Carbon capture is headed for the high seas

Unless you live near a port, you probably don’t think much of the tens of thousands of container ships tearing through the seas, hauling some 1.8 billion metric tons of stuff each year. Yet these vessels run on some of the dirtiest fuel there is, spewing more greenhouse gases than airplanes do in the process. The industry is exploring alternative fuels, and electrification, to solve the problem for next-generation ships, but in the meantime a Y Combinator-backed startup is gearing up to (hopefully) help decarbonize the big boats that’re already in the water.

London-based Seabound is currently prototyping carbon capture equipment that connects to ships’ smokestacks, using a “lime-based approach” to cut carbon emissions by as much as 95%, cofounder and CEO Alisha Fredriksson said in a call with TechCrunch. The startup’s tech works by routing the exhaust into a container that’s filled with porous, calcium oxide pebbles, which in turn “bind to carbon dioxide to form calcium carbonate,”—essentially, limestone, per Fredriksson.

Though carbon capture has yet to really catch on for ships, Seabound is just one of the companies out to prove the tech can eventually scale. Others, including Japanese shipping firm K Line and Netherlands-based Value Maritime, are developing their own carbon-capture tech for ships, typically utilizing the better-established, solvent-based approach (which is increasingly used in factories). Yet this comparably tried-and-true method demands more space and energy aboard ships, because the process of isolating the CO2 happens on the vessel, according to Fredriksson.

In contrast, Seabound intends to process the CO2 on land, if at all. When the ships return from their journey, the limestone can be sold as is or separated via heat. In the latter case, the calcium oxide would be reused and the carbon sold for use or sequestration, per Fredriksson, who previously helped build maritime fuel startup Liquid Wind. Her cofounder, CTO Roujia Wen, previously worked on AI products at Amazon.

Seabound says it has signed six letters of intent with “major shipowners,” and it aims to trial the tech aboard ships beginning next year. To get there, the company has secured $4.4 million in a seed round led by Chris Sacca’s Lowercarbon Capital. Several other firms also chipped in on the deal, including Eastern Pacific Shipping, Emles Venture Partners, Hawktail, Rebel Fund and Soma Capital.

Beyond carbon capture, another Y Combinator-backed startup is setting out to decarbonize existing ships via a novel battery-swapping scheme. New Orleans-based Fleetzero aims to power electrified ships using shipping container-sized battery packs, which could be recharged through a network of charging stations at small ports.

Galley Solutions turns kitchen chaos into recipe for streamlined operations

Galley Solutions, a food data company providing food operators with technology to make more profitable decisions around their culinary operations, raised $14.2 million in Series A funding.

Ian Christopher, COO, started the company with his brother-in-law, Benji Koltai, CEO, in 2017. The food enterprise resource planning tool came out of Koltai’s previous work at Sprig, a delivery-only restaurant started by CEO Gagan Biyani and former Google executive chef Nate Keller.

Christopher explained that in the early days, there was not a system of record, so much of the work was done in a low-tech environment — spreadsheets or pen and pencil. Koltai, who has food sensitivities, kept getting mislabeled meals and having health reactions.

“He went to the culinary team and just said, like, ‘Why are we getting this wrong?’” Christopher told TechCrunch. “We have this source of truth for our recipes, so why isn’t this propagating every other corner of this operation, including the labeling and the allergen information. That was when a sous chef kindly walked him through the chaos that was their kitchen operations.”

Koltai, working with Keller, took a recipe-centric approach and coded the first version of Galley, which provides clean recipe data, predictive purchasing, smart inventory and accurate food production planning. Keller is now working with Galley as a part of its customer success program.

Galley Solutions

Galley Solutions website example. Image Credits: Galley Solutions

The company’s technology is a kitchen productivity tool that focuses on core recipe data, and the purchasing and inventory aspects stem from that. For example, the carrots for a carrot soup are mapped to real-time vendor items so the kitchen can make better purchasing decisions and more accurate recipe margins.

Galley works with companies like DoorDash, Aramark and Chowbotics. The company grew its subscription revenue by 280% from last year and saw a 146% net dollar retention in the first quarter of 2022, Christopher said.

