Tag: acrew capital

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Pitch Deck Teardown: Nokod Security’s $8M seed deck

Gone are the days when you needed a developer to build an app for a relatively easy task. No-code and low-code development let you dramatically increase the speed of building and bringing simple (and, sometimes, not-so-simple) apps to market. I swear, half my life is being run by Zapier at the moment: Book a meeting with me, and all sorts of things happen automatically in the background to ensure that our meeting is on the right calendars, is transcribed and the video of the call is stored away and tagged with your company’s name.

The ease of creating apps that low-code and no-code offer has trade-offs, though: In order to work, they need access to some pretty sensitive data. If someone wants access to my data, they could try to hack my email, or they could hack one of the many automations tied to my email accounts. When more and more apps are essentially running on the same underlying architecture and code, they become a very tempting target for hackers and others with nefarious intentions.

Enter Nokod Security, which offers to monitor no-code and low-code apps for security vulnerabilities and mitigate breaches.

The company recently raised $8 million from Acrew Capital, Meron Capital and Flint Capital, and the team was gracious enough to share the (lightly edited) deck they used so we could take a sneaky peek under the hood.

We’re looking for more unique pitch decks to tear down, so if you want to submit your own, here’s how you can do that. 

Slides in this deck

The company has left the 21-slide deck intact except for a few parts.

  1. Cover slide
  2. Team slide
  3. Example no-code apps
  4. “Who uses no-code apps”
  5. Macro trend: The Low-Code / No Code trend
  6. Threats and attacks slide
  7. Problem slide
  8. Threats and Attacks slide
  9. Attack vectors slide
  10.   Mission slide
  11.   Solution slide
  12.   Architecture slide
  13.   TAM slide 1
  14.   TAM slide 2
  15.   TAM slide 3
  16.   Go-to-market slide
  17.   Competition slide
  18.   Validation slide
  19.   (Redacted) Validation takeaways slide
  20.   Timeline slide
  21.   Contact slide

Three things to love

Nokod’s deck has a lot of cool things going on, as well as some stuff that had me pretty confused. As always, I’ll get to my misgivings and OldManYellsAtCloud.gif feedback in just a moment. For now, let’s look at the slides that got me excited.

Give me a T! Give me an E!

Okay, I’m not gonna spell out T-E-A-M in the subhead, but this is an example of a company that knows its strengths. In an early-stage company, a founding team that has an unfair advantage is a straight-up superpower. Nokod has all bases covered on that front:

[Slide 2] Extraordinary founding team. Image Credits: Nokod

The two co-founders have both started and exited companies in the cybersecurity space before. That’s a hell of a way to catch an investor’s attention. Relevant experience and successful exits screams “unfair advantage.” Even after just reading this one slide, I was pretty unsurprised that this company successfully raised money.

Apart from the obvious, this slide shows that the founding team understands what’s important in a pitch deck: If you’ve got incredible traction, lead with that. If you don’t, highlight your experienced team.

Well-articulated problem

[Slide 9] An elegant outline of the problem at hand. Image Credits: Nokod.

A good fundraising story will have a good explanation of what the problem is and why it might be worth solving. Not everything on this list is well explained. To wit: Do you, without googling, know what PII is, or, indeed, why collection and storage of PII might be a bad thing?

The company could have taken the effort to explain the impact of some of these issues and why low- and no-code apps are particularly vulnerable in these situations, but I get the message in broad strokes: The cost of embracing no-code and low-code is that people might not always know exactly what’s going on, and if something does happen, it can be hard to figure out exactly where the ne’er-do-wells gained entry to a system.

A better go-to-market slide than most

[Slide 16] Let’s sell this thing. Image Credits: Nokod

This go-to-market slide has a clear profile of the customer: how they can be reached, what the business model is and where they are geographically.

Building a coherent go-to-market strategy can be surprisingly hard. It’s what I end up arguing about with my pitch coaching clients most often. Having some vague, hand-wavy “build it and they will come” theory works when you are focusing on the product, but if you are raising money to acquire customers, you don’t get to shrug and say, “We will figure it out when we get there.” You aren’t getting there. You are raising money to execute, so you are there.

This go-to-market slide has a clear profile of the customer: how they can be reached, what the business model is, where they are geographically and even who the decision-maker is within the business. I’m not sure how many medium-sized companies have a CISO or director of application security. I suspect a lot of the time, these decisions fall to a CTO rather than a dedicated, clearly defined security role.

Still, as an investor, I can look at this and see the outline of a plan. My next question would be: “Okay, talk me through your process. How do you actually land a sale?” The story should be consistent and outline a good sales funnel — something like, “The leads come from X, we reach the decision maker through A, B and C, and then we close the deal 25% of the time. But we suspect we can increase that percentage if we do Y and Z.” An answer like that will pass muster for me, and doubly so if the company already has paying customers and can point to the sales process it used.

In the rest of this teardown, we’ll take a look at three things Nokod could have improved or done differently, along with its full pitch deck!

Pitch Deck Teardown: Nokod Security’s $8M seed deck by Haje Jan Kamps originally published on TechCrunch

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StellarFi lands $15M to help people build credit by paying bills, rent on time

Building credit is hard when it’s difficult to even get credit.

