Browsing Tag: Startups

As AI has grown from niche to mission-critical technology, the companies that enable it have multiplied and in many cases prospered. A good example of that success is DefinedCrowd, which has gone from the Disrupt stage to globe-spanning AI toolkit to the Fortune 500 in just a couple of years. The company just raised a new $50.5 million B round to further fuel its expansion.

DefinedCrowd doesn’t make AI, but rather supplies data used to create it, specializing in natural language processing. After all, someone has to vet the 500 different ways you could ask for the weather — otherwise it would be much more difficult for machine learning systems to tell what users mean. The same goes for computer vision, sentiment recognition and other domains for which the company creates and sorts data. DefinedCrowd has a paid community hundreds of thousands strong doing this highly necessary but voluminous work.

As AI has worked its way into everything from creating and editing media to enterprise software, there’s been no shortage of companies in search of training data.

“The demand for data has consistently been growing over the last couple years — companies are more and more aware of the impact that data has on their systems, and have been looking for more languages and domains that weren’t considered five years ago,” co-founder and CEO Daniela Braga told TechCrunch.

She emphasized inclusivity, the potential for bias and more multilingual deployments as drivers of that demand. New markets and applications are opening up constantly and entrants need high-quality data to develop consumer-ready products.

“This puts us in a very good position, as our data is agnostic and we can work pretty much across all verticals,” Braga said.

As evidence this is not simply wishful thinking, the company reported a tremendous 656% increase in revenue year-over-year. They’ve also nearly tripled the size of their workforce in that time to more than 250 people.

It’s toward hiring that Braga expects a great deal of the $50 million round to go: got to have the developers to make the products to follow the road map. That means doubling the employee count — again.

I asked whether the present pandemic has had a major effect on DefinedCrowd’s operations or business. Braga noted that she hasn’t “noticed a significant downturn in the industry,” presumably because product development has continued in anticipation of consumer and enterprise needs returning to normal.

“We decided to make our business fully remote before lockdown measures were implemented,” she explained. “Transferring every employee to remote working in a short space of time was challenging; however, considering we were already a global company with four offices in three different countries, the adaptation phase was fairly smooth, and we were able to maintain full speed during the process.”

Semapa Next and Hermes GPE were added this round to the increasingly long list of investors, which now includes Evolution Equity Partners, Kibo Ventures, Portugal Ventures, Bynd Venture Capital, EDP Ventures, IronFire Ventures, Amazon Alexa Fund, Sony Innovation Fund and Mastercard.

Source: Tech Crunch Startups | AI is more data-hungry than ever, and DefinedCrowd raises M B round to feed it

If only Facebook had been using the kind of technology that TechCrunch Startup Battlefield alumnus D-ID was pitching, it could have avoided exposing all of our faces to privacy destroying software services like Clearview AI.

At least, that’s the pitch that D-ID’s founder and chief executive, Gil Perry, makes when he’s talking about the significance of his startup’s technology.

D-ID, which stands for de-identification, is a pretty straightforward service that’s masking some highly involved and very advanced technology to blur digital images so they can’t be cross-referenced to determine someone’s identity.

It’s a technology whose moment has come as governments and private companies around the world ramp up their use of surveillance technologies as the world adjusts to a new reality in the wake of the COVID-19 epidemic.

“Governments around the world and organizations have used this new reality basically as an excuse for mass surveillance,” says Perry. His own government has used a track and trace system that monitors interactions between Israeli citizens using cell phone location data to determine whether anyone had been in contact with a person who had COVID-19.

While awareness of the issue may be increasing among consumers and regulators alike, the damage has, in many cases, already been done. Social media companies have already had their troves of images scraped by companies like Clearview AI, ClearView, HighQ and NTechLabs, and much of our personal information is already circulating online.

D-ID is undeterred. Founded by Perry and two other members of the Israeli army’s cybersecurity and offensive cyber unit, 8200, Sella Blondheim and Eliran Kuta, D-ID thinks the need for anonymizing technologies will continue to expand — thanks to new privacy legislation in Europe and certain states in the U.S. 

