DotCom Therapy, a pediatric teletherapy company, just closed a $13 million Series A round. It’s far from the only teletherapy company looking to capitalize on a boom in venture capital investment in mental health startups, but it’s operating in a hyper-specific sphere: therapy for kids. 

DotCom Therapy was originally co-founded in 2015 by Rachel Mack Robinson, who, at the time, was a practicing pediatric therapist at a neurology clinic in Missouri, and Emily Purdom, a speech language pathologist. Purdom is no longer involved with the company. 

The pair noticed a pattern that still holds true in 2021: about one in five children in the U.S. experience a mental disorder (like ADHD, or anxiety or depression for example), but just 20% receive treatment from a mental healthcare provider, per the CDC. 

DotCom Therapy’s bet is that teletherapy can close that gap. 

In the company’s infancy, Robinson called school districts across the country asking to pilot a teletherapy program. Her first greenlight was a district in rural Alaska, where Robinson delivered a combination of in-person therapy and teletherapy.

Today, the company provides fully online speech, occupational and behavioral therapy, and has still focused on partnering with schools and other youth programs, like Little League (the company provided mental health services for the Little League World Series Tournaments). DotCom Therapy has partnered with more than 400 schools (in over 100 districts) in 38 states, so far. 

With this most recent round of funding, the company plans to expand operations beyond school districts, and scale up their service to reach kids both in and out of school. The program for families specifically is called Zesh, an online therapy platform that matches kids with therapists, schedules visits and hosts video calls. 

“Our main customer base was K-12 school districts. We have the core of our business rocking and rolling with our education market,” says Robinson. “But we know that we are wanting to expand our footprint, enter into health systems and also offer services for private patients through working different health plans,” she says. 

This Series A was led by New Capital Partners — a firm with a history of success in the telemedicine space. New Capital Partners were early investors in Teladoc, a virtual healthcare company founded in 2002. Teladoc went public in 2015 at an enterprise value of $620 million. The round was fleshed out with investment from LRVHealth and OSF Ventures. 

Will Cowen, general partner of LRVHealth, Stan Lynall, the vice president of investments for OSF Ventures, and James Outland, managing partner of New Capital Partners will join DotCom Therapy’s board. In total, the company has raised $14 million in funding. 

Before the pandemic, Robinson says the greatest barrier to success  would have been hooking school districts and families on teletherapy. The pandemic has changed that outlook significantly. 

In response to COVID-19, restrictions on reimbursement for telehealth services, as well as geographic requirements for telehealth services, were loosened. Use of telehealth services peaked in April 2020, but has since stabilized at about 38 times pre-pandemic usage, according to a July 2021 McKinsey report. 

With a move outside of school-based partners, DotCom Therapy will be entering into the wider sphere of mental health and telehealth, where there’s a significant amount of competition. Those range from unicorns like TalkSpace to other startups. 

In Robinson’s view, a specific focus on kids’ telehealth, and the specific disciplines of occupational and speech therapy, will help set DotCom apart in an increasingly crowded space. 

“The majority of our competitors, I like to think, are the Teladocs, or the Gingers. But for them, the main focus has been on the adult population,” she says. 

DotCom Therapy does have general research backing the idea that online speech and occupational therapy for kids works. One systematic review of seven studies on telehealth-delivered speech and language therapy made significant improvements in children’s language skills that were comparable to in-person therapy — though the research is still limited. 

In general, a lack of platform-specific validation has common critique for other mental-health telemedicine companies. DotCom Therapy has released white papers suggesting children have benefited from their teletherapy program. However, Robinson didn’t disclose any additional ongoing validation studies focused specifically on DotCom’s service. 

Instead she notes that the company has worked with two advisors, Andrey Ostrovsky, a former chief medical officer of Medicaid and Colleen Kraft, a past president of the American Academy of Pediatrics, to develop and track outcome metrics for each service. 

“This will include DSM-5 cross cutting measures, ASHA’s functional communication metrics and proprietary occupational therapy outcomes generated from a team of occupational therapists from masters to doctorate level,” says Robinson. 

On the business side, DotCom’s current school district-based approach is a multifaceted process — it takes more than just downloading an app. In one sense, they provide a service rather than just a platform. 

DotCom Therapy aims to become embedded within school districts the company works with. If a school has about 150 students that require speech therapy, for instance, DotCom Therapy will determine how many therapists they believe a school might need.

“We have a proprietary calculator that we’re able to identify the number of therapists that we need to deploy for that specific location,” Robinson says. Overall it takes about 21 days to match therapists with students, per DotCom Therapy’s website.

