There’s an old startup adage that goes: Cash is king. I’m not sure that is true anymore.
In today’s cash rich environment, options are more valuable than cash. Founders have many guides on how to raise money, but not enough has been written about how to protect your startup’s option pool. As a founder, recruiting talent is the most important factor for success. In turn, managing your option pool may be the most effective action you can take to ensure you can recruit and retain talent.
That said, managing your option pool is no easy task. However, with some foresight and planning, it’s possible to take advantage of certain tools at your disposal and avoid common pitfalls.
In this piece, I’ll cover:
Let’s run through a quick case study that sets the stage before we dive deeper. In this example, there are three equal co-founders who decide to quit their jobs to become startup founders.
Since they know they need to hire talent, the trio gets going with a 10% option pool at inception. They then cobble together enough money across angel, pre-seed and seed rounds (with 25% cumulative dilution across those rounds) to achieve product-market fit (PMF). With PMF in the bag, they raise a Series A, which results in a further 25% dilution.
The easiest way to ensure you don’t run out of options too quickly is simply to start with a bigger pool.
After hiring a few C-suite executives, they are now running low on options. So at the Series B, the company does a 5% option pool top-up pre-money — in addition to giving up 20% in equity related to the new cash injection. When the Series C and D rounds come by with dilutions of 15% and 10%, the company has hit its stride and has an imminent IPO in the works. Success!
For simplicity, I will assume a few things that don’t normally happen but will make illustrating the math here a bit easier:
Obviously, every situation is unique and your mileage may vary. But this is a close enough proxy to what happens to a lot of startups in practice. Here is what the available option pool will look like over time across rounds:
Image Credits: Allen Miller
Note how quickly the pool thins out — especially early on. In the beginning, 10% sounds like a lot, but it’s hard to make the first few hires when you have nothing to show the world and no cash to pay salaries. In addition, early rounds don’t just dilute your equity as a founder, they dilute everyone’s — including your option pool (both allocated and unallocated). By the time the company raises its Series B, the available pool is already less than 1.5%.
TheCut, a technology platform designed to handle back-end operations for barbers, raised $4.5 million in new funding.
Nextgen Venture Partners led the round and was joined by Elevate Ventures, Singh Capital and Leadout Capital. The latest funding gives theCut $5.35 million in total funding since the company was founded in 2016, founder Obi Omile Jr. told TechCrunch.
Omile and Kush Patel created the mobile app that provides information and reviews on barbers for potential customers while also managing appointments, mobile payments and pricing on the back end for barbers.
“Kush and I both had terrible experiences with haircuts, and decided to build an app to help find good barbers,” Omile said. “We found there were great barbers, but no way to discover them. You can do a Google search, but it doesn’t list the individual barber. With theCut, you can discover an individual barber and discover if they are a great fit for you and won’t screw up your hair.”
The app also enables barbers, perhaps for the first time, to have a list of clients and keep notes and photos of hair styles, as well as track visits and spending. By providing payments, barbers can also leverage digital trends to provide additional services and extras to bring in more revenue. On the customer side, there is a search function with barber profile, photos of their work, ratings and reviews, a list of service offerings and pricing.
Omile said there are 400,000 to 600,000 barbers in the U.S., and it is one of the fastest-growth markets. As a result, the new funding will be used to hire additional talent, marketing and to grow the business across the country.
“We’ve gotten to a place where we are hitting our stride and seeing business catapulting, so we are in hiring mode,” he added.
Indeed, the company generated more than $500 million in revenue for barbers since its launch and is adding over 100,000 users each month. In addition, the app averages 1.5 million appointment bookings each month.
Next up, Omile wants to build out some new features like a digital store and the ability to process more physical payments by rolling out a card reader for in-person payments. TheCut will also focus on enabling barbers to have more personal relationships with their customers.
“We are building software to empower people to be the best version of themselves, in this case barbers,” he added. “The relationship with customers is an opportunity for the barber to make specific recommendations on products and create a grooming experience.”
As part of the investment, Leadout founder and managing partner Ali Rosenthal joined the company’s board of directors. She said Omile and Patel are the kind of founders that venture capitalists look for — experts in their markets and data-driven technologists.
“They had done so much with so little by the time we met them,” Rosenthal added. “They are creating a passionate community and set of modern, tech-driven features that are tailored to the needs of their customers.”
Getting inside the mind of customers is a challenge as behaviors and demands shift, but Clootrack believes it has cracked the code in helping brands figure out how to do that.
It announced $4 million in Series A funding, led by Inventus Capital India, and included existing investors Unicorn India Ventures, IAN Fund and Salamander Excubator Angel Fund, as well as individual investment from Jiffy.ai CEO Babu Sivadasan. In total, the company raised $4.6 million, co-founder Shameel Abdulla told TechCrunch.
Clootrack is a real-time customer experience analytics platform that helps brands understand why customers stay or churn. Shameel Abdulla and Subbakrishna Rao, who both come from IT backgrounds, founded the company in 2017 after meeting years prior at Jiffstore, Abdulla’s second company that was acquired in 2015.
Clootrack team. Image Credits: Clootrack
Business-to-consumer and consumer brands often use customer satisfaction metrics like Net Promoter Score to understand the customer experience, but Abdulla said current methods don’t provide the “why” of those experiences and are slow, expensive and error-prone.
“The number of channels has increased, which means customers are talking to you, expressing their feedback and what they think in multiple places,” he added. “Word of mouth has gone digital, and you basically have to master the art of selling online.”
Clootrack turns the customer experience data from all of those first-party and third-party touchpoints — website feedback, chat bots, etc. — into granular, qualitative insights that give brands a look at drivers of the experience in hours rather than months so that they can stay on top of fast-moving trends.
Abdulla points to data that show a customer’s biggest driver of brand switch is the experience they receive. And, that if brands can reduce churns by 5%, they could be looking at an increase in profits of between 25% and 95%.
Most of the new funding will go to product development so that all data aggregations are gathered from all possible touchpoints. His ultimate goal is to be “the single platform for B2C firms.”
The company is currently working with over 150 customers in the areas of retail, direct-to-consumer, banking, automotive, travel and mobile app-based services. It is growing nine times year over year in revenue. It is mainly operating in India, but Clootrack is also onboarding companies in the U.S. and Europe.
Parag Dhol, managing director of Inventus, said he has known Abdulla for over five years. He had looked at one of Abdulla’s companies for investment, but had decided against it due to his firm being a Series A investor.
Dhol said market research needs an overhaul in India, where this type of technology is lagging behind the U.S.
“Clootrack has a very complementary team with Shameel being a complete CEO in terms of being a sales guy and serial entrepreneur who has learned his lessons, and Subbu, who is good at technology,” he added. “As CMOs realize the value in their unstructured data inside of their own database of the customer reviews and move to real-time feedback, these guys could make a serious dent in the space.”
Feeding babies can take many different forms, and is also an area where parents can feel less supported as they navigate this new milestone in their lives.
