Collaborative Fund backs Korea’s Sopoong Ventures to grow its footprint in Asia

Venture capital firms often open a physical office or hire local investors to make inroads into new markets, especially when expanding internationally.  

But funds are increasingly exploring a variety of other routes into new markets to shore up their deal flow. Most recently, a16z unveiled its fund-of-funds plan to invest in earlier-stage companies, and Sequoia Capital has built out programs for early-stage startups.

Collaborative Fund made a different choice. The U.S. venture capital firm recently took a strategic investment in a Korean social impact-focused VC called Sopoong Ventures to broaden its investment activities in Asia. The U.S. VC did not participate in the Korean VC fund as a limited partner, a more common route; instead, it took a direct investment, acquiring a minority stake in the Korean VC firm. The two VCs did not disclose the stake size nor its valuation when asked. TechCrunch talked with both separately.

This is not the first time that Collab Fund made a strategic partnership with a VC firm, founder and managing partner of Collaborative Fund Craig Shapiro told TechCrunch, but it has never disclosed the firms, regions, or stake sizes before this latest foray.

Through the strategic investment, both Collab and Sopoong want to strengthen their deal-sourcing pipelines for investing in tech companies in Asia with a focus on climate tech and sustainability, Max Han, CEO of Sopoong, said in an interview with TechCrunch.

Last July, Collab set up a $200 million fund called Collab SOS to double down on sustainability. Two of its recent investments out of that fund include Ph7, a Vancouver-based startup that extracts critical metals from e-waste using a proprietary process that eliminates the need for toxic chemicals and high-temperature furnaces; and Noya, a San Francisco-based direct air capture startup.

Collab invests in Series A or later stages, while the Korean VC focuses on seed rounds, Han said, adding that Sopoong will search for early-stage startups in South Korea and Southeast Asia to invest in, with Collab Fund supporting those portfolios through follow-on investments in later-stage rounds. On top of that, it is expected that Collab will enable Sopoong’s portfolio companies in Asia to make a foray into the North American market, Han noted. 

I spoke to Shapiro to hear why the U.S.-based VC firm chose the strategic investment with the Korean VC instead of opening a new office or hiring local investors in Seoul. Shapiro shared a few key factors that drove this decision. And I also asked Han about Sopoong’s long-term plan via the strategic partnership.

TechCrunch: VC firms investing in their peers is a rare event in South Korea. Why did Collaborative Fund, a U.S.-headquartered VC firm, partner strategically with Sopoong instead of opening a new office or hiring local investors in Seoul? 

Shapiro: First off, access to deal flow. Partnering with Sopoong provides us [with] a direct channel to access promising Korean startups. Sopoong is well-connected to the local startup ecosystem and can refer to deals that match our investment focus. This is more efficient than trying to source deals from the ground up ourselves in a new market.

Next, local expertise. The team at Sopoong has on-the-ground knowledge and experience investing in Korean startups. They can help evaluate opportunities and navigate the local business and regulatory landscape. We can leverage their expertise as we explore the market.

Thirdly, cost efficiency. Making a strategic investment in an existing fund is far less capital and resource intensive than opening our own office. We can tap into their infrastructure and knowledge base instead of building our own from scratch. 

On top of that, the strategic partnership enables portfolio support. Sopoong can provide valuable support and connections for any Korean startups we invest in through them. They offer back-office services, networking and guidance on matters like recruiting top talent or raising capital in Korea. 

This strategic partnership model has worked well for us in other markets. We believe investing in Sopoong is the most effective and efficient way for Collab Fund to access promising innovation in South Korea right now.

TC: Why did you choose South Korea? And why Sopoong? 

Shapiro: South Korea is a very exciting market to participate in. Collab has a rich history in the country. We were one of the earliest backers of [Korean car-sharing startup] Socar (alongside Sopoong) and several other South Korean-born startups. Our investments in South Korea date back over a decade. We have found the ecosystem of entrepreneurs, investors, and limited partners in South Korea to be as strong and forward-thinking as any market in the world. 

(Shapiro declined to comment on whether it still has a stake in Socar or exited after Socar’s IPO.)

TC: There’s been a big slowdown in the investment in the U.S.; valuations are also down when rounds are closing: Korea has been following a similar pattern. How successful are Korean startups in courting investment from the U.S.? 

