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Product-led revenue startup Correlated launches with $8.3M seed
Correlated on Wednesday announced it raised $8.3 million in seed funding to launch its product-led growth platform for sales teams.
NextView Ventures and Harrison Metal co-led the round and were joined by Apollo Projects, Attentive co-founders Brian Long and Andrew Jones, Cockroach Labs co-founder Ben Darnell and Atrium’s Pete Kazanjy. The round includes funding raised last year and more recent follow-on funding from both NextView and Harrison, co-founder and CEO Tim Geisenheimer told TechCrunch.
The New York-based company was founded in 2020 by Geisenheimer and Diana Hsieh, who overlapped at TimescaleDB, and John Pena, who Geisenheimer met at Facet. In their previous roles, they saw a need to connect product data to sales tools.
While at Timescale, Geisenheimer said there were thousands of free users to talk to, and he and Hsieh built a similar version of a product-led growth platform there, but secretly wished there was something more like Correlated available.
What they saw was data across multiple tools being stored manually on spreadsheets so that actionable insights could be generated. The data would quickly become outdated. Add in that the way customers use products now is different. Traditionally, customers would not be able to use a product until they talked to the sales team. Today, customers start using products for free and either get value from it or not, but sales teams don’t have real-time data on their experience.
“Sales needs to know how customers are using the product and the right time for sales to engage based on maturity of the experience,” Geisenheimer said. “That was the missing piece of it and sales teams ended up talking to the wrong people. With Correlated, they can close more deals efficiently.”
Correlated’s technology pulls in product usage data from tools and data warehouses and connects to a management platform like Salesforce or HubSpot, stitching it together into a data graph to show how customers are using a product. For example, within a company of 200 to 500 employees, a salesperson can see the frequency employees logged in and be alerted of when the best opportunity is to make the sale.
The company has a SaaS pricing model and is already working with mid-market companies like Ally, Pulumi, ReadMe and LaunchNotes. To support its launch out of beta, Geisenheimer intends to use the new funding for hiring across functions like engineering and go-to-market. The company has 11 employees currently.
There are other product-led growth platforms out there that raised venture capital funding recently, for example, Endgame, and similarly Geisenheimer said the competition is often in-house product teams building their own systems. Correlated’s differentiator is that it has taken on that task itself and enables customers to quickly see value once they are up-and-running, he added.
David Beisel, co-founder and partner at NextView Ventures, said his firm invests in category stage companies and is currently operating out of its fourth fund, infusing business-to-business SaaS and e-commerce companies. Beisel has known Geisenheimer for nearly a decade now, having met him when NextView invested in one of Geisenheimer’s previous companies, TapCommerce.
“At the end of the day with Tim, he knows sales and the company is selling a product that has a strong founder market fit,” Beisel said. “We are moving toward a world where end-user adoption of software — not the initial engagement — is growing over time. Instead, Correlated empowers that initial sale and account expansion and that will align with where the industry is going.”
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What Square’s acquisition of Afterpay means for startups
On Sunday Square announced it was gobbling up Afterpay in a deal worth $29 billion at the time of announcement. Alex followed up yesterday with more details on why the deal made sense for Square and Afterpay over here, but we wanted to ask some notable VCs what it means for the startup market.
For context, the Square deal follows a ton of money and interest flowing into the BNPL market. Just this year, VCs have invested in companies like Alma ($59.4 million, January 2021), Scalapay ($48 million, January 2021), Wisetack ($19 million, February 2021), Zilch ($80 million, April 2021) and Dividio ($30 million, June 2021).
Most of the investors we reached out to were generally bullish on the Square and Afterpay integration, but they were less excited about opportunities for other consumer BNPL businesses to emerge.
Then there’s Klarna, which raised $639 million at a post-money valuation of $45.6 billion in June, after raising $1 billion in March at a post-money valuation of $31 billion.
There’s also interest from some major public companies. After a slow start, PayPal is aggressively pushing BNPL services with merchants that offer it as a payment option. And there are reports that Apple is building its own BNPL offering through Apple Pay.