DotCom Therapy will also coordinate with administrators at K-12 school districts who can be in the room while kids participate in therapy (there’s a video of how that works here), and will also handle the scheduling and tracking of all student sessions. 

So far, DotCom Therapy has employed about 200 therapists, says Robinson, who are all employed as W-2 employees, rather than independent contractors. The company has about a 97% retention rate for employees, says Robinson. On the customer side, the company has retained about 90% of customers. 

With this Series A round, Robinson says the company is focusing on expansion into all 50 states by January, and by building out the services for private families. 

“I just feel a lot of urgency for us to grow quickly, but in a very smart way to be able to meet the demand without compromising quality. So what keeps me up at night is really making sure that we can grow at a healthy pace,” says Robinson. 

Relationships ultimately close deals, but long-term relationships come with a lot of baggage, i.e. email interactions, documents and meetings.

Affinity wants to take what Ray Zhou, co-founder and CEO, refers to as “data exhaust,” all of those daily interactions and communications, and apply machine learning analysis and provide insights on who in the organization has the best chance of getting that initial meeting and closing the deal.

Today, the company announced $80 million in Series C funding, led by Menlo Ventures, which was joined by Advance Venture Partners, Sprints Capital, Pear Ventures, Sway Ventures, MassMutual Ventures, Teamworthy and ECT Capital Partners’ Brian N. Sheth. The new funding gives the company $120 million in total funding since it was founded in 2014.

Affinity, based in San Francisco, is focused on industries like investment banking, private equity, venture capital, consulting and real estate, where Zhou told TechCrunch there aren’t customer relationship management systems or networking platforms that cater to the specific needs of the long-term relationship.

Stanford grads Zhou and co-founder Shubham Goel started the company after recognizing that while there was software for transactional relationships, there wasn’t a good option for the relationship journeys.

He cites data that show up to 90% of company profiles and contact information living in traditional CRM systems are incomplete or out of date. This comes as market researcher Gartner reported the global CRM software market grew 12.6% to $69 billion in 2020.

“It is almost bigger than sales,” Zhou said. “Our worldview is that relationships are the biggest industries in the world. Some would disagree, but relationships are an asset class, they are a currency that separates the winners from the losers.”

Instead, Affinity created “a new breed of CRM,”  Zhou said, that automates the inputting of that data constantly and adds information, like revenue, staff size and funding from proprietary data sources, to assign a score to a potential opportunity and increase the chances of closing a deal.

He intends to use the new funding to expand sales, marketing and engineering to support new products and customers. The company has 125 employees currently; Zhou expects to be over 200 by next year.

To date, the company’s platform has analyzed over 18 trillion emails and 213 million calendar events and currently drives over 500,000 new introductions and tracks 450,000 deals per month. It also has more than 1,700 customers in 70 countries, boasting a list that includes Bain Capital Ventures, Kleiner Perkins, SoftBank Group, Nike, Qualcomm and Twilio.

Tyler Sosin, partner at Menlo Ventures, said he met Zhou and Goel at a time when the firm was looking into CRM companies, but it wasn’t until years later that Affinity came up again when Menlo itself wanted to work with a more modern platform.

As a user of Affinity himself, Sosin said the platform gives him the data he cares about and “removes the manual drudgery of entry and friction in the process.” Affinity also built a product that was intuitive to navigate.

“We have always had an interest in getting CRMs to the next generation, and Affinity is defining itself in a new category of relationship intelligence and just crushing it in the private capital markets,” he said. “They are scaling at an impressive growth rate and solving a hard problem that we don’t see many other companies in the space doing.”

Varo Bank, which last year became the first U.S. neobank to be granted a national bank charter, announced this morning it has raised a staggering $510 million in a Series E funding round at a $2.5 billion valuation.

The massive “oversubscribed” financing comes nearly seven months after the fintech startup raised $63 million in a round led by NBA star Russell Westbrook, who also joined the startup as an advisor focused on the direction of Varo Bank’s programs aimed at underserved communities, including communities of color. 

Varo declined to reveal any hard revenue figures but did note that in the 13 months since obtaining its bank charter, the company has doubled its number of opened accounts to four million and tripled its revenue. The latest financing brings the San Francisco-based startup’s total raised to $992.4 million since its 2015 inception, meaning that this round alone effectively amounts to nearly $30 million more than what the company has raised over its lifetime. Varo has previously never disclosed valuation, but it did note that the $2.5 billion valuation figure is up “5x” since May of 2020.

At the time of its last raise, in February, Varo touted 3 million opened accounts. Doing the math we can deduce that the startup has added one million new accounts over the past seven months. At the time of its $241 million Series D last June (that included participation from U2’s Bono), Varo counted nearly 2 million banking and savings accounts.

