Tag: Edison Partners

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Overhaul, which taps AI to secure physical supply chains, raises $73M in equity and debt

Businesses dependent on the physical supply chain face a number of potential roadblocks. Customers expect fast deliveries with visibility into each step, but costs — including transportation and raw materials costs — are rising thanks to inflation and other factors. Meanwhile, there’s a talent shortage, particularly in areas like logistics and operations management, and technical barriers to keeping track of inventory.

Aiming to help overcome a few of the challenges, Barry Conlon and David Broe co-founded FreightWatch, a logistics security services company that they later sold to supply chain visibility platform Sensitech in 2012. After the sale, Conlon and Broe say that they saw a gap in the market to address cargo theft in a more innovative way, harnessing data, telemetry and software.

“Supply chain was moved to the front pages of the newspaper, amplifying the industry with pain points right in the spotlight,” Conlon told TechCrunch in an email interview. “It proved how fragile supply chains are, especially when things go wrong. It forced companies to shift their primary focus to greater transparency and resiliency to course correct immediately, while consumers demand more visibility and expect all brands to deliver the ‘Amazon’ experience.”

So in 2016, Conlon and Broe co-launched Overhaul, which provides visibility software that attempts to anticipate and mitigate freight shipping delays. Using real-time operational and behavioral data, Overhaul provides alerting and performance monitoring alongside basic organizational tools like checklists.

In a show investors are buying into the vision, Overhaul today announced that it raised $38 million in a Series A round led by Edison Partners, with participation from eGateway Capital, StepStone Group and TRM Ventures. Overhaul, in addition, secured a $35 million loan from Stifel Bank, bringing the startup’s total raised to date to just under $100 million.

Conlon says that the cash will be used primarily for R&D and customer acquisition efforts. “We are committed to keeping our investment requirements low, maintaining capital efficiency and to achieve profitability in 2023, setting us apart from our competitors and others in the industry,” he added.

Overhaul

Overhaul’s monitoring dashboard. Image Credits: Overhaul

Overhaul doesn’t exist in a vacuum. Tive, a startup developing supply chain visibility tools, raised $54 million last April. Altana, another rival supply chain visibility platform, bagged $100 million just a few months ago.

What differentiates Overhaul is a strong emphasis on AI and machine learning, Conlon asserts. The platform pulls in all available in-transit telemetry and contextual data, which Overhaul’s data scientists use to build and train AI models for a range of different purposes. For example, Conlon says, one of the models can detect when a cargo load’s security is at risk and alert a security operations team as well as law enforcement.

“Our platform can ingest complex datasets with zero need for new architecture or data structure,” Conlon said. “In the visibility space, companies like Project44 and FourKites have large ambitions but we provide a unique solution with our risk management capabilities that set us apart.”

Whatever the case, Overhaul appears to be growing healthily, with a customer base that now totals over 350 companies. Conlon forecasts that annual recurring revenue will reach $90 million by the end of the year as Overhaul inches its way toward profitability.

One step toward those growth goals was Overhaul’s acquisition of SensiGuard security services from Sensitech in February. In addition to bolstering Overhaul’s platform with visibility and risk monitoring tech, the purchase extended Overhaul’s book of business, adding customers in the tech and pharma industries, while extending Overhaul’s geographic footprint to Brazil, Mexico and the Czech Republic.

One niggle might be securing the next round of funding — not necessarily by any fault of Overhaul. There’s evidence to suggest that supply chain startups, once the darlings of VCs, are less attractive than they once were. According to PitchBook, global supply chain tech startups raised roughly $9 billion in Q2 2022, down 39% from a year earlier.

Conlon tried to assure us that Overhaul hasn’t been massively impacted by the macroeconomics — at least not yet. He pointed to the company’s robust workforce, which now numbers over 650 thanks in part to the SensiGuard acquisition.

“Overhaul has a sustainable model with best in class metrics through customer validation and an enterprise rolodex in pharma, healthcare, technology, 3PLs and food services,” Conlon continued. “We are playing offense while most of the market is reducing investment to extend the runway.”

Overhaul, which taps AI to secure physical supply chains, raises $73M in equity and debt by Kyle Wiggers originally published on TechCrunch

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15Five, a pioneer in talent management HR tech, raises $52M to boost its own performance

15Five — an early mover in the world of building technology to help motivate teams, and to improve performance management for execs overseeing those teams — has raised $52 million in a round of growth funding that it will be using to expand its own performance.

