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Shape Security hits $1B valuation with $51M Series F
Anti-fraud startup Shape Security has tipped over the $1 billion valuation mark following its latest Series F round of $51 million.
The Mountain View, Calif.-based company announced the fundraise Thursday, bringing the total amount of outside investment to $183 million since the company debuted in 2011.
C5 Capital led the round, along with several other new and returning investors, including Kleiner Perkins, HPE Growth and Norwest Ventures Partners.
Shape Security protects companies against automated and imitation attacks, which often employ bots to break into networks using stolen or reused credentials. Shape uses artificial intelligence to discern bots from ordinary users by comparing known information such as a user’s location, and collected data, like mouse movements, to shut down attempted automated logins in real time.
The company said it now protects against two billion fraudulent logins daily.
C5 managing partner André Pienaar said he believes Shape will become the “definitive” anti-fraud platform for the world’s largest companies.
“While we expect a strong financial return, we also believe that we can bring Shape’s platform into many of the leading companies in Europe who look to us for strategic ideas that benefit the entire value-chain where B2C applications are used,” Pienaar told TechCrunch.
Shape’s chief executive Derek Smith said the $51 million injection will go toward the company’s international expansion and product development — particularly the capabilities of its AI system.
He added that Shape was preparing for an IPO.
Correction: A draft of the company’s funding news said Shape had raised $173 million to date. The company said this was a typo and has in fact raised $183 million.
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Sidewalk Labs spins out urban data-gathering tool Replica into a company
Replica, the data-gathering tool created within Sidewalk Labs that maps the movement of people in cities, is now a company.
The newly formed company, which is headed by Nick Bowden, also announced Thursday it has raised $11 million in a Series A funding round from investors Innovation Endeavors, Firebrand Ventures and Revolution’s Rise of the Rest Seed Fund. The capital will be used to accelerate Replica’s growth through new hires beyond its existing 13-person staff, expansion to new cities and investment in its technology.
Replica will remain connected to Sidewalk Labs, the smart city technology firm owned by Google’s parent company Alphabet. Both Sidewalk Labs and Innovation Endeavors will be on the company’s board.
Replica, which is headquartered in Kansas City, with an engineering office in San Francisco, plans to launch in several new regions. Replica is already working with Kansas City, Portland, Chicago and Sacramento, with more cities to come this year.
The Replica tool, which has drawn the ire of some privacy advocates, grew out of Model Lab, a project started two years ago to investigate modeling as a way to address urban problems. Early work focused on meeting with public agencies throughout the world to learn more about the data, processes and other tools they used.
The Replica planning tool was born out what they discovered: Public agencies don’t have all the information needed to understand the link and interdependence between transportation and land use. The upshot is an incomplete picture of how people move within cities, leaving public agencies ill-equipped to make decisions about how land is used and what transportation is needed and where, the company says.
“Answering questions like who uses the street, in which way and why, are critical for city planners as they work to make transit and land use more efficient and sustainable,” Bowden wrote. “But current resources available to city planners to analyze people’s travel in urban areas are less than satisfactory.”
The Replica modeling tool uses de-identified mobile location data to give public agencies a comprehensive portrait of how, when and why people travel. Movement models are matched to a synthetic population, which has been created using samples of census demographic data to create a broad new data set that is statistically representative of the actual population. The result, Bowden says, is a model that is both privacy-sensitive and extremely useful for public agencies.
Bowden tried to quell privacy worries Thursday in a blog post, emphasizing that the data has been “de-identified,” meaning that an individual’s location data would be identifiable. The company says it’s not interested in the movement of individuals. Instead, the modeling tool is used to see and understand patterns of movement.
“For this reason, we only start with data that has been de-identified,” Bowden wrote Thursday. “This data is then used to train a travel behavior model — basically, a set of rules to represent the movement in a particular place.”
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SmileDirectClub makes its debut on the public market
SmileDirectClub rang the opening bell earlier today, marking its first day of trading as a public company. The teeth-straightening company is now trading on the Nasdaq under the symbol “SDC.”
Already, the stock is trading down 11% at $20.36 per share.
SmileDirectClub kicked off its IPO hoping to raise up to $1.3 billion at an offering price of $23 per share, with an expected market cap of around $10 billion. The company originally intended to set its price between $19 and $22 per share.
