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Startups Weekly: The world is eating tech

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You could almost hear the internet cracking apart this week as international businesses pulled away from Hong Kong and the US considered a ban on TikTok. Software can no longer eat the entire world like it had attempted last decade. Startups across tech-focused industries face a new reality, where local markets and efforts are more protected and supported by national governments. Every company now has a smaller total addressable market, whether or not it succeeds in it.

Facebook, for example, appears to be getting an influx of creators who are worried about losing TikTok audiences, as Connie Loizos investigated this week. This might mean more users, engagement and ultimately revenue for many consumer startups, and any other companies that rely on paid marketing through Facebook’s valuable channels. But it means fewer platforms to diversify to, in case you don’t want to rely on Facebook so much for your business.

As trade wars look more and more like cold wars, it also means that Facebook itself will have a more limited audience than it once hoped to offer its own advertisers. After deciding to reject requests from Hong Kong-based Chinese law enforcement, it seems to be on the path to getting blocked in Hong Kong like it is on the mainland. But as with other tech companies, it doesn’t really have a choice — the Chinese government has pushed through legal changes in the city that allow it to arrest anyone in the world if it claims they are organizing against it. Compliance with China would bring on government intervention in the US and beyond, among other reasons why doing so is a non-starter. 

This also explains why TikTok itself already pulled out of Hong Kong, despite being owned by mainland China-based Bytedance. The company is still reeling from getting banned in India last week and this maneuver is trying to the subsidiary look more independent. Given that China’s own laws allow its government to access and control private companies, expect many to find that an empty gesture.

Startups should plan for things to get harder in general. See: the next item below.

(Photo by Alex Wong/Getty Images)

Student visas have become the next Trump immigration target

International students will not be allowed to stay enrolled at US universities that offer only remote classes this coming academic year, the Trump administration decided this past week. As Natasha Mascarenhas and Zack Whittaker explore, many universities are attempting a hybrid approach that tries to allow some in-person teaching without creating a community health problem.

Without this type of approach, many students could lose their visas. Here’s our resident immigration law expert, Sophie Alcorn, with more details on Extra Crunch:

International students have been allowed to take online classes during the spring and summer due to the COVID-19 crisis, but that will end this fall. The new order will force many international students at schools that are only offering remote online classes to find an “immigration plan B” or depart the U.S. before the fall term to avoid being deported.

At many top universities, international students make up more than 20% of the student body. According to NAFSA, international students contributed $41 billion to the U.S. economy and supported or created 458,000 jobs during the 2018-2019 academic year. Apparently, the current administration is continuing to “throw out the baby with the bathwater” when it comes to immigration.

Universities are scrambling as they struggle with this newfound untenable bind. Do they stay online only to keep their students safe and force their international students to leave their homes in this country? Or do they reopen to save their students from deportation, but put their communities’ health at risk?

For students, it means finding another school, scrambling to figure out a way to depart the States (when some home countries will not even allow them to return), or figuring out an “immigration plan B.”

Who knows how many startups will never exist because the right people didn’t happen to be at the right place at the right time together? What everyone does know is that remote-first is here to stay.

No Code goes global

A few tech trends seem unstoppable despite any geopolitics, and one seems to be the universal human goal of making enterprise software suck less. (Okay, nearly universal.) Alex Nichols and Jesse Wedler of CapitalG explain why now is the time for no code software and what the impact will bel, in a very popular article for Extra Crunch this week. Here’s their setup:

First, siloed cloud apps are sprawling out of control. As workflows span an increasing number of tools, they are arguably getting more manual. Business users have been forced to map workflows to the constraints of their software, but it should be the other way around. They need a way to combat this fragmentation with the power to build integrations, automations and applications that naturally align with their optimal workflows.

Second, architecturally, the ubiquity of cloud and APIs enable “modular” software that can be created, connected and deployed quickly at little cost composed of building blocks for specific functions (such as Stripe for payments or Plaid for data connectivity). Both third-party API services and legacy systems leveraging API gateways are dramatically simplifying connectivity. As a result, it’s easier than ever to build complex applications using pre-assembled building blocks. For example, a simple loan approval process could be built in minutes using third-party optical character recognition (a technology to convert images into structured data), connecting to credit bureaus and integrating with internal services all via APIs. This modularity of best-of-breed tools is a game changer for software productivity and a key enabler for no code.

Finally, business leaders are pushing CIOs to evolve their approach to software development to facilitate digital transformation. In prior generations, many CIOs believed that their businesses needed to develop and own the source code for all critical applications. Today, with IT teams severely understaffed and unable to keep up with business needs, CIOs are forced to find alternatives. Driven by the urgent business need and assuaged by the security and reliability of modern cloud architecture, more CIOs have begun considering no code alternatives, which allow source code to be built and hosted in proprietary platforms.

Photo: Jason Alden/Bloomberg

Palantir has finally filed to go public

It’s 16 years old, worth $26 billion and widely used by private and public entities of all types around the world, but this employer of thousands is counted as a startup tech unicorn, because, well, it was one of the pioneers of growing big, raising bigger, and staying private longer. Aileen Lee even mentioned Palantir as one of the 39 examples that helped inspire the “unicorn” term back in 2013. Now the secretive and sometimes controversial data technology provider is finally going to have its big liquidity event — and is filing confidentially to IPO, which means the finances are still staying pretty secret.

Alex Wilhelm went ahead and pieced together its funding history for Extra Crunch ahead of the action, and concluded that “Palantir seems like the Platonic ideal of a unicorn. It’s older than you’d think, has a history of being hyped, its valuation has stretched far beyond the point where companies used to go public, and it appears to be only recently growing into its valuation.”

It also appears to be one of the unicorns that has seen a lot of upside lately. It has been in the headlines recently for cutting big-data deals with governments for pandemic work, on top of a long-standing relationship with the US military and other arms of the government. As with Lemonade, Accolade and a range of other IPOing tech companies that we have covered in recent weeks, it is presumably in a positive business cycle and primed to take advantage of an already receptive market.

(Photo by Kimberly White/Getty Images for TechCrunch)

Meaningful change from BLM

In an investor survey for Extra Crunch this week, Megan Rose Dickey checked in with eight Black investors about what they are investing in, in the middle of what feels like a new focus on making the tech industry more representative of the country and the world. Here’s how Arlan Hamilton of Backstage Capital responded when Megan asked what meaningful change might come from the recent heightened attention on the Black Lives Matter movement.

I happen to be on the more optimistic side of things. I’m not at a hundred percent optimistic, but I’m close to that. I think that there’s an undeniable unflinching resolve right now. I think that if we were to go back to status quo, I would be incredibly surprised. I guess I would not be shocked, unfortunately, but I would be surprised. It would give me pause about the effectiveness of any of the work that we do if this moment fizzles out and doesn’t create change. I do think that there is going to be a shift. I can already feel it. I know that more people who are representative of this country are going to be writing checks, whether through being hired, or taken through the ranks, or starting their own funds, and our own funds. I think there’s more and more capital that’s going to flow to underrepresented founders. That alone, I think, will be a huge shift.

Around TechCrunch

Extra Crunch support expands into Argentina, Brazil and Mexico

Five reasons to attend TC Early Stage online

Hear from James Alonso and Adam Zagaris how to draw up your first contracts at Early Stage

Hear how to manage your enterprise infrastructure from Sam Pullara at TechCrunch Early Stage

Kerry Washington is coming to Disrupt 2020

Amazon’s Alexa heads Toni Reid and Rohit Prasad are coming to Disrupt

Ade Ajao, Maryanna Saenko, Charles Hudson, Ulili Onovakpuri and Melissa Bradley are coming to Disrupt

Minted’s Mariam Naficy will join us at TechCrunch Early Stage

Across the week

TechCrunch

14 VCs discuss COVID-19 and London’s future as a tech hub

Societal upheaval during the COVID-19 pandemic underscores need for new AI data regulations

PC shipments rebound slightly following COVID-19-fueled decline

Here’s a list of tech companies that the SBA says took PPP money

Equity Monday: Uber-Postmates is announced, three funding rounds and narrative construction

Regulatory roadblocks are holding back Colombia’s tech and transportation industries

Extra Crunch

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings

Four views: Is edtech changing how we learn?

VCs are cutting checks remotely, but deal volume could be slowing

GGV’s Jeff Richards: ‘There is a level of resiliency in Silicon Valley that we did not have 10 years ago’

Logistics are key as NYC startup prepares to reopen office

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

We wound up having more to talk about than we had time for but we packed as much as we could into 34 minutes. So, climb aboard with DannyNatasha and myself for another episode of Equity.

Before we get into topics, a reminder that if you are signing up for Extra Crunch and want to save some money, the code “equity” is your friend. Alright, let’s get into it:

Whew! Past all that we had some fun, and, hopefully, were of some use. Hugs and chat Monday!

Equity drops every Monday at 7:00 a.m. PT and Friday at 6:00 a.m. PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Horizon Quantum raises $3.23M for its quantum software development tools

Horizon Quantum is part of a new crop of startups that focus on building new tools for building software for quantum computers. The Singapore-based company, which is hardware-agnostic but also launched a close partnership with Rigetti Computing in 2018, today announced that it has raised a $3.23 million funding round led by Sequoia Capital India. Previous investors SGInnovate, Abies Ventures, DCVC, Qubit Protocol, Summer Capital and Posa CV also participated.

At its core, Horizon Quantum aims to democratize quantum development. Because there is very little about quantum computing that is intuitive, the company argues, it will take a new set of tools to help today’s developers tackle quantum. What makes Horizon unique is that it takes conventional source code and then automatically analyzes that to figure out where a quantum computer could speed up an algorithm. Right now, the company can identify potential speedups in code written for Matlab and Octave.

“The conventional approach to developing quantum applications is to explicitly specify the individual steps of a quantum algorithm, or to use a library where such explicit steps are specified. What makes our approach unique is that we construct quantum algorithms directly from conventional source code, automatically identifying places where it can be sped up,” explained Si-Hui Tan, the chief science officer at Horizon Quantum. “Everything that relates to quantum mechanics happens under-the-hood and on-the-fly in our compiler. This automation is what alleviates the need for any quantum knowledge. All our users have to do is to provide their program in a conventional programming language.”

Horizon Quantum’s Joe Fitzsimons (CEO) and Si-Hui Tan (CSO).

At the same time, the company’s tools also make life for experienced quantum software developers easier by giving them the tools to write more succinct code that is also automatically optimized for the underlying quantum processors.

“We’re building a compiler that can go all the way from conventional, classical, code down to the control signals sent to the quantum hardware,” Quantum Horizon CEO Joe Fitzsimons told me in an email. “We’re still building, and we have a lot still to do, but we’ve demonstrated key parts of the technology, from identifying speedups in classical code down to characterising and mitigating errors in quantum processors. Our hope is that it will make quantum computing more easily accessible for the millions of software developers out there, and will allow us to leverage quantum computing in new domains (we specifically think about domains like geophysics for the energy sector and computational fluid dynamics for aerospace and automotive sectors).”

The company says it will use the new funding to help bring its technology to market and engage with its early customers.

Spike raises $8 million to make your email look like a chat app

Asynchronous chat apps like Slack have done their best to kill email, but maybe the key to chat replacing email is just making email look like chat? That’s the idea of Spike, a productivity startup that has built an email app that organizes emails into chat bubbles with an interface that encourages users to keep it short and simple.

Spike’s software began with a focus solely on re-skinning the email experience, but today they’re also launching support for collaborative notes and tasks into their interface as they look to provide a cohesive solution for productivity. The company is fitting an awful lot of functionality into one window, but they hope that streamlining these apps together can leave users spending less time tabbing through separate windows and more time getting stuff done.

“Email is a collection of your tasks, so why should it be separated from where your other tasks are?” asks CEO Dvir Ben-Aroya.

The new functionality widens the ambitions of the software but also refocuses the app on a more complete business use case. Ben-Aroya admits that the company hasn’t pushed monetization very hard in the past, instead looking to scale up its base of free users in an effort to eventually scale up inside organizations. As the app looks to bring small businesses and larger enterprises onboard, the app is keeping its free tier, but to get past limits on message history and note/task creation users are going to have to upgrade to a $7.99 per month per user plan ($5.99 per month when billed annually).

Alongside its product news, the startup also shared today that it has raised $8 million in a Series A round led by Insight Partners . Wix, NFX and Koa Labs also participated in the round. The company plans to use the cash to aggressively scale hiring and double its team this year.

“[W]e see a massive addressable market for centralized communication hubs to connect disparate messaging channels,” Insight Partners VP Daniel Aronovitz said in a statement. “The current climate and associated macro-tailwinds behind remote teamwork have only strengthened our belief that there is a sizable and growing demand for digital collaboration tools.”

The company’s platform is compatible with most email services and the app is available on Android, iOS, Mac and Windows.

Email startups are often privy to some of a user’s most sensitive data and can receive a lot of inquiries regarding privacy. As a result, Ben-Aroya believes his company is far ahead of competitors when it comes to safety. “Unlike many other available email clients, we’re never touching, manipulating, using, reusing or selling any part of the user data,” he says.

Spike has raised $16 million in funding to date.

Singapore-based caregiving startup launches Homage Health for online and home medical consultations

Homage, the Singapore-based startup that matches families and caregivers, has launched a new service that provides home medical visits, telehealth consultations and medication delivery. Called Homage Health, the service was already being developed before the COVID-19 pandemic, but co-founder and CEO Gillian Tee told TechCrunch that its launch was accelerated because many of the company’s caregiving recipients are elderly or have long-term health conditions, and are at higher risk for the disease.

Backed by investors including HealthXCapital, Alternate Ventures and KDV Capital, Homage launched in 2016 with a caregiving program that focuses on people who need long-term assisted living and rehabilitation care. This integrates with Homage Health because the platform’s caregivers, including nurses, are able to provide in-person support for online consultations with doctors and help followup on recommended healthcare regimens.

Before launching Homage Health, the startup worked with healthcare organizations to deliver mobile medical services, including doctor house calls, for its clients, and telehealth consultations as part of its COVID-19 response. Even before the pandemic, however, there was demand because many clients need regular health screenings.

“Particularly with COVID-19, as an essential service, we felt a higher impetus to ensure our care recipients can continue to gain access to in-home and caregiving services,” she said.

“A key example would be where our care recipients can receive speech therapy through teleconsultations,” she added. “For specific hallmark assessment sessions where a therapy care plan is defined, or where subsequent delivery is adjusted due to progressional improvements made, in-person sessions can be conducted, leading to best health, accessibility and cost outcomes.”

Having caregivers, medical sessions and prescriptions records on one platform also makes long-term healthcare management easier. For example, Homage can provide baseline medical assessment reports for medical and care providers.

Homage prescreens doctors before adding them to the platform. All of them are registered with the Singapore Medical Council, have a minimum of five years practicing medicine and receive medical teleconsultation training. The service can be used to diagnose common conditions, like the cold or allergies, or when prescriptions need to be refilled. It can also provide the follow-up consultations needed by people recovering from strokes or with chronic conditions like Parkinson’s disease and hypertension.

Homage Health will expand to include more rehabilitation and therapy categories. Basic teleconsultations have a flat fee of SGD $20, excluding prescriptions and delivery fees. Mobile medical services, which start at SGD $180, include at-home blood tests, home visits by doctors and minor surgery like wound care and drainage.

Steve Case and Clara Sieg on how the COVID-19 crisis differs from the dot-com bust

Steve Case and Clara Sieg of Revolution recently spoke on TechCrunch’s new series, Extra Crunch Live. Throughout the hour-long chat, we touched on numerous subjects, including how diverse founders can take advantage during this downturn and how remote work may lead to growth outside Silicon Valley. The pair have a unique vantage point, with Steve Case, co-founder and former CEO of AOL turned VC, and Clara Sieg, a Stanford-educated VC heading up Revolution’s Silicon Valley office.

Together, Case and Sieg laid out how the current crisis is different from the dot-com bust of the late nineties. Because of the differences, their outlook is bullish on the tech sector’s ability to pull through.

And for everyone who couldn’t join us live, the full video replay is embedded below. (You can get access here if you need it.)

Case said that during the run-up to the dot-com bust, it was a different environment.

“When we got started at AOL, which was back in 1985, the Internet didn’t exist yet,” Case said. “I think 3% of people were online or online an hour a week. And it took us a decade to get going. By the year 2000, which is sort of the peak of AOL’s success, we had about half of all the U.S. internet traffic, and the market value soared. That’s when suddenly, when any company with a dot-com name was getting funded. Many were going public without even having much in the way of revenues. That’s not we’re dealing with now.”

Venture partner Sieg agreed, pointing to the number of funds currently available in the venture capital asset class. Unlike twenty years ago when valuations were based on unsubstantiated future growth, the current crisis happened during a period of steady expansion. Because of this, funds and startups are in a better position to make it to the other side of this pandemic, she said.

Sieg pointed to one of Revolution Venture’s portfolio companies, Mint House, which aims to build a better temporary housing experience for business travelers. The company raised $15 million in May 2019, and according to Sieg, it focused on being capital-efficient from the start instead of chasing growth for its own sake. She said the company went from almost 90% occupancy to zero overnight and yet now, after a slight pivot, it’s back to a 60-65% occupancy rate by moving quickly to providing housing to healthcare workers.

The company’s strong balance sheet gave it room to pivot, she said.

And yet there are challenges. Sieg pointed out that for the first time in Revolution’s history, the firm’s funds are investing without meeting founder teams in person. It’s a longer process than the old way, she said, though noted that it levels the playing field for founders outside of the traditional circle. Investors have more time on their hands now, so she encourages founders to be persistent and keep reaching out for virtual meetings.

“I think it is important to take advantage of this time where you have people sitting around with more availability on their calendars and more willingness to engage,” Sieg said. “The nice thing about removing some of the in-person components is there’s a stronger focus on market opportunity, product and company, and the real metrics that [founders] can show. Removing some of that person-to-person noise and just focusing on the business means that a lot of these biases are going to be overcome.”

The pair said they believe some companies will have a strong tailwind coming out of this crisis. Case and Sieg pointed to trends that are rapidly accelerating: e-commerce, telehealth and direct-to-consumer companies. In this new environment, Case said location will matter more than ever. While he points out there are many smart people in Silicon Valley, there’s a reason why, for example, Monsanto is in St. Louis. “Some of the smartest people around healthtech are in Minneapolis where UnitedHealth is, or Rochester, Minnesota where Mayo is, or with MD Anderson in Texas or in Ohio with Cleveland Clinic or Johns Hopkins in Baltimore.”

“There are also specific categories that resonate now more than ever,” Sieg said. “We’re investors in a company called Bright Cellars that ships wine to your house. Obviously, people are staying at home, and they’re drinking a lot more. And [Bright Cellars] has been positively impacted by [stay-at-home orders] from a revenue perspective. There’s a company like Bloomscape, which is in Detroit, Michigan, and they’ve had their challenges with keeping their supply chain up and running, but they managed to do so. People are finding a lot of comfort in gardening and taking care of plants because it is something that can be done at home and feel like you’re engaged with something that’s alive, and you see the progression when you’re stuck at home.”

