Sramana Mitra: Can you give me a sense of how much people are paying for things like that? What’s an average deal size? What ballpark is the pricing? Barry Adika: A company like Adidas has 77 people...
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Chattermill, the London startup that offers what it calls a “customer understanding” platform that uses machine learning to gain scalable insights into customer feedback, has raised $8 million in Series A funding.
Leading the round is DN Capital, alongside Ventech and btov Partners. Silicon Valley Bank also participated, in addition to a number of angel investors including Matt Price (Senior Vice President at Zendesk), and Nilan Peiris (VP Growth at Transferwise). Existing investors Entrepreneur First, Avonmore Developments and 2be.lu also followed on.
I’m also told that Price, who previously led Zendesk’s growth in EMEA, will join the Chattermill board as Non-Executive Director.
Co-founded by Mikhail Dubov and Dmitry Isupov in 2015 while going through the company builder program run by Entrepreneur First, Chattermill was born out of a frustration that it can take weeks or months for customer research to yield any quality insights, which would then be out of date by the time it reached decision-makers and action could be taken. Like many problems of scale, the pair believed machine learning could be an important part of the solution, coupled with an accessible user interface that surfaces customer feedback across multiple channels in an actionable way.
Since then, Chattermill’s platform has been used by a number of high-growth companies, such as HelloFresh, Uber, Deliveroo, and Zappos. London fintech darling Transferwise was also an earlier customer — so perhaps unsurprising that its VP of Growth is now an investor.
Comments Transferwise’s Peiris: “Chattermill enables our team to take customer insights deeper than ever before and focus on the key factors that make a difference to our users and drive our growth. I’ve seen first-hand the value a product like Chattermill’s can add to a company and that’s why I decided to invest in this round”.
Agonistic to where the customer feedback is generated, Chattermill integrates with lots of third-party software, aggregating various feedback such as surveys, reviews, support tickets, and social media.
“We have built a large library of pre-built connections to the most popular customer feedback systems such as SurveyMonkey, Trustpilot, Zendesk and Salesforce,” explains Chattermill co-founder Mikhail Dubov.
“A new customer would usually connect a few of these data sources to start with. We then build a model to understand their customer experience from both the data we see and knowledge already embedded in our system. Once this is done, we can start delivering analytics and insights directly to their users in real time and with high accuracy, enabling businesses to make better-informed decisions at a faster speed and scale”.
Asked what assumptions Chattermill got right after raising its seed round in December 2017, Dubov says two key strategies have panned out well. One was to go after “customer-focused” businesses at the start, and the other was to double down on the depth of insights and the product’s ease of use versus “over-investing” in specific machine learning technologies.
“This meant our offering became even more powerful as NLP made a huge step forward in the last two years with models such as GPT and BERT,” Dubov explains. “We were able to swap out parts of our model to improve quickly rather than being attached to a specific architecture”.
However, not everything was foreseen, and Dubov says he didn’t anticipate how much the tech landscape around customer experience would change. “With the acquisitions of Qualtrics and IPOs from Medallia and SurveyMonkey, we now see a lot more attention to the sector from both customers and investors,” he says. “We also see a lot more interest in extracting insight from customer conversations via chat and voice than we did two years ago”.
Cobee, a Spanish fintech startup that has developed an employee benefit management app and accompanying card, has closed €2.1 million in “pre-Series A” funding.
The round was co-led by Speedinvest, and Target Global. Other backers include Chris Bouwer (co-founder of Adyen) and existing investors Encomenda Smart Capital, BStartup (Banco Sabadell), Lanai Partners and Abac Nest.
Founded in 2018 by Borja Aranguren and Daniel Olea, Cobee aims to help employees “leverage better economic performance” from their salary via a range of employee benefits and discounts offered through the platform. These are managed within the Cobee app and redeemed through use of the Cobee payment card.
The draw for companies signing up is that Cobee already claims its platform has higher engagement than many existing employee benefit programmes. And by being a fully digital and automated solution, there is considerably less administration needed to manage the programme.
“We realized that there is an increasing number of solutions that are being sold as benefits or products to the end employees through their HR department (gyms, insurance products, perks, vouchers, salary sacrifice formulas, etc.),” Cobee co-founder and CEO Borja Aranguren tells TechCrunch. “This, on the one hand, means administrative hassle for the HR departments to manage all the different providers and processes and, most importantly, on the other hand, brings a totally fragmented and unclear value proposition for the employee”.
