Business News

Daily Crunch: 85+ startups launch at YC Demo Day 1

Startup News - 1 hour 46 min ago

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Here are the 85+ startups that launched at YC’s W19 Demo Day 1

With more than 200 companies, the Winter 2019 class is by far YC’s largest yet. It’s so large, in fact, the accelerator had to change the way it does Demo Day — rather than all pitches happening on one stage, they were split across two stages (the “Pioneer” and “Mission” stages) running in parallel.

We were there, and as we do with each class, we’ve brought back our notes on everything we saw.

2. Apple upgrades the iMac line with boosted processors and graphics

The perennial favorite all-in-one is getting some key upgrades that will narrow the gap between the line and the high-end iMac Pro. The key additions are ninth-generation Intel processors and Radeon Pro Vega graphics.

3. Nvidia AI turns sketches into photorealistic landscapes in seconds

This is MS Paint for the AI age.

4. Atlassian acquires AgileCraft for $166M

AgileCraft provides business leaders with additional insights into the current status of technical projects and helps them understand the bottlenecks, risks and dependencies of these projects.

5. Instagram launches shopping checkout, charging sellers a fee

“Checkout with Instagram” launches today in the U.S. with more than 20 top brands, including Adidas, Kylie Cosmetics and Warby Parker, which will no longer have to direct customers to their websites to make a purchase.

6. Devin Nunes is suing Twitter over mean tweets from parody account of his mom

Simultaneously complaining that Twitter silences its critics while asking Twitter to silence his critics is a curious legal strategy — but it’s par for the course for Nunes.

7. HP built a better version of the Oculus Rift

Lucas Matney says the new HP Reverb is probably the best PC-powered consumer VR headset out there, when balancing price and feature set.

Categories: Business News

Glossier triples valuation, enters unicorn club with $100M round

Startup News - 3 hours 23 min ago

Glossier, known for its flagship line of barely there beauty products, has landed a $100 million Series D led by Sequoia Capital. The round values Emily Weiss’ business at a whopping $1.2 billion, fully cementing the company as a startup “unicorn” and tripling the valuation it garnered with a $52 million Series C in 2018.

News of the round was first reported by The Wall Street Journal and later confirmed by Glossier.

“We are building an entirely new kind of beauty company: one that owns the distribution channel and makes customers our stakeholders,” founder and chief executive officer Emily Weiss said in a statement.

As part of the round, which included support from newcomers Tiger Global Management and Spark Capital and existing investors Forerunner Ventures, Thrive Capital, IVP and Index Ventures, Glossier has hired Vanessa Wittman as its chief financial officer. Wittman previously held the same role at Oath and Dropbox. She replaces Henry Davis, who left the direct-to-consumer makeup brand in late 2018. Other recent additions include Edith Chen, Glossier’s new vice president of supply chain operations, and Nick DeAngelo, vice president of operations.

To date, New York-based Glossier has brought in nearly $200 million in venture capital investment, making it one of the most well-funded privately held beauty businesses. What’s next for the company? Weiss tells The WSJ an initial public offering isn’t out of the question, but didn’t provide a timeline. It’s been about five years since Glossier went from blog to business; it still has plenty of time before investors are pushing for an IPO.

Since it launched as a beauty blog in 2010, Glossier has grown into a 200-person business with $100 million in annual revenue in 2018. It has established two brick-and-mortar shops and expanded from au naturel makeup to “dialed-up extras” fit for the Instagram crowd. The recent launch of its first spin-off brand, Glossier Play, hints at a future where Glossier is a multi-brand beauty empire competing with the likes of Ulta and Estée Lauder.

Should VCs be investing in beauty brands?

Makeup is a huge and growing industry venture capitalists have been sleeping on. Megan Quinn, a general partner at Spark Capital, who led the round in Glossier on the firm’s behalf, says online beauty sales are expected to reach $120 billion by 2024. She expects Glossier to win the beauty market as a result of its intimate connection with customers, word of mouth customer acquisition channel and community-building tactics.

“To say that [Weiss] is a force of nature obfuscates her true superpower: she is a fantastic listener,” Quinn writes in a blog post. “By weaving her unique point of view with the feedback loops of her community, she has built a platform to power additional brands that respond to her customer’s needs. More importantly, she has built a world-class team of product designers, supply chain experts, marketing muscle, and arguably one of the largest engineering teams in beauty to make it happen.”

Glossier launches its first spin-off brand, a line of Instagram-friendly ‘dialed-up’ beauty extras

Categories: Business News

Patreon ups its revenue cut, but grandfathers in old creators

Startup News - 4 hours 42 min ago

Patreon couldn’t survive charging all creators just a 5 percent rake on the monthly subscriptions they earn from fans while building commerce tools like CRMs and merchandise to try to stay ahead of Twitch, YouTube and Google. But it also didn’t want to screw all its loyal early creators.

So today, Patreon is overhauling its pricing. Any creator can still get a 5 percent rate, but just for a Lite version without bonus tools or different fan tiers. All of Patreon’s extra features will now be in the Pro plan, with an 8 percent rate, but with existing creators grandfathered in at 5 percent. And the new Premium enterprise plan for 12 percent (9 percent for existing creators) will offer full-service merchandise sales, multi-user team accounts and dedicated customer support.

If you want the lower grandfathered rates, you’ll need to join Patreon in the next few weeks before the new rates go into effect in early May.

“With this change, Patreon is a long-term independent company that doesn’t need anyone else. That’s the move we’re making here,” says Patreon’s SVP of Product, Wyatt Jenkins. More sustainable pricing means creators won’t have to fear Patreon selling out in desperation to someone like Facebook that might neglect or exploit them.

Instead, Patreon CEO Jack Conte tells me he wants to balance powerful features with right-sized pricing for different creator types to become the platform-agnostic home for subscription patronage when tech giants are each trying to build their own. “To have a different membership for each distribution platform, that’s not going to work. You need a single place for the bottom of your distribution funnel,” Conte explains.

Balancing rates and resources

Patreon now has 3 million fans paying 100,000 creators more than half a billion dollars per year, and it will cross $1 billion in payouts in 2019 after six years in business. But Patreon was starving on its 5 percent rate, which some venture capitalists tell me is why they passed on its funding rounds totaling $105 million led by Thrive Capital and Index. Now it might make enough to keep the lights on, retain ownership and maybe even earn a profit one day.

Jenkins tells me Patreon spent a year talking to more than 1,000 creators to figure out how to re-price its offering. “People don’t like change. But I think in terms of change, we’re going to be able to invest in the different products in different ways. We can put a lot of horsepower into membership,” he explains. The company didn’t want to screw up like when it changed its payment processing rates a year ago, leading to creator backlash and some exodus. “We unilaterally did something that impacted creators’ patrons. That was the real landmine we stepped on.”

Patreon’s new rates

What Patreon discovered was some creators, especially individuals and hobbyists, didn’t care for bells and whistles. They wanted cheap and easy recurring payments so they can focus on their art, so Patreon made the 5 percent Lite plan that strips out the extra features but keeps the old rate.

More serious videographers, illustrators, comedians and pundits wanted to offer different price tiers for different levels of exclusive content. They need analytics, special offers, integrations with other productivity and commerce apps and priority customer support when things break. That’s what creators will get for 8 percent, unless they’re grandfathered in at 5 percent.

But Patreon also found there were whole media organizations with 50 employees built atop its patronage platform. They needed to be able to share accounts and get immediate support when necessary. Meanwhile, tons of creators see merchandise as a powerful way to lure in fans who want signed photos, stickers and other swag each month. “Eighty-five percent of our creators tell us we need merchandise. ‘We spend our days in the post office licking stamps. You can get great negotiation leverage since you have scale, so why aren’t you helping us with this?’ We can’t build that on 5 percent,” Jenkins tells me. They’ll all pay the 12 percent Premium plan price unless grandfathered in at 9 percent. Patreon will, in return, process, pack and ship all their merchandise.

Patreon is also changing its payment processing fees to make sure it doesn’t overpenalize smaller contributions, like creators’ popular $1 per month tiers. Now all transactions over $3 incur a 2.9 percent plus $0.30 fee similar to Stripe’s industry standard, while microtransactions under $3 cost 5 percent plus $0.10. Existing creators get the old rates, and people paying via PayPal from outside the U.S. get hit with an extra 1 percent fee.

The battle for fan subscriptions

Surprisingly, one of Patreon’s most popular creators told me they actually felt bad about being grandfathered in at a lower price, because why should they get special treatment compared to other artists who just might not be as tech savvy. That said, they weren’t going to voluntarily pay a higher rate. “I guess I’m not surprised,” Conte responds. “I’ve found that creators are really humble and selfless, always thinking about other people. I can imagine them saying ‘What about these people? Why am I paying less than them?”

If Patreon can power through the rate change without breaking momentum, it could have a bright future. It’s started a patronage trend, but leaked documents show Facebook plans to charge creators up to 30 percent like YouTube already does, and Twitch charges an astronomical 50 percent. But with far more restrictions on content and far more distrust accrued after years of forsaking creators and tense negotiations, Patreon’s neutral platform with the cheapest rate could remain the fan subscription leader at a time when ad revenue shares are proving inadequate to support turning one’s passion into their profession.

Patreon co-founder and CEO Jack Conte

When TechCrunch broke the news that Facebook planned to charge up to 30 percent, Conte said, “Honestly, it was relieving but really disappointing in some way. I think competition is good. I hope there are many membership products. I hope they’re successful and [give creators a choice]. Right now, it’s not a choice. Facebook’s product is not usable. The folks that have used Facebook’s product have turned it off. From a competitor standpoint, it confirmed my thought that Facebook doesn’t understand creators.”

That’s also why he hopes that one day the tech giants might just integrate Patreon rather than compete, and they could each get a cut of subscription revenue.

Looking forward, he says the toughest challenge for Patreon will be building three different products for three distinct types of creators without the infinite wallets of its rivals. “I think Patreon will be raising for a long time,” Conte says. That will fund Patreon’s plans for eventual international operations, where 40 percent of patrons and 75 percent of creators live. Right now Patreon is offered only in English and supports U.S. dollars. But if it can spin up local languages, currencies and payment processors, Patreon could be where creators around the world go to share with their biggest fans.

Categories: Business News

Custom framing startup Framebridge is opening two retail stores

Startup News - 2019, March 19 - 10:57pm

For a long while, you couldn’t swing a bag of cats around without hitting a retailer looking to create a digital presence. Now, the inverse is growing in popularity, with many digital-first retail brands looking to set up a brick-and-mortar shop.