Now in use at some 3,400 companies — customers include Credit Karma, Spotify and Pendo, with its sweet spot specifically on businesses with between 100 and 2,500 employees — the startup will double down on what David Hassell, the CEO and founder of 15Five, describes as not just as providing insights, but also outcomes, ushering in a wider move into areas like coaching and education to expand a platform that today is used to help track and set goals for teams and individuals in them.

“We’re going to continue to innovate and focus on the things that actually produce the results,” he said.

Quad Partners — a specialist investor focusing on in education and “workforce” technology — is leading this round, with Edison Partners, Next47, Origin Ventures, Matrix Partners, Point Nine Capital, and New Ground Ventures also participating. Hassell said the startup was not disclosing valuation. Prior to this it had raised around $42 million, with its last round pre-pandemic, a Series B of $30.7 million in 2019.

The intervening years since that last round have been a big fillip to 15Five and its mission as a company. Specifically, Covid-19 and its impact on how people work, and their productivity, under new circumstances such as working remotely, have put a spotlight on how organizations manage those teams, and how workers are impacted by those new conditions. Tools like 15Five’s found themselves in an interesting position: whereas previously some might have considered tech to help shape and work towards goals as potentially nice to have, in the absence of being able to see and work with teams in person, those tools suddenly tool on an essential role. In the best-scenarios, where the tools themselves are solid and used well, for managers, they gave them important insights into how people were doing; for workers, it helped them identify and give shape to what they were doing and where they were going, and wanted to go in their jobs.

“It has been very interesting to see how the whole world has kind of come in our direction and how things have evolved to because when we first started,” Hassell told me. In the beginning, his mission was to solve a problem for, as he put it, “CEOs and managers because HR was more administrative at that time.”

Nowadays, HR has become significantly more complex and the legacy tools that HR teams have used have really started to get reassessed, opening the door to companies like 15Five bringing more functionality and scope to their work.

“We are now, I think, probably the only HR tech platform that was built atop a powerful manager platform because that’s what we started out building,” he said.

There are any number of enterprise software companies in the market today that are addressing the challenges in HR, enterprise training and education, and performance management, but what makes 15Five unique among them is how it is integrating all of these, and how it’s doing it first and foremost from the perspective of performance management, which is a subtle but important distinction as it informs how, say, educational and training tools are built and incorporated, and to what end. It also opens the scope very interestingly into how the tech can evolve.

“We’ve invested a lot in the education space and in businesses that help human beings at every age become empowered and ultimately feel fulfilled,” said Connor O’Keefe, principal at Quad Partners, in a statement. “Education and personal growth doesn’t stop when you get your four-year degree. It’s a natural extension for us to help companies facilitate professional development in other organizations by assessing people, training managers, and being able to make rapid improvements in individual and business performance. What was compelling to us, and led to our investing in 15Five, is its cohesive mission and vision. Personal growth is at the crux of everything 15Five does.”

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Nuula raises $120M to build out a financial services ‘superapp’ aimed at SMBs

A Canadian startup called Nuula that is aiming to build a superapp to provide a range of financial services to small and medium businesses has closed $120 million of funding, money that it will use to fuel the launch of its app and first product, a line of credit for its users.

The money is coming in the form of $20 million in equity from Edison Partners, and a $100 million credit facility from funds managed by the Credit Group of Ares Management Corporation.

The Nuula app has been in a limited beta since June of this year. The plan is to open it up to general availability soon, while also gradually bringing in more services, some built directly by Nuula itself and but many others following an embedded finance strategy: business banking, for example, will be a service provided by a third party and integrated closely into the Nuula app to be launched early in 2022; and alongside that, the startup will also be making liberal use of APIs to bring in other white-label services such as B2B and customer-focused payment services, starting first in the U.S. and then expanding to Canada and the U.K. before further countries across Europe.

Current products include cash flow forecasting, personal and business credit score monitoring, and customer sentiment tracking; and monitoring of other critical metrics including financial, payments and eCommerce data are all on the roadmap.

“We’re building tools to work in a complementary fashion in the app,” CEO Mark Ruddock said in an interview. “Today, businesses can project if they are likely to run out of money, and monitor their credit scores. We keep an eye on customers and what they are saying in real time. We think it’s necessary to surface for SMBs the metrics that they might have needed to get from multiple apps, all in one place.”

