Browsing Tag: Startups

Stonly is building a service for customer support teams so that they can share step-by-step guides to solve the most common issues. The startup just raised a $3.5 million funding round led by Accel with business angels also participating, such as Eventbrite CTO Renaud Visage and PeopleDoc founders Jonathan Benhamou and Clément Buyse.

The startup isn’t building a chatbot for customer support — chatbots usually don’t understand what you mean and you end up contacting customer support anyway. Stonly believes that scripted guides with multiple questions work much better than both chatbots and intimidating knowledge bases.

But the company is well aware that it isn’t going to replace Zendesk or Intercom overnight. That’s why a Stonly guide is a module that you can embed in your existing tools. The startup currently supports Intercom, Zendesk, Freshdesk and Front.

This way, if somebody contacts you on Front or Intercom, you can reply with a Stonly guide to help your users solve their own issues (at least if it’s a common issue). Stonly is also launching its own more traditional knowledge base powered by Stonly guides so that your client can access common questions through a chat widget.

Putting together a Stonly guide doesn’t require any technical skills. After defining the steps, you can write text, add images, videos and buttons in a web interface. Stonly also supports translations.

And it’s been working well for the startup’s first clients. For instance, Dashlane noticed a 25% decrease in opened tickets for their most frequent issues after using Stonly. Other clients include Devialet, Happn and Calendly.

With today’s funding round, the startup is expanding to the U.S. with a new office in New York and David Rostan joining as head of revenue — he was previously VP of Sales and Marketing at Calendly.

Source: Tech Crunch Startups | Stonly grabs .5 million to make customer support more interactive

Welcome to the $100 million ARR club, BounceX.

This morning (evening, timezone depending), BounceX, a New York-based marketing technology startup, announced that it has reached the $100 million annual recurring revenue (ARR) threshold, adding its name to our running list of companies that have crossed over into nine-figure revenue while remaining private.

BounceX also announced a name change to Wunderkind, a move that its CEO Ryan Urban told TechCrunch signaled “a new chapter” for the firm. Summarizing the executive’s comments: After seven years in business and quite a lot of work building out its product line and revenue base, BounceX wants to think of itself as something more than merely another SaaS company; the name Wunderkind, in his view, demands that what they create “has to be extraordinary,” fitting into the idea.

Normally we’d gently tease such plainly stated aspirations, but with $100 million in ARR and a history of efficient growth behind the goal, we won’t. Instead, let’s talk about what the company does, and how it has grown to the size that it has.

What’s a BounceX?

I’ll spare you the details and explain what the company does without buzzwords, as best I can.

It starts with Web traffic. Everyone has it. But often you, an online retailer, don’t know who is coming to your website. BounceX (Wunderkind) can help you figure that out, matching anonymous web traffic to email addresses. Now you know some of the folks coming to your site, and how to reach them. Next, Wunderkind can help you send those identified folks targeted emails that match what is known about that person, or email address. The result of all this work is material revenue scale — the company claims that its technology boosts “behaviorally triggered emails to over 9%, on average, of a retailer’s digital revenue.”

For those doing the math at home, 9% is a lot.

All this works out for Wunderkind as well, with its ability to help companies drive revenue assisting it in landing deals. The company closes new customers pretty efficiently, with Urban telling TechCrunch that his company’s CAC-to-LTV ratio is “is probably the highest in [its] industry,” and has “been going up over time.”

How does it do that? By the company having what it called “really high [deal] close rates.” Fine, but how does the tech drive the company’s close rate? By promising results and cutting itself off if it fails.

Wunderkind runs short-term pilots with potential customers, say four months long. The company will only move to a more traditional SaaS contract if it sufficiently drives revenue for the potential customer. According to Urban, “90 to 95% of the time” his company “deliver[s] the guaranteed revenue.”

And the customer converts, voila!

This method of snagging customers led to Wunderkind having some pretty stellar SaaS metrics. Picking one from TechCrunch’s call with the CEO, “a lot of [Wunderkind sales] reps have north of $3 million quotas a year and they hit,” he said, meaning that they meet that high expectation.

So what?

