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Uptycs secures $50M Series C as security platform continues to expand
Uptycs, a Boston-area startup that uses data to help understand and prevent security attacks, announced a $50 million Series C today, 11 months after announcing a $30 million Series B. Norwest Venture Partners led the round with participation from Sapphire Ventures and ServiceNow Ventures.
Company co-founder and CEO Ganesh Pai says that he was still well capitalized from last year’s investment, and wasn’t actually looking to raise funds, but the investors came looking for him and he saw a way to speed up some aspects of the company’s roadmap.
“It was one of those things where the round came in primarily as a function of execution and success to date, and we decided to capitalize on that because we know the partners and raised the capital so that we could use it meaningfully for a couple of different things, primarily sales and marketing acceleration,” Pai said.
He said that part of the reason for the company’s success over the last year was that the pandemic generated more customer interest as people moved to work from home, the SolarWinds hack happened and companies were moving to the cloud faster. “We provided a solution which was telemetric powered and very insightful when it came to solving their security problems and that’s what led to triple digit growth over the last year,” he said.
But Pai says that the company has not been sitting still in terms of the platform. While last year, he described it primarily as a forensic security data solution, helping customers figure out what happened after a security issue has happened, he says that the company has begun expanding on that vision to include all four main areas of security, including being proactive, reactive, predictive and protective.
The company started primarily in being reactive by figuring what happened in the past, but has begun to expand into these other areas over the last year, and the plan is to continue to build out that functionality.
“In the context of SolarWinds, what everyone is trying to figure out is how soon into the supply chain can you figure out what could be potentially wrong by looking at indications of behavior or indications of compromise, and our ability to ingest telemetry from a diverse set of sources, not as a bolt-on solution, but something which is built from the ground up, resonated really well,” Pai explained.
The company had 65 employees when we spoke last year for the Series B. Today, Pai says that number is approaching 140 and he is adding new people every week, with a goal to get to around 200 people by the end of the year. He says as the company grows, he keeps diversity top of mind.
“As we grow and as we raise capital diversity has been something which has been a high priority and very critical for us,” he said. In fact, he reports that more than 50% of his employees come from under-represented groups whether it’s Latinx, Black or Asian heritage.
Pai says that one of the reasons he has been able to build a diverse workforce is his commitment to a remote workplace, which means he can hire from anywhere, something he will continue to do even after the pandemic ends.
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UK’s Paysend raises $125M at a $700M+ valuation to expand its all-in-one payments platform
With more people than ever before going online to pay for things and pay each other, startups that are building the infrastructure that enables these actions continue to get a lot of attention.
In the latest development, Paysend, a fintech that has built a mobile-based payments platform — which currently offers international money transfers, global accounts, and business banking and e-commerce for SMBs — has picked up some money of its own. The London-based startup has closed a round of $125 million, a sizable Series B that the company’s CEO and founder Ronnie Millar said it will be using to continue expanding its business geographically, to hire more people, and to continue building more fintech products.
The funding is being led by One Peak, with Infravia Growth Capital, Hermes GPE, previous backer Plug and Play and others participating.
Millar said Paysend is not disclosing valuation today but described it as a “substantial kick-up” and “a great step forward in our position ahead toward unicorn status.”
From what I understand though, the company was valued at $160 million in its previous round, and its core metrics have gone up 4.5x. Doing some basic math, that gives the company a valuation of around $720 million, a figure that a source close to the company did not dispute when I brought it up.
Something that likely caught investors’ attention is that Paysend has grown to the size it is today — it currently has 3.7 million consumer customers using its transfer and global account services, and 17,000 small business customers, and is now available in 110 receiving countries — in less than four years and $50 million in funding.
There are a couple of notable things about Paysend and its position in the market today, the first being the competitive landscape.
On paper, Paysend appears to offer many of the same features as a number of other fintechs: money transfer, global payments, and banking and e-commerce services for smaller businesses are all well-trodden areas with companies like Wise (formerly “TransferWise”), PayPal, Revolut, and so many others also providing either all or a range of these services.
To me, the fact that any one company relatively off the tech radar can grow to the size that it has speaks about the opportunity in the market for more than just one or two, or maybe five, dominant players.
Considering just remittances alone, the WorldBank in April said that flows just to low- and middle-income countries stood at $540 million last year, and that was with a dip in volumes due to COVID-19. The cut that companies like Paysend make in providing services to send money is, of course, significantly smaller than that — business models include commission charges, flat fees or making money off exchange rates; Paysend charges £1 per transfer in the U.K. More than that, the overall volumes, and the opportunity to build more services for that audience, are why we’re likely to see a lot of companies with ambitions to serve that market.
Services for small businesses, and tapping into the opportunity to provide more e-commerce tools at a time when more business and sales are being conducted online, is similarly crowded but also massive.
Indeed, Paysend points out that there is still a lot of growing and evolution left to do. Citing McKinsey research, it notes that some 70% of international payments are currently still cash-to-cash, with fees averaging up to 5.2% per transaction, and timing taking up to an hour each for sender and recipient to complete transfers. (Paysend claims it can cut fees by up to 60%.)
This brings us to the second point about Paysend: How it’s built its services. The fintech world today leans heavily on APIs: Companies that are knitting together a lot of complexity and packaging it into APIs that are used by others who bypass needing to build those tools themselves, instead integrating them and adding better user experience and responsive personalization around them. Paysend is a little different from these, with a vertically integrated approach, having itself built everything that it uses from the ground up.
