Fundings & Exits
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Cloud infrastructure startup CloudNatix gets $4.5 million seed round led by DNX Ventures
CloudNatix founder and chief executive officer Rohit Seth. Image Credits: CloudNatix
CloudNatix, a startup that provides infrastructure for businesses with multiple cloud and on-premise operations, announced it has raised $4.5 million in seed funding. The round was led by DNX Ventures, an investment firm that focuses on United States and Japanese B2B startups, with participation from Cota Capital. Existing investors Incubate Fund, Vela Partners and 468 Capital also contributed.
The company also added DNX Ventures managing partner Hiro Rio Maeda to its board of directors.
CloudNatix was founded in 2018 by chief executive officer Rohit Seth, who previously held lead engineering roles at Google. The company’s platform helps businesses reduce IT costs by analyzing their infrastructure spending and then using automation to make IT operations across multiple clouds more efficient. The company’s typical customer spends between $500,000 to $50 million on infrastructure each year, and use at least one cloud service provider in addition to on-premise networks.
Built on open-source software like Kubernetes and Prometheus, CloudNatix works with all major cloud providers and on-premise networks. For DevOps teams, it helps configure and manage infrastructure that runs both legacy and modern cloud-native applications, and enables them to transition more easily from on-premise networks to cloud services.
CloudNatix competes most directly with VMware and Red Hat OpenShift. But both of those services are limited to their base platforms, while CloudNatix’s advantage is that it is agnostic to base platforms and cloud service providers, Seth told TechCrunch.
The company’s seed round will be used to scale its engineering, customer support and sales teams.
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Soci raises $80M for its localized marketing platform
Soci, a startup focused on what it calls “localized marketing,” is announcing that it has raised $80 million in Series D funding.
National and global companies like Ace Hardware, Anytime Fitness, The Hertz Corporation and Nekter Juice Bar use Soci (pronounced soh-shee) to coordinate individual stores as they promote themselves through search, social media, review platforms and ad campaigns. Soci said that in 2020, it brought on more than 100 new customers, representing nearly 30,000 new locations.
Co-founder and CEO Afif Khoury told me that the pandemic was a crucial moment for the platform, with so many businesses “scrambling to find a real solution to connect with local audiences.”
One of the key advantages to Soci’s approach, Khoury said, is to allow the national marketing team to share content and assets so that each location stays true to the “national corporate personality,” while also allowing each location to express a “local personality.” During the pandemic, businesses could share basic information about “who’s open, who’s not” while also “commiserating and expressing the humanity that’s often missing element from marketing nationally.”
“The result there was businesses that had to close, when they had their grand reopenings, people wanted to support that business,” he said. “It created a sort of bond that hopefully lasts forever.”
Khoury also emphasized that Soci has built a comprehensive platform that businesses can use to manage all their localized marketing, because “nobody wants to have seven different logins to seven different systems, especially at the local level.”
The new funding, he said, will allow Soci to make the platform even more comprehensive, both through acquisitions and integrations: “We want to connect into the CRM, the point-of-sale, the rewards program and take all that data and marry that to our search, social, reviews data to start to build a profile on a customer.”
Soci has now raised a total of $110 million. The Series D was led by JMI Equity, with participation from Ankona Capital, Seismic CEO Doug Winter and Khoury himself.
“All signs point to an equally difficult first few months of this year for restaurants and other businesses dependent on their communities,” said JMI’s Suken Vakil in a statement. “This means there will be a continued need for localized marketing campaigns that align with national brand values but also provide for community-specific messaging. SOCi’s multi-location functionality positions it as a market leader that currently stands far beyond its competitors as the must-have platform solution for multi-location franchises/brands.”
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Genflow nabs $11M investment from BGF
Genflow, a London an0d LA-based brand building agency that offers an e-commerce and mobile tech platform to let influencers start companies, has raised $11 million in funding.
Leading the round is U.K. investor BGF. The injection of capital will be used by Genflow to further scale its offering and for international expansion.
Founded in 2016 by entrepreneur Shan Hanif to help social media influencers develop their brands and extract revenue from their audiences, Genflow combines aspects of a traditional branding agency — such as strategy, design and planning — and a tech company with its own software stack.
This sees Genflow position itself as a brand-as-a-service (BaaS) platform, which helps influencers develop their own digital and physical products instead of promoting other brands, and enables them to launch their own membership club, gated community, mobile app or direct to consumer brand.