With this problem in mind, Aranguren and Olea set out to build Cobee, which the pair describe as a fintech HR solution that empowers employees to consume their compensation and benefits on-demand.
“All our efforts are focused on making employees feel happy about their benefits, trying to unify the value proposition in an understandable and easy to use formula,” Aranguren explains. “For the companies, we offer an easy-to-use SaaS platform to configure their benefit offering and upload their employees. For the employees, it is an app and a payment card to consumer those benefits as they like, with funds coming from a company subsidy or from their own salary”.
The current Cobee offering includes benefits like meals, transportation, childcare, health insurance and training courses. Additional options, such as gym membership, are said to be coming in the next few months.
“Our product can cater for companies of all sizes, from SMEs or startups to large corporations of any sector,” adds Aranguren. “However, our main target segment are those companies ranging between 50 to 5,000 employees. We have customers and users like Petronas, Avis Budget Group, Auto1 Group, Opinno, Glovo, and Willis Towers Watson”.
Meanwhile, Cobee says it will use the new funding to “scale up its business model” in Spain and expand into international markets. To support its mission to become a European category leader, the company plans to strengthen its team and enhance its platform by integrating new products and benefits.
The business model is straightforward, too: Cobee charges companies a SaaS fee per active employee. “We follow a pure success-based approach and we only win if the employees win, which, after all, makes the companies win,” says the Cobee CEO. “Besides that, we leverage purchasing volumes to build a marketplace that we can monetize and that also allows us to create savings that can be transferred to our end customers/employees”.
Target Global, the pan-European venture capital firm headquartered in Berlin, has raised a new €120 million early-stage fund, following what it claims was only 3 months of fundraising.
Dubbed “Early Stage Fund II”, the new vehicle will see the firm continue to back early-stage tech companies across Europe and Israel, leading and co-leading seed and Series A rounds. It also has a later-stage growth fund and a dedicated mobility fund, and in combination Target Global currently has over €800 million in assets under management.
“Our ‘Early Stage Fund II’ will pretty much follow the same strategy as our ‘Early Stage Fund I’; same team, same size, same investment strategy,” Shmuel Chafets, General Partner and Vice-Chairman at Target Global, tells TechCrunch.
“We had long debates around fund size, and despite it being oversubscribed, we opted to keep it at the original €120 million, which we believe is optimal for European early-stage at the moment and will also us to both deliver venture returns to LPs and give our founders the time and attention that early stage companies need”.
To that end, Target Global — which has a 50-person team across offices in Berlin, London, Tel Aviv, Moscow and Barcelona — says it will continue to focus on startups that are disrupting “truly European, trillion-Euro industries,” citing retail, financial services, food, mobility, healthcare, and manufacturing organizations, and the application of technologies such as SaaS, online marketplaces and e-commerce, and AI.
“Category leaders” that the VC has already backed include Auto1, Delivery Hero, Wefox, TravelPerk, and Rapyd.
“We like to invest in companies that target huge markets and with great teams that have relevant experience for the problem they are solving and that show durability,” adds Chafets. “It is very rare to have a team in the pre-A stage that really has all the answers around product-market-fit and technology. Most companies go through good and bad times, we try to find the founders that would go the distance”.
Meanwhile, Target Global is also announcing that Dr Ricardo Schäfer has been appointed as a new partner for Early-Stage Fund II. He’ll be leading the firm’s early-stage investments in its London office. Described as a serial angel investor and an early backer of Revolut, Schäfer was most recently part of Seedcamp’s investment team, as well as a Venture Partner with Cherry Ventures.
“We are happy to strengthen our London team with such an experienced and successful early-stage investor,” says Alex Frolov, General Partner and CEO at Target Global, in a statement. “With his focus on fintech and proptech, and a hands-on, entrepreneurial approach, we feel that it’s an excellent match both for our Target Global investment strategy and our culture”.
HealthJoy, a platform designed to make it easier for employees to use their healthcare benefits, has raised $30 million in Series C funding led by Health Velocity Capital. Returning investors also participated, including U.S. Venture Partners, Chicago Ventures, Epic Ventures, Brandon Cruz and Clint Jones. This brings HealthJoy’s total funding so far to $53 million.
By integrating with healthcare service providers and partnering with benefit consultant agencies, HealthJoy simplifies the process of finding and using benefits. Its features include an AI-based virtual assistant and healthcare concierges. The startup says it has a monthly login rate of 33% and that its clients, which now includes 500 employers, see a tenfold increase in the employee use of benefits, including telemedicine.
