TC
Auto Added by WPeMatico
Abodu raises $20M to build prefabricated backyard homes
The need for more affordable housing has never been more urgent as a shortage in the U.S. housing market persists.
Startups attempting to help address the shortage in a variety of ways abound. One such startup, Abodu, has raised $20 million in a Series A funding round led by Norwest Venture Partners. Previous backer Initialized Capital also participated in the financing, along with Redfin CEO Glenn Kelman, former Stockton, California Mayor Michael Tubbs, GGV investor Hans Tung and Paradox Capital’s Kyle Tibbitts.
The California legislature changed laws in 2017 to make it easier to build Accessory Dwelling Units (ADUs). Then on January 1, 2020, the state of California made it dramatically easier to add extra housing units to single-family home sites. Cities and local agencies have to quickly approve or deny ADU projects within 60 days of receiving a permit application. The state also now prevents cities from imposing minimum lot size requirements, maximum ADU dimensions or off-street parking requirements.
Redwood City, California-based Abodu, which builds prefabricated ADUs, was founded in 2018 to serve as a “one-stop shop” for building an ADU, or as some describe it, a home in a backyard.
Image Credits: Co-founders John Geary and Eric McInerney / Abodu
What sets the company apart from others in the space, its execs claim, is that it not only builds and installs the units, it helps homeowners with the painful process of getting permits. Abodu says it pre-approves its structural engineering with California state-level agencies to ensure its units can be built statewide and works with local agencies to pre-approve its foundation systems to ensure projects can proceed on predictable timelines.
It also claims to offer a cheaper and faster process than if one were to build an ADU from start to finish. Specifically, the startup claims that one of its backyard homes can be installed in just 10% of the time it would take for a traditional ADU to be built.
Abodu has been active in the market, selling and building its ADUs since the fall of 2019. Since then, it has put “dozens and dozens” of units in the ground, and has multiple dozen units in production on top of that, according to CEO and co-founder John Geary. So far, it’s operating in the Bay Area, Los Angeles and Seattle. The company claims it can deliver an ADU in as little as 30 days in San Jose and Los Angeles thanks to the cities’ pre-approval process. In other cities in California and Washington, turnaround is “as little as 12 weeks.” But a standard bespoke project takes 4-5 months from start to finish, according to Geary.
The startup’s three products include a 340-square foot studio; a 500-square foot one bedroom, one bath, and a 610-square foot two bedroom unit. All have kitchens and living space.
Pricing starts at $190,000, but the average project cost across all sizes is around $230,000, Geary said, inclusive of permits and site work.
There are a variety of use cases for ADUs, the most popular of which is to house family and for rental income.
“During the pandemic, multigenerational living has been at an all-time high. There are acute family needs that people are trying to solve for,” Geary said. “In addition, folks are earning extra money by renting them out to members of the community such as teachers or fireman, a single person or younger couple.”
Next, Abodu is eyeing the San Diego market.
Earlier this week, we covered the recent raise of Mighty Buildings, another Bay Area-based startup building ADUs and other housing. The biggest difference between the two companies, according to Geary, is that Mighty Buildings is focused on innovation in construction with its 3D-printed method.
“We decided early on that we didn’t want to reinvent the wheel from the construction standpoint,” Geary said. “Instead, we looked at ‘how can we solve for speed and ease?’ ”
Abodu operates with an asset-light model, and doesn’t own any factories. Instead, it has built a network of factory “partners” across the Western U.S. that builds its units depending on how their capacities look at any given time.
Naturally, the company’s investors are bullish on the company’s business model.
Jeff Crowe, managing partner of Norwest Venture Partners, believes that Abodu’s “beautifully crafted units” are just one of the company’s selling points.
“John, Eric, and their team manage the end-to-end process of permitting, building, and installing on behalf of their customers,” he told TechCrunch. “And with the expedited permitting that Abodu has been granted in over two dozen cities, it has faster time-to-installation than other ADU market participants. The result has been very high levels of customer satisfaction and rapid growth.”
Former Stockton Mayor Tubbs said Abodu is tackling two of California’s most consequential issues: the statewide housing shortage and its impacts on racial and economic segregation in our neighborhoods.
“By making it fast and accessible for normal homeowners to build high-quality backyard housing units, Abodu’s success will mean integrating options for both renters and homeowners in the same neighborhoods, while supporting small landlords and property owners in building equity in their homes,” he wrote via email.
