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Equity Monday: Jeff’s going to space, and everyone wants a piece of Flipkart
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.
It’s WWDC week, so expect a deluge of Apple news to overtake your Twitter feed here and there over the next few days. But there’s a lot more going on, so let’s dig in:
- The Weekend: A supercharged, supercharged Model S Tesla car is not coming out. Instead, a merely supercharged version will come out. It’s still stupid fast and expensive. And Nigeria’s war with Twitter continued, with new efforts from the African nation to limit access to the social media service within its borders.
- This Morning: Flipkart is raising $3 billion at a roughly $40 billion valuation. The deal underscores not just how big the Indian tech scene is, but also how much investor interest there is in e-commerce bets more generally. And Jeff Bezos is going to space. Soon!
- Funding Rounds: Trulioo raised a $394 million Series D. The Canadian startup is now worth far more than $1 billion. And Chinese company Kanzhun is going public in the United States, which raised an eyebrow here amongst the Equity Morning Crew.
- Take The Damn Equity Survey: Take it! All the cools kids are taking it!
And that’s your start to the week. More to come from your friends here on Wednesday, and Friday. Chat soon!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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Mendel raises $18M to tease out data structure from medicine’s disparate document trove
The medical industry is sitting on a huge trove of data, but in many cases it can be a challenge to realize the value of it because that data is unstructured and in disparate places.
Today, a startup called Mendel, which has built an AI platform both to ingest and bring order to that body of information, is announcing $18 million in funding to continue its growth and to build out what it describes as a “clinical data marketplace” for people not just to organize, but also to share and exchange that data for research purposes. It’s also going to be using the funding to hire more talent — technical and support — for its two offices, in San Jose, California and Cairo, Egypt.
The Series A round is being led by DCM, with OliveTree, Zola Global, and MTVLP, and previous backers Launch Capital, SOSV, Bootstrap Labs and chairman of UCSF Health Hub Mark Goldstein also participating.
The funding comes on the heels of what Mendel says is a surge of interest among research and pharmaceutical companies in sourcing better data to gain a better understanding of longer-term patient care and progress, in particular across wider groups of users, not just at a time when it has been more challenging to observe people and run trials, but in light of the understanding that using AI to leverage much bigger data sets can produce better insights.
This can be important, for example, in proactively identifying symptoms of particular ailments or the pathology of a disease, but also recurring and more typical responses to specific treatment courses.
We previously wrote about Mendel back in 2017 when the company had received a seed round of $2 million to better match cancer patients with the various clinical trials that are regularly being run: the idea was that certain trials address specific types of cancers and types of patients, and those who are willing to try newer approaches will be better or worse suited to each of these.
It turned out, however, that Mendel discovered a problem in the data that it would have needed to enable its matching algorithms to work, said Dr. Karim Galil, Mendel’s CEO and founder.
“As we were trying to build the trial business, we discovered a more basic problem that hadn’t been solved,” he said in an interview. “It was the reading and understanding medical records of a patient. If you can’t do that you can’t do trial matching.”
So the startup decided to become an R&D shop for at least three years to solve that problem before doing anything with trials, he continued.
Although there are today many AI companies that are parsing unstructured information in order to extract better insights, Mendel is what you might think of as part of the guard of tech companies that are building out specific AI knowledge bases for distinct verticals or areas of expertise. (Another example from another vertical is Eigen, working in the legal and finance industries, while Google’s DeepMind is another major AI player looking at ways of better harnessing data in the sphere of medicine.)
The issue of “reading” natural language is more nuanced than you might think in the world of medicine. Galil compared it to the phrase “I’m going to leave you” in English, which could just as easily mean someone is departing, say, a room, as someone is walking out of a relationship. The “true” answer — and as we humans know even truth can be elusive — can only start to be found in the context.
The same goes for doctors and their observation notes, Galil said. “There is a lot hidden between the lines, and problems can be specific to a person,” or to a situation.
That has proven to be a lucrative area to tackle.
Mendel uses a mix of computer vision and natural language processing built by teams with extensive experience in both clinical environments and in building AI algorithms and currently provides tools to automate clinical data abstraction, OCR, special tools to redact and remove personal identifiable information automatically to share records, search engines to search clinical data and — yes — an engine to enable better matching of people to clinical trials. Customers include pharmaceutical and life science companies, real-world data and real-world evidence (RWD and RWE) providers and research groups.
And to underscore just how much there is still left to do in the world of medicine, along with this funding round, Mendel is announcing a partnership with eFax, an online faxing solution used by a huge number of healthcare providers.
