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5 consumer hardware VCs share their 2021 investment strategies

By Matt Burns

Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder.

TechCrunch surveyed five key investors who touch different aspects of the consumer electronics industry, based on our TechCrunch List of top VCs recommended by founders, along with other sources.

We asked these investors the same six questions, and each provided similar thoughts, but different approaches:

Despite the pandemic, each identified bright spots in the consumer electronic world. One thing is clear, investors are generally bullish on at-home fitness startups. Multiple respondents cited Peloton, Tonal and Mirror as recent highlights in consumer electronics.

Said Shasta Venture’s Rob Coneybeer, “With all due respect to my friends at Nest (where Shasta was a Series A investor), Tonal is the most exciting consumer connected hardware company I’ve ever been involved with.”

Besides asking about the trends and opportunities they’re pursuing in 2021, the investors we spoke to also identified other investors, founders and companies who are leaders in consumer hardware and shared how they’ve reshaped their investment strategies during the pandemic. Their responses have been edited for space and clarity.


Hans Tung, GGV Capital

Which consumer hardware sector shows the most promise for explosive growth?

For consumer hardware, offering end users a differentiated experience is extremely important. Social interactions, gamification and high-quality PGC (professionally generated content) such as with Peloton, Xiaomi and Tonal is a must to drive growth. It’s also easy to see how the acceleration of the digital economy created by COVID-19 will also drive growth for hardware.

First, services improved by the speed and reliability of 5G such as live streaming, gaming, cloud computing, etc. will create opportunity for new mobile devices and global mass market consumers will continue to demand high-quality, low-cost hardware. For example, Arevo is experimenting with “hardware as a service” with a 3D printing facility in Vietnam.

For enterprise hardware, security, reliability and fast updates are key competitive advantages. Also as a result of 5G… manufacturing automation and industrial applications. Finally IoT for health and safety may find its sweet spot thanks to COVID-19 with new wearables that track sleep, fitness and overall wellness.

How did COVID-19 change consumer hardware and your investment strategy?

One opportunity for consumer hardware companies to consider as a result of COVID-19 is how they engage with their customers. They should think of themselves more like e-commerce companies, where user experience, ongoing engagement with the consumer and iteration based on market feedback rule the day. While Peloton had this approach well before COVID, it has built a $46 billion company thinking about their products in this way.

For example, some consumers felt the bike was too expensive so instead of responding with a low-end product, the company partnered with Affirm to make their hardware more affordable with pay-as-you-go plans. A Peloton bike is not a one-and-done purchase; there is constant interaction between users, and the company that drives more satisfaction in the hardware adds more value in the business.

Entering 2021, in what way is hardware still hard?

Hardware is still hard because it takes more to iterate fast. The outcome for competitors relative to speed-to-market can be dramatic. For example, every year I look at future generation of EVs with lots of innovations and cool features from existing OEMs but see very few of these making it to market compared to Tesla and other pure players that are cranking out vehicles. Their speed of execution is impressive.

Who are some leaders in consumer hardware — founders, companies, investors?

  • John Foley, founder and CEO of Peloton. John and the Peloton team have cracked the code on the integration of community experience and hardware.
  • Sonny Vu, founder of Misfit and founder/CEO of Arevo, maker of ultrastrong, lightweight continuous carbon fiber products on demand. Experienced founder and team with 3D printing manufacturing know-how at scale are now able to offer breakthrough consumer and industrial products at competitive prices.
  • Manu Jain, head of Xiaomi’s business in India where Xiaomi is the #1-selling smart phone. He built the Indian operation from the ground up; had zero dollar marketing budget for the first three years; and localized manufacturing for all Xiaomi phones sold in India.
  • Jim Xiao, founder and CEO of Mason, a rising star who is creating “mobile infrastructure as a service.”
  • Irving Fain, founder and CEO of Bowery Farming. Irving and his team are on a mission to reimagine modern farming.

Is there anything else you would like to share with TechCrunch readers?

Worry less about trends and build products that resonate with customers.

 

Dayna Grayson, Construct Capital

iSpot expands its ad measurement platform by acquiring Ace Metrix

By Anthony Ha

iSpot.tv announced today that it has acquired Ace Metrix, a deal that brings two TV and video ad measurement companies together.

iSpot founder and CEO Sean Muller said that the companies have complementary solutions. After all, he said, “In simple terms, there are only two reasons why brands buy advertising — one is to deliver business results and the other is to build brand recognition, likability and impact.”

The existing iSpot platform excels in the first area, Muller said, measuring the reach and conversation rates of ads that run on both TV and streaming. Ace Metrix, on the other hand, measures how an ad affects consumer sentiment — so by bringing the two companies together, it can offer “a complete solution in one platform.”

Muller added that measuring the brand impact of an ad has become even more important as marketers try to navigate a constantly changing news landscape (to put it mildly).

“Brands are being forced to have a say in politics and all sorts of things,” he said. “Understanding the way your messages are being perceived is crucially important … When you invest in a piece of creative, it becomes even more important to ensure that your message is on point and triggers the right emotions.”

Ace Metrix had raised $25 million in funding from investors including Hummer Winblad Venture Partners, WPP, Palomar Ventures and Leapfrog Ventures, according to Crunchbase.

The financial terms of the acquisition were not disclosed, but iSpot says Ace’s 45 employees will all be joining the company, bringing total headcount to 240, with Ace CEO Peter Daboll becoming iSpot’s chief strategy officer. Ace will also maintain its office in Los Angeles (iSpot is headquartered in Bellevue, Washington).

Muller also noted that Ace had annualized SaaS revenues “north of the double digit millions” and that it was cashflow positive. The combined company has annual contracts with more than 500 brands.

“We’re integrating the companies together very quickly — it’s already underway,” he said. “We’re going to be one company, one vision and so the Ace products become part of the iSpot product suite. But we will maintain the Ace name for those products.”

Nuclear fusion tech developer General Fusion now has Shopify and Amazon founders backing it

By Jonathan Shieber

In a brief announcement today, the Canadian nuclear fusion technology developer General Fusion announced that the investment firm created by Shopify founder Tobias Lütke has joined the company’s cap table.

The size of the investment made by Lütke’s Thistledown Capital was not disclosed, but with the addition, General Fusion has the founders of the two biggest ecommerce companies in the Western world on its cap table.

Jeff Bezos, the founder and chief executive of Amazon, first invested in the company nearly a decade ago and General Fusion has been steadily raising cash since that time. In 2019, the company hauled in $100 million. That capital commitment is part of a haul totaling at least, $192 million, according to Crunchbase although the real figure is likely higher.

Indeed, General Fusion kept adding cash throughout 2020 as it looked to develop its demonstration fusion reactor.

General Fusion’s process is based on technology called Magnetized Target Fusion (MTF), first proposed by the US Naval Research Lab and developed in the 1970s.

The process involves creating a magnetically confined moderately warm plasma of around 100 eV (roughly 50 times the photon energy of visible light) in a flux conserver (a shell that preserves the magnetic field). By rapidly compressing the flux conserver and the magnetic field inside of it surrounding the plasma, the plasma is superheated to a temperature that can initiate a fast fusion burn, and create a fusion reaction, according to a 2017 description of the technology from General Fusion’s chief science officer and founder, Michael Laberge.

The company uses a roughly 3 meter sphere filled with molten lead-lithium that’s pumped to form a cavity. A pulse of magnetically confined plasma fuel is then injected into the cavity, then, around the spehere, pistons create pressure wave into the middle of the sphere, compressing the plasma to fusion conditions.

Neutrons escaping from the fusion reaction are captured in the liquid metal, and the heat from that metal generates electricity via a steam turbine. A heat exchanger steam turbine produces the power and the steam is recycled to run the pistons.

In recent years, both General Fusion and its main North American competitor Commonwealth Fusion Systems have made strides in getting their small-scale nuclear fusion technology ready for commercialization.

In the past, the wry joke about fusion technologies was that they were always ten years away, but now companies are looking at a four-year horizon to bring fusion to initial markets, if not the masses.

For its part, Commonwealth Fusion Systems is in the process of building a10-ton magnet that has the magnetic force equivalent to 20 MRI machines. “After we get the magnet to work, we’ll be building a machine that will generate more power than it takes to run. We see that as the Kitty Hawk moment [for fusion],” said Bob Mumgaard, the chief executive of Commonwealth Fusion in an interview last year.

