Hustle Fund, the pre-seed firm founded by former 500 Startups partners Elizabeth Yin and Eric Bahn, has closed their first fund, coming in at the tune of $11.5 million.
Hustle Fund also recently brought on Shiyan Koh to its team of general partners. Before joining the firm, Koh was the VP of business operations and corporate development at personal finance company NerdWallet. She formerly worked as an investment professional at Bridgewater Associates and Institutional Venture Partners. At Hustle Fund, Koh will be based in Singapore to focus on expanding the firm’s reach in Southeast Asia.
The fund initially hoped to raise $50 million, according to an SEC filing last October, but felt confident it could prove its investing hypothesis with $11.5 million, Koh said in an email to TechCrunch.
“This has allowed us to get to the business of backing founders faster,” Koh said. “We want to be in this business for decades to come, so Fund 1 is just the beginning!”
Limited partners in the fund include Shanda, a global investment firm focused on the online gaming industry, messaging and communications company LINE, Korean search engine Naver and others.
Hustle Fund wants to be different from its peers in the venture capital community. Instead of backing founders with degrees from Stanford or some Ivy League school, the goal is to level the playing field for founders by focusing on potential impact.
The firm operates by investing $25,000 in pre-seed startups, and then undertakes a four to six-week growth period with each company. The idea is to work alongside the team and then determine if the fund will follow on with additional monetary investment.
“One of the fascinating things I learned while running the 500 Startups accelerator is that I understood so much more about our investments once they came into the batch, and I could see them work,” Yin said in a press release. “Not surprisingly, I noticed that the best teams were the ones who could execute with speed. It’s from this observation, we built Hustle Fund to back founders who can execute with high velocity by observing founders work.”
Although Yin and Bahn’s departures from 500 Startups came in the midst of the drama surrounding 500 Startups founder Dave McClure’s alleged sexual misconduct, the pair was already planning on leaving the troubled accelerator to start their own fund. Before Yin and Bahn joined 500 Startups, they had their own respective careers as founders. Now, they’re combining their experiences as founders and investors to help small, scrappy startups.
Fifty-nine startups took the stage at Y Combinator’s Demo Day 2, and among the highlights were a company that helps developers manage in-app subscriptions; a service that lets you create animojis from real photos; and a surplus medical equipment-reselling platform. Oh… and there was also a company that’s developed an entirely new kind of life form using e coli bacteria. So yeah, that’s happening.
Based on some investor buzz and what caught TechCrunch’s eye, these are our top picks from the second day of Y Combinator’s presentations.
With a founding team including some of the leading luminaries in the field of biologically inspired engineering (including George Church, Pamela Silver and Jeffrey Way from Harvard’s Wyss Institute), 64-x is engineering organisms to function in otherwise inaccessible environments. Chief executive Alexis Rovner, herself a post-doctoral fellow at the Wyss Institute, and chief operating officer Ryan Gallagher, a former BCG Consultant, are looking to commercialize research from the Institute around accelerating and expanding the ability to produce functionalized proteins and sequence-defined polymers with diverse chemistries. Basically they’ve engineered a new life form that they want to use for novel kinds of bio-manufacturing.
Why we liked it: These geniuses invented a new life form.
Sher Butt, a former lab directory at Steep Hill, saw that cannabinoids were as close to a miracle cure for pain, epilepsy and other chronic conditions as medicine was going to get. But plant-based cannabinoids were costly and produced inconsistent results. Alongside Jacob Vogan, Butt realized that biosynthesizing cannabinoids would reduce production costs by a factor of 10 and boost production 24 times current yields. With a deep experience commercializing drugs for Novartis and as the founder of the cannabis testing company SB Labs, Butt and his technical co-founder are uniquely positioned to bring this new therapy to market.
Why we liked it: Using manufacturing processes to make industrial quantities of what looks like nature’s best painkiller at scale is not a bad idea.
RevenueCat helps developers manage their in-app subscriptions. It offers an API that developers can use to support in-app subscriptions on iOS and Android, which means they don’t have to worry about all the nuances, bugs and updates on each platform.
The API also allows developers to bring all the data about their subscription business together in one place. It might be on to something, though it isn’t clear how big that something is quite yet. The nine-month-old company says it’s currently seeing $350,000 in transaction volume every month; it’s making some undisclosed percentage of money off that amount.
Why we liked it: Write code. Release app. Use RevenueCat. Get paid. That sounds like a good formula for a pretty compelling business.
Indonesia is a country in transition, with a growing class of individuals with assets to invest yet who, financially, don’t meet the bar set by many wealth managers. Enter Ajaib, a newly minted startup with the very bold ambition of becoming the “Ant Financial of wealth management for Indonesia.” Why the comparison? Because China was in the same boat not long ago — a country whose middle class had little access to wealth management advice. With the founding of Ant Financial nearly four years ago, that changed. In fact, Ant now boasts more than 400 million users.