Faxing is totally antiquated in some parts of the world now — I’m not even sure that people the age of my children (tweens) even know what a “fax” is — but they remain one of the most-used ways to transfer documents and information between people in the worlds of healthcare and medicine, with 90% of the industry using them today. The partnership with Mendel will mean that those eFaxes will now be “read” and digitized and ingested into wider platforms to tap that data in a more useful way.
“There is huge potential for the global healthcare industry to leverage AI,” said Mendel board member and partner at DCM, Kyle Lui, in a statement. “Mendel has created a unique and seamless solution for healthcare organizations to automatically make sense of their clinical data using AI. We look forward to continuing to work with the team on this next stage of growth.”
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Endua creates hydrogen-powered clean energy storage, using tech from Australia’s national science agency
Hydrogen-based generators are an environmentally friendly alternative to ones powered by diesel fuel. But many rely on solar, hydro or wind power, which aren’t available all the time. Brisbane-based Endua is making hydrogen-based power generators more accessible by using electrolysis to create more hydrogen and storing it for long-term use. The startup’s technology was developed at CSIRO, Australian’s national science agency, and is being commercialized by Main Sequence, the venture fund founded by CSIRO and Ampol, one of the country’s largest fuel companies.
Main Sequence’s venture science model means that it first identifies a global challenge, then brings together the technology, team and investors to launch a startup that can address that problem. Through the program, Paul Sernia, the founder of electric vehicle charger maker Tritium, was brought on to serve as Endua’s chief executive officer, working with Main Sequence partner Martin Duursma to commercialize the hydrogen-based power generation and storage technology developed at CSIRO. Ampol will serve as Endua’s industry partner.
Endua is backed by $5 million AUD (about $3.9 million USD) from Main Sequence, CSIRO and Ampol. The company plans to launch in Australia first before expanding into other countries.
Sernia told TechCrunch that Endua was created to “solve one of the biggest problems facing the transition to renewable energy — how to store renewable energy in large quantities, for long periods of time.”
Endua’s modular power banks can run up to 150 kilowatts per pack and be extended for different use cases, serving as an alternative to power generators that run on diesel fuel. Batteries serve as backup, but Endua’s goal is to deliver renewable energy that can be stored in large quantities, enabling off-grid infrastructure and communities to have self-sustaining power sources.
“Hydrogen electrolysis technology has been around for quite some time but it still has a long way to go to meet the expectations of commercial markets and be cost-effective when compared to existing energy sources,” Sernia said. “The technology we’ve developed with CSIRO enables us to make the cost more affordable compared to fossil fuel sources, more reliable and easily maintained in remote communities.”
The startup plans to focus on industrial clients before reaching smaller businesses and residences. “One of the biggest opportunities, that few have really tackled, is that of diesel generator users like regional communities, mines or remote infrastructure,” Sernia said. “In farming, Endua’s solution could be used to power equipment such as a bore or irrigation pumps.” The power banks can plug into existing renewable energy systems, including solar and wind, to make the switch economical for users, he added. Water is part of the electrolysis process, but only a small amount is needed.
“Batteries are a great way to deliver dispatchable power in small increments and are a complementary part of the overall transition plan, but we’re focusing on delivering renewable energy that can be stored in large quantities, for large periods of time, so communities and remote infrastructure can access reliable, renewable energy at any time of day,” Sernia told TechCrunch.
Ampol is working with Endua as part of its Future Energy and Decarbonisation Strategy. It will test and commercialize Endua’s tech to reach its 80,000 B2B customers, focusing first on the off-grid diesel generator market, which the company said generates 200,000 tonnes of carbon emissions per year.
In a press statement, Ampol managing director and CEO Matthew Halliday said, “We are excited to be involved with Endua, which is part of our commitment to extending our customer value proposition by finding and developing new energy solutions that will assist with their energy transition.”
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Naspers co-leads $14.5M extension round in mobility startup WhereIsMyTransport
Many people in emerging markets depend on informal public transport to move across cities. But while there are ride-hailing and bus-hailing applications in some of these cities, there’s a dire need for journey-planning apps to improve mobility for users and reduce the time they spend commuting.
South African-founded startup WhereIsMyTransport is one such company filling that gap for now. Today, it is announcing a $14.5 million Series A extension to continue its expansion across emerging markets; the company already has a presence in South Africa and Mexico.
Naspers, via its investment arm, Naspers Foundry, co-led the investment with Cathay AfricInvest Innovation Fund. According to Naspers, the size of its check was $3 million. Japan’s SBI Investment also participated in the round.
The extension round is coming a year after WhereIsMyTransport received a $7.5 million Series A investment from VC firms and strategic investment from Google, Nedbank and Toyota Tsusho Corporation (TTC).
