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Barbershop technology startup theCut sharpens its platform with new $4.5M round

By Christine Hall

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.”

 

Bangkok-based insurtech Sunday banks $45M Series B from investors like Tencent

By Catherine Shu

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.

Other insurtech startups in Indonesia that have recently raised funding include Lifepal, PasarPolis, Qoala and Fuse.

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.”

Tracking startup focus in the latest Y Combinator cohort

By Anna Heim

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.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


What follows is a roundup of trends among Y Combinator startups and how they squared with our expectations.

A big thanks to the TechCrunch crew who covered the startup deluge live, and Natasha and Christine for helping build out our notes during our last few Twitter Spaces. Let’s talk trends!

More than expected

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.

What Amplitude’s choice to direct list says about its products, growth and value

By Alex Wilhelm

Amplitude is going public in a direct listing that will see its shares trade on the Nasdaq under the ticker symbol “AMPL.” The company first announced its intention to direct list in July and filed its S-1 document in August.

The San Francisco-based startup lists major shareholders Battery, Benchmark, IVP, Sequoia and Jasmine Ventures in its S-1 filing. Each of those investors owns at least 5% of the company.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Following our digs through recent IPO filings from Freshworks and Toast, this morning we’re taking a spade to Amplitude’s document.

We’re curious why the company is direct listing instead of raising capital in its debut. We also want to understand how the company sees the future, because its product thesis is essentially a roadmap to its long-term growth; how investors value the company will in part hinge on whether Wall Street agrees with where Amplitude sees technology heading.

And we’ll do our usual work to understand the company’s revenue mix and quality, wrapping with some noodling on what it may be worth. Sound fun? Good. Let’s get into it.

Amplitude’s core product thesis

Most S-1 filings are full of corporate babble that I don’t drag you through. After all, we don’t really need to chat about how a particular vertical SaaS company thinks that its chosen niche is a great market. You already know what the debuting concern thinks. But with Amplitude, I want to do a bit more.

Amplitude sells what it calls “digital optimization” software. In practice, that means its software helps other companies design better software.

The company thinks that the way that digital products are built has changed. Gone are the days, in its view, of trusting intuition when it comes to digital design choices. Instead, Amplitude expects that companies with digital products will instead lean on data-driven decision-making. Or as it phrased it in its filing, digital product design is leaving the “Mad Men” phase for a more “Moneyball” era.

Data is at the core of how Amplitude sees companies designing future products. But in its view, many companies currently rely on a collection of disparate software tools to collect data on their digital footprint. Amplitude thinks it has a better method of collecting digital user data — and learning from it.

Flat.mx raises $20M from VCs, proptech unicorn founders to fix Mexico’s ‘broken’ real estate market

By Mary Ann Azevedo

Flat.mx, which wants to build a real estate “super app” for Latin America, has closed on a $20 million Series A round of funding.

Anthemis and 500 Startups co-led the investment, which included participation from ALLVP and Expa. Previously, Flat.mx had raised a total $10 million in equity and $25 million in debt. Other backers include Opendoor CEO and CEO and co-founder Eric Wu, Flyhomes’ co-founder and CEO Tushar Garg and Divvy Homes’ co-founder Brian Ma.

Founded in July 2019, Mexico City-based Flat.mx started out with a model similar to that of Opendoor, buying properties, renovating them and then reselling them. That September, the proptech startup had raised one of Mexico’s largest pre-seed rounds to take the Opendoor real estate marketplace model across the Rio Grande.

“The real estate market in Mexico is broken,” said co-founder Bernardo Cordero. “One of the biggest problems is that it takes sellers anywhere from 6 months to 2 years to sell. So we launched the most radical solution we could find to this problem: an instant offer. This product allows homeowners to sell in days instead of months, a fast and convenient experience they can’t find anywhere else.”

Building an instant buyer (ibuyer) in Mexico — and Latin America in general — is a complex endeavor. Unlike in the U.S., Mexico doesn’t have a Multiple Listing Service (MLS). As such, pricing data is not readily available. On top of that, agents are not required to be certified so the whole process of buying and selling a home can be informal.

And since mortgage penetration in Mexico is also low, it can be difficult for buyers to have access to reasonable financing options.

“To build an iBuyer, we had to solve the transaction end-to-end,” said co-founder Victor Noguera. “We had to build the MLS, a third-party marketplace, a contractor marketplace, financial products, broker technology, and a home maintenance provider, along with other services. In other words, we have been building the real estate Superapp for Latam.”

Flat.mx says its certified remodeled properties have gone through a 200+ point inspection and “a full legal review.” 

Flat.mx is growing sales by 70% quarter-over-quarter, and has increased its inventory by 10x over the last year, according to its founders. It has also nearly tripled its headcount from 30 at the middle of last year to over 85 today. So far, Flat.mx has conducted thousands of home valuations and over 100 transactions.

Image Credits: Flat.mx

The pandemic only helped boost interest.

“Our low touch digital solution was key for having a strong business during the pandemic. We were able to create quick liquidity for sellers at a time in Mexico where it was complicated to sell,” said Cordero. “Our model allows sellers to sell with one visit instead of having to receive over 40 potential buyers at a time where they wanted to sell but also wanted to avoid contact with many buyers.”

The company plans to use its new capital to continue to develop what it describes as a “one-stop shop where homeowners and buyers will be able to get all the services they need in one place.”

The founders believe that rather than just try to tackle one aspect of the homebuying process, it makes more sense in emerging markets to address them all.

“We believe that each one of our products makes the others stronger and creating this ecosystem of products will continue to give us an important advantage in the market,” said Noguera. The startup plans to also use the capital from the round to expand its presence in Mexico for iBuying, and to invest in data and financial products.

Image Credits: Flat.mx

Naturally, Flat.mx’s investors are bullish.

Archie Cochrane, principal investor at Anthemis Group, said his firm views Flat.mx as an integral part of its embedded finance thesis in the context of the Mexican property sector. 

“The iBuyer model itself is well understood and developed in many parts of the world, but it is also a complex model with many variables that requires a seasoned and astute team to execute the strategy,” Cochrane wrote via email. “When we met Victor and Bernardo, it was clear that their clarity of vision and deep understanding of the broader opportunity set would allow them to succeed over the long term.

Tim Chae, managing partner at 500 Startups, said he envisions that Flat.mx will become “the go-to route” for buyers, sellers, agents and lenders in Mexican real estate. 

