Linear takes $4.2M led by Sequoia to build a better bug tracker and more

Software will eat the world, as the saying goes, but in doing so, some developers are likely to get a little indigestion. That is to say, building products requires working with disparate and distributed teams, and while developers may have an ever-growing array of algorithms, APIs and technology at their disposal to do this, ironically the platforms to track it all haven’t evolved with the times. Now three developers have taken their own experience of that disconnect to create a new kind of platform, Linear, which they believe addresses the needs of software developers better by being faster and more intuitive. It’s bug tracking you actually want to use.

Today, Linear is announcing a seed round of $4.2 million led by Sequoia, with participation also from Index Ventures and a number of investors, startup founders and others that will also advise Linear as it grows. They include Dylan Field (Founder and CEO, Figma), Emily Choi (COO, Coinbase), Charlie Cheever (Co-Founder of Expo & Quora), Gustaf Alströmer (Partner, Y Combinator), Tikhon Berstram (Co-Founder, Parse), Larry Gadea (CEO, Envoy), Jude Gomila (CEO, Golden), James Smith (CEO, Bugsnag), Fred Stevens-Smith (CEO, Rainforest), Bobby Goodlatte, Marc McGabe, Julia DeWahl and others.

Cofounders Karri Saarinen, Tuomas Artman, and Jori Lallo — all Finnish but now based in the Bay Area — know something first-hand about software development and the trials and tribulations of working with disparate and distributed teams. Saarinen was previously the principal designer of Airbnb, as well as the first designer of Coinbase; Artman had been staff engineer and architect at Uber; and Lallo also had been at Coinbase as a senior engineer building its API and front end.

“When we worked at many startups and growth companies we felt that the tools weren’t matching the way we’re thinking or operating,” Saarinen said in an email interview. “It also seemed that no-one had took a fresh look at this as a design problem. We believe there is a much better, modern workflow waiting to be discovered. We believe creators should focus on the work they create, not tracking or reporting what they are doing. Managers should spend their time prioritizing and giving direction, not bugging their teams for updates. Running the process shouldn’t sap your team’s energy and come in the way of creating.”

Linear cofounders (from left): KarriSaarinen, Jori Lallo, and Tuomas Artma

All of that translates to, first and foremost, speed and a platform whose main purpose is to help you work faster. “While some say speed is not really a feature, we believe it’s the core foundation for tools you use daily,” Saarinen noted.

A ⌘K command calls up a menu of shortcuts to edit an issue’s status, assign a task, and more so that everything can be handled with keyboard shortcuts. Pages load quickly and synchronise in real time (and search updates alongside that). Users can work offline if they need to. And of course there is also a dark mode for night owls.

The platform is still very much in its early stages. It currently has three integrations based on some of the most common tools used by developers — GitHub (where you can link Pull Requests and close Linear issues on merge), Figma designs (where you can get image previews and embeds of Figma designs), and Slack (you can create issues from Slack and then get notifications on updates). There are plans to add more over time.

We started solving the problem from the end-user perspective, the contributor, like an engineer or a designer and starting to address things that are important for them, can help them and their teams,” Saarinen said. “We aim to also bring clarity for the teams by making the concepts simple, clear but powerful. For example, instead of talking about epics, we have Projects that help track larger feature work or tracks of work.”

Indeed, speed is not the only aim with Linear. Saarinen also said another area they hope to address is general work practices, with a take that seems to echo a turn away from time spent on manual management and more focus on automating that process.

“Right now at many companies you have to manually move things around, schedule sprints, and all kinds of other minor things,” he said. “We think that next generation tools should have built in automated workflows that help teams and companies operate much more effectively. Teams shouldn’t spend a third or more of their time a week just for running the process.”

The last objective Linear is hoping to tackle is one that we’re often sorely lacking in the wider world, too: context.

“Companies are setting their high-level goals, roadmaps and teams work on projects,” he said. “Often leadership doesn’t have good visibility into what is actually happening and how projects are tracking. Teams and contributors don’t always have the context or understanding of why they are working on the things, since you cannot follow the chain from your task to the company goal. We think that there are ways to build Linear to be a real-time picture of what is happening in the company when it comes to building products, and give the necessary context to everyone.”

Linear is a late entrant in a world filled with collaboration apps, and specifically workflow and collaboration apps targeting the developer community. These include not just Slack and GitHub, but Atlassian’s Trello and Jira, as well as Asana, Basecamp and many more.

Saarinen would not be drawn out on which of these (or others) that it sees as direct competition, noting that none are addressing developer issues of speed, ease of use and context as well as Linear is.

“There are many tools in the market and many companies are talking about making ‘work better,’” he said. “And while there are many issue tracking and project management tools, they are not supporting the workflow of the individual and team. A lot of the value these tools sell is around tracking work that happens, not actually helping people to be more effective. Since our focus is on the individual contributor and intelligent integration with their workflow, we can support them better and as a side effect makes the information in the system more up to date.”

Stephanie Zhan, the partner at Sequoia whose speciality is seed and Series A investments and who has led this round, said that Linear first came on her radar when it first launched its private beta (it’s still in private beta and has been running a waitlist to bring on new users. In that time it’s picked up hundreds of companies, including Pitch, Render, Albert, Curology, Spoke, Compound and YC startups including Middesk, Catch and Visly). The company had also been flagged by one of Sequoia’s Scouts, who invested earlier this year

Sequoia Logo Natalie Miyake

Although Linear is based out of San Francisco, it’s interesting that the three founders’ roots are in Finland (with Saarinen in Helsinki this week to speak at the Slush event), and brings up an emerging trend of Silicon Valley VCs looking at founders from further afield than just their own back yard.

“The interesting thing about Linear is that as they’re building a software company around the future of work, they’re also building a remote and distributed team themselves,” Zahn said. The company currently has only four employees.

In that vein, we (and others, it seems) had heard that Sequoia — which today invests in several Europe-based startups, including Tessian, Graphcore, Klarna, Tourlane, Evervault  and CEGX — has been considering establishing a more permanent presence in this part of the world, specifically in London.

Sources familiar with the firm, however, tell us that while it has been sounding out VCs at other firms, saying a London office is on the horizon might be premature, as there are as yet no plans to set up shop here. However, with more companies and European founders entering its portfolio, and as more conversations with VCs turn into decisions to make the leap to help Sequoia source more startups, we could see this strategy turning around quickly.


By Ingrid Lunden

Celonis, a leader in big data process mining for enterprises, nabs $290M on a $2.5B valuation

More than $1 trillion is spent by enterprises annually on “digital transformation” — the investments that organizations make to update their IT systems to get more out of them and reduce costs — and today one of the bigger startups that’s built a platform to help get the ball rolling is announcing a huge round of funding.

Celonis, a leader in the area of process mining — which tracks data produced by a company’s software, as well as how the software works, in order to provide guidance on what a company could and should do to improve it — has raised $290 million in a Series C round of funding, giving the startup a post-money valuation of $2.5 billion.

Celonis was founded in 2011 in Munich — an industrial and economic center in Germany that you could say is a veritable petri dish when it comes to large business in need of digital transformation — and has been cash-flow positive from the start. In fact, Celonis waited until it was nearly six years old to take its first outside funding (prior to this Series C it had picked up less than $80 million, see here and here).

The size and timing of this latest equity injection is due to seizing the moment, and tapping networks of people to do so. It has already been growing at a triple-digit rate, with customers like Siemens, Cisco, L’Oreal, Deutsche Telekom and Vodafone among them. 

“Our tech has become its own category with a lot of successful customers,” Bastian Nominacher, the co-CEO who co-founded the company with Alexander Rinke and Martin Klenk, said in an interview. “It’s a key driver for sustainable business operations, and we felt that we needed to have the right network of people to keep momentum in this market.”

