Most founders who are raising capital look first to traditional equity VCs. But should they? Or should they look to one of the new wave of revenue-based investors?
Revenue-based investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance.
This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.com and @dteten. This is the 5th part of our series on Revenue-based investing VC that touches on:
Nearly 200 startups have just graduated from the prestigious San Francisco startup accelerator Y Combinator . The flock of companies are now free to proceed company-building with a fresh $150,000 check and three-months full of tips and tricks from industry experts.
As usual, we sent several reporters to YC’s latest demo day to take notes on each company and pick our favorites. But there were many updates to the YC structure this time around and new trends we spotted from the ground that we’ve yet to share.
After two days of founders tirelessly pitching, we’ve reached the end of YC’s Summer 2019 Demo Days. TechCrunch witnessed more than 160 on-the-record startup pitches coming out of Y Combinator, spanning healthcare, B2B services, augmented reality and life-extending.
The full list is worth a gander, you can read about the 84 startups from Day 1 and the 82 companies from Day 2 in the linked posts. You can also check out our votes for the best of the best from day 1.
After conferring on the dozens of startups we saw yesterday, here are our favorites from the second day of Y Combinator pitches.
Twitter’s ongoing, long-term efforts to make conversations easier to follow and engage with on its platform is getting a boost with the company’s latest acquihire. The company has picked up the team behind Lightwell, a startup that had built a set of developer tools to build interactive, narrative apps, for an undisclosed sum. Lightwell’s founder and CEO, Suzanne Xie, is becoming a director of product leading Twitter’s Conversations initiative, with the rest of her small four-person team joining her on the conversations project.
(Sidenote: Sara Haider, who had been leading the charge on rethinking the design of Conversations on Twitter, most recently through the release of twttr, Twitter’s newish prototyping app, announced that she would be moving on to a new project at the company after a short break. I understand twttr will continue to be used to openly test conversation tweaks and other potential changes to how the app works. )
The Lightwell/Twitter news was announced late yesterday both by Lightwell itself and Twitter’s VP of product Keith Coleman. A Twitter spokesperson also confirmed the deal to TechCrunch in a short statement today: “We are excited to welcome Suzanne and her team to Twitter to help drive forward the important work we are doing to serve the public conversation,” he said. Interestingly, Twitter is on a product hiring push it seems. Other recent hires Coleman noted were Other recent product hires include Angela Wise and Tom Hauburger. Coincidentally, both joined from autonomous companies, respectively Waymo and Voyage.
To be clear, this is more acqui-hire than hire: only the Lightwell team (of what looks like three people) is joining Twitter. The Lightwell product will no longer be developed, but it is not going away, either. Xie noted in a separate Medium post that apps that have already been built (or plan to be built) on the platform will continue to work. It will also now be free to use.
Lightwell originally started life in 2012 as Hullabalu, as one of the many companies producing original-content interactive children’s stories for smartphones and tablets. In a sea of children-focused storybook apps, Hullabalu’s stories stood out not just because of the distinctive cast of characters that the startup had created, but for how the narratives were presented: part book, part interactive game, the stories engaged children and moved narratives along by getting the users to touch and drag elements across the screen.
After some years, Hullabalu saw an opportunity to package its technology and make it available as a platform for all developers, to be used not just by other creators of children’s content, but advertisers and more. It seems the company shifted at that time to make Lightwell its main focus.
The Hullabalu apps remained live on the App Store, even when the company moved on to focus on Lightwell. However, they hadn’t been updated in two years’ time. Xie says they will remain as is.
In its startup life, the company went through YCombinator, TechStars, and picked up some $6.5 million in funding (per Crunchbase), from investors that included Joanne Wilson, SV Angel, Vayner, Spark Labs, Great Oak, Scout Ventures and more.
If turning Hullabalu into Lightwell was a pivot, then the exit to Twitter can be considered yet another interesting shift in how talent and expertise optimized for one end can be repurposed to meet another.
One of Twitter’s biggest challenges over the years has been trying to create a way to make conversations (also narratives of a kind) easy to follow — both for those who are power users, and for those who are not and might otherwise easily be put off from using the product.
The crux of the problem has been that Twitter’s DNA is about real-time rivers of chatter that flow in one single feed, while conversations by their nature linger around a specific topic and become hard to follow when there are too many people talking. Trying to build a way to fit the two concepts together has foxed the company for a long time now.
At its best, bringing in a new team from the outside will potentially give Twitter a fresh perspective on how to approach conversations on the platform, and the fact that Lightwell has been thinking about creative ways to present narratives gives them some cred as a group that might come up completely new concepts for presenting conversations.
At a time when it seems that the conversation around Conversations had somewhat stagnated, it’s good to see a new chapter opening up.
Disrupt San Francisco 2019, our flagship event on October 2-4, features three full days of programming, more than 10,000 attendees, over 1,200 exhibiting startups and sponsors — and that’s just for starters. That’s a lot of ground to cover. Here’s a hot tip: take advantage of group discounts, saddle up and bring your whole posse to the show and squeeze out every bit of information, inspiration and opportunity possible.
Spread your crew across Disrupt and get more done. Network til you drop in Startup Alley — using CrunchMatch, our free business match-making platform, to find and schedule meetings with only the best connections for your business. Bear witness to our epic pitch competition, Startup Battlefield — a great place to spot investment-worthy companies.
Attend the many Main Stage panel discussions and interviews with tech titans, up-and-coming founders and startup investors. Check out the conference agenda here. Looking for actionable tips and advice? Head for the Extra Crunch Stage. Yeah, you’ll learn a thing or two.
We offer group discounts for every pass level, to make your posse possible. Here’s what you need to know.
Group Innovator Pass: Buy five or more passes and get a 20% discount. Need 10 or more passes? Email us for a price quote at firstname.lastname@example.org. An Innovator Pass grants access to the Main Stage, Extra Crunch Stage, Q&As, workshops, CrunchMatch, networking receptions and the TechCrunch Events App, which lets you communicate with other attendees.
Group Founder Pass: Buy two or more passes and you’ll get a 10% discount. Your Founder Pass gets you the same benefits as an Innovator Pass but at an already discounted rate — but you must be a (co)founder of a company (of any size).
Group Investor Pass: Purchase two or more passes to get a 10% discount. An Investor Pass provides the same benefits as an Innovator pass, PLUS access to the Investor Lounge, an invitation to the investor-only reception and two hours of private meeting space.
