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Luxury air travel startup Aero raises $20M
Aero, a startup backed by Garrett Camp’s startup studio Expa, has raised $20 million in Series A funding — right as CEO Uma Subramanian said demand for air travel is returning “with a vengeance.”
I last wrote about Aero in 2019, when it announced Subramanian’s appointment as CEO, along with the fact that it had raised a total of $16 million in funding. Subramanian told me that after the announcement, the startup (which had already run test flights between Mykonos and Ibiza) spent the next few months buying and retrofitting planes, with plans for a summer 2020 launch.
Obviously, the pandemic threw a wrench into those plans, but a smaller wrench than you might think. Subramanian said that as borders re-opened and travel resumed in a limited capacity, Aero began to offer flights.
“We had a great summer,” she said. “We sold a lot of seats, and we were gross margin positive in July and August.”
The startup describes its offering as “semi-private” air travel — you fly out of private terminals, on small and spacious planes (Subramanian said the company has taken vehicles with 37 seats and retrofitted them to hold only 16), with a personalized, first-class experience delivered by its concierge team. Aero currently offers a single route between Los Angeles and Aspen, with one-way tickets costing $1,250.
Subramanian was previously CEO of Airbus’ helicopter service Voom, and she said she approached the company “very skeptically,” since the conventional wisdom in the aviation industry is that the business is all about “putting as many people into a finite amount of square footage” as possible. But she claimed that early demand showed her that “the thesis is real.”
“There is a set of people who want this,” she said. “Air travel used to be aspirational, something people got dressed up for. We want to bring back the magical part of the travel experience.”
After all, if you’re the kind of “premium traveler” who might already spend “thousands of dollars a night” on a vacation in Amangiri, Utah, it seems a little silly to be “spending hours trying to find a low-cost flight out of Salt Lake City.”
Image Credits: Aero
Subramanian suggested that while demand for business travel may be slow to return (it sounds like she enjoyed the ability to fundraise without getting on a plane), the demand for leisure travel is already back, and will only grow as the pandemic ends. Plus, the steps that Aero took to create a luxury experience also meant that it’s well-suited for social distancing.
Speaking of fundraising, the Series A was led by Keyframe Capital, with Keyframe’s chief investment officer John Rapaport joining the Aero board. Cyrus Capital Partners and Expa also participated.
The new funding will allow Aero to grow its team and to add more flights, Subramanian said. Next up is a route between Los Angeles and Cabo San Lucas scheduled to launch in April, and she added that the company will be returning to Europe this year.
“It’s a horrendous time to be Lufthansa, but counterintuitively, it’s the best time to start something from scratch,” she said — in large part because it’s been incredibly affordable to buy planes and other assets.
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.
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Unraveling ThredUp’s IPO filing: Slow growth, but a shifting business model
Another day, another venture-backed IPO filing. Today it’s ThredUp, a used-goods marketplace that is approaching the public markets in the wake of Poshmark’s own strong debut.
Both companies have a related market focus, albeit different approaches to selling used goods. Poshmark allows users to sell clothing items through its app. ThredUp, in contrast, acquires goods from users and sells them itself.
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But while Poshmark had profits to brag about in its own IPO filing, ThredUp does not and is also growing more slowly, expanding revenues just 13.6% in 2020. Reading its S-1 filing, it’s clear ThredUp did not have the best 2020, thanks in part to COVID-19.
This morning, let’s get into the numbers posted by the company backed by Trinity Ventures, Redpoint, Highland Capital Partners and Goldman Sachs to decide if it’s just merely to catch Poshmark’s wave, or if its business is a fine machine in its own right.
ThredUp’s model
To understand ThredUp’s business, we have to get into the mechanics of how it sells things. The company has two methods: direct sales and consignment. In the former, ThredUp buys goods and sells them. It then “recognize[s] revenue on a gross basis” and generates gross profit after deducting “inventory cost, inbound shipping and inventory write-downs, as well as outbound shipping, outbound labor and packaging costs.”
That is the model that ThredUp is leaving behind. After shifting to “primarily consignment sales” in 2019, the company’s business has skewed sharply in that direction. Consignment works by having consumers send ThredUp their goods, which it holds, and perhaps sells, remitting to the user a portion of the sale price. The method reduces write-downs and boosts gross margins.
