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Loliware’s kelp-based plastic alternatives snag $6M seed round from eco-conscious investors
The last few years have seen many cities ban plastic bags, plastic straws and other common forms of waste, giving environmentally conscious alternatives a huge boost — among them Loliware, purveyor of fine disposable goods created from kelp. Huge demand and smart sourcing has attracted a big first funding round.
I covered Loliware early on when it was one of the first companies to be invested in by the Ocean Solutions Accelerator, a program started in 2017 by the nonprofit Sustainable Ocean Alliance. Founder Chelsea “Sea” Briganti told me about the new funding on the SOA’s strange yet quite successful “Accelerator at Sea” program late last year.
The company makes straws primarily, with other products planned, out of kelp matter. Kelp, if you’re not familiar, is a common type of aquatic algae (also called seaweed) that can grow quite large and is known for its robustness. It also grows in vast, vast quantities in many coastal locations, creating “kelp forests” that sustain entire ecosystems. Intelligent stewardship of these fast-growing kelp stocks could make them a significantly better source than corn or paper, which are currently used to create most biodegradable straws.
A proprietary process turns the kelp into straws that feel plastic-like but degrade simply (and not in your hot drink — it can stand considerably more exposure than corn and paper-based straws). Naturally the taste, desirable in some circumstances but not when drinking a seltzer, is also removed.
It took a lot of R&D and fine-tuning, Briganti told me:
“None of this has ever been done before. We led all development from material technology to new-to-world engineering of machinery and manufacturing practices. This way we ensure all aspects of the product’s development are truly scalable.”
They’ve gone through more than a thousand prototypes and are continuing to iterate as advances make possible things like higher flexibility or different shapes.
“Ultimately our material is a massive departure from the paradigms with which other companies are approaching the development of biodegradable materials,” she said. “They start with a problematic, last-forever, fossil fuel-derived paradigm and try to make it not so bad — this is step-change development and too slow and frumpy to truly make an impact.”
Of course it doesn’t matter how good your process is if no one is buying it, a fact that plagues many ethics-first operations, but in fact demand has grown so fast that Loliware’s biggest challenge has been scaling to meet it. The company has gone from a few million to a hundred million in recent years to a projected billion straws shipping in 2020.
“It takes us about 12 months to get to full automation [from the lab],” she said. “Once we get to full automation, we license the tech to a strategic plastic or paper manufacturer. Meaning, we do not manufacture billions of straws, or anything, in-house.”
It makes sense, of course, just as contracting out your PCB or plastic mold or what have you. Briganti wanted to have global impact, and that requires taking advantage of global infrastructure that’s already there.
Lastly, the consideration of a sustainable ecosystem was always important to Briganti, as the whole company is founded on the idea of reducing waste and using fundamentally ethical processes.
“Our products utilize a super-sustainable supply of seaweed, a supply that is overseen and regulated by local governments,” Briganti said. “In 2020, Loliware will launch the first-ever Algae Sustainability Council (ASC), which allows us to be at the helm of the design of these new global seaweed supply chain systems as well as establishing the oversight, ensuring sustainable practices and equitability. We are also pioneering what we have coined the ‘Zero Waste Circular Extraction Methodology,’ which will be a new paradigm in seaweed processing, utilizing every component of the biomass as it suggests.”
The $5.9 million “super seed” round has many investors, including several who were on board the ship in Alaska for the Accelerator at Sea this past October (as SOA Seabird Ventures). The CEO of Blue Bottle Coffee has invested, as have New York Ventures, Magic Hour, For Good VC, Hatzimemos/Libby, Geekdom Fund, HUmanCo VC, CityRock and Closed Loop Partners.
The money will be used for scaling and further R&D; Loliware plans to launch several new straw types (like a bent straw for juice boxes), a cup and a new utensil. 2020 may be the year you start seeing the company’s straws in your favorite coffee shop rather than a few early adopters here and there. You can keep track of where they can be found here at the company’s website.
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Epsagon scores $16M Series A to monitor modern development environments
Epsagon, an Israeli startup that wants to help monitor modern development environments like serverless and containers, announced a $16 million Series A today.
