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Dismantling the myths around raising your first check
As startups and venture capital grow in tandem, fundraising has gone from a formal affair on Sand Hill Road to a process that can happen anywhere from Twitter to Zoom.
While fundraising may no longer require a trip to California, it might depend on whether you got an invite to a private audio app. And while you may not need to be an insider, second-time founders — largely male and white — still have a competitive advantage.
If your intention is to build a company that you want to own and run indefinitely, and/or to grow more slowly and take fewer risks, traditional venture capital is not right for what you want to build.
The growing complexity of fundraising has the opportunity to make tech either inclusive or exclusive. For new founders looking to raise money, let’s dismantle the myths about raising your first check and instead focus on how investors and other successful founders describe the nuance needed to secure money.
What makes my business venture-worthy?
This question is existential, but it should be at the forefront throughout your journey as a founder. Elizabeth Yin, founding partner of Hustle Fund, says startups should be able to hit one of two goals: Reach $100 million ARR by its fifth year or get to $1 billion in valuation in the same time period.
“This is hard to do. And most businesses will never get there — not for a lack of trying — but there’s a lot of luck whether your idea has that much demand that quickly,” she added.
“I think you will know in the first year or two how ‘easy’ or ‘hard’ it is to get customers and whether you think on that trajectory you can get to $100 million a year in a few years,” Yin said. “And if it’s really hard, it doesn’t mean you throw in the towel. … There are many great companies that are not VC-backable where the founders will make a lot of money, but it just means you need to think through where to get your financing. Perhaps it’s from angels. Perhaps it’s from revenue-based financing funds. Perhaps it’s from customer crowdfunding.”
While VC is the flashy gold medal, the rapid growth of emerging fund managers means that a first check can be piecemealed together from a variety of different sources. The options for financing are seemingly endless: syndicates, public crowdfunding, VC firms, accelerators, debt financing, rolling funds, and, for the profitable few, bootstrapping.
“When people go around saying, ‘Do you want to run a VC-backable company?’ that feels weird — you don’t necessarily get to pick how fast you can grow — the market just may or may not be there,” Yin said. “There’s a lot of luck with that.”
Leslie Feinzaig, founder of Female Founders Collective, said that beyond economics, the hardest part of knowing whether your startup makes sense as a VC-backed business is understanding your own goals as an entrepreneur.
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On-demand grocery startup Food Rocket launches in the Bay Area, goes up against delivery giants
On-demand grocery startups like Gorillas are invading Europe right now, but although on-demand-everything is kinda old-hat in the Bay Area, a new startup thinks it might just be able to do something new.
Food Rocket says it has raised a $2 million investment round from AltaIR Capital, Baring Vostok fund and the Angelsdeck group of business angels, including Philipp Bashyan, of Russia’s Yonder, who has joined as an investor and advisor.
Yes, admittedly, this tiny startup is competing with DoorDash, GoPuff, InstaCart and Amazon Fresh. Maybe let’s not get into that…
Using the company’s mobile app, users can order fresh groceries, ready-to-eat meals and household goods that will be delivered within 10-15 minutes, says the startup, which will be servicing SoMa, South Park, Mission Bay, Japantown, Hayes Valley and other areas. The company hopes to open 150 “dark stores” on the West Coast as part of its infrastructure.
Vitaly Aleksandrov, CEO, and co-founder of Food Rocket, said: “The level of competition in this market in the U.S. is still manageable, which is why we have the opportunity to become leaders in the sphere of fast delivery of basic products and household goods. We aim to replace brick-and-mortar supermarkets and to change consumers’ current habits in regards to grocery shopping.”
What can we say? Good luck?
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Orbiit raises seed funding to automate the interactions within an online community
Orbiit, a startup that automates the interactions within an online community, has raised a $2.7 million round led by Bread and Butter Ventures, with participation from new investors High Alpha Capital, LAUNCHub Ventures and Company Ventures. Existing investors Founders Fund, which led Orbiit’s $1 million pre-seed round, Acceleprise and other angels also participated. The capital will be used to build out the Orbiit product and engineering team.
Orbiit says its platform handles the communications, matching, scheduling, feedback collection and analytics for people connecting with each other in an online community. The idea is that the communities therefore learn and network better, engage more and share more knowledge.
