Browsing Tag: Startups

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

When we kicked off our series on private companies that have reached $100 million ARR, we didn’t expect it to last. Maybe a piece or two, but nothing more. Today’s entry should bring us past the 30 company mark.

It was less than a month ago that we added eight names to the club in a single post (HeadSpin, UiPath, DigitalOcean, BounceX, Wrike, Aeris, Podium and Lucid), the latter two having recently raised capital, announcing their revenue milestones at the same time. This morning, we’re appending just three names, but pay attention all the same.

We joked in February that our running tally of growth-oriented, private companies that had reached $100 million in annual recurring revenue read like a list of firms that either could, or should, go public in short order. Since then, the IPO market has largely closed in light of COVID-19, so I suppose we’re more adding to the backlog than queuing up companies for an S-1.

Either way, let’s talk about ActiveCampaign, Recorded Future and ON24 this morning!

New names

We’ll start, then, with Recorded Future .

Recorded Future

Boston-based Recorded Future, a cybersecurity company focused on “threat intelligence,” announced that it crossed the $100 million ARR mark recently, making the firm a success story for its city. But as with so many companies that we add to our list, its inclusion is slightly fraught.

Source: Tech Crunch Startups | Adding three more companies to the 0M ARR club

As we move through life in the pandemic, companies are being forced to review and understand how workflows happen. How do you distribute laptops to your workforce? How do you make sure everyone has the correct tool set? FortressIQ, a startup that wants to help companies use data to understand and improve internal processes, announced a $30 million Series B investment today.

M12, Microsoft’s venture fund and Tiger Global Management led the round with help from previous investors Boldstart Ventures, Comcast Ventures, Eniac Ventures and Lightspeed Venture Partners. The company has now raised almost $65 million, according to Pitchbook data.

As the product has matured, founder and CEO Pankaj Chowdhry, says its focus has shifted a bit. Whereas before it was primarily about using computer vision to understand workflows, customers are now using that data to help drive their own internal transformations.

That used to require a high priced consulting team to pull off, but FortressIQ is trying to use software, data and artificial intelligence to replace the consultant and expose processes that could be improved.

“We’re building this kind of cool computer vision to help with process discovery, mostly in the automation space to help you automate processes. But what we’ve seen is people leveraging our data to drive transformation strategies, of which automation ends up being a pretty small component,” Chowdry explained.

He said that this is helping define new ways of using the tool they hadn’t considered when they first started the company. “If you think about it, we can use analytics to drive better experiences, better training, all of that. We’ve seen how customers are driving overall improvement strategies by leveraging the data coming out of this system,” he said.

The company currently has 65 employees, but he couldn’t commit to a future number at this point because of the uncertainty that exists in the economy. He knows he wants to hire, but he’s not sure what that will look like. He said they used to revisit hiring every six months. Now it’s ever six weeks, and so they keep having to reevaluate based on an ever-shifting set of conditions.

Chowdry believes that companies will need to be more agile moving forward to react more quickly to changing circumstances beyond the current crisis, and he thinks that’s going to require solid business relationships to pull off.

“I think the idea is to be leveraging this time to build that relationship with your customers so as they do start looking at what are they going to do and where they need to be invested in the business, that we’ve got both the data and the infrastructure to help them do that.”

Source: Tech Crunch Startups | FortressIQ snags M Series B to streamline processes with AI-fueled data

Even in these trying economic times, there are some services that companies can’t do without. Having good security tools is one of them. Expel, a four-year-old startup that offers security operations as a service, announced a $50 million Series D financing today.

CapitalG led the round with participation from existing investors Battery Ventures, Greycroft, Index Ventures, Paladin Capital Group and Scale Venture Partners. The company has now raised almost $117 million, according to PitchBook data.

It’s never easy finding quality security talent to help protect a large organization. The idea behind Expel is to give customers a set of tools to help use automation to reduce the number of people required to keep an organization safe.

Most companies struggle to find experienced security employees, so it’s using automation to solve a real pain point for them. While co-founder and CEO Dave Merkel says you still need to staff the security operations center, you can do it with fewer people with his platform.