Tubbs went on to describe the speed that Abodu can deliver housing units to customers in certain parts of California “astounding.”
“Abodu’s team has done some of the most difficult legwork for property owners by building local contractor relationships with reliable, vetted, high-quality partners,” he said. “As a homeowner myself, I know the challenges of permitting and finding contractors during construction. It’s this thoughtful attention to detail and customer trust that sets Abodu apart from other similar offerings.”
Powered by WPeMatico
“Developers, as you know, do not like to pay for things”
In the previous part of this EC-1, we looked at the technical details of CockroachDB and how it provides accurate data instantaneously anywhere on the planet. In this installment, we’re going to take a look at the product side of Cockroach, with a particular focus on developer relations.
As a business, Cockroach Labs has many things going for it. The company’s approach to distributed database technology is novel. And, as more companies operate on a global level, CockroachDB has the potential to gain some significant market share internationally. The company is seven years into a typical 10-year maturity model for databases, has raised $355 million, and holds a $2 billion market value. It’s considered a double unicorn. Few database companies can say this.
The company is now aggressively expanding into the database-as-a-service space, offering its own technology in a fully managed package, expanding the spectrum of clients who can take immediate advantage of its products.
But its growth depends upon securing the love of developers while also making its product easier to use for new customers. To that end, I’m going to analyze the company’s pivot to the cloud as well as its extensive outreach to developers as it works to set itself up for long-term, sustainable success.
Cockroach Labs looks to the cloud
These days, just about any company of consequence provides services via the internet, and a growing number of these services are powered by products and services from native cloud providers. Gartner forecasted in 2019 that cloud services are growing at an annual rate of 17.5%, and there’s no sign that the growth has abated at all.
Its founders’ history with Google back in the mid-2000s has meant that Cockroach Labs has always been aware of the impact of cloud services on the commercial web. Unsurprisingly, CockroachDB could run cloud native right from its first release, given that its architecture presupposes the cloud in its operation — as we saw in part 2 of this EC-1.
Powered by WPeMatico
Lightyear nabs $13M Series A as online network procurement takes shape
It seems like everything is being pushed online now, but network procurement stubbornly has remained an in-person or phone-based negotiation. Lightyear, an early-stage New York City startup, decided to change that last year, and the company announced a $13.1 million Series A today.
The round was led by Ridge Ventures with participation from Zigg Capital and a slew of individual investors. Today’s investment comes on the heels of a $3.7 million seed round last October, bringing the total raised to $16.8 million.
CEO and co-founder Dennis Thankachan says that the company has been able to gain customers by offering a new way to procure network resources, which was a great improvement over manual negotiating.
“Last year we launched Lightyear, which was the first tool for buying your telecom infrastructure on the web. And although changing behaviors and the way that enterprises have done things for years is difficult, the status quo in telecom has been zero transparency, no web-based ways to do things, and oftentimes interfacing with really, really large vendors where you have no negotiating leverage even if you’re a big enterprise. That experience was so poor that a lot of enterprises were extremely happy to see what we put in the market,” he said.
What Lightyear offers is an online marketplace where companies can interact with vendors and get a range of price quotes to make a more informed buying decision. The company spent a lot of time improving the product since last October when you could configure some basic stuff, get a price quote and Lightyear would help you buy it.
Now Thankachan says that the solution covers the full life cycle of services including configuring a bigger array of services, helping manage the installation of the services and helping reduce the amount of delays and errors in installs. Finally, they help track and manage network inventory and can automate renewal for a whole group of services.
That has resulted in 4X growth in just nine months since the last round. In addition, the company had relationships with 400 vendors in October and has grown that to mid-500 vendors today. The startup has also doubled the number of employees to around 20.
Thankachan says that as a person of color he is particularly cognizant about building a diverse and inclusive culture. “I’m a person of color, who has been a minority in different work environments in the past, and I know how that feels and how frustrating that can be for a person who feels like their voice is not heard. […] So I think we can start to build a culture that is not necessarily the norm in [the telecommunications industry] by trying to give opportunities to [underrepresented] people,” he said.
Yousuf Khan, a partner at Ridge Ventures, who is leading the round and will be joining the board under the terms of the deal, says that as a former CIO he found Lightyear’s approach quite appealing.
