As the end of the decade draws near, this feature from Comic Years takes a look at some of the best Sci-Fi books of the past ten years. For this week’s posts, click on the paragraph links. Tech...
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Raysecur says at least ten times a day someone sends a suspicious package containing powder, liquid, or some other kind of hazard.
The Boston, Mass.-based startup says its desktop-sized 3D real-time scanning technology, dubbed MailSecur, can intercept and detect threats in the mailroom before they ever make it onto the office floor.
Mailroom security may not seem fancy or interesting, but they’re a common gateway into a corporate environment. They’re a huge attack vector for attackers — both physical and cyber. Earlier this year we wrote about warshipping, a “Trojan horse”-type attack that can be used as a way for hackers to ship hardware exploits into a business, break the Wi-Fi, and pivot onto the corporate network to steal data.
Now, the company has raised $3 million in seed-round funding led by One Way Ventures, with participation from Junson Capital, Launchpad Venture Group, and also Dreamit Ventures, a Philadelphia-based early stage investor and accelerator, which last year announced it would move into the early-stage security space.
Raysecur’s proprietary millimeter-wave scanner, MailSecur. (Image: supplied)
Raysecur uses millimeter-wave technology — similar to the scanners you find at airport security — to examine suspicious letters, flat envelopes, and small parcels. Its technology can detect powders as small as 2% of a teaspoon or a single drop of liquid, the company claims.
The startup said the funding will help expand its customer base. Although still in its infancy, the company has about ten Fortune 500 customers using its MailSecur scanner.
Since it was founded in 2018, the company has scanned more than 9.2 million packages.
Semyon Dukach, managing partner at One Way Ventures, said the funding will help “bring this compelling technology to an even broader market.”
In case you missed it, you can listen to the recording here: Rendezvous Online with Sramana Mitra Oct 29, 2019
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I’m publishing this series on LinkedIn called Colors to explore a topic that I care deeply about: the Renaissance Mind. I am just as passionate about entrepreneurship, technology, and business, as I...
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Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about Chinese investor activity in Africa. Before that, I noted Airbnb’s issues.
Remember, you can send me tips, suggestions and feedback to
This week I want to talk about Europe and not just because I’m in Europe prepping for TechCrunch’s annual conference, TechCrunch Disrupt Berlin. But because of a new trend we’re seeing in which U.S. venture capital funds strike deals overseas—more than ever.
Forbes wrote a piece on this trend this week alongside the release of their annual European Midas List, which ranks the top VCs on the continent. More and more, top funds, including the likes of Sequoia and Benchmark, are writing checks to companies in London, Dublin, Amsterdam, Stockholm and more.
Sequoia, for example, funded a teenager in Dublin, Ireland this year. Evervault is building a data protection solution aimed at developers, by way of an API, which aims to bake data protection into the app from the start. We hear a number of other top firms are sending partners over seas, too, or considering making such moves. Why? To search for companies to add to their global portfolios (in a region where they may also see a nice discount). As we prep for a new year, this is one of several trends in VC I’ll be keeping an eye on.
If you didn’t log on to Twitter this week, you may have missed The Verge’s investigation into workplace toxicity at Away, a ‘unicorn’ travel company known for its lightweight, compact suitcases (full disclosure: I have an Away bag). Read that story first, then check out Winnie co-founder and chief executive officer Sara Mauskopf’s piece from this week, “The inevitable takedown of the female CEO,” in which she questions why we celebrate female-founded companies, until they rise too far. Here’s a passage:
Aggressive. Blunt. Furious. These are words that have been used to criticize the behavior of female CEOs of prominent companies like Thinx, Cleo, Rent the Runway and ThirdLove, to name a few. Away is the latest female-led company to come under fire, in an article in The Verge on Thursday.
First, let me be clear: A toxic work culture is never acceptable. Regardless of who started a company or what kind of stress the company is under, it’s never okay to mistreat employees. Some of the things that came to light in these pieces are particularly abhorrent: sexual harassment, lying about one’s credentials, creating an unsafe space for underrepresented groups, overworking employees. These are dynamics that need to be called out and eliminated at all companies, whether female or male-led. The Away example is no exception.
Plus, read my profile of VSCO, the photo-sharing and editing app you may have never heard of. That is, until the “VSCO girl” meme craze of 2019.
It’s hard to believe it’s already that time of the year again, but Disrupt Berlin is this week! I’m in Berlin this week to meet with Europe’s top VCs and some of the most promising founders in the region. If you’re here too, make sure to say hi. Here are a few things you can expect to hear about at the event:
Learn how to win customers and influence consumersThree of the best tackle the thorny issue of Brexit for startupsLearn how to raise your first Euros#Equity
If you like this newsletter, you will definitely enjoy Equity, which brings the content of this newsletter to life — in podcast form! Join myself and Equity co-host Alex Wilhelm every Friday for a quick breakdown of the week’s biggest news in venture capital and startups.