U.S. Venture Partners (USVP), a new investor, led the round. Previous investors Lightspeed Venture Partners and StageOne Ventures also participated. Today’s investment brings the total raised to $20 million, according to the company.
CEO and co-founder Nitzan Shapira says that the company has been expanding its product offerings in the last year to cover not just its serverless roots, but also provide deeper insights into a number of forms of modern development.
“So we spoke around May when we launched our platform for microservices in the cloud products, and that includes containers, serverless and really any kind of workload to build microservices apps. Since then we have had a few significant announcements,” Shapira told TechCrunch.
For starters, the company announced support for tracing and metrics for Kubernetes workloads, including native Kubernetes, along with managed Kubernetes services like AWS EKS and Google GKE. “A few months ago, we announced our Kubernetes integration. So, if you’re running any Kubernetes workload, you can integrate with Epsagon in one click, and from there you get all the metrics out of the box, then you can set up a tracing in a matter of minutes. So that opens up a very big number of use cases for us,” he said.
The company also announced support for AWS AppSync, a no-code programming tool on the Amazon cloud platform. “We are the only provider today to introduce tracing for AppSync and that’s [an area] where people really struggle with the monitoring and troubleshooting of it,” he said.
The company hopes to use the money from today’s investment to expand the product offering further with support for Microsoft Azure and Google Cloud Platform in the coming year. He also wants to expand the automation of some tasks that have to be manually configured today.
“Our intention is to make the product as automated as possible, so the user will get an amazing experience in a matter of minutes, including advanced monitoring, identifying different problems and troubleshooting,” he said
Shapira says the company has around 25 employees today, and plans to double headcount in the next year.
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Cyral announces $11M Series A to help protect data in cloud
Cyral, an early-stage startup that helps protect data stored in cloud repositories, announced an $11 million Series A today. The company also revealed a previous undisclosed $4.1 million angel investment, making the total $15.1 million.
The Series A was led by Redpoint Ventures. A.Capital Ventures, Costanoa VC, Firebolt, SV Angel and Trifecta Capital also participated in on the round.
Cyral co-founder and CEO Manav Mital says the company’s product acts as a security layer on top of cloud data repositories — whether databases, data lakes, data warehouse or other data repository — helping identify issues like faulty configurations or anomalous activity.
Mital says that unlike most security data products of this ilk, Cyral doesn’t use an agent or watch points to try to detect signals that indicate something is happening to the data. Instead, he says that Cyral is a security layer attached directly to the data.
“The core innovation of Cyral is to put a layer of visibility attached right to the data endpoint, right to the interface where application services and users talk to the data endpoint, and in real time see the communication,” Mital explained.
As an example, he says that Cyral could detect that someone has suddenly started scanning rows of credit card data, or that someone was trying to connect to a database on an unencrypted connection. In each of these cases, Cyral would detect the problem, and depending on the configuration, send an alert to the customer’s security team to deal with the problem, or automatically shut down access to the database before informing the security team.
It’s still early days for Cyral, with 15 employees and a handful of early access customers. Mital says for this round he’s working on building a product to market that’s well-designed and easy to use.
He says that people get the problem he’s trying to solve. “We could walk into any company and they are all worried about this problem. So for us getting people interested has not been an issue. We just want to make sure we build an amazing product,” he said.
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Apple buys edge-based AI startup Xnor.ai for a reported $200M
Xnor.ai, spun off in 2017 from the nonprofit Allen Institute for AI (AI2), has been acquired by Apple for about $200 million. A source close to the company corroborated a report this morning from GeekWire to that effect.
Apple confirmed the reports with its standard statement for this sort of quiet acquisition: “Apple buys smaller technology companies from time to time and we generally do not discuss our purpose or plans.” (I’ve asked for clarification just in case.)
Xnor.ai began as a process for making machine learning algorithms highly efficient — so efficient that they could run on even the lowest tier of hardware out there, things like embedded electronics in security cameras that use only a modicum of power. Yet using Xnor’s algorithms they could accomplish tasks like object recognition, which in other circumstances might require a powerful processor or connection to the cloud.