Millar — a Scottish repeat entrepreneur (his previous company Paywizard, which has rebranded to Singula, is a specialist in pay-TV subscriber management) — notes that Paysend has built both its processing and acquiring facilities. “Because we have built everything in-house it lets us see what the consumer needs and uses, and to deliver that at a lower cost basis,” he said. “It’s much more cost-efficient and we pass that savings on to the consumer. We designed our technology to be in complete control of it. It’s the most profitable approach, too, from a business point of view.”
That being said, he confirmed that Paysend itself is not yet profitable, but investors believe it’s making the right moves to get there. To be clear, Paysend actually does partner with other companies, including those providing APIs, to improve its services. In April, Plaid and Paysend announced they were working together to power open banking transfers, reducing the time to initiate and receive money.
“We are excited by Paysend’s enormous growth potential in a massive market, benefiting from a rapid acceleration in the adoption of digital payments,” said Humbert de Liedekerke, managing partner at One Peak Partners, in a statement. “In particular, we are seeing strong opportunities as Paysend moves beyond consumers to serve business customers and expands its international footprint to address a growing need for fast, easy and low-cost cross-border digital payments. Paysend has built an exceptional payment platform by maintaining an unwavering focus on its customers and constantly innovating. We are excited to back the entire Paysend team in their next phase of explosive growth.”
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Qualified raises $51M to help Salesforce users improve their sales and marketing conversations
Salesforce dominates the world of CRM today, but while it’s a popular and well-used tool for organizing contacts and information, it doesn’t have all the answers when it comes to helping salespeople and marketers sell better, especially when meetings are not in person. Today, one of the startups that has emerged to help fill the gap is announcing a round of growth funding on the back of a huge year for its business.
Qualified — which builds better interactions for B2B sales and marketing teams that already use Salesforce by tapping into extra data sources to develop a better profile of those visiting your website, in aid of improving and personalizing the outreach (hence the name: you’re building “qualified” leads) — has picked up $51 million in funding. The startup will be using the Series B to continue building out its business with more functionality in the platform, and hiring across the board to expand business development and more.
Led by Salesforce Ventures, the funding round also included Norwest Venture Partners and Redpoint Ventures, both previous backers, among others. As with so many rounds at the moment — the venture world is flush with funding at the moment — this one is coming less than a year after Qualified’s last raise. It closed a $12 million Series A in August of last year.
Qualified was co-founded by two Salesforce veterans — ex-Salesforce CMO Kraig Swensrud and ex-SVP of Salesforce.com Sean Whiteley — serial entrepreneurs who you could say have long been hammering away at the challenges of building digital tools for sales and marketing people to do their jobs better online. The pair have founded and sold two other startups filling holes to that end: GetFeedback, acquired by SurveyMonkey, and Kieden, acquired by Salesforce.
The gap that they’re aiming to fill with this latest venture is the fact that when sales and marketing teams want to connect with prospects directly through, say, a phone call, they might have all of that contact’s information at their disposal. But if those teams want to make a more engaged contact when someone is visiting their site — a sign that a person is actually interested and thinking already about engaging with a company — usually the sales and marketing teams are in the dark about who those visitors are.
“We founded Qualified on the premise that a website should be more than a marketing brochure, but not just a sales site,” Swensrud, who is the CEO, said in an interview.
Qualified has built a tool that essentially takes several signals from Salesforce as well as other places to build up some information about the site visitor. It then uses it to give the sales and marketing teams more of a steer so that when they reach out via a screen chat to say “how can I help?” they actually have more information and can target their questions in a better way. A sales or marketing rep might know which pages a person is also visiting, and can then use the conversation that starts with an online chat to progress to a voice or video call, or a meeting.
If a person is already in your Salesforce Rolodex, you get more information; but even without that there is some detail provided to be slightly less impersonal. (Example: When I logged into Qualified to look around the site, a chat popped up with a person greeting me “across the pond”… I’m in London.)
Qualified also integrates with a number of other tools that are used to help source data and build its customer profiles, including Slack, Microsoft Teams, 6sense, Demandbase, Marketo, HubSpot, Oracle Eloqua, Clearbit, ZoomInfo and Outreach.
Additional data is part and parcel of the kinds of information that sales and marketing people always need when reaching out to prospective customers, whether it’s via a “virtual” digital channel or in person. However, in the last year — where in-person meetings, team meetings and working side-by-side with those who can give advice have all disappeared — having extra tools like these arguably have proven indispensable.
“Sales reps would heavily rely on their ‘road warrior’ image,” Swensrud said. “But all that stuff is gone, so as a result every seller is sitting at an office, at home, expecting digital interactions to happen that never existed before.”
And it seems some believe that even outside of COVID-19 enforcing a different way of doing things, the trend for “virtual selling”, as it’s often called, is here to stay: Gartner forecasts that by 2025, some 80% of B2B sales interactions will take place in digital channels. (So long to the expense account lunch, I guess.)
It’s because of the events of 2020, plus those bigger trends, that Qualified has seen revenues in the last year grow some 800% and its net customer revenue retention rate hover at 175%, with funding rounds come in relatively close succession in the wake of that.