And while it’s not impossible to get loans or credit cards, they are usually offered at high interest rates to the people who can least afford to pay them.

One Austin-based startup is out to help people build — or get — credit without taking on debt. And that startup, StellarFi, has just closed on a $15 million Series A round of funding to help it advance on that goal.

Lamine Zarrad started StellarFi in 2021 after selling another fintech company he’d started, banking app Joust, to ZenBusiness in 2020. Having faced his own struggles receiving credit as an immigrant, Zarrad was looking for a way to help others gain access to credit. 

He started StellarFi on the premise that people should be able to see benefits to their credit scores just by doing everyday things such as paying rent and bills on time. It does this by charging a subscription — either $4.99 or $9.99 — to manage members’ bills and recurring payments such as rent, subscriptions and utilities. Its goal is not only to help consolidate the payments, but to help ensure members pay on time. StellarFi then reports those on-time payments directly to the four main credit bureaus — Experian, Equifax, TransUnion and Innovis.

The company does not require a credit check or deposits and doesn’t charge any interest. It claims that members see an average increase of 26 points in the first month. The average credit score of users at signup is 580.

As a public benefit corporation, StellarFi’s mission is to help “financially disadvantaged” communities with support to build good credit. With its new capital, the company intends to build a marketplace to then link members to lenders.

Since launching its offering in late June, the company’s growth has exceeded expectations, according to Zarrad. StellarFi closed out the year with over $2 million in annual recurring revenue (ARR) — about double what it was projecting.

“In 134 days, we had hit $1 million in ARR,” he told TechCrunch. “I’ve built a unicorn before, but never seen this kind of growth.”

While Zarrad did not disclose the company’s new valuation after its latest raise, he shared that it was a significant “up round.” In total, StellarFi has raised $22.2 million in funding. Repeat backer Acrew Capital led its Series A, which included participation from Trust Ventures, ATX Venture Partners, Dream Ventures, Interplay, Accomplice Ventures, Vera Equity, FJ Labs, Fiat Ventures, Gaingels, Kelmhurst, Oyster Funds, Hilltop Ventures, Permit Ventures, Kindergarten Ventures, J2 Capital, Socially Financed and Kapital Ventures. 

“Every single seed investor participated in this round,” Zarrad said. “And we added new ones. Everyone is energized.”

StellarFi was set to close on $5 million in venture debt from Signature Bank for runway extension — a deal that fell through once that institution was forced to shutter earlier this month. It plans to still secure debt from another institution.  

Last September, Experian — perhaps in response to the increasing number of fintechs tackling this problem — released a new product called Experian Boost that, in its own words, lets people “get credit” for paying their rent on time. According to Zarrad, Experian Boost allows users to link their bank accounts via Finicity, then automatically identifies certain recurring bills like utilities and rent and extracts that data into their internal model designed to showcase alternative payment behaviors. This model resides only at Experian, Zarrad points out, as TransUnion, Equifax or Innovis don’t have access to it.

“More importantly, it’s not used by lenders in credit decisions,” he added. By contrast, as mentioned above, StellarFi operates as a bill-pay manager to help members continue to make on-time payments, and reports payments to all four credit bureaus, to impact all credit score models. 

“Unlike Boost, StellarFi does not report payment history derived from linked bank accounts. Instead, StellarFi actually pays the bills and then members pay us back,” Zarrad told TechCrunch. “Therefore, we’re able to create a credit relationship that we report to all bureaus that generate consumer reports used by lenders. In other words, our members are covered, no matter which credit report their lenders pull.”

The company has added affiliate partners and is investing in SEO and is seeing even faster growth this year, according to Zarrad.

“We’ve signed contracts with neobanks and other fintechs are sending us their customers,” he said. “We’re still onboarding lenders and financial institutions.” 

StellarFi has put a lot of eggs into the affiliate basket, Zarrad said, because he believes it creates trust and that conversions “are much higher” versus “going online and buying folks on social media.”

The company intends to build out more features and is still developing its mobile app.

“Our next goal is to conquer the mobile experience completely,” he said. “Once that’s done, members can not only get better credit, but also access to capital. We want to help them get that money through partners.”

Surprisingly thus far, Zarrad said that StellarFi has had “zero defaults” but has seen tons of fraud. “But we’ve built sophisticated algorithms to catch it upfront and quarantined attempted fraudsters.”

John Gardner of Acrew Capital said his firm first invested in StellarFi at the seed stage because it “held strong conviction” in Zarrad and his team’s ability “to scale another fintech business, considering their success building Joust.”

“Stellar’s approach is exciting because it meets consumers where they are – internet bills. We think this form factor is much easier for users to understand and link, helping them see quick and persistent boosts to their credit score in a fairly short time frame. Stellar also reports into a broader set of FICO models, meaning the score benefit is applicable to heftier loans, like auto or mortgage,” he wrote via email. “When it came time for the Series A, it became readily apparent that Stellar’s team could execute on their plans with a maniacal focus. They demonstrably improved credit scores within 30 days for members, scaled to over $1mm in ARR within a few months of launch and set up unique distribution partnerships to efficiently reach the right audiences. For consumer fintech, we get really excited by these growth characteristics, particularly when there is a clear line of sight to profitability.”

