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Talking shop with Twitter’s recent head of corp dev — and now VC — Seksom Suriyapa

By Connie Loizos

Seksom Suriyapa was seemingly destined to land at a venture firm. A Stanford Law graduate, he worked at two blue-chip investment banks before joining the cybersecurity company McAfee as a senior corp dev employee, later logging six years at the human resources software company SuccessFactors and, in 2018, landing at Twitter, where he headed up its 12-person corporate development team until June.

The bigger surprise is that Suriyapa — who just joined the L.A.-based venture firm Upfront Ventures — didn’t make the leap sooner. “The catalyst was finding a firm that felt like the exact right fit for me,” says Suriyapa.

We talked earlier today with Suriyapa — who lives and will remain in the Bay Area — about his new role at Upfront, where he will be leading its expanding growth-stage practice with firm founder Yves Sisteron.

He also shed light on how Twitter — which has been on a bit of buying spree — thinks about acquisitions these days. Our chat has been edited lightly for length.

TC: How did you wind up joining Upfront?

SS: [Longtime partner] Mark Suster and I were introduced through a mutual business acquaintance in the venture world, and I got to know him over a period of time and really came to find him to be a remarkable individual. He’s thoughtful about the business itself, he’s an incredible brand builder. I think you could argue that [Upfront] put L.A. on the venture map.

TC: It was also, for a long time, an early-stage firm, but now it has a ‘barbell’ strategy. Is your new job to make sure it can maintain its stake in its portfolio companies as they grow? Can you shop outside of that portfolio?

SS: The mission for me will be supporting the best of Upfront’s hundred-plus existing portfolio companies that are poised to scale, and also to invest in companies not currency on the platform, and I anticipate [the latter] will happen more and more over time.

TC: Twitter was a lot more active on the corp dev front during the years when you were there. Why?

SS: When i joined in 2018, Jack Dorsey had been CEO for about three years, and really his focus was on the core mission of driving the public conversation, and in doing that, Twitter shrunk itself out of a lot of businesses and [shrunk] people wise as well.

TC: I remember it laid people off in 2016.

SS: And one of the offshoots of that was way less in the way of newer products, so there were no new acquisitions in the three years prior to me joining, and that muscle atrophies if you don’t exercise it. So [ahead of me] Jack had transformed the management team, which had been, relatively speaking, a revolving door of executives until that point, and I was brought in with a specific mandate of reviving a corporate development practice that had been quiet for a few years. I’d known [CFO] Ned Segal when he was a banker at Goldman Sachs and [while] I was at SuccessFactors, so when I heard about the role through the grapevine, I reached out.

TC: So Twitter starts shopping, buying up the news reader service Scroll, the newsletter platform Revue. Were these decisions coming down from the top or vice versa?

SS: The best way to describe it would be that it was product-need driven. The company had a few different objectives. One was to diversify Twitter from its dependency on being an ad-driven business. Something like 80% of revenue comes from ads.

Second, there’s an incredible need to ramp up its machine learning and artificial intelligence as a company. If you’re looking for toxicity in conversation, it’s not scalable to hire tens of thousands of people to do that. You need machine learning to find it. Twitter done well is also able to show you the conversations that are most interesting to you, and to do that, it has to take signals from what you follow and spend time reading and what you interact with, and that, at its core, is ML AI.  [Relatedly] Jack has a vision that anybody who tweets in whatever their native tongue is should be able to talk with someone else in their native tongue as part of a global conversation, and to do that, you need [natural language processing] techniques galore.

TC: There’s also this focus on consumer applications.

SS: That’s the third objective. What are the tools that followers and creators can use in conversation with each other? So [Twitter] added audio [via its Clubhouse rival Spaces]. We bought Revue, which is a competitor to Substack. So there’s a lot of innovation happening around the type of content that someone should expect to see or create on Twitter.

TC: Would you describe these acquisitions as proactive or reactive?

SS: From the outside it would seem reactive, but the reality is we’d been thinking a lot about something like Spaces even before Clubhouse took off. I think what’s noticeable to me is [Spaces] is one of the first times you’ve seen a company like Twitter build up a capability and a new product area that’s going head-to-head going against a company that’s focused only on that realm, and it’s competitive from day one. Twitter beat Clubhouse in [offering an] Android version because it poured resources into it, and I’d argue that a lot of the mechanics of Twitter and the fact that creators are on Twitter puts it in an awesome spot to win this segment.

Twitter also just has a huge amount of expertise in finding toxicity and things you want to be wary of when you’re a social media play, and a company of Clubhouse’s size, at least in its initial days, will have a hard time getting there.

TC: Twitter has so many interests, including around cryptocurrencies and decentralization. 

SS: In terms of priorities at Twitter,  a lot is under wraps in terms of the technologies that we expect [will rise up over] the next five  to 10 years, but [a lot of thought is being given to] the impact of cryptocurrency and the underlying protocols around it and how Twitter participates in a trustless, permissionless [world] where there’s a decentralized internet that can protect people’s privacy and allow people not to worry where their content is stored. People think of Twitter as a consumer app but there’s amazing and considerable diversity under the hood.

TC: Do you think because of the current regulatory environment that it has a better shot at working with companies and projects that might have gotten snapped up by Facebook and Google?

In terms of the regulatory environment, the reality is that even if you take the Facebooks and Googles out of the equation, there are acquirers that are competitive that would step up and buy things, so it’s a little short-sighted to think of just those two. But even when they were active, we were winning [deals]. A lot of the companies we acquired self-selected to be at Twitter because they like what it stands for, they like the way that Jack Dorsey leads the organization, and they believe in the stands that he takes and the positions that he and his leadership espouse.

TC: You’re now representing a very different brand. How will your work at Twitter help you compete for deals on behalf of Upfront?

SS: I have this network of incredible entrepreneurs around the world because of companies across my career that I’ve helped acquire or tried to acquire or who are running businesses; I also [have relationships with] VCs at different stages who actively spot businesses around the world [and introduce them to corp dev teams]. You might also know that Twitter has a diversity and inclusion program where they intend to have 25% of leadership be diverse over the next several years, so my team was often involved in finding the best ways to find diverse targets to buy. I also led a series of LP investments into newly emerging funds, some LatinX-founded, some women-founded, some Black-founded, some that were diverse from a geographic standpoint that are scouting companies in far flung places . . .

TC: Does Twitter also make direct investments?

SS: We did direct investments but [backing fund managers] is a more leveraged approach. Most of them are seed funds and they’ll in turn invest in 30 to 60 companies each. But yes, I scouted companies in far flung places, including [India’s] ShareChat where I served on the board for two years. [Editor’s note: TechCrunch reported earlier this year that Twitter explored buying ShareChat at an earlier point; the company has since raised numerous rounds of funding and was most recently valued by its investors at nearly $3 billion.]

TC: You have a lot of relationships, but it would still seem really hard to compete for growth-stage deals when so many other outfits are now investing there, too. How do you plan to compete?

SS: I will clearly be drawing on those networks to find deals. I’ll be investing in sectors where Upfront has already invested in, but initially I’ll be double-clicking [in areas[ I have strong interest in, including around the creator economy ecosystem, because I did so much of that at Twitter, and “Web 3.0,” this permissionless [evolution that Twitter is also focused on]. But I won’t kid myself. You compete by learning what your value proposition is. At Twitter, my strategy was winning on speed, knowing people earlier, and [underscoring] Twitter’s value proposition [to close deals]. I can’t talk about my [VC] strategy without having implemented yet; I’ll have to figure out what’s most interesting to entrepreneurs that the megafunds don’t offer.