“There are nuances and specific problems that are unique to Mexico that Flat.mx has done a great job identifying and solving,” he said. 

ALLVP Partner Fernando Lelo de Larrea said that essentially after years of “unkept promises,” software is finally transforming the real estate industry in Mexico. 

“Most models replicate successful models from the more mature U.S. proptech space,” he said. “Since we started investing in proptech, we’ve never seen such an innovative approach to seizing a trillion dollar opportunity.”

Skit raises $23M Series B round led by WestBridge Capital to accelerate its growth

By Kate Park

“Traditional voice-based call center service is difficult and costly. This is where artificial intelligence and voice technology have presented an opportunity for enterprises to overcome the challenges of scale and engagement at their customer contact centers,” co-founder and CEO Skit Sourabh Gupta told TechCrunch.

The Covid-19 pandemic led to an unprecedented increase in call volumes at bank call centers as customers tried to manage their portfolios amid the chaos of work from home policy and financial instability, Gupta said. And that presented an opportunity for companies like Skit.

“Customers have a natural tendency to prefer voice call support over other self-service channels and this has led to the increase in pressure on the traditional interactive voice responses (IVR) systems and support agents to respond to all incoming queries,” he said.

Bengaluru-based artificial intelligence SaaS voice automation company Skit, formerly known as Vernacular.ai, developed its AI-based voice automation platform VIVA, short for Vernacular Intelligent Voice Assistant, which enables corporations to automate 90% of their call center operations powered by Natural Language Understanding (NLU) technology.  Its product VIVA covers more than 16 languages and 160 dialects.

Skit announced today it has closed $23 million Series B round to accelerate its growth in domestic and global markets including the US and South East Asia and enhance its voice automation platform.

The company was founded in 2016 by two co-founders, Indian Institute of Technology alumni, Roorkee alumnus, Sourabh Gupta and Akshay Deshraj.

The latest funding was led by WestBridge Capital along with existing investors Kalaari Capital and Exfinity Ventures, IAN Fund, LetsVenture and Sense AI. Angel investors including Prophetic Ventures’ Aaryaman Vir Shah also participated the round. The Series B round brings Skit’s total funding to $30 million.

Skit will use the fresh funding for sales, marketing, further R&D to strengthen its personalized solutions and voice products, as well as its global expansion.

“We want to double down and scale operations in both Indian and global markets. We are also planning on increasing our employee headcount. Through our new headquarters in New York, we want to build a strong customer base in North America by our product available to US enterprises,” Gupta told TechCrunch.

The company said it has quadrupled its amount of revenue and numbers of customers in 2020-2021 since its previous fundraising, $5.1 million Series A, in May 2020. Its average order book has also been growing in CAGR 200-300% every year, Gupta added. It currently has 150 employees.

Skit recently expanded into the US and South East Asia market.

“We noticed that there (South East Asia) is a high potential market for the adoption of conversational AI. Most importantly, these markets are home to a multitude of languages and dialects,” Gupta said in an exclusive interview with TechCrunch.

Given that language and hyper-personalization are Skit’s strongest suit, the company is witnessing increase adoption in South East Asia market, where is easier for the company to expand with similar demographics and business challenges as in India, Gupta explained.

It also opened headquarters in NYC, “It is a mature market, ahead in technology adoption with a level-playing for strong competition,” he said.

Venture advisor at WestBridge Capital Sashi Reddi said in a statement: “Skit’s success in helping India’s largest companies, positions them well to enter the US market where there is a massive need for voice AI solutions.”

The global contact center market size is expected to increase steadily and reach $496 billion by 2027. Skit will potentially address the $300 billion voice customer service market with its voice AI platform VIVA, Gupta said.

Its B2B and B2C clients are in diverse industries including banking, insurance, finance, securities, non-banking finance companies, travels, logistics, food & beverage, e-commerce. It has more than 25 B2B clients including Axis Bank, Hathway, Porter and Barbeque Nation, according to Gupta.

Call centers are traditionally places where there are high costs and high attrition rates, and for the end-users the traditional interactive voice responses (IVRs) and the wait times are irritating. There were longer than usual wait-times, call drops and going through extensive IVR menus and frequent agent transfers which increase customer frustration.

With over 10 million hour of training data, Skit’s VIVA replicates human-like conversation and understands speaker’s intent and can translate other unique speech characteristics that enable more efficient query resolutions, Gupta said.

Skit has been listed in Forbes 30 Under 30 Asia start-ups 2021.

Oviva grabs $80M for app-delivered healthy eating programs

By Natasha Lomas

UK startup Oviva, which sells a digital support offering, including for Type 2 diabetes treatment, dispensing personalized diet and lifestyle advice via apps to allow more people to be able to access support, has closed $80 million in Series C funding — bringing its total raised to date to $115M.

The raise, which Oviva says will be used to scale up after a “fantastic year” of growth for the health tech business, is co-led by Sofina and Temasek, alongside existing investors AlbionVC, Earlybird, Eight Roads Ventures, F-Prime Capital, MTIP, plus several angels.

Underpinning that growth is the fact wealthy Western nations continue to see rising rates of obesity and other health conditions like Type 2 diabetes (which can be linked to poor diet and lack of exercise). While more attention is generally being paid to the notion of preventative — rather than reactive — healthcare, to manage the rising costs of service delivery.

Lifestyle management to help control weight and linked health conditions (like diabetes) is where Oviva comes in: It’s built a blended support offering that combines personalized care (provided by healthcare professionals) with digital tools for patients that help them do things like track what they’re eating, access support and chart their progress towards individual health goals.

It can point to 23 peer-reviewed publications to back up its approach — saying key results show an average of 6.8% weight loss at 6 months for those living with obesity; while, in its specialist programs, it says 53% of patients achieve remission of their type 2 diabetes at 12 months.

Oviva typically sells its digitally delivered support programs direct to health insurance companies (or publicly funded health services) — who then provide (or refer) the service to their customers/patients. Its programs are currently available in the UK, Germany, Switzerland and France — but expanding access is one of the goals for the Series C.

“We will expand to European markets where the health system reimburses the diet and lifestyle change we offer, especially those with specific pathways for digital reimbursement,” Oviva tells TechCrunch. “Encouragingly, more healthcare systems have been opening up specific routes for such digital reimbursement, e.g., Germany for DiGAs or Belgium just in the last months.”