Shapiro: We believe market contractions are exactly the time you want to be investing. Data shows that innovation does not slow down or correlate to market conditions. As such, investing when valuations are more reasonable is an advantage to the firms that have access to capital. Collab Fund is fortunate in that we recently raised several new funds, which position us well for this time period. Korea is no different in this regard. At a high level, we view Korea as an incredible market with a rich history of innovation and entrepreneurship.

TC: What sectors do you want to focus on in South Korea?

Shapiro: Climate and sustainability will be the core focus, with an emphasis on fostering a more sustainable economy across materials, ingredients, energy, and supply chains. Many South Korean companies have a vested interest in sustainability, including major corporations such as SK, LG, GS, Hyundai, Kakao, and startups like Reco, MetaTexture and Armored Fresh.

TC: What strategic synergies does Collab Fund expect with Sopoong?

Shapiro: A strategic investment in the firm creates the greatest alignment of interests between Collab and Sopoong. Max (CEO of Sopoong) and the Sopoong team are meeting entrepreneurs very early in their journey and have a proven track record backing some of the leading companies pushing the world forward. We are excited to collaborate and share experiences to better support one another’s portfolio companies and the broader Collaborative network. 

We are excited by the early results of our Shared Future initiative, which has brought us an incredibly rich, diverse and global pipeline of very early-stage climate-focused companies. (Collab’s entire portfolio here.) We hope to work with Sopoong to make this an even greater success – with a stronger presence in South Korea.

TC: What is Sopoong’s long-term goal with the strategic partnership with Collab? Would the partnership help Sopoong make investments in the U.S.?

Han: So far, Sopoong Ventures has invested in more than 130 early-stage startups, 90% of which are based out of South Korea. With the partnership, Sopoong hopes to expand its investment horizons beyond Korea to Southeast Asia to North America.

In addition, we plan to participate in seed-round startups in the U.S. through Collab Fund.

TC: I haven’t seen any U.S.-based VC that has made strategic direct investments in a South Korean VC. Is this common, or is it the first case in South Korea? 

Han: I’ve often seen U.S.-based venture capitalists in Korean VC funds as limited partners, but I don’t think I’ve ever seen a direct investment in a Korean VC.

Collaborative Fund backs Korea’s Sopoong Ventures to grow its footprint in Asia by Kate Park originally published on TechCrunch

Collaborative Fund and the Wyss Institute partner to bridge the climate tech ‘valley of death’

For pretty much every startup, there’s a perilous period that occurs after things are up and running but the money isn’t flowing. Called the “valley of death,” the conundrum is especially challenging for climate tech startups, which tend to have a longer time to revenue than something like a payments SaaS, making the valley that much longer and more treacherous.

With some hard tech problems, whether they be fusion power, carbon capture or mushroom-based leather, another valley of death happens even earlier.

Traditionally, this is how it has worked: Founders start with government grants and pitches to attract investors. Particularly good pitches might convince more traditional investors to join larger seed rounds. But for many, the best way to cross the valley of death isn’t to bring more cash but to find the shortest route through it.

That’s the idea behind a new partnership between Collaborative Fund and Harvard University’s Wyss Institute. TechCrunch+ has exclusively learned that the venture capital firm is giving the Wyss Institute $15 million to build a lab focused on sustainable materials research, and in return it will get first crack at technologies and companies that come out of the institute.

“Moving the needle slightly is not going to have any real impact. We need to completely reimagine, completely reinvent what we already have,” Sophie Bakalar, partner at Collaborative Fund, told TechCrunch+. “Our objective is not just to fund these really breakthrough technologies, but find a way to get them out of the lab and into our lives.”

Collaborative Fund and the Wyss Institute partner to bridge the climate tech ‘valley of death’ by Tim De Chant originally published on TechCrunch

Alga Biosciences wants to help climate change, one bovine burp at a time

Cows are a significant source of methane emissions, primarily due to their unique digestive system. Milk and beef cows are ruminants, which means they have a specialized stomach chamber (called the rumen), which houses billions of microbes that facilitate the breakdown of fibrous plant material. The process is called “enteric fermentation,” and as these microbes work to digest the cellulose found in the cows’ diet, methane is produced as a byproduct. That’s a problem: The EPA identifies methane as being about 25 times more potent as CO2 as a greenhouse gas. Alga Biosciences leaps to the rescue, creating a new feed for cows that dramatically reduces how much burping goes on.