A founder’s guide to effectively managing your options pool

By Ram Iyer
Allen Miller Contributor
Allen Miller is a principal at Oak HC/FT based in San Francisco. He invests in early- and growth-stage companies, with a particular focus on fintech.

There’s an old startup adage that goes: Cash is king. I’m not sure that is true anymore.

In today’s cash rich environment, options are more valuable than cash. Founders have many guides on how to raise money, but not enough has been written about how to protect your startup’s option pool. As a founder, recruiting talent is the most important factor for success. In turn, managing your option pool may be the most effective action you can take to ensure you can recruit and retain talent.

That said, managing your option pool is no easy task. However, with some foresight and planning, it’s possible to take advantage of certain tools at your disposal and avoid common pitfalls.

In this piece, I’ll cover:

  • The mechanics of the option pool over multiple funding rounds.
  • Common pitfalls that trip up founders along the way.
  • What you can do to protect your option pool or to correct course if you made mistakes early on.

A minicase study on option pool mechanics

Let’s run through a quick case study that sets the stage before we dive deeper. In this example, there are three equal co-founders who decide to quit their jobs to become startup founders.

Since they know they need to hire talent, the trio gets going with a 10% option pool at inception. They then cobble together enough money across angel, pre-seed and seed rounds (with 25% cumulative dilution across those rounds) to achieve product-market fit (PMF). With PMF in the bag, they raise a Series A, which results in a further 25% dilution.

The easiest way to ensure you don’t run out of options too quickly is simply to start with a bigger pool.

After hiring a few C-suite executives, they are now running low on options. So at the Series B, the company does a 5% option pool top-up pre-money — in addition to giving up 20% in equity related to the new cash injection. When the Series C and D rounds come by with dilutions of 15% and 10%, the company has hit its stride and has an imminent IPO in the works. Success!

For simplicity, I will assume a few things that don’t normally happen but will make illustrating the math here a bit easier:

  1. No investor participates in their pro-rata after their initial investment.
  2. Half the available pool is issued to new hires and/or used for refreshes every round.

Obviously, every situation is unique and your mileage may vary. But this is a close enough proxy to what happens to a lot of startups in practice. Here is what the available option pool will look like over time across rounds:

 

Option pool example

Image Credits: Allen Miller

Note how quickly the pool thins out — especially early on. In the beginning, 10% sounds like a lot, but it’s hard to make the first few hires when you have nothing to show the world and no cash to pay salaries. In addition, early rounds don’t just dilute your equity as a founder, they dilute everyone’s — including your option pool (both allocated and unallocated). By the time the company raises its Series B, the available pool is already less than 1.5%.

Private equity giveth, and private equity taketh away

By Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Alex and Grace and Chris gathered to dig through the week’s biggest happenings, including some news of our own. As a note, Equity’s Monday episode will be landing next Tuesday, thanks to a national holiday here in the United States. And we have something special planned for Wednesday, so stay tuned.

Ok! Here’s the rundown from the show:

That’s a wrap from us for the week! Keep your head atop your shoulders and have a great weekend!

Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Extra Crunch roundup: Cohort analysis, YC Demo Day recaps, building your supply chain

By Walter Thompson

The ongoing fintech revolution continues to level the playing field where legacy companies have historically dominated startups.

To compete with retail banks, many newcomers are offering customers credit and debit cards; developer-friendly APIs make issuance relatively easy, and tools for managing processes like KYC are available off the shelf.

To learn more about the low barriers to entry — and the inherent challenges of creating a unique card offering — reporter Ryan Lawler interviewed:

  • Michael Spelfogel, founder, Cardless
  • Anu Muralidharan, COO, Expensify
  • Peter Hazlehurst, founder and CEO, Synctera
  • Salman Syed, SVP and GM of North America, Marqeta

Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.


We’re off on Monday, September 6 to celebrate America’s Labor Day holiday, but we’ll be back with new stories (and a very brief newsletter) on Tuesday morning.

Thanks very much for reading,

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

6 tips for establishing your startup’s global supply chain

Image Credits: Suriyapong Thongsawang (opens in a new window) / Getty Images

The barrier to entry for launching hardware startups has fallen; if you can pull off a successful crowdfunding campaign, you’re likely savvy enough to find a factory overseas that can build your widgets to spec.

But global supply chains are fragile: No one expected an off-course container ship to block the Suez Canal for six days. Due to the pandemic, importers are paying almost $18,000 for shipping containers from China today that cost $3,300 a year ago.

After spending a career spinning up supply chains on three continents, Liteboxer CEO Jeff Morin authored a guide for Extra Crunch for hardware founders.

“If you’re clear-eyed about the challenges and apply some rigor and forethought to the process, the end result can be hard to match,” Morin says.

Our favorite startups from YC’s Summer 21 Demo Day, Part 1

Y Combinator’s Summer 21 Demo Day, Part 1

Image Credits: Bryce Durbin / TechCrunch

Twice each year, we turn our attention to Y Combinator’s latest class of aspiring startups as they hold their public debuts.

For YC Summer 2021 Demo Day, the accelerator’s fourth virtual gathering, Natasha Mascarenhas, Alex Wilhelm, Devin Coldewey, Lucas Matney and Greg Kumparak selected 14 favorites from the first day of one of the world’s top pitch competitions.

Virtual events startups have high hopes for after the pandemic

Image Credits: Yuichiro Chino / Getty Images

Few people thought about virtual events before the pandemic struck, but this format has fulfilled a unique and important need for organizations large and small since early 2020. But what will virtual events’ value be as more of the world attempts a return to “normal”?

To find out, we caught up with top executives and investors in the sector to learn about the big trends they’re seeing — as the sequel to a survey we did in March 2020.

We surveyed:

  • Xiaoyin Qu, founder and CEO, Run The World
  • Rosie Roca, chief customer officer, Hopin
  • Hemant Mohapatra, partner, Lightspeed Venture Partners India
  • Paul Murphy, former investor in Hopin with Northzone (currently co-founder of Katch)

Tracking startup focus in the latest Y Combinator cohort

Alex Wilhelm and Anna Heim wrapped up TechCrunch’s coverage of the summer cohort from Y Combinator’s Demo Day with an evaluation of how the group fared in comparison to their expectations.

They were surprised by the number of startups focusing on no-and low-code software, and pleased by the unanticipated quantity of new companies focusing on space.

“It seems only fair to note that some categories of startup activity simply met our expectations in terms of popularity,” noting delivery-focused startups including dark stores and kitchens.

Popping up less than expected? Crypto and insurtech.

Read on for the whole list of startups that caught the eye of The Exchange.

Use cohort analysis to drive smarter startup growth

Image Credits: erhui1979 / Getty Images

Cohort analysis is what it sounds like: evaluating your startup’s customers by grouping them into “cohorts” and observing their behavior over time.

In a guest column, Jonathan Metrick, the chief growth officer at Sagard & Portage Ventures, offers a detailed example explaining the value of this type of analysis.

Questions? ​​Join us for a Twitter Spaces chat with Metrick on Tuesday, September 7, at 3 p.m. PDT/6 p.m. EDT. For details and a reminder, follow @TechCrunch on Twitter.

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.”

