funding – Page 142 – Product Management Confabulation

April 5, 2022

Dailyhunt and Josh apps parent firm raises $805 million at $5 billion valuation

At a time when a number of startups are finding it difficult to raise capital, VerSe Innovation, the parent firm of news aggregator app Dailyhunt and short video app Josh, said on Wednesday it has raised $805 million.

The startup, which plans to expand its family of consumer apps and is looking for opportunities for its creator base and users with web3, is valued at nearly $5 billion in the new round, up from about $3 billion just eight months ago, its co-founders told TechCrunch in an interview.

The round — a Series J — was led by Canada Pension Plan Investment Board (CPP Investments), its largest investment to date in the region. Ontario Teachers’ Pension Plan Board (Ontario Teachers’), Luxor Capital, and Sumeru Ventures as well as existing backers Sofina Group and Baillie Gifford also participated in the round.

The new round brings VerSe Innovation’s all-time raise to about $2 billion (some through secondary transactions).

VerSe Innovation currently operates three popular apps that have made deep inroads in smaller Indian cities and towns. Its short video app Josh has amassed over 150 million users, 50 million of whom create and publish content. The app clocks over 80 billion plays on its app each month, the startup said.

Thanks to these stats, Josh has emerged as what the startup claims to be a clear market leader. It competes with a handful of apps including YouTube, Instagram, and the merged entity of ShareChat and MX Player’s video apps.

India’s ban on TikTok in mid-2020 prompted several Indian startups to launch their own short video apps. But most of them have either shut down or pivoted.

VerSe Innovation co-founders Umang Bedi and Virendra Gupta. Bedi was the head of Facebook India prior to joining Dailyhunt.

News aggregator app Dailyhunt, which operates in 15 languages and has a creator ecosystem of over 100,000 content partners and licence with 15 music labels, has over 350 million users, whereas the startup’s recently launched app PublicVibe now serves over 5 million monthly active users.

The startup plans to continue to focus on service users in India, and deploy the new investments to broaden its AI and ML capabilities to make its apps more engaging to users, Umang Bedi, co-founder of VerSe Innovation, told TechCrunch in an interview.

“India’s digital content is experiencing phenomenal growth, and VerSe Innovation is well positioned to be one of the leaders in the fast-growing short video and local language content space,” said Frank Su, Managing Director and Head of Private Equity Asia at CPP Investments, in a statement.

“This investment aligns with our approach of providing strategic capital to industry leaders in India’s technology sector. We look forward to supporting the next phase of VerSe Innovation’s growth journey, which we believe will deliver strong risk-adjusted returns for the CPP Fund.”

This is a developing story. A lot more to follow…

April 5, 2022

TechCrunch+ roundup: ‘Valuation reset,’ spiking crypto losses, US insurtech meltdown

If you want to launch a startup in the middle of a downturn, don’t be spooked.

Not only is it easier to hire during a correction, founders are under less pressure to deploy blitzscaling tactics that can mask underlying problems in product and marketing.

And as the global venture market slows down slightly, many investors are dialing back their usual growth expectations for seed-stage startups, which gives founders more freedom to develop customer relationships and acquisition strategies. Seed-stage funding in Q1 2022 was flat from the previous quarter, but compared to a year ago, it was up 45%.

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Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription

According to Andy Stinnes, general partner at Cloud Apps Capital Partners, the current “valuation reset” is an opportunity for early-stage founders.

Right now, Stinnes says VC firms are prioritizing “the high-growth B- and C-stage companies that raised substantial cash and operate at high burn rates.”

But for companies in the $4 million-$5 million ARR range, a $15 million Series A might still make sense, he writes.

“Conversely, if you raise a $4 million-$6 million Series A at a more modest valuation, it gets much easier to reach the goal for a 2x-2.5x valuation step up to the Series B.”

You will find a lot of stories in the next few months directing your attention to the fact that a saggy stock market is a wet blanket for once-hot startup valuations, and that’s a fact. That is why founders should concentrate on reaching product-market fit and building community, instead of trying to stack a Series A round tall enough to get reported in TechCrunch.

Thanks very much for reading,

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

Raising the right amount of capital after a correction

Twitter Space: “How to Pitch Me,” with Mayfield Partners’ Arvind Gupta

This afternoon at 2:30 p.m. PT/5:30 p.m. ET, I’m hosting a Twitter Space with Mayfield Partner Arvind Gupta to discuss pitch strategies and techniques for early-stage founders.

More than just a discussion of basic best practices, we’ll also talk about some of the most common mistakes first-time founders make, and how investors prefer to be approached these days.

Even if you’re not starting up at the moment, this chat will be a great opportunity to pick up some useful information. I hope you’ll join the conversation!

To get a reminder, click here.

4 critical relationships that will help your startup succeed

Image Credits: malerapaso (opens in a new window) / Getty Images

Every founder understands the importance of getting closer to investors and mentors, but that’s not the whole story.

Reaching out to people “who truly need what you’re offering but are unhappy with your product” will uncover actionable feedback, says TMV Partner Darshan Somashekar.

To better understand how your products and services fit into the marketplace, he recommends forging relationships with computer science department heads, bootcamp directors, Twitter’s tech community, and finally, your nearest competitors.

“I believe in building a relationship with my rivals,” Somashekar says.