So far, the startup has treated 200,000 people but the addressable market is clearly huge — not least as European populations age — with Oviva suggesting more than 300 million people live with “health challenges” that are either triggered by poor diet or can be optimised through personalised dietary changes. Moreover, it suggests, only “a small fraction” is currently being offered digital care.

To date, Oviva has built up 5,000+ partnerships with health systems, insurers and doctors as it looks to push for further scale by making its technology more accessible to a wider range of people. In the past year it says it’s “more than doubled” both people treated and revenue earned.

Its goal is for the Series C funding is to reach “millions” of people across Europe who need support because they’re suffering from poor health linked to diet and lifestyle.

As part of the scale up plan it will also be growing its team to 800 by the end of 2022, it adds.

On digital vs face-to-face care — setting aside the potential cost savings associated with digital delivery — it says studies show the “most striking outcome benefits” are around uptake and completion rates, noting: “We have consistently shown uptake rates above 70% and high completion rates of around 80%, even in groups considered harder to reach such as working age populations or minority ethnic groups. This compares to uptake and completion rates of less than 50% for most face-to-face services.”

Asked about competition, Oviva names Liva Healthcare and Second Nature as its closest competitors in the region.

“WW (formally Weight Watchers) also competes with a digital solution in some markets where they can access reimbursement,” it adds. “There are many others that try to access this group with new methods, but are not reimbursed or are wellness solutions. Noom competes as a solution for self-paying consumers in Europe, as many other apps. But, in our view, that is a separate market from the reimbursed medical one.”

As well as using the Series C funding to bolster its presence in existing markets and target and scale into new ones, Oviva says it may look to further grow the business via M&A opportunities.

“In expanding to new countries, we are open to both building new organisations from the ground up or acquiring existing businesses with a strong medical network where we see that our technology can be leveraged for better patient care and value creation,” it told us on that.

 

CryptoPunks creator inks representation deal with major Hollywood talent agency

By Taylor Hatmaker

One of Hollywood’s biggest talent agencies is getting into the NFT game.

Larva Labs, the creator of CryptoPunks, just signed with United Talent Agency (UTA) in a representation deal that will bring one of the earliest and most iconic NFT projects into the entertainment and branding worlds.

“I would say that it is one of the first opportunities for an IP that fully originated in crypto-world to enter a broader entertainment space, and they earned it,” head of UTA Digital Assets Lesley Silverman told The Hollywood Reporter. “They really have hit the zeitgeist in a tremendous way.”

The deal could see CryptoPunks popping up across film, TV, video games and other licensing areas. Larva Labs’ other art projects, Meebits and Autoglyphs, will also be represented by UTA moving forward. The terms of the deal weren’t disclosed.

As speculative investment in NFTs explodes, CryptoPunks remain one of the most recognizable — and valuable — pioneers in the space. Larva Labs launched 10,000 of the individual algorithmically generated pixelated figures on the Ethereum blockchain back in 2017.

To the untrained eye, and arguably to the trained eye too, CryptoPunks are just little pixelated portraits of different characters, some wearing pirate hats, others in aviator glasses smoking pipes. But to the crypto world, punks are a social signifier, communicating early investment into NFTs, personal style and, importantly, wealth.

The value of CryptoPunks skyrocketed from zero (they were initially given away for free) and now even the least expensive collectible punks run for hundreds of thousands of dollars, with the most valuable selling for millions. In May, a bundle of nine CryptoPunks sold for just under $17 million in an auction run by Christie’s. And last week, even Visa got in the game, spending $150,000 on CryptoPunk #7610, a digital illustration sporting a mohawk and green face makeup.

Over the last 60 years, Visa has built a collection of historic commerce artifacts – from early paper credit cards to the zip-zap machine. Today, as we enter a new era of NFT-commerce, Visa welcomes CryptoPunk #7610 to our collection. https://t.co/XoPFfwxUiu

— VisaNews (@VisaNews) August 23, 2021

It’s noteworthy that a traditional talent agency best known for representing A-list celebrities is getting into the NFT game, but it’s not the group’s first time getting its feet wet in the wild world of crypto. Earlier this month, UTA signed a company called Rally that runs a platform that helps creators issue branded social tokens that fans can spend on merch and exclusive content.

CryptoPunks blasts past $1 billion in lifetime sales as NFT speculation surges

By Lucas Matney

Hello friends, and welcome back to Week in Review! Last week we dove into Bezos’s Blue Origin suing NASA. This week, I’m writing about the unlikely and triumphant resurgence of the NFT market.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.


The big thing

If I could, I would probably write about NFTs in this newsletter every week. I generally stop myself from actually doing so because I try my best to make this newsletter a snapshot of what’s important to the entire consumer tech sector, not just my niche interests. That said, I’m giving myself free rein this week.

The NFT market is just so hilariously bizarre and the culture surrounding the NFT world is so web-native, I can’t read about it enough. But in the past several days, the market for digital art on the blockchain has completely defied reason.

Back in April, I wrote about a platform called CryptoPunks that — at that point — had banked more than $200 million in lifetime sales since 2017. The little pop art pixel portraits have taken on a life of their own since then. It was pretty much unthinkable back then but in the past 24 hours alone, the platform did $141 million in sales, a new record. By the time you read this, the NFT platform will have likely passed a mind-boggling $1.1 billion in transaction volume according to crypto tracker CryptoSlam. With 10,000 of these digital characters, to buy a single one will cost you at least $450,000 worth of the Ethereum cryptocurrency. (When I sent out this newsletter yesterday that number was $300k)

When I published this back in April, the cheapest CryptoPunks were $30k, today the cheapest one available for sale is just shy of $300k https://t.co/X4iTSl6FjC

— Lucas Matney (@lucasmtny) August 27, 2021

It’s not just CryptoPunks either; the entire NFT world has exploded in the past week, with several billions of dollars flowing into projects with drawings of monkeys, penguins, dinosaurs and generative art this month alone. After the NFT rally earlier this year — culminating in Beeple’s $69 million Christie’s sale — began to taper off, many wrote off the NFT explosion as a bizarre accident. What triggered this recent frenzy?