“We are focused on long term shareholder value – the next 12, 24, 36 months and beyond,” SmileDirectClub CFO Kyle Wailes said in a statement to TechCrunch. “Today’s IPO allows us to reinvest in innovation in product, process, international growth and customer experience. We are just getting started but our commitment to our mission, our 5,500+ team members, our customers and now our shareholders is stronger than ever.”
The company plans to use money raised from the IPO for international expansion and developing new dental products. SmileDirectClub filed to go public back in August amid concerns from national dental associations.
Prior to this, SmileDirectClub reached a $3.2 billion valuation following a $380 million funding round last October. Investors from Clayton, Dubilier & Rice led the round, which featured participation from Kleiner Perkins and Spark Capital. This funding came on top of Invisalign maker Align Technology’s $46.7 million investment in SmileDirectClub in 2016, and another $12.8 million investment in 2017 to own a total of 19% of the company.
In 2018, SmileDirectClub’s revenues came in at $432.2 million, a significant uptick from just $147 million the year prior.
The company ships invisible aligners directly to customers, and licensed dental professionals (either orthodontists or general dentists) remotely monitor the progress of the patient. Before shipping the aligners, patients either take their dental impressions at home and send them to SmileDirectClub or visit one of the company’s “SmileShops” to be scanned in person.
SmileDirectClub says it costs 60% less than other types of teeth-straightening treatments, with the length of treatments ranging from four to 14 months. Upfront, SmileDirectClub costs $1,895, with the average treatment lasting six months.
Though, members of the American Association of Orthodontists have taken issue with SmileDirectClub, previously asserting that SmileDirectClub violates the law because its methods of allowing people to skip in-person visits and X-rays is “illegal and creates medical risks.” The organization has also filed complaints against SmileDirectClub in 36 states, alleging violations of statutes and regulations governing the practice of dentistry. Those complaints were filed with the regulatory boards that oversee dentistry practices and with the attorneys general of each state.
SmileDirectClub explicitly calls out those issues in its S-1 as potential risk factors. Here’s a key nugget:
A number of dental and orthodontic professionals believe that clear aligners are appropriate for only a limited percentage of their patients. National and state dental associations have issued statements discouraging use of orthodontics using a teledentistry platform. Increased market acceptance of our remote clear aligner treatment may depend, in part, upon the recommendations of dental and orthodontic professionals and associations, as well as other factors including effectiveness, safety, ease of use, reliability, aesthetics, and price compared to competing products.
Furthermore, our ability to conduct business in each state is dependent, in part, upon that particular state’s treatment of remote healthcare and that state dental board’s regulation of the practice of dentistry, each which are subject to changing political, regulatory, and other influences. There is a risk that state authorities may find that our contractual relationships with our doctors violate laws and regulations prohibiting the corporate practice of dentistry, which generally bar the practice of dentistry by entities. Two state dental boards have established new rules or interpreted existing rules in a manner that purports to limit or restrict our ability to conduct our business as currently conducted.
Additionally, as the S-1 notes, a national dental association recently filed a petition with the U.S. Food and Drug Administration claiming that SmileDirectClub’s manufacturing violates “prescription only” requirements. While no regulations or laws have been passed that would affect SmileDirectClub to date, it’s a possible scenario that would greatly impact the company’s core business.
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Patch Homes locks in $5M Series A to give homeowners financial freedom without debt
Home ownership has long been touted as the American dream. But rising rates of mortgage debt and student loan debt are making the pursuit of home ownership a nightmare. Debt-burdened individuals or those with inconsistent or tight cash flow can not only struggle to get credit loan approval when buying a home but also struggle to satisfy monthly mortgage payments even after purchase.
Patch Homes is hoping to keep the proverbial American dream alive. Patch looks to provide homeowners with cash flow and liquidity by allowing them to monetize their homes without taking on debt, interest or burdensome monthly payments.
Today, Patch took another big step in making its vision a far-reaching reality. The company has announced it has raised a $5 million Series A round led by Union Square Ventures (USV), with participation by from Tribe Capital and previous investors Techstars Ventures, Breega Capital and Greg Schroy.
