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Zynga acquires Echtra, maker of Torchlight 3, to double down on RPG games
Games company Zynga has been on an acquisition tear the last several years to beef up its activity, in particular in mobile and casual-puzzle games, spending over $3 billion to pick up a range of startups across Europe (specifically Turkey and Finland) in the process. Today, however, it’s taking a turn toward more immersive, highly graphic cross-platform experiences. The company has announced that it is acquiring San Francisco’s Echtra Games, the role-playing game publisher behind Torchlight III, which is available on Steam, XBox One, PS4 and Nintendo Switch.
The team will be working on releasing a new title in partnership with Zynga’s NaturalMotion studio, the company said. No other details on that were released for now.
Financial terms of the deal were not disclosed. It’s also not clear who backed Echtra, if anyone.
But Echtra is in some ways a classic example of a gaming startup built out of a burning idea, rather than cold, calculated moneymaking — perhaps the best kind of company you can have.
Max Schaefer, the co-founder and CEO, had previously been at Runic Games, the developer of the original Torchlight series, as well as Diablo and others. Runic was shuttered by its owner, Perfect World, and so in 2016, Schaefer went on to form a new company, Echtra, with some of his Runic colleagues and others in the industry because he saw more life left in the franchise.
That perhaps didn’t play out as well as Echtra had hoped, though. After the game exited early access into general availability, it received mixed reviews, some of the criticism leveled at how the game was built, and some because of bugs.
The plan will be to bring on Echtra’s team and expertise, potentially to continue building the franchise, but more generally to help Zynga build out more of a footprint in cross-platform games, and also gaming technology, in particular around tools built on Unreal Engine, the platform of choice at the moment for RPG and other immersive applications.
“Max and his team at Echtra Games are responsible for some of the most legendary game properties ever created, and they are experts in the action RPG genre and cross-platform development. I’m excited to welcome the Echtra Games team into the Zynga family,” said Frank Gibeau, chief executive officer of Zynga, in a statement. “This acquisition will be instrumental in growing our iconic licenses and brands from mobile to PCs and consoles, while helping to further expand Zynga’s total addressable market.”
“Echtra Games is delighted to be joining the Zynga family,” added Max Schaefer. “We share Zynga’s vision that cross-platform play is an essential part of the future of RPGs and interactive entertainment and are eager to apply our vast experience and talents to this effort.”
Gaming has been one of the bright spots in the last year — no surprise, since people are spending so much more time indoors and at home because of the pandemic. Zynga, as a consequence of that, has also been on a roll in recent times, with its fourth-quarter earnings, released last month, beating analyst expectations. Its revenues of $616 million are the highest-ever quarterly bookings posted by the company. Acquisitions are a major part of its strategy these days, the company said at the time.
Going for more immersive RPG titles outside of mobile is an ambitious and potentially more expensive undertaking and is a very notable swerve away from the company’s acquisitions in recent years, which have included a majority stake in Turkey’s Rollic for $228 million, Peak for $2.1 billion, 80% of Small Giant Games for $718 million; and Gram Games for $299 million.
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Firms backed by Robert Downey Jr. and Bill Gates have funded an electric motor company that slashes energy consumption
Sometimes the smallest innovations can have the biggest impacts on the world’s efforts to stop global climate change. Arguably, one of the biggest contributors in the fight against climate change to date has been the switch to the humble LED light, which has slashed hundreds of millions of tons of carbon dioxide emissions simply by reducing energy consumption in buildings.
And now firms backed by Robert Downey Jr. and Bill Gates are joining investors like Amazon and iPod inventor Tony Fadell to pour money into a company called Turntide Technologies that believes it has the next great innovation in the world’s efforts to slow global climate change — a better electric motor.
It’s not as flashy as an arc reactor, but like light bulbs, motors are a ubiquitous and wholly unglamorous technology that have been operating basically the same way since the nineteenth century. And, like the light bulb, they’re due for an upgrade.
“Turntide’s technology and approach to restoring our planet will directly reduce energy consumption,” said Steve Levin, the co-founder (along with Downey Jr. ) of FootPrint Coalition.
The operation of buildings is responsible for 40% of CO2 emissions worldwide, Turntide noted in a statement. And, according to the U.S. Department of Energy (DOE), one-third of energy used in commercial buildings is wasted. Smart building technology adds an intelligent layer to eliminate this waste and inefficiency by automatically controlling lighting, air conditioning, heating, ventilation and other essential systems and Turntide’s electric motors can add additional savings.