CEO Ali Farhadi and his founding team put the company together at AI2 and spun it out just before the organization formally launched its incubator program. It raised $2.7M in early 2017 and $12M in 2018, both rounds led by Seattle’s Madrona Venture Group, and has steadily grown its local operations and areas of business.
The $200M acquisition price is only approximate, the source indicated, but even if the final number were less by half that would be a big return for Madrona and other investors.
The company will likely move to Apple’s Seattle offices; GeekWire, visiting the Xnor.ai offices (in inclement weather, no less), reported that a move was clearly underway. AI2 confirmed that Farhadi is no longer working there, but he will retain his faculty position at the University of Washington.
An acquisition by Apple makes perfect sense when one thinks of how that company has been directing its efforts towards edge computing. With a chip dedicated to executing machine learning workflows in a variety of situations, Apple clearly intends for its devices to operate independent of the cloud for such tasks as facial recognition, natural language processing, and augmented reality. It’s as much for performance as privacy purposes.
Its camera software especially makes extensive use of machine learning algorithms for both capturing and processing images, a compute-heavy task that could potentially be made much lighter with the inclusion of Xnor’s economizing techniques. The future of photography is code, after all — so the more of it you can execute, and the less time and power it takes to do so, the better.
It could also indicate new forays in the smart home, toward which with HomePod Apple has made some tentative steps. But Xnor’s technology is highly adaptable and as such rather difficult to predict as far as what it enables for such a vast company as Apple.
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Mobile payment app Lydia raises $45 million round led by Tencent
French startup Lydia is raising a $45 million Series B round (€40 million). Tencent is leading the round with existing investors CNP Assurances, XAnge and New Alpha also participating.
If you live in France, chances are you already know Lydia quite well. The company has become a ubiquitous mobile payment app, especially for people under 30 years old. Think about it as a sort of Square Cash or Venmo, but for France.
“At first, we wanted to raise less but we ended up raising more,” Lydia co-founder and CEO Cyril Chiche told me in a phone interview.
The company has managed to attract 3 million users in France. More impressive, 25% of French people between 18 and 30 years old have a Lydia account — and 5,000 people sign up every day. Lydia currently has 90 employees.
More recently, the company has expanded beyond peer-to-peer payment. First, the company wants to help you manage your money in many different ways with an important value — everything should happen in real time.
You can create multiple Lydia accounts to put some money aside or use money in that sub-account for a specific purpose. That feature alone turns the app into a versatile money management app.
For instance, you can associate a Lydia payment card with a Lydia account and a virtual card with another Lydia account — that virtual card works with Apple Pay, Google Pay, Samsung Pay and more. You can change those settings in real time.
You can share accounts with other Lydia users. And shared accounts are truly shared — everyone can top up and withdraw money from that account. You can spend directly from that account or withdraw money to another account.
You can also turn any Lydia account into a money pot account. In just a few taps, you can generate a link and share it with your friends so that they can add money using their regular payment card or a Lydia account.
More recently, the company has introduced “the market”, a marketplace of other financial products. From the Lydia app, you can borrow up to €1,000 in just a few seconds. You can also insure your phone and other mobile devices. You can get some free credit when you open a bank account, insure your home with Luko, switch to another electricity and gas provider, compare mobile phone and internet providers and more.
And that strategy is going to be key in the future. “We have an ambitious goal, which is turning Lydia into a mobile financial service app,” Chiche said.
He also pointed out that the company that has been the most successful when it comes to creating a mobile marketplace of financial products is Tencent with WeChat.
“Tencent is also the number one player in the video game industry, and there’s no industry with as much user engagement,” Chiche said. Tencent acquired Supercell, bought 40% of Epic Games, acquired Riot Games (League of Legends), invested in Ubisoft, Activision Blizzard, Discord, etc. Lydia hopes that it can learn from Tencent on the user engagement front.
Compared to many fintech startups, Lydia doesn’t want to replace banks altogether — the company says it wants to build a meta-banking app. Peer-to-peer payments represent the top of the funnel and a great user acquisition strategy thanks to networking effects.