Patch Home looks to partner with homeowners by investing up to $250,000 (with an average investment of ~$100,000) for an equity stake in the home’s value, generally in the 5% to 20% range. Homeowners aren’t subject to any interest or recurring payments and have 10 years to pay back Patch’s investment. Upon doing so, the only incremental money Patch receives is its portion of the change in the home’s value over the course of the 10-year period. If the value of the home goes down in value, Patch willingly takes a loss on its investment.
According to Patch Homes CEO and co-founder Sahil Gupta, one of the major motivations behind the company’s model is to align Patch’s incentives with the homeowners’, allowing both parties to think of each other as trusted partners even after financing. After Patch’s investment, the company provides a number of ancillary services to homeowners, such as credit score monitoring, as well as home value and property tax tracking.
In one instance recounted by Gupta in an interview with TechCrunch, Patch even covered three months of an owner’s mortgage during a liquidity crunch for his small business, allowing him to maintain his home and credit score. Patch is incentivized to provide all services that can help ensure an increase in home value, benefiting both Patch and the homeowner, with the homeowner earning the majority of the asset’s appreciated value.
Additionally, since Patch’s model isn’t focused on a homeowner’s ability to pay back a loan, interest or periodic payments, Patch is able to provide financing to more people. Patch is able to help those with more variable qualifications that struggle to get traditional loans — such as a 1099 contracted worker — monetize their illiquid assets with less harsh or restrictive terms and without increasing their debt burden. Gupta described this as solving the core problem of providing liquidity to asset-rich but cash-flow sensitive people.
Patch is not only looking to provide easier liquidity to more homeowners, but they’re trying to do so faster than traditional lenders. Interested customers can first receive a free estimate of whether Patch will invest in their home or not, how much it’s willing to invest and what percentage equity it will take — primarily based on Patch’s machine learning models that focus on asset, market and location-level attributes.
After the initial estimate, a Patch home advisor will educate the customer on the product and start a formal application process, which includes your standard income and credit score verification, which takes 5-10 days. All-in, homeowners have the ability to get money in as little as 14 days, a significantly shorter timeline than your standard home credit process. Once the investment is made, owners have full freedom with how they use the money.
According to Patch, while its customers come from a diverse set of backgrounds, many either with accumulated debt have to pay down the net or may struggle making monthly payments. The average Patch homeowner uses 40% of the investment to eliminate debt, adds 40% to their savings account or passive income and invests 20% into home improvements.
To date, Patch has raised a total of $6 million and believes the latest round of funding will help scale its operations as they team up with advisors like USV that have experience scaling fintech companies (such as a Lending Club or Carta). The funds will be used to invest in product and Patch’s clearing technology in order to further expedite Patch’s lending process.
Patch also hopes to use the investment to help them gradually expand their footprint, with the goal of eventually having a presence all 50 states. (Patch is currently available in 11 regional markets within California and Washington and expects to be in 18 regional markets by the end of the year including those in Utah, Colorado and Oregon.)
Image via Patch Homes
What makes home ownership so galvanizing for the Patch team? Patch CEO Sahil Gupta spent years putting his Carnegie Mellon financial engineering degree to work in banking and finance, as well as in financial products and strategy positions at fintech startups backed by heavy hitters such as YC and Goldman Sachs.
After realizing the majority of the U.S. population are homeowners, but were struggling to make monthly payments or save for the future, Sahil wanted to figure out to take an illiquid asset like a home and make it easily accessible.
Around the same time, Sahil’s co-founder Sundeep Ambati was working as a contractor on a new business venture of his and was struggling to get a home equity loan. While these circumstances ultimately led Sahil and Sundeep to found Patch Homes in 2016 out of the Techstars New York accelerator program, the deeper motivation behind Patch can be traced back nearly 30 years when Sahil’s father made an equity-sharing agreement with his brother as they were building his family’s home in India.
With a growing family and a pregnant wife, Sunil’s father was adamant about living debt-free, so his brother provided an investment in exchange for an equity stake in the house. According to Sahil, the home is still in the family and has appreciated substantially in value to the benefit of both Sahil’s father and his brother. Longer-term, Patch wants to be the preferred partner for home ownership, helping reduce cash-tight owners’ financial anxiety without the debilitating weight of debt.
“Some companies want to help people buy or sell homes, but home ownership really begins after that point. Patch is built to be inside the home with you and everything that comes thereafter,” Gupta told TechCrunch.