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Got a news tip or inside information about a topic we covered? We’d love to hear from you. You can reach me at maryann@techcrunch.com. Or you can drop us a note at tips@techcrunch.com. Happy to respect anonymity requests.

StellarFi lands $15M to help people build credit by paying bills, rent on time by Mary Ann Azevedo originally published on TechCrunch

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Arthur.ai machine learning monitoring gathers steam with $42M investment

It’s widely understood that after machine learning models are deployed in production, the accuracy of the results can deteriorate over time. Arthur.ai launched in 2019 with the goal of helping companies monitor their models to ensure they stayed true to their goals. Since then, the company has also added explainability and bias mitigation to the array of services.

The tooling has been resonating in the market, and today the startup announced a hefty $42 million Series B. Company co-founder Adam Wenchel told TechCrunch it’s the largest round ever given to a machine learning monitoring startup.

Accuracy also means guarding against bias, and that’s something the company has been working on since we last spoke to them at the time of its $15 million Series A.

“We’ve worked a lot on the bias side of things. It’s becoming a lot more top of mind for people, like how do you keep these models from being discriminatory? And so we’ve done a lot of novel IP development around how do you automatically adjust the outputs of these models so that they meet whatever fairness constraints the customers want to achieve,” Wenchel said.

Explainability, as the name suggests, is understanding why you got the results you did. Wenchel uses the example of having high blood pressure, which could be from diet or other controllable factor, or it could be from a hereditary factor, you have no control over and might require medication to bring down. Understanding that there isn’t a one-size-fits-all answer is important can help prevent over generalizing what the machine learning model is telling you.

He said he definitely noticed a difference in raising this year versus the last time. “We had to meet with a dozen different investors to get those multiple term sheets as opposed to the frothy environment of 2020 when there were people who were calling every five minutes asking, are you ready? Are you ready? Are you ready yet? But it all worked out well for us,” he said.

Perhaps the company’s growth is one of the reasons for investor interest. The startup has averaged 58% ARR growth over the last four quarters, which looks even better when you consider the economic ups and downs we’ve been experiencing over the last couple of years.

The company has 55 employees today, up from 17 at the time of its Series A, and Wenchel says that diversity remains a company goal, one that they’ve been working on, both at the cap table level and at the employee level.

He says it’s particularly important in the research area, where having a diverse workforce can help prevent bias from creeping into their software. “We’ve published a number of papers and that team in particular is incredibly diverse, and I think a much better team for it,” he said.

Today’s round was led by Acrew Capital and Greycroft. The cap table includes Theresia Gouw from Acrew and Ashley Mayer from Coalition Operators. Gow will join the board under the terms of the funding.

Arthur.ai machine learning monitoring gathers steam with $42M investment by Ron Miller originally published on TechCrunch

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DEUNA enters Latin America’s crowded one-click checkout sector flush with $37M

DEUNA, a Mexico-based one-click checkout commerce startup, is officially joining Latin America’s nearly $100 billion e-commerce sector with $30 million in Series A funding after largely staying under the radar since being founded in late 2020.

Co-founders Roberto Enrique Kafati Santos and Jose Maria Serrano started the company after a career at McKinsey leading digital payments for Kafati Santos and at delivery company JOKR for Serrano. They also recently brought on Jose Jorge Molina, who was previously chief marketing officer for Bitso, to join the founding team to lead marketing.

“People were looking for help digitizing their businesses, and as we started looking into this, realized that brands needed help selling online,” Kafati Santos told TechCrunch. “At the time, we didn’t understand the opportunity to do an e-commerce platform, but the decision was obvious, and we have done payments ever since. We helped several brands last year and have now increased our sales five times.”

E-commerce is a hot market in Latin America, with the founders estimating it will grow 30% each year. However, they say the market continues to be plagued by three challenges: customer acceptance, conversion and fraud.

That’s why they say they are building a “Commerce 3.0” that will tackle all three of those. DEUNA provides a payments infrastructure that integrates with major payment providers and alternative payment methods and provides merchants access to more than 3 million users. In addition, merchants can use the tools to handle payment orchestration, payment processing, fraud prevention and lifecycle management based on actionable user real-time analytics.

In particular, to combat acceptance, DEUNA will offer multiple payment methods, which Kafati Santos believes will also help solve the problem of conversion, where some 70% of customers abandon their cart at checkout. The company has been able to increase acceptance rates by 40% and prove out about three times higher conversion rates, he said.

In Latin America, that is often due to about half of customers not having their payment method of choice approved. On top of that, those whose payment is approved, one in 20 payments are fraudulent, for example, a payment made with a stolen credit card, he added. That’s why DEUNA is building its own fraud tech with custom rules for merchants that cuts down on payment fraud and denials.

Addi raises $75M to advance ‘buy now, pay later’ in LatAm, nearly triples valuation

With a rather large e-commerce market, a lot of one-click competitors have entered, mainly driven by the consumer buying behavior shift that took place over the past two years. We recently saw Sleek raise $1.7 million to get started in a space that is dominated by companies like Ownit, Bolt, Checkout.com, OurPass and Rapyd, which have collectively raised more than $3 billion in investments within the past 18 months. During that time, Colombia-based Addi said it was getting into the one-click space after taking in a $75 million extension to its Series B.