Group Expo Only Pass: If you want to buy Expo Only passes in bulk (10 or more), email email@example.com for a price quote. An Expo Only Pass provides access to the Startup Alley expo floor, workshops and a lite version of the TechCrunch Events App.
Group Startup Alley Exhibitor Packages: If you’re interested in purchasing more than one Startup Alley Exhibitor Package, email firstname.lastname@example.org for more information. This package includes exhibit space for one day, use of the Startup Alley Lounge, access to the media list and two or three Founder Passes, depending on when you book.
Disrupt San Francisco 2019 takes place on October 2-4. Bring your posse and cover more ground, find more opportunity and discover more ways to grow your business. Get your group discounts today. If you’re riding solo, no problemo. Get an early-bird ticket and, depending on the pass level you choose, you can save up to $1,300. Saddle up and ride!
Is your company interested in sponsoring or exhibiting at Disrupt San Francisco 2019? Contact our sponsorship sales team by filling out this form.
The first day of work at a new job can be very stressful. The unfamiliar surroundings and onslaught of new material can cause new hires some degree of discomfort. But sometimes the atmosphere at the new company can be welcoming and can help counteract the stress.
Different companies have their own traditions to help make this transition period more comfortable and memorable for new hires. Some of these traditions include:
Usually, only employees can experience these traditions. But there’s one new-hire tradition that has become extremely popular and often highly publicized: the “welcome kit”.
Welcome kits usually contain a hodgepodge of items that employees will need on the job (pens, notebooks, books, etc.) and things to make employees feel welcome (clothing, stickers, water bottles, or more unusual items — often with the company name or logo on them).
To get a sense of how different companies handle their kits, we talked to four successful startups about their welcome kits in the article below, followed by our look at a dozen more:
This article is based on the personal welcome kit collection of Vladimir Polo, founder of AcademyOcean. AcademyOcean is a tool for interactive onboarding and training (and Vladimir Polo is a fan of welcome kits).
BuzzFeed is offering readers a new approach to finding content that fits the way they’re feeling right now.
It’s not the boring old approach of following a link on social media or search, or of typing BuzzFeed.com into your browser. Instead, on MoodFeed, readers can identify their mood, then they’ll get a list of articles that match those feelings.
There are currently six options — curious, stressed, bored, nostalgic, joyful or hungry. If you select “curious,” you’ll see a list of BuzzFeed posts about strange facts, life hacks and the like. If, on the other hand, you go with “nostalgic,” you’ll get lots of headlines about pop culture history. And if you’re not sure, you can just give the mood wheel a spin and see what it lands on.
Talia Halperin, BuzzFeed’s vice president of brand management, described this as an experiment in “getting our audience engaged and excited in a non-traditional way.” The team apparently created these recommendations by first identifying the main mood options, then “reverse-engineering” which articles would be a good fit.
And while BuzzFeed’s never offered this kind of interface before, Halperin argued that the broader strategy is one that the organization uses “all the time, in a curated, audience-focused way” — when the team is sharing and promoting articles, it’s thinking about moods and associated identities.
In fact, the BuzzFeed team has actually built AI tools to help with this process, automating the ability to identify which BuzzFeed stories should be posted on which BuzzFeed pages, when “evergreen” stories should be re-promoted and at what time headlines should be shared.
In the case of MoodFeed, Halperin made it sound like this is very much an experiment, with the company still figuring out things like “how often we should refresh it, what our strategy is around that.”
At the same time, she said there’s plenty of room for expansion.
“This could scale in a really interesting way,” she added. “You may have noticed that there are only six moods, but of course, there are several different moods that come along with certain events [so we’re interested] in really being able expand to expand the moods at different times of the year.”
The dog days of summer are upon us, and even busy startuppers across Europe are enjoying a well-deserved vacation. Down time’s important and so is saving money, so all this week we’re holding a 2-for-1 summer flash sale on passes to Disrupt Berlin 2019.
Disrupt Berlin takes place on 11-12 December and, depending on the type of pass you buy, our super early-bird pricing can save you up to €600. But now you can double your savings simply by purchasing an Innovator, Founder or Investor pass before our 2-for-1 flash sale ends on August 23 at 11:59 p.m. (CEST). Buy your 2-for-1 passes right here.
Experience all the early-stage startup excitement and opportunity that Disrupt Berlin offers and do it at a huge discount. Join your community — roughly 3,000 attendees from more than 50 countries, including European Union members, Israel, Turkey, Russia, Egypt, India, China and South Korea. Explore hundreds of early-stage startups exhibiting in Startup Alley. Listen to and learn from our roster of speakers — leading founders, technologists, investors and tech icons along with up-and-coming founders.
Be sure to watch — or even better apply to compete in — the Startup Battlefield pitch competition. TechCrunch editors will select some of the best early-stage startups to go head-to-head on the Disrupt Main Stage. Who knows, you might take home the $50,000 top prize or find your next investment opportunity.
More opportunity awaits in the form of TC Top Picks. Apply here to be one of a select few startups to represent these tech categories: AI/Machine Learning, Biotech/Healthtech, Blockchain, Fintech, Mobility, Privacy/Security, Retail/E-commerce, Robotics/IoT/Hardware, CRM/Enterprise and Education. If you’re chosen, you’ll receive a free Startup Alley Exhibitor Package, a VIP experience and a ton of media and investor exposure. What’s more, a TechCrunch editor will interview every TC Top Pick on the Showcase Stage. We’ll record that interview and promote the video across our social media platforms. That video will drive traffic to your site and come in mighty handy as a future talking point with investors.
Disrupt Berlin 2019 takes place on 11-12 December. Don’t let sleepy summer days distract you from serious summer savings. You have the rest of this week to double your savings on Innovator, Founder or Investor passes. Buy your 2-for-1 passes before our flash sale ends on August 23 at 11:59 p.m. (CEST). We’ll see you in December!
Is your company interested in sponsoring or exhibiting at Disrupt Berlin 2019? Contact our sponsorship sales team by filling out this form.
SpotQA, a new automated software testing platform that claims to be significantly faster than either manual testing or existing automated QA solutions, has raised $3.25 million in seed funding.
Leading the round is Crane Venture Partners, the newly-outed London venture capital firm focusing on “intelligent” enterprise startups. Also participating is Forward Ventures, Downing Ventures and Acequia Capital.