Meanwhile, the company is also exploring other applications for its technology. The services that D-ID uses to mask and blur faces can also be used to create deepfakes of images and video.

The market for these types of digital manipulations are still in their earliest days, according to Perry. Still, the company’s pitch managed to intrigue new lead investor AXA Ventures, which joined backers including Pitango, Y Combinator, AI Alliance, Hyundai, Omron, Maverick (U.S.) and Mindset, to participate in the company’s $13.5 million round.

D-ID already sees demand coming from automakers who want to use the technology to anonymize their driving monitoring systems — enabling them to record drivers’ reactions, but not any public identifying information. Security technologies that monitor for threats are another potential customer, according to the company. While closed circuit television monitors a physical space, it doesn’t need to collect the identifying information of people entering and exiting buildings.

“The convergence of increased surveillance and individual privacy protection places enterprises in a position where they must either anonymize their stored footage or risk violating privacy laws and face costly penalties.” said Blondheim.  

The technical wizardry that D-ID has mastered is impressive — and a necessary defensive tool to ensure privacy in the modern world, according to its founders. Consumers are demanding it, according to D-ID’s chief executive.

“Privacy awareness and the importance of privacy enhancing technologies have increased,” Perry said.

Source: Tech Crunch Startups | D-ID, the Israeli company that digitally de-identifies faces in videos and still images, raises .5 million

Corporate venture capitalists (CVCs) are booming in the startup space as large companies look to take advantage of the fast-paced innovation and original thinking that entrepreneurs offer.

For startups, taking funding from CVCs can come with many benefits, including new opportunities for marketing, partnerships and sales channels. Still, no founder should consider a corporate investor “just another VC.” CVCs come with their own set of priorities, strategic objectives and rules.

When it comes to choosing a CVC with which to enter negotiations, the most important step is doing your own diligence beforehand. An entrepreneur’s goal is to find the perfect match to partner with and guide you as you grow your business. So before you start discussing terms, you’ll want to understand what’s driving the CVC’s interest in venture investing.

While traditional VCs are purely financially driven, CVCs can be in the venture game for a variety of reasons, including finding new technology that might generate marketplace demand for their products. An example is Amazon’s Alexa fund, which invested into emerging companies that drive use and adoption of Alexa. Alternatively, a CVC’s parent company may be looking to invest in tech that will help them operate their own products more efficiently, such as Comcast Ventures investing in DocuSign.

As a rule of thumb, the bigger CVC funds like GV and Comcast tend to be financially driven, meaning they’ll be approaching negotiations through a financial lens. As such, the negotiating process more closely resembles an institutional fund. You as a founder have to do the work to figure out what’s driving your CVC — is this a customer acquisition or distribution opportunity? Or are they seeking to find a source of knowledge transfer and/or bring new tech into their parent company?

“Before negotiating, always look at a CVC’s existing portfolio,” says Rick Prostko, managing director at Comcast Ventures. “Have they made a lot of investments, at what stage, and with whom? From this information you’ll see the strategic thinking of the CVC, and you can determine how best to position yourself when you begin negotiations.”

Source: Tech Crunch Startups | What should startup founders know before negotiating with corporate VCs?

Corporate venture capital (CVC) is booming, with more than $50 billion of CVC capital deployed in 2018. The rise in capital expenditures by CVCs between 2013 and 2018 was an impressive 400%, according to Corporate Venturing Research Data. There are currently more than a hundred active CVC investors, and some sources suggest that almost half of all venture rounds include a strategic investor.

This rise has been driven by two factors: 1) the tech landscape is moving at a faster pace and bigger companies know they need to innovate quicker to meet market demand; and 2) the number of startups seeking CVC capital is growing as founders look beyond traditional venture funds to help grow their businesses.

Kruze Consulting and Goodwin have worked with hundreds of startups through the funding process, including those working with CVCs. Together, the two firms and their principals have decades of experience advising founders during and after their capital raises.

To help startups navigate CVC transactions, we’ve created a guide to working with CVCs. In this segment, we’ll discuss the types of CVCs, the best way to approach each type and the key things to keep in mind during initial discussions.