Devin de Vries, Chris King and Dave New started the company in 2015. As a mobility startup, WhereIsMyTransport maps formal and informal public transport networks. The company then uses data gotten to improve the public transport experience, making commuting safe and accessible.
In addition to this, WhereIsMyTransport licenses some of this data to governments, DFIs, NGOs, operators, and third-party developers. It claims this is done for research, analytics, insights and consumer and enterprise solutions purposes.
“WhereIsMyTransport started in South Africa, focused on becoming a central source of accurate and reliable public transport data for high-growth markets. We’re thrilled to welcome Naspers as an investor as our journey continues in megacities across the majority world,” said CEO Devin de Vries in a statement.
Last year when we covered the company, it had mapped 34 cities in Africa while actively mapping some in India, Southeast Asia and Latin America. Since then, it expanded into Mexico City last November and has completed multiple data production projects in the city alongside Lima, Bangkok, Gauteng and Dhaka. Right now, the company has worked in 41 cities across 28 countries.
WhereIsMyTransport also launched its first consumer product Rumbo, which provides network information from all modes of public transport in Mexico with more than 100,000 users delivering over 750,000 real-time network alerts. The company says there are plans to launch Rumbo in Lima, Peru later this year.
Devin de Vries (CEO WhereIsMyTransport). Image Credits: WhereIsMyTransport
For co-lead investor Naspers Foundry, this is the firm’s first investment in mobility. So far, it has funded four other South African startups — Aerobotics, SweepSouth, Food Supply Network and The Student Hub — with a focus on edtech, food and cleaning sectors.
“We couldn’t pass on the opportunity to back an extraordinary South African founder who has built his business here in Cape Town to a global market leader in mapping formal and informal transportation with a strong focus on emerging markets,” head of Naspers Foundry Fabian Whate told TechCrunch.
He also added that there is an overlap between mobility and the food and e-commerce businesses that seem to be the main focus from a Naspers perspective. “The global food and e-commerce businesses, often operating in emerging markets, are quite reliant on mobility solutions. So there’s a great overlap between what the Naspers Group does and the vision for WhereIsMyTransport.”
In South Africa, WhereIsMyTransport’s clients include Johannesburg commuter rail system Gautrain and Transport for Cape Town. On the other hand, its international client base includes Google, the World Bank and WSP, and others.
South Africa CEO of Naspers Phuthi Mahanyele-Dabengwa said: “Mobility remains an obstacle for billions of people in high-growth markets across the world. Our investment in WhereIsMyTransport is a testimony of our belief that great innovation and tech talent is found in South Africa, and with the right backing and support, these businesses can provide solutions to local challenges that can improve the lives of ordinary people in South Africa and abroad.”
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Extra Crunch roundup: Guest posts wanted, ‘mango’ seed rounds, Expensify’s tech stack
Prospective contributors regularly ask us about which topics Extra Crunch subscribers would like to hear more about, and the answer is always the same:
- Actionable advice that is backed up by data and/or experience.
- Strategic insights that go beyond best practices and offer specific recommendations readers can try out for themselves.
- Industry analysis that paints a clear picture of the companies, products and services that characterize individual tech sectors.
Our submission guidelines haven’t changed, but Managing Editor Eric Eldon and I wrote a short post that identifies the topics we’re prioritizing at the moment:
- How-to articles for early-stage founders.
- Market analysis of different tech sectors.
- Growth marketing strategies.
- Alternative fundraising.
- Quality of life (personal health, sustainability, proptech, transportation).
If you’re a skillful entrepreneur, founder or investor who’s interested in helping someone else build their business, please read our latest guidelines, then send your ideas to guestcolumns@techcrunch.com.
Thanks for reading; I hope you have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription
Opting for a debt round can take you from Series A startup to Series B unicorn
Image Credits: olegkalina (opens in a new window) / Getty Images
Debt is a tool, and like any other — be it a hammer or handsaw — it’s extremely valuable when used skillfully but can cause a lot of pain when mismanaged. This is a story about how it can go right.
Mario Ciabarra, the founder and CEO of Quantum Metric, breaks down how his company was on a “tremendous growth curve” — and then the pandemic hit.
“As the weeks following the initial shelter-in-place orders ticked by, the rush toward digital grew exponentially, and opportunities to secure new customers started piling up,” Ciabarra writes. “A solution to our money problems, perhaps? Not so fast — it was a classic case of needing to spend in order to make.”
If companies want to preserve equity, debt can be an advantageous choice. Here’s how Quantum Metric did it.
4 proven approaches to CX strategy that make customers feel loved
Image Credits: mucahiddin / Getty Images
People have been working to optimize customer experiences (CX) since we began selling things to each other.
