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Italy’s Commerce Layer raises $6M led by Benchmark for its headless e-commerce platform

2020, May 28 - 10:00pm

In the world of commerce, the last few months have underscored the fact that every retailer, brand and entity that sells or distributes something needs to have a digital strategy. Today, one of the startups that’s built a platform aimed at giving them more control in that process is announcing a Series A to continue expanding its business.

Commerce Layer, which has built a “headless” e-commerce platform — used to develop online sales strategies that use APIs to plug your inventory to take orders and payments from a variety of endpoints like other marketplaces, your own site and app (and the various payment systems you might use depending on the country you’re selling into), messaging services, social channels, and more — has raised a Series A of $6 million, which CEO and founder Filippo Conforti said the startup will be using to continue expanding in more geographies and adding in more endpoints to fit the needs of its current (and future) customers.

The funding is being led by Benchmark Capital, with participation also from Mango Capital, DAXN, PrimeSet, SV Angel, and NVInvestments. The startup is based out of Italy — specifically, just outside of Florence in Tuscany. And so the funding is notable for a few reasons: first, for the investors; second, what it says about this particular category in the tech ecosystem right now; and third, that even in what was at one point the epicenter of the COVID-19 outbreak in Western countries, we are seeing signs of recovery and activity in the tech ecosystem.

In fact, Commerce Layer was talking to Benchmark and others in the Valley well before the outbreak of the pandemic, and the term sheets with those investors were signed in January, also before things really kicked off in Italy. What took significantly longer was the process after, in which many individual investors in the startup, based in Italy, had to sign off paperwork related to the new investors and the fact that Commerce Layer was also incorporating in the US as part of that deal. All of that was handled remotely.

The world of e-commerce has changed a huge amount in the last couple of decades. The early days saw people ‘shopping’ online but ordering through email, eventually giving way to having your own site or selling perhaps on a marketplace like eBay or Amazon. Modern times have made that process both easier and more complex.

Complex, because brands and retailers now have a large array of options and permutations for how to sell something, both on their own sites as well as on a number of other platforms (some, as we have described before, have foregone sites altogether).

Easier, because the rise of APIs to enable developers to plug into a number of other systems without building everything themselves from scratch (including, even, platforms like RapidAPI, which has also recently raised $25 million, to help organise and manage how those APIs are used).

This is where Commerce Layer fits into the picture, with an API-based system that is able to manage multiple SKUs, prices, and inventory data to help its customers sell in any currency, with distributed inventory models, and global shipping that makes it easy to add or adjust where and when you are selling, be it across your site or app, or a different platform altogether.

There are a number of tools on the market today to enable the very smallest, and the very biggest, merchants to develop and power online sales for brick-and-mortar or pure-play e-commerce companies and brands; and there are even a number of “headless” options out there.

The wider list is pretty extensive, but some of the bigger names include Shopify, BigCommerce, Commercetools, and Ecwid and Strapi (both of which also announced funding just last week, see here and here).

Conforti — who got his start in e-commerce a decade ago when building online commerce solutions for Gucci — acknowledges that the competitive landscape is indeed very big, but also believes that the key lies services like his being significantly younger, and thus more modern and easy to use, than even the legacy headless systems or services developed by older e-commerce enablers.

“Being headless is mandatory in order to provide a truly omnichannel experience to customers,” Conforti said. If you’re not API-first that is a flag, he added. “Everyone knows it’s the future, and the present.” He said that he considered Commercetools, another European company, “the only real competitor” although “they were born 15 years ago so you get some older technology. Commerce Layer is more fresh with more modern APIs.”

Customers of Commerce Layer include Chilly’s (the fashionable water bottle company), Au Depart, Richard Ginori and more, who Conforti says help shape what his startup builds next: for example one of its customers wants an integration with Farfetch, the high-end fashion marketplace, and so they are building that to subsequently offer it as an option to others.

Eric Vishria, a general partner at Benchmark who is joining the board of the startup with this round, said that the distinction is great enough between what Commerce Layer has built and what already exists on the market to take a bet on the company.

“Right now there is a huge gap between the mom-and-pop, give-me-a-generic-template-based-storefront-quickly, and the invest-a-hundred-engineers-and-millions-of-dollars-to-build-everything-from-scratch,” he said. “The most likely approach to fill that need is the JAM stack and API approach – like Commerce Layer, which will give companies radically more flexibility to create unique experiences than a template. But allows them to build quickly and inexpensively by assembling building blocks rather than everything from scratch.

“We committed to investing in Commerce Layer before the pandemic took hold, but I couldn’t be more delighted to invest in a company founded in Italy right now. The fact that the team continued to build and grow in Italy through this all is a testament to the entrepreneurial spirit.

Benchmark once had a full European arm, which separated and now goes by the name Balderton. Meanwhile, it has also continued to invest in a number of startups in the region from its own funds, including Zendesk (Denmark), Elastic (Netherlands), Contentful and ResearchGate.

Categories: Business News

Wasabi announces $30M Series B as cloud storage business continues to grow

2020, May 28 - 9:36pm

We may be in the thick of a pandemic with all of the economic fallout that comes from that, but certain aspects of technology don’t change, no matter the external factors. Storage is one of them. In fact, we are generating more digital stuff than ever, and Wasabi, a Boston-based startup that has figured out a way to drive down the cost of cloud storage, is benefiting from that.

Today it announced a $30 million Series B led led by Forestay Capital, the technology innovation arm of Waypoint Capital, with help from previous investors. As with the previous round, Wasabi is going with home office investors, rather than traditional venture capital firms. Today’s round brings the total raised to $110 million, according to the company.

While founder and CEO David Friend wouldn’t discuss the specific valuation, he did say it was in the hundreds of millions of dollars.

Friend says the company needs the funds to keep up with the rapid growth. “We’ve got about 15,000 customers today, hundreds of petabytes of storage, 2,500 channel partners, 250 technology partners — so we’ve been busy,” he said.

He says that revenue continues to grow in spite of the impact of COVID-19 on other parts of the economy. “Revenue grew 5x last year. It’ll probably grow 3.5x this year. We haven’t seen any real slowdown from the coronavirus. Quarter over quarter growth will be in excess of 40% — this quarter over Q1 — so it’s just continuing on a torrid pace,” he said.

The challenge for a company like Wasabi, which is looking to capture a large chunk of the growing cloud storage market, is the infrastructure piece. It needs to keep building more to meet increasing demand, while keeping costs down, which remains its primary value proposition with customers.

The money will be used mostly to continue to expand its growing infrastructure requirements. The more they store, the more data centers they need, and that takes money. It will also help the company expand into new markets where countries have data sovereignty laws that require data to be stored in-country.

The company launched in 2015. It previously raised $68 million in 2018.

Wasabi just landed $68 million to upend cloud storage

Note: This article originally stated this was a debt financing round. The company has clarified that it is an equity round.