The latest is Framebridge, a custom framing startup that has raised more than $67 million. The company is launching two new retail stores in the D.C. area, one downtown and one in Bethesda.

“We’ve tested a number of pop-ups, and there were people that had been to our site several times but wanted to see us in person,” said founder and CEO Susan Tynan. “At our pop-ups, average order values were 40 percent higher than they were online.”

The storefronts will still send orders through to the company’s production facility, which will ship final products to end-users. But for folks who come in the store, the hope is that the experience is hyper-similar to using the website.

Framebridge first launched in 2014 with a simple premise: take the pain out of custom framing. The startup lets users browse framing options on the website and see exactly what the piece would look like via website or app. Once the user chooses a frame, Framebridge sends a shipping label and materials to the user, who then sends it to be framed in the Framebridge framing center.

Putting the process online was one step, but bringing down the price was the real innovation here. Through some automation and a refined in-house production process, Framebridge is able to promise customers that the most they’ll pay through the service is $209.

That may sound steep, but folks familiar with the process of getting art framed know just how expensive it can get.

In fact, founder and CEO Susan Tynan came up with the idea for Framebridge after her own harrowing attempt to get four national parks posters framed. Many hours and $1600 later, she decided to shake up the framing industry and has gone on to raise upwards of $67 million from investors like T. Rowe Price, New Enterprise Associates and Revolution.

With the store openings, Framebridge hopes to bring the same simplicity to brick-and-mortar. The company integrated a new POS that allows users to have a nearly identical experience to that of the web and app storefront, allowing them to see their art on screen before they purchase. Plus, the pricing for each frame in every size is clearly marked right on the counter so no customer is ever shocked by the price tag at the end.

[gallery ids="1798965,1798966,1798967,1798968"]

Tynan says that the strategy around launching two stores was to learn as quickly as possible. One store is larger and downtown, whereas the other is slightly smaller and in the suburbs, giving Framebridge the chance to see what works in various environments.

Tynan also mentioned that they’ve put particular effort into making sure the stores are beautiful and inspiring, rather than intimidating.

“The reality is that performance marketing continues to get more expensive and real estate is getting less expensive,” said Tynan. “Framebridge is a distinct category that makes senes offline. And even in my own painful experiences getting things framed before, I didn’t ever hate that it was offline. I hated that it was expensive and intimidating.”

The 14th Street store downtown, located at 1919 14th Street NW in D.C., is opening today at 11am ET, with the Bethesda location, 4806 Bethesda Ave, opening in April.

Categories: Business News

Employee retention platform Peakon raises further $35M in a new round led by Atomico

Startup News - 2019, March 19 - 9:04pm

Peakon, the Denmark headquartered “employee retention platform,” has raised a further $35 million in funding. Described as a Series B extension, the round is led by European venture capital firm Atomico, with backing from existing investors, including EQT Ventures, IDInvest Partners, Balderton Capital, and Sunstone.

Originally offering “people analytics” by enabling companies to more regularly survey employees, Peakon has since evolved to become a fully fledged SaaS for employee retention. It claims to now tackle three critical areas. They are employee engagement, actionable insights to prevent employee problems before they arise, and competitor analysis through benchmarking employee engagement data against Peakon’s proprietary industry-wide data.

Peakon’s surveys are designed to be both fast and conducted weekly, rather than annually (as is the traditional way of surveying employees). They also adhere to standardised questions so as to enable industry wide comparisons. This means that companies using the employee retention software can not only get a more immediate feel for how engaged employees are at any given moment, but also use that data to drive operational decisions and competitor analysis.

For example, Peakon claims to be able to predict when certain employees are in danger of leaving 250 days in advance of doing so. As hiring gets increasingly competitive, this heads up is crucial as it theoretically provides enough time for management to attempt to prevent critical employees from leaving.

Zooming out further, Peakon’s use of standardised questions for the micro surveys it conducts on behalf of customers is enabling the company to build what it claims to be the largest real-time database of “how the world’s workforce is feeling”. By diving deep into this data — based on more than 30 million data points and rising — various macro trends can be established, such as comparing the fall in worker productivity before the winter holidays across countries and demographics.

Meanwhile, I’m told Peakon has grown extremely fast over the last year. This has included opening an office in New York where co-founder Kasper Hulthin is now based, while the company expects its U.S. headcount to be over 50 employees within the next 12 months. Peakon also has offices in U.K., Denmark, Germany, and New Zealand, and says current headcount sits at over 180.

Since launching in early 2016, Peakon’s customers have included the likes of Capgemini, Verizon, BMW, TrustPilot, Harrods and easyJet.

Adds Mattias Ljungman, Partner at Atomico: “As our world continues to change, traditional concepts of work are being redefined. Workers have to deal with constant change, and this is why it is more important than ever for companies to listen to their employees’ voices and create a positive culture through feedback and engagement. Yet, today companies are still struggling to measure their most important asset: their people. We were blown away by Peakon’s rigorous, data-driven approach to this problem”.

Categories: Business News

Axeleo Capital raises $51 million fund

Startup News - 2019, March 19 - 2:01pm

Axeleo Capital has raised a $51 million fund (€45 million). Axeleo first started with an accelerator focused on enterprise startups. The firm is now all grown up with an acceleration program and a full-fledged VC fund.

The accelerator is now called Axeleo Scale, while the fund is called Axeleo Capital. And it’s important to mention both parts of the business as they work hand in hand.

Axeleo picks up around 10 startups per year and help them reach the Series A stage. If they’re doing well over the 12 to 18 months of the program, Axeleo funds those startups using its VC fund.

Limited partners behind the company’s first fund include Bpifrance through the French Tech Accélération program, the Auvergne-Rhône-Alpes region, Vinci Energies, Crédit Agricole, BNP Paribas, Caisse d’Épargne Rhône-Alpes as well as various business angels and family offices.

The firm is also partnering with Hi Inov, the holding company of the Dentressangle family. Axeleo will take care of the early stage investments of Hi Inov, which represent $11.3 million (€10 million).

Axeleo is focusing on early stage rounds, from $565,000 to $4.5 million (€500,000 to €4 million) in anything B2B, from artificial intelligence to cybersecurity and SaaS. So far, the team has invested in Alsid, Vectaury, 365Talents, Jenji, Ermeo and others.

Categories: Business News

Here are the 85+ startups that launched at YC’s W19 Demo Day 1

Startup News - 2019, March 19 - 10:46am

Y Combinator’s incubator classes have gotten huge.

With over 200 companies, the Winter 2019 class is by far YC’s largest yet. Meanwhile, the incubator prepares to shift its headquarters from Mountain View to San Francisco.

It’s so large, in fact, it’s had to change the way it does Demo Day. Rather than all pitches happening on one stage, they were split across two stages (the “Pioneer” and “Mission” stages) running in parallel. So even if you were in the building, you couldn’t see all the pitches in person.

We were there — and as we do with each class, we’ve brought back our notes on everything we saw. Here are the 85+ companies that pitched today. Come back tomorrow for Day 2!

Pioneer Stage

Career Karma: Hundreds of millions of people will need to change jobs in the coming years. Career Karma gives them a placement quiz and gets them accepted at coding bootcamps and other training programs that pay the startup $1,000 per student. With income-sharing agreements growing in popularity, plenty of job skill providers will be willing to pay to enroll the highest potential students.

VanGo: An on-demand ride service for getting your kids and teens around. The founders say that, because “moms trust other moms,” 85 percent of drivers on their service are moms and all of them are women. They plan to expand into other verticals to help parents down the road.

Team Mobot: Simulated user interface testing doesn’t catch all the bugs and can be complex for less tech savvy companies to perform. Team Mobot offers a fleet of robots that physically test any app’s UI on real devices to perform QA testing and spot bugs. Team Mobot’s fleet learns over time to increase accuracy, and the startup plans to invade the Internet of Things and medical device verticals next.

Bento Club: Cheaper lunch delivery for office workers. Customers pre-order food from a select set of restaurants, and Bento picks it up and brings all orders to a shared pickup spot within one block of the customer’s office. Thirty-eight percent of customers come from referrals.

Basilica: Most teams trying to build artificial intelligence systems don’t have enough data, and that data can be expensive to collect. Basilica says its transfer learning method allows businesses to create accurate AI with just 1,000 data points instead of 1 million. Basilica generates network effect by using data from across its clients to improve efficiency for each vertical that teams will need to keep up with Google.

Keynua: In Latin America, signing documents requires tedious identity verifications. With Keynua you record a short video to verbally agree to a document, and they use existing records to verify your identity. This team’s previous product (Cinepapaya) was acquired by Fandango in 2016.

Lumos: Doctors use Google 40X more than professional tools for finding medical information, but Google is full of ads and results are meant for patients not doctors. Lumos offers a medical Q&A search engine for doctors who pay $15 per month. A trial at UPenn saw half of the med students using Lumos each day within weeks of launch. Lumos says it has more potential business opportunities based off understanding what studies and info doctors trust, and having access to them at critical decision points during treatment.

Traverse Technologies: Traverse uses software to identify potential sites for wind and hydro power generation. The company then buys and resells those sites. They estimate that a plot that they buy for $750k can be resold for $5 million. The currently have about $50 million worth of letters of intent.

Basement: A social network for your close friends. Feed broadcasting social networks feel impersonal, and inevitably bloat with distant acquaintances you’re shy about sharing with. Basement is designed for college students and grads to just add their best friends. It offers Instagram-style posting tools, but the intimacy leads to comment threads that feel more like WhatsApp chat. Basement will have to get users to break the social contract of courtesy so they don’t friend the wrong people, but has a chance to be where Facebook wants to go.

CosmicJS: A drop-in, easier to manage alternative to WordPress. The company says that KFC, MLB, and Dailymotion are already customers. Currently making roughly $10k in monthly recurring revenue, and they say that’s growing about 15 percent monthly.

Ravn: Looking around corners is one of the most dangerous parts of war for infantry. Ravn builds heads-up displays that let soldiers and law enforcement see around corners thanks to cameras on their gun, drones, or elsewhere. The ability to see the enemy while still being behind cover saves lives, and Ravn already has $490,000 in Navy and Air Force contracts. With a CEO who was a Navy Seal who went on to study computer science plus experts in augmented reality and selling hardware to the Department Of Defense, Ravn could deliver the inevitable future of soldier heads-up displays.

54gene: 54gene aims to be 23andMe for Africa. The company says that competitor data is limited because their users are mostly white. By focusing on Africa, the company can help detect and identify DNA markers that might otherwise go overlooked. Co-founder Abasi Ene-Obong has a PhD in cancer biology from the University of London.