To that end, this latest round’s participants lines up with the company’s strategic goals. It is being led by Arena Holdings — an investment firm led by Feroz Dewan — with Ryan Smith, co-founder and CEO of Qualtrics; and Tooey Courtemanche, founder and CEO of Procore, also included, alongside previous investors 83North and Accel.

Celonis said Smith will be a special advisor, working alongside another strategic board member, Hybris founder Carsten Thoma. Dewan, meanwhile, used to run hedge funds for Tiger Global (among other roles) and currently sits on the board of directors of Kraft Heinz.

“Celonis is the clear market leader in a category with open-ended potential. It has demonstrated an enviable record of growth and value creation for its customers and partners,” said Dewan in a statement. “Celonis helps companies capitalise on two inexorable trends that cut across geography and industry: the use of data to enable faster, better decision-making and the desire for all businesses to operate at their full potential.”

The core of Celonis’ offering is to provide process mining around an organizations’ IT systems. Nominacher said that this could include anything from 5 to over 100 different pieces of software, with the main idea being that Celonis’s platform monitors a company’s whole solar system of apps, so to speak, in order to produce its insights — providing and “X-ray” view of the situation, in the words of Rinke.

Those insights, in turn, are used either by the company itself, or by consultants engaged by the organization, to make further suggestions, whether that’s to implement something like robotic process automation (RPA) to speed up a specific process, or use a different piece of software to crunch data better, or reconfigure how staff is deployed, and so on. This is not a one-off thing: the idea is continuous monitoring to pick up new patterns or problems.

In recent times, the company has started to expand the system into a wider set of use cases, by providing tools to monitor operations and customer experience, and to apply its process mining engine to a wider set of company sizes beyond large enterprises, and by bringing in more AI to its basic techniques.

Interestingly, Nominacher said that there are currently no plans to, say, extend into RPA or other “fixing” tools itself, pointing to a kind of laser strategy that is likely part of what has helped it grow so well up to now.

“It’s important to focus on the relevant parts of what you provide,” he said. “We one layer, one that can give the right guidance.”


By Ingrid Lunden

SocialRank sells biz to Trufan, pivots to a mobile LinkedIn

What do you do when your startup idea doesn’t prove big enough? Run it as a scrawny but profitable lifestyle business? Or sell it to a competitor and take another swing at the fences? Social audience analytics and ad targeting startup SocialRank chose the latter and is going for glory.

Today, SocialRank announced it’s sold its business, brand, assets, and customers to influencer marketing campaign composer and distributor Trufan which will run it as a standalone product. But SocialRank’s team isn’t joining up. Instead, the full six-person staff is sticking together to work on a mobile-first professional social network called Upstream aiming to nip at LinkedIn.

SocialRank co-founder and CEO Alex Taub

Started in 2014 amidst a flurry of marketing analytics tools, SocialRank had raised $2.1 million from Rainfall Ventures and others before hitting profitability in 2017. But as the business plateaued, the team saw potential to use data science about people’s identity to get them better jobs.

“A few months ago we decided to start building a new product (what has become Upstream). And when we came to the conclusion to go all-in on Upstream, we knew we couldn’t run two businesses at the same time” SocialRank co-founder and CEO Alex Taub tells me. “We decided then to run a bit of a process. We ended up with a few offers but ultimately felt like Trufan was the best one to continue the business into the future.”

The move lets SocialRank avoid stranding its existing customers like the NFL, Netflix, and Samsung that rely on its audience segmentation software. Instead, they’ll continue to be supported by Trufan where Taub and fellow co-founder Michael Schonfeld will become advisors.

“While we built a sustainable business, we essentially knew that if we wanted to go real big, we would need to go to the drawing board” Taub explains.

SocialRank

Two-year-old Trufan has raised $1.8 million Canadian from Round13 Capital, local Toronto startup Clearbanc’s founders, and several NBA players. Trufan helps brands like Western Union and Kay Jewellers design marketing initiatives that engage their customer communities through social media. It’s raising an extra $400,000 USD in venture debt from Round13 to finance the acquisition, which should make Trufan cash-flow positive by the end of the year.

Why isn’t the SocialRank team going along for the ride? Taub said LinkedIn was leaving too much opportunity on the table. While it’s good for putting resumes online and searching for people, “All the social stuff are sort of bolt-ons that came after Facebook and Twitter arrived. People forget but LinkedIn is the oldest active social network out there”, Taub tells me, meaning it’s a bit outdated.

Trufan’s team

Rather than attack head-on, the newly forged Upstream plans to pick the Microsoft-owned professional network apart with better approaches to certain features. “I love the idea of ‘the unbundling of LinkedIn’, ala what’s been happening with Craigslist for the past few years” says Taub. “The first foundational piece we are building is a social professional network around giving and getting help. We’ll also be focused on the unbundling of the groups aspect of LinkedIn.”

Taub concludes that entrepreneurs can shackle themselves to impossible goals if they take too much venture capital for the wrong business. As we’ve seen with SoftBank, investors demand huge returns that can require pursuing risky and unsustainable expansion strategies.

“We realized that SocialRank had potential to be a few hundred million dollar in revenue business but venture growth wasn’t exactly the model for it” Taub says. “You need the potential of billions in revenue and a steep growth curve.” A professional network for the smartphone age has that kind of addressable market. And the team might feel better getting out of bed each day knowing they’re unlocking career paths for people instead of just getting them to click ads.


By Josh Constine

Lawyers hate timekeeping. Ping raises $13M to fix it with AI

Counting billable time in six minute increments is the most annoying part of being a lawyer. It’s a distracting waste. It leads law firms to conservatively under-bill. And it leaves lawyers stuck manually filling out timesheets after a long day when they want to go home to their families.

Life is already short, as Ping CEO and co-founder Ryan Alshak knows too well. The former lawyer spent years caring for his mother as she battled a brain tumor before her passing. “One minute laughing with her was worth a million doing anything else” he tells me. “I became obsessed with the idea that we spend too much of our lives on things we have no need to do — especially at work.”

That’s motivated him as he’s built his startup Ping, which uses artificial intelligence to automatically track lawyers’ work and fill out timesheets for them. There’s a massive opportunity to eliminate a core cause of burnout, lift law firm revenue by around 10%, and give them fresh insights into labor allocation.

Ping co-founder and CEO Ryan Alshak. Image Credit: Margot Duane

That’s why today Ping is announcing a $13.2 million Series A led by Upfront Ventures, along with BoxGroup, First Round, Initialized, and Ulu Ventures. Adding to Ping’s quiet $3.7 million seed led by First Round last year, the startup will spend the cash to scale up enterprise distribution and become the new timekeeping standard.

I was a corporate litigator at Manatt Phelps down in LA and joke that I was voted the world’s worst timekeeper” Alshak tells me. “I could either get better at doing something I dreaded or I could try and build technology that did it for me.”

The promise of eliminating the hassle could make any lawyer who hears about Ping an advocate for the firm buying the startup’s software, like how Dropbox grew as workers demanded easier file sharing. “I’ve experienced first-hand the grind of filling out timesheets” writes Initialized partner and former attorney Alda Leu Dennis. “Ping takes away the drudgery of manual timekeeping and gives lawyers back all those precious hours.”

Traditionally, lawyers have to keep track of their time by themselves down to the tenth of an hour — reviewing documents for the Johnson case, preparing a motion to dismiss for the Lee case, a client phone call for Sriram case. There are timesheets built into legal software suites like MyCase, legal billing software like Timesolv, and one-off tools like Time Miner and iTimeKeep. They typically offer timers that lawyers can manually start and stop on different devices, with some providing tracking of scheduled appointments, call and text logging, and integration with billing systems.

Ping goes a big step further. It uses AI and machine learning to figure out whether an activity is billable, for which client, a description of the activity, and its codification beyond just how long it lasted. Instead of merely filling in the minutes, it completes all the logs automatically with entries like “Writing up a deposition – Jenkins Case – 18 minutes”. Then it presents the timesheet to the user for review before the send it to billing.