Steve Case is looking at founders who are managing today, but also imagining for the future. One example is Clear, he said, which fast-tracked the development of a flight pass for healthcare workers. And now, when people start flying again, the company will return to its strong core business while having additional momentum around this new business that provides passes to hospitals and arenas. This wouldn’t have happened if it was not for this crisis, Case said.

“I think [the COVID-19 crisis] is one of those shake-the-snowglobe moments where things are being reassessed,” Case said, “and one of the areas I think it’s going to accelerate is what I’ve called the ‘third wave of the internet.’”

Case explained he wrote about this new phase a few years ago in his book, aptly titled “The Third Wave: An Entrepreneur’s Vision of the Future.” According to Case’s thesis, the first wave was when AOL and other providers were introducing and onboarding users to the Internet. The second wave was when apps and software could be created using existing infrastructure. And now, according to this thought, the internet is meeting the real world with new solutions. The current crisis is accelerating the development of telehealth, smart cities, and industries in regulated sectors.

“Perseverance is going to matter more,” Case said. “The tough problems don’t lend themselves to overnight successes. It’s going to be a slog, and kind of like AOL of a 10-year in the making overnight success.”

The dot-com bust upended a lot of startups, and the COVID-19 crisis will do the same though with different results.

“The third wave of the Internet is when the Internet meets the real world, Steve Case said. “It’s things like health care, food, smart cities, and many other areas that haven’t changed much in the first and second waves that are going to change a lot in the third wave. We believe it’s going to be a different playbook.”


Vietnamese online pharmaceutical marketplace BuyMed raises $2.5 million

BuyMed, a Vietnamese startup that wants to fix Southeast Asia’s complex pharmaceutical distribution networks, announced today it has raised $2.5 million in pre-Series A funding. Investors include Sequoia Capital India’s Surge early-stage accelerator program, and Genesia Ventures. Returning investor Cocoon Capital also participated.

Founded in 2018, BuyMed operates Thuocsi.vn, a pharmaceutical distribution platform in Vietnam. Over the past 12 months, the company says it has tripled its annual revenue, and now plans to add new product lines, including cosmetics, medical devices, supplements and medical services, with the goal of becoming a “one-stop marketplace” for supplies needed by healthcare providers in Southeast Asia.

BuyMed verifies suppliers on its platform, improving safety and reducing the risk of medications making its way into the grey market (or unofficial distribution channels). The startup currently has 700 verified suppliers, distributors and manufacturers on its platform, who serve over 7,000 healthcare providers.

In a press statement, Genesia Ventures general partner Takahiro Suzuki, said, “There is still a tremendous opportunity for growth and improvement in Vietnam’s pharmaceutical supply chain and we believe that BuyMed’s founders have the experience, execution and operational management necessary to tackle this problem.”

BuyMed Co-founder and CEO Peter Nguyen formerly served as a consultant for companies like Eli Lilly, Roche and Siemens, helping them create more efficient operations and supply chains.

Nguyen told TechCrunch that there are no major multi-brand distributors in Vietnam, so most pharmaceutical manufacturers and brands need to set up their own networks. This means the process of getting medications and other pharmaceutical supplies to healthcare providers is highly-fragmented.

There are roughly 200 domestic manufacturers in Vietnam, in addition to imported brands, and their products are handled by over 3,000 distributors. While about 2% of pharmacies in Vietnam are part of a franchise or chain, the vast majority are independent. This means distributors need to serve over 40,000 independent pharmacies and about 5,000 independent clinics.

Nguyen added that fragmentation is similar in many other Southeast Asian markets, giving BuyMed an opportunity to expand across the region.

Thuocsi.vn’s usage has grown over the last 60 days, as more Vietnamese pharmacies source from online channels. In response to the COVID-19 pandemic, BuyMed has expanded its platform so more of its partners can sell online, and added safety measures like frequent warehouse and office sanitization and a no-contact drop-off and cash collection system.

6 investment trends that could emerge from the COVID-19 pandemic

Rocio Wu
Contributor

Rocio Wu is a venture partner at F-Prime Capital who focuses on early-stage investments in software/applied AI, fintech and frontier tech investments.

While some U.S. investors might have taken comfort from China’s rebound, we still find ourselves in the early innings of this period of uncertainty.

Some epidemiologists have estimated that COVID-19 cases will peak in April, but PitchBook reports that dealmaking was down -26% in March, compared to February’s weekly average. The decline is likely to continue in coming weeks — many of the deals that closed last month were initiated before the pandemic, and there is a lag between when deals are made and when they are announced.

However, there’s still hope. A recent report concluded that because valuations are lower and there’s less competition for deals, “the best-performing vintages tend to be those that invest at the nadir of a downturn and into the early stage of recovery.” There are countless examples from the 2008 recession, including many highly valued VC-backed businesses such as WhatsApp, Venmo, Groupon, Uber, Slack and Square. Other early-stage VCs seem to have arrived at a similar conclusion.

Also, early-stage investing seems more resilient. During the last recession, angel and seed activity increased 34% as interest in the stage boomed during a period of prolonged growth.

Furthermore, there is still capital to be deployed in categories that interested investors before the pandemic, which may set the new order in a post-COVID-19 world. According to data provider Preqin Ltd., VC dry powder rose for a seventh consecutive year to roughly $276 billion in 2019, and another $21 billion were raised last quarter. And looking at the deals on the early-stage side that were made year to date, especially in March, the vertical categories that garnered the most funding were enterprise SaaS, fintech, life sciences, healthcare IT, edtech and cybersecurity.

Image Credits: PitchBook

That said, if VCs have the capital to deploy and are able to overcome the obstacle of “having never met in person,” here are six investment trends that could emerge when the pandemic is over.

1. Future of work: promoting intimacy and trust

Clubhouse voice chat leads a wave of spontaneous social apps

Forget the calendar invite. Just jump into a conversation. That’s the idea powering a fresh batch of social startups poised to take advantage of our cleared schedules amidst quarantine. But they could also change the way we work and socialize long after COVID-19 by bringing the free-flowing, ad-hoc communication of parties and open office plans online. While “Live” has become synonymous with performative streaming, these new apps instead spread the limelight across several users as well as the task, game, or discussion at hand.

The most buzzy of these startups is Clubhouse, an audio-based social network where people can spontaneously jump into voice chat rooms together. You see the unlabeled rooms of all the people you follow, and you can join to talk or just listen along, milling around to find what interests you. High-energy rooms attract crowds while slower ones see participants slip out to join other chat circles.

Clubhouse blew up this weekend on VC Twitter as people scrambled for exclusive invites, humblebragged about their membership, or made fun of everyone’s FOMO. For now, there’s no public app or access. The name Clubhouse perfectly captures how people long to be part of the in-crowd.

Clubhouse was built by Paul Davison, who previously founded serendipitous offline people-meeting location app Highlight and reveal-your-whole-camera-roll app Shorts before his team was acquired by Pinterest in 2016. This year he debuted his Alpha Exploration Co startup studio and launched Talkshow for instantly broadcasting radio-style call-in shows. Spontaneity is the thread that ties Davison’s work together, whether its for making new friends, sharing your life, transmitting your thoughts, or having a discussion.

It’s very early days for Clubhouse. It doesn’t even have a website. There’s no telling exactly what it will be like if or when it officially launches, and Davison and his co-founder Rohan Seth declined to comment. But the positive reception shows a desire for a more immediate, multi-media approach to discussion that updates what Twitter did with text.

Sheltered From Surprise

What quarantine has revealed is that when you separate everyone, spontaneity is a big thing you miss. In your office, that could be having a random watercooler chat with a co-worker or commenting aloud about something funny you found on the internet. At a party, it could be wandering up to chat with group of people because you know one of them or overhear something interesting. That’s lacking while we’re stuck home since we’ve stigmatized randomly phoning a friend, differing to asynchronous text despite its lack of urgency.

Clubhouse founder Paul Davison. Image Credit: JD Lasica

Scheduled Zoom calls, utilitarian Slack threads, and endless email chains don’t capture the thrill of surprise or the joy of conversation that giddily revs up as people riff off each other’s ideas. But smart app developers are also realizing that spontaneity doesn’t mean constantly interrupting people’s life or workflow. They give people the power to decide when they are or aren’t available or signal that they’re not to be disturbed so they’re only thrust into social connection when they want it.

Houseparty chart ranks via AppAnnie

Houseparty embodies this spontaneity. It’s become the breakout hit of quarantine by letting people on a whim join group video chat rooms with friends the second they open the app. It saw 50 million downloads in a month, up 70X over its pre-COVID levels in some places. It’s become the #1 social app in 82 countries including the US, and #1 overall in 16 countries.

Originally built for gaming, Discord lets communities spontaneously connect through persistent video, voice, and chat rooms. It’s seen a 50% increase in US daily voice users with spikes in shelter-in-place early adopter states like California, New York, New Jersey, and Washington. Bunch, for video chat overlayed on mobile gaming, is also climbing the charts and going mainstream with its user base shifting to become majority female as they talk for 1.5 million minutes per day. Both apps make it easy to join up with pals and pick something to play together.

The Impromptu Office

Enterprise video chat tools are adapting to spontaneity as an alternative to heavy-handed, pre-meditated Zoom calls. There’s been a backlash as people realize they don’t get anything done by scheduling back-to-back video chats all day.

  • Loom lets you quickly record and send a video clip to co-workers that they can watch at their leisure, with back-and-forth conversation sped up because videos are uploaded as they’re shot.

  • Around overlays small circular video windows atop your screen so you can instantly communicate with colleagues while most of your desktop stays focused on your actual work.

  • Screen exists as a tiny widget that can launch a collaborative screenshare where everyone gets a cursor to control the shared window so they can improvisationally code, design, write, and annotate.

Screen

  • Pragli is an avatar-based virtual office where you can see if someone’s in a calendar meeting, away, or in flow listening to music so you know when to instantly open a voice or video chat channel together without having to purposefully find a time everyone’s free. But instead of following you home like Slack, Pragli lets you sign in and out of the virtual office to start and end your day.

Raising Our Voice

While visual communication has been the breakout feature of our mobile phones by allowing us to show where we are, shelter-in-place means we don’t have much to show. That’s expanded the opportunity for tools that take a less-is-more approach to spontaneous communication. Whether for remote partying or rapid problem solving, new apps beyond Clubhouse are incorporating voice rather than just video. Voice offers a way to rapidly exchange information and feel present together without dominating our workspace or attention, or forcing people into an uncomfortable spotlight.

High Fidelity is Second Life co-founder Philip Rosedale’s $72 million-funded current startup. After recently pivoting away from building a virtual reality co-working tool, High Fidelity has begun testing a voice and headphones-based online event platform and gathering place. The early beta lets users move their dot around a map and hear the voice of anyone close to them with spatial audio so voices get louder as you get closer to someone, and shift between your ears as you move past them. You can spontaneously approach and depart little clusters of dots to explore different conversations within earshot.

An unofficial mockup of High Fidelity’s early tests. Image Credits: DigitalGlobe (opens in a new window) / Getty Images

High Fidelity is currently using a satellite photo of Burning Man as its test map. It allows DJs to set up in different corners, and listeners to stroll between them or walk off with a friend to chat, similar to the real offline event. Since Burning Man was cancelled this year, High Fidelity could potentially be a candidate for holding the scheduled virtual version the organizers have promised.

Houseparty’s former CEO Ben Rubin and Skype GM of engineering Brian Meek are building a spontaneous teamwork tool called Slashtalk. Rubin sold Houseparty to Fortnite-maker Epic in mid-2019, but the gaming giant largely neglected the app until its recent quarantine-driven success. Rubin left.

His new startup’s site explains that “/talk is an anti-meeting tool for fast, decentralized conversations. We believe most meetings can be eliminated if the right people are connected at the right time to discuss the right topics, for just as long as necessary.” It lets people quickly jump into a voice or video chat to get something sorted without delaying until a calendared collab session.

Slashtalk co-founder Ben Rubin at TechCrunch Disrupt NY 2015

Whether for work or play, these spontaneous apps can conjure times from our more unstructured youth. Whether sifting through the cafeteria or school yard, seeing who else is at the mall, walking through halls of open doors in college dorms, or hanging at the student union or campus square, the pre-adult years offer many opportunities for impromptu social interation.

As we age and move into our separate homes, we literally erect walls that limit our ability to perceive the social cues that signal that someone’s available for unprompted communication. That’s spawned apps like Down To Lunch and Snapchat acquisition Zenly, and Facebook’s upcoming Messenger status feature designed to break through those barriers and make it feel less desperate to ask someone to hang out offline.

But while socializing or collaborating IRL requires transportation logistics and usually a plan, the new social apps discussed here bring us together instantly, thereby eliminating the need to schedule togetherness ahead of time. Gone too are the geographic limits restraining you to connect only with those within a reasonable commute. Digitally, you can pick from your whole network. And quarantines have further opened our options by emptying parts of our calendars.

Absent those frictions, what shines through is our intention. We can connect with who we want and accomplish what we want. Spontaneous apps open the channel so our impulsive human nature can shine through.

Sprout.ai raises $2.5M to speed up insurance claims

Sprout.ai, an insurtech incubated at London’s Imperial College that is applying AI to insurance claims,, has raised $2.5 million in additional seed funding. Leading the round is Amadeus Capital Partners, with participation from Playfair Capital, and Techstars.

Founded in 2018, Sprout.ai has developed AI-based software that it says enables insurance claims to be settled within “just 24 hours”. Specifically, it uses natural language processing and optical character recognition to understand unstructured insurance claim data, and then combines this with real-time external data such as weather, geolocation, business and medication information, to automate claims or escalate them for further human analysis.

“Our mission is to enable insurers to pay out successful claims inside 24 hours,” Sprout.ai co-founder and CEO Niels Thone tells me. “Currently the average claims settlement time in the U.K. is 25 days. This is mainly caused by a lack of information at the start of the claims journey and a lot of manual touch points throughout the journey. This causes two problems: bad customer experiences and high operational costs for claims teams”.

To remedy this, insurance companies can plug their existing systems into Sprout.ai’s “Contextual AI” solution, which provides what Thone says is a much more complete data capture at the start of the claims process, and then is able to automatically validate incoming claims and predict the next necessary steps in the process.

This sees the big bulk of claims sent straight through for processing, resulting in them being settled in record time. “This way claim handlers only have to focus on the really complex claims, where their specialised skill set is actually needed,” says the Sprout.ai CEO.

“The secret lies in accessing the underlying unstructured data, such as pdfs, images, documents, etc.,” he adds. “This is where all the actual ‘data gold’ or, as we call it, ‘data sprouts’ lie, so it’s pertinent that you have the means to extract and structure this data as well as leverage it for further claims verification. Sprout.ai has developed proprietary algorithms in both the OCR and NLP fields to enable very accurate and fast extraction of this underlying data”.

Asked about Sprout.ai’s revenue model, Thone says the insurtech operates via a transactional model, whereby it charges a fee per claim processed. “The fee is volume dependent, which means that the more claims we process for a client, the cheaper the price per claim becomes,” he explains.

Meanwhile, Sprout.ai, which was previously called BlockClaim, says it will use the investment to further build out its data science and engineering team, and expand its sales operations. The U.K. startup is also making plans for U.S. expansion.

Startups Weekly: Where social startups will get funding in the future

[Editor’s note: Want to get this free weekly recap of TechCrunch news that startups can use by emailSubscribe here.] 

While consumer tech has matured as a startup category in recent years, many investors continue to be bullish on specific trends like online gaming, voice, and the unbundling of platforms in favor of focused social networks. That’s the key takeaway from a survey that Josh Constine and Arman Tabatabai did this week with 16 of the most active investors in key social product categories over on Extra Crunch. Here’s an excerpt of the responses, from Olivia Moore and Justine Moore of CRV:

  • “Unbundling of YouTube.” You can build a big company by targeting a vertical within YouTube with a product that has better features and more opportunities for creator monetization. Twitch is a great example of this! We’re also watching early-stage companies like Supergreat (in beauty) and Tingles (ASMR).

  • Voice as a social medium. Voice continues to pick up steam as a broadcast medium via podcasting, but we haven’t seen a lot in social or P2P voice yet. We think a successful platform will leverage the fact that voice content can be created and consumed while doing other things. We’re big fans of companies like TTYL and Drivetime that are making strides here!

  • Flexible digital identities. Gen Zers are online constantly but have different preferences across platforms/friend groups about how they want to “show up” digitally. The rise of “Finsta” accounts is one good example of this. Companies like Facemoji already help users create social content using a curated digital avatar — we’re excited to see what else founders build here!

  • Synchronous, shared mobile experiences. We’re bullish on apps that connect users in real time to have a shared social experience. Most apps now are “single-player,” which creates scroll fatigue. HQ Trivia was an early example more on the entertainment side, while companies like Squad help users browse the internet and watch TikTok together.

Other respondees include: Connie Chan (Andreessen Horowitz). Alexis Ohanian (Initialized Capital), Niko Bonatsos (General Catalyst), Josh Coyne (Kleiner Perkins), Wayne Hu (Signal Fire), Alexia Bonatsos (Dream Machine), Josh Elman (angel investor), Aydin Senkut (Felicis Ventures), James Currier (NFX), Pippa Lamb (Sweet Capital), Christian Dorffer (Sweet Capital), Jim Scheinman (Maven Ventures), Eva Casanova (Day One Ventures) and Dan Ciporin (Canaan).

EC subscribers please note: a second part of this survey will be running this coming week, focused specifically on social investing in the COVID-19 era.

Are VCs investing — or maintaining?

Speaking of financing, who is actually writing checks right at this moment in time?

“I’ve seen a lot of VCs talking about being open for business,” Eniac Ventures founding partner Hadley Harris proclaimed on a fundraising-trend panel this week, “and I’ve been pretty outspoken on Twitter that I think that’s largely bullshit and sends the wrong message to entrepreneurs.” Instead, as Connie Loizos covered for us on TechCrunch, he said he didn’t have time to talk to more founders because he was so busy helping existing portfolio companies.

Not every investor agrees with that viewpoint —  VC Twitter features many an anecdote about fresh companies getting funding. 

Let’s just hope that both things are true, because it is already rough out there. 

Does your startup qualify for a PPP loan? (And should you apply?)

Two debates have been raging around government support for startups. First, the big, messy new Paycheck Protection Program — designed to cover expenses for small businesses — does seem to be somewhat available to startups, based on revisions published by the Small Business Administration late last week. But things get complicated quick depending on your fundraising and cap table, as Jon Shieber covered last weekend for TechCrunch. Venture firms typically have controlling interests in a portfolio of companies that total more than 500 people, so if such a firm also has a controlling interest in your startup, you may not be eligible. Even if the VC stake is under 50%, preferred terms that came with the fundraising may your application afoul of the rules.

To help founders work through their own situations faster, startup lawyer William Carleton wrote a quick guide for Extra Crunch. Here’s where he says you need to start:

Do you have a minority investor which controls protective covenants in your charter, or which controls a board seat afforded certain veto rights on board decisions? If the answer to either fork of that question is “yes,” you almost certainly have confirmed that you will need to amend your charter and/or other governing documents before proceeding with a PPP application.