Kafati Santos said DEUNA has been able to differentiate itself from many of the players in that it is solving the whole acceptance-conversion-fraud triangle, whereas others are just going after pieces of it.

Over the past two years, Kafati Santos and Serrano had bootstrapped the business for the most part, with the exception of a $7 million seed round in October 2021. They have grown revenue 120 times in the last year and brought on clients, including KFC, Pappos and Dunkin’ Donuts.

This new investment of $30 million was led by Activant Capital, with participation from Valor Capital, Abstract Ventures, Acrew Capital, Upload Ventures and a group of individual founder investors from companies including Plaid, Kavak, Jeeves, Xepelin, iFood and R2. The company raised a total of $37 million.

The founders plan to use the new capital to expand its presence in Mexico, Colombia, Ecuador and Chile, product development, go-to-market, adding employees to its team of 90 and entering new countries, like Brazil, in the coming months.

David Yang, partner at Activant Capital, said his firm has invested in a number of fintech companies and believes DEUNA is doing something unique.

“Raising a $30M Series A is hard in any market, but with their backdrop, we had high conviction in what they are doing,” Yang said. “This is a big market opportunity, in some ways more compelling than the U.S. DEUNA’s approach is also holistic rather than just pieces of the market. The team, and the vision they had with Jose (Molina) joining, has had strong execution to date.”

VCs say there are more startup opportunities to chase in Latin America

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Cryptoys banks a16z funding to build NFTs for kids

The past several months haven’t been entirely kind to the NFT market — while transaction volume hasn’t stuttered too significantly, the dollar amount invested in the space has been in free fall as cryptocurrency prices have taken a historic dive. With that as background, it might not seem like the best time to launch an NFT platform, let alone one geared towards children.

And yet, NFT startup Cryptoys is raising tens of millions of dollars with the goal of building a blockchain-based toy company that can expose younger users to the ideas of digital ownership and NFT mechanics. The platform, which will launch widely in the next couple months, features cutesy big-eyed animal characters with hats, sunglasses and cryptographically-ensured uniqueness.

Platforms for trading non-fungible tokens have often proven themselves difficult for even adult users to navigate, so the prospect of building an onboarding for younger users seems quite daunting. Cryptoys will be side-stepping some of this friction by partnering with Dapper Labs and launching their platform on the startup’s Flow blockchain. Flow, which Dapper’s NBA Top Shot runs on, offers a blockchain-lite experience that lets users sidestep some of the hallmark stumbling blocks of NFT land including high gas fees, convoluted wallet onboardings and the inability to transact with payment methods like credit cards.

Magic Eden raises $130M, hitting unicorn status at $1.6B valuation

Even so, making a blockchain easy enough for kids to use is a bit of a moot point at the moment, as users signing up for the platform will be required to be 18 or older, though CEO Will Weinraub says that parent-controlled wallets are on the way that will allow younger users to interact more directly with the platform and learn about NFTs.

“You have to take a step back from all of this web3 maximalism,” Weinraub says. “You’ve got to take baby steps to getting millions and millions of people to these new paradigms.”

Cryptoys is getting some help on this journey. The startup tells TechCrunch it has recently closed a $23 million Series A round led by a16z Crypto with participation with a host of other partners including Mattel, Dapper Labs, Draper & Associates, Acrew Capital, CoinFund, Animoca Brands and Sound Ventures. The startup announced a $7.5 million seed round — also led by a16z Crypto — in October.

Image: OnChain Studios

The funding will give Cryptoys’ parent company OnChain Studios some capital to build out their vision which includes a number of NFT-adjacent opportunities including games where users have the chance to earn NFTs through gameplay. Weinraub notes that the company is also planning to build experiences that won’t require that users interact with NFTs, something that may prove helpful as the startup looks to approach younger users on platforms like iOS which hasn’t been very friendly to the crypto industry — though Weinraub believes that could change.

“Apple is constantly evolving how they think about these things,” he says.

Among the biggest questions raised by an NFT-for-kids platform is why kids would care about their in-app purchases being blockchain-ordained. Weinraub says that kids bouncing from platform to platform means a lot of digital asset value being lost, and that he thinks his own children would be interested in reselling in-game items they’ve bought and grown tired of to fund new digital purchases. Weinraub believes that the phenomenon of parents spending hefty sums on cartoon animal NFTs has left a lot of space for parents to bond with their kids over investments and what digital ownership means.

For those parents that have gotten involved in the NFT space in the past several month, it’s fair to say that many investments haven’t turned out as profitable as anticipated even as many of the companies involved have seen big paydays. Asked whether the startup missed a historic launch window of NFT razzmatazz, Weinraub rebuffs, “it’s a much better time to launch products, a lot of the hype has been driven out of the market.”

The NFT slump is real (really)

Subscribe to TechCrunch’s crypto newsletter “Chain Reaction” for news, funding updates and hot takes on the wild world of web3 — and take a listen to our companion podcast!

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Women are leaving VC firms and creating a new class of emerging investors

Women in VC have caught the entrepreneurial bug.

