Equity Monday: New unicorns kick off the week as India get cross with Starlink

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

With a holiday-impacted week behind us, we hope that you are ready for the next few weeks of busy news. Because starting in the back-half of December, the world is going to slow down dramatically. Make sure that you are following the show on Twitter, and let’s get into it!

The show is back Wednesday! We’ll see you then!

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Particular Audience takes in $7.5M to give retailers way to take on Amazon

Being in control of customer data is one of the ways retailers, like Amazon, Spotify and Netflix, are able to tap into consumer behavior and create customized experiences whenever a user logs in.

Those are some of the reasons Amazon, in particular, is poised to grab 50% of the U.S. e-commerce market this year, and why Sydney-based Particular Audience wants to break down the data silos going on within e-commerce to give any retailer a chance to gather similar data on their customers to personalize experiences.

Particular Audience provides product discovery tools for retailers that are powered by artificial intelligence and machine learning. In fact, the company wants to go further and offer personalization based on anonymity and without compromising personal data, CEO James Taylor told TechCrunch.

Taylor launched Particular Audience in 2019 after taking a few years to work out the technology. The global pandemic threw a wrench in some plans, with Taylor and a handful of executives taking a pay cut so as to not have to let any employees go. However, with the e-commerce industry growing over the past 18 months, the company was able to get back to where it was, he said.

The company has now amassed a real-time data set on product search, sales, pricing and availability from across the internet, from its browser plugin SimilarInc.com, which gathers the data from its online shopper community without tracking or cookies. Retailers can analyze that data to tell them, for example, how better to promote high-margin or overstocked items.

“Data IP is the current frontier,” he said. “It is data that is going to improve predictions to personalize inventory and reduce waste while also helping with supply chain management. The goal is to create website data visibility that would benefit all of the other merchants other than Amazon.”

To continue developing its technology, the company secured $7.5 million in Series A funding in a round led by Equity Venture Partners and that included existing investors Carthona Capital and a group of angel investors. This latest investment gives the company $9.5 million in total funding raised to date, which includes $1.3 million in seed funding raised in 2019.

Particular Audience

How Particular Audience works on a website. Image Credits: Particular Audience

Particular Audience is working with approximately 100 websites currently. In addition to Sydney, the company also has an office in London. Europe makes up more than 50% of Particular Audience’s global revenue, and the new funding enables the company to open a new office in Amsterdam next year.

North America is also a growth territory for the company, where it has already opened an office in Vancouver, with plans to open a New York office in 2022 as well. The company has 60 employees, up from 20 last year, and Taylor expects to add 40 more in the next year, including rounding out its leadership team with a head of product.

The funding will also be invested into building out an API-first product suite and retail media platform so retailers can gain a revenue stream from cost per clicks. Meanwhile, the company saw 460% year over year in revenue growth and expects to hit $100 million in gross merchandise value through its products this year, up 19 times in the last two years, Taylor said.

As part of the investment, Daniel Szekely, partner at Equity Venture Partners, will join the board.

“Personalization of the internet is a critical frontier for e-commerce retailers, and in a world of growing online shopping options and diminishing consumer attention spans, delivering an experience that meets individual consumers’ needs is absolutely critical,” he said in a written statement. “James and his outstanding team have tackled this issue in a novel way, and the important need for their solution has been made obvious as the business gets pulled into multiple geographies. We’re thrilled to back them in their Series A and know this is just the beginning of the journey.”

 

Thought Machine closes $200M for its cloud native banking SaaS and becomes a unicorn

Thought Machine, a 2014 (Xoogler) founded startup that sells cloud-based b2b banking services, has closed a $200 million Series C round and announced that it’s achieved unicorn status (aka, passing a $1BN valuation).

The new funding follows an $83M Series B round last year — when it described its market cap as “increasing healthily”.

The Series C is led by New York- and San Francisco-based Nyca Partners, with other new investors including ING Ventures, JPMorgan Chase Strategic Investments and Standard Chartered Ventures — the investment arms of some of its global tier one banking clients.