It was also at the point in its growth where it was reaching profitability and was close to cash-flow positive when leadership decided to take advantage of its position to aggressively scale.

That’s where the Series A comes in. The investment was led by Astanor Ventures and includes participation from existing investor Zetta Venture Partners. This gives the company $20 million in total funding to date. Galley is the latest startup, bringing technology into the kitchen, to receive funding. Earlier this year, we also saw Meez raise $6.5 million for its recipe software.

Meanwhile, the new funding enables the company to scale and move into secondary marketplaces to connect supply and demand with a focus on automating the purchasing decision and purchasing activity.

“We were able to get to millions of dollars in revenue with two salespeople in our organization, so we have to scale our sales team,” Christopher said. The new funding will also go toward product and engineering.

Up next, the company is focusing on sustainability as part of its partnership with Astanor, including sustainability impacts and initiatives around food waste.

3 things to remember when diversifying your startup’s cap table

Making purposeful decisions on diversity and inclusion in the workplace goes beyond simply building your team.

As a minority female entrepreneur and co-founder of a women’s health startup, ensuring diversity within our cap table has been a must — and has proven instrumental to our success. Breaking down your cap table to diversify your investors based on a variety of criteria will provide far more value than funding alone.

I have spent the last 10 years working in women’s health, and the lack of diversity in investors and leadership baffles me. From the inception of my company until now, diversifying our cap table has been a top priority that will continue to serve as a key factor when bringing in investment.

Prioritizing diversity will bring a wealth of knowledge, perspective and expertise to the table. We knew that to make this happen, we had to focus on building a product and team that people wanted to invest in. Many startups talk about wanting to adding diversity to their cap table, but how should you go about it?

Set your investor criteria from the beginning

My co-founders and I were all in agreement that we would select our investors based on a variety of factors, such as type of investor (VC, angel, family office, etc.), gender, race, expertise and a deep passion for our mission. While arriving at these criteria, my co-founders and I wrote down reasons why each factor was important to us.

Breaking down your cap table to diversify your investors based on a variety of criteria will provide far more value than funding alone.

As a startup tackling a problem that affects women globally, it was particularly important for us to have women investors, racially diverse investors and industry professionals who understood the magnitude of the problem we were trying to solve.

Recent studies have shown that women and people of color disproportionately experience medical gaslighting. Seeking out investors who fit this profile was critical to onboarding people who we felt would share our passion for our work and be supportive along the way.

When setting your criteria, you should define your goals clearly and identify the value each investor will bring to the table. As a team, think about what you would want if you could have it your way and why.

Belong secures $80M to take the pain out of rental property management

Historically, the relationship between landlords and tenants can be a contentious one.

At the same time, the experiences of managing a property, and renting one, are not always smooth.

Belong, a startup that aims to address both these issues while giving renters a way to save toward home ownership, has just raised $50 million in equity and secured $30 million in debt to expand its offerings and markets it serves. Fifth Wall led the equity financing with returning backers Battery Ventures, Andreessen Horowitz (a16z) and GGV Capital. The round was preempted by Fifth Wall, noted Belong co-founder and president Owen Savir.

Founded in 2019 by Argentine-born Ale Resnik, Savir and Tyler Infelise, Belong is a three-sided marketplace that provides services for both homeowners that are landlords and renters.

From the homeowner perspective, Belong offers home management services that it says makes owning a rental home easier. For example, if a rental property needs a repair, the startup has an in-house maintenance team that can handle those on a landlord’s behalf. It also provides the homeowners with financial tools to manage their investment, as well as guaranteed rent on the first of each month. And it will also help an owner fix up a property and get it in rental-ready shape.

On the renters side, Belong says it has created a system that gives them a way to build home ownership themselves. For example, with each one-time rent payment, residents get around 3% of the price of rent back, which accumulates in an account with the aim of being used toward a down payment on the purchase of a home — but only if it’s used to buy a home through its platform. You see, the company serves as a real estate brokerage as well.

The mission is similar to that of Divvy’s, a proptech unicorn, but with a different model. Divvy, which raised $200 million in funding last August at a $2 billion valuation, buys homes on behalf of renters and helps them become homeowners.