A famous San Francisco bakery has an exhaust fan at street level; each morning, its neighbors awake to the scent of orange-cinnamon morning buns wafting down the block. Similarly, savvy hairstylists know to greet returning customers by asking if they want a repeat or something new.
Online, CX may encompass anything from recommending the right shoes to AI that knows when to send a frustrated traveler an upgrade for a delayed flight.
In light of Qualtrics’ spinout and IPO and Sprinklr’s recent S-1, Rebecca Liu-Doyle, principal at Insight Partners, describes four key attributes shared by “companies that have upped their CX game.”
Twitter’s acquisition strategy: Eat the public conversation
Image Credits: We Are (opens in a new window) / Getty Images
What is a microblogging service doing buying a social podcasting company and a newsletter tool while also building a live broadcasting sub-app? Is there even a strategy at all?
Yes. Twitter is trying to revitalize itself by adding more contexts for discourse to its repertoire. The result, if everything goes right, will be an influence superapp that hasn’t existed anywhere before. The alternative is nothing less than the destruction of Twitter into a link-forwarding service.
Let’s talk about how Twitter is trying to eat the public conversation.
Reading the IPO market’s tea leaves
Image Credits: Nigel Sussman (opens in a new window)
Although it was a truncated holiday week here in the United States, there was a bushel of IPO news. We sorted through the updates and came up with a series of sentiment calls regarding these public offerings.
Earlier this week, we took a look at:
- Marqeta‘s first IPO price range (fintech).
- 1st Dibs‘ first IPO price range (e-commerce).
- Zeta Global‘s IPO pricing (martech).
- The start of SoFi trading post-SPAC (fintech).
- The latest from BarkBox (e-commerce).
How Expensify hacked its way to a robust, scalable tech stack
Image Credits: Nigel Sussman
Part 4 of Expensify’s EC-1 digs into the company’s engineering and technology, with Anna Heim noting that the group of P2P pirates/hackers set out to build an expense management app by sticking to their gut and making their own rules.
They asked questions few considered, like: Why have lots of employees when you can find a way to get work done and reach impressive profitability with a few? Why work from an office in San Francisco when the internet lets you work from anywhere, even a sailboat in the Caribbean?
It makes sense in a way: If you’re a pirate, to hell with the rules, right?
With that in mind, one could assume Expensify decided to ask itself: Why not build our own totally custom tech stack?
Indeed, Expensify has made several tech decisions that were met with disbelief, but its belief in its own choices has paid off over the years, and the company is ready to IPO any day now.
How much of a tech advantage Expensify enjoys owing to such choices is an open question, but one thing is clear: These choices are key to understanding Expensify and its roadmap. Let’s take a look.
Etsy asks, ‘How do you do, fellow kids?’ with $1.6B Depop purchase
Image Credits: Getty Images
The news this week that e-commerce marketplace Etsy will buy Depop, a startup that provides a secondhand e-commerce marketplace, for more than $1.6 billion may not have made a large impact on the acquiring company’s share price thus far, but it provides a fascinating look into what brands may be willing to pay for access to the Gen Z market.
Etsy is buying Gen Z love. Think about it — Gen Z is probably not the first demographic that comes to mind when you consider Etsy, so you can see why the deal may pencil out in the larger company’s mind.
But it isn’t cheap. The lesson from the Etsy-Depop deal appears to be that large e-commerce players are willing to splash out for youth-approved marketplaces. That’s good news for yet-private companies that are popular with the budding generation.
Confluent’s IPO brings a high-growth, high-burn SaaS model to the public markets
Image Credits: Andriy Onufriyenko / Getty Images
Confluent became the latest company to announce its intent to take the IPO route, officially filing its S-1 paperwork this week.
The company, which has raised over $455 million since it launched in 2014, was most recently valued at just over $4.5 billion when it raised $250 million last April.
What does Confluent do? It built a streaming data platform on top of the open-source Apache Kafka project. In addition to its open-source roots, Confluent has a free tier of its commercial cloud offering to complement its paid products, helping generate top-of-funnel inflows that it converts to sales.
What we can see in Confluent is nearly an old-school, high-burn SaaS business. It has taken on oodles of capital and used it in an increasingly expensive sales model.
How to win consulting, board and deal roles with PE and VC funds
Image Credits: Orla (opens in a new window) / Getty Images
Would you like to work with private equity and venture capital funds?
There are relatively few jobs directly inside private equity and venture capital funds, and those jobs are highly competitive.
However, there are many other ways you can work and earn money within the industry — as a consultant, an interim executive, a board member, a deal executive partnering to buy a company, an executive in residence or as an entrepreneur in residence.