“Enteric methanogenesis, also known as cattle burps — is the single biggest source of anthropogenic methane emissions in the world. During the digestive process of cows, sheep, goats and other ruminants, microbes in the stomach of these animals break down food into smaller components, such as carbohydrates, proteins and fats. As a byproduct of this process, methane is produced and released into the atmosphere when the animal belches,” explains Alex Brown, co-founder/CEO of Alga Biosciences in an interview with TechCrunch. “When we got into Y Combinator, we put all of our money at the time into academic live animal trials to test our product, and found that methane emissions from beef cattle were undetectable with our approach. This is the first time results of this magnitude have been observed in live animals.”

Reducing belching has a side effect beyond just the environment. Methane is full of energy, and Alga claims that roughly 12% of all the calories a cattleman feeds his cow end up being wasted in the form of methane burps. This is a massive hidden cost for farmers, and it poses a huge opportunity for re-directing those calories to meat and milk production. The theory goes that kelp-based feed additives provide a direct avenue to reduce anthropogenic methane emissions; it could also be a massive economic benefit for farmers.

The company raised a round led by Collaborative Fund, and the company now has raised a total of $4 million in funding. In addition to Collaborative, Y Combinator, Day One Ventures, Cool Climate Collective, Pioneer Fund, Overview Capital and others also participated. The company has also received a grant from USDA Climate Smart Commodities.

Caroline McKeon (co-founder and Chief Scientific Officer), Daria Balatsky (co-founder and Chief Technology Officer), Alex Brown (co-founder and CEO). Image credit: Alga.

“The best climate tech startups will build solutions that reduce greenhouse gas emissions while being cheap, scalable and safe. We are thrilled that cattle farmers, like us, believe that Alga’s solution hits that trifecta,” said Tomas Alvarez Belon, investor at Collaborative Fund. “We are thrilled to support Alga Bio in this journey to create a methane-free world.”

The company is working on producing its feed additive for larger commercial pilots, and the company tells TechCrunch it can already produce at a scale of tens of thousands of head per day. There’s plenty of scale for growth; some sources estimate that there are around 1.5 billion cows in the world.

Alga Biosciences wants to help climate change, one bovine burp at a time by Haje Jan Kamps originally published on TechCrunch

Reimbursement and spend management platform PayEm secures $220M in equity and debt

When Itamar Jobani, a software developer by trade, was working for a healthcare company, he dreaded doing expense reports every month using his employer’s preferred reimbursement tool. Jobani looked for an alternative, but didn’t end up finding one — and so he built it himself.

PayEm, as it came to be known, launched in 2019 — Jobani partnered with fellow developer Omer Rimoch to get the idea off of the ground. Creating a spend and procurement platform from scratch might’ve been a big risk, but it appears to have paid off for Jobani, who claims that PayEm now has “hundreds” of customers and fast-growing revenue (up 550% over the last year).

To set the stage for further growth, PayEm has closed a $20 million series A equity round and taken out a $200 million credit line, the company announced today. Viola Credit, Mitsubishi Financial Group, Collaborative Fund, Pitango First, NFX, LocalGlobe and Glilot+ are among those who contributed the $220 million in funds, which Jobani says will be put toward expanding PayEm’s card operations, serving larger customers and improving the employee experience within the core digital product.

Why the decision to raise debt versus equity? Jobani says that it came down to a matter of timing — and flexibility. PayEm opted for warehouse lending, where its lender set up a facility that PayEm can access and use to seed its own loan origination. As more customers borrow from PayEm, both PayEm and the lender profit off of the lending.

Warehouse lending is relatively common in fintech. Buy now, pay later startup Afterpay had five warehouse facilities at the end of 2022.

“In order to continue and support the expansion of our customers, we are using a credit facility … to finance our customers’ short-term payments,” Jobani told TechCrunch via email. “A credit warehouse facility is a tool perfectly structured to support our customers’ payments activity and provide them with monthly payment terms in order for them to keep their businesses flowing as our business continues to grow. The size of this credit raising reflects the growing volume of monthly transactions on the PayEm platform.”


