Startup News

Earlier this year, a startup called Olive launched its new shopping site and app with the goal of making e-commerce more efficient, convenient and sustainable by offering a way for consumers to aggregate their orders from across retailers into single shipments that arrive in reusable packaging, not cardboard. If items need to be returned, those same packages are reused. Otherwise, Olive will return to pick them up. Since its February 2021 debut, the company has grown to include more than 100 retailers, predominately in the fashion space. Today, it’s expanding again by adding support for another 25 beauty retailers.

Launch partners on the new effort include brands like Supergoop!, Kora Organics, Pai Skincare, Erno Laszlo, Jecca Blac, Sahajan, Clark’s Botanicals, NuFace, Purlisse, Cover FX, LYS Beauty, SiO Beauty, Peace Out Skincare, Koh Gen Do, Julep Beauty, In Common Beauty, Indie Lee, Glow Recipe, Ursa Major, RMS Beauty, Ceremonia, Sweet Chef, Follain and BalmLabs.

They join Olive’s numerous apparel and accessory retailers like Adidas, Superga, Rag & Bone, Birdies, Vince, Goop, Khaite and Veronica Beard, among others.

To support the expansion, Olive also developed a new set of reusable packaging that has protective elements for more damageable items. While before, the company had offered a variety of packages like soft-sided garment bags and various sizes of more rigid containers (see below), it’s now introducing its own alternative to the air bubble strips you’ll find in most Amazon boxes these days. Olive’s version is integrated into its reusable packaging and can be easily deflated by the customer when it’s time to return the package at pickup.

Image Credits: Olive founder Nate Faust / Olive

The idea for Olive is a timely one. Because of the COVID-19 pandemic, e-commerce adoption has soared. But so has consumers’ guilt. Multiple packages land on doorsteps every week, with cardboard and plastic to recycle — if that’s even available in your area. Delivery trucks — Amazon, UPS, FedEx and others — are now a daily spectacle on every city street. Meanwhile, market leaders like Amazon and Walmart seem largely interested in increasing the speed of delivery, not necessarily the efficiency and sustainability. (Amazon allows shoppers to pick an Amazon Day delivery, for consolidated shipments, but it’s opt-in.)

Olive founder Nate Faust says he was inspired to build the company after realizing how little interest there was from larger e-commerce players in addressing some of the inconveniences and inefficiencies in the market. Faust previously served as a vice president at Quidsi (which ran Diapers.com and Soap.com and sold to Amazon), then co-founder and COO at Jet, which was acquired by Walmart for $3.3 billion. Before Olive, he was a senior vice president at Walmart.

After some soul searching, he realized he wanted to build something in the e-commerce space that was focused more on the social and environmental impact, not just on driving growth and consumption.

Image Credits: Olive

“I had an epiphany one evening when taking out the trash and recycling,” Faust explains. “It’s pretty crazy that we’re this far into e-commerce and this is the status quo delivery experience — all this waste, which is both an environmental issue and a hassle for consumers,” he says. “And the bigger issue than the packaging is actually the fact that the majority of those packages are delivered one at a time, and those last-mile emissions are actually the biggest contributor of carbon emissions in the post-purchase e-commerce supply chain.”

Consumers may not think about all the issues, because many of them are hidden, but they do struggle in other ways beyond dealing with the waste. Returns are still a hassle — so much so that Amazon now allows customers to go to Kohl’s, where it’s partnered on in-store return kiosks that also help the brick-and-mortar retailer increase their own foot traffic.

Plus, consumers who shop from different sites have to set up online accounts over and over, entering in addresses and payment information many times, which is an annoyance. Olive offers the convenience of an Amazon-like one-stop shop experience on that front.

Meanwhile, Olive addresses the return issue by allowing consumers to simply place their unwanted items back in Olive’s packaging, then leave them on their doorstep or with the building’s doorman for return. It works with both the USPS and a network of local carriers to serve the customers in its current footprint, which is about 100 million U.S. consumers on both coasts.

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While customers don’t have to deal with packaging, it hasn’t been entirely eliminated from the equation at this point. Olive today partners with retailers who ship packages to its own west coast and east coast warehouses, where they repackage them into the reusable containers to deliver to customers. Right now, that means Olive is responsible for the recycling issues. But it’s working with its brand partners to have them pack orders directly into the reusable packaging from the start — before shipping to Olive’s consolidation warehouses for delivery. Today, it has a few retailers on board with this effort, but it hopes that will eventually expand to include all partners.

The company generates revenue on an affiliate commission model, which works for now. But it may need to evolve that business model over time, as its customer base and partnerships grow. At present, around 10,000 consumers have used Olive, ahead of any large-scale marketing and customer acquisition efforts on the startup’s part.

For now, New York-based Olive is growing its business by way of a fundraise of around $15 million from investors including Invus, Primary Venture Partners and SignalFire.

Travel startups continue to rake in venture capital dollars as more people become comfortable traveling amid the global pandemic. The latest is SmarterTravel, which brought in $9.5 million in Series B funding co-led by Link Ventures and Second Alpha, with existing investors also participating.

In addition to the fundraise, the company, a provider of personalized travel recommendations and targeted travel content, announced its name change from HopJump, which reflects the company’s renewed vision of providing an informative online travel experience, CEO Jordan Staab told TechCrunch.

Jordan Staab, CEO of SmarterTravel. Image Credits: SmarterTravel

SmarterTravel has 7 million email newsletter subscribers and uses proprietary artificial intelligence fixes to give customers travel information and discounts. The company writes articles on every facet of travel to inform customers, especially now with airlines, hotels and countries placing certain restrictions on travel.

“The travel consumer is changing how they absorb information,” Staab said. “The consumer is coming to us instead of visiting 20 websites before they book. Before, you might have combed through reviews, but now you just want an expert to tell you, and that is what we are.”

HopJump was co-founded in 2018 by Staab as a digital marketing agency helping big brands with user acquisition campaigns. As it was building up to an initial public offering, Staab said the company wanted to move into building its own brand and saw an opportunity in travel, which accounts for a big market — 10% of global gross domestic product, he added.

The company went on to provide hotel discount travel prices to consumers but found it to be challenging. There are a lot of nuances and different approaches for offering four-star hotel rooms for two-star prices and bundling tactics, Staab explained.

“We fell in love with uncomplicating the process,” he said. “Consumers just want a good price from a company they trust, and that is what we set out to solve.”

In January 2020, the company launched its first product and had 60,000 members join in the first few months, but then the global pandemic hit. Suddenly, HopJump went from managing rapid growth to managing how the company might shut down.

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Still eager to stay in travel, the company pivoted back to marketing so it could continue examining the travel industry, he said. While the company was figuring out its next move, Staab said folks at SmarterTravel were helpful to them, and when he heard that its parent company, TripAdvisor, was needing to make layoffs, and that division was going to be let go, he decided to purchase that asset along with seven others, including Airfarewatchdog, Family Vacation Critic and Oyster. The deal closed in 2020.

Lisa Dolan, managing director at Link Ventures, said that SmarterTravel’s growth was one of the drivers of her firm’s investment. When no one was traveling due to COVID, the company acquired travel companies and made it through the pandemic while other startups in the space were struggling.

She also cited its strong revenue-generating business on the email side and that it capitalized on the fact that even in the pandemic, people were conducting web searches for car rentals, things to do in certain cities and looking for vacation inspiration.

SmarterTravel is going after a U.S. travel and tourism industry valued at $580.7 billion in 2019. It is also not the only one to gain investor attention recently. For example, just over the past month companies like Thatch raised $3 million for its platform aimed at travel creators, travel tech company Hopper brought in $175 million, Wheel the World grabbed $2 million for its disability-friendly vacation planner and Elude raised $2.1 million to bring spontaneous travel back to a hard-hit industry.

Meanwhile, the funding will drive SmarterTravel’s aim to grow rapidly in terms of getting its name out there, building new travel products and hiring key staff. The company already has 50 people, but needs more, Staab said.

“Travel has had a tough couple of years, but some pockets of it are back, and we are seeing that,” he added. “In a year that should have been a bad year, our growth has been good. We were up eight times in revenue in the past 12 months. We are growing, profitable and have extra funding to lean into the growth. It is not going to be easy growth, but we are well-positioned to understand how to do it.”

Even amid the pandemic, this newly funded travel startup is tackling the stodgy timeshare market

 

Building credit history can be difficult if you are a consumer that is having trouble getting access to credit in the first place.

Enter TomoCredit, which has developed a credit card focused on building credit history for first-time borrowers. The San Francisco-based startup is announcing today that it has raised $10 million in a Series A funding round co-led by Kapor Capital and KB Investment Inc. (KBIC), a subsidiary of South Korea’s leading consumer bank. Lewis & Clark Ventures, AME Cloud Ventures, Knollwood Investment Advisory, WTI, Bronze and Square co-founder Sam Wen also participated in the Series A financing.

The new capital comes just over seven months after TomoCredit raised $7 million in seed funding, and brings its total raised this year to $17 million. The company also announced today it has appointed Ash Gupta, former CRO at American Express, to its board.