There is something interesting to Qualified that reminds me a bit of more targeted ad retargeting, as it were, and in that, you can imagine a lot of other opportunities for how Qualified might expand in scenarios where it would be more useful to know why someone is visiting your site, without outright asking them and bothering them with the question. That could include customer service, or even a version that might sell better to consumers coming to, say, a clothes site after reading something about orange being the new black.
For now, though, it’s focused on the B2B opportunity.
There are a number of tools on the market that are competing with Salesforce as the go-to platform for people to organise and run CRM operations, but Swensrud is bullish for now on the idea of building specifically for the Salesforce ecosystem.
“Our product is being driven by and runs on Salesforce,” he noted, pointing out that it’s through Salesforce that you’re able to go from chatting to a phone call by routing the information to the data you have on file there. “Our roots go very deep.”
The funding round today is a sign that Salesforce is also happy with that close arrangement, which gives it a customization that its competitors lack.
“Qualified represents an entirely new way for B2B companies to engage buyers,” said Bill Patterson, EVP of CRM Applications at Salesforce, in a statement. “When marketing and inbound sales teams use this solution with Sales Cloud… they see a notable impact on pipeline. We are thrilled about our growing partnership with Qualified and their success within the Salesforce ecosystem.”
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Forter raises $300M on a $3B valuation to combat e-commerce fraud
E-commerce is on the rise, but that also means the risk, and occurrence, of e-commerce fraud is, too. Now, Forter, one of the startups building a business to tackle that malicious activity, has closed $300 million in funding — a sign both of the size of the issue and its success in tackling it to date.
The new funding, a Series F, values Forter at $3 billion — notable not least because the funding is coming only about six months since Forter’s previous round, a $125 million Series E that valued it at over $1.3 billion.
Tiger Global Management is leading this latest equity infusion, with new backers Third Point Ventures and Adage Capital Management, and existing investors Bessemer Venture Partners, Sequoia Capital, March Capital, NewView Capital, Salesforce Ventures and Scale Venture Partners, also involved.
The plan will be to use to the money to expand Forter — founded in Tel Aviv and now based in New York — geographically, bring more functionality into its product and explore adjacent areas where Forter might expand its capabilities, either organically or by way of acquisition.
Forter today focuses mainly on identifying fraud at the point of transaction and building an AI-based platform that “learns” more behaviors to improve its accuracy; it also builds models that keep more people transacting and helps bring down the number of “false positives” where activity that appears suspicious actually is not.
One area on its roadmap for expansion is remediation after the fraud occurs, said Liron Damri, Forter’s co-founder and president.
“Our vision is to serve the merchant as the go-to trusted partner for everything, so remediation is definitely on our roadmap,” he said of potential acquisition targets.
Damri, who co-founded the company with Michael Reitblat, CEO, and Alon Shemesh, chief analyst, said in an interview that the startup — which works with some 350 large customers like Priceline and Instacart and a growing number of service providers like FreedomPay and Flutterwave, altogether seeing some $250 billion worth of transactions globally last year — wasn’t proactively looking for more money.
“All we wanted to do was go back to run the company,” he said. “But in the past six months we’ve seen such a great momentum, doubling revenue and ARR, and seeing our customer volumes grow.”
That led to a lot of investors proactively reaching out and asking questions, he continued. He described Tiger as a “kingmaker” in the category of e-commerce, so it was an easy decision to make, and gave it the “gas” it needed to take its next growth steps.
E-commerce has been one of the major technology growth stories of the last year, fueled by a rush of consumers and businesses playing out their lives online at a time when it has been harder, and in some cases impossible, to transact in person.
While we have definitely seen a lot of growth, and growing sophistication, in the number of tools on the market to combat cybercrime, it’s in some ways an ouroboros of a problem: The more transactions that are made, the more there are that need to be monitored for suspicious activity. And in any case, fraud in e-commerce is not exactly going away. It’s estimated that it will cost retailers some $20 billion in 2021 and is always on the rise.
Forter got its start in 2013 focusing first on monitoring activity on sites wherever customers happened to be to identify suspicious behavior — a sign that it might be a bot or someone on an illicit spending spree racking up a lot of items in quick succession — with the bigger concept being to build a network of activity from which to learn and help make more informed decisions over time.
In more recent years, the essence of the issue has expanded somewhat, and also grown more sophisticated. As companies have grown their businesses to reach beyond early adopters and core audiences, and into a more “omnichannel” environment beyond basic check-outs on their own sites, so too have the kinds of consumers coming to shop.
This has meant that traditional “signals” of legitimate buyers no longer were the same as before — a predicament that really rose in profile in the last year, as many newcomers came to e-commerce for the first time during the pandemic. In fact, Damri told me that in 2020 there were seven times more “newcomers” to sites than in 2019.
So with most of the flagging of suspicious activity coming up at the point of transaction, Forter expanded to analyzing activity there.
As with a recent acquisition of Stripe’s, Bouncer, to build out its own anti-fraud product, a large part of Forter’s attention these days is on providing tools to companies to identify suspicious purchasing, but even more than that, to make sure that the many occasions that might look suspicious are not, to help reduce the amount of “cart abandonment” and increase conversions.
The old way of doing things, Damri said, involved “thousands of rules and applying suspicion on everyone. You were guilty unless proved otherwise.”