Image Credits: PayEm

PayEm offers procurement tools and workflows for expense approval automation, accounts payable automation, purchase order creation, expense reimbursement and credit card management. Its “record-to-report” platform captures employee spending requests, involving relevant stakeholders for approval based on the data collected and providing budgeting capabilities for budget overseers.

“[With PayEm,] CEOs and CFOs get complete control and visibility into real-time spend at the subsidiary, department and even employee level to ensure 360-degree efficiency,” Jobani said. “Meanwhile, VPs of procurement get everything from request to reconciliation, all in one place, and employees get real-time visibility and control over every aspect of budget spend. PayEm makes it easy to request funds, file reimbursements and issue employee-specific corporate cards — all while keeping spend and budget under control.”

Of course, PayEm isn’t the only vendor offering this — and it’s no wonder, given how lucrative the space is. According to Verified Market Research, the total spend management software market was valued at $1.08 billion in 2019 and could reach $3.97 billion by 2027. Startup Airbase — which early last year teamed up with Amex on a corporate card pilot — is valued at $600 million. Tipalti, which automates accounts payables for small- and medium-sized businesses, recently secured $270 million. There’s also publicly-traded, Brex (which not long ago snatched up $300 million), Ramp ($200 million in its latest funding round) and Zip (last valued at $1.2 billion).

But Jobani points to PayEm’s continued expansion as evidence that it’s beating back the competition successfully. The platform now creates bills and sends payments to over 200 territories and 130 currencies, and in the past year, its customer base has grown by close to 300%.

PayEm’s workforce — which is spread across offices in San Francisco, New York and Tel Aviv — is also expanding, now standing at around 100 full-time employees. Recent additions to the C-suite include chief revenue officer Steve Sovik, previously the CRO of Tipalti, and VP of product Gilad Bonjack, formerly at Hibob and Lighsticks.

“With the current macroeconomic conditions, it’s never been more important for companies to have an efficient and clear lens into their financial health. We’re pleased to be that single source of truth for them as they may weather turbulent times, navigate supply chain issues and simply need to do more with less,” Jobani added. “While the software-as-a-service industry is impacted by the overall mood, what we are seeing is that our product value is increasing during times like this, helping to visualize spend, reduce costs and make the entire procure-to-pay process easy and transparent.”

Reimbursement and spend management platform PayEm secures $220M in equity and debt by Kyle Wiggers originally published on TechCrunch

9 strategies that will help you overcome your fear of fundraising

The contracting private tech markets are driving down the pricing and frequency of funding rounds, while inflation cuts into companies’ runways, meaning they are able to build less product and acquire fewer users with the money they raised.

It’s true that VCs are doing more diligence and being more cautious with their decisions. Some want to make sure their existing founders have enough runway to weather this storm so they are prioritizing these companies. At the same time, there are hundreds of millions earmarked for early-stage companies, and firms such as Lightspeed, Collaborative Fund, CoinFund and Menlo Ventures have announced new funds in the last few weeks. Later-stage capital is now being redirected to earlier stages to avoid being exposed to one- to three-year exit timelines due to short-term turbulence and, instead, investors are focusing on exit horizons of over seven years.

In this economic environment, I’ve been asked by many founders how they can raise capital successfully, especially by those who feel demotivated by how long the process is taking. I want to share what is actually happening within VC, myths about raising in this environment, and actionable tips for closing pre-seed to Series B rounds that have also been instrumental in helping me raise $100 million for our fund.

As a founder, how can you navigate this environment and successfully raise a round?

Any change is an opportunity to create leverage, and a downturn is no exception.

Don’t dilute yourself for more than 10%-15% in any given round

If you want to build a big company, you need to keep enough equity for the next rounds and for yourself so that you’re incentivized to continue growing it. Investors often require this in later stages. At the same time, don’t get obsessed with certain valuation mark-ups. If it’s taking ages to close at a higher valuation, raise money on the same valuation or terms as the last round, or in the worst case, a down round to ensure your company’s financial stability.

Optimize for quality of investors over volume

First, create a list of every investor you know who is a good fit for your round. Then, create a second list of founders and advisors who could introduce you to good investors. Rank them as tier 1 and tier 2.

Tier 1 can lead rounds and signal to other investors that they need to get into your company ASAP. Tier 2 are those you’ll prioritize going to after you strike out with tier 1s. As you map out these lists, think about how relevant their funds are to your company.