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TomoCredit co-founder and CEO Kristy Kim came up with the concept for the company after being rejected multiple times for an auto loan while in her early 20s.

Kim, who immigrated to the U.S. from South Korea with her family as a child, was disappointed that her lack of credit history proved to be such an obstacle despite the fact she had a job “and positive cash flow.”

So she teamed up with Dmitry Kashlev, a Russian immigrant, in January of 2019 to create a solution for other foreign-born individuals and young adults facing similar credit challenges. That fall, the startup (short for Tomorrow’s Credit) was accepted into the Barclays Accelerator, powered by Techstars.

The fintech offers a credit card aimed at helping first-time borrowers build credit history, based on their cash flow, rather than on their FICO or credit report ratings. Its biggest differentiator, believes Kim, is that it has no fees, no APR and no credit pull. Traditional credit products rely heavily on fees and APR, she said, while TomoCredit makes money through merchant fees.

Image Credits: TomoCredit

TomoCredit is powered by Finicity (which was acquired by Mastercard last year), and leverages that company’s data network and open banking technology so that it can “securely” access applicants’ bank accounts to obtain financial data for underwriting purposes.

Once approved, applicants receive the TomoCredit Mastercard. The goal is to bring “millions of individuals that lack a credit score into the financial system, allowing a diverse group of consumers the opportunity to better position themselves as qualified candidates for mortgages, auto loans, or other major life purchases,” the company said.

TomoCredit has already pre-approved more than 300,000 customers and expects to issue a total of 500,000 cards by year’s end, according to Kim.

“We’ve grown 10x this year from the beginning of 2021,” Kim said. “Still, this round came together earlier than expected.”

Something that has been surprising to Kim is the interest from a variety of types of consumers.

“In the beginning, we thought international students and immigrants would be most interested in our product,” she told TechCrunch. “But after launching, we’ve realized that so many people can benefit — from gig economy workers to YouTubers to any young person who hasn’t had a chance to build credit yet. The market is way bigger than we even realized.”

In early 2022, the company plans to roll out the Tomo Black card, a product for some of its existing customers that “are showing good performance.” It’s currently testing it with some of its existing user base.

“This is a premium product that can grow with our customers, who we want to retain over the next 10 to 20 years,” Kim said. “We don’t want our product to be a stop-gap solution.”

Image Credits: TomoCredit

The startup plans to use its new capital to do more hiring and enhance features such as weekly autopay and high credit limits in an effort to “boost credit scores faster,” she added. Currently, TomoCredit has about 30 employees, up from 10 at the time of its last raise in February.

“My main focus is recruiting top talent,” Kim said, noting that the company had already hired “some senior people from Wells Fargo.” 

“When we recruit and hire, we care about diversity,” she added. “We’re building products for people who have been traditionally underserved by major banks. I think to align with our mission, we should embody that in building our team. More than 50% of our execs are female. The entire risk team is female. We are diverse in terms of gender, age and ethnicity because we want to truly understand our customers and build a product that is inclusive.”

Brian Dixon, partner at Kapor Capital, points out that there are about 45 million people in the U.S. who should have credit scores, but cannot take out a loan, get a credit card, or apply for a mortgage. And that number is only increasing.

“When we learned that Kristy experienced these issues firsthand when she moved to the United States and thoughtfully figured out a way to circumvent the predatory and broken credit card system, it deepened our conviction in her and the product itself,” he wrote via email.

Dixon believes that TomoCredit’s model of not charging the user makes it a “safe and affordable alternative” to what is in the market.

“Their mission aligns with our thesis of closing gaps of access and opportunity in the credit space at large as well,” he added.

TomoCredit raises $7M to help the cash rich and credit poor

In order to support a buildout of renewable energy, which tends to over-generate electricity at certain times of day and under-generate at others, the grid is going to need a lot of batteries. While lithium-ion works fine for consumer electronics and even electric vehicles, battery startup EnerVenue says it developed a breakthrough technology to revolutionize stationary energy storage.

The technology itself — nickel-hydrogen batteries — isn’t actually new. In fact, it’s been used for decades in aerospace applications, to power everything from satellites to the International Space Station and the Hubble Telescope. Nickel-hydrogen had been too expensive to scale for terrestrial applications, until Stanford University professor (and now EnerVenue chairman) Yi Cui determined a way to adapt the materials and bring the costs way, way down.

Nickel-hydrogen has a number of key benefits over lithium-ion, according to EnerVenue: it can withstand super-high and super-low temperatures (so no need for air conditioners or thermal management systems); it requires very little to no maintenance; and it has a far longer lifespan.

The technology has caught the eye of two giants in the oil and gas industry, energy infrastructure company Schlumberger and Saudi Aramco’s VC arm, which together with Stanford University have raised $100 million in Series A funding. The investment comes around a year after EnerVenue raised a $12 million seed. The company is planning on using the funds to scale its nickel-hydrogen battery production, including a Gigafactory in the U.S., and has entered a manufacturing and distribution agreement with Schlumberger for international markets.

“I spent almost three and a half years prior to EnerVenue looking for a battery storage technology that I thought could compete with lithium-ion,” CEO Jorg Heinemann told TechCrunch in a recent interview. “I had essentially given up.” Then he met with Cui, who had managed through his research to bring the cost down from around $20,000 per kilowatt hour to $100 per kilowatt hour within line of sight — a jaw-dropping decrease that puts it on-par with existing energy storage technology today.

EnerVenue CEO Jorg Heinemann Image Credits: EnerVenue (opens in a new window)

Think of a nickel-hydrogen battery as a kind of battery-fuel cell hybrid. It charges by building up hydrogen inside a pressure vessel, and when it discharges, that hydrogen gets reabsorbed in water, Heinemann explained. One of the key differences between the batteries in space and the one’s EnerVenue is developing on Earth is the materials. The nickel-hydrogen batteries in orbit use a platinum electrode, which Heinemann said accounts for as much as 70% of the cost of the battery. The legacy technology also uses a ceramic separator, another high cost. EnerVenue’s key innovation is finding new, low-cost and Earth-abundant materials (though the exact materials they aren’t sharing).

Heinemann also hinted that an advanced team within the company is working on a separate technology breakthrough that could bring the cost down even further, to the range of around $30 per kilowatt hour or less.

Those aren’t the only benefits. EnerVenue’s batteries can charge and discharge at different speeds depending on a customer’s needs. It can go from a 10-minute charge or discharge to as slow as a 10-20 hour charge-discharge cycle, though the company is optimizing for a roughly two-hour charge and four- to eight-hour discharge. EnerVenue’s batteries are also designed for 30,000 cycles without experiencing a decline in performance.

“As renewables get cheaper and cheaper, there’s lots of time of the day where you’ve got, say, a one- to four-hour window of close to free power that can be used to charge something, and then it has to be dispatched fast or slow depending on when the grid needs it,” he said. “And our battery does that really well.”

It’s notable that this round was funded by two companies that loom large in the oil and gas industry. “I think nearly 100% of the oil and gas industry is now pivoting to renewables in a huge way,” Heinemann added. “They all see the future as, the energy mix is shifting. We’re going to be 75% renewable by mid-century, most think it’s going to happen quicker, and those are based on studies that the oil and gas industry did. They see that and they know they need a new play.”

Image Credits: EnerVenue

Don’t expect nickel-hydrogen to start appearing in your iPhone anytime soon. The technology is big and heavy — even scaled down as much as possible, a nickel-hydrogen battery is still around the size of a two-liter water flask, so lithium-ion will definitely still play a major role in the future.

Stationary energy storage may have a different future. EnerVenue is currently in “late-stage” discussions on the site and partner for a United States factory to produce up to one gigawatt-hour of batteries annually, with the goal of eventually scaling even beyond that. Heinemann estimates that the tooling cap-ex per megawatt hour should be just 20% that of lithium ion. Under the partnership with Schlumberger, the infrastructure company will also be separately manufacturing batteries and selling them in Europe and the Middle East.

“It’s a technology that works today,” Heinemann said. “We’re not waiting on a technology breakthrough, there’s no science project in our future that we have to go achieve in order to prove out something. We know it works.”

E-commerce has undoubtedly seen a huge boost in growth in the last year and a half of Covid-19 living, with people turning to the web and apps to shop for essentials and not-so-essentials to keep their social distance, and using delivery services to receive their goods rather than picking things up in person.

Today, a Dutch startup called Sendcloud that has built a service to help retailers with the latter of these — providing a cloud-based to easily organize and carry out shipping services by choosing from a wide range of carriers and other options — is announcing $177 million in funding, a major investment that speaks not just to Sendcloud’s recent growth, but of the demand in the market for what it does: provide an efficient and viable alternative to simply turning to Amazon for fulfillment, or going through the manual and costly process of sorting out shipping directly with the companies that provide it.