This week, we discussed Harlem Capital’s debut fund, a $40 million effort that will back minority entrepreneurs. On top of that, we shared thoughts on Figure’s latest funding, European venture capital activity and more.
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
As the world grows increasingly digital, the craving for face-to-face connections is surging. Squad, an invite-only community and app, is trying to fill the need for offline connections by curating tight-knit events for Gen Z and Millennials.
“It mimics building relationships in real life,” says founder and CEO Isa Watson.
It’s an idea that investors are already backing: Squad closed a $3.5 million seed round and plans to raise its Series A in early 2020, but the road to securing that round was anything but easy. During a conversation on the How I Raised It podcast, Watson shared the ups and downs of her unique path to fundraising.
She started by putting some of the earliest capital into the business herself with support from her family. She then worked her way through more than 200 meetings in Silicon Valley to build up her credibility as a founder — a step that she can’t stress enough — before Squad even started its official seed round.
“Despite the fact that I went to MIT, despite the fact that I managed a billion-dollar product at JPMorgan Chase and even built a huge digital product, I was still a Silicon Valley outsider,” Watson says.
People sometimes have the perception that being an alumni at a top U.S. university will mean they can go to Silicon Valley and just be “in,” Watson explains, but that’s not quite how it works.
“It takes a lot of work and a lot of credibility building,” she says. “That’s what I was doing for a few years before we actually did our official seed round. By the time I did it, it was like my reputation preceded me and there was enough familiarity with me.”
Isa Watson, Squad founder and CEO
Despite taking more than 200 meetings in her efforts to crack Silicon Valley, Watson never took a cold meeting.
“Cold outreach is a tactic that I see a lot of founders using,” she says, “whereas I would argue that the more effective introduction comes from someone who knows someone.”
Leveraging the connections she built was critical in connecting Watson to her eventual funders. “They’re all referring you to the next three people to talk to,” Watson says. “It becomes like tree branches and then a network that’s growing in a multiplicative fashion.”
One of Squad’s earliest investors was Steven Aldrich, who at the time was working as chief product officer at GoDaddy . Both Aldrich and Watson grew up in North Carolina, and Steven’s father shared hometown roots with her, which helped her make the initial connection.
“It was about consistently making connections like that,” she says. “Steven introduced me to three people, and then those three other people introduced me to two people. And that’s essentially how I got the ball rolling.”
Not all meetings need to be about meeting for coffees or lunches, either — Watson took plenty of calls while expanding her network, as well. But the important step was making those connections, which was “a really hard hustle and grind, head down,” for the first two years.
When meeting people in Silicon Valley or expanding her network of prospective funders, Watson didn’t tease future funding rounds or send off vague meeting requests.
In trying to build out her network, she first researched a couple of key things: who did she need to know in order to build a really strong product, and who did she need to know in order to have solid distribution or growth marketing? Once she identified those folks, she would reach out to them individually and ask them for specific advice in their area of expertise.
“People always say, ‘When you want money, ask for advice. If you want advice, ask for money,’” Watson says. “Being super-explicit in the ask and explaining how you’ll spend their time and their brain space is super important.” No one has time for a generic request like, “Hey, can I pick your brain?”
When you’ve connected with someone, you should always ask them for recommendations for experts in specific areas — like growth marketing, product, etc. If they volunteer a few names, ask if you can send an email that they could forward on to introduce you to those individuals.
Following the introductions, it’s important to remember that it’s not just a “one and done,” as she says. Once you’ve met with someone through an introduction, follow up: let them know how the meetings went and thank them again.
“It’s like really, really intense relationship management, and it’s something that people with the highest EQ do best,” says Watson. “I would identify my needs, make specific asks … and then I would make sure to explicitly ask if they did not offer for three other intros for people that could be helpful, that would be excited about what we’re doing.”
When she realized it was time to start raising money for Squad, her first move was to identify her “quarterback for fundraising” — in this case, Charles Hudson from Precursor Ventures. It’s helpful, according to Watson, to not have “too many cooks in the kitchen,” or else you’ll end up with far too many opinions that don’t align.
Hudson had already invested a small amount of money in Squad at the time, but he quickly became the person Watson went to for feedback on her pitches. He counseled her on other aspects of running a process.
“One thing Charles tells me is that, with fundraising, you’re likely only going to be successful if that’s your core focus at that time,” Watson says. “It’s not something you can do passively.”
