But Benedikt Sauter, the co-founder and CEO of Xentral, said the ambition is to expand into the rest of Europe, and eventually other geographies, and to fold in more services to its ERP platform, such as a more powerful API to allow customers to integrate more services — for example in cases where a business might be selling on their own site, but also Amazon, eBay, social platforms and more — to bring their businesses to a wider market.
Mainly, he said, the startup wants “to build a better ecosystem to help our customers run their own businesses better.”
The funding is being led by Sequoia Capital, with Visionaires Club (a B2B-focused VC out of Berlin) also participating.
The deal is notable for being the prolific, high-profile VC’s first investment in Europe since officially opening for business in the region. (Sequoia has backed a number of startups in Europe before this, including Graphcore, Klarna, Tessian, Unity, UiPath, n8n and Evervault — but all of those deals were done from afar.)
Augsburg-based Xentral has been around as a startup since 2018, and “as a startup” is the operative phrase here.
Sauter and his co-founder Claudia Sauter (who is also his co-founder in life: she is his wife) built the early prototype for the service originally for themselves.
The pair were running a business of their own — a hardware company they founded in 2008, selling not nails, hammers and wood, but circuit boards they they designed, along with other hardware to build computers and other connected objects. Around 2013, as the business was starting to pick up steam, they decided that they really needed better tools to manage everything at the backend so that they would have more time to build their actual products.
But Bene Sauter quickly discovered a problem in the process: smaller businesses may have Shopify and its various competitors to help manage e-commerce at the front end, but when it came to the many parts of the process at the backend, there really wasn’t a single, easy solution (remember this was eight years ago, at a time before the Shopifys of the world were yet to expand into these kinds of tools). Being of a DIY and technical persuasion — Sauter had studied hardware engineering at university — he decided that he’d try to build the tools that he wanted to use himself.
The Sauters used those tools for for years, until without much outbound effort, they started to get a some inbound interest from other online businesses to use the software, too. That led to the Sauters balancing both their own hardware business and selling the software on the side, until around 2017/2018 when they decided to wind down the hardware operation and focus on the software full-time. And from then, Xentral was born. It now has, in addition to 1,000 customers, some 65 employees working on developing the platform.
The focus with Xentral is to have a platform that is easy to implement and use, regardless of what kind of SME you might be as long as you are selling online. But even so, Sauter pointed out that the other common thread is that you need at least one person at the business who champions and understands the value of ERP. “It’s really a mindset,” he said.
The challenge with Xentral in that regard will be to see how and if they can bring more businesses to the table and tap into the kinds of tools that it provides, at the same time that a number of other players also eye up the same market. (Others in the same general category of building ERP for small businesses include online payments provider Sage, Netsuite and Acumatica.) ERP overall is forecast to become a $49.5 billion market by 2025.
Sequoia and its new partner in Europe Luciana Lixandru — who is joining Xentral’s board along with Luciana Lixandru and Visionaries’ Robert Lacher — believe however that there remains a golden opportunity to build a new kind of provider from the ground up and out of Europe specifically to target the opportunity in that region.
“I see Xentral becoming the de facto platform for any SMEs to run their businesses online,” she said in an interview. “ERP sounds a bit scary especially because it makes one think of companies like SAP, long implementation cycles, and so on. But here it’s the opposite.” She describes Xentral as “very lean and easy to use because you an start with one module and then add more. For SMEs it has to be super simple. I see this becoming like the Shopify for ERP.”
In a move that could have wide ramifications across the tech landscape, Intel announced that VMware CEO Pat Gelsinger would be replacing interim CEO Bob Swan at Intel on February 15th. The question is why would he leave his job to run a struggling chip giant.
The bottom line is he has a long history with Intel, working with some of the biggest names in chip industry lore before he joined VMware in 2009. It has to be a thrill for him to go back to his roots and try to jump start the company.
“I was 18 years old when I joined Intel, fresh out of the Lincoln Technical Institute. Over the next 30 years of my tenure at Intel, I had the honor to be mentored at the feet of Grove, Noyce and Moore,” Gelsinger wrote in a blog post announcing his new position.
Certainly Intel recognized that the history and that Gelsinger’s deep executive experience should help as the company attempts to compete in an increasingly aggressive chip industry landscape. “Pat is a proven technology leader with a distinguished track record of innovation, talent development, and a deep knowledge of Intel. He will continue a values-based cultural leadership approach with a hyper focus on operational execution,” Omar Ishrak, independent chairman of the Intel board, said in a statement.
But Gelsinger is walking into a bit of a mess. As my colleague Danny Crichton wrote in his year-end review of the chip industry last month, Intel is far behind its competitors, and it’s going to be tough to play catch-up:
Intel has made numerous strategic blunders in the past two decades, most notably completely missing out on the smartphone revolution and also the custom silicon market that has come to prominence in recent years. It’s also just generally fallen behind in chip fabrication, an area it once dominated and is now behind Taiwan-based TSMC, Crichton wrote.
Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy, agrees with this assertion, saying that Swan was dealt a bad hand, walking in to clean up a mess that has years long timelines. While Gelsinger faces similar issues, Moorhead thinks he can refocus the company. “I am not foreseeing any major strategic changes with Gelsinger, but I do expect him to focus on the company’s engineering culture and get it back to an execution culture,” Moorhead told me.
The announcement comes against the backdrop of massive chip industry consolidation last year with over $100 billion changing hands in four deals, with Nvidia nabbing ARM for $40 billion, the $35 billion AMD-Xilink deal, Analog snagging Maxim for $21 billion and Marvell grabbing Inphi for a mere $10 billion, not to mention Intel dumping its memory unit to SK Hynix for $9 billion.
As for VMware, it has to find a new CEO now. As Moorhead says, the obvious choice would be current COO Sanjay Poonen, but for the time being, it will be CFO Zane Rowe serving as interim CEO, rather than Poonen. In fact, it appears that the company will be casting a wider net than internal options. The official announcement states, “VMware’s Board of Directors is initiating a global executive search process to name a permanent CEO…”
Holger Mueller, an analyst at Constellation Research, says it will be up to Michael Dell to decide who to hand the reins to, but he believes Gelsinger was stuck at Dell and would not get a broader role, so he left.