4 critical relationships that will help your startup succeed

International startups shrug off US insurtech meltdown

Image Credits: Nigel Sussman (opens in a new window)

Insurtech has had a rocky time lately. Publicly-traded companies have been hammered, and early-stage startups are seeing their valuations decline accordingly.

But as a whole, the pace of investments in the sector isn’t falling behind, as highlighted recently by the number of insurtech startups in emerging markets in YC’s W22 batch, wrote Alex Wilhelm and Anna Heim in The Exchange.

“This also explains why startups hoping to write their own policies shouldn’t be dismissed too quickly after all — if they are focusing on emerging markets and improving access to insurance.”

International startups shrug off US insurtech meltdown

3 things you can do right now to support Ukraine’s IT sector

Image Credits: Anna Fedorenko / Getty Images

Since Russia invaded Ukraine on February 24, many startups based in the war zone have found ways to continue operating.

Emmy Gengler, CEO of Softjourn, which has offices in California, Poland and Ukraine, identified three ways the international community can help sustain Ukraine’s technology ecosystem:

Continue looking to Ukraine for your IT and tech needs
Purchase or license Ukrainian products and services
Amplify awareness of Ukraine’s vital tech sector

3 things you can do right now to support Ukraine’s IT sector

Better.com teaches us how not to downsize a company

Image Credits: Bryce Durbin/TechCrunch

Has it ever been your responsibility to tell someone else that their job has been eliminated? I have, and it’s one of the most difficult things I’ve ever done at work.

In the last few months, digital mortgage lender Better.com conducted two mass layoffs: In December 2021, CEO and co-founder Vishal Garg laid off approximately 900 employees, just one day after they were informed that Better.com had $1 billion on its balance sheet.

Soon after, Garg said many of the separated workers had been so unproductive, they were “stealing” from customers and co-workers.

Last month, 3,000 of the remaining 8,000 employees were laid off, with many learning the news only after finding unexpected severance checks.

“This is an example to all companies of what not to do,” Lisa Calick, director of HR advisory services at Wiss & Company, told Mary Ann Azevedo.

“Communication around involuntary terminations should always be handled with tact, respect and consideration for the affected individuals.”

Better.com teaches us how not to downsize a company

Q1 crypto losses spike 695% on year following massive hacks

Image of a grenade made from computer keys against a neon yellow background.

Image Credits: Peter Dazeley (opens in a new window) / Getty Images

The total value of cryptocurrencies reached nearly $2.3 trillion last year, but as that number soared, so did interest from malign actors looking to exploit bugs, poor code and social engineering hacks.

The web3 ecosystem “lost” $1.23 billion to exploits in just the first quarter of 2022, a nearly eight-fold increase compared to a year earlier, and that number is likely to continue increasing as the space expands, reports Jacquelyn Melinek.

Q1 crypto losses spike 695% on year following massive hacks

April 5, 2022

Lightning Labs raises funding to enable stablecoin transfers through Bitcoin network

Lightning Labs is building infrastructure that would enable users to send money across the world almost instantaneously and at a low cost through the Bitcoin network.

The company just raised funding to support a protocol it has built called Taro, which would allow stablecoins to be transferred on Bitcoin’s Lightning Network, Decrypt first reported.

Taro is the latest of multiple products Lightning Labs has built specifically for the Lightning Network, which is a layer-two solution that makes the Bitcoin blockchain more efficient. Bitcoin’s Lightning Network is currently used by El Salvador, which recognizes the cryptocurrency as legal tender, and major companies and crypto exchanges such as Kraken.

Valor Equity Partners led the $70 million Series B round with participation from Baillie Gifford, Robinhood CEO Vlad Tenev, Goldcrest Capital, and others, according to Decrypt. Proceeds will be used to enable stablecoin transactions based on the Taro protocol, made possible by Bitcoin’s Taproot upgrade in November 2021.

The company brought in $10 million from its Series A last September after its $2.5 million seed round in 2018, bringing its total raised to $82.5 million, including the fresh capital.

The Bitcoin layer-one network itself supports about five transactions per second, according to crypto exchange Binance. Taro will support developers transferring assets on the Bitcoin Lightning Network by executing “hundreds of thousands of transactions per second,” a much greater volume than what the Bitcoin network could otherwise support, Lightning Labs CEO Elizabeth Stark told CNBC.

Stark explained the significance of the new protocol to Decrypt, saying that it will allow individuals without bank accounts to send and receive money in the form of stablecoins that represent their domestic fiat currency through mobile applications. While Lightning Labs won’t be issuing the stablecoins directly, Taro will provide the infrastructure and rails for stablecoin transfers to take place.

April 5, 2022

ReadySet raises $29M to expedite access to enterprise-scale app data

ReadySet, a company providing database infrastructure to help developers build real-time applications, today announced that it raised $24 million in a series A funding round led by Index Ventures with participation from Amplify Partners. Several angel investors also contributed, bringing ReadySet’s total raised to $28.9 million — building on a previously-undisclosed $4.9 million seed round.

According to cofounder and CEO Alana Marzoev, ReadySet is tackling a major challenge in the enterprise having to do with delivering dynamic content while servicing large, distributed customers. The current standard practice is to build custom query caching systems, but Marzoev claims that this can slow down engineering teams, drive up costs and cause outages at inopportune times.