“As a former CIO and someone who has led global technology operations, it’s refreshing to see Lightyear transforming the way business infrastructure gets bought…I wish Lightyear existed during my years as a CIO,” Khan said in a statement.
Powered by WPeMatico
Crypto startup Phantom banks funding from Andreessen Horowitz to scale its multichain wallet
While retail investors grew more comfortable buying cryptocurrencies like Bitcoin and Ethereum in 2021, the decentralized application world still has a lot of work to do when it comes to onboarding a mainstream user base.
Phantom is part of a new class of crypto startups looking to build infrastructure that streamlines blockchain-based applications and provides a more user-friendly UX for navigating the crypto world, something that can make the entire space more approachable to a non-developer audience. Users can download the Phantom wallet to their browsers to interact with applications, swap tokens and collect NFTs.
The crypto wallet startup has banked a $9 million Series A round led by Andreessen Horowitz (a16z), with Variant Fund, Jump Capital, DeFi Alliance, Solana Foundation and Garry Tan also participating. The round, which closed earlier this summer, comes as some venture capital firms embrace a crypto future even as volatility continues to envelop the broader market. Last month, a16z announced a whopping 2.2 billion crypto fund, the firm’s largest vertical-specific investment vehicle ever.
Image via Phantom
The co-founding team of CEO Brandon Millman, CPO Chris Kalani and CTO Francesco Agosti all come aboard from crypto infrastructure startup 0x.
At the moment, Phantom is best-known among the Solana community, where it has become the go-to wallet for applications on that blockchain. The startup’s ambition is to interface with more and more networks, currently building out compatibility with Ethereum and looking to embrace other blockchains, aiming to be a product built for a “multichain world,” Millman tells TechCrunch.
Alongside building out support for other networks, Phantom wants to build more sophisticated DeFi mechanisms right into their wallet, allowing users to stake cryptocurrencies and swap more tokens inside the wallet.
The startup says they have some 40,000 users of their existing wallet product.
Building out a presence on the popular Ethereum blockchain, which already has a handful of popular wallet providers, will be a challenge, but Phantom’s broadest challenge is helping a new breed of crypto-curious users interface with a network of apps that still have a long way to go when it comes to being mainstream-friendly.
“The entire space is kind of stuck in this ‘built by developers for other developers mode,’ ” Millman says. “This bar has been kind of stuck there, and no one is really stepping up to push the bar up higher.”
Powered by WPeMatico
Flymachine raises $21 million to build a virtual concerts platform for a post-pandemic world
As concerts and live events return to the physical world stateside, many in the tech industry have wondered whether some of the pandemic-era opportunities around virtualizing these events are lost for the time being.
San Francisco-based Flymachine is aiming to seek out the holy grail of the digital music industry, finding a way to capture some of the magic of live concerts and performances in a livestreamed setting. The startup hopes that pandemic-era consumer habits around video chat socialization combined with an industry in need of digital diversification can push their flavor of virtual concerts into the lives of music fans.
The startup’s ambitions aren’t cheap, Flymachine tells TechCrunch it has raised $21 million in investor funding to bankroll its plans. The funding has been led by Greycroft Partners and SignalFire, with additional participation from Primary Venture Partners, Contour Venture Partners, Red Sea Ventures and Silicon Valley Bank.
The virtual concert industry didn’t have as big of a lockdown moment as some hoped for. Spotify experimented with virtual events. Meanwhile, startups like Wave raised huge bouts of VC funding to turn real performers into digital avatars in a bid to create more digital-native concerts. And while some smaller artists embraced shows over Zoom or worked with startups like Oda, which created live concert subscriptions, there were few mainstream hits among bigger acts.
To make Flymachine’s brand of virtual concerts a thing, the startup isn’t trying to convert potential in-person attendees of a show into virtual participants, instead hoping to create an attractive experience for the folks who would normally have to skip the show. Whether those virtual attendees were too far from a venue, couldn’t get a babysitter for the night or just aren’t jazzed about a mosh pit scene anymore, Flymachine is hoping there are enough potential attendees on the bubble to sustain the startup as they try to blur the lines between “a night in and a night out,” CEO Andrew Dreskin says.