Categories: Business News

Gogoro unveils Eeyo, its new ebike brand

2020, May 28 - 8:00pm

Gogoro, the mobility company best known for its SmartScooters, revealed details about its new ebike brand Eeyo today. Eeyo will launch with two lightweight models, both powered by the SmartWheel, a self-contained hub designed by the company that integrates motors, batteries, sensors and smart connectivity technology.

Eeyo is the first product that Gogoro will introduce in the United States, nine years after it was founded by HTC executives. The ebikes will go on sale there and in Taiwan, where Gogoro is based, in July, and in Europe shortly afterward.

With more than 300,000 customers, Gogoro’s SmartScooters and their charging stations are a common sight in Taiwanese cities. Technology developed by the company, including its lightweight rechargeable batteries, are also used in scooters made by Yamaha, Suzuki, Aeon and PGO. It plans to make Eeyo’s tech available to manufacturing partners as well.

Gogoro co-founder and CEO Horace Luke told TechCrunch that even though scooters are widely used in many cities in Asia and Europe, they are less common in the U.S., so the company decided to make Eeyo its first American launch instead of the SmartScooter.

The team began planning Eeyo’s launch a year ago and even though they could not have anticipated it would happen during COVID-19, Luke said the pandemic has created new demand for ebikes, a market that was already growing quickly.

“At the moment, use of public transportation is down and people are very cautious about it. This is forcing people to find alternative ways to get around,” said Luke. “A lot of cities are very hilly, commutes are long and with streets closed, cars are not as efficient as they used to be. So there is a huge demand and the ebike market is blowing up.”

The company began working on Eeyo about three years ago, with the idea of creating a “human-electric hybrid.”

“That sounds like a fancy way of saying ‘e-bike’ until you ride what we made,” Luke said. “It took a lot of time for us to create this project. Instead of focusing on utility and the power assistance to get somewhere, we wanted to create a different paradigm. Thinking ‘I need to take my ebike to the grocery store’ isn’t usually exciting, but we wanted to focus on agility and excitement.”

Eeyo’s first ebike models, the 1 and 1s, were designed with a specific user in mind: city dwellers who want agile, fast bikes that are able to handle tricky terrain like hills. “I kept telling our team, I want the bike to give me the same feeling I had when I was 18 and able to get somewhere without breaking into a sweat. I wanted to bring that excitement and joy back into riding a two-wheeler to our customers.”

The Eeyo 1s and 1 weigh 26.4 pounds and 27.5 pounds, respectively, much lighter than many ebikes, which typically weigh 45 to 50 pounds. Its carbon fiber frame was designed so riders can carry the bikes on their shoulder. They are charged either by snapping chargers around their hubs, or placing them on an optional stand charger.

Most of the technology used in Gogoro’s SmartScooters, including its batteries and charging stations, were designed by the company’s engineers. SmartWheel, the key technology behind Eeyo, was also developed in-house.

“What drives the mechanism for performance is our innovation, the SmartWheel,” said Luke. “It is a hub-based motor, it has a battery and sensors in it, a computer system and a motor system.” That includes Gogoro’s Intelligent Power Assist system, which uses a torque sensor to detect how hard a rider is pedaling and calculate the amount of assistance the bike needs to give.

The SmartWheel also connects to the Eeyo app, which enables riders to monitor their speed and pedaling power when their smartphones are mounted to the bike. It also downloads over-the-air firmware and software updates for the bike, similar to the Gogoro SmartScooter’s automatic updates.

Both Eeyo models use the SmartWheel, have full carbon fiber frames and forks, and two riding modes: “sport mode,” which responds to the rider’s pedaling and delivers about 40 miles of range, or the distance the bike can be used to travel on one charge, and “Eco Mode,” which conserves battery power by limiting power assistance and can extend the ebike’s range to 55 miles.

The Eeyo 1s is available in one color, “warm white,” and its seat post, handlebars and rims are also made out of full carbon fiber. It weighs 26.4 pounds and will be priced at $4,599. The Eeyo 1 comes in two colors, “cloud blue” and “lobster orange,” and uses alloy seat posts, handlebars and rims instead. It weighs 27.5 pounds and will cost $3,899.

Gogoro sees itself as a mobility platform business that not only manufactures vehicles, but also develops technology for electric vehicles and vehicle sharing. Luke said the company wants to offer its ebike technology, including the SmartWheel, for use by other manufacturers because Gogoro “has never taken a one-size-fits-all approach, even with our scooter business. That is one reason we work with Yamaha, Suzuki, PGO, Aeon.”

Working with partners also furthers the company’s goal of getting more electric vehicles on the street and reducing pollution.

“We only have X amount of years to make changes and if we get more people alongside us, we can make a giant impact,” Luke added. “Other people will build different form factors, ones that are more leisure-like, more focused on utility, while we focus on sportiness, agility and fun.”

Known for its electric scooters, Gogoro moves toward its future as a mobility platform

Categories: Business News

Greyparrot bags $2.2M seed to scale its AI for waste management

2020, May 28 - 6:25pm

London-based Greyparrot, which uses computer vision AI to scale efficient processing of recycling, has bagged £1.825 million (~$2.2M) in seed funding, topping up the $1.2M in pre-seed funding it had raised previously. The latest round is led by early stage European industrial tech investor Speedinvest, with participation from UK-based early stage b2b investor, Force Over Mass.

The 2019 founded startup — and TechCrunch Disrupt SF battlefield alum — has trained a series of machine learning models to recognize different types of waste, such as glass, paper, cardboard, newspapers, cans and different types of plastics, in order to make sorting recycling more efficient, applying digitization and automation to the waste management industry.

Greyparrot points out that some 60% of the 2BN tonnes of solid waste produced globally each year ends up in open dumps and landfill, causing major environmental impact. While global recycling rates are just 14% — a consequence of inefficient recycling systems, rising labour costs, and strict quality requirements imposed on recycled material. Hence the major opportunity the team has lit on for applying waste recognition software to boost recycling efficiency, reduce impurities and support scalability.

By embedding their hardware agnostic software into industrial recycling processes Greyparrot says it can offer real-time analysis on all waste flows, thereby increasing efficiency while enabling a facility to provide quality guarantee to buyers, mitigating against risk.

Currently less than 1% of waste is monitored and audited, per the startup, given the expensive involved in doing those tasks manually. So this is an application of AI that’s not so much taking over a human job as doing something humans essentially don’t bother with, to the detriment of the environment and its resources.

Greyparrot’s first product is an Automated Waste Monitoring System which is currently deployed on moving conveyor belts in sorting facilities to measure large waste flows — automating the identification of different types of waste, as well as providing composition information and analytics to help facilities increase recycling rates.

It partnered with ACI, the largest recycling system integrator in South Korea, to work on early product-market fit. It says the new funding will be used to further develop its product and scale across global markets. It’s also collaborating with suppliers of next-gen systems such as smart bins and sorting robots to integrate its software.