“Rather than rebuilding these same broken systems, developers need solutions that slot into their existing infrastructure and achieve limitless read scaling,” Marzoev told TechCrunch via email earlier this month. “With ReadySet, we aim to make the process of globally caching … query results as streamlined and automated as caching images in a content delivery system.”

ReadySet’s product has its origins in research that Marzoev and the company’s second cofounder, Jon Gjengset, did at MIT while pursuing their doctorates. Marzoev was previously a cloud infrastructure researcher at Microsoft, where she worked on cloud networking and storage infrastructure technologies, while Gjengset was a senior software development engineer at Amazon Web Services.

Together at MIT, Marzoev and Gjengset spearheaded an open source project called Noria, a streaming data-flow system designed to act as a fast storage backend for web apps. After the project gained traction on GitHub, the two decided to refine it and bring it to market as a managed service: ReadySet.

“The traditional databases that back the world’s most popular applications catch fire when dealing with large datasets, complicated queries, or high request volumes — in other words, at the worst possible time, when the product starts gaining traction,” Marzoev said. “To handle the infrastructure challenges that come along with this growth, companies scramble to hire teams of engineers with specialized skill sets who can help build and maintain custom, in-house solutions. ReadySet circumvents this problem by providing limitless read scaling without requiring any code changes to integrate it into the application.”

Robustifying the query backend

To take a step back, enterprises leverage several different kinds of databases to store, serve and analyze their app data. By far the most common type are relational databases, which provide access to data points that are related to one another — as the name implies. Programming languages called relational query languages use algebra to interpret requests about data and then instruct a database management system, or DBMS, to execute the requests.

A relational query or request, then, is a request asked about data contained in two or more tables in a relational database.

ReadySet acts like a database, but precomputes and caches relational query results so that reads of data in the actual databases remain fast. The platform keeps cached results up-to-date as the underlying data, stored in persistent “base tables,” change.

“At its core, ReadySet accelerates queries via a novel … caching engine that keeps cached state up-to-date automatically while supporting millions of reads per second with sub-millisecond latencies on a single node,” the company claims in its press materials. “ReadySet slots in front of existing relational databases and … can be integrated into existing [apps] without code changes.”

Alternatives to ReadySet’s platform exist in the form of Materialize, an open source project akin to Noria, and key-value stores like Memcached, Redis and Amazon ElastiCache. (Key-value stores record data in a “key-value” format where data is fetched by a unique key or keys, optimized for reading and writing that data.) But Lenny Pruss, a general partner at Amplify Partners, argues that both competing systems and key-value stores aren’t “feature complete” and require writing custom logic to get them to work for relational database applications, in contrast to ReadySet.

“Over the last decade, we’ve seen applications become more dynamic, real-time and global, all the while innovation in data access technologies has lagged behind,” Pruss told TechCrunch via email. “This has resulted in a heavy burden placed on engineering teams struggling to make do with overly complex caching and/or database sharding architectures. We believe ReadySet offers a disruptive new approach to not only speed up application performance but free engineering teams from toil.”

Future expansion plans

ReadySet is currently pre-revenue stage, but the company is collaborating with a small number of potential customers as design partners. As ReadySet works toward a more generally available product, funded in part by the series A proceeds, brands will be able to sign up for early access, Marzoev says.

If surveys are any indication, there’s enterprise-sized appetite for solutions like ReadySet. In a 2021 survey by 451 Research, commissioned by Immuta, 55% of companies reported that their data is often stale or out-of-date by the time it’s consumed or analyzed. A separate poll by Dimensional Research for Fivetran suggests that the majority of companies, meanwhile, experience problems with pipelines to access their data breaking more than once per month.

“Our short-term aim is to drastically improve the speed and usability of caching. Our long-term vision is that caching is something that no developer ever has to think about again. You just hook ReadySet up to your application and it handles understanding what needs to be cached and when,” Marzoev added. “Internet user growth set records in the pandemic, but database performance has stayed the same. We’re responding to tremendous demand among enterprise and fast growing companies that are looking for a way to meet rapid growth goals with scalable caching technology.”

April 5, 2022

Data.World raises $50M to help enterprises organize and track their data

For all the talk about the criticality of data for businesses, enterprise data is commonly siloed, unreconciled and spread across disparate systems, making it challenging to use and analyze. According to a 2020 report from Seagate and IDC, enterprises collect only 56% of the data potentially available through their operations — 43% of which goes ultimately unleveraged. In its research, meanwhile, Accenture has found that only 32% of companies are able to realize “tangible and measurable” value from data, while only 27% derive “highly actionable” insights and recommendations.

A single platform isn’t likely to solve all the data problems hamstringing the enterprise, but entrepreneur Brett Hurt believes his latest venture — Data.World — can affect at least some change. Data.World, which today announced that it raised $50 million in Series C funding led by Goldman Sachs, looks to leverage cloud-based tools to deliver data discovery, data governance and big data analytics features with a corporate focus. Hurt says that the mission is to create a collaborative community for data scientists, engineers and researchers, and, toward that end, he claims that Data.World now has more than 1.6 million members across customers including the Associated Press and Penguin Random House.