The other aspect, of course, is whether startups should be applying for this in the first place. Congress broadly intended the money to go towards small to medium sized businesses, most of whom would never be considered for venture. Shieber’s article is full of comments on that topic, if you feel like weighing in….

The commercial real estate comeuppance

If you’re like me, and you’ve started companies in the Bay Area and struggled to find office space you could afford, enjoy this bit of schadenfraude as you plot your remote-first future. Because the commercial real estate industry is facing an existential crisis after many, many years of rent-seeking upon the Silicon Valley tech economy (and everyone else).

Connie explored this exploding topic with a range of startups, investors and CRE agents in a big feature for TechCrunch this week. One analyst “expects the market to come down by ‘at least 10% and probably 20% to 30%’ from where commercial space in San Francisco has priced in several years, which is $88 per square foot, according to CBRE. Driving the expected drop is the 2 million square feet that will come onto the market in the city as soon as it’s possible — space that companies want to get off their books.”

It’s quite possible to imagine even bigger declines, given the broader hits that most any possible tenant is also taking to their budgets. Who knows, maybe this whole process will even help make the Bay Area and other wealthy metros a little more affordable again.

GettyImages 960803498

Edtech gets hot again, according to investors

After lots of money and lots of struggle over the past decade, edtech is suddenly hot again thanks to the pandemic. Natasha Mascaranhas has been covering the trend recently, and dug in this week with a big investor survey on the category for Extra Crunch.

“One investor pivoted from spending a third of their time looking at edtech companies to devoting almost all their time to the sector,” she tells me. “Another, who has been bullish for years on edtech, says its business as usual for them, but that competition may arise. An ed-tech focused fund thinks the sector has been underfunded for a while, so the moment of reckoning has begun.”

Respondents include:

Across the week:

TechCrunch

Economists haven’t thrown out the models yet (but they will)

Five CEOs on their evolution in the femtech space

Equity Monday: Hunting for green shoots amid the startup data

Extra Crunch

How SaaS startups should plan for a turbulent Q2

Fintech’s uneven new reality has helped some startups, harmed others

Fast-changing regulations give virtual care startups a chance to seize the moment

Twilio CEO Jeff Lawson on shifting a 3,000-person company to fully remote

Amid unicorn layoffs, Boston startups reflect on the future

#EquityPod

From Alex:

We started with a look at Clearbanc  and its runway extension not-a-loan program, which may help startups survive that are running low on cash. Natasha covered it for TechCrunch. Most of us know about Clearbanc’s revenue-based financing model; this is a twist. But it’s good to see companies work to adapt their products to help other startups survive.

Next we chatted about a few rounds that Danny covered, namely Sila’s $7.7 million investment to help build technology that could take on the venerable and vulnerable ACH, and Cadence’s $4 million raise to help with securitization. Even better, per Danny, they are both blockchain-using companies. And they are useful! Blockchain, while you were looking elsewhere, has done some cool stuff at last.

Sticking to our fintech theme — the show wound up being super fintech-heavy, which was an accident — we turned to SoFi’s huge $1.2 billion deal to buy Galileo, a Utah-based payments company that helps power a big piece of UK-based fintech. SoFi is going into the B2B fintech world after first attacking the B2C realm; we reckon that if it can pull the move off, other financial technology companies might follow suit.

Tidying up all the fintech stories is this round up from Natasha and Alex, working to figure out who in fintech is doing poorly, who’s hiding for now, and who is crushing it in the new economic reality.

Next we touched on layoffs generally, layoffs at ToastAngelList, and not LinkedIn — for now. Per their plans to not have plans to have layoffs. You figure that out.

And then at the end, we capped with good news from Thrive and Index. We didn’t get to Shippo, sadly. Next time!

Listen to the full thing here!

Commercial real estate could be in trouble — even after this is over

Commercial real estate owners, brokers, and landlords have collectively made many hundreds of billions of dollars a year in recent years as the economy zipped along.

Now, they’re getting clobbered by the pandemic-fueled economic crisis. Worse, their industry may be forever changed by it.

To state the obvious, extracting rent from nearly anyone right now is problematic. According to the National Multifamily Housing Council, just 69% of U.S. households had paid their rent by April 5 compared with the 81% who’d paid by March 5 and the 82% who paid by the same time last year.

That statistic will almost assuredly look worse by May 5, given the soaring numbers of both laid-off and furloughed employees.

On the commercial side, the problem is beginning to look as dire. In addition to the countless small retail and restaurant businesses that may be forced to permanently vacate their commercial spaces because they can no long afford them, a growing number of corporate chains is also beginning to prove unwilling or able to pay their rent.

WeWork, for example, has stopped paying rent at some U.S. locations while it tries to renegotiate leases, says the WSJ, this even as the co-working company continues to charge its own tenants.

Staples, Subway and Mattress Firm have also stopped paying rent as a way to strong-arm building owners into rent reductions, lease amendments and other courses of action designed to offset the losses they are incurring because of the coronavirus.

Ch, ch, ch, changes

The question begged is what happens next. While some may look to muscle their way into distressed assets, it’s very possible that more broadly, the commercial real estate market will never look the same.

For one thing, while small retailers and restaurants melt away, some of their online rivals are beefing up. Amazon, despite no shortage of bad publicity, gains market share by the day. In fact, this week, it again sailed into trillion-dollar territory.

The online streetwear marketplace StockX is also booming, as we reported a few weeks ago. As said its CEO, Scott Cutler, at the time: “[W]e’ve always been a marketplace of scarcity, but now you can’t actually go into a real retail location, so you’re coming to StockX.”

The landscape may change particularly quickly in markets like San Francisco, Chicago, Boston, and New York, where not only is there a density of independent shops and restaurants, but startup employees and other white collar workers are suddenly working from home — and perfecting the art of distributed teamwork.

Consider Nelson Chu, the founder and CEO of Cadence, a seed-stage, 17-person securitization platform startup in New York. After recently landing $4 million in funding, Cadence signed a lease last month with a landlord who has agreed to start charging the outfit only when it is able to move into its new uptown digs.

It’s a good deal for Cadence, which doesn’t have to worry about paying for square footage it can’t use. Nevertheless, Chu notes that being forced to work remotely has awakened him to the possibility of incorporating more remote work into the startup’s processes.

“You always question whether remote work will impact business continuity,” says Chu “But now that we’re forced to do it, we haven’t skipped a beat. There could be something to be said for having less office space and allowing the people who commute from out of state to not have to be in the office every day.”

It’s easy to imagine that, using tools like Slack, Google Sheets, and Zoom, other founders and management teams that hadn’t already joined the telecommuting trend are coming to the same conclusion.

Taking care of business

The possibility isn’t lost on real estate companies.

“Remote work is something we’re thinking a lot about right now,” says Colin Yasukochi, director of research and analysis at the commercial real estate services giant CBRE. “People are right now being forced to do it,” but “I think some will inevitably stick” to working remotely, he says. “The question of how many, and for how long, is unknown.”

Certainly, it’s not the trend CBRE or others in the real estate world were expecting this year. An “outlook” report published by CBRE last November sounded understandably rosy. “Barring any unforeseen risks,” it said at the time, “resilient economic activity, strong property fundamentals, low interest rates and the relative attractiveness of real estate as an asset class” collectively suggested that 2020 would be a “very good year” for commercial real estate.

In the ensuing months, of course, that unforeseen risk has prompted shutdowns that have led to layoffs across nearly every sector of the economy. It has also — by the very nature of it being a viral contagion — made it highly likely that even when people are allowed to re-occupy commercial spaces, they’ll be less enthusiastic about dense workspaces.

This is doubly true if they know they can get their work done outside the office.

It could well lead to reduced demand for office space later on. It could also mean the same amount of space — or perhaps even more —  with reconfigured office layouts. No one yet knows, including commercial estate brokers.

Mark George, a San Jose, Calif.-based broker with the commercial real estate company Cresa, is currently working from home, where he shares an office with his wife, who is also working remotely for the first time. It’s nice to be home with their children, says George, but being housebound makes it harder to get a pulse on industry changes, particular in his industry.

Brokers are “somewhat isolated,” he says. “Touring activity has dried up because we can’t show space. City Hall is closed in every municipality, so you can’t pull permits. The industry is really shut down.”

George said that “deals that were at the finish line probably got signed” before the coronavirus really took hold in the U.S. But the “deals that were close and not quite there? Every deal I’ve seen has been put on ice. Everyone is in a holding pattern.”

A Cresa colleague of George in San Francisco, Brandon Leitner, echoes the sentiment, saying that “things are not moving fast.” Still, Leitner expects the firm — which handles clients as big as Twitter to Series A and even seed-stage companies — will see a deluge of activity once the city’s current stay-in-place mandate is lifted and brokers can start showing properties again.

Specifically, Leitner expects the market to come down by “at least 10% and probably 20% to 30%” from where commercial space in San Francisco has priced in several years, which is $88 per square foot, according to CBRE. Driving the expected drop is the 2 million square feet that will come onto the market in the city as soon as it’s possible — space that companies want to get off their books.

That’s a lot, particularly given that there is roughly 3.2 million square feet of commercial space available already, according to CBRE’s Yasukochi, who adds that a “good amount” came onto the market in the last six months alone.

Say it ain’t so

That’s not great for landlords, who are “hesitant right now to put a new number on the market,” says Leitner.

He offers that they are “realistic” and likely to “make as many concessions as they can” to hang on to and attract new tenants. Of course, there’s only so much they can do. They typically have debt to contend with, meaning that if there’s a sustained downturn, or fewer people return to the office, they will themselves be relying on their relationships with lenders to see them through.

George, the San Jose-based broker, believes lenders will be inclined to help in order to preserve their own investments. The Federal Reserve may also give the banks the ability to defer mortgage payments, which would make it easier for property owners to put off charging rent.

Even still, whether the commercial real estate market comes all the way back after Covid-19 remains to be seen.

“This [pandemic] is something we’ve never experienced before,” notes Yasukochi. He says CBRE’s economists estimate the next two quarters will be “very tough.” At the same time, he says, the market “might see a substantial” uptick in the four quarter.

“It really depends on whether demand bounces back, and whether expansion plans will be put on hold, or permanently [shelved].”

For now, he seems optimistic about a return to business as usual, particularly within his home market of San Francisco.

It “feels like things go wrong really fast in the Bay Area,” says Yasukochi. “But typically, they come back really fast, too.”

No doubt industry players are counting on it.

YC startup Felix wants to replace antibiotics with programmable viruses

Right now the world is at war. But this is no ordinary war. It’s a fight with an organism so small we can only detect it through use of a microscope — and if we don’t stop it, it could kill millions of us in the next several decades. No, I’m not talking about COVID-19, though that organism is the one on everyone’s mind right now. I’m talking about antibiotic-resistant bacteria.

You see, more than 700,000 people died globally from bacterial infections last year — 35,000 of them in the U.S. If we do nothing, that number could grow to 10 million annually by 2050, according to a United Nations report.

The problem? Antibiotic overuse at the doctor’s office or in livestock and farming practices. We used a lot of drugs over time to kill off all the bad bacteria — but it only killed off most, not all, of the bad bacteria. And, as the famous line from Jeff Goldblum in Jurassic Park goes, “life finds a way.”

Enter Felix, a biotech startup in the latest Y Combinator batch that thinks it has a novel approach to keeping bacterial infections at bay – viruses.

Phage killing bacteria in a petri dish

It seems weird in a time of widespread concern over the corona virus to be looking at any virus in a good light but as co-founder Robert McBride explains it, Felix’s key technology allows him to target his virus to specific sites on bacteria. This not only kills off the bad bacteria but can also halt its ability to evolve and once more become resistant.

But the idea to use a virus to kill off bacteria is not necessarily new. Bacteriophages, or viruses that can “infect” bacteria, were first discovered by an English researcher in 1915 and commercialized phage therapy began in the U.S. in the 1940’s through Eli Lilly and Company. Right about then antibiotics came along and Western scientists just never seemed to explore the therapy further.

However, with too few new solutions being offered and the standard drug model not working effectively to combat the situation, McBride believes his company can put phage therapy back at the forefront.

Already Felix has tested its solution on an initial group of 10 people to demonstrate its approach.

Felix researcher helping cystic fibrosis patient Ella Balasa through phage therapy

“We can develop therapies in less time and for less money than traditional antibiotics because we are targeting orphan indications and we already know our therapy can work in humans,” McBride told TechCrunch . “We argue that our approach, which re-sensitizes bacteria to traditional antibiotics could be a first line therapy.”

Felix plans to deploy its treatment for bacterial infections in those suffering from cystic fibrosis first as these patients tend to require a near constant stream of antibiotics to combat lung infections.

The next step will be to conduct a small clinical trial involving 30 people, then, as the scientific research and development model tends to go, a larger human trial before seeking FDA approval. But McBride hopes his viral solution will prove itself out in time to help the coming onslaught of antibiotic resistance.

“We know the antibiotic resistant challenge is large now and is only going to get worse,” McBride said. “We have an elegant technological solution to this challenge and we know our treatment can work. We want to contribute to a future in which these infections do not kill more than 10 million people a year, a future we can get excited about.”

Dahmakan, a Malaysian “full-stack” food delivery startup, raises $18 million Series B

Dahmakan, a full-stack food delivery startup based in Malaysia, announced today that it has closed a $18 million Series B. Investors include Rakuten Capital, White Star Capital, JAFCO Asia and GEC-KIP Fund, along with participation from South Korean food delivery app Woowa Brothers, and returning investors Partech Partners and Y Combinator.

This brings Dahmakan’s total funding to about $28 million. Its previous round of financing was announced last May.

Launched by former executives from FoodPanda, Dahmakan was the first Malaysian startup to participate in Y Combinator’s startup accelerator program. Operational costs for food delivery companies are notoriously high, and eat away at their profitability, but Dahmakan is among several startups that use “cloud” kitchens, located closer to customers, in order to reduce delivery costs.

The foundation of the startup’s full-stack platform is an operating system that controls nearly every step of its operations, from recipe development to last-mile delivery, and its cloud kitchens are part of “satellite” hubs placed around different cities to be closer to customers.

Instead of delivering from restaurants, Dahmakan creates its own meals, offering about 40 options each week from a database of 2,000 dishes. It selects its weekly menu based on customer data, including food preferences and spending habits, along with market research.

Then customers are given a menu and pick from a schedule of delivery times. Other startups trying to make food delivery more efficient in Southeast Asia by using a vertically-integrated model and cloud kitchens include Grain, which s backed by investors including Openspace Ventures, First Gourmet and Singha Ventures.

In a press statement about Dahmakan’s funding, White Star Capital managing partner Eric Martineau-Fortin said “Dahmakan is well-positioned to serve the growing demand for food delivery services in Southeast Asia with its unique, technology-forward approach of taking control of the entire value chain to provide affordable delivery options to SEA’s rising middle class.”

On-demand tutoring app Snapask gets $35 million to expand in Southeast Asia

Snapask, an on-demand tutoring app, announced today that it has raised $35 million in Series B funding. Earmarked for the startup’s expansion in Southeast Asia, the round was led by Asia Partners and Intervest.

Launched in Hong Kong five years ago, Snapask has now raised a total of $50 million and operates in Hong Kong, Taiwan, Malaysia, Indonesia, Thailand, Japan and South Korea. Its other investors have included Kejora Ventures, Ondine Capital and SOSV Chinaccelerator (Snapask participated in its accelerator program).

Founder and CEO Timothy Yu said Snapask will expand into Vietnam and focus on markets in Southeast Asia where there is a high demand for tutoring and other private education services. It will also open a regional headquarter in Singapore and develop video content and analytics products for its platform.

The company now has a total of 3 million students, with 1.3 million who registered over the past twelve months (including a recent surge that Yu attributes to students studying at home after COVID-19 related school cancellations). Over the past year, 100,000 tutors have applied, taking Snapask’s current total to 350,000 applicants.

Yu says that over 2 million questions are asked by students each month on the platform, with each subscriber typically asking about 60 questions a month, during tutoring sessions that last between 15 to 20 minutes. The majority, or about two-thirds, of the questions are about math and science-related topics.

One thing all of Snapask’s markets have in common are highly-competitive public exams to enter top universities, says Yu. The exams have both a positive and negative effect on education, he adds.

“Students have a very clear objective about what topics they need to study, so that is driving a very lucrative market in the tutoring industry. But I think what Snapask focuses on is that exams are important, but you should do it the right way. We’re about self-directed learning. It’s not necessary to go to three-hour classes every day after school. If you need specific help on a question, you can ask for it immediately.”

While at university, Yu worked as a math tutor, and sometimes spent a total of two hours commuting to sessions that lasted the same amount of time. In markets like Malaysia or Indonesia, many educators chose to work in major cities, leaving students in rural areas with less options. The goal of Snapask is to help solve those issues and connect tutors with more students.

Yu says the average time for students to connect with a tutor after asking a question is about 15 to 20 minutes, which it is able to do because of machine learning-based technology that matches them based on educational styles, subject and availability. Snapask’s matching algorithms are also based on how students engage with tutors (for example, if they respond better to concise or longer, more elaborate answers). Students can also pick up to 15 to 20 tutors for their favorites list, who are prioritized when matching.

Yu says Snapask screens tutors by looking at their university transcripts and public exam results. Then they go through a probation period on the platform to assess how they interact with students. The platform also tracks how many messages are sent during a tutoring session and response times to make sure that tutors are explaining students’ questions instead of just giving them the answers.

Tutors can talk to up to 10 students at a time through Snapask’s platform. Yu says Snapask tutors in Hong Kong, Singapore, Japan and South Korea who spend about two hours per day answering questions usually make about $1,200 a month, while those who work about four to five hours a day can make about $4,000 to $5,000 a month. The company uses different pricing models in Southeast Asian markets, and Yu says tutors there can make about 50% to 60% more than they would at traditional tutoring jobs.

Other study apps focused on students some of the same markets as Snapask include ManyTutors and Mathpresso, whose products combine tutoring services with tools that let students upload math questions, which are then scanned with optical character recognition to provide instant answers. Yu says Snapask is focusing on one-on-one tutoring because it wants to differentiate by creating a “holistic experience.”

“A lot of students come to Snapask after using OCR tools, which we know that user surveys, but they can’t get to certain steps. They still need someone to help them understand what is happening,” he says. “So we try not to use technology for every component in teaching, but to make it more efficient and scalable, and we’re creating a holistic experience to differentiate us.”

Created to help employees figure out health benefits, HealthJoy raises $30 million

HealthJoy, a platform designed to make it easier for employees to use their healthcare benefits, has raised $30 million in Series C funding led by Health Velocity Capital. Returning investors also participated, including U.S. Venture Partners, Chicago Ventures, Epic Ventures, Brandon Cruz and Clint Jones. This brings HealthJoy’s total funding so far to $53 million.

By integrating with healthcare service providers and partnering with benefit consultant agencies, HealthJoy simplifies the process of finding and using benefits. Its features include an AI-based virtual assistant and healthcare concierges. The startup says it has a monthly login rate of 33% and that its clients, which now includes 500 employers, see a tenfold increase in the employee use of benefits, including telemedicine.