“We try to provide Amazon-level logistics to all the other merchants out there,” Rob van den Heuvel, Sendcloud’s CEO and co-founder, said in an interview. Pre-lock down, he said the company — which now has 23,000 customers — was seeing on average between 70% and 80% growth each year. During lockdown that went up to 120%, with 133% increases in parcel volumes, “And we have not seen volumes going down since,” he added.

Softbank Vision Fund 2 — a prolific investor in the many parts of the e-commerce ecosystem — is leading this Series C, with L Catterton and HPE Growth also participating. This by far the biggest investment Sendcloud has ever had: the Eindhoven, Netherlands-based startup has been around since 2012 and before now had raised just over $23 million ($23 million, 23,000 customers has a nice ring to it.)

Van den Heuvel confirmed that the startup is not disclosing its valuation with this round although a source very close to the deal tells us it’s around $750 million.

As a point of reference, Shippo — a U.S. company operating in a similar space but with 100,000 customers to Sendcloud’s 23,000 — in June raised money at a $1 billion valuation. Shippo has, however, also raised significantly more money and will have had its valuation ratcheting up as a result of that, too. On Sendcloud’s side, our source pointed out that it’s demonstrated a very strong amount of capital efficiency in its growth.

The gap in the market that Sendcloud (and would-be rivals like Shippo and Stamps.com) is addressing is a very clear one. E-commerce is now a major channel for retailers of all sizes, and as the market continues to mature, customers buying online or in-person but still getting their goods delivered are getting more sophisticated in terms of what they expect in service levels.

The issue is that smaller retailers — realistically, anyone that is not Amazon, but especially those new to the e-commerce arena — typically don’t have systems in place to manage that delivery process in an efficient way. The very smallest, Van den Heuvel said, physically go to post offices to mail packages; and the bigger ones may order pick-up and shipping directly from specific carriers but find it costly to scale up from there, and to do so in a flexible way that ensures that they are getting the best prices and the best levels of service and the most options in terms of timings.

Amazon has in many ways set the bar for how shipping and delivery work, and in terms of what customers expect. It makes it easy for customers to expect and get fast and free shipping by way of its Prime membership club. It has a vast network of operations for itself and third parties it works with, and is increasingly directly controlling the different parts of that machine.  And, critically, it already provides shipping as a service, plus a wider range of warehousing and other options — wrapped up in the company’s Fulfillment By Amazon (FBA) product.

Sendcloud essentially is an aggregator and integrator that brings together the longer tail of e-commerce technology providers used by retailers — it has over 50 integrations with the likes of Shopify, Magento, WooCommerce, Amazon and so on — with the range of companies that carry out shipping and delivery services — the DHL, UPS, FedEx, DPD and so on, more than 35 in all currently (and growing). It’s a very fragmented market on both ends of that, and so this is about bringing that together in a seamless way so that retailers can just search for and pick services that work for their needs. And this is all automated and integrated into their check-out: picking shippers and organising it ceases to be a manual effort.

It provides its tools in freemium tiers: a no-cost “essentials” for the smallest users, with the next tier at €40 per month, then €89 and €179 per month depending on the size of business.

Sendcloud sits in the same category as startups that have been addressing the physical aspect of e-commerce in other areas like freight forwarding and warehousing, by building cloud-based platforms to knit the many providers of those services together in a way that hadn’t been digitized previously. Doing so in the area of shipping and delivery, an area that is only getting more ubiquitous and expected by consumers, represents a massive opportunity: the delivery market is expected to grow from $475 billion today to $591 billion in 2024, the company estimates. It may be a pain point that that the average consumer never has to deal with on an organizational level as much as retailers do, but as e-commerce continues to grow, so too will the need for this to work correctly, to keep consumers happy.

“Growing parcel volume and demand for flexible delivery have increased the need for smart shipping solutions amongst online merchants,” said Yanni Pipilis, managing partner at SoftBank Investment Advisers, in a statement. “Sendcloud has built a leading all-in-one shipping platform that aims to help merchants easily integrate functionalities such as checkout, shipping, tracking, returns, and analytics. We are pleased to partner with Rob and the Sendcloud team to support their mission of fueling the next wave of e-commerce enablement.” 

“Sendcloud’s scalable, intuitive, and highly localized platform is at the forefront of enabling sophisticated shipping for online merchants across Europe,” added Christopher North, managing partner at L Catterton. “We are excited to partner with the exceptional Sendcloud team to leverage our consumer-focused e-commerce experience and deep expertise working with high-growth technology and software businesses to drive continued innovation and position the Company for growth globally.” 

Sendcloud said that SoftBank Investment Advisors’ Neil Cunha-Gomes and Monika Wilk, and L Catterton’s Ido Krakowsky, are all joining its board.

Cross-border commerce company Zonos raised $69 million in a Series A, led by Silversmith Capital Partners, to continue building its APIs that auto classify goods and calculate an accurate total landed cost on international transactions.

St. George, Utah-based Zonos is classifying the round as a minority investment that also included individual investors Eric Rea, CEO of Podium, and Aaron Skonnard, co-founder and CEO of Pluralsight. The Series A is the first outside capital Zonos has raised since it was founded in 2009, Clint Reid, founder and CEO, told TechCrunch.

As Reid explained it, “total landed cost” refers to the duties, taxes, import and shipping fees someone from another country might pay when purchasing items from the U.S. However, it is often difficult for businesses to figure out the exact cost of those fees.

Checkout is the key to frictionless B2B e-commerce

Global cross-border e-commerce was estimated to be over $400 billion in 2018, but is growing at twice the rate of domestic e-commerce. This is where Zonos comes in: The company’s APIs, apps and plugins simplify cross-border sales by providing an accurate final price a consumer pays for an item on an international purchase. Businesses can choose which one or multiple shipping carriers they want to work with and even enable customers to choose at the time of purchase.

“Businesses can’t know all of a country’s laws,” Reid added. “Our mission is to create trust in global trade. If you are transparent, you bring trust. This was traditionally thought to be a shipping problem, but it is really a technology problem.”

As part of the investment Todd MacLean, managing partner at Silversmith Capital Partners, joined the Zonos board of directors. One of the things that attracted MacLean to the company was that Reid was building a company outside of Silicon Valley and disrupting global trade far from any port.

He says while looking into international commerce, he found people wound up being charged additional fees after they have already purchased the item, leading to bad customer experiences, especially when a merchant is trying to build brand loyalty.

Even if someone chooses not to purchase the item due to the fees being too high, MacLean believes the purchasing experience will be different because the pricing and shipping information was provided up front.

“Our diligence said Zonos is the only player to take the data that exists out there and make sense of it,” MacLean said. “Customers love it — we got the most impressive customer references because this demand is already out there, and they are seeing more revenue and their customers have more loyalty because it just works.”

In fact, it is common for companies to see 25% to 30% year over year increase in sales, Reid added. He went on to say that due to fees associated with shipping, it doesn’t always mean an increase in revenue for companies. There may be a small decrease, but a longer lifetime value with customers.

Going after venture capital at this time was important to Reid, who saw global trade becoming more complex as countries added new tax laws and stopped using other trade regulations. However, it was not just about getting the funding, but finding the right partner that recognizes that this problem won’t be solved in the next five years, but will need to be in it for the long haul, which Reid said he saw in Silversmith.

The new investment provides fuel for Zonos to grow in product development and go-to-market while also expanding its worldwide team into Europe and Asia Pacific. Eighteen months ago, the company had 30 employees, and now there are over 100. It also has more than 1,500 customers around the world and provides them with millions of landed cost quotes every day.

“Right now, we are the leader for APIs in cross-border e-commerce, but we need to also be the technology leader regardless of the industry,” Reid added. “We can’t just accept that we are good enough, we need to be better at doing this. We are looking at expanding into additional markets because it is more than just servicing U.S. companies, but need to be where our customers are.”

Blockchain startup XREX gets $17M to make cross-border trade faster

 

The distance between their farms and the nearest processor is key for smallholder farmers who need to process their crops. And though Nigeria’s food processing systems have a keen resemblance to the West with respect to big factories and huge economies of scale in high-demand cities, farmers still suffer from poor logistics networks.

With distance and logistics problems, farmers’ crops can go bad and when factories buy them, it affects their processing yields and price. Farmers, witnessing post-harvest loss, also get paid less and miss the opportunity to invest in their crops production.

Nigerian agritech startup Releaf is solving this by building proprietary hardware and software solutions to make these farmers and food factories more efficient and profitable. Today, the company is announcing that it has raised $2.7 million in seed and grants towards this effort.

Pan-African focused venture capital firms Samurai Incubate Africa, Future Africa and Consonance Investment Managers led the round. Individual investors like Stephen Pagliuca, the chairman of Bain Capital and Justin Kan of Twitch also participated.

In addition to the seed round, the agritech startup secured  $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.

Founded by Ikenna Nzewi and Uzoma Ayogu, Releaf focuses on value chains where smaller factories are set up near smallholder farmers. This allows them to get better processing yields and fewer logistics costs; in the end, the farmer has more money to work with.

When the pair started the company in 2017, the idea behind Relead was not concrete yet as the team, based in the U.S., had not figured out product-market fit.