Let’s take a look at the different ways you can work with the investment community.
The existential cost of decelerated growth
Image Credits: Nigel Sussman (opens in a new window)
Even among the most valuable tech shops, shareholder return is concentrated in share price appreciation, and buybacks, which is the same thing to a degree.
Slowly growing tech companies worth single-digit billions can’t play the buyback game to the same degree as the majors. And they are growing more slowly, so even a similar buyback program in relative scale would excite less.
Grow or die, in other words. Or at least grow or come under heavy fire from external investors who want to oust the founder-CEO and “reform” the company. But if you can grow quickly, welcome to the land of milk and honey.
Even among the most valuable tech shops, shareholder return is concentrated in share price appreciation, and buybacks, which is the same thing to a degree.
Slowly growing tech companies worth single-digit billions can’t play the buyback game to the same degree as the majors. And they are growing more slowly, so even a similar buyback program in relative scale would excite less.
Grow or die, in other words. Or at least grow or come under heavy fire from external investors who want to oust the founder-CEO and “reform” the company. But if you can grow quickly, welcome to the land of milk and honey.
Hormonal health is a massive opportunity: Where are the unicorns?
Image Credits: Carol Yepes (opens in a new window) / Getty Images
There is a growing group of entrepreneurs who are betting that hormonal health is the key wedge into the digital health boom.
Hormones are fluctuating, ever-evolving, and diverse — but these founders say they’re also key to solving many health conditions that disproportionately impact women, from diabetes to infertility to mental health challenges.
Many believe it’s that complexity that underscores the opportunity. Hormonal health sits at the center of conversations around personalized medicine and women’s health: By 2025, women’s health could be a $50 billion industry, and by 2026, digital health more broadly is estimated to hit $221 billion.
Still, as funding for women’s health startups drops and stigma continues to impact where venture dollars go, it’s unclear whether the sector will remain in its infancy or hit a true inflection point.
3 lessons we learned after raising $6.3M from 50 investors
Image Credits: sorbetto (opens in a new window)/ Getty Images
Two years ago, founders of calendar assistant platform Reclaim were looking for a “mango” seed round — a boodle of cash large enough to help them transition from the prototype phase to staffing up for a public launch.
Although the team received offers, co-founder Henry Shapiro says the few that materialized were poor options, partially because Reclaim was still pre-product.
“So one summer morning, my co-founder and I sat down in his garage — where we’d been prototyping, pitching and iterating for the past year — and realized that as hard as it was, we would have to walk away entirely and do a full reset on our fundraising strategy,” he writes.
Shapiro shares what he learned from embracing failure and offers three conclusions “every founder should consider before they decide to go out and pitch investors.”
For SaaS startups, differentiation is an iterative process
Image Credits: Kevin Schafer / Getty Images
Although software as a service has been thriving as a sector for years, it has gone into overdrive in the past year as businesses responded to the pandemic by speeding up the migration of important functions to the cloud, ActiveCampaign founder and CEO Jason VandeBoom writes in a guest column.
“We’ve all seen the news of SaaS startups raising large funding rounds, with deal sizes and valuations steadily climbing. But as tech industry watchers know only too well, large funding rounds and valuations are not foolproof indicators of sustainable growth and longevity.”
VandeBoom notes that to scale sustainably, SaaS startups need to “stand apart from the herd at every phase of development. Failure to do so means a poor outcome for founders and investors.”
“As a founder who pivoted from on-premise to SaaS back in 2016, I have focused on scaling my company (most recently crossing 145,000 customers) and in the process, learned quite a bit about making a mark,” VandeBoom writes. “Here is some advice on differentiation at the various stages in the life of a SaaS startup.”
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Xometry is taking its excess manufacturing capacity business public
Xometry, a Maryland-based service that connects companies with manufacturers with excess production capacity around the world, filed an S-1 form with the U.S. Securities and Exchange Commission announcing its intent to become a public company.
Growth aside, it’s clear that Xometry is no modern software business, at least from a revenue-quality profile.
As the global supply chain tightened during the pandemic in 2020, a company that helped find excess manufacturing capacity was likely in high demand. CEO and co-founder Randy Altschuler described his company to TechCrunch this way last September upon the announcement of a $75 million Series E investment:
“We’ve created a marketplace using artificial intelligence to power it, and provide an e-commerce experience for buyers of custom manufacturing and for suppliers to deliver that manufacturing,” Altschuler said at the time. Xometry raised nearly $200 million while private, per Crunchbase data.
With Xometry, companies looking to build custom parts now have the ability to do so in a digital way. Rather than working the phones or starting an email chain, they can go into the Xometery marketplace, define parameters for their project and find a qualified manufacturer who can handle the job at the best price.