So Hudson and Watson sat down and came up with a list of 35 target venture capitalists. He introduced her to five who she didn’t expect to be a good fit. They first went with the ones they didn’t expect would be a perfect match so she could gather feedback and see if Squad was actually ready to raise capital.
Of those first five meetings, one or two “were complete dings” and turned Squad down outright — but Watson made it to partner meetings in the three other meetings, a sign that VCs were seriously considering Squad.
Based on that feedback, Hudson introduced Watson to 10 more VCs — and shortly after, she met Michael Dearing at Harrison Metal, who led Squad’s seed round.
After Dearing offered up a term sheet of $3 million, Watson quickly had offers from other VCs.
“It’s funny because it took me deliberately being in the market for fundraising for like two and a half months to get that ‘yes’ from Michael. Before that, I had no cash really committed,” she says. “And then after just a few days of letting people know I had a term sheet for $3 million, I had like $6 million on a table. VCs are such followers.”
With that many offers on the table following Dearing’s lead, Watson was in the enviable position of needing to pick who she’d let into the seed round. So how did she choose?
“The first thing is value add,” Watson says. She asked herself: “did I feel like I had the right assortment of value? I maybe want someone in there who’s really strong on product; I may want someone who’s really strong at growth, strong at marketing.”
Her second criteria for making the decision was a less resume-focused. Simply put, she went with her gut.
“One thing that founders really, really underestimate is — is this person a good human being? I went with the people that I had felt most comfortable with, the people who I felt I could trust based on my interactions with them, and who were just supportive along the way.”
In case you missed it, you can listen to the recording here: Rendezvous Online with Sramana Mitra Oct 23, 2019
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Meatable, the Dutch startup developing cruelty-free technologies for manufacturing cultured meat, is pivoting to pork production as a swine flu epidemic ravages one quarter of the world’s pork supply — and has raised $10 million in financing to support its new direction.
When the company unveiled its technology last year, it was one of several companies working on the production of meat derived from animal cells — a method of meat production that theoretically has a far smaller carbon emissions footprint and is better for the environment than traditional animal farming.
At the time, it was one of several companies — including Memphis Meats, Future Meat Technologies, Aleph Farms, HigherSteaks and many, many pursuing technologies — to bring cultured beef to market. Now, as pork prices rise globally, Meatable becomes one of the first companies to publicly shift gears and turn its attention to the other white meat.
That’s not the only way the company is setting itself apart from its peers in the market. Meatable is also an early claimant to a commercially viable, patented process for manufacturing meat cells without the need to kill an animal as a prerequisite for cell differentiation and growth.
Other companies have relied on fetal bovine serum or Chinese hamster ovaries to stimulate cell division and production, but Meatable says it has developed a process where it can sample tissue from an animal, revert that tissue to a pluripotent stem cell, then culture that cell sample into muscle and fat to produce the pork products that palates around the world crave.
“We know which DNA sequence is responsible for moving an early-stage cell to a muscle cell,” says Meatable chief executive Krijn De Nood.
To pursue its new path, the company has raised $7 million from a slew of angel and institutional investors and a $3 million grant from the European Commission . Angel investors include Taavet Hinrikus, the chief executive and co-founder of TransferWise, and Albert Wenger, a managing partner at the New York-based venture firm Union Square Ventures.
Meatable’s De Nood says that the new cash will be used to accelerate the development of its prototype. The small-scale bioreactor the company had initially targeted for development in 2021 will now be ready by 2020 and the company is hoping to have an industry-scale plant online manufacturing thousands of kilograms of meat by 2025, according to De Nood.
Industrial farming is responsible for between 14% and 18% of the greenhouse gas emissions linked to global climate change and Meatable argues that cultured (lab-grown) meat has the potential to use 96% less water and 99% less land than industrial farming. Powering facilities using renewable energy could further reduce emissions associated with meat production, according to Meatable.
While file sharing, time tracking, email integration, Gantt charts and budget management are usually some of the most requested features in the average project management platform, we still have a proliferation of tools taking a multiplicity of approaches to the problem of just managing something.
Most people in tech are by now familiar with Slack, Asana, Notion, Trello, Azure DevOps, GitLab and GitHub. But the sector is still booming. Last month, Microsoft Teams had more than 20 million active users, up from 13 million in July. Slack reported more than 10 million daily active users in the second quarter. Adobe just launched a collaboration tool, Notion is super hot, Frame.io raised $50 million and Microsoft has Fluid. Even WordPress is getting in on the act.
(When is someone going to make something for journalists? Oh, we’re poor. I forgot).
And yet. And yet… project management for developers remains a rising area for startups.
