One the same day as Fortnite maker Epic Games goes to trial with one of the biggest legal challenges to the App Store’s business model to date, it has simultaneously announced the acquisition of the artist portfolio community ArtStation — and immediately lowered the commissions on sales. Now standard creators on ArtStation will see the same 12% commission rate found in Epic’s own Games Store for PCs, instead of the 30% it was before. This reduced rate is meant to serve as an example the wider community as to what a “reasonable” commission should look like. This could become a point of comparison with the Apple App Store’s 30% commission for larger developers like Epic as the court case proceeds.
ArtStation today offers a place for creators across gaming, media, and entertainment to showcase their work and find new jobs. The company has had a long relationship with Epic Games, as many ArtStation creators work with Epic’s Unreal Engine. However, ArtStation has also been a home to 2D and 3D creators across verticals, including those who don’t work with Unreal Engine.
The acquisition won’t change that, the team says in its announcement. Instead, the deal will expand the opportunities for creators to monetize their work. Most notably, that involves the commission drop. For standard creators, the fees will drop from 30% to 12%. For Pro members (who pay $9.95/mo for a subscription), the commission goes even lower — from 20% to 8%. And for self-promoted sales, the fees will be just 5%. ArtEngine’s streaming video service, ArtStation Learning, will also be free for the rest of 2021, the company notes.
The slashed commission, however, is perhaps the most important change Epic is making to ArtStation because it gives Epic a specific example as to how it treats its own creator communities. It will likely reference the acquisition and the commission changes during its trial with Apple, along with its own Epic Games Store and its similarly low rate. Already, Epic’s move had prompted Microsoft to lower its cut on game sales, too, having recently announced a similar 30% to 12% drop.
In the trial, Epic Games will try to argue that Apple has a monopoly on the iOS app ecosystem and it abuses its market power to force developers to use Apple’s payment systems and pay it commissions on the sales and in-app purchases that flow through those systems. Epic Games, like several other larger app makers, would rather use its own payment systems to avoid the commission — or at the very least, be able to point users to a website where they can pay directly. But Apple doesn’t allow this, per its App Store guidelines.
Last year, Epic Games triggered Fortnite’s App Store expulsion by introducing a new direct way to pay on mobile devices which offered a steep discount. It was a calculated move. Both Apple and Google immediately banned the game for violating their respective app store policies, as a result. And then Epic sued.
While Epic’s fight is technically with both Apple and Google, it has focused more of its energy on the former because Android devices allow sideloading of apps (a means of installing apps directly), and Apple does not.
Meanwhile, Apple’s argument is that Epic Games agreed to Apple’s terms and guidelines and then purposefully violated them in an effort to get a special deal. But Apple says the guidelines apply to all developers equally, and Epic doesn’t get an exception here.
However, throughout the course of the U.S. antitrust investigations into big tech, it was discovered that Apple did, in fact, make special deals in the past. Emails shared by the House Judiciary Committee as a part of an investigation revealed that Apple had agreed to a 15% commission for Amazon’s Prime Video app at the start, when typically subscription video apps are 30% in year one, then 15% in year two and beyond. (Apple says Amazon simply qualified for a new program.) Plus, other older emails revealed Apple had several discussions about raising commissions even higher than 30%, indicating that Apple believed its commission rate had some flex.
Ahead of today’s acquisition by Epic Games, ArtStation received a “Megagrant” from Epic during the height of the pandemic to help it through an uncertain period. This could may have pushed the two companies to further discuss deeper ties going forward.
“Over the last seven years, we’ve worked hard to enable creators to showcase their work, connect with opportunities and make a living doing what they love,” said Leonard Teo, CEO and co-founder of ArtStation, in a statement. “As part of Epic, we will be able to advance this mission and give back to the community in ways that we weren’t able to on our own, while retaining the ArtStation name and spirit.”
What is the biggest opportunity for proptech founders? How should they think about competition, strategic investment versus top-tier VC firms, and how to build their board? What about navigating regulation?
We sat down last week with Brendan Wallace, co-founder and general manager of Fifth Wall, and Hippo CEO Assaf Wand for an episode of Extra Crunch Live to discuss all of the above.
In the meantime, dive into the wide-ranging conversation we had with Wallace and Wand. You can find the full video, including the ECL Live pitch-off, below.
The first step in running a useful and beneficial board is determining who should be on that board, and that starts with the first round of capital investment and carries on forever.
One of the strategic benefits of Fifth Wall as an investor, according to Wallace, is that the firm was built specifically with strategic LPs in the real estate realm, allowing the firm to connect portfolio companies with massive incumbent players in the industry. Incumbents get access to new tools and software, portfolio companies get big customers, and Fifth Wall gets to reap the benefits of both. It’s a rare win-win-win.
We asked Wand about how he chose his investors, and how to weigh the value of a top-tier VC firm and a strategic angel investor, for example.
He explained that there is no right answer to a question like that, but it should always be thoroughly discussed by the team. One of the benefits of having a top-tier VC firm on board is that it has a signaling effect, helping you to recruit early team members and open doors.
Weav, which is building a universal API for commerce platforms, is emerging from stealth today with $4.3 million in funding from a bevy of investors, and a partnership with Brex.
Founded last year by engineers Ambika Acharya, Avikam Agur and Nadav Lidor after participating in the W20 YC batch, Weav joins the wave of fintech infrastructure companies that aim to give fintechs and financial institutions a boost. Specifically, Weav’s embedded technology is designed to give these organizations access to “real time, user-permissioned” commerce data that they can use to create new financial products for small businesses.
Its products allow its customers to connect to multiple platforms with a single API that was developed specifically for the commerce platforms that businesses use to sell products and accept payments. Weav operates under the premise that allowing companies to build and embed new financial products creates new opportunities for e-commerce merchants, creators and other entrepreneurs.
Left to right: Co-founders Ambika Acharya, Nadav Lidor and Avikam Agur; Image courtesy of Weav
In a short amount of time, Weav has seen impressive traction. Recently, Brex launched Instant Payouts for Shopify sellers using the Weav API. It supports platform integrations such as Stripe, Square, Shopify and PayPal. (More on that later.) Since its API went live in January, “thousands” of businesses have used new products and services built on Weav’s infrastructure, according to Lidor. Its API call volume is growing 300% month over month, he said.
And, the startup has attracted the attention of a number of big-name investors, including institutions and the founders of prominent fintech companies. Foundation Capital led its $4.3 million seed round, which also included participation from Y Combinator, Abstract Ventures, Box Group, LocalGlobe, Operator Partners, Commerce Ventures and SV Angel.
A slew of founders and executives also put money in the round, including Brex founders Henrique Dubugras and Pedro Franceschi; Ramp founder Karim Atiyeh; Digits founders Jeff Seibert and Wayne Chang; Hatch founder Thomson Nguyen; GoCardless founder Matt Robinson and COO Carlos Gonzalez-Cadenas; Vouch founder Sam Hodges; Plaid’s Charley Ma as well as executives from fintechs such as Square, Modern Treasury and Pagaya.
Foundation Capital’s Angus Davis said his firm has been investing in fintech infrastructure for over a decade. And personally, before he became a VC, Davis was the founder and CEO of Upserve, a commerce software company. There, he says, he witnessed firsthand “the value of transactional data to enable new types of lending products.”