Enter SimpliFed, an Ithaca, New York-based company providing virtual lactation and a baby feeding support platform. The startup announced Friday that it raised $500,000 in pre-seed funding led by Third Culture Capital.
Andrea Ippolito, founder and CEO of SimpliFed. Image Credits: SimpliFed
CEO Andrea Ippolito, a biomedical engineer and mother of two young children, had the idea for SimpliFed three years ago. She struggled with breastfeeding after having her first child and, realizing that she was not alone in this area, set out to figure out a way to get anyone access to information and support for infant feeding.
“Post discharge is when the rubber meets the goal for us,” she told TechCrunch. “This is a huge pain point for Medicaid, and it is not just about increasing access, but providing ongoing support for feeding and the quagmire that is health insurance. We want to help moms reach their infant feeding goals, no matter how they choose to feed, and to figure out what feeding looks like for them.”
The American Academy of Pediatrics recommends that mothers nurse for up to six months. However, the Centers for Disease Control and Prevention estimates that 60% of mothers don’t breastfeed for as long as they intend due to reasons like difficulty lactating or the baby latching, sickness or an unsupportive work environment.
SimpliFed’s platform is a judgement-free zone providing evidence-based information on nutritional health for babies. It isn’t meant to replace typical care that mother and baby will receive before and after delivery, but to provide support when issues arise, Ippolito said. Parents can book a free, initial 15-minute virtual consultation with a lactation expert and then subsequent 60-minute sessions for $100 each. There is also a future membership option for those seeking continuing care.
The new funds will be used to hire additional employees to further develop the telelactation platform and grow the company’s footprint, Ippolito said. The platform is gearing up to go through a clinical study to co-design the program with 1,000 mothers. She also wants to build out relationships with payers and providers toward a longer-term goal of becoming in-network and paid through reimbursement from health plans.
Julien Pham, managing partner at Third Culture Capital, said he met Ippolito at MIT Hacking Medicine a decade ago. A physician by training, he saw first-hand how big of an opportunity it is to demystify providing the best nutrition for babies.
“The U.S. culture has evolved over the years, and millennials are the next-generation moms who have a different ask, and SimpliFed is here at the right time,” Pham said. “Andrea is just a dynamo. We love her energy and how she is at the front line of this as a mother herself — she is most qualified to do this, and we support her.
Sunday, an insurtech startup based in Bangkok, announced it has raised a $45 million Series B. Investors include Tencent, SCB 10X, Vertex Growth, Vertex Ventures Southeast Asia & India, Quona Capital, Aflac Ventures and Z Venture Capital. The company says the round was oversubscribed, and that it doubled its revenue growth in 2020.
Founded in 2017, Sunday describes itself as a “full-stack” insurtech, which means it handles everything from underwriting to distribution of its policies. Its products currently include motor and travel insurance policies that can be purchased online, and Sunday Health for Business, a healthcare coverage program for employers. Sunday also offers subscription-based smartphone plans through partners.
The company uses AI and machine learning-based technology underwrite its motor insurance and employee health benefits products, and says its data models also allow it to automate pricing and scale its underwriting process for complex risks. Sunday says it currently serves 1.6 million customers.
The new funding will be used to expand in Indonesia and develop new distribution channels, including insurance agents and SMEs.
Insurance penetration is still relatively low in many Southeast Asian markets, including Indonesia, but the industry is gaining traction thanks to increasing consumer awareness. The COVID-19 pandemic also drove interest in financial planning, including investment and insurance, especially health coverage.
In a statement, Sunday co-founder and chief executive officer Cindy Kuo said, “Awareness for health insurance will continue to increase and we believe more consumers would be open to shop for insurance online. We plan to expand our platform architecture to offer retail insurance to our health members and partners while we continue to grow our portfolio in Thailand and Indonesia.”
Everything is switching from offline to online mode, spurred by the pandemic, and that also has turned around things for the creative economy. Creative professionals continue to look for ways to monetize their talents and knowledge through online education platforms like CLASS101 that bring stable incomes and improve opportunities.
CLASS101, a Seoul-based online education platform, announced today it has closed $25.8 million (30 billion won) Series B funding to accelerate its growth in South Korea, the U.S. and Japan.
The Series B round was led by Goodwater Capital, with additional participation from previous backers Strong Ventures, KT Investment, Mirae Asset Capital and Klim Ventures.
In 2019, the company raised a $10.3 million (12 billion won) Series A round led by SoftBank Ventures Asia along with Mirae Asset Venture Investment, KT Investment, Strong Ventures and SpringCamp.
Co-founder and CEO of CLASS101 Monde Ko told TechCrunch that the company will use the proceeds to focus on hiring more talent, as well as expanding domestic business and overseas markets in the U.S. and Japan.
Ko and four other co-founders established CLASS101 in 2018, which was pivoted from a tutoring service platform that was founded in 2015, Ko said. It has 350 employees now.
“We will keep supporting creators to monetize their talents and we will also allow creators to expand their revenue streams by selling their goods, digital files and more products via our platform,” Ko said.
When asked about what differentiated it from other peers, CLASS101 provides and ships all the necessary tools and material “Class Kit”, Ko said.
The company offers more than 2,000 classes within a raft of categories, with drawing, crafts, photography, cooking, music and more. It also provides about 230 classes in the U.S. and 220 classes in Japan. There are approximately 100,000 registered creators and 3 million registered users as of August 2021.
CLASS101 launched its platform in the U.S. in 2019 and entered Japan last year. The company opened online classes for kids aged under 14 in 2020.
“CLASS101 is a company that combines the advantages of Patreon and YouTube, offering tailored support for creators while fulfilling users’ learning needs,” co-founder and managing partner at Goodwater Capital Eric Kim said, adding that it is the fastest growing company “in an economic phenomenon in which individuals follow their passions and do what they really enjoy while also making a living from it.”
Shepherd, an insurtech startup focused on the construction market, has closed a $6.15 million seed round led by Spark Capital. The funding event comes after the startup raised a pre-seed round in February led by Susa Ventures, which also participated in Shepherd’s latest fundraising event.
Thinking broadly, Shepherd fits into a theme of neoinsurance providers selling more to other companies than to consumers. Insurtech startups serving consumers enjoyed years of venture capital backing only to find their public debuts met with early optimism followed quickly by eroding share prices.
But companies like Shepherd — and Blueprint Title earlier this week — are wagering on there being margin elsewhere in the insurance world to attack. For Shepherd, the construction market is its target, an industry that it intends to carve into starting with excess liability coverage.
The company’s co-founder and CEO, Justin Levine, told TechCrunch that contractors in the construction space have a number of insurance requirements, including general liability, commercial auto and so forth. But construction projects often also require more liability coverage, which is sold as excess or umbrella policies.
Targeting the middle-market of the construction space — companies doing $25 million to $250 million in projects per year, in its view — Shepherd wants to lean on technology as a way to help underwrite customers.
