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Updated: 5 hours 56 min ago

Wingcopter raises $22 million to expand to the U.S. and launch a next-generation drone

10 hours 5 min ago

German drone technology startup Wingcopter has raised a $22 million Series A – its first significant venture capital raise after mostly bootstrapping. The company, which focuses on drone delivery, has come a long way since its founding in 2017, having developed, built and flown its Wingcopter 178 heavy-lift cargo delivery drone using its proprietary and patented tilt-rotor propellant mechanism, which combines all the benefits of vertical take-off and landing with the advantages of fixed-wing aircraft for longer distance horizontal flight.

This new Series A round was led by Silicon Valley VC Xplorer Capital, as well as German growth fund Futury Regio Growth. Wingcopter CEO and founder Tom Plümmer explained to the in an interview that the addition of an SV-based investor is particularly important to the startup, since it’s in the process of preparing its entry into the U.S., with plans for an American facility, both for flight testing to satisfy FAA requirements for operational certification, as well as eventually for U.S.-based drone production.

Wingcopter has already been operating commercially in a few different markets globally, including in Vanuatu in partnership with Unicef for vaccine delivery to remote areas, in Tanzania for two-way medical supply delivery working with Tanzania, and in Ireland where it completed the world’s first delivery of insulin by drone beyond visual line of sight (BVLOS, the industry’s technical term for when a drone flies beyond the visual range of a human operator who has the ability to take control in case of emergencies).

Wingcopter CEO and co-founder Tom Plümmer. Credit: Jonas Wresch

While Wingcopter has so far pursued a business as an OEM manufacturer of drones, and has had paying customers eager to purchase its hardware effectively since day one (Plümmer told me that they had at least one customer wiring them money before they even had a bank account set up for the business), but it’s also now getting into the business of offering drone delivery-as-a-service. After doing the hard work of building its technology from the ground up, and seeking out the necessary regulatory approvals to operate in multiple markets around the world, Plümmer says that he and his co-founders realized that operating a service business not only meant a new source of revenue, but also better-served the needs of many of its potential customers.

“We learned during this process, through applying for permission, receiving these permissions and working now in five continents in multiple countries, flying BVLOS, that actually operating drones is something we are now very good at,” he said. This was actually becoming a really good source of income, and ended up actually making up more than half of our revenue at some point. Also looking at scalability of the business model of being an OEM, it’s kind of […] linear.”

UPS partners with Wingcopter to develop new multipurpose drone delivery fleet

Linear growth with solid revenue and steady demand was fine for Wingcopter as a bootstrapped startup founded by university students supported by a small initial investment from family and friends. But Plümmer says the company say so much potential in the technology it had developed, and the emerging drone delivery market, that the exponential growth curve of its drone delivery-as-a-service model helped make traditional VC backing make sense. In the early days, Plümmer says Wingcopter had been approached by VCs, but at the time it didn’t make sense for what they were trying to do; that’s changed.

“We were really lucky to bootstrap over the last four years,” Plümmer said. “Basically, just by selling drones and creating revenue, we could employ our first 30 employees. But at some point, you realize you want to really plan with that revenue, so you want to have monthly revenues, which generally repeat like a software business – like software as a service.”

Wingcopter 178 cargo drone performing a delivery for Merck.

Wingcopter has also established a useful hedge regarding its service business, not only by being its own hardware supplier, but also by having worked closely with many global flight regulators on their regulatory process through the early days of commercial drone flights. They’re working with the FAA on its certification process now, for instance, with Plümmer saying that they participate in weekly calls with the regulator on its upcoming certification process for BVLOS drone operators. Understanding the regulatory environment, and even helping architect it, is a major selling point for partners who don’t want to have to build out that kind of expertise and regulatory team in-house.

Meanwhile, the company will continue to act as an OEM as well, selling not only its Wingcopter 178 heavy-lift model, which can fly up to 75 miles, at speeds of up to 100 mph, and that can carry payloads up to around 13 lbs. Because of its unique tilt-rotor mechanism, it’s not only more efficient in flight, but it can also fly in much windier conditions – and take-off and land in harsher conditions than most drones, too.

Plümmer tells me that Wingcopter doesn’t intend to rest on its laurels in the hardware department, either; it’s going to be introducing a new model of drone soon, with different capabilities that expand the company’s addressable market, both as an OEM and in its drones-as-a-service business.

With its U.S. expansion, Wingcopter will still look to focus specifically on the delivery market, but Plümmer points out that there’s no reason its unique technology couldn’t also work well to serve markets including observation and inspection, or to address needs in the communication space as well. The one market that Wingcopter doesn’t intend to pursue, however, is military and defense. While these are popular customers in the aerospace and drone industries, Plümmer says that Wingcopter has a mission “to create sustainable and efficient drone solutions for improving and saving lives,” and says the startup looks at every potential customer and ensures that it aligns with its vision – which defense customers do not.

While the company has just announced the close of its Series A round, Plümmer says they’re already in talks with some potential investors to join a Series B. It’s also going to be looking for U.S. based talent in embedded systems software and flight operations testing, to help with the testing process required its certification by the FAA.

German drone delivery trial paves the way to replacing trucks for inter-office deliveries

Plümmer sees a long tail of value to be built from Wingcopter’s patented tilt-rotor design, with potential applications in a range of industries, and he says that Wingcopter won’t be looking around for any potential via M&A until it has fully realized that value. Meanwhile, the company is also starting to sow the seeds of its own potential future customers, with training programs in drone flights and operations it’s putting on in partnership with UNICEF’s African Drone and Data Academy. Wingcopter clearly envisions a bright future for drone delivery, and its work in focusing its efforts on building differentiating hardware, plus the role it’s playing in setting the regulatory agenda globally, could help position it at the center of that future.

Categories: Business News

Clubhouse announces plans for creator payments and raises new funding led by Andreessen Horowitz

14 hours 22 min ago

Buzzy live voice chat app Clubhouse has confirmed that it has raised new funding – without revealing how much – in a Series B round led by Andreessen Horowitz through the firm’s partner Andrew Chen. The app was reported to be raising at a $1 billion valuation in a report from The Information that landed just before this confirmation. While we try to track down the actual value of this round and the subsequent valuation of the company, what we do know is that Clubhouse has confirmed it will be introducing products to help creators on the platform get played, including subscriptions, tipping and ticket sales.

This funding round will also support a ‘Creator Grant Program’ being set up by Clubhouse, which will be used to “support emerging Clubhouse creators” according to the startup’s blog post. While the app has done a remarkable job attracting creator talent, including high-profile celebrity and political users, directing revenue towards creators will definitely help spur sustained interest, as well as more time and investment from new creators who are potentially looking to make a name for themselves on the platform, similar to YouTube and TikTok influencers before them.

Of course, adding monetization for users also introduces a method for Clubhouse itself to monetize. The platform is free to all users, and doesn’t yet offer any kind of premium plan or method of charging users, nor is it ad-supported. Adding ways for users to pay other users provides an opportunity for Clubhouse to retain a cut for its services.

Clubhouse voice chat leads a wave of spontaneous social apps

The plans around monetization routes for creators appear to be relatively open-ended at this point, with Clubhouse saying it’ll be launching “first tests” around each of the three areas it mentions (tipping, tickets and subscriptions) over the “next few months.” It sounds like these could be similar to something like a Patreon built right into the platform. Tickets are a unique option that would go well with Clubhouse’s more formal roundtable discussions, and could also be a way that more organizations make use of the platform for hosting virtual events.

The startup also announced that it will be starting work on its Android app (it’s been iOS only for now) and that it will also invest in more backend scaling to keep up with demand, as well as support team growth and tools for detecting and prevuing abuse. Clubhouse has come under fire for its failure in regards to moderation and prevention of abuse in the past, so this aspect of its product development will likely be closely watched. The platform will also see changes to discovery aimed at surfacing relevant users, groups (‘clubs’ in the app’s parlance) and rooms.

During a regular virtual town hall the app’s founders host on the platform, CEO Paul Davison revealed that Clubhouse now has 2 million weekly active users. It’s also worth noting that Clubhouse says it now has “over 180 investors” in the company, which is a lot for a Series B – though many of those are likely small, independent investors with very little stake.

Categories: Business News

SpaceX sets new record for most satellites on a single launch with latest Falcon 9 mission

15 hours 23 min ago

SpaceX has set a new all-time record for the most satellites launched and deployed on a single mission, with its Transporter-1 flight on Sunday. The launch was the first of SpaceX’s dedicated rideshare missions, in which it splits up the payload capacity of its rocket among multiple customers, resulting in a reduced cost for each but still providing SpaceX with a full launch and all the revenue it requires to justify lauding one of its vehicles.

The launch today included 143 satellites, 133 of which were from other companies who booked rides. SpaceX also launched 10 of its own Starlink satellites, adding to the already more than 1,000 already sent to orbit to power SpaceX’s own broadband communication network. During a launch broadcast last week, SpaceX revealed that it has begun serving beta customers in Canada and is expanding to the UK with its private pre-launch test of that service.

