Startups
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Icebreaker claims to be Finland’s most active pre-seed VC. The firm, which also invests in Estonia and Sweden, has backed 38 companies in the last three years out of its first fund, with a 65% success rate so far for companies that have been able to raise follow-on funding.
Two weeks ago, Icebreaker announced the launch of Fund II, with an initial close of €50 million. That’s more than twice the size of its first fund, which topped out at €20 million.
Its remit remains largely the same, however. The company typically invests between €150k and €800k in teams that have “deep domain expertise” and are building globally competitive tech companies according to Icebreaker co-founder and partner Riku Seppälä.
Noteworthy, this goes right to the top of the funnel and includes backing and helping to connect “pre-founders,” defined as individuals with over 5 years of work experience in their domain who are aiming to start or join a tech company. As part of this effort, Icebreaker operates an online and offline community to act as a catalyst for new companies to be founded.
Meanwhile, I’m told that Fund II was signed just as the coronavirus crisis began to take hold and includes the majority of LPs from Fund I in addition to new investors. Lead LPs are Tesi, KRR III, Varma Mutual Pension Insurance Company and Elo Mutual Pension Insurance Company, together with 41 other entities consisting of institutional investors, family offices and founders.
To find out more about Fund II and what’s it’s like to launch a new pre-seed fund at a time of such uncertainty, and to understand how Icebreaker thinks about startup life during and after lockdown, I put questions to Icebreaker co-founder and Partner Riku Seppälä.
TechCrunch: What does it feel like to close a new fund right at the start of a pandemic?
Riku Seppälä: Of course, we have been distracted by the mounting health crisis and how the world economy will recover, so the feelings are mixed.
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Ransomware is getting sneakier and smarter.
The latest example comes from ExecuPharm, a little-known but major outsourced pharmaceutical company that confirmed it was hit by a new type of ransomware last month. The incursion not only encrypted the company’s network and files, hackers also exfiltrated vast amounts of data from the network. The company was handed a two-for-one threat: pay the ransom and get your files back or don’t pay and the hackers will post the files to the internet.
This new tactic is shifting how organizations think of ransomware attacks: it’s no longer just a data-recovery mission; it’s also now a data breach. Now companies are torn between taking the FBI’s advice of not paying the ransom or the fear their intellectual property (or other sensitive internal files) are published online.
Because millions are now working from home, the surface area for attackers to get in is far greater than it was, making the threat of ransomware higher than ever before.
That’s just one of the stories from the week. Here’s what else you need to know.
Education giant Chegg confirmed its third data breach in as many years. The latest break-in affected past and present staff after a hacker made off with 700 names and Social Security numbers. It’s a drop in the ocean when compared to the 40 million records stolen in 2018 and an undisclosed number of passwords taken in a breach at Thinkful, which Chegg had just acquired in 2019.
Those 700 names account for about half of its 1,400 full-time employees, per a filing with the Securities and Exchange Commission. But Chegg’s refusal to disclose further details about the breach — beyond a state-mandated notice to the California attorney general’s office — makes it tough to know exactly went wrong this time.
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Oxwash, a UK-based laundry startup that’s aiming to disrupt traditional but environmentally costly washing and dry-cleaning processes by using ozone to sterilize fabrics at lower temperatures, along with electric cargo bikes for hyper local pick ups and deliveries, has bagged a £1.4 million (~$1.7M) seed.
Backers in the funding round include TrueSight Ventures, Biz Stone (co-founder of Twitter), Paul Forster (founder of Indeed.com), Founders Factory and other unnamed angel investors.
Prior to this, Oxwash was working with a £300k pre-seed round — which it used to fund building its first washing hubs (which it calls “Lagoons”) and to test its reengineered washing process.
The startup’s pitch is that its applying “space age” technology to clean dirty laundry, burnished by the claim that its co-founder and CEO, Kyle Grant, is a former NASA engineer — having spent two years as a systems engineer where he researched the use and effect of microorganisms for extended space travel.
That said, it’s packing its reengineered cleaning system into standard (but “massively” modified) industrial washing machines. Just add coronavirus-safe ‘space suits’ (er, PPE)….