Now a new product has been launched to address this space. And how ironic is it that’s called Space?
Space is billed as an integrated team environment that provides a toolset that combines into a single platform messaging, team and project management, internal blogs, meeting scheduling and software development processes.
It’s now available for early users, who will get an Organization plan free of charge. This includes 25 GB storage per user, a monthly limit of 10,000 CI credits and 125 GB data transfer per user.
With Space, all the data a team needs to work is stored in one place, while software development tools (source code management, code review and browsing, continuous integration, delivery and deployment, package repositories, issue tracking, planning tools and project documentation) are integrated with communication and identity support.
The idea is that any workflow can be automated, from onboarding new employees to configuring rules for merging requests to CI/CD pipelines. You also can schedule meetings, projects, tasks, commits, code reviews, etc.
Space is a bootstrapped spin-out from JetBrains, the company behind Kotlin, a semi-official language of Android. While Java is the official language of Android development, it has a steep learning curve. When JetBrains created Kotlin, it was so successful that it became a secondary “official” Java language. So, in theory, they ought to know their stuff.
JetBrains CEO Maxim Shafirov says “Most digital collaboration environments are in fact a mixed bag of solutions tackling different problems, from development tools to task management ones. This leaves people switching tools and tabs, manually copying information, and generally losing time and creative flow. JetBrains Space is changing this — and thus changing the foundation of creative work, software development included.”
JetBrains Space is available through a subscription model with a freemium starting tier, while the paid plans start at $8 per active user per month. The ultimate goal for Space is to provide a unified company-wide platform expanded to a wider range of creative teams, including designers, marketers, sales, accounting and more.
Time will tell if Space takes off (LOL) and can start to put the heat on products like Slack. As a Slack hater, I do hope so.
Home Alliance CEO Sardor Umrdinov has bootstrapped a marketplace of home appliance technicians to over $10 million in revenue. Great story. Sramana Mitra: Let’s start at the very beginning of your...
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Human beings love bargains. There is something hardwired into our brains that makes us seek a good deal. Some cultures, especially the Indian and Chinese, have an extraordinarily sharp elbow around...
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Canva, the design company with nearly $250 million in funding, has today announced a variety of new features, including a video editing tool.
The company has also announced Canva Apps, which allows developers and customers alike to build on top of Canva. Thus far, Dropbox, Google Drive, PhotoMosh and Instagram are already in the Canva Apps suite, with a total of 30 apps available at launch.
The video editing tool allows for easy editing with no previous experience required, and also offers video templates, access to a stock content library with videos, music, etc. and easy-to-use animation tools.
Meanwhile, Canva is taking the approach of winning customers when they’re young, with the launch of Canva for Education. It’s a totally free product that has launched in beta with Australian schools, integrating with GSuite and Google Classroom to allow students to build out projects, and teachers to mark them up and review them.
Canva has also announced the launch of Canva for Desktop.
As design becomes more important to the way every organization functions and operates, one of the only barriers to the growth of the category is the pace at which new designers can emerge and enter the workforce.
Canva has positioned itself as the non-designer’s design tool, making it easy to create something beautiful with little to no design experience. The launch of the video editing tool and Canva for Education strengthen that stance, not only creating more users for the platform itself but fostering an environment for the maturation of new designers to join the ecosystem as a whole.
Alongside the announcement, Canva CEO Melanie Perkins has announced that Canva will join the 1% pledge, dedicating 1% of equity, profit, time and resources to making the world a better place.
Here’s what she had to say about it, in a prepared statement:
Companies have a huge role to play in helping to shape the world we live in and we feel like the 1% Pledge is an incredible program which will help us to use our company’s time, resources, product and equity to do just that. We believe the old adage ‘do no evil’ is no longer enough today and hope to live up to our value to ‘Be a Force for Good’.
Interestingly, Canva’s position at the top of the design funnel hasn’t slowed growth. Indeed, Canva recently launched Canva for Enterprise to let all the folks in the organization outside of the design department step up to bat and create their own decks, presentations, materials, etc., all within the parameter’s of the design system and brand aesthetic.
A billion designs have been created on Canva in 2019, with 2 billion designs created since the launch of the platform.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week was a bit different than usual. First, we managed to come close to our old time target (20 minutes) instead of our regular length (30 minutes). And, second, Alex is coming back to TechCrunch starting next week!
Expect more Equity and, from Alex, writing for Extra Crunch. But don’t worry, we’ve got you covered. If you aren’t an Extra Crunch subscriber yet you can use the code “EQUITY” and save a bundle. (Woo!)