“From the beginning, we have been driven by the belief that data is the most transformative power in the enterprise and can create massive, positive change in business and beyond,” Hurt told TechCrunch in an interview conducted via email. “The siloing of data has historically forced IT teams into a ‘command and control’ posture. This produces a whole host of problems from overspending on attempts to centralize data to damaging the entire company culture around data. Data.World tackles these issues head-on by mapping siloed data to known business concepts so that everyone, whether you’re in the C-suite or the IT department, can understand and use knowledge.”

Making data actionable

Hurt cofounded Austin, Texas-based Data.World in 2015 alongside Bryon Jacob, Jon Loyens and Matt Laessig. Hurt got his start as a systems analyst at Deloitte before founding Coremetrics, a web analytics platform IBM later acquired for around $300 million. In 2005, he helped to launch the startup Bazaarvoice, which provides data about retail customers’ shopping habits.

Jacob was previously VP of technology at HomeAway.com, a vacation rental site, while Laessig — who’s cofounded several companies — served as VP of business development at Bazaarvoice. As for Loyens, he was the VP of engineering at Bazaarvoice before going on to lead engineering efforts at HomeAway.com

Data.World is an enterprise data catalog — an inventory of all data assets within an organization. It describes where data is stored, how to locate data sources, who can access the sources and who’s responsible for the data.

All data catalogs can help to scan, profile and index metadata while providing lineage across data sets (see Google Cloud Data Catalog, Alation Data Catalog, etc.). But Hurt claims that Data.World is unique in that it’s built on a knowledge graph, a collection of interlinked data concepts and entities that provides a “semantically-organized” view of an organization’s data and metadata.

“Knowledge graphs are the ideal architectural foundation for data catalogs, delivering value unattainable by relational and traditional graph datastores [and] bridging the gap between how data consumers understand their business world and how the company stores its data,” Hurt said. “Knowledge graphs offer greater flexibility, are more extensible, and have the capacity to serve as a launch pad for advanced data projects.”

Data.World’s “cloud-native,” software-as-a-service approach to development is another aspect that sets it apart from the competition, in Hurt’s mind. He points to the platform’s recently launched Kos, an open source metadata model and integration toolkit that’s designed to make it easier to model data consistently. A forthcoming product, following on the heels of user interface enhancements and “automated policy management” for sensitive data, will enable Data.World customers to use automations for certain metadata and governance tasks.

Image Credits: Data.World

When asked about security, Hurt is quick to highlight Data.World’s privacy tools, claiming the platform has the ability to mask, hide, or anonymize select rows or columns in databases. Data.World also provides monitoring for security and compliance, he says, and logs how specific data sets have been used or queried.

“Data.World is both cloud-first and security-first. All data transmitted over the internet is encrypted and all customer data stored on disk at rest is encrypted,” he added. “This includes files uploaded by customers, our application database, search indexes and any locally cached customer data … [The platform] extends beyond metadata governance into data access and exploration through secure data virtualization.”

Growth into the future

Hurt says that the latest funding round, which brings Data.World’s total raised to $132.2 million, will be put toward “global expansion, talent acquisition and product innovation.” The company aims to nearly double the size of its 100-person workforce in the next 12 to 18 months as it bolsters its public sector customer acquisition efforts. According to Hurt, Data.World currently counts states, counties and local government agencies among its customers.

“Enterprises are facing a potentially trillion-dollar data problem, and most just do not know where to start,” Hurt said, citing a NewVantage Partners survey from 2021 that found that only 24% of respondents believe their companies are actually data-driven. “We believe that leaders should view their data supply chain like their actual supply chain. This requires investment, but also a cultural shift around how enterprises view and collaborate around data.”

Beyond the usual suspects (e.g., Google, IBM, and Oracle), Data.World has rivals in startups like Stemma, which raised $4.8 million last June to build a managed data catalog platform. It also faces pushback from segments of the industry that aren’t convinced data catalogs are the right solution in today’s data-intensive world.

Investors like Goldman Sachs’ Mike Reilly are unsurprisingly unwavering in their convictions that the company has substantial runway, though. Both he and Hurt tout Data.World’s certified B Corporation and public benefit corporation statuses, which they say underline the company’s commitment to positive industry change. (It’s worth noting that B Corporations, a program administered by the nonprofit organization B Lab, is somewhat controversial, with some critics accusing it of ethics-washing.)

“Data.World sits at the intersection of several prevailing trends that are defining the future of data management,” Reilly said in a statement. “Given their positioning and product differentiation, we believe that they are best-positioned to capture extensive market share in the evolving, high-growth data catalog space.”

Prologis Ventures, Shasta Ventures, Vopak Ventures, Sandbox Insurtech Ventures, and individual investors Paul Albright, Zachary Karabell and Scott Stephenson also participated in Data.World’s Series C.

April 5, 2022

At long last, web3 makes a push to fight Google Maps

Over a decade ago, a group of employees at Yahoo were struggling to compete with Google Maps as the younger firm aggressively outspent its rivals and scaled its offering with a grand vision and unmatched risk-appetite.

“We didn’t have the same kind of budget and they ultimately won. But as a competitive person that was deeply frustrating to me,” said Ariel Seidman, who served as a product manager at Yahoo.

Soon enough, Siedman co-founded Gigwalk and attempted to use smartphones to supply mapping data. The startup scaled to 2 million users, amassed tens of millions of dollars in revenue, but in his own words, “it was never going to get to the scale that was really needed to build out a global map.”