“VMware has a deep bench, but it will be up to Michael Dell to get a CEO who can innovate on the software side and keep the unique DNA of VMware inside the Dell portfolio going strong, Dell needs the deeper profits of this business for its turnaround,” he said.
The stock market seems to like the move for Intel, with the company stock up 7.26%, but not so much for VMware, whose stock was down close to the same amount at 7.72% as we went to publication.
It’s estimated that there were some 50 billion connected devices globally in 2020, and while that really says a lot about how far we’ve come in tech, for many it also speaks to a big issue: security vulnerabilities, with the devices themselves, plus all the components and services running on them, all potential targets for anything from malicious hackers to not-so-intentional data leaks.
Today, an Israeli startup Vdoo — which has been developing AI-based services to detect and fix those kinds of vulnerabilities in IoT devices — is announcing $25 million in funding, money that it plans to use to help it better address the wider issue as it applies to all connected objects. With its initial focus on large industrial deployments, medical systems, communications infrastructure and automotive, Vdoo also looking more deeply now at the wider network of devices that use communications chips, providing quick (as in minutes) assessments to identify and remediate or directly fix various issues: it cites zero-day vulnerabilities, CVEs, configuration and hardening issues, and standard incompliances among them.
The funding — an extension to the $32 million round that Vdoo announced in April 2019 — is coming from two investors, Israel’s Qumra Capital and Verizon Ventures (the investing arm of Verizon, which — by way of its acquisition of Aol many years ago — also owns TechCrunch).
Verizon’s interest in Vdoo is strategic and speaks to the opportunity in the market. As CEO Netanel Davidi (who co-founded the company with Uri Alter and Asaf Karas) describes it, operators like Verizon are interested because of their role as a distributer and reseller of hardware as part of their wider services play, be it for broadband access, or a telematics service, or something for the connected home or connected office.
“They sell connected devices to enterprises and home users that are not made by them, yet the carriers are responsible for the security,” he said, “so the solution is to bake that into devices” to make it work more seamlessly, he said.
Verizon is not the startup’s only strategic backer. Others in the first tranche of this round included another carrier, Japan’s NTT Docomo, MS&AD Ventures (the venture arm of the global cyber insurance firm) and Dell Technology Capital, the VC arm of Dell.
The company has now raised around $70 million, and while it’s not disclosing valuation, Davidi confirmed that it has more than doubled this year.
(In April 2019, PitchBook estimated that it was just under $100 million, which would make it now at over $200 million if that figure is accurate.)
Davidi said that the decision to raise this money as an extension to the previous round rather than a new round was strategic: it gave the company the chance to raise funding more quickly, and to take more time to prepare for a bigger funding round in the near future.
And the reason for raising quickly was to address what was a quickly moving target: one of the by-products of the Covid-19 pandemic has been a dramatic shift to people working from home, buying new devices to enable that and in general using their communications networks much more heavily than before.
Connected device security typically focuses on monitoring activity on the hardware, how data is moving in and out of them. Vdoo’s approach has been to build a platform that monitors the behavior of the devices themselves, using AI to compare that behavior to identify when something is not working as it should.
“For any kind of vulnerability, using deep binary analysis capabilities, we try to understand the broader idea, to figure out how a similar vulnerability can emerge,” is how Davidi described the process when we talked about the first part of this round back in 2019.
Vdoo generates specific “tailor-made on-device micro-agents” to continue the detection and repair process, which Davidi likens to a modern approach to some cancer care: preventive measures such as periodic monitoring checks, followed by a “tailored immunotherapy” based on prior analysis of DNA.
Vdoo is a play on the Hebrew word that sounds like “vee-doo” and means “making sure”, and points to the basic idea of how it approaches the verification around its device monitoring. It also feels somewhat like the next step in endpoint security, which was the focus of Davidi and Alter’s previous startup, Cyvera, which was eventually acquired by Palo Alto Networks.
The focus on devices, in some ways, is a significantly more complex approach given that it’s not just about the device, but the many components that go into them. As we have seen with Meltdown and Spectre, vulnerabilities might exist at the processor level.
And as Davidi pointed out to me this week, at times those issues aren’t even intentional but still mean data can leak out, and at worst that can be exploitable by bad actors.
“Backdoors are being built into many devices, and some are not even intentional,” he said. “It may be that the developer wanted to create a shortcut to make something else easier in the future. Some will see that as a back door, and some will not.”
The fractal-like nature of the issue what Vdoo is digging into with its widening approach.
“Initially we wanted to serve the ecosystem of manufacturers, since they are the cause of the problem and the origin of the security issues,” he said. “We started there with Fortune 500 customers in areas like automotive and industrial and medical and telco and aviation. The idea was to make a platform that could serve and product security stakeholders. But then we saw that this was a big unserved market.”
Indeed, Vdoo quotes figures from research firm Markets and Markets that forecast that the global device security market will grow to $36.6 billion by 2025 from $12.5 billion in 2020.
“The number of connected IoT devices is rapidly growing, creating greater opportunities for security breaches,” said Boaz Dinte, Managing Partner of Qumra Capital, in a statement. “Vdoo’s unique device-centric, deep technology automated approach has already brought immediate value to vendors in a very short period of time. We believe the market opportunity is huge, and with newly infused growth capital, Vdoo is well-positioned to become the leading global player for securing connected devices.”
“With the expansion of 5G networks and mobile edge compute, there’s a need for an end-to-end, device-centric security approach to IoT,” added Verizon Ventures MD Tammy Mahn in a statement. “As the venture arm of a leading telco, Verizon Ventures is proud to invest in Vdoo and its world-class team on their journey to solve this global need, while ushering in a new era of security by design in our increasingly connected world.”
Stacklet, a startup that is commercializing the Cloud Custodian open-source cloud governance project, today announced that it has raised an $18 million Series A funding round. The round was led by Addition, with participation from Foundation Capital and new individual investor Liam Randall, who is joining the company as VP of business development. Addition and Foundation Capital also invested in Stacklet’s seed round, which the company announced last August. This new round brings the company’s total funding to $22 million.