That’s why investors have put over $100 million into Turntide in just the last six months.
PARIS, FRANCE – JUNE 16: Tony Fadell, inventor of the iPod and founder and former CEO of Nest, attends a conference during Viva Technology at Parc des Expositions Porte de Versailles on June 16, 2017 in Paris, France. Viva Technology is a fair that brings together, for the second year, major groups and startups around all the themes of innovation. (Photo by Christophe Morin/IP3/Getty Images)
The company, led by chief executive and chairman Ryan Morris, is commercializing technology that was developed initially at the Illinois Institute of Technology.
Turntide’s basic innovation is a software-controlled motor, or switch reluctance motor, that uses precise pulses of energy instead of a constant flow of electricity. “In a conventional motor you are continuously driving current into the motor whatever speed you want to run it at,” Morris said. “We’re pulsing in precise amounts of current just at the times when you need the torque… It’s software-defined hardware.”
The technology spent 11 years under development, in part because the computing power didn’t exist to make the system work, according to Morris.
Morris was initially part of an investment firm called Meson Capital that acquired the technology back in 2013, and it was another four years of development before the motors were actually able to function in pilots, he said. The company spent the last three years developing the commercialization strategy and proving the value in its initial market — retrofitting the heating ventilation and cooling systems in buildings that are the main factor in the built environment’s 28% contribution to carbon dioxide emissions that are leading to global climate change.
“Our mission is to replace all of the motors in the world,” Morris said.
He estimates that the technology is applicable to 95% of where electric motors are used today, but the initial focus will be on smart buildings because it’s the easiest place to start and can have some of the largest immediate impact on energy usage.
“The carbon impact of what we’re doing is pretty massive,” Morris told me last year. “The average energy reduction [in buildings] has been a 64% reduction. If we can replace all the motors in buildings in the U.S. that’s the carbon equivalent of adding over 300 million tons of carbon sequestration per year.”
That’s why Downey Jr.’s Footprint Coalition, and Bill Gates’ Breakthrough Energy Ventures and the real estate and construction-focused venture firm Fifth Wall Ventures have joined the Amazon Climate Fund, Tony Fadell’s Future Shape, BMW’s iVentures fund and a host of other investors in backing the company.
The company has raised roughly $180 million in financing, including the disclosure today of an $80 million investment round, which closed in October.
Buildings are clearly the current focus for Turntide, which only yesterday announced the acquisition of a small Santa Barbara, California-based building management software developer called Riptide IO. But there’s also an application in another massive industry — electric vehicles.
“Two years from now we will definitely be in electric vehicles,” Morris said.
“Our technology has huge advantages for the electric vehicle industry. There’s no rare earth minerals. Every EV uses rare earth minerals to get better performance of their electric motors,” he continued. “They’re expensive, destructive to mine and China controls 95% of the global supply chain for them. We do not use any exotic materials, rare earth minerals or magnets… We’re replacing that with very advanced software and computation. It’s the first time Moore’s law applies to the motor.”
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Dooly closes on $20M for AI-based tools to help salespeople with their busywork
Robotic process automation has taken the enterprise world by storm by providing a set of tools for those doing repetitive, volume-based tasks to use software to remove some of that labor to let those people focus on more complicated tasks. Today a startup that’s taken some of that ethos and is applying it to more individualized work — that of salespeople — is announcing some funding.
Dooly, a Vancouver, Canada-based startup that has built a set of AI-based tools that automate the busywork that goes into updating data in their sales software, and namely Salesforce, has picked up $20 million in funding to build out its business, which to date has picked up a number of customers among the sales teams of enterprise-focused software companies. They include Airtable, Asana, Intercom, Contentful, Vidyard, BigCommerce, Liftoff and CrowdRiff.
Its aim is to make sales software more useful for salespeople by eliminating the work that goes into inputting data into those systems.
“Really they’ve just created a mountain of virtual filing cabinets,” Kris Hartvigsen, Dooly’s founder and CEO, said in an emailed interview with me. “Filing cabinets just wait for drawers to be opened — or in the case of enterprise software, reports to be pulled and data to be input. We know people are capturing information across the business and our job is to make sure that the people and systems across the business have a better, faster, more far-reaching way of staying informed.”
The funding is being announced today, but it was actually raised in two tranches that had not previously been disclosed. A $3.3 million seed round was led by Boldstart Ventures and also included BoxGroup. Its $17 million Series A, meanwhile, was led by Addition, with Boldstart and BoxGroup again participating, along with Battery Ventures, Mantis (representing musicians The Chainsmokers) and SV Angel.