Levine said that his company’s offering will have two core parts. The first is what you expected, namely a complete digital experience for customers. The CEO likened its digital offering to table stakes for the insurtech world. We agree. But the company gets more interesting when we consider its second half, namely its work to partner with construction tech providers to help it make underwriting decisions.
The startup has partnered with Procore, for example, a company that invested in its business.
The concept of leaning on third-party software companies to help make underwriting decisions makes some sense — companies that are more technology-forward in terms of adopting new techniques and methods won’t have the same underwriting profile as companies that don’t. Generally, more data makes for better underwriting decisions; linking to the software that helps construction companies function makes good sense from that perspective.
The CEO of Procore agrees, telling TechCrunch that an early customer of his business said that its product is “a risk management solution disguised as construction management software.” The more risk that is managed, the lower Shepherd’s loss ratios may prove over time, allowing it to better compete on price.
On the subject of price, Levine thinks that the construction insurance market is suffering at the moment. Rising settlement costs have led to some legacy insurance books in the space with larger-than-anticipated losses, pushing some providers to raise prices. Levine’s view is that that Shepherd’s ability to enter its market without a legacy book of business will help it offer competitive rates.
Excess liability coverage is the “wedge” that Shepherd intends to use to get into the construction insurance market, it said, with intention of launching other products in time. The startup is attacking excess liability coverage first, its CEO said, because it’s the place of maximum pain in the larger construction insurance market.
Frankly, TechCrunch finds the B2B neoinsurance startup market fascinating. Selling policies to consumers has a particular set of cost of goods sold (COGS) — varying based on the type of coverage, of course — and often stark go-to-market costs. Furthermore, customer acquisition costs (CACs) can prove irksome when going up against national brands with huge budgets. Perhaps the business insurance market will prove more lucrative for upstart tech companies. Venture investors are certainly willing to place that particular wager.
Natalie Sandman led the deal for Spark, telling TechCrunch that when she first encountered Shepherd it was working on a different project, but that when it shifted its focus, it struck a chord with her firm. The investor said that the idea of bringing new data to the construction insurance underwriting process may help the company make smarter decisions. In the insurance world, better underwriting choices mean more profitable coverage. Which means greater future cash flows. And we all know that that means for value creation.
Botify has raised a $55 million Series C funding round led by InfraVia Growth with Bpifrance’s Large Venture fund also participating. The company has created a search engine optimization (SEO) platform so that your content is better indexed and appears more often in search results.
Existing investors Eurazeo and Ventech are also investing in the startup once again. Nicolas Herschtel from InfraVia and Antoine Izsak from Bpifrance will join the board of directors. Valuation has tripled since the company’s previous funding round.
While there are a ton of good and bad practices in the SEO industry, Botify defines itself as “white-hat company”. They respect the terms of services of search engines, they don’t scrape search results for insights, they don’t create shady backlinks on other websites.
“We’re going to optimize every step of the search funnel from first the quality of the website, how it is designed, how is the content going to be enriched with, etc.” co-founder and CEO Adrien Menard told me.
There are now three different components in the Botify product suite. The startup first released an analytics tool that gives you insights about your website. Basically, it lets you see how a crawler analyzes your site.
The company then released Botify Intelligence, which hands you a prioritized todo list of things you can do to improve your SEO strategy. And now, the company is also working on automation with Botify Activation. When Google’s search engine bot queries your site, Botify can take over and answer requests directly.
“We’re not trying to trick Google’s algorithm. We’re defining Botify as the interface between search engines and our clients’ websites. Search engines are going to access higher quality content. And it’s probably cheaper than with a normal process,” Menard said.
Companies aren’t necessarily using all three tools. They may start with analytics and take it from there. “You can use different products depending on the size of the company,” Menard said.
Over the past few years, Google has increased the number of ad slots on search results. It also promotes its own services, such as YouTube and Google Maps, before you can see the organic search results. I asked Adrien Menard whether that could be a concern for the future of Botify.
“I agree with you that we’re seeing more and more sections of the search results coming from first-party or paid results,” he said. “But the traffic generated by organic results is growing. It represents 30% of the traffic of the websites of our customers and this average is not decreasing.”
According to him, search keeps getting bigger and bigger. When you invest in search, you can see a clear return on investment when it comes to online sales, traffic, etc.
Right now, Botify has 500 customers, such as Expedia, L’Oréal, The New York Times, Groupon, Marriott, Condé Nast, Crate & Barrel, Fnac Darty, Vestiaire Collective and Farfetch.
With today’s funding round, the company wants to improve its automation capabilities, sign partnerships with more tech companies and increase its footprint with new offices in the Asia-Pacific region.
Last summer, Jeeves was participating in Y Combinator’s summer batch as a fledgling fintech.
This June, the startup emerged from stealth with $31 million in equity and $100 million in debt financing.
Today, the company, which is building an “all-in-one expense management platform” for global startups, is announcing that it has raised a $57 million Series B at a $500 million valuation. That’s up from a valuation of just north of $100 million at the time of Jeeves’ Series A, which closed in May and was announced in early June.
While the pace of funding these days is unlike most of us have ever seen before, it’s pretty remarkable that Jeeves essentially signed the term sheet for its Series B just two months after closing on its Series A. It’s also notable that just one year ago, it was wrapping up a YC cohort.
Jeeves was not necessarily looking to raise so soon, but fueled by its growth in revenue and spend after its Series A, which was led by Andreessen Horowitz (a16z), the company was approached by dozens of potential investors and offered multiple term sheets, according to CEO and co-founder Dileep Thazhmon. Jeeves moved forward with CRV, which had been interested since the A and built a relationship with Thazhmon, so it could further accelerate growth and launch in more countries, he said.
CRV led the Series B round, which also included participation from Tencent, Silicon Valley Bank, Alkeon Capital Management, Soros Fund Management and a high-profile group of angel investors including NBA stars Kevin Durant and Andre Iguodala, Odell Beckham Jr. and The Chainsmokers. Notably, the founders of a dozen unicorn companies also put money in the Series B including (but not limited to) Clip CEO Adolfo Babatz; QuintoAndar CEO Gabriel Braga; Uala CEO Pierpaolo Barbieri, BlockFi CEO Zac Prince; Mercury CEO Immad Akhund; Bitso founder Pablo Gonzalez; Monzo Bank’s Tom Blomfield; Intercom founder Des Traynor; Lithic CEO Bo Jiang as well as founders from UiPath, Auth0, GoCardless, Nubank, Rappi, Kavak and others.
The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering was live in Mexico and Canada and today launched in Colombia, the United Kingdom and Europe as a whole.
Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.
Jeeves claims that by using its platform’s proprietary Banking-as-a-Service infrastructure, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card (with 4% cash back), non card payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.
For example, a growing business can use a Jeeves card in Barcelona and pay it back in euros and use the same card in Mexico and pay it back in pesos, reducing any FX fees and providing instant spend reconciliation across currencies.
Thazhmon believes that the “biggest thing” the company is building out is its own global BaaS layer, that sits across different banking entities in each country, and onto which the end user customer-facing Jeeves app plugs into.