You can then connect your Lydia account with your bank account and your debit card. This way, you can send money back and forth between your Lydia accounts and your bank account. As a user, that strategy slowly pays off over time. After a while, you end up spending money directly from your Lydia account and relying more heavily on Lydia’s native payment features, with your bank account acting as a money back end.
At the bottom of the funnel, Lydia hopes that it can turn active Lydia users into paid customers with a handful of in-house and third-party financial products. In other words, Lydia doesn’t want to become a credit institution like a traditional bank, it wants to become a financial hub. Expanding the marketplace will be a big focus for the company going forward.
While Lydia is available in other European countries, Lydia is still massively used in its home market with other markets lagging behind. With today’s funding round, growth in foreign countries is going to be the second key topic.
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Customer data platform ActionIQ raises $32M
ActionIQ co-founder and CEO Tasso Argyros knows there are plenty of companies promising to help businesses use their customer data to deliver personalized experiences — as he put it, “The space has gotten very, very hot over the last couple of years.”
But in the face of growing competition, ActionIQ (founded in 2014 and headquartered in New York) has attracted some impressive customers, like The New York Times, Conde Nast, American Eagle Outfitters, Vera Bradley and Pandora Media, as well as high-profile investors like Sequoia Capital and Andreessen Horowitz.
Today, it’s announcing that it has raised $32 million in Series C funding.
“At this point, we believe we are four to five years ahead of the market,” Argyros told me. “[Customer data platforms are] very hot, you see people really jumping into it, but nobody really has a product.”
He attributed the rise of these platforms to the growth in customer acquisition costs: “Everybody’s switched their focus from ‘How do we acquire more customers?’ to ‘How do you grow lifetime value?’ ”
The key, Argyros said, is “delivering personalized experiences at scale.” So if you’re a business trying to understand which customers need to be convinced to stick around, which customers are ready to upgrade to a paid subscription and so on, you need a platform like ActionIQ: “What’s common about all these questions is that they’re all data questions.”
He described ActionIQ’s approach as “product-first,” creating self-serve tools for enterprises rather than relying on consulting or IT services, and he said the product is designed to “drive intelligent actions activated through any channel.”
Argyros contrasted this approach with the large marketing clouds, where he said that stitching together products from various acquisitions has led to “a huge data gap between what marketing clouds promise and what they can actually deliver.” And he said other customer data platforms are limited to bringing the data together — but “just putting customer data in one place, that doesn’t mean business can use the customer data to drive value.”
March Capital Partners led the round, with participation from Cisco Ventures, as well as previous investors Sequoia, Andreessen and FirstMark Capital. Meredith Finn, a partner at March, is joining ActionIQ’s board of directors.
“From my professional experience at Salesforce and Twitter, when it comes to building a relationship with your customers, data is everything,” Finn said in a statement. “ActionIQ took a data-first approach from day one in contrast to many vendors that are now scrambling to address their data gaps by duct-taping data infrastructure to their existing point solutions. … The potential of such a platform is limitless, and spans well beyond traditional marketing channels to other areas of customer interactions including web and mobile app experiences, customer support and sales.”
ActionIQ has now raised a total of $75 million in funding. And while the Series C isn’t significantly larger that the $30 million that ActionIQ raised in 2017, Argyros said the company didn’t need to raise a huge round this time around, because it’s already built out the core product.
“A lot of dollars were invested heavily in the product way before the demand was there,” he said. “The Series B was pretty significant because there was so much upfront product investment. … Most of these funds are going towards expanding the business in sales and marketing.”
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The crypto rich find security in Anchorage
Not the city, the $57 million-funded cryptocurrency custodian startup. When someone wants to keep safe tens or hundreds of millions of dollars in Bitcoin, Ethereum or other coins, they put them in Anchorage’s vault. And now they can trade straight from custody so they never have to worry about getting robbed mid-transaction.
With backing from Visa, Andreessen Horowitz and Blockchain Capital, Anchorage has emerged as the darling of the cryptocurrency security startup scene. Today it’s flexing its muscle and war chest by announcing its first acquisition, crypto risk modeling company Merkle Data.