Founded in 2016 by CEO Adil Mohammed, who sold his previous company to apparel platform Teespring, SpotQA’s flagship product is dubbed Virtuoso. Described as an “Intelligent Quality Assistance Platform” that uses machine learning and robotic process automation, it claims to speed up the testing of web and mobile apps by up to 25x and make QA accessible across an entire company, not just software or QA engineers.
“Over the years working closely with engineering teams, I learned how the QA and testing process, when done inefficiently, can be a big barrier for company growth and productivity,” Mohammed tells me. “The way testing is done today is not fit for purpose. Even automated testing methods are not keeping pace with agile development practices”.
This results in software testing creating a bottleneck that prevents companies deploying as fast as they’d like to, says the SpotQA CEO, which is pain point for all involved, from developers to testers, all the way through to DevOps and production. “It has a real impact on the company’s bottom line,” adds Mohammed.
The incumbent options are either manual testing or traditional automation. Mohammed says manual testing is slow and makes continuous development difficult as there is a constant “disconnect” between QA and other teams. In turn, traditional automation is not very smart and hasn’t seen much innovation in the last decade. “It’s still very code based, relies on expensive automation engineers and it is difficult to setup and maintain,” he argues.
In contrast, SpotQA claims to have designed Virtuoso so that software quality can be ensured across the entire software development lifecycle, something the company has branded “Quality Assistance”.
“By using machine learning and robotic process automation, Virtuoso is by far the most efficient and effective way to ensure bugs, inconsistencies and errors can be identified and fixed in a fraction of the time taken using manual and traditional automated testing,” says Mohammed.
Meanwhile, the London-based company will use the new injection of capital to scale engineering, sales and marketing, and to expand internationally. Existing Virtuoso customers include Experian, Chemistry, Optionis and DXC Technologies.
It’s that time of year, Silicon Valley’s investor technocrati and advice-giving Twitter celebrities descended upon Pier 48 in San Francisco to judge the latest summer batch of Y Combinator startups. TechCrunch was there, as well, and we were tapping away feverishly as co-founders pitched to woo investors.
There are 197 companies in total in the summer YC batch, we heard from 84 of them today — in addition to a few off-the-record pitches which we agreed to hold off publicizing as they remain in stealth. We’ll hear from another chunk of them tomorrow, so check back tomorrow for even more startup blurbs.
Demo Day used to be the debut for many of these companies, but as Y Combinator’s prestige has grown so has the likelihood that the batch’s best will be closing rounds at outsized valuations before the first pitches have been made.
We’ll undoubtedly be reporting on some of these rounds moving forward, but for now here are the 84 companies whose founders pitched onstage today at Y Combinator Demo Days – Day 1.
That’s all for Day 1, we’ll be posting our favorites from today’s batch soon and we’ll be back tomorrow with the rest of the batch.
This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.com and @dteten. This is part of an ongoing series on Revenue-Based Investing VC that will hit on:
So you’re interested in raising capital from a Revenue-Based Investor VC. Which VCs are comfortable using this approach?
A new wave of Revenue-Based Investors (“RBI”) are emerging. This structure offers some of the benefits of traditional equity VC, without some of the negatives of equity VC.
I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital.
(For more background, see the accompanying article “Revenue-based investing: A new option for founders who care about control” published on Extra Crunch.
RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance.
I’ve listed below all of the major RBI venture capitalists I’ve identified. In addition, I’ve noted a few multi-product lending firms, e.g., Kapitus and United Capital Source, which provide RBI as one of many structural options to companies seeking capital.
Alternative Capital: “You qualify if you have $5k+ MRR. We have a special program if you are pre-seed and need product development. Since 2017 we’ve managed $3 million in revenue-based financing, which helps cash-strapped technology companies grow. In 2019 we partnered with several revenue-based lending providers, effectively creating a marketplace.”
Bigfoot Capital: According to Brian Parks, “Bigfoot provides RBI, term loans, and lines of credit to SaaS businesses with $500k+ ARR. Our wheelhouse is bootstrapped (or lightly capitalized) SMB SaaS. We make fast, data-driven credit decisions for these types of businesses and show Founders how the math/ROI works. We’re currently evaluating about 20 companies a month and issuing term sheets to 25% of them; those that fit our investment criteria. We’re also regularly following-on for existing portfolio companies.”
Corl: “No need to wait 3-9 months for approval. Find out in 10 minutes. Corl can fund up to 10x your monthly revenue to a maximum of $1,000,000. Payments are equal to 2-10% of your monthly revenue, and stop when the business buys out the contract at 1-2x the investment amount.”
According to Derek Manuge, Corl CEO, “Funds are closed significantly quicker than the industry average at under 24 hours. The majority of businesses that apply for funding with Corl are E-commerce, SaaS, and other digital businesses.”
Manuge continues, “Corl connects to a business’ bank accounts, accounting software, payment processors, and other digital services to collect 10,000+ historical data points that are analyzed in real-time. We collect more data on an individual business than, to our knowledge, any other RBI investor, through our application process, data partners, and various public sources online. We have reviewed the application process of other RBI lenders and have not found one that has more API connections that ours. We have developed a proprietary machine learning algorithm that assesses the risk and return profile of the business and determines whether to invest in the business. Funding decisions can take as little as 10 minutes depending on the amount of data provided by a business.”
In the past 12 months, 500+ companies have applied for funding with Corl. The following information is based on companies funded by us and/or our capital partners:
Decathlon Capital: According to John Borchers, Co-founder, Decathlon is the largest revenue-based financing investor in the US. His description: “We announced a new $500 million fund in Q1 of 2019, in our 10th year. Unlike many RBI investors, a full 50% of our investment activity is in non-tech businesses. Like other RBI firms, Decathlon does not require warrants, governance involvement, or the types of financial covenants that are often associated with other venture debt type solutions. Decathlon typically targets monthly payment percentages in the 1% to 4% range, with total targeted multiples of 1.5x to 3.0x.”