The three types of corporate VCs

Roughly put, CVCs fall into three categories:

1. The corporate version of an institutional venture platform, meaning that they look to leverage their parent company’s strategic assets with the goal of scaling their portfolio and driving real revenue. As Grant Allen, general partner at SE Ventures, the CVC arm of Schneider Electric, says, “this type of CVC looks just like a pure financial VC, except with a big company behind them, and the ability to open up real channel revenue.”
2. Strategically-minded CVCs are not driven exclusively by returns, but also value innovation. These CVCs are looking for outsourced ways to stay on the leading edge and to learn about new technology that might benefit their parent corporation. This category likely still cares about returns, but their view on ROI is more nuanced than a traditional investor.
3. So-called “tourists” often are made up of brand new and relatively inexperienced venture arms of companies that have done very few deals and haven’t had time to develop a strong process or dealflow strategy.

As the realm of CVCs becomes increasingly professionalized, more and more CVCs fall into the first category. For entrepreneurs seeking CVC investors, those in the institutional or strategic category can provide tremendous value — though it’s important that a startup know which type of CVC they’re speaking to, and have clear objectives going in that align with the CVC’s goals and strengths.

Determining which type of CVC you’re dealing with

Before engaging with a CVC, or any potential investor for that matter, the most important step is to do your research. Who is the individual you’re meeting with? What’s his/her background and what deals has he/she done with this venture group? These are Must Knows before walking into the initial meeting.

Once you’re in early discussions, ask the CVC whether he or she has carry in the fund and whether the venture arm is autonomous. The answers to these questions will help you clarify whether you’re dealing with institutional versus strategic CVCs.

“With corporate-backed venture funds, it’s really key up front to know who you’re talking to,” says Allen. “It’s dangerous to call all groups that are nontraditional investors ‘CVCs’ since some are far more serious than others. Most have some degree of strategic mandate but many are increasingly investing for financial gain.”

The next question is: Are you dealing with a financially driven CVC or a strategically driven one? From a founder’s standpoint, you’ll need to know whether you’re meeting with an investor who views deals through the lens of, “I’m looking for a great team, huge market and a chance to bring in funding and connections to make a business as strong as it can be” or, “I’m looking for a solution/product/platform that I can bring into my company or use to expose my company to a brand new marketplace or technology.”

Once again, the way to determine which type of CVC you’re dealing with is to ask the right questions. In the first meeting, ask about their investment process, how investments are made and whether strategic business unit sponsorship is required for a given deal. The answers will tell you whether the CVC falls into Group 1 or 2, and you’ll be in a strong position to then make choices about whether this potential investor is right for you.

“Look for someone who will understand your business, meet with you and decide that there’s something beyond just capital that will form the basis for that relationship,” says Rick Prostko, managing director at Comcast Ventures. “In today’s venture market, founders want money AND value. Seek out a CVC who has valuable experience to provide, and look for someone who’s been an operator in this segment previously or who has valuable insight and experience to offer.”

What you need to know before you engage with a CVC

Once you’ve done your initial diligence, developed a relationship and determined that a CVC could be a strong investor in your business, there are important factors to be aware of as you move into the next stage of discussions. These include:

Expect deeper product and technical diligence. CVCs can call on technical, product and market experts within their corporation during the due diligence process. As such, their level of product diligence is typically more rigorous than traditional VCs. Be prepared for some grilling by subject matter experts. On the flip side, this diligence process provides you with exposure to potential customers and partners inside the corporation, so use this time to your advantage.

Be aware that you’re going to share confidential information with a large company. “CVCs know that you’re only as good as your reputation,” says Eric Budin, director at Touchdown Ventures . “As such, there are very few examples of CVCs abusing confidential information, because news of it would get around so quickly.”

Still, for a founder, the goal is to be thoughtful and strategic with what you share, and to determine whether the CVC is truly interested in doing a deal before you hand over financial, technical and competitive information. It’s possible that commercial teams at the CVC sponsor could gain unfair advantage from seeing your information, or use their CVC to gain valuable intel on the competition.