“One of the key problems we are solving is the lack of data,” said Mikela Druckman, co-founder & CEO of Greyparrot in a statement. “We see increasing demand from consumers, brands, governments and waste managers for better insights to transition to a more circular economy. There is an urgent opportunity to optimise waste management with further digitisation and automation using deep learning.”

“Waste is not only a massive market — it builds up to a global crisis. With an increase in both world population and per capita consumption, waste management is critical to sustaining our way of living. Greyparrot’s solution has proven to bring down recycling costs and help plants recover more waste. Ultimately it unlocks the value of waste and creates a measurable impact for the environment,” added Marie-Hélène Ametsreiter, lead partner at Speedinvest Industry, in another statement.

Greyparrot is sitting pretty in another aspect — aligning with several strategic areas of focus for the European Union, which has made digitization of legacy industries, industrial data sharing, investment in AI, plus a green transition to a circular economy core planks of its policy plan for the next five+ years. Just yesterday the Commission announced a €750BN pan-EU support proposal to feed such transitions as part of a wider coronavirus recovery plan for the trading bloc. 

Greyparrot uses computer vision to improve waste management

Categories: Business News

Meniga, the digital banking tech provider, raises €8.5M led by French bank Groupe BPCE

2020, May 28 - 4:45pm

Meniga, the London-headquartered fintech that provides digital banking technology to some of the world’s largest banks, has closed a €8.5 million in additional funding.

Described primarily as a “strategic investment,” the round is led by Groupe BPCE, the second-largest banking group in France, alongside Portugal’s Grupo Crédito Agrícola and long-standing strategic partner UniCredit. All three are customers of Meniga.

The funding will be used for continued investment in Meniga’s R&D activities, as well as to strengthen the fintech’s sales and service teams to meet what it says is growing demand. Other participants in the round include current institutional investors Velocity Capital, Industrifonden, and Frumtak Ventures.

“We are very pleased to welcome Groupe BPCE and Crédito Agrícola to our growing group of strategic investors,” says Georg Ludviksson, CEO and co-founder of Meniga, in a statement. “Partnering closely with our customers is a key part of our strategy to be the preferred digital innovation partner to our clients. An equity relationship is an excellent way to strengthen such partnerships”.

Meniga’s digital banking platform helps banks and fintechs use personal finance data to innovate in their online and mobile offerings. Its various products include a software layer that bridges the gap between a bank’s legacy tech infrastructure and a modern API, making it easier to build consumer-friendly digital banking experiences.

Meniga‘s product suite spans data aggregation technologies, personal and business finance management solutions, cashback rewards and transaction-based carbon insights.

The company’s tech has also been designed to support and benefit from Open Banking, and helped by this, its products and services are already used by more than 90 million banking customers across 30 countries.

This saw it open new office locations in Barcelona and Singapore in 2019, adding to its existing presence in London, where the company is headquartered, and Reykjavi, where much of its R&D is located, alongside offices in Stockholm, Helsinki and Warsaw.

Meanwhile, lead investor Groupe BPCE first partnered with Meniga back in 2018. Cue statement from Groupe BPCE’s Yves Tyrode, chief digital and data officer, and member of the management board of Groupe BPCE: “Our partnership with Meniga has been extremely positive to date. Together, we have laid the groundwork for continued digital innovation at Groupe BPCE to better serve our customers in a very dynamic banking market. We look forward to continue transforming our digital customer experience and contribute to building the future of digital banking together with Meniga”.

Meniga helps incumbent banks keep fintech fear at bay

Categories: Business News

Investors say emerging multiverses are the future of entertainment

2020, May 28 - 9:04am

The COVID-19 pandemic is accelerating the adoption of new technologies and cultural shifts that were already well underway. According to a clutch of heavy-hitting investors, this dynamic is particularly strong in gaming and extended reality.

Unlike other segments of the startup and tech world, where valuations have been slashed, early-stage companies focused on building new games, gaming infrastructure and virtual or extended reality entertainment are having no trouble raising money. They’ve even seen valuations rise, investors said.

“Valuations have increased pretty significantly in the gaming sector. Valuations have gone up 20 to 25% higher than I would have seen prior to this pandemic,” Phil Sanderson, a co-founder and managing director at Griffin Gaming Partners, told fellow participants on a virtual panel during the Los Angeles Games Conference earlier this month.

Driving the appetite for new investments is the entertainment industry’s bearhug of virtual events, animated features, games and social media platforms after widespread shelter-in-place orders made physical events an impossibility.

Categories: Business News

Fintech regulations in Latin America could fuel growth or freeze out startups

2020, May 28 - 7:45am
Ximena Aleman Contributor Share on Twitter Ximena Aleman is co-founder and chief business development officer at Prometeo, an open banking platform that serves Latin America.

It may have entered the game later than other leading regions such as Europe and North America, but Latin America’s fintech industry is dynamic and growing fast. The sector was recently given a valuation of more than $150 billion and continues to expand year-on-year.

And while the longer-term impact of COVID-19 on the sector is yet to be determined, there’s no doubt that the demand for certain fintech solutions is on the rise. As smaller financial institutions across the region are under pressure to digitize, many are calling on fintechs to help them along this journey. In addition, a number of SMEs are seeking out digital loan services to help them get through the crisis.

The sector’s speedy expansion has meant that regulators in LatAm are under increasing pressure to enact legislation that addresses the murky waters of fintech activity, providing confidence to consumers and investors alike. However, regulation across the region must be careful to not quash innovation, while startups must figure out how to be agile in an environment which is becoming increasingly regulated. Let’s take a closer look at what impact regulation has had so far in LatAm, and what needs to happen to strike a balance between sector growth and public trust.

The development of fintech regulation across LatAm

Mexico is currently leading the way when it comes to fintech regulation in LatAm, thanks to its comprehensive 2018 fintech Law. The law covers most fintech activities, including crowdfunding, virtual wallet, transactions carried out with cryptocurrencies and open banking. In addition, Mexico has certain financial laws that regulate financial entities in their execution of transactions using fintech. The law also provides a regulatory sandbox for both licensed and non-licensed companies.

Brazil is the furthest ahead after Mexico, as it individually legislates crowdfunding and peer-to-peer lending, while a special congressional commission is working on a broader legislative strategy. Brazil’s Central Bank also endeavors to make open banking legislation effective by the third quarter of 2020, which will pave the way for a thriving open banking ecosystem.

Categories: Business News

An hourly home-sharing startup in San Francisco finds itself in the city’s crosshairs

2020, May 28 - 7:04am

Emmanuel Bamfo is used to fighting uphill battles. Still, his latest fight, with the city of San Francisco, may well destroy his business if he doesn’t win it, and quickly.

Bamfo is the co-founder and CEO of Globe, a year-old, six-person startup that connects customers with rooms in people’s mostly urban homes. Think Airbnb, except that Globe isn’t for users looking for days- or months-long stays, but instead for a day break.