Since TechCrunch covered HealthJoy’s Series B round last year, the company has launched two new services. One is a price transparency tool called HealthJoy Rewards that allows companies to provide incentives for employees to use more cost-efficient services.
“For example, an MRI in Chicago can vary in price from around $500 for an independent clinic to around $3,500 in a hospital system,” HealthJoy founder and CEO Justin Holland told TechCrunch. “Our rewards platform allows companies to customize the incentive, but we provide nearly 100 recommendations. We’re showing an amazing ROI for companies that have adopted the program since we’re targeting high-cost procedures.”
The second new service is called HealthJoy EAP, an employee assistance program that Holland says is a priority for further development. It gives 24/7 access to short-term counseling, with several sessions available for free.
“Addressing mental heath is of extreme importance for companies in today’s world. Access to traditional counseling is on decline in many rural areas due to lack of access. In cities, costs have risen so many users are priced out of the market,” he says.
The funding will also be used to improve HealthJoy’s virtual assistant, develop new services, integrate with more partners and aggregate data. HealthJoy plans to add 200 employees in its Chicago office during 2021, with the goal of doubling its engineering team. Future plans include working with more small- to medium-sized businesses and a potential partnership to serve Medicare recipients.
Other startups focused on employee benefits include League, Catch and Collective Health. Holland says HealthJoy integrates with, instead of competing with, benefits administration platforms and differentiates by being able to work with any benefits package.
Health Velocity Capital partner Saurabh Bhansali will join HealthJoy’s board of directors. In a press statement, Bhansali said “HealthJoy offers proven technology solutions to help navigate employees through our nation’s complex and costly healthcare system, one that costs US employees over $1.2 trillion each year. Healthjoy has shown that it can deliver substantial cost savings to employers while simplifying the employee healthcare experience.”
As Indian startups begin to make inroads in the world of SaaS, Microsoft has taken notice. The American tech giant today launched 100X100X100, a program aimed at business-to-business SaaS startups.
Microsoft said Monday that 100X100X100 will bring together 100 companies and 100 early and growth startups. Each committed company will spend $100,000 over a course of 18 months.
“This initiative will help build scale and create amazing opportunities for startups. Businesses can now fast-track their digital journeys through easy adoption of enterprise-grade solutions,” said Anant Maheshwari, President of Microsoft India, in a statement.
Each startup participating in the program will also have access to prospective customers at Microsoft industry and customer events. Participants also get access to Microsoft’s technology platform, and guidance in fine tuning their business and expansion models.
Microsoft is not a new face in India’s startup ecosystem. The company runs Microsoft for Startups that allows early stage B2B startups to use the company’s Azure marketplace and enterprise sales team. Early last year, the company also expanded M12, its corporate venture fund, to India.
The company’s global rivals Google and Amazon are also actively helping startups in India, sponsoring countless events and bandying out a range of goodies including thousands of dollars of credit to use their cloud platforms.
The idea is simple: If the bets work, these startups are already a customer and their solutions could be beneficial to several tens of thousands of other customers. And it’s a safe time to make these bets.
In recent years, scores of startups have emerged in India to build SaaS software following the success of firms such as Freshworks, valued at $3.5 billion, and CleverTap. Since SaaS startups are not building hardware, or disbursing loans, they often have the best profit margin.
Shekhar Kirani, a partner at Accel, told TechCrunch in a recent interview that his biggest frustration was not seeing many more entrepreneurs build SaaS services. “Anyone with some coding skills and a cheap laptop can build a service and sell to the world,” he said.
At a recent SaaS focused event, Godard Abel, chief executive of business marketplace G2, said that India was already among the top five nations for active participations for development of new business services.
As for Microsoft, expect several more announcements this week as its chief executive, Satya Nadella, appears at company’s flagship conference in the country today and tomorrow.
This feature from TechCrunch looks at the key takeaways from the CB Insights report on funding in the FinTech sector in 2019. Insurtech and payroll and payment solutions were some of the sectors that...
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Barry Adika: Amazon decided to freeze some accounts that don’t have proper documentation. For these sellers, to photoshop an invoice is not a big deal. There’s no enforcement on Amazon’s side. That’s...