Put simply, he said, “think of it as a BaaS platform, but with only one app — the Jeeves app — plugged into it.”
Image Credits: Jeeves
The startup has grown its transaction volume (GTV) by more than 5,000% since January, and both revenue and spend volume has increased more than 1,100% (11x) since its Series A earlier this year, according to Thazhmon.
Jeeves now covers more than 12 currencies and 10 countries across three continents. Mexico is its largest market. Jeeves is currently beta testing in Brazil and Chile and Thazhmon expects that by year’s end, it will be live in all of North America and Europe. Next year, it’s eyeing the Asian market, and Tencent should be able to help with that strategically, he said.
“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon told TechCrunch. “Our model is very similar to that of Uber’s launch model where we can launch very quickly because we don’t have to rebuild an entire infrastructure. When we launch in countries, we actually don’t have to rebuild a stack.”
Jeeves’ user base has been doubling every 60 days and now powers more than 1,000 companies across LatAm, Canada and Europe, including Bitso, Kavak, RappiPay, Belvo, Runa, Moons, Convictional, Muncher, Juniper, Trienta, Platzi, Worky and others, according to Thazhmon. The company says it has a current waitlist of over 15,000.
Jeeves plans to use its new capital toward its launch in Colombia, the U.K. and Europe. And, of course, toward more hiring. It’s already doubled its number of employees to 55 over the past month.
Former a16z partner Matt Hafemeister was so impressed with what Jeeves is building that in August he left the venture capital firm to join the startup as its head of growth. In working with the founders as an investor, he concluded that they ranked “among the best founders in fintech” he’d ever interacted with.
The decision to leave a16z also related to Jeeves’ inflection point, Hafemeister said. The startup is nearly doubling every month, and had already eclipsed year-end goals on revenue by mid-year.
“It is evident Jeeves has found early product market fit and, given the speed of execution, I see Jeeves establishing itself as one of the most important fintech companies in the next few years,” Hafemeister told TechCrunch. “The company is transitioning from a seed company to a Series B company very quickly, and being able to help operationalize processes and play a role in their growth and maturity is an incredible opportunity for me.”
CRV General Partner Saar Gur (who is also an early investor in DoorDash, Patreon and Mercury) said he was blown away by Jeeves’ growth and how it has been “consistently hitting and exceeding targets month over month.” Plus, early feedback from customers has been overwhelmingly positive, Gur said.
“Jeeves is building products and infrastructure that are very difficult to execute but by doing the ‘hard things’ they offer incredible value to their customers,” he told TechCrunch. “We haven’t seen anyone build from the ground up with global operations in mind on day one.”
Panorama Education, which has built out a K-12 education software platform, has raised $60 million in a Series C round of funding led by General Atlantic.
Existing backers Owl Ventures, Emerson Collective, Uncork Capital, the Chan Zuckerberg Initiative and Tao Capital Partners also participated in the financing, which brings the Boston-based company’s total raised since its 2012 inception to $105 million.
Panorama declined to reveal at what valuation the Series C was raised, nor did it provide any specific financial growth metrics. CEO and co-founder Aaron Feuer did say the company now serves 13 million students in 23,000 schools across the United States, which means that 25% of American students are enrolled in a district served by Panorama today.
Over 50 of the largest 100 school districts and state agencies in the country use its platform. In total, more than 1,500 school districts are among its customers. Clients include the New York City Department of Education, Clark County School District in Nevada, Dallas ISD in Texas and the Hawaii Department of Education, among others.
Since March 2020, Panorama has added 700 school districts to its customer base, nearly doubling the 800 it served just 18 months prior, according to Feuer.
Just what does Panorama do exactly? In a nutshell, the SaaS business surveys students, parents and teachers to collect actionable data. Former Yale graduate students Feuer and Xan Tanner started the company in an effort to figure out the best way for schools to collect and understand feedback from their students.
With the COVID-19 pandemic leading to many students attending school virtually, the need to address students’ social and emotional needs has probably never been more paramount. Many children and teenagers have suffered depression and anxiety due to being isolated from their peers, and some believe the impact on their mental health has been even greater than any negative academic repercussions.
Students, for example, are asked questions to determine how safe they feel at school, how much they trust their teachers and how much potential they think they have.
“We help schools survey students, teachers and parents to understand the environment and experiences of the school,” Feuer told TechCrunch. “And then we help schools measure social and emotional development so that in the same way you might have rigorous data on math, you can now get information about social emotional learning and well-being.”
In the past year, for example, 25 million people across the country have taken a Panorama survey, which has resulted in quite a bit of information. The company is able to integrate with all of a district’s existing data systems so that it can pull together a “panorama” of its data, plus the information about a student.
“It’s really powerful because a teacher can then log in and see everything about a student in one place,” Feuer said. “But most importantly, we give teachers the tools to plan actions for a student.”
The company claims that by using its software, districts can see benefits such as improved graduation rates, fewer behavior referrals, more time engaged in learning and students building “stronger supportive relationships with adults and peers.”
Panorama plans to use its new capital toward continued product development, further deepening its district partnerships and naturally, toward hiring. Panorama currently has about 250 employees.
Notably, Panorama had not raised capital in a couple of years simply because, according to Feuer, it did not need the money.
“We met General Atlantic and realized the opportunity to reach the next level of impact for our schools,” he told TechCrunch. “But it was important to me that we didn’t need to raise the money. We chose to because we want to be able to invest in the business.”
Tanzeen Syed, managing director at General Atlantic, said edtech has been an important area of focus for this firm.
“When we looked at the U.S. education system, we thought that there was a massive opportunity and that we’re in the very early innings of using software and technology to really enhance the student experience,” he said.
When it came to Panorama, he believes “it’s not just a business” for the company.
“They truly and deeply care about providing students and administrators with the tools to make the student experience better,” Syed told TechCrunch. “And they’re maniacally focused on developing the sort of product to allow them to do that. In addition to that, we spoke with a lot of schools and districts and the feedback came back consistently positive.”
First, some housekeeping: Thanks to our new corporate parents, TechCrunch has the day off tomorrow, so consider this the last chapter of The Exchange for this week. (The newsletter will go out Saturday as always.) Also, Alex is off next week. Anna is taking on next week’s newsletter and may have a column or two on deck as well.
But before we slow down for a few days, let’s chat about the most recent Y Combinator Demo Day in thematic detail.
If you caught the last few Equity episodes, some of this will be familiar, but we wanted to put a flag in the ground for later reference as we cover startups for the rest of the year.
The Exchange explores startups, markets and money.
What follows is a roundup of trends among Y Combinator startups and how they squared with our expectations.
In a group of nearly 400 startups, you might think it’d be hard to find a category that felt overrepresented, but we’ve managed.
To start, we were surprised by the sheer number of startups in the cohort that were pursuing software models that incorporated no-code and low-code techniques. We expected some, surely, but not the nearly 20 that we compiled this morning.