The big challenge now for Alshak and the team he’s assembled is to grow up. They need to go from cat-in-sunglasses logo Ping to mature wordmark Ping.  “We have to graduate from being a startup to being an enterprise software company” the CEO tells meThat means learning to sell to C-suites and IT teams, rather than just build solid product. In the relationship-driven world of law, that’s a very different skill set. Ping will have to convince clients it’s worth switching to not just for the time savings and revenue boost, but for deep data on how they could run a more efficient firm.

Along the way, Ping has to avoid any embarrassing data breaches or concerns about how its scanning technology could violate attorney-client privilege. If it can win this lucrative first business in legal, it could barge into the consulting and accounting verticals next to grow truly huge.

With eager customers, a massive market, a weak status quo, and a driven founder, Ping just needs to avoid getting in over its heads with all its new cash. Spent well, the startup could leap ahead of the less tech-savvy competition.

Alshak seems determined to get it right. “We have an opportunity to build a company that gives people back their most valuable resource — time — to spend more time with their loved ones because they spent less time working” he tells me. “My mom will live forever because she taught me the value of time. I am deeply motivated to build something that lasts . . . and do so in her name.”


By Josh Constine

Alpaca nabs $6M for stocks API so anyone can build a Robinhood

Stock trading app Robinhood is valued at $7.6 billion, but it only operates in the US. Freshly-funded fintech startup Alpaca does the dirty work so developers worldwide can launch their own competitors to that investing unicorn. Like the Stripe of stocks, Alpaca’s API handles the banking, security, and regulatory complexity, allowing other startups to quickly build brokerage apps on top for free. It’s already crossed $1 billion in transaction within a year of launch.

The potential to power the backend of a new generation of fintech apps has attracted a $6 million Series A round for Alpaca led by Spark Capital . Instead of charging developers, Alpaca earns its money through payment for order flow, interest on cash deposits, and margin lending much like Robinhood.

“I want to make sure that people even outside the US have access” to a way of building wealth that’s historically only “available to rich people” Alpaca co-founder and CEO Yoshi Yokokawa tells me.

Alpaca co-founder and CEO Yoshi Yokokawa

Hailing from Japan, Yokokawa followed his friends into the investment banking industry where he worked at Lehman Brothers until its collapse. After his grandmother got sick, he moved into day-trading for three years and realized “all the broker dealer business tools were pretty bad”. But when he heard of Robinhood in 2013 and saw it actually catering to users’ needs, he thought “I need to be involved in this new transformation” of fintech.

Yokokawa ended up first building a business selling deep learning AI to banks and trading firms in the foreign exchange market. Watching clients struggle to quickly integrate new technology revealed the lack of available developer tools. By 2017, he was pivoting the business and applying for FINRA approval. Alpaca launched in late 2018, letting developers paste in code to let their users buy and sell securities.

Now international developers and small hedge funds are building atop the Alpaca API so they don’t have to reinvent the underlying infrastructure themselves right away. Alpaca works with clearing broker NTC, and then marks up margin trading while earning interest and payment for order flow. It also offers products like AlpacaForecast with short-term predictions of stock prices, AlpacaRadar for detecting price swings, and its MarketStore financial database server.

AlpacaForecast

The $6 million from Spark Capital, Social Leverage, Portag3, Fathom Capital, and Zillionize adds to $5.8 million in previous funding from investors including Y Combinator. The startup plans to spend the cash on hiring up to handle partnerships with bigger businesses, supporting its developer community, and ensuring compliance.

One major question is whether fintech businesses that start to grow atop Alpaca and drive its revenues will try to declare independence and later invest in their own technology stack. There’s the additional risk of a security breach that might scare away clients.

Alpaca’s top competitor Interactive Brokers offers trading APIs but other services as well that distract it from fostering a robust developer community, Yokokawa tells me. Alpaca focuses on providing great documentation, open source contribution, and SDKs in different languages that make it more developer-friendly. It will also have to watch out for other fintech services startups like DriveWealth and well-funded Galileo.

There’s a big opportunity to capitalize on the race to integrate stock trading into other finance apps to drive stickiness since it’s a consistent voluntary behavior rather than a chore or something only done a few times a year. Lender Sofi and point-of-sale system Square both recently became broker dealers as well, and Yokokawa predicts more and more apps will push into the space.

Why would we need so many stock trading apps? “Every single person is involved with money so the market is huge. Instead of one-player takes all, there will be different players that can all do well” Yokokawa tells me. “Like banks and investment banks co-exist, it will never be that Bank Of America takes 80% of the pie. I think differentiation will be on customer acquisition, and operations management efficiency.”

The co-founder’s biggest concern is keeping up with all the new opportunities in financial services, from cash management and cryptocurrency that Robinhood already deals in, to security token offerings, and fractional investing. Yokokawa says “I need to make sure I’m on top of everything and that we’re executing with the right timing so we don’t lose.”

The CEO hopes that Alpaca will one day power broader access to the US stock market back in Japan, noting that if a modern nation still lags behind in fintech, the rest of world surely fares even worse. “I want to connect this asset class to as many people as possible on the earth.”


By Josh Constine

Coveo raises $227M at $1B+ valuation for AI-based enterprise search and personalization

Search and personalization services continue to be a major area of investment among enterprises, both to make their products and services more discoverable (and used) by customers, and to help their own workers get their jobs done, with the market estimated to be worth some $100 billion annually. Today, one of the big startups building services in this area raised a large round of growth funding to continue tapping that opportunity. Coveo, a Canadian company that builds search and personalisation services powered by artificial intelligence — used by its enterprise customers by way of clould-based, software-as-a-service — has closed a $227 million round, which CEO Louis Tetu tells me values the company at “well above” $1 billion, “Canadian or US dollars.”

The round is being led by Omers Capital Private Growth Equity Group, the investing arm of the Canadian pensions giant that makes large, later-stage bets (the company has been stepping up the pace of investments lately), with participation also from Evergreen Coast Capital, FSTQ, and IQ Ventures. Evergreen led the company’s last round of $100 million in April 2018, and in total the company has now raised just over $402 million with this round.

The $1 billion+ valuation appears to be a huge leap in the context of Coveo’s funding history: in that last round, it had a post-money valuation of about $370 million, according to PitchBook data.

Part of the reason for that is because of Coveo’s business trajectory, and part is due to the heat of the overall market.

Coveo’s round is coming about two weeks after another company that builds enterprise search solutions, Algolia, raised $110 million. The two aim at slightly different ends of the market, Tetu tells me, not directly competing in terms of target customers, and even services. “Algolia is in a different zip code,” he said. Good thing, too, if that’s the case: Salesforce — which is one of Coveo’s biggest partners and customers — was also a strategic investor in the Algolia round. Even if these two do not compete, there are plenty of others vying for the same end of the enterprise search and personalization continuum — they include Google, Microsoft, Elastic, IBM, Lucidworks, and many more. That, again, underscores the size of the market opportunity.

In terms of Coveo’s own business, the company works with some 500 customers today and says SaaS subscription revenues grew more than 55 percent year-over-year this year. Five hundred may sound like a small number, but it covers a lot of very large enterprises spanning web-facing businesses, commerce-based organizations, service-facing companies, and enterprise solutions.

In addition to Salesforce, it includes Visa, Tableau (also Salesforce now!), Honeywell, a Fortune 50 healthcare company (whose name is not getting disclosed), and what Tetu described to me as an Amazon competitor that does $21 billion in sales annually but doesn’t want to be named.

Coveo’s basic selling point is that the better discoverability and personalization that it provides helps its customers avoid as many call-center interactions (reducing operating expenditures), improving sales (boosting conversions and reducing cart abandonment), and help companies themselves just work faster.