For its part, Belong differs from other offerings in the space in that it addresses the property management piece, according to Resnik, a former entrepreneur-in-residence at a16z, who previously founded three other startups.

Resnik said the concept for Belong was inspired by the “pain” he and one of his co-founders had when renting homes.

“We’re painfully aware of all the pains that people go through when they need to rent a home,” he told TechCrunch, “and how difficult it is to be able to afford a home.”

As they studied the problem, they discovered a “concerning” trend that more institutional investors were increasingly owning a share of the housing stock market.

“We dug into why there were not more individual homeowners, which would be net positive for the economy,” Resnik said. “And we realized it wasn’t easy to buy a home and manage it and do it in a way that’s stress free.”

Image Credits: Belong

Put simply, Belong wants to take residents out of “second-class citizen status” and connect them with homeowners “that want to give them a great experience” while those homeowners turn over management to the startup.

While Resnik declined to reveal valuation or hard revenue figures, he did say that San Mateo, California-based Belong grew its revenue by nearly 3x in 2021. With the latest financing, it has raised a total of $95 million in equity and secured $30 million in debt to date.

The startup has a variety of revenue streams, according to Resnik. For one, homeowners pay 8% of the rent that Belong collects for the service of “managing their home end to end.” It has a built-in payments infrastructure so that renters pay through the platform so the money comes out of that automatically. Every time the startup sources a resident for a home, they get a 6% share of the rent. It also allows homeowners to finance any maintenance or repairs that need to be conducted in a home.

Today, Belong operates in the Bay Area, Southern California, Miami and Seattle with an engineering team distributed across LatAm, a source of pride for Resnik. Thousands of homeowners and nearly 7,000 renters are on its platform currently. The company is looking to expand to new markets with the new capital as well as do more hiring and focus on product development.

Lead investor Fifth Wall has made investments in companies that help streamline the home buying and selling process for consumers. But Partner Dan Wenhold believes that Belong fills “an important gap in the market through its technology offering that serves consumers after they become homeowners or renters.”

“We believe Belong’s people-first model raises the bar for the future state of home rentals and ownership,” he said, noting that Belong’s focus on the retail segment of single family residential owners and renters is “a key differentiator.”

“These groups have been traditionally underserved by offline property managers who do not use technology or a tech-first approach to solving problems,” Wenhold told TechCrunch. “With in-house operations and service professionals in each market in which they operate, Belong brings a full-stack approach to property management.”

Generally, we’re seeing an increased number of companies focused on renters. Earlier this week, TechCrunch reported on Arrived’s $25 million Series A. That startup raised capital from Forerunner Ventures and Bezos Expeditions (Jeff Bezos’ private investment fund) to give people the ability to buy shares in single-family rentals with “as little as $100.”

My weekly fintech newsletter, The Interchange, launched on May 1! Sign up here to get it in your inbox.

Data intelligence startup Near, with 1.6B anonymized user IDs, lists on Nasdaq via SPAC at a $1B market cap; raises $100M

The IPO window has all but closed for technology companies in the wake of a massive downturn in the market, but an opening still remains for some, in the form of SPACs. Near — a data intelligence company that has amassed 1.6 billion anonymized user profiles attached to 70 million locations in 44 countries — today announced that it would be listing on Nasdaq by way of a merger with KludeIn I Acquisition Corp., one of the many blank check companies that have been set up for the purposes of taking privately held companies public, at a valuation “near” $1 billion. It will trade on Nasdaq using the “NIR” ticker.

Alongside that, the company is picking up a $100 million equity investment into its business from CF Principal Investments, an affiliate of Cantor Fitzgerald. 

If you’ve been following Near or the SPAC market, you might recall that there were rumors of KludeIn talking to Near back in December. At the time Near was reportedly aiming at a valuation of between $1 billion and $1.2 billion with the listing. The last several months, however, have seen the IPO market virtually shut down alongside a massive drop in technology stocks across the board and a wider downturn in tech investing overall, even in much smaller, earlier-stage startups.

Near, originally founded in Singapore in 2012 and now based out of Pasadena, had raised around $134 million in funding, including a $100 million round in 2019 — which had been the company’s last big raise.