When requesting intros, the best way to stand out is by showing alignment with the right partner at a relevant firm. Introductions are about quality, not volume. It’s better to get 20-30 meaningful conversations than sending 200 cold emails that result in nothing. Figure out who from your network can give the warmest intro to an investor. Then create a purpose-drafted pitch for that particular investor to ensure you show alignment in your interests.

Andreessen, Atlántico, MAYA Capital add some dough to Fudo’s restaurant tech recipe

The restaurant industry was thrown for a loop two years ago when the pandemic kept people at home. Some weren’t prepared to accept online orders and others didn’t have a delivery network.

Startups, like Fudo, stepped up with technology to get restaurants back on their feet. In Fudo’s case, the Argentina-based company offers a web-based restaurant operating system and point-of-sale software that brings together a restaurant’s operations into a centralized “hub.” Now they can take orders, set up tables, manage deliveries, see purchases, control inventory and get detailed analytics on all of that in real time.

“Most people know about Square and Toast in the U.S., but Latin America is different,” Justo Ferraro, CEO of Fudo, told TechCrunch. “There is a great difference between corporate restaurants and independent restaurants, and in the U.S., around 30% are independent, while in Latin America, it is 80%.”

That independent restaurant customer, most likely adopting restaurant operation technology for the first time, is who Fudo is targeting. As such, the company is also making it more accessible, charging between $25 and $50 per month.

Co-founder and CTO Juan Manuel Cuello had the idea for Fudo back in 2014 after working as a developer at, an Open table-like company that was acquired by The Fork. While helping out one of his restaurant friends who had purchased some legacy software that wasn’t working out, Cuello started coding his own software.

Fudo restaurant technology

Fudo’s table mockup for restaurants. Image Credits: Fudo

He bootstrapped the company before getting angel investment. Then the pandemic hit, which caused Cuello to do “a reset,” Ferraro said. That’s when Ferraro, who previously led the growth of Mercado Pago Point in Latin America, came onboard, and was joined by COO Rafael Teles, also a former executive at Mercado Pago, earlier this year.

Today, the company has a team of more than 70 employees in Argentina, Chile, Mexico, Colombia and Brazil. It also grew 10x to support 10,000 restaurants.

It was estimated that Latin America’s foodservice sales reached $270 billion in 2021, according to Statista. That has venture capitalists taking notice. For example, this year, companies like PreciTaste, Bear Robotics and Lunchbox all received investments for their approaches to streamline restaurant operations.

Fudo is now among them, having raised $7.5 million in seed funding and attracting some big names in the process. The company’s first institutional round of funding was co-led by Andreessen Horowitz, Atlántico and MAYA Capital. They were joined by Collaborative Fund, Goodwater and Latitud and a group of angel investors.

With this new injection of capital, the startup plans to accelerate its expansion in Mexico, launch its Brazilian operation this month and develop more financial products, initially to take digital payments right at the table, to support small and medium-sized businesses within the sector.

“We have the unique opportunity in Latin America to become a one-stop shop because this is an area that is still very underserved,” Ferraro said. “We believe that we can be the market standard, and that’s why we went through this round. We want to actually capture that opportunity.”

Announcing the first tranche of Startup Battlefield judges

The Startup Battlefield at TechCrunch Disrupt on October 18–20 is set to be our most epic yet. This year’s competitors, selected from our handpicked cohort, the Startup Battlefield 200, are some of the most promising, imaginative startups in tech.

We’re excited to begin announcing the innovators and investors who will judge this world-renowned pitch competition on tech’s biggest stage. But first…

A pro tip: Startup Battlefield isn’t just thrilling to watch; it’s a masterclass in how investors think. The judges’ feedback provides insight into the criteria they use to determine whether a company is viable or not. Watch and learn what investors look for, what motivates them and what pushes them to schedule a meeting.

Without further ado, here are the first three investors ready to help crown the next Startup Battlefield champion.

Jamison Hill, a partner at Base10 Partners

Jamison Hill joined Base10 as a partner in 2021 to lead the Advancement Initiative. Previously, he spent seven years at Bain Capital Ventures, leading growth investments in marketplace businesses (Cameo and Wonolo) and worked with leading software companies (FourKites, ShipBob) and fintech companies (Finix and Flywire).

