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Starry launches pilot program with Boston Housing Authority to expand affordable internet access
Internet service provider Starry announced today the launch of its Starry Connect program with a pilot through Boston Housing Authority (BHA) to help provide free access to internet for residents living in one of the city’s public housing apartment complexes.
The Boston-based startup launched in 2016 with a plan to provide internet access through a spoke-and-wheel system of transmitters and access points. This point-to-multipoint system uses a phased array laser on top of a city building to send a 5G signal out that users can connect to via Starry Points that can be installed at a window or personal roof.
“Access to high-speed broadband is critical for education, communication, and personal and professional development, and yet today, many people still lack access to a basic, affordable, and reliable internet connection,” said Chet Kanojia, co-founder and CEO, in a statement. “That’s why we’re excited to partner with the Boston Housing Authority to devise creative solutions to help get more of their residents online and engaged with the critical services they need.”
With the program Starry launched today, residents of the public housing apartment building will be able to access free Wi-Fi in the building’s common area, hallways and new computer lab.
Virginia Lam Abrams, Starry senior vice president of communications and government relations, told TechCrunch that some residents may also be able to access the signal in their rooms, but the primary focus for this installation is to provide common area access for these primarily elderly and disabled residents.
Because Starry Connect’s pilot launch in the BHA building is part of the Boston public housing system, residents will receive free connection, but Starry also has plans to provide low-cost pricing options for residents living in affordable housing, as well.
The program has no set end date, says Abrams, but the company has plans to check in with residents in a few months to see where the program is succeeding and where it can be improved. Following this initial pilot launch, Abrams says that Starry has hopes to expand into other BHA communities, as well as public and affordable housing in other U.S. cities.
Since its launch, the startup has expanded into Los Angeles and Washington, D.C., and following a $100,000 million funding round it closed this July, has plans to scale and expand into more cities in the coming year, including Houston, Chicago, San Francisco and Portland, Ore.
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Lyvly scores $4.6M for its members-based shared living and rental platform
Lyvly, a London-based startup that offers what might best be described as a members-based shared living and rental service, has raised $4.6 million in Series A funding. Leading the round is Mosaic Ventures, while Greg Marsh, who co-founded Onefinestay, has joined the burgeoning company as chairman and investor.
The latest take on how to improve the experience for “generation rent” in sprawling cities like London, Lyvly is at its most basic a two-sided marketplace that helps renters find high-quality shared living accommodations and landlords find good tenants. However, it goes far beyond simply matching supply and demand for house shares.
Not only are properties fully managed — including providing tenant services such as managing household bills, replacing consumables and cleaning — but at the heart of it all is the Lyvly community platform, which treats Lyvly renters as members within a network of “like-minded individuals who share a passion for shared living.” And, as wishy-washy as that sounds, there is no doubt that city living is often devoid of community, and in London especially it can be difficult to meet new people.
“Renting is often not a pleasant experience, and living in cities can be lonely and stressful,” says co-founder and CEO Philip Laney. “Moving into your new apartment, sorting out furniture and utilities, and then trying to connect with busy people around you all whilst working long hours in a transient economy are frustrations many of us have experienced. We are confronting three problems for renters in the city: their desire for community, convenience and affordability.”
Laney says the current way people rent shared accommodations is also painful for landlords, who don’t have consistency and control over the quality of their tenants, and often pay high fees to a middle-person and struggle with vacancy rates. “We provide them guaranteed income with no voids and no fees, and a genuinely positive social impact,” he says.
For renters, Lyvly operates a little like a members club. Once you’ve applied to join the community, you have a call with a member of the Lyvly team to learn more about your “life stage and values.” “We are people, not property first. So we establish what you’re seeking from your Lyvly move and whether you are keen to actively participate in the Lyvly community and share your life, not just spaces,” says Laney.
Next, you are given profiles of the members (and prospective housemates) you will be meeting with, and they are sent your profile and an overview as to why you are well-matched. You then meet each other, and if you like each other, you can apply online to the membership committee, which is made up of the most active Lyvly members and the team. This includes submitting your bio and stating why you want to be part of Lyvly, and what you would bring to the community.