“Genflow offers the complete infrastructure from design, development, manufacturing and logistics through to strategy, marketing and content creation to drive revenue and profit,” explains the company.
Genflow says its client base are established influencers who typically have large followings on Instagram and YouTube.
“Genflow allows an influencer to start their own business instead of the traditional brand deals so if someone with an audience wants truly their own audience and business Genflow does that for them,” says Hanif. “We provide them the complete infrastructure to launch a business: design, manufacturing, development, content, strategy and marketing all in one place. This gives us the unique ability to execute to a very high level that drives revenue”.
Hanif says influencers typically approach Genflow either with an idea or when they need help figuring out what brand they can launch. “We use ‘Genlytics,’ our in-house built software, to see what the best brand they can release by checking their analytics, breakdown of their followers, what brands they have worked with in the past and to see how much they can potentially sell,” he explains.
Next, Genflow onboards the client and begins the brand building process, offering broadly two options: Gated content, membership clubs, community and mobile apps, or developing direct to consumer brand with physical products.
The first is akin to having your own OnlyFans, Patreon or social media platform. The second is a classic D2C e-commerce play and includes designing the products, and working with factories to create samples, manufacture the products and then handle all logistics etc.
“In both cases then we plan the launch of the brand, the marketing strategy and then work with the influencer to launch the brand itself,” adds Hanif.
“What’s interesting is that traditionally in startups you find a problem, get a team, some funding then try to find customers. What we have invented is the ‘audience first approach’ where we already have the audience and now just need the right products and it’s instantly a success. The metrics that I see for our brands are not normal: conversion rates that are 5-30%, 20% repeat purchase buys and around 6:1 return on Facebook ads.
“We are proud that every brand we have launched to date is profitable and growing year on year so we know our approach works.”
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Fintech startups and unicorns had a stellar Q4 2020
The fourth quarter of 2020 was as busy as you imagined, with super-late-stage startups reaching new valuation thresholds at a record pace, and total venture capital funding in the United States recording its second-best result of all time.
That’s according to data released recently by CB Insights, which complements our look back at 2020’s venture capital year in America from yesterday.
At the time, we noted that American startups raised an average of $428 million each day last year, a sum that helps illustrate how rapid the private markets moved during the odd period.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
But a peek at aggregate results for the world’s largest VC market provides only part of the picture. We need to narrow our lens and peer more deeply into standout categories to understand how the U.S. venture capital market managed to post its biggest year ever in terms of dollars invested, despite seeing deal volume slip for a second consecutive year.
This morning, we’re scraping data together to better understand.
First, we want to see how unicorns performed in Q4 2020. This column noted in late December that it felt like unicorn creation was rapid in the quarter; how did that hold up?
Then we’ll dig into PitchBook data concerning the fintech sector, a huge recipient of venture capital time, attention and money.
Fintech’s 2020 is a good perspective to view both the year and its wild final quarter. So this morning, as America itself resets, let’s take a moment to understand last year just a little bit better as we get into this new one.
Unicorns
One of the most curious things about the unicorn era is the rising bet it represents. I’ve written about this before so I will be brief: Nearly every quarter, the number of unicorns — private companies worth $1 billion or more — goes up.
The private market is able to create more unicorns than it has been historically able to exit them.
Some of these companies exit, sometimes in group fashion. But, quarter after quarter, the number of unexited unicorns rises. This means that the bet on expected future liquidity from venture capitalists and other private investors keeps ratcheting higher.
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Cannabis marketing startup Fyllo acquires DataOwl
Fyllo has acquired DataOwl, a company offering marketing and loyalty tools for cannabis retailers.
Fyllo said it already works with 320 cannabis retailers across 25 states (plus Puerto Rico and Jamaica). According to Chief Marketing Officer Conrad Lisco, this acquisition allows the company to offer the industry’s “first end-to-end marketing solution,” combining consumer data, digital advertising, regulatory compliance (thanks to Fyllo’s acquisition of CannaRegs last year) and, through DataOwl, CRM and loyalty tied into a business’ point-of-sale system.
As an example, founder and CEO Chad Bronstein (previously the chief revenue officer at digital marketing company Amobee) said that retailers will be able to use the Fyllo platform to send promotional texts to regular customers while, crucially, ensuring those campaigns are fully in compliance with state and local regulations. He added that eventually, the platform could be used beyond cannabis, in other regulated industries.
“Beauty, gambling, etc. — the same things need to happen in every regulated industry, they would all benefit from loyalty and compliance automation,” Bronstein said.