Other startup companies are also racing to bring technologies to market and hit the 2025 timeline like the United Kingdom’s Tokamak Energy.

Like General Fusion, Commonwealth also has deep-pocketed backers including the Bill Gates-backed sustainable technology focused investor, Breakthrough Energy Ventures. In all, those investors have committed over $200 million to the company, which formally launched in 2018.

As these companies begin readying their technologies for market, governments are laying the groundwork to make it easier for them to commercialize.

At the end of last year, the Trump administration signed the COVID relief and omnibus appropriations bill that included an amendment to support the development of fusion energy in the US.

The new amendment directed the Department of Energy to carry out a fusion energy sciences research and development program; authorized DoE programs in inertial fusion energy and alternative concepts to find new ways forward for fusion power; reauthorized the INFUSE program to create public-private partnerships between national labs and fusion developers; and created a milestone-based development program to support companies not just through R&D, but into the construction of full-scale systems.

It’s this milestone program that was a cornerstone of the policy work that the Fusion Industry Association wanted to see in the US, according to a December statement from the organization.

By unlocking $325 million in financing over a five year period, the US government will actually double its research with matching contributions from the fusion industry. These demonstration facilities could go a long way toward accelerating the deployment of fusion technologies.

Founded in 2019, Thistledown Capital was formed to invest in tech that can decarbonize industry. The firm, based in Ottawa, has already backed CarbonCure, a technology that captures carbon dioxide from the air.

General Fusion has a strong record of attracting funding support from some of the world’s most influential technology leaders,” said Greg Twinney, CFO, General Fusion, in a statement. “Fusion is planet-saving technology, and we are proud to support the mission of Thistledown Capital in its pursuit for a greener tomorrow.”

Carbyne raises $25M for a next-generation platform to improve emergency 911 responses

By Ingrid Lunden

Emergency services continue to be a major force when it comes to coping with the COVID-19 health pandemic, and today a company that is building technology to help them run better is announcing a round of funding to continue expanding its business.

Carbyne — an Israeli startup that has built a cloud-based platform aimed at emergency services to help them pinpoint more complete information about the people who are calling in, and to provide additional telemedicine services to start responding faster — has picked up $25 million.

The plan will be to take the service — which was already seeing strong growth before the pandemic — to the next level in terms of the technology it is building and the markets and organizations it is serving.

“Carbyne was not founded last year: we were already pushing cloud services and video and location to 911 for quite a while and had served 250 million people before the pandemic,” said Amir Elichai, the CEO, in an interview. “But cloud solutions for emergency services went from nice-to-have to must-have with COVID.”

The company has partnerships with public health providers as well as with groups like CentralSquare and Global Medical Response (GMR), and says that in the U.S. it is on target to cover some 90% of the market.

The Series B1 is being led by Hanaco Ventures and ELSTED Capital Partners, with former CIA Director General David Petraeus, Founders Fund, FinTLV, and other past investors also participating.

The fact that this is a B1 round points to more funding on the way for the company in coming months. In any case, the $25 million is more than the company had planned to raise.

“The plan was to raise $15 million in 2020. After Covid started I decided we didn’t want to let anyone go, but we didn’t know what the situation would be. So we cut salaries instead across the board,” said Elichai. “But then we started to double revenues starting in Q2, and then in Q3 and Q4 grew 160%. It was straightforward to raise this money.”

The funding is coming on the heels of very strong growth for the company, in particular in the last year.

Carbyne’s services now cover about 400 million people, with a new implementation launching every 10 days since March of last year.

Elichai, who co-founded the company with Alex Dizengoff (CTO) and Yony Yatsun (engineering lead), said in an interview that in the last nine months, Carbyne has provided some 155 million location points to emergency medical services teams. Newer products are also growing. The services for EMS teams to provide help remotely have racked up 1.3 million minutes of video in that time, he said.

From what we understand, the funding puts Carbyne’s valuation at “over $100 million.” Although Elichai declined to give a specific figure, for some context, the company was valued at “around” $100 million when it last raised in 2018, a $15 million round that marked the first time that Founders Fund had invested in an Israeli startup.

The growth of the last year, and the ongoing demands on the business, point to that “over” being strong. Indeed, since its last round, the world at large, and the startup itself, have undergone some significant changes.

2018 and whatever dramas we were experiencing back then now feel like a distant, almost halcyon?, past when compared to some of the crises of the moment. One in particular, the coronavirus pandemic, has a direct connection to Carbyne.

Covid-19, the illness the results from the virus, has proven to be a pernicious and dogged ailment, often hitting people with its most dire and serious symptoms — the inability to breathe and organ failure — just when they start to think that they might be recovering. (Of course, that’s not the case for everyone, thankfully, but still it happens much too often to ignore.)

That has put a huge strain on emergency response services, from those that are fielding initial callouts, through to those making first contact with patients, and those at the hospitals bringing in and caring for the most serious cases. In many cases, those working these services have been stretched to overcapacity. The situation in many cities is nothing short of dire.

Carbyne’s technology has come into its own as a way not just to help those people do their jobs better by providing them with more data, but by becoming a means to those services channelling data back to those people calling in.

In the last couple of years, the startup has undergone some significant shifts in how it delivers its services.

When I covered the startup’s last funding round in 2018, for example, it provided some services directly to EMS organizations, but mainly it needed users to install an app, or provide that technology through another app, in order to work.

Now, Elichai says that the company has integrated some location services from companies like Google to remove the need to use an app to connect users to its platform.

Similarly, the startup has taken a strong lead in how it collaborates with municipalities not just to provide services to make their operations more efficient, but to help offset them getting overwhelmed.

A project in that vein was a recent undertaking in New Orleans, which Elichai said played a part in helping the city from really buckling under and managing the Covid-19 outbreak. More on that here:

Longer term, in countries like the US and elsewhere, there is a strong argument to be made for a lot of legacy services in 911-style emergency response finally getting the updates they have needed for years.

Specifically, earlier this month, a $1.5 trillion infrastructure bill approved in Congress earmarks $12 billion in funding for next-generation 911 deployments.

Carbyne believes that by 2023, it will be serving some 1.5 billion people, and it’s moves like this in the U.S. that point to why that might not be so far-fetched, Covid-19 or not.

“The ability to create transparent emergency communications between citizens, emergency call centers, first responders, and state and local government entities will prove of enormous importance as it is integrated into emergency response systems and will certainly save lives and improve outcomes,” said General Petraeus in a statement. “What Carbyne provides will dramatically enhance communications in the moments that matter most.”

Lumiata raises $14 million for its service to predict healthcare outcomes

By Jonathan Shieber

Healthcare systems are always looking out for ways to save money and a startup called Lumiata has just raised $14 million to continue building out its service that aims to help them do it. 

The company, already backed by Khosla Ventures and Blue Venture Fund raised its latest round from Defy.vc and AllegisNL Capital. 

The company’s software cleans up healthcare datasets and then analyzes them to look for underwriting risks and cost savings for healthcare payors and providers.

The company said it would use the money to accelerate investment in new products and services along with sales and marketing. It expects to open new offices in Guadalajara, Mexico in 2021.

“Lumiata excels at building trusted relationships with its customers,” said Dalbir Bains, FGC Health’s chairman, president and CEO, a Lumiata customer. “They have delivered results that help us manage consumer risks for co-morbidities. Our long partnership means that we can depend on them long-term to help us manage our pharmacy business.”

Products help businesses manage underwriting and clinical costs and risks for decision support.

 

Minna Technologies, a subscription management tool for banking customers, raises $18.8M

By Mike Butcher

With the proliferation of subscription services, combined with our lives becoming almost 100% digital, there’s a rising need to be able to manage these services. But most banks don’t have much of an answer. Step in Minna Technologies, which sells in its subscription management services into banking apps.

It’s now raised $18.8 million (€15.5m / £14m) in Series B fundraising from Element Ventures, MiddleGame Ventures, Nineyards Equity and Visa, to expand its open banking technology to banks globally.

Founded in Gothenburg, Sweden in 2016, Minna enables customers to manage subscription services via their existing bank’s app. Using Minna, customers can terminate subscriptions just from their banking app, automatically, cutting the data and financial ties between the merchant and customer. The platform can also notify customers when a free trial is about to end and facilitates utilities switching allowing them to find better deals. So far, Minna has partnerships with Lloyds Banking Group, Swedbank and ING.