Using its AI engine and some risk analysis (not unlike the kind that, say, an insurance or loan provider might apply in their businesses), Forter turned the proposition on its head.
“We wanted to approve as much as possible. We wanted to gradually increase the trust you have of your own customers. We changed the sentiment and approach… especially in areas that were neglected, such as those who saw significant changes in life,” Damri said. “This was extremely important as COVID-19 hit.”
Forter’s risk tolerance model, it seems, has so far proven out. Damri said that its algorithms applied reduce the total number of declines by 80%, but also reduce the number of chargebacks — one indicator of a mistake — by 60%.
This implies that it’s blocking more of the “wrong” kind of purchases, and letting through more of the legitimate ones. (That is, he pointed out, in addition to a few bad actors Forter intentionally lets buy things, just to learn how they operate. Damri referred to this as “paid-tuition.”)
Risk-based approvals, coupled with algorithms to learn what is truly bad, has resonated with customers, and investors.
“With the unprecedented rate of digital transformation and the fierce competition in creating the slickest user experience, superior fraud prevention plays an ever more critical role in e-commerce revenue growth” said John Curtius, a partner at Tiger Global Management, in a statement. “After we talked with dozens of customers of every relevant solution in this space, it was very clear to us that Forter is the clear leader in performance and scale.”
“As a longtime investor, it’s been incredible to see Forter’s ascent,” added Ravi Viswanathan, NewView Capital. “It’s a testament to the leadership team’s vision and execution in allowing merchants to provide the seamless experiences customers expect and to be able to accept as many transactions as possible, while still accurately identifying and blocking fraud.”
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Sinch, a Swedish customer engagement giant, raises $1.1B, SoftBank and Temasek participating
Sinch — a Twilio competitor based out of Sweden that provides a suite of services to companies to build communications and specifically “customer engagement” into their services by way of APIs — has been on a steady funding and acquisitions march in the last several months to scale its business, and today comes the latest development on that front.
The company has announced that it has raised another $1.1 billion in a direct share issue, with significant chunks of that funding coming from Temasek and SoftBank, in order to continue building its business.
Specifically, the company — which is traded on the Swedish stock exchange Nasdaq Stockhom and currently has a market cap of around $11 billion — said that it was making a new share issue of 7,232,077 shares at SEK 1,300 per share, raising approximately SEK 9.4 billion (equivalent to around $1.1 billion at current rates).
Sinch said that investors buying the shares included “selected Swedish and international investors of institutional character,” highlighting that Temasek and SB Management (a direct subsidiary of SoftBank Group Corp.) would respectively take SEK 2,085 million and 0.7 million shares. This works out to a $252 million investment for Temasek, and $110 million for SoftBank.
SoftBank last December took a $690 million stake in Sinch (when it was valued at $8.2 billion). That was just ahead of the company scooping up Inteliquent in the U.S. in January for $1.14 billion to move a little closer to Twilio’s home turf.
Sinch is not saying much more beyond the announcement of the share issue for now, except that the raise was made to shore up its financial position ahead of more M&A activity.
“Sinch has an active M&A-agenda and a track record of successful acquisitions, making [it] well placed to drive continued consolidation of the messaging and [communications platform as a service, CPaaS] market,” it said in a short statement. “Furthermore, the increased financial flexibility that the directed new share issue entails further strengthens the Company’s position as a relevant and competitive buyer.”
The company is profitable and active in more than 40 markets, and CEO Oscar Werner said in Sinch’s most recent earnings report that in the last quarter alone that its communications APIs — which work across channels like SMS, WhatsApp, Facebook Messenger, chatbots, voice and video — handled 40 billion mobile messages.
Notably, its strategy has a strong foothold in the U.S. because of the Inteliquent acquisition. It will be interesting to see how and if it continues to consolidate to build up market share in that part of the world, or whether it focuses elsewhere, given the heft of two very strong Asian investors now in its stable.
“Becoming a leader in the U.S. voice market is key to establish Sinch as the leading global cloud communications platform,” said Werner in January.
While Sinch has focused much of its business, as has Twilio, around an API-based model focused on communications services, its acquisition of Inteliquent also gave it access to a large, legacy Infrastructure-as-a-Service (IaaS) product set, aimed at telcos to provide off-net call termination (when a call is handed off from one carrier to another) and toll-free numbers.
Tellingly, when Sinch acquired Inteliquent, the two divisions each accounted for roughly half of its total business, but the CPaaS business is growing at twice the rate of IaaS, which points to how Sinch views the future for itself, too.
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In a YC ‘power’ play, Gridware girds $5.3M to save humanity from weather
You might have thought that with more than 300 companies joining this year’s winter batch of Y Combinator, the investor interest might have thinned. Well, it’s 2021 and investors are hopping around like crazy to invest in ideas that push the boundaries in fields far-flung from enterprise SaaS.
Case in point today: Gridware. It’s a startup I profiled earlier this year when it had just started up in its YC batch. As I wrote, it wants to save our power grids from the ravages of climate change:
Its approach is to use a small, sensor-laden box that can be installed to a power pole with just four screws. Gridware’s package contains microphones and other sensors to sense the ambient environment around a power pole, and it uses on-board AI/ML processing to listen for anomalies and report them to the relevant managers as appropriate.