Consignment sales at ThredUp “recognize revenue net of seller payouts,” deducting “outbound shipping, outbound labor and packaging costs” to reach gross profit results.
The revenue-mix focus change can be seen in how ThredUp generated gross profit in 2018, 2019 and 2020. In those years, consignment gross profit came to 38%, 67% and 81% of total gross profit. ThredUp’s business today is effectively a large, digital consignment effort.
What impact has that shift had on the company’s financial health? Let’s find out.
ThredUp’s growth
ThredUp posted $129.6 million in 2018 revenue, a figure that grew to $163.8 million in 2019 and $186 million in 2020. The company’s growth slowed from 26.4% in 2019 to 13.6% in 2020, a sharp deceleration. But at the same time, the portion of ThredUp revenues that came from consignment sales grew to 74% from 60%. Did that change have a material impact on the company’s gross margins, thus rendering its slow growth more palatable?
Not really. The company’s gross margins came to 68.7% in 2019 and 68.9% in 2020. That’s about as flat as Texas. And notably the number stayed flat despite the company noting that consignment revenues had stronger gross margins in 2019 and 2020 (77% and 75%, respectively) than its other model (57% and 51%, respectively).
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Snapcommerce raises $85M to make over your mobile shopping experience
People are not only shopping digitally more than ever, they’re also shopping using their mobile phones more than ever.
And for mobile-first companies like Snapcommerce, this is good news.
Snapcommerce, formerly known as SnapTravel, has raised $85 million in what the company is describing as a “Pre-IPO” growth round to help further its mission of “changing the way people shop on their phones.”
The Toronto, Ontario-based startup has built out an AI-driven, vertical-agnostic platform that uses messaging in an effort to personalize the mobile shopping experience and “deliver the best promotional prices.” While it was initially focused on the travel industry, the company is now branching out into other consumer verticals — hence its name change.
Inovia Capital and Lion Capital co-led the new growth round, which included participation from Acrew DCF, Thayer Ventures and Full In Partners, as well as existing backers Telstra Ventures and Bee Partners. The financing brings Snapcommerce’s total raised since its 2016 inception to over $100 million. Its last raise — a $7.2 million round from Telstra and NBA star Steph Curry — took place in 2019.
The startup was founded by tech entrepreneurs Hussein Fazal, whose prior company AdParlor grew to $100+ million in revenue, then sold to AdKnowledge back in 2011; and Henry Shi, who previously built uMentioned and worked at Google, where he helped launch YouTube Music Insights, according to previous TechCrunch reporting.
Snapcommerce co-founders Henry Shi and Hussein Fazal. Image courtesy of Snapcommerce
Snapcommerce launched its first, travel-focused product in 2017. It works by using chatbots to interact with customers via messaging apps such as SMS, Facebook and WhatsApp. But the company also has human agents ready to help if people need more assistance, in the past essentially serving as on-demand travel agents.
Its service is not just for hotels and flights, but also to help people book restaurants and activities too.
“Our focus has been on building that personal relationship,” Fazal said. “Many people end up coming back to us when they travel again.” In fact, over 40% of its sales in 2020 came from repeat customers.
Over the years, the company claims to have helped more than 10 million users globally save over $75 million. It expects to cross over $1 billion in total mobile sales this year.
And now it’s ready to branch out into helping consumers save money on goods.
“When shopping, it’s hard to find the right product and even if you do, it’s hard to find a good deal,” he said. “On a desktop, there’s ways around it. But on mobile, it’s virtually impossible.”
The company turned the corner to profitability three months into the pandemic in 2020, seeing a 60% spike in sales in the second half of the year compared to H2 2019, according to CEO Fazal.
It then decided to re-invest its profits to continue growing the business.
“The profitability during the pandemic gave us confidence that we could turn to profitability whenever we needed to and gave us control of our own destiny, which enabled this fundraise,” Fazal told TechCrunch. “The third quarter of 2020 ended up being our greatest quarter ever.”
The COVID-19 pandemic, naturally, only accelerated its growth as more consumers turned to mobile.
“We believe the next wave of power purchasers will be via mobile,” Fazal said. “Some of the new generation don’t even have desktops or laptops, and they spend all their time on their mobile phone and messaging. So we’re able to be at the forefront.”
Snapcommerce has an IPO in its sights, although no specific timeline. The company did not reveal its current valuation or hard revenue figures. The company makes money by either marking up prices provided by a merchant or charging the merchant a commission.