Slapdash: Enterprise apps run slow and it can be tough to find files or messages across them. Slapdash creates a desktop software-speed container in which workers can run all their office software like Slack, Dropbox, Asana, Salesforce, and Google. Users can search across all their apps and be more productive, luring SaaS subscriptions from their employers.

YourChoice: Male contraceptive pill. With “two of the world’s leading sperm physiologists”, YourChoice says they’ve created a pill thats 100% effective with “no side effects” by targeting the ABHD2 and ANT4 proteins in sperm. They’re also working on a hormone-free contraceptive pill for women.

AccioJob: Only one-third of India’s college graduates get placed in jobs because their schools often only expose them to local recruiters. AccioJob charges colleges $10,000 per year to place their students in jobs, and charges employers per placement. Since it gains student contact info and grades, AccioJob can become the gateway to the best Indian college grads as more students from the country begin to enroll.

CentaurLabs: Hires doctors to label medical imagery datasets at scale, which can then be used to train AI. In the future, they’re aiming to build a diagnosis system to provide second opinions for doctors and patients.

Travelchime: Planning travel requires cobbling together Google Docs, maps, blogs, friend recommendations, inspiration apps, and booking sites. Travelchime combines travel planning tools into a Google Doc-style interface that automatically suggests contextual information and places popular amongst travel writing that it’s indexed. Users can then book from Travelchime, which hopes it can build a more helpful version of TripAdvisor.

Seawise Capital: Trade loans for exporters in India. The founders say they make 10% on every loan, and have taken on $550k in loans in the past 6 weeks. They plan to raise $5 million in debt by Q3 2019, and $25 million in debt by Q1 2020.

PerShop: Shopping online can be frustrating because you’re either hopping between individual brands without comparative pricing, seeing too many irrelevant products on aggregators, or can’t checkout on social apps. PerShop is a personalized shopping site that only recommends you items from your favorite brands, in your size, in your price range. Eventually it plans to sell personalized, targeted e-commerce ads. PerShop gets smarter as people use it to buy or just for entertainment.

Prometheus: Removes CO2 from the air to make gasoline. They say they can make gasoline for about $3.00 per gallon. Whereas past attempts required massive distillation columns, founder Rob McGinnis says he was working with carbon nanotube membranes when he discovered a cheaper way to do it with much less real estate.

Unicorn: Scooter companies that rent by the minute lose 2 percent of their fleet per day to damage and theft, and that means customers don’t have a safe scooter available when they want one. Unicorn rents scooters by the week or month and is already profitable. Vehicles aren’t left outside overnight and spend more time rented, while customers know there’s a scooter available for them without having to buy one outright. Unicorn’s founder started Tile and now he wants to build a better unit economics business than Lime and Bird.

Loonify Space: A bespoke launch system meant specifically for carrying small satellites into orbit. A balloon carries rocket to 35km and launches it mid-air. They have Letters of Intent for 155 satellite launches, worth a total of roughly $77 million. They intend to have their first launch on May 9th.

Supernova: Programming apps based on design mockups can be tough internally, but expensive and hard to maintain if outsourced. Supernova converts designs into production-ready code that follows best practices so it’s easy to update. Supernova’s AI can understand a product’s purpose and distinguish between navigation elements, buttons, and more. As more businesses try to modernize with tech products, Supernova could let them focus on their utility rather than computer science.

Kovi: Provides rental cars for on-demand drivers in Latin America. They currently have around 300 cars on the street, with 3,000 rental requests this year. The company estimates that 70 percent of drivers in Latin America rent/lease their vehicles.

Deel:  20 million international contractors work with US companies but it’s difficult to onboard and train them. Deel handles the contracts, payments, and taxes in one interface to eliminate paperwork and wasted time. Deel charges businesses $10 per contractor per month and a 1% fee on payouts, which earns it an average of $560 per contractor per year. As the globalization megatrend continues, businesses need better remote HR tools.

COUTURME: Custom, AI-designed wedding/formal dresses. The customer inputs their preferences, the software generates options, and the dress is produced and shipped within 30 days. It went live in January, and has been growing at roughly 15% weekly since. Co-founder Yuliya Raquel previously founded plus-size designer fashion company IGIGI.

Instapath Inc: Cancer biopsies can take a week to get you your results. Instapath is building a fully-automated pathology lab that can test a tissue sample and provide a diagnosis within five minutes while you’re still at the doctor’s office. This eliminates agonizing waiting periods and can get users treated more quickly. Instapath charges $200 per procedure, has already processed 500 biopsies, and claims to be on the path to FDA clearance in nine months.

Bensen: Bensen wants to replace the drive-thru window by allowing restaurants to receive orders via voice assistants like Siri, Google Assistant, and Alexa in the car.. It’ll launch in two restaurant chains later this year, with Letters of Intent from companies with 800 locations. They’ll charge $3,000 per year per location.

Socrates Intelligence: There’s huge demand for reading in China but just one library per 480,000 citizens. Socrates Intelligence is the Netflix-style mailing business for books in China. For $56 per year, users can rent up to three books and get them within 48 hours. The startup already has 10,000 subscribers and plans to go after ebooks, audiobooks, and magazines next to become the ‘rent everything store’ for China.

Overview: Many factories use massive robots to manufacture goods overnight, but there’s not always someone watching. If something goes wrong but goes undetected, the robots can physically destroy themselves. Overview uses cameras and AI to monitor manufacturing robots, shutting them down if something goes wrong.

Sunsama: A task manager that integrates with SaaS tools like Trello, JIRA and Asana to help workers identify and manage the tasks they should be working on a specific day.

Kalshi: Instead of just betting on sports, Kalshi lets anyone bet on anything, like whether Brexit will happen by the end of the month or who will win an Oscar. Users bet against each other so it’s more like a futures market than gambling, and regulators like it since Kalshi doesn’t earn more when users lose. It already has 2 licenses making it legal in 200 countries and is in talks with US regulators to earn 7 percent transaction fees when people bet.

Volk Wireless: Volk is making an Android smartphone with a free data plan, no carrier required. The co-founders say they’re using long-range wireless hardware to share connections and build a network of phones. Co-Founder Greg Hazel was the Chief Architect at Bittorrent, while co-founder Straya Markovic was the lead engineer at mesh messaging platform Firechat.

Nowports: Half of shipping containers are lost or delayed in part because of inefficient routing and tracking. Nowports is the Flexport for Latin America, a freight forwarding business that helps pallets of goods get from factory to truck to boat to warehouse to retailer. Started by a third generation freight forwarder, Nowports could succeed where US companies lack the required local understanding.

Flower Co.: Memberships for cheaper weed sales and delivery. They’re currently selling $200k in marijuana per month to 700 members. They charge $100 a year for membership, and take 10% on product sales.

Middesk: It’s difficult to know if a business’ partners have paid their taxes, filed for bankruptcy, or are involved in lawsuits. That leads businesses to write off $120 billion a year in uncollectable bad debt. Middesk does due diligence to sort out good businesses from the bad to provide assurance for B2B deals loans, investments, acquisitions, and more. By giving clients the confidence that they’ll be paid, Middesk could insert itself into a wide array of transactions.

Eclipse Foods: Makes dairy product from plants, which they say are “indistinguishable” from those made from animal products. In their tests, 70% of consumers couldn’t tell the difference between their product and a leading competitor. The co-founders were previously the Director of R&D of Hampton Creek and an innovation specialist at the Good Food Institute (a non-profit focusing on plant-based meat/dairy alternatives).

Enemy on Board: By combining the excitement of League Of Legends with the strategy of Mafia, Enemy On Board is a game built for the Twitch era. 5 players team up to complete a mission, but 2 of them secretly are trying to sabotage it. The game’s beta launch is scheduled for June, but testers are already averaging 61 minutes per day, and people have spent 2000 hours watching gameplay on Twitch. Through microtransactions, Enemy On Board’s CEO who worked on League Of Legends believes they can build the next blockbuster freemium game.

Modoo Technology: A wearable for monitoring fetal health, measuring heart rate and baby movements. It has been selling in China for $200 since 2017, with $3.4 million in revenue in 2018. The company recently introduced a monthly subscription option for those who don’t want to buy outright.

Our World In Data: World leaders need easy-to-access, understandable data on issues like CO2 emissions or child mortality to make decisions. Our World In Data takes key findings from studies buried in paid journal articles and jargon, and put them on an open access website that has achieved top Google ranking for many queries. It already has 1 million users, and its team from University Of Oxford believes optimizing research data for the web could lead to better global policy.

Encarte: A browser extension bringing one-click checkout to any e-commerce store. Currently supports over 500,000 Shopify stores. It stores your data locally rather than in the cloud, and keeps track of all tracking numbers. They’re also building a “virtual e-commerce credit card” that will offer personalized promotions, amongst other things.

Atomic Alchemy: Radio cardiograms and PET/CT scans require nuclear medicine to visualize abnormalities. But five of the six reactors that generate this nuclear medicine are set to shut down in the next 10 years. Atomic Alchemy builds tiny, privately-owned reactors from off-the-shelf parts in order to generate nuclear medicine. The startup already has letters of intent it estimates are worth $50 million to $100 million, and hopes to be operational by 2024.

Jetpack Aviation: Jetpack is building a flying motorcycle. The company says its jet motorcycle is capable of getting from SF to Mountain View in ten minutes, and fits in a one-car garage. They estimate that their full-scale prototype should be done by the end of the year. They’ve received 9 pre-orders so far, worth about $4.1M in sales. The company’s founders previously built an FAA approved Jetpack called the JB10. We covered Jetpack Aviation on TechCrunch previously here.

Mission Stage

Trexo Robotics:  Trexo Robotics is developing a solution that gives those diagnosed with cerebral palsy a better solution than a wheelchair. The startup is focused on providing a robotics device for children with the disease, and the company’s first product will be available for $1,000 per month to families. The company says they currently have 5 units deployed and are approved for use in the U.S. and Canada.

Pachama: A verified marketplace for carbon credits focused on protecting and restoring the world’s forests. The startup uses machine learning, satellite imaging, drones and LIDAR to offset carbon emissions. Pachama connects carbon buyers — an organization seeking to offset their carbon emissions — to carbon projects.

Saratoga Energy: Over the course of six years, the company has developed and patented a production process to synthesize carbon nanotubes from CO2. The startup sells the carbon nanotubes, which are stronger and lighter than steel, at lower prices to aerospace, battery, concrete and other manufacturers. At the end of the week, the company will deliver their first batch for testing. Saratoga has raised $2 million in grant funding over the last two years.