Its investors include the likes of Sequoia India, JP Morgan, Cisco and Telstra (which have agreed to a one-year lock-up according to KludeIn’s SEC filings). Company data from PitchBook notes that Near had tried but cancelled a fundraise in May 2021.

All in all, Near is an interesting example when considering the predicament that a lot of later-stage startups might be finding themselves at the moment.

On the one hand, the company has some big customers and some potentially interesting technology, especially in light of the swing from regulators and the public toward demanding more privacy in data intelligence products overall.

It works with major brands and companies including McDonald’s, Wendy’s, Ford, the CBRE Group and 60% of the Fortune 500, which use Near’s interactive, cloud-based AI platform (branded Allspark) to tap into anonymised, location-based profiles of users based on a trove of information that Near sources and then merges from phones, data partners, carriers and its customers. It claims the database has been built “with privacy by design.”

It describes its approach as “stitching” and says that it’s patent-protected, giving it a kind of moat against other competitors, and potentially some value as an asset for others that are building big data businesses and need more privacy-based approaches.

On the other hand, while financials detailed in KludeIn’s SEC filings show growth, it is at a very modest pace — numbers may not look that great to investors especially in the current climate. In 2020, Near posted revenues of $33 million, with estimated revenues of $46 million for 2021, $63 million for 2022 and $91 million for 2023. The company estimates that its gross profit margin for this year will be 72% ($44 million) but equally estimates that EBITDA has been negative and will continue to be until at least 2024.

Image Credits: Near

Looking out further than Near, it will be interesting to see how many others follow the company in taking the SPAC exit route, which has proven to be a controversial vehicle overall.

On the plus side, SPACs are lauded by supporters for being a faster, more efficient route for strong startups to enter the public markets and thus raise money from more investors (and giving sight of an exit to private investors): this is very much the position Near and KludeIn are taking.

“Enterprises around the world have trusted Near to answer their critical questions that help drive and grow their business for more than a decade. The market demand for data around human movement and consumer behavior to understand changing markets and consumers is growing exponentially and now is the time to accelerate the penetration of the large and untapped $23 billion TAM,” Anil Mathews, founder and CEO of Near, said in a statement. “Going public provides us the credibility and currency to double-down on growth and to continue executing on our winning flywheel for enhanced business outcomes over the next decade.”

“I am thrilled to partner with Anil and the entire team at Near as they continue to help global enterprises better understand consumer behavior and derive actionable intelligence from their global, full-stack data intelligence platform,” added Narayan Ramachandran, the chairman and CEO of KludeIn. “We believe this merger is highly compelling based on the diversified global customer base, superior SaaS flywheel and network effects of Near’s business, highlighted by the company’s strong customer net retention.”

On the minus side, those positives are also the very reasons for some of SPAC’s problems: Simply put, they have enabled public listings for companies that might have found it much harder, if not impossible, to do so through the scrutiny of more traditional channels. Sometimes that has played out okay anyway, but sometimes it has ended badly for everyone. Just this week, Enjoy — which also listed by way of a SPAC — said that it was on course to run out of money by June and was reviewing its strategic options.

Time, the appetite for more data intelligence and potentially some factors out of its control like the investment climate, ultimately will show which way Near will go. The transaction is expected to generate $268 million of gross proceeds, assuming there are no redemptions and a successful private placement of $95 million of KludeIn common stock, KludeIn said.

Here’s what’s happening on Day Two of TC Sessions: Mobility 2022

How was your first day at TC Sessions: Mobility 2022? We hope you’re fully caffeinated and ready to roll because day two is packed with groundbreaking tech, opportunities galore and more top-notch programming. Finish your coffee, peruse the event agenda and plan your day.

We took the liberty of highlighting just some of the presentations you won’t want to miss. Enjoy the adventure!

Ready for a road trip? Audi spin-off Holoride’s got your entertainment needs covered — and you don’t have to wait for full autonomy, either. Its in-car VR system turns every vehicle into a moving theme park — and it rolls out in Audi cars as early as this summer. Nils Wollny, Holoride’s co-founder and CEO, will talk about where technologies — like VR, blockchain, NFTs and cryptocurrency — fit in the automotive space.