Stacklet helps enterprises manage their data governance stance across different clouds, accounts, policies and regions, with a focus on security, cost optimization and regulatory compliance. The service offers its users a set of pre-defined policy packs that encode best practices for access to cloud resources, though users can obviously also specify their own rules. In addition, Stacklet offers a number of analytics functions around policy health and resource auditing, as well as a real-time inventory and change management logs for a company’s cloud assets.
The company was co-founded by Travis Stanfield (CEO) and Kapil Thangavelu (CTO). Both bring a lot of industry expertise to the table. Stanfield spent time as an engineer at Microsoft and leading DealerTrack Technologies, while Thangavelu worked at Canonical and most recently in Amazon’s AWSOpen team. Thangavelu is also one of the co-creators of the Cloud Custodian project, which was first incubated at Capital One, where the two co-founders met during their time there, and is now a sandbox project under the Cloud Native Computing Foundation’s umbrella.
“When I joined Capital One, they had made the executive decision to go all-in on cloud and close their data centers,” Thangavelu told me. “I got to join on the ground floor of that movement and Custodian was born as a side project, looking at some of the governance and security needs that large regulated enterprises have as they move into the cloud.”
As companies have sped up their move to the cloud during the pandemic, the need for products like Stacklets has also increased. The company isn’t naming most of its customers, but one of them is FICO, among a number of other larger enterprises. Stacklet isn’t purely focused on the enterprise, though. “Once the cloud infrastructure becomes — for a particular organization — large enough that it’s not knowable in a single person’s head, we can deliver value for you at that time and certainly, whether it’s through the open source or through Stacklet, we will have a story there.” The Cloud Custodian open-source project is already seeing serious use among large enterprises, though, and Stacklet obviously benefits from that as well.
“In just 8 months, Travis and Kapil have gone from an idea to a functioning team with 15 employees, signed early Fortune 2000 design partners and are well on their way to building the Stacklet commercial platform,” Foundation Capital’s Sid Trivedi said. “They’ve done all this while sheltered in place at home during a once-in-a-lifetime global pandemic. This is the type of velocity that investors look for from an early-stage company.”
Looking ahead, the team plans to use the new funding to continue to developed the product, which should be generally available later this year, expand both its engineering and its go-to-market teams and continue to grow the open-source community around Cloud Custodian.
The round values the company at $1.36 billion, post-money.
You & Mr. Jones takes its name from CEO David Jones, who founded the company in 2015. After having served as the CEO of ad giant Havas, Jones told me that his goal in starting what he called “a brand tech group” was to provide marketers with something that neither traditional agencies nor technology companies could give them.
“At that moment, the choices were to go work with an agency group, which is great at brand and marketing, but they don’t understand tech, or with a tech company, which will only ever recommend their platform and don’t have the same [brand and marketing] expertise,” he said.
So You & Mr. Jones has built its own technology platform to help marketers with their digital, mobile and e-commerce needs, while also investing in companies like Pinterest and Niantic. And it makes acquisitions — last year, for example, it bought influencer marketing company Collectively.
You & Mr. Jones has grown to 3,000 employees, and its clients include Unilever, Accenture, Google, Adidas, Marriott and Microsoft. In fact, Jones said that as of the third quarter of 2020, its net revenue had grown 27% year over year.
That’s particularly impressive given the impact of the pandemic on ad spending, but Jones said that’s one of the key distinctions between digital advertising and the broader brand tech category, which he said has grown steadily, even during the pandemic, and which also sets the company apart from agencies that are “digital and tech in press release only.”
“We’re not an ad agency, we’ll never acquire agencies,” he said. “We have the technology platform, process and people to deliver all of your end-to-end, always-on content — social, digital, e-commerce and community management.”
In addition to the funding, the company is announcing that it has hired Paulette Forte, who was previously senior director of human services at the NBA, as its first chief people officer.
“The brand tech category didn’t even exist before You & Mr Jones was established,” Forte said in a statement. “The company became a true industry disruptor in short order, and growth has been swift. In order to keep up with the momentum, it’s critical to have systems in place that help talent develop their skills, encourage diversity and creativity, and find pathways to improving workflow. I am excited to join the leadership team to drive this crucial work forward.”
As ride-hailing companies like Uber and Lyft continue to find their feet in a new landscape for transportation services — where unessential travel is being actively discouraged in many markets and people remain concerned about catching the coronavirus in restricted, shared spaces — a smaller player that has carved out a place for itself targeting business users is announcing more funding.
Gett, which started out as a more direct competitor to the likes of Uber and Lyft but now focuses mainly on ground transportation services for business clients in major cities around the world, said in a short statement that it has closed a round of $115 million. The company — co-headquartered in London and Israel — also said it is now “operationally profitable” and is hitting its budget targets.
The funding is being led by new backer Pelham Capital Investments Ltd. and also included participation from unnamed existing investors.
Including this round, Gett has now raised $865 million, with past investors including VW, Access and its founder Len Blavatnik, Kreos, MCI and more. Gett’s last confirmed valuation was $1.5 billion, pegged to a $200 million fundraise in May 2019. It’s not talking about current valuation, or any recent customer numbers, today.
Dave Waiser, Gett’s founder and CEO, described the funding earlier today in a note to me as an extension to the company’s previous round, a $100 million equity investment that it announced in July last year.
Chairman Amos Genish, said in a statement that the funding round was oversubscribed, “which shows the market’s interest in our platform and long-term vision. Gett is disrupting and transforming a fragmented market delivering ever-critical cost optimisation and client satisfaction.”
The company has been building out a focus on the B2B market for several years now — a smart way of avoiding the expensive and painful race to compete like-for-like against the Ubers of the world — and this most recent round is focused on doubling down on that.
The Gett of the past — it was originally founded in 2010 under the name GetTaxi — did indeed try to build a business around both consumers and higher-end users, but the idea behind Gett today is to focus on corporate accounts.
Gett provides those businesses’ employees with a predictable and reliable app-based platform to make it easier to order car services wherever they happen to be traveling, and those businesses — which in the past would have used a fragmented mix of local services — then have a consolidated way of managing, accounting for and analysing those travel expenses. It claims to be able to save companies some 25%-40% in costs.
The company previously said that its network covered some 1,500 cities. In certain metropolitan areas like London and Moscow, Gett provides transportation services directly. In markets where it does not have direct operations (such as anywhere in the U.S., including New York), it partners with third parties, such as Lyft.