Cherry: Cherry is an office perks solution for the modern startup. Rather than giving entire swaths of employees the same benefits, the co-founders want to let people choose their favorite internet services. People will be able to select services through a Slackbot interface and get things like ClassPass and HBO paid for by their company. The company says they have 24 companies in paid pilot programs. We previously covered Cherry on TechCrunch here.

CityFurnish: The provider of a furniture rental marketplace in India, CityFurnish delivers and installs furniture to customers in Delhi, Pune, Mumbai and Bangalore for a monthly rental fee, offering free relocation and free maintenance services. The company doesn’t require any contracts and says it’s a cheaper option than actually buying furniture. CityFurnish has 10,000 subscribers today, $3 million in ARR and has been profitable for 18 months.

NaturAll Club: NaturAll Club wants you to refrigerate your haircare products. The startup’s products are made from fruit and vegetable pulp. The team’s first product is made with fresh avocado and did $2 million in sales in 6 months, the company says. While these may sound like Juicero packs for your hair, organic products are the fastest growing product category in beauty.

FlockJay: Operates an online sales academy that teaches job seekers from underrepresented backgrounds the skills and training they need to pursue a career in tech sales. The 12-week long bootcamp offers trainees coaching and mentorship. The company has launched its debut cohort with 17 students, 100 percent of which are already in job interviews and 40 percent of which have already secured new careers in the tech industry.

Demodesk: Demodesk is making a screen sharing tool to help companies reshape sales by demoing products directly for customers. What’s unique is that it isn’t your desktop, it’s a virtual machine where your demo presentation can live without potential customers having to wait through lengthy downloads while still being able to collaborate and edit what’s happening in the software.

Ultralight: A cross-platform app development tool used for rendering HTML UI within games and desktop applications. The company’s goal is to replace Chromium by providing a GPU-accelerated proprietary renderer. Ultralight says it will be compatible with most programming languages.

Keeper: Keeper wants to stop 1099 employees from getting ripped off by minutiae of tax forms. The company says that the average contractor overpays $1,249 per year in taxes. Keeper uses machine learning to automatically find tax write-offs inside the bank statements of users. They’re targeting the 50 million contractors in the U.S. to find their market.

Taobotics: A manufacturer of autonomous robots for supermarkets in China to help brands promote and advertise their products in stores. The startup, which employs a team of robotics experts, says people are 7x more likely to purchase a product from a robot than in-store sales help. Taobotics recently secured a deal to pilot 1,000 robots for Coca Cola.

Releaf: Releaf is building machinery to help African food factories operate more efficiently. The startup says that 90 percent of food factories are running under capacity because they can’t pre-process raw materials quickly enough. The startup says their machines quickly pay off for the factories and are already in use.

Synova Life Sciences: Synova Life Sciences is building a medical device that makes it easier to harvest stem cells from a patient’s fat. The company boasts that its device, which uses “modified shock waves”, can get stem cells from fat 30 times faster than current solutions, while yielding twice as many cells. They’ve already done 45 procedures with 14 different doctors.

Dyneti Technologies: Has invented a credit card scanner SDK that uses a smartphone’s camera to help prevent fraud by over 50 percent and improve conversion for businesses by 5 percent. The business was started by a pair of former Uber employees including CEO Julia Zheng, who launched the fraud analytics teams for Account Security and UberEATS. Dyneti’s service is powered by deep learning and works on any card format. In the two months since it launched, the company has signed contracts with Rappi, Gametime and others.

PreFlight: PreFlight is trying to fully automate UI testing and eliminate the need for companies to hire specifically for QA. The company’s Chrome extension can help developers record user actions and run robust testing. After launching just two weeks ago, users have collectively run 55,000 tests with PreFlight.

AmpUp: The “Airbnb for electric vehicle chargers.” AmpUp, preparing for a world in which the majority of us drive EVs, operates a mobile app that connects a network of thousands of EV chargers and drivers. Using the app, an electric vehicle owner can quickly identify an available and compatible charger and EV charger owners can earn cash sharing their charger at their own price and their own schedule. The service is currently live in the Bay Area. 

Docbot: An AI-enabled computer vision platform for gastroenterology practices to improve colonoscopy procedures. The service, which integrates with IT systems to make billing and documentation more efficient, tracks withdrawal time, intubation rate, bowel prep and adenoma detection rate. 20 million Americans get colonoscopies every year, though doctors aren’t always able to identify the colon polyps which can cause colon cancer. Docbot detects colon polyps in real-time. The service has been used in more than 2,000 procedures to date.

Edyst: Edyst is an online coding bootcamps geared towards college students in India hoping to find employment. The company guarantees that each student that graduates the course will get at least 5 job interviews. Right now, their course is paid for directly by colleges for students. Eventually, the co-founders believe that the bootcamp will be able to replace lower-tier universities in India.

Okteto: An application development platform for Kubernetes that helps developers to quickly iterate and improve their test decision time by 4x. The founders have decades of experience building application platforms for Docker and other businesses. Okteto’s goal is to become the standard way to develop cloud-based applications for Kubernetes.

Brew.com: A subscription-based podcasting app tackling the podcast monetization problem. Brew costs users $5 per month and helps creators of all levels earn money for their content by paying them on a per listen basis. The startup launched the app last week with exclusive shows from eight creators, including YouTubers Boogie2988 and Jack Vale, who each have millions of followers on YouTube. Brew currently has 200 creators on its waitlist. We previously covered Brew on TechCrunch here.

Sapling Intelligence: Sapling Intelligence wants to be a Grammarly for the enterprise. The company’s deep-learning writing assistant can help messaging stay on-brand with a uniform voice that can be tuned to approach different audiences. Their product is a browser extension that sits on top of products like Zendesk and Salesforce.

Evo.Do: The developer of a codeless test automation tool for the gaming industry and other digital products. The company says its AI-enabled bots are as smart and flexible at identifying bugs in games as a human. The bots are able to find bugs in minutes with no human intervention; one bot works faster and more efficiently than one human tester.

Reelables: Reelables is looking to ensure that enterprise companies lose fewer of their products. The company is building ultra-thin flexible bluetooth trackers that are build into labels that can be affixed to products. The “Tile for enterprise” startup has already launched a pilot program with GE.

Docucharm: The platform, co-founded by former Uber product manager Minh Tri Pham, turns documents into structured data a computer can understand to accurately automate document processing workflows and to take away the need for human data entry. Docucharm’s API can understand various forms of documents (like paystubs, for example) and will extract the necessary information without error. Its customers include tax prep company Tributi and lending businesses Aspire.

Closer Sports: Closer Sports is creating a live-streaming platform for athletes to connect with fans. The co-founders want their product to fill in the shortcomings of ESPN and existing social media services. Unlike Instagram, the startup lets athletes charge for access to their live-streams. The company is kicking things off with UFC fighters and had 500 paid subscribers after launching recently.

Datamode: The startup identifies bugs in businesses’ data pipelines. Debugging is very expensive and time-consuming for data engineering teams. Datamode diagnoses the root cause of pipeline failure showing businesses exactly when it failed and what is broken instantly. Datamode was started by repeat founders, including a co-founder of Movity, which sold to Trulia in 2010.

Schoolable: There are 65 million students in Africa attending private schools, but tuition payments can be a major pain point for parents paying for their child’s education. That’s because tuition payments are often due upfront and it’s more difficult than it should be for schools to keep track of payments. Schoolable is creating an invoicing app that helps ensure parents make payments on time, while also using the app to save directly for tuition.

Vectordash: Dubbing itself the “Netflix for gamers”, Vectordash turns your Macbook Air or other underpowered rig into a formidable machine through their cloud gaming service. Vectordash’s platform allows gamers to play games without rendering them locally, instead utilizing peer-to-peer rendering power via host GPUs. The company is charging $28 per month for the service. We previously covered Vectordash on TechCrunch here.

Doorport: They’ve built a small device that can be added to existing apartment intercom systems, allowing residents to unlock the building’s front door for themselves, guests, and delivery people with an app. Doorport is currently being piloted in San Francisco, Oakland, and New York.  The startup is still figuring out exactly how much their product will cost, and are testing different pricing models. We previously covered Doorport on TechCrunch here.

Intact Therapeutics: The makers of smart gels for local drug delivery for gastrointestinal diseases. The company’s gel was created for inflammatory bowel disease but can be used on several other diseases. Intact has already signed a deal with a large pharmaceutical gel maker to develop its products at scale.

Cuanto: Cuanto is building a payment product for Latin American businesses selling their goods on WhatsApp and Instagram, a sales pipeline that 80 percent of businesses there focus on. The company is planning to use the data they yield from sellers to facilitate loans to businesses in Latin America. The startup is already live in 5 countries.

Bottomless: Bottomless automatically restocks your coffee supply using an internet-connected scale which members place under their bag of coffee grounds. Tracking the weight of the bag, Bottomless’ scales determine when customers are low on grounds and ensure a new bag of previously selected freshly roasted coffee is on their doorstep before they run out. The service costs $36 per year. We previously covered Bottomless on TechCrunch here.

Heart Aerospace: The manufacturers of an electric regional airplane, the ES-19, expected to be certified for commercial flights by 2025. The airliners hold 19 passengers. The founder, Anders Forslund, has a Ph.D. in aircraft design and has already signed letters of intent with aerospace companies worth $1.6 billion.

Windsor: Windsor is building a platform that connects a company’s separate application data services. The company connects this data and builds timelines of runtime events, giving customers a closer eye into what is happening on their helping them answer more intimate questions about how their

CareerTu: A WeChat-based online digital marketing school targeting Chinese students living in the U.S. CareerTu wants to help those students who are lacking the necessary skills to succeed in U.S. jobs. In the year since it launched, the startup has brought in $700,000 in revenue from 160,000 users and is profitable. The company plans to expand to support Chinese students based in China.

Convictional: Convictional helps direct-to-consumer companies approach larger retailers more simply. It takes a lot of time for a supplier to build a relationship with a retailer and start selling their products. Convictional wants to speed things up by building a B2B self-service commerce platform that allows retailers to easily approach brands and make orders.

Dockup: Creates on-demand staging environments for engineering teams to save developers’ time. Large companies spend millions to scale staging, including Facebook and Google, while smaller startups are stuck with broken staging. Dockup, which launched this month with four paying customers, will reduce these staging headaches.