Adds Laney: “Once you’re in, we then guide you through the whole moving process, taking care of everything and removing any usual stresses that come from moving to a new place in London. You are introduced to other members in the area who have similar interests and values and other members reach out to you directly to invite you to other activities they’re hosting. We also regularly host events and actively support members to engage with each other and give value to the community.”
Lyvly’s target tenants are 25-35-year-olds who are looking for single occupancy. Laney says that’s because they are at similar life stages to each other and this is where the startup can make a meaningful difference. “We really care about being something to someone, rather than everything to no one. In time however, we will be able to expand Lyvly into different community groups,” he says.
Landlords using the platform range from individuals who are first-time owners to some of London’s biggest property companies.
Asked who Lyvly competes with, he cites the grey and black economy of shared housing and “dodgy landlords.” Technically the company is also competing with estate agents, although it is open to working with them to help find better tenants for their landlords.
Meanwhile, don’t confuse the startup for co-living, build-to-rent developers who “put property first” and aim to profit from the development of assets. In contrast, Lyvly makes money from the managed services it provides and is not developing new property but renting out existing housing stock.
“We believe people like living in existing houses and apartments and what we need to do is create a community around that. It’s not the configuration of the spaces that need changing, but how people interact inside and outside of them,” says Laney, adding that the use of existing housing infrastructure also means that Lyvly is potentially a lot more scalable.
Along with Laney, the startup’s other co-founders are Dario Favoino and Siraj Khaliq. Both Laney and Favoino have a 10-year background in real estate investment and property management at Deutsche Bank and Realstar. And in case you aren’t keeping up, Khaliq is a partner at London VC firm Atomico and was previously CTO and co-founder of Silicon Valley startup Climate Corporation, which exited in 2013 for more than $1.1 billion.
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Blissfully grabs $3.5 million seed investment to help companies get their SaaS in gear
Blissfully, a New York City startup that helps companies understand their SaaS usage inside their organizations, announced it has received a $3.5 million seed round.
The investment was led by Hummer Winblad Venture Partners. Hubspot, Founder Collective, and several unnamed pre-seed investors also participated. They got a $1.5 million pre-seed investment, bringing the total so far to $5 million, according the company.
Company co-founder and CEO Ariel Diaz says Blissfully actually helped him and his co-founder solve a problem they were having tracking the SaaS usage at their previous startups. Like many companies, they were using spreadsheets to track this information and they found it was untenable as the company grew beyond 30 or 40 people. They figured there had to be a better way, so they built one.
Their product is much more than simply a database of the SaaS products in use inside an organization. It can integrate with existing company systems like single sign-on tools such as Okta and OneLogIn, financial reporting systems and G Suite login information. “We are trying to automate as much of the data collection as possible to discover what you’re using, who’s using it and how much you are spending,” he said.
Blissfully SaaS report. Screenshot: Blissfully
Their scans often turn up products customers thought they had canceled or those that IT had asked employees to stop using. More than finding Shadow IT, the product also gives insight to overall SaaS spend, which many companies have trouble getting a grip on. They can find most usage with a scan. Some data such as customized contract information may have to be manually entered into the system, he says.
Hubspot CEO Brian Halligan, whose company is one of the investors in this round, sees a growing need for this kind of tool. “The widespread growth of SaaS across companies of all sizes is a leading indicator of the market need for Blissfully. As business’ investments in SaaS increase, they lose visibility into issues ranging from spending to security,” Halligan said in a statement.
The company offers a freemium and pay model and is available in the G Suite Marketplace. If you go for the free version, you can scan your systems for SaaS usage, but if you want to do more complex integrations with company systems, you have to pay. They currently have 10 employees and 500 customers with a mix of paying and free.
One interesting aspect of the Blissfully tool is that it is built entirely using Serverless architecture on AWS Lambda.
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Blippar is using AR to help customers find their way indoors
Remember the scene in Minority Report where Tom Cruz walks through the mall and thousands of holographic ads pop up around him? That reality may not be as far off as we thought.
Blippar, the augmented reality startup that launched back in 2011, is today announcing the launch of a new product that would let retailers, airports, commercial real estate owners, etc. place augmented reality content across their space.
The product is called the Blippar Visual Positioning System, and it uses computer vision and augmented reality to help customers, tenants, etc. find their way through a large indoor space such as a grocery store, department store, or stadium.