The startup’s strategy centers on building up partnerships with name brand concert venues around the U.S. — Bowery Ballroom in New York City, Bimbo’s 365 Club in San Francisco, The Crocodile in Seattle, Marathon Music Works in Nashville and Teragram Ballroom in Los Angeles, among them — and livestreaming some of the shows at those venues to at-home audiences. Flymachine’s team has deep roots in the music industry; Dreskin founded Ticketfly (acquired by Pandora) while co-founder Rick Farman is also the co-founder of Superfly, which puts on the Bonnaroo and Outside Lands music festivals.
Image Credits: Flymachine
In terms of actual experience — and I had the chance to experience one of the shows (pictured above) before writing this — Flymachine has done their best to recreate the experience of shouting over the tunes to talk with your buddies nearby. In Flymachine’s world this is attending the show in a “private room” with your other friends livestreaming in video chat bubbles from their homes. It’s well done and doesn’t distract too much from the actual concert, but you can adjust the sound levels of your friends and the music when the time calls for it.
Flymachine’s platform launch earlier this year, arriving as many Americans have been vaccinated and many concert-goers are preparing to return to normal, might have been considered a bit late to the moment, but the founding team sees a long-term opportunity that COVID only further highlighted.
“We weren’t in a mad dash to get the product out the door while people were sequestered in their homes because we knew this would be part of the fabric of society going forward,” Dreskin tells TechCrunch.
Powered by WPeMatico
What the growing federal focus on ESG means for private markets
The increasing regulation of ESG (environmental, social, governance) disclosure reporting may have started in the public markets, but will almost certainly have downstream effects for private market actors — for founders, companies and investors.
Since his confirmation as the chair of the U.S. Securities and Exchange Commission in April, Gary Gensler has made reforming ESG disclosures concerning climate change risk and human capital a top priority. The SEC’s regulatory agenda confirms as much. And Gensler is not alone in his focus on ESG at the federal level.
President Joe Biden issued an executive order encouraging regulators to assess climate-related financial risk. At the end of March, Treasury Secretary Janet Yellen wrote on Twitter that “our future livelihoods … depend on the financial sector to build a more sustainable and resilient economy.” Congress is considering measures that would require increased ESG disclosures, including the Improving Corporate Governance Through Diversity Act, the Diversity and Inclusion Data Accountability and Transparency Act and the Climate Risk Disclosure Act.
This renewed federal focus on ESG issues will bolster the SEC’s effort to create disclosure practices for public companies and mutual funds. Regardless of whether these federal policies around ESG come to pass, they reflect a momentum that will almost certainly impact private markets:
- Firms that want to go public — whether via SPAC, direct listing or traditional IPO — may have to seriously consider board diversity or environmental reporting in conjunction with — or well in advance of — their debuts.
- Private companies seeking to align with public companies as vendors or partners may be expected to meet specific ESG requirements before the engagement.
- Startup founders and venture funds raising capital may work to maintain the largest target market by proactively scoping ESG engagements to ensure they meet criteria for investors who may have their own ESG-focused investment requirements.
In his confirmation hearing before the Senate in early March, Gensler said, “Markets — and technology — are always changing. Our rules have to change along with them.”
The federal government is moving to increase regulation around ESG disclosure requirements with the goals of establishing greater transparency and metrics for public companies.
The federal government is moving to increase regulation around ESG disclosure requirements with the goals of establishing greater transparency and metrics for public companies. These requirements are a response to the changing markets — demands from consumers, scrutiny from investors and a general insistence for higher corporate standards from society at large.
Private markets aren’t immune to these forces. Already, three-quarters of investors in a 2020 survey said it was very important to measure the success of sustainability initiatives, but they also said there’s been a lack of clarity on how to define and measure outcomes.
To be sure, private markets are not headed toward full-scale adoption of ESG regulations. They will not be subject to the same reporting or disclosures framework as their public counterparts. Not today, and possibly not for some time.
But we may begin to see private investors, funds and companies adapting to get ahead of ESG regulation and position themselves to effectively operate in a new — albeit adjacent — regulatory environment. In their case, the rules may not change — but the game could.
Powered by WPeMatico
Mobile.dev launches with $3M seed to catch app issues pre-production
As mobile developers build apps, they push them out into the world and problems inevitably develop, which engineers have to scramble to fix. Mobile.dev, a new startup from a former Uber engineer, wants to flip that story and catch errors before the app launches. Today, the company emerged from stealth with a beta of their solution and a $3 million seed investment led by Cowboy Ventures with participation from multiple tech luminaries.