Alongside the VCs, there are a number of interesting strategic individual investors, too. Daniel Dines and Brandon Deer of UiPath (the RPA connection clearly is not one that I’m imagining!); Allison Pickens, the ex-COO of Gainsight; Zander Lurie of SurveyMonkey); Jay Simons, ex-CEO of Atlassian); Harry Stebbings; and other unnamed investors are all also involved. Ed Sim of Boldstart is joining Dooly’s board of directors with this announcement.
The challenge that Dooly has been built to solve is that while there are a lot of tools out there now to help salespeople source leads, manage the progress of their sales, give them advice and other helpful material to supplement their charm and the basic strength of a product, manage customers once they’ve signed on, and so on, all of them still require something important to work: a time commitment from salespeople to keep them updated with information. Ironically, the more tools to help them that are built, the more time salespeople need to spend feeding them data.
Even more ironically, one of the big daddies of the problem — the somewhat overweight Salesforce — has published figures (cited by Dooly) that say salespeople spend just 34% of their time selling. The rest (minus trips to get coffee to stay caffeinated) seems to be about data entry.
The idea with Dooly is that you turn it on, connect it to what you are using — starting with Salesforce — and Dooly lets you make notes which it then organises and puts into the right places in the rest of your apps.
“When a salesperson starts using Dooly, the ‘aha moment’ is pretty immediate,” Hartvigsen said. “Whether they want to do quick pipeline edits or push their notes to Salesforce, we don’t ask the user to learn any new patterns they aren’t familiar with, we just automate a bunch of things they hate doing, often comparing those traditional chores to clerical work.” For example, he notes, when they sync a note, Dooly automatically updates any Salesforce with any contacts found in the meeting, updates fields, adds to-dos, logs activities, and pushes messages to the appropriate internal stakeholders on Slack, all in the same motion.
The product currently also integrates with Slack, G-Cal and G-Drive, because, Hartvigsen said, “we see this as an area where there is the most immediate friction and an area that was in need of disruption.” He added that the plan is to add more integrations over time. “We see need to expand the solutions that anchor to our connected workspace, with our near-term focus being the systems that touch revenue teams,” he said.
The design of Dooly seems to be about investing a little in order to save more. On average people are using Dooly between 2.5 and 5 hours each day, but Hartvigsen claims that right now the system helps people make up for more hours each week in lost productivity. Its pricing starts at $25 per user per month, going up depending on features and use.
There are quite literally thousands of products out in the market today, and among them hundreds of strong ones, being built to help salespeople with different aspects of getting their jobs done. I’ve written about quite a few of them, and I’ve actually asked companies about whether they are tackling the very issue that Dooly has identified and is trying to fix.
They weren’t, but that doesn’t mean that they won’t. Chief among them are companies like UiPath and Salesforce, which sit on different sides of this problem and could well move into it as they keep growing. (Having UiPath as a backer by way of its founder and a senior executive points to a relationship there, which is interesting.)
In the meantime, there have been some other interesting innovations using AI to improve the sales process, with companies like Pipedrive, Clari, Seismic, Chorus.ai and Gong all using natural language, machine learning and big data analytics (itself helped by AI) to improve how sales get done.
“The first thing we noticed when we met the Dooly team was the thoughtful design-first approach to product that engendered tons of customer love. This love was inherent not only on popular ratings sites like G2 Crowd but also in the individual usage and viral adoption throughout companies with only one initial user,” said Ed Sim, founder and managing partner at Boldstart Ventures in a statement. “Dooly is revolutionizing the note-taking experience for customer facing end users from sales to customer success to product.”
“Dooly is relentlessly focused on building a user-first experience for its customers to seamlessly create workflows and unlock new revenue opportunities,” said Lee Fixel, founder of Addition, added. “We are thrilled to support Dooly as it continues to scale and enhance the sales function for more businesses.”
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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Sequoia Capital India’s Surge invests $2M in sales engagement platform Outplay
Outplay’s team members on a video call
Sales engagement platforms (SEP) help sales teams automate and track the large number of tasks they need to do each day as they contact leads and hone in on potential deals. Focused on small-to-medium-sized companies, SEP startup Outplay announced today it has raised $2 million from Sequoia Capital India’s Surge program for early-stage startups.
Outplay was founded in January 2020 by brothers Ram and Laxman Papineni and now counts more than 300 clients. Before launching Outplay, the Papineni brothers built AppVirality, a referall marketing tool for app developers.