Chris Arsenault, partner at Inovia and Snapcommerce lead investor, said his firm “tripled up” on its investment in the startup after witnessing its success in the travel space.
“Other companies out there only care about the transaction, and force consumers to look through several services to see if they got the best price, all the while telling them ‘there’s only two seats left,’ ” he told TechCrunch. “We believe that consumers aren’t going to accept that type of pressure-selling in the future. And Snapcommerce’s ability to build trust with its customers and service providers has attracted us to them as they are defining what the future of commerce is going to be like.”
Ultimately, the company plans to use its fresh capital to continue to scale with the goal of streamlining the entire mobile search, purchase and fulfillment process and make finding “the right item at the right price as easy as sending a message to a trusted friend.”
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.
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Papaya Global raises $100M more at a $1B+ valuation for tools to hire, pay and manage distributed workforces
Remote working — hiring people further afield and letting people work outside of a central physical office — is looking like it will be here to stay, and today one of the startups building tools for that environment is announcing a big fundraise in response to the opportunity.
Papaya Global, an Israeli startup that provides cloud-based payroll and hiring, onboarding and compliance services across 140 countries for organizations that employ full-time, part-time and contract workers outside of their home country, has picked up $100 million in funding and has confirmed that its valuation is now over $1 billion.
The company targets organizations that not only have global workforces, but are expanding their employee bases quickly. They include fast-growing startups like OneTrust, nCino and Hopin (which today announced a monster $400 million round), as well as major corporates like Toyota, Microsoft, Wix and General Dynamics.
Papaya is not disclosing revenue numbers but said that sales have grown 300% year-over-year for each of the last three years.
Led by Greenoaks Capital Partners, this Series C also includes significant participation from IVP and Alkeon Capital. Previous backers Insight Venture Partners, Scale Venture Partners, Bessemer Venture Partners, Dynamic Loop, New Era and Workday Ventures, Access Ventures and Group 11 also chipped in. The new investment brings Papaya’s total funding to $190 million.
Papaya has been on a fundraising tear in the last 18 months. Today’s news comes less than six months after it raised a $40 million Series B. And that round came less than a year after a $45 million Series A.
Why so much, so quickly? Partly because of the demands on the business, but possibly also to capitalize on an opportunity at a time when so many others are also going after it as well.
The opportunity is that companies and other organizations are finding themselves needing tools to address the current state of play: Workforce growth today doesn’t look like it did in 2019, and so incumbent solutions like ADP, or cobbled together solutions covering multiple geographies, either don’t cut it, or are too costly to maintain.
Papaya Global, in contrast, says it has built an AI-based platform that automates a lot of work and removes much of the manual activity that comes out of trying to right-size a lot of legacy payroll products to work in new paradigms.
“The major impact of COVID-19 for us has been changing attitudes,” CEO Eynat Guez, who co-founded the company with Ruben Drong and Ofer Herman, told me in an interview last September. “People usually think that payroll works by itself, but it’s one of the more complex parts of the organization, covering major areas like labor, accounting, tax. Eight months ago, a lot of clients thought, it just happens. But now they realize they didn’t have control of the data, some don’t even have a handle on who is being paid.”
One challenge, however, is that many others are also chasing these customers in hopes of becoming the ADP of distributed and global work.
Last month, a startup called Oyster, also aimed at distributed workforces, raised $20 million. Others in the same area that have raised lots of capital include Turing, Deel, Remote, Hibob, Personio, Factorial, Lattice, Turing and Rippling.
And as we have pointed out before, these are just some of the HR startups that have raised money in the last year. There are many, many more.
Investors here are hoping that as we see some consolidation emerge out of this mix, there will be a few leaders and that Papaya will be one of them.
“Papaya Global has built a best in class solution to onboard new employees, automate payroll, and manage a global workforce through a single pane of glass. Both growing and established companies have dramatically changed their working practices in recent years, and Papaya has seen impressive growth as a result. We’re excited to continue supporting them as they seek to simplify an increasingly complex challenge for some of the world’s biggest companies,” said Patrick Backhouse, partner at Greenoaks Capital, in a statement.
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.
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From the ashes of nearly a billion dollars, Ample resurrects Better Place’s battery swapping business model
A little over 13 years ago, Shai Agassi, a promising software executive who was in line to succeed the chief executive at SAP, then one of the world’s mightiest software companies, left the company he’d devoted the bulk of his professional career to and started a business called Better Place.
