Toast has raised more than $900 billion and is reportedly valued at over $5 billion. But back in 2011, no one knew this startup would see such meteoric success. It had a few things going for it, of course — founder Aman Narang hailed from Endeca, where he was a software engineer and product lead with a reputation for being able to ship a lot of software quickly.
But the ambitions behind Toast were big, and complicated, and enough to give pause to any investor. Kent Bennett was one such VC, and while he had conviction in the founding team, he wasn’t convinced that they could tackle such a big problem.
Toast is a restaurant POS system that acts as a sort of operating system for an establishment, managing everything from online orders, deliveries and marketing to payroll and team management as well as the actual point of sale. Being able to do all that requires building a number of complex products, such as payments.
Early on, Bennett had told Narang not to build a restaurant POS. To him, it was too complicated and nuanced, which is why the systems from the ’90s were still deeply entrenched 20 years later. However, he did offer space in the Bessemer office for the Toast team to work on their product.
“I caught up with Aman and he told me that they did this interesting thing after hearing that a lot of their customers were frustrated by payments platforms, which are separate from the POS,” said Bennett. “Aman said they built their own payments platform. Once again, I was like, ‘You did what? You’re not allowed to build payments.’ But he told me that they built it and it improves their products, and that, by the way, they make a margin on it.”
Bennett said that when they added up the margins from the payments and the POS, it was impactful.
“It hit me like a ton of bricks,” said Bennett. “This is a really good business.”
From there, it became his obsession. And though it took a few more quarters to close the deal, they eventually got there. Bessemer led the company’s Series B financing in 2016.
We spoke to Bennett and Narang recently on an episode of Extra Crunch Live to explore the story of how they came together for the deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far. The episode also featured the Extra Crunch Live Pitch-off, where audience members pitched their products to Bennett and Narang and received live feedback.
Extra Crunch Live is open to everyone each Wednesday at 3pm ET/noon PT, but only Extra Crunch members are able to stream these sessions afterwards and watch previous shows on-demand in our episode library.
Despite the complexity of the Toast system, or maybe because of it, Narang says the fundamentals are the most important part of communicating the business, especially when fundraising.
Team management software company Monday.com dropped a new IPO filing today. The latest document — an F-1/A, because the company is based in Israel — provides what could be Monday.com’s final pre-IPO pricing notes and details planned investments from both Zoom and Salesforce after its public offering closes.
The Exchange explores startups, markets and money.
Monday.com’s price range of $125 to $140 per share values it north of $6 billion at the top end of its target interval, a steep upgrade from its final private price recorded in mid-2019.
Let’s quickly unpack its IPO valuation range, discuss the private placements that Zoom and Salesforce plan, and parse what Monday.com’s IPO news means for the broader public offering window.
Because the company is expected to price tomorrow and trade Thursday, we’re looking at data that could prove final, unless Monday.com manages to push its IPO price range higher or prices above its current estimates. Given the sheer number of IPOs that are either filed or rapidly forthcoming, Monday.com could prove to be a bellwether for the larger unicorn software exit market. Therefore, its debut matters to more than itself, its employees and its venture backers.
There are a few ways to value a company as it goes public. The first is its so-called simple valuation. To calculate a simple price for a debuting entity, we simply multiply the two extremes of its IPO price range by the number of shares it will have outstanding after its debut. That works out as follows in the case of Monday.com:
Ending years of debates over environmental sustainability, the United States officially declared a climate crisis earlier this year, deeming climate considerations an “essential element” of foreign policy and national security. After recommitting the U.S. to the Paris Agreement, President Joseph R. Biden announced an aggressive new goal for reducing U.S. greenhouse gas emissions and pushed world leaders to collectively “step up” their fight against climate change.
At the same time, consumers are increasingly looking to do business with brands that align with their growing environmental values, rather than ignoring the climate consequences of their consumption. Even without regulation as a stick, consumer demand is now serving as a carrot to increase sustainability’s impact on public companies’ agendas.
Startups have already followed suit. Investors today view sustainability as an important pillar of any business model and are looking for entrepreneurs who “get it” from the beginning to build and scale next-generation companies. Startups interested in thriving cannot treat sustainability as an afterthought and should be prepared to enter the public eye with a plan for sustainable growth.
Today, companies of all sizes are being held to a higher standard by consumers, employees, potential partners and the media.
So what exactly do founders need to put in place to demonstrate that they’re on the right track when it comes to sustainability? Here are five attributes that investors are looking for.
It’s fairly easy for any company to claim that it understands customers’ wants and needs, but it’s challenging to have the tech stack in place to prove a company actually listens to customer feedback and meets those expectations.
Investors now expect startups to have both platforms and solutions — social listening channels, relationship management tools, surveying programs and review forums — that allow them to hear and act on the needs of their customers. Without the proper communications tools and actual people using them, your eco-friendly efforts will likely appear to be merely lip service.
Take the example of TemperPack, which manufactures recyclable insulated packaging solutions for shipments of cold, perishable foods and pharmaceuticals. The direct relationship between a packager like TemperPack and the end consumer is often invisible. But as we were looking into investing in the company, some of its life sciences customers told us about comments they had received from end users — people who were receiving medicine twice per day. Another supplier’s packaging required them to visit a recycler for disposal, a real-world pain point that was causing them to consider switching to a different medication.
Revolution Growth decided to add TemperPack as a portfolio company after directly seeing its customer feedback loop in action: End-user requests informed product development, proving both a market need and customer demand on the sustainability front. This firsthand example demonstrates how an investor, a packaging maker, a life sciences company and an end user are now interconnected in one relationship while underscoring how end-user feedback can connect the dots for sustainable product development.
Over the past several years, we have seen millennials and Gen Z consumers demand transparency in sustainability efforts. As these generations grow in purchasing power, investors will look for startups that make their commitments to eco-friendly goals as transparent as possible to satisfy shrewd consumer needs.
For many VCs, making public commitments to sustainability goals is a sign that your startup is working toward becoming a next-generation company. Investors will look for goals that are thoughtful, with a clear understanding of where your company will have agency and influence, and that are S.M.A.R.T (Specific, Measurable, Achievable, Realistic and Timely). They will also expect regular reports on progress.
Although a company’s management establishes these goals, its board should play a behind-the-scenes role in driving the goals forward, keeping leadership on track and setting the playing field so executives understand that they’re being evaluated on criteria transcending positive EBIDTA.
Taking these steps will ensure goals are responsible and ambitious while also holding the company accountable to consumers and stakeholders to see the initiatives through to completion.
Even the best-laid sustainability goals will go unmet without a strong culture designed to guarantee leadership and employee alignment. Sustainability must be ingrained in a startup’s culture — from the top down and bottom up — and there’s a lot at stake if it’s not.
Another Revolution Growth portfolio company, the global fintech-revolutionizing startup Tala, demonstrates how young companies can imbue their cultures with purpose-driven values. While Tala’s mission is to provide credit to the unbanked, the company believes that the consumer’s best interests should always come first. During 2019’s holiday season, Tala contrasted with businesses fueling consumption by instead urging customers in Kenya to not take out loans, protecting them from predatory unregulated lenders amid a lack of functioning credit bureaus and loan-stacking databases. This forward-looking approach ultimately safeguarded Tala’s customers and its vibrant digital lending industry.