Startups in the YC batch are building no-code and low-code tools to help developers build faster internal workflows (Tantl), build branded real estate portals (Noloco), sync data between other no-code tools (Whalesync), automate HR (Zazos), and more. Also in the mix were BrightReps, Beau, Alchemy, Hyperseed, Enso, HitPay, Whaly, Muse, Abstra, Lago, Inai and Breadcrumbs.io.
At least 18 companies in the group name-dropped no- and low-code in their pitches. They are taking on a host of industries, from finance and real estate to sales and HR. In short, no- and low-code tools are cropping up in what feels like every sector. It appears that the startup world has decided that helping non-developers build their own tools, workflows and apps is a trend here to stay.
Explosion, a company that has combined an open source machine learning library with a set of commercial developer tools, announced a $6 million Series A today on a $120 million valuation. The round was led by SignalFire, and the company reported that today’s investment represents 5% of its value.
Oana Olteanu from SignalFire will be joining the board under the terms of the deal, which includes warrants of $12 million in additional investment at the same price.
“Fundamentally, Explosion is a software company and we build developer tools for AI and machine learning and natural language processing. So our goal is to make developers more productive and more focused on their natural language processing, so basically understanding large volumes of text, and training machine learning models to help with that and automate some processes,” company co-founder and CEO Ines Montani told me.
The company started in 2016 when Montani met her co-founder, Matthew Honnibal in Berlin where he was working on the spaCy open source machine learning library. Since then, that open source project has been downloaded over 40 million times.
In 2017, they added Prodigy, a commercial product for generating data for the machine learning model. “Machine learning is code plus data, so to really get the most out of the technologies you almost always want to train your models and build custom systems because what’s really most valuable are problems that are super specific to you and your business and what you’re trying to find out, and so we saw that the area of creating training data, training these machine learning models, was something that people didn’t pay very much attention to at all,” she said.
The next step is a product called Prodigy Teams, which is a big reason the company is taking on this investment. “Prodigy Teams is [a hosted service that] adds user management and collaboration features to Prodigy, and you can run it in the cloud without compromising on what people love most about Prodigy, which is the data privacy, so no data ever needs to get seen by our servers,” she said. They do this by letting the data sit on the customer’s private cluster in a private cloud, and then use Prodigy Team’s management features in the public cloud service.
Today, they have 500 customers using Prodigy including Microsoft and Bayer in addition to the huge community of millions of open source users. They’ve built all this with just 17 people, even as they continue to slowly add employees, expecting to reach 20 by the end of the year.
She believes if you’re thinking too much about diversity in your hiring process, you probably have a problem already. “If you go into hiring and you’re thinking like, oh, how can I make sure that the way I’m hiring is diverse, I think that already shows that there’s maybe a problem,” she said.
“If you have a company, and it’s 50 dudes in their 20s, it’s not surprising that you might have problems attracting people who are not white dudes in their 20s. But in our case, our strategy is to hire good people and good people are often very diverse people, and again if you play by the [startup] playbook, you could be limited in a lot of other ways.”
She said that they have never seen themselves as a traditional startup following some conventional playbook. “We didn’t raise any investment money [until now]. We grew the team organically, and we focused on being profitable and independent [before we got outside investment],” she said.
But more than the money, Montani says that they needed to find an investor that would understand and support the open source side of the business, even while they got capital to expand all parts of the company. “Open source is a community of users, customers and employees. They are real people, and [they are not] pawns in [some] startup game, and it’s not a game. It’s real, and these are real people,” she said.
“They deserve more than just my eyeballs and grand promises. […] And so it’s very important that even if we’re selling a small stake in our company for some capital [to build our next] product [that open source remains at] the core of our company and that’s something we don’t want to compromise on,” Montani said.
Challenger bank Point has raised a $46.5 million Series B funding round. The company offers an account associated with a debit card. And the startup positions itself as a premium debit card company and tries to offer credit card rewards with debit cards.
Existing investor Peter Thiel's Valar Ventures is investing more money in the company and leading the Series B round. Other investors include Breyer Capital, YC Continuity and Human Capital. The company raised a $10.5 million Series A round 18 months ago and a seed round before that, which means that Point has raised $60 million in total.
Point wants to build the anti-credit card. The company tries to keep what’s best about credit cards but leave behind what’s not so good. Many people think credit cards are a slippery slope. If you spend too much money without realizing that you’re not going to be able to make ends meet, you’ll pay interests. Those interests can even make it harder to pay back your credit card debt.
That’s why credit card incentives are both attractive and scary. If you have enough savings or if you earn a lot of money, paying your credit card bill is not going to be an issue. But that’s not always the case.
Point tells you that you should ditch your credit card altogether. When you open a Point account, you can top it up with another debit card or set up direct deposits with your employer. Opening a Point account currently costs $49 per year. You get two free ATM withdrawals per month and you don’t pay any foreign transaction fees.
After that, you can safely spend money with your Point card. You know that you have enough money to pay for your purchases as it’s a debit card. Every time you want to buy something expensive, you have to top up your account first.
Point users earn points with every purchase. You get 5x points on subscriptions, such as Spotify and Netflix, 3x points on food deliveries and ride sharing, and 1x points on everything else. If you pay with your Point card, you also get trip cancellation insurance, car rental insurance, global travel assistance, phone insurance and new purchase insurance.
You can control the Point card from the Point app — you can lock it and unlock it whenever you want and you can choose to receive notifications whenever you want. The Point debit card also works with Apple Pay and Google Pay.
With today’s funding round, the company plans to hire more people, launch new features and introduce new products. In other words, don’t expect any major changes. But the company now has more money to expand more rapidly.
Image Credits: Point
HomeLight, which operates a real estate technology platform, announced today that it has secured $100 million in a Series D round of funding and $263 million in debt financing.
Return backer Zeev Ventures led the equity round, which also included participation from Group 11, Stereo Capital, Menlo Ventures and Lydia Jett of the SoftBank Vision Fund. The financings bring the San Francisco-based company’s total raised since its 2012 inception to $530 million. The equity financing brings HomeLight’s valuation to $1.6 billion, which is about triple of what it was when it raised its $109 million in debt and equity in a Series C that was announced in November of 2019.
Zeev Ventures led that funding round, as well as its Series A in 2015.
The latest capital comes ahead of projected “3x” year-over-year growth, according to HomeLight founder and CEO Drew Uher, who projects that the company’s annual revenue will triple to over $300 million in 2021. Doing basic math, we can deduce that the company saw around $100 million in revenue in 2020.
Over the years, like many other real estate tech platforms, HomeLight has evolved its model. HomeLight’s initial product focused on using artificial intelligence to match consumers and real estate investors to agents. Since then, the company has expanded to also providing title and escrow services to agents and home sellers and matching sellers with iBuyers. In July 2019, HomeLight acquired Eave as an entry into the (increasingly crowded) mortgage lending space.
“Our goal is to remove as much friction as possible from the process of buying or selling a home,” Uher said.