“We are on a journey to transform corporate ground travel and I’m delighted that investors find our model attractive,” Waiser said in a statement today. “This investment will allow us to further develop our SaaS technology and deepen our proposition within the corporate ground travel market.”
Updated to correct that this is an extension to the $100 million round.
We are more than seven years into the notion of modern containerization, and it still requires a complex set of tools and a high level of knowledge on how containers work. The DockerSlim open source project developed several years ago from a desire to remove some of that complexity for developers.
Slim.ai, a new startup that wants to build a commercial product on top of the open source project, announced a $6.6 million seed round today from Boldstart Ventures, Decibel Partners, FXP Ventures and TechAviv Founder Partners.
Company co-founder and CEO John Amaral says he and fellow co-founder and CTO Kyle Quest have worked together for years, but it was Quest who started and nurtured DockerSlim. “We started coming together around a project that Kyle built called DockerSlim. He’s the primary author, inventor and up until we started doing this company, the sole proprietor of that of that community,” Amaral explained.
At the time Quest built DockerSlim in 2015, he was working with Docker containers and he wanted a way to automate some of the lower level tasks involved in dealing with them. “I wanted to solve my own pain points and problems that I had to deal with, and my team had to deal with dealing with containers. Containers were an exciting new technology, but there was a lot of domain knowledge you needed to build production-grade applications and not everybody had that kind of domain expertise on the team, which is pretty common in almost every team,” he said.
He originally built the tool to optimize container images, but he began looking at other aspects of the DevOps lifecycle including the author, build, deploy and run phases. He found as he looked at that, he saw the possibility of building a commercial company on top of the open source project.
Quinn says that while the open source project is a starting point, he and Amaral see a lot of areas to expand. “You need to integrate it into your developer workflow and then you have different systems you deal with, different container registries, different cloud environments and all of that. […] You need a solution that can address those needs and doing that through an open source tool is challenging, and that’s where there’s a lot of opportunity to provide premium value and have a commercial product offering,” Quinn explained.
Ed Sim, founder and general partner at Boldstart Ventures, one of the seed investors sees a company bringing innovation to an area of technology where it has been lacking, while putting some more control in the hands of developers. “Slim can shift that all left and give developers the power through the Slim tools to answer all those questions, and then, boom, they can develop containers, push them into production and then DevOps can do their thing,” he said.
They are just 15 people right now including the founders, but Amaral says building a diverse and inclusive company is important to him, and that’s why one of his early hires was head of culture. “One of the first two or three people we brought into the company was our head of culture. We actually have that role in our company now, and she is a rock star and a highly competent and focused person on building a great culture. Culture and diversity to me are two sides of the same coin,” he said.
The company is still in the very early stages of developing that product. In the meantime, they continue to nurture the open source project and to build a community around that. They hope to use that as a springboard to build interest in the commercial product, which should be available some time later this year.
Cockroach Labs, makers of CockroachDB, have been on a fundraising roll for the last couple of years. Today the company announced a $160 million Series E on a fat $2 billion valuation. The round comes just eight months after the startup raised an $86.6 million Series D.
The latest investment was led by Altimeter Capital with participation from new investors Greenoaks and Lone Pine along with existing investors Benchmark, Bond, FirstMark, GV, Index Ventures and Tiger Global. The round doubled the company’s previous valuation and increased the amount raised to $355 million.
Co-founder and CEO Spenser Kimball says that the company’s revenue more than doubled in 2020 in spite of COVID, and that caught the attention of investors. He attributed this paradoxical rise to the rapid shift to the cloud brought on by the pandemic that many people in the industry have seen.
“People became more aggressive with what was already underway, a real move to embrace the cloud to build the next generation of applications and services, and that’s really fundamentally where we are,” Kimball told me.
As that happened, the company began a shift in thinking. While it has embraced an open source version of CockroachDB along with a 30-day free trial on the company’s cloud service as ways to attract new customers to the top of the funnel, it wants to try a new approach.
In fact, it plans to replace the 30 day trial with a newer version later this year without any time limits. It believes this will attract more developers to the platform and enable them to see the full set of features without having to enter credit card information. What’s more, by taking this approach it should end up costing the company less money to support the free tier.
“What we expect is that you can do all kinds of things on that free tier. You can do a hackathon, any kind of hobby project […] or even a startup that has ambitions to be the next DoorDash or Airbnb,” he said. As he points out, there’s a point where early stage companies don’t have many users, and can remain in the free tier until they achieve product-market fit.
“That’s when they put a credit card down, and they can extend beyond the free tier threshold and pay for what they use,” he said. The newer free tier is still in the beta testing phase, but will be rolled out during this year.
Kimball says that company wasn’t necessarily looking to raise, although he knew that it would continue to need more cash on the balance sheet to run with giant competitors like Oracle, AWS and the other big cloud vendors, along with a slew of other database startups. As the company’s revenue grows, he certainly sees an IPO in its future, but he doesn’t see it happening this year.
The startup ended the year with 200 employees and Kimball expects to double that by the end of this year. He says growing a diverse group of employees takes good internal data and building a welcoming and inclusive culture.
“I think the starting point for anything you want to optimize in a business is to make sure that you have the metrics in front of you, and that you’re constantly looking at them […] in order to measure how you’re doing,” he explained.
He added, “The thing that we’re most focused on in terms of action is really building the culture of the company appropriately and that’s something we’ve been doing for all six years we’ve been around. To the extent that you have an inclusive environment where people actually really view the value of respect, that helps with diversity.”
Kimball says he sees a different approach to running the business when the pandemic ends with some small percentage going into the office regularly and others coming for quarterly visits, but he doesn’t see a full return to the office post-pandemic.
This has been quite a week.
Instead of walking backward through the last few days of chaos and uncertainty, here are three good things that happened:
Despite many distractions in our first full week of the new year, we published a full slate of stories exploring different aspects of entrepreneurship, fundraising and investing.
We’ve already gotten feedback on this overview of subscription pricing models, and a look back at 2020 funding rounds and exits among Israel’s security startups was aimed at our new members who live and work there, along with international investors who are seeking new opportunities.