Over the past year, numerous notable women investors have left their roles at established firms to launch funds of their own. From Katie Haun spinning out of Andreessen Horowitz to Sydney Thomas leaving Precursor Ventures to, most recently, Sarah Guo moving on from Greylock, we are amid a wave of new emerging women managers.

There isn’t one specific reason why so many women have chosen this path this year, but rather a multitude of possible catalysts.

“It’s very personal,” Guo told TechCrunch about her decision to leave Greylock to start her own project. “Why does any founder start anything? They see a once-in-a-lifetime opportunity and they go do it.”

For Guo, after nearly a decade at enterprise-focused Greylock, she said she saw an opportunity brewing that had the potential to be a gold mine. Guo said that she thinks the market is at the beginning of a new tech cycle. After years of entrepreneurs building infrastructure technology, she thinks a new cohort of companies will emerge across machine learning, AI and data.

“If I’m right, and that new wave of businesses is just around the corner, then doing early-stage investing now in a bear market that sweeps out pretenders is exceedingly good conditions,” Guo said.

Sydney Thomas told Natasha Mascarenhas last week that she was leaving Precursor to capitalize on an opportunity she couldn’t ignore either. In her case, it’s investing in companies at the pre-seed stage before doubling down at seed, a funding void she noticed throughout her time at Precursor.

Thomas and Guo are not the first women to find a niche in venture and go after it. For Julie Wroblewski, it was hard to ignore the chance to focus. In 2019, she noticed a growing number of solid early-stage companies trying to solve problems in the care economy. While she was able to invest in some in her role at Pivotal Ventures, she realized it was a big enough opportunity to form an entire thesis. So she found a partner, Joanna Drake, and launched Magnify Ventures in 2020.

Spinning out has also given women the chance to break from the traditional venture mold and build firms that have different governance or structure.

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HYCU locks down additional funding to grow its cloud data protection business

Hybrid Cloud Up Time (HYCU), a self-described “backup-as-a-service” company for customers managing hybrid and multi-cloud environments, today announced that it raised $53 million in a “majority equity” Series B round led by Acrew Capital with participation from Bain Capital Ventures, Atlassian Ventures, and Cisco Investments. In an email interview with TechCrunch, CEO Simon Taylor said that the proceeds will be put toward expanding HYCU’s 300-person team with a particular focus on customer success and partnerships as well as funding the development of new products and services, including a software-as-a-service product.

HYCU was spun out of Comtrade Software, an IT solutions company based in Belgrade, Serbia, with offices in Dublin, Amsterdam, and Ljubljana. Comtrade — having sold the intellectual property of data monitoring software it created for Citrix and Microsoft — realized it could develop and sell data protection products through its own channels. The company decided to spin out HYCU while retaining a majority ownership and focusing on integration and outsourcing.

In 2018, Taylor was appointed CEO of HYCU (pronounced “haiku”), which is based in Boston — where Comtrade Software has a fourth outpost.

“HYCU is … focused on data resiliency,” Taylor said. “The emerging threat to the explosion of data is too important to take risks on. In addition, the emergence of multi-cloud and hybrid cloud where companies are migrating more workloads and apps from on-prem to public cloud is accelerating at an unprecedented rate. Lastly, the number of data silos within enterprises is increasing as well. All of these are reasons why our current and new investors are working with HYCU to address these challenges.”

HYCU offers software designed to protect data across multi-cloud and hybrid cloud environments. While “multi-cloud” and “hybrid cloud” both refer to deployments with more than one cloud, they differ in the kinds of infrastructure involved. A hybrid cloud blends two or more different types of clouds (e.g., an on-premises data center and public cloud like Amazon Web Services), while multi-cloud combines different clouds of the same type (e.g., Amazon Web Services and Google Cloud Platform).

Specifically, HYCU sells products — most of them self-serve — for cloud migration, security credential management, disaster recovery, and backup and recovery. Taylor sees the company’s offerings as competitive with legacy data protection providers with roots in mainframes, app-based data protection and management companies, and cloud-native, “backup-and-recovery-as-a-service” vendors

“HYCU experienced much of its growth during the pandemic. Much of that was driven by the need to simplify the ransomware recovery experience,” Taylor said. “The pandemic also saw the fastest rise in the use of multi-cloud systems. Many data protection solutions were developed before public clouds existed, and people began to realize the responsibility of protecting cloud data.”

There’s certainly no shortage of competition in the data backup and recovery sector. In our coverage of HYCU’s Series A, my colleague, Ingrid Lunden, noted three major rivals: Rubrik, Veeam, Veritas, and CommVault. Veeam was acquired by Insight in 2020 for $5 billion. As of early 2019, Rubrik was valued at a whopping $3.3 billion.

In 2019, IDC estimated that the market for data replication and protection software was worth $9.4 billion. It’s almost certainly grown since. Over 80% of companies responding to Flexera’s latest State of the Cloud survey reported having either a multi-cloud or hybrid cloud strategy.

Gartner predicted in a 2020 report that worldwide spending on information security and risk management technology and services would reach $150.4 billion in 2021, driven in part by high-profile ransomware attacks. At the same time, the analytics firm projected, spending on public cloud services would climb to $304.9 billion — up from $257.5 billion in 2020.