Beyond determining what they stand for, many of our portfolio companies face challenges securing talent. People have choices about where they want to work, and those with intrinsic motivations — such as concerns about the environment — will feel uncomfortable if their employers do not share their values. Regulatory risks and customer attrition pale in comparison to the human cost of losing star performers who seek other work cultures that better align with their values.
A clear values system should embed sustainability into the decision-making process, make obvious imperatives and empower employees to follow through.
Companies aren’t only judged by their own initiatives — they’re also judged by their partners. As startups build new relationships or expand to work with new suppliers, investors will be keen to know that these outside parties align with their stated sustainability philosophies.
Before becoming publicly involved with another company, a startup should gauge each new supplier’s reputation, including insights into their employment practices. Take leading Mediterranean fast-casual restaurant Cava or healthy-inspired salad-centric chain Sweetgreen, both Revolution Growth portfolio companies; neither will source proteins from farms with inhumane policies. If companies are not aware of these factors, their customers will eventually let them know, and likely hold them accountable for the oversight.
Think of it this way: If a diagram of your partnerships and supplier relationships was printed on the front page of The New York Times, would you be comfortable with what it shows the world? Today, companies of all sizes are being held to a higher standard by consumers, employees, potential partners and the media. It’s no longer possible to fly under the radar with relationships that are antithetical to a company’s sustainability goals. So take a hard look at your supplier and partner ecosystem, and make clear that you are bringing your green vision to life through every extension of your business.
Financial realism acknowledges that a company can want to do good, but unless they have the economics, they won’t survive to make an impact. For most startups, beginning with financial realism as a mindset and incrementalism as an approach will be key to success, enabling all businesses to contribute to a more resilient planet. For startups that prioritize environmentally friendly business practices alongside a product or service, this strategy can prevent goodness from becoming the enemy of greatness. Founders in this position can commit to a stage-by-stage sustainability plan, rather than expecting an overnight transformation. Investors understand the delicate balance between striving to meet green goals and keeping the lights on.
Entrepreneurs looking to build a business that not only adopts eco-friendly practices but also has sustainability at its heart may have to consider starting in a niche industry or market that is less price-sensitive and ready for a solution today. Once that solution is firmly established, the business can build upon what they’ve created, rather than going big with something that doesn’t scale — and failing fast. Without an initial set of customers that value and love what you’re doing, you won’t get to the bigger play.
As the public and private sectors continue to address the climate crisis, sustainability will increasingly become a mandate rather than an option, and funding will increasingly flow to startups that have addressed potential environmental concerns. Unfortunately, pressure for companies to meet sustainability demands has led to “greenwashing” — the deceptive use of green marketing to persuade consumers that a company’s products, aims and policies are environmentally friendly.
Greenwashing has forced investors to look beyond mere words for action. As we move toward a more sustainable future, startups pursuing VC funding will need to prove to investors that sustainability is a priority across their entire organizations, aligning their outreach, public commitments and cultures with accountability and concrete examples of sustainable activities. Even if those examples are just steps toward larger goals, they will show investors and customers that startups are ready today to contribute to a greener and better tomorrow.
The buy now, pay later frenzy isn’t going anywhere as more consumers seek alternatives to credit cards to fund purchases.
And those purchases aren’t exclusive to luxuries such as Pelotons (ahem, Affirm) or jewelry someone might be treating themselves to online. A new fintech company is out to help consumers finance big-ticket items that are considered more “must have” than “nice to have.” And it’s just raised $14 million in Series A funding to help it advance on that goal.
Neal Desai (former CFO of Octane Lending) and James Schuler (who participated in Y Combinator’s accelerator program as a high schooler) founded New York City-based Kafene in July 2019. The pair’s goal is to promote financial inclusion by meeting the needs of what it describes as the “consumers that are left behind by traditional lenders.”
More specifically, Kafene is focused on helping consumers with credit scores below 650 purchase retail items such as furniture, appliances and electronics with its buy now, pay later (BNPL) model. Consider it an “Affirm for the subprime,” says Desai.
Global Founders Capital and Third Prime Ventures co-led the round, which also included participation from Valar, Company.co, Hermann Capital, Gaingels, Republic Labs, Uncorrelated Ventures and FJ labs.
“Historically, if you could access credit, you could go to the bank or use a credit card,” Third Prime’s Wes Barton told TechCrunch. “But if you had some unexpected expense, and had to miss a payment with the bank, there would be repercussions and you could fall into a debt trap.”
Kafene’s “flexible ownership” model is designed to not let that happen to a consumer. If for some reason, someone has to forfeit on a payment, Kafene comes to pick up the item and the customer is no longer under obligation to pay for it moving forward.
The way it works is that Kafene buys the product from a merchant on a consumers’ behalf and rents it back to them over 12 months. If they make all payments, they own the item. If they make them earlier, they get a “significant” discount, and if they can’t, Kafene reclaims the item and takes the loan loss.
Image Credits: Kafene
It’s a modern take on Rent-A-Center, which charges more money for inferior products, Desai believes.
“This is also a superior product to credit cards, and the size of that market is massive,” Barton said. “We want to take a huge chunk of credit card business in time, and give consumers the flexibility to quit at any point in time, and fly free, if you will.”
Such flexibility, Kafene claims, helps promote financial inclusion by giving a wider range of consumers options to alternative forms of credit at the point of sale.
It also helps people boost their credit scores, according to Desai, because if they buy out of the loan earlier than the 12-month term, their credit score goes up because Kafene reports them as a positive payer.
“In any situation where they don’t steal the item, their credit score improves,” he said. “Even if they end up returning it because they can’t afford it. In the long run, they can have a better credit score to qualify for a traditional loan product.”
Kafene rolled out a beta of its financing product in December of 2019 and then had to pause in March due to the COVID-19 pandemic. The company essentially “hibernated” from March to June 2020 and re-launched out of beta last July.
By October, Kafene stopped all enrollment with merchants because it had more demand that it could handle — largely fueled by more people being financially strained due to the COVID-19 pandemic. In March 2021, the company was handling about $2 million a month in merchandise volume.
With its new capital, Kafene plans to significantly scale its existing lease-to-own financing business nationally, as well as to launch a direct-to-consumer virtual lease card.
Robotaxis may still be a few years out, but there are other industries that can be transformed by autonomous vehicles as they are today. MIT spin-off ISEE has identified one in the common shipping yard, where containers are sorted and stored — today by a dwindling supply of human drivers, but tomorrow perhaps by the company’s purpose-built robotic yard truck. With new funding and partnerships with major shippers, the company may be about to go big.
Shipping yards are the buffer zone of the logistics industry. When a container is unloaded from a ship full of them, it can’t exactly just sit there on the wharf where the crane dropped it. Maybe it’s time sensitive and has to trucked out right away; maybe it needs to go through customs and inspections and must stay in the facility for a week; maybe it’s refrigerated and needs power and air hookups.
Each of these situations will be handled by a professional driver, hooking the container up to a short-haul truck and driving it the hundred or thousand meters to its proper place, an empty slot with a power hookup, long term storage, ready access for inspection, etc. But like many jobs in logistics, this one is increasingly facing a labor shortage as fewer people sign up for it every year. The work, after all, is fairly repetitive, not particularly easy, and of course heavy equipment can be dangerous.
ISEE’s co-founders Yibiao Zhao and Debbie Yu said they identified the logistics industry as one that needs more automation, and these container yards especially. “Working with customers, it’s surprising how dated their yard operation is — it’s basically just people yelling,” said Zhao. “There’s a big opportunity to bring this to the next level.”