Hardware, IoT, infrastructure, utilities and government are five keywords you probably most would have wanted to avoid when pitching investors even a few years ago. But with power disappearing in states like California and Texas for stretches of time, investors have perhaps finally realized there is an opportunity to save the planet and make a bit of money here.
Gridware today announced that it has raised $5.3 million in a seed round led by Priscilla Tyler of True Ventures and Seth Bannon and Shuo Yang of Fifty Years. CEO and co-founder Tim Barat said fundraising was quite fierce. “We had 130 investors reach out to us, and I wasn’t even able to get back to some of them yet … [I’m] still going back through the emails,” he said. “Even before Demo Day, we had raised a significant portion of our round.”
Barat and the Gridware team were looking for investors who were mission-driven and really understood the timeline it would take to build the company. “You see a lot of investors say they are mission-driven … but when it comes time to put their money where their mouth is, it often goes to consumer technology where it is safer,” he said. Tyler at True leads climate investing for the firm, and True has made a variety of bets in the space. Fifty Years focuses on startups tackling the UN’s list of 17 Sustainable Development Goals.
Gridware co-founders Abdulrahman Bin Omar, Tim Barat, and Hall Chen. Image Credits: Gridware
You can read more about the company’s product and market in my profile from three months ago, but with the new funding, Gridware wants to double down on building a very intentional team capable of tackling this tough market. “Dealing with this multi-stakeholder business model is very challenging, so bringing on people with the experience, knowledge and wits to deal with this kind of environment is key,” Barat said.
As I explored recently, the disaster response space is probably one of the toughest markets in the world to sell into. Barat acknowledged the intrinsic difficulty, but sees huge potential in the long run. “One of the things that I have observed with the companies being successful — they really spend the time to meet as many stakeholders as possible,” he said. “With consumer, you can stand in front of a shopping mall and talk to 100 customers in a day [but] in govtech, getting 100 meetings even within a year is a huge accomplishment.”
The company will be re-opening its Bay Area office in Walnut Creek on June 1.
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Aurora Solar aims to power the growing solar industry with a $250M round C
Aurora Solar had one of those pitches that seemed obvious in retrospect. Instead of going to a house and measuring its roof manually for a solar panel installation, why not use aerial scans and imagery of the whole region? That smart play earned them a $20 million A round, a $50 million B round and now, only six months later, a massive $250 million C round as they aim to become the software platform on which the coming solar power expansion will be run.
The idea is simple enough to explain, but difficult to pull off. There’s lots of data out there about the topography, physical and infrastructural, of most cities. Satellite imagery, aerial lidar scans, light and power lines and usage data and, of course, where and how the sun hits a given location — this information is readily available. Aurora’s innovation wasn’t just using it, but assembling it into a cohesive system that’s simple and effective enough to be used widely by solar installers.
“Aurora’s core value proposition is the fact that you can do things remotely much faster and more accurately than if you traveled to the site,” explained co-founder and COO Sam Adeyemo.
Having developed algorithms that ingest the aforementioned data, the service they offer is a very quick turnaround on the tricky question of whether a solar installation makes sense for a potential customer, and if so what it might cost and look like, down to the size and angle of the panels.
Image Credits: Aurora Solar
“It’s not uncommon for the acquisition cost for a customer to be thousands of dollars,” said Adeyemo’s co-founder, CEO Chris Hopper. That’s partly because every installation is custom. He estimated that half the price tag of any setup is “soft cost” — that is, over and above the actual price of the hardware.
“If the quote is for $30K, what actually goes on your roof might be $15K, the rest is overhead, design, acquisition cost, yada yada yada,” he explained. “That’s the next frontier to make solar cost-competitive, and that’s where Aurora comes in. Every time we shave a few dollars off the price of an installation, it opens it up for new consumers.”
The company doesn’t do its own lidar flights or solar installations, so the $250 million in funding may strike some as rather high for a company making software. Though I did my best to tease out any secret skunkworks projects under way at Aurora, Adeyemo and Hopper patiently explained that enterprise-scale software isn’t cheap, and the funding is proportional to their ambitions.
“The amount we raised speaks to the opportunity ahead of us,” said Hopper. “There’s a lot more solar to put on roofs.”
Aurora has been used for evaluating about 5 million solar projects so far, about a fifth of which end up being built, Adeyemo estimated. And that’s just a fraction of a fraction. Solar makes up about 2% of the U.S.’s power infrastructure, right now, but that’s on track to increase by an order of magnitude in the next 20 years.
The new administration has thrown fuel on the fire of the industry’s optimism, and whether or not something like the Green New Deal comes to fruition, the fundamentally different approach to environmental and energy policy means there are more eyeballs directed at clean energy and consequently a lot of checks being written.
“It counts for a lot. With heightened awareness about climate change there will be more interest in ways to mitigate it,” said Adeyemo. He gave the example of Texas, which after the recent storms and blackouts had more inquiries per capita than anywhere else in the country. Renewables may be a charged issue in some ways, but solar power is bipartisan and broadly popular across the political spectrum.
Image Credits: Aurora Solar
The $250 million round, led by Coatue and with participation from previous investors ICONIQ, Energize Ventures and Fifth Wall, allows the company to go both broad and deep with their product.
“Historically we’ve been more of a design solution; the next phase is to broaden that into a platform that covers more of the process of going solar,” said Hopper. “We don’t believe this is going to be a niche market — going from 2 to 20% and beyond, that’s a huge endeavor.”