That startup promised to revolutionize the nascent electric vehicle market and make range anxiety a thing of the past. The company’s pitch? A network of automated battery swapping stations that would replace spent batteries with freshly charged ones.
Agassi’s company would go on to raise nearly $1 billion (back when that was considered a large sum of money) from some of the world’s top venture capital and growth equity firms. By 2013 it would be bankrupt and one of the many casualties of the first wave of cleantech investing.
Now serial entrepreneurs John de Souza and Khaled Hassounah are reviving the battery swapping business model with a startup called Ample and an approach that they say solves some of the problems that Better Place could never address at a time when the adoption of electric vehicles is creating a far larger addressable market.
In 2013, there were 220,000 electric vehicles on roads, according to data from Statista, a number which had grown to 4.8 million by 2019.
Ample has actually raised approximately $70 million from investors, including Shell Ventures, the Spanish energy company Repsol and the Moore Strategic Ventures, a venture firm that is the privately held investment firm of Louis M. Bacon, founder of the multibillion-dollar hedge fund, Moore Capital Management. That includes a $34 million investment first reported back in 2018, and a later round from investors including Japan’s energy and metals company, Eneos Holdings that closed recently.
“We had a lot of people that either said, I somehow was involved in that and was suffering from PTSD,” said de Souza, of the similarities between his business and Better Place. “The people who weren’t involved read up about it and then ran away.”
For Ample, the difference is in the modularization of the battery pack and how that changes the relationship with the automakers that would use the technology.
“The approach we’ve taken… is to modularize the battery and then we have an adapter plate that is the structural element of the battery that has the same shape of the battery, same bolt pattern and same software interface. Even though we provide the same battery system… it’s the same as replacing the tire,” said Hassounah, Ample’s co-founder and chief executive. “Effectively we’re giving them the plate. We don’t modify the car whatsoever. You either put a fixed battery system or an Ample battery plate. We’re able to work with the OEMS where you can make the battery swappable for the use cases where this makes a lot of sense. Without really changing the same vehicle.”
Ample’s currently working with five different OEMs and has validated its approach to battery swapping with nine different car models. One of those OEMs also brings back memories of Better Place.
It’s clear that the company has a deal with Nissan for the Leaf thanks to the other partnership that Ample has announced with Uber. Ample’s founders declined to comment on any OEM relationships.
It’s clear that Ample is working with Nissan because Nissan is the company that inked a deal with Uber earlier this year on zero-emission mobility. And Uber is the first company to use Ample’s robotic charging stations at a few locations in the Bay Area, the company said. This work with Nissan echoes Better Place’s one partnership with Renault, another arm of the automaker, which proved to be the biggest deal for the older, doomed, battery swapping startup.
Ample says it only takes weeks to set up one of its charging pods at a facility and that the company’s charging drivers on energy delivered per mile. “We achieve economics that are 10% to 20% cheaper than gas. We are profitable on day one,” said Hassounah.
Uber is the first step. Ample is focused on fleets first and is in talks with multiple, undisclosed municipalities to get their cars added to the system. So far, Ample has done thousands of swaps, according to Hassounah, with just Uber drivers alone.
The cars can also be charged at traditional charging facilities, Hassounah said, and the company’s billing system knows the split between the amount of energy it delivers versus another charging outlet, Hassounah said.
“So far, in the use cases that we have, for ridesharing it’s individual drivers who pay,” said de Souza. With the five fleets that Ample expects to deploy with later this year the company expects to have the fleet managers and owners pay for charging.
Some of the inspiration for Ample came from Hassounah’s earlier experience working at One Laptop per Child, where he was forced to rethink assumptions about how the laptops would be used, the founder said.
“Initially I worked on the keyboard display and then quickly realized the challenge was in the field and developed a framework for creating infrastructure,” Hassounah said.
The problem was the initial design of the system did not take into account lack of access to power for laptops at children’s homes. So the initiative developed a charging unit for swapping batteries. Children would use their laptops over the course of the day and take them home, and when they needed a fresh charge, they would swap out the batteries.
“There are fleets that need this exact solution,” said de Souza. But there are advantages for individual car owners as well, he said. “The experience for the owner of a vehicle is after time the battery degrades. With ours as we put new batteries in the car can go further and further over time.”
