FreshRSS

🔒
❌ About FreshRSS
There are new available articles, click to refresh the page.
Before yesterdayYour RSS feeds

Adyen alumni raise €2.6M seed to launch Silverflow, a ‘cloud-native’ card payments processor

By Steve O'Hear

Silverflow, a Dutch startup founded by Adyen alumni, is breaking cover and announcing seed funding.

The pre-launch company has spent the last two years building what it describes as a “cloud-native” online card processor that directly connects to card networks. The aim is to offer a modern replacement for the 20 to 40-year-old payments card processing tech that is mostly in use today.

Backing Silverflow’s €2.6 million seed round is U.K.-based VC Crane Venture Partners, with participation from Inkef Capital and unnamed angel investors and industry leaders from Pay.On, First Data, Booking.com and Adyen. It brings the fintech startup’s total funding to date to ~€3 million.

Bootstrapped while in development and launching in 2021, Silverflow’s founders are CEO Anne-Willem de Vries (who was focused on card acquiring and processing at Adyen), CBDO Robert Kraal (former Adyen COO and EVP global card acquiring & processing of Adyen) and CTO Paul Buying (founder of acquired translation startup Livewords).

“The payments tech stack needs an upgrade,” Kraal tells me. “Today’s card payment infrastructure based on 30 to 40-year-old technology is still in use across the global payment landscape. This legacy infrastructure is costing everyone time and money: consumers, merchants, payment-service-providers and banks. The legacy platforms require a lengthy on-boarding process and are expensive to maintain, [and] they also aren’t fit for purpose today because they don’t support data use”.

In addition, Kraal says that adding new functionality is a lengthy and expensive process, requiring the effort of specialised engineers which ultimately slows down innovation “for the whole card payments system”.

“Finally, every acquirer provides its customer with a different processing platform, which for a typical payment service provider (PSP) means they have to deal with multiple legacy platforms — and all the costs and specialised support each entails,” adds de Vries.

To solve this, Silverflow claims it has built the first payments processor with a “cloud-native platform” built for today’s technology stack. This includes offering simple APIs and “streamlined data flows” directly integrated into the card networks.

Continues de Vries: “Instead of managing a complex network of acquirers across markets with dozens of bank and card network connections to maintain, Silverflow provides card-acquiring processing as a service that connects to card networks directly through a simple API”.

Target customers are PSPs, acquirers and “global top-market merchants” that are seeing €500 million to 10 billion in annual transactions.

“As a managed service, Silverflow provides the maintenance for connections and new product innovation that users have typically had to support in-house or work on long-term product road maps with suppliers,” explains Kraal. “Based in the cloud, Silverflow is infinitely scalable for peak flows and also provides robust data insights that users haven’t previously been able to access”.

With regards to competitors, Kraal says there are no other companies at the moment doing something similar, “as far as we are aware”. Currently, acquirers use traditional third-party processors, such as SIA, Omnipay, Cybersource or MIGS. Some companies, like Adyen, have built their own in-house processing platform.

So, why hasn’t a cloud-native card processing platform like Silverflow been done before and why now? A lack of awareness of the problem might be one reason, says de Vries.

“Unless you have built several integrations to acquirers during your career, you are not aware that the 30 to 40-years-old infrastructure is still in use. This is not typically a problem some bright college graduates would tackle,” he posits.

“Second, to build this successfully, you need to have prior knowledge of the card payments industry to navigate all the legal, regulatory and technical requirements.

“Thirdly, any large corporate currently active in card payment processing will be aware of the problem and have the relevant industry knowledge. However, building a new processing platform would require them to allocate their most talented staff to this project for two-three years, taking away resources from their existing projects. In addition, they would also need to manage a complex migration project to move their existing customers from their current system to the new one and risk losing some of the customers along the way”.

Datto trades modestly higher after pricing IPO at top of range

By Alex Wilhelm

After pricing at $27 per share, Datto’s stock rose during regular trading. By mid-afternoon the data and security software company was worth $28.10 per share, up a hair over 4%.

The company’s IPO comes on the back of a rapid-fire Q3 in which a host of technology companies, particularly software, made it to the public markets. While the number of un-exited unicorns in the United States still rose in the quarter, Q3 brought with it a wave of liquidity that felt long coming.

Datto’s IPO is one among what appears set to be a smaller Q4 class, though offerings like Airbnb and Affirm are still tipped to be coming in short order. Airbnb and Affirm each announced that they have filed privately to float, though have yet to publicly drop their S-1 filings.

The Datto IPO was interesting for a few reasons, including its mix of slower growth and rising profitability, its place in the midst of the current Vista drama and how well it was priced.

While 2020 has brought with it many venture-backed IPOs, the year has also brought a nearly commensurate number of complaints about the IPO process itself. After many tech, and tech-ish, companies saw their values skyrocket after pricing and listing, vocal tech and venture figures argued that IPOs were effectively handing upside from companies to underwriting banks, and their customers.

There was some merit to the arguments. Datto, however, will not stoke similar fires. Up a mere few points from its IPO price, it was priced pretty much perfectly from the perspective of raising as much money as it could for itself in its debut.

Datto will use its IPO proceeds to pay down debts that it accrued during its takeover from Vista (private equity: a good deal for private equity). However, Datto’s CEO Tim Weller told TechCrunch in a call that the company will still be well-capitalized after the public offering, saying that it will have a very strong cash position.

The company should have places to deploy its remaining cash. In its S-1 filings, Datto highlighted a COVID-19 tailwind stemming from companies accelerating their digital transformation efforts. TechCrunch asked the company’s CEO whether there was an international component to that story, and whether digital transformation efforts are accelerating globally and not merely domestically. In a good omen for startups not based in the United States, the executive said that they were.

The company did not entertain a SPAC-led public debut, with Datto’s founder, Austin McChord, saying that his company had long planned a traditional public offering. Closing on the Vista front, McChord said that the removal of Vista’s Brian Sheth was immaterial to Datto’s IPO process.

Secureframe raises $4.5M to help businesses speed up their compliance audits

By Frederic Lardinois

While certifications for security management practices like SOC 2 and ISO 27001 have been around for a while, the number of companies that now request that their software vendors go through (and pass) the audits to be in compliance with these continues to increase. For a lot of companies, that’s a harrowing process, so it’s maybe no surprise that we are also seeing an increase in startups that aim to make this process easier. Earlier this month, Strike Graph, which helps automate security audits, announced its $3.9 million round, and today, Secureframe, which also helps businesses get and maintain their SOC 2 and ISO 27001 certifications, is announcing a $4.5 million round.

Secureframe’s round was co-led by Base10 Partners and Google’s AI-focused Gradient Ventures fund. BoxGroup, Village Global, Soma Capital, Liquid2, Chapter One, Worklife Ventures and Backend Capital participated. Current customers include Stream, Hasura and Benepass.

Image Credits: Secureframe

Shrav Mehta, the company’s co-founder and CEO, spent time at a number of different companies, but he tells me the idea for Secureframe was mostly born during his time at direct-mail service Lob.

“When I was at Lob, we dealt with a lot of issues around security and compliance because we were sometimes dealing with very sensitive data, and we’d hop on calls with customers, had to complete thousand-line security questionnaires, do exhaustive security reviews, and this was a lot for a startup of our size at the time. But it’s just what our customers needed. So I started to see that pain,” Mehta said.