 

Customer experience startup Clootrack raises $4M, helps brands see through their customers’ eyes

By Christine Hall

Getting inside the mind of customers is a challenge as behaviors and demands shift, but Clootrack believes it has cracked the code in helping brands figure out how to do that.

It announced $4 million in Series A funding, led by Inventus Capital India, and included existing investors Unicorn India Ventures, IAN Fund and Salamander Excubator Angel Fund, as well as individual investment from Jiffy.ai CEO Babu Sivadasan. In total, the company raised $4.6 million, co-founder Shameel Abdulla told TechCrunch.

Clootrack is a real-time customer experience analytics platform that helps brands understand why customers stay or churn. Shameel Abdulla and Subbakrishna Rao, who both come from IT backgrounds, founded the company in 2017 after meeting years prior at Jiffstore, Abdulla’s second company that was acquired in 2015.

Clootrack team. Image Credits: Clootrack

Business-to-consumer and consumer brands often use customer satisfaction metrics like Net Promoter Score to understand the customer experience, but Abdulla said current methods don’t provide the “why” of those experiences and are slow, expensive and error-prone.

“The number of channels has increased, which means customers are talking to you, expressing their feedback and what they think in multiple places,” he added. “Word of mouth has gone digital, and you basically have to master the art of selling online.”

Clootrack turns the customer experience data from all of those first-party and third-party touchpoints — website feedback, chat bots, etc. — into granular, qualitative insights that give brands a look at drivers of the experience in hours rather than months so that they can stay on top of fast-moving trends.

Abdulla points to data that show a customer’s biggest driver of brand switch is the experience they receive. And, that if brands can reduce churns by 5%, they could be looking at an increase in profits of between 25% and 95%.

Most of the new funding will go to product development so that all data aggregations are gathered from all possible touchpoints. His ultimate goal is to be “the single platform for B2C firms.”

The company is currently working with over 150 customers in the areas of retail, direct-to-consumer, banking, automotive, travel and mobile app-based services. It is growing nine times year over year in revenue. It is mainly operating in India, but Clootrack is also onboarding companies in the U.S. and Europe.

Parag Dhol, managing director of Inventus, said he has known Abdulla for over five years. He had looked at one of Abdulla’s companies for investment, but had decided against it due to his firm being a Series A investor.

Dhol said market research needs an overhaul in India, where this type of technology is lagging behind the U.S.

“Clootrack has a very complementary team with Shameel being a complete CEO in terms of being a sales guy and serial entrepreneur who has learned his lessons, and Subbu, who is good at technology,” he added. “As CMOs realize the value in their unstructured data inside of their own database of the customer reviews and move to real-time feedback, these guys could make a serious dent in the space.”

 

SimpliFed serves up $500,000 pre-seed toward infant nutrition support

By Christine Hall

Feeding babies can take many different forms, and is also an area where parents can feel less supported as they navigate this new milestone in their lives.

Enter SimpliFed, an Ithaca, New York-based company providing virtual lactation and a baby feeding support platform. The startup announced Friday that it raised $500,000 in pre-seed funding led by Third Culture Capital.

Andrea Ippolito, founder and CEO of SimpliFed. Image Credits: SimpliFed

CEO Andrea Ippolito, a biomedical engineer and mother of two young children, had the idea for SimpliFed three years ago. She struggled with breastfeeding after having her first child and, realizing that she was not alone in this area, set out to figure out a way to get anyone access to information and support for infant feeding.

“Post discharge is when the rubber meets the goal for us,” she told TechCrunch. “This is a huge pain point for Medicaid, and it is not just about increasing access, but providing ongoing support for feeding and the quagmire that is health insurance. We want to help moms reach their infant feeding goals, no matter how they choose to feed, and to figure out what feeding looks like for them.”

The American Academy of Pediatrics recommends that mothers nurse for up to six months. However, the Centers for Disease Control and Prevention estimates that 60% of mothers don’t breastfeed for as long as they intend due to reasons like difficulty lactating or the baby latching, sickness or an unsupportive work environment.

SimpliFed’s platform is a judgement-free zone providing evidence-based information on nutritional health for babies. It isn’t meant to replace typical care that mother and baby will receive before and after delivery, but to provide support when issues arise, Ippolito said. Parents can book a free, initial 15-minute virtual consultation with a lactation expert and then subsequent 60-minute sessions for $100 each. There is also a future membership option for those seeking continuing care.

The new funds will be used to hire additional employees to further develop the telelactation platform and grow the company’s footprint, Ippolito said. The platform is gearing up to go through a clinical study to co-design the program with 1,000 mothers. She also wants to build out relationships with payers and providers toward a longer-term goal of becoming in-network and paid through reimbursement from health plans.

Julien Pham, managing partner at Third Culture Capital, said he met Ippolito at MIT Hacking Medicine a decade ago. A physician by training, he saw first-hand how big of an opportunity it is to demystify providing the best nutrition for babies.

“The U.S. culture has evolved over the years, and millennials are the next-generation moms who have a different ask, and SimpliFed is here at the right time,” Pham said. “Andrea is just a dynamo. We love her energy and how she is at the front line of this as a mother herself — she is most qualified to do this, and we support her.

 

For VCs, the game right now is musical chairs

By Connie Loizos

In many ways, there has never been a better time to be a venture capitalist. Nearly everyone in the industry is raking in money, either through long-awaited exits or because more capital flooding into the industry has meant more money in management fees  — and sometimes both.

Still, a growing number of early-stage investors with whom we talk to on a routine basis are wary about the pace of dealmaking. It’s not just that it’s a lot harder to write checks at what feels like a reasonable clip at the moment, or that most VCs feel they can no longer afford to be price sensitive. Many of the founders with whom they work are being handed follow-on checks before figuring out how best to deploy their last round of funding.

Consider that from 2016 through 2019, an average of 35 deals a month featured rounds of $100 million or more, according to the data company CB Insights. This year, 126 companies a month on average have been raising those kinds of megarounds. The froth is hardly contained to maturing companies. Even the median U.S. Series A valuation hit $42 million in the second quarter, driven in part crossover investors like Tiger Global, which closed 1.26 deals per business day in Q2. (Andreessen Horowitz wasn’t far behind.)

It makes for some bewildering times, including for longtime investor Jeff Clavier, the founder the early-stage venture firm Uncork Capital. Like many of his peers, Clavier is benefiting from the booming market. Among Uncork’s portfolio companies, for example is LaunchDarkly, a company that helps software developers avoid missteps. The seven-year-old company announced $200 million in Series D funding last month at a $3 billion valuation. That’s triple the valuation it was assigned early last year.

“It’s an awesome company, so I’m very excited for them,” says Clavier.

At the same time, he added, “You have to put this money to work in a very smart way.”

That’s not so easy in this market, where founders are inundated with interest and, in some cases, are talking term sheets after the first Zoom with an investor. (“The most absurd thing we’ve heard are funds that are making decisions after a 30-minute call with the founder,” says TX Zhou, the cofounder of L.A.-based seed-stage firm Fika Ventures, which itself just tripled the amount of assets it’s managing.)

More money can mean a much longer lifeline for a company. But as many investors have learned the hard way, it can also serve as a distraction, as well as hide fundamental issues with a business until it’s too late to address them.