We reached out to Commerce Ventures founder and GP Dan Rosen, Better Tomorrow Ventures founding partner Jake Gibson, Fika Ventures partner TX Zhuo, and Matthew Harris of Bain Capital Ventures to see what they thought of the deal, as well as what it might mean for the opportunity for other BNPL companies and startups.
The main takeaways? “Buy now, pay later” may be effective at driving retail conversion, but scale matters and long-term margins look slim for BNPL startups.
Now, let’s hear from the venture community.
The venture view
Why is the BNPL market so hot?
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Extra Crunch roundup: Square buys Afterpay, paid search basics, career advice for devs
Square paid around a quarter of its present-day value for Afterpay, Alex Wilhelm notes in The Exchange. That seems like a lot. But was it too much?
“Afterpay brings global revenues, global users and a more diverse merchant network to Square,” Alex notes. “It would have had to spend to derive those assets over time. Square is willing to pay up to snag them now.”
Dana Stalder, a partner at Matrix Partners and Afterpay’s only institutional investor, describes the deal as part of a recurring “critical innovation cycle” in fintech that “determines the winners and losers” for decades to come.
“I’ve never seen a combination that has such potential to deliver extraordinary value to consumers and merchants,” says Stalder. “Even more so than eBay + PayPal.”
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
The best way to grow your career? Treat it like an app
Image Credits: jayk7 (opens in a new window) / Getty Images
Developers may delight in solving complex technical problems, but the problem of a career path is one many don’t think much about, Juniper Networks CTO Raj Yavatkar writes in a guest column.
He offers a solution that should appeal to developers and engineers: “Treat career advancement as you would a software project.”
Design expert Scott Tong outlines 4 concepts founders should consider when designing products
Image Credits: Scott Tong
At Early Stage 2021, design expert Scott Tong shared some ways founders should think about design and branding.
If you can link your brand with your company’s reputation, I think it’s a really great place to start when you’re having conversations about brands. What is the first impression? What are the consistent behaviors that your brand hopes to repeat over and over? What are the memorable moments that stand out and make your brand, your reputation memorable?
You can’t afford to make poor decisions about incentive stock options
Image Credits: Nora Carol Photography (opens in a new window) / Getty Images
If you’re fortunate enough to be considering cashing in on vested stock options, this guest column is worth a read.
“Most companies admit they need to be better at explaining how ISOs work in general, but they can’t legally work one-on-one with employees to help them exercise and sell shares the right way,” Wealthramp’s Pam Krueger and John Chapman write.
“That’s why, when the time is right, many employees actively look for help from a qualified fiduciary financial adviser who can walk these could-be ‘options millionaires’ through various cash-in scenarios.”
Demand Curve: Questions you need to answer in your paid search ads
Image Credits: metamorworks (opens in a new window) / Getty Images
At some point, almost every early-stage startup will use paid search ads to connect with customers and throw down the gauntlet with their competitors.
Most of these initial attempts at paid search are unsuccessful. There’s a steep learning curve when it comes to transforming passive searchers into paying customers, and almost no one gets it right the first time.
In a comprehensive guest post, growth marketing expert Stewart Hillhouse identified “14 questions your paid search should answer to ensure you’re only paying for the highest-intent shoppers.”
Question 1? “What’s in it for me?”
5 lessons from Duolingo’s bellwether edtech IPO of the year
Image Credits: Duolingo
Duolingo’s debut last week was a bright spot, Alex Wilhelm and Natasha Mascarenhas write, with the language learning app’s stock price landing above a raised IPO range.
Alex and Natasha detail five lessons to take from Duolingo’s flotation:
- The IPO event will bring “more sophistication” to Duolingo’s core service.
- Roadshow investors didn’t view Duolingo as an edtech company.
- China’s edtech crackdown will have a “neutral” impact on Duolingo.
- In certain cases, post-COVID growth declines aren’t lethal.
- Growth can still absolve rising losses.
Can your startup support a research-based workflow?