This isn’t Blippar’s foray into AR navigation. The company launched the AR City app in the summer of 2017, which uses the camera of the phone to pinpoint a user’s location with better accuracy than GPS, according to the company. Blippar rolled out functionality for AR City in more than 300 cities.
But the visual positioning system should prove more lucrative. Location services is one critical piece of our digital lifestyle that hasn’t been completely overwhelmed by advertisements. But it’s not hard to imagine advertisements popping up within a department store or sports stadium as a user looks for the beauty department or the closest hotdog, respectively of course.
Blippar sees an opportunity to use this for retail and shopping, entertainment and gamification, tourism, and even design, giving interior designers a chance to check out AR furniture, paint colors, etc.
But there’s also a huge play here around data. Facebook may know just about everything about you, but the advertising behemoth hasn’t made the most of leveraging a user’s location. Blippar might stand a chance at doing just that with the new visual positioning system, giving retailers unprecedented information around the way that customers move through a store.
Because the system uses computer vision to determine a user’s location, the product can be used in offline mode.
Blippar uses blueprints, photography, and 3D models of buildings to build out the visual positioning system, and can turn around the project almost immediately if they have access to CAD files of the building’s layout. Adding content, however, takes as long as designers and other project leaders need to figure out what that content should be and how it should look.
Blippar has been through a number of evolutions as a company. The startup first launched as a tool for brands and publishers, laying AR content on top of real-world objects that were tagged with a Blipp (a little sticker to trigger the AR content).
The company then moved into visual search, letting users point their phone at a car or a flower and learning more about what that real-world object is.
That has all laid the foundation for this latest B2B iteration around navigation. Blippar hasn’t yet disclosed the exact cost of using this new product, but did say that it will range between $300K and $1 million. Thus far, the company has signed on two major clients, one retailer and one commercial real estate owner, though Blippar didn’t disclose which companies it’s working with.
Blippar has raised more than $100 million since launch.
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Hinge Health raises $26M Series B to tackle musculoskeletal pain
Hinge Health, the San Francisco-based startup that offers a tech-enabled platform to treat musculoskeletal (MSK) disorders — things like knee pain, shoulder pain, or back pain — has raised $26 million in Series B funding.
Leading the round is Insight Venture Partners, with participation from the company’s Series A backer Atomico. In fact, I understand that the London VC firm has doubled down on its investment and has actually increased its stake in Hinge.
The new round of funding brings total raised by the company to $36 million since being founded in 2015 (and originally based in London). Hinge Health founders Daniel Perez and Gabriel Mecklenburg still maintain majority control of the board.
Billing itself as digitising healthcare, Hinge Health combines wearable sensors, an app, and health coaching to remotely deliver physical therapy and behavioural health for chronic conditions. The basic premise is that there is plenty of existing research to show how best to treat MSK disorders, but existing healthcare systems don’t do a very good job at delivering best practice, either because of cost and the way it is funded or for other systematic reasons. The result is an over tendency to fall back on the use of opioid-based painkillers or surgery, with sub-optimal results.
The startup’s initial target customers are self-insured employers and health plans, with the pitch being that its platform can significantly reduce medical costs associated with chronic MSK conditions.
To that end, Perez tells me Hinge Health now has 40 enterprise customers in the U.S. and has partnered with 10 of the largest health plans. This is off the back of improved results, with 2 in 3 patients who go through the program avoiding the need for surgery, up from 1 in 2 at the time of the startup’s Series A. “[We’re] aiming to bump that to 80 percent soon,” he says.
Just don’t call Hinge a “software as a drug” or so-called digital therapeutic. Perez isn’t a fan of either term, and certainly not when applied to the work Hinge Health is doing.
“Both seem to imply you just pop one easy pill and that’s it,” he says. “While software, connected hardware, and behavioural health support (e.g. education, coaching, targeted notifications, gamification/rewards) can help scale the labor intensive processes involved in chronic care, it’s not akin to just popping a pill and you’re done. That’s why I really dislike the term “digital therapeutic” when applied to chronic conditions, and I wish it was retired”.
Instead, Perez considers Hinge Health to be a “Digital Care Pathway” as patients are still required to carry out a lot of work in order to tackle their chronic condition. In other words, it goes well beyond just passively popping a “digital pill”.