New investor Lone Pine Capital led the latest round, along with “dozens” of additional new backers, including Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners/Stockbridge and funds and accounts managed by BlackRock. They joined existing investors Warburg Pincus, The Rise Fund, Gallatin Point Capital and HarbourVest Partners. 

Last year, Varo announced it had been granted a national bank charter from the Office of the Comptroller of the Currency (OCC) and secured regulatory approvals from the FDIC and Federal Reserve to open Varo Bank, N.A. — effectively becoming a “real” bank but with no physical branches.

CEO and founder Colin Walsh told TechCrunch that the move had a significant impact on his company’s growth. First off, it effectively eliminated an intermediary.

“Being in the regulated system loop has allowed us to expand our margins considerably,” he said. “We also now have direct access to the payment network so our ability to generate substantial value both to our consumers as well as to our shareholders is becoming more and more apparent.”

Walsh also said that Varo is not yet profitable, but is on its way there. He predicts that Varo will achieve profitability in about two years, or three years after becoming a bank.

“One of the nice things that the charter affords us is that we can actually pursue growth and profitability at the same time,” Walsh said. “It’s very much within that three-year window of when we became a bank.”

Also in the last 13 months, Varo has nearly doubled its employee count to nearly 800 today and expanded into a third hub in Charlotte, North Carolina.

Walsh admits that the raise was not necessarily in the company’s plans.

“We didn’t set out to raise this much money. It was coming in fast and furious and we were at like $510 [million] and I finally said, ‘Ok, enough,’ ” he said. “But the fact that we were able to raise this money without even really trying is evidence of the fact that there’s something happening that is just very culturally relevant in this moment and our success to me is very much about having that kind of impact at scale.”

The executive added that the choice of lead investor did tie in to its eventual plans to go public.

“They’re a very reputable sophisticated crossover investor that invests in high-growth, high-potential private market companies and ultimately work with them to go public,” Walsh told TechCrunch. “It’s definitely on the roadmap for us as I think there’s a ton of value we can create as a public company when the time is right.”

Existing investors, he added, aren’t putting pressure on Varo for that to happen. And so, Walsh predicts any move in that direction will only take place sometime “in the next couple of years.”

He also said that down the line, it’s possible that Varo would explore a global expansion.

Varo launched in 2017 with a mission to become “an all digital, mission-driven, FDIC insured bank designed around the modern American consumer,” Walsh said. Today, the company’s core product offerings include “premium” bank accounts that have no minimum balance requirement or monthly account fee and high-interest savings accounts combined with a suite of “tech-first features” designed to help people save and manage their money.

It recently launched Varo Advance, a short-term line of credit that gives qualifying customers a way to secure a cash advance of up to $100 within its app “in seconds” and Varo Perks cashback rewards. The company also has plans to launch Varo Believe, a credit building credit card program designed to help Varo customers “safely build or repair their credit,” with a flexible security deposit and without fees. 

The new capital will go toward continued investment in its products, risk platform and design, according to Walsh. Varo’s goal is to scale to “tens of millions” of consumers and to become a “loved brand recognized for its social impact mission,” he added.

Since the beginning, the startup has been vocal about its intent to help boost financial inclusion with its offerings that aim to serve marginalized and underserved communities that it says have been historically excluded from traditional financial institutions. For Walsh, that remains important.

“We believe we’re on the cusp of creating what will be an iconic brand that’s doing good in the world,” he said. “I want to be like the ‘Patagonia of banking,’ like where people feel really good about the company and what we’re doing and the impact we’re having on people’s lives.”

Varo Bank competes with a growing number of all-digital banks operating in the U.S., including Chime, Current, N26, Level, Step, Moven, Empower Finance, Dave, GoBank, Aspiration, Stash, Zero and others.

Like many other fintechs, Varo saw a pandemic-related boost in business.

“It’s been a time when many re-evaluated their banking relationships and decided to switch to a digital bank that offers far better value and more convenience than a traditional bank,” Walsh said.

David Craver, portfolio manager at Lone Pine Capital, said of his new investment: “What the Varo team has been able to achieve in such a short time in the market is truly remarkable. This is a group of trailblazers who are well on their way to building one of America’s next generation of iconic companies.”

Warburg Pincus’ Todd Schell and Varo investor said from day one, his firm was aligned with Walsh’s view that the bank charter was fundamental to a long term sustainable business model.