China is home to nearly 1.4 billion, compared with Indonesia, whose population of 261 million is tiny in comparison. Still, if its plans work out to charge 1.4 percent for every dollar managed, with an estimated $370 billion in savings in the country to chase after, it could be facing a meaningful opportunity in its backyard if it gains some momentum.
Why we liked it: If Ajaib’s wealth management plans (to charge 1.4 percent for every dollar it manages) work out — and with a total market of $370 billion in savings in Indonesia — the company could be facing a meaningful opportunity in its backyard.
The scooter craze is hitting Latin America and Grin is greasing the wheels. The Mexico City-based company was launched by co-founder Sergio Romo after he and his partner realized they weren’t going to be able to get a cut of the big “birds” on the scooter block in the U.S. (as Axios reported). Romo and his co-founder have already lined up a slew of investors for what may be the hottest new deal in Latin America. Backers include Sinai Ventures, Liquid2 Ventures, 500 Startups, Monashees and Base10 Partners.
Why we liked it: Scooters are so 2018. But there’s a lot of money to be made in mobility, and as the challenge from Bird and Lime to Uber and Lyft in hyperlocal transit has revealed, there’s no dominant player that’s taken over the market… yet.
Creating animated emojis made from real photos, Emojer just might be the most fun you can have with a camera. The company’s software uses deep learning algorithms to detect body parts and guides users in creating their own avatars with just a simple photo take from a mobile phone. It’s replacing deep Photoshop expertise and animation skills with a super simple interface. The avatars look very similar to Elf Yourself, a popular site that let you paste your friends’ faces on dancing Christmas elves goes viral every year at Christmastime. Founders have PhDs in machine learning and computer vision.
Why we liked it: As the company’s chief executive said, Snap was for sexting, and Facebook was hot or not, so who says the next big consumer platform couldn’t be the Trojan horse of easily generated selfiemojis (akin to Elf Yourself)?
Osh’s Affordable Pharmaceuticals
Osh’s Affordable Pharmaceuticals is a public benefit corporation connecting doctors and patients with sources of low-cost, compounded pharmaceuticals. The company is looking to decrease barriers to entry for drugs for rare diseases. Three weeks ago the company introduced a drug to treat Wilson’s Disease. There was no access to the drug that treats the disease before in Brazil, India or Canada. It slashes the cost of drugs from $30,000 a month to $120 per month. The company estimates it has a total addressable market of $17 billion. “Generic drug pricing is a crisis, people are dying because they can’t get access to the medicine they need,” says chief executive Alex Oshmyansky. Osh’s might have a solution.
Why we liked it: Selling lower-cost medications for rare diseases in countries that previously hadn’t had access to them is a good business that’s good for the world.
Tackling a $75 billion problem of healthcare waste, Medinas Health is giving hospitals an easy way to resell their used supplies. The company has already raised $1 million for its marketplace to help healthcare organizations buy and sell equipment. With a seed round led by Ashton Kutcher and Guy Oseary’s Sound Ventures, and General Catalyst’s Rough Draft Ventures fund, the company is also working to lower costs for cash-strapped rural healthcare centers.
Why we liked it: Finding uses for hospital equipment that’s been lying fallow in corners is a big business. A $75 billion business if Medinas’ estimates are correct. Add helping cut costs for rural medical facilities and Medinas is a business we can get behind.
Plus-size women have limited clothing options even at the largest retailers like Nordstrom and Macy’s. While a majority of American women fall into the plus-size clothing category, 100 million women are constrained to shopping for a very small percentage of options. And Comfort wants to solve the supply problem. To do this, the founders, two former Harvard classmates, are building a direct-to-consumer fashion brand with stylish, minimalist offerings for plus-size women, including tunic shirts and an apron dress. It’s very early days for the brand, but since launching in recent weeks, they’ve seen $25,000 in sales.
Why we liked it: This direct-to-consumer fashion brand is bringing higher quality, better-designed clothing options to a market that’s underserved and growing quickly. What’s not to like?
Influencers of the world are uniting on mobile app, ShopWith, which allows shoppers to browse virtual storefronts and aisles alongside their favorite fashion and beauty creators and YouTubers. Users can see exactly what products those influencers have featured and can buy them without ever leaving the app. It’s a free download and hours of commercially consumptive fun.
It’s like the QVC model, but for GenZ shoppers whose buying habits are influenced by social video content on YouTube, Instagram and Snapchat. The company revealed that one beauty influencer made $10,000 within five hours using the ShopWith platform. The founders are former product managers with experience building social commerce products at Facebook and Amazon.
Why we liked it: The QVC for GenZ not only has a nice ring to it, it’s a recipe for making cash registers hum. A mobile-first, influencer-based shopping company is something that we’d definitely not call an impulse purchase.