Laxman told TechCrunch that Outplay’s customers come from sectors like IT, computer software, marketing and advertising and recruiting, and most are based in North America and Europe.
Outplay is designed for teams that use multiple channels to reach potential customers, including phone calls, text messages, email, live chats on websites, and social media platforms like LinkedIn or Twitter. It integrates with customer relationship management platforms like Salesforce and Pipedrive, giving sales people a new interface that includes productivity and automation tools to cut the time they spend on administrative tasks.
Outplay’s platform
For example, Outplay can be used create sequences that send initial messages through different platforms, and then automatically follows up with new messages if there isn’t a reply within a pre-set time frame. Outplay also provides analytics to help sales people track how well sales campaigns are working.
Two of Outplay’s biggest competitors are Outreach and SalesLoft, both of which hit unicorn status in recent funding rounds. Laxman said Outplay is focused on ease of use, with other differentiators including more integrations with CRMs and other software, and a strong customer support team.
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Proptech startup States Title, now Doma, going public via SPAC in $3B deal
Real estate tech startup Doma, formerly known as States Title, announced Tuesday it will go public through a merger with SPAC Capitol Investment Corp. V in a deal valued at $3 billion, including debt.
SPACs, often called blank-check companies, are increasingly common. They exist as publicly traded entities in search of a private company to combine with, taking the private entity public without the hassle of an IPO.
When it floats later this year, Doma will trade on the New York Stock Exchange under the ticker symbol DOMA. The transaction is expected to provide up to $645 million in cash proceeds, including a fully committed PIPE of $300 million and up to $345 million of cash held in the trust account of Capitol Investment Corp. V.
CEO Max Simkoff founded San Francisco-based Doma in September 2016 with the aim of creating a technology-driven solution for “closing mortgages instantly.” While it initially was founded to instantly underwrite title insurance, the company has expanded that same approach to handle “every aspect” of closing and escrow.
Doma has developed patented machine learning technology that it says reduces title processing time from five days to “as little as one minute” and cuts down the entire mortgage closing process “from a 50+ day ordeal to less than a week.” The startup has facilitated over 800,000 real estate closings for lenders such as Chase, Homepoint, Sierra Pacific Mortgage and others.
The name change is designed to more accurately reflect its intention to expand “well beyond” title into areas such as appraisals and home warranties.
Its goal with going public is to be able to “continue to invest in growth, market expansion and new products.”
Anchoring the PIPE include funds and accounts managed by BlackRock, Fidelity Management & Research Company LLC, SB Management (a subsidiary of SoftBank Group), Gores, Hedosophia, and Wells Capital. Existing Doma shareholder Lennar has also committed to the PIPE and Spencer Rascoff, co-founder and former CEO of Zillow Group, has committed a personal investment to the PIPE.
Up to approximately $510 million of cash proceeds are expected to be retained by Doma, and existing Doma shareholders will own no less than approximately 80 percent of the equity of the new combined company, subject to redemptions by the public stockholders of Capitol and payment of transaction expenses.
In mid-February, Doma announced it had closed on $150 million in debt financing from HSCM Bermuda, which had previously invested in the company. And last May, it announced a massive $123 million Series C round of funding at a valuation of $623 million.
Results
The company posted modest growth from 2019 to 2020, seeing its GAAP revenues rise from $358.1 million to $409.8 million. After removing premiums paid to agents, its revenues (“retained premiums and fees”) decreased to $179.8 million in 2019 and $189.7 million in 2020. (For this section we’re leaning on the reported 2020 numbers that are caveated with an “estimated” tag. As it is March, we expect the final 2020 numbers to come in close enough to what was reported as to make us comfortable citing them.)
In 2021 the company also anticipates modest growth, with GAAP revenues estimated at $416.4 million, and its retained revenue figure landing at $226.4 million. More expansive growth is anticipated and sketched out for 2022 and 2023, though as those figures are far in the future we can discount them for now.
Doma also expects its economics to worsen in 2021, with its adjusted gross profit as a percentage of its retained premiums and fees falling from 48.3% last year to 39.5% this year. Of course we’re so far off the GAAP ranch with that metric as to be lost, but it’s worth noting what the company is telling the street about its impending financial performance.
Other metrics are also pointed in a negative direction, with Doma expecting its adjusted EBITDA to fall from -$19.0 million to -$66.6 million in 2021. The company does predict a rosy 2023 adjusted EBITDA number, for whatever stock you want to put in that.