Foundation has a thesis around the type of embedded fintech that Weav has developed, according to Davis. And it sees a large market opportunity for a new class of financial applications to come to market built atop Weav’s platform.
“We were excited by Weav’s vision of a universal API for commerce platforms,” Davis wrote via email. “Much like Plaid and Envestnet brought universal APIs to banking for consumers, Weav enables a new class of B2B fintech applications for businesses.”
Weav says that by using its API, companies can prompt their business customers to “securely” connect their accounts with selling platforms, online marketplaces, subscription management systems and payment gateways. Once authenticated, Weav aggregates and standardizes sales, inventory and other account data across platforms and develops insights to power new products across a range of use cases, including lending and underwriting; financial planning and analysis; real-time financial services and business management tools.
For the last few years, there’s been a rise of API companies, as well as openness in the financial system that’s largely been focused on consumers, Lidor points out.
“For example, Plaid brings up very rich data about consumers, but when you think about businesses, oftentimes that data is still locked up in all kinds of systems,” he told TechCrunch. “We’re here to provide some of the building blocks and the access to data from everything that has to do with sales and revenue. And, we’re really excited about powering products that are meant to make the lives of small businesses and e-commerce, sellers and creators much easier and be able to get them access to financial products.”
In the case of Brex, Weav’s API allows the startup to essentially offer instant access to funds that otherwise would take a few days or a few weeks for businesses to access.
“Small businesses need access as quickly as possible to their revenue so that they can fund their operations,” Lidor said.
Brex co-CEO Henrique Dubugras said that Weav’s API gives the company the ability to offer real-time funding to more customers selling on more platforms, which saved the company “thousands of engineering hours” and accelerated its rollout timeline by months.
Clearly, the company liked what it saw, considering that its founders personally invested in Weav. Is Weav building the “Plaid for commerce”? Guess only time will tell.
Earlier this year we reported on how Snap had acquired Berlin-based Fit Analytics, an AI-based fitting technology startup, as part of a wider push into e-commerce services, specifically to gain technology that can help prospective online shoppers a better sense of how a particular item or size would fit them. A 10-Q filing from Snap today has now put a pricetag on that deal.
Snap paid a total of $124.4 million, covering technology, IP, customer relationships and payouts to the team. The filing also noted that Snap spent a total of $204.5 million on acquisitions in 2020, but did not break them out.
The news comes ahead of Snap — whose flagship app Snapchat now has 280 million daily active users — preparing for its Snap Partner Conference in May. Sources say the company plans to announce, among other news, deeper commerce features for Snapchat — specifically tools to make it easier for Snapchat users to interact with and buy items that appear in the app, either in ads or more organically in content shared by other users.
While the exact details of those commerce tools, and the timing of when they might come online, are not yet known, Snap has hardly kept its interest in commerce a secret.
Snap has been hiring for roles to support its commerce efforts. Currently it’s advertising for a variety of engineering, marketing and product roles in commerce, to, in the words of one of the listings, for a Product Manager, “develop and launch shopping experiences and services that make shopping fun for Snapchatters and drive results for brands.” The listings also include a role specifically to work on Snapchat-based e-commerce efforts for direct-to-consumer (D2C) businesses.
And it has been making other recent acquisitions in addition to Fit Analytics that also line up with that.
They have included Screenshop, an app that describes itself as “the first AI-back style lens,” which can identify shoppable items in photos and then build a custom catalog of similar products that you can buy (akin to “shop the look” features that you will have come across in fashion media). And it’s also acquired Ariel AI, which has built technology to quickly render people in 3D, technology that can be used in a diverse set of applications, from games to virtual try-ons of clothing, makeup or accessories.
Snap confirmed the Ariel acquisition to CNBC in January. And while Screenshop deal was first reported earlier this month by The Information, Snap has declined to comment on it, although we have found people who worked at the startup now working at Snap.
Both acquisitions closed in 2020, according to reports, meaning that they came out of that year’s $204.5 million acquisition run. (Snap also noted a smaller acquisition, for $7.6 million, in the most recent quarter, but it did not disclose any further details.)
Even before all this, Snap had been making smaller efforts and tests in commerce going back years, although none of them have tipped into mainstream efforts.
Among them, in 2018 it launched a Snap Store — but that so far has not progressed beyond selling merchandise based on Bitmoji characters. And work on a Gucci shoe campaign last year, where Snapchat users could try shoes on in AR and then buy them, was seen by some as its big step into commerce — “we’ve moved from pure entertainment and expanded the use-case. And so with brands, it’s a really exciting time, especially in fashion and beauty. The Snapchat camera is connecting brands to their audiences in new ways,” a Snapchat AR executive said at the time — but that also didn’t develop into much beyond a one-off effort.
But with the pandemic leading to a surge of shopping online, and technology continuing to improve, the iron may finally be hot here.
As we said around the Fit Analytics acquisition, the idea of diversifying Snapchat’s revenue streams by building in more commerce experiences makes a lot of sense.
It gives the company another revenue stream at a time when Apple is introducing changes that might well affect how advertising can run and be monetized in the future. (The company most recently posted average revenues per user of $2.74, a figure Wall Street will be hoping will grow, not shrink.) It also plays into the demographics that Snapchat targets, where younger consumers are using social media apps to discover, share and shop for goods.
And specifically in the case of fashion, building experiences to shop for items on Snapchat leans into the augmented reality, image-altering, hyper-visual technology that has become a well-known and much-used hallmark of Snapchat and its owner, self-titled “camera company” Snap.
Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.
At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.
Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.
Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Vishal Garg), GoPuff, Instacart, Kavak and Sweetgreen.
Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process.
Image courtesy of Loft
In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.
“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”
The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.
“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”
Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”
While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.
The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”
Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.
In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.
In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.
This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.
Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.
Holoride, the company that’s building an immersive XR in-vehicle media platform, today announced it raised €10 million (approximately $12 million) in its Series A investing round, earning the company a €30 million ($36 million) valuation.
The Swedish ADAS software development company Terranet led the round with €3.2 million (~$3.9 million), followed by a group of Chinese financial and automotive technology investors, organized by investment professional Jingjing Xu, and educational and entertainment game development company Schell Games, which has partnered with holoride in the past to create content.
Holoride will use the fresh funds to search for new developers and other talent both as it prepares to expand into global markets like Europe, the United States and Asia, and in advance of its summer 2022 launch for private passenger cars.
“This goes hand-in-hand with putting more emphasis on the content creator community, and as of summer this year, releasing a lot of tools to help them build content for cars on our platform,” Nils Wollny, holoride’s CEO and founder, told TechCrunch.
The Munich-based company launched at CES in 2019. TechCrunch got to test out its in-car virtual reality system. Our team was surprised, and delighted, to find that holoride had figured out how to quell the motion sickness caused both by being a passenger in a vehicle, and by using a VR headset. The key? Matching the experience users have within the headset to the movement of the vehicle. Once holoride launches, users will be able to download the holoride app to their phones or other personal devices like VR headsets, which will connect wirelessly to the car itself, and extend their reality.
“Our technology has two sides,” said Wollny. “One is the localization, or positioning software, that takes data points from the car and performs real time synchronization. The other part is what we call our Elastic Software Development Kit. Content creators can build elastic content, which adapts to your travel time and routes. The collaboration with Terranet means their sensors and software stack that allow for a more precise capture and interpretation of the environment at an even faster speed with higher accuracy will enable us in the future for even more possibilities.”