Customers on today’s launch included Planet Labs, which sent up 48 SuperDove Earth imaging satellites; Swarm, which sent up 36 of its own tiny IoT communications satellites, and Kepler, which added to its constellation with eight more of its own communication spacecraft. The rideshare model that SpaceX now has in place should help smaller new space companies and startups like these build out their operational on-orbit constellations faster, complementing other small payload launchers like Rocket Lab, and new entrant Virgin Orbit, to name a few.

This SpaceX launch was also the first to deliver Starlink satellites to a polar orbit, which is a key part of the company’s continued expansion of its broadband service. The mission also included a successful landing and recovery of the Falcon 9 rocket’s first-stage booster, the fifth for this particular booster, and a dual recovery of the fairing halves used to protect the cargo during launch, which were fished out of the Atlantic ocean using its recovery vessels and will be refurbished and reused.

Categories: Business News

How VCs and founders see 2021 differently

2021, January 24 - 6:00am

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Click here if you want it in your inbox every Saturday morning.

Ready? Let’s talk money, startups and spicy IPO rumors.

We’re shaking things up this weekend in the newsletter, focusing on a series of larger themes and news items instead of having a few discrete sections. Why? Because there was too much to fit into our usual format. If you were a fan of the original layout, we’ll be back to it next week.

Today we’re talking Coinbase’s growth, how Juked.gg tapped the equity crowdfunding market, a noodle or two on the a16z media game, Talkspace’s SPAC, VC and founder predictions for 2021, and where’s the right place to found a company.

Sound good? Let’s get into it!

Coinbase’s deposits scale ahead of IPO

Thanks to Kazim Rizvi of Drop, parent company to Cardify which provides data on consumer spending, we have a look into how quickly deposits have scaled at American cryptocurrency platform Coinbase. As Coinbase has filed to go public, and we’re eagerly anticipating its eventual S-1 filing, we were stoked to get a directional look at how quickly consumer interest was growing for the assets it helps folks buy.

They are scaling rapidly. Using the first week of January 2019 as a baseline, by the last week of December 2020 deposits and withdrawals from Coinbase had grown by more than 12x apiece. That’s staggering growth, and while the data is somewhat volatile — and we’d treat it as directional instead of exact — on a week-to-week basis, it underscores how well companies like Coinbase may be performing as Bitcoin booms once again, bringing in more trading interest and consumer demand.

Via Cardify, Cardify data.

The Cardify data also indicates a multiplying of new customer acquisition at Coinbase over the same time period, and deposits scaling alongside the price of Bitcoin. As Bitcoin has topped the $30,000 mark recently, sharply higher than in recent quarters, the price gains may have helped Coinbase not only a solid Q4 2020, but perhaps put it on a path for a bonkers Q1 2021 as well.

If we were 10/10 excited about the Coinbase S-1 before this dataset, we’re now a heckin’ 12/10.

Equity crowdfunding seven-figures for esports content

Esports is super cool and if you don’t agree, you are incorrect. But it doesn’t matter if you or I are right or not on the question, as the market has largely decided that competitive gaming is worth time, attention and investors’ money.

The proliferation of esports leagues and games and the like has led to a decidedly fragmented universe, however, lacking a central hub akin to what ESPN provides the world of traditional sports.

But not to worry, Juked.gg just raised capital to build a content hub for esports. This means that old folks like myself can still find out when tournaments are happening, and enjoy a dabble of League of Legends or Starcraft 2 pro play when we can, sans hunting around the internet for dates and times.

Juked.gg went through 500 Startups (more on its class here), catching our eye at the time as a neat nexus for esports-related content. Now flush with a little over $1 million that it raised on the Republic platform, it has big plans.

The Exchange spoke with Juked.gg’s co-founder and CEO Ben Goldhaber about his company’s performance to date. Per Goldhaber, Juked has scaled from 500 users when it launched in late 2019, to 50,000 in December of 2020. Ahead, Juked may invest more in journalism, more into social features, and more into user-generated content. We’ll have more on Juked as it gets its vision built, now powered by over a million dollars from 2,524 investors, each betting that the startup is building the right product to help unify a growing, if distributed, entertainment category.

The a16z media push

To preserve our collective sanity, I’m not going to bang on at length here, but building out content at a VC firm is not new. Hell, how long ago did the First Round Review launch? What a16z appears to have in mind is different in scale, not substance. We chatted about it on Equity this week, in case you need more on the matter.

Talkspace’s maybe-not-stupid SPAC

While it is enjoyable to mock SPACs, featuring as many do companies that are nascent to say the least, not all SPAC-led debuts are as silly as the rest. This is the case with the impending Talkspace deal, the deck for which you can read here.

What matters is this set of charts:

Look at that! Historical revenue growth! Improving gross margins! Rising gross profit!

You may argue that the company is not really worth an enterprise value of $1.4 billion that it will sport after its combination with Hudson Executive Investment Corp., but, hey, at least it’s a real business.

How VCs and founders see 2021 differently

Seed VC NFX dropped a VC and founder survey the other day that I’ve been meaning to share with you. You can read the whole thing here, if you’d like.

I have two pull-outs for you this morning:

  1. VCs are more bullish on the economy than founders, with around 30% of founders expecting consumer spending to stay flat or decline, positions that only around 17% of VCs agreed with.
  2. And when it comes to leaving the Bay Area — yes, that chestnut again — 35% of founders have itchy feet, while just 20% of investors are similarly inclined. I think this is because the latter have houses in the Bay Area while most founders do not. But it should temper the view that all the money and talent are leaving. They aren’t.
There’s no place like no place

Initialized Capital put together some data on where founders think it is best to found a company. In 2020, nearly 42% of surveyed founders said the Bay Area. By 2021 that number had slipped to a little over 28%, with a plurality of 42% indicating that a distributed company is the best way to go.

I hear about this a lot from early-stage founders. They are often building what I call micro-multinationals, small companies that have a few employees in one country, and then a handful in others. Making that setup work is going to be a hotspot for HR software I reckon.

Regardless, the requirement of founding companies in the Bay Area is kaput. The advantages of founding there will linger much longer.

Coming up!

Coming up on The Exchange next week: The first entries of our new $50 million ARR series, featuring interviews with Assembly, SimpleNexus, Picsart, OwnBackup and others. And we have some $100 million ARR interviews in the can, as well.

Finally, to keep the The Powers That Be happy, The Exchange covered some neat stuff this week, including American VC results, fintech and unicorn venture capital, European and Asian venture capital results, how the IPO market is even more bonkers than you thought, and notes on what Qualtrics may be worth when it goes public.

Hugs, and let’s all get a nap in,

Alex

Categories: Business News

How fintech and serial founders drove African pre-seed investing to new heights in 2020

2021, January 23 - 4:00pm

When Stripe-subsidiary Paystack raised its seed round of $1.3 million in 2016, it was one of the largest disclosed rounds at that stage in Nigeria. 

At the time, seven-figure seed investments in African startups were a rarity. But over the years, those same seed-stage rounds have become more common, with some very early-stage startups even raising eight-figure sums. Nigerian fintech startup, Kuda, which bagged $10 million last year, comes to mind, for example.

Also notable amidst the growth in seven and eight-figure African seed deals have been gains in pre-seed fundraising. Typically, pre-seed rounds are raised when the startup is still in the product development phase, yet to make revenue or discover product-market fit. These investments are usually made by third-party investors (friends and family), and range between $25,000-$150,000.

But the narrative as to how much an early-stage African startup can raise as pre-seed has changed. 

Last year, African VCs who usually fund seed and Series A rounds began partaking in pre-seed rounds, and they don’t seem to be slowing down. Just a month into 2021,  Egyptian fintech startup Cassbana raised a $1 million pre-seed investment led by VC firm Disruptech in a bid to drive expansion within the country.

Nigeria’s Kuda raises $10M to be the mobile-first challenger bank for Africa

So why the sudden change in appetite from investors?

Andreata Muforo is a partner at TLcom Capital, a pan-African early-stage VC firm. She told TechCrunch that last year’s run of 23 pre-seed rounds (10 of which were $150,000+ deals) per Briter Bridges data, was due to the confidence investors had in the market, especially fintech.

Startups building financial infrastructure got noticed

While most African pre-seed investments in 2020 went to fintech, there were exceptions, including Egyptian edtech startup Zedny, which raised $1.2 million; Nigerian automotive tech startup Autochek Africa, which raised $3.4 million; and Nigerian talent startup TalentQL, which raised $300,000. 

Just as Paystack and Flutterwave built payment infrastructure for thousands of African businesses, these fintech startups are trying to make their mark in the sweet spots of credit and banking. 

“Fintech is compelling. But while most fintech startups play around the commodities side of fintech, it’s the companies building infrastructure around the market that got most of the pre-seed validation last year,” Muforo said. Her firm, TLcom, led the $1 million pre-seed investment in Okra.

Okra is an API fintech startup. So are Mono, OnePipe and Pngme. They are building Africa’s API infrastructure that connects bank accounts with financial institutions and third-party companies for different purposes. Within the past 18 months, Mono and Pngme raised $500,000, while OnePipe raised $950,000 in pre-seed.

It is noteworthy that while these startups are clamoring to solve Africa’s open API banking issues, three of the four deals came after Visa’s $5.3 billion acquisition of Plaid last year in January.