Anchorage Founders
Anchorage has already integrated Merkle’s technology and team to power today’s launch of its new trading feature. It eliminates the need for big crypto owners to manually move assets in and out of custody to buy or sell, or to set up their own in-house trading. Instead of grabbing some undisclosed spread between the spot price and the price Anchorage quotes its clients, it charges a transparent per transaction fee of a tenth of a percent.
It’s stressful enough trading around digital fortunes. Anchorage gives institutions and token moguls peace of mind throughout the process while letting them stake and vote while their riches are in custody. Anchorage CEO Nathan McCauley tells me, “Our clients want to be able to fund a bank account with USD and have it seamlessly converted into crypto, securely held in their custody accounts. Shockingly, that’s not yet the norm — but we’re changing that.”
Buy and sell safely
Founded in 2017 by leaders behind Docker and Square, Anchorage’s core business is its omnimetric security system that takes out of the equation passwords that can be lost or stolen. Instead, it uses humans and AI to review scans of your biometrics, nearby networks and other data for identity confirmation. Then it requires consensus approval for transactions from a set of trusted managers you’ve whitelisted.
With Anchorage Trading, the startup promises efficient order routing, transparent pricing and multi-venue liquidity from OTC desks, exchanges and market makers. “Because trading and custody are directly integrated, we’re able to buy and sell crypto from custody, without having to make risky external transfers or deal with multiple accounts from different providers,” says Bart Stephens, founder and managing partner of Blockchain Capital.
Trading isn’t Anchorage’s primary business, so it doesn’t have to squeeze clients on their transactions, and can instead try to keep them happy for the long-term. That also sets up Anchorage to be a foundational part of the cryptocurrency stack. It wouldn’t disclose the terms of the Merkle Data acquisition, but the Pantera Capital-backed company brings quantitative analysts to Anchorage to keep its trading safe and smart.
“Unlike most traditional financial assets, crypto assets are bearer assets: In order to do anything with them, you need to hold the underlying private keys. This means crypto custodians like Anchorage must play a much larger role than custodians do in traditional finance,” says McCauley. “Services like trading, settlement, posting collateral, lending and all other financial activities surrounding the assets rely on the custodian’s involvement, and in our view are best performed by the custodian directly.”
Anchorage will be competing with Coinbase, which offers integrated custody and institutional brokerage through its agency-only OTC desk. Fidelity Digital Assets combines trading and brokerage, but for Bitcoin only. BitGo offers brokerage from custody through a partnership with Genesis Global Trading. But Anchorage hopes its experience handling huge sums, clear pricing and credentials like membership in Facebook’s Libra Association will win it clients.
McCauley says the biggest threat to Anchorage isn’t competitors, though, but hazy regulation. Anchorage is building a core piece of the blockchain economy’s infrastructure. But for the biggest financial institutions to be comfortable getting involved, lawmakers need to make it clear what’s legal.
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Paper-rich startup employees look for ‘pre-wealth’ help to lock down stock options
For Silicon Valley’s potential startup millionaires, compensation packages staked on future promises of wealth are where the action is, but what happens when these employees get laid off or have to leave before an exit?
When Wouter Witvoet left a startup that he had joined as employee #4, he felt relatively prepared, having set aside $50,000 to exercise his available stock options, only to be informed by HR that he was also liable to pay taxes on said options so he was about $1.8 million short with 90 days to settle up.
“I ended up losing my entire equity stake,” Witvoet tells TechCrunch.
Witvoet later founded Secfi, which is just one of a handful of entities looking to establish itself in the hot “pre-wealth” management space with what it calls forward purchase agreements enabling startup employees to exercise stock options and wait until an IPO or exit to make payments.
Looking to leverage paper wealth is hardly a new trend, but more institutional investors are eyeing the non-traditional opportunity as high-growth startups get harder to access. For some of the hedge funds and private equity funds playing around in this space, these deals represents a back door into the paydays of mature IPO-bound startups at a discount.
There are a number of players with hundreds of millions at play. Section Partners has $120M in committed capital and calls it option exercise financing a “lifeline” for employees facing option expiration. Troy Capital Group’s Quid has partnered with Oaktree Capital Management on a $200 million fund. The Bay Area ESO Fund has been providing this financing to startup employees since its founding in 2012.