You can probably see where this is going: What happens when a company has a very strong customer value to customer acquisition cost structure, and a very efficient sales team? It doesn’t burn a lot of capital. Unsurprisingly, Wunderkind has been super efficient to date, with Urban telling TechCrunch that “the amount of equity [his company has] actually put to work is probably sub-$35 million,” with less than $50 million in equity capital raised. The company also has debt lines that it can use, the CEO noted.

Getting from $0 in ARR to $100 million while spending around $35 million in equity-sourced funds is pretty bonkers, but perhaps even more nuts is the fact that, per the CEO, Wunderkind got through its first four years on $1.5 million in external money. Urban chalked the low-burn results to the founding team and early employees having experience working with one another, and building features “purely focused on improving experience [and] driving revenue.”

That’s enough for now, we’ll write about the company more when it reaches its next ARR threshold, executes a secondary transaction to put off an IPO, or files. The lesson from today is that it’s possible to build a SaaS company to-scale with far less revenue than I thought possible. Anyhoo, Wunderkind joins the $100 million ARR cadre with what I think is the second-best result in terms of efficient growth. Only boostrapped Cloudinary has cleaner metrics, though with a smaller ARR total for now.

For more on the $100 million ARR club, you can check out this and this to read about other companies that have been inducted this year.

Source: Tech Crunch Startups | New York’s BounceX reaches 0M ARR, rebrands

The student loan crisis in the U.S. has left venture capitalists searching for novel approaches to financing higher education, but can the same systems designed for helping coders in Silicon Valley get jobs at Google help underserved students in developing countries become part of a global work force?

Similar to the buzzy San Francisco startup Lambda School, Microverse is a coding school that utilizes ISAs, or Income Share Agreements, as a means of allowing students to learn now and pay later with a fixed percentage of their future salary. Microverse isn’t aiming to compete heavily with Lambda School for U.S. students, however, they are looking more heavily at courting students in developing countries. The startup currently has students in 96 countries, with Mexico, Brazil, Kenya, Nigeria, Cameroon and India among their most represented, CEO Ariel Camus tells TechCrunch.

The pitch of bringing the ISA model worldwide has attracted investor interest. The startup tells TechCrunch it has just closed $3.2 million in seed funding from venture capitalists including General Catalyst and Y Combinator.

Lambda School and its ilk have excited plenty of investors. There has also been plenty of scrutiny and some questions on whether quickly scaling to venture-sized returns or building revenue by selling off securitized ISAs ends up pushing these startups toward cutting corners.

Microverse, for its part, is already built quite lean. The program has no full-time instructors. The entire curriculum is a self-guided English-only lesson plan that relies on students that are just months ahead in the program serving as “mentors.” Students are expected to spend eight hours per day pushing through the curriculum with assigned study partners and peer groups, graduating in about eight months on average, Camus says.

“The average starting salary for us — it’s of course lower and that’s expected,” said Camus. “The only way we can offer as good or better learning experience as Lambda or any other campus-based education in the U.S. — with salaries that will usually be lower — is if our costs are lower, and that’s why we have designed the entire system to allow us to scale faster. We don’t have to hire teachers, we don’t have to create content and that allows us to adjust to changes in the market and new technologies much much faster.”

While Lambda School’s ISA terms require students to pay 17% of their monthly salary for 24 months once they begin earning above $50,000 annually — up to a maximum of $30,000, Microverse requires that graduates pay 15% of their salary once they begin making more than just $1,000 per month, though there is no cap on time, so students continue payments until they have repaid $15,000 in full. In both startups’ cases, students only repay if they are employed in a field related to what they studied, but with Microverse, ISAs never expire, so if you ever enter a job adjacent to your area of study, you are on the hook for repayments. Lambda School’s ISA taps out after five years of deferred repayments.

Without much of the nuance in how Lambda School or Holberton School have structured their ISA terms, Microverse’s structure seems less amenable, but Camus defends the terms as a necessary means to getting around under-reporting.

“When you use a cap, you’re using a perverse incentive for under-reporting,” Camus says. “In the U.S. where you can enforce tax reviews, there’s no need to worry about that and I think it’s better if you can cap it, but in most of the developing countries where there is not a strong tax system, it isn’t a possibility.”