“Washing still has crazy carbon emissions, pollution and collection/delivery services cause large amounts of congestion. We saw a way to re-engineer the laundry process from the ground up and to be the first truly sustainable, space-age laundry company in the world,” says Grant, discussing the opportunity he and his co-founder spied to rethink laundry.
“We’re developing processes to have zero net carbon emissions for the whole laundry process — from collection to washing and back to delivery.”
The team is developing “chemistry that works at 20˚C better than at 40˚C or higher, integrating ozone disinfection to remove microorganisms by oxidation rather than using heat and developing water recycling and filtration systems to reduce water consumption and remove microfibre pollution at the same time”, per Grant.
It’s also structuring business operations to locate washing hubs in city centres, where its customers are based, so it can make use of electric bikes for moving the laundry around — allowing for a next day service with 30 minute collection and delivery windows.
“Traditional washing processes use huge amounts of water, energy to heat said water, harsh chemicals and normal petrol/diesel vans for the collections and deliveries. These process warehouses are usually located outside of cities and there are large lags in when items are returned to the customers (up to two weeks),” he further claims.
While ozone itself is a pollutant that degrades air quality, and can even be dangerous if released, Grant says the ozone used in its cleaning machines — which is produced from oxygen in the atmosphere — degrades back to oxygen “within minutes and is therefore inert and safe”.
“After extensive analysis ozone is far safer to use in commercial laundry processes than heat and harsh chemicals such as peroxides (bleach),” he suggests.
On safety, he also says their washing machines are modified to be sealed whilst “washing and disinfecting”, and can only be opened after the ozone has degraded. “Our lagoons are also fitted with ozone sensors that will cut off our generators if the ozone concentration in the air ever goes over the safe limit,” he adds. “Thankfully this has never occurred. The risks to our staff are far lower than when working with boiling water tanks, harsh chemicals and manual handling, the usual work flow in commercial laundries.”
Oxwash launched in the UK in early 2018 and now has more than 4,000 individual customers, per Grant, along with “several hundred” business customers — including the Marriott Hotel Chain, NHS GP practices, London Marathon and Universities of Oxford and Cambridge.
It’s executed a slight pivot of focus over the past two months — spying an opportunity to target risks related to the coronavirus. “We’ve developed a service in the last 2 months that is available to provide coronavirus disinfection,” he says in a statement. “We are working closely with [the UK’s National Health Service] NHS and vulnerable groups to provide support when needed.”
“We have adopted laboratory-grade PPE [personal protective equipment] processes, heavily inspired and adapted from my time working at NASA but also from guidelines from the NHS and HSE England,” Grant adds. “For example, we now perform contactless collections and deliveries whereby the customers pre-bag their items in supplied dissolvable bags. Our rider then has gloves, goggles and a respirator to perform the transfer back to the lagoon where a member of our team in full hazmat gear will load and unload the machines where disinfection is performed.”
Before the COVID-19 pandemic, he says the startup was getting traction from customers wanting to remove allergens that caused them allergic reactions.
“We were confident of moving into the healthcare market in the years to come but usually the tender process for such contracts is not conducive to a startup,” says Grant. “However since the advent of COVID-19 and our ongoing healthcare certification, we have seen a huge increase in the value of proper hygiene to both the individuals and businesses we serve. The Marriott Hotel chain and Airbnb have both expressed serious intent to work on a non-healthcare hygiene rating much like that of the Food Standards Authority. We are working with CINET (the international textile committee) to bring this to market with our technology and processes.”
The seed funding will be used to expand to more cities within the UK and Europe — with London and other European hubs, such as Paris and Amsterdam, in its sights. Its initial two locations are Oxford and Cambridge.
It’s also going to spin up on the hiring front, planning to add a head of growth and head of tech, as well as new operational roles in London.
Ploughing more resource into software dev is another focus, with funding going to expand the tech stack and the software systems which run its logistics and integrate with its digitised washing process. More work on its app is also planned.
Asked what makes Oxwash a scalable business, Grant points to the development of this proprietary software alongside the reengineered washing service. “This iteration of technology and service allows us to develop our washing technology rapidly and get real-time feedback on the end-product and service from our customers,” he says. “The scalable technology element is the proprietary washing process driven by our bespoke software stack and process algorithms.”