Since TechCrunch covered HealthJoy’s Series B round last year, the company has launched two new services. One is a price transparency tool called HealthJoy Rewards that allows companies to provide incentives for employees to use more cost-efficient services.

“For example, an MRI in Chicago can vary in price from around $500 for an independent clinic to around $3,500 in a hospital system,” HealthJoy founder and CEO Justin Holland told TechCrunch. “Our rewards platform allows companies to customize the incentive, but we provide nearly 100 recommendations. We’re showing an amazing ROI for companies that have adopted the program since we’re targeting high-cost procedures.”

The second new service is called HealthJoy EAP, an employee assistance program that Holland says is a priority for further development. It gives 24/7 access to short-term counseling, with several sessions available for free.

“Addressing mental heath is of extreme importance for companies in today’s world. Access to traditional counseling is on decline in many rural areas due to lack of access. In cities, costs have risen so many users are priced out of the market,” he says.

The funding will also be used to improve HealthJoy’s virtual assistant, develop new services, integrate with more partners and aggregate data. HealthJoy plans to add 200 employees in its Chicago office during 2021, with the goal of doubling its engineering team. Future plans include working with more small- to medium-sized businesses and a potential partnership to serve Medicare recipients.

Other startups focused on employee benefits include League, Catch and Collective Health. Holland says HealthJoy integrates with, instead of competing with, benefits administration platforms and differentiates by being able to work with any benefits package.

Health Velocity Capital partner Saurabh Bhansali will join HealthJoy’s board of directors. In a press statement, Bhansali said “HealthJoy offers proven technology solutions to help navigate employees through our nation’s complex and costly healthcare system, one that costs US employees over $1.2 trillion each year. Healthjoy has shown that it can deliver substantial cost savings to employers while simplifying the employee healthcare experience.”

Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million

Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.

The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times  published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank  Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.

The Org nabs $8.5M led by Founders Fund to build a global database of company org charts

LinkedIn has cornered the market when it comes to putting your own professional profile online and using it to network for jobs, industry connections and professional development. But when it comes to looking at a chart of the people, and specifically the leadership teams, who make up organizations more holistically, the Microsoft-owned network comes up a little short: you can search by company names, but chances are that you get a list of people based on their connectivity to you, and otherwise in no particular order (including people who may no longer even be at the company). And pointedly, there is little in the way of verification to prove that someone who claims to be working for a company really is.

Now, a startup called The Org is hoping to take on LinkedIn and address that gap with an ambitious idea: to build a database (currently free to use) of organizational charts for every leading company, and potentially any company in the world, and then add on features after that, such as job advertising, for example organizations looking to hire people where there are obvious gaps in their org charts.

With 16,000 companies profiled so far on its platform, a total of 50,000 companies in its database and around 100,000 visitors per month, The Org is announcing $11 million in funding: a Series A of $8.5 million, and a previously unannounced seed round of $2.5 million.

Led by Founders Fund, the Series A also includes participation from Sequoia and Balderton, along with a number of angels. Sequoia is actually a repeat investor: it also led The Org’s $2.5 million seed round, which also had Founders Fund, Kevin Hartz, Elad Gil, Ryan Petersen, and SV Angel in it. Keith Rabois, who is now a partner at Founders Fund but once held the role of VP of business and corporate development at LinkedIn, is also joining the startup’s board of directors.

Co-headquartered in New York and Copenhagen, Denmark, The Org was co-founded by Christian Wylonis (CEO) and Andreas Jarbøl, partly inspired by a piece in online tech publication The Information, which provided an org chart for the top people at Airbnb (currently numbering 90 entries).

“This article went crazy viral,” Wylonis said in an interview. “I would understand why someone would be interested in this outside of Airbnb, but it turned out that people inside the company were fascinated by it, too. I started to think, when you take something like an org chart and made it publicly facing, I think it just becomes interesting.”

So The Org set out to build a bigger business based on the concept.

For now, The Org is aimed at two distinct markets: those outside the company who might most typically be interested in who is working where and doing what — for example, recruiters, those in human resources departments who are using the data to model their own organizational charts, or salespeople; and those inside the company (or again, outside) who are simply interested in seeing who does what.

The Org is aiming to have 100,000 org charts on its platform by the end of the year, with the longer-term goal being to cover 1 million. For now, the focus is on adding companies in the US before expanding to other markets.

But while the idea of building org charts for many companies sounds easy enough, there is also a reason why it hasn’t been done yet: it’s not nearly as simple as it looks. That is one reason why even trying to surmount this issue is of interest to top VCs — particularly those who have worked in startups and fast-growing tech companies themselves.

“Today, information about teams is unstructured, scattered, and unverified, making it hard for employees and recruiters to understand organizational structures,” said Roelof Botha, partner at Sequoia Capital, in a statement.

“Organizational charts were the secret weapon to forging partnerships during my 20 years as an entrepreneur in Silicon Valley and Europe. Yet, they are a carefully guarded secret, which have to be painstakingly put together by hand,” said Lars Fjeldsoe-Nielsen, general partner at Balderton Capital, in a statement. “The Org is surfacing this critical information, improving efficiency from the sales floor to the boardroom.”

“Up-to-date org charts can be useful for everything from recruiting to sales, but they are difficult and time consuming to piece together,” added Rabois in a statement. “The Org is making this valuable information easily accessible in a way we were never able to do at LinkedIn.”

The approach that The Org is taking to building these profiles so far has been a collaborative one. While The Org itself might establish some company names and seed and update them with information from publicly available sources, that approach leaves a lot of gaps.

This is where a crowdsourced, wiki-style approach comes in. As with other company-based networking services such as Slack, users from a particular company can use their work email addresses to sign into that organization’s profile, and from there they can add or modify entries as you might enter data in a wiki — the idea being that multiple people getting involved in the edits helps keep the company’s org chart more accurate.

While The Org’s idea holds a lot of promise and seems to fill a hole that other companies like LinkedIn — or, from another direction, Glassdoor — do not address in their own profiling of companies, I can see some challenges, too, that it might encounter as it grows.

Platforms that provide insights into a company landscape, such as LinkedIn or Glassdoor, are ultimately banked more around individuals and their own representations. That means that by their nature these platforms may not ever provide complete pictures of businesses themselves, just slices of it. The Org, on the other hand, starts from the point of view of presenting the company itself, which means that the resulting gaps that arise might be more apparent if they never get filled in, making The Org potentially less useful as a tool.

Similarly, if these charts are truly often closely guarded by companies (something I don’t doubt is true, since they could pose poaching risks, or copycats in the form of companies attempting to build org structures based on what their more successful competitors are doing), I could see how some companies might start to approach The Org with requests to remove their profiles and corresponding charts.

Wylonis said that “99%” of companies so far have been okay with what The Org is building. “The way that we see it is that transparency is of interest to the people who work there,” he said. “I think that everyone should strive for that. Why block it? The world is changing and if the only way to keep your talent is by hiding your org chart you have other problems at your company.”

He added that so far The Org has not had any official requests, “but we have had informal enquiries about how we get our information. And some companies email us about changes. And when an individual person gets in touch and says, ‘I don’t want to be here,’ we delete that. But it’s only happened a handful of times.” It’s not clear whether that proportion stays the same, or goes up or down, as The Org grows.

In the meantime, the other big question that The Org will grapple with is just how granular should it go?

“I hope that one day we can have an updated and complete org chart for every business, but that might prove difficult,” Wylonis said. Indeed, that could mean mapping out 1 million people at Walmart, for example. “For the biggest companies, it may be that it works to map out the top 500, with the top 30-40 for smaller companies. And people can always go in and make corrections to expand those if they want.”

Voodoo Games thrives by upending conventional product design

Will Robbins
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Will Robbins is an early-stage investor at Contrary.
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Voodoo Games is one of the most interesting startups alive today. In mid-2018, it had 150 million MAUs and raised $200 million from Goldman Sachs, yet I’ve never heard anyone mention the company. That might be normal for an obscure enterprise SaaS play, but Voodoo is consumer-facing through and through.

Quantitative success aside, Voodoo upends much of the conventional thinking about product design and gaming. If it can do it, how can similar strategies apply to other products?

But first, some background: What is Voodoo Games?

Voodoo is best described as a product conglomerate. Take a look at its App Store page. It has dozens of generic-looking apps. The basic playbook is:

  • Quickly build a relatively low-quality, single-purpose game.
  • Make sure one mechanic is really fun. It doesn’t matter if users churn 20 minutes after downloading it.

Oyo’s revenue surged in FY19, but loss widened, too

Budget-lodging startup Oyo reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019, and pledged to cut down on its spending as the India-headquartered startup grows more cautious about its aggressive expansion.

The six-year-old startup’s growing revenue, up from $211 million in financial year ending March 31, 2018, is in line with the company’s ambitions to be in a clear path to profitability this year, said Abhishek Gupta, Global CFO of OYO Hotels & Homes, in a statement.

But the startup’s loss has widened, too. Its consolidated loss increased from 25% in FY18 to 35% in FY19, it said. In India, where Oyo clocked $604 million in revenue in FY19, it was able to reduce its loss to 14% (from 24%) of revenue in FY19 to $83 million.

The startup, which today operates more than 43,000 hotels with over a million rooms in 800 cities in 80 nations, said its expansion to China and other international markets contributed to the loss.

“These markets constituted 36.5% of the global revenues. While consistently improving operating economics in mature markets like India where it’s already seeing an improvement in gross margins, the company is determined to bring in the same fiscal discipline in emerging markets in the coming financial year,” the startup said in a statement.

Oyo has come under scrutiny in recent months for its aggressive expansion in a manner that some analysts have said is not sustainable. The startup, which rebrands and renovates independent budget hotels, has also engaged in sketchy ways to sign up new hotels, as documented by the New York Times earlier this year.

In recent months, Oyo executives have acknowledged that the startup grew too fast and is confronting a number of “teething issues.” Oyo has laid off at least 3,000 employees, mostly in India, in last three months.

Local Indian laws require every startup to disclose their annual financials. Most of them filed their financials in early October.

More to follow shortly…

Instamojo acquires Times Internet’s GetMeAShop to serve more small businesses in India

Instamojo, a Bangalore-based startup that helps merchants and small businesses accept digital payments, establish presence and sell on the web, has acquired Times Internet-owned Gurgaon-based startup GetMeAShop.

The deal is worth $5 million and includes conglomerate Times Internet making an investment in Instamojo, Sampad Swain, co-founder and chief executive of the Bangalore-based startup, told TechCrunch in an interview.

Hundreds of millions of people have come online in India in the last decade thanks to proliferation of low-cost Android smartphones and availability to some of the world’s cheapest mobile data plans. But most small businesses, especially neighbourhood stores and merchants, remain offline.

A wave of startups in the country today are trying to make it easier for these merchants and businesses to come online. GetMeAShop is one such startup. It runs a platform that allows businesses to set up their website, build an online store, and make it easier for merchants or individuals to engage with — and sell to — their customers through social apps such as WhatsApp and Facebook.

For Instamojo, this acquisition is not surprising. The seven-year-old startup began its journey as a payments provider for small businesses. Over the years, it has launched an online store, an app store, and a lending service to serve more needs of a business. “This acquisition will allow us to become a full-fledged operating system for businesses,” said Swain.

Instamojo has amassed 1.2 million merchants on its platform. “It took us seven years to get a million merchants on the platform. Now we are adding more than 2,000 a day. We are on track to hit 2 million merchants by the end of this year,” he said.

More to follow shortly…

Samasource CEO Leila Janah passes away at 37

The startup community has lost another moral leader today.

Leila Janah, a serial entrepreneur who was the CEO and founder of machine learning training data company Samasource, passed away at the age of 37 due to complications from Epithelioid Sarcoma, a form of cancer, according to a statement from the company.

She focused her career on social and ethical entrepreneurship with the goal of ending global poverty, founding three distinct organizations over her career spanning the for-profit and non-profit worlds. She was most well-known for Samasource, which was founded a little more than a decade ago to help machine learning specialists develop better ML models through more complete and ethical training datasets.

Janah and her company were well ahead of their time, as issues related to bias in ML models have become top-of-mind for many product leaders in Silicon Valley today. My TechCrunch colleague Jake Bright had just interviewed Janah a few weeks ago, after Samasource raised more than $15 million in venture capital, according to Crunchbase.

In its statement, the company said:

We are all committed to continuing Leila’s work, and to ensuring her legacy and vision is carried out for years to come. To accomplish this, Wendy Gonzalez, longtime business partner and friend to Leila, will take the helm as interim CEO of Samasource. Previously the organization’s COO, Wendy has spent the past five years working alongside Leila to craft Samasource’s vision and strategy.

In addition to Samasource, Janah founded SF-based Samaschool, a 501(c)(3) nonprofit dedicated to helping low-income workers learn critical freelancing skills by helping them negotiate the changing dynamics in the freelance economy. The organization has built partnerships with groups like Goodwill to empower them to offer additional curricular resources within their own existing programs and initiatives.

Janah also founded LXMI, a skin-care brand that emphasized organic and fair-trade ingredients, with a focus on sourcing from low-income women’s cooperatives in East Africa. Founded three years ago, the company raised a seed round from the likes of NEA, Sherpa, and Reid Hoffman according to Crunchbase.

Across all of her initiatives, Janah consistently put the concerns of under-represented people at the forefront, and designed organizations to empower such people in their daily lives. Her entrepreneurial spirit, commitment, and integrity will be sorely missed in the startup community.

Our editor Josh Constine had this to say of Janah’s impact. “Leila was propulsive. Being around her, you’d swear there were suddenly more hours in the day just based on how much she could accomplish. Yet rather than conjuring that energy through ruthless efficiency, she carried on with grace and boundless empathy. Whether for her closest friends or a village of strangers on the other side of the world, she embraced others’ challenges as her own. Leila turned vulnerability into an advantage, making people feel so comfortable in her presence that they could unwind their personal and professional puzzles. Leila is the kind of founder we need more of, and she’ll remain an example of how to do business with heart.”

Here are all 21 companies from Alchemist Accelerator’s latest batch

We’re down in Sunnyvale, CA today, where Alchemist Accelerator is hosting a demo day for its most recent batch of companies. This is the 23rd class to graduate from Alchemist, with notable alums including LaunchDarkly, MightyHive, Matternet, and Rigetti Computing. As an enterprise accelerator, Alchemist focuses on companies that make their money from other businesses, rather than consumers.

21 companies presented in all, each getting five minutes to explain their mission to a room full of investors, media, and other founders.

Here are our notes on all 21 companies, in the order in which they presented:

i-50: Uses AI to monitor human actions on production lines, using computer vision to look for errors or abnormalities along the way. Founder Albert Kao says that 68% of manufacturing issues are caused by human error. The company currently has 3 paid pilots, totalling $190k in contracts.

Perimeter: A data visualization platform for firefighters and other first responders, allowing them to more quickly input and share information (such as how a fire is spreading) with each other and the public. Projecting $1.7M in revenue within 18 months.

Einsite: Computer vision-based analytics for mining and construction. Sensors and cameras are mounted on heavy machines (like dump trucks and excavators). Footage is analyzed in the cloud, with the data ultimately presented to job site managers to help monitor progress and identify issues. Founder Anirudh Reddy says the company will have $1.2M in bookings and be up and running on 2100 machines this year.

Mall IQ: A location-based marketing/analytics SDK for retail stores and malls to tie into their apps. Co-founder Batu Sat says they’ve built an “accurate and scalable” method of determining a customer’s indoor position without GPS or additional hardware like Bluetooth beacons.

Ipsum Analytics: Machine learning system meant to predict the outcome of a company’s ongoing legal cases by analyzing the relevant historical cases of a given jurisdiction, judge, etc. First target customer is hedge funds, helping them project how legal outcomes will impact the market.

Vincere Health: Works with insurance companies to pay people to stop smoking. They’ve built an app with companion breathalyzer hardware; each time a user checks in with the breathalyzer to prove they’re smoking less, the user gets paid. They’ve raised $400k so far.

Harmonize: A chat bot system for automating HR tasks, built to work with existing platforms like Slack and Microsoft Teams. An employee could, for example, message the bot to request time off — the request is automatically forwarded to their manager, presenting them with one-click approve/deny buttons which handle everything behind the scenes. The company says it currently has 400 paying customers and is seeing $500k in ARR, projecting $2M ARR in 2020.

Coreshell Technologies: Working on a coating for lithium-Ion batteries which the company says makes them 25% cheaper and 50% faster to produce. The company’s co-founder says they have 11 patents filed, with 2 paid agreements signed and 12 more in the pipeline.

in3D: An SDK for 3D body scanning via smartphone, meant to help apps do things like gather body measurements for custom clothing, allow for virtual clothing try-ons, or create accurate digital avatars for games.

Domatic: “Intelligent power” for new building construction. Pushes both data and low-voltage power over a single “Class 2” wire , making it easier/cheaper for builders to make a building “smart”. Co-founder Jim Baldwin helped build Firewire at Apple, and co-founder Gladys Wong was previously a hardware engineer at Cisco.

MeToo Kit: a kit meant to allow victims of sexual assault or rape to gather evidence through an at-home, self-administered process. Co-founder Madison Campbell says that they’ve seen 100k kits ordered by universities, corporations, non-profits, and military organizations. The company garnered significant controversy in September of 2019 after multiple states issued cease-and-desist letters, with Michigan’s Attorney General arguing that such a kit would not be admissible in court. Campbell told Buzzfeed last year that she would “never stop fighting” for the concept.

AiChemist Metal: Building a thin, lightweight battery made of copper and cellulose “nanofibers”. Co-founder Sergey Lopatin says the company’s solution is 2-3x lighter, stronger, and cheaper than alternatives, and that the company is projecting profitability in 2021. Focusing first on batteries for robotics, flexible displays, and electric vehicles.

Delightree: A task management system for franchises, meant to help owners create and audit to-dos across locations. Monitors online customer reviews, automatically generating potential tasks accordingly. In pilot tests with 3 brands with 16 brands on a waitlist, which the company says translates to about $400k in potential ARR.

DigiFabster: A ML-powered “smart quoting” tool for manufacturing shops doing things like CNC machining to make custom parts and components. Currently working with 125 customers, they’re seeing $500k in ARR.

NachoNacho: Helps small/medium businesses monitor and manage software subscriptions their employees sign up for. Issues virtual credit cards which small businesses use to sign up for services; you can place budgets on each card, cancel cards, and quickly determine where your money is going. Launched 9 months ago, NachoNacho says it’s currently working with over 1600 businesses.

Zapiens: a virtual assistant-style tool for sharing knowledge within a company, tied into tools like Slack/Salesforce/Microsoft 365. Answers employee questions, or uses its understanding of each employee’s expertise to find someone within the company who can answer the question.

Onebrief: A tool aiming to make military planning more efficient. Co-founder/Army officer Grant Demaree says that much of the military’s planning is buried in Word/Powerpoint documents, with inefficiencies leading to ballooning team sizes. By modernizing the planning approach with a focus on visualization, automation and data re-usability, he says planning teams could be smaller yet more agile.