“In Varo we saw the opportunity to radically redefine a cost structure, introduce new products across a wide variety of categories, and uniquely solve use cases which have historically been out of scope,” Schell wrote via email. “Varo today has all of the pieces to this puzzle, including a next generation banking technology stack, the license to operate and fully derive the benefits of it, and the capital to scale. Varo already serves millions of Americans, but we believe it has the potential to reinvent financial services for tens of millions of people around the world.”

Airplanes and drones today, regardless of size or fuel type, all face the same limitation: eventually they have to land.

Skydweller Aero, the U.S.-Spanish aerospace startup, wants to break free from that constraint by developing an autonomous solar-powered aircraft it says will eventually be capable of perpetual flight.

Their pitch, which helped the company raise $32 million in a Series A, has led to an additional $8 million in oversubscribed funding led by Leonardo S.p.A, Marlinspike Capital and Advection Growth Capital. The company has also entered into a partnership with Palantir Technologies to use its Foundry analytics platform to process information at-scale and onboard the aircraft designed for telecommunications, government operations and emergency services.

“[Palantir is] the best at creating value from your data, whether it’s putting data into their system to create operational insights for how we may fly our aircraft, putting data in to understand the sensing systems that are coming off of our aircraft and what those might provide or to understand what’s coming through the networks in the aircraft,” Skydweller co-founder John Parkes told TechCrunch in a recent interview.

And Skydweller will be generating a lot of data. The company is focused on three data-rich markets: telecommunications, geospatial intelligence and government surveillance. Skydweller plans to use the Foundry platform to help its customers, which includes the government, better understand whatever areas are being monitored.

The Foundry platform will also come in handy for route and mission planning, as Skydweller intends to leverage weather and atmospheric information to ensure the aircraft can efficiently use the sun’s rays to stay in the air.

“What it’s all about is creating a persistent aerial layer or pseudo satellite,” Parkes said. “We’re focused on building a perpetual flight aircraft. The goal is to create a plane that will fly for forever, so long as the sun rises.”

Weather and atmospheric data is especially important, as it will determine, in part, the altitude at which the aircraft flies. While the plane will be able to fly at high altitudes, “the harder problem and the more useful problem,” according to Parkes, is to capture enough energy and use weather planning to stay at lower altitude. Lower altitudes give better internet quality, geospatial data and provide more power for payload, he said.

Skydweller’s tech was born out of the Swiss solar aircraft project dubbed Solar Impulse, which was helmed by Bertrand Piccard and André Borschberg. The project operated for 14 years and invested $190 million into the solar-powered aircraft before the foundation behind it sold the intellectual property to Skydweller in 2019. The Solar Impulse was configured to be piloted, however, so much of the work since then has been to unman the platform and turn it into an ultra-long endurance aircraft, Parkes said.

The aircraft is all-electric, outfitted with 2,200-square-foot solar-panel wings, 600 kilograms of batteries and a hydrogen fuel cell back-up power system. The solar panels aren’t only used to maintain flight; they will also power systems for customers, like a geospatial camera system or payload from a telecom company.

The company’s using standard commercial aviation parts but most of them haven’t been tested beyond a certain number of hours of use — certainly far less than the number of hours Skydweller plans to keep the aircraft in the air. Plus, like other planes built from emerging technologies, there isn’t a full certification framework already established for the vehicle

“You’re into that uncharted territory to break some of those hour paradigms,” he said.

Skydweller launched its flight test campaign in 2020, and has focused on installing and testing the autonomous systems tech since. He added that “in a very short horizon” the company will be test flying the autonomous aircraft, including take-off, full flight and landing, with future milestones focused on completing long-endurance flights. Customers will be able to start licensing the aircraft within a year to 18 months, Parkes estimated.

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PayPal Holdings, the U.S. fintech company, announced an acquisition of Paidy, a Japanese buy now, pay later (BNPL) service platform, for approximately $2.7 billion (300 billion yen), mostly in cash, to enhance its business in Japan.

The transaction completion including the regulatory approval is expected in the fourth quarter of 2021.

After the acquisition, the Japan-based company will continue to operate its existing business and maintain the brand while the leaders, Paidy’s president and CEO Riku Sugie and founder and executive chairman of Paidy Russel Cummer, keep their positions.

Japan is the third largest e-commerce market in the world, and so this is a significant move by PayPal to gain more market share both in the country and the region, specifically in the area of providing deferred payment services as an alternative to credit cards.

PayPal has long played nice with payment cards – users can upload details of their cards to PayPal and use it as a kind of digital wallet to manage how they pay for things online through it – but it got its start actually as a payment platform in itself, where people could pay into and out of PayPal accounts. Paidy is, in that sense, a strengthening of PayPal’s first-party rails, providing a way to ‘own’ that flow of money on its own infrastructure, not involving the card networks.