Secureframe co-founder and CEO Shrav Mehta

Secureframe co-founder and CEO Shrav Mehta

After stints at Pilot and Scale AI after he left Lob in 2017 — and informally helping other companies manage the certification process — he co-founded Secureframe together with the company’s CTO, Natasja Nielsen.

“Because Secureframe is basically adding a lot of automation with our software — and making the process so much simpler and easier — we’re able to bring the cost down to a point where this is something that a lot more companies can afford,” Mehta explained. “This is something that everyone can get in place from day one, and not really have to worry that, ‘hey, this is going to take all of our time, it’s going to take a year, it’s going to cost a lot of money.’ […] We’re trying to solve that problem to make it super easy for every organization to be secure from day one.”

The main idea here is to make the arcane certification process more transparent and streamline the process by automating many of the more labor-intensive tasks of getting ready for an audit (and it’s virtually always the pre-audit process that takes up most of the time). Secureframe does so by integrating with the most-often used cloud and SaaS tools (it currently connects to about 25 services) and pulling in data from them to check up on your security posture.

“It feels a lot like a QuickBooks or TurboTax-like experience, where we’ll essentially ask you to enter basic details about your business. We try to autofill as much of it as possible from third-party sources — then we ask you to connect up all the integrations your business uses,” Mehta explained.

The company plans to use much of the new funding to staff up and build out these integrations. Over time, it will also add support for other certifications like PCI, HITRUST and HIPAA.

Sym raises $9M Series A for its security workflow platform

By Frederic Lardinois

Sym, a new platform that makes it easier for developers to integrate security and privacy workflows into their process, today announced that it has raised a $9 million Series A round led by Amplify Partners. Earlier this year, the company announced its $3 million seed round lead by Andy McLoughlin of Uncork Capital and Robin Vasan of Mango Capital. Angel investors include former Google CISO Gerhard Eschelbeck, Atlassian CTO Sri Viswanath and Jason Warner, the CTO of GitHub.

Sym co-founder Yasyf Mohamedali spent the last few years as CTO of health tech company Karuna Health. In that role, he became intimately familiar with working in a high-compliance industry, handling vendor reviews and security audits. To make those processes more efficient, his team built lots of small tools, but he realized that everybody else in the industry was doing the same.

Image Credits: Sym

“As an engineer, it’s frustrating when you see people building the same thing over and over,” Mohamedali told me. “For years, I had this kind of concept in my head of, ‘what if we just built it all once, and then people didn’t have to keep redoing the same thing over and over?’ And so when I stepped away from Karuna to start Sym, originally, what I wanted to do was exactly that — and specifically for HIPAA. It’s kind of a naïve approach where I was like, ‘you know, what, I’m just going to build all the tools, someone needs to do HIPAA and open source it as like a black box thing.”

What he realized, though, is that companies have their own security and governance workflows that tend to share the same core but also a lot of variabilities. So what Sym now does is offer these core tools and lets companies mix and match what they need from this developer-centric toolbox the company has created.

“What we’re building is a set of workflow templates and primitives that map to that shared 20% core — and then a set of integrations that you can use to pull down those workflow templates, and codify that last mile variance by connecting those templates to all your different services,” Mohamedali explained.

What’s interesting about this approach is that Sym offers a Python SDK and lets developers create these workflows and integrations with only a few lines of code. In part, that’s due to the company’s philosophy of putting engineers back into control of security — the same way DevOps allowed them to reclaim control over infrastructure and Q&A. “DevOps is a thing. So now, DevSecOps needs to be a thing. We need to reclaim security. And we want to be the tool to do that with,” he said.

Mohamedali stressed that this was very much an opportunistic round, and for the next few months this raise won’t change anything in the company’s road map. But because Sym started signing up large customers — and had made commitments to them — now was a good time to raise, especially because the right partners came along. That means hiring more engineers, but over time, the company obviously also plans to build out its sales and marketing teams. The product itself, though, will remain in private beta until about the middle of next year. At that time, Sym will also launch a self-serve version of its platform.

Dublin’s LearnUpon raises $56M for its online learning management system for enterprises

By Ingrid Lunden

One big technology by-product of the Covid-19 pandemic has been a much stronger focus on online education solutions — providing the tools for students to continue learning when the public health situation is preventing them from going into physical classrooms. As it happens, that paradigm also applies to the business world.

Today, a startup out of Dublin called LearnUpon, which has been building e-learning solutions not for schools but corporates to use for development and training, has raised $56 million to feed a growth in demand for its tools, particularly in the U.S. market, which currently accounts for 70% of LearnUpon’s sales.

The funding is coming from a single investor, Summit Partners . LearnUpon’s CEO and co-founder Brendan Noud said the capital will be used in two areas. First, to add more people to the startup’s engineering and product teams (it has 180 employees currently) to continue expanding in areas like data analytics, providing more insights to its customers on how their training materials are used on via its learning management system (commonly referred to as LMS in the industry). Second, to bring on more people to help sell the product particularly in countries where it is currently growing fast, like the U.S., to larger corporate clients.

LearnUpon already has some 1,000 customers globally, including Booking.com, Twilio, USA Football and Zendesk. And notably, eight-year-old LearnUpon was profitable and had only raised $1.5 million before now.

“We’ve been growing organically pretty fast since we started but especially for the last 4-5 years using a SaaS model, but now we’re at a scale where the opportunity is vast, especially with more people working from home,” he said. “We want to give ourselves firepower.”

Corporate learning has followed similar but not identical trajectory to that of online education for K-12 and higher learning. In common, especially in the last 8 months. has been a growing need to engage and connect with learners at a time when it’s been challenging, or in some cases impossible, to see each other in person.

What’s different is that corporate learning was already a very established market, with organizations widely investing in online tools to manage training and personal development for years before any pandemic necessitated it.

Areas like employee onboarding, personnel development, customer training, training on new products, partner training, sales development, compliance, and building training services that you then sell to third parties are all areas that count as corporate learning. One researcher estimated that the corporate learning market was valued at an eye-watering $64 billion in 2019, with LMS investments alone at over $9 billion that year, and both are growing.

That has been a boost for companies like LearnUpon, which provides services in all of those categories and says that annual recurring revenues have grown by more than 50% year-on-year for each of the last 12 quarters.

But that also underscores the challenge in the market.

“It’s definitely a very crowded space, with maybe over 1000 LMS’s out there,” said Noud, although he added that it only has about 10-15 actually direct competitors (which to me still sounds like quite a lot). They include the likes of Cornerstone, TalentLMS from the Greek startup Epignosis, the Candian publicly-traded Docebo, and 360Learning from France.

But also consider those that have moved into corporate learning from other directions. LinkedIn has made big moves into learning to complement its bigger recruitment and professional development profile; and companies originally built to target the education sector, such as Coursera and Kahoot, have also expanded into business training and education. Both represent further competitive fronts for companies like LearnUpon natively built to service the business market.

Noud said that one reason why LearnUpon is finding some traction against the rest of the pack, and why it’s better, is because it’s a more comprehensive platform. Users can run live or asynchronous (on-demand) learning or training, and the SaaS LMS is designed to handle material and learning environments for multiple “students” — be they internal users, partners of the organization, or customers. In contrast, he said that many other solutions are more narrow in their scope, requiring organizations to manage multiple systems.

“And the legacy platforms are overly bloated, with bad customer support, which was a key area for us,” he said, recalling back to eight years ago when he and co-founder Des Anderson were first starting LearnUpon. “Our first hire was in customer support, and that has carried through to how we have grown.”