As of last September, the company had built relationships with 5,000 manufacturers around the world and had 30,000 customers using the platform.
At the time of that funding round, perhaps it wasn’t a coincidence that the company’s lead investor was T. Rowe Price. When an institutional investor is involved in a late-stage round, it’s usually a sign that the company is ready to start thinking about an IPO. Altschuler said it was definitely something the company was considering and had brought on a CFO, too, another sign that a company is ready to take that next step.
So what do Xometry’s financials look like as it heads to the public markets? We took a look at the S-1 to find out.
The numbers
Xometry makes money in two ways. The first comes from one part of its marketplace, with the company generating “substantially all of [its] revenue” from charging “buyers on its platform.” The other way that Xometry engenders top line is seller-related services, including financial work. The company notes that seller-generated revenues were just 5% of its 2020 total, though it does expect that figure to rise.
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Rebranded Toyota Ventures invests $300 million in emerging tech and carbon neutrality
Toyota AI Ventures, Toyota’s standalone venture capital fund, has dropped the “AI” and is reborn as, simply, Toyota Ventures. The fund is commemorating its new identity by investing an additional $300 million in emerging technologies and carbon neutrality via two early-stage funds: the Toyota Ventures Frontier Fund and the Toyota Ventures Climate Fund.
The introduction of these two new funds, each worth $150 million, brings Toyota Ventures’ total assets under management to over $500 million. With the new capital infusion into the Frontier Fund comes an expansion of Toyota Ventures’ core thesis, which previously focused on AI, autonomy, mobility, robotics and the cloud, and now is adding smart cities, digital health, fintech and energy. So while Toyota Ventures’ investment approach isn’t changing, it’s broadening the scope of startups it will consider investing in.
“AI is kind of shrinking as a proportion of everything,” Jim Adler, founding managing director of Toyota Ventures, told TechCrunch. “The first mission of the Frontier Fund has always been to discover what’s next for Toyota. Toyota pivoted to cars in the 1930s, and Toyota will grow to other businesses in the future. Startups are experiments in the marketplace, and this is a way for us to understand and get comfortable with where innovations are coming from.”
Toyota as a global company has more than 370,000 employees that cover a range of business units in which the company at large stands to benefit from investing, such as financial technology. The Frontier Fund is a step outside of mobility. It not only seeks to bring emerging tech to market, but it also wants to bring new innovations onboard, whether as a customer or an acquisition, according to Adler.
“I think the vision of the company really is that machines are here to stay, they amplify the human experience, and Toyota understands how machines amplify humans really well for the benefit of society, which sounds incredibly corny, but the company really believes that,” said Adler.
By that same token, the new Climate Fund seeks to invest in startups that can help Toyota accelerate its goal of reaching carbon neutrality by 2050. The company has been investing in hydrogen for years, including a recent partnership with Japanese fuel company ENEOS, but it’s open to whatever technology will help achieve carbon neutrality, according to Adler.
“We think renewable energies will play a role,” said Adler. “Hydrogen production, storage distribution and utilization will play a role. We think carbon capture and storage will play a role. We’re not going to get dogmatic about hydrogen because we’ve been at it for decades and maybe things will change. Hydrogen hasn’t been crowdsourced across the startup community because there just wasn’t a market for it, but I think the market may be emerging.”
The fund is accepting online pitches on its website from entrepreneurs seeking early-stage funding. On Thursday, Toyota Ventures also announced it would be expanding its team and working with a new Advisor Network as a resource for founders looking for guidance on anything from product development to diversity and recruitment.
“Toyota Ventures has been an invaluable partner for Boxbot since they invested in our seed round in 2018,” said Austin Oehlerking, co-founder and CEO of Boxbot, in a statement. “They have been instrumental in helping us to navigate complicated, existential challenges on our journey from concept to product/market fit. Jim and the team really understand how corporate venture capital should function in order to successfully partner with startups.”
Adler says he and his team come from an entrepreneurial background, so they understand what it’s like on the other side of the table. Toyota Ventures’ focuses on early-stage startups because that’s where it believes some of the most interesting innovations come from.
“I’m a big believer that early-stage venture capital is a telescope into the future,” said Adler. “I think we can actually find those incredibly valuable innovations that make this all worthwhile.”
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For SaaS startups, differentiation is an iterative process
Software as a service has been thriving as a sector for years, but it has gone into overdrive in the past year as businesses responded to the pandemic by speeding up the migration of important functions to the cloud. We’ve all seen the news of SaaS startups raising large funding rounds, with deal sizes and valuations steadily climbing. But as tech industry watchers know only too well, large funding rounds and valuations are not foolproof indicators of sustainable growth and longevity.