First, it planned to increase productivity in Nigeria’s agricultural sector using software. Even after graduating from Y Combinator’s summer batch that year, Releaf toyed around with ideas around trade finance and a marketplace for buyers and sellers of agricultural products.

The team would get a clearer picture of what it wanted to build when the founders moved back to Nigeria. The Americans of Nigerian descent toured across 20 states and studied different value chains for crops spotting inefficiencies that could be solved by technology.

“We took a much more broad approach to what the solution would be, but we really wanted to decide on a specific crop to work in. And we found that opportunity in the oil palm sector,” Nzewi said to TechCrunch in an interview.

The oil palm market in Nigeria is a $3 billion one with over 4 million smallholder farmers cultivating farms where those crops are planted.

These farmers drive 80% of the production of oil palm. But since the industry is quite fragmented, they have many challenges processing the oil palm because it’s a crop that requires serious processing power to extract vegetable oil from it.

Image Credits: Releaf

Farmers typically go through this process by using rocks or inappropriate hardware — ineffective processes that lead to low-quality oil palm largely unfit as input for high-quality vegetable oil manufacturing.

Nzewi says the team saw an opportunity and set out to build a technology to help farmers crack oil palm nuts. The result was Kraken, a proprietary patent-pending machine.

So here’s how the company’s business model works. Releaf buys nuts from the farmers, then uses the Kraken to crack the nuts and crush the kernels into vegetable oil. Releaf then sells the vegetable oil to FMCG processors and local manufacturers, mainly in Nigeria’s south-southern region.

“Nigeria has about 60% more demand for vegetable oil than it does supply. And it can not be met due to supply shortfall with imports because the government banned the importation of vegetable oil. So there is a need to take these smallholders who are driving 80% of production and make them more efficient so that we can have a better balance of supply and demand for vegetable oil,” Nzewi said about the pain point Releaf is addressing.

But still, why does the company think it can break into a competitive Nigerian vegetable oil market with hardly differentiable products?

Nzewi explains that the answer lies in the quality of products. Typically vegetable oil is driven by a free fatty acid (FFA) metric that measures vegetable oil’s impurity. The CEO claims that while the industry standard is about 5% FFA, Releaf produces at 3.5%.

Despite having an edge in quality of production, Releaf products are sold on an industry standard. Nzewi says that might not be the case in the future as the company is looking to finally take advantage of its product quality and increase prices to improve its profit margins.

According to the company, Kraken already processes 500 tonnes of palm nuts. Its software connects to over 2,000 smallholder farmers who have supplied over 10 million kilograms of quality palm kernel nuts to food factories.

Regarding expansion, Nzewi noted that Releaf has more appetite for moving into new geographies instead of crop offerings. His argument is that processing oil palm and cultivation style is a straightforward method due to its similarities across West Africa.

But for crop expansion, the company may need to find crops that can be planted alongside oil palm and practice intercropping or work with crops like soybeans or groundnuts used in the vegetable oil industry.

L-R: Uzoma Ayogu (CTO) and Ikenna Nzewi (CEO)

Releaf will use the seed investment to develop technology and deploy it to smallholder farmers, Nzewi tells me. Then the $1.5 million in grants will focus on providing working capital financing to these farmers. He adds that Releaf has run financing trials already this year where it has increased smallholder incomes by three to five times.

“We think there’s a really great opportunity to bring both physical technology and financial services to these communities to make them more productive. And it’s kind of central to our thesis,” the CEO said. “We believe that our smart factories can serve as an economic pillar in these rural communities and make it easier for us to supply these communities with other services that they can find valuable like access to working capital, payment for education, and access to insurance services. So we see the food processing as like the first step it cements us in the value chain.”

Earlier this year, agritech startups like Gro Intelligence and Aerobotics raised huge sums of venture capital and showed the sector’s promise in Africa. However, venture capital has slowed down over the past few months and Releaf’s investment brings that spotlight back to the sector, albeit briefly.

Rena Yoneyama, the managing partner at Samurai Incubate Africa, said Releaf’s novel approach sets it aside from other agritech startups the venture capital firm has engaged with.

“We believe the firm’s thesis on decentralizing food processing would have a strong match with Africa’s economic development landscape for the next few decades. Ikenna and Uzo are the perfect founders to disrupt this market in Nigeria and beyond. We are thrilled to back them as they innovate in providing both agro-processing and financial services to rural communities and farmers,” she added. 

Speaking on the investment as well, Iyin Aboyeji, general partner at co-lead investor Future Africa said, “…The team at Releaf is building the agro-allied industry of the future from the ground up, starting with palm oil which they have developed a novel technology to aggregate, deshell and process into critical ingredients like vegetable oil and glycerine. Future Africa is delighted to back Releaf to build the future of modern agriculture.”

South African startup Aerobotics raises $17M to scale its AI-for-agriculture platform

Folk is a new productivity tool started by European startup studio eFounders. And the startup just raised a $3.3 million seed funding round led by Accel with a big group of business angels.

When you think about managing contacts and relationships in a professional environment, you might think that companies have solved this already. An entire category of products and companies have emerged around this idea with CRMs. Popular CRM platforms include Salesforce and HubSpot and I’m sure your sales team loves their CRM.

But what does CRM mean exactly? Customer relationship management. If you work for a team that doesn’t have customers, then CRMs aren’t the most appropriate tools. For instance, PR teams work with journalists, logistics teams work with suppliers, events teams work with multiple kinds of partners, etc.

Folk wants to be the relationship management tool for the rest of the company. Chances are those teams don’t use a CRM. Instead, they often rely on shared spreadsheets or information remains siloed.

The company is even trying to give this new category of contact tools a name and calls is the xRM for extended relationships manager. “In xRM, the ‘x’ stands for anyone: you can use it not only for managing clients but also for journalists, suppliers, partners, for example,” Folk CEO Thibaud Elziere said in a statement.

Image Credits: Folk

Visually, Folk looks like a spreadsheet. You can add columns with specific information. You can also track your progress around a project with tags. Like with Airtable, Folk lets you filter your view, rearrange data and sort the table in different ways.

When you click on a contact, you open a dedicated contact page. It lets you change data more comfortably and view more information. In particular, you can add comments, assign contacts to your coworkers and view interactions with these contacts.

Image Credits: Folk

You don’t have to enter meetings in Folk or copy and paste email conversations in the service. Folk automatically pulls up data from your Gmail and Google Calendar accounts. This way, the entire team can see if someone is staying in touch more closely with a partner. You can choose to share some contacts with the rest of the team but keep your personal contacts to yourself.

In addition to Accel, 35 investors who tend to be operators in their companies are also participating. It’s a big group of investors and you can view the table of these investors at the end of the post.

It’s also worth noting that Thibaud Elziere, the CEO of Folk, is also a co-founder at eFounders, the startup studio where some popular SaaS tools originally started, such as Front, Aircall and Spendesk. And I’m sure he has a wide network of contacts in Folk that he can leverage to turn Folk into a commercial success.

List of business angels participating in Folk’s seed round

Founded in 2013, Bangladesh’s Chaldal was one of the first grocery delivery startups in the world to use the “dark” store model, picking up orders from its own warehouses instead of retail stores. Now the company says it is the country’s second-largest grocery player and the largest grocery e-commerce platform, with 27 warehouses located in four cities. Chaldal plans to expand into 15 new cities with a recently-closed $10 million Series C. The round was led by Taavet Hinrikus, co-founder of Wise; Topia chief product officer Sten Tamkivi; and Xploration Capital, with participation from Mir Group.

When Chaldal launched in Dhaka eight years ago, it first picked up orders from local grocery stores. But most retailers in the city are very small and Chaldal was unable to guarantee items would be available for its customers. As a result, it decided to start building its own network of warehouses.

“When we started, Instacart was still the dominant model, but we took a different stand and said we want to deliver from our own warehouses because that leads to better inventory management,” co-founder and chief executive officer Waseem Alim told TechCrunch.

Chaldal Wants To Become The Amazon Fresh Of Bangladesh’s Capital

Now the company, a Y Combinator alum, has 27 warehouses located in four cities (Dhaka, Naryanganj, Chattogram and Jashore). It will expand to 15 new cities and plans to open 50 warehouses by the end of this year. In addition to its flagship grocery deliveries, Chaldal will expand GoGo Bangla, its on-demand logistics service for small e-commerce businesses, and the Chaldal Vegetable Network, which connects farmers directly to retailers. It also has plans to launch a direct-to-consumer pharmacy.

Chaldal claims that has generated $40 million in revenue and performed 2.5 million orders over the past 12 months, growing about 120% year-over-year. It currently sells about 8,500 kinds of products and wants to expand that to 30,000 SKUs by December.

One of Chaldal’s “dark” stores, or warehouses

Alim says Chaldal’s core grocery operations have been profitable for a while now, and it only invests cash in building its technology or launching new verticals. One of the reasons it is able to make money is because Chaldal began batching deliveries early on, sending out riders from its full-time fleet with several orders at a time (it recently launched a part-time driver program). Batching also means Chaldal is able to offer deliveries in as little as 15 to 30 minutes.