“We believe that Coveo is the market leader in leveraging data and AI to personalize at scale,” said Mark Shulgan, Managing Director and Head of Growth Equity at Omers, in a statement. “Coveo fits our investment thesis precisely: an A-plus leadership team with deep expertise in enterprise SaaS, a Fortune 1000 customer base who deeply love the product, and a track record of high growth in a market worth over $100 billion. This makes Coveo a highly-coveted asset. We are glad to be partnering to scale this business.”

Alongside business development on its own steam, the company is going to be using this funding for acquisitions. Tetu notes that Coveo still has a lot of money in the bank from previous rounds.

“We are a real company with real positive economics,” he said. “This round is mostly to have dry powder to invest in a way that is commensurate in the AI space, and within commerce in particular.” To get the ball rolling on that, this past July, Coveo acquired Tooso, a specialist in AI-based digital commerce technology.


By Ingrid Lunden

CTO.ai’s developer shortcuts eliminate coding busywork

There’s too much hype about mythical “10X developers”. Everyone’s desperate to hire these ‘ninja rockstars’. In reality, it’s smarter to find ways of deleting annoying chores for the coders you already have. That’s where CTO.ai comes in.

Emerging from stealth today, CTO.ai lets developers build and borrow DevOps shortcuts. These automate long series of steps they usually have to do manually thanks to integrations with GitHub, AWS, Slack, and more. CTO.ai claims it can turn a days-long process like setting up a Kubernetes cluster into a 15-minute task even sales people can handle. The startup offers both a platform for engineering and sharing shortcuts, and a service where it can custom build shortcuts for big customers.

What’s remarkable about CTO.ai is that amidst a frothy funding environment, the 60-person team quietly bootstrapped its way to profitability over the past two years. Why take funding when revenue was up 400% in 18 months? But after a chance meeting aboard a plane connected its high school dropout founder Kyle Campbell with Slack CEO Stewart Butterfield, CTO.ai just raised a $7.5 million seed round led by Slack Fund and Tiger Global.

“Building tools that streamline software development is really expensive for companies, especially when they need their developers focused on building features and shipping to customers” Campbell tells me. The same way startups don’t build their own cloud infrastructure and just use AWS, or don’t build their own telecom APIs and just use Twilio, he wants CTO.ai to be the ‘easy button’ for developer tools.

Teaching Snakes To Eat Elephants

“I’ve been a software engineer since the age of 8” Campbell recalls. In skate-punk attire with a snapback hat, the young man meeting me in a San Francisco mission district cafe almost looked too chill to be a prolific coder. But that’s kind of the point. His startup makes being a developer more accessible.

After spending his 20s in software engineering groups in the Bay, Campbell started his own company Retsly that bridged developers to real estate listings. In 2014, it was acquired by property tech giant Zillow where he worked for a few years.

That’s when he discovered the difficulty of building dev tools inside companies with other priorities. “It’s the equivalent of a snake swallowing an elephant” he jokes. Yet given these tools determine how much time expensive engineers waste on tasks below their skill level, their absence can drag down big enterprises or keep startups from rising.

CTO.ai shrinks the elephant. For example, the busywork of creating a Kubernetes cluster such as having to the create EC2 instances, provision on those instances, and then provision a master node gets slimmed down to just running a shortcut. Campbell writes that “tedious tasks like running reports can be reduced from 1,000 steps down to 10″ through standardization of workflows that turn confusing code essays into simple fill-in-the-blank and multiple-choice questions.

 

The CTO.ai platform offers a wide range of pre-made shortcuts that clients can piggyback on, or they can make and publish their own through a flexible JavaScript environment for the rest of their team or the whole community to use. Companies that need extra help can pay for its DevOps-As-A-Service and reliability offerings to get shortcuts made to solve their biggest problems while keeping everything running smoothly.

5(2X) = 10X

Campbell envisions a new way to create a 10X engineer that doesn’t depend on widely-mocked advice on how to spot and capture them like trophy animals. Instead, he believes 1 developer can make 5 others 2X more efficient by building them shortcuts. And it doesn’t require indulging bad workplace or collaboration habits.

With the new funding that also comes from Yaletown Partners, Pallasite Ventures, Panache Ventures and Jonathan Bixby, CTO.ai wants to build deeper integrations with Slack so developers can run more commands right from the messaging app. The less coding required for use, the broader the set of employees that can use the startup’s tools. CTO.ai may also build a self-service tier to augment its seats plus complexity model for enterprise pricing.

Now it’s time to ramp up community outreach to drive adoption. CTO.ai recently released a podcast which saw 15,000 downloads in its first 3 weeks, and it’s planning some conference appearances. It also sees virality through its shortcut author pages, which like GitHub profiles let developers show off their contributions and find their next gig.

One risk is that GitHub or another core developer infrastructure provider could try to barge directly into CTO.ai’s business. Google already has Cloud Composer while GitHub launched Actions last year. Campbell says its defense comes through neutrally integrating with everyone, thereby turning potential competitors into partners.

The funding firepower could help CTO.ai build a lead. With every company embracing software, employers battling to keep developers happy, and teams looking to get more of their staff working with code, the startup sits at the intersection of some lucrative trends of technological empowerment.

“I have 3-year-old at home and I think about what it will be like when he comes into creating things online” Campbell concludes. “We want to create an amazing future for software developers, introducing automation so they can focus on what makes them such an important aspect. Devs are defining society!”

[Image Credit: Disney/Pixar via WallHere Goodfon]


By Josh Constine

WeFarm rakes in $13M to grow its marketplace and network for independent farmers

Huge networks like Facebook and LinkedIn have a huge gravitational force in the world of social media — the size of their audiences make them important platforms for advertising and those who want information (for better or worse) to reach as many people as possible. But alongside their growth, we’re seeing a lasting role for platforms and networks focused on more narrow special interests, and today one of them — focused on farmers, of all communities — is picking up a round of funding to propel its growth.

WeFarm, a marketplace and networking site for small-holder farmers (that is, farms not controlled by large agribusinesses), has raised $13 million in a Series A round of funding, with plans to use the money to continue adding more users — farmers — and more services geared to their needs.

The round, which brings the total raised by the company to a modest $20 million, is being led by True Ventures, with AgFunder, June Fund; previous investors LocalGlobe, ADV and Norrsken Foundation; and others also participating.

WeFarm today has around 1.9 million registered users, and its early moves into providing a marketplace — helping to put farmers in touch with local suppliers of goods and gear such as seed and fertilizers — generated $1 million in sales in its first eight months of operations, a sign that there is business to be had here. The startup points out that this growth has been, in fact, “faster… than both Amazon and eBay in their early stages.”

WeFarm is based out of London, but while the startup does have users out of the UK and the rest of Europe, Kenny Ewan, the company’s founder and CEO, said in an interview that it is seeing much more robust activity and growth out of developing economies, where small-scale agriculture reigns supreme, but those working the farms have been massively underserved when it comes to new, digital services.

“We are building an ecosystem for global small scale agriculture, on behalf of farmers,” Ewan said, noting that there are roughly 500 million small scale farms globally, with some 1 billion people working those holdings, which typically extend 1.5-2 hectares and often are focused around staple commercial crops like rice, coffee, cattle or vegetables. “This is probably the biggest industry on Earth, accounting for some 75-80% of the global supply chain, and yet no one has built anything for them. This is significant on many levels.”

The service that WeFarm provides, in turn, is two-fold. The network, which is free to join, first of all serves as sounding board, where farmers — who might live in a community with other farmers, but might also be quite solitary — can ask each other questions or get advice on agricultural or smallholding matters. Think less Facebook and more Stack Exchange here.

That provided a natural progression to WeFarm’s second utility track: a marketplace. Initially Ewan said that it’s been working with — and importantly, vetting — local suppliers to help them connect with farmers and the wider ecosystem for goods and services that they might need

Longer term, the aim will be to provide a place where smallholding famers might be able to exchange goods with each other, or sell on what they are producing.