CEO and co-founder Bilyana Freye said: “Tailored 1:1 connections allow members to discuss difficult topics, be vulnerable and share learnings with one another. Those 1:1 connections are the hardest to execute, but when you start investing in them, with the help of Orbiit, you see engagement feeding into all other initiatives and a vibrant, active community that truly delivers on the promise to its members.”
Bread and Butter Ventures Managing Partner Mary Grove added: “This age-old question of how to leverage technology at scale to drive meaningful connections across communities both internal to an organization and across the globe is a problem we’ve been actively seeking a solution to for a decade. Orbiit brings the perfect blend of tech-enabled software with human curation to create strong connections and provide insights back to community managers.”
The platform is being used by startup communities at True Ventures, GGV and Lerer Hippeau; private networking groups such as Dreamers & Doers; and customer communities, like the CFO community run by fintech leader Spendesk.
Founders Fund Principal Delian Asparouhov said: “We see Orbiit as a key platform for peer learning within companies and communities, unlocking untapped knowledge through curated matchmaking.”
LAUNCHub Ventures participated in the round, following the recent first close of its new $70 million fund.
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CorrActions raises $2.7M to help avoid errors in human-machine interactions
CorrActions, a noninvasive neuroscience startup that uses sensor data to evaluate a user’s cognitive state due to drowsiness, alcohol, fatigue and other issues, today announced that it has raised a $2.7 million seed round. Early-stage fund VentureIsrael, seed fund Operator Partners and the Israeli Innovation Authority are backing the company, which is based out of OurCrowd’s Labs/02 incubator.
The idea here is to use touch sensors wherever humans may interact with machines, be that in a fighter jet’s cockpit, a car or anywhere else where knowing a user’s cognitive state could prevent potentially catastrophic errors. CorrActions promises that its proprietary algorithms can identify the user’s cognitive state and detect errors 150 milliseconds before they occur by “decoding unconscious brain signals through body motion monitoring.” For the most part, the system is use-case agnostic since it’s basically a generic platform that is independent of where it is implemented.
“Using sensors that already exist in nearly every electronic device like smartwatches, smartphones and even steering wheels and joysticks, CorrActions is the first in the world to be able to read a person’s cognitive state at any given moment by analyzing micro changes in their muscular activity,” explained Eldad Hochman, the company’s co-founder and CSO. “It is enough for the person to come in contact with an electronic device for two minutes and we can accurately quantify cognitive state and even predict a rapid deterioration, which may lead to failure or accidents. We can see this coming seconds before it occurs. This means that we can quantify the level of fatigue, intoxication, exhaustion or lack of concentration at any given moment.”
A lot of modern cars already feature sensors that can monitor your alertness, of course, and so it’s maybe no surprise that CorrActions is already working on proofs of concept with a few players in the automotive industry. In addition, it is also working on projects with the defense industry to show that its systems can assess a pilot’s performance, for example. But Hochman also believes that the company’s algorithms may be able to alert athletes or the elderly when they may be at risk of injury and falls.
The company says it will use the new funding to further develop its algorithms and support its current deployment partners, especially in the automotive industry.
“We are developing, and already seeing significant results for a technology which has the potential to save companies man-hours and money by preventing basic operational errors,” said CorrActions co-founder and CEO Zvi Ginosar. “Moreover, the application of our platform can be used to save lives, and prevent thousands of accidents and errors. In the next months we hope to be able to report more ground-breaking results and proof of concept trials, and this funding will greatly help us reach this goal.”
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Augmented reality NFT platform Anima gets backing from Coinbase
Augmented reality and non-fungible tokens, need I say more? Yes? Oh, well NFTs have certainly had their moment in 2021, but the question of what they do or what can be done with them has certainly been getting voiced more frequently as the speculative gold rush begins to cool off and people start to think more about how digital goods can evolve in the future.
Anima, a small creative crypto startup built by the founders of photo/video app Ultravisual, which Flipboard acquired back in 2014, is looking to use AR to shift how NFT art and collectibles can be viewed and shared. Their latest venture is an effort to help artists bring their digital creations to a bigger digital stage and help find what the future of NFTs looks like in augmented reality.