Although the Visa-Plaid acquisition has now been called off, it is safe to say some African investors developed FOMO, handing out sizable checks to fund “Africa’s Plaid” in the process.

Visa will not acquire Plaid after running into regulatory wall

Digital lenders remain one of their most important customers for fintech API startups. They can access customers’ financial accounts to understand their spending patterns and know who to loan to.

Egypt’s Shahry and Nigeria’s Evolve Credit are fintech startups building credit infrastructure for their markets. Evolve Credit connects digital lenders to those who need loan services in Nigeria via its online loan marketplace. Shahry, on the other hand, employs an AI-based credit scoring engine so users in Egypt can apply for credit. The pair also secured impressive pre-seed funding — Evolve Credit, $325,000, and Shahry, $650,000.

A recurring theme: Serial founders

Muforo points out that aside from startups building fintech infrastructure, the caliber of founders was another reason pre-seed funding peaked last year.

Adewale Yusuf, co-founder and CEO of TalentQL, a startup that hires, manages and outsources talent for Nigerian and global companies, seemed to agree. He told TechCrunch that trust between the VCs and founders involved played a major role in most pre-seed rounds last year. 

“It wasn’t surprising that a lot of investors put money in pre-seed rounds. I say this because we also saw existing founders and serial entrepreneurs coming back to the market. To me, these founders’ credibility was a major part of why those rounds were large,” he said.

A second-time founder himself, Yusuf is the co-founder of Nigerian tech media publication Techpoint Africa. His partner at TalentQL, Opeyemi Awoyemi, is also a serial entrepreneur. He co-founded Ringier One Africa Media-owned Jobberman, one of Africa’s most popular recruitment platforms.

According to Adedayo Amzat, founder of Zedcrest Capital, which is the lead investor in TalentQL’s round, the founders’ experience proved vital in closing the deal. 

He says investors are more comfortable backing experienced founders in pre-seed rounds because they have a more mature understanding of the problems they’re trying to solve. So, in essence, they tend to raise more capital.

“If you look at pre-seed sizes, experienced founders can demand a significant premium over first-time founders,” Amzat said. “Pre-seed valuation cap for first-time founders will typically be between 400K to $1 million while we frequently see up to $5 million for experienced founders.” 

It was a recurring theme last year. Yele Bademosi, who runs Microtraction, a West African early-stage VC firm, is the CEO of Bundle Africa, a Nigerian-based crypto-exchange startup that raised $450,000 in April 2020. 

Shahry co-founders Sherif ElRakabawy and Mohamed Ewis also run Egypt’s largest shopping engine and price comparison website, Yaoota.

Mono co-founder and CEO Abdulhamid Hassan was the co-founder of Nigerian fintech startup OyaPay and data science startup Voyance. Also, Etop Ikpe, the co-founder and CEO of Autochek Africa, was CEO of DealDey and Cars45.

That said, Fara Ashiru Jituboh of Okra and Akan Nelson of Evolve Credit as first-time founders got investments that most of their counterparts would only dream of. For Jituboh, her solid tech background spoke for her — boasting a senior software engineering job at Pexels and engineering consultant role at Canva before founding Okra.

“We backed Fara because she’s a strong tech founder. When you look at the core of what Okra does as a tech-heavy company, you see how important it was to make the decision,” Muforo said about backing Okra’s CEO and CTO.

Nelson also told TechCrunch that his finance background helped Evolve Credit raise its six-figure sum. The team’s bullishness on finding product-market fit and the potential of Africa’s loan marketplace was also enough to bring foreign and local VCs like Samurai Incubate, Future Africa, Ingressive Capital and Microtraction on board.

While early-stage investments in African startups haven’t reached full speed, the explosion in the number of angel investors has lowered entry barriers into early-stage investing. 

Now investors are beginning to show readiness toward African startups that have promise as they continue to search for the next Paystack. 

“More people are willing to take risks now in the market, especially angel investors. They can easily let go of $10K-$50K because of success stories like Paystack,” Yusuf said about the $200 million acquisition by U.S. payments startup Stripe

Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent

For all of its significance to the African tech ecosystem, what particularly stands out about Paystack’s exit is the return on investment made for early investors.

By the time it exited in October 2020, some angel investors had an ROI of more than 1,400% according to Jason Njoku in his blog post. Njoku, who took part in the round as an angel investor, is the CEO of IROKO, a Nigerian VOD internet company.

For Muforo, witnessing more early-stage investments is a big deal, one the African tech ecosystem should savor regardless of the round in question.

“Pre-seed or seed are just names investors and founders give. They can basically mean the same thing, in my opinion,” she said. “What I think is most important is the fact that we’re getting more early-stage capital into Africa, and startups are getting more attention from investors, which is fantastic.”

Categories: Business News

End-to-end operators are the next generation of consumer business

2021, January 23 - 6:20am
Roger Lee Contributor Share on Twitter Roger Lee is a general partner at Battery Ventures, based in Menlo Park, CA, who focuses on investments in software and consumer tech, including online marketplaces. More posts by this contributor Justin Da Rosa Contributor Share on Twitter Justin Da Rosa is a vice president with Battery Ventures in San Francisco. He focuses on consumer internet, online marketplace and software investments. More posts by this contributor

At Battery, a central part of our consumer investing practice involves tracking the evolution of where and how consumers find and purchase goods and services. From our annual Battery Marketplace Index, we’ve seen seismic shifts in how consumer purchasing behavior has changed over the years, starting with the move to the web and, more recently, to mobile and on-demand via smartphones.

The evolution looks like this in a nutshell: In the early days, listing sites like Craigslist, Angie’s List* and Yelp effectively put the Yellow Pages online — you could find a new restaurant or plumber on the web, but the process of contacting them was largely still offline. As consumers grew more comfortable with the web, marketplaces like eBay, Etsy, Expedia and Wayfair* emerged, enabling historically offline transactions to occur online.

More recently, and spurred in large part by mobile, on-demand use cases, managed marketplaces like Uber, DoorDash, Instacart and StockX* have taken online consumer purchasing a step further. They play a greater role in the operations of the marketplace, from automatically matching demand with supply, to verifying the supply side for quality, to dynamic pricing.

The key purpose of being end-to-end is to deliver an even better value proposition to consumers relative to incumbent alternatives.

Each stage of this evolution unlocked billions of dollars in value, and many of the names listed above remain the largest consumer internet companies today.

At their core, these companies are facilitators, matching consumer demand with existing supply of a product or service. While there is no doubt these companies play a hugely valuable role in our lives, we increasingly believe that simply facilitating a transaction or service isn’t enough. Particularly in industries where supply is scarce, or in old-guard industries where innovation in the underlying product or service is slow, a digitized marketplace — even when managed — can produce underwhelming experiences for consumers.

In these instances, starting from the ground up is what is really required to deliver an optimal consumer experience. Back in 2014, Chris Dixon wrote a bit about this phenomenon in his post on “Full stack startups.” Fast forward several years, and more startups than ever are “full stack” or as we call it, “end-to-end operators.”

These businesses are fundamentally reimagining their product experience by owning the entire value chain, from end to end, thereby creating a step-functionally better experience for consumers. Owning more in the stack of operations gives these companies better control over quality, customer service, delivery, pricing and more — which gives consumers a better, faster and cheaper experience.

It’s worth noting that these end-to-end models typically require more capital to reach scale, as greater upfront investment is necessary to get them off the ground than other, more narrowly focused marketplacesBut in our experience, the additional capital required is often outweighed by the value captured from owning the entire experience.

End-to-end operators span many verticals

Many of these businesses have reached meaningful scale across industries:

Image Credits: Battery Ventures (opens in a new window)

All of these companies have recognized they can deliver more value to consumers by “owning” every aspect of the underlying product or service — from the bike to the workout content in Peloton’s case, or the bank account to the credit card in Chime’s case. They have reinvented and reimagined the entire consumer experience, from end to end.

What does success for end-to-end operator businesses look like?

As investors, we’ve had the privilege of meeting with many of these next-generation end-to-end operators over the years and found that those with the greatest success tend to exhibit the five key elements below:

1. Going after very large markets

The end-to-end approach makes the most sense when disrupting very large markets. In the graphic above, notice that most of these companies play in the largest, but notoriously archaic industries like banking, insurance, real estate, healthcare, etc. Incumbents in these industries are very large and entrenched, but they are legacy players, making them slow to adopt new technology. For the most part, they have failed to meet the needs of our digital-native, mobile-savvy generation and their experiences lag behind consumer expectations of today (evidenced by low, or sometimes even negative, NPS scores). Rebuilding the experience from the ground up is sometimes the only way to satisfy today’s consumers in these massive markets.

2. Step-functionally better consumer experience versus the status quo
Categories: Business News

Extra Crunch roundup: Digital health VC survey, edtech M&A, deep tech marketing, more

2021, January 23 - 5:58am

I had my first telehealth consultation last year, and there’s a high probability that you did, too. Since the pandemic began, consumer adoption of remote healthcare has increased 300%.

Speaking as an unvaccinated urban dweller: I’d rather speak to a nurse or doctor via my laptop than try to remain physically distanced on a bus or hailed ride traveling to/from their office.