Paidy is basically a two-sided payments service, acting as a middleman between consumers and merchants in Japan. Using machine learning it determines the creditworthiness of a consumer related to a particular purchase, and then it underwrites those transactions in seconds, guaranteeing payments to merchants. Consumers then make deferred payment to Paidy for those goods.

Paidy’s platform, which offers a monthly payment installment service branded ‘3-Pay’, enables shoppers to make purchases online and then pay for them each month in a consolidated bill at a convenience store or via bank transfer.

“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” said Peter Kenevan, vice president, head of Japan at Paypal.

Paidy has more than 6 million registered users, and the plan is to integrate PayPal and other digital and QR wallets with Paidy Link to connect further online and offline merchants.

In April 2021, the Japan-based company launched Paidy Link, allowing users to link digital wallets with their Payidy account. PayPal was the first digital wallet partner to integrate with Paidy Link.

“PayPal was a founding partner for Paidy Link and we look forward to looking together to create even more value,” Sugie said in a statement.

“Japan has been a vibrant environment for our growth to date and we’re honored to have our team’s hard work and potential recognized by a global leader. Together with Paypal, we will be able to further achieve our mission of taking the hassle out of shopping,” Cummer said.

In Nigeria, there are more than 40 million micro-businesses underserved in some form or another regarding banking services. Although some of these businesses have registered bank accounts, gaps exist in how banks use the data available to serve the needs of each business.

With banks, presenting a series of transactions as statements is all these businesses require. They care less about providing them with insights and growth opportunities around their customers and products.

A fintech startup, Prospa wants to change that and has begun to tap into this market. In March, the company was one of the 10 African startups participating in Y Combinator’s winter batch. A few months past graduation, the startup, combining both worlds of banking and business management tools for micro and small businesses, has closed a $3.8 million pre-seed round.

Prospa was founded by Frederik Obasi, Chioma Ugo and Rodney Jackson-Cole. As a serial entrepreneur running businesses in tech and media, Obasi experienced how tough running operations and banking his business simultaneously was in Nigeria.

Banks only concerned themselves with providing some financial services so people like Obasi had to look for software or personnel to cater to the operational parts of their businesses.

For someone who runs a large business with a considerable influx of cash, it is easy to assign staff or buy software to delegate tasks. But it can be expensive and a daunting task for smaller businesses; that’s why most of them struggle.

Sensing an opportunity, Obasi and his team launched Prospa under the premise that they would cheaply solve the needs of these small business owners in banking and software.

“When I left my last business, I wanted to do something really big and something that I knew the problem inside out. That’s why I started Prospa,” Obasi told TechCrunch over a call. 

The founders built the product between June and September 2019 and went live in October. Since then, the company acquired customers in stealth even when they got into YC. Obasi explains that he wanted Prospa to have organic traction void of the growth driven by hype and media noise.

“We like to think a really long-term game. We really wanted to really test the hypotheses, build an actual business with revenue and understand what we were doing. Then the COVID period came and we started seeing enough traction,” he added.

But when the company began to get some buzz, the typical description people had about Prospa was “a neobank for small businesses.” Over the call, CEO Obasi is quick to dispel that notion. Alongside providing banking services, he says Prospa offers invoicing tools, inventory management, employee and vendor management, an e-commerce store, and payroll features.

“Banking is just a little part of what we do. We know we’re put into the neobank category, but we see our product as 10% banking and 90% software. So the experience is very much different from what you’d get from a neobank and the use case for Prospa users is quite different,” he added.

Prospa focuses on freelancers and entrepreneurs, acting as the “operating system” for their businesses.

Registered businesses on the platform get access to an account number and other features Prospa provides. For unregistered businesses, Prospa takes them through a process of formalizing their business and providing bank accounts. However, in the grand scheme of things, this segment is more of an inroad into an upsell.

Talking on traction, Obasi says the company has tens of thousands of businesses and is growing 35% month-on-month. And from a non-banking perspective, Prospa has managed over 150,000 product catalogs while small businesses have sent out 360,000 invoices on the platform. 

Then pricing depends on the business’ turnover. For instance, a business with a turnover of ₦100,000 (~$200) is not expected to pay Prospa any subscription fee. But businesses with turnovers exceeding ₦100,000 pay fees between ₦3,000 (~$6) and ₦5,000 (~$10) monthly.

This past year, African VC has seen incredible numbers from all corners of the continent at different stages of investment. Prospa’s pre-seed investment, for instance, is the largest round of its kind in Nigeria and sub-Saharan Africa at the moment. In Africa, only Egyptian fintech Telda has raised a larger round.