“You may have a 24×7 Security Operations Center, but you don’t need the number of people everybody else does to protect your customers because Workbench does all of the heavy lifting for you. So instead of a SOC with 100 people, maybe you’ve got one with 15 people, and that gives tremendous leverage through this platform, and the platform ensures that you can provide high quality security without having to continually grow headcount,” Merkel explained.

Merkel sees the same economy everyone else does, but he believes that companies will continue to invest in security because they have to.

“Security tends to be a need as opposed to a want in many organizations, and so we still do see business happening. We will be using some of the money to continue to invest smartly in sales and marketing, but we’ll just need to be deliberate to make sure that we’re picking the right things that are still effective right now,” he said.

One thing that’s remarkable about this round is that Expel didn’t go looking for this new money. In fact, CapitalG came knocking, according to CapitalG general partner Gene Frantz.

“We sought out Expel, first and foremost. It wasn’t that Expel sought out to raise money and they called a bunch of people. We called them, and that was in response to a bunch of thematic work that we continually do in the security space,” Frantz told TechCrunch.

That work involved three main areas, where Expel happened to check all the boxes. The first was the threat landscape becoming ever more treacherous. The second was information overload from a variety of security products, and finally the dearth of experienced security personnel to deal with the first two problems.

“And so our bet is that this is the company in the space that actually will take on and address these challenges,” Frantz said.

Merkel describes having a company like CapitalG come to him as a humbling experience for him and his co-founders, especially under the current circumstances.

“It’s tremendous validation, but it is also humbling. We’re pretty thankful to be in that position, and we want to make sure that we do the right things to continue to honor the opportunity that we see in front of us.”

Source: Tech Crunch Startups | Expel lands M Series D as security operations increase in importance

As millions of students and teachers shift to learn from home in response to the novel coronavirus disease, modern-day flashcard business Quizlet has raised $30 million in a Series C round led by General Atlantic.

Quizlet’s chief executive officer Matthew Glotzbach said that the new funding values the business at $1 billion, up five times from its last funding round in 2018. Quizlet’s total known financing is more than $60 million.

The fresh funding comes off the heels of unprecedented usage for Quizlet, which connects students to virtual flashcards and study guides. Once a user makes a guide, they can share a unique link with friends and collaborate ahead of a test. School shutdowns due to COVID-19 have caused students to flock to the platform as they look for new ways to study, retain information and collaborate.

Students ask over 1 billion questions on Quizlet each week and more than 400 million virtual study guides have been created. The San Francisco-based startup is also seeing “massive international growth,” with 200% to 400% new user growth across its top international markets.

The company declined to share daily numbers, but said it sees over 50 million users every month, which is similar to a statistic it shared two years ago.

Glotzbach noted that more than two-thirds of high schoolers in the United States use Quizlet. At least half of U.S. college students have used the platform. That kind of market hold only comes from two aspects: volume and variety. The site’s curriculum spans from acid and bases in chemistry to the science of roller coasters to the art of sensation and perception.

As for why a flash card business could be worth a billion dollars, it isn’t. But an AI-powered tutoring platform could be, and that’s exactly what Quizlet is focusing on as a core product move in the foreseeable future. Quizlet Learn, Glotzbach says, is the most popular feature on the site and uses AI to help users study topics and learn mastery by a certain time.

Quizlet’s newest investor, General Atlantic, has invested in a number of edtech companies around the world, like OpenClassrooms, Ruangguru, Unacademy and, recently, Duolingo. Glotzbach said that Quizlet will continue to expand to new international markets, but does not have any “specific targets or names.” It is currently used in 130 countries across 19 localized languages, so it has a lot of room to grow.

Quizlet did not comment on profitability, but said its revenue is growing 100% year over year.

Quizlet views its closest competitor as Chegg, an online textbook company that went public in November 2013. Glotzbach says it has a larger audience and bigger footprint on education in the United States. He noted that other learning apps like Duolingo are vertical and subject focused, while Quizlet has a more broad curriculum.

While the new funding officially makes Quizlet a unicorn, Glotzbach said that when he announced the funding to his staff he compared the company more closely to a camel.

“We’ve built a very large-scale business with products that are easy to use, easy to get up and running and easy to share,” he said. “We use a low-cost subscription model that is very inexpensive so we get a lot of people upgrading to our premium product, and it drives economic business.”