Taking on more money also oftentimes goes hand-in-hand with a bigger valuation, and lofty valuations comes with their own positives and negatives. On the plus side, of course, big numbers can attract more attention to a company from the press, from customers, and from potential new hires.  At the same time, “The more money you raise, the higher the valuation it is, it catches up with you on the next round, because you got to clear that watermark,” says Renata Quintini of the venture firm Renegade Partners, which focuses largely on Series B-stage companies.

Again, in today’s market, trying to slow down isn’t always possible. Quintini says that some founders her firm has talked to have said, “‘I’m not going to raise any more because I cannot go faster; I cannot deploy more than my model is already supporting.'” For others, she continues, “You’ve got to look at what’s happening around you, and sometimes if your competitors are raising and they’re going to have a bigger war chest . . and [they’re] pushing the market forward . . . and maybe they can out-hire you or they can outspend you in certain areas where they can generate more traction than you . . .” that next check, often at the higher valuation, begins to look like the only option.

Many VCs have argued that today’s valuations make sense because companies are creating new markets, growing faster than before, and have more opportunities to expand globally, and certainly, in some cases, that it is true. Indeed, companies that were previously believed to be richly priced by their private investors, like Airbnb and Doordash, have seen their valuations soar as publicly traded companies.

Yet it’s also true that for many more companies, “valuation is completely disconnected from the [companies’] multiples,” says Clavier, echoing what other VCs acknowledge privately.

That might seem to be the kind of problem that investors love to face. But as been the case for years now, that depends on how long this go-go market lasts.

Clavier says that one of his own companies that “did a great Series A and did a great Series B ahead of its time is now being preempted for a Series C, and the valuation is just completely disconnected from their actual reality.”

He said he’s happy for the outfit “because I have no doubt they will catch up. But this is the point: they will have to catch up.”

For more from our conversation with Clavier, by the way, you can listen here.

Online learning platform CLASS101 bags $26M Series B to support growth

By Kate Park

Everything is switching from offline to online mode, spurred by the pandemic, and that also has turned around things for the creative economy. Creative professionals continue to look for ways to monetize their talents and knowledge through online education platforms like CLASS101 that bring stable incomes and improve opportunities.

CLASS101, a Seoul-based online education platform, announced today it has closed $25.8 million (30 billion won) Series B funding to accelerate its growth in South Korea, the U.S. and Japan.

The Series B round was led by Goodwater Capital, with additional participation from previous backers Strong Ventures, KT Investment, Mirae Asset Capital and Klim Ventures.

In 2019, the company raised a $10.3 million (12 billion won) Series A round led by SoftBank Ventures Asia along with Mirae Asset Venture Investment, KT Investment, Strong Ventures and SpringCamp.

Co-founder and CEO of CLASS101 Monde Ko told TechCrunch that the company will use the proceeds to focus on hiring more talent, as well as expanding domestic business and overseas markets in the U.S. and Japan.

Ko and four other co-founders established CLASS101 in 2018, which was pivoted from a tutoring service platform that was founded in 2015, Ko said. It has 350 employees now.

“We will keep supporting creators to monetize their talents and we will also allow creators to expand their revenue streams by selling their goods, digital files and more products via our platform,” Ko said.

When asked about what differentiated it from other peers, CLASS101 provides and ships all the necessary tools and material “Class Kit”, Ko said.

The company offers more than 2,000 classes within a raft of categories, with drawing, crafts, photography, cooking, music and more. It also provides about 230 classes in the U.S. and 220 classes in Japan. There are approximately 100,000 registered creators and 3 million registered users as of August 2021.

CLASS101 launched its platform in the U.S. in 2019 and entered Japan last year. The company opened online classes for kids aged under 14 in 2020.

“CLASS101 is a company that combines the advantages of Patreon and YouTube, offering tailored support for creators while fulfilling users’ learning needs,” co-founder and managing partner at Goodwater Capital Eric Kim said, adding that it is the fastest growing company “in an economic phenomenon in which individuals follow their passions and do what they really enjoy while also making a living from it.”

Shepherd raises $6.2M seed round to tackle the construction insurance market

By Alex Wilhelm

Shepherd, an insurtech startup focused on the construction market, has closed a $6.15 million seed round led by Spark Capital. The funding event comes after the startup raised a pre-seed round in February led by Susa Ventures, which also participated in Shepherd’s latest fundraising event.

Thinking broadly, Shepherd fits into a theme of neoinsurance providers selling more to other companies than to consumers. Insurtech startups serving consumers enjoyed years of venture capital backing only to find their public debuts met with early optimism followed quickly by eroding share prices.

But companies like Shepherd — and Blueprint Title earlier this week — are wagering on there being margin elsewhere in the insurance world to attack. For Shepherd, the construction market is its target, an industry that it intends to carve into starting with excess liability coverage.

The company’s co-founder and CEO, Justin Levine, told TechCrunch that contractors in the construction space have a number of insurance requirements, including general liability, commercial auto and so forth. But construction projects often also require more liability coverage, which is sold as excess or umbrella policies.

Targeting the middle-market of the construction space — companies doing $25 million to $250 million in projects per year, in its view — Shepherd wants to lean on technology as a way to help underwrite customers.

Levine said that his company’s offering will have two core parts. The first is what you expected, namely a complete digital experience for customers. The CEO likened its digital offering to table stakes for the insurtech world. We agree. But the company gets more interesting when we consider its second half, namely its work to partner with construction tech providers to help it make underwriting decisions.

The startup has partnered with Procore, for example, a company that invested in its business.

The concept of leaning on third-party software companies to help make underwriting decisions makes some sense — companies that are more technology-forward in terms of adopting new techniques and methods won’t have the same underwriting profile as companies that don’t. Generally, more data makes for better underwriting decisions; linking to the software that helps construction companies function makes good sense from that perspective.

The CEO of Procore agrees, telling TechCrunch that an early customer of his business said that its product is “a risk management solution disguised as construction management software.” The more risk that is managed, the lower Shepherd’s loss ratios may prove over time, allowing it to better compete on price.

On the subject of price, Levine thinks that the construction insurance market is suffering at the moment. Rising settlement costs have led to some legacy insurance books in the space with larger-than-anticipated losses, pushing some providers to raise prices. Levine’s view is that that Shepherd’s ability to enter its market without a legacy book of business will help it offer competitive rates.

Excess liability coverage is the “wedge” that Shepherd intends to use to get into the construction insurance market, it said, with intention of launching other products in time. The startup is attacking excess liability coverage first, its CEO said, because it’s the place of maximum pain in the larger construction insurance market.

Frankly, TechCrunch finds the B2B neoinsurance startup market fascinating. Selling policies to consumers has a particular set of cost of goods sold (COGS) — varying based on the type of coverage, of course — and often stark go-to-market costs. Furthermore, customer acquisition costs (CACs) can prove irksome when going up against national brands with huge budgets. Perhaps the business insurance market will prove more lucrative for upstart tech companies. Venture investors are certainly willing to place that particular wager.

Natalie Sandman led the deal for Spark, telling TechCrunch that when she first encountered Shepherd it was working on a different project, but that when it shifted its focus, it struck a chord with her firm. The investor said that the idea of bringing new data to the construction insurance underwriting process may help the company make smarter decisions. In the insurance world, better underwriting choices mean more profitable coverage. Which means greater future cash flows. And we all know that that means for value creation.

Fintech startup Jeeves raises $57M, goes from YC to $500M valuation in one year

By Mary Ann Azevedo

Last summer, Jeeves was participating in Y Combinator’s summer batch as a fledgling fintech.