Globe evolved from an earlier company called Recharge that tried convincing hotels to let its customers rent their rooms by the hour and even minute, and had raised around $10 million in funding. When hotels pushed back on the idea of cleaning their rooms so frequently, the nascent outfit entered into the popular accelerator program Y Combinator last summer and came out as a company that connects customers to home owners instead.

Growth at Globe had been slow but steady since, with more than 10,000 hosts around the world signing up to rent out rooms in their homes. Then came COVID-19.

Some hosts kept providing space to guests. One tech worker, Abe Disu, recently told The New York Times that he rented out his San Francisco apartment through Globe about 70 times between August and April, earning about $50 per hour after cleaning costs.

Many others expressed concerns about germs. “I thought we were dead,” says Bamfo.

Instead of giving up, Bamfo began to position Globe as a platform for people needing an escape from home quarantines. Globe can help individuals find that quiet place to make calls, away from roommates and children. It offers a reprieve from loved ones for a much-needed hour or two. It can even help those in desperate straights find better bandwidth. (You get the idea.)

It’s an appealing proposition on some levels. Who doesn’t long for a change in scenery at his point? Still, there is a pandemic, and safety is concern. Indeed, though Bamfo says Globe has layered in policies specific to COVID-19 — its cleaning checklist for hosts has grown longer and customers now have to send in pictures of thermometer readings — the city of San Francisco, at least, doesn’t think they go far enough.

The city sent Globe a letter last week noting that the company’s hourly rental business appears to violate the shelter-in-place order it instituted in March and that it extended indefinitely last week with some modifications that do not apply to Globe’s business. It says it’s prepared to take action, too. If has warned Globe that if it doesn’t immediately halt its business, the startup — and its founders, Bamfo and Erix Xu, who is a former senior engineering director at Reddit — risk “fine, imprisonment or both, pursuant to San Francisco Administrative Code section 7.17(b) and California Penal Code section 148.”

It adds that the “California Penal Code section 409.5 also authorizes the City to close down properties constituting a menace to public health. Likewise, failure to abide by the San Francisco Planning Code is a nuisance and is punishable by fines of up to $1,000 per day. Likewise, failure to abide by Chapter 41A of the Administrative Code is punishable by fines of up to $484 per day.”

It’s a bitter if somewhat unsurprising development for Globe, which is based in San Francisco, and counts the city as its biggest market. Bamfo and Xu have limited resources, and a drawn-out shut-down could very easily become permanent. Still, it’s hard to see how the company avoids a bigger blow-up if it doesn’t comply very soon — or the city doesn’t instead begin to relax some of its policies.

Right now, Bamfo seems to be counting on the latter, and perhaps for good reason. Yesterday, for example, California Governor Gavin Newsom said that barbershops and hair salons can begin accepting customers again in many California counties. San Francisco and neighboring counties are maintaining more sweeping restrictions for now, but that could change in a matter of weeks.

In the meantime, Bamfo — who says he was “shocked” by the city’s letter — is engaging in a game of chicken. He says that while Globe works on an official response, one that it will send by Tuesday of next week, the company is continuing to make its service available in its hometown.

Noting that neither Airbnb nor hotels have received the same feedback from the city, he says that Globe “doesn’t want to focus on regulations, fines, and threats of jail time. We want instead to elevate this discourse around solutions.”

 

Globe Living Receives Unwelcome News from San Francisco by TechCrunch on Scribd

Categories: Business News

Angling to be eyewear’s next big thing, Futuremood launches with mood-altering sunglasses

2020, May 28 - 3:43am

Austin Soldner and Michael Schaecher, the co-founders of the new sunglasses brand Futuremood, met at the newly formed San Francisco research and development lab created by the high-end audio tech developer Bose.

The two were tasked with working on Bose’s sunglasses wearable and bonded over a shared interest in sneakers and fashion. Over many conversations the two men realized there was an opportunity to use technology to rewrite the sunglasses playbook and launch the first new brand to the market since Oakley came on the scene.

There was also an opportunity to bring the materials science and tech-forward strategies that sneaker companies have developed to an industry that hadn’t seen any real technical revolutions in decades.

Enter Futuremood “Auras,” which the company bills as the first glasses scientifically tested and proven to alter your mood.

Using technology developed by the lens manufacturer Zeiss, Futuremood’s first glasses come in four colors — a relaxing green, a refreshing blue, an energizing red and a focusing yellow. The company is launching its eyewear in two styles, a boxy, chunky frame and a more traditional rounded frame.

Image Credits: Futuremood (opens in a new window)

Any mood-altering effects are thanks to Zeiss’ halochrome lens technology, which the lens manufacturer has been working with — and publishing papers on — to suss out the science behind its claims that the use of filtered light can change the way folks feel.

There’s some preliminary research that the company has done, but the science is still largely unproven (Zeiss conducted two studies at European universities). 

Schaecher and Soldner are believers, and the two longtime tech execs see these lenses as a window into a wider world of material science experimentation and product development that they’re hoping to bring to market with Futuremood.

“If you think about sneakers and where Nike and Adidas got to where they are today, it was through innovation in product design and materials and branding and marketing and all of that had been missing from the sunglasses space,” Schaecher said.

The second marketing hire at Airbnb and the first marketing hire at the now-defunct Munchery, Schaecher knows a thing or two about branding. Meanwhile, Soldner, the founder of Playground.fm, and a former product designer at Jawbone, is the technical expert and lead designer for all of Futuremood’s frames.

“We really saw an opportunity to push the envelope in technical innovation and product innovation,” said Schaecher. “We have a backlog of stuff to push the envelope of what sunglasses are.”

One thing sunglasses are is a very very big business. Consumers spent $14.5 billion on sunglasses in 2018, according to the market research firm, Grand View Research.

If Futuremood can capture even a fraction of that market with its unique spin on sunglasses, it’ll be in good shape.

As with any good direct to consumer product, Futuremood’s difference begins with its packaging. Tapping in to the mood-altering “wearable drugs” aesthetic, the company’s product is packaged in boxes with the same bright hues as the sunglasses. Inside there’s a cloth to clean the glasses, a velvet pouch to hold them and a scented pack of incense matches and a vaguely tarot-esque card with information about the glasses and the sensation they’re meant to evoke (there’s even a Spotify playlist to listen to).

In an email, Schaecher described the sensation as “not as subtle as CBD, but not as strong as a shot of tequila or glass of Rosé.

“Austin and I are really into different ways of self care and taking moments and… we thought there was an opportunity to bring delight and joy,” with the packaging, Schaecher said. “We don’t expect people to be firing up Spotify playlists and incense matches every time they wear things.”

Futuremood has been mostly bootstrapped to date, and like everything else in the year of our Lord 2020, the company’s plans were pushed back by the coronavirus pandemic.