The ISEE trucks are not fully custom vehicles but yard trucks of a familiar type, retrofitted with lidar, cameras, and other sensors to give them 360-degree awareness. Their job is to transport containers (unmodified, it is important to note) to and from locations in the yards, backing the 50-foot trailer into a parking spot with as little as a foot of space on either side.
“A customer adopts our solution just as if they’re hiring another driver,” Zhao said. No safe zone is required, no extra considerations need to be made at the yard. The ISEE trucks navigate the yard intelligently, driving around obstacles, slowing for passing workers, and making room for other trucks, whether autonomous or human. Unlike many industrial machines and vehicles, these bring the current state of autonomous driving to bear in order to stay safe and drive as safely as possible among mixed and unpredictable traffic.
The advantage of an automated system over a human driver is especially pronounced in this environment. One rather unusual limitation of yard truck drivers is that, because the driver’s seat is on the left side of the cabin, they can only park the trucks on the left as well since that’s the only side they can see well enough. ISEE trucks have no such limitation, of course, and can park easily in either direction, something that has apparently blown the human drivers’ minds.
Efficiency is also improved through the infallible machine mind. “There are hundreds, even thousands of containers in the yard. Humans spend a lot of time just going around the yard searching for assets, because they can’t remember what is where,” explained Zhao. But of course a computer never forgets, and so no gas is wasted circling the yard looking for either a container or a spot to put one.
Once it parks, another ISEE tech can make the necessary connections for electricity or air as well, a step that can be hazardous for human drivers in bad conditions.
The robotic platform also offers consistency. Human drivers aren’t so good when they’re trainees, taking a few years to get seasoned, noted Yu. “We’ve learned a lot about efficiency,” she said. “That’s basically what customers care about the most; the supply chain depends on throughput.”
To that end she said that moderating speed has been an interesting challenge — it’s easy for the vehicle to go faster, but it needs the awareness to be able to slow down when necessary, not just when there’s an obstacle, but when there are things like blind corners that must be navigated with care.
It is in fact a perfect training ground for developing autonomy, and that’s kind of the idea.
“Today’s robots work with very predefined rules in very constrained environments, but in the future autonomous cars will drive in open environments. We see this tech gap, how to enable robots or autonomous vehicles do deal with uncertainty,” said Zhao.
“We needed a relatively unconstrained environment with complex human behaviors, and we found it’s actually a perfect marriage, the flexible autonomy we’re offering and the yard,” he continued. “It’s a private lot, there’s no regulation, all the vehicles stay in it, there are no kids or random people, no long tail like a public highway or busy street. But it’s not simple, it’s complex like most industrial environments — it’s congested, busy, there are pedestrians and trucks coming in and out.”
Although it’s an MIT spinout with a strong basis in papers and computer vision research, it’s not a theoretical business. ISEE is already working with two major shippers, Lazer Spot and Maersk, which account for hundreds of yards and some 10,000 trucks, many or most of which could potentially be automated by ISEE.
So far the company has progressed past the pilot stage and is working with Maersk to bring several vehicles into active service at a yard. The Maersk Growth Fund has also invested an undisclosed amount in ISEE, and one detects the possibility of an acquisition looming in the near future. But the plan for now is to simply expand and refine the technology and services and widen the lead between ISEE and any would-be competitors.
Last year, Seattle-based network security startup ExtraHop was riding high, quickly approaching $100 million in ARR and even making noises about a possible IPO in 2021. But there will be no IPO, at least for now, as the company announced this morning it has been acquired by a pair of private equity firms for $900 million.
The firms, Bain Capital Private Equity and Crosspoint Capital Partners, are buying a security solution that provides controls across a hybrid environment, something that could be useful as more companies find themselves in a position where they have some assets on-site and some in the cloud.
The company is part of the narrower Network Detection and Response (NDR) market. According to Jesse Rothstein, ExtraHop’s chief technology officer and co-founder, it’s a technology that is suited to today’s threat landscape, “I will say that ExtraHop’s north star has always really remained the same, and that has been around extracting intelligence from all of the network traffic in the wire data. This is where I think the network detection and response space is particularly well-suited to protecting against advanced threats,” he told TechCrunch.
The company uses analytics and machine learning to figure out if there are threats and where they are coming from, regardless of how customers are deploying infrastructure. Rothstein said he envisions a world where environments have become more distributed with less defined perimeters and more porous networks.
“So the ability to have this high quality detection and response capability utilizing next generation machine learning technology and behavioral analytics is so very important,” he said.
Max de Groen, managing partner at Bain, says his company was attracted to the NDR space, and saw ExtraHop as a key player. “As we looked at the NDR market, ExtraHop, which […] has spent 14 years building the product, really stood out as the best individual technology in the space,” de Groen told us.
Security remains a frothy market with lots of growth potential. We continue to see a mix of startups and established platform players jockeying for position, and private equity firms often try to establish a package of services. Last week, Symphony Technology Group bought FireEye’s product group for $1.2 billion, just a couple of months after snagging McAfee’s enterprise business for $4 billion as it tries to cobble together a comprehensive enterprise security solution.
Many companies talk the talk when it comes to diversity, but it’s harder to know if a firm is actually going the extra mile to hire more qualified people from underrepresented groups, or if they just make noise about it. Blendoor, a six-year-old startup, wants to put data to work on the problem by giving companies a score based on publicly available data to let the world know just how diverse a company actually is.
Blendoor founder and CEO Stephanie Lampkin says that when she launched the company, it was more focused on finding qualified diverse candidates by mitigating unconscious bias in the hiring process. That involved removing name, age, gender or any other indications that could potentially create bias and just let the person’s work record stand on its own. She said that the startup targeted companies that had made public DEI pledges as a natural place to start.
As the company directed its efforts in this direction, however, Lampkin says that it quickly became apparent that the public positioning of a company, and how it directed its hiring resources, were often two different things, and she decided to switch focus. “So we decided to create an index, a credit score, and we pulled in a ton of data from their diversity reports, their EEO One forms if they publish them and all of this buzz around different pledges and investments and partnerships, etc.,” Lampkin told me.
She then took this data and structured it, normalized it and built an algorithm that could dynamically score companies much the same way that our credit rating or security scorecards work and make that information public.
She said the George Floyd killing was a turning point for her and the company. “When George Floyd [was killed] and I saw this resurgence of the diversity pledge, I decided that I don’t want to play in this diversity theater anymore and just be another check-the-box-solution that companies are using to demonstrate that they care,” she said.
She added, “So we decided to double down on BlendScore and in doing so hold companies accountable for all of these big financial commitments that they’re making in order to track the deployment of that capital, but also the downstream effects in terms of their hiring, retention, promotion rates, compensation equality, etc.”
That culminated in a report the company recent published looking at the data and finding that companies’ public stance doesn’t always match its public face, especially with pledges following Floyd’s death. “My initial purpose was to demonstrate if there is a negative correlation between pledges and performance — and the only area where we found that to be true was with Black employees versus Black Lives Matter pledges.” She says that everywhere else there was pretty consistent positive correlation around companies that said they wanted to improve in areas like gender diversity and pay equality, and those that were actually doing that.
In terms of making money, Lampkin says that she wants to focus on helping companies with governance when it comes to diversity pledges, especially for public companies, which will have to answer to a variety of constituencies, from investors to consumers. She also believes that their approach to measuring diversity will also increasingly have an impact on who wants to work at a company and the ability to attract the best talent.