Image Credits: Andriy Onufriyenko (opens in a new window) / Getty Images
In the U.S. alone, yearly spending on AI R&D is expected to reach $100 billion by 2025.
But can your humble startup attract and retain users while it conducts research and product development?
“For obvious reasons, companies want to make things that matter to their customers, investors and stakeholders. Ideally, there’s a way to do both,” says João Graça, CTO and co-founder of Unbabel, an AI-powered language operations platform.
Kodiak Robotics’ founder says tight focus on autonomous trucks is working
Image Credits: Bryce Durbin
As part of an ongoing series with transportation startup founders, Rebecca Bellan interviews Kodiak Robotics CEO and co-founder Don Burnette about why the autonomous trucking company remains private when so many of its rivals have gone public.
“I think there’s also lots of opportunity within the VCs and the private markets,” said Burnette.
“Kodiak is one of the only remaining serious AV trucking companies still in the private sector, and so I think that gives us some advantages in a lot of ways.”
How public markets can help address venture capital’s limitations
Image Credits: Nigel Sussman (opens in a new window)
After interviewing Draper Esprit co-founder Stuart Chapman, Alex Wilhelm and Anna Heim took a look at the trend of European VCs floating themselves.
Traditional VC models “can foist artificial time constraints on investors and force them to focus their deal flow into particular stages for fund-construction reasons,” Alex and Anna write for The Exchange.
“As we found out researching this piece, the public venture model highlights some of these limitations — and may be able to alleviate them in part.”
Robinhood’s CFO says it was ready to go public
Image Credits: Nigel Sussman (opens in a new window)
After Robinhood failed to burn up the stock charts, Alex Wilhelm wondered why, exactly, the investing and trading app’s IPO didn’t live up to expectations.
He spoke to Robinhood CFO Jason Warnick, who shared a few reasons why it was time for the company to float:
… Warnick indicated that there were a few factors at play, including that Robinhood had built out its leadership team and its internal processes, and that it had worked on user-safety-related tasks and expanded the site’s use cases. All of that is true.
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Edtech startup bina raises $1.4M to teach 4- to 12-year-olds, launch School-as-a-Service
With the pandemic wreaking havoc amongst early years education amid school lockdowns, it’s no wonder edtech startups have piled into the space. But it has also served to highlight the abysmal nature of early years teaching: Some 40 million teachers across the globe are leaving the sector, according to the World Bank. Of the 1.5 billion primary-age children, only a few can access high-quality education, and approximately 58 million primary-age children are out of education, most of whom are girls.
So the opportunity to make a difference, using online teaching, in these very young years, is great, because classes sizes can be reduced online, and the quality of teaching improved.
This is the idea behind bina, which bills itself as a “digital primary education ecosystem”. It has now raised $1.4 million to aim at the education of 4- to 12-year-olds.
The funding round was led by Taizo Son, one of Japan’s billionaires. Other investors and advisors include Jutta Steiner, founder at Parity Technologies, the company behind Polkadot decentralized protocol, and Lord Jim Knight, ex-Minister of Education (U.K.).
Bina’s “schtick” is that it has very small online class sizes of six students (3x smaller than the OECD average).
It also boasts of “adaptive learning paths” that cover international standards; teachers with a minimum of eight years of digital teaching experience; and data-driven decision making for its pedagogical approach.
Noam Gerstein, bina’s CEO and founder said: “I’ve interviewed students, teachers and parents globally for years, and it is clear a new systemic design is needed. With our founding families, we are building a world in which every child has access to quality education, educators’ skills are valued and continuously developed, and parents don’t need to choose between their work and family life.”
He says it also grants pupils company shares (RSUs) as they grow with the school. Currently available to English-speaking students in the CET time zone, the bina School is planning a SaaS product for governments, NGOs and school systems.
“We right now compete against companies like Outschool, Pearson’s online Academy, Primer and Prisma,” he told me over a call. “So these are the big names of the last year for the first phase. But the strategy is that we’re building it in two phases. The first phase is actually building a school that we operate as a ‘lab’ school. And the second phase is what we call ‘bina as a service’. So it’s a SaaS ‘school as a service’. The idea is that we offer collaboration with NGOs and governments, doing accreditation and training and licencing of the product. So for that second part we’re actually competing against the big accreditation system.”