Right now, OEMs are sending cars without batteries and Ample is just installing their charging system, said Hassounah, but as the number of vehicles using the system rises above 1,000, the company expects to send their plates to manufacturers, who can then have Ample install their own packs.
Currently, Ample only supports level one and level two charging, but won’t offer fast charging options for the car makers it works with — likely because that option would cannibalize the company’s business and potentially obviate the need for its swapping technology.
At issue is the time it takes to charge a car. Fast chargers still take between 20 and 30 minutes to charge up, but advances in technologies should drive that figure down. Even if fast charging ultimately becomes a better option, Ample’s founders say they view their business as an additive step to faster electric vehicle adoption.
“When you’re moving 1 billion cars, you need everything… We have so many cars we need to put on the road,” Hassounah said. “We think we need all solutions to solve the problem. As you think of fleet applications you need a solution that can match gas in charge and not speed. Fast charging is not available in mass. The challenge will not be can the battery be charged in five minutes. The cost of building chargers that can deliver that amount of power is prohibitive.”
Looking beyond charging, Ample sees opportunities in the grid power market as well, the two founders said.
“Time shift is built into our economics… that’s another way we can help,” said de Souza. “We use that as grid storage… we can do demand charge and now that the federal mandate is there to feed into the grid we can help stabilize the grid by feeding back energy. We don’t have a lot of stations to make a significant impact. As we scale up this year we will.”
Currently the company is operating at a storage capacity of tens of megawatts per hour, according to Hassounah.
“We can use the side storage to accelerate the development of swapping stations,” de Souza said. “You don’t have to invest an insane amount of money to put them in. We can finance the batteries in multiple ways as well as utilize other sources of financing.”
Ample co-founders John de Souza and Khaled Hassounah. Image Credit: Ample
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.
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As activist investors loom, what’s next for Box?
Box could be facing troubled times if a Reuters story from last week is accurate. Activist investor Starboard Value took a 7.9% stake in the storage company in September 2019, and a year ago took three board seats as its involvement in the cloud company deepened. It seemed only a matter of time before another shoe dropped.
Activist investor Starboard Value is reportedly after three additional board seats.
That thunk you just heard could be said shoe as Starboard is reportedly after three additional board seats. Those include current CEO Aaron Levie’s and two independent board members, all of whom have their seats coming up for election in June. If the firm were to obtain three additional seats, it would control six of nine votes and could have its way with Box.
What could the future hold for the company given this development (assuming it’s true)? It seems changes are coming for Box.
Below, we’ll explore how Box got to this point. And if an acquisition is in Box’s future, just who might be in the market for a cloud-native content management company built to scale in the enterprise? There would very likely be multiple suitors.
Box’s fickle financial fate
Starboard may have reason to be frustrated by Box’s performance. The cloud company’s stock price and market cap remain stubbornly low. Its share price is mired around $18 a share, not much higher than the price it went public at in 2015 when it was valued at $14 per share. Its market cap today is $3 billion, which is lacking in comparison to fellow cloud stalwarts like Dropbox at $9 billion, Slack at $23 billion or Okta at $34 billion.
Remember back in March 2014 when Box announced it was going public? It then did something highly unusual, delaying the deed 10 months until January 2015. One thing or another kept the company from pulling the trigger and just doing it. Perhaps it was a sign.
Instead, Box raised $150 million more after its S-1 filing received a lackluster response from the market. Looking back, you could argue that the SaaS model was simply less well known in 2014 than it is today. Certainly public investors are more sympathetic to software companies that run deficits in the name of growth than they were back then.
But when Box did file again, finally pricing at $14 per share in 2015, it received a strong welcome. The company had priced above its $11 to $13 per-share IPO range as TechCrunch reported at the time and instantly shot higher. We wrote on its IPO day that the cloud company quickly “surged to over $20 a share and [was then] trading at $23.67.”
A year later, our continuing coverage had flipped with the share price stuck at $10 in January 2016.
When growth won’t come
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Okta acquires cloud identity startup Auth0 for $6.5B
As Okta announced earnings today after the bell, it revealed that it’s buying cloud identity startup Auth0 for a hefty $6.5 billion. The company had a valuation of $1.92 billion when it raised $120 million led by Salesforce Ventures last July.