Part of it has been a resurgence of cryptocurrency prices toward all-time-highs and a desire among the crypto rich to diversify their stratospheric assets without converting their wealth to fiat currencies. Dumping hundreds of millions of dollars into an NFT project with fewer stakeholders than the currencies that underlie them can make a lot of sense to those whose wealth is already over-indexed in crypto. But a lot of this money is likely FOMO dollars from investors who are dumping real cash into NFTs, bolstered by moves like Visa’s purchase this week of their own CryptoPunk.

I think it’s pretty fair to say that this growth is unsustainable, but how much further along this market growth gets before the pace of investment slows or collapses is completely unknown. There are no signs of slowing down for now, something that can be awfully exciting — and dangerous — for investors looking for something wild to drop their money into… and wild this market truly is.

Here’s some advice from Figma CEO Dylan Field who sold his alien CryptoPunk earlier this year for 4,200 Eth (worth $13.6 million today).

Just getting into NFT’s? Welcome!! It’s a fascinating world and this is just the very start :)

My unsolicited advice: exercise caution + restraint. There are a lot of speculators in the space right now. Buy things you love / plan to hold forever and don’t expect prices to go up!

— Dylan Field (@zoink) August 28, 2021


Image Credits: Kanye West

Other things

Here are the TechCrunch news stories that especially caught my eye this week:

OnlyFans suspends its porn ban
In a stunning about-face, OnlyFans declared this week that they won’t be banning “sexually explicit content” from their platform after all, saying in a statement that they had “secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change.”

Kanye gets into the hardware business
Ahead of the drop of his next album, which will definitely be released at some point, rapper Kanye West has shown off a mobile music hardware device called the Stem Player. The $200 pocket-sized device allows users to mix and alter music that has been loaded onto the device. It was developed in partnership with hardware maker Kano.

Apple settles developer lawsuit
Apple has taken some PR hits in recent years following big and small developers alike complaining about the take-it-or-leave-it terms of the company’s App Store. This week, Apple shared a proposed settlement (which still is pending a judge’s approval) that starts with a $100 million payout and gets more interesting with adjustments to App Store bylines, including the ability of developers to advertise paying for subscriptions directly rather than through the app only.

Twitter starts rolling out ticketed Spaces
Twitter has made a convincing sell for its Clubhouse competitor Spaces, but they’ve also managed to build on the model in recent months, turning its copycat feature into a product that succeeds on its own merits. Its latest effort to allow creators to sell tickets to events is just starting to roll out, the company shared this week.

CA judge strikes down controversial gig economy proposition
Companies like Uber and DoorDash dumped tens of millions of dollars into Prop 22, a law which clawed back a California law that pushed gig economy startups to classify workers as full employees. This week a judge declared the proposition unconstitutional, and though the decision has been stayed on appeal, any adjustment would have major ramifications for those companies’ business in California.


Image of a dollar sign representing the future value of cybersecurity.

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

Extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Future tech exits have a lot to live up to
“Inflation may or may not prove transitory when it comes to consumer prices, but startup valuations are definitely rising — and noticeably so — in recent quarters. That’s the obvious takeaway from a recent PitchBook report digging into valuation data from a host of startup funding events in the United States…”

OpenSea UX teardown
“…is the experience of creating and selling an NFT on OpenSea actually any good? That’s what UX analyst Peter Ramsey has been trying to answer by creating and selling NFTs on OpenSea for the last few weeks. And the short answer is: It could be much better...

Are B2B SaaS marketers getting it wrong?
“‘Solutions,’ ‘cutting-edge,’ ‘scalable’ and ‘innovative’ are just a sample of the overused jargon lurking around every corner of the techverse, with SaaS marketers the world over seemingly singing from the same hymn book. Sadly for them, new research has proven that such jargon-heavy copy — along with unclear features and benefits — is deterring customers and cutting down conversions…”


Thanks for reading! And again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.

Lucas Matney

You Should Have Waited for the Official 'Spider-Man: No Way Home' Trailer

By Angela Watercutter
Also: The latest Matrix sequel has a title, and that’s all I want to know about it.

Corporate venture capital follows the same trend as other VC markets: Up

By Anna Heim

As the global market for startup investing presses to new heights in terms of dollars invested this year, and deal volume ticks up in several regions, corporations are diving into the action.

Data from CB Insights and Stryber indicate that corporate investors are taking part in deals worth more than ever, even if corporate venture capital (CVC) deal activity is not up uniformly around the world.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


In a sense, it’s not surprising that CVCs are seeing the deals that they participate in rising in size — the global venture capital market has trended toward larger deals and more dollars for some time now. But questions lie inside the eye-popping figures: How are corporate investors adapting to a more rapid-fire and expensive venture capital market? We also wanted to know if CVCs are shaking up their deal sourcing, and whether the classic corporate venture tension between strategic investing and deploying capital for financial return is seeing a focus mix shift.

To help us understand the data we have at our fingertips, The Exchange reached out to M12’s Matt Goldstein, Sony Innovation Fund’s Gen Tsuchikawa and WIND VenturesBrian Walsh. (TechCrunch last covered CVC outfit WIND Ventures here.)

Let’s talk data and then dig into the nuance behind the numbers.

A boom in deal value

Precisely measuring CVC activity is interestingly difficult. When we discuss the value of venture capital deals, for example, what counts and what doesn’t is a matter of taste. For example, how to treat the SoftBank Vision Fund. Do deals that it leads that include venture capital participation count toward larger VC activity for a given period of time? What about investments led by crossover funds?

No matter what you choose, aggregate venture capital data will always include dollars invested by non-venture entities. So you do the best you can. CVC has the same problem, amplified. Because CVCs are often participatory to deals, instead of leading them, especially in the later stages of startup investing today, tallying concrete corporate venture investment is difficult. So we proceed in the same manner as we do with aggregate venture data counting, including deals that a particular investor type participated in.

Perfect, no. But it’s consistent, which is what we likely care about more. All that’s to say that when we observe the following deal and dollar data, CB Insights notes plainly that for its purposes, “‘CVC-backed funding’ and ‘CVC-backed deals’ refer to corporate venture capital participation in these funding rounds.”

Fair enough. Per CB Insights’ H1 2021 CVC report, CVCs participated in $78.7 billion in funding activity in the first half of 2021, a record for a half-year period. That dollar figure was derived from some 2,099 deals around the world. Precisely how strong those figures are is not clear from their absolute scale.