That done, let’s dig into the news that Kate and Alex discussed, starting with Harlem Capital’s $40.3 million new fund. The New York-based outfit has a focus on investing in minority entrepreneurs, who receive significantly less than their white male counterparts. This is one of the largest funds with a diversity mandate to date, and that’s something to be stoked about.
Next we turned to Mike Cagney’s canny fundraising ability. The former SoFi CEO, ousted for bad behavior, is putting together another huge funding round for his startup, Figure Technologies. The expected $103 million round comes after the company raised $120 million before.
With more than $50 million raised of the more than $100 million it expects, covering Figure is partially a financial story. However, due to Cagney’s part in the project, it’s also a story of how fast money forgives.
Pivoting to Europe, Kate and Alex chewed into the latest report on European venture capital, pulling from Atomico and Forbes. The headlines are pretty simple: There are more EU-based unicorns than ever, more money invested in the region and the money is mostly finding male hands.
Disappointing diversity metrics aside, it’s an encouraging set of metrics for a region that has long found itself left to the side when major startup markets are discussed.
And finally, Alex wanted to talk about two impending U.S.-listed technology IPOs. Coming in the wake of the WeWork fiasco and sporting similar share prices but divergent growth profiles, the debuts of Bill.com and Sprout Social are events.
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
Streaming aggregator Reelgood capitalized on the overabundance of streaming services available today by offering consumers a universal dashboard where you can track what you’re watching and discover your next binge. It then translated the activity from its over 10 million users into data it licenses to major companies, including Roku, Microsoft, smart TV makers, NYPost and even hedge funds. Now the company has closed on $6.75 million in Series A funding to continue to grow its business.
The round was led by Runa Capital and includes participation from Reelgood’s seed round investor, August Capital. To date, Reelgood has raised $11 million.
The company’s app to some extent competes with those designed to help you keep track of the episodes you’ve watched across streaming services and TV, like TV Time, iTV, JustWatch and others. But Reelgood’s service stands out for its breadth of catalog — it tracks both movies and TV across some 336 streaming services, the website says. This includes free services like Tubi, Crackle and those from TV networks, plus authenticated “TV Everywhere” services for pay-TV subscribers, and subscription services like Netflix, Hulu, HBO, Amazon Prime and others. It also can help you compare prices on rental options.
And its robust search and filtering features can help you find titles that are new, coming or leaving services, or by any other filter — like genre, year, Rotten Tomatoes rating, IMDB score and more. The more you use and personalize the service, the better its suggestions for what to watch next then become.
Once you find something to watch, you just press play to launch the streaming service’s app or website.
The work involved in making a simple concept — a universal dashboard for streaming — is fairly complex, Reelgood says.
“Putting together these streaming service libraries involves ingesting massive and unstructured amounts of data from hundreds of different sources for real-time matching and combination using machine learning and human curators,” noted Reelgood’s head of Data, Pablo Lucio Paredes.
Reelgood also touts the quality of its data (averaging 98% across all 300+ services), which it then licenses to publishers, search engines, media players, TVs, voice assistants and other smart devices. Currently, the company has around 50 business customers who pay either for the raw data, the insights or both.
Roku, for example, uses Reelgood’s data for its own universal search feature. NYPost displays streaming availability data on their articles via a widget. Hedge funds look at the data to better understand consumer behavior in streaming services and the movement of content between catalogs.
This year, Reelgood hired Nielsen’s former SVP of global measurement, Mark Green, to lead its B2B data licensing business, called Reelgood Insights.
“I sought out and joined Reelgood because they are poised to capture the billions in revenue spent on viewership data as viewing continues to shift towards OTT,” said Green.
The additional funding will be used to expand the number of platforms where Reelgood is offered, including on a range of smart TVs through partnerships. The company has signed five smart TV deals with major brands that will begin to roll out in 2020, but LG is the only name Reelgood can currently disclose.
Reelgood is headquartered in San Francisco. It has 18 employees, both local and remote, and is hiring across a number of roles.
Style Theory, a platform for renting designer apparel in Indonesia and Singapore, announced today it has raised $15 million in Series B funding. The startup says this is the first closing of the round. It was led by SoftBank Ventures Asia, the early-stage venture arm of SoftBank Group, with participation from other investors, including Alpha JWC Ventures and the Paradise Group.
Both SoftBank Ventures Asia and Alpha JWC Ventures are returning investors, having previously participated in Style Theory’s Series A.
Founded in 2016 by Raena Lim and Chris Halim to counteract the waste created by fast fashion, Style Theory currently has more than 50,000 pieces of clothing and 2,000 designer bags in its inventory. In addition to its app, the company opened a flagship store on Orchard Road in Singapore last month. On average, Style Theory’s subscribers rent up to 20 pieces of clothing and two designer bags a month and it has delivered more than one million items since launching, its founders say.