“Our lenses are made in Zeiss’ Italian factory and the glasses were made outside of Shenzhen,” said Schaecher. “We quarantined the first order for two weeks. Zeiss was right in that region of Italy that was getting hit hard. We’ve been delaying since then. It’s hard to put into words what it’s like to grind on something for eighteen months… and then have to delay launching.”

Even with the pandemic, though, the company moved ahead with the design for its second product, and that gives a hint for where Schaecher and Soldner want to go with their business. “We have our second product line and that is not mood-altering glasses,” said Schaecher. “That’s a traditional sunglasses line that uses titanium alloy metals that are more commonly seen in aerospace than in eyewear.”

The design aesthetic is also more in the luxury vein, which Schaecher teased was akin to something that would be more at home in a Cartier showroom rather than a direct to consumer brand’s digital storefront.

Right now, the company is going direct to consumers through its website, but it’s looking at the potential for some retail collaborations and field marketing when the country opens back up for business.

As for the mood-altering effects and whether “wearable drug” can win market share, Schaecher is pretty optimistic. “People definitely have reactions,” he said. “It’s a fun, new thing that’s never existed before.”

Image Credits: Futuremood

Categories: Business News

Siren raises $11.8M for its limb-saving smart socks

2020, May 28 - 2:31am

Can a pair of socks help those with diabetes avoid foot amputations?

That’s one of the ideas behind Siren, a company that’s building smart, washable fabric wearables — the first of which is a pair of socks meant to help those with diabetes monitor their foot health and detect dangerous injuries early. They’ve just raised an $11.8 million Series B to help get it done.

The round was led by Anathem Ventures, and backed by Khosla, DCM and Founders Fund. As part of the raise, DCM’s Jason Krikorian (co-founder of Slingbox maker Sling Media) will be joining Siren’s board.

Siren co-founder Ran Ma tells me that amputations in patients with diabetes are largely the result of injuries that go undetected for too long. Over time, diabetes can cause nerve damage; when this nerve damage impacts the feet, patients can develop injuries and ulcers without noticing — out of sight, out of mind. Left untreated, these injuries can grow worse or become infected to the point that amputation is required. Tens of thousands of these amputations occur each year in the U.S. alone.

Siren’s socks help detect injuries that might otherwise go unnoticed by monitoring the temperature of six regions of the wearer’s foot. If one region seems to be getting considerably warmer than those around it, it could indicate ongoing inflammation caused by an injury. The socks can connect to the patient’s phone via Bluetooth to help them keep an eye on their feet — and, importantly, that information is beamed to their doctors, who can keep an eye out for red flags.

That last bit is particularly key right now. With the ongoing COVID-19 pandemic, many are avoiding doctors offices and hospitals in fear of being exposed to the virus; meanwhile, many offices have been limiting their more routine/less urgent or “non-essential” appointments — including, in this case, routine foot exams. Siren’s socks let a patient’s doctors monitor their foot health from afar.

We first met Siren back in 2017 when the company won the TechCrunch Hardware Battlefield at CES. Since then, the company has raised around $22 million in funding; this $11.8 million Series B, a previously undisclosed $6.5 million Series A in 2018 and a $3.4 million seed round.

Ran Ma tells me that they’ve made Siren Socks available in 10 states so far, with plans to expand nationwide by the end of this year.

Categories: Business News

Otrium raises $26 million to sell end-of-season fashion items

2020, May 28 - 2:01am

Otrium has raised a $26 million Series B funding round (€24 million), with Eight Roads Ventures leading the round. Existing investors Index Ventures and Hans Veldhuizen also participated. Otrium works with clothing brands to help them sell items when they reach the end-of-season status.

Due to fast fashion, you have to regularly clear some space in your stores and recover inventory from third-party stores to release new items. But end-of-season sales aren’t enough. Brands end up with a lot of inventory on their hand. And those items often get destroyed.

Otrium wants to add another sales channel for those specific items — and it’s an online one, which should help when it comes to shelf space. Lockdowns around the world have also generated more excess inventory for the spring-summer 2020 collections.

Fashion brands don’t want to sell outdated items on their own site because scarcity creates value. First, customers should check regularly with their favorite fashion brand to see what they’re selling right now. Second, fashion brands don’t want you to see that you could wait a few months to get an item for cheap.

That’s why Otrium has created a marketplace and tries to be as friendly as possible with fashion brands. If you decide to sell end-of-season collections on Otrium, you can manage your own outlet, get in-depth analytics and enable a dynamic pricing engine to maximize revenue on those outdated items.

Two hundred brands have decided to partner with Otrium, such as Joseph, Reiss, G-Star, Asics, Puma, Vans, Pepe Jeans, Alexachung and Scotch & Soda. There are one million registered customers on Otrium.

The e-commerce website is currently live in the Netherlands, France and Germany. It just launched its site in the U.K. as well. With today’s funding round, you can expect more international expansions in the future.

Categories: Business News

We throw away 80% of our content ideas, and you should too

2020, May 28 - 1:52am
Amanda Milligan Contributor Share on Twitter Amanda Milligan is the marketing director at Fractl, a prominent growth marketing agency that’s helped Fortune 500 companies and boutique businesses alike earn quality media coverage, backlinks, awareness and authority. More posts by this contributor

We’ve talked a bit publicly about our ideation process, but to be honest, it’s constantly evolving. With every piece of content we create and promote, we gain a better understanding of what works and what doesn’t.

But part of that process has always been allowing for the creative freedom to come up with ideas and then — and most importantly — kill your darlings if they don’t meet the criteria for a good idea.

It’s not always easy; creativity is personal. But culling the list of ideas is necessary for a successful content plan.

So how do you know which ones to cut?

Ask yourself these questions.

Is the idea packed with emotion?

Make a list of all the emotions associated with your idea. If you can’t think of any, it means the idea may need some tweaking, or you need to explore it in more depth.

Even helpful how-to content is tied to emotion. Take, for example, “Give Your Kids the Gift of Automotive Repair Skills While You’re Home Together,” a genius piece of content by Car and Driver.

There’s the emotional component of it being in the context of COVID-19, yes, but it’s more than that. It’s about spending quality time with your children and teaching them crucial skills. Related emotions include love, pride, empowerment, accountability, parental responsibility and more.

And the content creators were smart enough to call out the emotional component, like they did here:

Image Credits: Fractl (opens in a new window)

The post garnered nearly 5,000 engagements on Facebook, which to me indicates it hit the sweet spot of being helpful while also tapping into our emotions.

Fractl did a study back in 2013 that explored which type of emotions were the most prevalent in viral images, and, as it turns out, positive emotions had more representation than negative ones. Most prevalent of all? Surprise. People enjoy being astonished, delighted and unexpectedly joyful. Do any of your content ideas fit this bill?