Chaldal also worked closely with suppliers and manufacturers. “We are one of the most efficient online grocery retailers in the world in terms of amount of capital that has been invested in us versus our size, and that’s mainly because we have been really working with our supply chain and all those details,” Alim said.

For example, it sources produce directly from farms, and partners with large manufacturers like Unilever. “Walmart and stores like that don’t exist here, it’s mostly small retailers, so we’ve been able to have a huge impact on the supply chain side of things,” said Alim. “We are continuing to expand our micro-warehouse model and have started supporting, as part of the delivery mechanism we have built, a lot of small merchants,” including many sellers who signed up for GoGo Bangla during the pandemic.

Backed by Blossom, Creandum and Index, grocery delivery and dark store startup Dija launches in London

When Kleiner Perkins led Stord’s $12.4 million Series A in 2019, its founders were in their early 20s and so passionate about their startup that they each dropped out of their respective schools to focus on growing the business.

Fast-forward two years and Stord — an Atlanta-based company that has developed a cloud supply chain — is raising more capital in a round again led by Kleiner Perkins.

This time, Stord has raised $90 million in a Series D round of funding at a post-money valuation of $1.125 billion — more than double the $510 million that the company was valued at when raising $65 million in a Series C financing just six months ago.

In fact, today’s funding marks Stord’s third since early December of 2020, when it raised its Series B led by Peter Thiel’s Founders Fund, and brings the company’s total raised since its 2015 inception to $205 million.

Besides Kleiner Perkins, Lux Capital, D1 Capital, Palm Tree Crew, BOND, Dynamo Ventures, Founders Fund, Lineage Logistics and Susa Ventures also participated in the Series D financing. In addition, Michael Rubin, Fanatics founder and founder of GSI Commerce; Carlos Cashman, CEO of Thrasio; Max Mullen, co-founder of Instacart; and Will Gaybrick, CPO at Stripe, put money in the round. Previous backers include BoxGroup, Susa Ventures, Dynamo, Revolution and Rise of the Rest Seed Fund, among others.

Founders Sean Henry, 24, and Jacob Boudreau, 23, met while Henry was at Georgia Tech and Boudreau was in online classes at Arizona State (ASU) but running his own business, a software development firm, in Atlanta.

Over time, Stord has evolved into a cloud supply chain that can give companies a way to compete and grow with logistics, and provides an integrated platform “that’s available exactly when and where they need it,” Henry said. Stord combines physical logistics services such as freight, warehousing and fulfillment in that platform, which aims to provide “complete visibility, rapid optimization and elastic scale” for its users.

About two months ago, Stord announced the opening of its first fulfillment center, a 386,000-square-foot facility, in Atlanta, which features warehouse robotics and automation technologies. “It was the first time we were in a building ourselves running it end to end,” Henry said.

And today, the company is announcing it has acquired Connecticut-based Fulfillment Works, a 22-year-old company with direct-to-consumer (DTC) experience and warehouses in Nevada and in its home state.

With FulfillmentWorks, the company says it has increased its first-party warehouses, coupled with its network of over 400 warehouse partners and 15,000 carriers.

While Stord would not disclose the amount it paid for Fulfillment Works, Henry did share some of Stord’s impressive financial metrics. The company, he said, in 2020 delivered its third consecutive year of 300+% growth, and is on track to do so again in 2021. Stord also achieved more than $100 million in revenue in the first two quarters of 2021, according to Henry, and grew its headcount from 160 people last year to over 450 so far in 2021 (including about 150 Fulfillment Works employees). And since the fourth quarter is often when people do the most online shopping, Henry expects the three-month period to be Stord’s heaviest revenue quarter.

For some context, Stord’s new sales were up “7x” in the second quarter of 2020 compared to the same period last year. So far in the third quarter, sales are up almost 10x, according to Henry.

Put simply, Stord aims to give brands a way to compete with the likes of Amazon, which has set expectations of fast fulfillment and delivery. The company guarantees two-day shipping to anywhere in the country.

“The supply chain is the new competitive battleground,” Henry said. “Today’s buying expectations set by Amazon and the rise of the omni-channel shopper have placed immense pressure on companies to maintain more nimble and efficient supply chains… We want every company to have world-class, Prime-like supply chains.”

What makes Stord unique, according to Henry, is the fact that it has built what it believes to be the only end-to-end logistics network that combines the physical infrastructure with software.

That too is one of the reasons that Kleiner Perkins doubled down on its investment in the company.

Ilya Fushman, Stord board director and partner at Kleiner Perkins, said even at the time of his firm’s investment in 2019, that Henry displayed “amazing maturity and vision.”

At a high level, the firm was also just drawn to what he described as the “incredibly large market opportunity.”

“It’s trillions of dollars of products moving around with consumer expectation that these products will get to them the same day or next day, wherever they are,” Fushman told TechCrunch. “And while companies like Amazon have built amazing infrastructure to do that themselves, the rest of the world hasn’t really caught up… So there’s just amazing opportunity to build software and services to modernize this multitrillion-dollar market.”

In other words, Fushman explained, Stord is serving as a “plug and play” or “one stop shop” for retailers and merchants so they don’t have to spend resources on their own warehouses or building their own logistics platforms.

Stord launched the software part of its business in January 2020, and it grew 900% during the year, and is today one of the fastest-growing parts of its business.

“We built software to run our logistics and network of hundreds of warehouses,” Henry told TechCrunch. “But if companies want to use the same system for existing logistics, they can buy our software to get that kind of visibility.”

Casey Saran Contributor Share on Twitter An ad tech veteran who has logged time at Google and The Rubicon Project (now Magnite), Casey Saran is co-founder and CEO of Spaceback.

2021 has been a good year to be an adtech investor. Valuations are surging, Wall Street is happy and exits are frequent and satisfying. It’s the perfect time to double down and invest in an area that has been largely ignored but is poised for major upside in the next few years: Digital creative ad technology.

Think about it. When was the last time we saw a major adtech funding round that was directed at the actual ads themselves — the messages people actually see everyday? I’d argue that now is the perfect time.

The adtech startups that can figure out how to adapt ads that can interact with the remote control, a synced smartphone or voice commands — maybe even make them shoppable — can theoretically produce a game-changer.

Here are five reasons why VCs should consider ratcheting up their investment into adtech startups building the next generation of creative tools:

Creative tech is far from being saturated

Consider how much has been spent over the 15 years on digital advertising mechanics such as targeting, serving, measuring and verification. Not to mention the trillions that have gone toward helping brands keep track of customer data and interactions — the marketing clouds, DMPs and CDPs.

Yet you can count the number of creative-centric adtech companies on one hand. This means there is a lot of room for innovation and early leaders. VideoAmp, which helps brands make ads for various social platforms, pulled in $75 million earlier this year. Given how fast platforms like TikTok and Snap are growing, it won’t be the last.

Digital ad targeting is being squeezed

Ads need to do more work today. Between regulation, cookies going away and Apple locking down data collection, we’ve seen a renewed interest in contextual advertising, including funding for the likes of GumGum, as well as identity resolution firms like InfoSum.

But the digital ad ecosystem can’t get by only using broader data-crunching techniques to replace “retargeting.” The medium is practically crying out for a creative revival that can only be sparked by scalable tech. The recent funding for creative testing startup Marpipe is a start, but more focus is needed on actual tech-driven ideation and automation.

At first blush, the $12 billion Intuit-Mailchimp deal might not make a heck of a lot of sense. But people tend to pigeonhole companies, and in this case they might see Intuit as purely a financial software company and Mailchimp as an email marketing firm and nothing more. If that’s as far as your perspective goes, the deal is confusing. From a wider lens, however, there’s more to both companies than you might think.

Let’s start with Intuit. If you go to the company website and scan the product set, it’s clearly all about managing finances for consumer and small businesses alike. The latter category appears to be what the company wants to exploit and expand upon with this deal.

Prior to yesterday’s news, Intuit’s biggest acquisition had been on the consumer side buying Credit Karma for $7.1 billion last year. That deal gave the company’s customers a way to access their credit scores outside of the big three reporting companies: Experian, Equifax and TransUnion. Apparently not content with only that transaction, it set its sights on Mailchimp to throw some money at the business side of the house.

Canva is now valued at $40 billion following a fresh capital injection of $200 million (USD) in a round led by T. Rowe Price. New and existing investors participated in the round, including Franklin Templeton, Sequoia Capital Global Equities, Bessemer Venture Partners, Greenoaks Capital, Dragoneer Investments, Blackbird, Felicis and AirTree Ventures.

This round solidifies Canva as one of the most valuable private software companies out there, and it also propels the Australian tech scene forward.

Co-founder and CEO Melanie Perkins and her team started working on Canva in 2012, and launched the product in 2013. The premise behind it was relatively simple, but the technology itself… not so much.