She says that if people are insisting on making diversity a political stance, she’s going to focus on diversity as a fiduciary responsibility. While it may be good for society as a natural byproduct of that, some companies only see it through that governance lens, and if that’s the case, she intends to work that angle.
“I’m doubling down on ESG and fiduciary responsibility. No more talk about what’s good for a society. [It doesn’t matter] what you believe is good for society. This is now about risk management and ESG,” she said.
So far the company has 13 employees and she reports she’s raised about $1.7 million. She acknowledges raising money is a challenge, especially for a Black woman founder. It’s worth noting that fewer than 100 Black women have ever raised more than $1 million as of last year.
“It’s been really challenging. We’ve had to just survive off revenue, and think in part it’s because we sit at the intersection of social activism and for-profit venture, when a lot of investors are like Marc Andreessen they don’t see a path [for Stakeholder Capitalism], but I think that’s changing and the investor community claims to be on board for more impact investing, so we’ll see.”
You’d expect an expense management company to have a large sales department and advertise through all kinds of channels to maximize customer acquisition. But like we’ve seen over and over through the course of this EC-1, Expensify just doesn’t do what you think it should.
Keeping in mind this company’s propensity to just stick to its guts, it’s not much of a surprise that it got to more than $100M in annual recurring revenue and millions of users with a staff of 130, some contractors, and an almost non-existent sales team.
If you’re wondering how its possible to grow to such a level without an established sales team, the short answer is: Word of mouth. To an extent, Expensify can do this due to the space it’s in, as expense reporting is such a thankless, almost mind numbingly boring task that anyone who found a good solution is bound to recommend it to their colleagues and friends.
But it’s more interesting how Expensify grows bottom-up within SMBs, its core customer base. By providing an easy and meaningful experience via the product itself, the company has come to a point where it only takes one or two users who love the service to turn their company into customers.
This approach flips the traditional sales model on its head and is now known as product-led growth, but Expensify did it long before it was an accepted business model. Though that was harder than it sounds, it also put the company in a uniquely privileged position, which it is fully intent on leveraging.
There are many ways to get such a business model started, but as usual, Expensify threw caution and all advice out the window and banked on turning its users into evangelizers for its product.
Proving that Central and Eastern Europe remains a powerhouse of hardware engineering matched with software, Gideon Brothers (GB), a Zagreb, Croatia-based robotics and AI startup, has raised a $31 million Series A round led by Koch Disruptive Technologies (KDT), the venture and growth arm of Koch Industries Inc., with participation from DB Schenker, Prologis Ventures and Rite-Hite.
The round also includes participation from several of Gideon Brothers’ existing backers: Taavet Hinrikus (co-founder of TransferWise), Pentland Ventures, Peaksjah, HCVC (Hardware Club), Ivan Topčić, Nenad Bakić and Luca Ascani.
The investment will be used to accelerate the development and commercialization of GB’s AI and 3D vision-based “autonomous mobile robots” or “AMRs”. These perform simple tasks such as transporting, picking up and dropping off products in order to free up humans to perform more valuable tasks.
The company will also expand its operations in the EU and U.S. by opening offices in Munich, Germany and Boston, Massachusetts, respectively.
Gideon Brothers founders. Image Credits: Gideon Brothers
Gideon Brothers make robots and the accompanying software platform that specializes in horizontal and vertical handling processes for logistics, warehousing, manufacturing and retail businesses. For obvious reasons, the need to roboticize supply chains has exploded during the pandemic.
Matija Kopić, CEO of Gideon Brothers, said: “The pandemic has greatly accelerated the adoption of smart automation, and we are ready to meet the unprecedented market demand. The best way to do it is by marrying our proprietary solutions with the largest, most demanding customers out there. Our strategic partners have real challenges that our robots are already solving, and, with us, they’re seizing the incredible opportunity right now to effect robotic-powered change to some of the world’s most innovative organizations.”
He added: “Partnering with these forward-thinking industry leaders will help us expand our global footprint, but we will always stay true to our Croatian roots. That is our superpower. The Croatian startup scene is growing exponentially and we want to unlock further opportunities for our country to become a robotics & AI powerhouse.”
Annant Patel, director at Koch Disruptive Technologies, said: “With more than 300 Koch operations and production units globally, KDT recognizes the unique capabilities of and potential for Gideon Brothers’ technology to substantially transform how businesses can approach warehouse and manufacturing processes through cutting edge AI and 3D AMR technology.”
Xavier Garijo, member of the Board of Management for Contract Logistics, DB Schenker, added: “Our partnership with Gideon Brothers secures our access to best in class robotics and intelligent material handling solutions to serve our customers in the most efficient way.”
GB’s competitors include Seegrid, Teradyne (MiR), Vecna Robotics, Fetch Robotics, AutoGuide Mobile Robots, Geek+ and Otto Motors.
In today’s GPT-3 world, it’s not uncommon to hear about new software services that deal with text. Compose.ai is one such company, though it built its own language model to help folks write faster. Its early product work was enough for it to land a $2.1 million seed round led by Craft Ventures, it announced this morning.
Compose.ai is essentially an auto-complete function that works wherever you browse the web. The company is also building the capability for its AI-powered backend to learn your voice, imbibe context to help provide better responses, and, in time, absorb a company’s larger voice to help align its aggregate writing output.
Co-founders Landon Sanford and Michael Shuffett told TechCrunch that Compose.ai believes that in five years, average folks won’t type every word that they write. They want to bring that future to more people through the Compose.ai Chrome extension, which hopefully workers can access without having to get corporate permission.
Sanford and Shuffett described their language algorithm as a multi-tier product. Its first tier learns from reading the internet itself, learning English. The second tier deals with specific domains, like email. The third tier learns a user’s voice, and, in time, a fourth tier will deal with a company’s generalized approach to language.
The ability for a company to provide its workers with a shared language model that could offer linguistic and word-choice preferences as they write is an interesting concept. The idea of such a strong, centrally held tone lands somewhere between helpful and intellectually rigid. But lots of folks don’t want to put their own spin on writing; many people don’t like writing at all. So perhaps having more central support won’t be onerous to most — but rather a time-saving hack.
Regardless, Compose.ai is going to staff up modestly with its new raise. The company currently has three full-time workers and some contract help. Sanford and Shuffett told TechCrunch that the company intends to stay small, hiring a few experienced engineering and machine-learning staff to help flesh out its product team.
What’s ahead for Compose? Its founders told TechCrunch that they are starting to talk to the corporate world a bit more than before and are planning on launching a paid service toward the end of the quarter. That could mean early revenue, extending the startup’s runway substantially.
What Compose is building isn’t technically simple, and the company has interesting work ahead of it to get its economics properly tuned. The company’s founders told TechCrunch that the personalization work that its product will execute for customers can be expensive if done incorrectly; the pair said that they could make a future, $10/month plan attractive economically, but if done in a “naive” fashion, Compose.ai could spend $500 in compute costs to support the same account.
That would be bad.
But the company is confident that its impending paid plans should shake out well in financial terms, which makes us all the more interested in giving that version of its product a spin when we get the chance.
As people live longer and longer and have long-term health issues like cancer and dementia, caring for elderly relatives is becoming a huge societal and political issue. Right now this care is antiquated and run by incumbents, many of which still run off paper and Excel. We are now seeing a new wave of startups turn up to tackle this space by applying Apple’s age-old model of owning the experience end-to-end and running everything on a platform.