Forbes jumps into hot media liquidity summer with a SPAC combo

By Alex Wilhelm

What a busy week in the world of media liquidity.

That’s a sentence you don’t get to write often. Regardless, news broke this week that Axel Springer is buying U.S. political journalism outfit POLITICO. The transaction was expected, but the eye-popping roughly $1 billion price tag still has tongues wagging. We even got on the podcast to chat about it.

And Forbes announced that it is going public via a SPAC. The business publication’s news follows BuzzFeed’s journey to the public markets through a blank-check company. Hot media liquidity summer? Something like that.


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That TechCrunch is in the process of being sold to private equity, of course, is not something that we should forget. Shoutout to the Verizon bankers who found a way to get rid of us while also deleveraging Verizon’s debt profile. Ten points.

I want to take a quick tour of the Forbes SPAC deck this morning. Our notes on BuzzFeed’s are here, in case you want to run comparisons. This will be easy and fun. Perfect Friday morning fare. Into the data!

What’s it worth?

In corporate-speak, Forbes Global Media Holdings is merging with blank-check company Magnum Opus Acquisition Limited. The transaction will close either Q4 2021 or Q1 2022, Forbes estimates.

The deal itself is somewhat modest in scale compared with other SPAC deals we’ve recently looked into. Forbes reports that it will sport “an implied pro forma enterprise value of $630 million, net of tax benefits,” after its completion. Some $600 million in gross proceeds will be derived from Magnum Opus funds “and $400 million of additional capital through a private placement of ordinary shares of the combined company,” Forbes writes.

The company will sport an equity valuation of $830 million after the deal closes, per its own calculations. That number will change some depending on redemptions ahead of the combination. The gap between the large dollars going into the deal and the modest final valuation of the public Forbes entity is due to some $440 million in secondary transactions for existing Forbes shareholders.

In case you’d prefer all of that in table form, here’s the Forbes investor deck:

Image Credits: Forbes SPAC deck

Is $830 million a fair price? Let’s dig into Forbes’ results.

Apple lowers commissions on in-app purchases for news publishers who participate in Apple News

By Sarah Perez

Apple today is launching a new program that will allow subscription news organizations that participate in the Apple News app and meet certain requirements to lower their commission rate to 15% on qualifying in-app purchases taking place inside their apps on the App Store. Typically, Apple’s model for subscription-based apps involves a standard 30% commission during their first year on the App Store, which then drops to 15% in year two. But the new Apple News Partner Program, announced today, will now make 15% the commission rate for participants starting on day one.

There are a few caveats to this condition, and they benefit Apple. To qualify, the news publisher must maintain a presence on Apple News and they have to provide their content in the Apple News Format (ANF). The latter is the JavaScript Object Notation (JSON) format that’s used to create articles for Apple News which are optimized for Mac, iPhone and other Apple mobile devices. Typically, this involves a bit of setup to translate news articles from a publisher’s website or from their CMS (content management system) to the supported JSON format. For WordPress and other popular CMS’s, there are also plugins available to make this process easier.

Meanwhile, for publishers headquartered outside one of the four existing Apple News markets — the U.S., U.K., Australia or Canada — they can instead satisfy the program’s obligations by providing Apple with an RSS feed.

On the App Store, the partner app qualifying for the 15% commission must be used to deliver “original, professionally authored” news content, and they must offer their auto-renewable subscriptions using Apple’s in-app purchase system.

Image Credits: Apple

While there is some initial work involved in establishing the publisher’s connection to Apple News, it’s worth noting that most major publishers already participate on Apple’s platform. That means they won’t have to do any additional work beyond what they’re already doing in order to transition over to the reduced commission for their apps. However, the program also serves as a way to push news organizations to continue to participate in the Apple News ecosystem, as it will make more financial sense to do so across their broader business.

That will likely be an area of contention for publishers, who would probably prefer that the reduced App Store commission didn’t come with strings attached.

Some publishers already worry that they’re giving up too much control over their business by tying themselves to the Apple News ecosystem. Last year, for example, The New York Times announced it would exit its partnership with Apple News, saying that Apple didn’t allow it to have as direct a relationship with readers as it wanted, and it would rather drive readers to its own app and website.

Apple, however, would argue that it doesn’t stand in the way of publishers’ businesses — it lets them paywall their content and keep 100% of the ad revenue from the ads they sell. (If they can’t sell it all or would prefer Apple to do so on their behalf, they then split the commission with Apple, keeping 70% of revenues instead.) In addition, for the company’s Apple News+ subscription service — where the subscription revenue split is much higher — it could be argued that it’s “found money.” That is, Apple markets the service to customers the publisher hadn’t been able to attract on its own anyway.

The launch of the new Apple News Partner program comes amid regulatory scrutiny over how Apple manages its App Store business and more recently, proposed legislation aiming to address alleged anticompetitive issues both in the U.S. and in major App Store markets, like South Korea.

Sensing this shift in the market, Apple had already been working to provide itself cover from antitrust complaints and lawsuits — like the one underway now with Epic Games — by adjusting its App Store commissions. Last year, it launched the App Store Small Business Program, which also lowered commissions on in-app purchases from 30% to 15% — but only for developers earning up to $1 million in revenues.

This program may have helped smaller publishers, but it was clear some major publishers still weren’t satisfied. After the reduced commissions for small businesses were announced in November, the publisher trade organization Digital Content Next (DCN) — a representative for the AP, The New York Times, NPR, ESPN, Vox, The Washington Post, Meredith, Bloomberg, NBCU, The Financial Times, and others — joined the advocacy group and lobbying organization the Coalition for App Fairness (CAF) the very next month.

These publishers, who had previously written to Apple CEO Tim Cook to demand lower commissions — had other complaints about the revenue share beyond just the size of the split. They also didn’t want to be required to use Apple’s services for in-app purchases for their subscriptions, saying this “Apple tax” forces them to raise their prices for consumers.

It remains to be seen how these publishers will now react to the launch of the Apple News Partner program.

While it gives them a way to lower their App Store fees, it doesn’t address their broader complaints against Apple’s platform and its rules. If anything, it ties the lower fees to a program that locks them in further to the Apple ecosystem.