Obasi believes the company’s understanding of the market and what it wants to achieve was the main reason it could command such a price which, according to him, was almost four times oversubscribed. 

The investors in the round include VCs like Global Founders Capital and Liquid 2 Ventures. Founders of global fintechs like Mercury’s Immad Akhund, Karim Atiyeh of Ramp, and executives from Teachable, Square, Facebook and Nubank also participated in the round.

Seeing the likes of Akhund and Atiyeh on Prospa’s cap table might suggest to some that Prospa was backed because the company is building a replica of those businesses in Nigeria. However, Obasi says while there are similarities, Prospa is not building a product for startups.

“There’s a massive startup ecosystem in the U.S. where you can basically grow a billion-dollar company just serving YC companies. We don’t have that here. We’re really building for the backbone of the economy, which is small and micro-businesses. Speaking to and being able to build relationships with investors, one of the things we made clear is that we’re not an American copycat,” he said when asked if Prospa could be likened with Mercury and other U.S. startup-focused financial product.

Prospa plans to use its new capital to double down and expand with acquisition strategies to get more customers. In addition to that, the company plans to hire more talent, especially in product and engineering.

Intudo Ventures, the “Indonesia-only” investment firm, announced today it has closed its third fund, totaling $115 million. Called Intudo Ventures Fund III, it was raised in less than three months and oversubscribed.

Fund III’s limited partners include Black Kite Investments, the family office of Singaporean businessman Koh Bon Hwee; Wasson Enterprises, the family office of former Walgreens Boots Alliance chief executive officer Greg Wasson; and PIDC, the investment arm of Taiwan-based retail conglomerate Uni-President Enterprises Corp. Other LPs include more than 30 Indonesian families and their conglomerates; over 20 leading global funds and managing partners; and more than 10 founders of tech unicorns.

Intudo founding partners Patrick Yip and Eddy Chan launched the firm in June 2017 as the first Indonesia-only venture capital firm, with a debut fund of $10 million. At first, many people were dubious that a country-specific fund focused on early-stage Indonesian companies would take off, especially since Yip and Chan wanted to build a small portfolio and work closely with startups.

Then in 2019, Intudo closed its $50 million second fund with LPs including Founders Fund, which Chan said helped validate its mission. Portfolio companies from its first two funds include Pintu, TaniHub Group and Gredu.

At the beginning, “when we said we were going to raise $10 million, we got laughed out of the room by many managers, but four years into it, we’re running roughly $200 million dollars,” he told TechCrunch. “It shows that for the right markets, hyperlocal is the way to go.”

For its third fund, Intudo intends to invest in about 12 to 14 startups, in sectors like agriculture, B2B and enterprise, education, finance and insurance, healthcare and logistics. Initial check sizes will range from $1 million to $10 million. Leading early-stage and Series A rounds will continue to be Intudo’s core focus, but it also plans to invest in Series B and C rounds for companies from its first two funds.

Unlike many funds that have a handful of anchor investors, all of Intudo’s limited partners are capped at 10% of the total fund size so it can maintain its independent investment thesis and ensure all LPs are treated equally.

“I think 10% is a nice number, where it signals to the founder that we are doing what’s best for their company and not for one special interest group,” said Chan.

The firm will look for companies with competitive moats, like strong intellectual property or deep tech. It also looks for companies that operate in heavily-regulated sectors that are difficult for competitors to enter.

Chan pointed to crypto-exchange Pintu as a good example of Intudo’s investment thesis.

“Everyone was like, you invested in this because it’s trendy, but you have to understand that we met the founder when Bitcoin had dropped down to $6,000. When we gave him the term sheet, six months later in March 2019, Bitcoin was at $3,000,” he said. “The moral of the story is we knew the founder was legit and we were able to pick up all the best talent because you can’t go to a lot of major unicorns to work on crypto.”

Many of Intudo’s portfolio founders are pulkam kampung, or Indonesians who have studied and worked overseas, but returned to launch companies, and it runs a program called Pulkam S.E.A. Turtle Fellowship to mentor aspiring founders. One-third of the deals from Intudo’s first two funds were sourced from universities and the tech community in the United States.

Intudo works closely with founders after signing checks. For example, all of its companies have made a commercial deal sourced through the firm’s network before receiving an investment. Its country-specific approach is also an advantage during the pandemic, because Intudo can continue to hold in-person meetings with founders on an almost weekly basis.

