Chord connects new funding to predictive commerce metrics so brands can grow

Commerce has gone through quite a change over the past three years. First was the quick shift to online during the pandemic, then came the reckoning after people began venturing out again.

During this time, commerce companies, both brick-and-mortar and online, were looking to technology to get their companies up-and-running, but were finding it a bit tough with the absence of a big developer team to manage deployment.

Bryan Mahoney and Henry Davis, both former Glossier executives, saw the writing on the wall in 2020 and started Arfa, which is now Chord, a platform as a service, to provide commerce infrastructure software that gives brands and startups sophisticated technology and data without the requirement of a huge technology team. We profiled the company in 2021 when it raised an $18 million Series A round.

They found that not all commerce companies were ready, willing and able to invest in technology. However, as spending in places like Facebook and Google became more expensive and it was harder to acquire customers, companies started to see how data and technology could work in their favor.

“Companies are realizing they don’t have to be technology companies,” CEO Mahoney told TechCrunch. “We talk an awful lot in the industry about headwinds, and those headwinds to some extent are accelerants pushing these brands a little bit closer to the core, but making them realize that the solutions they’ve had, or the reluctance to spend on technology, is not going to work.”

Chord has 21 customers signed onto its platform, including Blue Bottle Coffee, Caraway, Loverboy and Joopiter. Meanwhile, Mahoney said December was the company’s busiest month so far, and year over year revenue growth was an increase of 360%.

For the past 18 months many of the customers were asking to see how their data could be used in more predictive capabilities. To do that, Chord is back with a $15 million Series A extension co-led by new investor Bright Pixel Capital and existing investor Eclipse. New investors in the round include GC1 Ventures, TechNexus Venture Collaborative and Anti Fund VC joining existing investors Imaginary Ventures, Foundation Capital and White Star Capital.

The new funding enabled Chord to build on its leadership team to add former Mailchimp chief data science officer David Dewey as new chief technology officer; Susie Korb as vice president of finance, a similar role she held at Toast; and Jamie Deveney, vice president of data, who was previously in the same role at Imperfect Foods.

In addition, Mahoney intends to deploy the new funds into data capability expansion, marketing, product development to support larger customers and its machine learning-powered data infrastructure that provides brands with a look at how key customer metrics will change over time.

In total, Chord raised $33 million. Mahoney did not disclose the company’s valuation, but did say “it’s in line with current multiples in the market.”

Technically the company should have looked at raising a classic Series B, but Chord wasn’t quite there yet, Mahoney admits. Proving that sometimes the grass isn’t always greener on the other side, he explained that the company’s initial investment came with a big valuation, which put pressure on the company to grow into it, even with no customers and no revenue at the time.

When Mahoney and Davis reached out to investors last summer, they took that past pressure into account, and as they spoke with investors, realized that they were actually in between a Series A and B, but didn’t want to push themselves in another “grow into the valuation” situation.

“We said let’s be really honest about what is going on in the market, and let’s be honest about where we are,” Mahoney said. “We are still a Series A company, but having really good traction is the time to get the fundraising going regardless of how we finally reach out to the investors.”

Chord connects new funding to predictive commerce metrics so brands can grow by Christine Hall originally published on TechCrunch

Eclipse Foods inks deal with Whole Foods for its plant-based ice cream

With demand for plant-based meat alternatives at an all-time high, Eclipse Foods is no doubt hoping to do for ice cream what companies like Impossible and Beyond have managed for the hamburger. Pre-pandemic, the company announced select retail availability in New York and its native San Francisco, and now it’s expanding coverage with a high-profile retail partnership.

Launched in early 2019, the company has raised nearly $16 million to date, including funding from YC. In an earlier interview with TechCrunch, CEO Aylon Steinhart noted that the company looks to differentiate itself from other plant-based foodstuffs with a simple approach to provide an alternative food source.

“We’re not using any expensive biotech to get to where we’re going,” the exec noted. “We take plants and we use our world-class expertise in functional plant proteins and how they work to blend plants together in a quite simple way.”

Eclipse is still looking to mimic dairy-based ice cream more directly. “Entering Whole Foods Market, a retailer synonymous for offering premium ingredient, high-caliber products, marks an important moment for Eclipse as we continue to grow our retail presence nationwide,” Steinhart said in a release.