Plus, don’t miss our first investor surveys of 2021: one by Lucas Matney on social gaming, and another by Mike Butcher that gathered responses from Portugal-based investors on a wide variety of topics.
Thanks very much for reading Extra Crunch this week. I hope we can all look forward to a nice, boring weekend with no breaking news alerts.
Senior Editor, TechCrunch
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In February 2020, gaming platform Roblox was valued at $4 billion, but after announcing a $520 million Series H this week, it’s now worth $29.5 billion.
“Sure, you could argue that Roblox enjoyed an epic 2020, thanks in part to COVID-19,” writes Alex Wilhelm this morning. “That helped its valuation. But there’s a lot of space between $4 billion and $29.5 billion.”
Alex suggests that Roblox’s decision to delay its IPO and raise an enormous Series H was a grandmaster move that could influence how other unicorns will take themselves to market. “A big thanks to the gaming company for running this experiment for us.”
I asked him what inspired the headline; like most good ideas, it came to him while he was trying to get to sleep.
“I think that I had ‘The Queen’s Gambit’ somewhere in my head, so that formed the root of a little joke with myself. Roblox is making a strategic wager on method of going public. So, ‘gambit’ seems to fit!”
Image Credits: Erik Von Weber (opens in a new window) / Getty Images
For our first investor survey of the year, Lucas Matney interviewed eight VCs who invest in massively multiplayer online games to discuss 2021 trends and opportunities:
Having moved far beyond shooters and sims, platforms like Twitch, Discord and Fortnite are “where culture is created,” said Daniel Li of Madrona.
Rep. Alexandria Ocasio-Cortez uses Twitch to explain policy positions, major musicians regularly perform in-game concerts on Fortnite and in-game purchases generated tens of billions last year.
“Gaming is a unique combination of science and art, left and right brain,” said Gigi Levy-Weiss of NFX. “It’s never just science (i.e., software and data), which is why many investors find it hard.”
Image Credits: C.J. Burton (opens in a new window) / Getty Images
Startups that lack insight into their sales funnel have high churn, low conversion rates and an inability to adapt or leverage changes in customer behavior.
If you’re hoping to convert and retain customers, “reinforcing your value proposition should play a big part in every level of your customer funnel,” says Joe Procopio, founder of Teaching Startup.
Image Credits: Bloomberg (opens in a new window) / Getty Images
Alex Wilhelm followed up his regular Friday column with another story that tries to find a well-grounded rationale for Tesla’s sky-high valuation of approximately $822 billion.
Meanwhile, GM just unveiled a new logo and tagline.
As ever, I learned something new while editing: A “melt up” occurs when investors start clamoring for a particular company because of acute FOMO (the fear of missing out).
Delivering 500,000 cars in 2020 was “impressive,” says Alex, who also acknowledged the company’s ability to turn GAAP profits, but “pride cometh before the fall, as does a melt up, I think.”
Note: This story has Alex’s original headline, but I told him I would replace the featured image with a photo of someone who had very “richest man in the world” face.
Image Credits: piranka / Getty Images
On Tuesday, enterprise reporter Ron Miller covered a major engineering project at customer data platform Segment called “Centrifuge.”
“Its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost,” but as Ron reports, it was also meant to solve “an existential crisis for the young business,” which needed a more resilient platform.
Image Credits: Sophie Alcorn
Now that the U.S. has a new president coming in whose policies are more welcoming to immigrants, I am considering coming to the U.S. to expand my company after COVID-19. However, I’m struggling with the morass of information online that has bits and pieces of visa types and processes.
Can you please share an overview of the U.S. immigration system and how it works so I can get the big picture and understand what I’m navigating?
— Resilient in Romania
The first “Dear Sophie” column of each month is available on TechCrunch without a paywall.
Image Credits: Hiraman (opens in a new window) / Getty Images
For founders who aren’t interested in angel investment or seeking validation from a VC, revenue-based investing is growing in popularity.
To gain a deeper understanding of the U.S. RBI landscape, we published an industry report on Wednesday that studied data from 134 companies, 57 funds and 32 investment firms before breaking out “specific verticals and business models … and the typical profile of companies that access this form of capital.”
Image Credits: Westend61 (opens in a new window)/ Getty Images
Mike Butcher continues his series of European investor surveys with his latest dispatch from Lisbon, where a nascent startup ecosystem may get a Brexit boost.
Here are the Portugal-based VCs he interviewed:
Image Credits: John Lund (opens in a new window)/ Getty Images
How do you scale online tutoring, particularly when demand exceeds the supply of human instructors?
This month, Chegg is replacing its seven-year-old marketplace that paired students with tutors with a live chatbot.
A spokesperson said the move will “dramatically differentiate our offerings from our competitors and better service students,” but Natasha Mascarenhas identified two challenges to edtech automation.
“A chatbot won’t work for a student with special needs or someone who needs to be handheld a bit more,” she says. “Second, speed tutoring can only work for a specific set of subjects.”
Image Credits: Treedeo (opens in a new window) / Getty Images
While I watched insurrectionists invade and vandalize the U.S. Capitol on live TV, I noticed that staffers evacuated so quickly, some hadn’t had time to shut down their computers.
Looters even made off with a laptop from Senator Jeff Merkley’s office, but according to security reporter Zack Whittaker, the damages to infosec wasn’t as bad as it looked.
Even so, “the breach will likely present a major task for Congress’ IT departments, which will have to figure out what’s been stolen and what security risks could still pose a threat to the Capitol’s network.”
Image Credits: Catherine Falls Commercial (opens in a new window) / Getty Images
On New Year’s Eve, I made a list of the 10 “best” Extra Crunch stories from the previous 12 months.
My methodology was personal: From hundreds of posts, these were the 10 I found most useful, which is my key metric for business journalism.
Some readers are skeptical about paywalls, but without being boastful, Extra Crunch is a premium product, just like Netflix or Disney+. I know, we’re not as entertaining as a historical drama about the reign of Queen Elizabeth II or a space western about a bounty hunter. But, speaking as someone who’s worked at several startups, Extra Crunch stories contain actionable information you can use to build a company and/or look smart in meetings — and that’s worth something.
F5, the applications networking company announced today that it is acquiring Volterra, a multi-cloud management startup for $500 million. That breaks down to $440 million in cash and $60 million in deferred and unvested incentive compensation.