Thrive Agric: The company helps smallholder farmers in Nigeria access crowdfunded loans to help grow their crops, as well as help them sell their produce. The company has worked with 14,000 farmers to date, with plans to reach 1,000,000 farmers across Africa by 2022 in what it says is a $54 billion market opportunity.

Skill-lync: Skill-lync is another YC startup looking to approach the fact that Indian college students aren’t getting jobs in the fields they study. The startup is targeting mechanical engineering students with a set of online courses that can make up for outdated college curriculums. The team is already educating 2,800 students and earning $82,000 in monthly revenues.

Rebank: An automation tool for business banking that works with any bank and/or multiple banks at once. Rebank, which claims to have “hacked banking,” has 40 companies currently using the tool to save time. Rebank operates under a subscription model, charging its customers $50 per month for access to its platform.

AXDRAFT: The startup is building software that helps smaller companies automate documents that they’re having to fill out again and again, helping startups spend less time drafting and proofreading routine documents. The company is starting off with a solution for contracts that helps startups fill out the documents quickly and for free while charging $25 to review the contracts and ensure that everything is up to snuff.

Glide: There has been a pretty major trend towards services that make it easier to build web pages or mobile apps. Glide lets customers easily create well-designed mobile apps from Google Sheets pages. This not only makes it easy to build the pages, but simplifies the skills needed to keep information updated on the site.

Boundary Layer Technologies: High-speed container ships using hydrofoils. The tech-enabled ships allow transit time that is comparable to air travel but much more affordable. The company built its prototype in just 10 weeks at a cost of $150,000 and has a letter of intent from Flexport to build ships that will travel between Los Angeles and Shanghai.

Categories: Business News

Atlassian acquires AgileCraft for $166M

Startup News - 2019, March 19 - 5:25am

Atlassian today announced that it has acquired AgileCraft, a service that aims to help enterprises plan their strategic projects and workstreams. The service provides business leaders with additional insights into the current status of technical projects and gives them insights into the bottlenecks, risks and dependencies of these projects. Indeed, the focus of AgileCraft is less on technical teams than on the business teams that support them and help them manage the digital transformation of their businesses.

The price total of the acquisition is about $166 million, with $154 million in cash and the remainder in restricted shares.

“Many leaders are still making mission-critical decisions using their instincts and best guesses instead of data,” said Scott Farquhar, Atlassian’s co-founder and co-CEO, in today’s announcement. “As Atlassian tools spread through organizations, technology leaders need better visibility into work performed by their teams. With AgileCraft joining Atlassian, we believe we’re the best company to help executives align the work across their organization – providing an all-encompassing view that connects strategy, work, and outcomes.”

As the name implies, AgileCraft focuses on the Agile methodology, though it also offers a bit of flexibility there with support for frameworks like SAFe, LeSS and Spotify. It supports pulling in data from tools like Atlassian’s Jira, but also Microsoft’s Team Foundation Server, IBM’s RTC and other services.

Atlassian will continue to operate AgileCraft, which had raised about $10.1 million before the acquisition as a standalone service. “We will continue to focus relentlessly on our customers’ success,” writes AgileCraft’s founder and CEO Steve Elliott. “We remain dedicated to pioneering enterprise agility and are thrilled to team up with the outstanding people at Atlassian to help our customers thrive.”

Over the years, Atlassian started embracing users and use cases for its tools that go beyond its core tools for developers. Jira and Confluence are the prime examples for this. Today’s acquisition continues this trend in that AgileCraft aims to bring to the rest of the company many of the methodologies that tech teams use.

“One of the critical roles we play for lots of organizations is in helping drive this kind of digital transformation where we’re really empowering the teams that are building and developing the kind of technology that moves our customers forward,” Atlassian president Jay Simons told me. “AgileCraft basically complements all of that by extending visibility into what teams are using Atlassian products to do up into key stakeholders and leaders in the business that are trying to manage better visibility at a portfolio or program level.”

Simons also stressed that AgileCraft already has very strong integrations into the existing Atlassian tools — and indeed, that was one of the main drivers of the acquisition. He noted that the company plans to improve those and think about additional patterns. “We’ll continue doing what we’re doing,” he said.

Simons also noted that he expects that a lot of Jira customers will now look at AgileCraft as an additional tool in helping the businesses manage their business’s digital transformation.

Atlassian doesn’t typically make a lot of acquisitions. Its pace is close to about one major buy per year. Last year, the company picked up OpsGenie for $295 million. In 2017, it acquired Trello for $425 million, the company’s biggest acquisition to date. Other major products the company has acquired include StatusPage, BlueJimp, HipChat and Bitbucket (all the way back in 2010).

Categories: Business News

misterb&b hits the equity crowdfunding trail to expand into hotels

Startup News - 2019, March 19 - 5:15am

Homosexuality is illegal in a third of the counties on this planet; in eight countries it is punishable by death. In the febrile atmosphere of today’s politics, hate-crime incidents in the U.S. increased by 17 percent from 2016 to 2017, according to the FBI.

More than 20 of those incidents were crimes against an individual’s sexual orientation — the largest increase since 9/11. Similar hate-crime statistics have increased in the U.K. and several other western countries.

It’s strange and saddening to think that men, women and gender non-conforming people who “travel while gay” are now in a more dangerous — and potentially life-threatening — situation around the world, despite us being well into the 21st century.

The key to the situation is knowing whether the place you’re staying will be welcoming or not. There are many incidents where, at hotels, gay travelers have been rejected or forced to book separate rooms, and had to fall back on third-party, unverified, user-generated reviews.

Now, misterb&b, the short-term rental marketplace aimed at the gay community, has a simple solution. Customers can book an entire home or rent a private room at the home of a gay or gay-friendly host, with many located in gay-friendly neighborhoods. The startup competes with more home-spun sites like “Gay Home Stays,” however, misterb&b has already raised substantial amounts in VC.

The startup graduated from the 500 Startups accelerator and has raised US$13.5 million from institutional investors like Project A and Ventech, and from angels like Joel Simkhai (founder of Grindr, which sold for US$300 million). The marketplace now has 310,000 hosts in more than 135 countries, and claims to have 30 percent revenue growth YoY; with 60 percent of the business done organically by repeat customers.

Indeed, misterb&b has now raised more than half a million dollars inside a week via Wefunder to fund its expansion. This will allow guests, hosts and the public to invest in the company’s push to launch its services into the hotel sector.

Investors are buying into a lucrative market. The niche of global gay tourism is estimated to be a $100 billion market, while gay people travel twice as much as other travelers. Its fundraising may also benefit from the influx of new tech millionaires being created by the upcoming IPOs of Uber, Lyft, Postmates and Airbnb.

CEO and founder Matthieu Jost says he wants to “build equality into the sharing economy and give back to a community that’s been historically economically marginalized,” providing its community “with the power of part ownership of the company.”

The idea for starting misterb&b was first conceived in 2013 after he had a negative experience while traveling with his partner and didn’t feel welcome by his host. “Six years ago, my partner and I traveled to and booked a room in Barcelona through a third-party rental website,” he told me via email.

“Unfortunately, when we arrived there, we were faced with a host who was very much homophobic and asked me if we were seriously going to share a bedroom. This was a very sad thing to have to face. Straight, hetero folks never have to worry about something so humiliating as this while on a lovely vacation; they will never have to think about it or prepare for it.”

“When I returned home I felt dejected, but I felt I had do something to solve this horrific problem — yet common fear — that our community faces. I don’t want my community to be afraid of traveling anymore,” he said.

“We are reaching out to the most passionate people in the community: our hosts and our guests, as well as LGBTQ allies,” said Jost. “We want to provide the opportunity to financially benefit from our successes,” he added.

The crowdfunding is for a new selection of gay-friendly and gay-welcoming hotels that have been selected by the company’s editorial team for their quality, exclusive and verified reviews from LGBTQ travelers. The idea is that travelers will also be able to connect with each other to explore the city together — especially because there’s safety in numbers.

Categories: Business News

Y Combinator bets on the booming podcast industry

Startup News - 2019, March 19 - 3:07am

Podcasts are exploding in popularity and Y Combinator, the startup accelerator known for its long list of unicorn graduates, is throwing its support behind a business tackling the podcast monetization problem. Among its latest and largest-ever cohort is Brew, a subscription-based app complete with original content.

Though Brew’s founders, Jijo Sunny, Madhavan Ramakrishnan, Aleesha John and Joseph Sunny, call Brew the “Netflix for podcasts,” the app differs from Luminary, which made headlines with the same tagline and a $100 million round earlier this month. Luminary, which hasn’t yet launched, will similarly operate under a subscription model, charging $8 a month for access to its podcasts. Instead of opening its platform to creators of any stature, the business is striking deals with established voices in the podcast industry, like Guy Raz of “How I Built This,” Adam Davidson of “Planet Money” and celebrities Trevor Noah and Lena Dunham.

Brew, on the other hand, charges listeners $5 per month for access to a different demographic: upstart podcasters and rising stars alike. In other words, if you and your mom wanted to start a podcast — and get paid — you can sign up on Brew and instantly start raking in cash. That is, if you’re garnering an audience of listeners; Brew pays its creators based on their number of unique listens.

The founding team behind Brew, a startup tackling the podcast monetization problem.

“Podcasts, by nature, have a low barrier to entry and that’s the best thing about podcasts, right?,” Brew chief executive officer Jijo Sunny tells TechCrunch. “Anyone anywhere can set up a podcast. To be a Netflix for audio, it has to be for all creators, not celebrities like Trevor Noah.”

The app officially launched in the app store last week with several original ad-free shows, including original content from YouTubers Boogie2988 and Jack Vale, who boast a 4.5 million and 1.5 million following on YouTube, respectively. Next month, Brew will make its platform available for all podcasters to upload shows.

“Our vision is to help millions of creators earn a living doing what they love,” Ramakrishnan tells TechCrunch.

The startup’s long-term vision includes incorporating a tipping feature, much like Himalaya, another podcasting business that recently secured a $100 million check. Himalaya allows listeners to send micro-payments to creators to help subsidize their ad-based income.

Later, Brew plans to allow podcasters to operate online stores within the app, so they can earn additional money through merchandise sales. Live podcasts, publishing and production tools are also on the roadmap.

Podcast startups are taking off thanks to support from venture capitalists, but the people behind the content still struggle to earn a solid paycheck. Justine and Olivia Moore of CRV, an early-stage venture capital firm, say podcasts monetize at only a penny per listener hour, on average. Podcasting, in other words, makes 10x less money per hours consumed than radio, TV, magazines or any other major content medium. Meanwhile, 73 million people are enjoying podcasts every month, per Edison Research, and some 15 billion episodes are downloaded each year.