Failing to come across as a unique, differentiated company will likely mean settling for an exit that feels mediocre instead of incredible.
To scale sustainably, grow its customer base and mature to the point of an exit, a SaaS startup needs to stand apart from the herd at every phase of development. Failure to do so means a poor outcome for founders and investors.
As a founder who pivoted from on-premise to SaaS back in 2016, I have focused on scaling my company (most recently crossing 145,000 customers) and in the process, learned quite a bit about making a mark. Here is some advice on differentiation at the various stages in the life of a SaaS startup.
Launch and early years
Differentiation is crucial early on, because it’s one of the only ways to attract customers. Customers can help lay the groundwork for everything from your product roadmap to pricing.
The more you know about your target customers’ pain points with current solutions, the easier it will be to stand out. Take every opportunity to learn about the people you are aiming to serve, and which problems they want to solve the most. Analyst reports about specific sectors may be useful, but there is no better source of information than the people who, hopefully, will pay to use your solution.
The key to success in the SaaS space is solving real problems. Take DocuSign, for example — the company found a way to simply and elegantly solve a niche problem for users with its software. This is something that sounds easy, but in reality, it means spending hours listening to the customer and tailoring your product accordingly.
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3 lessons we learned after raising $6.3M from 50 investors
It was August 2019, and the fundraising process was not going well.
My co-founder and I had left our product management jobs at New Relic several months prior, deciding to finally plunge into building Reclaim after nearly a year of late nights and weekends spent prototyping and iterating on ideas. We had bits and pieces of a product, but the majority of it was what we might call “slideware.”
When you can’t raise big on the vision, you need to raise big on the proof. And the proof comes from building, learning, iterating and getting traction with your first few hundred users.
When we spoke to many other founders, they all told us the same thing: Go raise, raise big, and raise now. So we did that, even though we were puzzled as to why anyone would give us money with little more than a slide deck to our names. We spent nearly three months pitching dozens of VCs, hoping to raise $3 million to $4 million in a seed round to hire our founding team and build the product out.
Initially, we were excited. There was lots of inbound interest, and we were starting to hear a lot of crazy numbers getting thrown around by a lot of Important People. We thought for sure we were maybe a week away from term sheets. We celebrated preemptively. How could it possibly be this easy?
Then in July, almost in an instant, everything started to dry up. The verbal offers for term sheets didn’t materialize into real offers. We had term sheets, but they were from investors that didn’t seem to care much about what we were building or what problems we wanted to solve. We quickly realized that we hadn’t really built momentum around the product or the vision, but were instead caught up in what we later learned to be “deal flow.”
Basically, investors were interested because other investors were interested. And once enough of them weren’t, nobody was.
Fortunately, as I write this today, Reclaim has raised a total of $6.3 million on great terms across a group of incredible investors and partners. But it wasn’t easy, and it required us to embrace our failure and learn three important lessons that I believe every founder should consider before they decide to go out and pitch investors.
Lesson 1: Build big before you raise big
In 2019, we were hunting for what some referred to as a “mango seed” — that is, a seed round that was large enough that it was perceptibly closer to a light Series A financing. Being pre-product at the time, we had to lean on our experience and our vision to drive conviction and urgency among investors. Unfortunately, it just wasn’t enough. Investors either felt that our experience was a bad fit for the space we were entering (productivity/scheduling) or that our vision wasn’t compelling enough to merit investment on the terms we wanted.
When we did get offers, they involved swallowing some pretty bitter pills: We would be forced to take bad terms that were overly dilutive (at least from our perspective), work with an investor who we didn’t think had high conviction in our product strategy, or relinquish control in the company from an extremely early stage. None of these seemed like good options.
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Google shares its $2M Black Founders Fund among 30 European startups
Google has selected 30 startups to receive a share of its $2 million Black Founders Fund in Europe, providing these companies with a spot of cash, some valuable cloud services and a bit of good old-fashioned networking among the Google crew.
The fund was announced last fall as part of a company-wide effort toward “building a more equitable future for everyone,” alongside grants and new sponsorships. More than 800 companies applied and Google interviewed 100 of them, ultimately winnowing that down to the 30 announced today.
Each company will receive “up to” $100,000 in non-dilutive funding, and up to $120,000 in Ads grants and $100,000 in Cloud credits. (I’ve asked Google for more details on how the fund was divided, and if any company received this full amount. I’ll update if I hear back.)
They’ll also get access to Google’s entrepreneurial network, tech support and some other assets that don’t have hard numbers associated with them.