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CELA Innovation holds a master class on Lean Startup Methodology for the Startup Alley+ cohort
Startup Alley is the place to be at TechCrunch Disrupt 2021 on September 21-23. The sold-out expo area is the virtual home to hundreds of innovative startups ready to demo their tech and talent. While exhibiting offers plenty of opportunity for all, a VIP experience kicked off in July for 50 startup exhibitors the TechCrunch staff chose to form the first Startup Alley+ cohort.
Part of that experience includes a series of master classes in the run-up to Disrupt. Case in point, on August 24, Dan Olsen will lead a master class called “How to Create Product-Market Fit.” Now, we’re ready to share the next presentation, and it’s another great one, folks.
On August 17th, John Lynn, co-founder of CELA Innovation, and Jade Kearney, Lean Startup expert and co-founder and CEO of She Matters, will present a master class called, “The Key Principles of the Lean Startup Methodology.”
A quick tangent: If you’re not already familiar with CELA or what it does, the NYC-based company matches early-stage startups to world-class accelerators and incubators that align with a startup’s vertical and business goals. Last year, at Disrupt 2020, CELA connected the winners of our Pitchers and Pitches mini pitch-off competitions with an accelerator to boost their business.
Meanwhile, back at the master class: Change — positive or negative — is inevitable, and this master class will focus on what founders can do when change arrives on their doorstep. Examples of change can include receiving funding, running out of funding, losing a co-founder or a key customer or anything else that’s shaking up their situation.
John and Jade will help each cohort founder produce a Lean Startup transformation for one current business situation. Founders can then use it as a template for optimizing anything in their business the next time change comes calling.
The session begins by examining why you should use the Lean Startup methodology at inflection points — when there is a sudden change to your company, good or bad.
You’ll learn how you can use the Lean Startup methodology to create resources when you are overwhelmed by opportunity or just feel like you have gone as far as you can go with what you have.
Next, John and Jade will show how this methodology makes the difference between knowing what you want to build and learning what you need know about your customers, industry or product.
Lastly, Team CELA will isolate some of your key business activities as they exist right now. Then they will walk you through a process to turn that activity into a Lean Startup experiment that produces insights, new value and new opportunities.
TechCrunch Disrupt 2021 takes place September 21-23. Don’t miss your opportunity to meet the Startup Alley+ cohort and hundreds of other innovative startups in our expo area. Opportunity is knocking — buy your TC Disrupt 2021 pass and go kick down the door.
Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.
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How public markets can help address venture capital’s limitations
British venture capital firm Draper Esprit recently moved its listing from the AIM to the main board in London, the LSE. The investing group also moved its secondary listing from Dublin’s Euronext Growth Market to its larger sister exchange, Euronext Dublin, which makes sense given its long connection to Irish capital.
Draper has always felt like something of an anomaly from our perspective, a generalist venture capital firm that was itself public. But this July, Forward Partners listed its shares on the AIM, and there are other venture firms in Europe that are also listed.
At first blush, the setup may seem odd; venture capital firms invest in companies that they hope to see go public one day — why would they float themselves? But Draper Esprit co-founder Stuart Chapman told TechCrunch in an interview that he finds it shocking “that venture capital backs some of the most mind-blowing tech advances in our history over the last 70 years, using the same legal structure as a 1958 property vehicle in New York.” It’s a reasonable point.
Perhaps fundraising success is part of why the venture model has not seen much disruption in recent decades, apart from rising fund sizes. But the model is not perfect. It can foist artificial time constraints on investors and force them to focus their deal flow into particular stages for fund-construction reasons. As we found out researching this piece, the public venture model highlights some of these limitations — and may be able to alleviate them in part.
The Exchange explores startups, markets and money.
Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
And yet we can’t come up with a single U.S. venture capital firm, for example, that has publicly listed in the same manner as Draper Esprit or Forward Partners.