Terranet’s VoxelFlow software, which was originally designed for ADAS applications, will help holoride advance its real time, in-vehicle XR entertainment. Terranet’s CEO Par-olof Johannesson, describes VoxelFlow as a new paradigm within computer vision and object identification, wherein a combination of sensors, event cameras and a laser scanner are integrated into a car’s windshield and headlamps in order to calculate the distance, direction and speed of an object.
Terranet’s VoxelFlow uses computer vision and object identification via a combination of sensors, event cameras and a laser scanner, which are integrated into a car’s windshield and headlamps, in order to calculate the distance, direction and speed of an object.
Holoride, which is manufacturer-agnostic, will be able to use the data points calculated by VoxelFlow in real time if holoride were being used in a vehicle that was built integrated with Terranet’s software. But more important is the ability for holoride to reuse 3D event data for XR applications, giving it to creators so they can create the most interactive experience. Terranet is also looking forward to opening up a new vertical for VoxelFlow.
“We are of course very eager to access holoride’s wide pipeline, as well,” said Johannesson. “This deal is very much about expanding the addressable market and tapping into the heart of the automotive industry, where lead times and turnaround times are usually pretty long.”
Holoride is on a mission to revolutionize the passenger experience by turning dead car time into interactive experiences that can run the gamut of gaming, education, productivity, mindfulness and more. For example, around Halloween 2019, holoride teamed up with Ford and Universal Pictures to immerse riders into the frightening world of the Bride of Frankenstein, replete with monsters jumping out and tasks for riders to perform.
Wollny said holoride always has an eye towards the next step, even though its first product hasn’t gone to market yet. He understands that the future is in autonomous vehicles, and wants to build an essential element of the future tech stack of future cars, cars in which everyone is a passenger.
“Car manufacturers always focus on the buyer of the car or the driver, but not so much on the passenger,” said Wollny. “The passenger is who holoride really focuses on. We want to turn every vehicle into a moving theme park.”
Subscription pricing is landing on Facebook’s Oculus Store, giving VR developers another way to monetize content on Facebook’s Oculus Quest headset.
Developers will be allowed to add premium subscriptions to paid or free apps, with Facebook assumedly dragging in their standard percentage fee at the same time. Oculus and the developers on its platform have been riding the success of the company’s recent Quest 2 headset, which Facebook hasn’t detailed sales numbers on but has noted that the months-old $299 headset has already outsold every other Oculus headset sold to date.
Subscription pricing is an unsurprising development but signals that some developers believe they have a loyal enough group of subscribers to bring in sizable bits of recurring revenue. Facebook shipped the first Oculus Rift just over five years ago, and it’s been a zig-zagging path to finding early consumer success during that time. A big challenge for them has been building a dynamic developer ecosystem that offer something engaging to users while ensuring that VR devs can operate sustainably.
At launch, there are already a few developers debuting subscriptions for a number of different app types, spanning exercise, meditation, social, productivity and DJing. In addition to subscriptions, the new monetization path also allows developers to let users try out paid apps on a free trial basis.
The central question is how many Quest users there are that utilize their devices enough to justify a number of monthly subscriptions, but for developers looking to monetize their hardcore users, this is another utility that they likely felt was missing from the Oculus Store.
Casa Blanca, which aims to develop a “Bumble-like app” for finding a home, has raised $2.6 million in seed funding.
Co-founder and CEO Hannah Bomze got her real estate license at the age of 18 and worked at Compass and Douglas Elliman Real Estate before launching Casa Blanca last year.
She launched the app last October with the goal of matching home buyers and renters with homes using an in-app matchmaking algorithm combined with “expert agents.” Buyers get up to 1% of home purchases back at closing. Similar to dating apps, Casa Blanca’s app is powered by a simple swipe left or right.
Samuel Ben-Avraham, a partner and early investor of Kith and an early investor in WeWork, led the round for Casa Blanca, bringing its total raise to date to $4.1 million.
The New York-based startup recently launched in the Colorado market and has seen some impressive traction in a short amount of time.
Since launching the app in October, Casa Blance has “made more than $100M in sales” and is projected to reach $280 million this year between New York and its Denver launch.
Bomze said the app experience will be customized for each city with the goal of creating a personalized experience for each user. Casa Blanca claims to streamline and sort listings based on user preferences and lifestyle priorities.
Image Credits: Casa Blanca
“People love that there is one place to book, manage feedback, schedule and communicate with a branded agent for one cohesive experience,” Bomze said. “We have a breadth of users from first time buyers to people using our platform for $15 million listings.”
Unlike competitors, Casa Blanca applies to a direct-to-consumer model, she pointed out.
“While our agents are an integral part of the company, they are not responsible for bringing in business and have more organizational support, which allows them to focus on the individual more and creates a better end-to-end experience for the consumer,” Bomze said.
Casa Blanca currently has over 38 agents in NYC and Colorado, compared to about 15 at this time last year.
“We are in a growth phase and finding a unique opportunity in this climate, in particular, because there are many women exploring new, more flexible job opportunities,” Bomze noted.
The company plans to use its new capital to continue expanding into new markets, nationally and globally; enhancingits technology and scaling.
“As we continue to grow in new markets, the app experience will be curated to each city – for example, in Colorado you can edit your preferences based on access to ski areas – to make sure we’re offering a personalized experience for each user,” Bomze said.
E-commerce is booming, but among the biggest challenges for entrepreneurs of online businesses are finding a place to store the items they are selling and dealing with the logistics of operating.
Tyler Scriven, Maxwell Bonnie and Paul D’Arrigo co-founded Saltbox in an effort to solve that problem.
The trio came up with a unique “co-warehousing” model that provides space for small businesses and e-commerce merchants to operate as well as store and ship goods, all under one roof. Beyond the physical offering, Saltbox offers integrated logistics services as well as amenities such as the rental of equipment and packing stations and access to items such as forklifts. There are no leases and tenants have the flexibility to scale up or down based on their needs.
“We’re in that sweet spot between co-working and raw warehouse space,” said CEO Scriven, a former Palantir executive and Techstars managing director.
Saltbox opened its first facility — a 27,000-square-foot location — in its home base of Atlanta in late 2019, filling it within two months. It recently opened its second facility, a 66,000-square-foot location, in the Dallas-Fort Worth area that is currently about 40% occupied. The company plans to end 2021 with eight locations, in particular eyeing the Denver, Seattle and Los Angeles markets. Saltbox has locations slated to come online as large as 110,000 square feet, according to Scriven.
The startup was founded on the premise that the need for “co-warehousing and SMB-centric logistics enablement solutions” has become a major problem for many new businesses that rely on online retail platforms to sell their goods, noted Scriven. Many of those companies are limited to self-storage and mini-warehouse facilities for storing their inventory, which can be expensive and inconvenient.
Scriven personally met with challenges when starting his own e-commerce business, True Glory Brands, a retailer of multicultural hair and beauty products.
“We became aware of the lack of physical workspace for SMBs engaged in commerce,” Scriven told TechCrunch. “If you are in the market looking for 10,000 square feet of industrial warehouse space, you are effectively pushed to the fringes of the real estate ecosystem and then the entrepreneurial ecosystem at large. This is costing companies in significant but untold ways.”