Earnest Capital: Earnest is not technically RBI. Tyler Tringas, General Partner, observes, “Almost all of these new [RBI] forms of financing really only work for more mature companies (say $25-50k MRR and up) and there are still very few new options at the stage where we are investing.” From their website: “We invest via a Shared Earnings Agreement, a new investment model developed transparently with the community, and designed to align us with founders who want to run a profitable business and never be forced to raise follow-on financing or sell their business.” Key elements:
Feenix Venture Partners: Feenix Venture Partners has a unique investment model that couples investment capital with payment processing services. Each of Feenix’s portfolio companies receives an investment in debt or equity and utilizes a subsidiary of Feenix as its credit card payment processor (“Feenix Payment Systems”). The combination of investment capital and credit card processing (CCP) fees creates a “win-win” partnership for investors and portfolio companies. The credit card processing data provides the investor with real-time sales transparency and the CCP fee margin provides the investor high current income, with equity-like upside and significant recovery for downside protection. Additionally, portfolio companies are able to access competitive and often non-dilutive financing by monetizing an unavoidable expense that is being paid to its current processors, thus yielding a mutual benefit for both parties.
Feenix focuses on companies in the consumer space across a number of industry verticals including: multi-unit Food & Beverage operators, hospitality, managed workspace (office or food halls), location-based entertainment venues, and various direct to consumer online companies. Their average check size is between $1-3 million, with multi-year term and competitive interest rates for debt. Additionally, Feenix typically needs fewer financial covenants and can provide quicker turnaround for due diligence with the benefit of transparency they receive by tracking credit card sales activity. 10% of Feenix’s portfolio companies have received VC equity prior to their financing.
Founders First Capital Partners: “Founders First Capital Partners, LLC is building a comprehensive ecosystem to empower underrepresented founders to become leading premium wage job creators within their communities. We provide revenue-based funding and business acceleration support to service-based small businesses located outside of major capital markets such as Silicon Valley and New York City.”
“We focus our support on businesses led by women, ethnic minorities, LGBTQ, and military veterans, especially teams and businesses located in low to moderate income areas. Our proprietary business accelerator programs, learning platform, and growth methodologies transition these underserved service-based businesses into companies with $5 million to $50 million in recurring revenue. They are tech-enabled companies that provide high-yield investments for fund limited partners (LPs) that perform like bonds but generate returns on par with equity investments. Founders First Capital Partners defines these high performing organizations as Zebra Companies .”
“Each year, Founders First Capital Partners works with hundreds of entrepreneurs. Three tracks of pre-funding accelerator programs determine the appropriate level of funding and advisory support needed for each founder to achieve their desired expansion: 1) Fastpath for larger companies with $2 million to $5 million in annual revenue, 2) Founders Growth Bootcamp program for companies with $250,000 to $2 million in annual revenue, and 3) Elevate My Business Challenge for companies with $50,000 to $250,000 in annual revenue.”
“Founders First Capital Partners (FFCP) runs a 5-step process:
According to Kim Folson, Co-Founder, “Founders First Capital Partner (F1stcp) has just secured a $100M credit facility commitment from a major institutional impact investor. This positions F1stcp to be the largest revenue-based investor platform addressing the funding gap for service-based, small businesses led by underserved and underrepresented founders.”
GSD Capital: “ GSD Capital partners with early-stage SaaS founders to fund growth initiatives. We work with founding teams in the Mountain West (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming) who have demonstrated an ability to get sh*t done… We empower founders with a 30-day fundraising process instead of multiple months running a gauntlet. ”
“To best explain the process of RBF funding, let’s use an example. Pied Piper Inc needs funding to accelerate customer acquisition for its SaaS solution. GSD Capital loans $250,000 to Pied Piper taking no ownership or control of the business. The funding agreement outlines the details of how the loan will be repaid, and sets a “cap”, or a point at which the loan has been repaid. On a 3-year term, the cap amounts typically range from 0.4-0.6x the loan amount. Each month Pied Piper reviews its cash receipts and sends the agreed upon percentage to GSD. If the company experiences a rough patch, GSD shares in the downside. Monthly payments stop once the cap is reached and the loan is repaid. In a situation where Pied Piper’s revenue growth exceeds expectations, prepayment discounts are built into the structure, lowering the cost of capital.”
“Requirements for funding consideration:
Indie.VC: Part of the investment firm O’Reilly AlphaTech Ventures. See Indie VC’s Version 3.0 . “On the surface, our v3 terms are a fairly vanilla version of a convertible note with a few key variables to be negotiated between the investor and the founder: investment amount, equity option, and repurchase start date and percentage.”
Kapitus: Offers RBI among many other options. “Because this [RBI] is not a loan, there is no APR or compounded interest associated with this product. Instead, borrowers agree to pay a fixed percentage in addition to the amount provided.”
Lighter Capital: “Since 2012, we’ve provided over $100 million in growth capital to over 250 companies.” Revenue-based financing which “helps tech entrepreneurs get to the next level without giving up equity, board seats, or personal guarantees… At Lighter Capital, we don’t take equity or ask you to make personal guarantees. And we don’t take a seat on your board or make you write a big check if you’re having a down month.”
Novel Growth Partners: ” We invest using Revenue-Based Investing (RBI), also known as Royalty-Based Investing… We provide up to $1 million in growth capital, and the company pays that capital back as a small percentage (between 4% and 8%) of its monthly revenue up to a predetermined return cap of 1.5-2.2x over up to 5 years. We can usually provide capital in an amount up to 30% of your ARR. Our approach allows us to invest without taking equity, without taking board seats, and without requiring personal guarantees. We also provide tailored, tactical sales and marketing assistance to help the companies in our portfolio accelerate their growth.” Keith Harrington, Co-Founder & Managing Director at Novel Growth Partners, observes that he sees two categories of RBI:
He said, “We chose the structure we did because we think it’s easier to understand, for both LPs and entrepreneurs.”
Podfund: Focused on podcast creators. “We agree to provide funding and services to you in exchange for a percentage of total gross revenue (including ads/sponsorship, listener support, and ancillary revenue such as touring, merchandise, or licensing) per quarter. PodREV terms are 7-15% of revenue for 3-5 years, depending on current traction, revenue, and projected growth. At any time you may also opt to pay down the revenue share obligation in full, as follows:
RevUp: “Companies receive $100K-250K in non-dilutive cash… [paid back in a] 36-month return period with revenue royalty ranging from 4-8%, no equity .”
” Investment size : $1 – 5+ million, significant capacity for additional investment.
Return method: Small percentage of monthly revenue. Keeps capital lightweight and aligned to companies’ growth.
Capped return: 1.5 – 2x the investment amount. Company maximizes equity upside from growth.
Investment structure: 5-year horizon. Long-term nature maximizes flexibility of capital.”
Jim Toth writes, “One thing that makes us different is that we live inside of an $8Bn private equity firm. This means that we have a tremendous amount of resources that we can leverage for our companies, and our companies see us as being quite strategic. We also have the ability to continue investing behind our companies across all stages of growth.”