Perceive: Spatial analytics for retail stores. Builds a sensor that hooks into existing in-store lighting wiring to create a 3D map of stores, analyzing customer movement/behavior (without face recognition or WiFi/beacon tracking) to identify weak spots in store layout or staffing.

Acoustic Wells: IoT devices for monitoring and controlling production from oil fields. Analyzes sound from pipes “ten thousand feet underground” to regulate how a machine is running, optimizing production while minimizing waste. Charges monthly fee per oil well. Currently has letters of intent to roll out their solution in over 1,000 wells.

SocialGlass: A marketplace for government procurement. Lets governments buy goods/services valued under $10,000 without going through a bidding process, with SocialGlass guaranteeing they’ve found the cheapest price. Currently working with 50+ suppliers offering 10,000 SKUs.

Applied Particle Technology: Continuous, realtime worker health/safety tracking for industrial environments. Working on wireless, wearable monitors that stream environmental data to identify potential exposure risks. Focusing first on mining and metals industries, later moving into construction, firefighting, and utilities environments.

Ophelia Brown’s Blossom Capital raises new $185M European early-stage fund

Blossom Capital, the early-stage VC firm co-founded by ex-Index Ventures and LocalGlobe VC Ophelia Brown, is announcing a second fund, less than 12 months since fund one was closed.

The new fund, which is described as “heavily oversubscribed,” sits at $185 million. That’s up from $85 million first time around.

Blossom’s remit remains broadly the same: to be the lead investor in European tech startups at Series A, along with doing some seed deals, too. In particular, the VC will continue to focus on finance, design, marketplaces, travel, developer-focused tools, infrastructure and “API-first” companies.

Its differentiator is pitched as so-called “high conviction” investing, which sees it back fewer companies by writing larger cheques, along with claiming to have close ties to U.S. top tier investors ready to back portfolios at the next stage.

And whilst a “bridge to the valley” is a well worn claim by multiple European VCs, Blossom’s track record so far bares this is out somewhat, even if it nascent. Of the firm’s portfolio, travel booking platform Duffel has received two follow-on investment rounds led by Benchmark and Index Ventures; cybersecurity automation platform Tines received follow-on investment led by Accel Partners; and payments unicorn Checkout.com is also backed by Insight Partners.

In addition, I understand that about half of Blossom’s LPs are in the U.S., and that all of the firm’s original LPs invested in this second fund, which Brown concedes was a lot easier to raise than the first. That’s presumably down to the up round valuations Blossom is already able to tout.

Citing benchmark data from Cambridge Associates and Preqin, Blossom says it sits in the top 5% of funds of 2018/2019 vintage in the U.S. and EU. Although, less than a year old, I would stress that it is still very early days.

More broadly, Brown and Blossom’s other partners — Imran Gohry, Louise Samet and Mike Hudack — argue that the most successful European companies historically are those that were able to attract U.S. investors but that companies no longer need to relocate to the U.S. to seize the opportunity.

“When we looked at the data it was very clear at the growth stage that, outside of Index and Accel, the most successful European outcomes were driven by the combination of European early-stage investors and top-tier U.S. growth investors,” explained Blossom Capital partner, Imran Ghory, in a statement. “From day one we prioritised building those relationships, both to share knowledge but also provide a bridge for European founders to access the best growth capital as they scale”.

Challenger business bank Qonto raises $115 million round led by Tencent and DST Global

French startup Qonto has raised a $115 million Series C funding round led by Tencent and DST Global. Today’s news comes a few days after another French fintech startup Lydia raised some money from Tencent.

Existing investors Valar and Alven are also participating in today’s funding round. TransferWise co-founder Taavet Hinrikus and Adyen CFO Ingo Uytdehaage are also joining the round. Qonto says that it represents the largest funding round for a French fintech company.

Qonto is a challenger bank, or a neobank, but for B2B use cases. Instead of attracting millions of customers like N26 or Monzo, Qonto is serving small and medium companies as well as freelancers in Europe.

According to the startup, business banking in Europe is broken. The company thinks it can provide a much better user experience with an online- and mobile-first product.

The company has managed to attract 65,000 companies over the past two years and a half. The product is currently live in France, Italy, Spain and Germany. In 2019 alone, Qonto has managed €10 billion in transaction volume.

With today’s funding round, the company plans to double down on its existing markets, develop new features that make the platform works better in each country based on local needs and hire more people. The team should grow from 200 to 300 employees within a year.

Qonto obtained a payment institution license in June 2018 and has developed its own core banking infrastructure. Around 50% of the company’s user base is currently using Qonto’s own core banking system. Others are still relying on a third-party partner.

Moving from one back end to another requires some input from customers, which explains why there are still some customers using the legacy infrastructure. Over the coming months, Qonto plans to launch new payment features that should convince more users to switch to Qonto’s back end.

Even more important, Qonto plans to obtain a credit institution license, which could open up a ton of possibilities when it comes to features and revenue streams. The company says that it should have its new license by the end of the year.

For instance, you could imagine being able to get a credit card, apply for an overdraft and get a small loan with Qonto.

Compared to traditional banks, Qonto lets you open a bank account more easily. After signing up, Qonto offers a modern interface with your activity. You can export your transactions in no time, manage your expenses and get real-time notifications. Qonto also integrates with popular accounting tools.

When it comes to payment methods, Qonto gives you a French IBAN as well as debit cards. You can order physical or virtual cards whenever you want, customize limits and freeze a card. Qonto also supports direct debit and checks. Like many software-as-a-service products, you can also manage multiple user accounts and customize permission levels.

PayU acquires controlling stake in Indian credit business PaySense, to merge it with LazyPay

PayU is acquiring a controlling stake in fintech startup PaySense at a valuation of $185 million and plans to merge it with its credit business LazyPay as the nation’s largest payments processor aggressively expands its financial services offering.

The Prosus-owned payments giant said on Friday that it will pump $200 million — $65 million of which is being immediately invested — into the new enterprise in the form of equity capital over the next two years. PaySense, which employs about 240 people, has served more than 5.5 million consumers to date, a top executive said.

Prior to today’s announcement, PaySense had raised about $25.6 million from Nexus Venture Partners, and Jungle Ventures, among others. PayU became an investor in the five-year-old startup’s Series B financing round in 2018. Regulatory filings show that PaySense was valued at about $48.7 million then.

The merger will help PayU solidify its presence in the credit business and become one of the largest players, said Siddhartha Jajodia, Global Head of Credit at PayU, in an interview with TechCrunch. “It’s the largest merger of its kind in India.” he said. The combined entity is valued at $300 million, he said.

PaySense enables consumers to secure long-term credit for financing their new vehicle purchases and other expenses. Some of its offerings overlap with those of LazyPay, which primarily focuses on providing short-term credit to consumers to facilitate orders on food delivery platforms, e-commerce websites and other services. Its credit ranges between $210 and $7,030.

Cumulatively, the two services have disbursed over $280 million in credit to consumers, said Jajodia. He aims to take this to “a couple of billion dollars” in the next five years.

PaySense’s Prashanth Ranganathan and PayU’s Siddhartha Jajodia pose for a picture

As part of the deal, PaySense and LazyPay will build a common and shared technology infrastructure. But at least for the immediate future, LazyPay and PaySense will continue to be offered as separate services to consumers, explained Prashanth Ranganathan, founder and chief executive of PaySense, in an interview with TechCrunch.

“Overtime as the businesses get closer, we will make a call if a consolidation of brands is required. But for now, we will let consumers direct us,” added Ranganathan, who will serve as the chief executive of the combined entity.

There are about a billion debit cards in circulation in India today, but only about 20 million people have a credit card. (The official government figures show that about 50 million credit cards are active in India, but many individuals tend to have more than one card.)

This has meant that most Indians don’t have a traditional credit score, so they can’t secure loans and a range of other financial services from banks. Scores of startups in India today are attempting to address this opportunity by using other signals and alternative data — such as the kind of a smartphone a person has — to evaluate whether they are worthy of being granted some credit.

Digital lending is a $1 trillion opportunity (PDF) over the four and a half years, according to estimates from Boston Consulting Group.

PayU’s Jajodia said PaySense and LazyPay will likely explore building new offerings such as credit for small and medium businesses. He did not rule out exploring getting a stake in more fintech startups in the future. PayU has already invested north of half a billion dollars in its India business. Last year, it acquired Wibmo for $70 million.

“At PayU, our ambition is to build financial services using data and technology. Our first two legs have been payments [processing] and credit. We will continue to scale both of these businesses. Even this acquisition was about getting new capabilities and a strong management team. If we find more companies with some unique assets, we may look at them,” he said.

PayU leads the payments processing market in India. It competes with Bangalore-based RazorPay. In recent years, RazorPay has expanded to serve small businesses and enterprises. In November, it launched corporate credit cards and other services to strengthen its neo banking play.

Indian tech startups raised a record $14.5B in 2019

Indian tech startups have never had it so good.

Local tech startups in the nation raised $14.5 billion in 2019, beating their previous best of $10.5 billion last year, according to research firm Tracxn .

Tech startups in India this year participated in 1,185 financing rounds — 459 of those were Series A or later rounds — from 817 investors.

Early stage startups — those participating in angel or pre-Series A financing round — raised $6.9 billion this year, easily surpassing last year’s $3.3 billion figure, according to a report by venture debt firm InnoVen Capital.

According to InnoVen’s report, early stage startups that have typically struggled to attract investors saw a 22% year-over-year increase in the number of financing deals they took part in this year. Cumulatively, at $2.6 million, their valuation also increased by 15% from last year.

Also in 2019, 128 startups in India got acquired, four got publicly listed, and nine became unicorns. This year, Indian tech startups also attracted a record number of international investors, according to Tracxn.

This year’s fundraise further moves the nation’s burgeoning startup space on a path of steady growth.

Since 2016, when tech startups accumulated just $4.3 billion — down from $7.9 billion the year before — flow of capital has increased significantly in the ecosystem. In 2017, Indian startups raised $10.4 billion, per Tracxn.

“The decade has seen an impressive 25x growth from a tiny $550 million in 2010 to $14.5 billion in 2019 in terms of the total funding raised by the startups,” said Tracxn.

What’s equally promising about Indian startups is the challenges they are beginning to tackle today, said Dev Khare, a partner at VC fund Lightspeed Venture Partners, in a recent interview to TechCrunch.

In 2014 and 2015, startups were largely focused on building e-commerce solutions and replicating ideas that worked in Western markets. But today, they are tackling a wide-range of categories and opportunities and building some solutions that have not been attempted in any other market, he said.

Tracxn’s analysis found that lodging startups raised about $1.7 billion this year — thanks to Oyo alone bagging $1.5 billion, followed by logistics startups such as Elastic Run, Delhivery, and Ecom Express that secured $641 million.

176 horizontal marketplaces, more than 150 education learning apps, over 160 fintech startups, over 120 trucking marketplaces, 82 ride-hailing services, 42 insurance platforms, 33 used car listing providers, and 13 startups that are helping businesses and individuals access working capital secured funding this year. Fintech startups alone raised $3.2 billion this year, more than startups operating in any other category, Tracxn told TechCrunch.

The investors

Sequoia Capital, with more than 50 investments — or co-investments — was the most active venture capital fund for Indian tech startups this year. (Rajan Anandan, former executive in charge of Google’s business in India and Southeast Asia, joined Sequoia Capital India as a managing director in April.) Accel, Tiger Global Management, Blume Ventures, and Chiratae Ventures were the other top four VCs.

Steadview Capital, with nine investments in startups including ride-hailing service Ola, education app Unacademy, and fintech startup BharatPe, led the way among private equity funds. General Atlantic, which invested in NoBroker and recently turned profitable edtech startup Byju’s, invested in four startups. FMO, Sabre Partners India, and CDC Group each invested in three startups.

Venture Catalysts, with over 40 investments including in HomeCapital and Blowhorn, was the top accelerator or incubator in India this year. Y Combinator, with over 25 investments, Sequoia Capital’s Surge, Axilor Ventures, and Techstars were also very active this year.

Indian tech startups also attracted a number of direct investments from top corporates and banks this year. Goldman Sachs, which earlier this month invested in fintech startup ZestMoney, overall made eight investments this year. Among others, Facebook made its first investment in an Indian startup — social-commerce firm Meesho and Twitter led a $100 million financing round in local social networking app ShareChat.

Meet Europe’s top VCs at Disrupt Berlin

Silicon Valley’s top venture capital firms, from Sequoia to Benchmark to Accel, are investing more and more dollars overseas, as more globally-minded unicorns crop up across Europe.

As Forbes recently noted, U.S. VCS are “bonkers for European startups,” with “more money … flowing into European tech than ever.” Seems like a great time to sit down with U.S. and European investors to get a better sense of what’s happening here. Conveniently, we’re gathering top venture capitalists at our annual European conference, TechCrunch Disrupt Berlin, next week.

For starters, we’ll have Forward Partners managing partner Nic Brisbourne, Target Global partner Malin Holmberg and DocSend founder Russ Heddleston together to provide exclusive fundraising advice to entrepreneurs. They’ll sit down with me for 45 minutes to shed light on the biggest challenges founders face while raising VC, how to perfectly crap your pitch and how to know if an investor is interested in your upstart.

Sequoia’s Andrew Reed, who’s worked on the firm’s investments in Bird, Figma, Front, Loom, Rappi, UiPath and more, will join us, too. From Index Ventures, a noted U.S. and U.K. investor, we’ll welcome principal Hannah Seal. From Atomico, a European venture capital firm, partner Sophia Bendz, partner Siraj Khaliq, partner Hiro Tamura and partner Niall Wass will all be in attendance. And from SoftBank, we’ll hear from SoftBank Vision Fund investment director Carolina Brochado and SoftBank Investment Advisors partner David Thevenon.

Roxanne Varza will give an update on Station F, the world’s biggest startup campus based in Paris. Varza first unveiled Station F at TechCrunch Disrupt back in December 2016; naturally, we’re excited to see what she has to stay this time.

As for others making the trip to Berlin from the U.S., we’ve got Joyance Partners investment partner Holly Jacobus and Accomplice partner Ash Egan on deck. The rest of the line-up includes some of Europe’s top VCs, including Accel partner Andrei Brasoveanu, Blossom Capital partner Louise Dahlborn Samet, Balderon Capital partner Suranga Chandratillake and principal Colin Hanna, Luminous Ventures founding partner Isabel Fox, Amadeus Capital Partners partner Volker Hirsch, Point Nine Capital partner Christoph Janz, dynamics.vs partner Tanja Kufner, Northzone partner Paul Murphy, Ada Ventures founding partner Matt Penneycard and Dawn Capital partner Evgenia Plotnikova.

Read the entire Disrupt Berlin agenda here. Tickets to the show are still available!

Meet Europe’s top VCs at Disrupt Berlin

Silicon Valley’s top venture capital firms, from Sequoia to Benchmark to Accel, are investing more and more dollars overseas, as more globally-minded unicorns crop up across Europe.

As Forbes recently noted, U.S. VCS are “bonkers for European startups,” with “more money … flowing into European tech than ever.” Seems like a great time to sit down with U.S. and European investors to get a better sense of what’s happening here. Conveniently, we’re gathering top venture capitalists at our annual European conference, TechCrunch Disrupt Berlin, next week.

For starters, we’ll have Forward Partners managing partner Nic Brisbourne, Target Global partner Malin Holmberg and DocSend founder Russ Heddleston together to provide exclusive fundraising advice to entrepreneurs. They’ll sit down with me for 45 minutes to shed light on the biggest challenges founders face while raising VC, how to perfectly crap your pitch and how to know if an investor is interested in your upstart.

Sequoia’s Andrew Reed, who’s worked on the firm’s investments in Bird, Figma, Front, Loom, Rappi, UiPath and more, will join us, too. From Index Ventures, a noted U.S. and U.K. investor, we’ll welcome principal Hannah Seal. From Atomico, a European venture capital firm, partner Sophia Bendz, partner Siraj Khaliq, partner Hiro Tamura and partner Niall Wass will all be in attendance. And from SoftBank, we’ll hear from SoftBank Vision Fund investment director Carolina Brochado and SoftBank Investment Advisors partner David Thevenon.

Roxanne Varza will give an update on Station F, the world’s biggest startup campus based in Paris. Varza first unveiled Station F at TechCrunch Disrupt back in December 2016; naturally, we’re excited to see what she has to stay this time.

As for others making the trip to Berlin from the U.S., we’ve got Joyance Partners investment partner Holly Jacobus and Accomplice partner Ash Egan on deck. The rest of the line-up includes some of Europe’s top VCs, including Accel partner Andrei Brasoveanu, Blossom Capital partner Louise Dahlborn Samet, Balderon Capital partner Suranga Chandratillake and principal Colin Hanna, Luminous Ventures founding partner Isabel Fox, Amadeus Capital Partners partner Volker Hirsch, Point Nine Capital partner Christoph Janz, dynamics.vs partner Tanja Kufner, Northzone partner Paul Murphy, Ada Ventures founding partner Matt Penneycard and Dawn Capital partner Evgenia Plotnikova.

Read the entire Disrupt Berlin agenda here. Tickets to the show are still available!

Meet Europe’s top VCs at Disrupt Berlin

Silicon Valley’s top venture capital firms, from Sequoia to Benchmark to Accel, are investing more and more dollars overseas, as more globally-minded unicorns crop up across Europe.

As Forbes recently noted, U.S. VCS are “bonkers for European startups,” with “more money … flowing into European tech than ever.” Seems like a great time to sit down with U.S. and European investors to get a better sense of what’s happening here. Conveniently, we’re gathering top venture capitalists at our annual European conference, TechCrunch Disrupt Berlin, next week.

For starters, we’ll have Forward Partners managing partner Nic Brisbourne, Target Global partner Malin Holmberg and DocSend founder Russ Heddleston together to provide exclusive fundraising advice to entrepreneurs. They’ll sit down with me for 45 minutes to shed light on the biggest challenges founders face while raising VC, how to perfectly crap your pitch and how to know if an investor is interested in your upstart.

Sequoia’s Andrew Reed, who’s worked on the firm’s investments in Bird, Figma, Front, Loom, Rappi, UiPath and more, will join us, too. From Index Ventures, a noted U.S. and U.K. investor, we’ll welcome principal Hannah Seal. From Atomico, a European venture capital firm, partner Sophia Bendz, partner Siraj Khaliq, partner Hiro Tamura and partner Niall Wass will all be in attendance. And from SoftBank, we’ll hear from SoftBank Vision Fund investment director Carolina Brochado and SoftBank Investment Advisors partner David Thevenon.

Roxanne Varza will give an update on Station F, the world’s biggest startup campus based in Paris. Varza first unveiled Station F at TechCrunch Disrupt back in December 2016; naturally, we’re excited to see what she has to stay this time.