Part of the funding will be used to further develop Style Theory’s tech platform. In an email interview, Lim and Halim told TechCrunch that Style Theory uses machine-learning algorithms to personalize clothing and fit recommendations for users based on their browsing and rental history and decide which designers and styles to carry. The startup also built a customized warehouse management system and distribution network that uses its own fleet of couriers to lower costs. In order to manage its inventory as the company scales up and expands into new markets, it plans to start using RFID tagging and will attach passive RFID tags on each of its rental items.
Lim and Halim say they plan to launch new apparel categories in Singapore and Indonesia before possibly expanding into more countries in 2020.
While Rent the Runway and Le Tote are the best-known fashion rental apps in the United States, Style Theory’s operating model has several key differences to serve the Southeast Asia market, Lim and Halim say. Longer work hours means many customers are often not at home to receive deliveries. They also rely on public transportation more than most Americans. In order to make the service more convenient, Style Theory opened its brick-and-mortar store and partners with automated locker providers, co-working spaces and department stores. Its app includes different payment solutions, as the regions they serve have relatively lower credit card penetration rates.
Style Theory’s inventory is also picked with a diverse array of customers in mind.
“With the melting pot of cultures, we have to approach our merchandise mix with consideration to the different societal standards of formality and modesty in the workplace and social environment,” said Lim and Halim.
“Not only does our assortment have to serve the all-year tropical climate, with a seasonal selection for travel, we have to also meet the demands for the different cultural groups and customer preferences. We have introduced a line up of modest wear in Indonesia and more festive wear during the celebratory seasons in the year.”
In a press release, SoftBank Ventures Asia senior partner Sean Lee said, “Fashion has emerged as one of the last frontiers of the sharing economy, and with an attractive business model, Style Theory has proven that the company can change the way people consume fashion in Southeast Asia. I am excited to support Style Theory’s expansion across the region as well as continuous disruption.”
There have been a lot of bumps in the road for startups building used-car marketplaces, but now one of the longer-standing of them has closed a major round of funding — a clear sign of the mileage left in this category. Vroom has raised $254 million, a Series H that it plans to use to keep scaling the business, and specifically also to expand a product and engineering hub based out of Detroit.
Vroom is based out of New York but operates across the U.S., and its platform has to date been used by more than 250,000 buyers and sellers, according to the company. It has some 3,000 vehicles listed at any time, covering some 400 makes and models, and the company tells me that it has seen “triple-digit growth in shipped unit sales” since last year.
Vroom declined to comment on its specific valuation, but a source close to the startup confirmed it is an up round. For some context, Vroom last raised money almost exactly one year ago, $146 million, which came in at a post-money valuation of $796 million, according to PitchBook. Putting that together with this being an up round, that would, on a basic level, now put Vroom’s valuation at more than $1 billion.
This latest round of funding is being led by Durable Capital Partners LP, with participation also from funds advised by T. Rowe Price Associates, L Catterton and others that are not being named.
Vroom has now raised a total of $721 million since it launched in 2013. Previous investors have included General Catalyst, Altimeter Capital and Allen & Co.
Vroom is led by former Priceline.com CEO Paul Hennessy, and the plan is to use the injection of capital to hire more employees, particularly for product and engineering jobs. Vroom said it expects in 2020 to “significantly increase” staff at its Detroit office.
The Detroit hub opened in August 2019 and is a symbolic as well as practical location: it’s the center of the U.S. automotive industry, making it a prime place for Vroom to recruit talent and build inroads in with carmakers and others.
“This new round of funding provides the necessary resources to further grow and scale our business,” Hennessy said in a statement. “We are thrilled to receive continued support from investors and partners, reinforcing the Vroom model as a tremendous opportunity to bring about a fundamental and enduring change in the used vehicle industry.”
More funding, indeed, is critical in what is a capitally intensive business, and for Vroom itself, it’s a sign of how its restructuring appears to be paying off. Back in 2018, Vroom laid off about 30% of its staff after a failed attempt at building brick-and-mortar car dealerships, amid a time when we were seeing several other problems hit its competitors.
Hennessy noted that using a try-anything and staying flexible approach has been a critical part of why it has managed to keep its engines running when so many others have stalled.
“We’ve taken a disciplined, asset-light approach to scaling our business. Where it makes sense for us to fully own part of our operation, like the development of our e-commerce platform, we do that. If it makes sense for us to work with others to scale our operations efficiently, like through partnerships for third-party reconditioning, we do that,” he told TechCrunch via email. “This approach gives us the flexibility to quickly adapt to market changes and consumer demand and has been instrumental in our growth.”