ScaleWorks: “We developed Scaleworks venture finance loans to fill a need we saw for our own B2B SaaS companies. No personal guarantees, board seats, or equity sweeteners. No prepayment penalties. Monthly repayments as a percentage of revenue.”
United Capital Source: Provides a wide structure of loans, including but not limited to RBI. The firm has provided more than $875 million in small business loans in its history, and is currently extending about $10m/month in RBI loans. Jared Weitz, Founder & CEO, said, “[Our] typical RBF client is $120K-$20M in annual revenue, with 4-200 employees. We only look at financials for deals over a certain size.
For smaller deals, we’ll look at bank statements and get a pretty good picture of revenues, expenses and cash flow. After all, since this is a revenue-based business loan, we want to make sure revenues and cash flow are consistent enough for repayment without hurting the business’s daily operations. When we do look at financials to approve those larger deals we are generally seeing a 5 to 30% EBITDA margin on these businesses.” United Capital Source was selected in the 2015 & 2017 Inc. 5000 Fastest Growing Companies List.
Note that none of the lawyers quoted or I are rendering legal advice in this article, and you should not rely on our counsel herein for your own decisions. I am not a lawyer. Thanks to the experts quoted for their thoughtful feedback. Thanks to Jonathan Birnbaum for help in researching this topic.
Does the traditional VC financing model make sense for all companies? Absolutely not. VC Josh Kopelman makes the analogy of jet fuel vs. motorcycle fuel. VCs sell jet fuel which works well for jets; motorcycles are more common but need a different type of fuel.
A new wave of Revenue-Based Investors are emerging who are using creative investing structures with some of the upside of traditional VC, but some of the downside protection of debt. I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital.
I believe that Revenue-Based Investing (“RBI”) VCs are on the forefront of what will become a major segment of the venture ecosystem. Though RBI will displace some traditional equity VC, its much bigger impact will be to expand the pool of capital available for early-stage entrepreneurs.
This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.com and @dteten. This is part of an ongoing series on Revenue-Based Investing VC that will hit on:
RBI structures have been used for many years in natural resource exploration, entertainment, real estate, and pharmaceuticals. However, only recently have early-stage companies started to use this model at any scale.
According to Lighter Capital, “the RBI market has grown rapidly, contrasting sharply with a decrease in the number of early-stage angel and VC fundings”. Lighter Capital is a RBI VC which has provided over $100 million in growth capital to over 250 companies since 2012.
Lighter reports that from 2015 to 2018, the number of VC investments under $5m dropped 23% from 6,709 to 5,139. 2018 also had the fewest number of angel-led financing rounds since before 2010. However, many industry experts question the accuracy of early-stage market data, given many startups are no longer filing their Form Ds.
John Borchers, Co-founder and Managing Partner of Decathlon Capital, claims to be the largest revenue-based financing investor in the US. He said, “We estimate that annual RBI market activity has grown 10x in the last decade, from two dozen deals a year in 2010 to upwards of 200 new company fundings completed in 2018.”
Superlatives abound at Cerebras, the until-today stealthy next-generation silicon chip company looking to make training a deep learning model as quick as buying toothpaste from Amazon. Launching after almost three years of quiet development, Cerebras introduced its new chip today — and it is a doozy. The “Wafer Scale Engine” is 1.2 trillion transistors (the most ever), 46,225 square millimeters (the largest ever), and includes 18 gigabytes of on-chip memory (the most of any chip on the market today) and 400,000 processing cores (guess the superlative).
Cerebras’ Wafer Scale Engine is larger than a typical Mac keyboard (via Cerebras Systems)
It’s made a big splash here at Stanford University at the Hot Chips conference, one of the silicon industry’s big confabs for product introductions and roadmaps, with various levels of oohs and aahs among attendees. You can read more about the chip from Tiernan Ray at Fortune and read the white paper from Cerebras itself.
Superlatives aside though, the technical challenges that Cerebras had to overcome to reach this milestone I think is the more interesting story here. I sat down with founder and CEO Andrew Feldman this afternoon to discuss what his 173 engineers have been building quietly just down the street here these past few years with $112 million in venture capital funding from Benchmark and others.
First, a quick background on how the chips that power your phones and computers get made. Fabs like TSMC take standard-sized silicon wafers and divide them into individual chips by using light to etch the transistors into the chip. Wafers are circles and chips are squares, and so there is some basic geometry involved in subdividing that circle into a clear array of individual chips.
One big challenge in this lithography process is that errors can creep into the manufacturing process, requiring extensive testing to verify quality and forcing fabs to throw away poorly performing chips. The smaller and more compact the chip, the less likely any individual chip will be inoperative, and the higher the yield for the fab. Higher yield equals higher profits.
Cerebras throws out the idea of etching a bunch of individual chips onto a single wafer in lieu of just using the whole wafer itself as one gigantic chip. That allows all of those individual cores to connect with one another directly — vastly speeding up the critical feedback loops used in deep learning algorithms — but comes at the cost of huge manufacturing and design challenges to create and manage these chips.
Cerebras’ technical architecture and design was led by co-founder Sean Lie. Feldman and Lie worked together on a previous startup called SeaMicro, which sold to AMD in 2012 for $334 million. (Via Cerebras Systems)
The first challenge the team ran into according to Feldman was handling communication across the “scribe lines.” While Cerebras chip encompasses a full wafer, today’s lithography equipment still has to act like there are individual chips being etched into the silicon wafer. So the company had to invent new techniques to allow each of those individual chips to communicate with each other across the whole wafer. Working with TSMC, they not only invented new channels for communication, but also had to write new software to handle chips with trillion plus transistors.
The second challenge was yield. With a chip covering an entire silicon wafer, a single imperfection in the etching of that wafer could render the entire chip inoperative. This has been the block for decades on whole wafer technology: due to the laws of physics, it is essentially impossible to etch a trillion transistors with perfect accuracy repeatedly.
Cerebras approached the problem using redundancy by adding extra cores throughout the chip that would be used as backup in the event that an error appeared in that core’s neighborhood on the wafer. “You have to hold only 1%, 1.5% of these guys aside,” Feldman explained to me. Leaving extra cores allows the chip to essentially self-heal, routing around the lithography error and making a whole wafer silicon chip viable.