On the other hand, sharing your intel could be a fantastic way to get in front of an internal team at the parent company. The key is to think carefully about what you are being asked to share and with whom, and set ground rules with the CVC before they begin diligence.

“It’s important to understand how the corporate fund is structured and how they handle any information that’s shared,” says Prostko. “It might be in your interest to loop in a business unit [within the parent company] that could benefit from learning about your business. On the flip side, if the CVC is a potential competitor, you’ll want to be more careful about what you reveal.”

There will be a risk of regime change. Large companies operate like, well, large companies. People leave, management changes happen and priorities shift. At the outset, ask questions such as: Who will support your company if the commercial manager leading your investment leaves? What will happen to the CVC if the person leading the venture arm is fired? Will they do their pro-rata if the person leading your deal is gone? What happens to any commercial relationships that you might be working on? It’s important to have a keen understanding of internal dynamics before you enter the relationship.

“In general, the more successful a firm is, the more likely the CVC will stick around,” says Allen. “Be sure to look at the individual’s history at the firm, how long he or she has been there, and whether he or she has jumped from fund to fund. If the investing partner has come out of the corporate ‘mother ship,’ and lacks any credible venture experience, buyer beware.”

The CVC may be subject to regulatory rules. Depending on the industry, government regulations may impact how your deal is structured. Banks, for example, are subject to rules that can restrict the percentage of voting stock they can own. Foreign investors may need to comply with CFIUS regulations if your company provides certain specified technologies. Generally, the CVCs will understand the regulations that apply to them. They may not, however, bring them up until late in the process, which could lead to delays.

Commercial transactions with the corporate arm can slow things down. Purely strategic CVCs (Group 2) often require a commercial transaction to happen in connection with a venture deal. The process involved in these transactions often takes longer than the financing process, which can cause issues if the CVC is a key (but not sole) investor in the round. If you’re dealing with a Group 2 CVC, discuss this issue ahead of time to see if you can decouple the two transactions and close the investment prior to inking the commercial deal.

The best way to think about CVC investment

CVCs offer a wealth of capital, human resources and corporate partnerships for startups. But whether you choose to take CVC capital or not, you can benefit from merely approaching CVCs if you have business units operating in either the same space or a tangential space. An initial meeting both gives you an opportunity to do a sales pitch and offers the CVC a chance to vet a product or team and gain some deal insight. For founders, you gain a powerful sales opportunity that might have otherwise taken months or years to obtain.

“Even if you’re told ‘no’ by a CVC, the meeting could result in a good business relationship that could turn into a sales opportunity for you in the near future,” says Prostko.

The WRONG way to think about approaching CVC investors is something along the lines of, “I can’t raise what I want from financial VCs so I’ll go to CVCs as my second choice, since they’re more likely to say ‘yes’ and/or give me better terms.” This attitude will shut doors and cut you off from valuable partners, capital and opportunities to strategically grow your business.

Above all, stay informed as you choose whom to bring in as a partner. Ultimately, it’s your business and the responsibility to ensure that you bring in the right capital partners lies with you.

Source: Tech Crunch Startups | How to approach (and work with) the 3 types of corporate VCs

Last Thursday, Mark Zuckerberg told Facebook’s 48,000 employees that he expects upwards of 50% of the company will be working remotely within 10 years. After outlining many of the advantages that remote work confers — including to “potentially spread more economic opportunity around the country and potentially around the world” — he added that those who choose to move to other places in the U.S. or elsewhere will be paid based on where they live.

“We’ll localize everybody’s comp on January 1,” Zuckerberg said. “They can do whatever they want through the rest of the year, but by the end of the year they should either come back to the Bay Area or they need to tell us where they are.”

Facebook isn’t pioneering something entirely new. The concept of localized compensation has been around for some time, and it’s used by tech companies like GitHub that have primarily distributed workforces. Still, questions about whether it’s fair to pay employees based on their location are sure to grow as more outfits adopt remote-work policies.

Despite Facebook’s uncharacteristic transparency about its thinking, not everyone thinks the tactic makes sense.