As for others making the trip to Berlin from the U.S., we’ve got Joyance Partners investment partner Holly Jacobus and Accomplice partner Ash Egan on deck. The rest of the line-up includes some of Europe’s top VCs, including Accel partner Andrei Brasoveanu, Blossom Capital partner Louise Dahlborn Samet, Balderon Capital partner Suranga Chandratillake and principal Colin Hanna, Luminous Ventures founding partner Isabel Fox, Amadeus Capital Partners partner Volker Hirsch, Point Nine Capital partner Christoph Janz, dynamics.vs partner Tanja Kufner, Northzone partner Paul Murphy, Ada Ventures founding partner Matt Penneycard and Dawn Capital partner Evgenia Plotnikova.

Read the entire Disrupt Berlin agenda here. Tickets to the show are still available!

Playbuzz becomes Ex.co and expands its content marketing platform

Playbuzz, a startup that helps publishers to add things like polls and galleries to their articles, has rebranded itself as Ex.co.

Co-founder and CEO Tom Pachys told me the name stands for “the experience company,” and he said it reflects the company’s broader content marketing ambitions. Ex.co will continue working with news publishers, but Pachys said there’s a bigger market for what the company has built.

“We’re seeing businesses wanting to become publishers in a way, to interact with their users in a way that’s very similar to what a publisher does,” Pachys said.

Playbuzz/Ex.co is hardly the first publishing startup realize that there may be more money in content marketing, but Pachys argued that this isn’t just a sudden pivot. After all, the company is already working with clients like Visa, Red Bull and Netflix (as well as our corporate siblings at The Huffington Post).

“The previous name does not reflect the values that we stand for today — not even future values,” he said.

Tom Pachys

Tom Pachys

Pachys also suggested that existing content marketing tools are largely focused on operations and workflow — things like hiring the right freelancer — while Ex.co aims at making it easier to actually create the content.

“We’re the ones innovate within the core — not around it, but the core itself,” he said. “And rather than trying to call them competition, we want to integrate with as much players in the ecosystem as possible.”

In addition to announcing the rebrand, Ex.co is also relaunching its platform as a broader content marketing tool, with new features like content templates, real-time analytics and lead generation.

Pachys, by the way, is new to the CEO role, having served as COO until recently, while previous Playbuzz CEO Shaul Olmert has become the company’s president. Pachys said the move wasn’t “directly correlated” with the other changes, and instead allows the two of them to focus on their strengths — Pachys oversees day-to-day operations, while Olmert focuses on investor relations and strategic deals.

“I co-founded the company with Shaul, who’s a very good friend of mine, we’ve known each other 20 years,” Pachys said. “Shaul is very much involved in the company.”

Gradeup raises $7M to expand its online exam preparation platform to smaller Indian cities and towns

Gradeup, an edtech startup in India that operates an exam preparation platform for undergraduate and postgraduate level courses, has raised $7 million from Times Internet as it looks to expand its business in the country.

Times Internet, a conglomerate in India, invested $7 million in Series A and $3 million in Seed financing rounds of the four-year-old Noida-based startup, it said. Times Internet is the only external investor in Gradeup, they said.

Gradeup started as a community for students to discuss their upcoming exams, and help one another with solving questions, said Shobhit Bhatnagar, cofounder and CEO of Gradeup, in an interview with TechCrunch.

While those functionalities continue to be available on the platform, Gradeup has expanded to offer online courses from teachers to help students prepare for exams in last one year, he said. These courses, depending on their complexity and duration, cost anywhere between Rs 5,000 ($70) and Rs 35,000 ($500).

“These are live lectures that are designed to replicate the offline experience,” he said. The startup offers dozens of courses and runs multiple sessions in English and Hindi languages. As many as 200 students tune into a class simultaneously, he said.

Students can interact with the teacher through a chatroom. Each class also has a “student success rate” team assigned to it that follows up with each student to check if they had any difficulties in learning any concept and take their feedback. These extra efforts have helped Gradeup see more than 50% of its students finish their courses — an industry best, Bhatnagar said.

Each year in India, more than 30 million students appear for competitive exams. A significant number of these students enroll themselves to tuitions and other offline coaching centers.

“India has over 200 million students that spend over $90 billion on different educational services. These have primarily been served offline, where the challenge is maintaining high quality while expanding access,” said Satyan Gajwani, Vice Chairman of Times Internet.

In recent years, a number of edtech startups have emerged in the country to cater to larger audiences and make access to courses cheaper. Byju’s, backed by Naspers and valued at over $5.5 billion, offers a wide-ranging self-learning courses. Vedantu, a Bangalore-based startup that raised $42 million in late August, offers a mix of recorded and live and interactive courses.

Co-founders of Noida-based edtech startup Gradeup

But still, only a fraction of students take online courses today. One of the roadblocks in their growth has been access to mobile data, which until recent years was fairly expensive in the country. But arrival of Reliance Jio has solved that issue, said Bhatnagar. The other is acceptance from students and more importantly, their parents. Watching a course online on a smartphone or desktop is still a new concept for many parents in the country, he said. But this, too, is beginning to change.

“The first wave of online solutions were built around on-demand video content, either free or paid. Today, the next wave is online live courses like Gradeup, with teacher-student interactivity, personalisation, and adaptive learning strategies, deliver high-quality solutions that scale, which is particularly valuable in semi-urban and rural markets,” said Times Internet’s Gajwani.

“These match or better the experience quality of offline education, while being more cost-effective. This trend will keep growing in India, where online live education will grow very quickly for test prep, reskilling, and professional learning,” he added.

Gradeup has amassed over 15 million registered students who have enrolled to live lectures. The startup plans to use the fresh capital to expand its academic team to 100 faculty members (from 50 currently) and 200 subject matters and reach more users in smaller cities and towns in India.

“Students even in smaller cities and towns are paying a hefty amount of fee and are unable to get access to high-quality teachers,” Bhatnagar said. “This is exactly the void we can fill.”

Max Q: SpaceX and Boeing gear up for commercial crew mission tests

Welcome back to Max Q, our weekly look at what’s happening in space and space startup news. This week was a bit more quiet than usual coming off of the amazingly over-packed International Astronautical Congress, but there were still some big moves that promise a lot more action to come before they year’s over – particularly in the race to fly American astronauts to space on a rocket launched from American soil once again.

There’s also startup news, including how an entirely different kind of race – one to make stuff in space – could be a foundational moment that opens up entirely new areas of opportunity for entrepreneurs big and small.

1. SpaceX’s crucial parachute tests are going well

SpaceX needs to nail one key ingredient before its Crew Dragon missions can proceed apace with people on board. Actually, it has to nail quite a few, but parachutes are a crucial one, and it has been developing the parachutes that will help Crew Dragon float back safely to Earth for years not.

The third iteration is looking like the one that will be used for the first Crew Dragon missions with astronauts, and luckily, that version three system has now completed 13 successful tests in a row. That’s approaching the kind of reliability it needs to show to be used for the real thing, so this is good news for the current goal of putting astronauts on board early next year.

2. SpaceX and Boeing ready key milestone tests

SpaceX has another key test for Crew Dragon coming up as early as this week – a static fire of its capsule abort engines. This is a key test because the last one didn’t go so well. Also, Boeing will be doing their pad abort test as early as this week as well, which sets things up nicely for a busy time next year in crewed spaceflight.

3. How in-space manufacturing could prompt a space business boom

Launching stuff to space is expensive and really limits what you can do in terms of designing spacecraft and components. There’s been efforts made to reduce the costs, including SpaceX and Blue Origin pursuing reusable rocketry, but just building stuff up there instead of launching it could unlock much deeper cost savings – and new technical possibilities. (ExtraCrunch subscription required)

4. Changing the economics of satellite propulsion

Satellite propulsion has, until very recently, been almost entirely a bespoke affair, which translates to expensive and generally not accessible to startup companies who actually have to worry about stuff like burn rates. But Morpheus Space has a new “Lego-like” system for offering affordable, compact and scalable propulsion that can serve pretty much any satellite needs.

5. Dev kits for small satellites

Small satellite business is booming, and Kepler wants to make sure that developers are able to figure out what they can do with smallsats, so it’s offering a developer kit for its toaster-sized IoT communications satellites. Cooler than the Apple TV dev boxes that were on offer once upon a time.

6. Northrop Grumman launches ISS resupply mission

The ISS is getting a shipment of supplies and scientific material courtesy of a resupply cargo capsule launched by Northrop Grumman on Saturday. One thing on board is twelve containers of read wine, courtesy of startup Space Cargo Unlimited. I’ll have more info about that on Monday, so stay tuned.

Los Angeles-based BuildOps, subcontracting software for real estate, raises $5.8 million

Software development companies tackling services for niche industries, like commercial real estate subcontracting, continue to find Los Angeles to be fertile ground for development.

The latest company to raise funding from a clutch of investors is BuildOps, which raised $5.8 million in seed financing from some big names in the Los Angeles tech ecosystem.

Led by Fika Ventures, with additional investments from MetaProp VC, Global Founders Capital, CrossCut Ventures, TenOneTen, IGSB, 1984 Ventures, L2 Ventures, GroundUp, NBA all-star Metta World Peace, Oberndorf Enterprises, Wolfson Group and scouts from Sequoia Capital, the new financing will be used to support the company’s continued growth.

BuildOps sells software that integrates scheduling, dispatching, inventory management, contracts, workflow and accounting into a single software package for commercial real estate contractors with staff ranging from a few dozen to several hundred employees.

Software for the service industry is nothing new for Los Angeles entrepreneurs. The unicorn ServiceTitan hails from the greater Los Angeles area and a number of other software as a service businesses are calling the greater Los Angeles area home.

It’s hard to argue with the size of the commercial construction market. Over the past three years, commercial construction spending grew from $626 billion to $807 billion, according to data provided by the company. And while most large vendors — architects, general contractors and property management companies — have some project management software, the fragmented group of subcontractors that provide services to those customers has remained resistant to adopting new technologies, the company said.

The firm was co-founded by former ServiceTitan developer Neeraj Mittal; Microsoft, Nextag, Swurv and Fundly former executive Steve Chew; and Alok Chanani, who previously founded a commercial real estate company and was a former commander of a transportation unit of the Army in Iraq.

“At BuildOps, we are on a mission to bring a true all-in-one solution on the latest technology to the people who keep America’s hospitals, power plants and commercial real estate running. We are privileged to be working closely with some of the country’s top commercial contractors,” said Chanani.

That sentiment is echoed by Liquid 2 Ventures managing partner and former National Football League superstar, Joe Montana .

“Liquid 2 Ventures has an investment thesis in supporting America’s working class and I just love the idea of making their lives far easier and better. You have one solution that does it all and talks seamlessly to every single part of their business from parts to ordering to inventory and more,” said Montana in a statement. “There are very few world-class technology solutions for commercial subcontractors like this and we believe in the founders.”

Deadspin writers quit after being ordered to stick to sports

Writers Laura Wagner, Kelsey McKinney, Tom Ley, Lauren Theisen, Patrick Redford, Albert Burneko and Chris Thompson all tweeted today that they have resigned from Deadspin, the sports-focused site owned by G/O Media.

A quick refresher: G/O Media was formerly known as Gizmodo Media Group, and before that as Gawker Media. It took on its current name and current leadership earlier this year when Univision sold the unit to private equity firm Great Hill Partners, who appointed former Forbes.com CEO Jim Spanfeller as its new chief executive.

Since then, the relationship between G/O Media leadership and the editorial staff has been rocky, as you would have learned by reading Deadspin itself, particularly an in-depth story by Wagner in August about how employees were unhappy with “a lack of communication regarding company goals, seeming disregard for promoting diversity within the top ranks of the company, and by repeated and egregious interference with editorial procedures.”

Just now I resigned my position at Deadspin today along with many of my colleagues. I have been here only five months but they have been some of the best of my career and I will miss it deeply.

— kelsey mckinney (@mckinneykelsey) October 30, 2019

A few weeks later, Deadspin’s editor in chief Megan Greenwell resigned, saying that G/O Media’s new editorial director Paul Maidment was directing the staff to stick to sports coverage — a decision that she argued wasn’t dictated by traffic, since “posts on The Concourse, Deadspin’s vertical dedicated to politics and culture and other topics that are not sports, outperform posts on the main site by slightly more than two to one.”

Apparently Maidment repeated that edict in a memo earlier this week, which was leaked to The Daily Beast, and in which he said, “Deadspin will write only about sports and that which is relevant to sports in some way.”

The Deadspin homepage was subsequently filled with non-sports content, and editor Barry Petchesky tweeted that he had been “fired from Deadspin for not sticking to sports.”

I quit today too https://t.co/W7meIcW0Cx

— Laura Wagner (@laurawags) October 30, 2019

At the same time, Deadspin also posted a story criticizing auto-playing ads on the site, declaring, “We, the writers, editors, and video producers of Deadspin, are as upset with the current state of our site’s user experience as you are.” The post is no longer live, but the criticism reportedly prompted advertiser Farmers Insurance to pull the campaign.

This all appears to have prompted a mass exodus from Deadspin today. The Gizmodo Media Group union also issued this statement:

Today, a number of our colleagues at Deadspin resigned from their positions. From the outset, CEO Jim Spanfeller has worked to undermine a successful site by curtailing its most well-read coverage because it makes him personally uncomfortable. This is not what journalism looks like and it is not what editorial independence looks like.

“Stick to sports” is and always has been a thinly veiled euphemism for “don’t speak truth to power.” In addition to being bad business, Spanfeller’s actions are morally reprehensible. The GMG Union stands with our current and former Deadspin colleagues and condemns Jim Spanfeller in the strongest possible terms.

We’ve reached out to G/O Media for comment and will update if we hear back.

As Juul announces mass layoffs, a new lawsuit alleges it shipped a million contaminated pods

A lawsuit filed a by former Juul executive alleges that the company knew a batch of contaminated e-liquid had been used in about one million pods shipped to retailers earlier this year, but did not inform customers. The lawsuit, first reported by BuzzFeed, was brought by Siddharth Breja, former senior vice president of global finance at Juul from May 2018 to March 2019, who alleges he was fired after complaining about the contaminated pods.

News of the lawsuit comes the same day as Juul’s announcement it will lay off about 500 people, or 10% to 15% of its workforce, and the departure of four executives, including chief financial officer Tim Danaher. Juul is currently under scrutiny by the Food and Drug Administration, which claims the startup made misleading statements about its product and targeting of teens.

In the lawsuit, Breja claims that during a meeting on March 12, he learned a contaminated batch of mint e-liquid was used to make 250,000 refill kits, or a total of one million pods, that had already been shipped to retailers.

Breja alleges that when he complained about Juul’s refusal to issue a product recall or health and safety notice, Danaher said doing so would cost the company billions of dollars in lost sales, hurting its then-$38 billion valuation. About a week later, Breja says the company fired him, telling him that it was because he had misrepresented himself as former chief financial officer at Uber. In the lawsuit, Breja says the claim was “preposterous,” and that he had accurately represented his former position as a chief financial officer of a division at Uber.

In the lawsuit, Breja also claims that Juul wanted to sell pods that were almost a year old and when he asked the company to include an expiration or best by date, or a date of manufacture on the packaging, he was told by former CEO Kevin Burns that “half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods?”

TechCrunch has contacted Juul and the law firm representing Breja for comment. In a statement to BuzzFeed, Breja’s attorney Harmeet Dhillon said “Mr. Breja became aware of very concerning actions at the company, and he performed his duty to shareholders and to the board by reporting these issues internally. In exchange for doing that, he was inappropriatey terminated. This is very concerning, particularly since some of the issues he raised concerned matters of public safety.”

Burns was replaced in September by K.C. Crosthwaite, a former executive at Juul’s largest shareholder Altria . A replacement for Danaher has not been announced yet.

Looking for a job selling weed? EpicHint pitches training for cannabis dispensary ‘budtenders’

Adriana Herrera first came up with the idea for EpicHint, a training and staffing service for cannabis dispensaries, while she was surfing off the coast of Oaxaca, Mexico.

Decompressing after the dissolution of her last startup venture — her second attempt at running her own business — Herrera realized quickly that surfing and #vanlife wasn’t her ultimate calling.

The serial entrepreneur had previously founded FashioningChange, a recommendation engine for sustainable shopping, back in 2011. The company was gaining traction and had some initial support, but it ran into the buzzsaw of Amazon’s product development group, which Herrera claims copied their platform to build a competing product.

Undeterred, Herrera took some of the tools that FashioningChange had developed and morphed them into a business focused on online marketing to shoppers at the point of sale — helping sites like Cooking.com pitch products to people based on what their browsing history revealed about their intent.

By 2017, that business had also run into problems, and Herrera had to shut down the company. She sold her stuff and had headed down to Oaxaca, but kept thinking about the emergent cannabis industry that was taking off back in the U.S.

Herrera had a friend who’d been diagnosed with colon cancer and was taking medicinal marijuana to address side effects from the operation that removed his colon.

“When recovering from the removal of his colon, he’d run out of his homegrown medicine and go to dispensaries where he . got the worst service,” Herrera wrote in an email. “He would ask for something pain, nausea, and sleep, and was always recommended the most expensive product or a product that was being promoted. He never got what he needed and had to self advocate for the right product while barely being able to stand.”

Herrera buckled down and did research throughout the course of 2018. She hit up pharmacies first as a customer, asking different “budtenders” for information about the product they were selling. Their answers were… underwhelming, according to Herrera. The next step was to talk to dispensary managers and research the weed industry.

By her own calculations, cannabis companies (including dispensaries and growers) will add roughly 300,000 jobs — most of them starting out at near-minimum-wage salaries of $16 per-hour. Meanwhile current training programs cost between $250 and $7,000.

That disconnect led Herrera to hit on her current business model — selling an annual subscription software for brands and dispensaries that would offer a training program for would-be job applicants. The training would give dispensaries a leg up for experienced hires, increasing sales and ideally reducing turnover that costs the industry as much as $438 million.

“The data is showing an average of a 30% turnover rate in 21 months,” says Herrera. “Looking at turnover and a lot of that comes down to bad hiring.”

The company is on its first eight customers, but counts one undisclosed, large, multi-state dispensary along with a few mom and pop shops.

Herrera also says that the service can reduce bias in hiring. Because dispensaries only hire candidates after they’ve completed the program, any unconscious bias won’t creep into the hiring process, she says.

Applicants interested in a dispensary can enroll in the dispensary “university” and once they complete the curriculum go through a standardized form to apply for the job.

Our  recommendation to run and get the best results is to pre-train, pre-screen and have the graduates unlock the ability to apply.”

Here are the five Startup Battlefield finalists at Disrupt SF 2019

Over the past two days, 20 startups have taken the stage at Disrupt SF, laying out their visions, demonstrating their technology and answering questions from our expert judges.

The startups came from all across the world, and they’re tackling industries ranging from cholera detection to orbital refueling.

Now we’ve taken the judges’ feedback and chosen five finalists — who will be presenting tomorrow, October 4, for a new group of judges. The ultimate winner will take home $100,000, equity-free, as well as receive temporary ownership of the Disrupt Cup.

You can watch the finals at Disrupt SF or on the TechCrunch website at 1:15pm Pacific. And without further ado, here are the finalists:

OmniViz

OmniVis aims to make detection of cholera and other pathogens as quick, simple, and cheap as a pregnancy test. Its smartphone-powered detection platform could save thousands of lives.

You can read more about OmniVis here.