In addition to providing access to goods for sale, WeFarm is helping to manage the e-commerce process behind it. For example, in regions like Africa, mobile wallets have become de facto bank accounts and proxies for payment cards, so one of the key ways that people can pay for items is via SMS.

“For 90% of our users, we are the only digital service they use, so we have to make sure we can fulfil their trust,” Ewan said. “This is a network of trust for the biggest industry on earth and we have to make sure it works well.”

For True and other investors, this is a long-term play, where financial returns might not be as obvious as moral ones.

“We are enormously inspired by how Kenny and the Wefarm team have empowered the world’s farmers, and we see great potential for their future,” said Jon Callaghan, co-founder of True Ventures, in a statement. “The company is not only impact-driven, but the impressive growth of the Wefarm Marketplace demonstrates exciting commercial opportunities that will connect those farmers to more of what they need to the benefit of all, across the food supply chain. This is a big, global business.”

Still, given the bigger size of the long tail, the company that can consolidate and manage that community potentially has a very valuable business on its hands, too.


By Ingrid Lunden

Aurora Insight emerges from stealth with $18M and a new take on measuring wireless spectrum

Aurora Insight, a startup that provides a “dynamic” global map of wireless connectivity that it built and monitors in real time using AI combined with data from sensors on satellites, vehicles, buildings, aircraft and other objects, is emerging from stealth today with the launch of its first publicly-available product, a platform providing insights on wireless signal and quality covering a range of wireless spectrum bands, offered as a cloud-based, data-as-a-service product.

“Our objective is to map the entire planet, charting the radio waves used for communications,” said Brian Mengwasser, the co-founder and CEO. “It’s a daunting task.” He said that to do this the company first “built a bunker” to test the system before rolling it out at scale.

With it, Aurora Insight is also announcing that it has raised $18 million in funding — an aggregate amount that reaches back to its founding in 2016 and covering both a seed round and Series A — from an impressive list of investors. Led by Alsop Louie Partners and True Ventures, backers also include Tippet Venture Partners, Revolution’s Rise of the Rest Seed Fund, Promus Ventures, Alumni Ventures Group, ValueStream Ventures, and Intellectus Partners.

The area of measuring wireless spectrum and figuring out where it might not be working well (in order to fix it) may sound like an arcane area, but it’s a fairly essential one.

Mobile technology — specifically, new devices and the use of wireless networks to connect people, objects and services — continues to be the defining activity of our time, with more than 5 billion mobile users on the planet (out of 7.5 billion people) today and the proportion continuing to grow. With that, we’re seeing a big spike in mobile internet usage, too, with more than 5 billion people, and 25.2 billion objects, expected to be using mobile data by 2025, according to the GSMA.

The catch to all this is that wireless spectrum — which enables the operation of mobile services — is inherently finite and somewhat flaky in how its reliability is subject to interference. That in turn is creating a need for a better way of measuring how it is working, and how to fix it when it is not.

“Wireless spectrum is one of the most critical and valuable parts of the communications ecosystem worldwide,” said Rohit Sharma, partner at True Ventures and Aurora Insight board member, in a statement. “To date, it’s been a massive challenge to accurately measure and dynamically monitor the wireless spectrum in a way that enables the best use of this scarce commodity. Aurora’s proprietary approach gives businesses a unique way to analyze, predict, and rapidly enable the next-generation of wireless-enabled applications.”

If you follow the world of wireless technology and telcos, you’ll know that wireless network testing and measurement is an established field, about as old as the existence of wireless networks themselves (which says something about the general reliability of wireless networks). Aurora aims to disrupt this on a number of levels.

Mengwasser — who co-founded the company with Jennifer Alvarez, the CTO who you can see presenting on the company here — tells me that a lot of the traditional testing and measurement has been geared at telecoms operators, who own the radio towers, and tend to focus on more narrow bands of spectrum and technologies.

The rise of 5G and other wireless technologies, however, has come with a completely new playing field and set of challenges from the industry.

Essentially, we are now in a market where there are a number of different technologies coexisting — alongside 5G we have earlier network technologies (4G, LTE, Wifi); a potential set of new technologies. And we have a new breed of companies are building services that need to have close knowledge of how networks are working to make sure they remain up and reliable.

Mengwasser said Aurora is currently one of the few trying to tackle this opportunity by developing a network that is measuring multiples kinds of spectrum simultaneously, and aims to provide that information not just to telcos (some of whom have been working with Aurora while still in stealth) but the others kinds of application and service developers that are building businesses based on those new networks.

“There is a pretty big difference between us and performance measurement, which typically operates from the back of a phone and tells you when have a phone in a particular location,” he said. “We care about more than this, more than just homes, but all smart devices. Eventually, eerything will be connected to network so we are aiming to provide intelligence on that.”

One example are drone operators who are building delivery networks: Aurora has been working with at least one while in stealth to help develop a service, Mengwasser said, although he declined to say which one. (He also, incidentally, specifically declined to say whether the company had talked with Amazon.)

5G is a particularly tricky area of mobile network spectrum and services to monitor and tackle, one reason why Aurora Insight has caught the attention of investors.

“The reality of massive MIMO beamforming, high frequencies, and dynamic access techniques employed by 5G networks means it’s both more difficult and more important to quantify the radio spectrum,” said Gilman Louie of Alsop Louie Partners, in a statement. “Having the accurate and near-real-time feedback on the radio spectrum that Aurora’s technology offers could be the difference between building a 5G network right the first time, or having to build it twice.” Louie is also sitting on the board of the startup.


By Ingrid Lunden

Descartes Labs snaps up $20M more for its AI-based geospatial imagery analytics platform

Satellite imagery holds a wealth of information that could be useful for industries, science and humanitarian causes, but one big and persistent challenge with it has been a lack of effective ways to tap that disparate data for specific ends.

That’s created a demand for better analytics, and now, one of the startups that has been building solutions to do just that is announcing a round of funding as it gears up for expansion. Descartes Labs, a geospatial imagery analytics startup out of Santa Fe, New Mexico, is today announcing that it has closed a $20 million round of funding, money that CEO and founder Mark Johnson described to me as a bridge round ahead of the startup closing and announcing a larger growth round.

The funding is being led by Union Grove Venture Partners, with Ajax Strategies, Crosslink Capital, and March Capital Partners (which led its previous round) also participating. It brings the total raised by Descartes Labs to $60 million, and while Johnson said the startup would not be disclosing its valuation, PitchBook notes that it is $220 million ($200 million pre-money in this round).

As a point of comparison, another startup in the area of geospatial analytics, Orbital Insight, is reportedly now raising money at a $430 million valuation (that data is from January of this year, and we’ve contacted the company to see if it ever closed).

Santa Fe — a city popular with retirees that counts tourism as its biggest industry — is an unlikely place to find a tech startup. Descartes Labs’ presence there is a result of that fact that it is a spinoff from the Los Alamos National Laboratory near the city.

Johnson — who had lived in San Francisco before coming to Santa Fe to help create Descartes Labs (his previous experience building Zite for media, he said, led the Los Alamos scientists to first conceive of the Descartes Labs IP as the basis of a kind of search engine) — admitted that he never thought the company would stay headquartered there beyond a short initial phase of growth of six months.

However, it turned out that the trends around more distributed workforces (and cloud computing to enable that), engineers looking for employment alternatives to living in pricey San Francisco, plus the heated competition for talent you get in the Valley all came together in a perfect storm that helped Descartes Labs establish and thrive on its home turf.

Descartes Labs — named after the seminal philosopher/mathematician Rene Descartes — describes itself as a “data refinery”. By this, it means it injests a lot of imagery and unstructured data related to the earth that is picked up primarily by satellites but also other sensors (Johnson notes that its sources include data from publicly available satellites; data from NASA and the European space agency, and data from the companies themselves); applies AI-based techniques including computer vision analysis and machine learning to make sense of the sometimes-grainy imagery; and distills and orders it to create insights into what is going on down below, and how that is likely to evolve.