One longtime Bay Area recruiter who typically focuses on executive searches calls “disparate pay for the same work” a “dangerous place to be.” Explains the recruiter, Jon Holman, “Even if you invoke the geographic disparity arithmetic based almost entirely on housing costs, what if a new openness to telecommuting means that more women or people of color can aspire to some of these jobs? Are you going to pay them less than the mostly white and Asian-American engineers in the Bay Area? I doubt it.”

Source: Tech Crunch Startups | Why localized compensation in a work-anywhere world isn’t so simple

Long-distance ridesharing startup BlaBlaCar announced that it is expanding to scooter sharing. But the company isn’t going to operate its own fleet of scooters. Instead, BlaBlaCar is partnering with Voi, a European e-scooter service that has raised $136 million over multiple rounds.

Voi operates in dozens of European cities, including Paris, Marseille and Lyon. Over the next few weeks, Voi scooters will feature three different brands — Voi, BlaBlaCar and BlaBla Ride.

Existing Voi members will still be able to use the Voi app. But BlaBlaCar also plans to launch its own app, BlaBla Ride. Existing BlaBlaCar users will be able to log in with their BlaBlaCar accounts.

According to AFP, BlaBlaCar says it isn’t a financial transaction — it’s just a partnership that could benefit users of both platforms.

BlaBlaCar has launched several new services over the past couple of years. It has acquired Ouibus and rebranded it to BlaBlaBus. And, it operates a carpooling marketplace for daily commutes between your home and your workplace called BlaBlaLines.

Interestingly, unlike Grab, Gojek and Uber, BlaBlaCar isn’t building a super app to access several different services. BlaBlaLines is still a separate app, for instance. It creates some friction for users that could be interested in multiple services.

The company thinks BlaBla Ride could be a great solution for the last mile of your ride. A bus or carpooling driver could drop you off in the city center and you could then unlock a scooter to reach your destination.

Source: Tech Crunch Startups | BlaBlaCar partners with scooter startup Voi to launch new BlaBla Ride app

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

“Dear Sophie” columns are accessible for Extra Crunch subscribers; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie:

My spouse’s startup is transferring her to the U.S. to help set up an office there. Will I be able to go with her and work in the U.S.? How long will it take for me to get a work permit? How long will we be able to stay?

— Hopeful in Hyderabad

Dear Hopeful:

Congratulations on starting an exciting new adventure with your family. U.S. immigration law allows visa holders to bring their spouse and dependent children with them to the U.S. and you can check out this podcast on the topic. Dependent children are defined as children who are under the age of 21 and unmarried. Whether or not the spouse can get a work permit, which is called an Employment Authorization Document (EAD), depends on which dependent visa the spouse receives.

Source: Tech Crunch Startups | Dear Sophie: Can I work in the US on a dependent spouse visa?

Even though it’s a vast sector in the midst of transformation, manufacturing is often overlooked by early-stage investors. We surveyed top VCs in the industry to gather their perspectives on the challenges and opportunities facing manufacturing.

Traditionally, manufacturing companies are capital-intensive and can be slow to implement new technology and processes. The investors in the survey below acknowledge the long-standing barriers facing founders in this space, yet they see large opportunities where startups can challenge incumbents.

These investors noted that the pandemic is bringing overnight change in the manufacturing world; old rules are being rewritten in the face of worker safety, remote work and the need for increased automation. According to Eclipse Ventures founder Lior Susan, “COVID-19 has exposed the systemic vulnerabilities inherent to manufacturing and supply chain and, as such, significant opportunities for innovation. The market was lukewarm for a long time — it’s time to turn up the heat.”

• Lior Susan, founder and managing partner, Eclipse Ventures.
• Ajay Agarwal, Bain Capital.
• Greg Papadopoulos, venture partner, NEA.
• Dayna Grayson, co-founder and general partner, Construct Capital.

Lior Susan, Eclipse Ventures

What trends are you most excited about in manufacturing from an investing perspective?