On the labor side, Grant says Oxwash is “working towards a B Corp accreditation”.
“[We] have long held that our team should be properly reimbursed for their work but also as ambassadors for our brand out on our bikes. To that end all of our riders (couriers) are fully employed and like the rest of the team they are paid in excess of the national living wage,” he adds.
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New vehicles today can produce a treasure trove of data. Without the proper tools, that data will sit undisturbed, rendering it worthless.
A number of companies have sprung up to help automakers manage and use data generated from connected cars. Israeli startup Otonomo is one such player that jumped on the scene in 2015 with a cloud-based software platform that captures and anonymizes vehicle data so it can then be used to create apps to provide services such as electric vehicle management, subscription-based fueling, parking, mapping, usage-based insurance and emergency service.
The startup announced this week it has raised $46 million to take its automotive data platform further. The capital was raised in a Series C funding round that included investments from SK Holdings, Avis Budget Group and Alliance Ventures. Existing investors Bessemer Venture Partners also participated. Otonomo has raised $82 million, to date.
The funds will be used to help Otonomo scale its business, improve its products and help it remain competitive, according to the company. Otonomo is also aiming to expand into new markets, particularly South Korea and Japan.
“We now have the expanded resources needed to deliver on our vision of making car data as valuable as possible for the entire transportation ecosystem, while adhering to the strictest privacy and security standards,” Otonomo CEO and founder Ben Volkow said in a statement.
Otonomo’s pitch focuses on creating opportunities to monetize connected car data while keeping it safe from the moment it is captured. Once the data is securely collected, the platform modifies it so companies can use it to develop apps and services for fleets, smart cities and individual customers. The platform also enables GDPR, CCPA and other privacy regulation-compliant solutions using both personal and aggregate data.
Today, Otonomo’s platform takes in 2.6 billion data points a day from more than 20 million vehicles through partnerships with more than automakers, fleets and farm and construction manufacturers. Otonomo has more than 25 partnerships, a list that includes Daimler, BMW, Mitsubishi Motor Company and Avis Budget Group. The company said it’s preparing to bring on seven more customers.
That opportunity for Otonomo is growing based on forecasts, including one from SBD Automotive that predicts connected cars will account for more than 70% of cars sold in North American and European markets in 2020.
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When we launched in 2016, we took the unusual approach of saying we’d buy common stock in startups. We believed then, and still do, that alignment with founders was more important than covering our downside in investments that didn’t work as planned. Said differently, we wanted to enhance our upside through alignment, rather than maximizing our downside through terms.
The world has changed a lot since that time. While we are actively making investments, and still buying common stock, we know that many entrepreneurs may be trying to raise money now — and it is very hard.
Fred Destin wrote a great piece about the ugly terms that can creep into term sheets during difficult times. If you have a choice between a good term sheet and a bad one, of course, you’ll take the good one. But what if you have no choice? And how can you compare term sheets in the first place?
To this end, we developed the term-sheet grader, a simple way to compare different term sheets or help characterize whether a term sheet is good or evil.
Let me first point out that none of this has anything to do with the valuation of the round (share price), the amount of capital, the likelihood of reaching a closing, the quality of the firm or the trust you have with the individual leading the investment, all absolutely critical pieces of the puzzle. Here, we are just looking at the terms and conditions, the legal structure of the investment.
We’ve listed nine key terms below — five that have to do with economics and four that relate to control and decision-making:
FWIW, the Pillar common stock standard deal earns a +8 (shown below).
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Byju’s, an education learning startup in India that has seen a surge in its popularity in recent weeks amid the coronavirus outbreak, is in talks to raise as much as $400 million in fresh capital at a $10 billion valuation, said three people familiar with the matter.
The additional capital would be part of the Bangalore-based startup’s ongoing financing round that has already seen Tiger Global and General Atlantic invest between $300 million to $350 million into the nine-year-old startup.
That investment by the two firms, though, was at an $8 billion valuation, said people familiar with the matter. Byju’s was valued at $5.75 billion in July last year, when it raised $150 million from Qatar Investment Authority and Owl Ventures.
If the deal goes through at this new term, Byju’s would become the second most valuable startup in India, joining budget lodging startup Oyo, which is also valued at $10 billion, and following financial services firm Paytm that raised $1 billion at $16 billion valuation late last year.