For students that qualify for terms for repaying this ISA, they are, again, on the hook for $15,000. Charging such a hefty fee for an online course without full-time instructors geared toward students in developing countries could be controversial for a venture-backed startup, but it will also put a heavy burden on the school to keep their students satisfied and help them find employment via its network of career counselors.

The CEO acknowledges the high price of Microverse’s instruction. “It is huge,” but he says that the premium is necessary to build a business around getting students in developing countries careers in the global workforce. Microverse is keeping its total number of admitted students small early on so that it can ensure it’s meeting their needs, Camus says, noting that Microverse accepts just 1% of applicants, adding 70-80 students to the program per month.

“This conversation around the ISA in the U.S. is so hot that you have to frame it in such a different way when you’re talking about students in developing and emerging countries. Like, there are no alternatives,” Camus says. “…if you can find a value proposition that aligns with their goals and gives them some international and professional exposure, that gives them a world-class education… that’s a very compelling proposition.”

Source: Tech Crunch Startups | VCs bet millions on Microverse, a Lambda School for the developing world

It’s been a big news day for Salesforce . It announced that co-CEO Keith Block would be stepping down, and that it had acquired Vlocity for $1.33 billion in an all-cash deal.

It’s no coincidence that Salesforce targeted this startup. It’s a firm that builds six industry-specific CRMs on top of Salesforce — communications, media and entertainment, insurance and financial services, health, energy and utilities and government and nonprofits — and Salesforce Ventures was also an investor. This would appear to have been a deal waiting to happen.

Brent Leary, founder and principal analyst at CRM Essentials, says Salesforce saw this as an important target to keep building the business. “Salesforce has been beefing up their abilities to provide industry-specific solutions by cultivating strategic ISV partnerships with companies like Vlocity and Veeva (which is focused on life sciences). But this move signals the importance of making these industry capabilities even more a part of the platform offerings,” Leary told TechCrunch.

Ray Wang, founder and principal analyst at Constellation Research, also liked the deal for Salesforce. “It’s a great deal. Vlocity gives them the industries platform they need. More importantly, it keeps Google from buying them and [could generate] $10 billion in additional industries revenue growth over next four years,” he said.

Vlocity had raised about $163 million on a valuation of around $1 billion as of its most recent round, a $60 million Series C last March. If $1.33 billion seems a little light, given what Vlocity is providing the company, Wang says it’s because Vlocity needed Salesforce more than the other way around.

“Vlocity on its own doesn’t have as big a future without Salesforce. They have to be together. So Salesforce doesn’t need to buy them. They could keep building out, but it’s better for them to buy them now,” Wang said.

Still, the company was valued at $1 billion just under a year ago, and sold for $1.33 billion after raising $163 million. That means it received 8.2x total invested capital ($1.33 billion/ $163 million invested capital), which isn’t a bad return.

In a blog post on the Vlocity website, founder and CEO David Schmaier put a positive spin on the deal. “Upon the close of the transaction, Vlocity — this wonderful company that we, as a team, have created, built, and grown into a transformational solution for six of the most important industries in the enterprise — will become part of Salesforce,” he wrote.

Per usual, the deal will be predicated on regulatory approval and close some time during Salesforce’s second quarter in fiscal 2021.

Source: Tech Crunch Startups | Salesforce grabs Vlocity for .33B, a startup with B valuation

Checkout.com, the quiet London-based payment platform, has acquired its first startup, ProcessOut. Checkout.com surprised everyone last year when it announced a gigantic $230 million Series A round. It turns out the payment processing boom is not over yet.

Checkout.com focuses on enterprise clients with customers all around the world. It provides a full-stack payment service, from accepting transactions, processing them and detecting fraud. It helps with reconciliation thanks to an API and a reporting hub.

The startup is particularly efficient when it comes to supporting multiple currencies and payment methods. You can accept payments in more than 150 currencies. Checkout.com supports debit and credit cards, Apple Pay and Google Pay, as well as local payment methods such as Klarna, iDEAL and Giropay, and e-wallets such as PayPal and Alipay.