Digital solutions that offer manufacturers greater agility and resilience will become major areas of focus for investors. For example, manufacturers still reliant on manual assembly were unable to build products when factories closed due to the coronavirus lockdown. While nothing would have kept production at 100%, the ability to quickly pivot and engage software-defined processes would have allowed manufacturing lines to continue building with a skeleton crew (especially important for any facility required to implement social distancing). Such systems have remote monitoring capabilities and computer vision systems to flag defeats in real-time and halt production if necessary.

Source: Tech Crunch Startups | Where these 4 top VCs are investing in manufacturing

In the “Age of Corona” — as some like to call it, the roboticization of industry and business has been super-charged by the pandemic. So while companies using messaging platforms to drive customers toward purchases was always on a long-term trend, the sheer volume of people staying online 24/7 during global lockdowns has led to this tactic also being boosted.

So it’s therefore understandable that Spectrm, an AI-powered conversational marketing platform that does just this, has raised $3 million in Series A funding from international VC fund Runa Capital.

Spectrm automates conversations to engage and convert customers online via an AI-driven algorithm. Then marketers use that data to segment the customer base and build stronger customer relationships. The platform is used by companies like eBay, Ford, Groupon, Renault, KLM and more.

According to Global WebIndex research, social media users are now spending an average of 2 hours and 24 minutes per day across eight social networks and messaging apps. And during COVID-19-driven lockdowns, that would have been much more.

Conversational marketing is a hot area. Facebook Messenger marketing has 10-80 times better engagement than email, for instance.

Max Koziolek, co-founder and CEO of Spectrm, said in a statement: “Our vision is to combine the power of conversations with the reach of the largest platforms in the world… we believe conversation is a deeply human experience that is more effective and more insightful than any other format in marketing.”

Dmitry Galperin, partner at Runa Capital said: “Instead of trying to cover all marketing communication channels, it is much more effective to direct efforts to those that generate the most customer insights and highest ROI. Conversational marketing is one of those channels.”

Spectrm’s competitors include LivePerson (Nasdaq-listed), ManyChat (raised $19.1 million), Snaps.io ($11.3 million), Automat.ai ($10.9 million), and Chatfuel ($120,000).

Source: Tech Crunch Startups | Spectrm raises M Series A from Runa Capital for its conversational marketing platform

Spero Ventures, the venture capital firm backed by eBay founder Pierre Omidyar, has gone to Mexico City for its latest investment, backing the identity verification technology developer Mati.

Launched in San Francisco, the two co-founders Filip Victor and Amaury Soviche, decided to relocate to Mexico because of its proximity to big, untapped markets in Mexico, Brazil and Colombia.

“After developing the technology in San Francisco, we chose to start commercially in Latin America. It has been the perfect petri dish for us: the markets here, especially in Mexico, Brazil and Colombia, are very exciting. These countries have the highest payments fraud rates in the world, which makes their identity issues the most interesting,” said Victor in a statement.

The rise of a new generation of fintech startup across Latin America creates a unique opportunity for Mati in a number of markets — and so does a new generation of financial services regulations, the company said. “We view the fintech regulations sweeping across LatAm as an opportunity to help a lot of promising fintechs and marketplaces get to the next level,” Victor said.

Already working across three countries, with operations in Mexico City, St. Petersburg and San Francisco, Mati is an example of the global scope that even very early-stage companies can now achieve.

Identity verification is at the core of much of the modern gig economy and much of the social networking defining life during a pandemic.

The company said it will use the capital investment — it would not disclose the amount of money it raised — to continue product development and expand its geographic footprint.

The scope of the identity verification problem is what brought Spero to the table to discuss an investment, according to a statement from Shripriya Mahesh, the founding partner at Spero.

“For us, identity is foundational to scaling the vast array of gig economy, fintech, social and commerce platforms that represent our collective future of work,” Mahesh said. “The ability to have safe and trusted interactions at an unprecedented scale, especially with people in places where national identity infrastructure is limited, will create opportunities and global connections we can’t yet even forecast.”

Source: Tech Crunch Startups | Omidyar-backed Spero Ventures invests in Mexico City’s Mati, a startup pitching ID-verification