Buckle up for a fascinating look at automotive cybersecurity. In 2015, Charlie Miller and Chris Valasek famously hacked and took control of a Jeep Cherokee. Today the duo — undisputed leaders in the cybersecurity industry — hold top security roles at Cruise, the self-driving company backed by GM. They join us onstage to discuss the ever-changing security risks associated with today’s connected cars — and tomorrow’s robotaxis. 

Don’t miss the moment when Arrival’s prototype finally, well, arrives. Last year the company announced a partnership with Uber in the U.K. The plan? Design and build an affordable, electric vehicle purpose-built for ride-hailing. This is the first public debut of the prototype before the vehicle (here’s hoping) enters production. Arrival president Avinash Rugoobur will talk about the prototype’s design process and other projects either in the pipeline or right around the corner.

A solid pitch is essential if you want to fund your startup dream. Grab your preferred note-taking device and head over to the TechCrunch Mobility pitch-off. Dozens of the industry’s brightest mobility entrepreneurs will bring the heat and pitch to a live audience — and a panel of expert VCs who will then offer invaluable feedback. Watch. Listen. Learn. 

Forget about knights — they’re so sixth century. We’ve got Entrepreneurs of the Roundtable. Well, roundtables. Check out the three we have on tap today.

  • The future of fleets: While vehicle fleets represent a significant opportunity to achieve scale quickly in green mobility, the customer is different from other commercial and industrial customers. Join Doug Davenport, the founder and executive director of ProspectSV, for a discussion about the needs of institutional customers and how to win in this unique market.
  • Sustainable mobility in emerging markets: Optimizing people, planet and profit through technology: Join Damilola Olokesusi, the CEO and co-founder of Shuttlers — a tech-driven transportation startup in the highly congested Lagos and Abuja metropolis — for a discussion on long-term transportation sustainability. The focus? How technology can optimize three key pillars — people, planet and profit — to help raise awareness of, and offer solutions to, the shortcomings of transportation technology in emerging markets.
  • Why you can’t build a new EV in corporate America: Gas-powered cars and motorcycles have been around for more than a hundred years. During that time, auto brands and major corporations have gained a wealth of capital and experience. Talk about an entrenched legacy. But with the major push for electrification, that legacy is a bit of a crutch. Join Richard Meaux, COO of Exro Technologies, to learn and discuss why electrification requires a huge shift in mindset. And that shift has corporate America learning from nimble tech startups working with the latest electrification tech and thinking way beyond “how things have been done.”

That’s day two of TC Sessions: Mobility 2022 in a nutshell. Wait, you don’t have a ticket? No worries — you can still buy a pass for as little as $65. See you there!

 

Pitch Deck Teardown: BoxedUp’s $2.3M seed round pitch deck

Back in March, I wrote about how BoxedUp pivoted to enable high-end video production gear sharing and its $2.3 million seed round. At the time, the company’s founder David Boone stuck out, so when I started the pitch deck teardowns, I knew I wanted to feature BoxedUp in one of the installments.

Today, we’re taking a close look at the pitch deck that helped Boone raise the company’s first round of institutional capital.

I am grateful to BoxedUp for sharing a completely unredacted deck with us — all the details the company used to raise the money are in there, so it is a particularly representative deck.


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

  • 1 — Cover slide
  • 2 — Team highlights slide
  • 3 — Business cycle slide
  • 4 — Market size slide
  • 5 — Problem slide 1
  • 6 — Problem slide 2 (shows the price of equipment)
  • 7 — Problem slide 3 (problem as experienced by equipment owners: under-utilized premium equipment)
  • 8 — Problem slide 4 (problem as experienced by creators: poor rental options and high price)
  • 9 — Solution slide
  • 10 — Go-to-market strategy
  • 11 — “Previous customers” slide
  • 12 — Target audience slide
  • 13 — Business model slide
  • 14 — Traction slide
  • 15 — Projection slide
  • 16 — Competition slide
  • 17 — Market size slide
  • 18 — Cover slide (“Where BoxedUp is going”)
  • 19 — Road map slide
  • 20 — Team slide
  • 21 — End slide
  • 22 — Use of funds and fundraising progress slide

Three things to love

BoxedUp quickly demonstrates a deep understanding of the market it is in and makes a compelling case for why high-end video and audio equipment makes sense.