In January 2020, HomeLight launched its flagship financial products, HomeLight Trade-In and HomeLight Cash Offer. Since then, it has grown those products by over 700%, Uher said, in part fueled by the pandemic.
HomeLight’s Trade-In product gives its clients greater control over the timeline of their move and ability to transact, and Cash Offer gives people a way to make all cash offers on homes, “even if they need a mortgage,” he said.
“The pandemic only highlighted many of the pain points in the real estate transaction process that we’ve been focused on solving since our founding,” Uher told TechCrunch. “Between the real estate industry’s historic information asymmetry, outdated processes and unreasonable costs — not to mention today’s record-low inventory and all-time high bidding wars — buying or selling a home can be an incredibly difficult process, even without the challenges put in place by a global pandemic.”
Image Credits: HomeLight
Then in August 2020, the company acquired Disclosures.io and launched HomeLight Listing Management, with the goal of making it easier for agents to share property information, monitor buyer interest and manage offers in one place.
In June of 2021, HomeLight appointed Lyft chairman and former Trulia CFO Sean Aggarwal to its board.
Uher founded HomeLight after he and his wife felt the pain of trying to buy a home in the competitive Bay Area market.
“The process of buying a home in San Francisco was so frustrating it made me want to bang my head against the wall,” Uher told me at the time of HomeLight’s Series C. “I realized there were so many things wrong with the real estate industry. I went through a few real estate agents before finding the right match. So when I did find one, it made me feel empowered to compete and win against the other buyers.”
He started HomeLight with a single product, its agent matching platform, which uses “proprietary machine-learning algorithms” to analyze millions of real estate transactions and agent profiles. It claims to connect a client to a real estate agent on average “every 90 seconds.”
Over the years, Uher said that hundreds of thousands of agents have applied to be a part of the HomeLight agent network and that it has worked with over 1 million homebuyers and sellers in the U.S. Today, the company works closely with the top 28,000 of those agents across the country. HomeLight maintains that it is not trying to replace real estate agents, but instead work more collaboratively with them.
Uher said the company plans to use its new capital in part toward expanding to new markets its Trade-In and Cash Offer operations. HomeLight Trade-In and Cash Offer are currently available in California, Texas and, more recently, in Colorado.
“We plan to expand as quickly as we can across the entire country,” Uher said. “We also plan to hire aggressively in 2021 and beyond.”
HomeLight presently has over 500 employees, up from about 350 at the end of last year. The company has offices in Scottsdale, Arizona, San Francisco, New York, Seattle and Tampa, and plans to open new sites throughout the U.S. in the coming months.
Oren Zeev, founding partner at Zeev Ventures, said he believes that HomeLIght is better positioned than any other proptech company “to reinvent the transaction experience” for agents and their clients.
“With the onset of iBuyers and other technology introduced in the past decade, many proptech companies are building products to cut agents out of the transaction process entirely,” Zeev wrote via email. “This is where HomeLight uniquely differs — and excels — from its competitors…They’re in the perfect position to revolutionize the industry.”
YouTravel.Me is the latest startup to grab some venture capital dollars as the travel industry gets back on its feet amid the global pandemic.
Over the past month, we’ve seen companies like Thatch raise $3 million for its platform aimed at travel creators, travel tech company Hopper bring in $175 million, Wheel the World grab $2 million for its disability-friendly vacation planner, Elude raise $2.1 million to bring spontaneous travel back to a hard-hit industry and Wanderlog bag $1.5 million for its free travel itinerary platform.
Today YouTravel.Me joins them after raising $1 million to continue developing its online platform designed for matching like-minded travelers to small-group adventures organized by travel experts. Starta VC led the round and was joined by Liqvest.com, Mission Gate and a group of individual investors like Bas Godska, general partner at Acrobator Ventures.
Olga Bortnikova, her husband Ivan Bortnikov and Evan Mikheev founded the company in Europe three years ago. The idea for the company came to Bortnikova and Bortnikov when a trip to China went awry after a tour operator sold them a package where excursions turned out to be trips to souvenir shops. One delayed flight and other mishaps along the way, and the pair went looking for better travel experiences and a way to share them with others. When they couldn’t find what they were looking for, they decided to create it themselves.
“It’s hard for adults to make friends, but when you are on a two-week trip with just 15 people in a group, you form a deep connection, share the same language and experiences,” Bortnikova told TechCrunch. “That’s our secret sauce — we want to make a connection.”
Much like a dating app, the YouTravel.Me’s algorithms connect travelers to trips and getaways based on their interests, values and past experiences. Matched individuals can connect with each via chat or voice, work with a travel expert and complete their reservations. They also have a BeGuide offering for travel experts to do research and create itineraries.
Since 2018, CEO Bortnikova said that YouTravel.Me has become the top travel marketplace in Eastern Europe, amassing over 15,900 tours in 130 countries and attracting over 10,000 travelers and 4,200 travel experts to the platform. It was starting to branch out to international sales in 2020 when the global pandemic hit.
“Sales and tourism crashed down, and we didn’t know what to do,” she said. “We found that we have more than 4,000 travel experts on our site and they feel lonely because the pandemic was a test of the industry. We understood that and built a community and educational product for them on how to build and scale their business.”
After a McKinsey study showed that adventure travel was recovering faster than other sectors of the industry, the founders decided to go after that market, becoming part of 500 Startups at the end of 2020. As a result, YouTravel.Me doubled its revenue while still a bootstrapped company, but wanted to enter the North American market.
The new funding will be deployed into marketing in the U.S., hiring and attracting more travel experts, technology and product development and increasing gross merchandise value to $2.7 million per month by the end of 2021, Bortnikov said. The goal is to grow the number of trips to 20,000 and its travel experts to 6,000 by the beginning of next year.
Godska, also an angel investor, learned about YouTravel.Me from a mutual friend. It happened that it was the same time that he was vacationing in Sri Lanka where he was one of very few tourists. Godska was previously involved in online travel before as part of Orbitz in Europe and in Russia selling tour packages before setting up a venture capital fund.
“I was sitting there in the jungle with a bad internet connection, and it sparked my interest,” he said. “When I spoke with them, I felt the innovation and this bright vibe of how they are doing this. It instantly attracted me to help support them. The whole curated thing is a very interesting move. Independent travelers that want to travel in groups are not touched much by the traditional sector.”
3D printing has garnered a lot of hype, much of it for good reason: the technology has unlocked new kinds of object shapes and geometries, and it uses materials that tend to be much lighter weight than their traditionally manufactured counterparts. But there remain high barriers to entry for many companies that either don’t have training in additive manufacturing, or that need to use materials that aren’t suitable for a traditional 3D printer.
3D printing startup AON3D wants to remove both of those barriers by increasing automation and, crucially, making more materials 3D-printable, and it has raised a $11.5 million Series A to get there.
The company manufactures industrial 3D printers for thermoplastics. What distinguishes AON3D’s platform is that it’s materials-agnostic, co-founder Kevin Han explained, meaning the printers are able to accept the more than 70,000 commercially available thermoplastic composites or even a custom blend. That’s the company’s real breakthrough, according to its founders: the ability to turn existing materials already used by clients, 3D-printing ready.