Orbit Fab

Orbit Fab has created space-based robotic refueling technology. You might remember the company from a milestone accomplishment it achieved earlier this year: Becoming the first startup to supply water to the International Space Station.

You can read more about Orbit Fab here.

Render

Render has created a managed cloud platform. At the Startup Battlefield, it announced the ability to spin up object storage in the cloud, while greatly simplifying the tasks associated with adding storage.

You can read more about Render here.

StrattyX

StrattyX is a trading interface that lets you set up sophisticated “if-this-then-that” rules and execute orders on the stock market. The company aims to open up automated trading software to anyone, from non-professional traders who have some savings to professional day traders.

You can read more about StrattyX here.

Traptic

Things like wheat and corn are routinely harvested by machines, but strawberries (and other fruits) present a unique challenge. Traptic uses 3D vision and robotic arms to harvest ripe strawberries.

You can read more about Traptic here.

MyMilk Labs launches Mylee, a small sensor that analyzes breast milk at home

Many expectant mothers are told that breastfeeding will come naturally, but it is often a fraught and confusing experience, especially during the first few weeks after birth. Parents often worry about if their babies are getting enough nutrition or if they are producing enough milk. MyMilk Labs wants to give nursing mothers more information with Mylee, a sensor that scans a few drops of breast milk to get information about its composition and connects to a mobile app. The Israel-based company presented today at Disrupt Battlefield as one of two wild card competitors picked from Startup Alley.

The Mylee launched at Disrupt with a pre-order price of $249 (its regular retail price is $349). Based in Israel, MyMilk Labs was founded in 2014 by Ravid Schecter and Sharon Haramati, who met while working on PhDs in neuroimmunology and neurobiology, respectively, at the Weizmann Institute of Science.

Mylee deviceDuring the company’s stage presentation, Schecter said the device is meant to give mothers and lactation consultants objective information about breast milk.

Breast milk changes in the first days and weeks after birth, progressing from colostrum to mature milk. Mylee scans the electrochemical properties of milk and then correlates that to data points based on MyMilk Labs’ research to calculate where the sample is on the continuum, then tells mothers if their milk is “delayed” or “advanced,” relative to the time that has passed since they gave birth.

The device’s first version is currently in a beta pilot with lactation consultants who have used them to scan milk samples from 500 mothers.

MyMilk Labs already has consumer breast milk testing kits that enable mothers to provide a small sample at home that is then sent to MyMilk Labs’ laboratories for analysis. One is a nutritional panel that gives information about the milk’s levels of vitamins B6, B12 and A, calories and fat percentage, along with dietary recommendations for the mother. Another panel focuses on what is causing breast pain, a frequent complaint for nursing mothers. It tests for bacterial or fungal infections and gives antibiotic suggestions depending on what strains are detected.

Though some doctors believe testing kits are unnecessary for the majority of nursing mothers, there is demand for more knowledge about breastfeeding, as demonstrated by the line-up of breast milk testing kits from MyMilk Labs and competitors like Lactation Labs, Everly Well and Happy Vitals. Haramati said on stage that MyMilk Labs plans to eventually transfer some of the tests’ capabilities to the Mylee.


One day left to get featured at TechCrunch Disrupt Berlin’s Startup Battlefield

Founders. The clock is ticking. Applications for Startup Battlefield at Disrupt Berlin 2019 are closing in just about 24 hours.

On December 11-12, TechCrunch will feature the top early-stage startups from around the world in the most renowned on-stage pitch competition in the world – Startup Battlefield. Companies are battling for $50,000 in equity-free prize money, the infamous Disrupt Cup and the attention of press and investors from around the world.

You’ll join the leave of highly successful Startup Battlefield Alumni, including N26, JukeDeck, Dropbox, GetAround, Mint.com, and more. All together, the 857 companies that have launched with Startup Battlefield have raised over $8.9 billion in funding, with 113 successful exits (IPOs and acquisitions).

It’s simply. Startups from any part of the world and any industry can apply. Companies must be early stage, pre-major publicity and have a minimally viable product to demo live on stage. TechCrunch editors review the applications and select the top 3-5% of companies that apply – more competitive than college!

After being selected, founders will go through a mini-accelerator with the Startup Battlefield team, where we will train you on your pitch, go-to-market strategy, on stage talent and set you up for the biggest, most public launch on the largest tech stage in the world. Teams pitch for 6 minutes including a live demo, followed by a 6 min Q&A with our esteemed judges – VCs, angels and heads of major companies.

If you make it to the final round, you simply pitch on stage again with the same pitch in front of a brand new set of judges. These judges debate and decide the final winner of the competition and the startup that gets to bring home $50,000 and the Disrupt Cup.

Participating in Startup Battlefield gets you a whole suite of perks. We’re talking free exhibition space in Startup Alley for both days of Disrupt, invitations to private events, backstage access, CrunchMatch — our free business-matching platform — free subscriptions to Extra Crunch and a ticket to all future TechCrunch events. That’s some major value right there.

There’s nothing to lose, and everything to gain. Stop procrastinating apply to Startup Battlefield today. We want to see you in Berlin!

Honestbee owes almost $1 million in unpaid salary to employees, according to affidavit filed by its CEO

Honestbee, the Singapore-based grocery delivery startup that has been struggling with financial issues, owes 217 employees a total of almost USD $1 million in unpaid salary. The Strait Times reported that the figure was revealed in an affidavit filed in court on Sept. 20 by Honestbee CEO Ong Lay Ann as part of the startup’s debt moratorium application.

The Ministry of Manpower told the Strait Times that 44 employees have filed claims with the Tripartite Alliance for Dispute Management, with some of the employees settling mediation by agreeing to a payment schedule with Honestbee that will be monitored by the alliance.

In an emailed statement to TechCrunch, an Honestbee spokesperson said, “There is a communicated salary delay for Honestbee’s ex-employees and employees currently serving notice. While there are regular injections of working capital, the amount remains insufficient for all headcount. As a result, the company has made the difficult decision to prioritize existing staff in Singapore. The company has the full intention in meeting its obligations to staff and will be, if not already in active discussions with staff in relation to a feasible payment schedule.”

TechCrunch reported in April that Honestbee was running out of money and trying to find a buyer. The company, which used to operate in eight markets across Asia, has stopped operating in Hong Kong and Indonesia, temporarily halted services in Japan and the Philippines and suspended its food delivery service in Thailand.

The affidavit filed by Ong says Honestbee currently has 190 employees, down from 523 full-time employees and 77 part-time workers in January.

Ong also said that Honestbee chairman Brian Koo resigned from the board on on Sept. 12.

According to the affidavit, Koo and associates including investment vehicles he set up, are owed about $258 million, or about 90% of Honestbee’s debt. Koo, a founding managing partner of venture capital firm Formation Group, was one of Honestbee’s earliest investors and served as interim CEO from May to July after former chief executive Joel Sng stepped down.

Facebook has acquired Servicefriend, which builds ‘hybrid’ chatbots, for Calibra customer service

As Facebook prepares to launch its new cryptocurrency Libra in 2020, it’s putting the pieces in place to help it run. In one of the latest developments, it has acquired Servicefriend, a startup that built bots — chat clients for messaging apps based on artificial intelligence — to help customer service teams, TechCrunch has confirmed.

The news was first reported in Israel, where Servicefriend is based, after one of its investors, Roberto Singler, alerted local publication The Marker about the deal. We reached out to Ido Arad, one of the co-founders of the company, who referred our questions to a team at Facebook. Facebook then confirmed the acquisition with an Apple-like non-specific statement:

“We acquire smaller tech companies from time to time. We don’t always discuss our plans,” a Facebook spokesperson said.

Several people, including Arad, his co-founder Shahar Ben Ami, and at least one other indicate that they now work at Facebook within the Calibra digital wallet group on their LinkedIn profiles. Their jobs at the social network started this month, meaning this acquisition closed in recent weeks. (Several others indicate that they are still at Servicefriend, meaning they too may have likely made the move as well.)

Although Facebook isn’t specifying what they will be working on, the most obvious area will be in building a bot — or more likely, a network of bots — for the customer service layer for the Calibra digital wallet that Facebook is developing.

Facebook’s plan is to build a range of financial services for people to use Calibra to pay out and receive Libra — for example, to send money to contacts, pay bills, top up their phones, buy things and more.

It remains to be seen just how much people will trust Facebook as a provider of all these. So that is where having “human” and accessible customer service experience will be essential.

“We are here for you,” Calibra notes on its welcome page, where it promises 24-7 support in WhatsApp and Messenger for its users.

Screenshot 2019 09 21 at 23.25.18

Servicefriend has worked on Facebook’s platform in the past: specifically it built “hybrid” bots for Messenger for companies to use to complement teams of humans, to better scale their services on messaging platforms. In one Messenger bot that Servicefriend built for Globe Telecom in the Philippines, it noted that the hybrid bot was able to bring the “agent hours” down to under 20 hours for each 1,000 customer interactions.

Bots have been a relatively problematic area for Facebook. The company launched a personal assistant called M in 2015, and then bots that let users talk to businesses in 2016 on Messenger, with quite some fanfare, although the reality was that nothing really worked as well as promised, and in some cases worked significantly worse than whatever services they aimed to replace.

While AI-based assistants such as Alexa have become synonymous with how a computer can carry on a conversation and provide information to humans, the consensus around bots these days is that the most workable way forward is to build services that complement, rather than completely replace, teams.

For Facebook, getting its customer service on Calibra right can help it build and expand its credibility (note: another area where Servicefriend has build services is in using customer service as a marketing channel). Getting it wrong could mean issues not just with customers, but with partners and possibly regulators.

Shipper, a platform for e-commerce logistics in Indonesia, raises $5 million

Indonesia has one of the fastest-growing e-commerce markets in the world, but the logistics industry there is still very fragmented, creating headaches for both vendors and customers. Shipper is a startup with the ambitious goal of giving online sellers access to “Amazon-level logistics.” The company has raised $5 million in seed funding from Lightspeed Ventures, Floodgate Ventures, Insignia Ventures Partners and Y Combinator (Shipper is part of the accelerator’s winter 2019 batch), which will be used for hiring and customer acquisition.

Shipper was launched in 2017 by co-founders Phil Opamuratawongse and Budi Handoko, and is now used by more than 25,000 online sellers. Indonesia’s e-commerce market is growing rapidly, but online sellers still face many logistical hurdles.

The country is large (Indonesia has more than 17,500 islands, of which 600 are inhabited) and unlike the United States, where Amazon dominates, e-commerce sellers often use multiple platforms, like Tokopedia, Shopee, Bukalapak and Lazada. Smaller vendors also sell through Facebook, Instagram, WhatsApp and other social media. Once an order has been placed, the challenge of making sure it gets to customers starts. There are more than 2,500 logistics providers in Indonesia, many of whom only cover a small area.

“It is really hard for any one provider to do nationwide themselves, so the big ones usually use local partners to fulfill locations where they don’t have infrastructure,” says Opamuratawongse.

The startup’s mission is to create a platform that makes the process of fulfilling and tracking orders much more efficient. In addition to a package pick-up service and fulfillment centers, Shipper also has a technology stack to help logistics providers manage shipments. It is used to predict the best shipping routes and consolidate packages headed in the same direction and also provides a multi-carrier API that allows sellers to manage orders, print shipping labels and get tracking information from multiple providers on their phones.

When it launched three years ago, Shipper began by focusing on the last-mile for smaller vendors, who Opamuratawongse says typically keep inventory in their homes and fulfill about five to 10 orders per day. Since many give customers a choice of several logistics providers, that meant they needed to visit multiple drop-off locations every morning.

Shipper offers pick-up service performed by couriers (who Opamuratawongse says are people like stay-at-home parents who want flexible, part-time work) who collect packages from several vendors in the same neighborhood and distribute them to different logistics providers, serving as micro-fulfillment hubs. Shipper signs up about 10 to 30 new couriers each week, keeping them at least 2.5 kilometers apart so they don’t compete against each other.

The company began setting up fulfillment centers to keep up with vendors whose businesses were growing and were turning to third-party warehouse services. Shipper has established 10 fulfillment centers so far across Indonesia, including Jakarta, with plans to open a new one about every two weeks until it covers all of Indonesia.

Opamuratawongse says he expects the logistics industry in Indonesia to remain fragmented for the next decade at least, and perhaps longer because of Indonesia’s size and geography. Shipper will focus on expanding in Indonesia first, with the goal of having 1,000 microhubs within the next year and 15 to 20 fulfillment centers. Then the company plans to tackle other Southeast Asian countries with rapidly-growing e-commerce markets, including Thailand, Vietnam and the Philippines.

How to get people to open your emails

Julian Shapiro
Contributor

Julian Shapiro is the founder of BellCurve.com, a growth marketing agency that trains you to become a marketing professional. He also writes at Julian.com.

We’ve aggregated the world’s best growth marketers into one community. Twice a month, we ask them to share their most effective growth tactics, and we compile them into this Growth Report.

This is how you’re going stay up-to-date on growth marketing tactics — with advice you can’t get elsewhere.

Our community consists of 600 startup founders paired with VP’s of growth from later-stage companies. We have 300 YC founders plus senior marketers from companies including Medium, Docker, Invision, Intuit, Pinterest, Discord, Webflow, Lambda School, Perfect Keto, Typeform, Modern Fertility, Segment, Udemy, Puma, Cameo, and Ritual .

You can participate in our community by joining Demand Curve’s marketing webinars, Slack group, or marketing training program. See past growth reports here and here.

Without further ado, onto the advice.


How can you send email campaigns that get opened by 100% of your mailing list?

Based on insights from Nick Selman, Fletcher Richman of Halp, and Wes Wagner.

  • First, a few obvious pieces of advice for avoiding low open rates:
    • Avoid spam filters by avoiding keywords commonly used in spam emails.
    • Consider using email subjects (1) that are clearly descriptive and (2) look like they were written by a friend. Then A/B your top choices.
    • Include the recipient’s name in your email body. This signals to spam filters that you do in fact know the recipient.
  • Now, for the real advice: Let’s say 60% of your audience opens your mailing, how can you get the remaining 40% to open and read it too?
    • First, wait 2 weeks to give everyone a chance to open the initial email.
    • Next, export a list of those who haven’t opened. Mailchimp lets you do this.
    • Important note: The reason many recipients don’t open your email is because it was sent to Spam, it was buried in Promotions, or it was insta-deleted because it looked like spam (but wasn’t). The goal here is to resuscitate these people. You have two options for doing so:
    • (1) Duplicate the initial email then selectively re-send it to non-openers. This time, use a new subject (try a new hook) and downgrade the email to plain text: remove images and link tracking. De-enriching the email in this way can help bypass spam filters and the Promotions tab.
    • (2) Alternatively, export your list of non-openers to a third-party email tool like Mailshake (or Mixmax).
      • First, connect Mailshake to a new Gmail account on your company domain.
      • Next, configure Mailshake to automatically dole out small batches of emails on a daily schedule. Let it churn through non-openers slowly so that Gmail doesn’t flag your account as a spammer.
      • Emails sent through Mailshake are more likely to get opened than emails sent through Mailchimp. Why? Mailshake sends emails through your Gmail account, and Gmail-to-Gmail emails have a greater chance of bypassing Spam and Promotions folders, particularly if the sender doesn’t have a history of its emails being marked as spam.

Cloudflare co-founder Michelle Zatlyn on the company’s IPO today, its unique dual class structure, and what’s next

Shares of Cloudflare rose 20% today in its first day of trading on the public market, opening trading at $18 after it priced its IPO at $15 a share yesterday and holding steady through the day.

Put another way, the performance of the nine-year-old company — which provides cloud-based network services to enterprises — was relatively undramatic as these things go. That’s a good thing, given that first-day “pops” often signal that a company has left money on the table. Indeed, Cloudflare had initially indicated that its shares would be priced between $10 and $12, before adjusting the price upward, which suggests its underwriters, led by Goldman Sachs, fairly accurately gauged demand for the offering.

Of course, it was still a very big day for Cloudlfare’s 1,069 employees and especially for Cloudflare’s founders Matthew Prince, its CEO, and Michelle Zatlyn, its COO. We talked with Zatlyn today in the hours after the duo rang the opening bell to ask about the experience, and how the IPO impacts the company going forward. Our chat has been edited lightly for length and clarity.

TC: Thanks for making time for us on a busy day.

MZ: Of course! [TechCrunch’s] Battlefield [competition, in which Cloudflare competed in 2011] is such an integral part of our funding story. Thank you for giving us the stage to launch our company.

TC: Did you get any sleep last night?

MZ: I was so exhausted that I got a great night’s sleep. This whole process has been so incredible, so special. I didn’t know what to expect, and it’s been way better than I could have imagined. There are 150 of our teammates, early employees, family members, board members, champions and other friends here with us [in New York at the NYSE]. We also live-streamed [our debut] to our offices around the world so they could share this moment with us.

TC: How are you feeling about today? The stock is up 20%. There’s always banter afterward about whether a listing was priced right, whether any money was left on the table.

MZ: At this point, we’ve raised almost a billion dollars between today and all of the money we’ve raised from venture investors. We have a great team. We’re really happy. The markets are going to react how they react, but it’s part of our DNA to provide more value than we capture. We think that’s the way to build an enduring company.

TC: You have a liquid currency now. Do you imagine Cloudflare might become more acquisitive as a public company?

MZ: We’ve done some acquisitions on the smaller side and of course, we have a team that’s always looking at different opportunities. But we’re really engineering-driven, and we think we have many products and services left to build, so we’ll continue to invest in our products and in R&D development, as well as in our customer relationships.

TC: Retaining employees is a challenge that some newly public companies worry about. How will you address this in the coming days and months as lock-up periods expire?

MZ: I’m so proud of where we are today and of our whole team, and we’re just getting started. [Matthew and I will] show up Monday morning and get back to work and so will our employees, because they want to make the company [an even greater business].

TC: The company went public with a dual-class structure that gives not just management but all employees 10 times the voting rights of the shares sold to the public. Why was this structure important to Cloudflare, and did it give investors pause?

MZ: There are more than 1,000 people around the world who are building the product and working with customers, and we think it’s important for them to have that 10:1 structure, so it’s something we put in place a few years ago with the encouragement of some of our earlier investors.

TC: Were you modeling this after another company? Is there a precedent for it?

MZ: I don’t know of another one — there may be — but we weren’t inspired by another company. We just felt passionately about this being the right corporate structure and [I don’t think it was harder for us to tell the story of Cloudflare because of it]. Over the last two weeks, in talking with investors across the world, it wasn’t in the top 10 topics that came up, so I think we did a good job of describing it in our S-1.

TC: What was the roadshow like? What surprised you most?

MZ: Don’t get me wrong, there’s a ton of work involved from all kinds of people, in finance, our legal teams … But roadshows have a bad rap in that people think they’re grueling and that, by the end, you’ll be exhausted. That was my expectation. But it was really fun. It was a huge privilege to represent Cloudflare to all these investors who were incredibly smart and well-prepared. We traveled all over and people told us ‘You look better than most teams.’

Michelle Zatlyn

TC: Where does one go for these roadshows?