Now, Saltbox has completed a $10.6 million Series A round of financing led by Palo Alto-based Playground Global that included participation from XYZ Venture Capital and proptech-focused Wilshire Lane Partners in addition to existing backers Village Capital and MetaProp. The company plans to use its new capital primarily to expand into new markets.
The company’s customers are typically SMB e-commerce merchants “generating anywhere from $50,000 to $10 million a year in revenue,” according to Scriven.
He emphasizes that the company’s value prop is “quite different” from a traditional flex office/co-working space.
“Our members are reliant upon us to support critical workflows,” Scriven said.
Besides e-commerce occupants, many service-based businesses are users of Saltbox’s offering, he said, such as those providing janitorial services or that need space for physical equipment. The company offers all-inclusive pricing models that include access to loading docks and a photography studio, for example, in addition to utilities and Wi-Fi.
Image Credits: Saltbox
Image Credits: Saltbox
The company secures its properties with a mix of buying and leasing by partnering with institutional real estate investors.
“These partners are acquiring assets and in most cases, are funding the entirety of capital improvements by entering into management or revenue share agreements to operate those properties,” Scriven said. He said the model is intentionally different from that of “notable flex space operators.”
“We have obviously followed those stories very closely and done our best to learn from their experiences,” he added.
Investor Adam Demuyakor, co-founder and managing partner of Wilshire Lane Partners, said his firm was impressed with the company’s ability to “structure excellent real estate deals” to help them continue to expand nationally.
He also believes Saltbox is “extremely well-positioned to help power and enable the next generation of great direct to consumer brands.”
Playground Global General Partner Laurie Yoler said the startup provides a “purpose-built alternative” for small businesses that have been fulfilling orders out of garages and self-storage units.
Saltbox recently hired Zubin Canteenwalla to serve as its chief operating offer. He joined Saltbox from Industrious, an operator co-working spaces, where he was SVP of Real Estate. Prior to Industrious, he was EVP of Operations at Common, a flexible residential living brand, where he led the property management and community engagement teams.
Dan Gilbert loves his hometown of Detroit. He loves it so much that the billionaire founder of what would eventually become the mortgage lender Quicken Loans has poured at least $2.5 billion into rehabilitating buildings in the heart of the city.
He has also invested in many companies that are now tenants in those buildings, along with the restaurants and retailers that have made the scene far livelier than before Gilbert began his campaign to reestablish Detroit as one of the most important cities in the country.
We had a chance to talk recently with Gilbert, a father of five whose other notable interests include the highly valued e-commerce marketplace StockX, which he cofounded in 2015, and the Cleveland Cavaliers NBA team, which he acquired — along with their arena in downtown Cleveland — for a reported $375 million in 2005.
He shared why Detroit should be top of mind for founders from across the U.S. We also talked a bit about sports and why he chose a traditional IPO path for Rocket Companies, the parent company of Quicken that he took public in August of last year. Excerpts from that conversation follow.
TC: As a native Clevelander and longtime Cavs fan, I’m curious about your connection to Cleveland.
D: When the Cavs came up for sale in 2005 or 2004, the banker who was selling them called us up because our group had made an attempt at the Milwaukee Brewers baseball team, and they thought we may want to buy the team. And the seller at the time [businessman Gordan Gund] wanted a very simple, non-complex process with one buyer. So they called us up, and we decided to do it.
TC: Well, you got us back in the game, so to speak, so thank you. In the meantime, you’ve obviously been very focused on Detroit, where you grew up and went to college. What’s the case for Detroit over other Midwestern cities?
DG: First of all, one of the metrics that companies use when they decide on a city is how many people they can reach within a five-hour drive, because they figure that talent within that five-hour circumference is willing to drive in or at least explore that city. And there are 60 million people within five hours of Detroit, including in Chicago, Toronto, all of Michigan, all of Ohio, Indianapolis, Pittsburgh — I could go on and on.
The same is true of universities. There are something like 30 major universities within a five-hour drive, including the University of Michigan, Michigan State, Wayne State, Carnegie Mellon, and Ohio State, and those are just the bigger schools. There are also a bunch of great schools in Canada that specialize in software development. Collectively, that’s a huge advantage when it comes to tapping into possible talent.
Detroit has had so many decades of bad PR that it’s hard to get over that image without seeing it for yourself, but once you spend two hours here, you get it. You feel the energy. You feel the passion. You see the young people.
TC: Do you think Detroit is better suited for companies of a certain size? Things are changing quickly but there’s a learning curve in some cities regarding the specific needs of startups. I talked with Drive Capital in Columbus recently, and they said they’d had to do a lot to educate landlords. Of course, you’re among the biggest landlords in Detroit.
DG: That’s a really great insight from Drive. At this point, Detroit is home to both [big and small companies]. We first moved around 1,400 people from the suburbs into downtown Detroit in the summer of 2010 and we now have more than 20,000 people at this tech company, which Quicken Loans clearly is. And [that kind of hub] allows you to create an ecosystem of people and ideas that interest VCs, so that’s become one part of it.
We control a couple million square feet of real estate ourselves, but then we have another four or five million square feet that we’re building or that’s already bought, so we can accommodate startups and be flexible around their growth. But on top of that, we have three locations in downtown Detroit that companies like Pinterest and Snap have used; you’ve got existing big tech companies with locations here like Amazon, which has an engineering office with more than 500 people downtown, and Google, which has a 50,000-square foot office, and Microsoft, which has 50,000 square feet in the same building I’m in. So it’s not just the startup scene.
TC: Are there enough venture dollars in Detroit to support what you’re trying to build? The Drive team also talked about missing opportunities because they don’t have the bandwidth to fund everything they are seeing. They need backup. Do you?
DG: Certain VCs have discovered us. Ron Conway of SV Angel, for example, fell in love with Detroit a couple of years ago and he has exposed us to everybody in his network. He has invested in a lot of our deals here. And there are others. Google Ventures and Battery Ventures came in early. DST Global, General Atlantic, GGV Capital, Altimeter, Whale Rock Capital, Tiger Global have put money into startups here.
It’s kind of a new thing for us. Quicken Loans just went public after 35 years, and we never really raised much VC money because we never had to because of our cash flow. So it’s a little bit of a new thing for us with StockX; we never really had a startup blow up that suddenly. But every brick in the wall helps.
TC: Speaking of StockX, its tagline is the “stock market of things.” Might one of those things be non-fungible tokens at some point? A lot of people are suddenly buying and selling digital items.
DG: Like NBA Top Shot? We love that model. We have some similar models that we’re working on right now. We’re in research and development on some things that are very close to it. I have four teenagers out of five kids at home, and I can tell you that’s definitely the hot thing right now.
TC: What is the next step for StockX? Is it an IPO?
DG: I think the next step for StockX will probably be an IPO. It’s just a matter of when. Probably sometime in 2022. I’m not saying anything official here; I’m just saying there’s a good chance it will.
TC: Do you have strong feelings about traditional IPOs versus other ways that companies are going public? You took Quicken public through a traditional IPO. Another Detroit-based mortgage company, United Wholesale Mortgage, more recently took the SPAC route instead.
DG: I think [a StockX offering] would probably be traditional only because, to be honest with you, I don’t know much about the complications and all the details of trying to do it a different way. We had success with Quicken Loans, so that’s what we’re coming off of.