It’s clear there is an untapped opportunity to help content creators get rich. The Brew team’s experience — they previously built Buymeacoffee.com, a tipping platform for artists that has funded 40,000 people to date — coupled with VCs excitement for the growing medium puts Brew on a solid path for growth.

Brew’s team is originally from Kerala, India but plans to permanently set up shop in San Francisco. They’ve raised a total of $400,000, including Y Combinator’s $150,000 check. CrunchRoll founder Kun Gao and Teachable CEO Ankur Nagpal are amongst its early backers.

Brew, alongside some 200 other startups, will pitch to investors at YC Demo Days later today and tomorrow.

What’s next for podcasting?

Categories: Business News

ClimaCell bets on IoT for better weather forecasts

Startup News - 2019, March 19 - 2:03am

To accurately forecast the weather, you first need lots of data — not just to train your forecasting models but also to generate more precise and granular forecasts. Typically, this has been the domain of government agencies, thanks to their access to this data and the compute power to run the extremely complex models. Anybody can now buy compute power in the cloud, though, and as the Boston and Tel Aviv-based startup ClimaCell is setting out to prove, there are now also plenty of other ways to get climate data thanks to a variety of relatively non-traditional sensors that can help generate more precise local weather predictions.

Now you may say that others, like Dark Sky, for example, are already doing that with their hyperlocal forecasts. But ClimaCell’s approach is very different, and with that has attracted as clients airlines like Delta, JetBlue and United, sports teams like the New England Patriots and agtech companies like Netafim.

“The biggest problem is that to predict the weather, you need to have observations and you need to have models,” ClimaCell CEO Shimon Elkabetz told me. “The entire industry is basically repackaging the data and models of the government [agencies]. And the governments don’t create the relevant infrastructure everywhere in the world. Even in the U.S., there’s room for improvement.”

And that’s where ClimaCell’s main innovation comes in. Instead of relying on government sensors, it’s using the Internet of Things to gather more weather data from far more places than would otherwise be possible. This kind of sensing technology could turn millions of existing connected devices — like cell phones, connected vehicles, street cameras, airplanes and drones — into virtual weather stations. It’s easy enough to see how this would work. If a driver turns on a windshield wiper or fog lights, you know it’s probably raining or foggy. Often, these cars also relay temperature data. If a street camera sees rain, it’s raining.

What’s more complex is that ClimaCell has also developed the technology to gather data from how atmospheric conditions impact the signal propagation between cell phones and their base stations. And to take this one step further — and beyond the ground level — it has also figured out how to gather similar data from satellite-to-ground microwave signals.

“The idea is that everything is sensitive to weather and we can turn everything into a weather sensor,” said Elkabetz. “That’s why we call it the weather of things. It enables us to put in place virtual sensors everywhere.”

Using all this data, ClimaCell is providing its customers, like airlines, ridesharing companies and energy companies, with real-time weather data and forecasts.

Using all of this data the company also recently launched flood alerts for about 500 cities that can provide 24 to 48-hour warnings ahead of major flood events. To do this, the company combined its weather data with its own hydrological model.

For now, most of ClimaCell’s business model focuses on selling its data and predictions to other businesses. The company plans to launch a consumer app in May, though. I got a sneak peek of the app; while I can’t vouch for the forecasts, it’s a very well-designed application that you’ll probably want to look at, no matter whether you’re a weather geek or just want to see if you can get a quick bike ride in before the rain starts.

Why a consumer app? “We want to become the biggest weather technology company in the world,” Elkabetz said. To get to this point, the company has raised a total of $68 million to date from investors that include Clearvision Ventures, JetBlue Technology Ventures, Ford Smart Mobility,  Envision Ventures, Canaan Partners, Fontinalis Partners and Square Peg Capital.

Categories: Business News

YC-backed Basement is a social network for close friends only

Startup News - 2019, March 19 - 1:06am

The past few years have been a bit of a dark age for budding social media startups. Facebook, Instagram, Twitter, Snap and messenger apps took up all the time of their users, leaving little room for yet another social media platform.

But the tide is shifting. Privacy scandals have shaken some users’ faith in giants like Facebook, Instagram and Twitter, and users have grown fatigued by the constant onslaught of #content.

Basement, a YC-backed startup, is looking to give users a new, simpler social network.

Basement allows users to only add up to 20 friends on the network. Co-founders Fernando Rojo and Jeremy Berman said they waited around for someone to build something like Basement after seeing their own friend groups migrate most of their communication to messenger apps from Facebook and other social networks.

On Basement, there are no filters or influencers. The hope is that users share with the people they actually want to share with.

It uses a feed-based system for sharing, letting users share content to their 20 friends. Users can also share to a smaller group of friends by tagging them, which limits the viewership to only mutual friends of those tagged.

Users who are friends can see one another’s comments on a mutual friend’s post. However, comments left by non-friends will always appear anonymous.

Alongside the main feed, Basement also has a meme feed, letting users choose from the internet’s top trending memes to share to their friend group.

Of course, Basement isn’t the first startup to try out the idea of a close-friends social network. Path was founded by Shawn Fanning and Dave Morin in 2010, giving users a photo-sharing and messaging platform that maxed out at 50 friends.

The network grew in the face of competition from Facebook, and at peak had around 50 million users. In fact, Path was raising money at a valuation of $500 million and turned down a $100 million offer from Google in its early months.

But it failed to retain talent, users and momentum. (A controversial privacy scandal in 2012 didn’t help.) In 2015, Path sold to Kakao for an undisclosed amount and was shut down for good just last year.

Rojo and Berman believe timing is more in their favor than it was with Path, but are also targeting a different audience. Whereas Path was aimed both at close friends and family, Basement wants to position itself squarely with young people who are already spending their time in meme-laden group chats.

“One of the challenges is that growth isn’t necessarily as inherently explosive in a micro-network as it would be with a broader social network,” said Rojo. “What’s exciting to us is that if anyone tries to spark up something similar to this, they’ll be one or two years behind. It’s harder to grow a micro-network, but once it’s bigger it’s much more robust because it’s the place where people turn when they want to connect with their close friends.”

What’s more: Basement promises to never run ads on the platform.

The company plans to mimic the WhatsApp business model, giving users their first year free and then charging an inexpensive subscription after that.

Categories: Business News

WorkClout brings SaaS to factory floor to increase operational efficiency

Startup News - 2019, March 18 - 11:21pm

Factory software tools are often out of reach of small manufacturers, forcing them to operate with inefficient manual systems. WorkClout, a member of the Y Combinator Winter 2019 class, wants to change that by offering a more affordable SaaS alternative to traditional manufacturing software solutions.

Company co-founder and CEO Arjun Patel grew up helping out in his Dad’s factory and saw first-hand how difficult it is for small factory owners to automate. He says that traditional floor-management tools are expensive and challenging to implement.

“What motivated me is when my dad was trying to implement a similar system,” Patel said, noting that his father’s system had cost more than $240,000, took over a year to get going and wasn’t really doing what he wanted it to do. That’s when he decided to help.

He teamed up with Bryan Trang, who became the CPO, and Richard Girges, who became the CTO, to build the system that his dad (and others in a similar situation) needed. Specifically, the company developed a cloud software solution that helps manufacturers increase their operational efficiency. “Two things that we do really well is track every action on the factory floor and use that data to make suggestions on how to increase efficiency. We also determine how much work can be done in a given time period, taking finite resources into consideration,” Patel explained.

He said that one of the main problems that small-to-medium sized manufacturers face is a lack of visibility into their businesses. WorkClout looks at orders, activities, labor and resources to determine the best course of action to complete an order in the most cost-effective way.

“WorkClout gives our customers a better way to allocate resources and greater visibility of what’s actually happening on the factory floor. The more data that they have, the more accurate picture they have of what’s going on,” Patel said.

Production Schedule view. Screenshot: WorkClout

The company is still working on the pricing model, but today it charges administrative users like plant management, accounting and sales. Machine operators get access to the data for free. The current rate for paid users starts at $99 per user per month. There is an additional one-time charge for implementation and training.

As for the Y Combinator experience, Patel says that it has helped him focus on what’s important. “It really makes you hone in on building the product and getting customers, then making sure those two things are leading to customer happiness,” he said.

While the company does have to help customers get going today, the goal is to make the product more self-serve over time as they begin to understand the different verticals for which they are developing solutions. The startup launched in December and already has 13 customers, generating $100,000 in annual recurring revenue (ARR), according to Patel.

Categories: Business News

Meet eFounders’ next batch of startups that want to redefine the future of work

Startup News - 2019, March 18 - 7:10pm

European startup studio eFounders has been relentlessly building new startups over the past few years. In 2019, the company plans to launch Bonjour, a demo tool for sales teams; Chilli, a recommendation service to help small and medium companies leverage modern software-as-a-service products; and Swan, a banking API to generate banking services on demand.

If you’re not familiar with eFounders, the team regularly comes up with ideas for new software-as-a-service companies and hires founding teams. In exchange for financial and human resources, eFounders keeps a significant stake in its startups. After a year or so, startups take off on their own, raise their own rounds of funding and leave the eFounders nest.

Many SaaS companies you’ve heard about first started as an eFounders projects, such as Front, Aircall, Forest and a dozen more. Indeed, eFounders says that it wants to “build the future of work,” which means building the tools and services that companies use every day.

According to eFounders, the value of the portfolio is growing quite rapidly. Companies have raised $187 million in total and have a post-money valuation of $541 million. They generate $67 million in annual recurring revenue combined.

But let’s go back to this new batch of startups. I’m sure some of them will pivot and I’m not yet familiar with their visions, but here’s what I understand they plan on doing based on public information.

Bonjour

Bonjour is all about empowering sales teams with an all-in-one service to close a deal. Instead of scheduling a video call in Google Calendar, sharing your screen for a demo in Skype or getting information from your CRM and losing a lead while juggling with all those services, you can do all your work in Bonjour.

It starts with a video call service that works in your browser. Your future client can just click to join a call. Sales reps can see CRM information right from their Bonjour interface. They can also start a screensharing session to show some slides or demo an app.

But Bonjour wants to go further and take care of everything that happens before and after the demo. For instance, I’m sure you’ve seen plenty of websites with a button that says “request a demo.” At best, you can fill out a form with your contact information so that the company can contact you later. At worst, you just get a phone number or an email address. Many of your potential leads may give up.