The startup has put together a small $500K pre-seed round from Coinbase Ventures, Divergence Ventures, Flamingo DAO, Lyle Owerko and Andrew Unger.
“As NFTs move away from being a more speculative market where it’s all about returns on your purchases, I think that’s healthy and it’s good for us specifically because we want to make things that are more approachable,” co-founder Alex Herrity says.
Their broader vision is finding ways for digital objects to interact with the real world, something that’s been a pretty top-of-mind concern for the AR world over the last few years, though augmented reality development has cooled more recently as creators have sunk into a wait-and-see attitude toward new releases from Apple and Facebook. Both the AR and NFT spaces are incredibly early, something Anima’s co-founders were quick to admit, but they think both spaces have matured enough that the gimmicks are out in the open.
“There’s a context shift that happens when you see AR as a vehicle to have a tactile relationship with something that you collected or that you see is a lifestyle accessory versus the common thing now where it’s a little bit more of an experiential gimmick,” co-founder Neil Voss tells TechCrunch.
The team has worked with a couple artists already as they’ve made early experiments in bringing digital art objects into AR and they’re launching a marketplace late next month based on ConsenSys’s Palm platform, where they hope to showcase more of their future partnerships.
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Just 12 hours left to apply to Startup Battlefield at TC Disrupt 2021
We’ve been urging you to apply to Startup Battlefield at TechCrunch Disrupt 2021 for weeks now, and you have just over 12 hours left before the application window slams shut on May 27 at 11:59 p.m. (PT). Don’t procrastinate — the experience alone, whether you win the $100,000 prize or not, can improve the trajectory of your business.
Case in point: Mollie Breen started out as a mathematician at the National Security Agency before co-founding an IoT/OT security startup called Perygee. She and her team competed in Startup Battlefield last year at Disrupt 2020. Although they didn’t reach the finals, Breen has plenty to say about the experience. Here’s what she shared with us in a quick Q&A.
TC: Why did you apply to Startup Battlefield?
Breen: I admired the leadership and growth of other companies that, at one point, were Startup Battlefield contestants. I noticed they had similar traction to us when they applied, and their products resembled ours in their ability to disrupt the respective industry.
TC: What was the training process like?
Breen: It was incredibly valuable both in the short term and long term. Every team gets a weekly session with the Battlefield editor. Together you rehearse and go over every iteration of the pitch line-by-line and slide-by-slide. After each session, I walked away with constructive feedback on everything — the content, the speaking style and even the font color on a particular slide.
This was a unique opportunity, and we put in extra hours to be ahead of schedule, sent drafts for review in the off hours and even doubled down on additional practice with Q&As. As a result, we couldn’t have been more prepared for pitch day. And the training has stayed with Perygee well past the sessions and the competition.
TC: What did it feel like to pitch at Disrupt?
Breen: Pitching at Disrupt was, in some ways, like other pitches except that you have an international audience. Since, at that point, we had practiced our pitch dozens of times, the real unknown during the competition was the Q&A with the VC judges.
There was additional pressure to answer succinctly and convincingly within a time constraint that you wouldn’t have during a normal one-on-one pitch. But with the prep help from the TechCrunch team, I felt ready to speak in front of such a large audience. I encourage anyone who might be nervous about the big stage to go for it and trust you’ll have more than enough preparation when you get there.
TC: What was the post-pitch impact? Did you meet investors, press or other key partners?
Breen: It helped accelerate our progress. Following Battlefield, we closed an oversubscribed fundraising round. We acquired additional beta users, including our first beta user who messaged us after reading about Perygee on TechCrunch. We also gained numerous press opportunities to share our story.
It’s almost a year since Startup Battlefield, and I’m still impressed by how many people start the conversation saying they watched the pitch while reading our company’s background. It’s a reminder that the opportunities created by being a TechCrunch Battlefield company continue.
TC: Do you have any great news to share since your pitch?
Breen: At TechCrunch Battlefield we were a small team doing MVP testing and just about to start raising. Since the pitch, we have scaled on all fronts. We grew the founding team and the engineering team, and we deployed the product to enterprise networks. Some of those deployments include contacts who reached out because of TechCrunch — and we raised our seed round!