Prior to Bain Capital Ventures, Hill was an early employee at Bonobos, where he built out the brand’s analytical capabilities across finance, retail and marketing. He began his career as a management consultant advising clients on growth strategy and digital transformation at Bain & Company.

Hill was listed on Forbes 30 Under 30 in 2016 and Venture Capital Journal’s Rising Stars in 2021. He currently serves on the board of Hope in a Box, a program that supports educators in building LGBTQ-inclusive classrooms.

Kanyi Maqubela, a managing partner at Kindred Ventures

A managing partner at Kindred Ventures, Kanyi Maqubela focuses his investment and formation work in theme areas, including fintech, health and wellness, e-commerce, supply-chain and climate tech.

Over the last 10 years, Maqubela has led and participated in more than 50 investments, including CloudTrucks, Goldfinch, Tala, Upstart, Just, Outschool, Mural, Earnest, Kano (Stem Player), HelloSign and more.

Prior to Kindred Ventures, Maqubela was a partner at Collaborative Fund, where he served on boards, including Spruce, True Link, Camino Financial, Hopscotch and Buffer. As an entrepreneur and operator, he co-founded Heartbeat Health. Earlier in his career, Maqubela ran growth at One Block Off the Grid (acquired by $NRG) and was an early employee at Doostang (acquired by Universum Global).

Katie Rae, the CEO and managing partner at The Engine

Since 2017, Katie Rae has served as the CEO and managing partner of The Engine, a venture capital firm that invests in early-stage companies solving the world’s biggest problems. Before joining The Engine, Rae founded and served as managing partner at Project 11 Ventures.

Rae also held leadership roles at Techstars Boston, serving as managing director (2011–2014) and chairman until 2016. She has advised hundreds of founders and invested in more than 100 companies at their earliest stages. Key investments include Flywire, PillPack (acquired by Amazon for $1 billion), Bevi, GrabCad and Synack.

In addition to her investing career, Rae has more than 15 years of experience in senior management and product positions at Microsoft, Eons, AltaVista, RagingBull, Zip2 and Mirror Worlds.

Rae is also founder and president of Equity Summit, an annual event bringing together female and underrepresented minority fund managers and world-leading limited partners. She currently serves on the boards of Commonwealth Fusion Systems, Form Energy, Via Separations, Lilac Solutions, Boston Metal, Sublime Systems and VEIR.

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Holey Grail Donuts bites into $9M for Los Angeles retail expansion

Holey Grail Donuts started selling its hand-fried, made-to-order taro donuts on Sunday mornings out of a little red burger trailer in Kauai in 2018.

Four years and hundreds of long lines later, the truck is still there, but the company is taking on what co-founder Nile Dreiling calls “a stale $40 billion donut industry” by expanding its presence into brick-and-mortar locations in Los Angeles after raising $9 million in financing.

Dreiling, who was previously doing ecological engineering in Oregon, teamed up with his sister, Hana Dreiling, a private chef in Kauai, Hawaii, to start Holey Grail Donuts. They spent a lot of time reverse-engineering the donut to get the end product, which is a taro donut fried in organic, fair trade coconut oil versus palm and other oils “that often leave a waxy taste in your mouth,” Nile Dreiling told TechCrunch. He believes his company is the only one making its donuts in this sustainable way.

“We are taking something that everyone is familiar with, and reinventing it to meet our values, while essentially improving the tastes without the negative health and environmental consequences,” he said. “The process we incorporate yields a donut base that’s hot and crispy and not too sweet, which is the perfect vessel for essentially consistently rotating the garnishes. We currently have over 60 flavors that we’ve developed over the past couple of years.”

The fun part? The company uses a donut robot to make and fry the dough so one person isn’t constantly sitting in front of the fryer. That’s particularly helpful inside the food truck where there is limited space, and enables employees to serve a large capacity of customers quicker, Nile Dreiling said. Holey Grail Donuts also utilizes an app so people can order ahead of time.

Among the ever-rotating jukebox of flavors, popular toppings include L&L (lemon zest infused sugar, lime curd, finger lime caviar and begonia petals), North Shore (locally-grown turmeric, tangelo and freshly cracked black pepper) and Lydgate Farms (vanilla bean, single-origin cacao nibs and cherry).

As mentioned, the global donut industry is a $40 billion market, and Dreiling estimates the market is approaching $50 billion by 2025, with 30% of that growth attributed to North America’s love of the donut.