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How well do Robinhood’s financials stack up against incumbent online brokerages? While we wait for the seven-year-old company’s long-planned IPO, Alex Wilhelm examined Morgan Stanley’s big $13 billion purchase of E-Trade for fresh data comparison points. Robinhood has 10 million accounts — twice what E-Trade has — but it also appears to make much less money per user and has far fewer assets under management, as he covered for Extra Crunch. So while its fee-free approach has destroyed a key revenue stream for competitors, it still has to grow its own “order-flow” business into its private-market valuation.
One solution is to make the platform stickier via social features. On the same day as the E-Trade deal announcement, Robinhood launched a new Profiles feature to encourage users to share stock tips. Josh Constine explored the offering and where it is headed on TechCrunch, concluding that “Profiles and lists, and then eventually more social features, could get Robinhood’s users trading more so there’s more order flow to sell and more reason for them to buy subscriptions.”
Alex also took a look at a new report on fintech funding, which found last year was a peak overall — but skewed towards later-stage companies. Certainly, the wealth management segment is looking mature.
But the category is massive, with many more incumbents left to disrupt. What are fintech investors looking for? Check out our popular investor survey on this topic from November.
How your startup can use TikTok for growth
Fifth Wall’s Brendan Wallace: the proptech sector is hot despite WeWork
“Our mandate is any technology that can be strategic to the real estate industry,” the prolific investor told Connie Loizos in an extended interview for Extra Crunch this week. While WeWork may have depressed some investor interest, plenty of models are working great across various segments — so he and his partners are raising more funds. One of the hottest sectors, perhaps surprisingly, is in sustainable buildings. As Wallace details, public pressure, large-tenant pressure, large-investor pressure and new metro requirements have removed any choice that the industry has in the matter:
Make no mistake; we are front-and-center to what is happening in the real estate industry and the collision with technology, and this is the single-most-important thing that has happened to the real estate industry in the last five decades. The real estate industry is going to have to go carbon-neutral and that is brand-new.
Is this sector also your focus? Be sure to check out our survey of investors in construction robotics from last week to find out some of the latest opportunities, plus our overview survey of real estate and prop tech investors from November.
The future of manufacturing and warehouse robotics
Ahead of our big robotics conference at UC Berkeley in early March, we have been producing a whole series of surveys on robotics verticals. This week, our resident financial analyst Arman Tabatabai teamed up with our hardware editor turned conference organizer, Brian Heater, to do a series of interviews with VCs who are focused on warehouse and manufacturing robotics. Investors include:
Rohit Sharma, True VenturesAjay Agarwal, Bain Capital VenturesRick Prostko, Comcast VenturesFatima Husain, Comcast VenturesShahin Farshchi, Lux CapitalCyril Ebersweiler, SOSV & HAXKelly Coyne, Grit VenturesTell TechCrunch about gaming startups and remote work
Our media columnist Eric Peckham wants to feature your advice in two upcoming articles. If you have relevant expertise, click the links below and share your opinions.
What are the best cities for gaming startups and how should gaming entrepreneurs compare which city is right for them?Have you helped lead a startup whose team is split 8-10 time zones apart between offices in Europe/Israel and the West Coast of the US? What tips do you have for others navigating this challenge?Across the week
Do AI startups have worse economics than SaaS shops? (EC)
Elon Musk says all advanced AI development should be regulated, including at Tesla (TC)
SpaceX alumni are helping build LA’s startup ecosystem (EC)
Dear Sophie: I need the latest details on the new H-1B registration process (TC)
Tracking China’s astounding venture capital slowdown (EC)
The rise of the winged pink unicorn (TC)
Voodoo Games thrives by upending conventional product design (EC)
Ex-YC partner Daniel Gross rethinks the accelerator (TC)
How companies are working around Apple’s ban on vaping apps (EC)
Rippling starts billboard battle with Gusto (TC)
#Equitypod
This week was a fun combination of early-stage and late-stage news, with companies as young as seed stage and as old as PE-worthy joining our list of topics.
Danny and Alex were back on hand to chat once again. Just in case you missed it, they had some fun talking Tesla yesterday, and there are new Equity videos on YouTube. Enjoy!
This week the team argued about org-chart companies, debt raises, some of the items mentioned above, and much more. Details here.
Financial services startups raised less money in 2019 than they did in 2018 as VC firms looked to back late stage firms and focused on developing markets, a new report has revealed.