“Patch was created to partner with homeowners to help them unlock their home equity so they can achieve their financial goals along every step of their home ownership journey.
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Y Combinator’s Michael Seibel, Ali Rowghani to reveal new YC top 100 list, talk startups at Disrupt SF
Y Combinator has become its own economy since its founding in 2005, as the formative seed-stage venture fund has nurtured leading startups across industries. Today, you’ll often see newer YC startups get started by providing services to larger YC companies — and then become the larger companies themselves (Stripe and Gusto are two of the most widely known examples, to date).
With its second Demo Day of the year wrapped up last month, the firm has also launched its largest group of startups ever in 2019.
CEO Michael Seibel will be joining us onstage at Disrupt SF this year, along with Ali Rowghani, the CEO of its Continuity growth fund, to give us a closer look at what’s going on. They’ll be announcing the second-annual list of the top 100 YC companies as part of this, and tell me that while most people can predict Dropbox and Airbnb showing up, many of the other names are going to be surprising.
We’ll be asking them about what it takes to get in to YC in the first place these days, and what it takes to build a company that can make a list like this. Seibel and Rowghani will also be available for an extra-long question-and-answer portion of the talk with attendees as a part of our Extra Crunch-themed stage at the conference.
While the full details of the list will be unveiled on October 2nd, they note that the ranking will be based on valuation, like last year’s: “Why valuation? We have long said that valuation is a poor way to measure a company’s value in the short term. That said, it’s the most commonly available metric to compare companies in the startup world. Other metrics, like revenue, are more often kept private. It’s worth noting that we have a number of very impressive companies who would have made the top 100 list if it were sorted by revenue, token value, rev/employee ratio, or other methods of measuring value. This list does not represent these successes.” They add that it will show the number of jobs each company has created, and the industry sector that it is a part of.
To date, YC says it has backed more than 4,000 founders, who have created more than 2,000 companies that together are worth more than $100 billion. Among the top 100 companies who made the list last year, it says 93 were valued at more than $100 million and had between them created more than 28,000 jobs.
Don’t miss our recent coverage of Demo Day (including our favorites from both days), as well as our discussions with Seibel about the investment theses and trends that it is betting on.
Disrupt SF runs October 2 to October 4 at the Moscone Center in San Francisco. Tickets are available here.
*Disclosure: I went through YC myself (w07) but have no financial relationship with it today, cap table or otherwise.
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RYOT co-founder Bryn Mooser launches a new documentary studio called XTR
Bryn Mooser, co-founder of virtual and augmented reality studio RYOT, said he’s “hanging up my VR and AR hats to really focus on more, shall we say, traditional nonfiction storytelling.”
Back in 2016, Mooser sold RYOT to The Huffington Post and AOL (TechCrunch’s parent company, now known as Verizon Media), and he left RYOT at the end of last year. Today he’s announcing XTR, a production company focused on documentary films and nonfiction series.
The company’s name comes from the 16 millimeter camera that Mooser said was part of a “first wave” of tools making documentary filmmaking more accessible. With XTR, Mooser said he wants to continue that process.
“Technology is front-and-center of this revolution that’s happening,” he told me. “What’s happening in documentary films right now is a direct result of cameras getting cheaper,” making it easier for anyone to create a “beautiful, professional film.”
At the same time, he noted that documentary distribution was previously limited to art-house cinemas, HBO and “one row at your local Blockbuster.” Now, social media and streaming services like Netflix and Hulu have opened up new distribution channels that are bringing documentaries to broader audiences.
XTR studio
XTR will be based out of LA’s Echo Park neighborhood, in a warehouse that will serve as office, post-production facility and event space. And rather than operating like a traditional production company, Mooser said he wants XTR to take “more of a tech startup approach.”
He explained, “We have a vision to really scale it out: How do we work with a lot of new directors? How do we work with all the platforms? How do we think about audiences globally?”
That approach also involves outside capital. XTR said it has already raised an undisclosed amount of funding from former AOL CEO Tim Armstrong, Airbnb co-founder Joe Gebbia, Franklin McLarty, Christina and David Arquette, Josh Kushner, Lyn and Norman Lear, Bryan Baum, Mark McLarty and Zem and James Joaquin.