I ask the Hinge Health founder if perhaps it is access to a one-to-one health coach via the app that makes all the difference, especially related to adherence, rather than technology. That depends, he says, revealing that some patients rely very heavily on having access to a coach, while others need very little or zero coaching support, and instead rely on Hinge’s wearable motion sensors to guide them through their exercises and to track progress.
Adds Perez: “The clinical literature is very compelling; when you have a relationship with a real person on the care team, it boosts adherence to the care plan. Critically that person doesn’t have to be a doctor or even a nurse, but it must be someone you trust”.
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Berlin’s Taxfix, a mobile assistant for filing your taxes, picks up $13M led by Valar Ventures
Taxfix, the Berlin-based startup that has developed a mobile assistant to help you file your tax return, has closed $13 million in Series A funding. The round is led by Peter Thiel’s Valar Ventures, with participation from existing investors Creandum and Redalpine.
Launched in 2017, Taxfix is built on the premise that filing taxes remains a daunting task in most countries, involving a lot of archaic form filling, often carried out incorrectly and without the proper advice, and rarely optimised for tax refunds. As a result, the company says that in Germany alone, over 10 million employees decide not to file a tax return, and therefore forgo an average tax rebate of 935 Euros.
“The problem is that most people don’t have a personal tax accountant, nor the sufficient knowledge on how to file their taxes,” explains Taxfix co-founder and CEO Mathis Büchi. “Taxpayers are required to invest a substantial amount of time to become an expert themselves to receive their maximum tax refund. That’s why the rich can optimise their taxes with their own accountants and the regular citizens are overpaying billions of Euros in taxes every year in almost every country in the world”.
To help combat this, the Taxfix app works similar to a chatbot, and — coupled with the startup’s “tax-engine technology” — aims to make filing your taxes as easy as it would be if you hired your own tax accountant. You simply photograph your annual payslip and work through a questionnaire personally tailored to optimise your refund. The Taxfix app then automatically calculates the predicted tax rebate and submits your filing for you.
“[Taxfix creates] a digital tax accountant on the mobile phone, which asks the users simple questions and makes sure they optimise their refund and file their tax return correctly,” says Büchi.
To date, Taxfix’s typical customers are young people between 20-35 years old, who are not tax experts and often have never filed a tax return before. For every tax return that generates a refund of over 50 Euros, the startup charges 35 Euros for submission to the relevant financial authorities.
Of course, there are already a large number of startups and software companies that can help you file a tax return. These include legacy players such as WISO in Germany and Intuit’s TurboTax in the U.S., or upstarts such as the U.K.’s TaxScouts. A government’s own online tax filing gateway could also be considered a direct competitor.
“Taxfix differentiates itself from all other solutions by its mobile-first approach and by not using forms fields as the user interface,” adds Büchi. “Taxfix creates a completely new user experience with the conversational interface that asks simple questions and translates the information into tax language automatically. It takes on average 20 minutes to file your taxes with Taxfix, compared to 3 to 6 hours with traditional software”.
Meanwhile, Büchi says the new funding will be used for international expansion, bringing the app’s tax declaration capabilities to other jurisdictions. The German company also plans to invest heavily in machine learning to bring its tax engine technology “to the next level”.
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WeWork’s HQ product aims to better accommodate mid-sized companies
WeWork recently announced a new office space solution called “HQ by WeWork” to provide mid-sized companies the privacy, flexibility, customization and cost-efficiency they need without making a long-term brick-and-mortar commitment.
According to U.S. Census data, the number of mid-sized companies with 11 to 250 employees account for 1.1 million companies in the country and employ approximately 30 million people. In many cases, these companies have begun seeing growth but are not ready (or financially capable enough) to settle into a long-term office space that they may soon outgrow.
“Be it those lifestyle businesses that are going to be 30 people forever, a small law firm, or a tech firm, we believe very strongly in companies of that size and how important they are to their local economies,” WeWork Chief Growth Officer Dave Fano told TechCrunch. “Often times space is still very much a challenge for companies of that size and the way they have to make these [office space] commitments ends up probably being an inhibitor to their growth.”