According to research firm CB Insights’ annual report published this week, fintech startups across the world raised $33.9 billion* in total last year across 1,912 deals*, down from $40.8 billion they picked up by participating in 2,049 deals the year before.
It’s a comprehensive report, which we recommend you read in full here (your email is required to access it), but below are some of the key takeaways.
Early stage startups struggled to attract money: Per the report, financing for startups looking to close Seed or Series A dropped to a five-year low in 2019. On the flip side, money pouring into Series B or beyond startups was at record five-year high.Early-stage deals dropped to a 12-quarter low as deal share globally shifts to mid- and late-stages (CB Insights)
The fintech market globally had 67 unicorns as of earlier this month (CB Insights)
2019 saw 83 mega-rounds totaling $17.2B, a record year in every market except Europe
*CB Insights report includes a $666 million financing round of Paytm . It was incorrectly reported by some news outlets and the $666 million raise was part of the $1 billion round the Indian startup had revealed weeks prior. We have adjusted the data accordingly.
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Some of Latin America’s leading venture capital investors are now backing hotel chains.
In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.
Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.
Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.
The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.
Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.
“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.
Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.
“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.
The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.
Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:
The New York Times published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.
Whether Oyo, backed by billions from the SoftBank Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.
Tyler Haney, the founder and chief executive of activewear label Outdoor Voices, has stepped down, the company confirmed for us this afternoon.
The Business of Fashion, which first reported the news, said the transition follows a previously unreported capital injection from Outdoor Voices’ investors at a lower valuation than previous rounds. It says the company tried raising new funding late last year but “had difficulty.”
We reached out to Haney directly earlier today, as well as board members from the venture firms that have backed the company, including General Catalyst and Forerunner Ventures. In the meantime, the company sent us the following: “As we look to grow and to scale, Tyler Haney has transitioned from her role as Chief Executive of Outdoor Voices to a new position as Founder. We have raised another round of financing from our current investor group to support our growth and expansion moving forward. Tyler will remain a member of the Board of Directors and will assist with the search for a new CEO. Until we fill that role, Cliff Moskowitz will serve as the Company’s Interim CEO.”
BoF cites executive turnover as an earlier indicator that not all was well within the company, suggesting that mismanagement was one factor that prompted Pamela Catlett — a former Nike and Under Armour exec — to leave the company months after joining as president last year.
Retail legend Mickey Drexler, formerly of J.Crew fame — who was named chairman of Outdoor Voices’ board in the summer of 2017 as part of a $9 million convertible debt round led by Drexler’s family office — also resigned his position last year, though he maintained a director’s seat.
Operational challenges aside, according to BoF, Outdoor Voices has had trouble replicating the kind of excitement that met its earliest offerings, including flattering, color-blocked athleisure wear, like leggings, sports bras, tees and tanks.
The company has since rolled out an exercise dress that has gained traction with some consumers, but newer offerings meant to extend the brand’s reach, including solidly colored hoodies and terrycloth jogging pants that are less distinguishable from other offerings in the market, have apparently failed to boost sales.
Indeed, according to the BoF report, the brand was losing up to $2 million per month last year on annual sales of around $40 million.
The BoF story doesn’t mention the company’s brick-and-mortar locations and how they factor into the company’s narrative. But certainly, as with a growing number of direct-to-consumer brands that have been encouraged by their backers to open real-world locations, they’ve become a major cost center for the outfit. Outdoor Voices now has 11 locations around the U.S., including in Austin, LA, Soho in New York, Boston, Nashville, Chicago and Washington, D.C.
Even with (at least) $64 million in funding that Outdoor Voices has raised from investors over the years, it’s also going head-to-head with very powerful, very entrenched and endurably popular brands, including Nike and Adidas. While Outdoor Voices is still in the fight, the shoe and apparel giants have vanquished plenty of upstarts over the years.
What happens next to Haney — a former track athlete from Boulder who first launched the business with a Parsons School of Design classmate — isn’t yet clear. Still, she isn’t going far, reportedly. BoF says she still owns 10% of Outdoor Voices and will remain engaged with the company in some capacity.
Featured above, left to right, Emily Weiss of Glossier and Tyler Haney of Outdoor Voices at a 2017 Disrupt event.
A few days ago, Andreessen Horowitz’s Martin Casado and Matt Bornstein published an interesting piece digging into the world of artificial intelligence (AI) startups, and, more specifically, how those companies perform as businesses. Core to the argument presented is that while founders and investors are wagering “that AI businesses will resemble traditional software companies,” the well-known venture firm is “not so sure.”