Screenshot 2019 10 11 at 13.26.33

This includes not just what is happening on the surface of the earth, but also in the air above it: Descartes Labs has worked on projects to detect levels of methane gas in oil fields, the spread of wildfires, and how crops might grow in a particular area, and the impact of weather patterns on it all.

It has produced work for a range of clients that have included governments (the methane detection was commissioned as part of New Mexico’s effort to reduce greenhouse gas emissions), energy giants and industrial agribusiness, and traders.

“The idea is to help them take advantage of all the new data going online,” Johnson said, noting that this can help, for example, bankers forecast how much a commodity will trade for, or the effect of a change in soil composition on a crop.

The fact that Descartes Labs’ work has connected it with the energy industry gives an interesting twist to the use of the phrase “data refinery”. But in case you were wondering, Johnson said that the company goes through a process of vetting potential customers to determine if the data Descartes Labs provides to them is for a positive end, or not.

“We have a deep belief that we can help them become more efficient,” he said. “Those looking at earth data are doing so because they care about the planet and are working to try to become more sustainable.”

Johnson also said (in answer to my question about it) that so far, there haven’t been any instances where the startup has been prohibited to work with any customers or countries, but you could imagine how — in this day of data being ‘the new oil’ and the fulcrum of power — that could potentially be an issue. (Related to this: Orbital Insight counts In-Q-Tel, the CIA’s venture arm, as one of its backers.)

Looking ahead, the company is building what it describes as a “digital twin” of the earth, the idea being that in doing so it can better model the imagery that it injests and link up data from different regions more seamlessly (since, after all, a climatic event in one part of the world inevitably impacts another). Notably, “digital twinning” is a common concept that we see applied in other AI-based enterprises to better predict activity: this is the approach that, for example, Forward Networks takes when building models of an enterprise’s network to determine how apps will behave and identify the reasons behind an outage.

In addition to the funding round, Descartes Labs named Phil Fraher its new CFO, and is announcing Veery Maxwell, Director for Energy Innovation and Patrick Cairns, who co-founded UGVP, as new board observers.


By Ingrid Lunden

Snaplogic raises $72M more for its enterprise data integration platform

Cloud services and the adoption of apps that rely on them are continue to grow in popularity, but a persistent theme in enterprise technology has been that a lot of organizations still continue to use legacy software and architectures, for reasons of cost, migration headaches and simply because sometimes, if it ain’t broke, don’t fix it. That doesn’t mean they couldn’t benefit from a better way of integrating some of those workflows, and better leveraging the data coming out of those different apps, and today a startup that’s built a service to help them do that has raised a growth round of funding.

Snaplogic, which has built an integration platform that lets enterprises bring in and integrate both legacy and cloud apps to better monitor them and let them work together, has closed $72 million in growth financing, money that it will be using to expand its business globally. According to analysis from PitchBook, this latest funding comes at a $260 million pre-money valuation, which would work out to about $372 million post-money. We are checking with Snaplogic to see if it can confirm those numbers directly.

This latest round, which brings the total raised by Snaplogic to $208 million, is being led by growth equity VC Arrowroot Capital, with participation also from Golub Capital and existing investors. Past investors are an illustrious group that has included a mix of financial and strategic backers such as Andreessen Horowitz, Vitruvian (which led its previous round), Capital One, Ignition Parnters, Microsoft, and a number of others.

The company is not disclosing how big its customer base is currently. In its last round in 2016, it had grown to 700 enterprises, adding 300 in just one year, which was an especially big amount of growth. Current customers feature a number of big names like Adobe, Verizon (which owns TechCrunch), AstraZeneca, Bristol-Myers Squibb, Emirates, Schneider Electric, Siemens, Sony, and Wendy’s. It describes the bigger integration market as a $30 billion opportunity.

The defining characteristic in that list is that these are businesses that pre-date the big cloud revolution, and so they are more likely than not grappling with a mix of new and legacy apps that need to be balanced against one another, brought together in some instances to work together, and harnessed in terms of their data to help in a company’s wider efforts around big data for projects in areas like application integration, data integration, API management, B2B integration and data engineering.

“This is an exciting time for SnapLogic,” said Gaurav Dhillon, CEO at SnapLogic, in a statement. “We’re extremely proud to have built a modern and innovative solution that is solving really hard problems for our enterprise customers. This latest investment is a testament to the hard work and ongoing support of our customers, partners, and employees around the world. Together, we’ll continue to chart the way forward, making integration even faster and easier so enterprises can realize their data-driven ambitions.”

There has been an interesting wave of startups that have emerged specifically to tackle the opportunity of providing  tools to businesses that are still using old kit and older software to give them the ability to take advantage of new innovations in computing and how to use their bigger pool of data. Others include Workato (which itself has raised money in the last year), MuleSoft (now a part of Salesforce), and Microsoft itself, and in that context, Snaplogic has been taking a very measured approach in how it raises capital and expands.

“Our approach is to do successive up rounds with straightforward terms rather than chase a big slug with onerous terms,” CEO Guarav Dhillon told TechCrunch once. He’s a repeat entrepreneur and has a track record of conservative but sound growth. “We built Informatica with just $13.5 million, so my approach is to raise funds as needed.”

It’s an approach that is resonating with investors. “SnapLogic is attacking a huge and surging market opportunity with a uniquely modern and powerful platform,” said Matthew Safaii, Founder and Managing Partner at Arrowroot Capital, in a statement. “They’ve built an amazing product, work with an impressive roster of customers, and are led by an experienced executive team. As SnapLogic sets its sights on continued product leadership and global expansion, we look forward to partnering with them to help get their pioneering integration platform into the hands of even more enterprises around the globe.”

“SnapLogic is reinventing application and data integration for the modern era,” said Robert Sverbilov, Director at Golub Capital, added. “We are excited to support SnapLogic’s next generation SaaS application integration platform and to help secure its footing as a leader in the iPaaS (Integration Platform as a Service) vertical.”

 


By Ingrid Lunden

A startup factory? $1.2B-exit team launches $65M super{set}

Think Jack Dorsey’s jobs are tough? Well, Tom Chavez is running six startups. He thinks building businesses can be boiled down to science, so today he’s unveiling his laboratory for founding, funding and operating companies. He and his team have already proven they can do it themselves after selling their startups Rapt to Microsoft and Krux to Salesforce for a combined $1.2 billion. Now they’ve raised a $65 million fund for “super{set}”, an enterprise startup studio with a half-dozen companies currently in motion.

The idea is that {super}set either conceptualizes a company or brings in founders whose dream they can make a reality. The studio provides early funding and expertise while the startup works from their shared space in San Francisco, plus future ones in New York and Boston. The secret sauce is the “super{set} Code,” an execution playbook plus technological tools and building blocks that guide the strategy and eliminate redundant work. “Our belief is that we can make the companies 10x faster and increase capital efficiency by 5X,” says Chavez of his partnership with {super}set co-founders Vivek Vaidya, who acts as CTO, and Jae Lim who manages the fund.

Superset Team

The {super}set team (from left): Tom Chavez, Jae Lim, Jen Elena and Vivek Vaidya

Perhaps the question isn’t whether the portfolio startups can scale, but if the humans behind them can without breaking. It’s stressful running a single company, let alone six. Even with the order of operations nailed down, each encounters unique challenges and no plan is one-size-fits-all. But after delivering 17.5X returns to their past investors, Chavez et al. have proven their power to repeatedly recognize what enterprises need and build admittedly boring but bountiful products in customer data management, and advertising yield.