Nuula was originally a side-project at BFS, a company that focused on small business lending, where the company started to look at the idea of how to better leverage data to build out a wider set of services addressing the same segment of the market. BFS grew to be a substantial business in its own right (and it had raised its own money to that end, to the tune of $184 million from Edison and Honeywell).  Over time, it became apparent to management that the data aspect, and this concept of a super app, would be key to how to grow the business, and so it pivoted and rebranded earlier this year, launching the beta of the app after that.

Nuula’s ambitions fall within a bigger trend in the market. Small and medium enterprises have shaped up to be a huge business opportunity in the world of fintech in the last several years. Long ignored in favor of building solutions either for the giant consumer market, or the lucrative large enterprise sector, SMBs have proven that they want and are willing to invest in better and newer technology to run their businesses, and that’s leading to a rush of startups and bigger tech companies bringing services to the market to cater to that.

Super apps are also a big area of interest in the world of fintech, although up to now a lot of what we’ve heard about in that area has been aimed at consumers — just the kind of innovation rut that Nuula is trying to get moving.

“Despite the growth in services addressing the SMB sector, overall it still lacks innovation compared to consumer or enterprise services,” Ruddock said. “We thought there was some opportunity to bring new thinking to the space. We see this as the app that SMBs will want to use everyday, because we’ll provide useful tools, insights and capital to power their businesses.”

Nuula’s priority to build the data services that connect all of this together is very much in keeping with how a lot of neobanks are also developing services and investing in what they see as their unique selling point. The theory goes like this: banking services are, at the end of the day, the same everywhere you go, and therefore commoditized, and so the more unique value-added for companies will come from innovating with more interesting algorithms and other data-based insights and analytics to give more power to their users to make the best use of what they have at their disposal.

It will not be alone in addressing that market. Others building fintech for SMBs include Selina, ANNA, Amex’s Kabbage (an early mover in using big data to help loan money to SMBs and build other financial services for them), Novo, Atom Bank, Xepelin, and Liberis, biggies like Stripe, Square and PayPal, and many others.

The credit product that Nuula has built so far is a taster of how it hopes to be a useful tool for SMBs, not just another place to get money or manage it. It’s not a direct loaning service, but rather something that is closely linked to monitoring a customers’ incomings and outgoings and only prompts a credit line (which directly links into the users’ account, wherever it is) when it appears that it might be needed.

“Innovations in financial technology have largely democratized who can become the next big player in small business finance,” added Gary Golding, General Partner, Edison Partners. “By combining critical financial performance tools and insights into a single interface, Nuula represents a new class of financial services technology for small business, and we are excited by the potential of the firm.”

“We are excited to be working with Nuula as they build a unique financial services resource for small businesses and entrepreneurs,” said Jeffrey Kramer, Partner and Head of ABS in the Alternative Credit strategy of the Ares Credit Group, in a statement. “The evolution of financial technology continues to open opportunities for innovation and the emergence of new industry participants. We look forward to seeing Nuula’s experienced team of technologists, data scientists and financial service veterans bring a new generation of small business financial services solutions to market.”

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Yieldstreet raises $100M as it mulls going public via SPAC, eyes acquisitions

These days, investing goes way beyond the stock market. And in recent years there’s been a growing number of startups which aim to give more people access to a wider array of investment opportunities. Today, one of those startups has raised a significant round of funding to help it achieve its goals.

Yieldstreet — which provides a platform for making alternative investments in areas like real estate, marine/shipping, legal finance, commercial loans and other opportunities that were previously only open to institutional investors — announced Tuesday that it has raised $100 million in a Series C funding round.

Former E*TRADE CEO Mitch Caplan, of Tarsadia Investments, led the round. Other participants include Alex Brown (a division of Raymond James), Kingfisher Capital, Top Tier Capital Partners and Gaingels. Existing backers Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft and Expansion Capital also put money in the round, which brings Yieldstreet’s total raised to $278.5 million since its 2015 inception.

Milind Mehere and Michael Weisz co-founded Yieldstreet with the mission of making investing more inclusive for non-institutional investors. In an interview with TechCrunch, CEO Mehere declined to say at what valuation the Series C was raised other than to say “near unicorn.”

What he did share is that Yieldstreet has funded nearly $1.9 billion on its platform and has about 300,000 consumers signed up on its platform. That’s up from $600 million invested on its platform from more than 100,000 members in February 2019, at the time of its last raise. Also since that time, Yieldstreet has seen its investor base climb by 350%, he said. And this year, the company is expecting “over 50% revenue growth,” compared to 2020.