The ice cream will be available at select locations in Northern California to start.

VC Lior Susan has a big idea that seems to be working: building next-generation industrial companies

Many investors in Silicon Valley are waiting the next big platform. That’s fine with Lior Susan, a former Flex exec who in 2015 cofounded Eclipse Ventures with the legendary venture capitalist Pierre Lamond, long of Sequoia Capital.

The duo, along with a team that has now grown to 13 people — happen to think the Next Big Thing is not whatever comes after social networks and flying cars; they think the biggest opportunities that too few VCs recognize is the chance to augment or else build from scratch the next Honeywell or GE Johnson & Johnson through full tech stacks that enable speed and efficiencies that are hard for incumbents to rival. 

As Susan likes to note, pointing to the runaway success of companies like Apple and Amazon that do it all, “Software is not enough.” He’s also quick to point out that the average tenure of the biggest U.S. companies — those on the S&P 500 — was 33 years back in 1965 and soon, it’s expected to shrink to 14 years.

Certainly, Eclipse is putting its money where its mouth is. It has already helped to create and fund one company — Bright Machines — which primarily develops software for robotic systems that manufacturing companies already have in place, and that Eclipse enticed numerous Autodesk executives to lead.

Now Eclipse, which also makes early-stage bets on startups, is working on creating another company. And Susan suggests that more companies will follow.

It’s an ambitious strategy. But because investors seemingly approve — committing $500 million to Eclipse’s third fund earlier this year (up from its second, $185 million fund) — we sat down with Susan recently to learn more about both who he is and what Eclipse is trying to do. Our chat has been edited lightly for length.

TC: You grew up in Israel on a kibbutz. How do you think that shaped you?

LS: I grew up in a family of four — three boys and a girl. I grew up on the north part of the country, on farmland, growing bananas. My grandfather was one of the early establishers of the [Israel Defense Forces] so I thought i was going to be a soldier all my life. I didn’t think I needed to go to high school. And I joined the military in 2000 and was in the special forces until 2008.

After that, my brother and I started a networking company, Intucecell. He was always more of a brain than me, to be honest, but from an early age, I was very curious about mechanical systems, and he was always curious about software, and we started Intucell in 2008, raised $5 million from Bessemer [Venture Partners] in 2009, and we sold the company to Cisco in 2012 for $475 million.

It’s funny, because we grew up in this community where no one has a bank account, it’s all about sharing. Maybe because we were raised in a very socialism pathway environment, we became the other extreme as adults.

TC: How did you wind up in Silicon Valley?

LS: They didn’t need me [at Cisco] because he was the brains, so I thought I’d come to Silicon Valley for three months and I wound up randomly meeting Mike McNamara, who at the time was the CEO of Flextronics. I had a little man crush [right away]. I was like, damn, I can learn a lot from this guy. He told me [Flex, as the company has been rebranded] needed someone to build a special operations tech team inside of the Flex. I was thinking I might go kite surfing in Brazil. Working in an American corporation didn’t sound like the right thing to me. But we liked each other and so I [joined the company].

TC: What was that like? What were you focused on?

LS: For the first 10 months, I actually moved to Zhuhai, China, where one of the main facilities of Flex was [situated], and there I saw firsthand high manufacturing at scale. And the interesting thing, what got me thinking about [the path that led to Eclipse] is that Flex had 12 segments: aerospace, automotive, consumer, yadda yadda. And each of them will do more than a billion dollars [a year in revenue]. And I would see them talking about how their industries are changing because of software. I mean, the language was identical across these very different markets. And I started to understand that three or four decades of technology innovation were coming together to create what we now call full stack, so networking and clouds for infrastructure and open source and DevOps tools and open source hardware and supply chain and manufacturing — they were coming together. 

I thought, if those [big] companies could use those tools, could small companies use those tools and essentially accelerate and go faster? So I started building those companies inside Flex, inside this division. And surprisingly enough, I saw it was doable, that the cost of capital is going down and you actually can move much faster.

TC: What were some of those companies?

LS: One is Elementum, a supply chain management company that has now raised close to $200 million. Another is Bright Machines, which is actually in our [Eclipse] portfolio now. We had six companies when I left.