TC: Is there anything else you’d like to share?
Breen: I’m grateful for the camaraderie and relationships we developed with the other teams. What you didn’t see on stage during the pitches was all of us cheering one another on from the group chat or social media feed. Even now, we continue to support one another through navigating business questions or promoting product launches. If it weren’t for Startup Battlefield, I would never have met this awesome group of startups.
You have just 24 hours left to channel your inner Mollie Breen. Apply to Startup Battlefield before the deadline expires on May 27 at 11:59 p.m. (PT). Get moving!
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Breinify announces $11M seed to bring data science to the marketing team
Breinify is a startup working to apply data science to personalization, and do it in a way that makes it accessible to nontechnical marketing employees to build more meaningful customer experiences. Today the company announced a funding round totaling $11 million.
The investment was led by Gutbrain Ventures and PBJ Capital with participation from Streamlined Ventures, CXO Fund, Amino Capital, Startup Capital Ventures and Sterling Road.
Breinify co-founder and CEO Diane Keng says that she and co-founder and CTO Philipp Meisen started the company to bring predictive personalization based on data science to marketers with the goal of helping them improve a customer’s experience by personalizing messages tailored to individual tastes.
“We’re big believers that the world, especially consumer brands, really need strong predictive personalization. But when you think about consumer big brands or the retailers that you buy from, most of them aren’t data scientists, nor do they really know how to activate [machine learning] at scale,” Keng told TechCrunch.
She says that she wanted to make this type of technology more accessible by hiding the complexity behind the algorithms powering the platform. “Instead of telling you how powerful the algorithms are, we show you [what that means for the] consumer experience, and in the end what that means for both the consumer and you as a marketer individually,” she said.
That involves the kind of customizations you might expect around website messaging, emails, texts or whatever channel a marketer might be using to communicate with the buyer. “So the AI decides you should be shown these products, this offer, this specific promotion at this time, [whether it’s] the web, email or SMS. So you’re not getting the same content across different channels, and we do all that automatically for you, and that’s [driven by the algorithms],” she said.
Breinify launched in 2016 and participated in the TechCrunch Disrupt Startup Battlefield competition in San Francisco that year. She said it was early days for the company, but it helped them focus their approach. “I think it gave us a huge stage presence. It gave us a chance to test out the idea just to see where the market was in regards to needing a solution like this. We definitely learned a lot. I think it showed us that people were interested in personalization,” she said. And although the company didn’t win the competition, it ended up walking away with a funding deal.
Today the startup is growing fast and has 24 employees, up from 10 last year. Keng, who is an Asian woman, places a high premium on diversity.
“We partner with about four different kinds of diversity groups right now to source candidates, but at the end of the day, I think if you are someone that’s eager to learn, and you might not have all the skills yet, and you’re [part of an under-represented] group we encourage everyone to apply as much as possible. We put a lot of work into trying to create a really well-rounded group,” she said.
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RevenueCat raises $40M Series B for its in-app subscription platform
RevenueCat, a startup offering a series of tools for developers of subscription-based apps, has raised $40 million in Series B funding, valuing its business at $300 million, post-money. Founded by developers who understood the difficulties in scaling a subscription app firsthand, RevenueCat’s software development kit (SDK) solution gives companies the tools they need to build a subscription business, including not just adding subscriptions themselves, but maintaining them over time even as the app stores implement changes. It also aids by sharing subscription data with other tools the business uses, like those for advertising, analytics or attribution.
The funding round was led by Y Combinator’s Continuity Fund and included participation from Index Ventures, SaaStr, Oakhouse, Adjacent and FundersClub, as well as Blinklist CTO Tobias Balling and Algolia CEO Nicolas Dessaigne. With the round, YC Continuity Partner Anu Hariharan is joining RevenueCat’s board, which today includes Index’s Mark Fiorentino in addition to the founders.
Explains RevenueCat CEO Jacob Eiting, the idea for the company came about after he and co-founder Miguel Carranza Guisado (CTO) struggled to figure out subscription infrastructure while working together at Elevate. After years of untangling a “subscription mess” in order to figure out answers to basic questions like subscriber retention and lifetime value, they realized there was potential in helping solve this problem for other developers.