HYCU claims to be in a strong position for expansion, with a customer base totaling more than 3,100 organizations including U.S. state and local government agencies, the U.S. Department of Defense, and “multiple” branches of the U.S. military. In anticipation of courting future public sector clients, perhaps, HYCU recently announced support for AWS GovCloud, Amazon’s cloud regions designed to host sensitive data and regulated workloads.

“Wherever the need for cost-efficient, multi-cloud data protection as a service exists, we service those needs,” Taylor said. “HYCU is positioned to continue to thrive. We were approached to start a Series B and were able to do it at a time when many tech companies were challenged to raise money. Protecting data is a need that will always be present, especially as more data is created.”

To date, HYCU has raised $140 million.

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Creative Juice launches a $50M fund to invest in creators

A banking app built for online creators, Creative Juice announced its $50 million fund to underwrite creator businesses. YouTubers and other social media stars stars can apply for upfront cash to grow their businesses in exchange for a cut of their revenue over a certain period of time, usually between six months and three years.

It sounds like a loan, but it’s not a loan (at least in the sense that Creative Juice isn’t a bank, so they’re not allowed to say they give loans.) They refer to distributing “Juice Funds,” their investments in creators, as underwriting creator businesses, or as revenue-based financing. But Juice Funds don’t accrue interest like a loan. And if the creator fulfills the terms of their contract, yet doesn’t make enough money to pay back their Juice Funds before their term is up, then it’s Creative Juice that eats the deficit, not the creator.

So far, according to CEO Sima Gandhi, there haven’t been any issues with creators not being able to pay Creative Juice back. This is in part because Creative Juice is so selective about whom it funds.

“Creators are the next generation of [small and medium-sized businesses] in America,” said Gandhi, who was formerly the head of business development and strategy at Plaid, a fintech unicorn. “If you’re a content creator, you can now set up an Instagram shop, you can sell merchandise, you can sell tickets to things, you can sell food. You can do anything a typical business would do, yet they’re not treated like a business.”

It’s difficult for creators to get loans from banks, since their line of work is less established than your standard small business. Other startups have also sprung up to help fill in this gap like Karat Financial, which offers creators access to business credit cards.

“Any industry needs capital to grow, and it’s actually really remarkable that creators have grown as quickly as they have without access to capital,” Gandhi told TechCrunch. Creators might use these funds to hire an assistant, rent out a studio that makes filming more efficient, invest in merchandise to sell, or buy new equipment.

Of course, there’s inherent risk for a creator to take any sort of outside financing that has strings attached — but Gandhi says that Creative Juice only succeeds if the creators that it funds succeed, too. Creative Juice secured this $50 million pool from an alternative lender, HCGFunds, so if the startup doesn’t fund creators who won’t be able to turn a profit and then some, then Creative Juice is screwed, too.

“It’s very incentive aligned,” Gandhi emphasized. “One of our company values is that we grow as creators grow. It’s always got to be about what’s creator-first, and we will say no to creators if we don’t think they should take the capital.”

How it started

While at Plaid, Gandhi noticed that although the creator economy was booming, traditional banks and lenders didn’t understand the business model behind a cook who shares viral recipes on TikTok, or a fashion stylist on Instagram.

In 2021, Gandhi started Creative Juice alongside Ezra Cooperstein, the president of Night, a management company representing top digital creators like makeup maven Safiya Nygaard, underwater treasure hunter DALLMYD and stunt YouTuber MrBeast, who also sits on the Creative Juice cap table.

The company began as a financial management solution for creators, helping them to manage multiple revenue streams from various apps and sponsorships, project their income and automate invoicing. The app also offers YouTubers the ability to get advance access to their AdSense payouts.

But when MrBeast tweeted in December 2020 that he wished there was a way to invest in creators, Gandhi and Cooperstein got an idea (… or maybe the tweet was an elaborate marketing stunt, but … who can say?).

Soon, Creative Juice partnered with MrBeast to test this model of underwriting creators with a $2 million fund — and evidently, it worked well enough that the company is launching a second round of Juice Funds at 25 times the size. Plus, Creative Juice just raised a $15 million Series A round led by Acrew Capital, with participation by Meena Harris (a lawyer, children’s author and niece of Vice President Kamala Harris), Concrete Rose, former NFL star Larry Fitzgerald and TikToker Jared Waldrom.

Every Juice Funds contract is different. Any creator can apply for Juice Funds, and the company evaluates their existing business to see if it would be mutually beneficial to underwrite them. If so, they agree on a percentage of revenue that the creator will share with Creative Juice for the duration of a designated time period, which may range between around six months to three years. Gandhi declined to share what percentage of creators earnings are typically shared, but indicated that usually it’s up to the creator’s discretion whether they’d want a longer contract with a lesser revenue share, or vice versa.

“Yes, we are a company. We want to make money. We’re not a charity. But we want to do it in a way that’s really responsible and sustainable for the ecosystem,” said Gandhi. “That’s why we do it. We want to see creators thrive and succeed.”

The terms of the contract dictate that the creator stick to a certain upload schedule, which is usually whatever they’ve already been doing — for example, if they upload three YouTube videos per week, then they will be expected to keep posting at least three times per week.