Without discounting costs, Doma’s 2020 net loss of $35.1 million is expected to expand to $103.1 million this year. Still, as with many entities pursuing a public debut via a SPAC, Doma is debuting while it is still sorting out elements of its business as the pandemic starts to diminish in light of increasingly readily available vaccines. It certainly has high hopes for its future.
The SPAC parade
Doma joins the growing number of proptech companies going the public route. On Monday, Compass, the real-estate brokerage startup backed by roughly $1.6 billion in venture funding, filed its S-1.
In 2020, Social Capital Hedosophia II, the blank-check company associated with investor Chamath Palihapitiya, announced that it would merge with Opendoor, taking the private real estate startup public in the process.
Porch.com also went public in a SPAC deal in December. And, SoftBank-backed View, a Silicon Valley-based smart window company, will complete a recent SPAC merger to be publicly listed on the NASDAQ stock exchange on March 9. The company is expected to debut trading with a market value of $1.6 billion.
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Fluid Truck, the Zipcar of commercial trucks, raises $63M to take on rental giants
Fluid Truck has built an app-based platform that aims to take away the pain and cost of owning or leasing commercial vehicles, all while grabbing market share from established companies like Penske, Ryder and U-Haul.
Now, it has the capital to help it get there. The Denver-based company said Tuesday it raised $63 million in a Series A funding round to expand its truck-sharing platform, which helps mid-mile and last-mile delivery companies remotely manage an on-demand rental fleet via web or mobile app. Private equity firm Bison Capital led the round, with participation from Ingka Investments (part of Ingka Group, the main Ikea retailer), Sumitomo Corporation of Americas and Fluid Vehicle Owners.
The investment, its first external round, comes after rapid growth at the four-year-old company. Founder and CEO James Eberhard told TechCrunch that revenue increased 100x in the last two years. That type of growth sounds promising, but the company did not provide a baseline, so it’s hard to judge scale.
With e-commerce expected to continue to rise at a global 9.5% compound annual growth rate from 2020 to 2025, the demand for accessible trucks for hire might see correlative growth. It’s no surprise that e-commerce is one of the industries Fluid Truck has targeted.
Fluid Truck, which operates in 25 U.S. markets, operates like the car-sharing company Zipcar, with a commercial bent. Businesses such as moving and e-commerce delivery companies can use the platform to rent trucks. Fluid Truck’s pitch to businesses extends beyond the “you don’t need to buy or lease” argument. The platform also allows delivery companies to dispense with having a manager on staff who would manage, maintain and eventually sell the fleet.
Businesses eager to outsource the purchasing and managing of their trucks can find fleets for hire in industrial parks and retail areas within Fluid’s service network.
“You can hop on our platform, rent a truck and be in it in a matter of minutes, which really allows businesses to scale up and scale down,” said Eberhard. “We’re watching our user behavior go from a place where they used to own every vehicle they needed at a time to a place where they’re now grabbing spare capacity off Fluid.”
Eberhard hopes to see that type of supplementary use morph into an end state where companies don’t own a single truck and run solely on Fluid Truck’s platform.
Fluid Truck argues that its tech stack, which is designed to smooth out the booking and renting process, gives it a competitive edge in a market dominated by the likes of U-Haul, Ryder and or other small depots. Eberhard said the process of going to a depot and waiting in line is slow and sloppy, whereas Fluid Truck’s app makes renting a van as easy as calling an Uber.
“We take all those complexities away and allow people to have a virtual fleet,” Eberhard told TechCrunch.
Fluid Truck’s fleet is made up of thousands — and soon to be tens of thousands — of cargo vans, pickup trucks, large box trucks and various other vehicles. The company also claims to have the largest medium-duty EV rental fleet in the United States, which it continues to expand as it works with OEMs to increase fleet capacity. Electric vehicles still make up less than 1% of its total portfolio due to the slower adoption of EVs on the commercial side.
Eberhard wants Fluid to be a dominant force in the trucking industry. But Fluid Truck is not the only truck sharing app on the streets. Competitors GoShare and Bungii have similar offerings.
This sizable round could provide an advantage as it tries to become the household name in digital truck sharing. Perhaps, as importantly, the company has the attention and investment of Ikea.
“This is another step in enabling Ikea retail to provide last mile delivery services to our customers, continue to improve on our customer promise, while also reducing our environmental footprint,” Krister Mattsson, managing director of Ingka Investments said in a statement, a comment that suggests a future partnership with Fluid Truck.
With this latest capital round, Fluid’s goal is to (you guessed it) scale outwards, with a focus on expanding the team, adding dozens more markets in the U.S. and preparing to take Fluid into the EU and Canada.