To better understand why we’re seeing European VCs float, and not their peers in other markets, The Exchange reached out to Draper Esprit, Forward Partners, and fellow listed venture investors Mercia and Augmentum Fintech. From the group, we’ve learned that there are plenty of reasons why the model may be popular in the U.K. and not in the U.S.
But there are also reasons why being a public venture capitalist can make the VC game a rather different, longer-term effort. The firms in question did not go public on a whim.
So let’s talk about the good, the bad, and the regulatory concerning publicly listed venture capital firms. The future? Or just a regional quirk?
From exception to trend?
Following its move, Draper Esprit is now the largest “purely tech VC” listed on London’s Main Market. Its initial listing had also been a market milestone: “Listing Draper Esprit five years ago was a radical and unusual step for a venture capital business,” Chapman said of Draper’s 2016 dual-listing on London’s AIM and Dublin’s Enterprise Securities Market (ESM) — now Euronext Growth.
Just last month, two tech-related investment funds IPO’d on the London Stock Exchange: space-focused Seraphim Capital and Nic Brisbourne’s Forward Partners. In both cases, Draper Esprit was happy to assist with information, Chapman told us, adding that the firm also invested in Forward via its fund-of-funds effort.
The news adds up to a roster of listed investors that also includes fintech fund Augmentum Fintech, asset manager Mercia Asset Management PLC and intellectual property commercialization company IP Group. “We’re supportive of others following in our footsteps and we will be big fans of having much wider diversity,” Chapman told TechCrunch in an interview, which you can read in full here.
Having recently joined the club, Forward Partners’ founder and CEO Nic Brisbourne gave us a good overview of the three high-level reasons that could lead a fund to list: open opportunities to create more value from new initiatives that sit outside traditional investment capital; breaking the cycle of fundraising; and opening access to the early-stage venture capital asset class. Let’s take a closer look.
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Rani Therapeutics’ $73M IPO will fund upcoming clinical trials
Rani Therapeutics, a San Jose-based company developing a pill to replace medical injections, went public on Friday.
According to S-1 filings, shares were estimated to price between $14 and $16 last week. On Friday, shares debuted slightly lower, around $11. Rani raised about $73 million in its debut.
Rani’s debut comes amidst a flurry of IPO activity in therapeutics. In 2020, 71 biotech companies went public. Already in 2021, 59 companies have IPO’ed, and even more are on the way. On July 30 alone, eight biotech companies were expected to begin trading, including Rani Therapeutics.
Rani Therapeutics, is, as founder Mir Imran puts it, “laser focused” on itself, rather than the IPO activity around it. The decision to go public was partially bolstered by the results of a phase I study — early evidence that the RaniPill, the company’s flagship product, could be brought into the clinic.
“We are already in humans, and clearly on a strong path to make oral biologics [a] reality. This is a hot and unique market for life science direction and we’re excited to be driving innovation in this area,” Imran tells TechCrunch.
Rani Therapeutics’ flagship product is RaniPill, essentially, a capsule designed to deliver medicines that would usually be delivered via injections. TechCrunch covered the pill in more detail here, but it works according to a few basic steps.
The pill is covered by a coating resistant to stomach acid. Once the pill enters the small intestine, the coating dissolves, allowing for a small balloon to inflate. Once that small balloon inflates, medication is delivered by a microneedle (which dissolves after the drug is administered). Then, the rest of the balloon is “excreted through normal digestive processes,” per the company’s S-1 filing.
This whole process occurs in a pill that, on the outside, looks like a gel capsule.
There is evidence for some conditions suggesting patients prefer oral drugs to injections: for example, studies on cancer patients have illuminated patient preference for oral therapies rather than regular injections. That’s not the case for every condition. Some patients show preference to long-acting medicines delivered via injection rather than having to take lots of pills (this is the case for some HIV patients).
However, it’s fair to say that needles aren’t exactly pleasant. A 2019 review and meta analysis of 35 studies found that between 20% and 30% of young adults are afraid of needles, a fear that can lead some people to avoid medical treatments or vaccines.