With that, changes are happening even at the highest levels in the industry with well-known brands like Dunkin’ and Krispy Kreme pivoting to supply and advertise new product ranges that meet the demands of people wanting to make healthier choices, he explained.

“What we’re doing at Holey Grail is approaching demand with a high level of integrity and a mission focused on creating healthier options with incredible taste,” Nile Dreiling added.

The company currently operates a food truck in Waikiki and recently opened a flagship store in Honolulu to complement a shop in Hanalei.

Nile Dreiling said he was not sharing specific details related to revenue or growth metrics at this time, but did say, “we have certainly seen incredible growth in Hawaii and we’re starting to see this traction in Los Angeles as well.” The “Tasting Box” of four donuts retails for $15, and with the integration of its app this year, Dreiling says the average order volume has increased to $20 to $23 per order as people add on beverages.

Now armed with this cash infusion, the company is putting down roots in permanent locations in Santa Monica and Larchmont later this year that complement a roaming food truck in Culver City.

In addition, the company is building out a new supply chain for that expansion, which includes partnering with local farmers stateside to source produce, while also maintaining its relationships with Hawaiian growers of taro, coconut oil and cacao. It is also scouting out new markets for additional retail and food truck locations.

The $9 million combines both a Series A, led by Collaborative Fund and Lee Fixel, and a seed round led by True Ventures. The firm’s Tony Conrad is on Holey Grail Donuts’ board of directors. Additional investors include Tony Hawk, James Freeman, Christopher Kostow, Hass Hassan, Stephan Jenkins, Yves Behar, Matt Mullenweg and Ryan Graves.

Tony Conrad, partner at True Ventures, told TechCrunch that Holey Grail Donuts’ food truck approach to choosing the right location for retail shop caught his eye.

“The first capital we put into the company was to see if that concept could translate into four walls of a donut shop,” he added. “We activated into a neighborhood to see if that neighborhood actually cared or liked it and if we had the right foot traffic. It’s also kind of like pre-marketing before you open up to get community support, and I don’t know why more people don’t do it. It’s quite novel. It works.”

AlgiKnit’s seaweed-sourced materials could mend the textile industry’s toxic habits

AlgiKnit is on a mission to offer more environmentally conscious materials for the heavily polluting fashion and textile industries. The startup is developing materials from seaweeds such as Macrocystis pyrifera, one of the planet’s most renewable and regenerative organisms, creating yarns and fibers that don’t rely on petroleum or toxic chemicals.

Aleks Gosiewski, Aaron Nesser and Tessa Callaghan found the materials being used in the textile industry were incredibly harmful to the environment and ultimately found it difficult to reconcile after working in fashion in different capacities. This prompted the question: Is there a way to design better products and more sustainable materials themselves? And thus, the trio founded AlgiKnit in 2017.

“Giant kelp doesn’t rely on harmful fertilizers and pesticides to grow, does not necessitate the use of arable land or fresh water and efficiently sequesters CO2 from the ocean,” AlgiKnit CEO and co-founder Tessa Callaghan told TechCrunch.

Today, AlgiKnit said it has raised a $13 million Series A led by Collaborative Fund, with participation from H&M CO: LAB (the investment arm of H&M Group), Starlight Ventures, Third Nature Ventures, as well as previous backers Horizons Ventures and SOSV.

The startup says its goal is to provide designers and brands with the tools and materials necessary to create a sustainable future for people and the planet.

The company is primarily focused on B2B sales and relationships. Generally, fibers and yarns including AlgiKnit’s can be used throughout multiple applications and form factors like knit and woven goods, according to Callaghan. Uses for its materials could include apparel, interiors, furnishings and automotive, Callaghan added.

“Sustainability is no longer a luxury; it has become a requirement,” Callaghan said. “We hear this sentiment expressed by brands across a wide range of industries, and it speaks to the scale of impact we need to achieve.”

With the latest funding, AlgiKnit will accelerate to scale its production capabilities and bring its material to the world. In addition, the startup plans to increase its team, currently 20 people, and is actively hiring for 10 new roles at its headquarters in North Carolina. The funding also will help AlgiKnit invest in its manufacturing and R&D divisions.