One area where LearnUpon not doing anything right now is in content development. It does offer tools to construct tests and surveys, but users can also import content created with other e-learning authoring tools, Noud said. Similarly, it’s not in the business of building its own live teaching platforms: you can import links from others like Zoom to provide the platform where people will teach and engage.

That’s not going to be a focus for now for the company, but given that others it competes with are providing a one-stop shop, for those that are looking to simplify procurement and have a more direct hand in building training as well as managing it, you can see how this might be an area that LearnUpon might develop down the line.

“In today’s knowledge economy, we believe corporate learning has become a key requirement for all organizations of scale – and the added challenge of remote working has only accelerated the importance of delivering learning digitally,” said Antony Clavel, a Principal with Summit Partners, in a statement. “With its modern, cloud-based learning management system, strong product development organization, demonstrated dedication to customer success and capital efficient go-to-market model, we believe LearnUpon is strongly positioned to serve this growing and increasingly critical market need. We are thrilled to support Brendan and the LearnUpon team in this next phase of growth.”

Clavel is joining the LearnUpon Board of Directors with this round. The startup is not disclosing its valuation.

SAIF Partners rebrands as Elevation Capital, secures $400 million for its new India fund

By Manish Singh

SAIF Partners has raised $400 million for a new fund and rebranded the 18-year-old influential venture capital firm as it looks to back more early-stage startups in the world’s second largest internet market.

The new fund is SAIF Partners’ seventh for early-stage startups in India. Its previous two funds were each $350 million in size, and the firm today manages more than $2 billion in assets.

SAIF Partners started investing in Indian startups 18 years ago. The firm began as a joint venture with SoftBank and its first high-profile investment was Sify. But the two firms’ joint venture ended more than a decade ago, so the firm is now getting around to rebranding itself, Ravi Adusumalli, the managing partner of SAIF Partners, told TechCrunch in an interview.

The firm — which has seven unicorns in its portfolio, including Paytm’s parent firm One97 Communications, food delivery startup Swiggy and online learning platform Unacademy — is rebranding itself as Elevation Capital.

“Elevation reflects our investment ethos and re-emphasises our commitment to the founders who help redefine our future. For our existing partners, it is a commitment of continued collaboration on our path-breaking journeys together. For our new partners, it is a promise to do all we can to achieve great heights together, from day one,” said Adusumalli.

SAIF Partners has backed more than 100 startups to date. The venture firm makes long-term bets on founders and backs young firms beginning their early years when they are raising their seed, pre-Series A and Series A financing rounds.

The venture firm invests in startups operating in a wide-range of sectors and plans to continue this strategy and add more areas of interest, said Deepak Gaur, a managing director at Elevation Capital, in an interview with TechCrunch.

“Enterprise SaaS is one area where we are spending a lot of resources,” he said. “We believe the time has come for this sector and we will see many global companies emerge from India.”

More than 15 startups in Elevation Capital’s portfolio are projected to become a unicorn in the next few years, according to Tracxn, a firm that tracks startups and investments in India. These include app-based platform to book home services Urban Company, insurance tech startup Acko, digital loan platform Capital Float, and real estate property marketplace NoBroker.

A number of SAIF Partners-backed startups, including IndiaMART, MakeMyTrip and Justdial, have become publicly listed companies, too.

Mukul Arora, a managing director at SAIF Partners, said that the state of the Indian startup ecosystem has changed for the better in the past decade. “A few years ago, we were seeing many startups replicate a foreign company’s play in India. Today, we are seeing our ideas being replicated outside of the country. Someone is building a Meesho for Brazil,” he said.

The founders have also grown more sophisticated, said Mayank Khanduja, a managing director at Elevation Capital. Elevation Capital has over three dozen employees, with about two-dozen focused on the investment size.

Elevation Capital’s new fund comes at a time when many established venture capital firms have also closed their new funds for India in recent months. In July, Sequoia Capital announced two funds — totaling $1.35 billion in size — for India. A month later, Lightspeed raised $275 million for its third Indian fund. Accel late last year closed its sixth fund in India at $550 million.

All of the LPs participating in Elevation Capital’s new fund, as was the case with previous funds, are U.S.-based, and the vast majority of them are nonprofits, said Adusumalli. Without disclosing any figures, he said the firm’s previous funds have performed very well.

Pimloc gets $1.8M for its AI-based visual search and redaction tool

By Natasha Lomas

U.K.-based Pimloc has closed a £1.4 million (~$1.8 million) seed funding round led by Amadeus Capital Partners. Existing investor Speedinvest and other unnamed shareholders also participated in the round.

The 2016-founded computer vision startup launched a AI-powered photo classifier service called Pholio in 2017 — pitching the service as a way for smartphone users to reclaim agency over their digital memories without having to hand over their data to cloud giants like Google.

It has since pivoted to position Pholio as a “specialist search and discovery platform” for large image and video collections and live streams (such as those owned by art galleries or broadcasters) — and also launched a second tool powered by its deep learning platform. This product, Secure Redact, offers privacy-focused content moderation tools — enabling its users to find and redact personal data in visual content.

An example use case it gives is for law enforcement to anonymize bodycam footage so it can be repurposed for training videos or prepared for submitting as evidence.

Pimloc has been working with diverse image and video content for several years supporting businesses with a host of classification, moderation and data protection challenges (image libraries, art galleries, broadcasters and CCTV providers),” CEO Simon Randall tells TechCrunch.

“Through our work on the visual privacy side we identified a critical gap in the market for services that allow businesses and governments to manage visual data protection at scale on security footage. Pimloc has worked in this area for a couple of years building capability and product; as a result, Pimloc has now focused the business solely around this mission.”

Secure Redact has two components: A first (automated) step that detects personal data (e.g. faces, heads, bodies) within video content. On top of that is what Randall calls a layer of “intelligent tools” — letting users quickly review and edit results.

“All detections and tracks are auditable and editable by users prior to accepting and redacting,” he explains, adding: “Personal data extends wider than just faces into other objects and scene content, including ID cards, tattoos, phone screens (body-worn cameras have a habit of picking up messages on the wearer’s phone screen as they are typing, or sensitive notes on their laptop or notebook).”

One specific user of redaction with the tool he mentions is the University of Bristol. There, a research group, led by Dr Dima Damen, an associate professor in computer vision, is participating in an international consortium of 12 universities which is aiming to amass the largest data set on egocentric vision — and needs to be able to anonymise the video data set before making it available for academic/open source use.

On the legal side, Randall says Pimloc offers a range of data processing models — thereby catering to differences in how/where data can be processed. “Some customers are happy for Pimloc to act as data processor and use the Secure Redact SaaS solution — they manage their account, they upload footage and can review/edit/update detections prior to redaction and usage. Some customers run the Secure Redact system on their servers where they are both data controller and processor,” he notes.

“We have over 100 users signed up for the SaaS service covering mobility, entertainment, insurance, health and security. We are also in the process of setting up a host of on-premise implementations,” he adds.

Asked which sectors Pimloc sees driving the most growth for its platform in the coming years, he lists the following: smart cities/mobility platforms (with safety/analytics demand coming from the likes of councils, retailers, AVs); the insurance industry, which he notes is “capturing and using an increasing amount of visual data for claims and risk monitoring” and thus “looking at responsible systems for data management and processing”; video/telehealth, with traditional consultations moving into video and driving demand for visual diagnosis; and law enforcement, where security goals need to be supported by “visual privacy designed in by default” (at least where forces are subject to European data protection law).