Slow and steady is part of its founding story: Quizlet was founded in 2005 by a 15-year-old, Andrew Sutherland. It was fully bootstrapped until 2015. Glotzbach, who was previously an executive at YouTube, then joined in 2016.

But while it has humble roots, this new round was closed in the heat of a global pandemic.

“We saw record drops in the stock market multiple days in a row while trying to both manage [the round] and move an entire company to remote work,” he detailed. “It was closed during such a volatile time.”

Glotzbach said that the round was more opportunistic, and that it didn’t “need an injection of capital to make ends meet.”

Therefore, Quizlet’s new shiny valuation is yet another example of how edtech has found both revitalization and green shoots during this catastrophic time, and how remote learning is going from a tool to a necessity for many learners.

Source: Tech Crunch Startups | Quizlet valued at billion as it raises millions during a global pandemic

London-based femtech hardware startup Astinno has picked up an Innovate UK grant worth £360k ($450k) to fund further testing of a wearable it’s developing for women experiencing a perimenopause symptom known as hot flushes.

The sensor-packed device, which it’s calling Grace, is being designed to detect the onset of a hot flush and apply cooling to a woman’s wrist to combat the reaction — in a process it likens to running your wrists under a cold tap.

The aim is for algorithmically triggered cooling to be done in a timely enough manner to prevent hot flushes from running their usual unpleasant and uncomfortable course. While the bracelet wearable itself is being designed to look like a chunky piece of statement jewellery.

The femtech category in general has attracted an influx of funding in recent years, as venture capitalists slowly catch up to the opportunities available in products and services catering to women’s health issues.

But it’s fair to say menopause remains a still under-addresed segment within the category. Although there are now signs that more attention is being paid to issues that affect many hundreds of millions of middle aged (and some younger) women around the world.

The team working on Grace has built several prototypes to date, per founder Peter Astbury. He says some limited user tested has also been done. But they’ve yet to robustly prove efficacy of the core tech — hence taking grant funding for more advanced testing. At this stage of development there’s also no timeline for when a product might be brought to market.

Astinno and Morgan IAT, its commercial partner on the project, have been awarded the Innovate UK money via a publicly funded UK SMART grants scheme (the pair are getting match funding via the scheme, with the public body putting up 70% and Astinno and Morgan IAT funding the other 30% of their respective costs).

Loughborough University — Astbury’s alma mater — is also involved as a research party, and is being funded for 100% of its grant costs.

“Several prototypes have been created so far, mainly by myself having received electronics and design training as part of my degree at Loughborough University,” says Astbury. “Shortly after leaving university I also briefly worked with an electronics company who helped to refine some of the components within the Grace product.

“Morgan IAT has the crucial technical role of developing a number of prototypes in conjunction with Astinno. This includes both hardware and software development, building many more advanced prototypes that are being tested, refined and then tested again.

“We’re working with three researchers from Loughborough University which brings together industry leading expertise in menopause psychology and physiology. Based at the National Centre for Sports and Exercise Medicine, the researchers are using their fantastic lab facilities to test Grace, meaning that everything we’re doing is being validated by professional research. Once this step is complete, we’ll have more of an idea regarding product release time-frames.”

Astbury founded the startup last summer — but had begun work on the concept for Grace several years before, during his final year at Loughborough, back in 2016.

“As a member of Loughborough’s business incubator, ‘The Studio’, I was awarded an enterprise grant which helped to fund the business. I have also been putting my User Experience design skills and expertise to good use, contracting for start-ups and larger healthcare companies on a part-time basis to ‘bootstrap’ development,” he adds.

The idea for the wearable came after Astbury conducted user research by talking to women about their menopausal symptoms and hearing about their coping strategies for hot flushes and the night sweats that can be induced.

“A woman was telling me about her symptoms and how she coped with them until now. She would wake up ten to fifteen times each night due to her night sweats. Each time, she would go to the bathroom and run her wrists under cold water which helped the flush to subside. Looking into this method in more depth, it became clear that cooling an area of skin can indeed be extremely effective and there are lots of women that use this technique,” he explains.

“During a hot flush, your brain mistakenly thinks that you are becoming too warm and causes your body to lose heat. This results in sweating, a reddening of the skin and shortness of breath. The skin, however, acts like your body’s thermometer, passing information to your brain. By applying cooling to the skin at the right time, we’re harnessing the body’s natural temperature regulation system. The brain receives signals that you are cool and, in turn, the body reacts in a way that is directly opposite to a hot flush.”