The co-founders would not be more specific than that scaling a SaaS company requires significant cash up front, and during the push to come they can’t be worried about whether or when they’ll need to get more capital.
“The first five years of the company were quasi-bootstrapped… we’d raised like a million bucks. So we know what it’s like to grow a company from that perspective, and now we know what it’s like to really need the capital to scale the business,” said Adeyemo. “If you want to be the platform for a significant percentage of the energy capacity of the country… you gotta tool up.”
What exactly tooling up comprises we will soon find out — the company is planning to announce more news at its upcoming summit in June.
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Mental health app Wysa raises $5.5M for ’emotionally intelligent’ AI
It’s hard enough to talk about your feelings to a person; Jo Aggarwal, the founder and CEO of Wysa, is hoping you’ll find it easier to confide in a robot. Or, put more specifically, “emotionally intelligent” artificial intelligence.
Wysa is an AI-powered mental health app designed by Touchkin eServices, Aggarwal’s company that currently maintains headquarters in Bangalore, Boston and London. Wysa is something like a chatbot that can respond with words of affirmation, or guide a user through one of 150 different therapeutic techniques.
Wysa is Aggarwal’s second venture. The first was an elder care company that failed to find market fit, she says. Aggarwal found herself falling into a deep depression, from which, she says, the idea of Wysa was born in 2016.
In March, Wysa became one of 17 apps in the Google Assistant Investment Program, and in May, closed a Series A funding round of $5.5 million led by Boston’s W Health Ventures, the Google Assistant Investment Program, pi Ventures and Kae Capital.
Wysa has raised a total of $9 million in funding, says Aggarwal, and the company has 60 full-time employees and about three million users.
The ultimate goal, she says, is not to diagnose mental health conditions. Wysa is largely aimed at people who just want to vent. Most Wysa users are there to improve their sleep, anxiety or relationships, she says.
“Out of the 3 million people that use Wysa, we find that only about 10% actually need a medical diagnosis,” says Aggarwal. If a user’s conversations with Wysa equate with high scores on traditional depression questionnaires like the PHQ-9 or the anxiety disorder questionnaire GAD-7, Wysa will suggest talking to a human therapist.
Naturally, you don’t need to have a clinical mental health diagnosis to benefit from therapy.
Wysa isn’t intended to be a replacement, says Aggarwal (whether users view it as a replacement remains to be seen), but an additional tool that a user can interact with on a daily basis.
“Sixty percent of the people who come and talk to Wysa need to feel heard and validated, but if they’re given techniques of self help, they can actually work on it themselves and feel better,” Aggarwal continues.
Wysa’s approach has been refined through conversations with users and through input from therapists, says Aggarwal.
For instance, while having a conversation with a user, Wysa will first categorize their statements and then assign a type of therapy, like cognitive behavioral therapy or acceptance and commitment therapy, based on those responses. It would then select a line of questioning or therapeutic technique written ahead of time by a therapist and begin to converse with the user.
Wysa, says Aggarwal, has been gleaning its own insights from more than 100 million conversations that have unfolded this way.
“Take for instance a situation where you’re angry at somebody else. Originally our therapists would come up with a technique called the empty chair technique where you’re trying to look at it from the other person’s perspective. We found that when a person felt powerless or there were trust issues, like teens and parents, the techniques the therapists were giving weren’t actually working,” she says.
“There are 10,000 people facing trust issues who are actually refusing to do the empty chair exercise. So we have to find another way of helping them. These insights have built Wysa.”
Although Wysa has been refined in the field, research institutions have played a role in Wysa’s ongoing development. Pediatricians at the University of Cincinnati helped develop a module specifically targeted toward COVID-19 anxiety. There are also ongoing studies of Wysa’s ability to help people cope with mental health consequences from chronic pain, arthritis and diabetes at The Washington University in St. Louis and The University of New Brunswick.
Still, Wysa has had several tests in the real world. In 2020, the government of Singapore licensed Wysa, and provided the service for free to help cope with the emotional fallout of the coronavirus pandemic. Wysa is also offered through the health insurance company Aetna as a supplement to Aetna’s Employee Assistance Program.
The biggest concern about mental health apps, naturally, is that they might accidentally trigger an incident, or mistake signs of self harm. To address this, the U.K.’s National Health Service (NHS) offers specific compliance standards. Wysa is compliant with the NHS’ DCB0129 standard for clinical safety, the first AI-based mental health app to earn the distinction.
To meet those guidelines, Wysa appointed a clinical safety officer, and was required to create “escalation paths” for people who show signs of self harm.
Wysa, says Aggarwal, is also designed to flag responses to self-harm, abuse, suicidal thoughts or trauma. If a user’s responses fall into those categories Wysa will prompt the user to call a crisis line.
In the U.S., the Wysa app that anyone can download, says Aggarwal, fits the FDA’s definition of a general wellness app or a “low risk device.” That’s relevant because, during the pandemic, the FDA has created guidance to accelerate distribution of these apps.
Still, Wysa may not perfectly categorize each person’s response. A 2018 BBC investigation, for instance, noted that the app didn’t appear to appreciate the severity of a proposed underage sexual encounter. Wysa responded by updating the app to handle more instances of coercive sex.