On the competitive front, he notes that startups are increasingly focusing on specialist application areas for AI — arguing they have an opportunity to build compelling end-to-end propositions which are harder for larger tech companies to focus on.

For Pimlock specifically he argues it has an edge in its particular security-focused niche — given “deep expertise” and specific domain experience.

“There are low barriers to entry to create a low-quality product but very high technical barriers to create a service that is good enough to use at scale with real ‘in the wild’ footage,” he argues, adding: The generalist services of the larger tech players do not match up with domain specific provisions of Pimloc/Secure Redact. Video security footage is a difficult domain for AI, systems trained on lifestyle/celebrity or other general data sets perform poorly on real security footage.”

Commenting on the seed funding in a statement, Alex van Someren, MD of Amadeus Capital Partners, said: “There is a critical need for privacy by design and large-scale solutions, as video grows as a data source for mobility, insurance, commerce and smart cities, while our reliance on video for remote working increases. We are very excited about the potential of Pimloc’s products to meet this challenge.”

“Consumers around the world are rightfully concerned with how enterprises are handling the growing volume of visual data being captured 24/7. We believe Pimloc has developed an industry leading approach to visual security and privacy that will allow businesses and governments to manage the usage of visual data whilst protecting consumers. We are excited to support their vision as they expand into the wider Enterprise and SaaS markets,” added Rick Hao, principal at Speedinvest, in another supporting statement.

Lawmatics raises $2.5M to help lawyers market themselves

By Anthony Ha

Lawmatics, a San Diego startup that’s building marketing and CRM software for lawyers, is announcing that it has raised $2.5 million in seed funding.

CEO Matt Spiegel used to practice law himself, and he told me that even though tech companies have a wide range of marketing tools to choose from, “lawyers have not been able to adopt them,” because they need a product that’s tailored to their specific needs.

That’s why Spiegel founded Lawmatics with CTO Roey Chasman. He said that a law firm’s relationship with its clients can be divided into three phases — intake (when a client is deciding whether to hire a firm); the active legal case; and after the case has been resolved. Apparently most legal software is designed to handle phase two, while Lawmatics focuses on phases one and three.

The platform includes a CRM system to manage the initial client intake process, as well as tools that can automate a lot of what Spiegel called the “blocking and tackling” of marketing, like sending birthday messages to former clients — which might sound like a minor task, but Spiegel said it’s crucial for law firms to “nurture” those relationships, because most of their business comes from referrals.

Lawmatics’ early adopters, Spiegel added, have consisted of the firms in areas where “if you need a lawyer, you go to Google and start searching ‘personal injury,’ ‘bankruptcy,’ ‘estate planning,’ all these consumer-driven law firms.” And the pandemic led to accelerated the startup’s growth, because “lawyers are at home now, their business is virtual and they need more tools.”

Spiegel’s had success selling technology to lawyers in the past, with his practice management software startup MyCase acquired by AppFolio in 2012 (AppFolio recently sold MyCase to a variety of funds for $193 million). He said that the strategies for growing both companies are “almost identical” — the products are different, but “it’s really the same segment, running the same playbook, only with additional go-to-market strategies.”

The funding was led by Eniac Ventures and Forefront Venture Partners, with participation from Revel Ventures and Bridge Venture Partners.

“In my 10 years investing I have witnessed few teams more passionate, determined, and capable of revolutionizing an industry,” said Eniac’s Tim Young in a statement. “They have not only created the best software product the legal market has seen, they have created a movement.”

 

Private equity firms can offer enterprise startups a viable exit option

By Ron Miller

Four years ago, Ping Identity was at a crossroads. A venerable player in the single sign-on market, its product was not a market leader, and after 14 years and $128 million in venture capital, it needed to find a new path.

While the company had once discussed an IPO, by 2016 it began putting out feelers for buyers. Vista Equity Partners made a $600 million offer and promised to keep building the company, something that corporate buyers wouldn’t guarantee. Ping CEO and co-founder Andre Durand accepted Vista’s offer, seeing it as a way to pay off his investors and employees and exit the right way. Even better, his company wasn’t subsumed into a large entity as likely would have happened with a typical M&A transaction.

As it turned out, the IPO-or-acquisition question wasn’t an either/or proposition. Vista continued to invest in the company, using small acquisitions like UnboundID and Elastic Beam to fill in its roadmap, and Ping went public last year. The company’s experience shows that private equity offers a reasonable way for mature enterprise startups with decent but not exceptional growth — like the 100% or more venture firms tend to favor — to exit, pay off investors, reward employees and still keep building the company.

But not everyone that goes this route has a tidy outcome like Ping’s. Some companies get brought into the P/E universe where they replace the executive team, endure big layoffs or sell off profitable pieces and stop investing in the product. But the three private equity firms we spoke to — Vista Equity, Thoma Bravo and Scaleworks — all wanted to see their acquisitions succeed, even if they each go about it differently.

Viable companies with good numbers

Datto sets initial IPO price range, indicating a valuation of around $4B

By Alex Wilhelm

It was just a few weeks ago that Datto, what TechCrunch called a “backup and disaster recovery firm,” filed to go public. This week the firm set an initial range for its debut.

The Vista Equity Partners -backed company was picked up by the private equity firm back in 2017. Vista is back in the news lately for several reasons, some stemming from executive shenanigans — read: tax evasion and huge penalties — but at least what’s coming from Datto’s camp is good tidings.

How so? Vista bought Datto for around $1.5 billion, and is set to make billions on its exit, based on the company’s expected IPO pricing.

Per the data firm’s latest S-1 filing, Datto is targeting a $24 to $27 per share price range. Here’s the math:

  • Total shares outstanding after IPO, sans underwriters’ allotment: 157,548,740 shares
  • Total shares outstanding after IPO, with underwriters’ allotment: 160,848,740
  • Max valuation at current prices, sans underwriters’ allotment: $4.25 billion
  • Max valuation at current prices, with underwriters’ allotment: $4.34 billion

Those two final numbers are dramatically bigger than the $1.5 billion that Vista is said to have paid for Datto.

How has Datto managed to generate so much value in the last few years? In financial terms, the company grew to a run rate of around $500 million, based on its Q1 and Q2 2020 revenue results. That gives the company a revenue multiple of less than 10x at its current IPO price maximum.

And that price makes sense. Datto is not growing very quickly, just 16% from H1 2019 to H1 2020, for example. The company did recently become profitable, however, which helps its valuation case. But more importantly, between 2017 and 2020 we have seen revenue multiples for software companies expand. That, plus Datto’s growth since 2017, have repriced it far above its sale price.

For Vista, it’s good news. Provided that they don’t get into tax issues over this particular set of returns. More on Datto as it prices and debuts.

Future raises $24M Series B for its $150/mo workout coaching app amid at-home fitness boom

By Lucas Matney

With thousands of gyms across the country forced to close down during the pandemic, there’s been an unprecedented opportunity for fitness companies pitching an at-home solution. This moment has propelled public companies like Peloton to stratospheric highs — its market cap is about to eclipse $40 billion — but it has also pushed venture capitalists towards plenty of deals in the fitness space.

Future launched with a bold sell for consumers, a $150 per month subscription app that virtually teamed users up with a real life fitness coach. Leaning on the health-tracking capabilities of the Apple Watch, the startup has been aiming to build a platform that teams motivation, accountability and fitness insights.

via Future

Close to 18 months after announcing a Series A led by Kleiner Perkins, the startup tells TechCrunch they’ve closed a $24 million Series B led by Trustbridge Partners with Caffeinated Capital and Kleiner Perkins participating again.