To better meet the needs of these companies, HQ by WeWork offers private office floors (leased and managed by WeWork) that companies can move into for flexible leasing periods — typically for a minimum of 12-24 months. But, should a company outgrow its space in six months, Fano said WeWork will work to accommodate a move to support its growth.
Unlike WeWork’s Powered by We model, which allows companies to bring the management of WeWork to spaces they rent themselves, companies using HQ by WeWork can leave the ins-and-outs of office real estate to the office-sharing company.
HQ by WeWork offers spaces with customizable color schemes and branding incorporation, private entrances and a service-lite model of WeWork management that includes essentials (IT, AV, etc.) but without all the bells and whistles (e.g. full conference rooms, events) that come with a typical WeWork office space. This paring down of amenities allows it to offer these spaces at a lower price per person than a typical WeWork accommodation, Fano told me. That said, HQ tenants can still drop-by any WeWork facility to utilize the features their spaces lack.
So far, WeWork has leased six HQ spaces in New York City and is actively working to expand HQ by WeWork into all the company’s flagship cities, such as Los Angles and Toronto.
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Spark Neuro raises $13.5M to measure your emotional response to ads and movies
I’m not immune to compliments, and Spencer Gerrol, founder and CEO of Spark Neuro, offered a real winner as he demonstrated his technology.
“I love your brain,” he told me. This was after the startup’s vice president of research Ryan McGarry had strapped sensors to my fingers and head, then showed me an intense movie clip, with my attention level and emotional response displayed on a screen for all to see.
That, in miniature, is what Spark Neuro does: It helps companies study the audience response to things like ads, movies and trailers.
The goal is to replace things like focus groups and surveys, which Gerrol said are subject to a variety of biases, including group pressure and the desire to give the answer that you think the researcher wants to hear.
For example, he showed me a Mr. Clean ad that had performed poorly among men in focus groups. Spark Neuro, in contrast, found that it actually had “beautiful performance” among both men and women, and it ended up being one of the best-received ads at last year’s Super Bowl. (Apparently the guys just didn’t want to admit that they enjoyed watching a seductive cartoon man.)
We’ve also written about startups that try to measure ad effectiveness using technology like eye tracking and studying facial expressions. Gerrol said those are valuable data points, and indeed, they’re part of Spark Neuro’s research. But they have their limitations, which is why the company also looks at brain and electrodermal activity.
Gerrol highlighted the EEG data (i.e. data about the electrical activity in your brain) as offering “such richness and such depth.” The challenge is that “the data is incredibly noisy.” So Spark Neuro has developed tools to automatically remove the noise and make the data easy to understand.
At the same time, it’s not just relying on technology — Gerrol said his researchers also do one-on-one interviews with participants afterwards to get a better understanding of their responses.
“The most important thing, by 100 fold, is the intellectual property around the algorithms,” he added. “The algorithms take a mess of data that’s meaningless to the human eye and turn it into something you can just understand as a marketing executive.”
My own readings looked daunting at first, but they quickly became comprehensible as Gerrol walked me through them, showing me where my attention and emotions spiked.
Spark Neuro is already working with a long list of clients that includes Anheuser-Busch, General Motors, Hulu, JetBlue, Paramount and Walmart. It’s also announcing that it’s raised a $13.5 million Series A led by Thiel Capital, with participation from Will Smith (yes, that Will Smith) and former Disney CEO Michael Eisner.
Eventually, Gerrol suggested the technology could be applied in other ways, like measuring student attention in the classroom.
“There’s a million applications,” he said. “We’re very focused on being a dominating force in a discrete industry, but it’s also important to our future to set ourselves up for further applications.”
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SoundCloud on the blockchain? Audius raises $5.5M to decentralize music
Audius wants to cut the middlemen out of music streaming so artists get paid their fair share. Coming out of stealth today led by serial entrepreneur and DJ Ranidu Lankage, Audius is building a blockchain-based alternative to Spotify or SoundCloud.
Users will pay for Audius tokens or earn them by listening to ads. Their wallet will then pay out a fraction of a cent per song to stream from decentralized storage across the network, with artists receiving roughly 85 percent — compared to roughly 70 percent on the leading streaming apps. The rest goes to compensating whomever is hosting that song, as well as developers of listening software clients, one of which will be built by Audius.