“The real key to Grace is accurately and reliably pre-empting hot flushes (the automated nature of the bracelet) so that cooling can be applied at the earliest stage possible,” he adds. “We’re doing that using a specific line-up of sensor technology and algorithms all working together but I’m afraid the details of that can’t be disclosed publicly yet.”

Astbury says he was keen to get grant funding at this stage of product development to avoid dilution of the business, given VCs would require their chunk of equity.

“One of the best things about Innovate UK for a science-based start-up like Astinno is that it doesn’t contribute to the dilution of your business,” he notes. “By the end of a successful grant project, a company becomes a much more attractive investment from the perspective of both investors and the start-up. I have had discussions with multiple angels/VC’s and will maintain those relationships, however a grant was the best option for us at this stage.”

Source: Tech Crunch Startups | UK femtech startup Astinno, which is working on a wearable to combat hot flushes, picks up grant worth 0k

M17, the Taiwan-based live streaming entertainment startup, announced that it has raised a $26.5 million Series D. The round was led by Vertex Growth Fund, with participation from Stonebridge Korea Unicorn Venture Fund, Innoven Capital Singapore, Kaga Electronics and ASE Global Group.

The new funding will be used for growth in Japan, one of M17’s key markets, and expansion into the United States and other regions including the Middle East.

The company’s funding announcement said that more users are logging onto live streaming apps to stay entertained during the COVID-19 pandemic. It added that M17, whose products include live streaming app 17 Media and a talent agency called Unicorn Entertainment, has seen a record number of artists and users signing up over the past few months.

17 Media enables content creators to monetize through in-app gifts and social commerce. In January, the company said it had processed over $500 million worth of virtual gifts for 30,000 exclusive content creators.

Two years ago, M17 planned to list on the New York Stock Exchange, but cancelled its IPO in June 2018 and decided to continue raising private funding.

In a statement, Vertex Growth managing director Tam Hock Chuan said, “We are impressed by M17’s market leading position and continued strong growth in Japan, Taiwan and Hong Kong. With M17’s unique value proposition and battle-hardened management team, the company is well prepared for its next phase of growth.”

Source: Tech Crunch Startups | Taiwan-based live streaming company M17 raises .5 million Series D led by Vertex Growth

Modulr, the U.K. fintech that offers ‘Payments as a Service’ as an alternative to commercial and wholesale transaction banking, has secured £18.9 million in growth funding. Leading the round is Highland Europe, with participation from existing investors including Frog Capital.

Modulr says the injection of capital will be used to further develop the payments platform and expand into new products and markets, including European expansion. It brings the total raised by the company to just over £43 million, not including a £10 million grant from the Capability and Innovation Fund (pdf).

“We are solving the problem of relationship and technical access to commercial and wholesale transaction banking,” co-founder and CEO Myles Stephenson tells TechCrunch. “We’re providing a complete alternative to using a bank for payments: technology, regulatory permissions and direct access to the payment schemes”.

Last year, this saw Modulr became one of only a few non-banks to gain direct access to Faster Payments and Bacs, the two main U.K. bank payments schemes. The fintech is also a “principal” issuing member of Visa.

“We see ourselves as the plumbing layer behind the scenes – delivering the payments infrastructure that enables other businesses to automate payment flows and reconciliation, embed payment flows within their platform and build entirely new payment services for their customers,” adds Stephenson.

To date, businesses across lending, fintech, alternative banking, accounting, travel and more have processed over £25 billion in payments through the Modulr platform, which counts Revolut as one of its largest customers. Other partner clients including Sage, Liberis, Salary Finance and Iwoca.

In terms of competition, Stephenson says Modulr is typically replacing “the payment services provide by a bank combined with a technology service such as Bottomline Technologies”. (Although, of course, there are other modern payments as a service providers, including challenger bank Starling).

“What we think makes us stand out is our sole focus on being a B2B and infrastructure provider with access to, and trust of, key regulators and payment networks/schemes,” he adds. “This means we have the same level of access to payment schemes as a bank provides, but backed by our resilient, reliable and powerful API platform”.