Lloyds Banking Group, which led Thought Machine’s Series A, has also participated in the latest raise.

Other existing investors also returning for the Series C are British Patient Capital, Eurazeo, SEB, Molten Ventures (formerly Draper Esprit), Backed, and IQ Capital.

Thought Machine describes itself as a “cloud native core banking technology” firm — and is selling cloud-basked banking infrastructure to old and new banks as they look to offer their customers services via the cloud, moving away from mainframe, legacy banking tech (in the case of old school banks) or offering cloud-based services from the get-go in the case of challenger banks and fintech startups.

The startup’s Series C follows a period of accelerated growth, with Thought Machine noting it’s added 200+ employees since 2020 and relocating into a larger London HQ to accommodate its expanded headcount.

The new funding will be used to continue development and expansion of its flagship SaaS product Vault — a cloud-native platform which its b2b customers rely on to provide a range of retail banking services, from checking accounts, savings accounts, loans and credit cards to mortgages.

Vault is built around APIs, using a microservice architecture and a system of Smart Contracts — hosted on a cloud service of the customer’s choosing (the likes of Google Cloud Platform, Microsoft Azure, Amazon Web Services and IBM Cloud are supported) — with touted benefits including increased flexible and more scalable infrastructure, as well as reduced running costs vs maintaining legacy technology.

Commenting on the funding in a statement, Paul Taylor, CEO and founder of Thought Machine said: “We are delighted to have earned the support of our new and existing investors as we continue to move the world’s leading banks into the cloud. We set out to eradicate legacy technology from the industry and ensure that all banks deployed on Vault can succeed and deliver on their ambitions. These new funds will accelerate the delivery of Vault into banks around the world who wish to implement their future vision of financial services.”

In another supporting statement, Hans Morris, managing partner at Nyca Partners, added: “Thought Machine is the leading technology among the new generation of cloud native core platforms, and as a result it has become the top choice for tier one banks looking to upgrade their core architecture. These institutions tell us that Thought Machine’s engineering approach is unrivalled; Vault is highly configurable, flexible, scalable, and specifically designed for the complex environment and requirements of tier one banks. Investing in Thought Machine is an investment in the future of banking and we are very energized to be working with them as they build a new standard for core banking technology.”

Jefa raises $2 million for its challenger bank for women in LATAM

Fintech startup Jefa has raised a $2 million seed round to build a challenger bank with a product specifically designed for women living in Latin America and the Caribbean. The company has managed to attract 115,000 women on its waitlist and participated in TechCrunch’s Startup Battlefield last year.

Investors in Jefa include The Venture Collective, DST Global, Foundation Capital, Amador Holdings, The Fund, FINCA Ventures, Rarebreed VC, Siesta Ventures, Springbank Collective, Bridge Partners, Hustle Fund, Foundation Capital and Latitude. Several business angels also participated, such as Daniel Bilbao, JP Duque, Ricardo Shaefar, Jean-Paul Orillac and Allan Arguello.

In addition to this founding round, the startup has also signed a deal with Visa. It’s a multi-year strategic partnership agreement. Jefa will be able to take advantage of Visa’s resources and products to create its payment products and more.

“Visa believes in empowering women,” senior director of fintech partnerships for Visa Latin America and the Caribbean Sonia Michaca said in a statement. “Financial and digital inclusion transform economies. Women, who control the lion-share of everyday household spending, should be at the core of this transformation, yet women are vastly underserved by traditional banks. We are thrilled to be partnering with Jefa, a women-led platform in Latin America and the Caribbean, and one which explicitly serves women’s financial needs in the region.”

The team behind Jefa believes that banks have neglected women for too long. Even challenger banks have mostly been designed for male customers in the first place. It doesn’t necessarily mean that women can’t open an account with a challenger bank. But some product decisions are unfriendly to women.

Back when Jefa founder and CEO Emma Smith pitched at TechCrunch Disrupt, she listed some of the reasons why most people in Latin America who don’t currently have a bank account are women. For instance, minimum balance requirements are hostile to women who statically earn lean than men.