“The founder community has obviously gone through a tough time this year and last year due to COVID,” said Yip. “A lot of these founders needed to make course adjustments and corrections to their business plans. I think our role as an in-market, involved investor has been even more enhanced. A lot of the companies that have gone under, they did not have an in-country partner from the get-go.”

He added, “I think our involved approach and having a concentrated portfolio is something that is appreciated by the founder community as well, so that’s definitely something we intend to rinse and repeat going into Fund III.”

07

Four months after its last funding announcement, Singapore-based e-commerce aggregator Rainforest has closed a $20 million pre-Series A round led by Monk’s Hill Ventures. Other participants included January Capital, Crossbeam Venture Partners, Amasia and Lo & Behold Group, along with returning investors Nordstar and Insignia Venture Partners.

Rainforest announced in May that it had raised $6.55 million in equity and a $30 million debt facility to fund acquisitions. The company says its latest raise means it now has more than $50 million to spend on acquiring e-commerce brands.

Founded by former Carousell and Fave executives, Rainforest buys mostly Asia-based Amazon brands and wants to become the e-commerce version of consumer goods conglomerate Newell Brands.

Co-founder and chief executive officer J.J. Chai told TechCrunch in an email that Rainforest raised funding again because it’s doubled its portfolio since the last round and also has “a number of sizable acquisitions in the pipeline.” The company originally intended to raise about $8 million to $12 million to add to its seed round, but increased that amount to $20 million because of investor interest, he added. In addition to brand acquisitions, the funding will also be used on hiring and building its tech infrastructure.

Chai said Rainforest raised only equity this time because it hasn’t finished using the debt facility it got from Accial earlier this year.

Since launching in January 2021, Rainforest has acquired six brands, including one from China for $3.6 million, marking its first foray into the country, and plans to triple its brand portfolio by the end of this year. After buying brands, Rainforest scales them up through inventory management, cost optimization and expansions into new marketplaces and distribution channel. The company claims its portfolio brands have seen over 50% improvement in annual growth rates after their acquisitions.

Rainforest also announced it has hired Yev Ivanko, previously co-founder and CEO at NimbleSeller, as its vice president of acquisitions, and Christine Ng, who has worked in marketing and branding at Sephora, ShopStyle, Luxola and Shopbop, as its new vice president of brands.

Marshmallow — a U.K.-based car insurance provider that has made a name for itself in the market by providing a new approach to car insurance aimed at using a wider set of data points and clever algorithms to net a more diverse set of customers and provide more competitive rates — is announcing a milestone today in its life as a startup, as well as in the bigger U.K. tech world.

The London company — co-founded by identical twins Oliver and Alexander Kent-Braham and David Goaté — has raised $85 million in a new round of funding. The Series B valuation is significant on two counts: it catapults Marshmallow to a “unicorn” valuation above $1 billion — specifically, $1.25 billion; and Marshmallow itself becomes one of a very small group of U.K. startups founded by Black people — Oliver and Alexander — to reach that figure.

(To be clear, Marshmallow describes itself as “the first UK unicorn to be founded by individuals that are Black or have Black heritage”, although I can think of at least one that preceded it: WorldRemit, which last month rebranded to Zepz, and is currently valued at $5 billion; co-founder and chairman Ismail Ahmed has been described as the most influential Black Briton.)

Regardless of whether Marshmallow is the first or one of the first, given the dearth of diversity in the U.K. technology industry, in particular in the upper ranks of it, it’s a notable detail worth pointing out, even as I hope that one day it will be less of a rarity.

Meanwhile, Marshmallow’s novel, big-data approach and successful traction in the market speak for themselves. When we covered the company’s most recent funding round before this — a $30 million raise in November 2020 — the startup was valued at $310 million. Now less than a year later, Marshmallow’s valuation has nearly quadrupled, and it has passed 100,000 policies sold in its home country, growing 100% over the last six months.

The plan now, Oliver told me in an interview, will be to deepen its relationships with customers, in part by providing more engagement to make them better drivers, but also potentially selling more services to them, too.

In this, the startup will be tapping into a new approach that other insurtech startups are taking as they rethink traditional insurance models, much like YuLife is positioning its life insurance products within a bigger wellness and personal improvement business. Currently, the average age of Marshmallow’s customers is 20 to 40, Oliver said — and there are some early thoughts of launching new products aimed at even younger users. That means there is long-term value in improving loyalty and keeping those customers for many years to come.

Alongside that, Marshmallow will also use the funding to inch closer to its plan to expand to markets outside of the U.K. — a strategy that has been in the works for a while. Marshmallow talked up international expansion in its last round but has yet to announce which markets it will seek to tackle first.