Categories: Business News

RudderStack raises $5M seed round for its open-source Segment competitor

2020, May 28 - 1:33am

RudderStack, a startup that offers an open-source alternative to customer data management platforms like Segment, today announced that it has raised a $5 million seed round led by S28 Capital. Salil Deshpande of Uncorrelated Ventures and Mesosphere/D2iQ co-founder Florian Leibert (through 468 Capital) also participated in this round.

In addition, the company also today announced that it has acquired Blendo, an integration platform that helps businesses transform and move data from their data sources to databases.

Like its larger competitors, RudderStack helps businesses consolidate all of their customer data, which is now typically generated and managed in multiple places — and then extract value from this more holistic view. The company was founded by Soumyadeb Mitra, who has a Ph.D. in database systems and worked on similar problems previously when he was at 8×8 after his previous startup, MairinaIQ, was acquired by that company.

Mitra argues that RudderStack is different from its competitors thanks to its focus on developers, its privacy and security options and its focus on being a data warehouse first, without creating yet another data silo.

“Our competitors provide tools for analytics, audience segmentation, etc. on top of the data they keep,” he said. “That works well if you are a small startup, but larger enterprises have a ton of other data sources — at 8×8 we had our own internal billing system, for example — and you want to combine this internal data with the event stream data — that you collect via RudderStack or competitors — to create a 360-degree view of the customer and act on that. This becomes very difficult with the SaaS-hosted data model of our competitors — you won’t be sending all your internal data to these cloud vendors.”

Part of its appeal, of course, is the open-source nature of RudderStack, whose GitHub repository now has more than 1,700 stars for the main RudderStack server. Mitra credits getting on the front page of HackerNews for its first sale. On that day, it received over 500 GitHub stars, a few thousand clones and a lot of signups for its hosted app. “One of those signups turned out to be our first paid customer. They were already a competitor’s customer, but it wasn’t scaling up so were looking to build something in-house. That’s when they found us and started working with us,” he said.

Because it is open source, companies can run RudderStack anyway they want, but like most similar open-source companies, RudderStack offers multiple hosting options itself, too, that include cloud hosting, starting at $2,000 per month, with unlimited sources and destination.

Current users include IFTTT, Mattermost, MarineTraffic, Torpedo and Wynn Las Vegas.

As for the Blendo acquisition, it’s worth noting that the company only raised a small amount of money in its seed round. The two companies did not disclose the price of the acquisition.

“With Blendo, I had the opportunity to be part of a great team that executed on the vision of turning any company into a data-driven organization,” said Blendo founder Kostas Pardalis, who has joined RudderStack as head of Growth. “We’ve combined the talented Blendo and RudderStack teams together with the technology that both companies have created, at a time when the customer data market is ripe for the next wave of innovation. I’m excited to help drive RudderStack forward.”

Mitra tells me that RudderStack acquired Blendo instead of building its own version of this technology because “it is not a trivial technology to build — cloud sources are really complicated and have weird schemas and API challenges and it would have taken us a lot of time to figure it out. There are independent large companies doing the ETL piece.”

Categories: Business News

Onboarding employees and maintaining culture in a remote work environment 

2020, May 28 - 12:56am
Caryn Marooney Contributor Share on Twitter Caryn Marooney is general partner at Coatue Management and sits on the boards of Zendesk and Elastic. In prior roles she oversaw communications for Facebook, Instagram, WhatsApp and Oculus and co-founded The OutCast Agency, which served clients like Salesforce.com and Amazon. More posts by this contributor

It all happened so fast.

In a matter of weeks, companies everywhere shut down offices and went fully remote — with employees working from home and connecting over video and email instead of in-person. And those are just the people lucky enough to still have jobs.

To say this has made work more difficult is an understatement. But what about people who are just starting new jobs and those who are responsible for onboarding them? How do you get someone up to speed when you’ve never actually met them? How do you make them feel like part of the team when the team itself is scattered across the country and around the world?

How do you foster and maintain the culture when so many people are never in the same place?

This post aims to share lessons from leaders who run distributed companies — including GitLab, Elastic and others — about how to onboard employees and maintain culture in a remote work environment. Done right, these steps won’t just make things easier during this tough time; they will also help over the long-term as some teams move to more distributed, remote environments.

The lessons themselves fall into three main buckets:

Write it down

Writing things down may sound like more work, but having a record also forces people to think through processes and make sure they are consistent. Winging it isn’t good enough anymore. Neither is accepting different levels of training depending on who your manager is. It’s time to make what was somewhat informal and ad hoc more formal and concrete.

When it comes to onboarding, every company should ask themselves:

  • What is the process for onboarding?
Categories: Business News

Rise Gardens raises seed funding for an indoor hydroponic gardening system

2020, May 28 - 12:00am

You don’t need a green thumb and a big backyard to grow baskets of fresh produce. In fact, according to Chicago-based Rise Gardens, you probably just need a bookshelf’s worth of space in your living room and an app.

Rise Gardens, an indoor hydroponic gardening system, has raised $2.6 million in seed funding for home-grown produce. The financing was led by True Ventures .

Rise Gardens sells a hardware and software indoor planting system. Customers receive a home garden kit and can assemble the system, which looks like a piece of furniture, in 45 minutes. Then, users can input Rise-provided plant pods in each row of the system to grow produce of their choice, from butter lettuce to tomatoes and arugula. The “garden” comes in three sizes, which Rise Gardens details as “matching the dimensions of an entryway table, a credenza and a shelf.”

Rise Gardens’ in-home plant system

Rise can offer this flexible solution thanks to hydroponics, a scientific method that grows plants using nutrients and water, rather than soil and sunlight. The planting system includes specific features to optimize growth. For example, Rise provides a meter for users to check the pH of the water.

From a software perspective, Rise has an app that tracks how often a user should water their plants. It also sells a subscription-based offering that brings new “seed pods” and nutrients to customers on a monthly basis.

While the system is intentionally designed to resemble furniture one would already have in the home, according to founder Hank Adams, it has a use beyond aesthetics.

The company uses vertical farming to produce food all on a vertical plane, and created a system that is both self-sustainable and flexible. In Rise’s case, it means that the user can grow root vegetables on one shelf, tomatoes and lettuce on the other.

Looking at Rise’s venture-backed competition, the concept of vertical farming isn’t new. It helps people bring more produce to fruition while staying conservative on space, because it builds up instead of out. Plus, the indoor system lets you grow year-round, instead of relying on Mother Nature.

Infarm closed a $100 million Series B in June for vertical farming tech targeted toward restaurants and grocery stores. Plenty has raised hundreds of millions for indoor farming technology. Other companies that have their eyes on indoor farming systems are AeroFarms, BrightFarms, Bowery Farming and Freight Farms.

But from a consumer angle, which is where Rise is coming from, the competition isn’t as fierce, claims founder Adams. He says that most solutions that exist in the market right now for consumers stick to growing a few herbs.