“The textile industry is responsible for as much as 8% of the world’s CO2 emissions — in addition to being massively polluting and water-intensive,” partner at Collaborative Fund Sophie Bakalar said in a statement. “We’re thrilled to be leading AlgiKnit’s Series A round and to be investing in a technology that is pushing the world towards a more sustainable future.”

In June, the company opened its new manufacturing facility in the Research Triangle area in North Carolina. AlgiKnit says it sought to minimize its construction footprint by outfitting its 15,000-square-foot expansion with upcycled materials and second-hand furniture.

“The building process was predicated on creating a vibrant, innovative working environment without compromising our commitment to the planet,” said co-founder and COO of AlgiKnit Aleksandra Gosiewski, who led the company’s expansion to North Carolina. “From utilizing an existing space that met our specifications to reusing and repurposing as much as we possibly could, sustainability was always top of mind.”

“With the opening of our new facility in the Research Triangle area of North Carolina, we are focused on expanding our production capabilities, partnerships and team to address global demand more quickly,” Callaghan said. “This is a huge next step in bringing this technology to scale and creating positive, tangible change for the planet.”

AlgiKnit has raised a total of $17.9 million to date.

Brown Foods ushers in new age of dairy, raises a ‘latte’ money for cowless cow’s milk

Cow’s milk continues to be a staple of human nutrition. Pediatricians recommend it for infant growth, and for the most part, it has more protein than alternative “milks.” However, this dairy delight isn’t tolerated by all people, and the process from cow to dinner table is a known strain on environmental resources.

Enter Brown Foods, a 1-year-old company developing its first product, UnReal Milk, which is “real” whole milk created using mammalian cell culture technology.

Sohail Gupta Brown Foods milk

Sohail Gupta, co-founder and CEO of Brown Foods Image Credits: Brown Foods

The founders, Sohail Gupta, Avhijeet Kapoor and Bhavna Tandon, have been friends since their undergraduate days at the Indian Institute of Technology Delhi. Gupta has been a vegetarian throughout his life, and when his wife got pregnant, they were not able to find a milk alternative that was as nutritious to conventional dairy, that didn’t contribute further to climate change and that was cruelty-free to animals.

UnReal Milk is their answer to that problem. With a presence in Boston and India, Brown Foods is a Y Combinator Winter 2022 alum that touts being the first company in the U.S. to produce “real cow’s milk” in a laboratory, accomplishing the milestone in less than 3 months.

“We validated for the major macronutrients, the proteins, the fats and the carbs,” Gupta told TechCrunch. “We could see that the profiles for those were similar to milk at large-scale quantities, and as a result, we could say that we have a superior product from the lab.”

And, by using the cell-cultured approach, UnReal Milk can be similar in taste and texture to real milk, unlike plant-based alternatives. In addition, it can also be converted into typical dairy products, like butter, cheese and ice cream, and is nutritionally similar to cow’s milk. However, unlike conventional dairy, Brown Foods’ milk is estimated to have a 90% smaller carbon footprint.

Armed with the laboratory validation, the pre-revenue company moved forward with raising a seed round, and Thursday it announced $2.36 million from investors, including Y Combinator, AgFunder, SRI Capital, Amino Capital, Collaborative Fund and a group of individual angel investors like Kunal Shah.

Scaling is often an issue with cell-cultivated meat products, so time will tell if Brown Foods is able to jump that hurdle and have a viable product on the market in the next few years.

Gupta expects to start with a small scale-up in the next year. The majority of the funding will go toward those efforts: the bioprocess, scale-up and product development.

“The top-level roadmap of how we are thinking is doing some kind of sampling where we can actually get feedback and learn what things look like and then go toward the kinds of products we will have for commercialization,” he added.

Meanwhile, the global dairy alternatives market is forecasted to be a $50 billion business by 2028, and startups are flocking into this sector with various approaches like cell cultivation and plant-based beverages, all trying to disrupt a $468 billion conventional dairy market.

The dairy alternative market is expected to grow faster than conventional dairy during this decade, at 10% versus 3%, which has venture capital investors drinking it up. For example, Better Dairy raised $22 million earlier this year to create dairy-free cheese, while Miruku is leveraging molecular farming technology to create dairy proteins. At the same time, The EVERY Company, NotCo, Climax Foods and Perfect Day also have investor attention as they develop their animal-alternative cheese and dairy products.