Fluid Truck will also be investing back into its own tech stack, which includes an internal proprietary telematics platform to predict and automate servicing and maintenance of the company’s fleet.
Early Stage is the premier ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand 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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SpineZone is the latest health tech startup to raise millions in the musculoskeletal space
SpineZone is a startup that creates personalized exercise programs and treatment for neck and back pain. The company uses an online platform and in-person clinics to deliver a curriculum that, ideally, helps patients avoid the need for prescription drugs, injections and surgeries, and providers then avoid the cost of all of the above. Co-founded by brothers Kian Raiszadeh and Kamshad Raiszadeh, the company tells TechCrunch that it has raised $12 million in a Series A round led by Polaris Partners and Providence Ventures, with participation from Martin Ventures.
At its core, SpineZone is a virtual physical therapy platform augmented by in-person clinics. The latter bit is important because it takes a video repository, which has health outcomes baked into it, and helps get those same users some real-life support.
Patients can log onto the site, either through smartphone or laptop, and then answer a series of questions around pain and risk factors. Then, patients can go through a series of exercises. These exercises are created in tandem with professionals, and are based on peer-reviewed and evidence-based articles on musculoskeletal health.
Beyond this digital archive of videos, SpineZone offers an in-person clinic option to help patients practice these exercises. Off of this strategy, the startup claims that it has “1 million lives under management.”
SpineZone’s value proposition is that it helps payers and providers, whether that be employers, clinics or health plans such as Cigna or Aetna, avoid placing their patients in surgeries, which are expensive. By taking care of pain issues before they bubble up, SpineZone says that its current partners have been able to have a 50% reduction in surgery rate (it’s worth noting that COVID-19 could also play a role in this because it is high-risk to enter a medical facility).
Partners are happy because footing the bill of a non-operative procedure is remarkably cheaper than a non-operative procedure.
The cost saving that a medical center could endure can be in the millions. For example, the Sharp Community Medical Group saved $3.4 million in cost savings after working with SpineZone for two years.
SpineZone’s business model is a smidge more complicated than your classic SaaS fee. For example, it charges a clinic based on the number of members it serves per month, and also shares in the downside. For example, if SpineZone promises to get a clinic to $12 million in spend from $15 million, and the cost ends up being $17 million, the company will pay the clinic a portion of the difference. Alternatively, if SpineZone got the clinic to $10 million, even below estimates, it shares in the upside.
SpineZone joins a cohort of health tech startups that focus on musculoskeletal conditions. Venture-backed competitors include Peerwell, Force Therapeutics and Hinge Health, which was most recently valued at $3 billion, with plans to go public.
In order to win, many startups, SpineZone including, need value-based care to replace fee-for-service care. Value-based care is the idea that doctors are paid for outcomes instead of the number of times you enter a doctor’s office. The end goal is that this format creates monetary incentives around getting to an outcome faster: If a doctor is going to make $30,000 on fixing a knee, regardless of whether it takes two appointments or 20 appointments, they might as well do a more thorough job upon check-up instead of elongating the process. The flipside of this, of course, is that doctors might optimize for outcome volume and speed rather than the quality of the result itself.
While SpineZone’s early traction is promising, the healthcare ecosystem still has a ways to go before value-based models take precedence. Right now, Kian Raiszadeh estimates that 10 to 20% of revenue in a medical center comes from value-based care. SpineZone is projecting that it will get to 50% of revenue in the near future.
“And that’s the biggest evolution and tallest lift that we’re expecting,” he said.
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Parabol raises $8M after reaching 100,000 users of its agile meeting software
This morning Parabol, a startup that provides retrospective meeting software to agile development teams, announced that it has closed an $8 million Series A. Microsoft’s venture capital arm, M12, led the deal. The investment also saw participation from Techstars, CRV, and Haystack.
TechCrunch caught up with Parabol CEO Jordan Husney to talk about the round, and his company. We were curious how large the market that Parabol serves is, and if the company was overly-nicheing its service. While the startup is still young, the answer appears to be no – adding to our general sentiment that the software market is even larger than we perhaps thought.
Let’s explore how Parabol came to be, and how it came to pick its target market. Or more precisely, how its target market chose it.
Building horizontally, focusing vertically
After a stint in the consulting world, Husney was more than aware of the communications issues that distributed teams can endure. With multiple offices the norm among big companies, he told TechCrunch in an interview, communications between remote workers came down to an email thread, or a meeting. A self-described “recovering engineer,” Husney wondered if there was space in the business market for “structured communications,” or the type of asynchronous meetings that are popular in the code-writing world.