A lot has changed in recent years that has Siedman convinced again that it’s now the right time to take another stab at fulfilling his long-lasting dream of building a global mapping infrastructure.

Google Maps’ remarkable price hike four years ago came as a surprise to countless businesses relying on the Android-maker’s offering. It upset many of them and drove some to try alternatives.

Three startup founders in India and Pakistan have told me in recent years that cutting reliance on Google Maps is saving them tens of thousands of dollars each month, for instance.

There’s also an antitrust investigation looming over Google Maps, according to Reuters, which reported last month that the DOJ had “breathed new life into an investigation of Google Maps to determine if bundling the service together with other Google software illegally stifles competition.”

And then there’s the whole web3 push.

Siedman believes that now exists the right incentive model – getting a community behind the project and sharing the upside with them – and the infrastructure that can help a project quickly scale and offer a solution to businesses that makes economic sense.

“Only the largest and most capitalized tech companies in the world have the resources to do digital mapping, and even with all those resources street level imagery in many parts of the world is only updated once every two years. This causes cascading logistical, municipal, and political problems. However, maps have the potential to be near real time. An open source, community-owned map is the only way to continuously construct a living, breathing, ever-updating view of our world,” he said.

On Tuesday, Hivemapper, Siedman’s new startup, announced it has raised $18 million to make further inroads with its attempt.

The startup’s Series A round was led by Multicoin Capital. Scores of other investors including Craft Ventures, Solana Capital, Shine Capital, Spencer Rascoff’s 75 and Sunny Ventures also participated in the round, which brings Hivemapper’s all-time raise to $23 million.

Investors are getting both equity and warrants for tokens in the new round, said Siedman in an interview with TechCrunch.

Hivemapper is building a decentralized, blockchain-based mapping network. It is relying on dashcams, and maps contributors and drivers, to capture 4K, street-level imagery. This data is then processed, tweaked for quality assurance, and annotated.

Map consumers leverage the map via a set of APIs that can call for images, directions, geocoder searches, and more. The platform’s Freshview feature allows consumers to zoom in on an intersection and see a timelapse montage of that location.

For their contribution, Hivemapper says it is rewarding both drivers and editors with the startup’s native token called HONEY.

Siedman said his conversation with a number of entrepreneurs including Amir Haleem, the founder and chief executive of decentralized wireless network Helium, helped him gain more confidence about the business model of giving ownership to the contributors. Haleem is also joining Hivemapper’s board of directors.

“That’s what generates loyalty. That’s what generates passion, right? And ultimately, especially for the early contributors, I felt like even if they made $5,000 or $10,000 in cash that was never gonna be significant relative to the value that they’re actually providing for the map in the early days. Ownership would actually compensate them correctly, especially if the global map becomes worth tens of tens of billions of dollars or hundreds of billions of dollars,” he said.

Using dashcams has its own advantages. Tushar Jain, Managing Partner of Multicoin Capital, said dashcams allows drivers and the firm to avoid spending on expensive mapping vehicles, “nor does it have to pay people to drive those cars around.”

“Instead, the network can simply identify regions that need to be mapped and put bounties on them, which are then claimed by a vast community of map contributors who are eager to claim those rewards for simply driving their daily commutes. As a result, Hivemapper creates unprecedented coverage, freshness, and quality in a radically more cost effective way,” he said.

Hivemapper is currently live in nine metro areas. It plans to launch in 30 more markets this year before expanding to international regions.

The startup, to begin with, is planning to cater to businesses such as logistics and delivery firms, governments and NGOs.

Hivemapper is building atop of the Solana blockchain. (Businesses will buy credit, which will be transacted on the blockchain. But each API call by the business for using Hivemapper won’t be treated as transactions.)

Hivemapper says it will begin shipping its dashcam, priced at $449, in July this year. Siedman said he is open to the idea of trading the HONEY token on popular exchanges, but that’s not the immediate focus.

April 5, 2022

Ghost Financial whips up new capital into finance tools for ghost kitchens

After operating his own ghost kitchen, Keto Kitchen, in Austin for the past year, serial entrepreneur John Meyer saw that fintech resources for the industry were lacking.

When Keto Kitchen had good sales in the first quarter, Meyer went to the bank to ask for expansion financing and recalled the banker asking him what a ghost kitchen was. That told him there was an opportunity for a data-driven financing tool for these types of restaurants.

“Even if bankers did know about it they didn’t have technology to properly underwrite them,” he added. So instead, Meyer, founder and CEO, created Ghost Financial to initially do two things: provide what he touts as “the first cash-back credit card for food and beverage inventory” and use data and technology to underwrite restaurant expansion loans and credit limits for the card.

The credit card offers 1% cash back on purchases, which can be pretty lucrative, especially if ghost kitchens spend, on average, about $40,000 a month for inventory from their suppliers, he added.

Ghost Financial founder John Meyer. Image Credits: Ghost Financial

Ghost Financial is also developing API integrations with point-of-sale systems, like Toast, and delivery apps, like DoorDash, so it can pull metrics that represent areas including operational health and efficiency, hourly and daily sales, average food preparation ties, ratings and reviews to determine credit limit and provide an instant loan decision.

If you’re wondering where you’ve heard Meyer’s name, you may remember him from 2015 when he was building Fresco News, a crowdsourced network for breaking news, or as co-founder of Homebound, where he is still an advisor.