Switch and Click, a self-described “cringe entertainment tech channel,” used Juice Funds to buy new equipment and hire a video editor. With that infusion of capital, they grew their revenue 70%, allowing them to buy out of their revenue-share contract with half the term left to go.

Guitaro5000, a music channel, used Juice Funds to travel to new filming locations, since he noticed that his videos with unique settings performed the best. As a result, his revenue has increased by 50%, and he’s noticed an uptick in fan interaction.

Channels like Oompaville, Grow With Jo and Internet City have also received Juice Funds.

MrBeast’s ‘Real Life Squid Game’ and the price of viral stunts

How it’s going

Creative Juice has received thousands of applications, but the startup has only deployed Juice Funds to around 20 creators. Gandhi says that so far, Creative Juice hasn’t had any issues with a creator not being able to scale their business enough for the startup to make its money back.

“This is risky, right? No one’s ever done this before,” Gandhi told TechCrunch. “This is a whole new type of asset that I hope someday, there’ll be a massive securitization market around, and everyone wants to buy creator backed securitization investments.”

Other creator economy startups like Spotter have also experimented with offering YouTubers large sums of upfront cash in exchange for five years of royalties from their back catalog.

In both cases, there’s a gamble on the creator’s end. These cash infusions can, in some cases, be exactly what a YouTuber needs to grow their channel to the next level and make more income in the long run. But there’s always the risk that something goes wrong, and an independent artist gets caught in a contractual bind.

Both Gandhi and Aaron DeBevoise, Spotter’s CEO, told TechCrunch that their companies would never do a deal that they didn’t think was beneficial for the creator too. But it’s hard to predict how an investment may pan out in such a precarious business, and creators must understand the risks involved in any sort of dealings with new startups pioneering experimental investment models.

Notably, neither Creative Juice nor Spotter require creators to take on debt. But no matter how legit a deal might seem, it’s never a bad idea for independent business owners to keep their guard up, just in case.

Not every creator economy startup is built for creators

Spotter raises $200M to invest $1 billion into YouTubers’ back catalogs

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Silverfort nabs $65M with a ‘holistic’ approach to protecting ID management across IT silos and legacy systems

Identity management is at the heart of how a lot of organizations aim to keep their systems secure, but that leaves a big question unanswered: how secure is the identity management system overall, and what about all the gaps that are not covered? Today a startup called Silverfort, which has built what it believes is a platform that can cover those bases and more, is announcing $65 million in funding to expand.

The company’s platform is built both to work with existing identity management software providers, as well as provide a layer of security across systems and hardware that might not already be covered by them. The latter group is more tricky and a bigger target than some might realize, said Silverfort’s co-founder and CEO Hed Kovetz in an interview, citing both legacy systems and machine-to-machine networks being two of the most exposed when it comes to hacking these days. 

“The market is realizing that identity is the next big thing in security, but it is so fragmented,” Kovetz said in an interview.

Israel-based Silverfort’s funding, a Series C, brings the total raised to over $100 million, and it is being made at an undisclosed valuation. The last estimate PitchBook gives for it is $150 million, but that was back in August 2020 and the company has grown since then — 2.5x year on year, with 3.5x growth for the U.S. “Hundreds of people are coming to us,” Kovetz said. Customers today include Singtel, Samsonite and UPS “among the smaller” of them, he said. Bigger customers are not being disclosed and overall about half are based in the U.S. in a total list of over 200 customers.

Led by Greenfield Partners, the round also includes new backers GM Ventures, Acrew Capital and Vintage Investment Partners; and previous investors StageOne Ventures, Singtel Innov8, Citi Ventures, Aspect Ventures and Maor Investments. This is a mix of both financial and strategic investors, although Kovetz would not disclose many details of which were using its services, and how.

An interesting one to draw out from that list, however, is GM Ventures, which presumably could both be working with the startup to secure its own systems, which span on-premise and cloud systems, but also legacy software mixed with next-generation applications; as well as services that it might develop for its own customers who will increasingly load more identity-based services into connect-car environments. In short there is a lot of potential there, and GM seems to be similarly non-committal in describing how it might use the tech:

“The need for robust threat protection across the enterprise is more prevalent today than ever before, as traditional network parameters rapidly change and new threats emerge,” said Wade Sheffer, MD of GM Ventures, in a statement. “Our investment in Silverfort underscores GM Ventures’ commitment to identifying next generation technologies that will enhance a business’ digital enterprise while supporting GM’s transformation to a technology leader and platform innovator. We are optimistic about Silverfort’s growth and believe their technology has the potential to stop future identity-based threats at GM and beyond.”

While you might argue that identity management systems in themselves are systems put in place to help with security, and in any case many of them might be sold alongside or to work with other kinds of services to build a larger security stack, Kovetz’s and Silverfort’s argument is that there is a lot of merit to de-coupling identity from security around that identity layer.

Part of the reason for that, Kovetz said, is because each identity product, just as many applications themselves, sit in silos — and that is before one considers the different parts of an enterprise network that might not be covered by identity-based authentication. Taken together, it creates a ripe opportunity for a malicious hacker looking out for small gaps and points of entry. (In that regard, it’s not unlike someone in a crowded place looking for someone to pickpocket — that person doesn’t regard those who are protected, but looks for those who are less on their guard and likely will not be.)