Borrowing from the ethos of agile development, a method of writing software that prioritizes collaboration and evolution over process and documentation, Husney built Parabol to bring agile work and communications methods to non-developer business teams. If agile principles were good at helping foster developer results through status meetings, why wouldn’t the same process translate to other work settings?
But the market had other ideas. Instead of hitting it big in the business world, owing to the friction resulting from needing what Husney described as a “behavior change” — something often lethal to rapid adoption of a new service, or product — agile teams themselves started using Parabol’s tech.
The startup followed the demand. And there’s quite a lot of it, as it turns out. Husney estimated that there are around 20 million agile developers in the world, the business from which has helped propel companies like Atlassian to enormous heights. It’s a big enough pool for the startup to swim in for a long time.
Returning to our earlier note about the depth of the software market, Parabol is a good reference point. It appears capable of building a real company on the back of supporting a subset of the software creation world’s peculiar meeting style; the market for software is simply gigantic.
Growth
After deciding to support agile software teams, growth came quickly to Parabol. In 2018 and 2019, the company saw growth of 20% to 40% each month, its CEO said. Calling his company a “rocket,” Husney gave partial credit to Parabol’s freemium go-to-market model, a common approach when selling to developers who eschew the traditional sales process.
By selling to the already-converted, Parabol found product-market fit. Husney himself had underestimated the demand from agile software developers for tools to support they work, because he thought that they’d already figured out their own needs, he told TechCrunch.
What Parabol has built is not a simple tool, however. Powering retrospective meetings and incident post-mortems, its software collects notes from workers on things that should be done, things that should no longer done, and things that should be kept up. The service then aggregates them automatically by topic, followed by users voting to decide on changes and takeaway actions. The result is an asynchronous way for developer teams to stay in sync.
The startup closed a Seed round in November of 2019, just in time to have cash on hand for the COVID-19 pandemic. The rapid switch to remote work quickly drove Parabol’s user growth from 600 per week in January of 2020, to 5,000 per week in March of the same year. The company has some public usage data available here, in case you want to check the spike yourself.
After raising its $4 million Seed, Husney decided to raise more capital after being told by others that it was a great time to do so. And after winding up with a few firms to choose between, wound up taking Microsoft’s money.
There’s a story there. Per Husney, Microsoft’s M12 was not on the top of its venture capital list; there is a somewhat good reason for that, as taking strategic capital over pure-venture capital is a choice and not the best one for every startup. But after Husney and company got to know the Microsoft partners, and each side underwent diligence, the fit became clear. According to the CEO, M12’s investing team called various Microsoft groups — Azure, GitHub, etc — to ask them about their views on Parabol. They raved. So Microsoft had strong internal signals concerning the deal, and Parabol learned that its potential investor was a heavy user of its product.
The deal worked out.
Why $8 million and not more? The startup’s growth plan isn’t super capital intensive according to Husney, and its market is pulling it instead of the other way around. The team is dilution-conscious as well, he explained. The founding team put the company together in 2015, and didn’t raise its seed round until 2019. It was ramen days back then, he explained; you’ll cling to your ownership, I suppose, when you have bought it that dearly.
Parabol runs lean on purpose. Husney said that his team was not following the Reid Hoffman blitzscaling ethos, instead focusing on hiring for individual leverage. In the CEO’s view, you don’t need to scale quickly to build collaboration products.
The $8 million raise could give Parabol infinite runway, the CEO said, but his company instead raised it for about a 24 month spend. At the end of that he expects the company to have around 30 workers, up from its current 10.
Parabol wants to quadruple its revenues this year, and triple them in 2022. And it wants to scale to 500,000 users from its current 100,000 this year, reaching one million by the end of next year. Let’s see how it performs against those goals.
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Xage introduces Zero Trust remote access cloud solution for hard-to-secure environments
When a hacker broke into the computer systems of the Oldsmar, Florida water supply last month, it sent up red flags across the operational tech world, whether that’s utilities or oil and gas pipelines. Xage, a security startup that has been building a solution to help protect these hard-to-secure operations, announced a Zero Trust remote access cloud solution today that could help prevent these kinds of attacks.
Duncan Greatwood, CEO at Xage, says flat out that if his company’s software was in place in Oldsmar, that hack wouldn’t have happened. Smaller operations like the one in Oldsmar tend to be one-person IT shops running older remote access software that’s vulnerable to hacking on a number of levels.