Secfi, which has raised $7 million in venture funding from investors including Rucker Park Capital, Social Leverage and the Weekend Fund, had previously been acting as a go-between for multiple firms, but is announcing today that they’ve partnered with New York hedge fund Serengeti Asset Management, locking down a $550 million debt facility.
Taking out run-of-the-mill loans to exercise options with the assumption that a great exit inevitably awaits your startup is an awful call. These forward purchase agreements are backed by the options themselves so the recourse is limited to the options in question. If your startup succeeds, you’ll be paying the company back the principal, plus an interest rate and an equity rate, i.e. a good chunk of your upside. If your startup endures a WeWork-like fiasco, no one is coming after your car.
With more late-stage startups pumping the brakes on spending and eyeing layoffs, there aren’t many great resources for affected employees looking to see what their options are worth. Many end up finding themselves going down Quora rabbit holes, browsing for information that is rarely one-size-fits-all. Educating on an individual basis has its merits, but most of these options financing firms are also trying to get HR departments at companies to do a bit of the marketing for them through partnerships with the startups themselves.
As more money gets directed from these behemoth funds toward “pre-wealth” financial services, you can expect to see more startups like Secfi popping up hoping to offer potential startup millionaires a platform that extends beyond the pathway to options upside.
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Don’t be a selfless startup
One of the enduring truths of big companies is that they aren’t innovative. They are “innovative” in the marketing sense, but fail to ever execute on new ideas, particularly when those ideas cannibalize existing products and revenues.
So it often takes a real competitor to force these incumbent, legacy businesses to evolve in any meaningful way. Usually that change leads to disruption, in the classic way that Clayton Christensen describes in “The Innovator’s Dilemma.” An upstart company creates a new technology or business model that is better for an under-served segment of a market, and as that company improves, it competes directly with the incumbent and eventually wins over its market with a vastly superior product.
Unfortunately, real life isn’t so easy, as WeWork and MoviePass have shown us over the past few years.
In both cases, there were incumbents. In movie theaters, you had AMC and the like, which built a business model around ticket sales (shared with movie studios) and food/beverage concessions that targeted occasional customers at a high price point. Meanwhile, in commercial real estate, you had large landowners and family holders who demanded extremely long rent terms at high prices, often with personal financial guarantees from the CEO of the tenant firm.
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Google acquires AppSheet to bring no-code development to Google Cloud
Google announced today that it is buying AppSheet, an eight-year-old no-code mobile-application-building platform. The company had raised more than $17 million on a $60 million valuation, according to PitchBook data. The companies did not share the purchase price.
With AppSheet, Google gets a simple way for companies to build mobile apps without having to write a line of code. It works by pulling data from a spreadsheet, database or form, and using the field or column names as the basis for building an app.
It is integrated with Google Cloud already integrating with Google Sheets and Google Forms, but also works with other tools, including AWS DynamoDB, Salesforce, Office 365, Box and others. Google says it will continue to support these other platforms, even after the deal closes.
As Amit Zavery wrote in a blog post announcing the acquisition, it’s about giving everyone a chance to build mobile applications, even companies lacking traditional developer resources to build a mobile presence. “This acquisition helps enterprises empower millions of citizen developers to more easily create and extend applications without the need for professional coding skills,” he wrote.
In a story we hear repeatedly from startup founders, Praveen Seshadri, co-founder and CEO at AppSheet, sees an opportunity to expand his platform and market reach under Google in ways he couldn’t as an independent company.
“There is great potential to leverage and integrate more deeply with many of Google’s amazing assets like G Suite and Android to improve the functionality, scale, and performance of AppSheet. Moving forward, we expect to combine AppSheet’s core strengths with Google Cloud’s deep industry expertise in verticals like financial services, retail, and media and entertainment,” he wrote.
Google sees this acquisition as extending its development philosophy with no-code working alongside workflow automation, application integration and API management.
No code tools like AppSheet are not going to replace sophisticated development environments, but they will give companies that might not otherwise have a mobile app the ability to put something decent out there.
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