As the company outlines in its deck (slide 6), a full set of video equipment for a high-end shoot can cost $100,000 — about the same as a high-end luxury sedan. You wouldn’t buy a convertible for a weekend trip; you’d rent one, so there’s no reason you wouldn’t do that when shooting a music video either.

An excellent illustration of bottom-up market sizing

[Slide 12] BoxedUp makes the point that it has a huge beachhead market. Image Credits: BoxedUp.

On its 12th slide, the company is doing something really clever indeed — it outlines its beachhead audience. That is the first audience the company is planning to target with its marketing efforts. Without spelling it out, it shows that it has huge annual market potential (12,000 cinematographers running 20-50 projects per year at a $15,000-$1 million budget), with annual spend ranging from $3.6 billion at the low end to $600 billion at the high end.

We can talk about whether those numbers are realistic and what share BoxedUp is likely to grab of that budget, but it tells me one thing for sure: If the founder can defend those numbers in one market, they have a venture-scale business in their hands.

From startup to scale-up

[Slide 13] Marketplaces are notoriously hard, but the company preempts hard questions by tackling the transition head-on. Image Credits: BoxedUp.

One of the really big challenges with marketplaces is priming the pump. Turo, for example, would be useless if it doesn’t have any inventory, but it would be equally pointless if it doesn’t have anybody to rent its cars.

Getting to a point of equilibrium is notoriously hard. Too much inventory and the equipment owners get restless because nobody is willing to rent anything. Too many renters, and that side of the equation falls apart, because it gets too expensive (owners are likely to crank up the price), or there isn’t any equipment available.

It’s a delicate dance, but BoxedUp has an elegant solution: Solve the supply side of the market by buying a bunch of equipment it can rent out. That means it can focus its marketing efforts on the renters and fully control the experience. Once it gets traction, it can communicate what it learned to the supply-side along with data about what types of equipment customers want and are willing to rent.

Traction, market segmentation and storytelling

[Slide 14] Rapid revenue growth and smooth growth across both its business models paint a promising picture. Image Credits: BoxedUp (opens in a new window)

I rarely feature three slides in a row in these teardowns, but I wanted to highlight how slides 12, 13 and 14 together tell an important part of the story.

Slide 12 explains the size of the market for its initial customer; slide 13 shows how the company is tackling one of the hardest problems with a marketplace economy (supply and demand side imbalance); and slide 14 shows that the strategy is working. There’s about a 50-50 split between first-party rentals (i.e., BoxedUp’s own equipment on the platform) and third-party rentals (i.e., marketplace rentals).

Of course, these numbers reflect the business in September and we don’t know what happened since, but if the company managed to keep its growth trajectory, I’d be very surprised if I don’t end up writing about the company raising a monster Series A round very soon.

Getting storytelling and narrative arcs right is crucial in pitches, and these slides do three things extremely well: There’s very little content on the slides, so there’s no confusion about what the founders want you to look at; they tell a clear and unambiguous story; and the three slides work in perfect concert.

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

Three things that could be improved

BoxedUp successfully answers some of the hardest parts of a marketplace startup story in its deck and deserves major kudos for that part of the pitch.

Other aspects of its deck were a little bit more confusing to get a handle on, however.

Former AWS engineer sets out to build a better log search engine

When ZincSearch founder Prabhat Sharma worked as a solutions architect at AWS, he helped customers implement a lot of tools on top of AWS infrastructure services. He noticed that most of the solutions that were designed to help companies sift through log data were from a different era, and those that weren’t, hadn’t really caught on in a big way.

He decided it was time to build a more modern alternative and last August he began noodling with an idea. “I looked around, and then I saw that there were a couple of people who had tried building a couple of things. But none of them was actually good enough. So then I thought, let me give it a shot and see if I can build something,

He spent several months developing what would become ZincSearch. In December, he put it on GitHub, and was happily surprised to find that it got some traction. The largest incumbent in this space is Elastic, the makers of ElasticSearch, a public company founded in 2012. He wanted to build something that was a modern alternative to that tool without some of the overhead he observed when he was at Amazon. So he set out to create a single binary that would set up quickly and not use a ton of RAM.