This June, the startup emerged from stealth with $31 million in equity and $100 million in debt financing. 

Today, the company, which is building an “all-in-one expense management platform” for global startups, is announcing that it has raised a $57 million Series B at a $500 million valuation. That’s up from a valuation of just north of $100 million at the time of Jeeves’ Series A, which closed in May and was announced in early June.

While the pace of funding these days is unlike most of us have ever seen before, it’s pretty remarkable that Jeeves essentially signed the term sheet for its Series B just two months after closing on its Series A. It’s also notable that just one year ago, it was wrapping up a YC cohort.

Jeeves was not necessarily looking to raise so soon, but fueled by its growth in revenue and spend after its Series A, which was led by Andreessen Horowitz (a16z), the company was approached by dozens of potential investors and offered multiple term sheets, according to CEO and co-founder Dileep Thazhmon. Jeeves moved forward with CRV, which had been interested since the A and built a relationship with Thazhmon, so it could further accelerate growth and launch in more countries, he said.

CRV led the Series B round, which also included participation from Tencent, Silicon Valley Bank, Alkeon Capital Management, Soros Fund Management and a high-profile group of angel investors including NBA stars Kevin Durant and Andre Iguodala, Odell Beckham Jr. and The Chainsmokers. Notably, the founders of a dozen unicorn companies also put money in the Series B including (but not limited to) Clip CEO Adolfo Babatz; QuintoAndar CEO Gabriel Braga; Uala CEO Pierpaolo Barbieri, BlockFi CEO Zac Prince; Mercury CEO Immad Akhund; Bitso founder Pablo Gonzalez; Monzo Bank’s Tom Blomfield; Intercom founder Des Traynor; Lithic CEO Bo Jiang as well as founders from UiPath, Auth0, GoCardless, Nubank, Rappi, Kavak and others.

Whew.

The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering was live in Mexico and Canada and today launched in Colombia, the United Kingdom and Europe as a whole. 

Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.

Jeeves claims that by using its platform’s proprietary Banking-as-a-Service infrastructure, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card (with 4% cash back), non card payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.

For example, a growing business can use a Jeeves card in Barcelona and pay it back in euros and use the same card in Mexico and pay it back in pesos, reducing any FX fees and providing instant spend reconciliation across currencies. 

Thazhmon believes that the “biggest thing” the company is building out is its own global BaaS layer, that sits across different banking entities in each country, and onto which the end user customer-facing Jeeves app plugs into.

Put simply, he said, “think of it as a BaaS platform, but with only one app — the Jeeves app — plugged into it.”

Image Credits: Jeeves

The startup has grown its transaction volume (GTV) by more than 5,000% since January, and both revenue and spend volume has increased more than 1,100% (11x) since its Series A earlier this year, according to Thazhmon.

Jeeves now covers more than 12 currencies and 10 countries across three continents. Mexico is its largest market. Jeeves is currently beta testing in Brazil and Chile and Thazhmon expects that by year’s end, it will be live in all of North America and Europe. Next year, it’s eyeing the Asian market, and Tencent should be able to help with that strategically, he said.

“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon told TechCrunch. “Our model is very similar to that of Uber’s launch model where we can launch very quickly because we don’t have to rebuild an entire infrastructure. When we launch in countries, we actually don’t have to rebuild a stack.”

Jeeves’ user base has been doubling every 60 days and now powers more than 1,000 companies across LatAm, Canada and Europe, including Bitso, Kavak, RappiPay, Belvo, Runa, Moons, Convictional, Muncher, Juniper, Trienta, Platzi, Worky and others, according to Thazhmon. The company says it has a current waitlist of over 15,000.

Jeeves plans to use its new capital toward its launch in Colombia, the U.K. and Europe. And, of course, toward more hiring. It’s already doubled its number of employees to 55 over the past month.

Former a16z partner Matt Hafemeister was so impressed with what Jeeves is building that in August he left the venture capital firm to join the startup as its head of growth. In working with the founders as an investor, he concluded that they ranked “among the best founders in fintech” he’d ever interacted with.

The decision to leave a16z also related to Jeeves’ inflection point, Hafemeister said. The startup is nearly doubling every month, and had already eclipsed year-end goals on revenue by mid-year.

It is evident Jeeves has found early product market fit and, given the speed of execution, I see Jeeves establishing itself as one of the most important fintech companies in the next few years,” Hafemeister told TechCrunch. “The company is transitioning from a seed company to a Series B company very quickly, and being able to help operationalize processes and play a role in their growth and maturity is an incredible opportunity for me.”

CRV General Partner Saar Gur (who is also an early investor in DoorDash, Patreon and Mercury) said he was blown away by Jeeves’ growth and how it has been “consistently hitting and exceeding targets month over month.” Plus, early feedback from customers has been overwhelmingly positive, Gur said.

“Jeeves is building products and infrastructure that are very difficult to execute but by doing the ‘hard things’ they offer incredible value to their customers,” he told TechCrunch. “We haven’t seen anyone build from the ground up with global operations in mind on day one.”

HomeLight closes on $100M Series D at a $1.6B valuation as revenue surges

By Mary Ann Azevedo

HomeLight, which operates a real estate technology platform, announced today that it has secured $100 million in a Series D round of funding and $263 million in debt financing.

Return backer Zeev Ventures led the equity round, which also included participation from Group 11, Stereo Capital, Menlo Ventures and Lydia Jett of the SoftBank Vision Fund. The financings bring the San Francisco-based company’s total raised since its 2012 inception to $530 million. The equity financing brings HomeLight’s valuation to $1.6 billion, which is about triple of what it was when it raised its $109 million in debt and equity in a Series C that was announced in November of 2019.

Zeev Ventures led that funding round, as well as its Series A in 2015.

The latest capital comes ahead of projected “3x” year-over-year growth, according to HomeLight founder and CEO Drew Uher, who projects that the company’s annual revenue will triple to over $300 million in 2021. Doing basic math, we can deduce that the company saw around $100 million in revenue in 2020.

Over the years, like many other real estate tech platforms, HomeLight has evolved its model. HomeLight’s initial product focused on using artificial intelligence to match consumers and real estate investors to agents. Since then, the company has expanded to also providing title and escrow services to agents and home sellers and matching sellers with iBuyers. In July 2019, HomeLight acquired Eave as an entry into the (increasingly crowded) mortgage lending space.

“Our goal is to remove as much friction as possible from the process of buying or selling a home,” Uher said.

In January 2020, HomeLight launched its flagship financial products, HomeLight Trade-In and HomeLight Cash Offer. Since then, it has grown those products by over 700%, Uher said, in part fueled by the pandemic.

HomeLight’s Trade-In product gives its clients greater control over the timeline of their move and ability to transact, and Cash Offer gives people a way to make all cash offers on homes, “even if they need a mortgage,” he said. 

“The pandemic only highlighted many of the pain points in the real estate transaction process that we’ve been focused on solving since our founding,” Uher told TechCrunch. “Between the real estate industry’s historic information asymmetry, outdated processes and unreasonable costs — not to mention today’s record-low inventory and all-time high bidding wars — buying or selling a home can be an incredibly difficult process, even without the challenges put in place by a global pandemic.”

Image Credits: HomeLight

Then in August 2020, the company acquired Disclosures.io and launched HomeLight Listing Management, with the goal of making it easier for agents to share property information, monitor buyer interest and manage offers in one place. 