Canva allows anyone to design. Presentations, t-shirts, brochures, flyers… you name it. The first step in this is creating a truly simple user interface, where folks can simply drag and drop components into their designs, complete with hundreds of thousands of templates, without doing a lot of fine tuning. The second step is creating a massive library of content, from fonts to templates to imagery, gifs and videos. The third step is to make that product accessible to everyone, whether it’s a platform or device or language or price.

Going after everyone, instead of just designers, has proved incredibly fruitful for the company. To be clear, designers still use Canva to lay out components they’ve designed in other products, such as Figma and Sketch, and Canva actually plays nicely with a variety of design software products. But Canva has no intention of going head to head with Figma, Adobe or Sketch.

Perkins described it with the example of a business card. Designers will create the components of a business card in their design platform of choice, and then lay out the template for business cards in Canva, sharing that template with the entire organization. That way, when someone gets a title change or a new employee comes on, they can actually edit the card themselves without the help of a designer and send it to print.

TechCrunch asked Perkins why Canva hasn’t extended the platform more aggressively into the workflow of professional designers.

“We would like to replace PDF,” said Perkins. “Rather than people sending PDFs backwards and forwards between the designer and the client, designers can just create a template for organization use. It’s less important for us to absolutely excel at things like vector design because there are amazing programs on the market that may be there. We really want to focus on that collaboration piece.”

Though a bottoms-up enterprise strategy is relatively popular these days, Canva was an early master of the model. Canva launched as a free product, and over time the company introduced enterprise layers into the mix.

As of now, Canva has more than 60 million monthly active users across 190 countries, with big-name companies on the enterprise plan. This includes Salesforce, Marriott International, PayPal and American Airlines. Canva expects to exceed $1 billion in annualized revenue by the end of 2021. More than 500,000 teams are paying for the product in some capacity.

With a 2,000-person team, Canva will use the fresh funding to double its workforce in the next year.

Canva also shared its DEI numbers, with females representing 42% of the workforce. The company did not share any stats around people of color on the team.

Perkins explained to TechCrunch that a huge part of the company’s growth has to do with an obsession over creating a highly valuable free product.

“We intentionally make our free product extremely generous for a number of reasons,” said Perkins. “It’s critical both for our marketing and towards our mission of empowering people to design. But, as part of our marketing, it means that people are able to love the product, share it with their friends and family, and promote it on social media. And then that virality really rapidly fuels our growth.”

Alongside growing the team, Canva also has plans to further build out the product in the next year, launching website design soon. This will allow users to turn existing and new presentations and designs into a website, and even search for and buy a domain for that site.

Canva is also working on a new video editor and an offline mode.

Canva CEO Melanie Perkins will tell us about the journey to a $15B valuation at Disrupt

Perkins says that Canva has two goals, and that each fuels the other. The first is to become one of the world’s most valuable companies, and the other is to do the most good that it can do.

The company has already joined the 1% pledge and has several efforts around being a force for good, including giving the premium product to more than 130,000 nonprofits, allocating more than 45,000 volunteering hours each year and launching Print One, Plant One, which is a project that plants a tree for every single print order placed through Canva.

With today’s funding announcement, cofounders Perkins and Cliff Obrecht are committing the vast majority of their own equity in the company (around 30%) to doing good in the world, with plans to do this through the Canva Foundation.

Perkins will be joining us at Disrupt to talk about the new funding, valuation, what’s in store for Canva, and share her broader thoughts on design as a category.

Are founders in fundraising mode short-sighted when it comes to working with Chinese venture funds?

Runa Capital’s Asia business development manager Denis Kalinin studied data from iTjuzi, a database of Chinese venture capitalists, and found:

“…Chinese funds invested around $250 billion in 2020 (three times higher than the figure reported in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.”

The pandemic, geopolitical tensions and other factors led many Chinese venture funds to pare back their international investments, but that’s largely “because during COVID, China’s economy recovered much faster than other countries’,” writes Kalinin.

His analysis covers multiple angles: Chinese investments in Europe are catching up with those in Asia and the United States, half of China’s top cross-border investors are CVCs, and investors are particularly interested in fintech, deep tech and digital health at the moment.

“Chinese investors can bring value to foreign startups, but you need to study their expertise and how it can be useful for you.”

Is it so bad to take money from Chinese venture funds?

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Today at 2 p.m. PT/5 p.m. ET on Twitter Spaces, Managing Editor Danny Crichton and immigration law attorney Sophie Alcorn will discuss whether remote work is making H-1B visas less critical for international founders.

Join @DannyCrichton on Tuesday, September 14 at 2 p.m. PT/5 p.m. ET as he discusses if remote work will make H-1B visas redundant with @Sophie_Alcorn https://t.co/SCMUiqUj8J

— TechCrunch (@TechCrunch) September 10, 2021

It’s a provocative question: If remote teams are becoming the norm, tech hubs are decentralizing and investors are comfortable cutting checks after a Zoom call, how important is it to do business as a startup inside the U.S?

It’s sure to be an interesting conversation; to get a reminder, please follow @TechCrunch on Twitter.

Thanks very much for reading Extra Crunch this week!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Toast looks toward $18B valuation in upcoming IPO

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

Toast released an early IPO price range of $30 to $33 per share on Monday, and Alex Wilhelm digs into the S-1/A filing to “better understand how to value vertical SaaS startups that are pursuing a payments-and-SaaS business approach.”

Is the restaurant software startup worth the $18 billion valuation it’s aiming for?

Toast looks toward $18B valuation in upcoming IPO

3 keys to pricing early-stage SaaS products

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

Every founder who launches an enterprise software startup has to figure out the “right” pricing model for their products.

It’s a consequential decision: Per-seat licenses are easy to manage, but what if customers prefer a concurrent licensing model?

“Early pricing discussions should center around the buyer’s perspective and the value the product creates for them,” says Ridge Ventures partner Yousuf Khan, who previously worked as a CIO.

“Of course,” he notes, “self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.”

3 keys to pricing early-stage SaaS products

Is India’s BNPL 2.0 set to disrupt B2B?

Image Credits: jayk7 / Getty Images

India’s mom-and-pop businesses are experiencing a digital transformation that’s creating new e-commerce opportunities; smartphones have replaced paper records, and a new government-backed instant payments system is disrupting how value is exchanged.

But instead of importing legacy credit systems, buy now, pay later systems are the “next step for solving the digital B2B puzzle,” writes Anubhav Jain, co-founder and CEO of Rupifi.

Is India’s BNPL 2.0 set to disrupt B2B?

What to make of Freshworks’ first IPO price range

Image Credits: scyther5 / Getty Images

Freshworks, which develops and offers a variety of business software tools, set an IPO price range of $28 to $32 per share on Monday, meaning its valuation could reach nearly $10 billion, Alex Wilhelm writes.

“It appears that the Freshworks IPO is pretty reasonably priced as is, though a boost to its price range is not out of the question if public market investors decide that they are bullish on its future growth prospects. We just don’t see dramatic upside.”

ish on its future growth prospects. We just don’t see dramatic upside.”

What to make of Freshworks’ first IPO price range

Here’s what your BNPL startup could be worth

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

The multibillion-dollar exits of Japanese startup Paidy (to PayPal) and Australian buy now, pay later company Afterpay (to Square) “provided hard market proof that what BNPL startups are building has value beyond simple operating results,” Alex Wilhelm writes in The Exchange.

He breaks down the value of Afterpay, Paidy and Klarna using a simple metric: What would you pay for $1 of BNPL GMV?

Here’s what your BNPL startup could be worth

3 methodologies for automated video game highlight detection and capture

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

Video game livestreaming is booming.

Twitch has an average of almost 3 million concurrent viewers; by comparison, on the night of the 2020 U.S. presidential election, CNN’s livestream averaged 1.1 million.

The most successful streamers use their ad revenue and sponsorship money to hire video editors and social media teams to make them look good, but new automated tools are giving part-time streamers the ability to spotlight their best moments as well.

3 methodologies for automated video game highlight detection and capture

Have ‘The Privacy Talk’ with your business partners

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

A data breach costs a company an average of $3.8 million, Marc Ellenbogen, Foursquare’s general counsel, notes in a guest post, adding up to a “concrete financial incentive to having The Privacy Talk.”

What is it?

“It’s the conversation that goes beyond the written, publicly posted privacy policy and dives deep into a customer, vendor, supplier or partner’s approach to ethics,” he writes.

If you think the talk doesn’t apply to you, think again.

Have ‘The Privacy Talk’ with your business partners

Advanced rider assistance systems: Tech spawned by the politics of micromobility

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

In an effort to “reassure local administrations that micromobility is safe, compliant and a good thing for cities,” scooter operators are “implementing technology similar to advanced driver assistance systems (ADAS) usually found in cars,” Rebecca Bellan writes.

She breaks down how the tech could help prevent unwanted behavior and explores the cost for scooter operators and opportunities for startups.

Advanced rider assistance systems: Tech spawned by the politics of micromobility

 

Mailchimp is selling itself to Intuit in a transaction valued at $12 billion. The deal is a coup not only for companies that eschew venture capital backing — Mailchimp is famous for its bootstrapping history — but also for the city of its founding, Atlanta.