“It’s not difficult to compromise a virtual network computing (VNC) connection. It’s not difficult to compromise a stale account that’s been left on a jump box. What we started to do last year was deliver what we call a Zero Trust remote access solution to these kinds of customers,” Greatwood told me.
This involves controlling access device by device and person by person by determining who can do what based on them authenticating themselves and proving who they are. “It doesn’t rely on knowledge of a device password or a VPN zone password,” he explained.
The solution goes further with a secure traversal tunnel, which relies on a tamper-proof certificate to prevent hackers from getting from the operations side of the house — whether that’s a utility grid, water supply or oil and gas pipeline — to the IT side where they could then begin to muck about with the operational technology.
Xage also uses a distributed ledger as a core part of its solution to help protect identity policies, logs and other key information across the platform. “Having a distributed ledger means that rather than an attacker having to compromise just a single node, it would have to compromise a majority of the nodes simultaneously, and that’s very difficult [if not impossible] to do,” he said.
What’s more, the ledgers operate independently across locations in a hierarchy with a global ledger that acts as the ultimate rules enforcer. That means even if a location goes offline, the rules will be enforced by the main system whenever it reconnects.
They introduced an on-premise version of the Zero Trust remote access system last October, but with this kind of technology difficult to configure and maintain, some customers were looking for a managed solution like the one being introduced today. With the cloud solution, customers get a hosted solution accessible via a web browser with much faster deployment.
“What we’ve done with the cloud solution is made it really simple for people to adopt us by hosting the management software and the core Xage fabric nodes in this Xage cloud, and we’re really dramatically reducing that time to value for a remote access solution for OT,” Greatwood said.
You might be thinking that CISOs might not trust a cloud solution for these sensitive kinds of environments, and he admits that there is some caution in this market, even though they understand the benefits of moving to the cloud. To help ease these concerns, they can do a PoC in the cloud and there is a transfer tool to move back on prem easily if they are not comfortable with the cloud approach. So far he says that no early customers have chosen to do that, but the option is there.
Xage was founded in 2017 and has raised $16 million so far, according to Crunchbase data.
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Volvo to sell only all-electric vehicles by 2030
Volvo Cars said it will only make and sell all-electric vehicles by 2030 as part of a broader transformation of the automaker that will include shifting sales online.
“The key to sustainability is electrification, said Volvo Cars CEO Håkan Samuelsson during a presentation Tuesday. “Together with investments in charging infrastructure that is the right way to go and the course we have chosen at Volvo.”
The announcement was tied to the launch of the C40 Recharge, a low-slung crossover based on the company’s CMA vehicle platform. While the C40 is the second vehicle under Volvo’s EV-focused Recharge brand, it is the first model designed from the beginning as a battery-electric only vehicle. All Volvo vehicles with fully electric and plug-in hybrid powertrains are housed under the Recharge brand. Like the XC40 Recharge, the C40 will have an infotainment system powered by Google’s Android operating system and the ability to handle over-the-air software updates.
Image Credits: Screenshot/Volvo
“It’s a car of firsts and it’s a car of the future,” CTO Henrik Green said, adding that the C40 will have two motors, a 78 kilowatt-hour battery and an estimated range of 420 km (260 miles) that will improve over time via software updates. C40 will go in production this fall and will be built alongside the XC40 Recharge at the Volvo Cars manufacturing plant in Ghent, Belgium, the company said.
Volvo, which is owned by China’s Geely Holdings, aims for 50% of its global sales to consist of fully electric cars, with the rest hybrids. By 2030, every car it sells should be fully electric, the company said.
The company is well on its way to its electrification goal, according to Samuelsson, noting that last year one car out of three sold in Europe was a Recharge model, a chargeable plug-in hybrid.
Volvo’s evolution isn’t just pinned to the powertrain.
“The future customer offer cannot just consist of an electric car,” Samuelsson said. “We also need to listen to our consumers, and they expect transparency and a seamless experience getting and having a car.”
Volvo will only sell its all-electric vehicles online and at preset prices. Customers will be able to subscribe or buy the vehicles, which will come with a customer care package. The vehicles will also have pre-selected configurations to shorten the time between ordering and receiving a vehicle.
Volvo’s move to become an all-electric brand is in sync with a growing number of automakers, including GM and Jaguar. Last month, GM committed to selling only electric vehicles by 2035 and becoming a carbon neutral operation globally by 2040. GM said in November it will spend $27 billion over the next five years on the development of electric vehicles and automated technology, a 35% increase that exceeds the automaker’s investment in gas and diesel and is an effort to bring products to market faster.
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