TikTok is taking another step towards directly funding publishers’ content with today’s announcement that it’s financially backing the production of media publisher NowThis’ new series, “VIRAL,” which will feature interviews with public health experts and a live Q&A session focused on answering questions about the pandemic. The partnership represents TikTok’s first-ever funding of an episodic series from a publisher, though TikTok has previously funded creator content.
Through TikTok’s Instructive Accelerator Program, which was formerly known as the Creative Learning Fund, other TikTok publishers have received grants and hands-on support from TikTok so they could produce quality instructive content for TikTok’s #LearnOnTikTok initiative. The program today is structured as four, eight-week cycles during which time publishers post videos four times per week.
NowThis had also participated in the Creative Learning Fund last year and was selected for the latest cycle of the Instructive Accelerator Program. But its “VIRAL” series is separate from these efforts.
NowThis says it brought the concept for the show to TikTok earlier this year outside of the accelerator program, and TikTok greenlit it. TikTok then co-produced the series and provided some funding. Neither NowThis nor TikTok would comment on the extent of the financial backing involved, however.
The “VIRAL” series itself is hosted by infectious disease clinical researcher Laurel Bristow, who spent the last year working on COVID treatments and research. Every Thursday, Bristow will break down COVID facts in easy-to-understand language, NowThis says, including things like vaccine efficacy, transmission timelines, and treatment. The show will also bust COVID myths, provide information about ongoing public health risks, and feature interviews with a cross-section of experts.
Each episode of the will be 45 minutes in length and will also include an interactive segment where the TikTok viewing audience will be able to engage in a real-time Q&A session about the show’s content. In total, five episodes are being produced, and will air starting on Thursday April 15 at 6 PM ET and will run through Thursday May 13 on the @NowThis main TikTok page.
@nowthisTune in to our new TikTok live show VIRAL on Thursdays at 6pm ET with host @kinggutterbaby
NowThis has become one of the most-followed news media accounts on TikTok, with 4.6 million followers across its news and politics channels, since launching a little over a year ago. Because of its focus on video, it’s been a good fit for the TikTok’s platform.
The approach TikTok is taking with “VIRAL’s” production, it’s worth noting, stands in contrast to how other social media platforms are handling the pandemic and COVID-19 information. While most, including TikTok, have pledged to fact check COVID-19 information, remove misinformation and conspiracies, point users to official sources for health information, and provide other resources, TikTok is directly funding public health content featuring scientists and researchers, and then promoting it on its network.
The company explained to TechCrunch its thinking on the matter.
“As the pandemic continues to evolve, we think it’s important to provide our community an outlet to dispel misinformation and communicate with public health experts in real-time,” said Robbie Levin, Manager of Media Partnerships at TikTok. “NowThis has consistently been a great partner that produces engaging and informative content, so we felt this series would be an impactful and important avenue for our users to receive credible information on our platform,” Levin noted.
While the pandemic has driven the topic of choice here, paying creators for content is not new. And TikTok isn’t the only one to do so. Instagram and Snapchat are both funding creator content for their TikTok clones, Reels and Spotlight, respectively. And new social platforms like Clubhouse are funding creators’ shows, as well.
TikTok says it’s not currently talking to other publishers to produce more series like “VIRAL,” but it isn’t ruling out the idea of expanding its creator funding and producing efforts. In addition to its accelerator program, which is continuing, TikTok says if “VIRAL” proves successful and the community responds positively, it will pursue similar opportunities in the future.
The sheer volume of people migrating to Austin from all over the country, but particularly from the San Francisco Bay Area, has been making headlines for a while now.
One result of this continued migration is a steady surge in housing prices due to increased demand and low inventory that dropped to nearly zero earlier this year. Now, Homebound, a Santa Rosa, California-based tech-enabled homebuilding startup, is entering the Austin market with the goal of helping ease some of the pain felt in the city by offering an alternative to buying existing homes.
Homebound has raised about $73 million over the years from the likes of Google Ventures, Fifth Wall, Khosla, Sound Ventures, Atomic and Thrive Capital. It raised a $35 million Series B last April and then closed on a $20 million convertible note late last year. CEO Nikki Pechet and Atomic managing partner Jack Abraham founded the company in 2017 after Abraham lost his home to wildfires.
Essentially serving as a virtual general contractor, Homebound combines technology and a network for “vetted” and licensed building “experts” to manage the new home construction from the design phase to completion. The startup has developed tools to track and manage hundreds of unique tasks associated with building a home.
Up until this point, Homebound has been focused on helping homeowners navigate the challenges and complexities of rebuilding after wildfires in California. But this month, Homebound will be expanding to Austin, its first non-disaster market, with the goal of taking learnings from those rebuilds and applying the same “streamlined, tech-enabled building process” to make custom homebuilding an option for local homeowners.
I talked with Homebound’s CEO and co-founder, Nikki Pechet, to learn more.
With Homebound, she said, the company is out to serve as a “next gen” homebuilder to make it possible “for anyone, anywhere to build a home.”
Austin’s housing market is definitely overheated, with homes going 10-30% above asking in some cases (I should know, I live here).
“Homeowners have been reaching out to us from across the country asking us to come to their market,” Pechet said. “We’re already seeing Austin grow faster than any of our other markets did in their early days. It’s going to be a huge market for us.”
It’s a model Pechet envisions replicating in other cities with similar housing supply issues such as Miami, Tampa, Raleigh and Charlotte.
“This is just the start,” Pechet said. “We’re taking the platform to markets across the country to help exactly with this issue.”
The company starts by helping a potential homeowner identify land they want to build on, or help them find a lot among the inventory Homebound has already built up. From there, it can help with everything from architectural plans to design to actual construction via its platform. Homebound offers a set of plans for people to choose from, with varying levels of customization.
Building costs for a typical single-family home in the Austin area will start around $300,000 depending on the size, complexity of house, lot size and location. That does not include land cost. Some people are opting to build second units on existing properties.
“In most cases, people can build a new home for less than they can pay for an existing home just because of the dynamics,” Pechet said.
After a relatively quiet couple of months from Oculus on the software front, Facebook’s VR unit is sharing some details on new functionality coming to its Quest 2 standalone headset.
The features, which include wireless Oculus Link support, “Infinite Office” functionality and upcoming 120hz support will be rolling out in the Quest 2’s upcoming v28 software update. There’s no exact word on when that update is coming but the language in the blog seems to intimate that the rollout is imminent.
The big addition here is a wireless version of Oculus Link which will allow Quest 2 users to stream content from their PCs directly to their standalone headsets, enabling more graphics-intensive titles that were previously only available on the now pretty much defunct Rift platform. Air Link is a feature that will enable users to ditch the tethered experience of Oculus Link, though many users have been relying on third-party software to do this already, utilizing Virtual Desktop.
It appears this upgrade is only coming to Quest 2 users in a new experimental mode, but not owners of the original Quest headset. Users will need to update the Oculus software on both their Quest 2 and PC to the v28 version in order to use this feature.
Accompanying the release of Air Link in this update is new features coming to “Infinite Office” a VR office play that aims to bring your keyboard and mouse into VR and allow users to engage with desktop-style software. Facebook debuted it back at their VR-focused Facebook Connect conference, but they haven’t said much about it since.