The talks haven’t finalized yet and terms could change, said one of the aforementioned people. This person, along with the other two, requested anonymity as the matter is private.
Spokespeople of Byju’s and Prosus Ventures, the largest investor in the startup, declined to comment. A spokesperson for Tiger Global did not respond to a request for comment.
Byju’s has seen a sharp surge in both its free users and paying customers in recent weeks as it looks to court students who are stuck at home because of the nationwide lockdown New Delhi ordered in late March.
The startup told TechCrunch last month that traffic on its app and website was up 150% in March and it added six million students to the platform during the month.
Other edtech startups, including Unacademy, which was recently backed by Facebook, and early-stage startups such as Sequoia Capital India-backed Classplus, and Chennai-based SKILL-LYNC, have also seen growth in recent weeks, they told TechCrunch last month.
Through its app, tutors on Byju’s help all school-going children understand complex subjects using real-life objects such as pizza and cake. The app also prepares students who are pursuing undergraduate and graduate-level courses.
Over the years, Byju’s has invested in tweaking the English accents in its app and adapted to different education systems. It had amassed more than 35 million registered users, about 2.4 million of which are paid customers as of late last year.
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The COVID-19 crisis is creating an untold amount of uncertainty through every business sector, but for cannabis startups, it’s exacerbating a critical market that was already in decline.
TechCrunch spoke to Schwazze CEO Justin Dye following his company’s recent rebrand. He joined the company when it was Colorado’s Medicine Man Technologies (MMT) in late 2019 and is revamping the organization, including changing its name to Schwazze and acquiring a handful of companies to create a healthier, vertically integrated cannabis company.
The cannabis market is experiencing a correction after a period of rapid expansion. Shops are feeling the pain, and public valuations are settling under IPO levels — and this was before a pandemic swept the world. Cannabis media outlet Leafly laid off 91 employees in late March, and Eaze, an early mover in on-demand pot delivery, is experiencing major trouble after raising serious cash and recently losing a top partner in Caliva. In several states, efforts are underway to prop up the cannabis market by asking for the federal government to allow these businesses to be eligible for federal financial relief.
According to Dye, there are several things CEOs of cannabis companies of every size should work toward. His advice echoes what TechCrunch has heard in other verticals, as well: During the COVID-19 crisis, cannabis companies must hunker down and lean on strong teams to weather the storm. Once the skies start to clear, capital will be available to the survivors.
One, the cannabis market is looking for financially sustainable companies, Dye said.
“This next reset in the cannabis industry will not only be aspirational, but it’s going to be coupled with a requirement for performance in terms of executing against a plan and driving profits — or driving it to create free cash flow to be reinvested in the business and product experiences.”
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Customs is the sieve of international supply chains. And yet despite its critical role, clearing customs for freight brokers can be a slow and opaque process reliant on manual data entry and prone to errors.
Silicon Valley-based KlearNow has developed a platform that aims to bring customs clearance into the digital age. Now, with $16 million new funding, KlearNow aims to expand its geographic reach and improve its product to cover increasingly complex export-import verticals and time-sensitive shipments.
The company has certification to handle any import into the U.S., no matter what the commodity is. KlearNow is close to getting certified in Canada and the U.K., and plans to expand to Netherlands, Belgium, Spain and Germany. KlearNow has about two dozen customers.
The Series A funding round was led by GreatPoint Ventures, with additional participation from Autotech Ventures, Argean Capital and Monta Vista Capital . Ashok Krishnamurthi, managing partner at GreatPoint Ventures, will join KlearNow’s board. Daniel Hoffer from Autotech Ventures is joining as a board observer.
“This is a significant opportunity to transform an archaic industry that is key to global commerce,” Krishnamurthi said in a statement.
The freight ecosystem is filled with different players from the factories and port authorities to the ship liners and the last-mile delivery companies. Each of them have their own systems.
“There’s no one system that you can transmit the data to,” KlearNow founder and CEO Sam Tyagi said in a recent interview. “So everybody dumps technology down to a PDF or a PNG or some sort of format that everybody can read. The broker gets those documents, and then they print it out — so now they become non-digital.”