TC: Were these funded solely by Flex at the outset?

LS: Flex was 100 percent funding the companies at the beginning — and giving them resources and connections and customers — and we’d either spin out the company and get outside capital, or just keep it internal.

TC: Why leave that role to start a venture firm?

LS: I was living in Palo Alto and started having investor friends and was making some angel investments, and I saw most of my friends just looking for the next dating apps. I was like, ‘What about supply chain stuff?’ but they wanted easy stuff that explodes very fast.

So between seeing what I did at Flex and realizing that few investors were interested in this opportunity, I decided to do something. My original idea was to take $10 million of our own [family] money and be a kind of super angel. But when I told Mike [McNamara], ‘I’m going to leave’ and ‘Thank you very much, I learned a lot,’ he said, ‘Hey, do a fund.’ And we launched and started investing and we saw the size of the market that we had in mind was growing fast. [Editor’s note: After spending 12 years as CEO of Flex, McNamara joined Eclipse four months ago as a partner, along with Sanjay Jha, who was most recently the CEO of Global Foundries and was both CEO and co-CEO of Motorola Mobility before that.]

TC: You have an interesting team. Among others, you have McNamara and Jha. You also last year brought aboard Greg Reichow, who was previously Tesla’s VP of production. These are not necessarily the usual suspects when it comes to people joining VC. Does Eclipse operate like a traditional venture firm?

LS: Our style of investment is slightly different than other people; we maybe look more like private equity than venture, including that we’re very involved; we do nine to 10 deals a year with eight partners. We also aim for a much higher ownership than firms usually have and our heavy operational backgrounds is our tool to win those deals. We have some idea of what a complex operation looks like, even while we’re investing in industries to which we didn’t have exposure before, like health care and real estate — places where we didn’t expect to invest but that are being impacted by the same paradigm shift.

TC: How did the Bright Machines deal work? The startup started as an internal project at Flex, so do you co-own it with the company?

LS: It started internally at Flex. There were 400 poeple working on it internally, and I went to [Flex management and its board] and I said, ‘I want the team.’ Flex said, ‘Absolutely no.’ But I went back with a better argument why they should, including that they needed to hire talent that wasn’t going to come to work for Flex, and that the company could be worth $5 billion, $7 billion some day. And after 12 months, we carved out the company, with its [intellectual property] and the $350 million in contracts it had, and we created a new company, and we own 20 percent, Flex owns 28 percent, and the team owns the rest. And it’s on a $100 million annual revenue run rate already in less than a year as an independent company.

TC: What do you see happening with Bright Machines?

LS: it will go public, I’d guess in sub five years. The model is pretty compelling if you’re doing it right.

TC: How does the deal underscore your broader thesis?

LS: Think of it this way. It’s really hard for me to compete with LinkedIn, LinkedIn has very smart people. For me to compete with Honeywell or Dupont or Rockwell . . . I’m not saying they aren’t smart, but they have a different mindset. There are many companies that Silicon Valley has never heard of but are $17 billion market cap companies with little to no technology. So if we now have the talent internally, we can use the talent to create these platform companies. In fact, we’re building our second one, though I can’t share more just yet.

TC: So Eclipse is an investment firm and an incubator.

LS: We debating this name constantly, but we aren’t an incubator.

My two cents is that public equities are getting destroyed, so limited partners want to go into private markets. Some of the hedge funds like Coatue understand this, and they’ve created vehicles to [invest in private companies]. But in the private equity world, a fund that manages $400 billion and used to buy assets with financial engineering [meaning debt] is [not wringing the same kind of returns out of these bets]. If you’re buying Avis, you’re going to lose your shit because people are using Uber.

What’s happening for the first time in the last two decades is that someone made the music to start, so there’s musical chairs where there were none empty before. It was always the same five or six firms winning the best deals, and that was about it. Someone like us had no chance to grab a chair — no freakin’ chance. But public equity dollars started showing up SoftBank style, and now they are reacting. And you learn that when you react in the military, you jeopardize the house. You go outside of your discipline, and you go outside of your comfort zone, and I’m attacking the chair. I wonder if I can sit.