Given that TechCrunch cares a lot about startup business fundamentals, the notion that one oft-discussed and well-funded category of venture-backed startup might sport materially less attractive economics than we expected captured our attention.
The Andreessen Horowitz (a16z) perspective is straightforward, arguing that AI-focused companies have lesser gross margins than software companies due to cloud compute and human-input costs, endure issues stemming from “edge-cases” and enjoy less product differentiation from competing companies when compared to software concerns. Today, we’re drilling into the gross margin point, as it’s something inherently numerical that we can get other, informed market participants to weigh in on.
If a16z is correct about AI startups having slimmer gross margins than SaaS companies, they should — all other things held equal — be worth less per dollar of revenue generated; or in simpler terms, they should trade at a revenue multiple discount to SaaS companies, leaving the latter category of technology company still atop the valuation hierarchy.
This matters, given the amount of capital that AI-focused startups have raised.
Is a16z correct about AI gross margins? I wanted to find out. So this week I spoke to a number of investors from firms that have made AI-focused bets to get a handle on their views. Read the full a16z piece, mind. It’s interesting and worth your time.
Today we’re hearing from Rohit Sharma of True Ventures, Jeremy Kaufmann of Scale Venture Partners, Nick Washburn of Intel Capital and Ben Blume of Atomico. We’ll start with a digest of their responses to our questions, with their unedited notes at the end.
AI economics and optimism
We asked our group of venture investors (selected with the help of research from TechCrunch’s Arman Tabatabai) three questions. The first dealt with margins themselves, the second dealt with resulting valuations and, finally, we asked about their current optimism interval regarding AI-focused companies.
Sramana Mitra: I’m going to need you to start at the point where you’re launching this company. How did you set up the pieces of this business? How did you get jets? How did you get seats on jets?...
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DSP Concepts — a startup whose Audio Weaver software is used by companies as varied as Tesla, Porsche, GoPro and Braun Audio — is announcing that it has raised $14.5 million in Series B funding.
The startup goal, as explained to me by CEO Chin Beckmann and CTO Paul Beckmann (yep, they’re a husband-and-wife founding team), is to create the standard framework that companies use to develop their audio processing software.
To that end, Chin told me they were “picky about who we wanted on the B round, we wanted it to represent the support and endorsement of the industry.”
So the round was led by Taiwania Capital, but it also includes investments from the strategic arms of DSP Concepts’ industry partners — BMW i Ventures (which led the Series A), the Sony Innovation Growth Fund by Innovation Growth Ventures, MediaTek Ventures, Porsche Ventures and the ARM IoT Fund.
Paul said Audio Weaver started out as the “secret weapon” of the Beckmanns’ consulting business, which he could use to “whip out” the results of an audio engineering project. At a certain point, consulting customers started asking him, “Hey, how about you teach me how to use that?,” so they decided to launch a startup focused on the Audio Weaver platform.
Paul described the software as a “graphical block diagram editor.” Basically, it provides a way for audio engineers to combine and customize different software modules for audio processing.
“Audio is still in the Stone Ages compared to other industries,” he said. “Suppose you’re building a product with a touchscreen — are you going write the graphics from scratch or use a framework like Qt?”
Similarly, he suggested that while many audio engineers are still “down in the weeds writing code,” they can take advantage of Audio Weaver’s graphical interface to piece everything together, as well as the company’s “hundreds of different modules — pre-written, pre-tested, pre-optimized functions to build up your system.”
For example, Paul said that by using the Audio Weaver platform, DSP Concepts engineers could test out “hundreds of ideas” for algorithms for reducing wind noise in the footage captured by GoPro cameras, then ultimately “hand the algorithms over to GoPro,” whose team could them plug the algorithms into their software and modify it themselves.
The Beckmanns said the company also works closely with chip manufacturers to ensure that audio software will work properly on any device powered by a given chipset.
Other modules include TalkTo, which is designed to give voice assistants like Alexa “super-hearing,” so that they can still isolate voice commands and cancel out all the other noise in loud environments, even rock concerts. (You can watch a TalkTo demo in the video below.)
DSP Concepts has now raised more than $25 million in total funding.
Bootstrapping with Services is a tried and true strategy, including for building Unicorns. In our 2012 story, Alteryx CEO Dean Stoecker talks about raising a Series A with $10 million in the bank....
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