Today’s updates include added keyboard support that not only allows users to link their device but see it inside VR, this support is limited to a single model from a single manufacturer (the Logitech K830) but Facebook says they’ll be adding support down the road to other keyboards. Users with this keyboard will be able to see outlines of their hands as well as a rendering of the keyboard in its real position, enabling users to accurately type (theoretically). Infinite Office will also allow users to designate where their real world desk is, a feature that will likely help users orient themselves. Even with a keyboard, there’s not much users can do at the moment beyond accessing the Oculus Browser it seems.
Lastly, Oculus is allowing developers to sample out 120hz frame rate support for their titles. Facebook says that there isn’t actually anything available with that frame rate yet, not even system software, but that support is here for developers in an experimental fashion.
Oculus says the new software update will be rolling out “gradually” to users.
Hello friends, and welcome back to Week in Review!
Last week, I talked about Clubhouse’s slowing user growth. Well, this week news broke that they had been in talks with Twitter for a $4 billion acquisition, so it looks like they’re still pretty desirable. This week, I’m talking about a story I published a couple days ago that highlights pretty much everything that’s wild about the alternative asset world right now.
If you successfully avoided all mentions of NFTs until now, I congratulate you, because it certainly does seem like the broader NFT market is seeing some major pullback after a very frothy February and March. You’ll still be seeing plenty of late-to-the-game C-list celebrities debuting NFT art in the coming weeks, but a more sober pullback in prices will probably give some of the NFT platforms that are serious about longevity a better chance to focus on the future and find out how they truly matter.
I spent the last couple weeks, chatting with a bunch of people in one particular community — one of the oldest active NFT communities on the web called CryptoPunks. It’s a platform with 10,000 unique 24×24 pixel portraits and they trade at truly wild prices.
I wrote about the history and legacy of CryptoPunks, a vibrant $200 million NFT marketplace built around trading pixelated characters. There are only 10,000 of them and owning the cheapest one will cost you about $30k. https://t.co/X4iTSl6FjC
— Lucas Matney (@lucasmtny) April 8, 2021
This picture sold for a $1.05 million.
I talked to a dozen or so people (including the guy who sold that one ^^) that had spent between tens of thousands and millions of dollars on these pixelated portraits, my goal being to tap into the psyche of what the hell is happening here. The takeaway is that these folks don’t see these assets as any more non-sensical than what’s going on in more traditional “old world” markets like public stock exchanges.
A telling quote from my reporting:
“Obviously this is a very speculative market… but it’s almost more honest than the stock market,” user Max Orgeldinger tells TechCrunch. “Kudos to Elon Musk — and I’m a big Tesla fan — but there are no fundamentals that support that stock price. It’s the same when you look at GameStop. With the whole NFT community, it’s almost more honest because nobody’s getting tricked into thinking there’s some very complicated math that no one can figure out. This is just people making up prices and if you want to pay it, that’s the price and if you don’t want to pay it, that’s not the price.”
Shortly after I published my piece, Christie’s announced that they were auctioning off nine of the CryptoPunks in an auction likely to fetch at least $10 million at current prices. The market surged in the aftermath and many millions worth of volume quickly moved through the marketplace minting more NFT millionaires.
Is this all just absolutely nuts? Sure.
Is it also a poignant picture of where alternative asset investing is at in 2021? You bet.
Here are the TechCrunch news stories that especially caught my eye this week:
Amazon workers vote down union organization attempt
Amazon is breathing a sigh of relief after workers at their Bessemer, Alabama warehouse opted out of joining a union, lending a crushing defeat to labor activists who hoped that the high-profile moment would lead more Amazon workers to organize. The vote has been challenged, but the margin of victory seems fairly decisive.
Supreme court sides with Google in Oracle case
If any singular event impacted the web the most this week, it was the Supreme Court siding with Google in a very controversial lawsuit by Oracle that could’ve fundamentally shifted the future of software development.
Coinbase is making waves
The Coinbase direct listing is just around the corner and they’re showing off some of their financials. Turns out crypto has been kind of hot lately and they’re raking in the dough, with revenue of $1.8 billion this past quarter.
Apple share more about the future of user tracking
Apple is about to upend the ad-tracking market and they published some more details on what exactly their App Tracking Transparency feature is going to look like. Hint: more user control.
Consumers are spending lots of time in apps
A new report from mobile analytics firm App Annie suggests that we’re dumping more of our time into smartphone apps, with the average users spending 4.2 hours a day doing so, a 30 percent increase over two years.
Sonos perfects the bluetooth speaker
I’m a bit of an audio lover, which made my colleague Darrell’s review of the new Sonos Roam bluetooth speaker a must-read for me. He’s pretty psyched about it, even though it comes in at the higher-end of pricing for these devices, still I’m looking forward to hearing one with my own ears.
Image Credits: Nigel Sussman
Some of my favorite reads from our Extra Crunch subscription service this week:
The StockX EC-1
“StockX is a unique company at the nexus of two radical transitions that isn’t just redefining markets, but our culture as well. E-commerce upended markets, diminishing the physical experience by intermediating and aggregating buyers and sellers through digital platforms. At the same time, the internet created rapid new communication channels, allowing euphoria and desire to ricochet across society in a matter of seconds. In a world of plenty, some things are rare, and the hype around that rarity has never been greater. Together, these two trends demanded a stock market of hype, an opportunity that StockX has aggressively pursued.”
Building the right team for a billion-dollar startup
“I would really encourage you to take some time to think about what kind of company you want to make first before you go out and start interviewing people. So that really is going to be about understanding and defining your culture. And then the second thing I’d be thinking about when you’re scaling from, you know, five people up to, you know, 50 and beyond is that managers really are the key to your success as a company. It’s hard to overstate how important managers, great managers, are to the success of your company.
So you want to raise a Series A
“More companies will raise seed rounds than Series A rounds, simply due to the fact that many startups fail, and venture only makes sense for a small fraction of businesses out there. Every check is a new cycle of convincing and proving that you, as a startup, will have venture-scale returns. Moore explained that startups looking to move to their next round need to explain to investors why now is their moment.”
Until next week,
Realworld has a big vision — founder and CEO Genevieve Ryan Bellaire told me her goal is “simplifying adulthood.” And the New York startup has raised $3.4 million in seed funding to make it happen.
Apparently that’s something Bellaire struggled with herself in her early twenties. Despite being a lawyer with an MBA, she said she found herself “just totally unprepared for all these real-world things,” whether that was figuring out housing or heath insurance — something I (a non-lawyer, non-MBA) can definitely relate to.
“There’s tons of content out there out there that can tell you to fill out this form to sign up for a credit card, but you don’t know what you don’t know,” she said. “There’s not one place that defines adulthood.”
At the same time, there are online services that can make aspects of adulthood easier — whether that’s Lemonade for insurance, Betterment for investing or Zocdoc for doctor’s appointments. But again, finding these services and just knowing that you should use them can be a challenge, so Bellaire said Realworld is meant to serve as the “single point of entry.”
To do that, the startup has created more than 90 step-by-step playbooks, covering everything from budgeting to moving to salary negotiation. Bellaire said these are designed for members of Gen Z who are just leaving college and entering the workforce.
Realworld CEO Genevieve Ryan Bellaire. Image Credits: Realworld
Of course, even if you focus on a specific age group, different twentysomethings will have different backgrounds, income levels and challenges. Bellaire said the playbooks will customize their instructions based on a user’s specific goals and circumstances, but she also argued that Realworld’s “starter pack” of 15 playbooks covers things that every adult will need to deal with in some form, such as creating budgets, finding an apartment and understanding income taxes.