The latest to join this race is U.K. startup Lifted, which has now raised $6.2 million in a Series A funding round led by Fuel Ventures. Also participating were existing investor 1818 Venture Capital as well as new investors Novit Ventures, Perivoli Innovations, the J.B. Ugland family office and a number of angels. This latest funding round takes the total raised by Lifted to $11.2 million.
Lifted says its U.K. market is increasing and claims the number of people caring for adult loved ones has risen exponentially during the pandemic, with almost one in two people supporting people outside their household.
The startup is entering a perfect storm of increasing need, unpopular care homes and the U.K. government still without a long-term plan for social care.
In contrast to a raft of agencies and freelancers, Lifted directly employs its care workforce and uses its platform to “gamify and improve the experience of carers to make them perform better in people’s lives and also to restore respect to the caring profession” with its Care Management Platform, says the company.
Lifted has also acquired the “Live Better With Dementia” website and launched the Lifted Dementia Hub, an online community with a marketplace of products.
Rachael Crook co-founded Lifted with Sam Cohen. She says she was inspired to get into the sector when, at the age of 24, she had to care for her mother, who was diagnosed with dementia at age 56. “I was in that position much younger than most people. And it seemed abundantly clear to me that it was an experience that was hugely emotionally important to me, and financially expensive, was really convoluted and frustrating. It made an already really difficult time, more difficult. My mum brought me up to really fight for the underdog and I felt like the carers themselves were getting a really poor deal. And yet, it’s a huge colossal market. The care market is set to double in the next 20 years, and for the next 10 years, we will look to compete against traditional care companies. We want to transform the care experience. This is a product that is worth four and a half times your mortgage. And yet, it’s predominantly bought in a really antiquated way with paper and pen systems. It’s really hard to keep up to date with your loved ones’ care. We’re also competing against new entrants.”
She added: “In 12 months, we have tripled revenue, launched the first App in the world to offer free care advice, and cut Carer churn to half the industry average, all while maintaining exclusively 5-star reviews on Trustpilot.”
Mark Pearson, managing partner of Fuel Ventures said: “Rachael, Sam and their team have delivered exceptional growth in the past year. They have a unique vision of the future for care and their model is delivering clear results for both sides of the marketplace.”
Early stage investor Version One, which consists of partners Boris Wertz and Angela Tran, has raised its fourth fund, as well as a second opportunity fund specifically dedicated to making follow-on investments. Fund IV pools $70 million from LPs to invest, and Opportunities Fund II is $30 million, both up from the $45 million Fund III and roughly $20 million original Opportunity Fund.
Version One is unveiling this new pool of capital after a very successful year for the firm, which is based in Vancouver and San Francisco. 2021 saw its first true blockbuster exit, with Coinbase’s IPO. The investor also saw big valuation boosts on paper for a number of its portfolio companies, including Ada (which raises at a $1.2 billion valuation in May); Dapper Labs (valued at $7.5 billion after riding the NFT wave); and Jobber (no valuation disclosed but raised a $60 million round in January).
I spoke to both Wertz and Tran about their run of good fortune, how they think the fund has achieved the wins it recorded thus far, and what Version One has planned for this Fund IV and its investment strategy going forward.
“We have this pretty broad focus of mission-driven founders, and not necessarily just investing in SaaS, or just investing in marketplaces, or crypto,” Wertz said regarding their focus. “We obviously love staying early — pre-seed and seed — we’re really the investors that love investing in people, not necessarily in existing traction and numbers. We love being contrarian, both in terms of the verticals we go in to, and and the entrepreneurs we back; we’re happy to be backing first-time entrepreneurs that nobody else has ever backed.”
In speaking to different startups that Version One has backed over the years, I’ve always been struck by how connected the founders seem to the firm and both Wertz and Tran — even much later in the startups’ maturation. Tran said that one of their advantages is following the journey of their entrepreneurs, across both good times and bad.
“We get to learn,” she said. “It’s so cool to watch these companies scale […] we get to see how these companies grow, because we stick with them. Even the smallest things we’re just constantly thinking about— we’re constantly thinking about Laura [Behrens Wu] at Shippo, we’re constantly thinking about Mike [Murchison] and David [Hariri] at Ada, even though it’s getting harder to really help them move the needle on their business.”
Wertz also discussed the knack Version One seems to have for getting into a hot investment area early, anticipating hype cycles when many other firms are still reticent.
“We we went into crypto early in 2016, when most people didn’t really believe in crypto,” he said. “We started investing pretty aggressively in in climate last year, when nobody was really invested in climate tech. Having a conviction in in a few areas, as well as the type of entrepreneurs that nobody else really has conviction is what really makes these returns possible.”
Since climate tech is a relatively new focus for Version One, I asked Wertz about why they’re betting on it now, and why this is not just another green bubble like the one we saw around the end of the first decade of the 2000s.
“First of all, we deeply care about it,” he said. Secondly, we think there is obviously a new urgency needed for technology to jump into to what is probably one of the biggest problems of humankind. Thirdly, is that the clean tech boom has put a lot of infrastructure into the ground. It really drove down the cost of the infrastructure, and the hardware, of electric cars, of batteries in general, of solar and renewable energies in general. And so now it feels like there’s more opportunity to actually build a more sophisticated application layer on top of it.”
Tran added that Version One also made its existing climate bet at what she sees as a crucial inflection point — effectively at the height of the pandemic, when most were focused on healthcare crises instead of other imminent existential threats.
I also asked her about the new Opportunity Fund, and how that fits in with the early stage focus and their overall functional approach.
“It doesn’t require much change in the way we operate, because we’re not doing any net new investments,” Tran said. “So we recognize we’re not growth investors, or Series A/Series B investors that need to have a different lens in the way that they evaluate companies. For us, we just say we want to double down on these companies. We have such close relationships with them, we know what the opportunities are. It’s almost like we have information arbitrage.”
That works well for all involved, including LPs, because Tran said that it’s appealing to them to be able to invest more in companies doing well without having to build a new direct relationship with target companies, or doing something like creating an SPV designated for the purpose, which is costly and time-consuming.
Looking forward to what’s going to change with this fund and their investment approach, Wertz points to a broadened international focus made possible by the increasingly distributed nature of the tech industry following the pandemic.
“I think that the thing that probably will change the most is just much more international investing in this one, and I think it’s just direct result of the pandemic and Zoom investing, that suddenly the pipeline has opened up,” he said.
“We’ve certainly learned a lot about ourselves over the past year and a half,” Tran added. “I mean, we’ve always been distributed, […] and being remote was one of our advantages. So we certainly benefited and we didn’t have to adjust our working style too much, right. But now everyone’s working like this, […] so it’s going to be fun to see what advantage we come up with next.”
Selling enterprise software is much more complicated than convincing a potential customer that your solution is the best and signing a contract. A recent Gartner study found that buying groups for B2B solutions can involve up to six to 10 decision makers, and that the majority of buyers said their most recent purchase was “very complex or difficult” as they came to a consensus while negotiating with vendors.
BuyerAssist, a new startup founded by former employees of sales readiness platform MindTickle, wants to make the buying process as smooth as possible. The company is launching its beta product to the public today with $2 million in seed funding led by Stellaris Venture Partners and Emergent Ventures, with participation from angel investors. The capital will be used for hiring in the U.S. and India, with plans to bring BuyerAssist’s platform out of beta later this year.