With Auth0, Okta gets a cloud identity company that helps developers embed identity management into applications, adding an entirely new dimension to its identity platform. Okta co-founder and CEO Todd McKinnon says the acquisition gives his company broad coverage in the identity space and the acquisition has the power to lift identity to a first-class cloud category along with infrastructure, enterprise software like collaboration and CRM and others.
“There are a few other [primary cloud categories], but one of those has to be identity. And for identity to rise to that status, it has to cover all the use cases. It’s got to be both workforce and customer. So workforce [has been] our [primary] business traditionally, and customer is newer,” McKinnon told me.
The customer piece involves having your customers use Okta/Auth0 on the back end to sign onto your platform, rather using it as just your corporate credentials. Having coverage across both areas is what has McKinnon so excited.
Eugenio Pace, co-founder and CEO Auth0 sees his company together with Okta as powerful combination in the identity management space, and he’s not just hyping the deal when he says that. “Together, we can offer our customers workforce and customer identity solutions with exceptional speed, simplicity, security, reliability and scalability. By joining forces, we will accelerate our customers’ innovation and ability to meet the needs and demands of consumers, businesses and employees everywhere,” Pace said in a statement.
Pace and co-founder Matias Woloski came from Microsoft where they worked until launching their startup in 2013. As McKinnon points out this is a substantial company with 800 employees. It is expected to reach $200 million in revenue this year.
“So they have this mindset of building a service that is flexible and API-driven and great tools for developers and all the extensibility or customizability, that developers would need. And you can’t, you can’t do that later, you have to start from the beginning
McKinnon says while they share some common customers, there will be net new ones as well and the nature of the two companies coverage areas means that they can sell Auth0 into traditional Okta customers and vice versa. The combined entities could fill in a soup-to-nuts kind of identity offering.
As Pace told TechCrunch’s Zack Whittaker in 2019, it has always been focused on developers:
“We’re not profitable because we’ve chosen to reinvest and continue to sustain the high scale of growth,” he said. “But we are more efficient every day — in the way we acquire customers, the way we service customers, in the way we ship new design capabilities.”
The question is how much this will change under the Okta, but Auth0 users can breathe a sigh of relief in that McKinnon says that the company will operate as an independent unit inside of Okta as they look for paths to integration in the coming months. What’s more, McKinnon says he has a relationship with the two founders going back years and it sounds like there is an element of trust there.
Okta had a pretty good quarter too while it was at it, announcing $234.7 million in revenue up 40% year over year, but Wall Street appears to be unhappy with the deal with the stock price down 6.9% in after hours trading.
Auth0 was founded in 2013 and raised over $300 million along the way. In addition to Salesforce Ventures, other investors included Sapphire Ventures, Bessemer Venture Partners and Meritech Capital Partners.
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Bottomless closes $4.5M Series A to scale its subscription coffee business
As a devoted coffee drinker I was enthused by the idea of Bottomless. The Y Combinator-backed startup sends its users coffee as they run low so that they never run out of the Magic Juice of Life. What could be better?
Because life is somewhat funny, after signing up for its service the company reached out to share that it had raised a Series A. So I got on the phone with Liana Herrera, the company’s co-founder, to chat about the startup, which is part coffee-sourcing engine, part subscription/e-commerce play and part hardware effort.
So before we talk about its Series A, let’s work better to understand what Bottomless is building, and how it works.
What’s Bottomless?
Born from its founders’ issues ordering the right amount of Soylent when they actually needed it, and wondering why there wasn’t a better way to subscribe to goods consumed on a regular basis, Herrera uncovered the idea for Bottomless.
Today the product works by letting users pick the type of coffee they are interested in, be it caffeine level, price and the like. The company then provides customers with a small digital scale that they connect to their home internet. And then as users consume coffee that Bottomless sends them, placing the bag on the hardware in between uses, the scale notes how much is left and orders more before they run out.
A Bottomless scale, via the company as my kitchen lighting is bad.
You can set the sensitivity of the scale, asking it to either be ambitious in keeping you from running out of beans or ground coffee, or more relaxed. As I write to you today, I think that my third bag of decaf has arrived. It’s a neat system.
And from a business perspective, the Bottomless model has plusses. I honestly do not recall the price range of coffee that I picked, and do not know how much I am actually paying Bottomless at the moment. But I do know that having different types of coffee arrive at the house as I run low is pretty damn cool.