In addition, he argued that mainstream brands are increasingly interested in using data around cannabis and CBD consumers, as borne out in a Forrester study commissioned by Fyllo.
Lisco said this acquisition comes at a crucial time for the cannabis industry, with dispensaries classified as essential businesses in many states, as well as continuing momentum behind marijuana legalization.
“In 2020, cannabis came of age,” he said. “We would say it went from illicit to essential in 10 months … 2021 is really about watching endemic [marijuana] brands try to scale, so that they can capitalize on the explosive growth. They’ve historically been excluded from the kinds of integrated marketing capabilities that other non-endemic [mainstream] brands get to use when they go to market.”
Bronstein said Fyllo aims to bring those capabilities to marijuana brands, first by bringing its compliance capabilities into the DataOwl product. The company also aims to create a national cannabis loyalty platform, allowing a marijuana retailer in one state to easily expand its marketing capabilities into other states in a compliant fashion.
The financial terms of the acquisition were not disclosed. DataOwl co-founders Dan Hirsch and Vartan Arabyan are joining Fyllo, as is the rest of their team, bringing the company’s total headcount to 110.
“By integrating with Fyllo, DataOwl’s solutions will reach the widest possible audience via the industry’s most innovative marketing platform,” Hirsch said in a statement.
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HiPeople picks up $3M seed to automate reference checks
HiPeople, an HR tech startup based in Berlin that wants to automate the reference checking process, has raised $3 million in seed funding.
Leading the round is Mattias Ljungman’s Moonfire, with participation from Capnamic Ventures and Cherry Ventures. It follows a $1.1 million pre-seed in late 2019. Notably, the seed round was closed fully remote, without any in-person meetings. “Just like the hiring processes of HiPeople’s clients,” founders Jakob Gillmann and Sebastian Schüller told me in an email.
HiPeople says the investment will be used to support growth so that more recruiters can hire remotely using automated reference checks. Longer term, the company is developing a candidate analytics platform to provide rich data and insights on each candidate and enable what it frames as “data-driven” hiring.
“Abstractly-speaking HiPeople is in the talent insights business,” say Gillmann and Schüller. “Its mission is to enable better hiring by automatically collecting and analyzing talent data, and providing rich insights. HiPeople currently solves this by automating candidate reference checks from request, to collection, and analysis. This allows companies to extend the information they have on a candidate without additional manual work”.
The idea behind the software-as-a-service is that HiPeople’s approach creates a seamless user experience for the recruiter, and “verified, in-depth reference checks they can trust”. As a result, the startup claims that its users on average collect 2x the amount of references on a candidate, in 50% of the time. “Traditionally, reference checks are underutilized due to the highly manual process, and often only exclusively used for executive hiring. HiPeople dusts off reference checks, and enables rich talent insights by rethinking how they are done,” says HiPeople’s founders.
HiPeople’s customers span fast-growing startups to tech scale-ups and more established upper mid-market companies. For example, process mining company Celonis, which doubled its workforce in the last 12 months to 1,200 employees globally, uses HiPeople to improve hiring quality for roles in San Francisco, Munich and Tokyo. “By programmatically conducting reference checks the company hires talent based on verified insights on topics like areas of improvement, skills, teamwork style, or work values,” explains HiPeople.
Adds Moonfire’s Mattias Ljungman: “Workflow automation of repetitive processes, and insights on the candidate that go beyond the limitations of the CV, are a clear pain for anybody in recruiting. The Covid-influenced reality of remote work, hence remote hiring practices, has increased the complexity of finding the right talent. HiPeople created a way to enable anybody who is hiring to make better decisions, whilst improving processes and increasing hiring velocity”.
Gillmann and Schüller tell me that in Europe, HiPeople mainly competes with the existing infrastructure and processes recruiters use to manually conduct references checks. In the U.S., companies like Xref or Crosschq are more direct competitors in terms of automating reference checks.
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Landbot closes $8M Series A for its ‘no code’ chatbot builder
Barcelona-based Landbot, a “no-code” chatbot builder, has bagged an $8 million Series A led by the Spanish-Israeli VC firm Swanlaab, alongside support from Spain’s innovation-focused public agency, CDTI. Previous investors Nauta Capital, Encomenda and Bankinter also participated in the round.
We last chatted to Landbot back in 2018 when it raised a $2.2 million seed and had 900+ customers. It’s grown that to ~2,200 paying customers, with some 50,000 individuals now using its tool (across both free and paid accounts).