Insurance — and in particular insurance startups — are often thought of together with fintech startups, not least because the two industries have a lot in common: they both operate in areas of assessing and mitigating risk and fraud; they are in many cases discretionary investments on the part of the customers; and they are both highly regulated and require watertight data protection for their users.

Perhaps because so much of the hard work is the same for both, it’s not uncommon to see services built to serve both sectors (FintechOS and Shift Technology being two examples), for fintech companies to dabble in insurance services, and so on.

But in reality, insurance — and specifically car insurance — has seen a massive impact from COVID-19 unique to that industry. Separate reports from EY and the Association of British Insurers noted that 2020 actually saw a lift for many car insurance companies: lockdowns meant that fewer people were driving, and therefore fewer were getting into accidents and making fewer claims on policies they took out before the pandemic.

2021, however, has been a different story: new pricing rules being put into place will likely see a number of providers tip into the red for the year. And the Chartered Insurance Institute points out that it will also be worth watching to see how the low usage of cars in one year will impact use going forward: some car owners, especially in urban areas where keeping a car is expensive, will inevitably start to question whether they need to own and insure a car at all.

All of this, ironically, actually plays into the hand of a company like Marshmallow, which is providing a more flexible approach to customers who might otherwise be rejected by more traditional companies, or might be priced out of offerings from them. Interestingly, while neobanks have definitely spurred more traditional institutions to try to update their products to compete, the same hasn’t really happened in insurance — not yet, at least.

“We started with the idea of the power of data and using a wider range of resources [than incumbents], and using that in our pricing led us to be able to offer better rates to more people,” Oliver said, but that hasn’t led to Marshmallow seeing sharper competition from older incumbents. “They are big companies and stuck in their ways. These companies have been around for decades, some for centuries. Change is not happening quickly.”

That leaves a big opportunity for companies like Marshmallow and other newer players like Lemonade, Hippo and Jerry (not an insurance startup per se but also dabbling in the space), and a big opening for investors to back new ideas in an industry estimated to be worth $5 trillion.

“The traction the team has achieved demonstrates the demand for a new kind of insurance provider, one that focuses more on consumer experience and uses the latest technology and data to give fair prices,” said Eileen Burbidge, a partner at Passion Capital, in a statement. “We’ve been proud to support the team’s ambitions since the start, and now look forward to its next chapter in Europe as it continues its mission to change the industry for the better.” Alongside Passion Capital, Investec and Scor also invested in this round. A full list of backers was not disclosed.

We have been raised to believe in recycling, but it has mostly been a sham — only 9% of all plastic waste produced in 2018 was recycled. The beauty industry produces over 120 billion units of packaging every year, little of which is recycled. Globally, an estimated 92 million tons of textile waste ends up in landfills.

Reducing waste is key to meeting environmental milestones, and some retail firms have narrowed in on a unique approach to minimize what their customers throw away: personalization. Accurate personalization can guide consumers to the right products, reducing waste while increasing conversion and loyalty.

For big brands and retailers, personalization is expected to be the top category for tech investment this year. Moreover, personalization holds high appeal, with 80% of survey respondents indicating they are more likely to do business with a company if it offers personalized experiences and 90% indicating that they find personalization appealing, according to a survey by Epsilon.

Startups that deliver sustainable personalization solutions that also improve business for retailers and brands fall into three categories:

AR virtual try-on with shade matching

Faces are easy to map, since it’s not difficult to virtually place a lipstick color on a face, but using AR and AI to recommend skin-tone-matching makeup products has been challenging for many AR virtual try-on companies. “I’ve been searching for an intuitive foundation-shade-finder tool since launching Cult Beauty in 2008, and nothing has lived up to the experience of having a professional match you in daylight until I discovered MIME,” says Alexia Inge, founder of Cult Beauty. “There are so many variables like light, skin tones, prevalent undertones, device, screen, OS, formula density, formula oxidation, as well as preferences for coverage levels, finish, brand and skin type,” she says.

MIME founder and CEO Christopher Merkle said, “Virtual try-on has exploded in the past few years, but for color cosmetics, the technology doesn’t help solve the primary customer pain point: shade matching. From day one, I decided to focus our company’s R&D efforts exclusively on color accuracy. I want to make sure that when the consumer receives their foundation or concealer in the mail, it’s the perfect shade once applied to their skin.”

MIME’s Shade Finder AI allows consumers to take a photo of themselves, answer a few questions, then get matched with a makeup color that pairs with their skin tone. MIME helps retailers and brands increase their online and in-store purchase conversion by up to five times. More than 22% of beauty returns are due to poor customer color purchases, but Merkle says MIME can get returns as low as 0.1%.