In June of 2021, HomeLight appointed Lyft chairman and former Trulia CFO Sean Aggarwal to its board.

Uher founded HomeLight after he and his wife felt the pain of trying to buy a home in the competitive Bay Area market.

“The process of buying a home in San Francisco was so frustrating it made me want to bang my head against the wall,” Uher told me at the time of HomeLight’s Series C. “I realized there were so many things wrong with the real estate industry. I went through a few real estate agents before finding the right match. So when I did find one, it made me feel empowered to compete and win against the other buyers.”

He started HomeLight with a single product, its agent matching platform, which uses “proprietary machine-learning algorithms” to analyze millions of real estate transactions and agent profiles. It claims to connect a client to a real estate agent on average “every 90 seconds.”

Over the years, Uher said that hundreds of thousands of agents have applied to be a part of the HomeLight agent network and that it has worked with over 1 million homebuyers and sellers in the U.S. Today, the company works closely with the top 28,000 of those agents across the country. HomeLight maintains that it is not trying to replace real estate agents, but instead work more collaboratively with them.

Uher said the company plans to use its new capital in part toward expanding to new markets its Trade-In and Cash Offer operations. HomeLight Trade-In and Cash Offer are currently available in California, Texas and, more recently, in Colorado.

“We plan to expand as quickly as we can across the entire country,” Uher said. “We also plan to hire aggressively in 2021 and beyond.”

HomeLight presently has over 500 employees, up from about 350 at the end of last year. The company has offices in Scottsdale, Arizona, San Francisco, New York, Seattle and Tampa, and plans to open new sites throughout the U.S. in the coming months. 

Oren Zeev, founding partner at Zeev Ventures, said he believes that HomeLIght is better positioned than any other proptech company “to reinvent the transaction experience” for agents and their clients.

“With the onset of iBuyers and other technology introduced in the past decade, many proptech companies are building products to cut agents out of the transaction process entirely,” Zeev wrote via email. “This is where HomeLight uniquely differs — and excels — from its competitors…They’re in the perfect position to revolutionize the industry.”

SoftBank deepens commitment to LatAm with two new partners focused on early-stage investing

By Mary Ann Azevedo

In March 2019, SoftBank Group International made headlines when it announced the SoftBank Innovation Fund, which started out with a $2 billion commitment to invest in tech startups in Latin America.

A lot has changed since then. SoftBank changed the name of the fund to the SoftBank Latin America Fund, or LatAm Fund for short. The Japanese investment conglomerate has dramatically ramped up its investing in the region, and so have a number of other global investors. In fact, venture capitalists poured an estimated $6.2 billion into Latin American startups in the first half of 2021.

As evidence of its continued commitment to the region, SoftBank Group announced today that it has added two new managing partners to its LatAm Fund team: Rodrigo Baer and Marco Camhaji. The two will focus on “identifying and supporting” early-stage companies across the Latin American region, SoftBank told TechCrunch exclusively.

Baer and Camhaji will report to SoftBank Executive President & COO Marcelo Claure, who points out that the firm’s LatAm fund has invested in more than two-thirds of the nearly two dozen unicorns currently operating in the region. He said that SoftBank is today “one of the largest and most active” technology investors in the region.

 

The move is significant in that the hires represent an expansion of SoftBank LatAm Fund’s mandate and means that the firm is now backing companies at all stages in the region.

By bringing Baer and Camhaji on board, Claure said in a statement, SoftBank will “be better able to identify high-growth companies and support them at every step of their lifecycle.”

SoftBank describes Baer as one of the pioneers of Brazil’s venture capital industry. He has invested in more than 20 companies since 2010. According to Crunchbase, he co-founded Warehouse Investimentos in 2010, where he led deal-sourcing efforts. He joined the investment team of Redpoint eVentures, a LatAm-based early-stage VC fund, in June 2014. He also was previously an engagement manager at McKinsey and worked at Aurora Funds, a healthcare-services focused fund based in the US. He is also active with Endeavor and multiple angel groups. 

Prior to joining SoftBank, Camhaji was a business development principal at Amazon, establishing strategic partnerships with fintechs in Latin America. He also served as the CEO of Adianta, a Brazilian B2B invoice financing company. Previously, Camahji was a founder and partner at Yellow Ventures, making seed investments in technology startups. He was also a partner and CFO of Redpoint eVentures.

In August, Shu Nyatta, a managing partner at SoftBank who co-leads its $5 billion Latin America Fund, pointed out a dynamic that might seem obvious but is rarely articulated: Technology in LatAm is often more about inclusion rather than disruption.

“The vast majority of the population is underserved in almost every category of consumption. Similarly, most businesses are underserved by modern software solutions,” Nyatta told TechCrunch. “There’s so much to build for so many people and businesses. In San Francisco, the venture ecosystem makes life a little better for individuals and businesses who are already living in the future. In LatAm, tech entrepreneurs are building the future for everyone else.

Some recent SoftBank investments in the region include:

  • Kavak, a used car marketplace born in Mexico but now also operating in Brazil and Argentina. “Think of Carvana, but for emerging markets.”
  • Rappi, where “DoorDash-meets-Instacart,” operating across Latin America.
  • QuintoAndar, a Brazilian real estate marketplace.
  • Creditas unlocks the equity trapped in homes and cars and other important assets for Brazilians.
  • Gympass is a marketplace for fitness and wellness, provided through the enterprise to employees.

As global investors continue to flood the region with capital, it’s clear that SoftBank is getting even more aggressive about backing startups in Latin America.

iPhone inside 30 mins? Germany’s Arive brings consumer brands to your door, raises €6M

By Mike Butcher

In Europe and the US we are very much getting used to groceries being delivered within 15 minutes, with a huge battleground of startups in the space. Startups across Europe and the US have raised no less than $3.1 billion in the last quarter alone for grocery deliveries within 10 or 20-minute delivery promises. But all are scrambling over a market where the average order size is pretty low. What if it was in the hundreds, and didn’t require refrigeration?

This is probably going to be the newest “15/30minute” consumer battleground, as high-end consumer goods come to last-mile deliveries.

The latest to Arive in this space is… arive – a German-based startup that delivers high-end consumer brands within 30 minutes. It’s now raised €6 million in seed funding from 468 Capital, La Famiglia VC and Balderton Capital.

But stacking its shelves with well-known brands and spinning up last-mile delivery logistics, Arive is offering fitness products, cosmetics, personal care, homeware, tech and fashion. Consumers order via an app, with the delivery coming via a bike-only fleet in 30-minutes or less.

The behavior it’s tapping into is already there. It seems the pandemic has made us all work and play from home, leaving foot traffic in inner cities still below pre-Covid levels.

Arive says it works directly with brands to offer a selection of their products for on-demand delivery, offering them a new distribution channel to a new type of customer that wants speed and convenience.

arive is currently available in Munich and has recently launched in Berlin, Frankfurt, and Hamburg. The 30-minute delivery guarantee means it doesn’t need as many micro fulfillment centers as grocery players, helping it to keep infrastructure costs low.

Maximilian Reeker, co-founder of arive, said: “While the space for hyper-fast grocery delivery is increasingly crowded, we found the brands we love are still stuck in a three-day delivery scheme. For today’s time-poor consumers, this is too long.”

Bardo Droege, investor at 468 Capital, commented: “Our cities are dynamic, fast-moving places, and people living there want the tools and services that reflect their lifestyles so it’s no wonder the 15-minute groceries category has taken off so quickly. We’re confident the arive team will take this on.”