Apple and Google, Eiting explains, aren’t always up to date with what companies actually need to build subscription businesses. “They’re kind of learning as they go. They just weren’t able to provide us the data we needed, and then also the infrastructure to do that is non-trivial.”
Image Credits: RevenueCat
When Eiting and Guisado sat down to work on RevenueCat in 2017, no one else was even building anything like this. But the demand for the startup’s tools and integrations soon resonated with developers who had faced similar challenges in the growing subsection app market.
Using the service, developers can access a real-time dashboard that display key metrics, like subscription revenue, churn, LTV (lifetime value), subscriber numbers, conversions and more. The data can then be shared through integrations with other tools and services, like Adjust, Amplitude, Apple Search Ads, AppsFlyer, Branch, Facebook Ads, Google Cloud Intercom, Mixpanel, Segment and several others.
After launching out of Y Combinator’s accelerator the following year, RevenueCat was soon live with 100 apps and had crossed $1 million in tracked revenue by the time it raised its $1.5 million seed round.
Today, RevenueCat has more than 6,000 apps live on its platform, with over $1 billion in tracked subscription revenue being managed by its tools. That’s double the number of apps that were using its service as of its $15 million Series A last August.
With the additional funding, the company will lower its pricing to put its tools in reach of more developers. Previously, it charged $120 per month for its charts and some of its integrations, or $499 per month for access to all integrations. This was affordable for larger companies, but could still be a difficult sell to the long tail of app developers where revenues ranged from $10K to $50K per month.
Now, RevenueCat will charge a small percentage of an app’s sales instead of a flat fee. Developers with up to $10,000 in monthly tracked revenue (MTR) can get started with the service for free and as their demands grow — like needing access to charts, support for web hooks, integrations and others — they can move up to either the Starter or Pro plans as $8/mo or $12/mo per $1,000 in MTR, respectively.
“I’m excited to give those tools to developers, especially on the small end, because it might be what they need to get out of that ‘less than $10K range,’ ” Eiting says. “Also, the beauty of freemium, or having a really generous free tier, is that it makes your tool the de facto — you remove as much friction as possible for providing software services and then, if you get your pricing right — which I think we have — it all kind of pays for itself,” he adds.
The company also plans to use the new funds to further invest in its business, expanding from App Store and Google Play support to include Amazon’s Appstore. It will also grow its team.
As part of its expected growth, RevenueCat recently hired a head of Product, Jens-Fabian Goetzmann, previously a PM at Microsoft and then product head at fitness app 8fit. Currently 30 people, in the year ahead, RevenueCat will grow to 60 people, hiring across design, product, engineering, sales and other roles.
“The world is moving toward subscriptions — and for companies, building out this model translates to weeks of developers’ time,” says YC Continuity’s Hariharan. “RevenueCat helps developers roll out subscriptions in minutes and creates a source of truth for customer data. With developers creating solutions to problems in the world, it’s important that they can find ways to monetize, grow, and support their most committed customers. RevenueCat is doing so by building subscriptions 2.0.”
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mmhmm, the video conferencing software, kicks off summer with a bunch of new features
mmhmm, the communications platform developed by Phil Libin and the All Turtles team, is getting a variety of new features. According to Libin, there are parts of video communication today that can not only match what we get in the real world, but exceed it.
That’s how this next iteration of mmhmm is meant to deliver.
The new headline feature is mmhmm Chunky, which allows the presenter to break up their script and presentation into “chunks.” Think of the presenter the same way you think of slides in a deck. Each one gets the full edit treatment and final polish. With Chunky, mmhmm users can break up their presentation into chunks to perfect each individual bit of information.
A presenter can switch between live and pre-recorded chunks in a presentation. So you can imagine a salesman making a pitch and switching over to his explanation of the pricing as a pre-recorded piece of his pitch, or a teacher who has a pre-recorded chunk on a particular topic can throw to that mid-class.
But mmhmm didn’t just think about the creation side, but also the consumption side. Folks in the audience can jump around between chunks and slides to catch up, or even view in a sped-up mode to consume more quickly. Presenters can see where folks in the audience are as they present or later on.
Libin sees this feature as a way to supercharge time.