Minna’s technology reduces the burden on a bank’s call centers, plus banks can also benefit financially from Minna’s role in facilitating utility switching, raising the prospect of banks becoming marketplaces.

The appearance of Minna suggests that the first wave of neo-banks is about to be accompanied by a second wave of overlayed services such as this. The average European is spending £301 (€333) a month on 11 subscriptions, which is predicted to increase to £459 (€508) a month on 17 subscriptions by 2025. IDC predicts that by 2050, 50% of the world’s largest enterprises will focus the majority of their businesses on digitally enhanced products, services, and experiences. Subscriptions are even coming from car makers such as Volvo.

Joakim Sjöblom, CEO and co-founder of Minna Technologies, said: “Over the past four years the subscription economy has exploded from Spotify and Netflix to even iPhones and cars. It’s becoming increasingly difficult for consumers to keep track of the payments and harder for banks to handle inquiries to shut them down. Minna’s tech improves the procedure for banks by simplifying the process, as well as providing an in-demand digital product that consumers are starting to expect from their financial institutions.”

Sjöblom told me that by largely working with incumbent banks, Minna is providing them with a way to fight back against challenger banks.

Pascal Bouvier, Managing Partner, MiddleGame Ventures said: “We strongly believe in a vision where banks develop their checking account offerings into “connected and intelligent” platforms and where retail clients are able to interact in many more ways than in the recent past.”

Drata raises $3.2M for its compliance audit platform

By Frederic Lardinois

Drata, a startup that helps businesses get their SOC 2 compliance, today announced that it has raised a $3.2 million seed round led by Cowboy Ventures and that it is coming out of stealth. Other investors include Leaders Fund, SV Angel and a group of angel investors.

Like similar services, Drata helps businesses automate a lot of the evidence collection as they prepare for a SOC 2 audit. The focus of the service is obviously on running tests against the SOC 2 framework to help businesses prepare for their audit (and to prepare the right materials for the auditor). To do so, it features integrations with a lot of standard online business tools and cloud services to regularly pull in data. One nifty feature is that it also lets you step through all of the various sections of the SOC 2 criteria to check your current readiness for an audit.

At the end of the day, tools like Drata are meant to get you through an audit, but at the same time, the idea here is also to give you a better idea of your own security posture. For that, Drata offers continuous control monitoring, as well as tools to track if your employees have turned on all the right controls on their work computers, for example. Since companies have to regularly renew their certification, too, Drata can help them to continuously collect all of the data for their renewal, something that previously often involved boring — and quickly forgotten — manual tasks like taking screenshots of various settings every month or so.

Image Credits: Drata

Drata co-founder and CEO Adam Markowitz worked on the space shuttle engines after graduating from college and then launched his own startup, Portfolium, after that program ended. Portfolium, which helped students showcase their work in the form of — you guessed it — a portfolio, eventually sold to Instructure in 2019, where Markowitz stayed on until he launched Drata last June, together with a group of former Portfolium founders and engineers. Besides Markowitz, the co-founders include CTO Daniel Marashlian and CRO Troy Markowitz. It was the team’s experience seeing companies go through the audit process, which has traditionally been a drawn-out and manual process, that led them to look at building their own solution.

The company already managed to sign up a number of customers ahead of its official launch. These include Spot by NetAppAccel RoboticsAbnormal SecurityChameleon and Vareto. As Markowitz told me, even though Drata already had customers who were using the service to prepare for their audits, the team wanted to remain in stealth mode until it had used its own tool to go through its own audit. With that out of the way, and Drata receiving its SOC 2 certification, it’s now ready to come out of stealth.

As the number of companies that need to go through these kinds of audits increases, it’s maybe no surprise that we’re also seeing a growing number of companies that aim to automate much of this process. With that, unsurprisingly, the number of VC investments in this space also continues to increase. In recent months, Secureframe and Strike Graph announced their own funding rounds, for example.

Image Credits: Drata

Openbase scores $3.6M seed to help developers find open-source components

By Ron Miller

Openbase founder Lior Grossman started his company the way that many founders do — to solve a problem he was having. In this case, it was finding the right open-source components to build his software. He decided to build something to solve the problem, and Openbase was born.

Today, the company announced a $3.65 million seed round led by Zeev Ventures with participation from Y Combinator and 20 individual tech industry investors. Openbase was a member of the YC 2020 cohort.

Grossman says that being part of YC helped him meet investors, especially on Demo Day when hundreds of investors listened in. “I would say that being part of YC definitely gave us a higher profile, and exposed us to some investors that I didn’t know before. It definitely opened doors for us,” he said.

As developers build modern software, they often use open-source components to help build the application, and Openbase helps them find the best one for their purposes. “Openbase basically helps developers choose from among millions of open-source packages,” Grossman told me.

The database includes 1.5 million JavaScript packages today, with support for additional languages including Python and Go in beta. The way it works is that users search for a package based on their requirements and get a set of results. From there, they can compare components and judge them based on user reviews and other detailed insights.

Openbase data screen gives detailed insights on the chosen package including popularity and similar packages.

Image Credits: Openbase

Grossman found that his idea began resonating with developers shortly after he launched in 2019. In fact, he reports that he went from zero to half a million users in the first year without any marketing beyond word of mouth. That’s when he decided to apply to Y Combinator and got into the Summer 2020 class.

The database is free for developers, and that has helped build the user base so quickly. Eventually he hopes to monetize by allowing certain companies to promote their packages on the system. He says that these will be clearly marked and that the plan is to have only one promoted package per category. What’s more, they will retain all their user reviews and other associated data, regardless of whether it’s being promoted or not.

Grossman started the company on his own, but has added five employees, with plans to hire more people this year to keep growing the startup. As an immigrant founder, he is sensitive to diversity and sees building a diverse company as a key goal. “I built this company as an immigrant myself […] and I want to build an inclusive culture with people from different backgrounds because I think that will produce the best environment to foster innovation,” he explained.

So far the company has been fully remote, but the plan is to open an office post-pandemic. He says he sees a highly flexible approach to work, though, with people spending some days in the office and some at home. “I think for our culture this hybrid approach will work. Whenever we expand further I obviously imagine having more offices and not only our office in San Francisco.”

Gainful raises $7.5M for personalized sports nutrition

By Anthony Ha

Gainful, a startup offering personalized subscriptions to protein powders and hydration products, is announcing that it has raised $7.5 million in Series A funding.

COO Eric Wu, who founded the company with CTO Jahaan Ansari, told me that Gainful began with his own experience experimenting different protein powders and eventually the combination that worked best for his goals and dietary needs.

“In my personal experience, trying to find a protein powder can be a very overwhelming experience,” Wu told me. “There are a million ingredients, and you just want somebody to talk to who can cut through all that noise.”

So when when you first sign up for Gainful, you take a quiz about things like your height, weight, exercise patterns, fitness goals and how often you plan to consume the protein product. The company will then recommend a powder for you, as well as providing ongoing access to a registered dietitian who can answer any additional questions.

Wu said that behind the scenes, Gainful developed “hundreds and hundreds of different [protein] blends,” then worked with its science advisory board (which includes nutrition experts who have worked with the Golden State Warriors and Sacramento Kings) to “hone in on a set number of blends.” When asked for more details about how many products the company is actually selling, Wu said it’s “more than handful” and they’re “constantly being iterated on.”

Gainful hydration

Image Credits: Gainful

All Gainful products are made without artificial colors, flavors or sweeteners, and they’re gluten-free and soy-free as well. With the new electrolyte drink mixes (which I’ve tried and enjoyed), the startup is moving beyond protein, and Wu said it will continue to add new products and new flavors. At the same time, you still need a subscription to the protein powder (pricing starts at $39) to get access to additional products.

To explain this relatively high commitment approach, Wu said, “We really believe that we’ve created a system of products that all have complementary benefits and work really synergistically. If you’re hydrating properly, you can work harder during your exercise, and your personalized protein powder is working harder for you. All of these are offered … not as a magic bullet, not as a lose-weight-fast solution, but as a way of being healthy. It’s not supposed to be a flash in the pan.”

The Series A round was co-led by BrandProject and Courtside Ventures, with participation from AF Ventures, Round13 Capital, Barrel Ventures and the founder of Polaris Sports.

Gainful was part of Y Combinator’s winter 2018 batch. It also had a leadership transition early last year, with Wu shifting from CEO to COO (where he said he could focus more on product development), while Dean Kelly joined as chief executive.