When Jefa launches, the company will let you open a bank account for free from a mobile app. You don’t have to visit a bank branch. A few days later, you’ll receive a Visa debit card. There will be a built-in savings feature and a reward program.

The startup plans to roll out its product in Mexico first, then Colombia and Central America. Jefa isn’t the first challenger bank trying to branch out from the unified banking offering. There are several startups trying to create vertical banks, such as banks for kids (Greenlight or Step) or banks for climate change-focused customers (Aspiration). And there’s now Jefa creating a vertical bank for women.

Flowrite is an AI writing productivity tool that wants to help you hit inbox zero

When TechCrunch asks Flowrite if it’s ‘Grammarly on steroids’, CEO and co-founder Aaro Isosaari laughs, saying that’s the comment they always get for the AI writing productivity tool they’ve been building since late summer 2020 — drawing on early access to OpenAI’s GPT-3 API, and attracting a wait-list of some 30,000 email-efficiency seeking prosumers keen to get their typing fingers on its beta.

The quest for ‘Inbox zero’ — via lightning speed email composition — could be rather easier with this AI-powered sidekick. At least if you’re the sort of person who fires off a bunch of fairly formulaic emails each and every day.

What does Flowrite do exactly? It turns a few instructions (yes you do have to type these) into a fully fledged, nice to read email. So where Grammarly helps improve a piece of (existing) writing, by suggesting tweaks to grammar/syntex/style etc, Flowrite helps you write the thing in the first place, so long as the thing is email or some other professional messaging type comms.

Email is what Flowrite’s AI models have been trained on, per Isosaari. And frustration with how much time he was having to spend composing emails was the inspiration for the startup. So its focus is firmly professional comms — rather than broader use cases for AI-generated words, such as copy writing etc (which GPT-3 is also being used for).

“In my previous work I knew that this is a problem that I had — I’d spend several hours every day communicating with different stakeholders on email and other messaging platforms,” he says. “We also knew that there are a lot more people — it’s not just our problem as co-founders; there’s millions of people who could benefit from communicating more effectively and efficiently in their day to day work.”

Here’s how Flowrite works: The user provides a set of basic (bullet pointed) instructions covering the key points of what they want to say and the AI-powered tool does the rest — generating a full email text that conveys the required info in a way that, well, flows.

Automation is thus doing the wordy leg work of filling in courteous greetings/sign-offs and figuring out appropriate phrasing to convey the sought for tone and impression.

Compared to email templates (an existing tech for email productivity), Isosaari says the advantage is the AI-powered tool adapts to context and “isn’t static”.

One obvious but important point is that the user does also of course get the chance to check over — and edit/tweak — the AI’s suggested text before hitting send so the human remains firmly the agent in the loop.

Isosaari gives an example use-case of a sales email where the instructions might boil down to typing something like “sounds amazing • let’s talk more in a call • next week, Monday PM” — in order to get a Flowrite-generated email that includes the essential details plus “all the greetings” and “added formalities” the extended email format requires.

(Sidenote: Flowrite’s initial pitch to TechCrunch was via email — but did not apparently involve the use of its tool. At least the email did not include a disclosure that: “This email is Flowrittenas a later missive from Isosaari (to send the PR as requested) did. Which, perhaps, gives an indication of the sorts of email comms you might want to speed-write (with AI) and those you maybe want to dedicated more of your human brain to composing (or at least look like you wrote it all yourself).)

“We’ve built an AI powered writing tools that helps professionals of all kinds to write and communicate faster as part of their daily workflow,” Isosaari tells TechCrunch. “We know that there’s millions of people who spend hours every day on emails and messages in a professional context — so communicating with different stakeholders, internally and externally, takes a lot of work, daily working hours. And Flowrite helps people to do that faster.”

The AI tool could also be a great help to people who find writing difficult for specific reasons such as dyslexia or because English is not their native language, he further suggests.