Amid the at-home fitness boom, Future has seen major growth of its own. CEO Rishi Mandal says that the company’s growth rate has tripled in recent months as thousands of gyms closed their doors. He says shelter-in-place has merely accelerated an ongoing shift towards tech-forward fitness services that can help busy users find time during their day to exercise.

The operating thesis of the company is that modern life is inherently crazy not just during pandemic times but in normal times,” Mandal says. “The idea of having a set routine is a complete fallacy.”

At $149 per month, Future isn’t aiming for mass market appeal the same way other digital fitness programs being produced by Peloton, Fitbit or Apple are. It seems to be more squarely aimed at users that could be a candidate for getting a personal trainer but might bot be ready to make the investment or don’t need the guided instruction so much as they need general guidelines and some accountability.

As the startup closes on more funding, the team has big goals to expand its network. Mandal aims to have 1,000 coaches on the Future platform by this time next year. Reaching new scales could give the service a chance to tackle new challenges. Mandal sees opportunities for Future to expand its coaching services beyond fitness as it grows, “there’s a real opportunity to help people with all aspects of their health.”

Proterra, which makes big honkin’ battery systems and electric buses, raises $200 million

By Jonathan Shieber

Proterra, the battery system technology developer for heavy-duty electric vehicles, said it has raised $200 million in a new round of funding.

The new cash comes from Cowen Sustainable Investment Advisors, which led the round, along with money from Soros Fund Management, Generation Investment Management and Broadscale Group.

Cowen took the bulk of the round with $150 million while Soros, Generation and Broadscale forked over another $50 million.

This new capital infusion follows a year’s worth of speculation about a potential public offering for the big honkin battery systems developer. TechCrunch last reported in August 2019 that Proterra had hit a $1 billion valuation according to investors and would be seeking a potential IPO at the time.

The company said the new money would go to support the company’s ongoing research and development efforst into battery and electric drivetrain technologies and business development to increase the company’s footprint in additional commercial vehicle segments.

Proterra’s also looking at charging and energy management technology development to lower fleet management costs associated with operating electric fleets.

To date, Proterra has raised equity and debt totaling at least roughly $1 billion from investors including G2VP, Kleiner Perkins Caufield & Byers, Constellation Ventures, Mitsui & Co. as well as BMW i Ventures, Edison Energy, the Federal Transportation Administration, General Motors’s venture arm and Tao Capital Partners .

Proterra, mainly makes buses for local, state and federal agencies that can travel 350 miles on a single charge. The Burlingame, Calif. company, which has a number of former Tesla employees in leadership positions, including the company’s former chief executive Ryan Popple, has also diversified its business to provide its power trains to other heavy- and medium-duty commercial electric vehicle manufacturers.

The company is now working with OEMs like Thomas Built Bus, Van Hool, FCCC, BusTech and Optimal-EV to bring 100% battery-electric vehicles powered by its technology to market, the company said in a statement.

“As demand grows for battery-electric vehicles and 100% zero-emission fleets, we are excited to collaborate with CSI as well as our other investors to accelerate the transition to clean, quiet transportation for all and deliver even more Proterra Powered vehicles around the world,” said Jack Allen, Proterra’s current chairman and chief executive.

BofA Securities acted as sole placement agent on this transaction.

Temporal raises $18.75M for its microservices orchestration platform

By Frederic Lardinois

Temporal, a Seattle-based startup that is building an open-source, stateful microservices orchestration platform, today announced that it has raised an $18.75 million Series A round led by Sequoia Capital. Existing investors Addition Ventures and Amplify Partners also joined, together with new investor Madrona Venture Group. With this, the company has now raised a total of $25.5 million.

Founded by Maxim Fateev (CEO) and Samar Abbas (CTO), who created the open-source Cadence orchestration engine during their time at Uber, Temporal aims to make it easier for developers and operators to run microservices in production. Current users include the likes of Box and Snap.

“Before microservices, coding applications was much simpler,” Temporal’s Fateev told me. “Resources were always located in the same place — the monolith server with a single DB — which meant developers didn’t have to codify a bunch of guessing about where things were. Microservices, on the other hand, are highly distributed, which means developers need to coordinate changes across a number of servers in different physical locations.”

Those servers could go down at any time, so engineers often spend a lot of time building custom reliability code to make calls to these services. As Fateev argues, that’s table stakes and doesn’t help these developers create something that builds real business value. Temporal gives these developers access to a set of what the team calls ‘reliability primitives’ that handle these use cases. “This means developers spend far more time writing differentiated code for their business and end up with a more reliable application than they could have built themselves,” said Fateev.

Temporal’s target use is virtually any developer who works with microservices — and wants them to be reliable. Because of this, the company’s tool — despite offering a read-only web-based user interface for administering and monitoring the system — isn’t the main focus here. The company also doesn’t have any plans to create a no-code/low-code workflow builder, Fateev tells me. However, since it is open-source, quite a few Temporal users build their own solutions on top of it.

The company itself plans to offer a cloud-based Temporal-as-a-Service offering soon. Interestingly, Fateev tells me that the team isn’t looking at offering enterprise support or licensing in the near future, though. “After spending a lot of time thinking it over, we decided a hosted offering was best for the open-source community and long term growth of the business,” he said.

Unsurprisingly, the company plans to use the new funding to improve its existing tool and build out this cloud service, with plans to launch it into general availability next year. At the same time, the team plans to say true to its open-source roots and host events and provide more resources to its community.

“Temporal enables Snapchat to focus on building the business logic of a robust asynchronous API system without requiring a complex state management infrastructure,” said Steven Sun, Snap Tech Lead, Staff Software Engineer. “This has improved the efficiency of launching our services for the Snapchat community.”

Popmenu earns raves from investors for its marketing and delivery software for restaurants

By Jonathan Shieber

Brendan Sweeney didn’t know anything about the restaurant business before he and his co-founders launched the Atlanta-based startup Popmenu.

What Sweeney did know was that it was nuts that while every other business was using incredible graphics, curated text, carefully crafted images and fancy videos to make their pitch to customers restaurants were — posting a text-based menu.

“It’s just crazy that restaurants present their inventory, which is their whole story, their whole selling proposition in plain text,” Sweeney said.

Popmenu, he company he co-founded with three former colleagues from software businesses around the Atlanta area (and which has closed on $17 million in new financing) offers a solution.

What the company’s software aims to do is keep customers on restaurant’s own online real estate by incorporating third party reviews, images, recommendations, and better descriptions into the webpages that it hosts for the culinary creators that use its service. “If you had all that information on a restaurant website it would probably reduce the need to bounce out so much,” Sweeney said.

Popmenu does more than just prettify webpages for the savory savants whose coding skills may not match their craft in the kitchen. The software also helps with social media management, emailing and, yes, even the all-important delivery services that have become vital in the time of a still-spreading pandemic.

It’s the pandemic that juiced the company’s growth, Sweeney said. “We saw ten years of trends in the first ten weeks of COVID-19,” he said. “A lot of people were unprepared for it.”

Sweeney and his co-founders Mike Gullo, Anthony Roy, and Justis Blasco had all worked together at either CareerBuilder or Commissions Inc. It was the experience at Commissions that actually gave Sweeney and his colleagues the idea to start Popmenu.