While he was at Uber, company CEO and co-founder Leland Takamine says that he observed this workflow where an app was put out in the world, a company set up tooling to monitor the app and then worked to fix the problem as users reported issues or the monitoring software picked them up. At Uber, they began building tooling to try to catch problems pre-production.
When he started mobile.dev with COO Jacob Krupski, the goal was to build something like this, but for every company regardless of the size. “The insight that we had was that anything we could do to catch problems before releasing an app was 100 times more valuable than anything that you can monitor in production,” Takamine told me.
And that’s what the company aims to do.”Our mission at mobile.dev at a high level is to empower companies to deliver high-quality mobile applications. And more specifically, stop sacrificing users and start catching issues before you release,” he said.
He says that when he speaks to app developers about a solution like this, they are intrigued because as he says “it’s really a no-brainer” question, but unless you have the scale of a company like Uber and vast engineering resources there hasn’t been a solution like this available for the average company or individual developer. And it was that deep technical expertise he built at Uber that laid the groundwork for what they are building at mobile.dev.
The two founders launched the company a year ago and have been working with design partners and initial customers, particularly Reddit. The product goes into beta today. For now, they are the only two employees, but that is going to change with the new capital as they look to add more engineering talent.
With a very specific set of skills required to build a solution like this, it makes it even more challenging to hire diverse employees, but Takamine says that the goal is to build a diverse team. “I think it’s making sure that we look beyond just our immediate network and making sure that we’re looking at diverse sources,” he said.
The company launched during the pandemic and with just the two founders involved have been fully remote up until now, and they intend to keep it that way as they add new employees in the coming months.
“We’re going to be fully remote, I think we have a great advantage that we’re starting from remote, and it’s much more difficult to transition from an office to remote. So we’re starting from first principles here and building our culture around remote work,” he said.
Powered by WPeMatico
Simpplr raises $32M for its intranet platform
Simpplr, a modern platform for building intranet sites (or “employee communications and enablement platforms,” as the company calls it), today announced that it has raised a $32 million Series C round led by Tola Capital. Norwest Ventures, which led the company’s Series B round last year, as well as Salesforce Ventures and George Still Ventures also participated. This brings Simpplr’s total funding to just over $61 million.
As Simpplr CEO and founder Dhiraj Sharma told me, the Series B round was meant to help the team accelerate product innovation and development. Unsurprisingly, the COVID-19 pandemic only increased demand for digital workplace solutions like Simpplr. As Sharma noted, the company’s thesis was always that the world was moving toward remote/hybrid work. The pandemic only accelerated this process and with that, the sense of urgency in its customer base to modernize their own platforms for communicating with their employees. To keep up with this growth, the company doubled its team since last August (though Sharma, just like many other startup founders I’ve recently talked to, also bemoaned that it’s becoming increasingly hard to find talent).
The company says that it added 100 enterprise customers over the course of the last year. Today, its customer base includes a number of early adopters like Splunk or Nutanix, which were always building toward a global workforce and always had a need for a product like Simpplr. But due to the pandemic, more traditional businesses like Fox, AAA insurance or Renewal by Andersen also needed to quickly find ways to support their newly remote workforces.
“When this pandemic happened, there were lots of traditional companies who didn’t think that they would be doing remote work as much in the near future as they had to,” Sharma said. “For them, things changed and then what they realized is that they did not have effective means of formal employee communication and also lacked the digital employee experience — and they realized that very quickly.”
Simpplr is obviously not the only intranet solution on the market, but Sharma argues that the service isn’t just recognized by analyst firms like Gartner and Forrester, but also highly reviewed by its customers, in large part thanks to its focus on user experience. “UX is our number one strength and differentiator. We have been pushing the boundaries of intranet for the last five years,” he said and cited features like the company’s auto-governance engine, which he likened to a “Roomba for your intranet.”
Image Credits: Simpplr
Analytics, too, is another area where Simpplr is trying to differentiate itself. “Our company’s mission is to help companies build a better workplace — and unless we can show the areas of improvement and provide insights like how to do something better, we just become a dumb tool,” he said. “For us, what is very important is not only that you are communicating but helping our customers to understand what’s working and what’s not working. What’s the impact of the communication and how are your employees feeling about it?”