Those first two challenges — communicating across the scribe lines between chips and handling yield — have flummoxed chip designers studying whole wafer chips for decades. But they were known problems, and Feldman said that they were actually easier to solve that expected by re-approaching them using modern tools.
He likens the challenge though to climbing Mount Everest. “It’s like the first set of guys failed to climb Mount Everest, they said, ‘Shit, that first part is really hard.’ And then the next set came along and said ‘That shit was nothing. That last hundred yards, that’s a problem.’”
And indeed, the toughest challenges according to Feldman for Cerebras were the next three, since no other chip designer had gotten past the scribe line communication and yield challenges to actually find what happened next.
The third challenge Cerebras confronted was handling thermal expansion. Chips get extremely hot in operation, but different materials expand at different rates. That means the connectors tethering a chip to its motherboard also need to thermally expand at precisely the same rate lest cracks develop between the two.
Feldman said that “How do you get a connector that can withstand [that]? Nobody had ever done that before, [and so] we had to invent a material. So we have PhDs in material science, [and] we had to invent a material that could absorb some of that difference.”
Once a chip is manufactured, it needs to be tested and packaged for shipment to original equipment manufacturers (OEMs) who add the chips into the products used by end customers (whether data centers or consumer laptops). There is a challenge though: absolutely nothing on the market is designed to handle a whole-wafer chip.
Cerebras designed its own testing and packaging system to handle its chip (Via Cerebras Systems)
“How on earth do you package it? Well, the answer is you invent a lot of shit. That is the truth. Nobody had a printed circuit board this size. Nobody had connectors. Nobody had a cold plate. Nobody had tools. Nobody had tools to align them. Nobody had tools to handle them. Nobody had any software to test,” Feldman explained. “And so we have designed this whole manufacturing flow, because nobody has ever done it.” Cerebras’ technology is much more than just the chip it sells — it also includes all of the associated machinery required to actually manufacture and package those chips.
Finally, all that processing power in one chip requires immense power and cooling. Cerebras’ chip uses 15 kilowatts of power to operate — a prodigious amount of power for an individual chip, although relatively comparable to a modern-sized AI cluster. All that power also needs to be cooled, and Cerebras had to design a new way to deliver both for such a large chip.
It essentially approached the problem by turning the chip on its side, in what Feldman called “using the Z-dimension.” The idea was that rather than trying to move power and cooling horizontally across the chip as is traditional, power and cooling are delivered vertically at all points across the chip, ensuring even and consistent access to both.
And so, those were the next three challenges — thermal expansion, packaging, and power/cooling — that the company has worked around-the-clock to deliver these past few years.
Cerebras has a demo chip (I saw one, and yes, it is roughly the size of my head), and it has started to deliver prototypes to customers according to reports. The big challenge though as with all new chips is scaling production to meet customer demand.
For Cerebras, the situation is a bit unusual. Since it places so much computing power on one wafer, customers don’t necessarily need to buy dozens or hundreds of chips and stitch them together to create a compute cluster. Instead, they may only need a handful of Cerebras chips for their deep-learning needs. The company’s next major phase is to reach scale and ensure a steady delivery of its chips, which it packages as a whole system “appliance” that also includes its proprietary cooling technology.
Expect to hear more details of Cerebras technology in the coming months, particularly as the fight over the future of deep learning processing workflows continues to heat up.
Huron founder and CEO Matt Mullenax is hoping to build a big business around body wash.
“For us, the broader mission is A+ personal care for guys everywhere — not just guys in New York or guys in the Bay Area or guys in Los Angeles,” he said.
The startup has raised $1 million in seed funding from RXBAR founders Peter Rahal and Jared Smith, CXT Investments, and Lean Luxe founder M. Paul Munford.
Mullenax told me he became interested in this market after working as a finance and operations analyst at Bonobos, where he “fell in love with the [direct-to-consumer] model.” He also said he has personal experience with bad skin, but “couldn’t justify paying $75 a month for face wash.”
So the goal at Huron is to create products that can stack up against “brands on the shelves at Bloomingdale’s, Neiman Marcus or Nordstrom,” but without the costs and price markup associated with a big department store. The initial lineup includes body wash ($14), face wash ($14) and face lotion ($15), with plans for more products soon.
Consumers can buy Huron products individually, as part of a larger kit or via subscription. Mullenax said the Huron website is designed to be friendly and educational for men who don’t know a lot about personal care, but at the same time it doesn’t isn’t “forcing this guy into a subscription mechanism,” and instead allowing them “come to the site and just transact on a bottle of bodywash.”
As for the broader competitive landscape — which includes companies that started with razors or cologne but have broader ambitions in men’s personal care — Mullenax said, “The industry is becoming increasingly competitive, and it it should be, it’s a huge category.”
He argued that the market has room for more than just “one winner or two winners or five winners.” And in his view, Huron will be set apart with its “ability to create a brand with a tone of voice that resonates, with products that work, at a price point that makes senes for this guy.”
Now, a startup says its “out-of-the-box tools” can help protect customers’ privacy while also saving companies from themselves. How? With a software-as-a-service product that promises to help employees access the app data they need — and only the app data they need. Among the features the company, Internal, is offering, are search and filtering, auto-generated tasks and team queues, granular permissioning on every field, audit logs on every record and redacted fields for sensitive information.
Whether the startup can win the trust of enterprises is the biggest question for the company, which was created by Arisa Amano and Bob Remeika, founders who last year launched the blockchain technology company Harbor. The two also worked together previously at two other companies: Zenefits and Yammer.
All of these endeavors have another person in common, and that’s David Sacks, whose venture firm, Craft Ventures, has just led a $5 million round in Internal. Sacks also invested last year in Harbor; he was an early investor in Zenefits and took over during troubled times as its CEO for less than a year; he also founded Yammer, which sold to Microsoft for $1.2 billion in cash in 2012.
All of the aforementioned have been focused, too, on making it easier for companies to get their work done, and Amano and Remeika have built the internal console at all three companies, which is how they arrived at their “aha” moment last year, says Amano. “So many companies build their consoles [which allow users advanced use of the computer system they’re attached to] in a half-hearted way; we realized there was an opportunity to build this as a service.”
“Companies never dedicate enough engineers to [their internal consoles], so they’re often half broken and hard to use and they do a terrible job of limiting access to sensitive customer data,” adds Remeika. “We eliminate the need to build these tools altogether, and takes just minutes to get set up.”