Apple, in a gesture of goodwill, also said today it would recommit support to three leading media non-profits, Common Sense Media, the News Literacy Project, and Osservatorio Permanente Giovani-Editori. These non-profits offer nonpartisan, independent media literacy programs, which Apple views as key to its larger mission to empower people to become smart and active news readers. Apple also said it would later announce further media literacy projects from other organizations. The company would not disclose the size of its commitment from a financial standpoint however, or discuss how much it has sent such organizations in the past.

“Providing Apple News customers with access to trusted information from our publishing partners has been our priority from day one,” said Eddy Cue, Apple’s senior vice president of Services, in a statement. “For more than a decade, Apple has offered our customers many ways to access and enjoy news content across our products and services. We have hundreds of news apps from dozens of countries around the world available in the App Store, and created Apple News Format to offer publishers a tool to showcase their content and provide a great experience for millions of Apple News users,” he added.

More details about the program and the application form will be available at the News Partner Program website.

AI voice, synthetic speech company LOVO gets $4.5M pre-series A funding

By Kate Park

“Voice skins” have become a very popular feature for AI-based voice assistants, to help personalize some of the more anodyne aspects of helpful, yet also kind of bland and robotic, speaking voices you get on services like Alexa. Now a startup that is building voice skins for different companies to use across their services, and for third parties to create and apply as well, is raising some funding to fuel its growth.

LOVO, the Berkeley, California-based artificial intelligence (AI) voice & synthetic speech tool developer, this week closed a $4.5 million pre-Series A round led by South Korean Kakao Entertainment along with Kakao Investment and LG CNS, an IT solution affiliate of LG Group.

Its previous investor SkyDeck Fund and a private investor, vice president of finance at DoorDash Michael Kim, also joined the funding.

The proceeds will be used to propel its research and development in artificial intelligence and synthetic speech and grow the team.

“We plan on hiring heavily across all functions, from machine learning, artificial intelligence and product development to marketing and business development. The fund will also be allocated to securing resources such as GPUs and CPUs,” co-founder and chief operating officer Tom Lee told TechCrunch.

LOVO, founded in November 2019, has 17 people including both co-founders, chief executive office Charlie Choi and COO Lee.

The company plans to double down on improving LOVO’s AI model, enhance its AI voices and develop a better product that surpasses any that exists in the current market, Lee said.

“Our goal is to be a global leader in providing AI voices that touches people’s hearts and emotions. We want to democratize limitations of content production. We want to be the platform for all things voice-related,” Lee said.

With the mission, LOVO allows enterprises and individual content creators to generate voiceover content for using in marketing, e-learning, customer support, movies, games, chatbots and augmented reality (AR) and virtual reality (VR).

“Since our launch a little over a year ago, users have created over 5 million voice content on our platform,” co-founder and CEO Choi said.

LOVO launched its first product LOVO Studio last year, which provides an easy-to-use application for individuals and businesses to find the voice they want, produce, and publish their voiceover content. Developers can utilize LOVO’s Voiceover API to turn text into speeches in real-time, integrated into their applications. Users also can create their own AI voices by simply reading 15 minutes of script via LOVO’s DIY Voice Cloning service.

LOVO owns more than 200 voice skins that provide users with voices categorized by language, style, and situation suited for their various needs.

The global text to speech (TTS) market is estimated at $3 billions, with the global voiceover market at around $10 billion, according to Lee. The Global TTS market is projected to increase $5.61 billion by 2028 from $1.94 billion in 2020, based on Research Interviewer’s report published in August 2021.

LOVO already secured 50,000 users and more than 50 enterprise customers including the US-based J.B. Hunt, Bouncer, CPA Canada, LG CNS, and South Korea’s Shinhan Bank, Lee mentioned.

LOVO’s four core markets are marketing, education, movies and games in entertainment and AR/VR, Lee said. The movie Spiral, the latest film of the Saw Series, features LOVO’s voice in the film, he noted.

It is expected that LOVO will create additional synergies in the entertainment industry in the wake of the latest funding from a South Korean entertainment.

VP of CEO Vision Office at Kakao Entertainment J.H. Ryu said, “I’m excited for LOVO’s synergies with Kakao Entertainment’s future endeavors in the entertainment vertical, especially with web novels and music,” Ryu also added, “AI technology is opening the doors to a new market for audio content, and we expect a future a where an individual’s voice will be utilized effectively as an intellectual property and as an asset.”

Founding Partner at SkyDeck Fund Chon Tang said, “Audio is uniquely engaging as a form of information but also difficult to produce, especially at scale. LOVO’s artificial intelligence-based synthesis platform has consistently out-performed other cloud-based solutions in quality and cost.”

LOVO is also preparing to penetrate further to international market, “We have a strong presence in the US, UK, Canada, Australia and New Zealand, and are getting signals from the rest of Europe, South America and Asia,” Lee said. LOVO has an office in South Korea and is looking to expand into Europe soon, Lee added.

Mental health startup Intellect gets $2.2M to expand across Asia

By Catherine Shu

Intellect, a Singapore-based startup that wants to make mental health care more accessible in Asia, announced it has raised $2.2 million in pre-Series A funding. It is taking part in Y Combinator’s current batch, which will hold its Demo Day at the end of this month.

The round was led by returning investor Insignia Venture Partners and included participation from Y Combinator, XA Network and angel investors like Rainforest co-founder J.J. Chai; Prenetics and CircleDNA founder Danny Yeung; and Gilberto Gaeta, Google’s director of global HR operations.

This brings Intellect’s total funding since it launched a year ago to $3 million, including a seed round announced in December 2020 that was also led by Insignia.

Intellect offered two main product suites: a consumer app with self-guided programs based on cognitive behavioral therapy techniques, and a mental health benefits solution for employers with online therapy programs and telehealth services. The startup now claims more than 2.5 million app users, and 20 enterprise clients, including FoodPanda, Shopback, Carousell, Avery Dennison, Schroders and government agencies.

Founder and chief executive officer Theodoric Chew told TechCrunch that Intellect’s usage rate is higher than traditional EAP helpline solutions. On average, its mental health benefits solution sees about 20% to 45% engagement within three months after being adopted by companies with more than 5,000 employees.

In many Asian cultures, there is still a lot of stigma around mental health issues, but that has changed over the last year and a half as people continue to cope with the emotional impact of the COVID-19 pandemic, Chew said. “From individuals, to companies, insurers and governments, all these different types of people and organizations are today prioritizing mental healthcare on an individual and organizational level in an extremely rapid manner.”