The startup plans to release its first mobile app next month, and its goal is to become what Bellaire described as a “platform, marketplace and community.” The playbooks are a big piece of the platform, and eventually, Realworld could also include a marketplace for services that will help you accomplish those adulthood goals, as well as a community where users share their knowledge and advice.
Realworld initially charged for access to its playbooks, but they’re now available for free. Instead, Bellaire said the company could charge a subscription fee for additional features and for “concierge-oriented support.”
“This is one of those problems where if you get it right, you can make a huge impact, but you can also have huge financial success,” she added.
It sounds like investors agree. Realworld had previously raised $1.1 million, and this new seed round was led by Fitz Gate Ventures, with participation from Bezos Expeditions (Jeff Bezos’ personal investment firm), Knightsgate Ventures, The Helm, Great Oaks VC, Copper Wire Ventures, AmplifyHer Ventures, Underdog Labs, Human Ventures and Techstars.
Amplifyher partner Meghan Cross Breeden noted that Realworld could “corner the market on life milestones,” not just for Gen Z right now, but for “every future milestone … in the long-haul of adulthood, from buying a home to caring for a parent.”
SaaS to support mid-sized companies’ financial planning with real-time data and native collaboration isn’t the sexiest startup pitch under the sun but it’s one that’s swiftly netted Abacum a bunch of notable backers — including Creandum, which is leading a $7M seed round that’s being announced today.
The rosters of existing investors also participating in the round are Y Combinator (Abacum was part of its latest batch), PROFounders, and K-Fund, along with angel investors such as Justin Kan (Atrium and Twitch co-founder and CEO); Maximilian Tayenthal (N26 co-founder and co-CEO & CFO); Thomas Lehrman (GLG co-founder and ex-CEO), Avi Meir (TravelPerk co-founder and CEO); plus Jenny Bloom (Zapier CFO and Mailchimp ex-CFO) and Mike Asher (CFO at Neo4j).
Abacum was founded last year in the middle of the COVID-19 global lockdown, after what it says was around a year of “deep research” to feed its product development. They launched their SaaS in June 2020. And while they’re not disclosing customer numbers at this early stage their first clients include a range of scale-up companies in the US and in Europe, including the likes of Typeform, Cabify, Ebury, Garten, Jeff and Talkable.
The startup’s Spanish co-founders — Julio Martinez, a fintech entrepreneur with an investment banking background, and Jorge Lluch, a European Space Agency engineer turned CFO/COO — spotted an opportunity to build dedicated software for mid-market finance teams to provide real-time access to data via native collaborative that plugs into key software platforms used by other business units, having felt the pain of a lack of access to real-time data and barriers to collaboration in their own professional experience with the finance function.
The idea with Abacum is to replace the need for finance teams to manually update their models. The SaaS automatically does the updates, fed with real-time data through direct integrations with software used by teams dealing with functions like HR, CRM, ERP (and so on) — empowering the finance function to collaborate more easily across the business and bolster its strategic decision-making capabilities.
The startup’s sales pitch to the target mid-sized companies is multi-layered. Abacum says its SaaS both saves finance teams time and enables faster-decision making.
“Prior to using Abacum, finance analysts in our clients were easily spending 50% to 70% of their time in manual tasks like downloading files from different systems, copy&pasting them in massive spreadsheets (that crash frequently), formatting the data by manually adding and removing rows, columns and formats, connecting the data in a model prone to manual error (e.g. vlookups & sumifs),” Martinez tells TechCrunch. “With Abacum, this entire manual part is automatically done and the finance professionals can spend their time analyzing and adding real value to the business.”
“We enable faster decisions that were not possible prior to Abacum. For instance, some of our clients were updating their cohort analysis on a quarterly basis only because the associated manual tasks were too painful. With us, they’re able to update the analysis weekly and take better decisions as a result.”
The SaaS also supports decisions in another way — by applying machine learning to business data to generate estimates on future performance, providing an AI-based reference point based on historical data that finance teams can use to inform their assumptions.
And it aids cross-business collaboration — allowing users to share and gather information “easily through workflows and permissions”. “We see that this results in faster and richer decisions as more stakeholders are brought into the process,” he adds.
Martinez says Abacum chose to focus on mid-market finance teams because they face “more challenges and inefficiencies” vs the smaller (and larger) ends of the market. “In that segment, the finance function is underinvested — they face the acute complexities of scaling companies that become very pressing but at the same time they are still considered a support function, a back-office,” he argues.
“Abacum makes finance a strategic function — we deliver native collaboration to finance teams so that they become the trusted business partner they want to be. We also see that the pandemic has accelerated the need for finance teams to collaborate effectively and work remotely,” he adds.
He also describes the mid market segment as “fairly unpenetrated” — claiming many companies do not yet having a solution in place.
While competitors he points to when asked about other players in the space are long in the tooth in digital terms: Adaptive Insights (2003); Host Analytics (2001); and Anaplan (2008).
Commenting on the seed round in a statement, Peter Specht, principal at Creandum, added: “The financial planning processes in many companies are ripe for disruption and demand more automation. Abacum’s slick solution empowers finance teams to be more collaborative, efficient and better informed with access to real-time data. We were impressed by their user-friendly product, the initial hiring of top talent, and crucially the strong founders and their extensive operational experience — including as CFOs and entrepreneurs who have experienced the problem first-hand. We are delighted to be part of Abacum’s journey to empower global SMEs to bring their financial operations to new levels.”
Abacum’s seed financing will be ploughed into product development and growth, per Martinez, who says it’s focused on wooing finance teams in the US and Europe for now.
The last year has put a spotlight on mental health, and startup Real is looking to shake up the space with a product that makes group therapy available on-demand.
Founded by CEO Ariela Safira, Real is inspired by a long-standing methodology in the world of mental health: Group therapy. AA, for instance, has been around for decades and proven to be incredibly effective for some. But that format isn’t as readily available across a variety of issues beyond the disease of addiction.
To deploy this service, Real has raised $10 million in Series A financing, led by Lightspeed Venture Partners with participation from existing and new investors, including Megan Rapinoe and Minnesota Vikings Linebacker Eric Kendricks.
Real employs full-time therapists to lead group therapy across a variety of issues, including exploration of sexuality, anxiety, managing anger with family members, and other real-world issues. With Real, users pay $28/month to have access to these pathways (as Real calls them), letting users watch these group therapy sessions on-demand and get journal prompts and other resources.
One of the benefits of this platform is that users can get more tactical advice on these things, rather than trying to explore the problems. They also feel less alone, as they see others are struggling with the same things.
Perhaps most importantly, Real allows users to tap into the conversations and therapy they need at the time they want it.
Safira explained that she might be deep in her thoughts and feelings on Wednesday at 11pm, but can’t get a one-on-one therapy session until 2pm on Monday. Her state may have changed. With Real, she can get online and access the right pathway in the moment.
Interestingly, Real’s research shows that most people doing one-on-one therapy said they went for general anxiety, relationship problems, and career advice. However, on Real, the top pathways are sexuality, motherhood, and intimacy. The conclusion is that the things people want to work on the most are not always the things they’re most comfortable digging into in a one-on-one setting.