FinAccel, a Southeast Asia-based startup that offers a digital credit card service in Indonesia, has closed a $30 million Series B round as it begins to consider overseas expansion.
The company launched its ‘Kredivo’ service two years ago to help consumers pay online in Southeast Asia, where credit card penetration is typically low, and it is essentially the combination of a digital credit card and PayPal. The service is available in Indonesia, Southeast Asia’s largest economy, where it uses a customer’s registered phone number — there is no physical credit card — and a dedicated checkout on online retail websites.
For consumers, the service offers a 30-day payback option and then more longer-term options of three, six and 12-month payback windows. The 30-day option is interest-free, but other plans come with a 2.95 percent per month charge on the reducing principle, which effectively makes it 25 percent flat.
FinAccel says it has credit scored close to two million consumers in Indonesia, while on the retail side it has partnered with 200 online sales platforms including large names such as Alibaba’s Lazada, Shopee (which is owned by U.S.-listed Garena), and unicorn Tokopedia, which counts SoftBank and Alibaba among its investors.
This new investment, by the way, is a notable one for Southeast Asia, which has generally been considered to have a gap in Series B funding, so $30 million for a two-year-old business is quite something.
The round itself is led by Australia’s Square Peg Capital — in what is one of its highest-profile overseas deals to date — alongside new investors MDI Ventures, which is affiliated with Telkom Indonesia, and UK-based Atami Capital. Existing investors Jungle Ventures, Openspace Ventures, GMO Venture
Partners, Alpha JWC Ventures and 500 Startups also took part in the round.
FinAccel founders (left to right) Umang Rustagi (COO), Akshay Garg (CEO) and Alie Tan (head of product engineering)
Garg, who founded ad tech firm Komli, said the company is processing “hundreds of millions” in U.S. dollars per year and the immediate plan is to keep growing in Indonesia. Already, however, it is eyeing up potential expansions with its first move overseas is likely to be in Southeast Asia in early 2018, although he declined to provide more details.
“Our goal is to become the preferred digital credit card for millennials in Southeast Asia,” he told TechCrunch. “Those are consumers who are mobile-first and already bankable. The credit gap in this market is huge, there’s no electronic verification and other things that we take for granted in the West just don’t work here.”
FinAccel isn’t going after the unbanked in the region, but it also isn’t going after banks either. Garg said that it is possible that the company might try to work with banks in the future in order to grow its market share and offer new products.
One area it is looking at is financial products — such as loans for personal, educational and emergency purposes — but there could be ways to leverage its online presence and adoption among young people and work with existing financial institutions, which he believes simply aren’t equipped to reach out in the same way.
“We don’t see ourselves disrupting the banks, we are more partners,” he explained. “We could partner on balance sheet and on issuing credit cards to offer more efficient and seamless financial inclusion at best possible rates.”
Naspers, the South Africa-based firm that famously backed Chinese giant Tencent in its infancy, is in talks to invest in Singapore-based startup Carousell, according to two sources with knowledge of discussions.
Carousell offers a mobile app that combines listings with peer-to-peer selling across Southeast Asia, Taiwan and Hong Kong. That makes it well-aligned with Naspers’ portfolio, which features some of the world’s largest classifieds services including OLX, which covers 45 countries, Letgo in the U.S. and Avito in Russia.
TechCrunch understands that Naspers is pursuing a deal with Carousell with a view to making it the firm’s key play in Southeast Asia and other parts of the APAC region.
Discussions are at a relatively early stage so it isn’t clear what percentage of the company that Naspers is seeking to acquire, although it would be a minority investment that values the Carousell business at over $500 million. The deal could be a first step towards Naspers acquiring a controlling interest in the business further down the line, one source said.
Carousell declined to respond when asked for comment.
“It is our company’s policy to neither acknowledge nor deny our involvement in any merger, acquisition or divestiture activity, nor to comment on market rumors,” Naspers told TechCrunch in a statement.
Timing of the discussions is notable since Carousell announced a $85 million investment round in May. (TechCrunch broke news of the round the previous October.) That deal — the startup’s Series C — took it to $126 million from investors to date and added big names to the Carousell cap table. EDBI, the corporate investment arm of Singapore’s Economic Development Board, and Singapore’s DBS, Southeast Asia’s largest bank, took part in the Series C, which also included existing backers Rakuten Ventures, the VC linked to Japanese e-commerce giant Rakuten, Golden Gate Ventures, Sequoia India and 500 Startups.
Carousell is highly-regarded in Singapore for being one of the first home-grown startups to show promise — its three founding members each graduated the National University of Singapore, NUS.
Aside from raising significant investor capital, it has scaled regionally it is battle against larger and better-funded e-commerce rivals Alibaba -owned Lazada and Shopee, a business from NYSE-listed Sea. In May, Quek told TechCrunch that Carousell has helped sell over 50 million items between users and it currently has over 144 million listings.