Popmenu co-founders Brendan Sweeney, Mike Gullo, Justis Blasco, and Anthony Roy. Image Credit: Popmenu

Where Commissions was about designing tools to help local real estate agents and brokers take some power back from the large online platforms that were eating their lunch, Popmenu is bringing the same tools for small businesses to restaurateurs.

“I got this playbook for helping small business with SAAS. [And we’re] helping restaurants take control back from Yelp and TripAdvisor,” said Sweeney.

Other companies around the country, like ChowNow out of Los Angeles, are trying to do something similar. But while ChowNow is focused on online ordering, Popmenu started with marketing and… well… making menus “pop”.

The company is going to use the new cash it raised to add services like on-premises contactless transactions and from there could have a connection from the front-of-the-house to the back-of-the-house operations and ordering and fulfillment services.

Existing investors like Base10 Partners and Felicis Ventures returned to finance the company’s Series B along with new lead investor Bedrock Capital. Popmenu has also received some celebrity financing in the form of a commitment from Mantis VC, the newly launched investment firm from the wildly popular Chainsmokers band.

Apparently, they wanted something just like this, according to Milan Koch of Mantis VC. “When Alex, Drew and I met the Popmenu team, it was obvious to us right away how much they really cared about restaurateurs,” Koch said in a statement. “Having close ties with owners and hospitality groups worldwide and knowing the unique challenges they face, we got excited about how Popmenu’s product could help impact their businesses in so many different ways.”

Popmenu sells its software for a monthly fee of $269 per-location.

“So many industries have experienced radically accelerated trends through the COVID crisis, probably none more so than the restaurant industry,” said Sweeney, in a statement. “They’ve embraced technology as key to weathering these challenging times. We are fired up to give them even more help attracting guests and reducing costs and complexity on the road to recovery.”

Menlo Micro, a startup bringing semiconductor tech to the humble switch, is ready for its closeup

By Jonathan Shieber

Sixteen years ago a group of material scientists and engineers at General Electric banded together to reinvent the circuit breaker. Now, Menlo Microsystems, the spinoff commercializing that technology, is ready to bring its revolutionary new switches to market, with huge implications for everything from 5G technologies to quantum computing.

Based in Irvine, Calif., Menlo Micro takes its name from the Menlo Park, NJ research lab where Thomas Edison patented the first light switch back in 1893 and the company’s ties to GE run deep.

Researchers at GE spent more than a decade working internally on Menlo Micro’s core technology, a novel process that applies semiconductor manufacturing techniques to the production of micro electro-mechanical systems, before spinning it out into a new business five years ago.

Using a novel alloy, Menlo Micro is able to reduce the size of the switches it makes to 50 microns by 50 microns, or roughly the width of a human hair. This miniaturization can enable hardware manufacturers to come up with completely new designs for a host of products that used to require much larger components.

“The micro electro-mechanical system that we use to make this… that’s not new,” said Russ Garcia, the company’s chief executive. “The problem was — the first level innovation is how do you take a mechanical switch like the light switch or a relay and scale that down to a wafer.”

Many companies have tried to make MEMs contact switches, spending hundreds of millions of dollars, but Garcia said that the reliability and durability of the switches was always an issue. The material science behind Menlo’s switches solves the problem, he said.

Menlo’s switches pack lots and lots of MEMS relays onto a single chip that can function like a massive mechanical relay, reducing something that was the size of a fist to something the size of a microchip.

The company’s founders think the potential uses are pretty limitless, thanks to the massive size reduction and increased durability that its switches offer.

Close up of a Menlo Micro switch. Image Credit: Menlo Micro

Initial markets for commercialization

“One way to look at this is in edge and IOT applications,” said company co-founder Chris Giovanniello, a former vice president of business development at GE Ventures and Menlo Micro’s current senior vice president of worldwide marketing.  “What we tend to think about and what most of the industry thinks about is low energy bluetooth and wifi and low power processing for decision making. Once you’ve sensed it, communicated it, and made a decision, you have to do something about it.”

Initially Menlo Micro spun out from GE with Giovanniello and co-founders including chief technology officer, Chris Keimel, and Jeff Baloun, the senior vice president of operations. Garcia, who saw the company’s initial pitch at a semiconductor conference where GE was touting the technology, was brought on board by one of Menlo Micro’s early investors Paladin Capital Group. 

Paul Conley of Paladin Capital sent me this deck and said ‘Wow there might be something there.’ We met Chris and then met up with the other Chris they wanted me to help out with strategy,” Garcia said. He wound up coming on board as a founding executive. 

Current solid state technologies tasked with making something happen based on the data currently use more power than the rest of the systems that they’re tied to. Menlo Micro’s chips would substantially reduce energy loss and improve the efficiency of entire systems, he said. 

“If you think of the light switch in your house, it’s two metal contacts that come together. If that contact is really good and clean the electricity flows through very efficiently and when you turn it off… no electricity can flow through and [nothing] happens at all,” said Garcia, a longtime executive in the MEMS industry. “In a semiconductor, there’s loss in that contact. When you run a transistor on it allows the energy to flow through but loses some of that energy in heat and when you turn it off it allows some of that energy to flow through. When you take the billions of switches… all of that incremental energy is completely lost.”

The benefits of the technology mean demand from the defense industry, which wants to put the new switches in radar, radio, and satellite networks. Commercial applications include wi-fi connectivity, 5G cell networks, for radio frequency and microwave switching. Consumers could see the switches in cell phones meaning fewer dropped calls, higher speeds and capacity for data, and longer battery life.

Menlo has already sent samples from its production line to 30 lead customers in aerospace and defense, telecommunications and testa and measurement. And the company has raised $44 million in new funding from investors including Nest founder Tony Fadell’s Future Shape Group to boost its production capacity to meet potential demand.

“The concept of an ‘ideal switch’ was theoretical – something companies have been working to  achieve for decades – until Menlo Micro,” said Marianne Wu, the former head of GE Ventures and current Managing Director of 40 North Ventures, which led Menlo Micro’s latest round. “We are incredibly excited to work with such a dynamic, experienced team on a core  technology that is disrupting nearly every industry.” 

Series of Menlo Micro switches on a circuit board. Image Credit: Menlo Micro

Thinking beyond 5G, defense and industrial IOT

Over the last 30 months, Menlo Micro said it has completed the transfer and qualification of its manufacturing process, moving from a 4-inch research fab to a new 8-inch high volume manufacturing line.

That means the company is able to increase production for its initial products and boost its capacity. With the qualification in hand, the company expects to bring production up to over 100,000 units per month by the end of 2020 and reach production capacity for millions of switches per month in 2021.

So beyond telecommunications and defense, there are target markets in energy storage, automotive, aerospace because of the miniaturization — while quantum computing companies are interested in the technology because of its durability.

“The relay is a large mechanical devices that you can hold in yourhand and used in many applications for turning on and off the power that goes to an industrial piece of equipment to your car to motors that need to be driven,” said Giovanniello. “They’re very hard to integrate because they’re so big. We can take the electrical characteristics of having a true metal to metal on low loss connection and then, when it’s open there’s an air gap that no current can flow through.. We can integrate [the switches] into completely different architectures.” 

Ultimately, Giovanniello said the go-to-market strategy is to focus on the “rule of 99”.

“We’re able to reduce the size, the weight, and the power fo the box that [the switch] is going into by up to 99%. That’s a huge improvement in infrastructure and cost,” he said.