Vroom has focused its efforts since the layoffs on building out its leadership team. Vroom has added several executives in recent months, including Dave Jones, who spent more than a decade at Penske Automotive Group and recently joined as its chief financial officer.
The lead investor in this Series H is notable. Durable Capital Partners is the new fund led by former star T. Rowe Price portfolio manager Henry Ellenbogen, and the firm has now started investing in earnest.
This is the second investment it has made in the wider transportation category, after taking part in a $400 million round for Convoy. It also invested in a fintech startup Rapyd, which is moving into logistics now. All three of these investments have been announced in the space of a month.
Ellenbogen first became familiar with the company because T. Rowe Price made an investment in 2015.
“I’ve worked with the Vroom team for years and I’m pleased to announce that it is one of the first companies that my new firm is investing in,” he said in a statement. “We’re very excited to be a part of the future of automotive retail and support Vroom in its efforts to move the car buying and selling process online for consumers across the country.”
Vroom was part of a wave of online used marketplace startups that launched about seven years ago. Several of these companies have shuttered, while others such as Shift and Carvana have survived and even scaled.
Carvana became a public company in 2017 and its market cap is currently around $13 billion. In the meantime, others have waded into the field with alternative business models, such as Fair.com and its approach of “flexible” car ownership that looks similar to leasing (and these new players have faced their own challenges).
The center of Vroom’s business is an e-commerce platform that handles the entire transaction for buyers and sellers of used vehicles.
Vroom’s platform gives customers who want to sell or trade in their vehicles real-time appraisals, loan payoffs and at-home vehicle pickup. The company reconditions the vehicles it takes possession of and then includes them on its online catalog.
Buyers can get financing through a number of lending partners that Vroom has partnered with, including Capital One, Ally and, more recently, Chase. Once the sale is complete, Vroom delivers the vehicle directly to customers’ doorsteps in the U.S.
“Airbnb’s unit economics are quite legendary — the S-1 is going to be MOST disrupted FASTEST in the next 3 YEARS? Caps for effect.”
Who tweeted that? Initialized Capital’s Garry Tan? Homebrew’s Hunter Walk? Y Combinator co-founder Paul Graham? Or perhaps one of the dozens of other venture capitalists active on Twitter .
No, it was Parrot.VC, a new Twitter account and website dedicated to making light of VC Twitter. Brother-sister duo Samantha and Nick Loui, the creators of the new tool, fed 65,000 tweets written by some 50 venture capitalists to a machine learning bot. The result is an automated tweet generator ready to spew somewhat nonsensical (or entirely nonsensical) <280-character statements.
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According to Hacker News, where co-creator Nick Loui shared information about their project, the bot uses predictive text to generate “amazing, new startup advice,” adding “Gavin Belson – hit me up, this is the perfect acquisition for Hooli,” referencing the popular satirical TV show, “Silicon Valley.”
This isn’t the first time someone has leveraged artificial intelligence to make fun of the tech community. One of my personal favorites, BodegaBot, inspired by the Bodega fiasco of late 2017, satirizes Silicon Valley’s unhinged desire to replace domestic service with technology.
Although the 2008 global financial crisis sparked the fintech movement, in Latin America, the rise of ecommerce was responsible for the first wave of fintech startups.
Because digital payments were key to enabling the growth of ecommerce, investors funded companies like Braspag, PagSeguro, PayU, Mercado Pago and Moip in the early 2000s to take advantage of this opportunity.
Payment is still the most relevant segment, with successful cases like Stone and PagSeguro, but after the financial crisis, we started to see the rise of financial technology in lending and neobanking, generating impressive cases like Nubank, Neon, Creditas, Credijusto and Ualá.
As the ecosystem evolves and expands, let’s take a closer look at emerging trends in Latin America that might give us a hint about where to expect its next fintech unicorns.
Latin America has seen explosive growth in ride-hailing and food delivery platforms such as Uber, Didi, Rappi and iFood, creating a totally new market opportunity — many gig economy workers can’t access basic financial services such as bank accounts, personal loans and insurance. Even those who have access often struggle with financial products that that don’t suit their needs because they were designed for full-time workers.
Spotting this opportunity, Uber Money launched at Money 2020, focusing on providing drivers with financial services. As 50% of the population in Latin America is unbanked where Uber has more than 1 million drivers, the region is definitely a ripe market. Cabify is going even farther by spinning off Lana, its company that provides financial services, so it can expand its market beyond Cabify drivers to include other gig economy professionals.