Headquartered in San Francisco, with an office in Pune, India, BuyerAssist.io was founded last year by Amit Dugar, Shankar Ganapathy and Shyam HN, all alumni of SoftBank Vision 2-backed MindTickle, a platform that enables companies to train their sales staff at scale. The philosophy behind BuyerAssist draws on HN and Ganapathy’s experience on the sales and marketing side of MindTickle: Ganapathy was its director of strategic accounts, while HN served as head of global sales development.
“We’ve sold half a million dollar deals, and deals where you have anywhere form 10 to 25 people involved from the buyer side,” HN told TechCrunch. “There’s a core team of about five to 10 people, but then there is also an extended team that comes and goes during the process.”
The pandemic added an extra layer of complexity to B2B sales, because many deals were done remotely. Furthermore, sales representatives get less time to interact with buyers. The Gartner report found that when B2B buying teams consider a purchase, they spend only 17% of that time meeting with potential suppliers, and the amount of time they spend interacting with any sales representative may be only 5% to 6%. This means vendors have to find ways to keep potential buyers engaged, while making the process easier for them.
BuyerAssist describes itself as a “operating system for B2B companies to deliver the most effective buying experience.” It helps by providing a centralized place to gather information that would usually be buried in emails and notes, and make it searchable. It also lets both vendors and buyers share information about their needs (like pricing, information security reviews and when they want to deploy software by), creating more transparency for each side, and stores important files like proposals, contracts and legal documentation.
For vendors, having information and questions from potential buyers organized in one place can help them better understand their deals pipeline and meet revenue goals. BuyerAssist also provides analytics that can help them retain more contracts. For example, it alerts vendors when buyers become less engaged, which may mean they are losing interest.
During its beta stage, BuyerAssist worked with four companies. The platform is currently focused on enterprise software and SaaS companies that do a lot of their sales remotely, but can be used for any complex sales process that involves multiple calls and emails. Other sectors BuyerAssist wants to enter include manufacturing and financial services.
BuyerAssist is part of a new crop of startups focused on helping vendors and buyers work together on complicated sales. Others include Accord, MetaCX, Dealpoint and Redcapped.io. HN said that the space is still very new, so companies are still figuring out their positioning. In BuyerAssist’s case, this means focusing on buyer engagement, instead of mutual success plans or collaborations, from the beginning. HN said the company will double down on investing in two key areas of product development: building its enterprise grade product to support complex sales and becoming the preferred way for buying teams to engage with BuyerAssist’s clients.
In statement about the investment, Stellaris Venture Partners partner Alok Goyal said, “As a venture capitalist focusing on the SaaS space, we get to see hundreds of teams. But it is very rare to find teams that create a perfect storm of domain expertise, functional expertise in different areas of building SaaS companies and at the same time bringing the perfect complementarity between the founders.”
Anupam Rastogi, a partner at Emergent Ventures, said “What excites me about BuyerAssist is that it focuses on reducing friction between buyers and sellers. Buyers want more flexibility and less noise. Sellers want to run a more consistent sales process. BuyerAssist facilitates this, and enables both to build a long term partnership. This is where we see the industry heading in the years and decades to come.”
3D-printed rocket startup Relativity Space has raised a $650 million Series E, bringing its total raised to over $1.2 billion. Relativity’s post-money valuation now stands at $4.2 billion, a source familiar with the matter told TechCrunch.
The round was led by Fidelity Management & Research Company, with participation from new investors with funds and accounts managed by BlackRock, Centricus, Coatue, and Soroban Capital, and participation from existing investors Baillie Gifford, K5 Global, Tiger Global, Tribe Capital, XN, Brad Buss, Mark Cuban, Jared Leto, and Spencer Rascoff.
The funds from the Series E will go toward accelerating the production of Terran R, the company’s heavy-lift, fully reusable two-stage rocket. Terran R joins Terran 1, Relativity’s debut rocket, which will conduct its first orbital flight at the end of 2021.
The company has been pretty tight-lipped about Terran R, but are now releasing further details alongside the funding announcement. As expected, Terran 1 and Terran R differ in pretty significant ways: the former is expendable, the latter reusable; the former is designed for small payloads, the latter for large. Even the Terran R’s payload fairing is reusable, and Relativity has devised a system that makes it easier to recover and recycle as it stays attached to the second stage.
The larger rocket will clock in at 216 feet tall with a maximum payload capacity of 20,000 pounds to low Earth orbit. (For comparison, SpaceX’s Falcon 9 rocket stands at around 230 feet with a maximum payload to LEO of 22,800 pounds.)
Terran R will use seven of its new Aeon R engines on the first stage, each capable of 302,000 pounds of thrust. The same 3D printers that will produce Terran R’s engines and rockets also currently make the nine Aeon 1 engines that power the Terran 1, which means Relativity doesn’t have to drastically reconfigure its production line to build the new launch vehicle.
A single Terran R should take around 60 days to build, Ellis estimated. That’s an incredible pace for a rocket with this kind of payload capacity.
Even though Terran 1 has not seen a launch yet, Relativity shows no signs of slowing down Terran R’s development: Ellis said the company will also launch Terran R from its launch site at Cape Canaveral as early as 2024 and that it signed its first anchor customer, “a well-known blue-chip company,” for the new rocket.
Relativity has printed around 85% of the rocket that will perform the company’s first orbital flight at the end of this year. The Terran 1 that will perform that mission will not be carrying any payload. Terran 1’s second launch is scheduled to take place in June ’22, and will carry cubesats to LEO as part of NASA’s Venture Class Launch Services Demonstration 2 (VCLS Demo 2) contract.
Relativity CEO Tim Ellis in an interview with TechCrunch likened 3D printing to a paradigm shift in manufacturing. “I think really the thing people haven’t gotten about our approach, or 3D printing in general, is it’s actually more like transitioning from gas internal combustion engines to electric, or on-premise service to cloud,” Ellis said. “3D printing is a cool technology but more than that, it’s actually software and data-driven manufacturing and automation technology.”
Because the core of 3D printing is a technology stack, the company can produce algorithmically generated structures with “geometries that couldn’t be possible” with traditional manufacturing, Ellis said. And the design can be easily adjusted to fit market demand.
Ellis, who started the metal 3D printing division at Blue Origin before founding Relativity, said that the strategy from day one was to design and build Terran 1 and a heavy-lift counterpart.
The actual mechanisms involved in 3D printing can technically occur in environments even when gravity is much lower – like the gravity on Mars, which is only about 38% of the gravity on Earth. But more importantly, Ellis said it’s an approach that’s “inevitably required” in an uncertain off-planet environment.
“When we founded Relativity, the inspiration was watching SpaceX land rockets and dock with the space station. They were 13 years old and they were, despite all of that pretty inspiring success, the only company that wanted to make humanity a multi-planetary and go to Mars,” Ellis said. “And I thought that 3D printing tech was inevitable to actually build an industrial base on another planet. No one else had actually even tried to go to Mars or said that was their core mission. And that’s still true today, actually, even five years later, it’s still just us and SpaceX. And I really do hope to inspire dozens to hundreds of companies to go after that mission.”
New York-based Simulate today announced a $50 million fundraise. Led by Alexis Ohanian’s 776, the Series B brings the meat alternative’s total funding to north of $60 million and values it at $260 million.