Stravito raises $14.6M to create a ‘Netflix for enterprise market research’

By Mike Butcher

Market research and insights are often underutilized assets for enterprises but it’s usually too hard to find content and there’s a lot of duplication, or information isn’t used well.

Swedish startup Stravito says it can centralize internal and external data sources and create something more akin to a ‘Spotify or Netflix’ for these kinds of assets, making them far more usable and consumable, they say.

It’s clearly onto something, since it’s now raised a €12.4million ($14.6million USD) series A funding round led by Endeit Capital, with additional investment from existing investors HenQ, Inventure and Creades. To date, Stravito has raised €20.1million ($23.7million USD).

Founded in 2017 by market research veterans and former iZettle employees, Stravito counts among its customers Carlsberg, Edwards Lifesciences, Pepsi Lipton, Danone, Electrolux and Comcast.

Thor Olof Philogène, CEO and co-founder at Stravito said: “It has never been more important for the world’s largest enterprises to understand and react to their customer’s changing behaviors using centralized, vetted company insights. Stravito’s technology and platform makes it fast and easy for companies to use research to make better decisions.”

On a call with me he added: “We provide a search technology, and a great design, all combined to deliver an intuitive, highly automated cloud service that allows these big companies to centralise internal and external data sources so they can pull out the nuggets they need.”

Jelle-Jan Bruinsma, Partner at Endeit Capital, added: “Endeit Capital is always looking for the next generation of international software scale-ups, and Stravito stood out in the Nordics through its impressive work to raise the bar in the multibillion dollar market research and data industry.”
Stravito also appointed Elaine Rodrigo, Chief Insights & Analytics Officer at Reckitt Benckiser, to its board of directors.

Berlin Brands Group, now valued at $1B+, raises $700M to buy and scale merchants that sell on marketplaces like Amazon

By Ingrid Lunden

Berlin Brands Group — one of the new wave of e-commerce startups hoping to build lucrative economies of scale around buying up smaller brands that sell on marketplaces like Amazon and using technology to run and scale them more efficiently — has picked up a big round of funding to fill out that mission. The startup has closed a round of $700 million, comprising both equity and debt, which it will use in part to continue building its fulfillment and logistics infrastructure, as well as its tech platform, and in part to buy more companies.

BBG confirmed that the investment — one of the biggest to date in the space — boosts its valuation to over $1 billion.

Bain Capital is leading the equity portion of this round. The deal will also see it buy out a previous investor, Ardian, for an undisclosed amount that is separate to the $700 million raise.

This funding round is the second announced by BBG this year. In January it announced it would be investing $302 million off its own balance sheet for M&A, and in April it announced a debt round of $240 million. This latest $700 million is different in that it includes the equity component alongside the equity.

BBG got its start initially developing its own products and selling them on Amazon and other marketplaces — founder and CEO CEO Peter Chaljawski was a DJ in a previous life and started with a focus on audio equipment he developed for himself.

Over time, it saw an opportunity to diversify that into a wider consolidation play, where BBG would also acquire and merge third party brands into its business, tapping into the opportunity to provide the owners of the third-party businesses an exit route and bring those smaller brands more scale, more marketing nous, and more tech to improve the efficiency of their operations.

Today the mix totals 3,700 products and 14 own brands, including Klarstein (kitchen appliances), auna (home electronics and music equipment), Capital Sports (home fitness) and blumfeldt (garden). BBG says it has access to some 1.5 billion e-commerce customers across various marketplaces where it sells goods in Europe, the UK, the U.S. and Asia. Notablym unlike many others in the same space as BBG, it is focused on more than Amazon, with some 100 channels in 28 countries.

That list of “many others in the same space” is a long one and seemingly growing by the day. Yesterday, two of them — Heroes and Olsam — respectively raised $200 million and $165 million. Others leveraging the opportunity of consolidating merchants that sell via Fulfillment by Amazon include  Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.

As more startups enter the fray, all battling to buy the best of the third-party brands will become more of a challenge, and so the backing of Bain should help BBG shore up against that competition.

“With Bain Capital’s commitment and the additional funding secured, we have set our next milestone on our path to building a global house of brands,” said Chaljawski in a statement. “This allows us to tackle strategic goals of acquiring and developing brands globally, as well as the operational and logistical expansion. Bain Capital’s experience working with founders worldwide will help us continue our evolution as a leading e-commerce company in scaling brands.”

“BBG is a disruptive leader in the rapidly changing consumer goods space. Their ability to develop and scale brands that meet current consumer trends through their highly efficient e-commerce platform gives the company tremendous growth potential in a fast-growing market,” added Miray Topay, MD at Bain Capital Private Equity. “We have partnered with many founder-led management teams and look forward to helping Peter and his team achieve their goal of becoming a global leader in consumer e-commerce”.

Forum Brands secures $100M in debt financing to acquire more e-commerce brands

By Mary Ann Azevedo

Forum Brands, an e-commerce acquisition platform, announced today that it has secured $100 million in debt funding from TriplePoint Capital.

The financing comes just just over two months after the startup raised $27 million in an equity funding round led by Norwest Venture Partners.

Brenton Howland, Ruben Amar and Alex Kopco founded New York-based Forum Brands in the summer of 2020, during the height of the COVID-19 pandemic. 

“We’re buying what we think are A+ high-growth e-commerce businesses that sell predominantly on Amazon and are looking to build a portfolio of standalone businesses that are category leaders, on and off Amazon,” Howland told me at the time of the company’s last raise. “A source of inspiration for us is that we saw how consumer goods and services changed fundamentally for what we think is going to be for decades and decades to come, accelerating the shift toward digital.”

Since we covered the company in June, Forum Brands says it has acquired several new brands, including Bonza, a seller of pet products, and Simka Rose, a baby-focused brand specializing in eco-friendly products. Simka sells in the U.S. and the EU and is an example of how Forum is expanding globally, Amar said.

Howland and Amar emphasize that the Forum team continues to focus on quality over quantity when evaluating potential acquisitions. Although they meet with 15-20 founders a week, they are selective in which companies they choose to acquire.

“We continue to be a quality-first buyer, and not quantity-driven,” Amar said, noting that the company will still help a company build its brand even if it does not yet meet Forum’s quality threshold or if the founders are just not yet ready to sell.

The new funds will be used to, naturally, acquire more e-commerce companies. As part of the debt financing, Sajal Srivastava, co-CEO and co-founder of TriplePoint Capital, will be joining Forum’s board of directors.

“We are impressed not only by Forum’s long-term strategy and ability to leverage technology and deep collective e-commerce and M&A experience but also by how Forum cultivates relationships with their sellers both before and after partnering with them,” he said in a written statement.

At the time of its June raise, Forum had about 20 employees. As of today, it has about 40.

Forum’s technology employs “advanced” algorithms and over 100 million data points to populate brand information into a central platform in real time, instantly scoring brands and generating accurate financial metrics.

On August 31, we covered the news that on the heels of Heroes announcing a $200 million raise to double down on buying and scaling third-party Amazon Marketplace sellers, another startup out of London aiming to do the same announced some significant funding of its own. Olsam, a roll-up play that is buying up both consumer and B2B merchants selling on Amazon by way of Amazon’s FBA fulfillment program, closed on $165 million — a combination of equity and debt that it will be using to fuel its M&A strategy, as well as continue building out its tech platform and to hire more talent.