Since its seed it’s also increased recurrent revenues 10x — and is expecting growth to keep stepping up, fuelled by the new financing.
It says the coronavirus pandemic has supercharged demand for conversational landing pages as all sorts of businesses look for ways to automate higher volumes of digitally inbound customer comms, without needing to make major investments in in-house IT.
Landbot’s customers range from SMEs to specific teams and products within larger organisations, with the startup name-checking the likes of Nestlé, MediaMarkt, Coca-Cola, Cepsa, PcComponentes and Prudential among its customer roster.
“We are seeing strong traction from industries like eCommerce, Financial Services and Marketing Agencies,” CEO & co-founder Jiaqi Pan tells TechCrunch. “The ecommerce segment is one we have seen the most growth in since COVID-19, where we increased 2x the number of customers from ecommerce industry.”
The new funding will be used to double Landbot’s team during 2021 (currently it employs 40 people) — with hiring planned across sales, marketing and engineering.
The startup, which launched its “no code” flavor of chatbot builder back in 2017, previously relocated HQ from Valencia to Barcelona to help with recruitment.
Since Landbot’s launch, the burgeoning “no code/low code” movement has become a fully fledged trend driven by demand for productivity — and lead-boosting digital services outstripping most businesses’ supply of expert in-house techies able to build stuff.
Hence the rise of service-builder tools that make customizable tech capabilities accessible to non-technical staff.
The pandemic has merely poured more fuel on this fire — and low-friction tools like Landbot are clearly reaping the rewards.
Interestingly, as well as competing with other conversational chatbot builders, like San Francisco-based ManyChat, Landbot says it’s seeing traction from customers who are seeking to replace web forms with more engaging chat interfaces.
Its drag-and-drop chatbot builder tool supports information workers to design what Landbot bills as “an immersive web page experience filled with gifs and visual elements to capture the attention of the end-user” — so you can understand the appeal for SMEs to be able to replace their boring old static forms with an experience any smartphone user is familiar with from using messaging apps like WhatsApp.
“In terms of the main competitor in the no-code space, we have some overlap with ManyChat as the most direct competitor for Chatbot. On the other hand, as we have a lot of customers using us to replace their forms we are competing also against form builders like Typeform,” says Pan, the latter another Barcelona-based startup which similarly bills itself as a platform for “conversational” and “interactive” data collection.
Landbot notes it recently acquired India-based Morph.AI, a chat-based marketing automation tool, which it’s using to help convert social, website and ad traffic into leads — also with the aim of further expanding into presence in the Asian market.
To date, 90% of its customers are international, with 60% coming from the U.S., U.K. and Germany.
Commenting on the Series A in a statement, Juan Revuelta, general partner of Swanlaab, said: “The beauty of Landbot is in the drag and drop solution of the product. The simplicity is critical to making this product accessible to everyone across many different types of business. If you’re a small company you don’t have the luxury of time or money to solve issues in customer service or run lavish marketing campaigns.
“Landbot helps all businesses to have truly frictionless conversations with customers and exchange the data they need to make smarter decisions and scale. The team has had a remarkable 2020, and we’re excited to support them in helping more businesses this year.”
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Podchaser raises $4M to build a comprehensive podcast database
Podchaser, a startup building what it calls “IMDB for podcasts,” recently announced that it has raised $4 million in a funding round led by Greycroft.
In other words, it’s a site where — similar to the Amazon-owned Internet Movie Database — users can look up who’s appeared in which podcasts, rate and review those podcasts and add them to lists. In fact, CEO Bradley Davis told me that the startup’s “vibrant, exciting community of podcast nerds” have already created 8.5 million podcast credits in the database.
Davis said this is something he simply wanted to exist and was, in fact, convinced that it had to exist already. When he realized that it didn’t, he posted on Reddit asking whether anyone was willing to build the company with him — which is how he connected with his eventual co-founder and CTO Ben Slinger in Australia. (Podchaser is a fully distributed company, with Davis currently based in Oklahoma City.)
To be clear, Davis doesn’t think podcast nerds are the only ones taking advantage of the listings. Instead, he suggested that it’s useful for anyone looking to learn more about podcasts and discover new ones, with Podchaser’s monthly active users quintupling over the past year.
For example, he said that one of the most popular pages is politician Pete Buttigieg’s profile, where visitors don’t just learn about Buttigieg’s own podcast but see others on which he’s appeared. (You can also use Podchaser to learn more about TechCrunch’s Equity, Mixtape and Original Content podcasts, though those profiles could stand to be filled out a bit more.)