Volterra emerged in 2019 with a $50 million investment from multiple sources including Khosla Ventures and Mayfield along with strategic investors like M12 (Microsoft’s venture arm) and Samsung Ventures. As the company described it to me at the time of the funding:
Volterra has innovated a consistent, cloud-native environment that can be deployed across multiple public clouds and edge sites — a distributed cloud platform. Within this SaaS-based offering, Volterra integrates a broad range of services that have normally been siloed across many point products and network or cloud providers.
The solution is designed to provide a single way to view security, operations and management components.
F5 president and CEO François Locoh-Donou sees Volterra’s edge solution integrating across its product line. “With Volterra, we advance our Adaptive Applications vision with an Edge 2.0 platform that solves the complex multi-cloud reality enterprise customers confront. Our platform will create a SaaS solution that solves our customers’ biggest pain points,” he said in a statement.
Volterra founder and CEO Ankur Singla, writing in a company blog post announcing the deal, says the need for this solution only accelerated during 2020 when companies were shifting rapidly to the cloud due to the pandemic. “When we started Volterra, multi-cloud and edge were still buzzwords and venture funding was still searching for tangible use cases. Fast forward three years and COVID-19 has dramatically changed the landscape — it has accelerated digitization of physical experiences and moved more of our day-to-day activities online. This is causing massive spikes in global Internet traffic while creating new attack vectors that impact the security and availability of our increasing set of daily apps,” he wrote.
He sees Volterra’s capabilities fitting in well with the F5 family of products to help solve these issues. While F5 had a quiet 2020 on the M&A front, today’s purchase comes on top of a couple of major acquisitions in 2019 including Shape Security for $1 billion and NGINX for $670 million.
The deal has been approved by both companies boards, and is expected to close before the end of March subject to regulatory approvals.
RedHat today announced that it’s acquiring container security startup StackRox . The companies did not share the purchase price.
RedHat, which is perhaps best known for its enterprise Linux products has been making the shift to the cloud in recent years. IBM purchased the company in 2018 for a hefty $34 billion and has been leveraging that acquisition as part of a shift to a hybrid cloud strategy under CEO Arvind Krishna.
The acquisition fits nicely with RedHat OpenShift, its container platform, but the company says it will continue to support StackRox usage on other platforms including AWS, Azure and Google Cloud Platform. This approach is consistent with IBM’s strategy of supporting multi-cloud, hybrid environments.
In fact, Red Hat president and CEO Paul Cormier sees the two companies working together well. “Red Hat adds StackRox’s Kubernetes-native capabilities to OpenShift’s layered security approach, furthering our mission to bring product-ready open innovation to every organization across the open hybrid cloud across IT footprints,” he said in a statement.
CEO Kamal Shah, writing in a company blog post announcing the acquisition, explained that the company made a bet a couple of years ago on Kubernetes and it has paid off. “Over two and half years ago, we made a strategic decision to focus exclusively on Kubernetes and pivoted our entire product to be Kubernetes-native. While this seems obvious today; it wasn’t so then. Fast forward to 2020 and Kubernetes has emerged as the de facto operating system for cloud-native applications and hybrid cloud environments,” Shah wrote.
Shah sees the purchase as a way to expand the company and the road map more quickly using the resources of Red Hat (and IBM), a typical argument from CEOs of smaller acquired companies. But the trick is always finding a way to stay relevant inside such a large organization.
StackRox’s acquisition is part of some consolidation we have been seeing in the Kubernetes space in general and the security space more specifically. That includes Palo Alto Networks acquiring competitor TwistLock for $410 million in 2019. Another competitor, Aqua Security, which has raised $130 million, remains independent.
StackRox was founded in 2014 and raised over $65 million, according to Crunchbase data. Investors included Menlo Ventures, Redpoint and Sequoia Capital. The deal is expected to close this quarter subject to normal regulatory scrutiny.
The ongoing push for social distancing to slow the spread of Covid-19 has meant that more people than ever before are using internet-based services to get things done. And that is having a direct impact on digital customer service, which is seeing unprecedented traffic and demands when things are not running smoothly. Today, one of the startups that’s built an interesting, very “hands-on” approach to addressing that problem is announcing a round of funding to expand its business.
Glia, which has built a platform that not only integrates and helps manage different customer support channels, but also provides tools to help agents proactively get into a customer’s app or web page to help them find things or fix issues, is today announcing that it has picked up $78 million, a Series C. Dan Michaeli, said will be used to continue developing its technology and expanding to address inbound interest for its services after seeing its revenues grow by 150% in 2020.
The company’s original focus was around financial services and it counts a large base of customers in that area, but it is also seeing a lot of activity in adjacent industries like insurance, as well as education, retail and other categories Michaeli said.
“We’ve had overwhelming demand and it’s incredible to see how businesses want to adopt us right now,” he said in an interview. “The plan is to significantly scale up and continue to define and meet that demand for digital customer service.” The company is likely also to use some of the funding for acquisitions in what appears to be a rapidly consolidating market.
The round is being led by Insight Partners, with Don Brown (an entrepreneur in the world of customer service, with his company Interactive Intelligence acquired by Genesys for $1.4 billion) also participating.
Glia isn’t disclosing other investors, but past backers include Tola Capital, Temerity Capital, Grassy Creek and Wildcat Capital, as well as Insight. Prior to this, the company, which has been around since 2012 and was previously known as Salemove, had raised just $28 million and its valuation was a modest $69 million according to PitchBook data (and it’s not disclosing valuation today).
While there are a lot of customer service startups in the market today, and a number of them are seeing huge boosts in their business, and even some consolidation as others snap up tech to make sure they have their own customer service strategies going in the right direction. (Witness Facebook of all companies acquiring omnichannel customer support and CRM leader Kustomer for $1 billion in November.)
Glia is not unlike many of the new guard of these companies, in that its focus is very squarely on providing a platform to be able to manage and interact across whatever digital channel a customer happens to be using. Glia, I should point out, means “glue” in Greek.
What makes Glia quite interesting and different from these are some of the twists it uses to engage with users. One of these involves being able to give agents the ability to actually get on the screen of the user in question, in order to both guide the user around the screen, and to see what the user is doing on that screen.