Image Credits: Yieldstreet

Since its inception, Yieldstreet says it has provided nearly more than $950 million in principal and interest payments to its investors.

And, both the number of investment requests and new investors surged by more than 250% from January to April 2021 compared to the same period in 2020, with new investors already exceeding all of last year, according to the company.

Mehere also shared that Yieldstreet is considering going public via a SPAC (special purpose acquisition vehicle) sometime in the next year or two.

“We are growing extremely fast and a few SPACs have approached us,” he told TechCrunch. “We are on a great path to potentially explore some of those options in the next 12 to 24 months. I think the public markets would be great for a company like Yieldstreet, purely because that gives you the visibility to expand your consumer growth but also gives you access to equity to pursue growth strategies such as potential acquisitions and other things.”

So far, Yieldstreet has acquired two companies (both in 2019): WealthFlex and Athena Art Finance. 

YieldStreet acquires Athena for $170M to add art financing to its alternative investment platform

Some context

At a very high level, Yieldstreet aims to give consumers access to invest in asset classes outside of the stock market.

“These are investments that generate passive income. For example, we do a bunch of things in real estate such as financing warehouses, multifamily and distribution centers,” Mehere told TechCrunch. “We also do art, auto loans or equipment finance. These are typically investments done by institutions and what we’re trying to do is really fractionalize them and get them to real estate investors. A lot of this stuff is asset-backed and it’s generating cash flow.”

In an effort to help people understand just exactly what they’re putting their money into, Yieldstreet aims to provide “a ton of investor education,” Mehere added, in the form of content such as articles, blog posts and infographics.

The company also aims to have its portfolios working “around the clock” to automatically apply earned income toward everyday expenses — a concept conceived by Mahere as “self-driving money.”

Yieldstreet will use its new capital to expand its user base, develop new investment products, explore international expansion and pursue strategic acquisitions, according to Mehere. Outside of its New York City headquarters, Yieldstreet also has offices in Brazil, Greece and Malta.

“Alternative investing has generally been restricted to very high net worth individuals. This is not just a U.S. problem, but a worldwide one. In Europe, especially, it is exacerbated by a negative interest rate,” he said. “So it’s even more compelling to them to tap into U.S. assets.” As such, Yieldstreet plans to expand into Europe and Asia as part of its growth strategy.

Tarsadia Investments (and former E*TRADE CEO) President Caplan believes the company is “uniquely positioned” to “achieve significant growth in revenue while ultimately achieving tremendous scale.”

“Everything begins and ends with the management team,” he told TechCrunch. “Yieldstreet’s management team’s vision for the future of digital investing aligned perfectly with that of our organization at Tarsadia. Yieldstreet is building the future of investing.”

Optimism reigns at consumer trading services as fintech VC spikes and Robinhood IPO looms

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When this growth investor expects startups will be able to raise again

Earlier today, TechCrunch caught up with Chris Sugden, a managing partner at Edison Partners, to talk about the current fundraising market, what’s next for SaaS startups and if there’s any good news to be found in today’s market.

As the stock market continues to gyrate (more up than down), and the unicorn exit market looks increasingly moribund, understanding how private investors are putting capital to work today and over the next few quarters is critical for startup founders. A host of startups that would have normally raised in Q1 of this year did not. The fundraising market they encounter the rest of the year will help determine their business trajectory.

Before we dive into our Q&A on all that, a short note on Edison Partners . Edison is a growth equity firm, which, according to Sugden, means that its checks range from $5 million to $30 million, with a “sweet spot” between $10 million and $15 million. Regarding stage, Sugden said that Edison looks to put capital into companies with between $8 million and $20 million in revenue, noting that the larger companies stretch his firm’s check size to the max.

About 75% of the firm’s investments are in software-as-a-service companies (SaaS), with the other 25% going into other types of startups. According to the investor, the average growth in Q4 2019 of the firm’s 12 investments from its ninth fund was about 100%, compared to the year-ago period.

So, Sugden is an active investor at a firm that has been around for a few decades with a good-sized account from which to invest. Let’s dig into how he sees the market shaking out.

Fundraising in 2020

The following excerpts come from TechCrunch’s chat with Sugden, which we’ve grouped and edited for clarity. We’ve peeled back the conversation, allowing us to pull out the parts that felt the most useful for startups. We start with his view of the 2020 venture capital market.