Avalow, for example, has built a self-watering, sub-irrigation-based and raised planter bed to help consumers grow herbs from the comfort of their homes.

Adams says that Rise wants to be a more wholesome solution.

“Our system was built to grow a lot of volume of food,” he said. “We didn’t want to grow something that was an overtly and purely visual interest.” He claims that Rise can grow a head of lettuce in 22 to 25 days.

Since shelter-in-place orders began, Adams claims that sales have increased 750% and Rise has sold 6,000 seeds per week in the last two months, which represents more than 1,500 pounds of produce. But he says this uptick in usage isn’t due to people avoiding the grocery stores, necessarily.

“We’re not telling you that you never have to go to a grocery store again after your system is a month old,” he said. “You will, but it does have an impact” on the total amount of groceries you buy.

So Rise is selling to someone who wants to supplement their food intake, not replace it with their own indoor farming setup. The hardware itself is more luxury than modest: Rise Gardens starts selling at $550. Adams claims that the system will pay for itself (in produce) after 16 months of usage.

So while an indoor farming system might not yet be a casual household appliance found next to the toaster, Adams finds hope for his currently luxurious company by peering at the past.

“In the past century there was a lack of appliances that felt like luxuries at the time, like dishwashers,” he said. “But now you can’t imagine living without a dishwasher or washing machine.”

A hopeful side effect of this pandemic is that nutrition will be more of a conversation, and priority, in all of our lives. With new cash, Rise Gardens is betting that that conversation around food sourcing will turn into action.

Categories: Business News

Extra Crunch Live: Join Initialized’s Alexis Ohanian and Garry Tan for a live Q&A on Tuesday at 2pm EDT/11am PDT

2020, May 27 - 10:37pm

Extra Crunch Live is on fire, and the hits keep rolling! Next week, we’ll sit down with Initialized’s Alexis Ohanian and Garry Tan. You can catch the chat live on Tuesday, June 2 at 2 p.m. EDT/11 a.m. PDT.

Alexis Ohanian is the founder and former CEO of Reddit, and his investment portfolio includes Flexport, Ro and Papa. Garry Tan has invested in Instacart and Coinbase, to name a couple, and also has a background in entrepreneurship, having founded Posterous and Posthaven. Previously, Tan was a partner at Y Combinator for four years.

For those of you who aren’t caught up, Extra Crunch Live is a virtual speaker series that connects Extra Crunch members with the brightest minds in tech and VC where the audience has a chance to ask direct questions.

We’ll talk to Ohanian and Tan about how they’re advising their portfolio companies through the pandemic. Which startups should hunker and conserve cash, and which ones should sprint and advance? Is there a middle ground, and if so, what does it look like?

We’ll also discuss their outlook on economic recovery and opportunities that allow entrepreneurs to capitalize on the speed at which the world is changing. Which sectors are piquing their interest? Is Initialized going to invest aggressively in this ecosystem or be more risk-averse than usual? What’s it like doing deals over Zoom or Google Meet?

Extra Crunch members are encouraged to drop their questions in the Q&A chat for Ohanian and Tan. We’ll get to as many of them as possible, so please click here to join.

You can find the full details for our discussion below the break.

In the coming weeks, we’ll be chatting with GGV’s Hans Tung, Eventbrite’s Julia Hartz, Superhuman’s Rahul Vohra and Plaid’s Zach Perret. You can check out the full schedule here. Members also have access to the complete backlog of Extra Crunch Live episodes, which include chats with Kirsten Green, Roelof Botha, Mark Cuban and Aileen Lee.

See you there!

Categories: Business News

Toro snags $4M seed investment to monitor data quality

2020, May 27 - 10:22pm

Toro’s founders started at Uber helping monitor the data quality in the company’s vast data catalogs, and they wanted to put that experience to work for a more general audience. Today, the company announced a $4 million seed round.

The round was co-led by Costanoa Ventures and Point72 Ventures with help from a number of individual investors.

Company co-founder and CEO Kyle Kirwan says the startup wanted to bring the kind of automated monitoring we have in applications performance monitoring products to data. Instead of getting an alert when the application is performing poorly, you would get an alert that there is an issue with the data.

“We’re building a monitoring platform that helps data teams find problems in their data content before that gets into dashboards and machine learning models and other places where problems in the data could cause a lot of damage,” Kirwan told TechCrunch.

When it comes to data, there are specific kinds of issues a product like Toro would be looking at. It might be a figure that falls outside of a specific dollar range that could be indicative of fraud, or it could be simply a mistake in how the data was labeled that is different from previous ways that could break a model.

The founders learned the lessons they use to build Toro while working on the data team at Uber. They had helped build tools there to find these kinds of problems, but in a way that was highly specific to Uber. When they started Toro, they needed to build a more general purpose tool.

The product works by understanding what it’s looking at in terms of data, and what the normal thresholds are for a particular type of data. Anything that falls outside of the threshold for a particular data point would trigger an alert, and the data team would need to go to work to fix the problem.

Casey Aylward, vice president at Costanoa Ventures likes the pedigree of this team and the problem it’s trying to solve. “Despite its importance, data quality has remained a challenge for many enterprise companies,” she said in a statement. She added, “[The co-founders] deep experience building several of Uber’s internal data tools makes them uniquely qualified to build the best solution.”

The company has been at this for just over a year and have been keeping it lean with 4 employees including the two co-founders, but they do have plans to add a couple of data scientists in the coming year as they continue to build out the product.

Categories: Business News

Census raises $4.3M seed to put product info in cloud data warehouses to work

2020, May 27 - 10:00pm

Companies spend inordinate amounts of time and money building data warehouses and moving data from enterprise applications. But once they get the data in, how do they get specific information like product data back out and distribute it to business operations, who can use it to better understand customers? That’s where Census comes in. It builds a layer on top of the data warehouse that makes it easy for the data team to distribute product data where it’s needed.

The company announced a $4.3 million seed today, although it closed last year while they were still building the product. That round was led by Andreessen Horowitz with help from SV Angel and a number of angel investors.

Census CEO Boris Jabes says the company was founded to solve this problem of data distribution from a cloud data warehouse. He says for starters they are concentrating on product data.

“The product is designed to sync data directly from cloud data warehouses like Snowflake, BigQuery and Redshift […] and the main reason we did that was people really needed to get access to this kind of product data and all this data that’s locked in all their systems and take advantage of it,” Jabes explained.

He says that the first step is to make the product data sitting in the data warehouse actionable for the organization. They are working with data teams at early customers to remove the complexity of getting that data out of the warehouse and putting it to work in a more automated fashion.

They do this by creating a unified schema that sits on top of the data in the warehouse and makes it easier to distribute it to the teams that need it inside the organization. It essentially acts as a middleware layer on top of the warehouse that you can take advantage of without having to write code to decide where data might be most useful.