Audius plans to launch its open-sourced product in beta later this year. But it’s already found some powerful investors that see SoundCloud as vulnerable to the cryptocurrency revolution. Audius has raised a $5.5 million Series A led by General Catalyst and Lightspeed, with participation from Kleiner Perkins, Pantera Capital, 122West and Ascolta Ventures. They’re betting that Audius’ token will grow in value, making the stockpile it keeps worth a fortune. It could then sell chunks of its tokens to earn revenue instead of charging artists directly.
Audius co-founders (from left): head of product Forrest Browning, CEO Ranidu Lankage, CTO Roneil Rumburg
“The biggest problem in the music industry is that streaming is taking off and artists aren’t necessarily earning a lot of money. And it can take three months, or up to 18 months for unsigned artists, to get paid for streams,” says Lankage. “That’s what crypto really solves. You can pay artists in near real-time and make it fully transparent.”
The big question will be whether Audius can use the token economy to crack the chicken-and-egg problem of getting its first creators and listeners on a platform that might be less functionally robust than its traditional competitors. There are a lot of moving parts to decentralize, but there are also plenty of disgruntled musicians out there waiting for something better.
From Sri Lankan hip-hop star to serial entrepreneur
Most startup guys don’t have Billboard charting singles on their bio, but Lankage does. Born in Sri Lanka, his hip-hop songs in his native tongue of Sinhalese were the first of the language to be played on the BBC and MTV. He got signed to Sony and even went platinum, but left the label seeking greater control over his work. After going to Yale, he applied his music business knowledge to build a Reddit for dance music called The Drop with Twitch’s Justin Kan back in 2015.
The two teamed up again on a video version of Q&A app Quora called Whale, but that fizzled out too. Lankage’s next venture Polly, a polling tool built as a complement to Snapchat, inspired the now super-popular Instagram Stories polls and questions stickers. But after an acqui-hire by Reddit fell through, he returned to his first love: music.
“I’ve always been passionate about building tools for creators,” says Lankage. But this time, he wanted to focus on helping them turn their art into a profession. He teamed up with CTO Roneil Rumburg, an engineering partner at Kleiner Perkins who’d build a crypto wallet called Backslash, and head of product Forrest Browning, who’d sold his software metering startup StacksWare to Avi Networks.
Their goal is to build a blockchain streaming music service where listeners don’t have to understand blockchains. “A user wouldn’t even know that they have a wallet,” says Rumburg. They’ll just hear an ad every once in a while, get a subscription, or pay per stream. Since Audius is open sourced, developers will be able to build their own listening clients on top, which could specialize in discovery of certain types of music or offer their own payment schemes.
“I have known Ranidu, Forrest and Roneil for a long time, and have always been impressed with their ability to blend art, technology and business together,” says investor Niko Bonatsos of General Catalyst. “In Audius, they bring together all three skills, with a deep technical heart and a compelling solution for a very big marketplace.”
Tokens, not record labels
For starters, Audius is focusing on signing up independent electronic musicians. These are the types that might be popular on SoundCloud but actually have to pay for hosting there while not getting much back due to the platform’s weak monetization options. Don’t expect U2 and Ariana Grande on Audius, at least not yet. But the startup could differentiate by offering access to content you can’t find elsewhere.
To get artists on board, Lankage tells me Audius plans “to use token incentives.” Those willing to jump on first before there are many listeners could get a bonus allotment of tokens that might be worth more if they help popularize the service. And where artists go, their fans will follow. Audius is hoping artists will share its links first because that’s where they’ll earn the most money.
Audius has also lined up a legion of big-name advisors to help it develop its blockchain product and artist relationships. Those include Augur co-founder Jeremy Gardner, EDM artist 3LAU, EA co-founder Bing Gordon and more it can’t announce just yet.
The linchpin of Audius will be the user experience. If the system feels too complicated, listeners and artists will stay elsewhere. A DJ might earn more per stream from Audius, but if Spotify or SoundCloud offer better ways for fans to subscribe to them and generate more plays long-term, they’ll still direct supporters there. But if Audius can hide the nerdy bits while solving the music industry’s problems, it has the potential to be one of the first mainstream consumer blockchain projects that treats the tech as a utility, not just a new stock market to bet on.