If you go to any customs brokers office they look like the old doctor’s office where all those folders are there with nicely arranged, really organized but very manual process,” he added. From here, Tyagi said, a broker will read off from those printed documents and type the information into another system that is communicated to Customs and Border Patrol’s system.
“It is very manual, it’s very small, and they work in a siloed system,” Tyagi said. “There is no visibility for the customer, or the importer, and it’s very costly because of the manual intervention.”
KlearNow developed a digital customs clearance platform that aims to be agnostic. This allows importers, customs brokers and freight forwarders to integrate with local customs authorities and conduct business on a single digital platform remotely and in real time. The platform automates this process to eliminate errors and reduces the time to clear customs. KlearNow says it can slash customs clearance times from hours to minutes.
The startup is also betting that its platform will find new customers in this remote work era that was caused by the COVID-19 pandemic. Custom brokers, who might normally travel into central offices and manage physical paperwork, are now faced with completing that task from home.
“Remote work is impossible for these people,” because they often need to access large-format printers, Tyagi said.
The company said its digital platform can funnel new clients, like these newly remote workers, directly to brokers for global customs clearance.
Tyagi said the company has also added new capabilities in response to COVID-19, such as expediting their FDA module to clear much-needed medical supplies, and is temporarily offering free clearance for nonprofit organizations that are importing masks, hand sanitizers and ventilators.
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Gaming platforms have earned serious clout with investors in recent years. Add in the VC excitement surrounding collaboration tools and it’s no surprised there’s interest in backing another gaming chat app.
Guilded is creating a chat platform designed for competitive gaming and esports that focuses heavily on keeping gamers organized and connected with their teams.
The startup’s sell is that Discord (currently valued at $2 billion) has moved too broadly in recent years and that their feature set isn’t actually focused on what competitive gamers are looking for, forcing them to turn to spreadsheets and form submissions when they’re looking to get serious about organization.
“Discord is really great for a lot of communities, but we’re building chat specifically for gamers,” Guilded CEO Eli Brown told TechCrunch.
Guilded just announced that they’ve raised $7 million in Series A funding led by Matrix Partners. Initialized Capital, Susa Ventures and Sterling.VC also participated in the deal. Guilded was in Y Combinator’s S17 class.
Guilded is a bit more tightly organized than Discord, with the focus more dialed in on teams and server-based structures. The deep integration of scheduling and calendars is perhaps the biggest differentiation of the platform.
In addition to text chat, users can create inline events, upload documents and post screen captures as well. You can fire up the app while you’re actually playing a game and use voice chat to communicate with your server. Guilded currently supports more than 400 titles.
As with any new communications tool, Guilded’s challenge will be chipping away at competing products, namely Discord, and achieving a critical mass of users and servers that can self-sustain moving forward.
Looking ahead, the platform is looking to get deeper into facilitating gameplay. Users can already browse through public servers to immediately join or apply to be accepted to a private server and these servers can be further broken down into individual groups or channels. Guilded is building out a tournaments feature to match servers with similar skill levels to each other, a feature that’s launching in the coming months.
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Back in January, Georgia Tech professor David Joyner got a cryptic email from a student based in Wuhan, China.
“I’m under quarantine, but my internet access is okay so I have more time to spend on classwork, I wanted to let you know,” the message read. Unsure why Wuhan would be under quarantine, Joyner did a quick Google search and saw the beginnings of the coronavirus pandemic.
“I thought, there’s something going on in Wuhan so maybe we’ll have some students affected by it,” Joyner said. Fast-forward two months and the coronavirus is a household term. All of Joyner’s students, regardless of geography, have been impacted by the pandemic.
It has been a little over a month since colleges and schools across the country started shutting down due to COVID-19. Edtech startups had a surge in usage and a demand for more resources than ever. Now that the adoption scramble has slowed, the same startups are reckoning with unprecedented use cases.
Everyone knows how they’re expected to behave in a physical classroom, but can you stop a student from cheating when taking a test in their bedroom at home? How should teachers offer 1:1 time and take questions during a lesson?
Piazza founder Pooja Sankar says teachers face more open questions: “What does it mean to record myself? What does it mean to have a camera on my face? How do I know I can hold a class with reliable internet connection?”
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