Fresco News Aims To Build A Crowdsourced Network For Breaking News

Meyer was candid about his journey starting Homebound with Jack Abraham. This happened to be around the time he lost his father to depression, and Meyer decided to take some time off to focus on healing, and about a year-and-a-half ago, he started a number of side passion projects, including angel investing, advising and starting Keto Kitchen.

Ghost Financial card app. Image Credits: Ghost Financial

“I went from a seasoned tech entrepreneur to working 12 hours a day in the kitchen with chefs and dishwashers,” he said. “That dive into the service industry taught me a lot. Restaurants have small profit margins, maybe 5% or less. There are extremely hard workers, and it turns out, a vast majority of the industry, especially ghost kitchens, are paying for inventory with a check, cash or ACH and not benefiting financially from a five- or six-figure per month expense.”

Meyer cited research showing that by 2030, ghost kitchens will be a $1 trillion industry. So to get in front of the demand and further develop Ghost Financial’s first two core products, the company took in a $2.5 million pre-seed round to build engineering and marketing teams.

He secured a diverse mix of investors, including HOF Capital, 305 Ventures, Hustle Fund, Active Capital, Anthony Ghosn, The Council, Amber Illig, Sarah Kaney, Meg Fitzpatrick, Samantha Stein, Sabrina Halper, Kosinski Ventures, House Capital, Starship Ventures, Ben Yu, Adam Guild, Cory Levy, Ditec Ventures, Draft Ventures, Pareto20 and Kepler Operator Fund.

“I am a big believer in funding for bringing in strategic expertise and additional capabilities so that we can move quicker,” Meyer said. “This is an obvious concept that I am surprised was not built before.”

He says there are a few competitors out there that are still in stealth mode, but Ghost Financial’s secret sauce is its empathy-first approach that cares about operators rather than asking them to spend 30% of their revenue on tools. Instead, his company makes money through the credit card interchange fees, pulling in around 2% in fees, of which half goes back to the operator in the form of the cash back.

Others are also seeing pent-up demand in this area and are providing some interesting offerings. For example:

Melon Kitchens is an Indianapolis-based delivery-only restaurant accelerator for Black chefs that includes a three-month program to guide emerging food entrepreneurs from idea to test kitchen to revenue generation. The project is backed by Kelli Jones of Sixty8 Capital.
MayaEats’ One Stop Kitchen functions as a partner with underperforming restaurants to renovate their physical stores, digitize them and convert them into fast-casual restaurants and fulfillment centers.
Last year, Inspire Brands launched Alliance Kitchen in Atlanta, touted as “the first ghost kitchen operated by a multi-brand restaurant” that includes Arby’s, Buffalo Wild Wings, Jimmy John’s, SONIC Drive-In and Rusty Taco.

We’ve also seen other tools for ghost kitchens receive funding. For example: CloudKitchens, Travis Kalanick’s ghost kitchen startup, raised $850 million at a $15 billion valuation in January. And All Day Kitchens, which raised $65 million in Series C funding for its approach to enabling restaurants to share their food across a city using satellite kitchens. We also saw Popchew, Lunchbox, Forward Kitchens, Muy, JustKitchen and robotic kitchens like YPC raise funds in the past year.

Meanwhile, Meyer expects to launch the tools later this year with some $27 million in committed minimum spending, which he says is likely to triple and quadruple as it rolls out the credit card.

Up next, the company’s third product will focus on restaurant insurance — one of the biggest pain points — and the fourth one will be on an optimized payroll system. All of which will put Ghost Financial in position as a one-stop shop for the finance and business needs of ghost kitchens and restaurants.

The voracious fight for your salad bowl

April 5, 2022

Endel raises $15M to further develop its AI-powered sound wellness technology

Berlin-based sound wellness company Endel has raised $15 million in Series B funding led by Waverley Capital and True Ventures to further develop its patented technology. The company’s app creates soundscapes that are designed to help people relax, focus and sleep better. The technology takes inputs from the user’s movement, time of day, weather, location and other factors to use AI to generate personalized soundscapes that adapt to changes in real-time.

Founded in 2018, Endel has more than 1 million monthly active users and over 1.5 million monthly listening hours. The company says its personalized soundscapes increase focus by 7 times and decrease stress by 3.6 times if used regularly. The app is accessible on iOS, Android, Apple Watch, Amazon Alexa and Apple TV. Since its launch, the company has partnered with several artists to create soundscapes, including Grimes, James Blake, Alan Watts, Miguel and more.

“Endel is first and foremost a technology that is built to help you focus, relax and sleep.” Endel co-founder and CEO Oleg Stavitsky told TechCrunch in an interview. “The reason I’m emphasizing technology is because we have built this proprietary patented scientifically validated technology that generates personalized real-time adaptive soundscapes on the spot.”

Stavitsky says Endel’s approach draws on several areas of science, including research around circadian rhythms to complement soundscapes with specific aspects about users, such as their location, sex, age and more. The app has several modes designed to help its users with daily tasks. The “relax” mode calms your mind to create feelings of comfort and safety. The “focus” mode boosts your productivity by helping you concentrate for longer. The “sleep” mode soothes you into deep sleep with gentle sounds and the “recovery” mode is designed to lower anxiety. The “study” mode improves concentration and keeps you calm while working. Lastly, the “move” mode boosts performance while walking, hiking and running.