“The real big innovation beyond just the hardware cost is on the material side,” co-founder Randeep Singh explained to TechCrunch in a recent interview. “We can take in a new material from a big company […] we take that material that a customer may need to use for a specific reason, run a bunch of tests and turn it into a 3d printable process.”
By doing so, AON3D says it also opens up additive manufacturing to many more companies, who may want to pursue 3D printing but are unable to fundamentally change their materials to get there. With AON3D’s process, they don’t have to, Han explained.
The company was founded by Han, Singh, and Andrew Walker, who met while studying materials engineering at Montreal’s McGill University. AON3D was largely born out of what the trio saw as a gap in the market between 3D printers that are very expensive — up to hundreds of thousands per machine — and more consumer-geared printers that aren’t much more than a couple of hundred bucks.
They started off operating 3D printers as a service, before launching a Kickstarter campaign in 2015 that ultimately garnered CAN $89,643 ($71,064) to bring the company’s debut 3D printer, the AON, to backers. Six years later, they’ve raised a total of $14.2 million in funding. This latest round was led by SineWave Ventures with participation from AlleyCorp and Y Combinator Continuity. BDC, EDC, Panache Ventures, MANA Ventures, Josh Richards & Griffin Johnson, and SV angels also participated.
Beyond selling printers and customized materials, AON3D also works with companies on an ongoing basis, giving training in additive manufacturing and ensure their printer parameters are adequate for the parts they want to make.
The company has found a number of clients in the aerospace industry, in part because of the advantages in weight — crucial for space companies, where the economics largely come down to payload size — as well as cost, time and the ability to use geometries that aren’t possible through injection molding or traditional manufacturing processes.
That includes Astrobotic Technology, a lunar exploration startup that is aiming to send a lander to the moon on a SpaceX Falcon 9 rocket in 2022. Onboard the mission will be hundreds of parts printed using AON3D’s AON M2+ high-temperature printer, which will likely be the first additively manufactured parts to touch the lunar surface. These include bracketry components, including critical parts in the avionics boxes.
Image Credits: Astrobotic
“This [partnership] is giving Astrobotic the ability to use materials that they want to use very quickly,” Singh said. “Otherwise, they have really long lead time to get like material to work in a different process.” Injection molding using high-performance polymers, for example, can have a lead time of many months, he added, versus in a day or two using 3D printing.
Looking to the future, the company will be using the capital from this financing round to build a dedicated full-scale materials lab and to grow its team. The company also wants to fully automate the 3D printing process, using data coming out of the materials lab, so that any business can start using additive manufacturing for their products.
Pancake brought in a $350,000 seed round to develop its home design platform that leverages furniture you already have in your home with a designer’s fresh eye on your space.
Maria Jose Castro and Roberto Meza, both from Costa Rica, started the company in 2020, based on their own experience of transitioning to work-from-home and needing to outfit a space. However, design services can be expensive, and therefore not accessible to everyone.
Pancake is reinventing the way you can work with an interior designer and get a rendering of your space to work from. Customers can go on the website and book a session with a designer, providing them with measurements and photos of the room.
The designer then prepares a rendering of the space and a deck to explain the design and how the customer will do it — and if paint or furniture is needed that isn’t already available, Pancake will show the customer where to find it. Future features of the site will include connecting with furniture providers, Jose Castro told TechCrunch.
Meza called the company “furniture-as-a-service,” with the main focus to reuse what already exists in a space to create healthy, sustainable spaces that someone can work in, live in and enjoy all at the same time. While that may seem like a tall order, he said that with everyone suddenly together during the global pandemic, relationships are better when people are in a space they like.
“Wellness in construction is what I do, and we wanted to create that with Pancake,” he added. “Sometimes it is the little things that create a space and makes you feel good, or not feel good.”
Pancake plans to use its funding to further develop its platform and add new features like an ecological footprint calculator so customers can see how sustainable their designs are. The company also prides itself on transparent pricing. An average two-hour session with a designer is $199, and the designer will add to the budget if items like paint and new furniture are needed.
Christian Rudder, co-founder of OkCupid, is the lead investor in the seed round. He said that he doesn’t typically invest at the seed stage, but was impressed with the progress Pancake has made in a short period of time. This includes marketing tests on social media platforms that yielded a respectable return on investment, he added.
Meanwhile, Pancake has facilitated over 100 designer sessions and has begun to see referrals and repeat customers who want to design additional rooms in their house. That has translated into 200% month over month revenue growth, on average, despite having to stop for four months during the pandemic, Meza said. Up next, the company will continue to build out its brand and revenue model as it advances to a Series A round next year.
Pixalate raised $18.1 million in growth capital for its fraud protection, privacy and compliance analytics platform that monitors connected television and mobile advertising.
Western Technology Investment and Javelin Venture Partners led the latest funding round, which brings Pixalate’s total funding to $22.7 million to date. This includes a $4.6 million Series A round raised back in 2014, Jalal Nasir, founder and CEO of Pixalate, told TechCrunch.
The company, with offices in Palo Alto and London, analyzes over 5 million apps across five app stores and more 2 billion IP addresses across 300 million connected television devices to detect and report fraudulent advertising activity for its customers. In fact, there are over 40 types of invalid traffic, Nasir said.
Nasir grew up going to livestock shows with his grandfather and learned how to spot defects in animals, and he has carried that kind of insight to Pixalate, which can detect the difference between real and fake users of content and if fraudulent ads are being stacked or hidden behind real advertising that zaps smartphone batteries or siphons internet usage and even ad revenue.
Digital advertising is big business. Nasir cited Association of National Advertisers research that estimated $200 billion will be spent globally in digital advertising this year. This is up from $10 billion a year prior to 2010. Meanwhile, estimated ad fraud will cost the industry $35 billion, he added.
“Advertisers are paying a premium to be in front of the right audience, based on consumption data,” Nasir said. “Unfortunately, that data may not be authorized by the user or it is being transmitted without their consent.”
While many of Pixalate’s competitors focus on first-party risks, the company is taking a third-party approach, mainly due to people spending so much time on their devices. Some of the insights the company has found include that 16% of Apple’s apps don’t have privacy policies in place, while that number is 22% in Google’s app store. More crime and more government regulations around privacy mean that advertisers are demanding more answers, he said.
The new funding will go toward adding more privacy and data features to its product, doubling the sales and customer teams and expanding its office in London, while also opening a new office in Singapore.
The company grew 1,200% in revenue since 2014 and is gathering over 2 terabytes of data per month. In addition to the five app stores Pixalate is already monitoring, Nasir intends to add some of the China-based stores like Tencent and Baidu.
Noah Doyle, managing director at Javelin Venture Partners, is also monitoring the digital advertising ecosystem and said with networks growing, every linkage point exposes a place in an app where bad actors can come in, which was inaccessible in the past, and advertisers need a way to protect that.