Wu added that the company has seen significant growth during the pandemic, due to the general shift towards e-commerce, as well as “people reflecting on what it means to lead a full, healthy, happy life in a time when it was really difficult.”

Steve Jurvetson and Maryanna Saenko on their new fund, SPACs and the great tech exodus

By Connie Loizos

Future Ventures — cofounded by venture capitalist Steve Jurvetson and Maryanna Saenko, a colleague of Jurvetson at his last firm, DFJ, as well as an investor previously with Airbus Ventures and Khosla Ventures — has closed its second fund with $200 million in capital commitments, say the pair.

In a wide-ranging conversation yesterday afternoon, Jurvetson characterized the fund as “dramatically oversubscribed in a fairly short period of time,” adding that roughly one-third of its investors are venture capitalists or other investors, that the “second largest bucket [comprises] tech executives, CEOs, and former CEOs of enormous companies of relevance to our ecosystem” and that the last third of the firm’s capital is coming from institutions, including one university endowment. (He didn’t specify which.)

As with Future’s $200 million debut fund, which closed two years ago, the outfit’s newest vehicle has a 15-year time horizon, giving it more leeway to make longer-term bets. Jurvetson also confirmed that as with that debut fund, Future features fairly standard economics, including charging 2.5% in management fees and 25% in so-called carried interest (meaning the share of the profits that Future keeps from its investments).

“We tell our LPs, ‘Look, this is a long game, these companies take longer than five to seven years to come to full maturity,'” said Jurvetson, who has been on the board of SpaceX since 2009 and, along with three other directors, left the board of Tesla in September, following a 13-year run as a director. “They may go public in that timeframe. But as you can see with Tesla and SpaceX and some of the greatest tech stories of our day, you really would regret having feel pressured to punch out early when they’re really in the greatest phases of torrid growth.”

Undoubtedly, Future’s new fund could have been bigger. Jurvetson has been doing business with Elon Musk for more than 20 years, and beyond his early involvement with SpaceX and Tesla, Future participated in the first round of Musk’s tunnel-based transportation system, Boring Company.

The firm also wrote the first check to Musk’s neurotechnology startup, Neuralink, which last summer unveiled its progress toward developing implantable brain-computer interfaces that include thousands of electrodes that Musk helps will eventually help to cure conditions like Alzheimer’s and dementia, among other things.

Though SpaceX is now an 18-year-old company, Future has a stake in that business, too. In fact, Future’s first check went to Space X, and the firm last year raised a $100 million SpaceX SPV (special purpose vehicle) in just five days — capital that Saenko said came from most of the fund’s investors, who were given the option of participating if they wanted.

These pop-up type funds won’t happen routinely, according to Jurvetson. “We communicated in our fundraising that a special situation, maybe two, would occur where we do a later-stage, large check, single investment in a company we have immense conviction in, and we didn’t anticipate that to happen right away, but the opportunity to reopen the prior year’s round [in SpaceX] and join an extension of that close made it very tempting to do on behalf of the fund.”

The broader plan is to continue committing smaller amounts to startups — $3.8 million on average — and for that funding to be the first that the teams raise. Future intends to invest in roughly 20 companies altogether from the new fund — as with the last — and to take a more relaxed view on board seats than might other firms.

Part of that owes to necessity, suggests Saenko, noting that she and Jurvetson only have so much bandwidth. But she also said she could “not think of a single situation where we’re not fully in the information flow of the company” even without a director role, which is often why VCs insist on one.

In the meantime, well beyond its Musk-related bets, Future has been assembling a portfolio that’s wide-ranging, with investments tied to cellular manufacturing, longevity, and edge AI, among other things.

It just led a follow-on round in Sensei Biotherapeutics, a 21-year-old, Boston-based developer of personalized cancer drugs that’s planning a public offering this year and which uses bacteriophage to induce an adaptive immune response.

Future — which is also investor in the lab-grown meat producer Memphis Meats — is also very focused right now on regenerative agriculture and permaculture, which is an approach to land management that adopts arrangements observed in flourishing natural ecosystems.

Said Saenko, “I think it would behoove all of us to look at our food industry and ask what are the ways in which we are currently feeding our global population that are unsustainable in the future, given the number of people that we have and are going to continue having on this planet.”

What doesn’t interest the pair remotely are other trends sweeping the venture industry right now, from space investing to moving from California.

On space investing, Jurvetson — who led DFJ’s investment in both SpaceX and the satellite company Planet — said it’s far too crowded now (“though I’m going to be a space tourist one day for sure”).

As for moving — as Musk did recently to Austin — Saenko isn’t going anywhere, she said. Neither is Jurvetson, who spent 12 years in Texas, including in high school, and has no interest in returning.

“Sadly,” he said yesterday, “many of my friends have punched out and gone to Texas or Florida.” He berates them for it, too, he said, explaining: “If you become wealthy enough as an investor or an entrepreneur such that you could choose to live anywhere you want in your life, why in the world would you pick up and go to some godforsaken place now? Just to avoid capital gains tax? How about, for example, donate to charity instead and avoid that capital gains tax?”

There is a “different way to look at the world rather than just trying to do wealth transfer and preservation across generations,” he said. “That just feels so short sighted to me.”

And don’t even get them started on the blank-check companies that have come into vogue as a path for more automotive companies in particular to become publicly traded. For example, Lucid Motors, the California EV startup that gave up majority ownership to Saudi Arabia’s sovereign wealth fund last year in exchange for $1.3 billion, is reportedly in talks to go public through a merger with one of the special purpose acquisition vehicles of Wall Street veteran Michael Klein.

Faraday Future, another electric vehicle startup, is reportedly looking to go public via a merger with a separate SPAC sponsor.

Asked what Future Ventures makes of the trend, Jurvetson — who experienced a high-profile split from DFJ in 2017 (DFJ has continued on as DFJ Growth) —  did not mince words about the electric vehicle category especially. “It would be really refreshing if a decent company was included in the mix, but it is just a rogue’s gallery of horrific companies.” Mostly, he continued, “these are companies that are unable to raise a penny from any other source” at this point in their trajectory.

Saenko was more diplomatic if no more optimistic about some of the related deals being struck right now.

“We’re not saying that every SPAC company is a terrible company,” she said. “I think what we’re saying is that everyone should be very wary of these companies because of Steve’s point that they’re early-stage companies and the SPAC is solely a fundraising system.”

Public market investors “expect a particular level of maturity and progress and meaningful forecasting from the companies that are on the public markets,” she added, “and that’s just not going to be true of the vast majority of the companies that have gone through SPACs. And that could have a potentially terrible blowback on the entire tech industry.”

Weber acquires smart cooking startup June

By Darrell Etherington

Outdoor cooking industry leader and famed kettle-grill-maker Weber has acquired June, the smart cooking startup founded in 2013 by Matt Van Horn and Nikhil Bhogal. While financial terms of the deal weren’t disclosed, Weber has confirmed that June will continue to operate as its own brand wholly owned by Weber-Stephen Products and will continue to both sell and develop the June Oven and related products. Meanwhile, June co-founder Nikhil Bhogal will take on a role as SVP of Technology and Connected Devices across the Weber lineup.

Weber had already teamed up with June, with the startup providing the technology and expertise behind its Weber Connect smart grilling platform. That includes both the Weber Connect Smart Grilling Hub, which adds connected smart grill features to any grill, and the built-in smart cooking features on its SmokeFire line of wood pellet grills. That partnership began with a cold email Van Horn received in 2018 from then-Weber CEO and current Executive Chairman Jim Stephen, the son of the company’s original founder.

“He said he was a fan, he was a customer, and he couldn’t imagine a future without June technology powering every product in the Weber collection,” Van Horn told me in an interview. “I said, ‘Slow down — what are you talking about? Yeah, who are you?’ And he said ‘I’m flying out, I’ll be there Monday.'” I normally have my nice demo setup that I do, I’ll do like chocolate lava cake and a steak [in the June Oven]. So I got there about 15 minutes early to do that, and [Jim] was already sitting in the front steps of the office, ready to open the door for me — he’s like, ‘I don’t need a demo, I own this.'”

“His energy and ability to see things often before other people, it blew my mind,” Van Horn continued. “Soon after I met Chris [Scherzinger, Weber’s current chief executive], who was joining as CEO and [I] was able to experience firsthand this, honestly very surprising and wonderful culture of this historic Weber brand.”