500 Startups may soon be coming up on the one-year mark for the end of a tumultuous saga involving its founder, but its accelerator classes still continue to plug along — and its next batch is now getting ready to roll.
The firm’s 23rd batch of startups this year consists of the usual mix of business to business and consumer companies (even coffee) that end up in each class. This class is definitely a smaller one, but it still seems to spread a pretty wide number of different verticals. There’s also, of course, a blockchain track for this class, though a small percentage of the startups in it are taking part of that — and there was still a certain rigor they had to have to run through it.
“For every major tech movement, for every tech phase, there’s the infrastructure phase and the deployment phase,” 500 Startups partner Marvin Laio said. “Our view, with the blockchain, we’re in the infrastructure phase. A lot of these projects outside that we see and read about, they’re kind of bad. They’re really applications. There’s no point having a mobile app if you don’t have the app store. You need to build out the app store. For better or worse, we’re in the infrastructure phase right now.”
The firm is still clearly making some pretty big changes, including an unconventional deal with the Abu Dhabi Financial Group (ADFG) that gives it a stake in the firm’s parent company. The terms of that deal weren’t disclosed, it was another move among many by CEO Christine Tsai to begin to rework the mechanics of how the firm works — especially as it hopes to succeed as both a venture fund as as a program for entrepreneurs looking to get their companies off the ground. Dave McClure, the firm’s co-founder, resigned last year following allegations of sexual misconduct, and since then it’s been trying to get back to business as usual.
500 Startups takes a similar approach to other accelerators, where they will invest around $150,000 for a small chunk of equity and then take on a small amount of that back (a little more than $37,000) for program fees. The firm has primarily been known for its savvy when it comes to growth and marketing, so the support entrepreneurs get usually has that as a core part of the experience.
Here’s the next batch of 500 Startups companies:
Chipper — A mobile app that helps student loan borrowers pay off debt faster through round ups from everyday transactions and contributions from family and friends.
Copper Cow Coffee — A service that brings specialty Vietnamese coffee to offices and homes biodegradable pour over technology.
Finedine Menu — A management platform for restauranteurs to create data driven digital menus for a smarter dining experience.
Harmonica — A mobile application that helps users find the right life partner that focuses on quality and fits conservative cultures.
Koreaboo — A digital media company that creates and shares viral Korean pop culture content in English to millions of people around the world.
Lexop — A digital process server that allows law firms and property managers prove the delivery of their emails in a legal and trackable way.
Lexyom — An online platform that provides users with smart legal answers and tailored legal services using artificial intelligence.
Libra Credit — A global lending platform that allows anyone to borrow money against their crypto-curriences and crypto-assets
Metadium — An identity service platform that provides the fundamentals for various services providers to develop their business on the blockchain.
Orchard — A program for affordable smartphone insurance to enterprises, leveraging diagnostic software to make device support and claims a seamless self-serve experience.
Purple Go — Enables retailers in the $36B vision care industry to reach today’s omni-channel consumer with seamlessly integrated online and in-store mobile software services.
reflect — A mental health platform that reimagines in-person therapy to be more accessible and effective by using data-driven matching to increase engagement and outcomes.
Salusive Health — A nurse-based healthcare provider that offers a technology platform with clinical services to help physician practices streamline disease management.
Shezlong — An online mental health platform focusing in the Middle East and North Africa region that allows patients to be connected with licensed therapists via video visit on mobile or web.
Solana — A high performance blockchain that can scale over 700,00 transactions per second on stock hardware.
Starship — A mobile health savings account with automated investing built for humans.
StructionSite Inc — Lets construction project teams access the jobsite remotely and compare design to reality.
It is normal for VC firms to work closely with big corporates as LPs that supply money for their funds — the Middle East has proven to be fertile hunting ground for the likes of 500, Uber and Softbank — but direct investment in parents is not common in VC-land. ADFG has been an LP with 500 for some time and Christine Tsai, who heads the VC firm up, said there is “strong alignment on vision and complementary strengths” between the two.
Founded in 2011, ADFG claims to have $6 billion in assets under management via offices in the UAE, UK and Eastern Europe. The firm covers public markets, private markets, real estate and debt investments.
500 isn’t saying what size ADFG’s investment other than it will lead to “substantial capital” being injected into the firm to “accelerate the growth of our key initiatives, expand into new markets, and anchor future 500 funds.”
ADFG will also get a board seat at 500, Tsai confirmed.
SmartHR, a startup helping Japanese employers run HR and staffing smarter — because that’s of course its name — has raised a JPY 1.5 billion ($13.3 million) Series B round led by 500 Startups Japan. The startup is perhaps comparable to the likes of Zenefits and Gusto in the U.S. — it aims to drag Japanese HR departments into today’s digital era. “In Japan… Read More