MZ: You have the usual suspects; there’s a travel roadshow circuit, with some variations based on people’s vacation schedules, but New York, San Francisco, Boston, Chicago, Baltimore is common, Kansas City, Indianapolis, Toronto. You go in person to some places and in others, people dial in. But the whole thing gave me new insight into these pools of capital after venture capital. It was really interesting.

TC: Cloudflare said in a recent amendment to its S-1 that it was in touch with the U.S. Treasury’s Office of Foreign Assets Control back in May after determining that its products were used by individuals and entities that have been blacklisted by the U.S. Did this new revelation slow anything down?

MZ: There was no impact. Your group of advisors expands when you go through a public offering, and lawyers dot every ‘i’ and cross every ‘t,’ and you become a better company for it.

We deliver cybersecurity solutions that are made broadly available to businesses, entrepreneurs and nonprofits, and that’s incredible, but there are also some unsavory actors online, and we’ve always been a transparent organization [about having to grapple with this].

TC: How will Cloudflare handle requests for service by embargoed and restricted entities going forward? As a public company, does that process change in any way?

MZ: We have a really good process today. I think people think that we let anyone use Cloudflare and that’s it. But if customers are breaking the law, we remove them from our network and that’s not new and we publish transparency reports on it.

Sometimes, [you’re confronting] things that aren’t illegal but they’re gross, and the question is whose job is it to take it offline. But I work with some of the smartest minds on this and we try to be very transparent about how we figure this out. The conversation is so much better than it was a few years ago, too, with policy makers and academics and the business community engaging on this. People around the world are talking about where the lines can be drawn, but these are tricky, heady conversations.

TC: They certainly put Cloudflare in a precarious spot sometimes, as when the company banned the internet forum 8chan earlier this year after it was learned that the site was used by a gunman to post an anti-immigration rant. Can we expect that Cloudflare will continue to make decisions like this on a case-by-case basis?

MZ: Freedom of speech is such a fundamental part of this nation. Citizens should want the lawmakers to decide what the law should be, and if lawmakers could do this, it would be much better. On the other side, these are new issues that are arising so we shouldn’t rush. Lots of opinions need to be weighed and conversations are much further along than they once were, but there’s still work to be done, and Cloudflare is one [participant] in a much broader conversation.

Another high-flying, heavily funded AR headset startup is shutting down

While Apple and Microsoft strain to sell augmented reality as the next major computing platform, many of the startups aiming to beat them to the punch are crashing and burning.

Daqri, which built enterprise-grade AR headsets, has shuttered its HQ, laid off many of its employees and is selling off assets ahead of a shutdown, former employees and sources close to the company tell TechCrunch.

In an email obtained by TechCrunch, the nearly 10-year-old company told its customers that it was pursuing an asset sale and was shutting down its cloud and smart-glasses hardware platforms by the end of September.

“I think the large majority of people who worked [at Daqri] are sad to see it closing down,” a former employee told TechCrunch. “[I] wish the end result was different.”

image

The company’s 18,000+ square foot Los Angeles headquarters (above) is currently listed as “available” by real estate firm Newmark Knight Frank. The company’s Sunnyvale offices appear to have been shuttered sometime prior to 2019.

Daqri’s shutdown is only the latest among heavily funded augmented reality startups seeking to court enterprise customers.

Earlier this year, Osterhout Design Group unloaded its AR glasses patents after acquisition talks with Magic Leap, Facebook and others stalled. Meta, an AR headset startup that raised $73 million from VCs including Tencent, also sold its assets earlier this year after the company ran out of cash.

Daqri faced substantial challenges from competing headset makers, including Magic Leap and Microsoft, who were backed by more expansive war chests and institutional partnerships. While the headset company struggled to compete for enterprise customers, Daqri benefitted from investor excitement surrounding the broader space. That is, until the investment climate for AR startups cooled.

Daqri was, at one point, speaking with a large private-equity firm about financing ahead of a potential IPO, but as the technical realities facing other AR companies came to light, the firm backed out and the deal crumbled, we are told.

As of mid-2017, a Wall Street Journal report detailed that Daqri had raised $275 million in funding. You won’t find many details on the sources of that funding, other than references to Tarsadia Investments, a private-equity firm in Los Angeles that took part in the company’s sole disclosed funding round. We’re told Tarsadia had taken controlling ownership of the firm after subsequent investments.

In early 2016, Daqri acquired Two Trees Photonics, a small UK startup that was building holographic display technologies for automotive customers. The UK division soon comprised a substantial portion of the entire company’s revenues, sources tell us. By early 2018, the division was spun out from Daqri as a separate company called Envisics, leaving the Daqri team to focus wholly on bringing augmented reality to enterprise customers.

The remaining head-worn AR division failed to gain momentum after prolonged setbacks in adoption of its AR smart glasses, including difficulties in training workers to use the futuristic hardware, a source told TechCrunch.

All the while, the company’s leadership put on a brave face as the startup sputtered. In an interview this year with Cornell Enterprise Magazine, Daqri CEO Roy Ashok told the publication that the startup was forecasting shipments of “tens of thousands” of pairs of its AR glasses in 2020.

Daqri, its founder and several executives did not respond to requests for comment.

Gig worker bill AB-5 passes in California

Assembly Bill 5, the gig worker bill opposed by the likes of Uber, Lyft and DoorDash, has passed in the California State Senate. This comes shortly after California Governor Gavin Newsom officially put his support behind AB 5 in an op-ed.

The bill needed 21 votes to pass in the State Senate. It passed in a 29 to 11 vote this evening.

The next step is for Governor Newsom to sign the bill into law, which he is expected to do. If he signs the bill, it will go into effect at the beginning of 2020.

“AB 5 is only the beginning,” Gig Workers Rising member and driver Edan Alva said in a statement. “I talk daily to other drivers who want a change but they are scared. They don’t want to lose their only source of income. But just because someone really needs to work does not mean that their rights as a worker should be stepped all over. That is why a union is critical. It simply won’t work without it.”

The bill, first introduced in December 2018, aims to codfiy the ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors based on the presumption that “a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits…”

Those who work as 1099 contractors can set their own schedules, and decide when, where and how much they want to work. For employers, bringing on 1099 contractors means they can avoid paying payroll taxes, overtime pay, benefits and workers’ compensation.

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”

In short, AB-5, which has already passed in the California State Assembly, would ensure gig economy workers are entitled to minimum wage, workers’ compensation and other benefits.

Uber and Lyft, two of the main targets of this legislation, are adamantly against it. Last month, Uber, Lyft and DoorDash amped up their efforts to do whatever they can to prevent it from happening. That’s in part due to the fact that the companies cost of operating would increase.

Uber, Lyft and DoorDash each put $30 million toward funding a 2020 ballot initiative that would enable them to keep their drivers as independent contractors.

Assuming Gov. Newsom signs the bill, it will go into effect Jan. 1, 2020.

AB5 has passed through the Senate! We thank @LorenaAD80 for championing this in the legislature and celebrate with drivers from across the state who have spent years organizing. Up next: a real union for drivers!

— Gig Workers Rising (@GigWorkersRise) September 11, 2019

Good Capital launches to close the funding gap for early-stage Indian startups

Rohan Malhotra and Arjun Malhotra left their jobs in London and Silicon Valley to explore opportunities in India in late 2013. A year later, the brothers launched Investopad to connect with local startup founders and product managers and built a community to exchange insight. Somewhere in the journey, they wrote early checks to social-commerce startup Meesho, which now counts Facebook as an investor, Autonomic, which got acquired by Ford, and HyperTrack, among others. Now the duo is ready to be full-time VCs.

On Monday, they announced Good Capital, a VC fund that would invest in early-stage startups. Through Good Capital’s maiden fund of $25 million, the brothers plan to invest in about half a dozen startups in a year and provide between $100,000 to $2 million in their Seed and Series A financing rounds, they told TechCrunch in an interview last week.

“Through Investopad, we helped startup founders raise money, provided guidance, and helped them find customers. We did a ton of events, and learned about the market,” said Arjun, who worked at Capricorn Investment Group and also acted in 2014 blockbuster Bollywood title “Highway.”

Investopad’s first fund portfolio stands at a gross IRR of 138.3% and nine of its 12 investments have realised returns, with every dollar invested already returned, the brothers said.

Good Capital will focus on investing in startups that are building solutions that address users who have come online in India for the first time in the last two years, they said.

“We don’t have laser-focus on a particular sector,” said Rohan, who previously worked as a sports agent in the talent management business. “Our primary focus is to help startups that are taking a bottom-up approach.”

One example of such startup is Meesho, a social-commerce startup that has amassed over 2 million users who are engaging with the platform to sell products across India.

In a statement, Vidit Aatrey, cofounder and CEO of Meesho, said, “Rohan and Arjun were our earliest investors. They have a phenomenal global network of entrepreneurs, operators and investors. They helped us early on with introductions to such people; who brought not only capital but, more importantly, valuable operational inputs which helped us learn quickly and find product-market fit faster. While we’ve grown from 2 people to over 1,000+ at Meesho, they remain close confidants!”

The VC fund has completed its first close of $12 million from Symphony International Holdings, a host of European family offices, and a number of other Silicon Valley entrepreneurs.

Sundeep Madra, CEO of Ford X, and Yogen Dalal, Partner Emeritus at the Mayfield Fund and founder of Glooko, and Dinesh Moorjani, Managing Director of Comcast Ventures and founder of Hatch Labs and Tinder, will serve as advisors to Good Capital.

“Rohan and Arjun have a unique ability to identify trends and bring together founders and investors to go after the unique problems that India needs to have solved. They operate with a sense of urgency and innovation which is a major key at the seed-stage.” said Madra, who has invested in companies such as Uber and Zenefits.

The fund has also set up an investment committee whose members are Sanjay Kapoor, former CEO of Airtel and now a senior advisor at BCG, Rahul Khanna, formerly a managing partner at Cannan Partners and now founder of Trifecta Capital, and Kashyap Deorah, a serial entrepreneur who is currently building HyperTrack.

Good Capital has also already made two investments: SimSim, a video-based e-commerce platform that is trying to replicate the experience consumers have in offline stores, and Spatial, a cross-reality platform that allows people to collaborate through augmented reality. Garrett Camp, a founder of Uber and Expa, and Samsung Next have also invested in Spatial.

The VC fund is also interested in funding business-to-business startups, though they say these startups would ideally be building solutions for overseas markets. “There we are generally targeting makers, developers and designers, rather than solving problems for heavy-duty sales businesses.”

The arrival of Good Capital should help the Indian startup community, which today has to rely on a handful of VC funds that invest in early stage startups. “Conventionally, funds have targeted the top of the pyramid by exploring visible opportunities and replicated US companies and models,” said Moorjani in a statement.

“In contrast, Good Capital’s first principles thinking applied to India’s larger economy, which is coming online at scale with a supporting ecosystem for the first time, has been refreshing to see. The team is beyond talented.,” he added.

Even as Indian tech startups raised a record $10.5 billion in 2018, early-stage startups saw a decline in the number of deals they participated in and the amount of capital they received.

Early-stage startups participated in 304 deals in 2018 and raised $916 million in funds last year, down from $988 million they raised from 380 rounds in 2017 and $1.096 billion they raised from 430 deals the year before, research firm Venture Intelligence told TechCrunch.

As for Investopad, the brothers said they have hired a number of people who will now continue its operation.

WeChat restricts controversial video face-swapping app Zao, citing “security risks”

Zao went viral in China this weekend for its realistic face-swapping videos, but after controversy about its policies, WeChat restricted access to the app on its messaging platform.

Developed by a unit of Momo, one of China’s most popular dating apps, Zao creates videos that replace the faces of celebrities in scenes from popular movies, shows and music videos with a selfie uploaded by the user.

The app, currently available only in China, went viral as users shared their videos through WeChat and other social media platforms in China. But concerns about the potential misuse of deepfake technology coupled with a clause (now deleted) in Zao’s terms of use that gave it full ownership and copyright to content uploaded or created on it, in addition to “completely free, irrevocable, perpetual, transferrable, and re-licensable rights,” caused controversy.

In case you haven’t heard, #ZAO is a Chinese app which completely blew up since Friday. Best application of ‘Deepfake’-style AI facial replacement I’ve ever seen.

Here’s an example of me as DiCaprio (generated in under 8 secs from that one photo in the thumbnail) 🤯pic.twitter.com/1RpnJJ3wgT

— Allan Xia (@AllanXia) September 1, 2019

By going viral quickly and being very easy to use (Zao’s videos can be generated from a single selfie, though it suggests that users upload photos from several angles for better results), the app has also focused more attention on deepfake technology and how it can potentially be used to spread misinformation or harass people.

Users can still upload videos they created with Zao to WeChat, but if they try to download the app or send an invite link to another WeChat user, a message is displayed that says “this web page has been reported multiple times and contains security risks. To maintain a safe online environment, access to this page has been blocked.”23011567479434 .pic

Zao was released last Friday and quickly became the top free iOS app in China, according to App Annie. A statement posted on Sept. 1 to Zao’s Weibo account says “we completely understand everybody’s concerns about the privacy issue. We are aware of the issue and we are thinking about how to fix the problems, we need a little time.” Its terms and conditions now say user-generated content will only be used by the company to improve the app and that all deleted content will be removed from its servers.

TechCrunch has contacted Zao for comment.

Silicone 3D printing startup Spectroplast spins out of ETHZ with $1.5M

3D printing has become commonplace in the hardware industry, but because few materials can be used for it easily, the process rarely results in final products. A Swiss startup called Spectroplast hopes to change that with a technique for printing using silicone, opening up all kinds of applications in medicine, robotics and beyond.

Silicone is not very bioreactive, and of course can be made into just about any shape while retaining strength and flexibility. But the process for doing so is generally injection molding, great for mass-producing lots of identical items but not so great when you need a custom job.

And it’s custom jobs that ETH Zurich’s Manuel Schaffner and Petar Stefanov have in mind. Hearts, for instance, are largely similar but the details differ, and if you were going to get a valve replaced, you’d probably prefer yours made to order rather than straight off the shelf.

“Replacement valves currently used are circular, but do not exactly match the shape of the aorta, which is different for each patient,” said Schaffner in a university news release. Not only that, but they may be a mixture of materials, some of which the body may reject.

But with a precise MRI the researchers can create a digital model of the heart under consideration and, using their proprietary 3D printing technique, produce a valve that’s exactly tailored to it — all in a couple of hours.

ethz siliconeprinting 1

A 3D-printed silicone heart valve from Spectroplast.

Although they have created these valves and done some initial testing, it’ll be years before anyone gets one installed — this is the kind of medical technique that takes a decade to test. So in the meantime they are working on “life-improving” rather than life-saving applications.

One such case is adjacent to perhaps the most well-known surgical application of silicone: breast augmentation. In Spectroplast’s case, however, they’d be working with women who have undergone mastectomies and would like to have a breast prosthesis that matches the other perfectly.

Another possibility would be anything that needs to fit perfectly to a person’s biology, like a custom hearing aid, the end of a prosthetic leg or some other form of reconstructive surgery. And of course, robots and industry could use one-off silicone parts as well.

ethz siliconeprinting 2

There’s plenty of room to grow, it seems, and although Spectroplast is just starting out, it already has some 200 customers. The main limitation is the speed at which the products can be printed, a process that has to be overseen by the founders, who work in shifts.

Until very recently Schaffner and Stefanov were working on this under a grant from the ETH Pioneer Fellowship and a Swiss national innovation grant. But in deciding to depart from the ETH umbrella they attracted a 1.5 million Swiss franc (about the same as dollars just now) seed round from AM Ventures Holding in Germany. The founders plan to use the money to hire new staff to crew the printers.

Right now Spectroplast is doing all the printing itself, but in the next couple of years it may sell the printers or modifications necessary to adapt existing setups.

You can read the team’s paper showing their process for creating artificial heart valves here.

Fresh out of Y Combinator, Tandem lands millions from Andreessen Horowitz

Tandem, one of the most sought after companies to graduate from Y Combinator’s summer batch, will emerge from the accelerator program with a supersized seed round and an uncharacteristically high valuation.

The months-old business, which is developing communication software for remote teams after pivoting from crypto, is raising a $7.5 million seed financing at a valuation north of $30 million, sources tell TechCrunch. Airbnb investor Andreessen Horowitz is leading the round.

Tandem and a16z declined to comment for this story. The round has yet to close, which means the deal size is subject to change. Y Combinator startups raise capital using SAFE agreements, or simple agreements for future equity, which allow investors to buy shares in a future priced round at a previously agreed-upon valuation.

We’re told several top venture capital firms were vying for a stake in Tandem. One firm even gifted the founders a tandem bike, sources tell TechCrunch, resorting to amusing measures to sway the Tandem team. But it was a16z — which has an established interest in the growing future of work sector, evidenced by its recent investment in the popular email app Superhuman — that ultimately won the coveted lead investor spot.

Tandem provides a virtual office for remote teams, complete with video-chatting and messaging capabilities, as well as integrations with top enterprise tools including Notion, GitHub and Trello. The service launched one month ago and has signed contracts with Airbnb, Dropbox and others. The company claims to be growing 50% week-over-week.

“Every company is a remote company,” Tandem chief executive officer Rajiv Ayyangar said during his pitch to investors on day two of Y Combinator Demo Days this week. “You have salespeople in the field, [companies with] multiple offices, people working from home. Tandem isn’t just building the future of remote work, it’s building the future of work.”

Ayyangar was previously a data scientist at Yahoo before joining Yakit, a startup seeking to simplify ecommerce delivery, as the director of product. Co-founders Bernat Fortet Unanue and Tim Su are also Yahoo alums.

We’re told Tandem’s fundraise was nearly complete before it pitched to investors Tuesday afternoon. Startups that participate in YC are often flooded with offers from VCs throughout the three-month program. Firms are hungry for the batch’s Airbnb, Dropbox or Stripe — graduates of the program — and will pay premiums on startup equity for their chance to invest in a future ‘unicorn.’

As a result, the median seed deal for U.S. startups in 2018 was roughly $2 million — a record high — with typical pre-money valuations hovering north of $10 million. Tandem’s seed financing represents both a trend of swelling seed deals and valuations, as well as a tendency for VCs to dole out more cash to fresh-from-YC companies amid heightened competition amongst their peers.

The previous YC batch, which wrapped up in March, included ZeroDown, Overview.AI and Catch, a trio of companies that pocketed venture capital ahead of demo day. ZeroDown, a financing solution for real estate purchases in the Bay Area, raised upwards of $10 million at a $75 million valuation before demo day, sources told TechCrunch at the time (months after demo day, Zero Down announced a whopping $30 million financing). ZeroDown was an outlier, of course, as the company’s founders had previously co-founded the billion-dollar HR software company Zenefits.

As for the summer batch, we’re told Actiondesk, Taskade and Tandem are amongst the startups to garner the most hype from investors. Some even forwent the demo day pitch altogether. BraveCare, which is creating urgent care clinics intended just for kids, raised $4.1 million ahead of demo day, we’re told. The company opted not to pitch to additional investors this week.

You can read about all the company’s that pitched during demo day one here and demo day two here.