Even after things return to (rolls eyes) normal, if I thought there was a reliable way to receive high-quality healthcare in my living room, I’d choose it.

Clearly, I’m not alone: a May 2020 McKinsey study pegged yearly domestic telehealth revenue at $3 billion before the coronavirus, but estimated that “up to $250 billion of current U.S. healthcare spend could potentially be virtualized” after the pandemic abates.

That’s a staggering number, but in a category that includes startups focused on sexual health, women’s health, pediatrics, mental health, data management and testing, it’s clear to see why digital-health funding topped more than $10 billion in the first three quarters of 2020.

Drawing from The TechCrunch List, reporter Sarah Buhr interviewed eight active health tech VCs to learn more about the companies and industry verticals that have captured their interest in 2021:

  • Bryan Roberts and Bob Kocher, partners, Venrock
  • Nan Li, managing director, Obvious Ventures
  • Elizabeth Yin, general partner, Hustle Fund
  • Christina Farr, principal investor and health tech lead, OMERS Ventures
  • Ursheet Parikh, partner, Mayfield Ventures
  • Nnamdi Okike, co-founder and managing partner, 645 Ventures
  • Emily Melton, founder and managing partner, Threshold Ventures

Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription

Since COVID-19 has renewed Washington’s focus on healthcare, many investors said they expect a friendly regulatory environment for telehealth in 2021. Additionally, healthcare providers are looking for ways to reduce costs and lower barriers for patients seeking behavioral support.

“Remote really does work,” said Elizabeth Yin, general partner at Hustle Fund.

We’ll cover digital health in more depth this year through additional surveys, vertical reporting, founder interviews and much more.

Thanks very much for reading Extra Crunch this week; I hope you have a relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

8 VCs agree: Behavioral support and remote visits make digital health a strong bet for 2021

Image Credits: Luis Alvarez (opens in a new window) / Getty Images

8 VCs agree: Behavioral support and remote visits make digital health a strong bet for 2021

Lessons from Top Hat’s acquisition spree

Image Credits: Bryce Durbin

In the last year, edtech startup Top Hat acquired three publishing companies: Fountainhead Press, Bludoor and Nelson HigherEd.

Natasha Mascarenhas interviewed CEO and founder Mike Silagadze to learn more about his content acquisition strategy, but her story also discussed “some rumblings of consolidation and exits in edtech land.”

Lessons from Top Hat’s acquisition spree

How VCs invested in Asia and Europe in 2020

Image Credits: Nigel Sussman (opens in a new window)

Last year, U.S.-based VCs invested an average of $428 million each day in domestic startups, with much of the benefits flowing to fintech companies.

This morning, Alex Wilhelm examined Q4 VC totals for Europe, which had its lowest deal count since Q1 2019, despite a record $14.3 billion in investments.

Asia’s VC industry, which saw $25.2 billion invested across 1,398 deals is seeing “a muted recovery,” says Alex.

“Falling seed volume, lots of big rounds. That’s 2020 VC around the world in a nutshell.”

How VCs invested in Asia and Europe in 2020

Decrypted: With more SolarWinds fallout, Biden picks his cybersecurity team

Image Credits: Treedeo (opens in a new window) / Getty Images

In this week’s Decrypted, security reporter Zack Whittaker covered the latest news in the unfolding SolarWinds espionage campaign, now revealed to have impacted the U.S. Bureau of Labor Statistics and Malwarebytes.

In other news, the controversy regarding WhatsApp’s privacy policy change appears to be driving users to encrypted messaging app Signal, Zack reported. Facebook has put changes at WhatsApp on hold “until it could figure out how to explain the change without losing millions of users,” apparently.

Decrypted: With more SolarWinds fallout, Biden picks his cybersecurity team

Hot IPOs hang onto gains as investors keep betting on tech

Image Credits: Nigel Sussman (opens in a new window)

A big IPO debut is a juicy topic for a few news cycles, but because there’s always another unicorn ready to break free from its corral and leap into the public markets, it doesn’t leave a lot of time to reflect.

Alex studied companies like Lemonade, Airbnb and Affirm to see how well these IPO pop stars have retained their value. Not only have most held steady, “many have actually run up the score in the ensuing weeks,” he found.

Hot IPOs hang onto gains as investors keep betting on tech

Dear Sophie: What are Biden’s immigration changes?

Image Credits: Bryce Durbin / TechCrunch

Dear Sophie:

I work in HR for a tech firm. I understand that Biden is rolling out a new immigration plan today.

What is your sense as to how the new administration will change business, corporate and startup founder immigration to the U.S.?

—Free in Fremont

Dear Sophie: What are Biden’s immigration changes?

Hello, Extra Crunch community!

Image Credits: atakan (opens in a new window) / Getty Images

I began my career as an avid TechCrunch reader and remained one even when I joined as a writer, when I left to work on other things and now that I’ve returned to focus on better serving our community.

I’ve been chatting with some of the folks in our community and I’d love to talk to you, too. Nothing fancy, just 5-10 minutes of your time to hear more about what you want to see from us and get some feedback on what we’ve been doing so far.

If you would be so kind as to take a minute or two to fill out this form, I’ll drop you a note and hopefully we can have a chat about the future of the Extra Crunch community before we formally roll out some of the ideas we’re cooking up.

Drew Olanoff
@yoda

Hello, Extra Crunch community!

In 2020, VCs invested $428m into US-based startups every day

Image Credits: Nigel Sussman (opens in a new window)

Last year was a disaster across the board thanks to a global pandemic, economic uncertainty and widespread social and political upheaval.

But if you were involved in the private markets, however, 2020 had some very clear upside — VCs flowed $156.2 billion into U.S.-based startups, “or around $428 million for each day,” reports Alex Wilhelm.

“The huge sum of money, however, was itself dwarfed by the amount of liquidity that American startups generated, some $290.1 billion.”

Using data sourced from the National Venture Capital Association and PitchBook, Alex used Monday’s column to recap last year’s seed, early-stage and late-stage rounds.

In 2020, VCs invested $428M into US-based startups every day

How and when to build marketing teams at deep tech companies

Image Credits: Andy Roberts (opens in a new window) / Getty Images

Building a marketing team is one of the most opaque parts of spinning up a startup, but for a deep tech company, the stakes couldn’t be higher.

How can technical founders working on bleeding-edge technology find the right people to tell their story?

If you work at a post-revenue, early-stage deep tech startup (or know someone who does), this post explains when to hire a team, whether they’ll need prior industry experience, and how to source and evaluate talent.

How and when to build marketing teams at deep tech companies

Bustle CEO Bryan Goldberg explains his plans for taking the company public

Bustle Digital Group CEO Bryan Goldberg. Image Credits: Bustle Digital Group

Senior Writer Anthony Ha interviewed Bustle Digital Group CEO Bryan Goldberg to get his thoughts on the state of digital media.

Their conversation covered a lot of ground, but the biggest news it contained focuses on Goldberg’s short-term plans.

“Where do I want to see the company in three years? I want to see three things: I want to be public, I want to see us driving a lot of profits and I want it to be a lot bigger, because we’ve consolidated a lot of other publications,” he said.

Bustle CEO Bryan Goldberg explains his plans for taking the company public

It may not be as glamorous as D2C, but beauty tech is big money

Image Credits: Laia Divols Escude/EyeEm (opens in a new window) / Getty Images

The U.S. Federal Trade Commission is not a huge fan of personal-care D2C brands merging with traditional consumer product companies.

This month, razor startup Billie and Proctor & Gamble announced they were calling off their planned merger after the FTC filed suit.

For similar reasons, Edgewell Personal Care dropped its plans last year to buy Harry’s for $1.37 billion.

In a harsher regulatory environment, “the path to profitability has become a more important part of the startup story versus growth at all costs,” it seems.

It may not be as glamorous as D2C, but beauty tech is big money

Twilio CEO says wisdom lies with your developers

SAN FRANCISCO, CA – SEPTEMBER 12: Founder and CEO of Twilio Jeff Lawson speaks onstage during TechCrunch Disrupt SF 2016 at Pier 48 on September 12, 2016 in San Francisco, California. Image Credits: Steve Jennings/Getty Images for TechCrunch

Companies that build their own tools “tend to win the hearts, minds and wallets of their customers,” according to Twilio CEO Jeff Lawson.

In an interview with enterprise reporter Ron Miller for his new book, “Ask Your Developer,” Lawson says founders should use developer teams as a sounding board when making build-versus-buy decisions.

“Lawson’s basic philosophy in the book is that if you can build it, you should,” says Ron.

Twilio CEO Jeff Lawson says wisdom lies with your developers

Categories: Business News

Sounding Board raises cash as startups wake up to executive coaching

2021, January 23 - 1:58am

In an unprecedented work environment defined by distributed teams and virtual-only communication, two co-founders think their 2018 bet reigns truer than ever: mentors need mentorship, too.

Christine Tao and Lori Mazan, the brains behind Sounding Board, want to train any leader within an organization to be a better leader. The San Francisco startup connects anyone from first-time managers to C-suite executives with coaches through a marketplace.