“Jalal and Amin (Bandeali) have insight from where the fraud could take place and created a unique way to solve this large problem,” Doyle added. “We were impressed by their insight and vision to create an analytical approach to capturing every data point in a series of transactions — more data than other players in the industry — for comprehensive visibility to help advertisers and marketers maintain quality in their advertising.”
Corelight, a San Francisco-based startup that claims to offer the industry’s first open network detection and response (NDR) platform, has raised $75 million in Series D investment led by Energy Impact Partners.
The round — which also includes a strategic investment from Capital One Ventures, Crowdstrike Falcon Fund and Gaingels — brings Corelight’s total raised to $160 million, following a $50 million Series C in October 2019, a $25 million Series B in September 2018 and a $9.2 million Series A in July 2017.
While it’s raised plenty of capital in the past few years, the startup isn’t planning its exit just yet. Brian Dye, CEO of Corelight, tells TechCrunch that given Corelight’s market opportunity and performance — the startup claims to be the fastest-growing NDR player at scale — it plans to invest in growth and expects to raise additional capital in the future.
“Public listing time frames are always hard to forecast, and we view the private markets as attractive in the short term, so we expect to remain private for the next couple years and will look at market conditions then to decide our next step,” Dye said, adding that Corelight plans to use its latest investment to fuel the acceleration of its global market presence and to develop new data and cloud-based offerings.
“Aside from go-to-market expansion, we are investing to ensure that the insight we provide both continues to lead the industry and can be readily used by customers of all types,” he added.
Corelight, which competes with the likes of FireEye and STG-owned McAfee, was founded in 2013 when Dr. Vern Paxson, a professor of computer science at the University of California, Berkeley, joined forces with Robin Sommer and Seth Hall to build a network visibility solution on top of an open source framework called Zeek (formerly Bro).
Paxson began developing Zeek in 1995 when he was working at Lawrence Berkeley National Laboratory (LBNL). The software is now widely regarded as the gold standard for both network security monitoring and network traffic analysis and has been deployed by thousands of organizations around the world, including the U.S. Department of Energy, various agencies in the U.S. government and research universities like Indiana University, Ohio State and Stanford.
As live audio becomes more and more popular, co-founders David Sacks (former COO of PayPal and CEO of Yammer) and Axel Ericsson sought to combine social audio and podcasting into one seamless app. The resulting app Callin launches today on iOS with an announcement of $12 million in Series A funding co-led by Sequoia, Goldcrest, and Craft Ventures, where Sacks is a founder and partner.
On live audio platforms like Clubhouse or Twitter Spaces, once a room ends, the audio is gone. While Callin has similar live audio functionality, it sets itself apart by allowing users to save their live recording and edit it into an episode of a podcast.
“I’d been meaning to do a podcast for years, and I just had never gotten around to it, because it’s too complicated, and the barriers are too high,” said Sacks, who started his “All In” podcast in lockdown. “We have a guy in the studio who spends six hours doing post-production on every episode of the pod, and we all had to get microphones, hardware… It’s complicated to organize.”
For aspiring podcasters creating their first shows, Callin reduces the barrier to entry while allowing users to retain ownership of the content they create on the app. To start recording, users just open a room, which can be private or public — then they can invite guests to talk with them, or record alone. In a live room, Callin also has a more streamlined queue for audience participation to make it easier for hosts to manage crowds.
To edit your podcast after recording, the app generates a transcript — it takes about the same amount of time as your recording to transcribe. Then, you can tap a block of text to cut it from the podcast, including isolated filler words, like um and uh. As of now, you can’t cut individual words or phrases within each block of text identified by the AI, but Sacks says that the app will continue building out its editing system. Callin also automates the process of cutting out “dead air” at the beginning or end of a recording. After finishing edits, the host can upload the recording as an episode of a show that they create on the app. Users can also export their audio to share it on other podcasts hosts, and in the future, Sacks said users will be able to syndicate the content via an RSS feed.
“But consuming that content via a podcast app would be different from experiencing it on Callin, because you have the interactive playback to see the room as it was when the conversation occurred,” said Sacks. “So you can see the avatar of who’s talking and you can click it and follow them or browse their profile to see what else they’re interested in, so it’s a different experience than just a flat audio file.”
Image Credits: Callin, screenshot by TechCrunch
Podcasters cannot yet publish their transcripts — which, like most automated transcripts, aren’t 100% accurate — but that functionality, which Callin is working on, could create some much-needed accessibility that’s still lacking on Clubhouse. Like Clubhouse, Callin doesn’t support live captioning yet (Twitter Spaces does). But Sacks said that once it expands to allow hosts to share transcripts, live captioning would “be on the roadmap.”
“There are apps out there that do rooms, there’s apps that let you edit transcripts, and there’s apps that do social discovery or highlights, but nobody’s really put all these pieces together into one experience,” Sacks said. “So we’re trying to be this complete vertical stack for anyone who wants to create an audio show, and so I think you’ll see us keep iterating on every aspect of that experience. We want there to be nothing you can do in a podcasting studio that you can’t do on our app.”
Still, in its current form as it launches into the App Store, Callin lacks tools to edit the quality of an audio recording, add sound effects or music, and edit content in a more precise way. Plus, a podcast recorded on an iPhone won’t sound as good as a professionally produced show, or even a hobbyist’s podcast recorded on a consumer-grade USB mic. But the success of live audio apps has shown that sometimes listeners aren’t looking for quality post-production and sound design, but rather, they just want to hear people talk about a subject that interests them. So, Callin and its investors are betting on the fact that people would want to listen to pre-recorded Clubhouse rooms if they could.
Sacks has used his app to create shows like “Sacks on SaaS,” a show for software company founders, and an interview show called “Red Pills,” which is titled with a phrase that has a very fraught history on the internet. Other user-made content on the app includes shows about the NFL, startups in Berlin, cooking, and more. In its beta, Sacks says that Callin had “thousands” of users who created over 100 shows.
Per its Community Guidelines, Callin “is a place for people to speak, so whenever speech is limited on our platform, there should be a good reason.” Callin will only limit speech restricted by the host of a room, speech restricted by “underlying technology platforms” like Apple and Google, and “dangerous speech not protected by the First Amendment.”
Content moderation has been a challenge on live audio platforms like Clubhouse, which has struggled to refine its content moderation standards after reports of racist and antisemitic speech. Callin’s Community Guidelines indicate that it will host any user-generated content that won’t get the app booted off of Apple and Google stores. Recently, Parler served as a high-profile example of how a social platform’s refusal to moderate content got it removed from app stores, though it has since been reinstated after months of back-and-forth.
With its $12 million Series A round, Callin hopes to support Android and web versions of the app. Eventually, Callin could seek profit through advertisements and show subscriptions, but Sacks says that the company plans to scale first before exploring its monetization options.
“I think this is the best product that I’ve ever worked on,” said Sacks. “I mean, I think it’s better than Yammer. I think it’s better even than PayPal.”