To make that happen, however, is not easy. The startup’s business is a little complex. Before and even after Bottomless went through Y Combinator back in 2019, the company hand-built its coffee-weighing scales. Herrera told TechCrunch that the old Silicon Valley saw that hardware is hard is in fact an understatement. After all the soldering she described during an interview, I believe her.
Still, after finishing the accelerator program the company managed to grow in 2019 by what Herrera said was around 10x. That customer expansion allowed the company to order bulk hardware from China in early 2020. After its first production run finished — a few thousand units — COVID-19 shut down that country’s supply chain. Happily for the startup, by the time COVID-19 had taken over America, the Chinese economy opened up and production could begin again.
Per the company, Bottomless scaled another 5-7x in 2020. An October 2020 CNN piece notes that the company had around 750 customers in late 2019, and some 6,000 by the time of publication. Herrera wants to massively expand that number, telling TechCrunch that she’d like to grow by 10x again this year, and that 5x expansion was the lower-end of her expectations.
Powering that growth are a host of coffee companies that Bottomless works with. Those companies handle roasting the beans and sending them to different Bottomless customers. So that no one reaches a zero-coffee state. And dies. Or whatever happens when one actually runs out of coffee.
The startup told TechCrunch that there are some 500 roasters on their wait list, implying that it will have the capacity to take on more customers this year.
Despite all the growth, the company still has some edges to refine. Setting up Wi-Fi on my scale wasn’t super-simple, for example. Herrera did note that her firm has a new scale coming out in the next three months. That could lower the difficulty barrier for new customers. Still, with 6,000 customers last October ordering three to four bags of coffee monthly, per Herrera’s estimate, the company had reached a comfortable seven-figure GMV run-rate before 2021 began.
For coffee roasters who may have seen their customer base slow during the pandemic, and consumers increasingly willing to dive into e-commerce, the company’s model could have long-term legs. Which brings us to the investors making that bet.
The round
Bottomless raised a $4.5 million Series A in January of 2021. It’s a smaller A than we tend to see in recent years, but Herrera said that her company has always been scrappy, which we take to mean that it has a history of being frugal. Patrick OShaughnessy led the round.
TechCrunch asked if the $4.5 million was a lot of money for the startup, as we didn’t have a clear picture at the time of its fundraising history. Herrera said that Bottomless has gotten to where it is today on just $2 million. So, the Series A is more than double all the money that the company as raised to date. It’s a lot of money, in other words.
Besides the new scale design, when asked about what the company intends to do with its funds, Herrera detailed the type of person she’s looking to hire — namely intellectually flexible folks who are informal, scrappy and very hack-y. More staff, in other words.
Let’s see how far Bottomless can get with its new check. Apparently I will be helping its KPIs for the foreseeable future as a customer.
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Clari revenue forecasting platform snags $150M investment and triples valuation to $1.6B
Clari, the revenue operations platform that helps companies predict revenue outcomes, announced a $150 million Series E today on a $1.6 billion valuation, a number that more than triples its 2019 Series D valuation of $500 million.
Silver Lake led the latest investment with participation from B Capital Group and existing investors Sequoia Capital, Bain Capital Ventures, Sapphire Ventures, Madrona Ventures, Thomvest and Tenaya Capital. The company reports it has now raised a total of $285 million.
While COVID made 2020 trying for everyone, a company with a product that allows executive teams to understand and predict revenue at a granular level was obviously going to be in demand, and Clari saw a lot of interest over the last year.
“It was a surreal year for us, given the momentum we had and all of the tough news we saw going on around us. For us, the usage metrics were just off the charts, as people need visibility and predictability and control over their revenue forecasts,” company co-founder and CEO Andy Byrne told me.
While Byrne didn’t want to discuss revenue specifics, he did point out that he beat by 110% the revenue plan he submitted to his board. He said the performance has led to a lot of inbound investor interest in the company.
“That’s why we’ve had such great investor interest is that [VCs] were hearing in the investment community about how transformative Clari has been […] just giving companies what we call revenue confidence, being able to go and understand where you’re going to be and to accurately predict the impact the pandemic is going to have on your trajectory, good or bad,” Byrne explained.
To this point, the company has been working with sales and marketing teams, but Byrne says that the company is expanding the scope of the product to bring that same predictability to other parts of an organization.