While Mooser is officially unveiling the company today, he said it’s already developing eight documentaries (which will be announced later this year) with partners like Vice Studios, Futurism and Anonymous Content.
“There’s a real opportunity to have a new company in there, looking out for those new filmmakers, and [trying] to shift the power balance a little bit,” he said. “The way we do that is, we look for great talent and we empower them to do what they want to do … at every step of the way.”
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Veo raises $6M Series A to bring its ‘AI camera’ for soccer matches to the US
Veo, a Copenhagen, Denmark-based startup that offers an “AI camera” to make it easier for amateur soccer clubs to video and stream matches, has raised $6 million in Series A funding.
Backing the round is U.S.-based CourtsideVC, France’s Ventech Capital and Danish firm VC Seed Capital. Veo says the new capital will be used to launch in the U.S.
Founded in 2015 by Henrik Teisbæk, Jesper Taxbøl and Keld Reinicke, Veo has set out to “democratise” the filming of soccer matches and training by negating the need for multiple camera operators and/or a vision mixer.
It does this by employing a 4K lens camera that records the entire pitch (it’s designed to be mounted on a 23-foot tripod for optimal view), coupled with its AI video technology that processes the resulting video. This sees Veo follow the action via virtual panning and zooming to create a TV-like viewing experience.
As we’ve noted before, that does mean a portion of the image will often be cropped out, resulting in a loss of resolution overall. However, the idea is that by starting with 4K, the video quality is more than sufficient for playback on smaller screens, such as smartphones and tablets.
“Our immediate goal is to establish a foothold for Veo on the U.S. market, and a lot of the investment will go towards achieving that,” Veo CEO Henrik Teisbæk tells TechCrunch with regards to the new funding round. “In the long term, we want to use our U.S. market presence as a stepping stone towards becoming a central player on the global football market, and to hopefully break into other sports.”
Teisbæk says the U.S. was chosen because it is one of the “biggest and most exciting” soccer markets, and North American soccer players, coaches, clubs and associations are very data-driven and open to new technology. “That represents a huge potential for us,” he adds.
Meanwhile, Veo says that in the last year it has seen 25,000 games recorded by 1,000 clubs in 50 countries. The company now employs 35 people in its Copenhagen HQ, where it develops the Veo software and hardware.
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Accel and Sequoia seed Middesk with $4M to background check businesses
For those of you that diligently follow the hot startups to graduate from Y Combinator’s accelerator program, you might recall Middesk.
The company was amongst an exclusive subset of startups in YC’s winter 2019 batch to walk into demo day term sheet in hand. Top VCs, like Accel and Sequoia Capital, couldn’t wait until the team’s public pitch was complete to seed the company.
Middesk performs background checks, but not of people; rather, the startup helps companies identify business and regulatory risk in their customer base. Today, it’s announcing its first round of capital, a $4 million financing led by Accel’s Rich Wong, with participation from Sequoia. Founded by two early employees of another YC graduate, Checkr, which automates the pre-employment background check process for companies, Middesk chief executive officer Kyle Mack and chief technology officer Kurt Ruppel wanted to apply their learnings to a business identity product.
“What we’ve built from the ground up is a product to help companies understand who their customers are and what those customers do for their business,” Mack explains.
Selling a product in a traditional and heavily regulated industry, Mack says having top-tier, established venture funds Accel and Sequoia on board has made a big difference for the company. This is particularly interesting, given the round comes at a time in which competition for early-stage deals is greater than ever. More and more billion-dollar funds are moving downstream to purchase stakes in promising companies as early as possible, beating out seed funds by providing better terms and brand recognition.
Accel was also an early investor in Checkr, which most recently raised a $100 million Series C at a $900 million valuation, and was familiar with the Middesk team prior to the company’s formation: “One of the nice things about this job is if you have a chance to do it right, you can build relationships with people and work with them across multiple companies,” Accel’s Wong tells TechCrunch.
San Francisco-based Middesk is working with customers, including Checkr and Plaid, a well-financed leader in fintech, as well as smaller entrants to the B2B market, like the even more recent YC-grad Vouch, which sells business insurance to startups. Mack says they are particularly focused on payments, lending, payroll, expenses and credit businesses, or those with regulatory risk requirements.