ProcessOut is a French startup that realized e-commerce companies have been leaving money on the table by relying on a single payment provider. The company built a smart routing checkout module that works with dozens of payment providers.

When you enter your card number, ProcessOut can select the best payment provider when it comes to fees and acceptance rate. For instance, a local payment provider can be a lot cheaper than Stripe, but transactions get declined a lot more often. The startup can figure out whether a transaction will go through before selecting an obscure payment provider.

The company then shows you dashboards so you can visualize payment data in a single location. You can generate report and match transactions on your bank account with transactions on different payment providers.

That combination of data visualization and smart routing helped them score some big clients, such as Glovo, Veepee, Rakuten.fr and Dashlane. In 2019, ProcessOut tracked 10% of online transactions in France. Transactions representing $20 billion have been analyzed by ProcessOut over the past 12 months.

With today’s acquisition, ProcessOut’s team of 14 employees are joining Checkout.com’s team of 600 employees. Checkout.com isn’t disclosing the terms of the transaction. Checkout.com is getting a ton of insight on different payment providers. It can learn from ProcessOut’s technology to optimize its internal payment workflows, as well.

Source: Tech Crunch Startups | Checkout.com acquires payment optimization startup ProcessOut

Silicon Valley air purifier startup Molekule was born out of an idea Dr. Yogi Goswami had back in the ’90s using photo-voltaic technology to kill air pollutants. His son, a young boy at the time, suffered from severe allergies and Dr. Goswami wanted to build something those like him could use in their home to clear the air. But the sleekly designed Molekule took a bit of a blow last fall when Wirecutter called it “the worst air purifier we’ve ever tested.”

Molekule has since told TechCrunch comparing its PECO technology to the more common HEPA air filter technology is like comparing apples to oranges. “Up until now, everything has been air filtration, not real air purification,” co-founder and CEO of the company Jaya Rao told TechCrunch.

To disprove the naysayers, Molekule sent off its tech for testing at the Berkeley Lab, which concluded no measurable amount of VOC’s or ozone were emitted; Molekule effectively removed harmful chemicals in the air, like toluene, limonene, formaldehyde, as well as ozone, and that “no secondary byproducts were observed when the air cleaner was operated in the presence of a challenge VOC mixture.”

Compare that to Wirecutter’s own assessment that, “on its auto setting, which is its medium setting, the Molekule reduced 0.3-micron particulates by (in the best case) only 26.4 percent over the course of half an hour. Compare that with the 87.6 percent reduction the Coway Mighty achieved on its medium setting.” TechCrunch reached out to Wirecutter and was told it still stands by its findings and does not recommend consumers purchase a Molekule.

It should be noted Consumer Reports also tested the Molekule device and it, too, did not recommend a purchase as the unit was not “proficient at catching larger airborne particles.” However, Molekule demonstrated to other news outlets at its own facilities that the photochemical reaction in its units did break down contaminants and kill mold spores.

“To test PECO technology you actually need really sophisticated equipment,” Rao said. “Boiling it down to really simple factors is not enough because air is made up of many tiny but toxic things. These are airborne chemicals nanometers in size, which Wirecutter admittedly did not test at all for.”

Wirecutter’s Tim Heffernan disputes Molekule’s claims of superiority in the category, however. “Now they are comparing apples to oranges,” he told TechCrunch. “The claims about destroying bacteria and viruses, for example, HEPA filters capture them and they capture them permanently.”

So how’s a consumer to know what’s right? First, take into account Molekule commissioned the Berkeley Lab for their independent testing and that Wirecutter and Consumer reports ran their own independent testing. However, it might boil down to understanding the premise of the technology. HEPA filters came out of the Manhattan Project in the 1940s, when scientists needed to develop a filter suitable for removing radioactive materials from the air. It works by capturing and filtering out harmful particles, viruses and mold. However, PECO, the technology in a Molekule unit, uses the science of light to kill mold and bacteria and break down harmful particulates in the air.

Regardless of whether you want an air purifier that captures particulates or breaks them down, Molekule has continued to move forward. The company has since launched a mini unit meant for smaller rooms and started to grow business verticals outside of the direct-to-consumer model, forging partnerships with hotels and hospitals.