Starting today, companies can decide for themselves whether they think Internal can help their employees interact with their customer app data in a more secure and compliant way. The eight-person company has just made the product available for a free trial.
Naturally, Amano and Remeika are full of assurances why companies can trust them. “We don’t store data,” says Amano. “That resides on the [customer’s] servers. It stays in their database.” Internal’s technology instead “understands the structure of the data and will read that structure,” offers Remeika, who says not to mistake Internal for an analytics tool. “Analytics tools commonly provide a high-level overview; Internal is giving users granular access to customer data and letting you debug problems.”
As for competitors, the duo say their most formidable opponent right now is developers who throw up a data model viewer that has complete access to everything in a database, which may be sloppy but happens routinely.
Internal isn’t disclosing its pricing publicly just yet, but it says its initial target is non-technical users, on operations and customer support teams, for example.
As for Harbor (we couldn’t help but wonder why they’re already starting a new company), they say it’s in good hands with CEO Josh Stein, who was previously general counsel and chief compliance officer at Zenefits (he was its first lawyer) and who joined Harbor in February of last year as its president. Stein was later named CEO.
In addition to Craft Ventures, Internal’s new seed round comes from Pathfinder, which is Founders Fund’s early-stage investment vehicle, and other, unnamed angel investors.
OKRs, or Objectives and Key Results, are a popular planning method in Silicon Valley. Like most of those methods that make you fill in some form once every quarter, I’m pretty sure employees find them rather annoying and a waste of their time. Ally wants to change that and make the process more useful. The company today announced that it has raised an $8 million Series A round led by Access Partners, with participation from Vulcan Capital, Founders Co-op and Lee Fixel. The company, which launched in 2018, previously raised a $3 million seed round.
Ally founder and CEO Vetri Vellore tells me that he learned his management lessons and the value of OKR at his last startup, Chronus. After years of managing large teams at enterprises like Microsoft, he found himself challenged to manage a small team at a startup. “I went and looked for new models of running a business execution. And OKRs were one of those things I stumbled upon. And it worked phenomenally well for us,” Vellore said. That’s where the idea of Ally was born, which Vellore pursued after selling his last startup.
Most companies that adopt this methodology, though, tend to work with spreadsheets and Google Docs. Over time, that simply doesn’t work, especially as companies get larger. Ally, then, is meant to replace these other tools. The service is currently in use at “hundreds” of companies in more than 70 countries, Vellore tells me.
One of its early adopters was Remitly . “We began by using shared documents to align around OKRs at Remitly. When it came time to roll out OKRs to everyone in the company, Ally was by far the best tool we evaluated. OKRs deployed using Ally have helped our teams align around the right goals and have ultimately driven growth,” said Josh Hug, COO of Remitly.
Vellore tells me that he has seen teams go from annual or bi-annual OKRs to more frequently updated goals, too, which is something that’s easier to do when you have a more accessible tool for it. Nobody wants to use yet another tool, though, so Ally features deep integrations into Slack, with other integrations in the works (something Ally will use this new funding for).
Since adopting OKRs isn’t always easy for companies that previously used other methodologies (or nothing at all), Ally also offers training and consulting services with online and on-site coaching.
Pricing for Ally starts at $7 per month per user for a basic plan, but the company also offers a flat $29 per month plan for teams with up to 10 users, as well as an enterprise plan, which includes some more advanced features and single sign-on integrations.
There has long been a stigma associated with therapy and mental health coaching, a stigma that is even more pronounced in the business world, despite considerable evidence of the efficacy of these services. One of the organizations that has set out to change this negative association is Torch, a startup that combines the therapeutic benefits of executive coaching with data-driven analytics to track outcomes.
Yet, as Torch co-founder and CEO Cameron Yarbrough explains in this Breaking Into Startups episode, the startup wasn’t initially a tech-oriented enterprise. At first, Yarbrough drew on his years of experience as a marriage and family counselor as he made the transition into executive coaching, even referring to the early iterations of Torch as little more than “a matchmaking service between coaches and professionals.”
In time, Yarbrough identified a virtually untapped market for executive coaching — one that, by his estimate, could amount to a $15 billion industry. To demonstrate to investors the great potential of this growing market, he first built up a clientele that provided Torch with sufficient recurring revenue and low churn rate.
Only then was Yarbrough able to raise a $2.4 million seed round from Initialized Capital, Y Combinator, and other investors, convincing them that data analytics software could enhance the coaching process — as well as coach recruitment — enough to effectively “productize feedback,” as he puts it.
For Yarbrough and Torch, “productizing feedback” involves certain well-known business strategies that complement traditional coaching methods. For instance, Torch’s coaching procedure includes a “360 review,” a performance review system that incorporates feedback from all angles, including an employee’s manager, peers, and other people within an organization who have knowledge of the employee’s work.
The 360 review is coupled with an OKR platform, which provides HR departments and other interested parties with the metrics and analytics to track employee progress through the program. This combination is designed to promote the development of soft skills, which in turn drive leadership.
Torch has achieved considerable success, landing several influential clients in the tech sector through its B2B approach. But Yarbrough is clear that his goal with the company is to “democratize” access to professional coaching, in hopes of providing the same kind of mental health counseling and support to employees in all levels of an organization.
In this episode, Yarbrough discusses the history and trajectory of Torch, his experience scaling a company many considered unscalable, and the methods he uses to manage his own emotional and mental health as the CEO of an expanding startup. Yarbrough offers insights into the feelings of anxiety and dread common among entrepreneurs and provides a close look at how he has found business and personal success with Torch.
Breaking Into Startups: There’s a difference between a mentor and a coach. Today, I want to talk about that difference and in addition to the intersection between business and psychology, What Cameron Yarbrough, CEO of Torch and Founder of Well Clinic.
If you’re someone that is looking for a mentor or a coach as you break into tech, or if you just want to be surrounded by peers, make sure you download the Career Karma app by going to www.breakingintostartups.com/download.
On today’s episode, you’re going to understand the importance of therapy, mental health and coaches, as well as how historically, it has been inaccessible to people and how Cameron is using his background to democratize this for the world.
If this is your first time listening to the Breaking Startups Podcast, make sure you leave a review on iTunes and tell your friends. Listen to it on Soundcloud and talk about it on Spotify. If you have any feedback for us, positive or negative, please let us know. Without further ado, let’s break-in.
Cameron Yarbrough is the CEO of Torch. He’s one of the best executive coaches in the world. Not only are we going to be talking about coaching and mentoring for executives, but we’ll also be talking about coaching in general for everyone. We’re going to go into how he created his company.