Image Credits: Endel

Stavitsky says the new funding will be used to further develop the company’s patented technology and to further reduce the time it takes to generate soundscapes. He noted it used to take the company months to generate and create soundscapes and that it now takes Endel sound designers about a week to do so. Stavitsky says his team is looking to bring that process down to days, and eventually hours. The company also plans to continue to produce content with artists and start collaborating with world-known scientists.

Endel recently conducted a customer research project and found that it has three main audiences for its app. The first is young professionals who need to get into a state of concentration to complete a series of tasks, whether that’s creating a presentation or sending out a bunch of emails. The second is students, which Stavitsky said is interesting because Endel hasn’t intentionally targeted that demographic. The third major group is frontline workers, such as nurses and doctors, who come home after long shifts and use Endel to fall asleep faster.

On top of a 30% uptick in usage amid the pandemic, the company also saw a change in user behavior. Prior to the pandemic, sleep used to be the Endel’s most popular use case, but focus overtook sleep during the pandemic. Stavitsky says the company found that people were using Endel to work and study from home when they were having trouble concentrating.

In terms of the future, Stavitsky sees Endel going beyond its current offering and becoming more personalized for users through an “always-on” model.

“In three to five years, I believe Endel will be the platform for functional audio. Right now, people go into the app and they browse through a catalog of soundscapes and they choose one and decide what they’re going to listen to right now. This is a very old school consumption pattern. I think what we want to get to is a user opening Endel and seeing just one big play button and you press play and then it automatically sees how many meetings you’ve had today, what your heart rate is like, what the weather is like and then proactively shifts between soundscapes. So it would be an always-on smart soundscape that follows you everyone,” he said.

Endel’s Series B funding follows its $5 million Series A investment announced in 2020. Endel has now raised a total of $22.1 million in funding.

April 5, 2022

Starlight shoots for the moon, aiming to build the Brex of crypto

Companies are scrambling to participate in the crypto ecosystem, but many of the tools available for them to use are disjointed and not user-friendly, especially for those new to web3.

New York-based Starlight aims to simplify the process for onboarding companies into crypto. Its product allows companies to set up a crypto wallet and track and manage their digital assets on an ongoing basis, all in one place, co-founder and CEO Grey Nguyen told TechCrunch.

Nguyen and co-founder Ben Yang, now CTO at Starlight, left jobs at other tech companies to participate in a fellowship for pre-seed founders hosted by South Park Commons last year. The pair wanted to pursue a venture in the web3 space, and went through about 20 different ideas in that realm before they decided to work on a business providing tools for DAOs (decentralized autonomous organizations). They quickly realized the market for DAO tools was overcrowded with lots of nascent solutions. More importantly, they felt they were still so early to the space that the DAOs they sought out as customers were still working through fundamental internal questions and weren’t ready to commit to using a particular product, Nguyen said.

Starlight co-founders Grey Nguyen and Ben Yang Image Credits: Starlight

All the challenges they faced trying to launch this DAO tooling venture revealed a much greater opportunity for Nguyen and Yang as they attempted to manage their startup’s expenses, many of which were incurred in cryptocurrency.

“It was then that we realized, this whole time, we had this problem of needing some crypto for our company, right? We needed to deploy things on the mainnet, pay for services, pay our people, and we had this difficult problem with needing to convert our dollars in a bank account into crypto,” Nguyen said.

They tried to get on board with “every major exchange” in crypto, including Coinbase, Gemini, and Kraken, to establish a wallet and manage their spending — but oftentimes, onboarding onto these platforms can take months, Nguyen said. He and Yang asked other companies in the space what solutions they used, and found that the most popular options were to either wait to get onboarded by a big exchange, regardless of how long it took, or for founders to use their own personal wallets to manage their companies’ crypto and take reimbursements after the fact.

When they couldn’t find a solution that would get them up and running with their own wallet in one or two days, they were in disbelief, Nguyen said. They decided to put the DAO tooling project on hold and build the solution they needed instead, which Nguyen described as similar to corporate card and spend management startups Ramp, Brex, and Mercury, but specifically for crypto.

There aren’t a lot of players offering a comprehensive corporate spend management platform for crypto in one place, but other startups have built tools focused on specific areas under the corporate expense umbrella. Sprout and Bitwage, for example, help companies navigate compensating their employees in crypto, while startups such as Paysail enable businesses to make cross-border B2B payments in crypto.

Starlight’s core customers are companies who need to convert some of their cash into crypto, many of which are digitally native but new to web3, Nguyen said. He added that Starlight has also seen interest in its product from crypto-native entities, including DAOs, which often invest in other companies, creating a need for them to convert cash into crypto and vice versa.

Starlight’s treasury management interface Image Credits: Starlight

Eventually, Nguyen hopes Starlight will be able to meet the needs of every business that needs crypto to interact in what he called the “new economy” of web3.

“No matter what you do, you will need some sort of crypto in your treasury to operate in the crypto economy, whether it is paying for services, paying people, or buying certain things,” Nguyen said.

Starlight is still in private beta mode, but plans to launch its product in the coming months, according to Nguyen. While the platform only supports “a handful” of cryptocurrencies today (Nguyen did not name which ones), Starlight’s plan is to support many major stablecoins and cryptocurrencies at its public launch, Nguyen said. He noted that the startup is actively working on adding support for the Avalanche and Solana blockchains, and that it is “chain-agnostic,” meaning Starlight decides which cryptocurrencies to support based on user demand rather than its own judgment on any one of them.