There has been endless discussion about how to fix podcast discovery, and while Davis isn’t claiming that Podchaser will solve it wholesale, he thinks it can be part of the solution — not just through its own database, but through the broader Podcast Taxonomy project that it’s organizing.
“I think if we are successful at standardizing a lot of the terminology, and if we do an analysis of all podcasts, of how popular they are, that [will help many listeners] to cull and find the good stuff,” he said.
Podchaser plans to add new features that will further encourage user contributions, like a gamification system and a discussion system.
While the consumer site is free, the startup recently launched a paid product called Podchaser Pro, which provides reach and demographic data across 1.8 million podcasts. It also monetizes by providing podcast players with access to its credits through an API.
Davis said the startup was “lucky” that it decided to build a database that’s “agnostic” from any specific podcast player.
“So we had a lot of latitude to work with those platforms, we integrate with many of those platforms and you’re going to see a lot of our credits showing up [in podcast players],” he said.
In addition to Greycroft, Advancit Capital, LightShed Ventures, Powerhouse Capital, High Alpha, Hyde Park Venture Partners and Poplar Ventures also participated in the round, as did TrendKite founder A.J. Bruno, Ad Results Media CEO Marshall Williams and Shamrock Capital Partner Mike LaSalle.
“Even in the face of a pandemic, the podcast market continues to grow at a breakneck pace,” said Greycroft co-founder and chairman Alan Patricof in a statement. “The demand from consumers and brands is insatiable. Podchaser’s data and discovery tools are crucial to taking podcasting to new heights.”
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A first look at Qualtrics’ IPO pricing
Earlier today, Qualtrics dropped a new S-1 filing, this time detailing its proposed IPO pricing. That means we can now get a good look at how much the company may be worth when it goes public later this month.
The debut has been one TechCrunch has been looking forward to since the company announced that it would be spun out from its erstwhile corporate parent, SAP. In 2019, the Germany-based enterprise giant SAP snatched up Qualtrics for $8 billion just before it was to go public.
Qualtrics is either worth less than we would have guessed, or its first IPO range feels light.
That figure provides a good marker for how well SAP has done with the deal and how much value Qualtrics has generated in the intervening years. Keep in mind, however, that the value of software companies has risen greatly in the last few years, so the numbers we’ll see below benefit from a market-wide repricing of recurring revenue.
Qualtrics estimates that it may be worth $22 to $26 per share when it goes public. Is that a lot? Let’s find out.
Qualtrics’ first IPO range
First, scale. Qualtrics is selling just under 50 million shares in its public offering. As you can math out, at more than $20 per share, the company is looking to raise north of $1 billion.
After going public, Qualtrics anticipates having 510,170,610 shares outstanding, inclusive of its 7.4 million underwriter option. Using that simple share count, Qualtrics would be worth $11.2 billion to $13.3 billion.
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Citrix is acquiring Wrike from Vista for $2.25B
Citrix announced today that it plans to acquire Wrike, a SaaS project management platform, from Vista Equity Partners for $2.25 billion. Vista bought the company just two years ago.
Citrix, which is best known for its digital workspaces, sees this as a good match, especially at a time when employees have been forced to work from home because of the pandemic. Combining the two companies produces a powerful approach, one that didn’t escape Citrix CEO and president David Henshall.
“Together, Citrix and Wrike will deliver the solutions needed to power a cloud-delivered digital workspace experience that enables teams to securely access the resources and tools they need to collaborate and get work done in the most efficient and effective way possible across any channel, device or location,” Henshall said in a statement.
Andrew Filev, founder and CEO at Wrike, who has managed the company through these multiple changes and remains at the helm, believes his company has landed in a good spot with the Citrix purchase.
“First, as part of the Citrix family we will be able to scale our product and accelerate our roadmap to deliver capabilities that will help our customers get more from their Wrike investment. We have always listened to our customers and have built our product based on their feedback — now we will be able to do more of that, faster,” Filev wrote in a company blog post announcing the deal, stating a typical argument from CEOs of acquired companies.
The startup reports $140 million ARR, growing at 30% annually, so that comes out to approximately 16x its present-day revenue, which is the price companies are generally paying for acquisitions these days. However, as Wrike expects to reach $180 million to $190 million in ARR this year, the company’s sale price could look like a bargain in a few years’ time if the projections come to pass.
The price was not revealed in the 2018 sale, but it surely feels like a big win for Vista. Consider that Wrike has previously raised just $26 million.
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