One obvious limitation is that Flowrite is only able to turn out emails in English. And while GPT-3 does have models for some other common languages, Isosaari suggests the quality of its ‘human-like’ responses there “might not be as good” as they are in English — hence he says they’ll remain focused there for now.

They’re using GPT-3’s language model as the core AI tech — but have also, recently, begun to use their own accumulated data to “fine tune it”, with Isosaari noting: “Already we’ve built a lot of things on top of GPT-3 so we’re building a wrapper on it.”

The startup’s promise for the email productivity tool is also that the AI will adapt to the user’s writing style — so that faster emails won’t also mean curtly out of character emails (which could lead to fresh emails asking if you’re okay?).

Isosaari says the tech is not not mining your entire email history to do this — but rather only looks at the directly preceding context in an email thread (if there is one).

Flowrite does also currently rely on cloud processing, since it’s calling GPT-3’s tech, but he says they want to move to on-device processing, which would obviously help address any confidentiality concerns, when we ask about that.

For now the tool is browser-based and integrates with web email. Currently it only works for Chrome and Gmail but Isosaari confirms the team’s plan is to expand integrations — such as for messaging platforms like Slack (but still initially at least, only for the web app version).

While the tech tool is still in a closed beta, the startup has just announced a $4.4 million seed raise.

The seed is led by Project A, along with Moonfire Ventures and angel investors Ilkka Paananen (CEO & Co-founder of Supercell), Sven Ahrens (director of global growth at Spotify), and Johannes Schildt (CEO & Co-Founder of Kry). Existing investors Lifeline Ventures and Seedcamp also joined in the round.

What types of emails and professionals is Flowrite best suited for? On the content side, Isosaari says it’s “typically replies where there’s some kind of existing context that you are responding to”.

“It’s able to understand the situation really well and adapt to it in a really natural way,” he suggests. “And also for outreaches — things like pitches and proposals… What it doesn’t work that well for is if you want to write something that is really, really complex — because then in order to do that you would need to have all that information in the instructions. And then obviously if you need to spend a lot of time writing the instruction that could be even close to the final email — and there’s not much value that Flowrite can provide at that point.”

It’s also obviously not going to offer great utility if you’re firing off “really, really short emails” — since if you’re just answering with a couple of words it’s likely quicker to type that yourself.

In terms of who’s likely to use Flowrite, Isosaari says they’ve had a broad range of early adopters seeking to tap into the beta. But he describes the main user profile as “executives, managers, entrepreneurs who communicate a lot on a daily basis” — aka, people who “need to give a good impression about themselves and communicate very thoughtfully”.

On the business model front, Flowrite’s initial focus is on prosumers/individual users — although Isosaari says it may look to expand out from there, perhaps first supporting teams. And he also says he could envisage some kind of SaaS offering for businesses down the line.

Currently, it’s not charging for the beta — but does plan to add pricing early next year.

“Once we move out of the beta then we’ll be starting to monetize,” he adds, suggesting that a full launch out of beta (so no more waitlist) could happen by mid 2022. 

The seed funding will primarily be spent on growing the team, according to Isosaari, especially on the engineering side — with the main goal at this early stage being to tool up around AI and core product.

Expanding features is another priority — including adding a “horizontal way” of using the tool across the browser, such as with different email clients.

Perfeggt brings in first capital to shell out plant-based egg alternative

Sales of plant-based alternatives, like dairy and meat, are surging in the global market, and Perfeggt wants to do the same for the egg.

The Berlin-based foodtech company is poised to debut its chicken-less egg product in the first quarter of 2022 in Germany, Switzerland and Austria. Today, the company announced it raised $2.8 million in its first funding round to aid the initial launch and then expand further in Europe later in 2022.

Backers in the round include EVIG Group, Stray Dog Capital, E2JDJ, Tet Ventures, Good Seed Ventures, Sustainable Food Ventures and Shio Capital.

Perfeggt CEO Tanja Bogumil co-founded the company, which is part of Lovely Day Foods GmbH, earlier this year with Gary Lin, EVIG’s founder and CEO, and Bernd Becker, who was a long-time head of R&D for Rügenwalder Mühle, a German vegetarian and vegan meat maker.