Goodcall picks up $4M, Yelp partnership to answer merchant inbound calls

By Christine Hall

Even without staffing shortages, local merchants have difficulty answering calls while all hands are busy, and Goodcall wants to alleviate some of that burden from America’s 30 million small businesses.

Goodcall’s free cloud-based conversational platform leverages artificial intelligence to manage incoming phone calls and boost customer service for businesses of all sizes. Former Google executive Bob Summers left Google back in January, where he was working on Area 120 — an internal incubator program for experimental projects — to start Goodcall after recognizing the call problem, noting that in fact 60% of the calls that come into merchants go unanswered.

“It’s frustrating for you and for the person calling,” Summers told TechCrunch. “Every missed call is a lost opportunity.”

Goodcall announced its launch Wednesday with $4 million in seed funding led by strategic investors Neo, Foothill Ventures, Merus Capital, Xoogler Ventures, Verissimo Ventures and VSC Ventures, as well as angel investors including Harry Hurst, founder and co-CEO of Pipe.com, and Zillow co-founder Spencer Rascoff.

Goodcall mobile agent. Image Credits: Goodcall

Restaurants, shops and merchants can set up on Goodcall in a matter of minutes and even establish a local phone number to free up an owner’s mobile number from becoming the business’ main line. The service is initially deployed in English and the company has plans to operate in Spanish, French and Hindi by 2022.

Merchants can choose from six different assistant voices and monitor the call logs and what the calls were about. Goodcall can also capture consumer sentiment, Summers said.

The company offers three options, including its freemium service for solopreneurs and business owners, which includes up to 500 minutes per month of Goodcall services for a single phone line. Up to five additional locations and five staff members costs $19 per month for the Pro level, or the Premium level provides unlimited locations and staff for $49 per month.

During the company’s beta period, Goodcall was processing several thousands of calls per month. The new funding will be used to continue to offer the free service, hire engineers and continue product development.

In addition to the funding round, Goodcall is unveiling a partnership with Yelp to tap into its database of local businesses so that those owners and managers can easily deploy Goodcall. Yelp data shows that more than 500,000 businesses opened during the pandemic. The company pulls in from Yelp a merchant’s open hours, location, if they offer Wi-Fi and even their COVID policy.

“We are partnering with Yelp, which has the best data on small businesses, and other large distribution channels to get our product to market,” Summers said. “We are bringing technology into an industry that hasn’t innovated since the 1980s and democratizing conversational AI for small businesses that are the main driver of job creation, and we want to help them grow.”

 

Insurify, a ‘virtual insurance agent,’ raises $100M Series B

By Mary Ann Azevedo

How many of us have not switched insurance carriers because we don’t want to deal with the hassle of comparison shopping?

A lot, I’d bet.

Today, Insurify, a startup that wants to help people make it easier to get better rates on home, auto and life insurance, announced that it has closed $100 million in an “oversubscribed” Series B funding round led by Motive Partners.

Existing backers Viola FinTech, MassMutual Ventures, Nationwide, Hearst Ventures and Moneta VC also put money in the round, as well as new investors Viola Growth and Fort Ross Ventures. With the new financing, Cambridge, Massachusetts-based Insurify has now raised a total of $128 million since its 2013 inception. The company declined to disclose the valuation at which the money was raised.

Since we last covered Insurify, the startup has seen some impressive growth. For example, it has seen its new and recurring revenue increase by “6x” since it closed its Series A funding in the 2019 fourth quarter. Over the last three years, Insurify has achieved a CAGR (compound annual growth rate) of 151%, according to co-founder and CEO Snejina Zacharia. It has also seen consistent “2.5x” year-over-year revenue growth, she said.

Insurify has built a machine learning-based virtual insurance agent that integrates with more than 100 carriers to digitize — and personalize — the insurance shopping experience. There are others in the insurtech space, but none that we know of currently tackling home, auto and life insurance. For example, Jerry, which has raised capital twice this year, is focused mostly on auto insurance, although it does have a home product. The Zebra, which became a unicorn this year, started out as a site for people looking for auto insurance via its real-time quote comparison tool. Over time, it has also evolved to offer homeowners insurance with the goal of eventually branching out into renters and life insurance. But it too is mostly focused on auto.

Zacharia said that since Insurify’s Series A funding, it has expanded its home insurance marketplace, deepened its carrier integrations to provide users an “instant” purchase experience and launched its first two embedded insurance products through partnerships with Toyota Insurance Management Solutions and Nationwide (the latter of which also participated in the Series B funding round).

Image Credits: Insurify

Last year, when ShyScanner had to lay off staff, Insurify scooped up much of its engineering team and established an office in Sofia, Bulgaria.

Zacharia, a former Gartner executive, was inspired to start the company after she was involved in a minor car accident while getting her MBA at MIT. The accident led to a spike in her insurance premium and Zacharia was frustrated by the “complex and cumbersome” experience of car insurance shopping. She teamed up with CTO Tod Kiryazov to build Insurify, which the pair describe as a virtual insurance agent that offers real-time quotes.

“We decided to build the most trusted virtual insurance agent in the industry that allows for customers to easily search, compare and buy fully digitally — directly from their mobile phone, or desktop, and really get a very smart, personalized experience based on their unique preferences,” Zacharia told TechCrunch. “We leverage artificial intelligence to be able to make recommendations on both coverage as well as carrier selection.”

Notably, Insurify is also a fully licensed agent that takes over the fulfillment and servicing of the policies. Since the company is mostly working as an insurance agent, it gets paid new and renewed commission. So while it’s not a SaaS business, its embedded insurance offerings have SaaS-like monetization.

“Our goal is to provide an experience for the end consumer that allows them to service and manage all of their policies in one place, digitally,” Zacharia said. “We think that the data recommendations that the platform provides can really remove most of the friction that currently exists in the shopping experience.”

Insurify plans to use its fresh capital to continue to expand its operations and accelerate its growth plans. It also, naturally, wants to add to its 125-person team.

“We want to build into our API integrations so customers can receive real-time direct quotes with better personalization and a more tailored experience,” Kiryazov said. “We also want to identify more embedded insurance opportunities and expand the product functionality.”

The company also down the line wants to expand into other verticals such as pet insurance, for example.

Insurify intends to use the money in part to build brand awareness, potentially through TV advertising.

“Almost half of our revenue comes from self-directed traffic,” Zacharia said. “So we want to explore more inorganic growth.”

James “Jim” O’Neill, founding partner at Motive Partners and partner Andy Rear point out that online purchasing now accounts for almost all of the growth in U.S. auto insurance. 

“The lesson from other markets which have been through this transition is that customers prefer choice, presented as a simple menu of products and prices from different insurers, and a straightforward online purchasing process,” they wrote via email. “The U.S. auto market is huge: even a slow transition to online means a massive opportunity for Insurify.”

In conducting their due diligence, the pair said they were impressed with how the startup is building a business model “that works for customers, insurers and white-label partners.”

Harel Beit-On, founder and general partner at Viola Growth, believes that the quantum leap in e-commerce due to COVID-19 will completely transform the buying experience in almost every sector, including insurance.

“It is time to bring the frictionless purchasing experience that customers expect to the insurance space as well,” she said. “Following our fintech fund’s recent investment in the company, we watched Insurify’s immense growth, excellent execution with customer acquisition and building a brand consumers trust.”

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.”

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