For companies developing quantum computers, the value proposition is not just about the size of the MEMS, but the durability of the alloy that Menlo Micro has developed. “For quantum, you have to have devices that operate at close to absolute zero… Semiconductors don’t work down to those temperatures so they use old-fashioned mechanical relays [which] can take hours to get back to temperature,” Giovanniello said. “Our materials are so robust they work [at temperatures] down to a few milikelvins.”

It’s this flexibility and the potential redesign of old industrial technologies that haven’t been updated for nearly a century that has enabled the company to bring in $78 million in funding from investors including Piva, Paladin Capital Group, Vertical Venture Partners, Future Shape and strategic investors like Corning and Microsemi.

“For 40+ years, the industry has been searching for a switch that has the perfect combination of  the electromechanical relay and the silicon transistor,” said Tony Fadell, in a statement. “[This technology] is a tiny,  efficient, reliable micro-mechanical switch with unmatched RF-performance and, counterintuitively, high-power handling of 1,000s of Watts. As our world moves to the  electrification and wireless of everything, Menlo Micro’s deep innovation is already triggering  massive cross-industry upheaval.”

Discuss the unbundling of early-stage VC with Unusual Ventures’ Sarah Leary & John Vrionis

By Natasha Mascarenhas

This year has been everything but business as usual for the venture and tech community. And we still have a presidential election ahead of us.

So, why not listen to the aptly-named experts over at Unusual Ventures? Partners Sarah Leary (co-founder of Nextdoor) and John Vrionis, formerly of Lightspeed Ventures Partners, will join us on Tuesday, October 20 on the Extra Crunch Live virtual stage.

Thanks to all of you who have joined us for our series of live discussions that has included tech leaders like Sydney Sykes, Alexia von Tobel, Mark Cuban and many others (all recordings are still accessible for Extra Crunch subscribers to watch and learn from).

If you’re new, welcome! You’ll have a chance to participate in the live discussion if you have an Extra Crunch subscription.

Unusual Ventures’ investments span the consumer and enterprise space, including companies like Robinhood, AppDynamics, Mulesoft and Winnie.

For this chat, I plan to spend some time talking to Leary and Vrionis about how early-stage venture capital has changed with the rise of rolling funds, community funds and syndicates. Unusual Ventures claims “there’s an enormous opportunity to raise the bar on what seed-stage investors provide for early-stage founders,” so we’ll get into that opportunity as well.

And if we have time, we’ll discuss remote work, building in public and the U.S. presidential election.

So, what are you waiting for? Add the deets to your calendar (below the jump!) and join me next Tuesday.

Details

YCharts sells to PE firm in all-cash transaction as it looks to pass $15M ARR this year

By Alex Wilhelm

This morning, YCharts, a financial data and charting service, announced that it has been purchased by LLR Partners, a private equity firm.

The companies are dubbing the transaction a “growth recapitalization,” indicating that the smaller firm won’t be stripped of its talent in hopes of driving near-term positive EBITDA. The deal was an all-cash transaction, TechCrunch confirmed.

Digging into YCharts itself, the company told TechCrunch via email that it expects to “surpass” $15 million in annual recurring revenue (ARR) this year, and that it has been growing top line at a compound annual growth rate of 30 to 40% for “the past several years.”

Those figures imply that YCharts did not sell for cheap. At the market’s current multiples, YCharts was likely worth between 10 and 20x times its ARR, making the deal (presuming, say, $13.5 million ARR at the time of the sale) worth between $135 million and $270 million, unless LLR managed to secure a discount, or the firm’s economics were worse than we’d imagine from our current remove.

The companies declined to share details of the transaction, including price.

As a somewhat long-term YCharts user — the startup set up custom colors in my account so that I could share charts in TechCrunch green, which was fun — the deal is notable in that I’ve come to appreciate what the service is capable of; it’s a great tool to create charts that encompass a wealth of financial data to make a clear point, like the historical trends in Tesla’s price/sales ratio compared to other automotive players, for example.

Financial tooling that is accessible, and shareable, is rare in our Bloomberg world. So here’s to hoping that  the transactions promised investment into YCharts bears out.

Turning to the why, I asked YCharts why it didn’t merely raise external capital instead of selling itself. YCharts’ CEO Sean Brown wrote that he’s “found that capital is easy to get,” but that “LLR Partners provides [YCharts] with much more than just capital.” The investing group, Brown continued, shares his company’s vision, has “strong domain experience,” along with “a dedicated team focused on fintech, and a ton of relevant strategic and operational expertise.”

The CEO also stressed LLR’s prior investments into other fintech companies, and said that “as part of the buyout of our existing shareholders, LLR will be funding capital to YCharts’ balance sheet to support continued investment in product and sales [and] marketing.”

YCharts raised capital as an independent company across a number of rounds, including a 2010 Series A led by Hyde Park Angels and I2A Fund, and a Series B and C led by Morningstar. The company had around $15 million in known capital raised, according to Crunchbase data.

Greycroft, Lerer Hippeau and Audible back audio measurement startup Veritonic

By Anthony Ha

Veritonic is announcing that it has raised $3.2 million in Series A funding led by Greycroft, with participation from Lerer Hippeau and Amazon-owned audiobook service Audible.

CEO Scott Simonelli, who founded the New York startup with COO Andrew Eisner and CTO Kevin Marshall, told me that his goal is to create a new category of “audio intelligence” — namely, measuring and predicting the effectiveness of any piece of audio content or advertising.

The company is focused on marketing initially, with its first product, Creative Measurement, analyzing any audio ad and showing marketers how it scores compared to similar content, as well as identifying which parts of the audio are most effective. And Veritonic is launching a new product, Competitive Intelligence, which helps businesses see how and where their competitors are spending on advertising and provides alerts when those competitors launch a new ad.

Simonelli said that until now, audio measurement has been limited to things like creating audience panels with a few hundred people, which simply doesn’t scale, given the enormous growth in the audio market.

Veritonic, on the other hand, has analyzed thousands of audio files, correlating the content with data about how people responded and using that analysis to predict how people will respond to new audio. Simonelli said the company can add more “fuel” by going out and gathering more human response data, but even without additional data, it can provide an instant prediction on an ad or campaign’s effectiveness.

Veritonic

Image Credits: Veritonic

Simonelli also noted that Veritonic has spent the past five years developing technology that’s specifically attuned to the challenges of measuring audio effectiveness — like the fact that audio is experienced over time and, even more than other media, needs to be memorable.

“We can look at a sonic profile and predict and evaluate how somebody is going to respond,” he said.

The ultimate goal, he added, is to create the “benchmark for audio advertising,” which means working with a variety of players in the industry. For example, he said that when you look at other audio investments in Greycroft’s portfolio (such as podcast network Wondery or podcast analytics company Podsights): “Veritonic makes every one of those audio investments more valuable.”

Veritonic’s made pretty good progress on that goal already, with partners including Pandora, SiriusXM and NPR, and brand clients like Pepsi, Visa and Subway. It was previously backed by Newark Venture Partners (whose founder Don Katz previously founded Audible).

“We are excited to be a part of Veritonic’s continued growth and success,” said Greycroft’s Alan Patricof in a statement. “I’m personally very passionate about the future of voice, and the team at Veritonic deeply understands how to use audio to drive recall, stickiness and brand awareness — which is hugely important in a highly-competitive consumer brand landscape.”