Intellect protects user privacy with zero-knowledge encryption, so the startup and employers don’t have access to people’s records or communications with their coaches and counsellors. Any insights shared with employers are aggregated and anonymized. Chew said the company is also compliant with major data privacy regulations like ISO, HIPAA and GDPR.

Intellect is currently collaborating in 10 studies with institutions like the National University of Singapore, King’s College London, University of Queensland and the Singapore General Hospital. It says studies so far have demonstrated improvements in mental well-being, stress levels and anxiety among its users.

The new funding will be used to expand into more Asian markets. Intellect currently covers 12 countries and 11 languages.

 

With investors like Lightspeed and The Chainsmokers, Mexican neobroker Flink raises $57M to boost financial inclusion in LatAm

By Mary Ann Azevedo

Flink, a Mexico City-based neobroker, has raised $57 million in a Series B round of funding led by Lightspeed Venture Partners.

The financing comes just over six months after Flink raised $12 million in a Series A round led by Accel. Existing backers Accel, ALLVP, Clocktower and new investor Mantis Venture Capital (founded by The Chainsmokers) also put money in the Series B. Since its 2017 inception, the startup has raised nearly $70 million.

Neobrokers are defined as startups that are disrupting the investment industry by providing a platform for a wider range of consumers to partake in the stock market by offering them more incremental investment options and modern and easy mobile-based interfaces to manage their money. There is a growing number of them globally, including Scalable Capital, Bitpanda and Trade Republic in Europe.

For Mexico City-born Sergio Jiménez Amozurrutia, the fact that in his country of more than 120 million people, only a tiny fraction of the population has the ability to invest in the capital markets felt unfair. To him, the lack of widespread participation in investing is an example of the rich getting richer as part of an infrastructure “that is built for the wealthy.” The result of the imbalance is that a lot of people have historically been locked out of making potentially wealth-building investments.  

So after selling Easy Credit, a consumer lending platform he’d built with Rick Rafael Bueno (whom he met in 2015 at a hackathon at Tech de Monterrey), Amozurrutia set out to give Mexicans access to something he believed they’d never had access to: an app-based consumer trading platform.

Flink launched its app in 2018 with a wallet service, a digital and physical global debit card backed by Mastercard and, last year, it began offering the ability to buy and sell fractional shares from 30 pesos, without commissions, for NYSE-listed stocks.

“Users can invest as little as US$1 and with zero commissions,” Amozurrutia said. “We want Flink to be the easiest way to invest, save and use your money.” 

Image Credits: Lightspeed’s Mercedes Bent and Flink founding team / Lightspeed

The demand for what the startup has to offer is clearly there. Since launching its first brokerage product in July of 2020, Flink has 1.6 million users, up from 1 million users at the time of its February raise. Over 85% of its users are first-time investors. GenZers seem to be the most interested in investing — 27% of the app’s clients are between 18 and 25 years old, while 22% are millennials, execs say.

“Most legacy Mexican banks cater to less than 1% of the population — meaning most Mexicans don’t have a bank account, let alone a brokerage account,” Amozurrutia said at the time of the company’s last raise. “At Flink, we’re guided by the belief that Mexico’s financial system should work for everyone — not only a select few.”

The company is growing its user base by 38% per month and revenue by 31% per month, according to  Amozurrutia, and touts a user acquisition cost of 62 cents. It is currently the largest retail brokerage service in Mexico, he said. Flink has 110 employees, up from 25 people a year ago today.

The startup plans to use its new capital to keep growing its team, toward product development and to expand its service to different countries in Latin America.

“The lack of access for retail investing is all over LATAM, and at Flink we want to change that,” Amozurrutia told TechCrunch. “We are focused on offering the opportunity to invest and grow their money to everyone in LATAM.”

Lightspeed Partner Mercedes Bent said her firm “fell in love” with Flink’s mission and impact on the country’s “financial ecosystem.” It was also impressed by the company’s unique features, including allowing Mexican investors to access the U.S. stock market and invest fractional shares.

“Many equities platforms only let you invest in equities in your own country,” she said. “Flink also has a big focus on education and creating an investment experience that makes it easy for their users to onboard.” For example, Bent noted, Flink has a podcast dubbed “Finanzas en órbita” that provides financial and stock market education in México.

In a blog post, Bent and Will Kohler wrote that they could feel the company’s passion and vision for creating more financial inclusion in Mexico, even via a Zoom call.

“The excitement leapt through the video screen,” the pair wrote. “…Flink’s vision for the future goes beyond accessing stocks, and we wanted to be a part of it.”

Flink marks Lightspeed’s third investment in Mexico, alongside Stori and Frubana, and Bent and Kohler say there is “more to come.”

“We are big believers in México, and bullish on LATAM,” they wrote.

D2C specs purveyor Warby Parker files to go public

By Alex Wilhelm

Did you miss IPOs? I sure did. They could be coming back after a summer lull.

Warby Parker, a D2C glasses company backed by over a half-billion dollars of private capital, filed to go public yesterday. For investors like General Catalyst, Tiger Global and Durable Capital Partners, it’s an important debut. Having taken on equity capital since at least 2011, investors have been waiting a long time for Warby to float.


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And there’s quite a lot to like about the company, the first parse of its IPO filing reveals. There are some less attractive elements to its business worth discussing, and we need to examine how COVID-19 impacted the company’s 2020 performance.

Warby last raised known private capital in August 2020, a $120 million Series G that valued the company at just over $3 billion on a post-money basis. D1 Capital Partners led that transaction, which included both Durable Capital and Baillie Gifford.

For D2C startups, the Warby IPO is something of a do-over. The Casper IPO from early 2020 is now a cautionary tale for companies employing the business model; the company reduced its IPO range, priced at $12 per share and today trades for just over $5.

But there’s more to Warby Parker’s IPO than just the D2C category. It’s a public benefit corporation, which it says in its filing means that it is “focused on positively impacting all stakeholders” as opposed to merely shareholders. And the company has a charitable bent to its efforts through a foundation and donation model of giving away eyewear when customers purchase their own set. Warby also has a hybrid sales model, leaning on both IRL and digital retail channels. There’s lots to dig into.

So let’s parse Warby’s growth history, its profitability progress over time and how the company is blending IRL shopping with digital channels. We’ll close by examining just how the company was priced last year, taking a guess at what it might be worth in today’s public markets.