To be clear, the connection and ability to track what the user is doing is just on the screen in question, and it’s done with the user’s awareness of what is going on. In the demo of the service that I went through, it’s a very smooth service, which reminded me just a little of things like Clippy on Microsoft Word.
Alongside this, Glia provides tools to agents to let coach them on questions to ask, phrasing to use, and links for answers, and Glia also develops virtual customer service assistants, to help with more basic questions. These also have the ability to interact with people’s screens when they make contact with a company. This in effect sees the company combining a number of technologies in one place, from natural language to suggest (and in some cases run) customer service responses, through to computer vision to help detect what is going on on the remote screen, through to more fundamental CRM technology to run those services across multiple platforms.
While screen sharing has been a well-used tool in other areas — for example in workforce collaboration environments, or for presenting online — Glia is seen as one of the pioneers in leveraging that for customer service. For investors, the interest in Glia has been to tap into that.
“We are proud to expand our investment in Glia as the company continues to lead the evolution of Digital Customer Service for businesses across the globe,” said Lonne Jaffe, managing director at Insight Partners, in a statement. “Glia’s platform provides the modern technology necessary for businesses to meet customers in their digital journeys and communicate through the customer’s channel of choice. With this capital, the company will continue to scale and keep up with skyrocketing demand.”
We are in a key moment of digital transformation in customer services. Surprisingly, there are still many who opt for calling in to ask questions, but as Michaeli noted, these days, even when they are still using phones, customers will do so with “their screens in front of them.”
Brown believes that this is the other opportunity to seize. “Many companies are still focused on moving antiquated, on-premises telephony systems to cloud contact centers that essentially offer the same functionality,” he said in a statement. “Instead, businesses can leapfrog this process and move directly to a digital-first cloud approach by partnering with Glia. If I were to build Interactive Intelligence for today’s contact center, I would take Glia’s approach.”
As the pandemic took hold in 2020, companies accelerated their move to cloud services. Lacework, the cloud security startup, was in the right place at the right time as customers looked for ways to secure their cloud native workloads. The company reported that revenue grew 300% year over year for the second straight year.
It was rewarded for that kind of performance with a $525 million Series D today. It did not share an exact valuation, only saying that it exceeded $1 billion, which you would expect on such a hefty investment. Sutter Hill and Altimeter Capital led the round with help from D1, Coatue, Dragoneer Investment Group, Liberty Global Ventures, Snowflake Ventures and Tiger Capital. The company has now raised close to $600 million.
Lacework CEO Dan Hubbard says one of the reasons for such widespread interest from investors is the breadth of the company’s security solution. “We enable companies to build securely in the cloud, and we span across multiple different categories of markets, which enable the customers to do that,” he said.
He says that encompasses a range of services including configuration and compliance, security for infrastructure as code, build time and runtime vulnerability scanning and runtime security for cloud native environments like Kubernetes and containers.
As the company has grown revenue, it has been adding employees quickly. It started the year with 92 employees and closed with over 200 with plans to double that by the end of this year. As he looks at hiring, Hubbard is aware of the need to build a diverse organization, but acknowledges that tech in general hasn’t done a great job so far.
He says they are working with the various teams inside the company to try and change that, while also working to support outside organizations that are helping educate under represented groups to get the skills they need and then building from that. “If you can help solve the problem at an earlier stage, then I think you’ve got a bigger opportunity [to have a base of people to hire] there,” he said.
The company was originally nurtured inside Sutter Hill and is built on top of the Snowflake platform. It reports that $20 million of today’s total comes from Snowflake’s new venture arm, which is putting some money into an early partner.
“We were an alpha Snowflake customer, and they were an alpha customer of ours. Our platform is built on top of the Snowflake data cloud and their new venture arm has also joined the round with an investment to further strengthen the partnership there,” Hubbard said.
As for Sutter Hill, investor Mike Speiser sees Lacework as one of his firm’s critical investments. “[Much] like Snowflake at a similar point in its evolution, Lacework is growing revenue at over 300% per year making Lacework one of Sutter Hill Ventures’ most important and promising portfolio companies,” he said in a statement.
The Covid-19 pandemic and specifically need for social distancing to slow the spread of the virus have continued to keep many of us away from the office. Now, increasingly, many organizations and people believe that it could usher in a more permanent shift to remote, distributed and virtual work. Today, a startup that has built a set of tools specifically to help salespeople with that change — by way of digital sales — has raised a substantial growth round to meet that demand.
SalesLoft, a sales platform based out of Atlanta, Georgia that provides AI-baseed tools to help salespeople run their sales process virtually — from finding and following up on leads, through to helping them sell with virtual coaching tools, and then assisting in the post-sales process — has closed $100 million in funding.
The company’s co-founder and CEO Kyle Porter confirmed to TechCrunch that the company is now valued at $1.1 billion post-money, a substantial hike on its previous valuation. In April 2019, well before any global health pandemics, the company had raised a Series D of $70 million at around a $600 million valuation (a figure we confirmed at the time with sources close to the company).
This latest round is being led by Owl Rock Capital, with previous investors Insight Partners, HarbourVest, and Emergence Capital — a VC focused specifically on enterprise startups, which notably was an early backer of Zoom and many others — also participating.
SalesLoft has now raised some $245 million, an impressive sum for any startup, but also worth pointing out for the fact that its not based out of the Valley but Atlanta, Georgia (a state in the news for other reasons at the moment, as the focus of a hotly contested US Senate runoff election).
The company has been on a growth tear for several years now, as one of the big players in the area of so-called sales engagement: tools to help salespeople sell better to clients (or would-be clients), which can include real-time monitoring of interactions to provide coaching to improve the process, suggestions for supplementary content to enhance the pitch, and more basic software simply to manage records and communications.
Even before the pandemic hit, this was a key growth area in enterprise software, with both in-person and online/digital salespeople relying on these kinds of products to help them get more of an edge with their work, but a lot of the focus had really been on inside sales (B2B sales focusing on bigger purchases). Porter described the effect of Covid-19 as a “tailwind” propelling that already strong trend.