By scaling group therapy sessions to an on-demand audience, Real has been able to bring the cost of this type of service way down, especially when compared to one-on-one therapy.
Real is the product of many years of work in the mental health space. While she was studying for her undergrad at Stanford, Safira’s friend attempted suicide. It was her first time confronting the mental health system and it made her wonder why the system was designed the way it was. She threw herself in.
“I spent two to three years working on how to redesign the mental health care system,” she said. “That entails, visiting and flying to rehab centers, therapy offices, architecture firms that have built those spaces to learn why we make the decisions in mental health care that we make. Things like is there research behind the bright white walls in inpatient mental health facilities, and if not, is that based on legal hurdles or financial hurdles? I really wanted to get into the foundation of how to build a system.”
Image Credits: Real
She dropped out of Stanford, then returned to Stanford, then went to Columbia for her masters, and then dropped out of Columbia to start Real. And the time seems to finally be right. Real has attracted investment from big names in institutional VC and big names in general.
“[Ariela] looked at something that has been around for so long, therapies in the traditional sense, and flipped it on its head to break up the status quo, and I thought that was really interesting and innovative,” said Megan Rapinoe in an interview with TechCrunch. “There are obviously a lot of barriers to access mental health services, for a lot of different reasons. Hopefully, this platform can make it easier for people to get the help that they need.”
Rapinoe is but one of the big names invested in Real. She is joined by Gwyneth Paltrow and Eric Kendricks.
Kendricks explained that he had never been averse to therapy but that he learned a lot after meeting his now-fiance and hearing about her struggles and the struggles of her family, which has dealt with a variety of mental health issues.
“Everything was going was going well for me,” he said. “I was always playing well in the field, and financially, I’m making more money than when I was a kid. But I did have moments where I was questioning myself and in my head a lot and it’s kind of a weird feeling. I had to take a step back and I realized that I was going through a little bit of something. But based on the conversations I had with my fiance, I used my resources to to find the help that I needed and it was amazing.”
He explained that the shift in society’s mentality around mental health has paved the way for a product like Real, which is a more proactive and preventative approach to mental wellness.
But Real has also been able to react quickly to big events in our world. The company has launched a product called Real to the People, which offers free access to the platform during moments of crisis, including the COVID-19 pandemic, the murder of George Floyd, and most recently, the spike in anti-Asian hate crimes.
Nicole Quinn, partner at Lightspeed, explained that the firm has had an interest in the mental health space for a long time. In fact, LSVP is an investor in Calm.
“The ‘aha’ moment for me was when I looked at the disease of alcoholism,” said Quinn, who led the round in Calm. “You get to go to Alcoholics Anonymous, and you really benefit through having groups. Can we apply that same group method by scaling to other areas. We have a fundamental belief that yes, you can.”
Real has raised a total of $16 million since launch.
KKR has just closed $15 billion for its Asia-focused private equity fund, exceeding its original target size after receiving “strong support” from new and existing global investors, including those in the Asia Pacific region.
The new close came nearly four years after KKR raised its Asian Fund III of $9.3 billion and marks the New York-based alternative asset management titan’s ongoing interest in Asia. It also makes KKR Asian Fund IV one of the largest private equity funds dedicated to the Asia Pacific region.
KKR itself will inject about $1.3 billion into Fund IV alongside investors through the firm and its employees’ commitments. The new fund will be on the lookout for opportunities in consumption and urbanization trends, as well as corporate carve-outs, spin-offs, and consolidation.
KKR has been a prolific investor in Asia-Pacific since it entered the region 16 years ago with a multifaceted approach that spans private equity, infrastructure, real estate and credit. It currently has $30 billion in assets under management in the region.
The firm has been active during COVID-19 as well. On the one hand, the pandemic has accelerated the transition to online activities and singled out tech firms that proved resilient during the health crisis. Market disruption in the last year has also made valuations more attractive and pressured companies to seek new sources of capital. All in all, these forces provide “increasingly interesting opportunities for flexible capital providers like KKR,” the firm’s spokesperson Anita Davis told TechCrunch.
Since the pandemic, KKR has deployed about $7 billion across multiple strategies in Asia.
While KKR looks for deals across Asia, each market provides different opportunities pertaining to the state of its economy. For deals in consumption upgrades, KKR seeks out companies in emerging markets like China, Southeast Asia and India, said Davis. In developed countries like Japan, Korea and Australia, KKR observed that continued governance reform, along with a focus on return on equity (ROE), has driven carve-outs from conglomerates and spin-offs from multinational corporations, Davis added.
Specifically, KKR’s private equity portfolio in Asia consists of about 60 companies across 11 countries. Some of its more notable deals include co-leading ByteDance’s $3 billion raise in 2018 amid the TikTok parent’s rapid growth and bankrolling Reliance Jio with $1.5 billion in 2020.
“The opportunity for private equity investment across Asia-Pacific is phenomenal,” said Hiro Hirano, co-head of Asia Pacific Private Equity at KKR. “While each market is unique, the long-term fundamentals underpinning the region’s growth are consistent — the demand for consumption upgrades, a fast-growing middle class, rising urbanization, and technological disruption.”
The Asian Fund IV followed in the footsteps of KKR’s two other Asia-focused funds that closed in January, the $3.9 billion Asia Pacific Infrastructure Investors Fund and the $1.7 billion Asia Real Estate Partners Fund.
While several tech companies are opting to delay their IPOs in the face of less-than-enthusiastic market demand for their shares, real estate tech company Compass forged ahead and went public today. After pricing its shares at $18 apiece last night, the low end of a lowered IPO price range, Compass shares closed the day up just under 12% at $20.15 apiece.
TechCrunch caught up with Compass CEO and founder Robert Reffkin to chat about his company’s debut in the market’s suddenly choppy waters for tech and tech-enabled debuts.
Regarding whether Compass is a tech company or a real estate brokerage, Reffkin — who raised the comparison himself — used the opportunity to note that companies like Amazon or Tesla aren’t only one thing. Amazon is a logistics company, an e-commerce company, a cloud-computing business and a media concern all at the same time. Price that.
The argument was good enough for Compass to sell 25 million shares — a lowered amount — at its IPO price for a gross worth $450 million. That, the CEO said, was his company’s goal for its public offering.
Sparing TechCrunch the usual CEO line about an IPO not being a destination but merely one stop on a longer journey at that juncture, Reffkin instead argued that putting nine figures of capital into his company was his objective, not a particular price or resulting valuation.
That might sound simple, but as Kaltura and Intermedia Cloud Communications have pushed their IPOs back, it’s a bit gutsy. Still, if financing was the key objective, Compass did succeed in its debut. And it was even rewarded with a neat little bump in value during its first day’s trading.
Reffkin did confirm to TechCrunch what we’ve been reporting lately, namely that the IPO market has changed for the worse in recent weeks. He described it as “challenging.”
So why go public now when there is so much capital available for private companies?
Reffkin cited a few numbers, but centered his view around having what he construes as the “right team” and the “right results.” We’ll get a bit more on the latter when Compass reports its first set of public earnings.
For now, it’s a company that braved stormier seas than we might have expected to see so soon after a blistering first few months of the year for IPOs.
And because I would also bring her along if I ever took a company public, here’s the company’s founder and CEO with his mother:
Via the company.