“At mmhmm, we stopped doing synchronous updates with our fully distributed team,” said Libin. “We don’t have meetings anymore where people take turns updating each other because it’s not very efficient. Now the team just sends around their quick presentations, and I can watch it in double speed because people can listen faster than people can talk. But we don’t have to do it at the same time. Then, when we actually talk synchronously, it’s reserved for that live back-and-forth about the important stuff.”
mmhmm is also announcing that it has developed its own video player, allowing folks to stream their mmhmm presentations to whichever website they’d like. As per usual, mmhmm will still work with Zoom, Google Meet, etc.
The new features list also includes an updated version of Copilot. For folks who remember, Copilot allowed one person to present and another person to “drive,” or art direct, the presentation from the background. Copilot 2.0 lets two people essentially video chat side by side, in whatever environment they’d like.
Libin showed me a presentation/conversation he did with a friend where they were both framed up in Libin’s house. He clarified that this feature works best with one-on-one conversations, or, one-on-one conversations in front of a large audience, such as a fireside chat.
Alongside mmhmm Chunky, streaming and Copilot 2.0, the platform is also doing a bit of spring cleaning with regards to organization. Users will have a Presentation Library where they can save and organize their best takes, and organizations can also use “Loaf” to store all the best videos and presentations company-wide for consumption later. The team also revamped Presets to make it easier to apply a preset to a bunch of slides at once or switch between presets more easily.
A couple other notes: mmhmm is working to bring the app to both iOS and Android very soon, and launch out of beta on Windows.
Libin explained that not every single feature described here will launch today, but rather you’ll see features trickle out each week as we head into summer. He’ll be giving a keynote on the new features here at 10 a.m. PT/1 p.m. ET.
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Australian startup Pyn raises $8M seed to bring targeted communication in-house
Most marketers today know how to send targeted communications to customers, and there are many tools to help, but when it comes to sending personalized in-house messages, there aren’t nearly as many options. Pyn, an early-stage startup based in Australia, wants to change that, and today it announced an $8 million seed round.
Andreessen Horowitz led the investment with help from Accel and Ryan Sanders (the co-founder of BambooHR) and Scott Farquhar (co-founder and co-CEO at Atlassian).
That last one isn’t a coincidence, as Pyn co-founder and CEO Joris Luijke used to run HR at the company and later at Squarespace and other companies, and he saw a common problem trying to provide more targeted messages when communicating internally.
“I’ve been trying to do this my entire professional life, trying to personalize the communication that we’re sending to our people. So that’s what Pyn does. In a nutshell, we radically personalize employee communications,” Luijke explained. His co-founder Jon Williams was previously a co-founder at Culture Amp, an employee experience management platform he helped launch in 2011 (and which raised more than $150 million), so the two of them have been immersed in this idea.
They bring personalization to Pyn by tracking information in existing systems that companies already use, such as Workday, BambooHR, Salesforce or Zendesk, and they can use this data much in the same way a marketer uses various types of information to send more personalized messages to customers.
That means you can cut down on the company-wide emails that might not be relevant to everyone and send messages that should matter more to the people receiving them. And as with a marketing communications tool, you can track how many people have opened the emails and how successful you were in hitting the mark.
David Ulevitch, general partner at a16z and lead investor in this deal, points out that Pyn also provides a library of customizable communications materials to help build culture and set policy across an organization. “It also treats employee communication channels as the rails upon which to orchestrate management practices across an organization [by delivering] a library of management playbooks,” Ulevitch wrote in a blog post announcing the investment.
The startup, which launched in 2019, currently has 10 employees, with teams working in Australia and the Bay Area in California. Williams says that already half the team is female and the plan is to continue putting diversity front and center as they build the company.
“Joris has mentioned ‘radical personalization’ as this specific mantra that we have, and I think if you translate that into an organization, that is all about inclusion in reality, and if we want to be able to cater for all the specific needs of people, we need to understand them. So [diversity is essential] to us,” Williams said.
While the company isn’t ready to discuss specifics in terms of customer numbers, it cites Shopify, Rubrik and Carta as early customers, and the founders say there was a lot of interest when the pandemic hit last year and the need for more frequent and meaningful types of communication became even more paramount.
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