It also just announced a raise of $58 million in Series C funding, bringing just over $91 million to its coffers. Rao tells TechCrunch the raise was unexpected, but came out of chats with Samantha Wang from RPS Ventures, which led the round.

“We feel confident in Molekule’s PECO technology, and have taken an extensive look at the science behind it. It is not only backed by decades of academic research, it has also gone through the peer-reviewed process numerous times, and has been tested and validated by third-party scientists and laboratories across the country,” Wang told TechCrunch.

Other participation in the round included Founder’s Circle Capital and Inventec Appliances Corp (IAC). Existing investors Foundry Group, Crosslink Capital, Uncork Capital and TransLink Capital also participated in the financing.

Molekule also tells TechCrunch it has seen a healthy growth trajectory in the past year, despite the negative press. According to the company, Molekule has seen a 3x increase in year over year filter subscription revenue since launch, and its repeat customer growth sits at about 200%.

It’s a well-designed, though pricier air purification machine with an interesting future in the commercial space, particularly in hospitals, schools, commercial manufacturing and hotels, as Wang points out.

As long as the tech truly makes the air better.

Source: Tech Crunch Startups | Molekule hopes to clear the air with million in Series C funding and Berkeley Lab’s seal of approval

French startup Cityscoot is raising a $25.6 million (€23.6 million) funding round from Allianz France, Demeter as well as existing investors Groupe RATP and Banque des Territoires. The startup is also raising at least $6.5 million (€6 million) in debt in order to finance its service.

Cityscoot is a free-floating electric scooter service (moped scooters). Users can locate and unlock scooters using a mobile app. You can then park it and lock it again.

The service is currently live in Paris, Nice, Milan and Rome. With today’s funding round, the startup plans to expand to two new European cities, starting with Barcelona in May 2020. Cityscoot will operate a fleet of 8,000 scooters.

In Paris alone, Cityscoot handles 15,000 to 25,000 trips per day. Each trip lasts 15 minutes on average. Given that you pay €0.24 to €0.34 per minute, it means that Cityscoot is generating tens of thousands of euros of revenue per day in Paris.

Over the past few months, Cityscoot has partnered with Uber so that you can locate and unlock scooters straight from the Uber app. It looks like the integration isn’t live yet.

Cityscoot’s main competitor Coup shut down a couple of months ago. “Even though Coup is a well-known brand in this market with a loyal customer base that regularly uses our services, operating Coup in the long term has become economically unsustainable,” the company said at the time.

Unit economics could be the reason why Cityscoot recently raised its prices. If you don’t top up your account, you now pay €0.34 per minute instead of €0.29 per minute. You pay less if you buy prepaid packages. This could be a great way to foster recurring use.

Source: Tech Crunch Startups | Cityscoot raises another .6 million for its electric moped service

Recapped. Layoffs. Slowdown. CEO transition. Budget cuts. Downsizing.

In spite of a spate of massive startup exits the last few months, culminating in fintech’s shining moment yesterday with Intuit’s $7.1 billion acquisition of Credit Karma, it’s been a tough period for the startup world. Layoffs abound, centered perhaps on SoftBank’s Vision Fund portfolio but hardly exclusive to it. Startups, both infamous and unheard of, are shutting their doors. And that doesn’t even begin to factor in the global macro concerns like coronavirus that will drive investor sentiment this year.

There’s a bit of malaise underway in the startup world, a sense that possibilities are closing, that everything that will be built has been built, that tech itself is under an excruciating microscope by the public that makes innovation impossible.

All of that may well be true. And yet, there remains so, so much more to get done.

Whole sectors of the economy still need to be completely rebuilt from the ground up. Healthcare is barely digital, never personalized and based on almost no evidence or data whatsoever. Construction costs for housing and infrastructure have skyrocketed, with almost no real benefit to the end user whatsoever. Millions of people are facing student debt crises, and yet our school system doesn’t look all that much different from a century ago.