Although established players in this sector have a clear advantage, they aren’t the only ones looking to explore this opportunity; Brazilian YC alumni Zippi is offering personal loans to ride-hailing drivers based on their driving earnings. As the gig economy tends to keep growing in the region, I believe we will start to see more solutions for those professionals.
As the banking world has been shaken by fintechs, insurance companies are growing aware that high regulatory barriers won’t protect their industry from disruption.
Insurance penetration in Latin America has been historically low compared to developed markets — 3.1%, compared to 8% — but the insurance market is growing well and tends to close this gap. Adding this to bad services and complex products that insurances provide, insurtech has an immense opportunity to grow.
Because purchasing insurance is historically a complicated and painful experience, the first insurtechs in the region focused on providing a better experience by digitizing the process and using online channels to acquire customers. Those insurtechs worked together with the insurance companies and operating as online broker, but now, we’re starting to see startups providing new insurance products, as well as traditional insurances in different models.
Some are partnering with insurance companies while others are competing directly with them; Think Seg and Miituo partnered with larger players to provide a pay-as-you-go model for car insurance, while Mango Life and Kakau are offering a better purchasing experience. On the other end, Crabi and Pier are rethinking the insurance model from the ground up.
As insurtechs emerge as a potential threat, incumbents are more willing to work with startups that can improve their services to enable them to compete on better grounds, which is exactly what companies such as Bdeo, Lisa, and HelloZum are doing.
Although penetrating the insurance industry is more complicated than other financial services due to high regulatory demands and steep initial operating costs, insurtechs fueled by VC investment will without any doubt try to do it. And, if we’ve learned anything from other fintech segments, it’s that entrepreneurs will find ways to overcome initial challenges.
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1. 300M-user Imgur launches Melee, a gaming meme app
Melee, the company’s first app beyond its flagship product, lets users subscribe to the games from which they love to get memes and gameplay clips. You also can scroll through a popular post’s feed if you’re curious about unfamiliar games.
If you’re worried about the risk that gaming communities might turn toxic, Imgur says Melee has multiple layers of community and staff moderation, will remove obscene content and won’t tolerate bullying.
2. SpaceX nears milestone on key crew launch system test
SpaceX is keeping relatively close to schedule on one of the bold timelines pronounced by its CEO Elon Musk. Specifically, the company notes that it has now completed seven system tests of the latest, upgraded version of the parachutes it plans to use with its Crew Dragon capsule when it launches with astronauts on-board.
3. Flipkart leads $60M investment in logistics startup Shadowfax
Shadowfax operates a business-to-business logistics network in more than 300 cities in India. The startup works with neighborhood stores to use their real estate to store inventory, and with a large network of freelancers for delivery.
4. A Sprint contractor left thousands of US cell phone bills on the internet by mistake
A contractor working for cell giant Sprint stored hundreds of thousands of cell phone bills for AT&T, Verizon (which owns TechCrunch) and T-Mobile subscribers on an unprotected cloud server.
5. How to build or invest in a startup without paying capital gains tax
Qualified Small Business Stock (QSBS) presents a significant tax savings opportunity for people who create and invest in small businesses. (Extra Crunch membership required.)
6. Volvo invests in autonomous vehicle operating system startup Apex.AI though its VC arm
Apex.AI is working on developing a robotic operating system qualified for use in production automobiles. Its offerings include a set of simple-to-integrate APIs that can give automakers and others access to fully certified autonomous mobility technology.
7. Check out the prizes for TC Hackathon at Disrupt Berlin
One team gets $5,000, but we’ve got additional prizes from a range of sponsors. Also: This is next week!
Autonomous robotic road-riding cargo pod startup Einride has signed a new partner for a commercial pilot on Sweden’s roads, which should be a great test of the company’s electric driverless transportation pods. Einride will be providing service for Coca-Cola European Partners, which is the official authorized bottler, distributor, sales and marketing company for Coca-Cola branded products in Sweden.
The partnership will see Einride commercially operating its transportation system between Coca-Cola European Partners’ warehouse in Jordbro outside Stockholm, and retailer Axfood’s own distribution hub, transporting Coca-Cola brand products to the retailer ahead of sending them off to local retail locations in Sweden.
Coca-Cola European Partners is looking to this partnership as part of its goal to continue to reduce emissions, since Einride’s system could potentially cut CO2 output by as much as 90% compared to current in-use solutions. This pilot is set to take place over the next few years, according to the two companies, and Einride says it hopes that it’ll be able to be on the road as early as some time next year, pending approval from the authorities since it’s a trial that will take place on public roads.
Einride announced $25 million in new funding in October, and has been running trials of the Einride Pod electric transport vehicle it created on public roads since May.
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