Revenue has doubled or tripled every year since 2016, which the company says hovers in the “multi-millions” range. But in the wake of the coronavirus pandemic, Sounding Board has seen demand for its platform grow even more. Quarterly bookings have increased 3.4 times from Q2 2020, and in the last five months, monthly revenue has doubled.

On the heels of this growth, the co-founders say that Sounding Board’s next step as a startup is to grow beyond coaching services and into a platform that can show leaders how those newfound skills are impacting business development. The new product is meant to serve as a hub and roadmap where a participant and coach can track insights, progress and behaviors.

Within the platform, a user can schedule sessions with a coach, get matched to someone, as well as look at resources and complete tasks assigned to them. Beyond that, there is a feature that allows the coach and the manager to measure goals on an ongoing basis, similar to OKR-related software.

“The content is great, but unless you can apply that content, it’s not very useful,” Mazan said. “So this coaching is a way to help people apply the insights and the learning they’ve gotten from some kind of content and really utilize that in the workplace.”

The new product takes the monthly in-person summit that your organization used to call executive coaching and turns it into a living, breathing part of a manager’s workflow.

Beyond helping its users have a better temperature check on their progress, the product will help Sounding Board scale its services. Now any tutor on Sounding Board has more ways into a user’s mind and workflow, so every call isn’t synchronous and can be managed more evenly.

The co-founders see their long-term differentiation living in this feature. Anyone can create a marketplace, but it takes seamless, easy-to-use tech to track the effectiveness of what happens post-coaching.

Tao admits that the startup isn’t for everyone. Sounding Board has seen early adoption around enterprise companies that are in a late-stage, hyper-growth mindset heading toward an IPO. That level of maturity is a sweet spot for a third-party such as them to come in and scale leaders across teams. Customers include VMware, Uber, Plaid, Chime and Dropbox.

Why is everyone making OKR software?

That said, within organizations, 60% of Sounding Board’s users are first-time managers, 30% are middle-tier and 10% are C-suite. The co-founders think these numbers indicate a broader demand for mentorship beyond what their competitors offer, which often sticks to C-suite life coach territory or stress management.

“Everyone is starting to realize that we’re going to have to offer coaching broader than just in the C-suite, and sometimes they don’t really know what that means,” said Mazan.

The realization, along with COVID-19 tailwinds, has helped Sounding Board attract new millions in venture capital. The startup tells TechCrunch that it has raised a $13.1 million Series A led by Canaan Partners. Other investors include Correlation Ventures, Bloomberg Beta, Precursor Ventures, as well as Degreed founder David Blake and Kevin Johnson, the former CEO of Udemy.

Categories: Business News

How VCs invested in Asia and Europe in 2020

2021, January 23 - 12:35am

Wrapping our look at how the venture capital asset class invested in 2020, today we’re taking a peek at Europe’s impressive year, and Asia’s slightly less invigorating set of results. (We’re speaking soon with folks who may have data on African VC activity in 2020; if those bear out, we’ll do a final entry in our series concerning the continent.)

After digging into the United States’ broader venture capital results from last year with an extra eye on fintech and unicorn investing, at least one trend was clear: Venture capital is getting later and larger (as expected).

Record dollar amounts were being invested, but across falling deal volume. More money and fewer rounds meant larger rounds, often going to the late and super-late stage startups in the market.

Unicorns are feasting, in other words, while some younger startups struggle to raise capital.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

There have been some encouraging signs of seed activity, mind, but full-year data made it clear that in America, the more mature startups had the best of it.

But what about the rest of the world? After parsing KPMG data concerning both how VCs invested in Europe (here) and Asia (here) last year, there are clear echoes. But not entire reproductions.

Let’s discuss key data points from the two reports. This will be illustrative, brief and painless. Into the data!

European VCs: Rich, but not evenly distributed

Compared to historical investment levels, KPMG’s European VC report describes a venture capital scene at its peak. Q4 2020 saw $14.3 billion invested into EU startups across 1,192 deals, the highest dollar amount charted and a modest besting of the previous record set in Q3 2020.

However, despite impressive investment totals, the number of deals that the money was spread over proved lackluster.

The Q4 2020 deal count was the lowest on record since the continent’s deal peak in Q1 2019. Squinting at the provided chart, it appears that deal volume in Europe has fallen from around 2,200 in that peak quarter, to Q4’s fewer than 1,200 deals.

Categories: Business News

MotoRefi raises $10M to keep pedal on auto refinancing growth

2021, January 23 - 12:17am

A month before the COVID-19 pandemic had spread to North America, auto fintech startup MotoRefi — newly armed with nearly $9 million in venture capital — was preparing to bring its refinancing platform to the masses.

CEO Kevin Bennett, and the investors behind the company, saw the opportunity to service Americans who collectively hold $1.2 trillion in auto loans. What they didn’t anticipate was the sudden uptick in demand fueled by COVID-19 and the uncertainty and chaos that the pandemic created.

MotoRefi, which was born out of QED Investors in 2017, developed an auto refinancing platform that handles the entire process, including finding the best rates, paying off the old lender and re-titling the vehicle. The company has benefitted from the convergence of two trends sparked by COVID-19 that has turbocharged its business: an accelerated adoption of fintech across the economy and growing attention toward personal finance. 

Now, investors are pouring more money into the startup to help it make the most of the spike in demand for auto refinancing.

MotoRefi said Friday it has raised $10 million in a round led by Moderne Ventures. Liza Benson, a partner at Moderne Venture, will join the board.

“Many people are looking around saying how can they save money?” Bennett said, commenting on the events of the past year. “And while auto refinance historically is in a relatively low awareness category of personal finance, that interest has really grown and accelerated through 2020.”

For instance, Google searches for auto refinance increased about 40% in 2020 over the previous year, he added.

The company said its revenue rose by sixfold, its workforce tripled to more than 150 people and the number of lenders on its platform doubled over the past year. MotoRefi said it refinanced more than $250 million of auto loans in 2020.

“We actually weren’t planning on raising twice in a year,” Bennett said. “But the growth had been pretty noticeable from the investor standpoint in the market.”

That new capital will be used to hire more employees and expand its offerings, according to Bennett, who noted that MotoRefi now operates in 42 states and Washington, DC.

MotoRefi has raised more than $24 million to date. The company raised $8.6 million last February in a Series A funding round. That round, which would later grow to $9.4 million, was co-led by Accomplice and Link Ventures. Motley Fool Ventures, CMFG Ventures (part of CUNA Mutual Group) and Gaingels also participated in the round. The Series A round followed $4.7 million in seed funding that MotoRefi announced in March 2019.

Categories: Business News

Dashlane taps JD Sherman, ex-Hubspot COO, as new CEO, as co-founder Emmanuel Schalit steps aside

2021, January 23 - 12:05am

Our reliance on internet-based services is at an all-time high these days, and that’s brought a new focus on how well we are protected when we go online. Today comes some news from one of the bigger companies working in the area of password security, which points out how business is shifting for the companies providing these tools.

Emmanuel Schalit, the co-founder of popular password manager Dashlane, is stepping down as CEO of the startup. He is being replaced by JD Sherman, the former COO of HubSpot, as Dashlane makes plans to move more aggressively to court more business users.

“This is about thinking about its next leg of our scaling strategy, more B2B monetization after being strong in B2C,” Sherman said in an interview, praising his predecessor’s growth of the consumer business and noting his realization that “B2B was not his forte.”

Sherman’s career focus, in contrast, has been all about B2B. Before his eight years at HubSpot, he was the CFO of Akamai (which, as a CDN, also had security as a focus, albeit in a completely different way), and before that IBM.

Since accepting the offer, Sherman (pictured right) has been quietly working with Schalit — who will no longer hold any operational role — to get up to speed and will be taking over formally at the start of February.

Sherman is based out of Boston and will eventually commute to Dashlane’s HQ in New York (“eventually” because everyone is remote-working at the moment, with Sherman himself getting hired in a virtual process).

The changing of the guard comes at an interesting time for the startup. Dashlane now has 15 million users, up from 10 million+ in 2019. That was the same year that Dashlane announced two significant rounds of funding just six weeks apart from each other: first a $30 million round (which appeared to have some debt as part of it), then a $110 million Series D that valued the company at just over $500 million. Its backers include the likes of Sequoia, Bessemer, FirstMark, Rho Ventures and consumer credit reporting giant TransUnion.

Sherman would not talk about current valuation, nor where the company is currently standing regarding its next financial steps, except to say that it’s in a good place and to provide the smallest of hints of an IPO on the horizon.

“The Series D was a healthy round for a subscription business,” he said. “Right now, cashflow is solid and we have the funding we need for our growth, so there is no urgent plan to raise money. When we do, we’ll see if it is an IPO round” — that is, the last round before an IPO — “or not. To me, it’s all about growing the business.”

My guess: that valuation has gone up, given the boost in user numbers, the growth of its enterprise business and the huge shifts in the market in the last year that have put a spotlight on companies that are making using the internet safer. (Also, note that LogMeIn, which owns competitor LastPass, was picked up by PE firms for about $4.3 billion in a deal that completed last year.)

Use ‘productive paranoia’ to build cybersecurity culture at your startup

Dashlane was founded focused primarily on providing password management tools for consumers. These still account for the majority of its users, but the Series D funding was in part to fuel a bigger push into the business market, and to generally get on the radar of more people.