As mentioned, June became a partner to Weber and powered the connected cooking platform it debuted at CES last year. Weber also led June’s Series C funding round, a previously undisclosed final round of financing that Weber led in 2018 prior to this exit.

Van Horn will act as president of June under the terms of the new arrangement and will continue to lead development of its current and future products. He said that Weber’s ability to help them with international scale and distribution via their existing global footprint was a big motivating factor in why June chose to join the now 63-year-old company. But another key ingredient was just how much Weber proved to be a place where the company’s culture was still centered on customer focus and a love of food.

“Obviously why Nikhil and I started June was that we love food, and we love cooking,” Van Horn said. “And a lot of the principles of how we think about how products get made are a lot of Apple’s principles — a large percentage of the June team comes from Apple. We’ve obviously kind of brought that to a microscale with our small 60-person startup. But being able to work with this very eager Weber team, that’s just been really excited from the start has been pretty incredible.”

As for Weber, the company gains a software and technology team that was born out of the idea of approaching cooking from a tech-first perspective — and they intend to infuse that expertise throughout their product lineup, with an eye toward building on their legacy of quality and customer enthusiasm.

“Once you infuse the software engineering, the connected product design and the machine-intelligence expertise that you have, you get these core competencies or capabilities, but that really undersells it,” Scherzinger told me. “Matt put together a team of superstars, and we just got a first-round draft pick [in June] that takes the Weber game to another level. That allows us to accelerate a significant number of initiatives, and you can expect to see an expansion of what Weber Connect can become in terms of new experiences for consumers, new services and new products, for sure, starting as early as 2021 and 2022.”

While Weber and June are not sharing specifics around the deal, as mentioned, Scherzinger did mention that “Matt and his team and his investors all did handsomely.” June’s prior investors include Amazon Alexa Fund, Lerer Hippeau, First Round Capital, Promus Ventures, Industry Ventures, Eclipse Ventures and more.

Slim.ai announces $6.6M seed to build container DevOps platform

By Ron Miller

We are more than seven years into the notion of modern containerization, and it still requires a complex set of tools and a high level of knowledge on how containers work. The DockerSlim open source project developed several years ago from a desire to remove some of that complexity for developers.

Slim.ai, a new startup that wants to build a commercial product on top of the open source project, announced a $6.6 million seed round today from Boldstart Ventures, Decibel Partners, FXP Ventures and TechAviv Founder Partners.

Company co-founder and CEO John Amaral says he and fellow co-founder and CTO Kyle Quest have worked together for years, but it was Quest who started and nurtured DockerSlim. “We started coming together around a project that Kyle built called DockerSlim. He’s the primary author, inventor and up until we started doing this company, the sole proprietor of that of that community,” Amaral explained.

At the time Quest built DockerSlim in 2015, he was working with Docker containers and he wanted a way to automate some of the lower level tasks involved in dealing with them. “I wanted to solve my own pain points and problems that I had to deal with, and my team had to deal with dealing with containers. Containers were an exciting new technology, but there was a lot of domain knowledge you needed to build production-grade applications and not everybody had that kind of domain expertise on the team, which is pretty common in almost every team,” he said.

He originally built the tool to optimize container images, but he began looking at other aspects of the DevOps lifecycle including the author, build, deploy and run phases. He found as he looked at that, he saw the possibility of building a commercial company on top of the open source project.

Quinn says that while the open source project is a starting point, he and Amaral see a lot of areas to expand. “You need to integrate it into your developer workflow and then you have different systems you deal with, different container registries, different cloud environments and all of that. […] You need a solution that can address those needs and doing that through an open source tool is challenging, and that’s where there’s a lot of opportunity to provide premium value and have a commercial product offering,” Quinn explained.

Ed Sim, founder and general partner at Boldstart Ventures, one of the seed investors sees a company bringing innovation to an area of technology where it has been lacking, while putting some more control in the hands of developers. “Slim can shift that all left and give developers the power through the Slim tools to answer all those questions, and then, boom, they can develop containers, push them into production and then DevOps can do their thing,” he said.

They are just 15 people right now including the founders, but Amaral says building a diverse and inclusive company is important to him, and that’s why one of his early hires was head of culture. “One of the first two or three people we brought into the company was our head of culture. We actually have that role in our company now, and she is a rock star and a highly competent and focused person on building a great culture. Culture and diversity to me are two sides of the same coin,” he said.

The company is still in the very early stages of developing that product. In the meantime, they continue to nurture the open source project and to build a community around that. They hope to use that as a springboard to build interest in the commercial product, which should be available some time later this year.

Roboflow raises $2.1M for its end-to-end computer vision platform

By Frederic Lardinois

Roboflow, a startup that aims to simplify the process of building computer vision models, today announced that it has raised a $2.1 million seed round co-led by Lachy Groom and Craft Ventures. Additional investors include Segment co-founder Calvin French-Owen, Lob CEO Leore Avidar, Firebase co-founder James Tamplin and early Dropbox engineer Aston Motes, among others. The company is a graduate of this year’s Y Combinator summer class.

Co-founded by Joseph Nelson (CEO) and Brad Dwyer (CTO), Roboflow is the result of the team members’ previous work on AR and AI apps, including Magic Sudoku from 2017. After respectively exiting their last companies, the two co-founders teamed up again to launch a new AR project, this time with a focus on board games. In 2019, the team actually participated in the TC Disrupt hackathon to add chess support to that app — but in the process, the team also realized that it was spending a lot of time trying to solve the same problems that everybody else in the computer vision field was facing.

Image Credits: Roboflow

“In building both those [AR] products, we realized most of our time wasn’t spent on the board game part of it, it was spent on the image management, the annotation management, the understanding of ‘do we have enough images of white queens, for example? Do we have enough images from this angle or this angle? Are the rooms brighter or darker?’ This data mining of understanding in visual imagery is really underdeveloped. We had built a bunch of — at the time — internal tooling to make this easier for us,” Nelson explained. “And in the process of building this company, of trying to make software features for real-world objects, realize that developers didn’t need inspiration. They needed tooling.”

So shortly after participating in the hackathon, the founders started putting together the first version of Roboflow and launched the first version a year ago in January 2020. And while the service started out as a platform for managing large image data sets, it has since grown to become an end-to-end solution for handling image management, analysis, pre-processing and augmentation, up to building the image recognition models and putting them into production. As Nelson noted, while the team didn’t set out to build an end-to-end solution, its users kept pushing the team to add more features.

Image Credits: Roboflow

So far, about 20,000 developers have used the service, with use cases ranging from accelerating cancer research to smart city applications. The thesis here, Nelson said, is that computer vision is going to be useful for every single industry. But not every company has the in-house expertise to set up the infrastructure for building models and putting it into production, so Roboflow aims to provide an easy to use platform for this that individual developers and (over time) large enterprise teams can use to quickly iterate on their ideas.

Roboflow plans to use the new funding to expand its team, which currently consists of five members, both on the engineering and go-to-market side.

The Roboflow racoon.

The Roboflow racoon. Image Credits: Roboflow

“As small cameras become cheaper and cheaper, we’re starting to see an explosion of video and image data everywhere,” Segment co-founder and Roboflow investor French-Owen noted. “Historically, it’s been hard for anyone but the biggest tech companies to harness this data, and actually turn it into a valuable product. Roboflow is building the pipelines for the rest of us. They’re helping engineers take the data that tells a thousand words, and giving them the power to turn that data into recommendations and insights.”

Lantern is a startup looking to ignite a conversation about how to die well

By Danny Crichton

America is a land of paperwork, and nowhere is that more obvious than at the end of someone’s life. Advanced care directives have to be carefully disseminated to healthcare providers and strictly followed. Property has to be divided and transferred while meeting relevant estate laws. And of course, there are the logistics of a funeral, cremation or other option that has its own serious complexities, costs and choices.

The worst time to figure out how to die is when you die. The best time to figure it out is precisely when you don’t have to.

For New York City-headquartered Lantern, the goal is to initiate those conversations early and give its users significantly better peace-of-mind, particularly in these dolorous times.

The company offers essentially a “how-to” platform for beginning to prepare for end-of-life, offering checklists and monitoring to ensure that the vast majority of details are figured out in advance. In some cases, the startup will handle the underlying details itself, while in other areas like estate planning, it works with partners such as Trust & Will, which we have profiled a number of times on TechCrunch.