Climate change itself is going to eat away at more and more of the planet, just as several billion more people come online, join the industrial and knowledge economies and demand the same amenities offered in the developed world. How do we offer air conditioning, housing, transportation, healthcare and more to every human on the planet? We need to 100x the global GDP while cutting carbon emissions, and billions of people are counting on us.

Within organizations, we are still just beginning to figure out how design, data and decisions work together to drive product innovation and growth. I just wrote about a prototyping tool yesterday, following up on my colleague Jordan Crook’s look at what has been happening in the design world. Yes, the tools are getting better, but what would happen if a million more people could effortlessly design? Or what would happen if billions of people had access to no-code platforms more broadly? What could we empower them to create?

Or just take our general experience with digital products. Our phones are faster, the photos they take are at exquisite resolutions and their svelte materiality remains superb. But do they really offer a seamless experience? I am still syncing files, tracking emails, attempting to connect a lunch meeting to my calendar and not dropping the details while flicking my fingers back and forth. The mundane nature of our daily software usage belies the reality that we use ridiculously elementary tools compared to what is possible even with today’s technology, no hand waving required.

And then there is data. The data revolution in business, entertainment, government and more is barely in its infancy. Data may be slushing around large enterprises, but it hardly makes a dent on decision-making, even today. What would happen if we could use data more effectively? What if we could explore data even faster than today’s clunky BI tools? What if the best patterns for exploring data were readily available to every single person on Earth? What if we could instantly and easily build best-of-breed AI models to solve even our simplest decision-making problems?

I could go on for pages and pages. From specific markets, to the dynamics within communities, and societies and companies, to the end users and the products they are offered, we are nowhere near the end of the innovation cycle. This isn’t Detroit circa a century ago, when hundreds of auto manufacturers and related companies eventually combined into a handful of today’s behemoths. There is still so much to do, and FAANG can’t do it all.

What’s crazy is that within the right circles, there has never been a wider sense of awe at the gap between what we know to do and what we know we need to do. There are so many unsolved challenges today worth exploring that could not only help the lives of tens of millions of people, but that could also be multi-billion-dollar economies themselves.

And so we need to bifurcate our sentiments. We do need to memorialize the failed startups, the ambitions that never quite made it. We need to recognize when mistakes are made, and have empathy for those affected by them. We shouldn’t ignore the negative news of our industry at all, lest we repeat the same blunders.

Yet, a positive sentiment in the face of this avalanche of negative news and critical analysis is vital. You have to keep your eye on the future, on the change, on the power that still rests with all of us to make a difference right now. So much needs to be done, and the day is still young.

Source: Tech Crunch Startups | Startup malaise, startup ambition

The night before the Robotics + AI event at UC Berkeley, TechCrunch is hosting a private Pitch Night, featuring innovative startups in robotics and artificial intelligence. After reviewing hundreds of applications, TechCrunch selected the early-stage startups below to pitch in front of industry executives, TC writers and our expert panel of judges: Brian Heater (TC’s own Hardware Editor), Aaron Jacobson (NEA), Jennifer Roberts (Grit Ventures) and Sunil Nagaraj (Ubiquity VC).

Founders will pitch in front of the crowd followed by a tough Q&A from the judges. After all companies have pitched, the judges will select the top five teams to demo onstage at the main event on March 3: TC Sessions: Robotics + AI.

Check out the featured companies here:

AirWorks
Augean Robotics
BlinkAI Technologies
KEWAZO GmbH
Olis Robotics
RoboTire
SLAMcore
Tombot
Valyant AI

To see the startups pitching at the main event, book your $345 General Admission ticket today and save $50 before prices go up at the door. But no one likes going to events alone. Why not bring the whole team? Groups of four or more save 15% on tickets when you book here.

Update: This article has been updated to reflect the new judging panel. Sunil Nagaraj will be replacing Rob Coneybeer.

Source: Tech Crunch Startups | Announcing the TC Pitch Night: Robotics + AI startups

Six weeks after we broke the news that cannabis startup Eaze was running out of money, laying off more employees and scrambling to pay its bills and stay afloat as it worked on a pivot to selling its own supply rather than just that of third-party providers, the company has finally closed some funding and appears to be moving forward with its plans.