Looking ahead, the company is working on building more AI into its tools — including its analytics — to help companies better communicate with their employees and understand the impact of those messages.
As for the new funding round, Sharma noted that he bootstrapped his previous two companies, which has made him take a somewhat conservative approach to fundraising. “When I used to hear that your investors or VCs expect growth at all costs, I just could never understand that,” he said. “So while building this company, even though this is a venture-funded company, I still wanted to make sure that I use the finances responsibly and I build a business in a sustainable manner. I wanted to make sure that if we raised a large investment, we have a proper use for that investment and that this investment will bring the right results.”
Tola Capital principal Eddie Kang will now join Simpplr’s board. “The future of work is hybrid and Simpplr is essential to a company’s ability to engage with employees,” he said. “As enterprise software investors, what excites us about Simpplr’s platform is that it allows leadership teams to streamline communications across channels and provides a turnkey platform that drives value to customers very quickly. Our partnership with Simpplr will accelerate its roadmap to meet the needs of global business leaders and communications teams.”
Powered by WPeMatico
Former Nutanix execs launch new startup with $50M seed round
Today a new software company from two former Nutanix executives called DevRev emerged from stealth with a $50 million seed round from Mayfield Fund, Khosla Ventures and several industry luminaries. The company, which aims to bring the coding and revenue processes closer together, already has 75 employees working on the new software platform, which they hope to have ready to launch later this year.
It’s not every day you see a $50 million seed round, but perhaps the fact that former Nutanix co-founder and CEO Dheeraj Pandey and his former SVP of engineering Manoj Agarwal are involved, could help explain the investor enthusiasm for the new project.
Pandey says that he has seen a gap between developers and the revenue the applications they create are supposed to generate. The idea behind the new company is to break down the silos that exist between the front of the office and the back of the office and give developers a deeper understanding of the customers using their products, or at least that’s the theory.
“Dev and rev are yin and yang to each other. In today’s world they are really far apart with tons of bureaucracy between these two parties. Our goal to bring dev and rev to get rid of the bureaucracy,” Pandey told me
The company intends to build an API to help developers pull this information from existing systems for companies already working with a CRM tool like Salesforce, while helping gather that customer information for younger companies who might lack a tool. Regardless, the idea is to bring that info where the developer can see it to help build better products.
The way it works in most companies is customer service or sales hears complaints or suggestions about the product, and tickets get generated, but putting these issues in front of the people building the software isn’t always easy or direct. DevRev hopes to change that.
Navin Chaddha, managing director at Mayfield, whose firm is investing in DevRev, sees a need to bring these different parts of the company together in a more direct way. “The code that developers work on today is used by support as well as marketing and sales. By bringing the world of issues and tickets closer to the world of revenue and growth, DevRev’s unified platform bridges the gap between developer and customer and elevates the developer to a business leader,” Chaddha said.
With 75 employees working on the problem, DevRev is already a substantial startup. As experienced founders Pandey and Agarwal certainly understand the importance of building a diverse and inclusive company. Pandey sees the top of the employment funnel really being focused on engineering, design and business schools and the company is working to bring in a diverse group of young employees.
“[We are looking at ways] to search for talent and to promote talent, to make them into leaders. I think we have an empty canvas by the way, and we have this idea of COVID, and being able to do remote work has really grown the top of the funnel, the mouth of the funnel now can be anything and everything. […] [Colleges and universities] are I would say the real source of all diversity at the end of the day. We have seen how engineering schools, design schools and business schools are actually getting so diverse,” he said.
The company is working to build the product now and reaching out to developer communities on Discord, GitHub and other places that developers gather online to get their input, while testing and improving the product in-house and with design partners.
Nutanix, the founders’ previous company, launched in 2009 and raised over a $1 billion before going public in 2016. Pandey and Agarwal left Nutanix at the end of last year to launch the new company.
Powered by WPeMatico
Investment app Syfe raises $29.6M Series B led by returning investor Valar Ventures
Syfe founder Dhruv Arora
Investment apps in Southeast Asia are attracting a lot of funding, and now some are raising fast follow-on rounds, too. For example, Indonesian robo-advisor app Bibit raised $65 million in May just four months after a $30 million growth round. Now Singapore-based Syfe is announcing that it has closed a $40 million SGD (about $29.6M USD) Series B, only nine months after its Series A. It also said all of Syfe’s full-time employees will receive equity in the company.