Right now, the company has two plans: a simple free one and a $27 / year plan that tracks your progress on end-of-life planning and allows you to collaborate with family, friends or whoever else needs to be part of your decision-making. The company is in the process of adding other à la carte options for additional fees.

Last month, the company raised $1.4 million in a seed round led by Draper Associates with a few other firms involved. Earlier, the company raised a pre-seed round of $890,000 from the likes of 2048 Ventures, Amplify and others, bringing its total fundraised to date to $2.3 million. The company is organized as a public-benefit corporation and was founded in September 2018 and first launched a year later.

For founders Liz Eddy and Alyssa Ruderman, Lantern was an opportunity to tackle a looming problem in a compassionate and empathetic way. “I started my first company when I was 15,” Eddy, who is CEO, said. That company focused on dating abuse and domestic violence education for high school and later college students. “I really fell in love with the pace and variety of starting something new, but also in creating conversations around topics that people really don’t want to talk about and making it more palatable and comfortable,“ she said.

Lantern co-founders Alyssa Ruderman and Liz Eddy. Photo via Lantern.

Later, she joined local suicide prevention non-profit Crisis Text Line, which has an SMS-based network of crisis counselors who are trained to calm people and begin their process of recovery. She spent more than six years at the organization.

As for Ruderman, who is COO of Lantern, she most recently spent two years at Global Citizen, a non-profit organization focused on ending extreme poverty. The two connected and incubated Lantern at startup accelerator Grand Central Tech.

The idea for better end-of-life planning came from personal experience. “I lost my dad when I was in elementary school,” Eddy said, “and saw firsthand how loss and grief impacts a family financially, emotionally, logistically, legally — every aspect.”

Today, many of these processes are offline, and the online products mostly available today are focused on individual elements of end-of-life planning, such as estate planning or selecting and purchasing a casket. Eddy and Ruderman saw an opportunity to provide a more holistic experience with a better product while also initiating these conversations earlier.

That pre-planning part of the product was launched just as the pandemic was getting underway last year, and Eddy said that “we had a sort of a really interesting launch where people were starting to come to terms with their own mortality in a way we hadn’t seen in a very long time.” Typical users so far have been between 25 and 35 years old, and many people start planning when they have a major life event. Eddy says that the death of a family member is an obvious trigger, but so is having a baby or starting a company.

One aspect that Eddy emphasized repeatedly was that having a will and pre-planning for end-of-life are not equivalent. “Even if you don’t have a dollar to your name after you pass away, there are a ton of other things that your loved ones, family members, whoever’s responsible has to consider,” she said.

From a product perspective, there are some nuances compared to your more typical SaaS startup. For one, the company needs to engage you regularly, but not too frequently. Unlike, say, a wedding which is a single event that then is over, your documents and directives need to be occasionally edited and updated as a user’s life circumstances change.

Beyond that, one of the largest challenges with a product that talks about death is building a connection with a user that doesn’t seem cold, and, well, Silicon Valley-like. “Even as a product that is entirely virtual, making sure that you really feel that human connection throughout” is a high priority, Eddy said. “We use a lot of empathetic language, and our imagery, all of the illustrations are done by illustrators who have lost someone in memory of the person who’s lost.”

Longevity startups may remain a thesis for some VC investors, but handling the end — no matter when — is an activity every person faces. Lantern might shine just a bit more light on what is otherwise a debilitating and scary prospect.

LAUNCHub Ventures heading towards a $85M fund for South Eastern European startups

By Mike Butcher

LAUNCHub Ventures, an early-stage European VC which concentrates mainly on Central Eastern (CEE) and South-Eastern Europe (SEE), has completed the first closing of its new fund at €44 million ($53.5M), with an aspiration to reach a target size of €70 million. A final close is expected by Q2 2021.

Its principal backer is the European Investment Fund, corporates and a number of Bulgarian tech founders and investors.

With this new fund, LAUNCHub aims to invest in 25 startups in the next 4 years. The initial investment range will be between €500K and €2M in verticals such as B2B SaaS, Fintech, Proptech, Big Data, AI, Marketplaces, Digital Health. The fund will also actively invest in the Web 3.0 / Blockchain space, as it has done so since 2014.

LAUNCHub has also achieved a 50:50 gender split in its team, with Irina Dimitrova being promoted to operating partner while Raya Yunakova who joins as an Investor, previously working for PiLabs in London and Mirela Yordanova joins as an Associate, previously leading the startup community at Google for Startups Campus in London.

The investor is mining a rich view of highly skilled developers in the CEE countries where there are approximately 1.3 developers for every 100 people in the workforce. “Central and Eastern Europe’s rapid economic growth has caught the attention of Western investors searching for the next unicorn. The region has huge and still untapped potential with more and more local success stories, paving the way for the next generation of CEE tech founders.” said Todor Breshkov, Founding Partner at LAUNCHub Ventures .

LAUNCHub Ventures competes with other investors like Earlybird in the region, but they tend to invest at a later stage and is more typically a co-investor with LAUNCHub. Nearby Greece also features Greek funds such as Venture Friends and Marathon, but these tend to focus on their core country and diaspora entrepreneurs. Others include Speedinvest (usually focused on DACH) and Credo Ventures, more focused on the Czech Republic and CEE.

LAUNCHub partner and cofounder Stefan Grantchev told me: “Our strategy is to be regional, not to focus specifically on Bulgaria – but to look at all the opportunities in the region of South-Eastern Europe.”

LAUNCHub Ventures has backed companies including:

  • Giraffe360 (Robotic camera for real estate listing automation, co-investment with Hoxton Ventures and HCVC)

  • Fite (Premium direct to consumer digital live streaming for sports, followed-on by Earlybird)

  • GTMHub (The world’s leading and most intuitive OKR software, followed-on by CRV)

  • FintechOS (Banking and Insurance middleware for automation and digital innovation acceleration, followed-on by Earlybird and OTB)

  • Cleanshelf (Enterprise SaaS management and optimization platform, followed-on by Dawn Capital)

  • Office RnD (Co-working and flexible office space management, followed-on by Flashpoint Ventures)

  • Ferryhopper (Ferry ticketing platform for Southern Europe, co-investment with Metavallon)

Inside SuperCharger Ventures’ debut virtual edtech accelerator

By Natasha Mascarenhas

Before the pandemic, edtech companies went decades without raising financing due to lack of interest from generalist venture capitalists. Now, more than a year since COVID-19 began, the sector is showing signs of maturation, from first profits to unicorns, potential IPOs and a rush of talent.

Momentum in mind, cross-border venture capital firm SuperCharger Ventures is launching a debut accelerator exclusively for early-stage edtech founders. The 12-week accelerator, which kicks off today, is being held virtually, with six startups in the debut cohort.

Interestingly, this isn’t the firms’ first time doing an accelerator. SuperCharger has led three cohorts of startups through a fintech-focused accelerator. The pivot from one booming category to another boils down to a simple dynamic, says SuperCharger Ventures co-founder Janos Barberis: banks.

“Banks just don’t have the space or the bandwidth to start dealing with innovation right now,” Barberis said. The co-founder thinks that COVID-19 created a supply and demand unevenness between fintech services and banks, and as many branches struggle to stay open, “the first thing banks cut is innovation.”

So, the firm is hopping to edtech, and taking a key lesson with it from its fintech experience: the importance of B2B and recurring revenue streams.

“The corporate angle? It’s sticky, healthy and revenue driven,” Barberis said. “It’s healthy income, and I think right now investors are willing to pay for that healthy income.”

Financially, Barberis’ argument is hard to disagree with. But when you look at some of the biggest edtech unicorns in this current moment, many are B2C, including Quizlet, Course Hero and ApplyBoard. It’s because in education, it sometimes can be easier to sell to the end-user than dealing with highly fragmented institutions — at least in the United States.

Still, B2B businesses have the biggest potential for reach, and we’re seeing consumer businesses turn COVID-19 demand into enterprise deals. There’s also hope to be found internationally, which can sometimes have a less fragmented market of institutions, says Barberis.

Beyond B2B sales, cohort startups must be focused on expanding into European and Asian markets.

Barberis sees opportunity in those markets, minus China, because both appear to have gaps in edtech. In Europe, he says there’s a high demand for corporate digital learning from universities, and in Asia, he thinks that investor education is necessary so bets can be placed in countries beyond simply China. On one end there is demand, and on the other end there is opportunity to generate demand.

He leaves out China from the Asian market expansion because he thinks that the country, like the United States, is too saturated with companies right now.