Some companies use services like Calendly so you can pick the right day and time in a calendar view. Bonjour lets you do the same thing and customize your forms. After the demo, you can track conversion rates and improve your sales pitch.

Chilli

Many SaaS companies sell their products to startups, big enterprise clients and everything in between. But the vast majority of companies are still small and medium businesses operating in countless industries. Some of them have been in business for a while and are still using outdated tools.

If you’re reading TechCrunch every day and working for a startup, you might not realize what it’s like to work for an independent movie production company, a small law firm or a traditional knife-making company.

Many companies still rely on an old PC tower hiding in a corner of the office with a shared hard drive. They send Excel documents back and forth, store their to-do lists on a Post-it note and write expense reports on paper forms.

Chilli wants to help small companies change the tools and services they’re using to run their businesses. You can’t give those companies the same sales pitch. And many SaaS companies don’t even try to sell to SMBs because it’s too costly.

That’s why Chilli isn’t just selling one product, but many different SaaS products. They can spend some time with you to understand your needs and recommend some products to increase the productivity of your company. It’s still unclear how Chilli plans to generate revenue, but it’s an interesting idea.

Swan

Details are still thin with Swan. It’s a fintech company that will let you add a banking layer to your service. The company says that you’ll be able to generate accounts, cards and IBANs on the fly.

I’m not sure how they plan to sell the product, but I think it could be particularly useful for marketplace companies and the gig economy in general. If you’re generating revenue because you’re renting your car on Drivy, delivering goods on Glovo or freelancing on Fiverr, you might want to cash out as quickly as possible. You could generate a card and spend your earnings straight from those platforms.

The ability to generate IBANs and accounts is also a great way to collect money and provide an alternative payment method in addition to card payments. But let’s see how the Swan team plans to position the product.

Categories: Business News

KashFlow founder Duane Jackson has launched Staffology, a payroll SaaS and API

Startup News - 2019, March 18 - 7:00pm

We already knew that serial entrepreneur Duane Jackson, who is best known for founding and exiting cloud accounting software KashFlow, was working on his third venture after recently selling Supdate to Crowdcube. And today Staffology, which Jackson tells me he began developing just over a year ago, is launching publicly.

Dubbed Staffology Payroll, the U.K. company’s first product is cloud payroll software built on top of a “comprehensive” and open API. The idea is that anything the web-based application does can also be achievable programmatically via the API.

“A few companies I advise were in need of a web-based payroll app with an API and it just didn’t exist,” explains Jackson. “Xero had been talking about an API for their U.K. payroll for years but it just didn’t look like it was happening [it is now, although it’s still in beta]. I had the opportunity to move on from Supdate which meant I would have some time on my hands, so I thought I’d give it a go myself.”

Jackson says that development of Staffology Payroll started in March 2018 and after a period of private and public beta testing it has passed the important milestone of gaining recognition for RTI and CIS filing from HMRC, the U.K.’s tax authority. The next stage is to encourage other software vendors and platforms to provide payroll functionality via the startup’s API.

“Automation of business processes is on the increase,” notes Jackson, but with regards to payroll this hasn’t yet happened for a lot of companies. “A real bottleneck is payroll because there simply aren’t the APIs out there to do it well,” he says. “It’s no longer just large employers trying to take advantage of technology and the efficiencies it can bring. Whether you’re a construction company managing payments to thousands of subcontractors or an accountancy firm managing payroll for hundreds of small businesses, integration and automation can save you a small fortune.”

To that end, the Staffology founder says the product has been used by a range of customers while in beta. Typical customers include accountants, payroll bureaus and employers of various sizes. “The white-label option is proving attractive to challenger banks looking at how our product can help them compete in the SME market and to HR SaaS vendors who hope it’ll make their own offerings more attractive,” says Jackson.

Another current customer is a large construction company that is integrating Staffology Payroll into their in-house systems to save them “days of work every month.”

Meanwhile, Staffology has been funded by Jackson’s own cash to date and he sees no reason to raise venture capital. “I made enough from my other exits to not have to worry about taking a salary from the business,” he says. “And as a full-stack developer I’m able to do the majority of the development work myself. So the costs have been minimal and what costs there have been I can comfortably cover. I’ve already had interest from a couple of VCs, but I struggle to see why I need to go down that route.”

With that said, Jackson is under no illusion that a payroll SaaS will only make significant profits with scale. Payroll processing is priced as a commodity and therefore Staffology will be a business that requires high volumes.

“Making money is the bit I still have to prove,” he adds. “The maximum you can get away with charging per payslip is £1, therefore the only way to make good money is to do very high volume. High volume payroll is exactly what APIs are best placed to handle and our product and pricing is designed to work for that market.”

Categories: Business News

Lyft’s imminent IPO could value the company at $23B

Startup News - 2019, March 18 - 12:29pm

Ride-hailing firm Lyft will make its Nasdaq debut as early as next week at a valuation of up to $23 billion, The Wall Street Journal reports. The business will reportedly price its shares at between $62 and $68 apiece, raising roughly $2 billion in the process.

With a $600 million financing, Lyft was valued at $15.1 billion in June.

Lyft filed paperwork in December for an initial public offering, mere hours before its competitor Uber did the same. The car-sharing behemoths have been in a race to the public markets, igniting a pricing war ahead of their respected IPOs in a bid to impress investors.

Uber’s IPO may top $120 billion, though others have more modestly pegged its initial market cap at around $90 billion. Uber has not made its S-1 paperwork public but is expected to launch its IPO in April.

Lyft has not officially priced its shares. Its S-1 filing indicated a $100 million IPO fundraise, which is typically a placeholder amount for companies preparing for a float. Lyft’s IPO roadshow, or the final stage ahead of an IPO, begins Monday.

San Francisco-based Lyft has raised a total of $5.1 billion in venture capital funding from key stakeholders including the Japanese e-commerce giant Rakuten, which boasts a 13 percent pre-IPO stake, plus General Motors (7.76 percent), Fidelity (7.1 percent), Andreessen Horowitz (6.25 percent) and Alphabet (5.3 percent). Early investors, like seed-stage venture capital firm Floodgate, also stand to reap big returns.

Lyft will trade under the ticker symbol “LYFT.” JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc. are leading the IPO.

Lyft recorded $2.2 billion in revenue in 2018 — more than double 2017’s revenue — on a net loss of $911 million.

Lyft declined to comment.

Uber will reportedly file for IPO next month

Categories: Business News

To get big faster, younger unicorns start buying startups sooner

Startup News - 2019, March 18 - 6:49am

In the name of getting big quick, it seems like some of the most valuable private tech companies are turning to mergers and acquisitions (M&A) as a way to accelerate business growth. So-called “unicorns”—privately-held technology companies which achieve billion-dollar valuations sometime before (or as a direct result of) going public or exiting via M&A—are chomping at the bit to make their first acquisitions, suggesting a mounting pressure on companies to grow even quicker.

Analysis of Crunchbase data indicates that, on average, recently founded unicorn companies are more likely to make their first M&A transactions sooner after founding than their older counterparts. In other words, younger unicorns buy other companies earlier. Here’s the data.

The narrowing gap between founding and first M&A

Using M&A data for companies in Crunchbase’s unicorn list, we found out when unicorn companies made their first M&A transactions on average. (We detail a bit more of the methodology in a note at the end.) Companies founded in more recent years were quickest to hit the M&A trail.

Eleven unicorn companies founded in 2007 took an average of roughly 8.33 years before making their first acquisitions. At time of writing, 29 unicorns founded in 2012 have made their first startup purchases, averaging just 4.1 years before doing so.

Note that there’s a bit of a sampling bias here. To an extent, it’s expected that unicorn companies founded in more recent years will have a lower average age of first acquisition, because there are many unicorn companies which haven’t yet made their first M&A deals.

The bulk of all M&A transactions by unicorns (not just the first ones) occur within the first seven years after founding.

We should take recent years’ dramatic reduction in average time until first acquisition with a heftier grain of salt (again, there are plenty of unicorns which haven’t yet gone shopping for startups). Even with that caveat made, averages have steadily trended lower between 2007 and 2012, after remaining steady (across an admittedly small sample set) since the start of the unicorn era.

This suggests that younger unicorns are increasingly using M&A transactions as a way to accelerate their path to massive market power.

It’s a big move for a company to buy another one. There’s all the financial particulars to negotiate, the legal and regulatory hurdles to clear, and the inevitable friction of integrating teams and technology from one entity with another. And that’s when the process is amicable and goes smoothly. The amount of time and resources a company commits to carrying out an M&A strategy is nontrivial, so it’s understandable why a company would put this process off to a later date or eschew it entirely. That high-growth tech companies are pursuing such a time and energy-intense strategy earlier on in the venture life-cycle points to the benefits M&A can bring to startups seeking to scale speedily.

Methodology notes

We found this by analyzing the set of acquisitions made by companies in Crunchbase’s list of unicorns, which we used as a proxy for “high-performing private technology companies” as a collective whole. We found the time elapsed between unicorns’ listed founding dates (which, note, have varying levels of precision) and the date of their first-ever acquisitions, regardless of whether the acquirer had achieved unicorn status. We then plotted the resulting data in a couple of ways.

More information about Crunchbase News’s methodology can be found on a dedicated page on this site.

Categories: Business News

Decade in review: Trends in seed- and early-stage funding

Startup News - 2019, March 17 - 6:30am

We’ve decided to step back from the breaking news for a minute to conduct a review of seed and early-stage funding trends over the last decade for U.S.-based companies.

I’m fairly certain we can all agree that the environment for startups has changed dramatically in the past 10 years, specifically in two major ways:

  1. The development of seed funding as its own class and;
  2. The expansion of growth stage investing.

What we’ve also seen are recent concerns raised about the decline in seed stage funding by Mark Suster, a partner at UpFront Ventures, as there has not been commensurate growth in early stage funding (Series A and B), to meet this growth in seed-financed companies. This is often expressed as the Series A crunch.

So with venture funding at an all-time high, along with increased growth in supergiant rounds, now seems like an appropriate time to conduct this kind of review.

Setting the stage

First, let’s set the stage for our analysis and explain where our data comes from with a few quick facts:

  • Rounds below $1 million can be the most difficult to capture adequately as many angel and pre-seed deals are not reported.
  • Luckily, Crunchbase has an “active founder community” that adds early stage financings.
  • By “active founder community” we are referring to many founders who are active on Crunchbase adding their company, themselves as founders, and their fundings.
  • Around 47 percent of fundings below $5 million in the U.S. are added by contributors, as distinct from our analyst teams who process the news, track Twitter, and work directly with our venture partners.
  • For this study, we bucket U.S. funding rounds by size to indicate stage.
  • Given the high percentage of self-reported seed financing, data added after the end of a quarter needs to be factored in.
  • For this reason we use projected data for many of the Crunchbase quarterly reports in order to more accurately reflect recent funding trends. For the charts below we are using actual data, with some provisions for the data lag when discussing the trends.