The latest round’s lead investor is Valar Ventures, which also led Syfe’s Series A, marking the fintech-focused venture capital firm’s first investment in an Asian startup. Returning investors Presight Capital and Unbound participated, too.
This brings Syfe’s total raised so far to $70.7 million SGD (about $52.3 million USD) since it was founded in 2019. The startup did not disclose its Series B post-money valuation, but founder and chief executive officer Dhruv Arora told TechCrunch it increased 3.6 times from its Series A. The company also hasn’t disclosed total user numbers, but assets under management have grown four times since January, thanks in large part to user referrals and the launch of new products like Syfe Cash+ and Core portfolios.
“To be honest, we weren’t really looking to raise a Series B,” Arora told TechCrunch. “We saw some of the positive outcomes of resources from our Series A. We really scaled up the team and started launching new products and options for our users.” Syfe probably could have waited another six months to a year to raise a new round, he added, but its investors approached the startup again and offered good terms for another round.
About 50% to 70% of new users each month come through recommendations from existing customers, which keeps Syfe’s acquisition costs extremely low, Arora says. Since the beginning of this year, it has also doubled its team in Singapore to more than 100 people, allowing the startup to explore different kind of distribution strategies and partnerships. The app currently has users in 42 countries, but only actively markets in Singapore, where it holds a Capital Markets Services license from the Monetary Authority of Singapore (MAS). It has plans to announce a second market soon.
Syfe was founded in 2017 and launched its app in July 2019. Prior to starting Syfe, Arora was an investment banker at UBS Investment Bank before serving as vice president and head of growth at Indian grocery delivery startup Grofers.
While retail investment rates are still low in Southeast Asia, interest has jumped significantly over the past year. One of the reasons most commonly cited is the economic impact of COVID-19, which motivated people to earn returns from their money instead of keeping it in saving accounts.
“Most of my career has been within Hong Kong, Singapore and parts of India. I think culturally we’ve always been told to save, save, save,” Arora says. “It made sense because banks were giving good interest rates, but now the majority of economies are in negative real rate of interest.” Along with consumers’ growing familiarity with online wallets and other digital financial services, this set the stage for investment apps to come in, attracting customers who might not have gone to traditional brokerages.
Arora says he expected people to become more interested in investing, but gradually, over the course of about five to seven years. Instead, that shift is happening much more quickly. “My view is that tomorrow’s saving accounts become smart investing accounts. That’s been my view ever since we started Syfe, but this last year has made it evident that it has to happen and has to happen much bigger. So I think this wave will continue,” he says.
While many investment apps focus on millennial users, Syfe’s target demographic is wider. In the last six to nine months, Arora says there has been an uptick in users aged 50 and above on the platform, and its oldest user is 93 years old.
“The users in that segment have become a bigger percentage and the reality is that they typically have more disposable income. The average customer in their 50s will deploy, in our experience, almost twice the more conventional demographic which might be between 30 to 40,” says Arora.
Out of the many investment apps that have emerged in Southeast Asia, users most often compare Syfe to Stashaway, Endowus and Autowealth when shopping around for a platform. Arora says the space has a lot of room to grow because retail investment in the region is still very low. “I think it’s still super early in the game. There is enough room for multiple players and I think more will come into this domain, because if you can get your acquisition metrics into place, this can be a very profitable business.”
In terms of differentiating, Syfe is focused on new product development and user localization and personalization so customers can create more customized portfolios.
Syfe has a team of financial advisors for users who want person-to-person consultations, but Arora says most of Syfe’s investors rely entirely on its app to decide how to invest. Over the last nine months, it has only added one new advisor to its team, while focusing on making its user interface more intuitive.
“The human touch is optional, but it’s not necessary and in many cases, it’s only needed to help people understand the offering once,” says Arora. “But our goal is always going to be technology company and for the app to become so intuitive that whether you are 18 or 93, you are able to use the offering with very limited guidance.”
In a press statement, Valar Ventures founding partner Andrew McCormack says, “Syfe was our first investment in Asia and we’ve been impressed by its rapid, sustained growth over the past couple of years. The opportunity for the company to meet the saving and investment needs of a burgeoning mass-affluent consumer population in Asia remains significant, and we are confident that Syfe will continue to expand at pace.”
Powered by WPeMatico