“The effects of Covid have been a tailwind due to the effects of digital selling,” he said. “All sellers immediately became remote. But now the genie is out of the bottle and not going back in. It’s meant that inside sales are now all sales. Whether the opportunities are mid-funnel or upgrades or renewals, we are establishing ourselves as the engagement platform of record because it’s all becoming digital and all sellers are finding more success.”
He added that SalesLoft’s own sales cycle has improved by 40% since the pandemic, a reflection, he said, of the “urgency and need” for tools like those that the startup develops.
Another shift has been in terms of the kinds of customers SalesLoft works with. The company originally was focused on the mid-market, but that has changed with more larger enterprises also coming on board. Google, LinkedIn (which backs SalesLoft and is in a strategic partnership with it), Cisco, Dell and IBM are all customers, and Porter said that more “mainstream” businesses like Cargil, 3M and Standard & Poor are also increasingly becoming clients.
That is leading the startup to building out bigger solutions, beyond the basic pitch of “sales engagement” that has been SalesLoft’s mainstay up to now. The company competes against a plethora of others including of Clari, Chorus.ai, Gong, Conversica, Afiniti and Outreach, as well as biggies like Salesforce. Outreach, notably, had a big mid-Covid round of its own, raising at a $1.3 billion valuation in June last year, a mark of that wider market demand. Porter notes that SalesLoft’s big selling point is that it offers an increasingly end-to-end sales solution to customers, meaning less shopping around.
“Building high quality pipeline requires a tight partnership between marketing and sales,” said Alison Wagonfeld, CMO of Google Cloud, in a statement. “SalesLoft has helped us align around efficiency in our process and consistency in prospect experience, and we are excited to continue growing with them as a partner.”
Segment, the startup Twilio bought last fall for $3.2 billion, was just beginning to take off in 2015 when it ran into a scaling problem: It was growing so quickly, the tools it had built to process marketing data on its platform were starting to outgrow the original system design.
Inaction would cause the company to hit a technology wall, managers feared. Every early-stage startup craves growth and Segment was no exception, but it also needed to begin thinking about how to make its data platform more resilient or reach a point where it could no longer handle the data it was moving through the system. It was — in a real sense — an existential crisis for the young business.
The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost.
Segment’s engineering team began thinking hard about what a more robust and scalable system would look like. As it turned out, their vision would evolve in a number of ways between the end of 2015 and today, and with each iteration, they would take a leap in terms of how efficiently they allocated resources and processed data moving through its systems.
The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost. This is the story of how that system came together.
The systemic issues became apparent the way they often do — when customers began complaining. When Tido Carriero, Segment’s chief product development officer, came on board at the end of 2015, he was charged with finding a solution. The issue involved the original system design, which like many early iterations from startups was designed to get the product to market with little thought given to future growth and the technical debt payment was coming due.
“We had [designed] our initial integrations architecture in a way that just wasn’t scalable in a number of different ways. We had been experiencing massive growth, and our CEO [Peter Reinhardt] came to me maybe three times within a month and reported various scaling challenges that either customers or partners of ours had alerted him to,” said Carriero.
The good news was that it was attracting customers and partners to the platform at a rapid clip, but it could all have come crashing down if the company didn’t improve the underlying system architecture to support the robust growth. As Carriero reports, that made it a stressful time, but having come from Dropbox, he was actually in a position to understand that it’s possible to completely rearchitect the business’s technology platform and live to tell about it.
“One of the things I learned from my past life [at Dropbox] is when you have a problem that’s just so core to your business, at a certain point you start to realize that you are the only company in the world kind of experiencing this problem at this kind of scale,” he said. For Dropbox that was related to storage, and for Segment it was processing large amounts of data concurrently.
In the build-versus-buy equation, Carriero knew that he had to build his way out of the problem. There was nothing out there that could solve Segment’s unique scaling issues. “Obviously that led us to believe that we really need to think about this a little bit differently, and that was when our Centrifuge V2 architecture was born,” he said.
The company began measuring system performance, at the time processing 8,442 events per second. When it began building V2 of its architecture, that number had grown to an average of 18,907 events per second.
Chronosphere, the scalable cloud native monitoring tool launched in 2019 by two former Uber engineers, announced a $43.4 million Series B today. The company also announced that their service was generally available starting today.
Greylock, Lux Capital and venture capitalist Lee Fixel, all of whom participated in the startup’s $11 million Series A in 2019, led the round with participation from new investor General Atlantic. The company has raised $54.4 million.
The two founders, CEO Martin Mao and CTO Rob Skillington, created the open source M3 monitoring project while they were working at Uber, and left in 2019 to launch Chronosphere, a startup based on that project. As Mao told me at the time of the A round, the company wanted to simplify the management of running the open source project:
“M3 itself is a fairly complex piece of technology to run. It is solving a fairly complex problem at large scale, and running it actually requires a decent amount of investment to run at large scale, so the first thing we’re doing is taking care of that management,” Mao said.
He said that the company spent most of last year iterating the product and working with beta customers, adding that they certainly benefited from building the commercial service on top of the open source project.
“I think we’re lucky that we have the foundation already from the open source project, but we really wanted to focus a lot on building a product on top of that technology and really have this product be differentiated, so that was most of the focus of 2020 for us,” he said.
Mao points out that he and Skillington weren’t looking for this new round of funding as they still had money left from the A round, but the company’s previous investors approached them and they decided to strike to add additional money to the balance sheet, which would help grow the company, attract employees and help reassure customers they had plenty of capital to continue building the product and the company.
As the company has developed over the last year, it has been adding employees at a rapid clip, growing from 13 at the time of the A round in 2019 to 50 today with plans to double that by the end of next year. Mao says the founders have been thinking about how to build a diverse company from its early days.
“So […] beginning last year we were making sure we were hiring the right leaders, and the right recruiting team who also care about diversity, then following that we made company-wide goals and targets for both gender and ethnic diversity, and then [we have been] holding ourselves accountable on these particular goals and tracking against them,” Mao said.
The company has been spread out from the beginning, even before COVID, with offices in Seattle, New York and Lithuania, and that has helped in terms of having a broader base to recruit from. Mao wants to remain mostly remote whenever it’s possible to return to the office, but maintain hubs on each coast where employees can meet and see each other in person.
With the product generally available today, the company will look to expand its customer base, and with the open source project to drive interest, they have a proven way to attract new customers to the commercial product.