Source: Tech Crunch Startups | Modulr raises £18.9M for its ‘Payments as a Service’

When you think of voice assistants like Amazon’s Alexa and Apple’s Siri, the words “emotional” and “expressive” probably don’t come to mind. Instead, there’s that recognizably flat and polite voice, devoid of all affect — which is fine for an assistant, but isn’t going to work if you want to use synthetic voices in games, movies and other storytelling media.

That’s why a startup called Sonantic is trying to create AI that can convincingly cry and convey “deep human emotion.” The U.K.-based startup announced last month that it has raised €2.3 million in funding led by EQT Ventures, and today it’s releasing a video that shows off what its technology is capable of.

You can judge the results for yourself in the video below; Sonantic says all the voices were created by its technology. Personally, I’m not sure I’d say the performances were interchangeable with a talented human voice actor — but they’re certainly more impressive than anything synthetic that I’ve heard before.

Sonantic’s actual product is an audio editor that it’s already testing with game makers. The editor includes a variety of different voice models, and co-founder and CEO Zeena Qureshi said those models are based on and developed with actual voice actors, who then get to share in the profits.

“We delve into the details of voice, the nuances of breath,” Qureshi said. “That voice itself needs to tell a story.”

Co-founder and CTO John Flynn added that game studios are an obvious starting point, as they often need to record tens of thousands of lines of dialogue. This could allow them to iterate more quickly, he said, to alter voices for different in-game circumstances (like when a character is running and should sound like they’re out of breath) and to avoid voice strain when characters are supposed to do things like cry or shout.

At the same time, Flynn comes from the world of movie post-production, and he suggested that the technology applies to many industries beyond gaming. The goal isn’t to replace actors, but instead to explore new kinds of storytelling opportunities.

“Look how much CGI technology has supported live-action films,” he said. “It’s not an either-or. A new technology allows you to tell new stories in a fantastic way.”

Sonantic also put me in touch with Arabella Day, one of the actors who helped develop the initial voice models. Day remembered spending hours recording different lines, then finally getting a phone call from Flynn, who proceeded to play her a synthesized version of her own voice.

“I said to him, ‘Is that me? Did I record that?’ ” she recalled.

She described the work with Sonantic as “a real partnership,” one in which she provides new recordings and feedback to continually improve the model (apparently her latest work involves American accents). She said the company wanted her to be comfortable with how her voice might be used, even asking her if there were any companies she wanted to blacklist.

“As an actor, I’m not at all thinking that the future of acting is AI,” Day said. “I’m hoping this is one component of what I’m doing, an extra possible edge that I have.”

At the same time, she said that there are “legitimate” concerns in many fields about AI replacing human workers.

“If it’s going to be the future of entertainment, I want to be a part of it,” she said. “But I want to be a part of it and work with it.”

Source: Tech Crunch Startups | Sonantic is ready to convince listeners that synthetic voices can cry

Alon Gilady, CEO of RenovAI, told me his startup is trying to solve the problem that many of us face when we’re moving into a new home — we aren’t interior designers, but we can’t afford to hire real designers, either.

Apparently Gilady’s co-founder and vice president of products, Alon Chelben, had this issue himself when he moved into a new apartment and tried to use DIY design applications, only to be disappointed by the “very ugly” results.

“He thought to himself, ‘I cannot design,’ ” Gilady said. “From that idea, we realized that there’s an opportunity here.”

While there are other online design services, Gilady said most of them are focused on creating 3D visualizations, or on connecting customers with human designers.

RenovAI (which is part of the current class of startups at Alchemist Accelerator) can also create visualizations, but its focus is on building AI tools that understand the principles of good design. And while the team started out by thinking of the consumer problem, they decided that the best path to market was by working with retailers.

RenovAI’s products can design an entire space based on a customer’s specifications and taste. There’s also RenovAI Scout, which recommends a specific product based on your taste and current room design; and Complete the Look, which recommends items that complement what you’re already buying.

But what does it mean for an AI to understand good design? Gilady said the team has trained its algorithms on “thousands of different floor plans” to understand the rules of how a room should be laid out, and also broken down design into 16 different “substyles.”

“Our picture recommendation engine goes through the images to understand the relations between the items, the color, the palette, the texture and material,” he said. “It does a statistical analysis to understand how things are matching each other, how to create the design rules of every substyle.”