The programming fits the normal accelerator model, with information tailored explicitly to the world of education, such as how to partner with an education institution or shorten sales cycles (as so much of edtech B2B sales happens during the summer months).

The firm doesn’t give any capital, but takes between 1-2% of equity in return for its services, which it estimates cost between $75,000 and $100,000 in “value.” SuperCharger culminates with a Demo Day, and companies in aggregate plan to raise between $15 to $20 million in venture capital.

Other firms have similarly created accelerator programs during the pandemic to help with deal flow and stay competitive in the always-hot seed space, including NextView Ventures.

This isn’t SuperCharger Ventures’ first time doing an accelerator. The firm held three fintech-focused accelerators in the past, graduating 49 companies. The pivot from one booming sector to another comes from fintech saturation, says Barberis.

Out of 208 applications, SuperCharger landed on six companies in its debut cohort:

  • Axon Park: Founded by Taylor Freeman, Axon Park is using virtual reality to virtually train workforces, such as teaching proper PPE procedures to healthcare professionals. It sells its programming to businesses, governments and universities.
  • BSD Education: Co-founded by Christopher Geary and Nickey Khemchandani, the startup sells tech curriculum to schools teaching students between the ages of eight and 18. Beyond curriculum, the startup offers professional training development for teachers and a platform for online learning to be held.
  • Dijital Kolej: Zeynep Dereli and Ferruh Gürtaş are betting on an online hybrid education model that balances asynchronous and synchronous learning throughout the day.
  • Newcampus: The startup, launched by Will Fan and Fei Yao, describes itself as a gym membership for learning experiences. It’s part of the wave of companies focused on lifelong learning, with a focus on leadership information.
  • Ringbeller: CJ Casciotta is working on a startup that uses interactive video lessons to teach kids soft skills, such as creativity and kindness.
  • Roybi: Elnaz Sarraf and Ron Cheng are creating an AI-robot that teaches kids topics in STEM.

Orange spins out Orange Ventures with $430 million allocation

By Romain Dillet

Telecom company Orange is making some changes to its venture capital arm. Orange Ventures is becoming a separate legal entity and Orange itself is allocating $430 million (€350 million).

With this new corporate structure, Orange could attract third-party investors in its fund. Other telecom companies have made some headlines with their venture funds in the past, such as SoftBank’s Vision Fund and Reliance Jio.

Separating Orange Ventures from Orange is also going to boost confidence when it comes to confidentiality and conflicts of interest between a startup and the telecom company. There’s a more visible firewall between Orange and Orange Ventures.

But if you want to partner with Orange, there are some opportunities on the table — the company says those synergies are “flexible and optional”.

Orange Ventures focuses on investments in companies that operate more or less in the same space as Orange. It includes many verticals, such as connectivity, cybersecurity, fintech and e-health. Previous investments include Monzo, Luko, Raisin, YouVerify and WeaveWorks.

Orange Ventures currently has offices in Paris and Dakar and tends to invest in startups from seed stage up to Series A or B. The firm says it can invest as much as €20 million in a single round. It is screening startups in Europe, Africa, the Middle East and the U.S. There are around 20 people working for Orange Ventures.

VCs discuss gaming’s biggest infrastructure investment opportunities in 2021

By Lucas Matney

We last polled our network of investors on the topic of gaming infrastructure startups back in May just as it was becoming clear what pandemic opportunities were in store for gaming startups.

Accel’s Amit Kumar told us at the time that “social and interactivity layers spanning across these games” were poised to be the big winners, highlighting his firm’s investments in startups like Discord and Mayhem. In December, Discord announced it was raising at a valuation of $7 billion and this month Pokémon Go creator Niantic announced it was buying Mayhem.

Following my story this week digging into investor sentiment around evolved opportunities in social gaming, I dug into gaming tools and rising platforms and pinged a handful of VCs to hear their thoughts on that market.

The broader market moves of the past several months have defied expectations with startups in the gaming world picking up substantial steam as well. This week, Roblox announced it had raised at a $29.5 billion valuation — up from $4 billion in February of last year. Game makers across the board, including Roblox, have been acquiring gaming infrastructure startups as of late.

I talked to investors about what they wanted to see more of in the space.

“We’d love to see more innovation around gaming infrastructure, which has the potential to democratize game development and allow clever indies to compete with Riot and Epic,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch.

They highlighted numerous areas for new opportunity including specialized engines, next-gen content creation platforms, and tools to port desktop experiences to mobile. The VCs we chatted with were also intrigued by latent opportunities presented by major platforms’ adopting of cloud gaming tech. The overall trend was one promoting accessibility, a desire to provide more casual experiences for platforms that may have typically catered to “hardcore” audiences.

It was also apparent from conversations that Roblox is significantly shaping investor attitudes toward the potential growth opportunities and pitfalls in the entire gaming industry, with VCs who didn’t get in on Roblox eager to dissect its success and bet on an adjacent player or one that could follow a similar recipe for success.

Responses have been edited for length and clarity. We spoke with:

  • Hope Cochran, Madrona Venture Group
  • Daniel Li, Madrona Venture Group
  • Ethan Kurzweil, Bessemer Venture Partners
  • Sakib Dadi, Bessemer Venture Partners
  • Alice Lloyd George, Rogue VC
  • Gigi Levy-Weiss, NFX

Hope Cochran and Daniel Li, Madrona Venture Group

Cloud game-streaming networks are exciting but don’t seem like a sure bet quite yet, how do you feel about them?

DL: I think the real story behind cloud gaming is “play anywhere” and the cross-platform nature of it. Gaming is just different than Netflix, it’s not like you want to have an endless library of content. When I’m playing a game, I want to play Overwatch all the time and I don’t need to have access to 1,000 other games. I think the approach that the cloud companies have taken has been more around the thinking of, what do we have and what can we build for gamers with it? More so than what do gamers want and what can we give them? It’s definitely trended toward that direction with things like giving away two free games per month, but really I think the thing that will be exciting in the longer term for cloud gaming is to play your game anywhere and play with your friends anywhere.

If users embrace desktop-class cloud gaming on mobile and there’s a broader cross-platform unification, does that spell trouble for today’s mobile gaming industry?

DL: The audiences between a Candy Crush and a Warzone are probably a little different, though I like to play both. So maybe it gets into eating some people’s lunch but I don’t think it’s anything where the number one problem for a Candy Crush is people hopping over to play desktop Call of Duty.

Are there any clear infrastructure gaps where you’d like to see new startups rise up and fill the void?

DL: Honestly just tools for building games, like next-gen Roblox Studio, next-gen Unity and Unreal type stuff — I’ve seen a couple interesting companies there. I think we’ve seen a few smaller companies focused on making sure that a network is safe for children, but I feel like a lot of the infrastructure stuff is really driven by what type of new content is coming out. So as the social games became really popular, securing that and making sure that the chats were safe became really important.

HC: I would love to see something built for helping games that were created for the triple-A environment to port over better to mobile environments. Every time I work with a gaming company on that, they seem to have to rebuild the game so it’d be really interesting to see something like that really helps them adopt to the mobile form.

Jumbotail raises $14.2 million for its wholesale marketplace in India

By Manish Singh

Jumbotail, an online wholesale marketplace for grocery and food items, said on Friday it has raised an additional $14.2 million as the Bangalore-based startup chases the opportunity to digitize neighborhood stores in the world’s second-largest internet market.

The five-year-old startup said the new tranche of its Series B financing round was led by VII Ventures, with participation from Nutresa, Veronorte, Jumbofund, Klinkert Investment Trust, Peter Crosby Trust, Nexus Venture Partners, and Discovery Ventures.

The startup told TechCrunch that the new tranche concludes its Series B round, which it kickstarted in 2019 with a tranche of $12.7 million. It ended up raising about $44 million in the Series B round (including Friday’s tranche), and to date has amassed about $54 million in equity investment, the startup told the publication.

Jumbotail said it serves over 30,000 neighborhood stores (popularly known in India as kiranas) in the country. In addition to its business-to-business marketplace, the startup also provides working capital to neighborhood stores through partnerships with financial institutions.

The startup, which has built its own supply chain network to enable last-mile delivery, also supplies these stores with point-of-sale devices so that they can easily get access to a much wider selection of catalog and have the new inventory shipped to them within two days. It also integrates these stores with hyperlocal delivery startups such as Dunzo and Swiggy to help mom and pop shops further expand their customer base.