Bernd Becker, Gary Lin, Tanja Bogumil v.l.n.r. Perfeggt

Perfeggt co-founders, from left, Bernd Becker, Gary Lin and Tanja Bogumil. Image Credits: Patrycia Lukaszewicz

“I really believe we deserve better food,” Bogumil told TechCrunch. “My mother’s family is from an agriculture background in small-scale farming, so I have always been conscious of where the food we eat comes from. I turned vegetarian at 12 when my uncle brought me to a slaughterhouse to show me that the sausages I ate were not made the right way. I didn’t fully get what was happening there, but it didn’t feel right or humane.”

Unlike dairy, where there is already sustainability, she believes the egg is still largely untapped. Sure, there are companies making similar plant-based alternatives, like Simply Eggless and Just Eat, which raised $200 million earlier in the summer, but worldwide, more than 1.3 trillion eggs are produced annually, meaning there is room to grow, and applications are versatile, Bogumil said.

Perfeggt’s first plant-based egg product is a protein-rich liquid alternative made from fava beans. It can be prepared as a scrambled egg or omelet in the pan. The company will initially be launching its product with food service organizations.

As with all food, taste is king, and with this product, the co-founders worked to create similar mouth feel, sensory, flavors and textures — all elements that Bogumil says are needed to get people to switch to a plant-based equivalent.

“This is something we spent time on figuring out,” she added. “Our product is built around the fava bean, which is very suited to mimic functionality required for these applications.”

To do this, Perfeggt’s R&D site in Emsland, Germany works closely with Wageningen University & Research, known for its life sciences research, to test plant-based protein sources and their combinations that come closest to the nutritional and functional properties of animal products.

The new funding enables the company to build out its team at its headquarters and R&D facility. The company is currently hiring for food scientists, marketing and R&D.

Meanwhile, Bogumil believes that more companies coming into the egg alternative space will help Perfeggt’s mission to shift people to plant-based foods.

“This is not a one-winner-takes-all market,” she said. “We have never in history seen alternative proteins be so close to the mainstream market. Clearly that is reflected in the capital markets, and not just for developing niche markets, but for the future of food.”

“We are incredibly impressed by the team’s rapid technological progress in developing next-generation alternative proteins and finding solutions that improve human, planetary and animal health,” Stephanie Dorsey, founding partner at E2JDJ, added in a written statement. “The egg market is a massive opportunity and this is just the beginning.”

Pyxo wants to build the biggest network of reusable food containers

Meet Pyxo, a French startup that has been thinking a lot about single-use plastic food packaging for the past three years. The company wants to offer a service that makes it as easy and as cost-efficient to use reusable food storage containers at scale.

The idea behind Pyxo comes from a fair at the Tuileries gardens in Paris. Right next to the food stands, waste bins were overflowing with soda cups, clamshell burger containers and various single-use food packaging.

At first, the company started working with French corporate catering service company Sodexo. They worked with them to replace plastic cups and make everything reusable. Due to the coronavirus pandemic and the switch to remote work, Pyxo started looking for other potential clients.

They have started working with Foodles, Popchef and other foodtech companies that offer connected fridges with packed lunches and snacks.

But Pyxo’s biggest market opportunity comes from a regulatory change. In July 2020, France’s parliament passed an anti-waste law with some drastic changes. Restaurants have to switch to reusable food containers by January 2023.

It means that fast food restaurant chains won’t be able to use paper-and-plastic cups, disposable clamshell boxes, etc. Pyxo is already working with an unnamed fast food chain in France to help them switch to reusable packaging.

The startup has created a sort of marketplace of reusable food containers that connect every company in the industry. When a fast food restaurant buy a batch of containers, they all come with a QR code or NFC chip to track them everywhere.

Restaurants can outsource cleaning to specialized companies who can give you a batch of clean containers when they come and pick up the containers of the day. These contracting companies also scan containers, cups and whatever they are cleaning.