Rani Therapeutics has been developing capsules for drugs that have already been approved by the FDA, but are often administered via regular injections. They include:
- Octreotide for acromegaly or neuroendocrine tumors in the GI tract (NETs)
- TNF-alpha inhibitors for psoriatic arthritis
- Parathyroid hormone (PTH) for osteoporosis
- Human growth hormone (HGH) for HGH deficiency
- Parathyroid hormone for hypothyroidism
The product furthest along in the research cycle is the pill developed to administer octreotide (called RT-101), which was tested in a phase I clinical trial on 62 participants. The trial results, partially reported in the S-1 filing, showed 65% bioavailability of the octreotide drug, compared to an injection. That suggests that the pills can get the drugs into the body efficiently, though these results are early.
Next year, the company plans to initiate two additional Phase I studies on PTH for osteoporosis, and human growth hormone. Studies on the rest of the drugs in the pipeline are scheduled for 2023.
Ultimately, the company’s goal is to validate the RaniPill independently of specific drugs. The company is pursuing an Investigational Device Exemption (IDE), which would allow the company to test RaniPill in a clinical study without a drug involved. This study aims to establish how safe the product is for repeated dosing, and is slated to begin next year.
“I think we want to continue to generate data with drugs, because we will be making drugs. But nonetheless, it’s important to establish what the platform’s safety and tolerability is,” said Imran. So that’s quite important as well.”
The company’s leadership does have a track record of successful exits in the biotech space.
Rani Therapeutics was founded in 2012 by Mir Imran, who has already overseen several exits and acquisitions of medical device companies. In 1985, Imran developed an implantable cardiac defibrillator as part of his first company, Intec Systems, which was later acquired by Eli Lilly. Since, he has started 20 medical device companies, of which 15 have either IPOed or been acquired.
However, for now, Rani Therapeutics financials report significant losses. Net losses for 2019 and 2020 totaled $26.6 million and $16.7 million, respectively. As of March 2021, the company was running a deficit of $119.6 million.
In total, the company has raised about $211.5 million in funding since inception, without counting cash generated from today’s IPO. Rani Therapeutics has plans to use the $73 million raised during the IPO to fund the IDE study and pursue additional clinical trials.
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Revery gets $2M to improve mental health with mobile gaming techniques
In “Macbeth,” Shakespeare described sleep as the “chief nourisher in life’s feast.” But like his titular character, many adults aren’t sleeping well. Revery wants to help with an app that combines cognitive behavioral therapy (CBT) for insomnia with mobile gaming concepts.
Founded in March 2021, Revery is currently in beta stealth mode and plans to launch its app in the United States later this year. The company announced today it has raised $2 million, led by Sequoia Capital India’s Surge program. Participants included GGV Capital, Pascal Capital, zVentures (Razer’s corporate venture arm) and angel investors like MyFitnessPal co-founder Albert Lee; gaming entrepreneur Juha Paananen; CRED founder Kunal Shah; Mobile Premier League founder Sai Srinivas; Carolin Krenzer; and Josh Lee.
Lee, a mutual friend, first introduced Revery’s founders, Tammie Siew and Khoa Tran, to one another. Before launching the startup, Siew worked at Sequoia Capital India, Boston Consulting Group and CRED, while Tran was a former product manager at Google.
Revery plans to focus on other mental health issues in the future, but it’s starting with sleep because “it has such a strong correlation with mental health and we’re leveraging protocols, cognitive behavioral therapy for insomnia, that’s robust and have been tried and tested for 30 years,” Siew told TechCrunch. “That is the first indication, but the goal is to build multiple games for other wellness indications as well.”
A study by research firm Infinium found that about 30% to 45% of adults in the world experience insomnia, a problem exacerbated by the COVID-19 pandemic. Chronic lack of sleep is linked to a host of health issues, including high blood pressure, strokes, depression and lowered immunity.
For Revery’s team, which also includes former Zynga and King lead game designer Kriti Sawa and software engineer Stephanie Wong, their focus on sleep is personal.