Simonelli added that Veritonic will use the new funding to expand its data science and sales teams. Eventually, he hopes to start analyzing non-advertising content as well — for example, since Audible is an investor, he said, “Analyzing every audiobook on the planet is something we’re ready for and excited to do.”

Delivery startup goPuff raises $380M at a $3.9B valuation

By Anthony Ha

GoPuff is a Philadelphia-headquartered startup that delivers products like over-the-counter medicine, baby food and alcohol (basically, the stuff you’d buy at a convenience store) in 30 minutes or less.

Yakir Gola, who serves as co-CEO with his co-founder Rafael Ilishayev, told me that their goal is to create “the go-to platform for over-the-counter medicine or household products or baby food or ice cream or even alcohol — goPuff will deliver all these products in under 30 minutes, 24/7.”

While the startup has kept a relatively low profile in the media, it’s already available in more than 500 U.S. cities (recent launches include Dallas, Miami, Detroit, Minneapolis and Houston). And it’s raised $1.35 billion in total funding, including a just-announced $380 million round that values the company at $3.9 billion.

The new round was led by Accel and D1 Capital Partners, with participation from Luxor Capital and Softbank Vision Fund. (Accel and Softbank both invested previously as well.)

“Accel first invested in goPuff in 2018 because of the team’s visionary approach to on-demand delivery and its commitment to building the infrastructure needed to create its unique, vertically integrated model,” said Accel partner Ryan Sweeney in a statement. “Because of goPuff’s focused approach, they have consistently delivered some of the best unit economics we’ve seen, while growing nationwide. We’re thrilled to remain a committed partner to Yakir, Rafael and the rest of the goPuff team on their journey.

goPuff

Image Credits: goPuff

Gola said that he and Ilishayev created the company in 2013 when they were attending Drexel University together and thought, “There has to be a better way to get convenience products delivered.”

Despite the company’s impressive war chest, Gola said goPuff has had “a huge focus on fiscal responsibility” from the start. At first, the founders were the ones making the deliveries, and they funded their initial expansion with cashflow and profits.

“What was important for us from day one was to start a business that makes money, that has real margins,” he said.

To achieve that, Gola touted the startup’s “vertically integrated model,” where it buys products directly from manufacturers, then gets those products to consumers through a network of 200 “micro-fulfillment” centers (staffed with goPuff employees) and a network of independent drivers.

Besides meaning that goPuff “makes money off the products we sell” (rather than simply charging a fee on deliveries), Gola said this model allows the company to mix products from national and local brands, and it’s “constantly introducing new products and discontinuing things that don’t sell.”

As you’d expect, demand increased significantly during the pandemic, but Gola said the company also made sure to provide protective equipment to all its employees and drivers, and it created an emergency fund to provide financial assistance for any of them who got sick.

In addition to the funding, goPuff is announcing that it has hired former Lowe’s CMO Jocelyn Wong as its first chief customer officer, former Uber global head of fintech and U.S. business development Jonathan DiOrio as its first chief business officer and former TripAdvisor engineering executive Rekha Singh as vice president of engineering.

Looking ahead, as companies like Amazon and Uber are also looking to deliver more and more products in less and less time, Gola said goPuff will continue to differentiate itself in a few key ways.

“There’s nothing like goPuff, so we had to build everything from scratch,” he said. “Whether it’s our location-based inventory system or many things related to our technology, that’s all ours. And then when you talk about differentiation from the customer side, we control the inventory and can make sure that the customers get exactly what they ordered. That focus on our customer is how we’re going to win long-term, and it’s how we got to the point of where we are today.”

Adding Claire Díaz-Ortiz to its partnership, Magma Partners launches initiative to invest in female founders in LatAm

By Jonathan Shieber

Claire Díaz-Ortiz has been many things over the course of her career — an angel investor, an early Twitter employee (who notably got the Pope on Twitter), the founder of a nonprofit, a published author and an entrepreneur.

Now, the globe-trotting, multi-hyphenate polymath is adding “partner” to her list of titles as she joins the Latin American investment firm Magma Partners to head up its investment activities across South America’s southern cone and launch a new firm-wide initiative to invest in more women entrepreneurs.

With the appointment, Diaz-Ortiz joins a small but growing list of women investing in startups across the Latin American region, which is subject to the same woeful gender disparities as the rest of the venture world. As she’s noted, only 8% of VC investing partners are women in LatAm versus 13% in the USA

As part of her responsibilities, Diaz-Ortiz will help Magma operate the Brava Initiative, a commitment from Magma and a number of partner funds to invest in at least 20 female-founded Latin American companies over the next three years.

As Diaz-Ortiz has noted in TechCrunch, investing in female founders makes sense:

Many studies have established that female-founded companies outperform their all-male counterparts. Boston Consulting Group reports that for every dollar a female founder or co-founder raises, she generates 2.5X more revenue than a male founder.1 First Round Capital’s research held that the female-founded companies it backed performed 63% better than all-male founding teams.2 The Ewing Marion Kauffman Foundation’s showed that return on investment from women-led teams is 35% higher than their all-male counterparts.3 AllRaise, a nonprofit promoting women in VC, found that “companies with women on their founding teams are likely to exit at least one year faster compared to the rest of the market, and the number of exits for companies with at least one female founder is growing at a faster rate year-over-year than exits for companies with only male founders.”4 Jen Neundorfer, founding partner at Jane VC, succinctly explains her fund’s thesis of investing in female founders as, “investing in an overlooked asset class that is overperforming.” After all, it’s a “trillion-dollar opportunity.”5

“We’re doing this because female founded startups have better returns and to highlight the disparity in VC funding to women entrepreneurs,” Diaz-Ortiz wrote in a statement.

Claire Diaz-Ortiz. Image Credit: Jose Diaz-Ortiz

Magma has already made its first four investments into women-led or co-led startups: Jefa, a neobank focused on serving women in Central America; The Intern Group, which offers virtual internships for lifelong learning across careers; Prometeo, a startup developing open banking protocols for Latin American financial services; and Flickplay, a developer of augmented reality features for social networking.

Latin America already has several proof points to back up the assertion that money invested in female founders is money well spent. One need only look at the success of Nubank and its co-founder Cristina Junqueira to see that investing in women-led firms can make sense.

There’s still plenty of room to improve, but Latin America is already doing better than the rest of the world when it comes to backing diverse founding teams. In 2019, investments into mixed female-male founding teams represented 16% of dollars invested in Latin America, 9% in the USA and only 8% in Europe. 

“The venture capital industry in Latin America is quite young, not more than two decades. The first wave of firms was started by partners capable of raising funds from a male dominated pool of capital,” said Antonia Rojas of the new Brava Initiative from Magma, in a statement. “The next generation of VCs in the region will come from partners capable of accessing the best deals and adding the most value to founders. In this new era, where results matter more, women are playing a much bigger role. (Traditional LPs will soon realize this.)”

The Brava Initiative has also enlisted a group of mentors from around the world to provide guidance to the Latin American founders that it will back, including Maren Bannon, the founder of January Ventures.

It will also have a mentor network and an SPV so that people who want to support women founders directly can invest alongside Magma.

“When I was a female founder (who was in her 30s and a mother of two), I never walked into a VC’s office and felt it was created for me. So instead of joining one of those funds as an investor, I decided to co-found my own. I wanted to build January Ventures the way I wish a VC fund looked: open, inclusive, welcoming, accessible, transparent,” Bannon said in a statement. “Having more female investors writing checks will help get more funding to female founders.”

❌