All the startups are led by Black founders, and 40% by women of color. One of the latter is Nancy de Fays, co-founder of LINE, which makes these cool battery-hub combos for the MacBook “Pro” that add a ton of ports and battery life and look sweet to boot. I’ve learned a lot chatting with her at trade shows, and regret that I do most of my work at a desktop so I don’t have an excuse to use one of the company’s gadgets.
In response to being selected for Google funding, de Fays penned a blog post exhorting corporations to throw their weight around in favor of social change, and for startups to lead the way in diversity and equity:
We buy values and standards more than we buy the product itself. We buy ideals of life more than the actual features. Putting the these two parameters in the equation – the capability of big corps to shout loud, and consumers’ receptiveness to brands values and messages – it does make sense to me that to drive such a society change, big companies should voice and convey strong messages.
Founders need to build diverse teams without falling into compassion fatigue. They must show empathy and respect and bring onboard the best talents. Period. They need to be outspoken about their values, convey a strong, global mindset and build their organisation around them. And if they find themselves scoring low on diversity along the way, they should question themselves on the why and act on it without doing charity.
It’s something of a counterpoint to the idea, also commonly expressed these days, that companies should be mission-focused and objective.
Here are the other 29 companies that Google will be giving a boost to (descriptions taken from the blog post):
- Afrocenchix – Afrocenchix formulate, manufacture, and sell safe, effective products for afro and curly hair.
- AudioMob – AudioMob provides non-intrusive audio ads within mobile games.
- Augmize – Augmize builds risk models for property and casualty insurers using interpretable machine learning.
- Axela Innovation – Axela Innovations created a smart platform that joins up care services and puts the person receiving care at the center of the process.
- Bosque – Bosque is the first tech-enabled, direct-to-consumer plant brand in Europe with digitized inventory, AR tech, and on-demand access to vetted plant experts.
- Circuit Mind Limited – Circuit Mind is building intelligent software that fully automates the design of electronic circuit systems.
- Clustdoc – Clustdoc is client onboarding automation software used by organizations and teams around the world.
- Contingent – Contingent is an AI platform that proactively predicts, monitors, and manages supplier risk.
- Define – Define is a legal technology company that optimizes the contract drafting and reviewing process for lawyers, serving the world’s largest banks and consulting companies.
- Freyda – Freyda is digitizing the asset management industry by helping funds and service providers to become hyper-efficient in how they approach their data capture from documents.
- Heex Technologies – Heex Technologies provides AI-powered software and web services to development teams in data-intensive fields such as autonomous driving.
- HomeHero – HomeHero is an operating system for the house, making running a home simple and easy.
- Hutch Logistics – Hutch Logistics is a fulfilment and operating system for e-commerce brands.
- iknowa – iknowa is an end-to-end building and renovation platform for property owners and tradespeople.
- Kami – Kami empowers parents during family planning, pregnancy and childhood, allowing them to adapt and thrive through even the most difficult transitions.
- Kwara – Kwara makes building wealth together frictionless, by turning analog credit unions in emerging markets into modern digital banks.
- Lalaland – Lalaland uses AI to create synthetic humans for fashion eCommerce brands to increase diversity in retail.
- Modularity Grid – Modularity Grid is an AI platform that makes energy systems more efficient and resilient.
- Movemeback – Movemeback (often referred to as “the Linkedin of Africa”) is a global social professional platform, connecting people to opportunities, insights, and people they don’t have access to.
- Playbrush – Playbrush is the innovation leader in oral care, growing smart toothbrush subscriptions to foster better mouth and body health.
- Remote Coach – Remote Coach is a platform providing technology for personal trainers and fitness influencers to digitize and grow their businesses.
- Robin AI – Robin AI uses a combination of human and artificial intelligence to read and edit contracts.
- Scoodle – Scoodle is a platform for education influencers. Everyone has something they want to learn and something they can teach—we bring both sides together.
- Suvera – Suvera delivers a virtual care clinic for patients with long-term conditions in the UK.
- Syrona Health – Syrona is a digital health Company providing tracking, treatment, and management solutions for people with chronic gynecological conditions.
- Tradein – Tradein is a real-time scoring and prediction of business payment behavior and solvency.
- Vanilla Steel – Vanilla Steel offers a digital auctions platform for excess steel that provides sellers a simple inventory management process for excess material.
- Wild Radish – Wild Radish enables people who love food and cooking to engage in Michelin-quality, unique, cooking and dining experiences at home.
- Xtramile – Xtramile is a data-driven platform that delivers the right job to the right candidate anywhere online.
Feels like we’ll be hearing from most of these folks again. You can find out more about Google’s startup programs here.
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