The expansion into business users was a natural move in more ways than one. First, the consumer service is designed as a freemium offering, while businesses provide a more steady and guaranteed revenue stream. Second, there is a natural progression that comes from being a happy consumer user: you might want to have the same service for your online work life, too. That remains the strategy for Sherman.

“The plan is to have two sides to the business,” he said, using the well-worn consumer-to-business analogy of a flywheel to describe how it will work: “The more who use it, more businesses will start to adopt it and get comfortable with using a password manager.”

That strategy is lately getting a major fillip, in the form of the massive boost in online activity in the past year.

Activities like taking care of all your shopping, entertainment, social and work-related needs have all moved online in the last year, pushed into the virtual sphere by the emergence and persistent presence of the easily contagious and dangerous COVID-19 virus.

Some of that shift has worked out better than many thought it would, and now, some believe that even when the pandemic does get under control, a lot of us will still be using the internet to get all of those things done on a regular basis.

But while I’ve heard a lot of industry people describe that situation as “the genie is out of the bottle”, perhaps a more fitting expression might be that Pandora’s box has been opened. That is to say, the increased online usage has created an alarmingly large opportunity for malicious hacking, security breaches and misuse of our online identities.

This consequently has a pretty direct link back to Dashlane.

Password protection is one of the most important elements of keeping yourself and your information safe online, with weak, stolen and reused passwords some of the biggest causes of security breaches both for consumers and businesses (by some estimates, you can track 80-90% of all security breaches back to password issues).

Beyond that, not least because of all the breaches we’ve now seen, the current market has become much more concerned about privacy and security (a trend manifesting in all kinds of ways), and that has bred a lot more awareness and appetite for the kinds of tools that Dashlane, and other companies that enable better online security, provide.

There will likely continue to be developments in the technology to both suss out bad actors and block them in their tracks when they do try to enter networks, and the technology sold to organizations to keep their and their customers’ information in the cloud in more secure ways will also be improved. But above and beyond all that, password managers are likely to continue to play a role in the mix.

Google is making autofill on Chrome for mobile more secure

Password managers may not always be a perfect solution — there have been a few cases of breaches over the years, and while they have not been in recent times, security researchers at the University of York in May 2020 identified vulnerabilities that could potentially be exploited — but they remain a relatively easy option for end users themselves to be more proactive in protecting their identities specifically by building a better way to guard their passwords. (Among all that, it’s also worth pointing out that Dashlane has never had a breach in its 10+ years of operations.)

And there are a number of routes to providing password management, including efforts from platform players themselves and more direct Dashlane competitors like 1Password and LastPass. Notably, some of the efforts to bridge some of that together, such as the “OpenYolo” project spearheaded by Google and Dashlane, have stalled over the years, in part because of the complexity of implementing it with other existing managers.

But even within that fragmented, competitive and (still at times) vulnerable market, Dashlane still has a lot of opportunities for growth.

“The business is strong and growing,” Sherman said. “The craziness around COVID and remote networking have raised the profile of password management and security in general. It’s a more difficult environment, but there is a tailwind there.”

Categories: Business News

Blobr, the ‘no-code’ company turning APIs into products, raises €1.2M pre-seed

2021, January 22 - 11:57pm

Blobr, a Paris-based startup operating in the no-code space with tech to make it easier for companies to expose and monetise their existing APIs, has raised €1.2 million in pre-seed funding.

The round is led by pan-European pre-seed and seed investor Seedcamp, with participation from New Wave, Kima and various angel investors. Blobr is also the first company to take investment from New Wave — the new European venture capital firm co-founded by Pia d’Iribarne and Jean de la Rochebrochard — since the VC confirmed it had closed $56 million in deployable capital from an all-star lineup of investors, including Iliad’s Xavier Niel, Benchmark’s Peter Fenton and Tony Fadell of Apple fame.

Blobr, founded by Alexandre Airvault (CEO) and Alexandre Mai (CTO), is aiming to become the default “business and product layer” for APIs. This idea is to enable product and business people to manage and monetise a company’s application programming interfaces without technical knowledge or the need to use up more internal engineering resources. And by doing so, the startup believes we’ll see much more innovative use of APIs as commercial data and functionality is made accessible by more third parties to build on top.

“We believe companies should stop thinking of APIs as mere pipes and start building them as products to unleash their power,” says Airvault. “This means APIs should be priced, customized and managed with a user-oriented mindset and not only a tech one”.

To make this a reality, Blobr is designed to empower product and business owners to “make data-sharing a profitable model”, while reducing their dependence on tech. “I believe this approach is what will drive the data exchanges to the next level”, he explains.

Blobr’s no-code technology offers quite a lot of functionality already. From one existing internal API, you can filter confidential information or GDPR-related data; it’s also possible to deliver different API output depending on customer segmentation so you only expose the data that’s needed; and API usage can be linked to usage-based business models or a monthly subscription in Stripe.

Airvault says the startup’s main competitors include API management solutions from Google, IBM, Axway and MuleSoft. “Those platforms are tailored for internal APIs but are not thought of and optimized to manage APIs as products. They are tailored for technical people, whereas Blobr as a no-code solution is built from scratch for product and business people to avoid technical people to be involved in the equation,” he adds.

New Wave is a new European seed fund headed up by ex-Accel VC Pia d’Iribarne

Categories: Business News

JustKitchen is using cloud kitchens to create the next generation of restaurant franchising

2021, January 22 - 3:23pm

JustKitchen operates cloud kitchens, but the company goes beyond providing cooking facilities for delivery meals. Instead, it sees food as a content play, with recipes and branding instead of music or shows as the content, and wants to create the next iteration of food franchises. JustKitchen currently operates its “hub and spoke” model in Taiwan, with plans to expand four other Asian markets, including Hong Kong and Singapore, and the United States this year.

Launched last year, JustKitchen currently offers 14 brands in Taiwan, including Smith & Wollensky and TGI Fridays. Ingredients are first prepped in a “hub” kitchen, before being sent to smaller “spokes” for final assembly and pickup by delivery partners, including Uber Eats and FoodPanda. To reduce operational costs, spokes are spread throughout cities for quicker deliveries and the brands each prepares is based on what is ordered most frequently in the area.

In addition to licensing deals, JustKitchen also develops its own brands and performs research and development for its partners. To enable that, chief operating officer Kenneth Wu told TechCrunch that JustKitchen is moving to a more decentralized model, which means its hub kitchens will be used primarily for R&D, and production at some of its spoke kitchens will be outsourced to other food vendors and manufacturers. The company’s long-term plan is to license spoke operation to franchisees, while providing order management software and content (i.e. recipes, packaging and branding) to maintain consistent quality.

Demand for meal and grocery deliveries increased dramatically during the COVID-19 pandemic. In the United States, this means food deliveries made up about 13% of the restaurant market in 2020, compared to the 9% forecast before the pandemic, according to research firm Statista, and may rise to 21% by 2025.

But on-demand food delivery businesses are notoriously expensive to operate, with low margins despite markups and fees. By centralizing food preparation and pickup, cloud kitchens (also called ghost kitchens or dark kitchens) are supposed to increase profitability while ensuring standardized quality. Not surprisingly, companies in the space have received significant attention, including former Uber chief executive officer Travis Kalanick’s CloudKitchens, Kitchen United and REEF, which recently raised $1 billion led by SoftBank.

The hidden cost of food delivery

Wu, whose food delivery startup Milk and Eggs was acquired by GrubHub in 2019, said one of the main ways JustKitchen differentiates is by focusing on operations and content in addition to kitchen infrastructure. Before partnering with restaurants and other brands, JustKitchen meets with them to design a menu specifically for takeout and delivery. Once a menu is launched, it is produced by JustKitchen instead of the brands, who are paid royalties. For restaurants that operate only one brick-and-mortar location, this gives them an opportunity to expand into multiple neighborhoods and cities (or countries, when JustKitchen begins its international expansion) simultaneously, a new take on the franchising model for the on-demand delivery era.

One of JustKitchen’s delivery meals

Each spoke kitchen puts the final touches on meal before handing them to delivery partners. Spoke kitchens are smaller than hubs, closer to customers, and the goal is to have a high revenue to square footage ratio.

“The thesis in general is how do you get economies of scale or a large volume at the hub, or the central kitchen where you’re making it, and then send it out deep into the community from the spokes, where they can do a short last-mile delivery,” said Wu.

JustKitchen says it can cut industry standard delivery times by half, and that its restaurant partners have seen 40% month on month growth. It also makes it easier for delivery providers like Uber Eats to stack orders, which means having a driver pick up three or four orders at a time for separate addresses. This reduces costs, but is usually only possible at high-volume restaurants, like fast food chain locations. Since JustKitchen offers several brands in one spoke, this gives delivery platforms more opportunities to stack orders from different brands.

In addition to partnerships, JustKitchen also develops its own food brands, using data analytics from several sources to predict demand. The first source is its own platform, since customers can order directly from Just Kitchen. It also gets high-level data from delivery partners that lets them see food preferences and cart sizes in different regions, and uses general demographic data from governments and third-party providers with information about population density, age groups, average income and spending. This allows it to plan what brands to launch in different locations and during different times of the day, since JustKitchen offers breakfast, lunch and dinner.