Silverfort’s approach is unique (and patented, Kovetz pointed out), if a little quirky-sounding. As he described it to me, customers aren’t necessarily asked to give up any of their current ID management products. Silverfort is used alongside all of them, however many there may be. At the same time it takes a snapshot of a company’s whole landscape of machines and provides observation around all of those ID services and around machines that are not covered by any of them to bring an all-in-one approach to covering it, providing both Threat Detection and Response (ITDR) and Identity Threat Prevention (ITP) capabilities.

As Kovetz describes it, instead of building another ID platform, Silverfort “sits behind all the other platforms.” The other platforms forward their authentications to Silverfort, which becomes “like a second opinion” in authenticating a user. The legacy points are more complex to integrate, and is in part where some of the patented tech comes into play, he added.

“The company has spent years building a best-in-class platform to solve holistically a growing security problem now gaining mainstream awareness,” said Avery Schwartz, a partner at Greenfield Partners, in a statement. “We are energized both by the positive impact the company’s technology is having and by the leadership’s vision and passion. It is clear to us that Silverfort’s strong momentum in the market is just the start, and we are excited to join them on this journey.”

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Bazaar raises $70 million from Tiger Global and Dragoneer to digitize Pakistan’s retail

Dragoneer Investment Group and Tiger Global are backing Bazaar, a startup that is attempting to digitize Pakistan’s retail with e-commerce, fintech and last-mile supply chain solutions, they said today, joining a growing list of high-profile investors making large bets in the South Asian market.

The two investors are leading Bazaar’s $70 million Series B funding. Existing backers including Indus Valley Capital, Defy Partners, Acrew Capital, Wavemaker Partners, B&Y Venture Partners and Zayn Capital also participated in the new round, which brings one-and-a-half year old startup’s all-time raise to over $100 million.

Bazaar is attempting to build what it calls an “operating system for traditional retail” in Pakistan. It’s a $170 billion market that comprises 5 million small, medium-sized and enterprises across the country.

But these merchants are largely unbanked and offline today. Banks and other formal financial institutions don’t extend credit to these merchants because they don’t have a credit score. This gap has forced many of these shop operators to take loans from shark loan providers.

For those following the South Asia coverage, this challenge will sound very familiar.

Business-to-business e-commerce Udaan, logistics startup ElasticRun, and Dukaan, a startup that is helping shops go online, as well as scores of startups and giants including Reliance and Amazon are solving a similar problem in India.

Bazaar is combining many of these offerings.

The startup’s B2B e-commerce marketplace, thanks to its network of a dozen fulfillment facilities, is helping merchants in 21 towns and cities across Pakistan procure items to sell.

These merchants also use the startup’s Easy Khata app, which helps them maintain bookkeeping. Bazaar’s financial arm, called Bazaar Credit, is offering these merchants, many of whom operate neighborhood stores, with short-term working capital financing.

Bazaar’s suite of commerce, fintech and supply chain products

Piecing together many of its services makes sense for a startup like Bazaar in Pakistan as it enables the startup to offer a more comprehensive set of values to a merchant and Easy Khata is helping the firm win customers, said Saad Jangda, co-founder of Bazaar, in an interview with TechCrunch.

In August, “we had just started piloting our credit product and at the time we had partnered with a third-party,” he said. “Now, our credit product is developed completely in-house and is digitally-enabled that connects to our last mile network. Everything from order generation to credit disbursement to cash collection is done completely by Bazaar,” he said.

“We acquire customers through Easy Khata, funnel them through commerce, and once we have enough data on the merchants, we start building a credit product atop of it,” he said, adding that the startup has issued thousands of loans in recent months.

Easy Khata has amassed over 2.4 million registered businesses across 500 cities in Pakistan. “But more importantly, Easy Khata is serving as both a core system of records and also helping us launch in new cities,” he said.

Merchants have recorded over $10 billion in annualized bookkeeping transaction value on Easy Khata, the startup said. “Our expansion within Pakistan in the last few months is a testament to how crucial Easy Khata is for us,” he said.

The startup’s last mile network, which was operational in just two cities in August of last year, is now adding three to four cities each month.

“The goal is to keep building for Pakistan. We want to cover more than 100 urban and rural centres across the country and build the largest network in the country so that we can move any category of goods from point A to B whenever and wherever is needed.”

The startup plans to deploy the fresh capital to expand to more cities across Pakistan and launch new marketplace categories. It is also working to scale its lending offerings and explore new product lines.

Childhood friends Saad and Hamza reconnected in Dubai a few years ago. At the time, Jawaid was at McKinsey & Company while Jangda was working with Careem as a product manager for ride-hailing and food delivery products. The opportunities they saw in their home nation drove them back to the country to build Bazaar.

“We are thrilled to support Bazaar’s vision of building an end-to-end commerce and fintech platform for millions of unbanked and offline merchants in Pakistan,” said Christian Jensen, Partner at Dragoneer Investment Group. “Bazaar’s pace of geographic expansion and new product development is a testament to the rare talent and culture Hamza and Saad have cultivated at Bazaar.”