Now, let’s take a look at the trends.

Rounds below $1 million are slumping

Since 2014 we have seen mostly double-digit declines in less than $1 million rounds each year – a strong pivot from 2008-2014 when we saw double-digit growth.

In 2018 seed funding counts and amounts below $1 million were down from 2015 at 41 and 35 percent respectively. Given that data at this stage can be added long after the round took place, we assess there could be a 20 percentage-point relative increase in 2018 compared to 2017.

If we factor this in, 2018 seed funding counts and amounts below $1 million are down from 2015 at 30 and 23 percent respectively. In other words, seed below $1 million are closer to 2012 and 2017 levels.

$1 million to $5 million rounds are flattening

Round from $1 million to $5 million also experienced growth from 2008 through 2015, more than threefold for counts and close to threefold for amounts. Upward growth stalled from 2015. However, we do not see a substantial downward trend in the last three years. Dollars invested are stable at $7.5 billion from 2015 through 2017. Counts and amounts are down in 2018 from the 2015 height by 12 percent for deal count and 6 percent for amounts.

At Crunchbase we are always cautious about reporting downward trends for the most recent year or quarter, as data does flow in after the close of the most recent time period. If the trend is over a greater time period, that is a stronger signal for change in the market. Based on data continuing to be added after the end of a year for the previous year, we assess around 10 percentage point increase relative to 2017. This would make 2018 roughly equivalent  to 2017 on rounds and slightly up on amounts.

Seed funds take bigger stakes

Why is seed flattening? Seed investors report putting more dollars into fewer deals. Or as they raise more substantial subsequent funds, they are putting more dollars into the same number of transactions. Seed funds need to get enough equity for a meaningful stake, should a startup survive to raise subsequent rounds. Seed funds are investing in fewer startups for more equity.

Larger venture funds taking a less active role in seed

UpFront Ventures’ Suster (referenced earlier) also talks about larger venture firms becoming less active in seed, as investing at the seed stage can limit their ability down the road to invest in competitive startups who emerge as growing contenders in a specific sector. The growth of more substantial funds in venture allows firms to see deals mature before investing, perhaps paying more to get the equity they want, and allowing startups not growing as quickly to fail or get acquired.

As Fred Wilson from Union Square Ventures notes, “In the first five years of this decade, we saw the seed portion of the market explode. In the last five years of this decade we saw the growth portion of the market explode. But over those last ten years, the middle part, the traditional venture capital market, has not changed much.”

The middle is growing

For the middle, Series A and B rounds (which used to be the first institutional money in), the market for $5 million to $10 million rounds has almost doubled, but it has taken from 2008 to 2018. In that same period, growth has been slower than round below $5 million. Growth has continued past 2015. Since 2015, rounds are down slightly for one year, and then continue to grow in 2017 and 2018. Counts are up from 2015 by 17 percent and dollars by 18 percent.

$10 to $25 million rounds are growing

Rounds of $10 million to $25 million have grown over 11 years by 73 percentage points for counts, and 78 percentage points for amounts. This is a slower pace than $5 million to $10 million rounds, but continuing to edge up year over year.

Seed is maturing

Seed is its own class that is here to stay. Indeed pre-seed, seed and seed extension all seem to have specific dynamics. Of the 600-plus active seed funds who have raised a fund below $100 million, close to half have raised more than one fund. In the last three years in the U.S. we have not seen a slowing of seed funds raised for $100 million and below.

Conclusion

When we take into account the data lag, dollars for below $5 million is projected to be $8.5 billion, close to the height in 2015 of $8.6 billion. Deal counts are down from the height by a fifth, which does mean less seed-funded startups in the U.S. Provided that capital allocation is greater than $5 million continues to grow, less seed funded startups will die before raising a Series A. More companies have a chance to succeed, which is good for seed funds, and ultimately for the whole ecosystem.

Categories: Business News

Pre- and Post-Money SAFEs: Choosing the right one for your startup

Startup News - 2019, March 17 - 2:15am
Jared Verzello Contributor Jared Verzello is a startup and venture capital lawyer and GM of Atrium Seed where he guides companies through formation, fundraising, hiring, and managing board meetings.

With Y Combinator’s Demo Day taking place at Pier 48 in San Francisco next week, its largest batch of companies ever is getting ready to present to an audience of select investors. Having taken Atrium through Demo Day myself, I have first-hand knowledge of the process. When the founders have finished their pitches, the time to talk numbers will closely follow. Chief among the many decisions founders will face during this time is whether to opt for the Pre-Money SAFE or the new Post-Money SAFE, the two standardized legal documents that YC has introduced in recent years.

Both versions are meant to make the process fast, easy and fair for both parties in the early-stage fundraising process. But there are crucial differences between the two that founders should examine carefully.

Essentially, the Pre-Money SAFE is exceptionally favorable to founders because it gets them pre-valuation funding like a convertible note, but debt-free. The Post-Money SAFE sweetens some of the terms for investors, like locking in their percentage ownership in a priced round later on.

Overall, we expect the Post-Money version to become more common, especially if the company is raising a round above $1 million or $2 million, and the investors have more leverage to ask for it in the negotiation.

(Note: This article is aimed at giving founders a general understanding of the changes from Pre-Money SAFEs to Post-Money SAFEs. The information provided is based on my professional experience and opinions, and should not be used without careful consideration and advice by qualified advisors and legal counsel. Also, to learn more and ask questions about Pre and Post-Money SAFEs, join me on April 16th for a webinar where I’ll dive in a bit deeper.)

Two structures for raising startup investment

Today there are two general ways of structuring a startup fundraising round. The first can be called a “priced equity round,” and is characterized by the sale of preferred stock with a fixed valuation.

Categories: Business News

Startups Weekly: Uber’s headline-grabbing week and sextech at SXSW

Startup News - 2019, March 16 - 9:00pm

I spent the week at SXSW, Austin’s really, really huge technology, music, comedy and film festival. It’s my first year making the trek down here for the event, which I did to interview sextech entrepreneur Lora DiCarlo founder Lora Haddock, whose robotics innovation reward was infamously revoked at this year’s CES.

“I brush my teeth and I masturbate. It’s all normal,” she said, addressing the stigma surrounding female-focused pleasure tech. Haddock, during our chat, also announced the first-ever government grant for a sextech startup, a $99,637 funding for Lora DiCarlo from the state of Oregon. Lora DiCarlo plans to release its first product, the Osé, this fall.

Here’s what happened while I was wondering confused around Austin.

Uber, Uber, Uber

Uber dominated the news cycle this week; here’s the TL;DR. The ride-hailing company is probably, most likely going to unveil its S-1 next month and it’s tying up some loose ends ahead of its big IPO. Uber wants to raise roughly $1 billion at a valuation of between $5 billion and $10 billion for its autonomous vehicles unit — yes, the same one that was burning through $20 million per month. Waymo, similarly, is looking to raise outside capital for the first time for its AV efforts.

Top TPG dealmaker caught in college admissions scandal

Bill McGlashan, who built his career as a top investor at the private equity firm TPG, was fired (or maybe quit?) says the firm after he was caught up in what the Justice Department said is the largest college admissions scandal it has ever prosecuted. Even worse, McGlashan lead TPG’s social impact strategy under the Rise Fund brand, making the charges particularly damning.

Accel gets $2.5B

HotelTonight and Slack stakeholder Accel raised $2.525 billion, sources confirm to TechCrunch; $525 million for its fourteenth early-stage fund, $1.5 billion for its fifth growth fund and $500 million for its second Leaders Fund, or a dedicated pool of capital meant to help the firm strengthen its positions on particularly competitive bets. Plus, 137 Ventures announced its fourth fund with $210 million in committed capital. The firm provides liquidity to founders and early employees of “sustainable, fast-growing, private companies.” In essence, 137 Ventures buys shares directly from employees at unicorn tech companies, like Palantir,  Flexport and Airbnb.

Sam Altman

Last week, we reported Y Combinator president Sam Altman would be stepping down to focus on OpenAI. TechCrunch’s Connie Loizos questions whether he had a positive or negative influence on the accelerator during his presidency. Altman was part of the first YC startup class in 2005 and began working part-time as a YC partner in 2011. He was ultimately made the head of the organization five years ago.

Brian O’Malley’s HotelTonight win

Forerunner Ventures general partner Brian O’Malley went long on HotelTonight and it paid off. For your weekend reading, we thought you might enjoy an oral history from O’Malley about how he stumbled upon HotelTonight and remained connected to the company across its nine-year history.

Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets

Startup cash

VC shakeups 

In an announcement that shocked VC Twitter, Tiger Global announced that Lee Fixel, whom Bill Gurley once said is one of the smartest investors on the scene, is leaving the firm at the end of June. Scott Shleifer and Chase Coleman will continue as co-managers of the portfolios Fixel has overseen, with Shleifer taking over as its head. “Lee has been a driving force behind the expansion of Tiger Global’s private equity investing activities in the United States and India, and he has distinguished himself as a world-class investor across multiple sectors and stages,” the firm stated. And on the hiring front, Canvas Ventures is expanding its team of three general partners to four with the hiring of Mike Ghaffary, a former general partner at Social Capital.

Extra Crunch

Subscribers to TechCrunch’s premium content can learn which types of startups are most often profitable.

Y Combinator’s latest batch

YC demo days are coming up quick. The TechCrunch staff has been meeting with YC startups and documenting their journey through the startup accelerator. I spoke to YourChoice Therapeutics, a startup developing unisex, non-hormonal birth control, and Bottomless, which operates a direct-to-consumer coffee delivery service. TechCrunch’s Lucas Matney wrote about Jetpack Aviation, a YC startup, and its $380,000 flying motorcycle, and Adventurous, an augmented reality scavenger hunt crafted for families. TechCrunch’s Megan Rose Dickey spoke to Ysplit, which wants to make it so you never have to owe anyone money ever again.

Listen to me talk

This week on Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines, Crunchbase News’ editor-in-chief Alex Wilhelm and TechCrunch’s Connie Loizos discuss Uber’s IPO and Stash’s big round. Listen here.

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Categories: Business News

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