Mailchimp’s mega-exit comes in the same year that fellow Atlanta-based startup Calendly raised a massive $350 million round that valued the technology company north of $3 billion, per Crunchbase data.

The two companies underscore how possible it is to build large startups in markets outside of the traditional collection of cities most associated with technology entrepreneurship in the United States, like Boston, New York City and San Francisco, to name a few.

The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.

Investors are taking note. CB Insights data through Q2 2021 indicates that startups in Atlanta are on a fundraising tear, already surpassing total capital raised in 2020 in just the first half of this year. The city’s venture acceleration is similar to fundraising gains we’ve seen in markets like Chicago.

The Exchange wanted to better understand the Atlanta market, especially regarding how bullish its local inventors are that its current pace of fundraising can continue, and what sort of external interest its startups are enjoying. So, we ran questions by Sean McCormick, the CEO of Atlanta-based SingleOps, a software startup that raised capital earlier this year; Atlanta Ventures’ A.T. Gimbel; and BLH Venture Partners’ Ashish Mistry. We also heard from Paul Noble, CEO of Verusen, a supply chain intelligence startup that raised an $8 million Series A round in January.

The picture that forms is one of a city enjoying a rising tide of venture activity, boosted by some local dynamics that may have helped some of its earlier-stage companies scale more cheaply than they might have in other markets. And there’s plenty of optimism to be found concerning the near future. Let’s explore.

A funding boom

It’s cliche at this point to note that a particular geography is experiencing record venture capital results; many cities, regions and countries are seeing startup capital inflows accelerate. But there are markets where the gains still stand out despite the generally warm climate for private capital investments into private companies.

Atlanta is one such market. Per CB Insights data, the U.S. city saw $2.17 billion in total investment during 2020. In the first quarter of 2021, Atlanta nearly matched its 2020 tally, with its startups collecting some $2.07 billion in total capital. Another $953 million was invested in the second quarter of the year; keep in mind that venture capital data is laggy, and thus what may appear to be a sharp decline may be ameliorated by later disclosures.

But with around $3 billion invested in the first half of 2021, already around a 50% gain on 2020’s full-year figures, it’s clear the city is seeing an unprecedented wave of venture investment.

Dollar volume is half the venture capital activity matrix, of course. The other key data line for the investment type is deal volume. There Atlanta’s activity is less superlative; Q1 2021 saw Atlanta startups attract 57 total deals, the second-best results that we have data for, narrowly losing to Q3 2017’s 59 deals.

But Q2 2021 saw Atlanta’s known venture deal volume fall to 42, a figure that is a slight miss from 2020’s average deal volume, measured on a quarterly basis. The same caveat regarding delayed data applies here, but perhaps not enough to completely close the gap between what we might have expected from Atlanta startups in terms of Q2 deal volume in the wake of the city’s super-active Q1.

Despite the somewhat slack Q2 2021 deal count in Atlanta, per current data, it’s clear that the city is enjoying record venture capital attention. What’s driving the uptick? Let’s find out.

This year at TechCrunch Disrupt (happening just next week), there is more to explore than ever before. From the scores of Startup Alley companies to the Startup Battlefield presentations to the Disrupt Stage, Extra Crunch Stage and beyond.

We’ll hear from big name VCs like Chamath Palihapatiya, a16z’s Katie Haun, GC’s Niko Bonatsos, Forerunner’s Kirsten Green and more. Founders, such as Stewart Butterfield (Slack), Tope Awotona (Calendly), Brian Armstrong (Coinbase) and Melanie Perkins (Canva), will share how they’ve grown an idea into a unicorn. We’ll even have policy folks like Transportation Secretary Pete Buttigieg and the SEC’s Erin Schneider at the show, with celebrities Ryan Reynolds and Seth Rogen to boot.

On the Extra Crunch stage, panels on how to raise your first dollars, how to craft your pitch deck, how to land your first B2B customers and how to find product market fit will include audience Q&A, to make sure you leave with everything you need to know to be successful.

Obviously, it would be impossible to catch it all in real time. But the Disrupt Desk is making its grand return after debuting in 2020.

The Disrupt Desk will hit you with all the biggest highlights from the show, complete with analysis of breaking news and meaningful insights from our speakers. Plus, the Disrupt Desk will have a few never-before-seen demos and breaking news announcements.

Of course, alongside catching up with the Disrupt Desk, Disrupt attendees can catch everything from the show on-demand with their complementary 3-month Extra Crunch membership.

TechCrunch Disrupt 2021 goes down in just a few days (September 21-23 to be exact), so snag your pass soon before it’s too late! Prices are less than $100 to get access to it all but just until Monday when prices increase by $200.

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Wall-mounted fitness startup Tonal this morning announced that it’s bringing live courses to it portfolio of strength training workouts. The company did a soft launch of the live offering back in December of last year, though at the time, it wasn’t live, so much as prerecorded — “live, on tape,” to steal a line from The Larry Sanders Show.

“[Y]our coach works out with you — just like in a live class,” the company wrote. Our Live (Beta) workouts combine the energizing feeling of working out alongside a coach with Tonal’s ability to count your reps and wait for you to complete each set […] It’s all on-demand, so you can work out whenever it fits into your schedule.”

The new offering brings the company’s content selection more in-line with leaders in the home fitness space like Peloton. Certainly live isn’t for everyone, but many users do appreciate the motivation that comes with a fixed schedule, as well as the sense of community one derives from working out with others.

The new offering provides real-time feedback from coaches, coupled with a “social zone” for interacting with fellow Tonal users. The portfolio is also getting four new coaches for live workouts. After a day, live workouts will be archived in Tonal’s on-demand offerings.

“As our community has grown over the past few years, we’ve been encouraged by the organic social engagement, the craving for more interaction with our coaches, and the excitement that comes from reaching new milestones,” founder and CEO Aly Orady said in a release. “Tonal Live will allow us to connect these elements through a studio experience while retaining the foundation of what differentiates our workouts: personalization, guidance, and feedback.”

Founded in 2015, the San Francisco-based company is among those connected fitness brands that saw a major boost as the pandemic forced many to rethink their workout routines. Tonal has raised $450 million to date, including a $250 million Series E that raised its valuation to $1.6 billion, back in March.

The Tonal EC-1

Strength-training startup Tonal crosses unicorn status after raising $250M

When you’re hot, you’re hot. And 1047 Games is making the most of the heat generated by Splitgate, its first game and now a breakout success. After working on a shoestring for years, the team has since May raised three rounds, the latest for a massive $100 million.

Co-founder and CEO Ian Proulx credited a dedicated community and, as he described it, “taking a Silicon Valley approach to running a game business.”

At the time 1047 Games was founded, about five years ago, free to play (F2P) PC games were a niche genre. While games like World of Tanks and Warframe were seeing success, and of course many mobile games relying on in-app purchases, Fortnite had yet to show the industry that F2P could be so ludicrously profitable.

“Five years ago it was very hit-driven: You spend years developing a product, put all this money into hyping the launch and then hope it’s a success,” Proulx explained. “Our process was, there’s no way we can take that risk — if we spent our entire budget and got it wrong, we’re out of business. So we thought, let’s do a soft launch, put it out there and see what happens, learn, listen, look at the data. Why would I spend money marketing a product that I have no idea about whether it will be a success? If we wanted to spend money, and we didn’t have a lot, I’d rather spend it on a product that has great metrics and KPIs.”

If you’re not familiar with it, Splitgate is a multiplayer online competitive shooter with a lot of DNA from the old-school arena shooters like Quake 3, Unreal Tournament and Halo. Those games are frenetic enough, but Splitgate adds the ability to bend space with portals, like the eponymous Portal, adding a truly ridiculous amount of mobility to the action.

Image Credits: 1047 Games

Proulx said investors shut the door on him repeatedly because they didn’t see Splitgate competing in any of the popular genres, battle royales and hero shooters, for instance. But he felt confident that this update to a familiar formula would be a success partly because the demand was there, just sleeping. “People grew up playing these games, and the reason [the market] is dead is not because they stopped loving them,” he said. “No one has moved the needle because there hasn’t been a lot of innovation, and there hasn’t been something that’s accessible to the masses. Quake Arena is great, but it’s extremely difficult. No 12-year-old Fortnite kid is gonna play it. We really do fill this void.”

While gameplay-wise Splitgate is most obviously similar to classic shooters, Proulx said a better comparison would be Rocket League, another huge success story in gaming that took a great concept and provided it as cheaply as possible, making money off cosmetic items and other totally optional perks.

“You can just have fun, turn your brain off and play, but there’s this limitless skill ceiling,” he explained.

It didn’t spring fully formed from 1047 in 2019, though. The team put out the gaming equivalent of a minimum viable product. “It was fun, and the basics were there,” he said, “but we learned there’s way more to running a business and free-to-play than just having a fun game.”

The danger for any game is simply that people stop playing, so the team focused on retention and on listening to feedback from the community to make Splitgate a “forever game” that can go years, with “seasons,” new features and maps, and so on.