Today Eaze — which claims to have 600,000 registered customers and completed 5 million legal deliveries — confirmed a bridge round of $15 million, plus a further $20 million as part of a Series D round of funding, totaling $35 million in funding. It will be using the money to help steer itself away from its original pure-marketplace model — where it worked with third parties to source cannabis products, which it then sold on and delivered to users — and into a strategy based around the idea of “verticalization,” where Eaze itself will be running a retail and distributor operation of its own, alongside the resale of some 100 licensed brands via retail partners.

“Verticalization is Eaze’s second act,” said CEO Ro Choy in a statement. “Until now, we’ve invested in proving our market fit, building an enormous and loyal customer base, and becoming California’s biggest marketplace for legal cannabis delivery. Now, we’re proving we can make this business work in a more sustainable and profitable way, while continuing to grow Eaze’s existing services.”

We had reported that the fundraising was in the works in January. The Series D portion of the funding is coming from a group of investors led by a firm called FoundersJT LLC, and the bridge round is coming from Rose Capital and DCM, both previous investors. Eaze said that it has the facility to extend the Series D by another $20 million. It’s not disclosing its valuation.

The news brings some resolution to a very troubled period at the startup, which has been through several executive changes, a couple of rounds of layoffs and general employee attrition — losing key people like its chief strategy officer, its chief of staff and a number of engineering staff — while struggling to build out a sustainable business working with cannabis retailers to use the Eaze platform to resell and deliver their products.

(Along with the funding news it announced today, Eaze also said that Megan Miller, who had formerly been in finance, was appointed its new COO, while John Curtis became the new CFO.)

Eaze’s big promise was to come out early and build a brand in the cannabis market, a very emerging area of consumer goods that had only relatively recently been decriminalised in California (and is still not completely legal everywhere).

Tapping a new opportunity to sell cannabis products to a new class of consumers — those who might not have been keen to purchase products when they were illegal, or already regular or semi-regular cannabis users who were happy to pay more for the convenience of using an app to shop and get delivery — Eaze believed that California’s move was just the beginning of a bigger swing, and it projected growth across the U.S. accordingly. With one of its co-founders formerly an executive from Yammer, it became the first cannabis startup to raise money from Silicon Valley VCs, and positioned itself as the “Uber of pot.”

But as we’ve seen time and again, being an early mover is not always the best position in the tech world.

The legalisation swing has not played out quite as Eaze predicted, and so the startup’s national expansion plans were curtailed. Meanwhile, in addition to dealing with the basic struggles that every e-commerce company faces — customer acquisition, logistics and scaling a company’s business, talent and so on — Eaze has had a number of challenges particular to its specific industry.

They included issues around payment acceptance — credit card companies didn’t want to allow the company to accept card payments, so for a while it operated on a cash-only model, prone to error, fraud and more — through to poor (negative) margins reselling other retailers’ products. And ultimately, legalisation meant a lot of price and product competition when it came to capturing customers.

The funding Eaze announced today (which it has been trying to close for months) will be used in part to help specifically with a few of these challenges: margins and supply.

We reported in January that Eaze was in the process of buying assets from a bankrupt former partner, DionyMed (which had, at one point, also been involved in a complicated lawsuit against Eaze), and that deal now has closed.

Eaze will now resell product from DionyMed’s former subsidiary Hometown Heart (HTH), which has depots in Oakland and San Francisco, and Eaze said it will expand that with its own consumer brands “in partnership with local licensees while continuing to support a broad array of independent, world-class California brands and independent licensed retailers across the state.”

Despite all of the above problems, Eaze’s basic business appears to have been growing, which is likely the reason why the company and its investors believe there is something worth saving and restructuring.

Eaze said that in 2019 it had a 97% annual increase in new sign-ups; 74% annual increase in first-time deliveries; a 71% annual increase in overall deliveries; and 104% annual increase in customers age 50+. Notably, it did not disclose today how many repeat, loyal customers it has amassed in that growth, so that is one to watch going forward.

Source: Tech Crunch Startups | Troubled Eaze finally closes M funding to to sell its own cannabis