The studio’s playbooks cover business plan formation, pitch strategies, go to market, revenue, machine learning, management principles, HR processes, sales methods, pipeline measurement, product sequencing, finance, legal and more. There’s also shared engineering code it provides, so each startup doesn’t have to reinvent the wheel. “I don’t think you can systemize it but I do think you can accelerate and de-risk the path,” Chavez explains.

Superset Code 1

{super}set Code

Today, the first {super}set company is coming out of stealth. Eskalera helps enterprises retain top talent by tracking diversity and inclusion stats of employees to engage them with career growth and community programs. Chavez is the CEO, but plans to install a new one shortly so he can focus more time on founding more startups. There are 55 employees across the first six companies, with two already generating revenue and most ready to emerge in the next nine months.

The funding for Eskalera and other {super}set companies comes with unique terms. Because Chavez and the team aren’t just board members you hear from once a quarter but “shoulder to shoulder with the entrepreneurs” as he repeats several times in our interview, the startups pay more equity for the cash.

The hope is having seasoned leadership aboard is worth it. “We’re product people first and foremost,” Chavez tells me. “What are you going to build? Who’s going to buy it? Why? What’s the technical moat? We’re not people doing jazz hands.” The {super}set team has plenty of skin in the game, though, given Chavez himself put in a big chunk of the $65 million, and the fund sticks to a standard management fee.

Eskalera

Eskalera

To supercharge the companies, {super}set brings in expert staffers in artificial intelligence, data science and more, who then align with the most relevant companies in the portfolio. They get equity grants to incentivize them to work hard on the startups’ behalf. “The worry I have about these larger funds is that they have an incentive disconnect where they work for the fees” Chavez says. His fund hopes to win through follow-on funding of its winners.

Tom Chavez Superset

{super}set co-founder Tom Chavez

If portfolio companies hit hard times, Chavez says {super}set will stick with them. “My first company had multiple layoffs and a major pivot. We had an enterperenur that walked away. They lost conviction, but we brought that company to an $180 million exit after people said there was no effing way and that felt really good,” Chavez says of staying the course. “The good entrepreneurs have that demonic energy.” But if everyone involved agrees a project isn’t working, they’ll shutter it. “It comes back to opportunity cost of people’s time.”

Chavez has respect for studios taking different approaches, like Atomic in consumer startups, Science in e-commerce and Pioneer Square Labs, which maintains a larger fund staff. “What excites me is moving entrepreneurship a step forward. Why couldn’t we franchise this in other cities?” He hopes {super}set can attract top talent that “just want to work on cool shit” rather than getting sucked into a single company.

Can {super}set keep all the plates spinning and really lower their risk? “If we’re wrong there will be a giant orange plume streak across the sky. The early returns are promising but we have to prove it,” Chavez says. But after accruing plenty of wealth for himself, he says the thrill that keeps him in the startup game is seeing life-changing outcomes for his teams. “I have spreadsheets showing the wealth generated by employees of companies I’ve built and nothing makes me happier than seeing them pay for tuitions, property, or retiring.”


By Josh Constine

Meme editor Kapwing grows 10X, raises $11M

Kapwing is a laymen’s Adobe Creative Suite built for what people actually do on the internet: make memes and remix media. Need to resize a video? Add text or subtitles to a video? Trim or crop or loop or frame or rotate or soundtrack or… Then you need Kapwing. The free web and mobile tool is built for everyone, not just designers. No software download or tutorials to slog through. Just efficient creativity.

Kapwing Video Editor

In a year since coming out of stealth with 100,000 users, Kapwing has grown 10X to over 1 million. Now it going pro, building out its $20/month collaboration tools for social media managers and scrappy teams. But it won’t forget its roots with teens, so it’s dropped its pay-$6-to-remove-watermarks tier while keeping its core features free.

Eager to capitalize on the meme and mobile content business, CRV has just led an $11 million Series A round for Kapwing. It’s joined by follow-on cash from Village Global, Sinai, and Shasta Ventures plus new investors Jane VC, Harry Stebbings, Vector, and the Xoogler Syndicate. CRV partners ‘the venture twins’ Justine and Olivia Moore actually met Kapwing co-founder and CEO Julia Enthoven while they all worked at The Stanford Daily newspaper together in 2012.

“As a team, we love memes. We talk about internet fads almost every day at lunch and pay close attention to digital media trends” says Enthoven, who started the company with fellow Googler Eric Lu. “One of our cultural tenets is to respect the importance of design, art, and culture in the world, and another one is to not take ourselves too seriously.” But it is taking on serious clients.

Kapwing Tools

 

As Kapwing’s toolset has grown, it’s seen paying customers coming from Amazon, Sony, Netflix, and Spotify. Now only 13% of what’s made with it are traditional text-plus-media memes. “Kapwing will always be designed for creators first: the students, artists, influencers, entrepreneurs, etc who define and spread culture” says Enthoven. “But we make money from the creative professionals, marketers, media teams, and office workers who need to create content for work.”

That’s why in addition to plenty of templates for employing the latest trending memes, Kapwing now helps Pro subscribers with permanent hosting, saving throughout the creation process, and re-editing after export. Eventually it plans to sell enterprise licenses to let whole companies use Kapwing.

Kapwing Tools 1

Copycats are trying to chip away at its business, but Kapwing will use its new funding to keep up a breakneck pace of development. Pronounced “Ka-Pwing” like a bullet riccochet, it’s trying to stay ahead of Imgflip, ILoveIMG, Imgur’s on-site tool, and more robust apps like Canva.

If you’ve ever been stuck with a landscape video that won’t fit in an Instagram Story, a bunch of clips you want to stitch together, or the need to subtitle something for accessibility, you’ll know the frustration of lacking a purpose-built tool. And if you’re on mobile, there are even few options. Unlike some software suite you have to install on a desktop, Kapwing works right from a browser.

Trending Memes Kapwing

“‘Memes’ is such a broad category of media nowadays. It could refer to a compilation like the political singalong videos, animations like Shooting Star memes, or a change in music like the AOC Dancing memes” Enthoven explains. “Although they used to be edgy, memes have become more mainstream . . . Memes popularized new types of multimedia formats and made raw, authentic footage more acceptable on social media.”

As communication continues to shift from text to visual media, design can’t only be the domain of designers. Kapwing empowers anyone to storytell and entertain, whether out of whimsy or professional necessity. If big-name creative software from Adobe or Apple don’t simplify and offer easy paths through common use cases, they’ll see themselves usurped by the tools of the people.


By Josh Constine

Fundbox raises $176 million Series C to build ‘Visa’ for B2B payments

Credit cards have become all but ubiquitous for consumer transactions, and it isn’t hard to see why. By intermediating payments, networks like Visa allow buyers and sellers to exchange money for goods and services without knowing the financial risk profile of the counter-party. Rather than applying for credit at every merchant you shop at, you apply once at your issuing institution, and then can transact with every merchant on the network. It’s the simple formula: reducing friction means more sales, and therefore more profits.

Yet for all the innovation in the consumer side of the economy, there has been an astonishingly limited amount of innovation in the B2B world. Payments between businesses are still conducted through invoices, with net payment terms that can exceed 90 days and with little knowledge of the financial risk of the counter-parties. There is no FICO score for business as there is with consumers, nor is there a system that can intermediate those transactions and reduce their friction.

That’s where Fundbox comes in. The SF-headquartered startup wants to ultimately transform B2B payments by creating a Visa-like payments network that allows businesses to transact with each other without having to know counter-party risk while also getting everyone paid faster.

It’s a vision that has pulled in the attention of even more venture capital. The company, which was founded in 2013, announced today that it has raised $176 million in a series C equity financing led by a consortium of funders, including Allianz X, Healthcare of Ontario Pension Plan, HarbourVest and a litany of others. Existing backers Khosla, General Catalyst, and Spark Capital Growth also participated. With this new round of capital, the company’s total equity funding reaches upwards of $300 million.