Revery’s team on a Zoom call
“Everyone on our team has a deeply personal connection to the mission, because everyone on our team has experienced, or had a family member or friends go through challenges in mental health,” said Siew. “They’ve seen how late intervention creates consequences that could have been avoided if they had gotten help earlier.”
When Tran was 15, he was diagnosed with hypertension and several other health conditions that needed medication. It wasn’t until he was 26 that Tran found out that sleep apnea was at the root of his medical issues. After getting surgery, Tran’s blood pressure became normal and many of his other conditions also improved.
“When I finally got treatment for my sleep disorder, only then did I realize the impact of sleep on mental health,” Tran said. “For me, I was really lucky that a doctor caught my sleep disorder and super lucky to have the time and resources to get treatment. For many people, it’s incredibly inaccessible.”
Revery’s medical advisory team includes the doctor who performed Tran’s surgery, Stanford Sleep Surgery Fellowship director Dr. Stanley Liu; Stanford professor and behavioral sleep medicine expert Dr. Fiona Barwick; and Dr. Ryan Kelly, a clinical psychologist who researches how video games can be used in therapy.
When people think of sleeping apps, ones that focus on meditation (Calm and Headspace, for example) or soothing noises usually come to mind. The Revery team isn’t sharing a lot of details about its app before launch, but says it draws from casual mobile games, which are designed to get people to return for short play sessions over a long period of time. The goal is to use gamification to make CBT practices interactive and fun, so it becomes part of users’ daily routines.
“That’s the same kind of gameplay that Zynga and King have used, which is why Kriti’s experience is super helpful,” said Siew. Casual games revolve around rewarding people for small actions, and for the Revery app, that means positive reinforcement for habits that contribute to better sleep. For example, it will reward people for putting down their phones.
“I think a lot of people have the misconception that solving sleep is only at the time you fall asleep. They don’t realize that sleep is impacted by what you do throughout the day,” Siew said. “A big part is also what are your thoughts, behavior and the other things that you do, so in order to effectively and sustainably improve sleep, we also have to change your thoughts and behaviors outside of the time you’re trying to fall asleep.”
In a statement, GGV Capital managing director Jenny Lee said, “We are excited about the growing mental wellness market, and believe that Revery’s unique mobile game-based approach has the opportunity to create immense impact. We are happy to back such a mission-driven team in this space.”
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You can’t afford to make poor decisions about incentive stock options
One of the big reasons you’re giving 110% of your talent and effort to your private company is because you’re hoping to eventually cash in on all those vested incentive stock options (ISOs) that have been sitting in some account, waiting for the day your company goes public.
There’s nothing wrong with that. Who doesn’t dream of reaping an options windfall and using it to retire early, buy a house, pay off their college loans, travel around the world or become a full-time philanthropist?
Unfortunately, when it comes to figuring out how to cash in their stock awards, most employees are on their own.
Their employers can’t always provide the answers they need — especially when the questions relate to personal finances. Most companies admit they need to be better at explaining how ISOs work in general, but they can’t legally work one-on-one with employees to help them exercise and sell shares the right way.
Most companies admit they need to be better at explaining how ISOs work in general, but they can’t legally work one-on-one with employees to help them exercise and sell shares the right way.
That’s why, when the time is right, many employees actively look for help from a qualified fiduciary financial adviser who can walk these could-be “options millionaires” through various cash-in scenarios.
Here’s a real-life example (using a pseudonym).
Kurt is a 50-year-old VP of product management at a healthcare startup that just went public. Over his three years with the company, Kurt had amassed 350,000 ISOs worth approximately $6 million. Unlike many options millionaires, he didn’t intend to cash in everything and retire early. He planned to stay with the firm but wanted to liquidate enough ISOs to pay for a vacation home and add greater diversification to his investment portfolio. This presented significant tax risks that Kurt wasn’t aware of.
If Kurt exercised his ISOs and sold the shares before a year had passed, his profits would be characterized as short-term capital gains, which are taxed as ordinary income.