JustKitchen is incorporated in Canada, but launched in Taiwan first because of its population density and food delivery’s popularity. Before the COVID-19 pandemic, food delivery penetration in the U.S. and Europe was below 20%, but in Taiwan, it was already around 30% to 40%, Wu said. The new demand for food delivery in the U.S. “is part of the new norm and we believe that is not going away,” he added. JustKitchen is preparing to launch in Seattle and several Californian cities, where it already has partners and kitchen infrastructure.

“Our goal is to focus on software and content, and give franchisees operations so they have a turnkey franchise to launch immediately,” said Wu. “We have the content and they can pick whatever they want. They have software to integrate, recipes and we do the food manufacturing and sourcing to control quality, and ultimately they will operate the single location.”

REEF Technology raises $700M from SoftBank and others to remake parking lots

Categories: Business News

Chinese esports player VSPN closes $60M Series B+ round to boost its international strategy

2021, January 22 - 10:00am

Esports “total solutions provider” VSPN (Versus Programming Network) has closed a $60 million Series B+ funding round, joined by Prospect Avenue Capital (PAC), Guotai Junan International and Nan Fung Group.

VSPN facilitates esports competitions in China, which is a massive industry and has expanded into related areas such as esports venues. It is the principal tournament organizer and broadcaster for a number of top competitions, partnering with more than 70% of China’s esports tournaments.

The “B+” funding round comes only three months after the company raised around $100 million in a Series B funding round, led by Tencent Holdings.

This funding round will, among other things, be used to branch out VSPN’s overseas esports services.

Tencent leads $100M Series B funding round into China-based esport provider VSPN

Dino Ying, founder and CEO of VSPN, said in a statement: “The esports industry is through its nascent phase and is entering a new era. In this coming year, we at VSPN look forward to showcasing diversified esports products and content… and we are counting the days until the pandemic is over.”

Ming Liao, the co-founder of PAC, commented: “As a one-of-its-kind company in the capital market, VSPN is renowned for its financial management; these credentials will be strong foundations for VSPN’s future development.”

Xuan Zhao, head of Private Equity at Guotai Junan International said: “We at Guotai Junan International are very optimistic of VSPN’s sharp market insight as well as their team’s exceptional business model.”

Meng Gao, managing director at Nan Fung Group’s CEO’s office said: “Nan Fung is honored to be a part of this round of investment for VSPN in strengthening their current business model and promoting the rapid development of emerging services and the esports streaming ecosystem.”

Esports pioneer Dino Ying talks to TechCrunch about the next phase of VSPN

Categories: Business News

Hims, the telehealth startup, saw its shares slip in their trading debut — and that’s fine with its CEO

2021, January 22 - 8:37am

Hims & Hers, a San Francisco-based telehealth startup that sells sexual wellness and other health products and services to millennials, began trading publicly today on the NYSE after completing a reverse merger with the blank-check company Oaktree Acquisition Corp.

Its shares slipped a bit, ending the day down 5% from where they started, but the company, which was founded in 2017 and now claims nearly 300,000 paying subscribers for its various offerings, has never been focused on a splashy headline about its first-day performance, co-founder and CEO Andrew Dudum told us earlier today.

On the contrary, Dudum says that while Hims might have once imagined a traditional IPO, it decided to go the special purpose acquisition company (SPAC) route because of their pricing mechanisms and because it was approached by a SPAC led by renowned money manager Howard Marks, the founder of the global alternative investment firm Oaktree Capital Management. (“We fell in love with the Oaktree team and the capital market experience and deep resources they have.”)

We talked with Dudum about that SPAC’s structure; the lockups involved now that Hims’ shares are trading; and how much of the business still centers around one of its first offerings, which was a generic version of erectile dysfunction pills. Our conversation has been edited lightly for length and clarity.

TC: You’re a Bay Area-based company selling to a mostly U.S. audience. How are you thinking about expanding that footprint geographically?

AD: We do have a small operation selling in the U.K.; we’re getting our feet wet in that market and building out a team and infrastructure and fulfillment. If you look at the regulatory landscape, there’s a huge amount of room [to grow] in Europe, Australia, Canada, the Middle East and Asia, and so in that order, we’ll start to [move into those markets].

TC: What is your average customer cost? 

AD: It has come down from $200 when we first launched, to roughly $100 last year, and we make, on average, close to $300 in the first couple of years in terms of a patient’s lifetime value.

TC: How quickly do customers churn?

AD: We break down lifetime value projections by quarter cohorts, and quarter over quarter, year over year, we’re monetizing each of these cohorts better, with high-margin profiles.

As of last quarter, the business was growing 90% year-over-year, with 76% gross margins and greater cash efficiency, and that’s because as we provide more offerings, there is more cross-purchasing. Also, word of mouth is becoming more of a dynamic, with more than 50% of the traffic to the site free at this point because we have built a brand with a young demographic.

TC: When are you projecting that you’ll turn profitable?

AD: We’ve reduced our annual burn and increased our margin efficiency and organic growth, so on a quarterly basis, we think in the next couple of years is a real possibility.

Image Credits: Hims & Hers

TC: Hims’ first wellness offerings included pills for male pattern hair loss and erectile dysfunction. How much revenue does that ED business account for?

AD: What we’ve disclosed is that roughly half [of our revenue] is that sexual health category — which includes [medicines for] generic erectile dysfunction, birth control, STDs, UTIs and premature ejaculation. The other half is predominately dermatology, including hair care [to address hair loss] and acne, and we’ve more recently moved into primary care and behavioral health.

TC: For retail investors, how do you differentiate the business from that of your rival Ro, which heavily promotes its ED products?

AD: There are a number of core differences between us and public and private players. First is our real focus on diversifying our offerings. With our focus on sexual health, dermatology, primary care and behavioral health, it’s in our DNA to quickly expand into new businesses.

We also think we’re different from most [rivals] in that we really invest time in building deep relationships with [those who represent] the future of healthcare markets — people in their teens, 20s and 30s. This demographic has a different set of tech expectations and consumer expectations than people in their 40s, 50s and 60s, and if we want to build for the future, that means building for the largest body of payers in the future.

Hims launches group therapy services as first foray into broader mental health initiative

Traditional healthcare companies monetize only the sick, but optimizing around that demographic precludes you from understanding what the next generation really needs and wants. I’ve never seen such a divergence between a patient population and legacy experience, and that’s a real advantage to us as a business.

TC: Hims just went public through a SPAC in a deal that gives the company around $280 million in cash — $205 million of that from Oaktree’s blank-check company and another $75 million through a private placement deal. How much runway does that give you?

AD: The company doesn’t burn a tremendous amount — between $10 million and $20 million a year — so a relatively long runway if we keep operating the business as is. But it does allow us to expand and grow into new businesses, too, including into big categories like sleep, infertility, diabetes and other chronic conditions.

TC: What about acquisitions?

AD: We’ll keep an eye open for strategic opportunities and consolidation opportunities. More than a dozen businesses a month come to us to be consolidated into the brand, but generally speaking, we’ve had the belief that so much is in front of us that we don’t want to be distracted.

TC: Is there a lockup period for anyone?

AD: There’s a traditional lockup for executives and employees and the board.

TC: Did your SPAC sponsors get a board seat?

AD: No.

TC: How much do they now own of the company, and can they sell?

AD: Oaktree owns a couple percent and [the syndicate they brought to do the private placement] [owns] 12%. But the very reason we went with them was the quality of the team and the organization . . . and they have the added incentive for the next year or two from a compensation standpoint for the company to succeed and to prove [out their thesis that Hims is a smart investment].

TC: Do you think the traditional IPO process is broken?

AD: The traditional IPO market hasn’t changed. It takes 12 to 18 months of preparation, which is a crazy amount of time for management to be distracted, then there’s this one-day PIPE that gives institutions a tremendous amount of money instantaneously. Maybe it makes for a good CNBC headline, but at tremendous cost to the company. It’s atrocious. If you were a founder or employee and getting diluted twice as much as you have to be, you’d be really upset. It’s no surprise to me that founders like myself are looking at other modalities with better pricing and better structures.

Almost everything you need to know about SPACs

Categories: Business News

The only take about the future of media is that media is the future

2021, January 22 - 8:31am

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week we — Natasha and Danny and Alex and Grace — had more than a little to noodle over, but not so much that we blocked out a second episode. We try to stick to our current format, but, may do more shows in the future. Have a thought about that? equitypod@techcrunch.com is your friend and we are listening.

Now! We took a broad approach this week, so there is a little of something for everything down below. Enjoy!

Plaid launches FinRise, an incubator for underrepresented fintech founders

Microsoft invests in Cruise in new $2 billion round

Like we said, it’s a lot, but all of it worth getting into before the weekend. Hugs from the team, we are back early Monday.

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Categories: Business News

Forsaking funding at a $1 billion valuation, Solugen preps a new green chemical product and a big 2021

2021, January 22 - 7:12am

Late last year, Solugen, a startup using synthetic biology to take hydrocarbons out of the chemicals industry, decided against pursuing a new round of funding that would have valued the company at over $1 billion, TechCrunch has learned.