The original MVP release saw some traction, around 600,000 downloads in its first month, but the big multiplatform relaunch — still as an “open beta” — this summer made a huge splash, pulling in more than 10 million in July.

Suddenly the tables had turned and 1047 was holding, as Proulx put it, “lightning in a bottle.”

“Our first round six months ago was extremely difficult. We talked to every investor on the planet and they all said no,” he recalled. But the hard work paid off: “We got lucky and ended up with the perfect partners — I can’t stress enough how supportive our investors have been.”

The next round (with Human Capital, just as Splitgate was taking off, went from phone call to funding over a weekend. This third round, with 1047 picking and choosing, was led by Lightspeed Venture Partners with participation from “Insight Partners, Anthos Capital, and earlier seed round investors Galaxy Interactive, VGames, Human Capital, Lakestar, DraperDragon, and Draper University” (from the press release).

One wonders what a team of fewer than 10 people could possibly do with $100 million ($116 million if you count the two previous rounds). But the bet investors are making is not that 1047 is going to suddenly make Assassin’s Creed, but rather that they think 10 million (and rising) people playing a unique game is potentially a huge opportunity — if the developers have the chance to follow through. This post-hype period is the valley of death for many games, the developers starved for cash after streamers and curious casuals move on. But the funding means that, for 1047, it’s license to hire like mad and double down.

“The scope of what we can do is now through the roof,” said Proulx. “There’s so much we couldn’t think about because we were a tiny team with a tiny budget, but now everything is on the table. We’re focusing on the long term — I look at the game as being 25% done. We don’t need to be Fortnite tomorrow, but now it really is about building the next Riot Games, the next big games business.”

In the meantime, Splitgate itself is still on the road to 1.0 and Proulx says the team can now truly focus on making it the game they and the community have been shaping it to be for years. He noted that many players have stuck by the team for years and helped make the game what it is, and that their input is just as important now.

“We read everything, we’re listening — keep the feedback coming. We’re still operating like the indie team that had to stay close with our community. We’re still in that mindset,” Proulx said, “but now we just have a ridiculous amount of money.”

Millions.co, a social commerce platform geared toward professional and semi-professional athletes wanting help to monetize their fanbase by selling merch and/or on-demand video, has grabbed $10 million in funding led by Boston-based Volition Capital.

The round is being loosely pegged as a Series A as the seasoned team behind Millions self-funded the first wave of development to get the platform launched.

The founding team includes CEO Matt Whitteker, a boxing gym owner who co-founded the supply chain data management unicorn Assent Compliance and NoNotes.com; CMO Brandon Austin, co-founder of Go-Fish Cam; and, in advisor roles, Adrian Salamunovic, co-founder of DNA 11 and CanvasPop; Scott Whitteker (Fight for the Cure) and Bruce Buffer (a veteran sports announcer).

Millions launched its fan engagement social commerce platform in April — with an initial three products for pro/semi-pro athletes to pitch at their followers: Namely custom merchandize (including a free design service); ask-me-anything personalized videos; and a pay-per-view streaming offering that lets fans pay to tune into a livestream of their favorite sportsperson.

The startup’s initial plan had been to build just an e-commerce and merchandising platform but, having built that component, Salamunovic says the team decided to bundle in video products — such as personalized videos and “democratising” pay-per-view (PPV). 

“Our biggest advantage and differentiator is that we are strictly focused on the sports world and fan engagement,” he tells TechCrunch. “The obvious indirect competitors are Twitch (heavily focused on e-sports/gaming), Patreon (focused on creators), Represent.com (focused on merch drops for ‘influencers’), and even OnlyFans (we know who they focus on) but we’re laser-focused on the multibillion-dollar sports market.”

“Cameo has a very similar product to our video ‘Ask Me Anything’ platform — but we don’t focus on birthday shout-outs we focus on allowing fans to ask their favorite athletes questions around their training, their success, predictions (we’ve seen a lot of gamblers use our platform to get tips) and less on things like shout-outs,” he adds. “We love Cameo, but we’re really different and focused on sports.”

Cameo raises $50M to deliver personalized messages from celebrities & influencers

“Instagram, TikTok, Snapchat, Facebook are all great social media platforms that allow athletes to engage and interact with their fans but it’s not a great place to monetize your audience,” Salamunovic also argues. “We help athletes create a brand, build a merch line, sell video content (personalized videos and watch parties all on a single platform). We’re not trying to replace any of these platforms, we’re complementing them by allowing the athletes to provide a single link and landing page for deeper interaction and monetization. The fans seem to love it too.”

At this stage, Millions only has around 300 athlete profiles live but says it has “thousands” who’ve registered interest across a variety of sports categories.

Its first focus — including for partnerships with agencies and sports leagues — has been on “combat sports and gyms”. But the platform has a long list of sports types in the search filter — from lacrosse to water polo to baseball or gymnastics — so the ambition is to go after a very broad funnel of pro/semi sportspeople. 

And for every Michael Jordan or Cristiano Ronaldo — aka, those top-tier athletes who can command hundreds of millions in sponsorship fees by inking partnerships with top brands to promote their products and who you certainly won’t find selling hats on Millions — there are scores of athletes who aren’t able to cut such sweet deals and who will have far more modest fanbases.

It’s that broad field of players and performers who Millions hopes will flock to its platform — and take up its dedicated offer of social commerce tools and tech to engage with and monetize their followers.

Commenting on the funding in a statement, Sean Cantwell, managing partner at Volition Capital, suggested: “Athletes are always looking for ways to connect on a deeper level with fans, generate additional revenue streams and build their personal brands and Millions offers all of this on a single platform. We think that Millions is the future of fan engagement.”

To help grease the funnel of sportspeople it needs to drive eyeballs to its platform, Millions is offering athletes a “signing bonus” when they join and start selling — with a variety of tiers of bonus (of up to $5K) per sportsperson.

“We initially wanted to stay hyper-focused on combat sports and not try to ‘boil the ocean’. Now we’re releasing new athletes’ profiles daily and introducing new sports like football, volleyball, golf and more,” notes Salamunovic. “Really, this platform is designed for any athlete who wants to reach their fans and create new monetization channels without having to put a ton of effort into things like page design, technology, design or logistics… we take care of all that so they can focus on engaging with their fans and most importantly on their sport and training.” 

“We’re looking to build the most important sports tech company in history,” he adds. “We’re going to be the Etsy ($21 billion market cap) of sports. That’s an ambitious statement but it’s true; 98% of athletes NEED our product/platform.”

Chasing that scale is why Millions is raising now. And while the early focus has been on North America — where about 90% of the onboarded sportspeople hail from currently — it reckons there’s “huge growth potential” in Europe and Asia so is very much gunning to build a global business.

It says it’ll be splashing Series A cash on growing its product engineering team and recruiting to expand its team generally, as well as spending on marketing to get the word out to athletes and get more signed up to build their own brands and sell direct to fans. 

“I believe a powerful thing we’re doing, past just the product offering, is enabling athletes to have a team,” adds Austin. “With Millions, athletes get a marketing team, a personal account manager, and a design team that they can use to build their brand and product line, and to promote to, and further build, their fan base. We allow the athlete to focus on training, playing/fighting, and winning while we help take care of everything else, and coach them on how to brand and market themselves.” 

Millions’ business model is to take a 20% cut of all sales athletes make via the platform — with the split remaining the same for merchandise or video sales.

For the former, Millions is using a global network of print-on-demand suppliers to do the fulfilment.

While products the platform can customize for athletes to sell as their own brand merch include t-shirts, caps and hoodies.

TikTok partners with Shopify on social commerce

It’s a two-Exchange Tuesday, everyone. First up, we’re talking fintech valuations. Next up, we’re digging into Atlanta.

Last week’s news that PayPal intends to buy Japanese startup Paidy marked the second major acquisition of a buy now, pay later (BNPL) company this year. PayPal’s news followed an even larger deal by Square for the Australian BNPL company Afterpay.

The multibillion-dollar exits provided hard market proof that what BNPL startups are building has value beyond simple operating results; major fintech platforms are willing to shell out large sums for their revenues and possible strategic value.

The Exchange explores startups, markets and money.

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Because both deals happened in 2021, they provide two data points for the value of BNPL companies operating at scale. And because both Square and PayPal provided some information to their investors concerning their transactions, we have a little bit of comparative work to do.

Let’s do a little math and figure out how much PayPal and Square investors are paying for transaction volume across both platforms. Then, we’ll peek at what Affirm is worth along similar lines. We’ll wrap with a look at Klarna’s numbers to see if there’s anything we can dig up there.

Our goal is to find out what sort of price floor or ceiling the Paidy and Afterpay deals imply, if other players in their space are matching that figure, and why. This will be fun!

What would you pay for $1 of BNPL GMV?

Square’s Afterpay deal is worth some $29 billion, a huge sum. It isn’t hard to see why the U.S. consumer- and business-focused fintech is willing to write so large a check — Afterpay does volume.