Clari has mostly focused on technology companies with customers like HPE, Workday and Adobe, but it has plans to expand beyond that vertical. In fact, one of the ways Byrne plans to put today’s investment to work is to push into other verticals, which could also benefit from this kind of revenue visibility.
The company is up to 300 employees, with plans to double that number by the end of 2021. Byrne says he is building a positive work culture and points to recently being recognized as one of the best places to work by Inc., Bay Area News Group, #GirlsClub and Built In. He says they have made progress when it comes to diversity hirings across a number dimensions, but admits there is still work to be done.
“We actually specifically [established] a commission around diversity and inclusion that has board level [backing] that we’re running to continue to do better work there. Having said that, we still recognize that we’re not too dissimilar to a lot of companies where we feel like there’s so much more that we need to do,” he said.
At this point in the company’s evolution with plenty of money in the bank and a healthy valuation, Byrne did not shy away from the IPO question, although as you would imagine, he wasn’t ready to discuss specifics.
“I would say the answer is unequivocally yes, and we’re building toward this. […] We don’t have a time frame upon which we know where we’re going to go public, but the next goal is to get to the IPO starting line,” he said.
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Yugabyte announces $48M investment as cloud-native database makes enterprise push
As demand for cloud-native applications is growing, Yugabyte, makers of the cloud-native, open-source YugabyteDB database, is seeing a corresponding rise in demand for its products, especially with large enterprise customers. Today, the company announced a $48 million financing round to help build on that momentum. The round is an extension of the startup’s $30 million Series B last June.
Lightspeed Venture Partners led the round with participation from Greenspring Associates, Dell Technologies Capital, Wipro Ventures and 8VC. It has raised a total of $103 million, according to the company.
Kannan Muthukkaruppan, Yugabyte co-founder and president, says the startup saw a marked increase in interest in both the open-source and commercial offerings in 2020 as the pandemic pushed many companies to the cloud faster than they might have gone otherwise, something many startup founders have pointed out to me.
“The distributed SQL space is definitely heating up, and if anything over the last six months almost in every vector in terms of enterprise customers — from Fortune 500 companies across financial, retail, ISP or telcos — are putting Yugabyte in production to be the system of record database to meet some of their business critical services needs,” Muthukkaruppan told me.
In addition, he’s seeing a similar rise in the level of interest from the open-source version of the product. “Similarly, the groundswell on the community and the open-source adoption has been phenomenal. Our Slack [open source] user community quadrupled in 2020,” he said.
That kind of momentum led to the increased investor interest, says co-founder and CTO Karthik Ranganathan. “Some of the primary reasons to go and even ask for funding was that we realized we could accelerate some of this stuff, and we couldn’t do that with the original $30 million we had raised,” he said. The original thinking was to do a secondary raise in the $15-20 million range, but multiple investors expressed interest in participating, and it ended up being $48 million when all was said and done.
Former Pivotal president Bill Cook came on board as CEO at the same time they were announcing their last funding round in June, and brought some enterprise chops to the table. It was his job to figure out how to expand the market opportunity with larger high-value enterprise clients. “And so the last six or seven months has been about that, dealing with enterprise clients on one hand and then this emerging developer-led cloud offering as well,” Cook said.
The company has a three-tier offering that includes the open-source YugabyteDB. Then there is a fully managed cloud version called Yugabyte Cloud, and finally there is a self-managed cloud version of the database called Yugabyte Platform. The latter is especially attractive to large enterprise customers who want to be in the cloud, but still want to maintain control of their data and infrastructure, and so choose to manage the cloud installation themselves.
Yugabyte started last year with 50 employees, doubled that to this point, and now expects to reach 200 by the end of this year. As they add employees, the leadership team is cognizant of the importance of building a diverse and inclusive workforce, while recognizing the challenges in doing so.
“It’s work in progress as always. We’ve added diversity candidates right along the whole spectrum as we’ve grown but from my perspective it’s never sufficient, and we just need to keep pushing on it hard, and I think as a leadership team we recognize that,” Cook said.
The three leaders of the company have been working together remotely now since the announcement in June, and had only met briefly in person prior to the pandemic shutting down offices, but they say that it has gone smoothly. And while they would obviously like to meet in person again when the time is right, the momentum the company is experiencing shows that things are moving in the right direction, regardless of where they are getting their work done.
Note: The article originally stated this was a Series C round, but the company later clarified that it was a B-1 round; we’ve updated the article to reflect that.
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