RenovAI already has pilots with online furniture retailers like Made.com and Mobly. And Gilady said that there’s plenty of opportunity for growth, even during the COVID-19 pandemic, as plenty of people are stuck at home and wanting to make improvements.

“I think more and more retailers and mom-and-pop shops are paying more attention to online,” he said. “[They know] that if they offer a more fun and seamless experience online, in the long run, it’s a bigger opportunity and we can reach more customers.”

Source: Tech Crunch Startups | RenovAI helps retailers offer automated interior design advice to their customers

This morning, Snap joined a host of startup accelerators shifting its demo day online amid the COVID-19 quarantine. With its third class of startups, Yellow, Snap’s in-house startup accelerator that launched in 2018, brought investors and founders together in private slack channels after a live-streamed presentation.

The event kicked off with a few words from CEO Evan Spiegel and soon transitioned into a succession of live-streamed pitches from the 10 startups in Yellow’s latest batch. The group occupies some familiar spaces for past investments, with a focus on niche social communities, mobile media tools and augmented reality.

Snap investment Hardworkers

The 10 startups in Yellow’s third batch include:

• Brightly: a media platform and community that promotes ethical and sustainable brands.
• Charli Cohen: a “next-gen” streetwear fashion brand.
• Hardworkers: a professional network for blue-collar workers.
• Mogul Millennial: a media startup sharing professional resources for Black entrepreneurs.
• Nuggetverse: a web comics media startup.
• SketchAR: an augmented reality drawing app with social tie-ins.
• Stipop: a rich cross-platform chat sticker API.
• TRASH: an app for quickly editing social video cuts using machine learning.
• Veam: a social network built around AirDrop.
• Wabisabi Design: an augmented reality game studio focused on bit-sized titles.

Yesterday, I got the opportunity to chat with Mike Su, who leads the Yellow program at Snap. Su said that shifting to a fully online program was a bit of a shock to the program, which was about one month in when COVID-19’s impact worsened stateside.

Yellow’s small batches are much easier to manage than other accelerator behemoths like Y Combinator that are pushing hundreds of startups through their network. Nevertheless, Su says it was an interesting adjustment shifting the accelerator program to a remote setting, though a later program start date gave them the advantage of seeing how others wrapped up their programs. “We tuned into a bunch of different digital demo days; one of our advantages was being able to learn from others,” he says.

Yellow investment SketchAR

While emerging during a possible recession is far from ideal launch timing, Su believes this class of startups are still in a good position. “When you look across a lot of the companies, actually their work becomes more essential than it ever was before,” Su tells TechCrunch, particularly highlighting the program’s investment in Hardworkers, which is building a professional network for blue-collar workers who have been particularly affected by the pandemic. Another investment from this batch, Mogul Millennial, is building a media brand around connecting Black professionals with professional resources.

“If you look up and down the class, all the founders aren’t just taking after an opportunity, but personally are on a mission to solve a particular problem,” Su says. “So I think that foundation made them more predisposed I guess, to be able to push through this kind of environment.”

While web comics brands and AR sketching might not immediately seem like huge problems during trying times like the COVID-19 pandemic, many of the startups in Yellow’s recent batch are working to solve problems that have proven to be key opportunities for Snap, which has been on a redemptive growth spree since early 2019, locking down young users and seeing its share price surge.

Snap invests $150,000 in each Yellow startup for an equity stake, and while the program does not require batch participants to integrate with Snap’s services, the company has used the program to invest in strategic areas that it has also pushed on the product side.

Earlier Yellow bets skewed more toward content investments as Snapchat was scaling Discover. Now Su says he’s fielding plenty of augmented reality pitches. Su also notes that the accelerator had its most international batch to date this year, with startups from Lithuania, Korea, Mexico and the U.K. making their way to Los Angeles.

“We always start with top-level strategy, with [CEO Evan Spiegel], figuring out overall direction of where we see the world evolving, where we think there are real opportunities and where we think we can make a difference in supporting these companies,” Su says. “And then once we’re aligned on the top-level strategy I think Evan puts a lot of trust in myself and my partner in crime Alex Levitt to find good companies that we’re excited about.”

Source: Tech Crunch Startups | Snap’s Yellow accelerator debuts its third batch of investments