Inside Warby Parker’s historical growth

Looking at Warby’s full-year results for 2020 is not inspiring. The company grew well from 2018 to 2019, expanding from $272.9 million in revenue to $370.5 million in revenue, or around 36%. That’s not an astounding pace of growth, but it’s more than respectable for a company of Warby’s age and size.

Then in 2020 the company only managed to eke out 6% growth to $393.7 million in top line. What happened to slow the company’s growth rate from Just Fine to Not Fine At All? COVID, it appears.

Ai Palette raises $4.4M to help companies react faster to consumer trends

By Catherine Shu

Developing new packaged foods and consumer goods can take a couple years as companies research, prototype and test products. In a society that runs on social media, however, people expect to see trends land on store shelves much more quickly. Founded in 2018, Ai Palette uses machine learning to help companies spot trends in real time and get them retail-ready, often within a few months. The startup, whose clients include Danone, Kellogg’s, Cargill and Dole, announced today it has raised an oversubscribed $4.4 million Series A co-led by pi Ventures and Exfinity Venture Partners. Both will join Ai Palette’s board.

The round also included participation from returning backers food tech venture firm AgFunder and Decacorn Capital, and new investor Anthill Ventures. It brings Ai Palette’s total raised to $5.5 million, including a seed round announced in 2019.

Ai Palette is based in Singapore, with an engineering hub in Bangalore. Its customer base started in Southeast Asia, before expanding into China, Japan, the United States and Europe.

Its customer base started in Southeast Asia and India, and expanded to China, Japan, the United States and Europe. Ai Palette supports 15 languages, which the company claims is the most of any AI-based tool for predicting consumer packaged goods (CPG) trends. Its funding will be used to expand into more markets and fill engineering and data science roles.

Ai Palette was founded in 2018 by chief executive officer Somsubhra GanChoudhuri and chief technology officer Himanshu Upreti, who met through Entrepreneur First, the “talent investor” that recruits and teams up potential founders.

Before Ai Palette, GanChoudhuri worked in sales and marketing at Givaudan, the world’s largest manufacturer of fragrances and flavors. This allowed him to see how product innovation is done for many types of consumer products, ranging from snacks and fast food to packaged goods. Many of the companies he worked with were beginning to realize that a two-year product innovation cycle could no longer meet demand. Upreti, an advanced machine learning and big data analysis expert, previously worked at companies including Visa, where he built models that can handle petabytes of data.

Ai Palette’s first product is Foresight Engine, which tracks trends like ingredients or flavors, analyzes why they are popular and predicts how long demand will last. It also identifies “white space opportunities,” or situations where there is unmet demand. For example, GanChoudhuri said the COVID-19 pandemic has changed the way people eat — they are now eating health snacks up to six times a day in front of screens — so companies have the chance to release new kinds of products.

Foresight Engine gives contextual information, said Upreti. “For example, is a food item eaten on the go, or at a café. Is a product consumed socially or individually? What’s trending at kids’ birthday parties? For a specific product or ingredient, images provide information on product pairings and product format.”

The platform uses data from sources like social media, search, blogs, recipes, menus and company data. “Data sets popular to each market are prioritized, like a local recipe or a food delivery app,” said GanChoudhuri. “And they are tracked over the years to determine growth trajectory with a strong degree of confidence.”

Some specific examples of how Ai Palette’s tech has translated into new products include brands that want to launch a new flavor, like for a potato chip or soda, in a specific country. They can use the Foresight Engine to not only see what trends are rising, but which ones have the potential to become long-term favorites, so they don’t invest in a product that will almost instantly lose its popularity.

Many of Ai Palette’s clients have used it to react to new trends and consumer behavior patterns during the COVID-19 pandemic. Not surprisingly, people in many markets are interested in healthy food or ones that are supposed to boost immunity. For example, in Southeast Asia there is more demand for lemon and garlic, while acerola and yerba mate are trending in the United States.

On the other hand, “in China, taste is paramount, even over health, because people are looking for food that brings back a sense of normalcy,” said GanChoudhuri. Meanwhile in India, there is demand for products with longer shelf life as people continue to cope with the pandemic, but many consumers are also seeking interesting snacks to ease the boredom of lockdown, with kimchi and other Korean flavors becoming especially popular.

Ai Palette’s ability to work with many languages is one of the ways it differentiates from other machine learning-based trend-prediction platforms. It currently supports English, simplified Mandarin, Japanese, Korean, Thai, Vietnamese, Bahasa Indonesian, Bahasa Melayu, Tagalog, Spanish, French and German, with plans to add more as it targets new European countries, Mexico, Latin America and the Middle East.

 

Boston’s startup market is more than setting records in scorching start to year

By Anna Heim

The global startup community is currently enjoying a period of fundraising success that may be unprecedented in the history of technology and venture capital. While this is happening around the world, few startup hubs in the world are reveling in a greater boost to their ability to attract capital than Boston.

The well-known U.S. city is a traditional venture capital hub, but one that seemed to fall behind its domestic rivals Silicon Valley and New York City in recent years. However, data indicates that Boston’s startup activity in fundraising terms has reached a new, higher plateau, funneling record sums into the city’s upstart technology companies this year.

And, according to local investors, there could be room for further acceleration in capital disbursement.


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The Exchange wanted to better understand what’s driving Boston’s rapid-fire results, and discover if there is any particular need for caution or concern. Is the market overheated? According to local investors Rob Go from NextView, Jamie Goldstein from Pillar VC, Lily Lyman from Underscore and Sanjiv Kalevar from OpenView, things may be more than warm, but Boston’s accelerating venture capital totals in 2021 are not based on FOMO or other potentially ephemeral trends.

Instead, Boston is benefiting from larger structural changes to at least the U.S. venture capital market, helping close historical gaps in its startup funding market and access funds that previously might have skipped the region. And local university density isn’t hurting the city’s cause, either, boosting its ability to form new companies during a period of rich investment access.

Let’s talk data, and then hear from the investing crew about just what is going on over in Beantown.

A record year in the making

When discussing venture capital data, we often note that it is somewhat laggy, with rounds announced long after they are closed. In practice, this means that more recent data can undersell how a particular quarter has performed. With Boston’s 2021 thus far, all that we can say is that if this data includes normal venture capital lag, it will simply be all the more incredible.

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