Ashish Jhina, co-founder of Jumbotail, said he believes the startup has reached an inflection point in its growth and is now ready for its next chapter, which includes hiring top talent and expanding to more regions in the country, especially in several cities in South India.

“We are seeing tremendous interest from investors across the globe who are drawn to our highly scalable and operationally profitable business model, built on the industry’s best technology and customer NPS,” said Jhina, who previously served in Indian army and then worked at e-commerce firms eBay and Flipkart.

At a recent virtual conference, Jhina said that the coronavirus pandemic, which prompted New Delhi to order a nationwide lockdown and put restrictions on e-commerce firms, has illustrated just how crucial neighborhood stores are in people’s lives. And for all the ills that the virus has wrought to the world, it did help accelerate the adoption of technology among these stores.

A number of food brands whose products neighborhood stores sell today are not standardized, which poses a question about their quality. To fill this gap, Jumbotail runs its own private label portfolio and Jhina said the startup will deploy part of the fresh fund to broaden this catalog. Having private label also allows Jumbotail to ensure that its retail partners can get the supply of items throughout the year — and of course, it also helps the startup, which has been operationally profitable for nearly three quarters, improve its margin.

There are more than 30 million neighborhood stores in India that dot across the thousands of cities and towns in the country. These small businesses have been around for decades and survived — and even thrived — despite e-commerce giants pouring billions of dollars in India to change how people shop. In recent years, scores of startups — and giants — in India have begun to explore ways to work with these neighborhood stores.

One of them is India’s largest retail chain Reliance Retail, which serves more than 3.5 million customers each week through its nearly 10,000 physical stores in more than 6,500 cities and towns in the country. In late 2019, it entered the e-commerce space with JioMart through a joint venture with sister subsidiary telecom giant Jio Platforms. By mid last year, JioMart had expanded to over 200 Indian cities and towns — though currently its reach within those cities and customer service leave a lot to be desired.

Reliance Retail also maintains a partnership with Facebook for WhatsApp integration. Facebook, which invested $5.7 billion in Jio Platforms last year, has said that it will explore various ways to work with Reliance to digitize the nation’s mom and pop stores, as well as other small- and medium-sized businesses.

For JioMart, Reliance Retail is working with neighborhood shops, giving them a digital point-of-sale machine to make it easier for them to accept money electronically. It is also allowing these shops to buy their inventory from Reliance Retail, and then use their physical presence as delivery points. At present, the platform is largely focused on grocery delivery. In a recent report to clients, Goldman Sachs analysts estimated that Reliance could become the largest player in online grocery within three years.

SilviaTerra wants to bring the benefits of carbon offsets to every landowner everywhere

By Jonathan Shieber

Zack Parisa and Max Nova, the co-founders of the carbon offset company SilivaTerra, have spent the last decade working on a way to democratize access to revenue generating carbon offsets.

As forestry credits become a big, booming business on the back of multi-billion dollar commitments from some of the world’s biggest companies to decarbonize their businesses, the kinds of technologies that the two founders have dedicated ten years of their lives to building are only going to become more valuable.

That’s why their company, already a profitable business, has raised $4.4 million in outside funding led by Union Square Ventures and Version One Ventures, along with Salesforce founder and the driving force between the 1 trillion trees initiative, Marc Benioff .

“Key to addressing the climate crisis is changing the balance in the so-called carbon cycle. At present, every year we are adding roughly 5 gigatons of carbon to the atmosphere*. Since atmospheric carbon acts as a greenhouse gas this increases the energy that’s retained rather than radiated back into space which causes the earth to heat up,” writes Union Square Ventures managing partner Albert Wenger in a blog post. “There will be many ways such drawdown occurs and we will write about different approaches in the coming weeks (such as direct air capture and growing kelp in the oceans). One way that we understand well today and can act upon immediately are forests. The world’s forests today absorb a bit more than one gigatons of CO2 per year out of the atmosphere and turn it into biomass. We need to stop cutting and burning down existing forests (including preventing large scale forest fires) and we have to start planting more new trees. If we do that, the total potential for forests is around 4 to 5 gigatons per year (with some estimates as high as 9 gigatons).”

For the two founders, the new funding is the latest step in a long journey that began in the woods of Northern Alabama, where Parisa grew up.

After attending Mississippi State for forestry, Parisa went to graduate school at Yale, where he met Louisville, Kentucky native Max Nova, a computer science student who joined with Parisa to set up the company that would become SiliviaTerra.

SilviaTerra co-founders Max Nova and Zack Parisa. Image Credit: SilivaTerra

The two men developed a way to combine satellite imagery with field measurements to determine the size and species of trees in every acre of forest.

While the first step was to create a map of every forest in the U.S. the ultimate goal for both men was to find a way to put a carbon market on equal footing with the timber industry. Instead of cutting trees for cash, potentially landowners could find out how much it would be worth to maintain their forestland. As the company notes, forest management had previously been driven by the economics of timber harvesting, with over $10 billion spent in the US each year.

The founders at SilviaTerra thought that the carbon market could be equally as large, but it’s hard for moset landowners to access. Carbon offset projects can cost as much as $200,000 to put together, which is more than the value of the smaller offset projects for landowners like Parisa’s own family and the 40 acres they own in the Alabama forests.

There had to be a better way for smaller landowners to benefit from carbon markets too, Parisa and Nova thought.

To create this carbon economy, there needed to be a single source of record for every tree in the U.S. and while SiliviaTerra had the technology to make that map, they lacked the compute power, machine learning capabilities and resources to build the map.

That’s where Microsoft’s AI for Earth program came in.

Working with AI for Earth, TierraSilva created their first product, Basemap, to process terabytes ofsatellite imagery to determine the sizes and species of trees on every acre of America’s forestland. The company also worked with the US Forestry Service to access their data, which was used in creating this holistic view of the forest assets in the U.S.

With the data from Basemap in hand, the company has created what it calls the Natural Capital Exchange. This program uses SilviaTerra’s unparalleled access to information about local forests, and the knowledge of how those forests are currently used to supply projects that actually represent land that would have been forested were it not for the offset money coming in.

Currently, many forestry projects are being passed off to offset buyers as legitimate offsets on land that would never have been forested in the first place — rendering the project meaningless and useless in any real way as an offset for carbon dioxide emissions. 

“It’s a bloodbath out there,” said Nova of the scale of the problem with fraudulent offsets in the industry. “We’re not repackaging existing forest carbon projects and try to connect the demand side with projects that already exist. Use technology to unlock a new supply of forest carbon offset.”

The first Natural Capital Exchange project was actually launched and funded by Microsoft back in 2019. In it, 20 Western Pennsylvania land owners originated forest carbon credits through the program, showing that the offsets could work for landowners with 40 acres, or, as the company said, 40,000.

Landowners involved in SilivaTerra’s pilot carbon offset program paid for by Microsoft. Image Credit: SilviaTerra

“We’re just trying to get inside every landowners annual economic planning cycle,” said Nova. “There’s a whole field of timber economics… and we’re helping answer the question of given the price of timber, given the price of carbon does it make sense to reduce your planned timber harvests?”

Ultimately, the two founders believe that they’ve found a way to pay for the total land value through the creation of data around the potential carbon offset value of these forests.

It’s more than just carbon markets, as well. The tools that SilviaTerra have created can be used for wildfire mitigation as well. “We’re at the right place at the right time with the right data and the right tools,” said Nova. “It’s about connecting that data to the decision and the economics of all this.”

The launch of the SilviaTerra exchange gives large buyers a vetted source to offset carbon. In some ways its an enterprise corollary to the work being done by startups like Wren, another Union Square Ventures investment, that focuses on offsetting the carbon footprint of everyday consumers. It’s also a competitor to companies like Pachama, which are trying to provide similar forest offsets at scale, or 3Degrees Inc. or South Pole.

Under a Biden administration there’s even more of an opportunity for these offset companies, the founders said, given discussions underway to establish a Carbon Bank. Established through the existing Commodity Credit Corp. run by the Department of Agriculture, the Carbon Bank would pay farmers and landowners across the U.S. for forestry and agricultural carbon offset projects.

“Everybody knows that there’s more value in these systems than just the product that we harvest off of it,” said Parisa. “Until we put those benefits in the same footing as the things we cut off and send to market…. As the value of these things goes up… absolutely it is going to influence these decisions and it is a cash crop… It’s a money pump from coastal America into middle America to create these things that they need.” 

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