Aggarwal also notes that Wysa contains a manual list of sentences, often containing slang, that they know the AI won’t catch or accurately categorize as harmful on its own. Those are manually updated to ensure that Wysa responds appropriately. “Our rule is that [the response] can be 80%, appropriate, but 0% triggering,” she says.
In the immediate future, Aggarwal says the goal is to become a full-stack service. Rather than having to refer patients who do receive a diagnosis to Employee Assistant Programs (as the Aetna partnership might) or outside therapists, Wysa aims to build out its own network of mental health suppliers.
On the tech side they’re planning expansion into Spanish, and will start investigating a voice-based system based on guidance from the Google Assistant Investment Fund.
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factory14 raises $200M to jump into the Amazon marketplace roll-up race
It doesn’t feel like a week goes by at the moment that another startup doesn’t emerge armed with a huge wallet of cash to pursue a strategy of consolidating and then scaling promising brands that have built a business selling on marketplaces like Amazon’s. In the latest development, a startup called factory14 is coming out of stealth mode in Europe with $200 million in funding to snap up smaller businesses and help them grow through better economies of scale.
Along with this, factory14 is also announcing its latest acquisition to underscore its acquisition strategy: it’s acquired Pro Bike Tool, a popular D2C seller of its own-brand bike accessories and tools, for an undisclosed sum. The company, which is now fully owned by factory14, has kept the original founders on to lead the smaller company.
This is factory14’s fourth acquisition since launching earlier this year, and the company said that its focus on acquiring marketplace sellers that are already seeing success and some scale means that it is already profitable.
The startup — based in Luxembourg (with offices in Madrid, London, Shanghai and Taipei) — is describing this funding injection as a seed round, but in fact the majority of it is coming in the form of debt to acquire companies. Dmg Ventures (the VC arm of the Daily Mail Group) and DN Capital co-led the equity-based seed funding, with VentureFriends and unnamed individuals in the tech world also participating. Victory Park Capital, meanwhile, provided the credit facility and also participated in the equity consortium.
CEO Guilherme Steinbruch, an alum of Global Founders Capital (the investment firm co-founded by the Samwer brothers of Rocket Internet fame, among others), co-founded factory14 with Marcos Ramírez (COO) and Gianluca Cocco (CBO) — who have respectively worked at e-commerce giants like Amazon and Delivery Hero.
Steinbruch himself also has an interesting background. He hails from Brazil and is a member of the powerful industrial family that controls a major steel producer, a leading textile producer and a bank (Steinbruch said that factory14 has no connection to these, and is not an investor in the startup).
He said that the idea for founding factory14 in Europe came out of his interest in e-commerce and specifically the traction that Thrasio, one of the U.S. based pioneers of the roll-up space, was seeing for the model.
The Marketplace on Amazon is a massive business. One estimate puts the number of third-party sellers at 5 million, with more than 1 million sellers joining the platform in 2020 alone. Thrasio, meanwhile, has in the past estimated to me that there are probably 50,000 businesses selling on Amazon via FBA making $1 million or more per year in revenues.
It’s the latter category that is the target for factory14, Steinbruch told me. Its belief is that focusing on more successful businesses will mean a better hit rate on finding companies that have already built more solid supply chains, branding and overall quality. Being willing to pay a little more for these sellers, he said, will help it compete against what has become a very crowded field.
“There are many players, there is no denying it,” he said, adding that their research has (so far) found more than 50 roll-up players going for the same general opportunities that it is.
But in the process of planning out how factory14 might differentiate itself in that mix, Steinbruch said it found some distinct differences.
“Some are looking for volume, and are willing to buy up many companies as cheaply as possible. But we took the decision to focus only on high-quality assets,” he said. “We knew we would have to pay higher multiples for a brand growing 200% a year, but when we started targeting these we were surprised to find there was less competition for these assets rather than for the smaller ones. That was a good surprise. It means that, yes, we have competition but we’ve managed to be pretty successful anyway.”
Even among the bigger retailers selling on Amazon using the e-commerce giant’s distribution and fulfillment platform, there are reasons why the consolidators have started to circle beyond just wanting to jump on a good thing. The system has within it a lot of work that is repeatable across many different companies, specifically in areas like analytics, supply chain management, marketing and more: building a framework that could handle those processes for many at once makes sense. There is also the fact that in many cases, marketplace sellers may have found themselves sitting on successful businesses but unable to source the investment (or the will) to scale them to the next step.
All the same, the mix of competitors hoping to scoop them up is a pretty formidable one, and the point of differentiation between them all may not in itself be as distinct as factory14 (or any of them) hopes.
Just today, another ambitious player in this space, Heyday out of San Francisco, announced a further $70 million in equity funding led by General Catalyst. It, too, is raising large amounts of debt and eyeing up more innovative ways of accommodating the most interesting companies selling on Amazon in a bid for more quality and success.
“The top 1.5% of marketplace sellers are doing $1 million in revenues, and we believe there may be some that cross the $1 billion threshold eventually,” Heyday CEO and co-founder Sebastian Rymarz told me last week. To woo the best of them in the current market, as part of its ambition to become the “P&G” of the 21st century, it too is taking a very open-ended approach, he said.
“We have some come to Heyday, or we bring in our own brand managers. Sometimes it’s a matter of some ongoing participation and interest, growth equity where we buy some now and will buy more of your business over time. We are still defining that and that is fine, we are comfortable with that,” he said. “It’s about unique partnerships that we’re forming to accelerate their businesses.”