Simulate’s first product, Nuggs (formerly also the startup’s name), has already caused a splash, thanks in no small part to aggressive online advertising. The company notes a massive push in retail availability in the last six months. The chicken nugget alternative was available direct to consumers through online ordering when it launched in Summer 2019 — availability that moved the needle during U.S. shutdowns over the past year.
“During the height of the pandemic, people really wanted frozen food shipped directly to their door,” founder and CEO Ben Pasternak tells TechCrunch. “At the time, we were DTC only, so we saw a lot of growth there prior to our pivot to retail.”
He adds that the majority of the company’s sales now currently come from retail, due to accessibility and more restrictive DTC pricing. Currently, the product is available in 5,000 retail locations, a list that includes pretty massive retail names like Walmart/ Sam’s Club, Target and Whole Foods.
“We are getting ready to launch in restaurants and in fast food,” says Pasternak. “Internationally, we recently launched across Canada, and have plans to expand to other countries too.”
Funding will also go toward expanding the company’s headcount. Currently at 20, Simulate expects to expand employment to 50 people by 2022. “Over half of that expansion will be focused on growing our engineering team,” Pasternak says.
This morning Airbase, a corporate spend startup, announced that it has closed a $60 million Series B led by Menlo Ventures. The deal’s announcement comes after Divvy, another corporate-spend focused startup, sold to Bill.com for several billion dollars, and other unicorns in the space like Brex and Divvy each raised nine-figure rounds.
According to Airbase CEO Thejo Kote, his company’s round is not a response to the Divvy sale. Instead, he told TechCrunch in an interview, his company kicked off its fundraising process before that deal was announced.
Not that what Airbase undertook was a process in the traditional sense; Kote did not spend months schlepping a deck along Sand Hill Road, imbibing mediocre architecture, overdressed MBAs and good weather in equal quantities. Instead, he decided that his firm was open to raising more capital in April despite having capital in the bank from previous investments, and 10 days later had signed a term sheet with Menlo.
Menlo partner and new Airbase board member Matt Murphy told TechCrunch in a separate interview that his firm had had its eye on the company for some time before its deal, allowing it to move quickly when Kote opened the door to more funding. (Murphy was candid in sharing that he had spent quite some time getting in front of Airbase, which we pass along as evidence of just how competitive the venture capital market can be in 2021.)
According to Kote, his firm’s new capital was raised on a $600 million valuation, post-money, which means that the Menlo-led transaction involved 10% of the company’s shares.
TechCrunch’s coverage of the corporate spend market has largely focused on the revenue growth of the competing players, and their decision to either charge for the software that they offer along with corporate cards or not. But Kote views the market as segmenting in a somewhat different manner, namely along target customer scale. Divvy, for example, went after SMBs, while Airbase has more of a mid-market focus.
The customer targeting matters, with Kote telling TechCrunch that mid-market companies are looking for a single solution to replace various point-services that they have traditionally paid for. In the case of corporate spend, that could mean that many companies are willing to pay for new software so long as it can replace several services that they were buying discretely before; say, corporate cards and expense management software.
Kote said that the Divvy-Bill.com news was a “massive validation” of his company’s thesis that software would prove key in the market formerly focused on corporate cards, and that offering cards was itself a “race to the bottom.”
In the view of Airbase’s CEO, his company has a six to eight quarter lead on its competitors in product terms. The market will vet that perspective, but the company’s confidence in its vision and new capital should provide it with ample opportunity to prove out its thesis in the coming quarters, and see whether where it views its product in terms of market positioning viz. demand and competitors is correct.
Menlo Ventures seems to think so, to the tune of its largest single check to date from a non-growth fund. What did Murphy et al. find so compelling about the company? In the investor’s view, Airbase has a shot at replacing point-solutions in mid-market companies, precisely as Kote imagines:
Airbase consolidates all the different spend apps which greatly decreases complexity in workflows as finance teams previously had to jump from app to app and don’t have a real time, holistic view in one place. […] Of course there is an advantage in not having to pay for multiple apps, but the biggest benefits are simplicity of workflows which is where we heard most of the product love.
Murphy continued, adding that at many companies “a manager won’t know until after [a quarter ends] whether the team for example spent above or below budget,” which makes integrated solutions more attractive.
Why does the viewpoint matter? It implies that the market that Airbase can sell into is rather large; instead of considering the aggregate non-payroll spend that its possible customer companies may generate and then applying an interchange vig to the total to calculate its potential scale, we might tabulate mid-market software spend on expenses, accounting and other categories as the startup’s true TAM. And as Airbase can still generate top-line from interchange and other sources, it could be well-situated for long-term growth.
Of course, its competitors are not interested in letting Airbase have all the fun. Ramp recently raised lots of capital, and is investing in its own software stack. With a free price point, it’s perhaps the most aggressive player on the interchange-first side of its market. And Brex is working to make lots of public noise, again, and has its own tower of cash, software focus and recently launched paid-SaaS service.
Now Airbase has more cash than it has ever had in its accounts, and has been busy hiring. The company has picked up a CFO, a general counsel and a VP of sales, from Mattermost, Robinhood and Dropbox, respectively.
Which all sounds very much like the long-term prep work for an eventual IPO. Set your timers for 2024.
Hey, founders between gigs: What now?
If you exited your last company for airplane money and are now independently wealthy, congratulations! If you want to build another company, just self-fund. If you want outside capital, VCs will chase after you to invest.
Unfortunately, most founders are not in that position: nine out of 10 startups fail. Even if you achieve a high valuation, you might end up like FanDuel’s founders: Their investors got the benefit of a $465 million exit; the founders got zero.
As someone with “founder” on your resume, you face a greater challenge when trying to get a traditional salaried job. You’ve already shown that you really want to lead a company and not just rise up the ladder, which means some employers are less likely to hire you. One research paper found:
[F]ormer founders receive fewer callbacks than non-founders; however, all founders are not disadvantaged similarly. Former founders of successful ventures receive even fewer [emphasis added] callbacks than former founders of failed ventures. Through 20 interviews with technical recruiters, we highlight the mechanisms driving this founder-experience discount: concerns related to the applicant’s capability and ability to fit into and remain committed to the wage employment and the hiring firm.
At my prior firm, ff Venture Capital, we invested in a company co-founded by Nate Jenkins, who had a successful exit, but not quite enough to buy a private plane. He’s now researching his next opportunity and interviewing for some jobs. At the end of a recent interview, the interviewer summarized, “I’ll hire you, but is this what you really want to do?”
That said, Samuel Sabin, CEO of HireBlue, observed, “Some founders who work better with more resources at their disposal may be tapped for intrapreneurship roles. Also, some companies value a self-starter mentality.”
So what should you do? Especially if your life partner and/or bank account are burnt out on the income volatility of startups?
I’ve been in this situation myself when I shut down one startup and exited two others. I think you have six main options:
If you want to work on your startup idea, the bar for starting a company should always be very high. VCs have a diversified portfolio and most of their investments die. You don’t have a diverse portfolio and so you’re taking far more risk than the VCs. For free resources to help research your ideas, see What startup will you build? Identifying market white space.
TechCrunch Early Stage Part Two is set to take place July 8th and 9th. You can still shoot your shot to pitch to an amazing panel of judges and thousands of TC viewers. TechCrunch editors will select 10 founders from around the world to pitch on stage July 9th. Apply here.