“Effectively anyone that’s touching money that’s a B2B business has regulatory requirements to do what we do,” Mack said. “There is a whole new wave of companies applying consumer-style experiences to business products, but the risks they deal with, they aren’t designed to manage those risks at scale.”
With the infusion of capital, Middesk has grown its team from two to seven, creating engineering and operations teams in the process. In the long term, Mack cites Plaid and its proven ability to rapidly become the go-to tool for connecting applications to consumer bank accounts, as inspiration.
“We talk about this idea of becoming a single source for all the external signals you might want to have about a business,” he said. “Plaid has built a single place to get a host of transaction data of people and businesses. We think about Middesk as a single place to find high-quality and trusted information for a single business.”
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Beamery announces platform to help HR recruit and retain talent
Almost every company has a talent problem. It’s hard to find good employees and, once you do, to keep them happy. Today, Beamery announced a fully integrated platform to help solve that problem.
Company co-founder and CEO Abakar Saidov says that while drawing and retaining talent can provide organizations with a key strategic advantage, there has been a dearth of digital tools to help. “What we found was that there is no fundamental kind of operating system or system of record to be able to run that part of the business,” he said.
While there are point solutions for different parts of the process, Beamery recognized an opportunity to deliver a more complete platform. “We essentially built what we’re calling a talent operating system, which encompasses the core primary business objectives of what a company is trying to do with talent,” Saidov explained.
That involves a suite of tools with the three key components around attracting, engaging and retaining talent, which Saidov says lines up in a way like a sales and marketing process. The problem as he sees it, is that the tools available for sales and marketing lack a set of features companies need when it comes to talent.
Each of the three components of the Beamery solution have been designed with helping companies move through the talent workflow process. Attracting involves setting up micro sites for recruiting on the company website that are linked to Beamery, along with an event planning tool for setting up something like a campus recruitment day.
The Engage component involves a talent CRM database and marketing tools, while the Retain piece is about helping employees apply for internal jobs and survey tools to get feedback throughout the process.
The solution also involves linking to other enterprise systems, so there is a middleware piece that enables companies to connect to other tools. Saidov said that prior to today’s announcement, the company offered the CRM and middleware pieces, but it recognized all along that it needed a more complete solution. It just took some time and money to develop it.
If you’re wondering how this could work with LinkedIn, he says that it co-exists with it. Just as salespeople might find prospects in LinkedIn, then manage the customer relationship in a CRM tool, recruiters can find candidates in LinkedIn and manage the recruitment process in Beamery. (One of the company’s investors includes Microsoft Ventures. Microsoft bought LinkedIn in 2016 for $26.2 billion.)
The company has raised $40 million so far, according to Saidov, and today it has 160 employees based in London, with offices in San Francisco and Austen.
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Simbe raises a $26M Series A for its retail inventory robot
San Francisco-based robotics startup Simbe just announced a $26 million Series A. The round was led by Venrock and features Future Shape, Valo Ventures and Activant Capital. The company is one of several looking to automate the process of providing retail inventory.
Simbe says the funding will go toward growing its headcount, exploring new markets and accelerating the deployment of its existing robots. The news also finds Nest’s Tony Fadell, Venrock’s David Pakman and Pathbreaker Venture’s Ryan Gembala joining the startup’s board.
“Our investors, both previous and new, provide much more than financial support. They are advocates and trusted advisors who bring invaluable institutional knowledge to all facets of our business,” co-founder and CEO Brad Bogolea said in a release. “Both our equity financing partners and the SoftBank Robotics team are deeply aligned with Simbe’s vision to revitalize physical retail through data. We are at a pivotal time of growth and value their support as we continue to transform retail at a global scale.”
Simbe has been showcasing its inventory robot Tally since 2015. Soon after, Lemnos made an investment in the company. Earlier this year, U.S. supermarket chain Giant Eagle announced plans to begin a pilot program deploying Tally in select stores. That announcement came a week or so after Walmart announced its own plan to pilot robots from Pittsburgh-based competitor, Bossa Nova.
Other retailers using Simbe robots include Schnuck Markets, Decathlon Sporting Goods and Groupe Casino. Along with the Series A, SoftBank Robotics is also providing an inventory financing agreement to help scale manufacturing for the company.
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