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Patreon buys Memberful but keeps it indie as patronage consolidates
Patreon is forming a patronage empire. Today it acquired white-labeled subscription membership platform Memberful, which lets creators sell exclusive access to content through their own site instead of a centralized platform like Patreon. Rather than being folded into a Patreon feature, Memberful will run as an independent brand, maintaining its tiered pricing structure, though new sign-ups will get a rate closer to Patreon’s low 5 percent rake.
Terms weren’t disclosed for the deal that brings Memberful’s whole seven-person team and 500 paying clients aboard. But Patreon clearly sees rolling up competitors and complements in the patronage space as a worthy use of its $60 million raise at a $450 million valuation late last year that brought it to $105 million in funding. In June, Patreon bought Kit to let creators bundle in merchandise with their perks for paying monthly subscribers. It also bought out competitor Subbable back in 2015.
By teaming up, Patreon and Memberful will be able to provide subscription patronage services for creators, whether they want their fan community to live on Patreon, or through Memberful on their own WordPress or website with integrations of Stripe and MailChimp. Patreon already has 2 million patrons paying an average of $12 each to a total of 100,000 creators, and it expects to pay out $300 million in 2018 alone. The acquisition could let Patreon move up market, recruiting comedians, illustrators, game developers and vloggers that already have an established audience elsewhere.
“I think membership is on the up and is going to grow for the next decade,” says Patreon VP of Product Wyatt Jenkins. “Our strategy is to be an open, neutral platform,” as opposed to focusing on one type of content like YouTube with videos or Twitch with streaming where you’re locked into that platform’s tools. Memberful, launched in 2013, has bootstrapped the creation of its white-labeled tools without the need for venture funding.
Memberful gives creators like Stratechery’s Ben Thompson (who has an interview with Patreon CEO Jack Conte about the acquisition) and podcast producer Gimlet Media full control over branding, with no Patreon chrome. But it’s more expensive and also requires more work as creators have to manage their own site, customer service and payment processing. Memberful takes a 10 percent cut with no monthly fee for its limited basic tier, or $25 per month plus 4.9 percent for the full-featured pro version, though it also offers enterprise pricing. That pricing will remain for existing users, but “new customers will see a transaction fee closer to Patreon’s,” which is a flat 5 percent, a Patreon spokesperson tells me. Patreon does basically everything for a creator, but it also ropes them into the Patreon-branded ecosystem that also promotes other content makers.
Sometimes Patreon handling everything can be a problem, though. Last week it experienced a higher-than-normal volume of declines from banks of charges to patrons. That left some creators without their expected income, and required patrons to deal with the chore of calling their bank to tell them paying $1, $5 or $20 per month to their favorite creator wasn’t fraud. Patreon now tells me that “as of Friday, we let everyone know that we were back to normal decline rates, and were going to continue retrying the rest of the cards like we normally do.”
It makes sense for Patreon to race to consolidate the patronage industry as it’s being invaded by giant incumbents. Twitch, YouTube and Facebook all offer their own versions of paid subscriptions to creators that get patrons extra perks like exclusive content or badges so they stick out in chat rooms full of fans. While those platforms are all focused on video streamers, they still pose a threat to Patreon, which needs to maximize the number of successful creators it hosts in order to earn enough from its tiny cut of payments. Facebook especially could muscle in, as many creators already run their own Facebook Pages.
Asked about competition from those platforms, Jenkins said, “I think there’s a strong chance it’s a tailwind. The concept of membership is pretty new. If those big companies are going to drop millions of dollars into marketing the concept of membership I think that’s great.” He stressed the question of “Do you want to own your fan base? On YouTube, those aren’t your fans, they’re YouTube users. YouTube is incentivized to keep them watching videos so it can show ads.”
That might lead fans to unsubscribe from a creator as YouTube promotes other similar ones they could watch instead. “You don’t own the relationship.” Facebook Page admins have found that out the hard way as algorithm changes prioritize friends over public figures, making it tough to reach the followers they spent years begging to like them. If Patreon can offer creators audience growth through discovery on its interconnected network without cannibalizing anyone’s member counts, its neutrality and focus could make it a leader in this new wing of the digital economy.
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