Closer to home in more ways than one, Berlin’s Razor Group — funded by Steinbruch’s former colleagues from GFC, and founded by ex-Rocket Internet people — earlier this month raised $400 million. Thrasio itself has raised very large rounds in rapid succession totaling hundreds of millions of dollars in the last year, and is also profitable. Others in the same area that have also raised huge war chests include Branded; Heroes; SellerX; Perch; Berlin Brands Group (X2); Benitago; Latin America’s Valoreo (with its backers including Razor’s CEO) and an emerging group out of Asia including Rainforest and Una Brands.
Even with all of this, there will be opportunities, these entrepreneurs believe, to bring together more disparate smaller e-commerce retailers to help them better leverage marketing, supply chains, analytics and wider business expertise to grow for the longer term, leveraging the marketplace model that has come to dominate how many shop online today.
Factory14 said it expects to have $20 million in “trailing twelve months” EBITDA by the end of 2021 and expects to double its team to 80 by that point too.
For as long as Amazon and its marketplace model remain, it seems investors will come with their checkbooks, too.
“E-commerce is undergoing structural changes which are enabling thousands of exciting new brands to be born every day,” said Manuel Lopo de Carvalho, CEO at dmg ventures, in a statement. “Factory14 can provide these brands with the tools, capital and expertise that enable them to play in the big leagues.”
Ian Marsh, principal at DN Capital, said that the VC did its homework before backing the startup, too. “We had discussions with most aggregators and were immediately impressed by factory14’s differentiated vision focused on strong consumer brands and the world-class team they have put together with top tier private equity investors combined with seasoned e-commerce executive and former Amazonians. We are excited to work with Guilherme, Marcos, Gianluca and the rest of the factory14 team to create brands that inspire consumers around the world.”
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Kleiner spots Spot Meetings $5M to modernize walk-and-talks for the Zoom generation
Trees, those deciduous entities you can occasionally see outdoors when not locked down or strapped down at a desktop ruminating on a video call, have long been the inspiration for fresh new ideas. Stories abound of how founders built companies while walking the foothills in Silicon Valley or around parks in San Francisco, and yet, we’ve managed over the past year to take movement mostly out of our remote work lives.
Chicago-based Spot Meetings wants to reinvigorate our meetings — and displace Zoom as the default meeting medium at the same time.
The product and company are just a few months old and remain in closed beta (albeit opening up a bit shortly here), and today the company is announcing $5 million in seed funding led by Ilya Fushman at Kleiner Perkins. That follows a $1.9 million pre-seed round led by Chapter One earlier this year.
CEO and co-founder Greg Caplan said that the team is looking to rebuild the meeting from the ground up for an audio-only environment. “On mobile, it needs to be abundantly simple to be very functional and understood for users so that they can actually use it on the go,” he described. In practice, that requires product development across a wide range of layers.
The product’s most notable feature today is that it has an assistant, aptly named Spot, which listens in on the call and which participants can direct commands to while speaking. For instance, saying “Spot Fetch” will pull the last 40 seconds of conversation, transcribe it, create a note in the meeting and save it for follow-up. That prevents the multi-hand tapping required to save a note or to-do list for follow-up with our current meeting products. You “don’t even need to take your phone out,” Caplan points out.
What gets more interesting is the collaboration layer the company has built into the product. Every audio meeting has a text-based scratch pad shared with all participants, allowing users to copy and paste snippets into the meeting as needed. Those notes and any information that Spot pulls in are saved into workspaces that can be referenced later. Spot also sends out emails to participants with follow-ups from these notes. If the same participants join another audio meeting later, Spot will pull in the notes from their last meeting so there is a running timeline of what’s been happening.
Spot’s product design emphasizes collaboration within an audio-focused experience. Image Credits: Spot Meetings
Obviously, transcription features are built-in, but Spot sees opportunities in offering edited transcripts of long calls where only a few minutes of snippets might be worth specifically following up on. So the product is a bit more deliberate in encouraging users to select the parts of a conversation that are relevant for their needs, rather than delivering a whole bolus of text that no one is ever actually going to read.
“Collaboration from now and the future is going to be primarily digital … in-person is forever going to be the exception and not the rule,” Caplan explained. Longer term, the company wants to add additional voice commands to the product and continue building an audio-first (and really, an audio-only) environment. Audio “very uniquely helps people focus on the conversation at hand,” he said, noting that video fatigue is a very real phenomenon today for workers. To that end, more audio features like smarter muting are coming. When a participant isn’t talking, their background noise will automatically melt away.
Before Spot Meetings, Caplan was the CEO and co-founder of Remote Year, a startup that was designing a service for company employees to take working trips overseas. I first covered it back in 2015, and it went on to raise some serious venture dollars before the pandemic hit last year and the company laid off 50% of its workforce. Caplan left as CEO in April last year, and the company was ultimately sold to Selina, which offers co-working spaces to travelers, in October.
Caplan’s co-founder who leads product and engineering at Spot Meetings is Hans Petter “HP” Eikemo. The duo met during the very first Remote Year cohort. “He has been a software engineer for two decades [and was] literally the first person I called,” Caplan said. The team will grow further with the new funding, and the company hopes to start opening its beta to its 6,000 waitlist users over the next 3-4 weeks.
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