Startups will have five minutes to pitch their companies, business models and innovative ideas — followed by a Q&A with our superb panel of judges. The winner will get a feature article on TechCrunch.com, one-year free subscription to Extra Crunch and a complimentary Founder Pass to TechCrunch Disrupt this fall.
TechCrunch Early Stage Part Two is set to be a game-changer for founders looking to take their startups to the next level. At this two-day virtual event, early-stage founders can take part in highly interactive group sessions with top investors and ecosystem experts, in fields ranging from fundraising and marketplace positioning, to growth marketing and content development.
Without further ado, here are your judges for the Early Stage Pitch-Off:
Ben Sun, Primary Venture Partners
Image Credits: Primary Venture Partners
Ben is a co-founder and general partner at Primary Venture Partners. He has been a serial entrepreneur and investor as a co-founder of LaunchTime, an incubator and investor in early-stage tech startups and as a co-founder of Community Connect, which was one of the first social networking companies. Ben focuses his investing activities on primarily consumer-facing companies. His previous investments include Coupang, Jet.com, MakeSpace, Ollie, Mirror, Slice, Bounce Exchange, Selfmade, Shoptalk and Penrose Hill. Ben has been active in the NYC tech community for almost 20 years. Prior to working as an entrepreneur and investor, Ben worked at Merrill Lynch in the Technology Investment Banking Group. He graduated from the University of Michigan with a degree in Economics.
Leah Solivan, Fuel Capital
Image Credits: Leah Solivan
Leah Solivan is general partner at Fuel Capital, where she invests in early-stage companies across consumer technology, hardware, marketplaces and retail. She’s passionate about supporting teams who are taking on world-changing ideas. Leah relates so well to founders because she is one herself. She created one of the most widely recognized consumer brands of the past decade with TaskRabbit. As TaskRabbit’s CEO for eight years, Leah scaled the company to 44 cities and raised more than $50 million. In 2016, Leah transitioned into the role of executive chairwoman and in 2017, TaskRabbit was acquired by IKEA.
Shardul Shah, Index Ventures
Image Credits: Index Ventures
Shardul joined Index in 2008. He focuses on security, cloud infrastructure and enterprise software investments. He is a director of Attack IQ, Brightback, Castle Intelligence, Datadog (Nasdaq:DDOG), Expel, Gatsby and Wiz.io. Shardul was previously a director of Adallom (Microsoft), Sourceclear (CA Technologies), Koality (Docker), Lacoon (Check Point), Base (Zendesk) and an investor in Duo Security (Cisco). After graduating from the University of Chicago, Shardul worked with Summit Partners where he focused on healthcare and internet technologies.
The pandemic forced companies around the world to adjust to a “new normal,” which caused many leaders to pivot their business strategies and adopt new technologies to continue operations. In a time of chaos and change, there is no senior leader that can navigate this sort of change better than a CTO.
Not only do CTOs understand the ever-changing tech landscape, they also provide invaluable insights to help organizations go beyond traditional IT conversations and leverage technology to successfully scale businesses.
Boards are facing pressure to be strategic and thoughtful on how to evolve in the rapidly iterating world of technology, and a CTO is uniquely positioned to address specific challenges.
There are now more reasons than ever to consider adding a CTO to your board. As a CTO myself, I know how important and impactful it can be to have technical-minded leaders on a company’s board of directors. At a time when companies are accelerating their digital transformation, it’s critical to have diverse technical perspectives and people from varying backgrounds, as transformations are a mix of people, process and technology.
Drawing on my experience on Lightbend’s board of directors, here are five hidden benefits of making space at the table for a CTO.
Currently, most boards of directors are composed of former CEOs, CFOs and investors. While such executives bring vast experience, they have very specific expertise, and that frequently does not include technical proficiency. In order for a company to be successful, your board needs to have people with different backgrounds and expertise.
Inviting different perspectives forces companies out of the groupthink mentality and find new, creative solutions to their problems. Diverse perspectives aren’t just about the title –– racial ethnicity and gender diversity are clearly a play here as well.
For a product-led company, having a CTO who has been close to product development and innovation can bring deep insights and understanding to the boardroom. Boards are facing pressure to be strategic and thoughtful on how to evolve in the rapidly iterating world of technology, and a CTO is uniquely positioned to address specific challenges.
Briq, which has developed a fintech platform used by the construction industry, has raised $30 million in a Series B funding round led by Tiger Global Management.
The financing is among the largest Series B fundraises by a construction software startup, according to the company, and brings Briq’s total raised to $43 million since its January 2018 inception. Existing backers Eniac Ventures and Blackhorn Ventures also participated in the round.
Briq CEO and co-founder Bassem Hamdy is a former executive at construction tech giant Procore (which recently went public and has a market cap of $10.4 billion) and Canadian software giant CMiC. Wall Street veteran Ron Goldshmidt is co-founder and COO.
Briq describes its offering as a financial planning and workflow automation platform that “drastically reduces” the time to run critical financial processes, while increasing the accuracy of forecasts and financial plans.
Briq has developed a toolbox of proprietary technology that it says allows it to extract and manipulate financial data without the use of APIs. It also has developed construction-specific data models that allows it to build out projections and create models of how much a project might cost, and how much could conceivably be made. Currently, Briq manages or forecasts about $30 billion in construction volume.
Specifically, Briq has two main offerings: Briq’s Corporate Performance Management (CPM) platform, which models financial outcomes at the project and corporate level and BriqCash, a construction-specific banking platform for managing invoices and payments.
Put simply, Briq aims to allow contractors “to go from plan to pay” in one platform with the goal of solving the age-old problem of construction projects (very often) going over budget. Its longer-term, ambitious mission is to “manage 80% of the money workflows in construction within 10 years.”
The company’s strategy, so far, seems to be working.
From January 2020 to today, ARR has climbed by 200%, according to Hamdy. Briq currently has about 100 employees, compared to 35 a year ago.
Briq has 150 customers, and serves general and specialty contractors from $10 million to $1 billion in revenue. They include Cafco Construction Management, WestCor Companies and Choate Construction and Harper Construction. The company is currently focused on contractors in North America but does have long-term plans to address larger international markets, Hamdy told TechCrunch.
Hamdy came up with the idea for Santa Barbara, California-based Briq after realizing the vast amount of inefficiencies on the financial side of the construction industry. His goal was to do for construction financials what Procore did to document management, and PlanGrid to construction drawing. He started Briq with his own cash, amassed through secondary sales as Procore climbed the ranks of startups to become a construction industry unicorn.
Briq CEO and co-founder Bassem Hamdy. Image Credits: Briq
“I wanted to figure out how to bring the best of fintech into a construction industry that really guesses every month what the financial outcomes are for projects,” Hamdy told me at the time of the company’s last raise – a $10 million Series A led by Blackhorn Ventures announced in May of 2020. “Getting a handle on financial outcomes is really hard. The vast majority of the time, the forecasted cost to completion is plain wrong. By a lot.”
In fact, according to McKinsey, an astounding 80 percent of projects run over budget, resulting in significant waste and profit loss.
So at the end of a project, contractors often find themselves having doled out more money and resources than originally planned. This can lead to negative cash flow and profit loss. Briq’s platform aims to help contractors identify outliers, and which projects are more at risk.
Throughout the COVID-19 pandemic, Briq has proven to be “extremely valuable” to contractors, Hamdy said.
“In an industry where margins are so thin, we have given contractors the ability to truly understand where they stand on cash, profit and labor,” he added.