In addition to that, customers could also order take-out food and bring it home in reusable containers. They could use an app to find the nearest collection point — it doesn’t necessarily have to be the restaurant where you originally ordered your food. Pyxo is thinking about gamification and small deposits to incentivize returns.

“Our vision is that it’s an infrastructure industry,” co-founder and CEO Benjamin Peri told me. Pyxo thinks it is building a network that works just like the electrical grid. Down the road, the startup believes there will be a dense network of restaurants, collection points and cleaning centers.

Fast food chains could help kickstart the industry because a single client has a ton of restaurants around the country. They could incentivize other actors to participate in the network with Pyxo acting as the network operator.

The company is just getting started as there are only a few restaurants actively using Pyxo right now. But the startup has raised a $7.9 million (€7 million) funding round from Eurazeo, FiveSeasons Ventures and others.

On January 1st, 2023, the startup expects to work with 2,000 points of sales in the restaurant industry alone. Pyxo still expects to work with foodtech companies and corporate catering services, but they would represent a smaller part of the business. With today’s funding round, the company expects to recruit 70 additional employees.

Image Credits: Pyxo

How Pilot convinced Index Ventures to think long-term about margins

On a recently recorded (and soon-to-be published) episode of the Found podcast, an entrepreneur told my co-host and me that he sees a broad swath of the venture capitalists out there as money managers, more focused on short-term gains and returns than long-term revolutionary technology.

Whether you agree or not, it’s hard to ignore the fact that the multipliers in Silicon Valley and the growth of software businesses have changed the way we think about a startup’s timeline.

“The pressure from [Index] caused us to work a little harder and be a little bit more precise in our instrumentation to be able to prove that the long-term trajectory would achieve certain milestones that would work for everybody.” Jessica McKellar

Pilot, a bookkeeping software service that has raised more than $160 million since inception, is not necessarily a stranger to the shorter-term desires of investors. Index Ventures partner Mark Goldberg, who led the Series A and Series B rounds for the startup, would be the first to tell you that the board and the founders had some early disagreements about how the company should operate.

Obviously, it wasn’t enough to stop him or Index from doubling down on the business.

We talked about all this and more on TechCrunch Live.

Doubling down

“It was pretty terrifying,” said Goldberg. “In my gut, I thought, ‘Wow, we better get this right.'”

A few things clicked into place for Goldberg to want to keep investing in Pilot. The first was that it was a real category-creation opportunity, in that bookkeeping was a $100 billion industry that was largely fragmented.

The second was the customer love for the product.

“We started to hear customers proactively calling us from within the Index portfolio saying that they hated doing bookkeeping and back office functions, and now they don’t have to think about it. They said things like ‘Whoever this Pilot team is, they’re doing some wizardry so I can just shut my brain off to the part of the business I didn’t enjoy doing.'”

The third was the conviction and dedication of the team to empathizing with and understanding their customers.

He recalled a time early on when the team was no more than 10 people, most of them engineers, when he visited the office on a weekend. They were all wearing green visors, doing bookkeeping for their customers.

“They weren’t doing it because they needed to for customer support, but because they really wanted to empathize with the customers for the product that they were building,” said Goldberg. “That’s the sort of sweat equity and market recognition that told me, if this continues to grow, there really is no ceiling on what this business could become.”

While that sort of dedication to understanding the user was attractive, it was not without its costs.

Counterintuitive convictions

“Pilot is a technology company wrapped in this lovely human layer of high-touch support for its customers, which is a bit counter-intuitive in Silicon Valley, where most companies don’t want humans in the loop,” said Goldberg. “That’s what I know and understand, and we had a view that this sort of tech-enabled service model could be very valuable, but we wanted to make sure that they could create a financial profile that had gross margins that reflected that of a software company.”

In its simplest form, Jessica McKellar and her co-founders felt very strongly that they wanted to focus on the customer fully and deliver great customer service from the very beginning. In a business where you are onboarding customers by ingesting the entirety of their financials, that can be costly.