He believes that the solution he built is an improvement over what’s out there, and it appears that users agreed. The launch generated some discussion on Hacker News and Reddit, and quickly built up 2000 stars on GitHub – today the tool is approaching 8,000 stars, a sign that people are liking it.

This did not go unnoticed in venture circles, who monitor open source projects looking for potential companies to invest in. As investors reached out, Sharma realized he was onto something. In April, he left his job at Amazon to launch ZincSearch as a company.

The startup is still very early and still a work in progress as an alpha project, but Sharma has big plans. “Right now it is still in alpha, but I plan to make a general release within three to six months and offer a cloud service by the end of the year, most likely,” he said.

As he completes the administrative aspects of legally forming the company, which is only a couple of months old at this point, he is looking to hire six people by the end of year to help finish the open source project and launch the cloud version. As a first-time founder just putting the initial pieces of the company together, he is only beginning to think about hiring and how to bring in diverse employees, but he knows diverse teams perform better, and he says that he is looking at ways to make that happen.

The company announced a $3.6 million seed investment to help push his vision forward. The round was led by Nexus Venture Partners with participation from Dell Technologies Capital, Secure Octane, Cardinia Ventures and several tech industry leaders.

FloorFound grabs more capital to grow its oversized recommerce business

While we had the chance to be at home more over the past few years, you may have spruced up a home office or replaced a couch. However, once the new item was in your home, you may have had some buyer’s remorse or the item didn’t live up to its website photo.

In any case, that oversized item needs a new home, and FloorFound is working with brands and retailers to give that couch to someone who will love it, while avoiding the landfill.

We first caught up with the Austin-based company and its founder and CEO Chris Richter in 2020 when FloorFound was getting started. The company went on to raise $4 million in seed funding in 2021 and is now back with a $10.5 million Series A financing round.

The round was co-led by Next Coast Ventures and LiveOak Venture Partners with participation from existing investors Flybridge Capital Partners and Schematic Ventures and new investor Data Point Capital.

Richter told TechCrunch that the funding comes as more people are interested in purchasing resale. The company-sponsored survey done in 2021 found that over 90 percent of U.S. consumers reported buying resale items, while research from First Insight and the Wharton School suggests 83% of consumers who have purchased secondhand products plan to do so again, which is up from 17% in 2019.

“The tailwinds that were supportive of our business in 2020 and 2021 have only gotten better, as has consumer sentiment around sustainability, so we have grown accordingly,” he added.

Reverse logistics don’t work without a plan on how to handle the return and resale of those larger items, however, and FloorFound is making this process simpler through its end-to-end technology platform that streamlines both the recovery and resale of returned, lightly used and open-box items.

In February 2021, the company launched its solution and since then has more than doubled its recommerce sales each quarter on average. It also grew its client base five times, which includes furniture brands like Inside Weather, Floyd and Burrow. And, Richter noted, FloorFound worked with its clients to keep nearly 450,000 pounds of furniture in circulation and out of landfills so far.

FloorFound is the latest to raise funding within a U.S. resale industry poised to grow over 150% in the next decade and be valued at $330 billion, according to research from Mercari and GlobalData. It joins Loveseat, also based in Austin, which raised $7 million in Series A funding in March for its returned home goods marketplace. On the fashion front, companies like Recurate announced $17.5 million Series A funding this week.

Meanwhile, FloorFound intends to use the new funding to expand its market presence in the U.S. and move into additional retail verticals like appliances, mattresses and exercise equipment. The company currently has four major third-party logistics partnerships and over 40 warehouse hubs, a number Richter plans to triple this year.

What makes FloorFound stand out from its competitors is its approach to putting retailers, which often struggle with how to effectively do returns, at the center of recommerce, according to Richter.

“Retailers are going to miss out on a revenue opportunity if they don’t participate in recommerce, but trade-in and buy-back is a leap for many of them,” he added. “By focusing on the problem of oversized returns, we can help them use that inventory to launch new sales channels.”