The vast enterprise tech category is Silicon Valley’s richest, and today it’s poised to change faster than ever before. That’s probably the biggest reason to come to TechCrunch’s first-ever show focused entirely on enterprise. But here are five more reasons to commit to joining TechCrunch’s editors on September 5 at San Francisco’s Yerba Buena Center for an outstanding day (agenda here) addressing the tech tsunami sweeping through enterprise.
#1 Artificial Intelligence.
At once the most consequential and most hyped technology, no one doubts that AI will change business software and increase productivity like few if any, technologies before it. To peek ahead into that future, TechCrunch will interview Andrew Ng, arguably the world’s most experienced AI practitioner at huge companies (Baidu, Google) as well as at startups. AI will be a theme across every session, but we’ll address again it head-on in a panel with investor Jocelyn Goldfein (Zetta), founder Bindu Reddy (Reality Engines) and executive John Ball (Salesforce / Einstein).
#2. Data, The Cloud and Kubernetes.
If AI is at the dawn of tomorrow, cloud transformation is the high noon of today. 90% of the world’s data was created in the past two years, and no enterprise can keep its data hoard on-prem forever. Azure’s CTO Mark Russinovitch (CTO) will discuss Microsft’s vision for the cloud. Leaders in the open-source Kubernetes revolution, Joe Beda (VMWare) and Aparna Sinha (Google) and others will dig into what Kubernetes means to companies making the move to cloud. And last, there is the question of how to find signal in all the data – which will bring three visionary founders to the stage: Benoit Dageville (Snowflake), Ali Ghodsi (Databricks), Murli Thirumale (Portworx).
#3 Everything else on the main stage!
Let’s start with a fireside chat with SAP CEO Bill McDermott and Qualtrics Chief Experience Officer Julie Larson-Green. We have top investors talking where they are making their bets, and security experts talking data and privacy. And then there is quantum, the technology revolution waiting on the other side of AI: Jay Gambetta, the principal theoretical scientist behind IBM’s quantum computing effort, Jim Clarke, the director of quantum hardware at Intel Labs, and Krysta Svore, style="font-weight: 400;"> who leads the Microsoft’s quantum effort.
All told, there are 21 programming sessions.
#4 Network and get your questions answered.
There will be two Q&A breakout sessions with top enterprise investors for founders (and anyone else) to query investors directly. Plus, TechCrunch’s unbeatable CrunchMatch app makes it really easy to set up meetings with the other attendees, an incredible array of folks, plus the 20 early-stage startups exhibiting on the expo floor.
Enterprise giant SAP is our sponsor for the show, and they are not only bringing a squad of top executives, they are producing four parallel track sessions featuring key SAP Chief Innovation Officer Max Wessel, SAP Chief Designer and Futurist Martin Wezowski and SAP.IO’s managing director Ram Jambunathan (SAP.iO) in sessions including, how to scale-up an enterprise startup, how startups win large enterprise customers, and what the enterprise future looks like.
Check out the complete agenda. Don’t miss this show! This line-up is a view into the future like none other.
Grab your $349 tickets today, and don’t wait till the day of to book because prices go up at the door!
We still have 2 Startup Demo Tables left. Each table comes with 4 tickets and a prime location to demo your startup on the expo floor. Book your demo table now before they’re all gone!
Healthtech is apparently in a golden age. Just a few weeks ago, Livongo and Health Catalyst raised a combined $500 million through IPOs with a joint valuation reaching $3.5 billion. Deals such as these are catalyzing a record-breaking 2019, with digital health deal activity expected to surpass the $8.1 billion invested in 2018.
Amidst such abundance, the digital health ecosystem is thriving: as of 2017, greater than 300,000 mobile applications and 340 consumer wearable devices existed—with 200 new mobile applications added daily. No theme has been more important to this fundraising than artificial intelligence and machine learning (AI/ML), a space which captured more than one-quarter of healthtech funding in 2018.
Yet, how many of these technologies will prove valuable in medical, ethical, or financial terms?
Our research group at Stanford addressed this question by taking a deeper dive into the saying that, in AI/ML, “garbage in equals garbage out.” We did this by distinguishing digital health algorithms leveraging AI/ML from their underlying training data, documenting the numerous consequences to the outputs of these technologies should the inputs resemble, well, “garbage.”
For example, the utility of genetic risk scores provided by companies such as 23andMe and AncestryDNA (which have estimated valuations of $1.75 and $2.6 billion, respectively) may be limited due to diagnostic biases stemming from the underrepresentation of diverse populations.
Responding to such observations, we provide a variety of recommendations to the developers, inventors, and founders spearheading the advancement of digital health—as well as the funders supporting this charge forward—to ensure that their innovations are valuable to the stakeholders they target.
As businesses use an increasing variety of marketing software solutions, the goal around collecting all of that data is to improve customer experience. Simon Data announced a $30 million Series C round today to help.
The round was led by Polaris Partners . Previous investors .406 Ventures and F-Prime Capital also participated. Today’s investment brings the total raised to $59 million, according to the company.
Jason Davis, co-founder and CEO, says his company is trying to pull together a lot of complex data from a variety of sources, while driving actions to improve customer experience. “It’s about taking the data, and then building complex triggers that target the right customer at the right time,” Davis told TechCrunch. He added, “This can be in the context of any sort of customer transaction, or any sort of interaction with the business.”
Companies tend to use a variety of marketing tools, and Simon Data takes on the job of understanding the data and activities going on in each one. Then based on certain actions — such as, say, an abandoned shopping cart — it delivers a consistent message to the customer, regardless of the source of the data that triggered the action.
They see this ability to pull together data as a customer data platform (CDP). In fact, part of its job is to aggregate data and use it as the basis of other activities. In this case, it involves activating actions you define based on what you know about the customer at any given moment in the process.
As the company collects this data, it also sees an opportunity to use machine learning to create more automated and complex types of interactions. “There are a tremendous number of super complex problems we have to solve. Those include core platform or infrastructure, and we also have a tremendous opportunity in front of us on the predictive and data science side as well,” Davis said. He said that is one of the areas where they will put today’s money to work.
The company, which launched in 2014, is based in NYC. The company currently has 87 employees in total, and that number is expected to grow with today’s announcement. Customers include Equinox, Venmo and WeWork. The company’s most recent funding round was a $20 million in July 2018.