The platform will be free for users, though Starlight eventually hopes to monetize through other revenue streams, like offering its customers the ability to stake their cryptocurrency and taking a percentage of the yield they earn by doing so, Nguyen said.

Nguyen thinks part of the reason a crypto-focused solution like Starlight hasn’t been built at scale is that builders in the crypto space have been focused on other projects and are used to relying on “duct-tape solutions” for their crypto spend management. Although Nguyen and Yang are first-time founders, Nguyen believes that having gone through so many ideas before finally deciding to build Starlight constitutes a major advantage for the startup.

“You really need to be a second, third, fourth or even fifth-time crypto explorer to come across a problem like this, right? Because most [founders] who are building crypto products are either first or second-time builders or explorers. If they come across this problem, they will probably just ignore it, find a workaround solution and move on and build their thing. That’s what happened to us the first few times when we came across it, too,” Nguyen said.

To build out the platform and prepare for its public launch, Starlight has raised $5 million in seed funding. Abstract Ventures and A* Capital co-led the round, and BoxGroup, SV Angel, Paxos, South Park Commons, and Brevan Howard participated alongside a group of angel investors, including former Coinbase CTO Balaji Srinivasan, Plaid co-founder William Hockey, and others.

April 5, 2022

Wholesum raises $50M Series A to roll up third-party sellers on e-commerce platforms

As the boom of the e-commerce aggregator trend continues in Asia, South Korea, the fifth-largest e-commerce market in the world, is rolling up.

Wholesum, a Seoul-based e-commerce aggregator, is jumping on the trend of larger firms buying up third-party merchants that would usually sell on e-commerce platforms like Amazon and eBay. The company said Tuesday that it has raised $35 million in debt and $15 million in equity in a Series A round. The investment comes months after the startup raised $4.75 million in seed funding in August 2021 and $18 million in debt in November 2021, said Andrew Joo, co-founder of Wholesum.

Wholesum, which currently has five Korean local brands, aims to acquire an additional 15-20 brands across lifestyle, health, children and pet categories this year.

“The pandemic and maturing e-commerce platforms inspired the creation of 10,000 new independent brands per month in Korea,” said Joo. “Consumer curiosity to experiment and try new retail experiences grew. This generated brand traction and consumer following but led to growth that’s difficult to sustain for many brand entrepreneurs. The solution to their pain points is why Wholesum exists.”

South Korea’s fintech and e-commerce platform maturity has driven the growth of independent brands, Joo told TechCrunch. In South Korea, there are about 500,000 third-party merchants on e-commerce marketplaces like Coupang, eBay, SSG.com, cafe24 and Naver SmartStore, but the third-party sellers have three main problems: no access to growth capital, lack of recruiting challenges and a steep marketing learning curve, according to Joo.

To help address local small brands’ problems, KB Ham, who previously worked at Coupang and South Korea-based fashion brands distributor LG fashion, and Joo, who has backgrounds in finance and private equity for nearly two decades, co-founded Wholesum in 2021.

One of the value propositions to the third-party merchants is that they can take the proceeds from the sale of their brands and create a new brand, which may be more aligned with their values or passion, Joo told TechCrunch. “Perhaps a brand they couldn’t do when they started their first brand because they didn’t have the capital or didn’t understand the value chain like manufacturing, fulfillment and delivery,” Joo continued.

“The previous decade was the time to invest in online marketplace growth, but now is the time to leverage that global infrastructure and invest in the segment of the e-commerce value chain, like brands and D2C sales, where we can be present anywhere in the world,” said Ham.

Wholesum

Una Brands launches with $40M to roll up brands on multiple Asia-Pacific e-commerce platforms

“We think our total addressable market is around 45,000 brands that generate in excess of $1 million of sales per year,” Joo told TechCrunch. “Organic growth for our portfolio of brands is high teens since the acquisition, but it’s early days, so we think we can hit 30-40% year on year once we hit our stride. Our acquisitions have ranged in valuation from $250,000 to $6 million.”

Wholesum says it doesn’t view the volume of acquisitions as its most important key performance indicator.

“We acquire and scale brands; but at our core, we honor brand owners and their product achievements through post-acquisition organic growth and hope to inspire the next cycle of entrepreneurs seeking to transform their passion into a sustainable brand with the optionality to join Wholesum someday,” Joo said in the company’s statement.

Wholesum’s go-to-market strategy focuses on discovering made-in-Korea brands that primarily sell on local e-commerce marketplaces, Joo said. That does not mean Wholesum is not eyeing overseas markets, he said, adding that it acquires Korean brands with the potential to scale across global marketplaces, including Lazada, Shopee, Amazon, and Mercado Libre.

The latest funding was led by Kingsway Capital, Antler Global and Widus Partners, with participation from its previous backers Nordstar and Bass investment. New investors KSV Global and Bold Ventures also joined in the round.

“By partnering with high-quality brands backed by data-driven insights and strong operational acumen, we believe Wholesum will extend its lead as the leading player in this large, underserved and idiosyncratic South Korean e-commerce market,” said partner of Antler Global Teddy Himler.

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