In addition to the equity capital, the company also announced that it has raised a $150 million credit facility to underwrite its product.

Fundbox CEO Eyal Shinar said that a priority in this fundraise was to select backers who not only could invest in equity, but also had large balance sheets who could expand the company’s underwriting capability as it scales.

Today, Fundbox’s core product is a revolving line of credit for small businesses. Cash flow is a huge concern for many companies, since they often have to wait for a payment from an invoice to arrive before investing in their next projects or hiring more employees. A revolving line of credit allows companies to flexibly draw down and pay back a loan, while only paying fees on what a company uses.

To apply for the loan, companies connect Fundbox to their financial data store (for example, QuickBooks), and Fundbox slurps in the data and offers a credit decision in as fast as minutes. Companies can then tap their line of credit almost immediately and use it as working capital. As invoices are paid, companies can then pay off their line of credit and stop paying fees.

From that product base, Shinar ultimately sees Fundbox as a GDP-scale startup, given the value it could potentially unlock for companies and the economy at large. “There are more than $3 trillion locked in those invoices,” he explained to me, “$3.4 trillion flows through consumer credit cards, but $23 trillion are in invoices … and even if you focus on [just] small and medium business, it’s $9 trillion.”

As the company collects data from all the players in the market, it wants to build upon those data network effects to ultimately operate the payment rails for B2B transactions. So instead of offering a line of credit to the seller, it could facilitate both sides of the transaction and get rid of the root complexity in the first place.

It’s a bold vision, and certainly one that has attracted a variety of players. In the startup world, Kabbage (whose co-founder and president Kathryn Petralia I will be interviewing at TechCrunch Disrupt SF next week) has built a business around line of credit lending and has similarly raised large amounts of venture capital.

Larger companies like Square, PayPay, and Intuit (which owns the popular accounting software QuickBooks) have introduced various lending products to B2B customers. And in terms of payments, Stripe through its new credit card and Brex offer the means for companies to empower their employees to make purchases on behalf of the company.

Shinar said that a huge priority for Fundbox has been to make underwriting more efficient. He said that a large percentage of the current employee base at the company is data scientists, and the company has built upon the wave of digitalization that has taken place among small and medium businesses. “Every company has at least one set of APIs … and it is accessible, and it is granular,” Shinar said. By just tapping into those existing data feeds, Fundbox is able to avoid the human underwriting common with much of business lending today.

One initiative the company has undertaken is a tool dubbed “X-Ray” to better describe how the company’s machine learning models are really underwriting its loan products. Shinar noted that payments is a highly-regulated space, and that the company has to be able to explain its decisions and how they are unbiased to any regulator that might start asking questions.

The company today has 240 employees spread across SF, Tel Aviv, and a recently launched office in Dallas. Shinar says that he wants to use the new funds to “go on the offensive” and “double and triple down on what is working.”


By Danny Crichton

Tipalti collects $76M from Twitter alums’ 01 Advisors and more for its AI-based accounts payable solution

Accounting is one of the cornerstones to building a business, but for most companies, getting it right is more of a necessity than it is one of their core competencies. That has created a vacuum, and now, a company called Tipalti — which has developed a popular solution to automate accounting for businesses that are not accounting companies by nature — has raised a significant round of funding to underscore that demand.

Today, the Israeli-Californian startup is announcing that it has picked up $76 million, money it plans to use to continue expanding the functionality of its platform and growing its business.

The funding, a Series D that brings the total raised by Tipalti to $146 million, is interesting in part because of who is providing it. Led by Zeev Ventures, it also includes backing from previous investor Group 11, along with new backers 01 Advisors, Greenspring Associates, and TrueBridge Capital Partners.

In case the name doesn’t ring a bell, 01 Advisors is the new investment firm co-founded Twitter’s former CEO and COO, Dick Costolo and Adam Bain, which started raising money only last month and appears to have disclosed one other investment before this, in the e-sports startup PlayVS.

01 Advisors’ interest in backing Tipalti comes from the fact that Twitter is a longtime customer of Tipalti’s, dating back to when Costolo and Bain were running things. Chen Amit, CEO and Co-founder of Tipalti, told me in an interview that the social media company signed up around the time that it was going public, ramping up its revenue generating functions (mainly advertising), and needed a strong accounts payable solution to pay suppliers and others in its ecosystem that wouldn’t break the bank and would help it track all the taxes and other areas that would now be getting thoroughly audited.

That experience, along with Tipalti’s wider track record among other fast-growing tech businesses whose business models are built on working with large networks of partners — other customers include Uber, Roku, Zumba, GoDaddy, Zola, GoPro, Foursquare, and Vimeo — is what compelled Costolo and co. to invest.

“While at Twitter, we chose Tipalti and they played a pivotal role in enabling us to scale and grow,” he said in a statement. “Tipalti’s platform was crucial In helping us manage payments to thousands of our publishers and partners around the world with ease, while delivering a flawless experience. Investing in Tipalti allows us to help bring the same benefits we experienced as operators to the thousands of companies that need this support.

Tipalti’s emergence and growth comes out of an interesting climate shift in the world of startups. The accounting department is not the first thing people usually think about when they consider an exciting tech startup. Indeed, there’s a longstanding belief among some founders and their investors that certain ideas are too good to adulterate early on with thoughts of generating revenue, especially when the startup is in high-growth mode. However, when the scale does tip over into making money (way earlier for some than others), it becomes a crucial area to get right.

Tipalti sits among a number of other startups that have emerged in recent years to help handle less-sexy, but very essential back office functions, the kind that can cripple or even kill off a business of not handled well. Others in the group include the likes of AppZen, which has built AI-based expense auditing tools that it now wants to expand into other finance team functions; and Gusto, which helps manage payroll and benefits.

There are also a number of companies also looking to build better tools for accounts payable automation, including the likes of AccessPay (which also covers accounts receivable functions), OneSource Virtual, abd MineralTree. All of the big accounting software providers will provide a degree of automation in their products, too, although Tipalti’s Amit believes that these target much larger enterprises. RPA companies that are aiming to automate all back-office functions are also potential (if not existing) competitors, too.

Tipalti’s pitch is primarily to the midmarket, which is partly why it has been a big hit with startups that are growing fast but might not yet be at the point of considering solutions built for much larger companies. The tools are able to read, process, pay, and account for invoices using its automation technology, and the startup measures its effectiveness in terms of how much human work it can take on.

In fact, it describes a slightly frighteningly precise efficiency equivalent: citing research from the Levvel Research Accounts Payable Survey, the average midmarket organization has “an average of 9.8 full-time accounts payable employees.” Tipalti says that its platform can provide 80% of that workload function. (The idea being that the remaining 1.96 of humans (!) left over after Tiptali has done its magic can work on other tasks and longer need to dedicate all of their time to accounts payable procedures.)

It’s not just about reducing human overhead, though.

Amit said that some 30%-40% of its customers are gig economy businesses, with a fair number working across different international markets. That makes for a very messy accounting operation. “When you have payees all over the world, that affects you every month,” he said, adding that regulations are becoming ever more stringent on how businesses account for revenues and pay out to people, with the rise in money laundering and using assets in nefarious ways. “Regulators want more information communicated around payments, or the can be a new embargo on an entity, and so you need to change that, your banking process and who you can work with.”

The big pitch with automating companies may be that they are not aiming to take humans out of work, but to free them up to work on other things that AI cannot replace — not yet, anyway — and as an added benefit, they are helping companies reduce their operational expenses and helping them to run things better. How that will play out in the longer term could indeed be great, or it could see even more people with too much time on their hands. But in the meanwhile, Tiptali has grown by leaps and bounds. The company says it’s now processing more than $8 billion in annual transactions, with its customer and business bookings doubling in the first half of 2019.

Tipalti is not disclosing its valuation with this round, but Amit said on the back of that growth it has tripled since it last raised money.


By Ingrid Lunden