David Ulevitch, who led the investment at a16z says that removing this manual part of the process is highly valuable. “For years, organizations have had to do the frustrating task of manually syncing data between dozens of apps. This friction is especially painful now that data has become critical to every team in a business, from product to sales. Census sets a new standard for how product-led SaaS companies can operationalize data,” he said in a statement.

Jabes understands these are difficult times for every business, and especially an early stage startup, but he says they are focusing on an aspect of the business that potential customers need.

“We’ve seen companies actually spending time trying to tackle some of these data problems […] so I’m still optimistic,” he says.

Categories: Business News

Kentik raises $23.5M for its network intelligence platform

2020, May 27 - 10:00pm

Kentik, the company once known as CloudHelix, today announced that it has raised a $23.5 million growth funding round led by Vistara Capital Partners, with existing investors August Capital, Third Point Ventures, DCVC, and Tahoma Ventures also participating. With this round, Kentik has now raised a total of $61.7 million.

The company’s platform allows enterprises to monitor their networks, no matter whether that’s over the Internet, inside their own data centers or in public clouds.

“The world has become even more internet-centric, and we are seeing growth in traffic levels, product engagement, and revenue across both our enterprise and service provider customers,” said Avi Freedman, the co-founder and CEO of Kentik when I asked him why he was raising a round now. “We’ve seen an increased pace of adoption of the kind of hybrid and internet-centric architectures that Kentik is built for and thought it was a great time to increase investment, especially in product, as well as go-to-market and partner expansion to support market demand.”

Freedman says the company has been growing 100% compounded year-over-year since it launched in 2015 and now has customers in 25 countries. These include leading enterprises, SaaS companies, content providers, gaming companies, content providers, and cloud and communication service providers, he tells me. Current customers include the likes of IBM, Zoom, Dropbox, eBay, Cisco and GoDaddy.

The company says it will use the new funding to invest in its product and for go-to-market investments.

One notable fact about this new round is that it is a combination of equity and growth debt. Why growth debt? “Growth debt is an attractive option for startups with the right scale and strong unit economics, especially with the changes to capital markets in response to current economic conditions,” said Freedman. “Another element that makes long-term debt attractive is that unlike equity financing, long-term debt limits dilution for everyone, but especially benefits our employees who hold common stock.” That, it’s worth noting, is also something that lead investor Vistara Capital has made one of the core tenets of its investment philosophy. “Since Kentik is now at a scale where we have enough data on the business fundamentals to be able to make growth investments using debt while still being able to repay it over time, it made sense to us and our investors,” noted Freedman.

Categories: Business News

LeverEdge wants to get you and your friends a volume discount on student loans

2020, May 27 - 10:00pm

Student loans are both a trillion-dollar debt category and also one of the most popular mini-verticals out there in fintech startup investing right now. There are dozens if not hundreds of companies in the space, and they all mostly do one of two things: either they help students think through their student loan options before choosing one (acting as a financial advisor to avoid mistakes) or they help students after they finish school figure out how to optimize their repayments or acquire loan forgiveness.

And so when I heard the pitch for LeverEdge, I was intrigued, because it really doesn’t fit either bucket.

Rather than approaching each user individually and trying to optimize their own financial decision independently, LeverEdge proposes helping students band together as a group and negotiate reduced student loan rates by essentially acting as a collective bargaining unit with banks.

For founders Chris Abkarians and Nikhil Agarwal, the idea came as they were entering Harvard Business School.

The two connected with some other HBS students through online new admit groups on Facebook and came up with the idea of trying to work together to lower their interest rates. The annual cost of attendance at HBS is $111,102 right now (annually!), so multiplied by two for the two-year MBA and you are looking at potentially massive cost savings if you can lower your interest rate.

There was just one problem: banks loved the idea, but no one knew how to actually negotiate interest rates at individual branches. As Agarwal explained, “So after work we would try to leave at a reasonable time to get to the bank branch before it closes and then pitch the branch manager on this. They were super excited, but then they’d be like, well, I don’t know what to do with this, I can’t change interest rates for you.”

So Abkarians started sending cold emails to bank CEOs with the same proposition, and also got a positive response, but was told that he would need much more volume to make a negotiated deal worthwhile for banks. At the time, the two only had 50 to 70 people working together, but they spread the option around more heavily with their classmates and students at other business schools and eventually got to 700 students with $26 million in loan volume over the next 10 days.

With that scale, the two were able to negotiate a competitive rate with a bank that saved each student an average of $15,000 in fees over the full life of their loans according to their calculations.

They did all this entirely virtually too. Abkarians and Agarwal eventually met for the first time in person at Harvard in the fall, still with a whirl of excitement over what had transpired over the summer. They started asking for feedback from their users about the process, and Agarwal said:

The number one negative feedback we got was you closed the deal on July 26, [but] I couldn’t use it because my tuition due date was before that day. And then every other piece of feedback — even for this haphazardly run group — was incredibly amazing. And that really convinced us [… that] we owe it to our members and really the future generation of classes to make this a thing.

LeverEdge is taking that one-off experience and systemizing it for more students in more contexts. The startup, which was officially founded in May 2018, targets the private student loan market outside of federal programs typical for most undergrads. That loan market typically has higher (and sometimes dramatically higher) interest rates than traditional federal student loans, and lenders also has the flexibility to negotiate interest rates unlike with federal loans.

Today, LeverEdge has more than 15,000 students on its platform and has financed $100 million in student loans according to the startup. It also raised a $2.5 million seed round led by NFX along with Global Founders Capital and founders from fintech companies Earnest and SoFi.

The company spends most of the year aggregating students for the next school year, and then “we spend around two months in this auction process between different lenders,” Abkarians said. The company currently has nine employees, and “our staff is focused on partnership building,” he said.

The new version of a startup team photo. LeverEdge Team, photo via LeverEdge

As for business model, LeverEdge takes a pre-set referral fee from lenders upfront for each tranche of loans that they negotiate between students and the lender. That fee is “non-negotiable” according to Agarwal, and all lenders participating in the auction agree to pay it if they have the winning bid. The company varies the fee based on the loans that are grouped together (Agarwal said that, for example, refinance loans have a lower referral fee than other student loans). He believes this approach ensures that LeverEdge always has the right incentives to get the best prices for students.

Importantly, no student is obligated to take the final loan as negotiated by LeverEdge. But, if the company is doing its job, then the offered loan should be competitive with any alternative loan on the market. “We still encourage people to compare it against other things and if they find anything that is better than what we’ve found to please just let us know. No one has yet,“ said Abkarians.

The big question now is what will happen this coming school year given COVID-19. On one hand, students may avoid campuses knowing that schools are moving heavily toward virtual classes due to social distancing policies. On the other hand, economic recessions and greater concerns around costs may lead more students to seek out cheaper student financing options: exactly the customers that LeverEdge wants to find.

Overall, it’s an interesting play on the student loan space and one of the more interesting fintech startups I have seen in some time.

Categories: Business News

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