Instead, the Houston-based bio-manufacturing company raised an internal round of roughly $30 million from existing investors and continued working on its latest project — a new bio-based manufacturing process for a high-value specialty chemical that can act as an anti-corrosive agent.

That work represents a potentially lucrative new product line for the company and charts a course for a host of other businesses that are refashioning the basic building blocks of life in an attempt to supplant chemistry with biology for manufacturing and production.

If Solugen can get its high-value chemical into commercial production, the company can follow the path that sustainable tech companies like Tesla have mastered — moving from a pricy specialty product into the mass market. And rather than over-promise and underdeliver, Solugen wanted to get the product line right first before raising big bucks, according to people familiar with the company’s thinking.

As the world looks to move away from oil and its byproducts to reduce greenhouse gas emissions and slow down or reverse global climate change, the chemicals industry is in the crosshairs as a huge target for disruption. Vehicle electrification solves only one part of the oil problem. The extractive industry doesn’t just produce fuel, but also the chemicals that make up most of the products that defined consumer goods in the twentieth century.

Chemicals are everywhere and they’re a huge business.

Companies like Zymergen raised hundreds of millions of dollars last year to develop industrial applications for synthetic biology, and they’re not alone. Startups including Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all raised significant amounts of capital to reduce the environmental footprint of food, chemicals, ingredients and plastics through synthetic biology.

Synthetic biology startups are giving investors an appetite

Some of these companies are seeing early success in food replacements and ingredients, but the promise of biologically based chemicals have been elusive — until now.

Solugen’s new product will produce glucaric acid, a tough-to-make chemical that can be used in water treatment facilities and as an anti-corrosive agent — and the company can make it with a zero carbon (or potentially carbon negative) manufacturing process, according to Solugen co-founder and chief technology officer, Sean Hunt.

The glucaric acid from Solugen is cheaper to produce and more environmentally friendly than existing phosphonates that are used for water treatment — and the company has the benefit of competing against chemicals manufacturers in China.

Given the continuing tensions between the two countries, the U.S. is looking to make more high-value products — including chemicals — domestically, and Solugen’s technology is a good way forward to have home-grown supplies of critical materials.

Solugen still intends to raise more capital, the company just wanted to wait until its latest production plant for the acid came online, according to Hunt.

It’s also the fruit of years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, first realized they could potentially use the technology they’d developed to make specialty chemicals back in 2017, according to Hunt. But first the company had to make the hydrogen peroxide as a precursor chemical, Hunt said.

“It’s advantageous for us to focus on this,” said Hunt. “As we scale, we can enter more commodity-type markets down the road.”

It’s all part of the notable strides the entire industry is making, said Hunt. “Synthetic biology has really made significant strides,” he said. “We have our commercial plant coming online this summer [and it proves] synthetic biology has gotten to the point where we can compete on price and performance.”

So the capital infusion will come as the company gets closer to the completion of these commercial scale facilities.

“It’s not like we were sitting on a term sheet and we said no,” Hunt said. “We want to make sure that we are hitting the milestones and the goals at a commensurate pace which is this year. I’m extremely bullish and optimistic of 2021.”

Solugen’s co-founder sees the path that his company is on as one that other startups working in the synthetic biology space will pursue to bring profitable products to market at the higher end before competing with more sustainable versions of commodity chemicals.

“How do you start a company that has this level of capital intensity?” Hunt asked. “You can start in the fine chemicals space where everything sells for tens to hundreds of dollars per pound. For us, glucaric acid is that specialty chemical and then we will do commodity.”

Zymergen raised $300 million because synthetic biology is so hot right now

Categories: Business News

Decrypted: With more SolarWinds fallout, Biden picks his cybersecurity team

2021, January 22 - 3:00am

All change in the capital as the Biden administration takes charge, and thankfully without a hitch (or violence) after the attempted insurrection two weeks earlier.

In this week’s Decrypted, we look at the ongoing fallout from the SolarWinds breach and who the incoming president wants to lead the path to recovery. Plus, the news in brief.

THE BIG PICTURE Google says SolarWinds exposure “limited,” more breaches confirmed

The cyberattack against SolarWinds, an ongoing espionage campaign already blamed on Russia, claimed the U.S. Bureau of Labor Statistics as another federal victim this week. The attack also hit cybersecurity company Malwarebytes, the company’s chief executive confirmed. Marcin Kleczynski said in a blog post that attackers gained access to a “limited” number of internal company emails. It was the same attackers as SolarWinds but using a different intrusion route. It’s now the third security company known to have been targeted by the same Russian hackers after a successful intrusion at FireEye and an unsuccessful attempt at CrowdStrike.

Today, I disclosed publicly that @Malwarebytes had been targeted by the same nation state actor that attacked SolarWinds. This attack is much broader than SolarWinds and I expect more companies will come forward soon.

— Marcin Kleczynski (@mkleczynski) January 19, 2021

Categories: Business News

Bodyguard is a mobile app that hides toxic content on social platforms

2021, January 22 - 2:31am

If you’re somewhat famous on various social networks, chances are you are exposed to hate speech in your replies or in your comments. French startup Bodyguard recently launched its app and service in English so that it can hide toxic content from your eyes. It has been available in French for a few years and the company has attracted 50,000 users so far.

“We have developed a technology that detects hate speech on the internet with a 90% to 95% accuracy and only 2% of false positive,” founder and CEO Charles Cohen told me.

The company has started with a mobile app that anyone can use. After you download the app and connect the app with your favorite social networks, you choose the level of moderation. There are several categories, such as insults, body shaming, moral harassment, sexual harassment, racism and homophobia. You can select whether it’s a low priority or a top priority for each category.

After that, you don’t have to open the app again. Bodyguard scans replies and comments from its servers and makes a decision whether something is OK. For instance, it can hide comments, mute users, block users, etc. When you open Instagram or Twitter again, it’s like those hateful comments never existed.

The app currently supports Twitter, YouTube, Instagram and Twitch. Unfortunately, it can’t process content on Snapchat and TikTok due to API limitations.

Behind the scenes, most moderation services rely heavily on machine learning or keyword-based moderation. Bodyguard has chosen a different approach. It algorithmically cleans up a comment and tries to analyze the content of a comment contextually. It can determine whether a comment is offensive to you, to a third-party person, to a group of persons, etc.

More recently, the startup has launched a B2B product. Other companies can use a Bodyguard-powered API to moderate comments in real-time on their social platforms or in their own apps. The company charges its customers using a traditional software-as-a-service approach.

Facebook’s Oversight Board will review the decision to suspend Trump

Categories: Business News

Why you should add TechCrunch Early Stage 2021 to your must-attend list

2021, January 22 - 2:03am

As 2020 fades into the rearview mirror of history (huzzah!), it’s time to map out strategies to transform your early-stage startup dream into reality. If there’s one thing every early founder needs it’s information, and you’ll find it in abundance at TechCrunch Early Stage 2021.

Introduced last year — and one of the most popular events in TechCrunch history — TC Early Stage provides new startup founders (pre-seed through Series A) access to top experts to help them develop and strengthen their core entrepreneurial skills.

We’re talking everything from legal issues, fundraising, marketing, growth, product-market fit, tech stack, recruiting, pitch deck teardowns and more. Think of it as a condensed accelerator experience packed with workshops and highly interactive Q&As.

This conference was so popular that we’re hosting two virtual TC Early Stage events this year. Early Stage part one (April 1-2) and Early Stage part two (July 8-9). Even better, each event stands on its own merit with different topics, content, speakers and perspectives. Attend both to double your knowledge, double your networking, double your opportunities.

We might be biased, but we’re not the only people raving about TC Early Stage. Listen to what these early-stage founders said about TC Early Stage 2020:

“I recommend going to Early Stage. The virtual aspect helps in terms of scheduling, it offers community-building through networking and it gives early-stage founders a framework for navigating the startup ecosystem. This is the stage where founders need more support, especially if they haven’t done this before.” — Ashley Barrington, founder, MarketPearl.

“Sequoia Capital’s session, Start with Your Customer, looked at the benefits of storytelling and creating customer personas. I took the idea to my team, we identified seven different user types for our product, and we’ve implemented storytelling to help onboard new customers. That one session alone has transformed my business.” — Chloe Leaaetoa, founder, Socicraft.

“Early Stage 2020 provided a rich, bootcamp experience with premier founders, VCs and startup community experts. If you’re beginning to build a startup, it’s an efficient way to advance your knowledge across key startup topics.” — Katia Paramonova, founder and CEO of Centrly.

Here’s the skinny on passes. Founder passes for either April or July event cost $199. Investors and startup enthusiasts can purchase Innovator passes for $299. Note: Early-bird pricing ends Feb 27 and May 1, respectively.

Pro Tip: Save more when you buy a dual-event pass. Attend both Early Stage events for just $299 (Founder) or $349 (Innovator). Remember: The events feature different speakers, topics and content.

Don’t miss this unparalleled, interactive opportunity to learn best startup practices from leading experts, investors and successful founders. Mark your calendar and buy your Early Stage passes today!

Is your company interested in sponsoring or exhibiting at Early Stage 2021 — Operations & Fundraising? Contact our sponsorship sales team by filling out this form.

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