To illustrate the potential tax implications of this action, we created a hypothetical scenario that showed if Kurt exercised all of his ISOs and sold the shares immediately, he would incur approximately $6 million in ordinary income, which would push him into the top tax bracket and put him on the hook for almost $3 million in combined federal and state taxes.
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Novakid’s investors bet $35M that it can teach kids English
If you’re trying to develop fluency in a non-native tongue, language immersion is a crucial part of the learning process. Surrounding yourself with native speakers helps with pronunciation, context building, and most of all, confidence.
But what if you’re an eight-year-old kid in Spain learning English and can’t swing a solo trip to the United States for the summer?
Novakid, founded by Maxim Azarov, wants to be your next best option. The San Francisco-based edtech startup offers virtual-only, English language immersion for kids between the ages of four through 12, by combining a mix of different services from live tutors to gamification.
After closing its $4.25 million Series A round last December, Novakid announced today that it is back with a $35 million Series B financing, led by Owl Ventures and Goodwater Capital. Existing investors also participated in the round, including PortfoLion, LearnStart, TMT Investments, Xploration Capital, LETA Capital and BonAngels.
The startup is raising capital in response to an active start to its year. The company’s active client base grew 350% year over year, currently at over 50,000 paying students. The money will be used to get more students into its universe of tools, as well as help Novakid expand into international markets with high populations of speakers who want to learn English.
The company’s suite of services are built around two principles: First, that it can immerse early-age learners into the world of English at scale, and second, that it can actually be fun to use.
When a user signs up, they are first connected to one of Novakid’s 2,000 live tutors for their first class. Tutors must be native English speakers with a B.A. degree or higher, as well as an international teaching certificate such as DELTA, CELTA, TESOL or TEFL.
“One of the things that is really important, even psychologically, is to start listening to the language, start interacting with a live person, and remove being afraid of not understanding something,” Azarov said. The company wants to recreate the conditions of how a kid likely learned their first language.
In the class, the tutors only speak English, and users are encouraged to do the same to slowly build and mistake their way into confidence. While the live, video-based classes are a key part of Novakid’s product, Azarov said it was important that his company “was not just giving you access to a teacher” as its main value proposition.
“Most of the competitors are taking teachers and making them available remotely so you don’t have to travel and you have a bigger selection,” he said. But if you look at the industry in the bigger picture, guys like Oxford, Cambridge, Pearson who provide content for the language learning industry, their product basically sucks. It’s really bad.” So, Novakid puts most of its energy into rebuilding a curriculum that works with better design, and includes games.
Gamified content lives both in and out of classes. Within the classroom, a teacher may take a student on a VR-enhanced tour through famous landmarks and museums to practice vocabulary. Self-paced content could look like a multiplayer “battle” between two students answering questions within a certain time period to get a better score. Novakid has an entire team dedicated to game design and development.
Students are clicking in. Novakid users spend two-thirds of their time on the website with tutors, and one-third with self-paced content that the company built in-house. The company wants to switch those concentrations because more students are spending time with the asynchronous content around grammar and vocabulary, and teachers are reserved for more complex information like speaking and conversation.
Part of the difficulty of scaling up a language learning business is that users need to stay motivated. Gamification helps with engagement, but Novakid’s clientele of children could also be fast to churn compared to adult learners, simply due to priorities. Azarov said that he sees how some would view selling exclusively to children as a disadvantage, but he views their focus as differentiation.
“You get better brand equity when you’re more focused,” he said. “The way kids learn language is vastly different from the way adults learn language, and I don’t think the general players who do ‘everything from everybody’ will be able to do [the former] as well as we are.” Duolingo recently launched Duolingo ABC, a free English literacy app with hundreds of short-form exercises. While the now-public company has strong branding, Novakid’s strategy differs by adding in more services around live learning and speaking.
So far, the company has proven that its strategy is sticking. Its revenue in 2020 was $9 million, and in 2021 it is expected to hit between $36 million to $45 million in revenue. It declined to disclose the specifics around diversity of the team, but plans to kick off a quite intensive recruiting spree going forward. Azarov plans to add 200 people to his 300-person company in the next six months.
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