TaxDown banks ~$3M for tech that helps people get their taxes done

Madrid-based TaxDown, which automates income tax filing by calculating regional deductions due to users so they don’t have to navigate complex tax rules themselves, has raised €2.4 million (~$3M) in seed funding.

US-based FJ Labs has joined TaxDown’s investment board as it closes the seed round. It says all its previous investors participated in the round, including James Argalas (Presidio Union); Abac Nest, Abac’s venture capital business; Baldomero Falcones, the former Chairman at Mastercard; and the founders of Jobandtalent, Juan Urdiales and Felipe Navío (another Madrid-based startup).

For the past three years TaxDown been offering a service in Spain but is now eyeing international expansion, as well as further growth in its home market.

Last year, it says it managed more than €29M in taxes for users — delivering savings of €4M+ to users.

Its target is to hit 500,000 users in Spain this year. While international expansion is planned for the second half of 2021, with TaxDown saying it’s focused on other European and Latin American markets.

“From the beginning, our ambition has been to help people fill in their taxes all over the world. That is why we developed our proprietary software/tax language that allows a tax expert with no coding capabilities to translate the tax law into calculation and logic that can be interpreted by our backend seamlessly,” says Enrique García, CEO and co-founder. “This tax language allowed us to launch in Spain in 4 months with only one tax consultant. We are confident that we can launch a new country in only 6 months.”

“The tax filing process is far from being simple,” he goes on, explaining how its tech simplifies income tax filing in Spain. “Currently, when using the Spanish Tax Agency tax-filling tool, taxpayers need to manually apply deductions on their tax forms. The problem is, with national regional deductions being different in each region in Spain, taxpayers often do not even know they’re entitled to those deductions. Thus, by not applying them to their tax form, they lose money. What TaxDown does is leverage the advanced Spanish Tax Agency technology, which offers an API to request the financial data related to a taxpayer — always with prior authorization from the user — with 2.000+ datapoints.

“Once we have that, our algorithm ‘RITA’ is capable of understanding the user’s personal and financial data, select the optimum questions that the user needs to answer — an average of 9 over a database of 3.000+ – and precisely calculate the tax return, with no errors.”

“Technology is the heart of TaxDown,” he adds. “Besides our algorithm RITA that has been trained with over 40.000+ tax returns, today we also use AI to help our ‘taxers’ with tips on how to lower future tax bills, and we have started working on live income tax simulation for our users throughout the entire year.”

García says TaxDown calculated more than 42,000 tax returns last year with a team of just two in-house tax experts — thanks to proprietary internal tools which allow them to handle this scale (by being “80x more efficient than the Spanish average”, as he puts it). He adds that further efficiency gains are expected.

“We have developed a machine-learning tool that flags the tax returns that need to be reviewed before filing based on historical data. Thus, we continuously increase the percentage of tax returns that are automatically submitted with no manual intervention,” he tells TechCrunch, adding: “Thanks to this feature, we expect to improve our efficiency at least 5x versus last year.”

According to García, TaxDown has never had any filings rejected for inaccuracies because he says its algorithms continually run tests and validate the information with the authorities. “Furthermore, our technology can flag errors in real time in case that there is a discrepancy, so our tax experts can manually check the tax return form if needed,” he adds.

Its business model — currently — is a sort of twist on freemium, in that it will only charge users if the income tax savings it calculates for them exceed €35.

García says that so far an average of three out of 10 users see financial savings from using its tool — but he suggests it’s not only savings that motivate users; he says they also want reassurance that they are taking “the best approach with their taxes: doing them effortlessly, correctly, with all the guarantees, tapping for experts’ live help at any time, ensuring the best result they can get, and of course knowing that we have their backs in case of an audit”.

Given that wider relationship it’s building with users, TaxDown sees potential to evolve its business model by expanding to offer additional fintech services, such as financial advice, in the future.

“Our vision goes far beyond income tax return preparation, we believe that tax data is becoming one of the most valuable data assets for people (take Trump’s tax returns for example), and we want to assess our ’taxers’ based on the best and more qualitative information that we can get,” says García. “Therefore, in the future we want to be a trusted financial advisor not just for taxes, but for personal finances as well. We believe we are well positioned to be an intermediary between our users and financial institutions.”

 

Hi Marley raises $25M to fund its AI-powered communication platform for the insurance industry

If you’ve ever had to file a claim with your insurance company, you know that it’s not exactly fun. Often, you’re on hold indefinitely waiting to speak to a live person. And if you’ve ever had to file an auto or home insurance claim, you know that all the back and forth with your carrier and the various vendors can take up so much time.

Hi Marley is a Boston startup that has set out to modernize communications in the insurance space by giving carriers a way to “seamlessly” communicate with their policyholders via text. The company just closed on a $25 million Series B funding round to help scale its SMS platform.

Hi Marley also includes other vendors in that communicatiofns channel, such as car repair or rental companies. The goal is to keep policyholders happier and less likely to churn to another carrier, in addition to helping carriers resolve claims faster.

On the back end, Hi Marley is a platform of apps, APIs and a layer of intelligence that integrates with other core systems such as Guidewire and Duck Creek “to deliver critical insights” to the carriers, according to CEO and co-founder Mike Greene. Per its website, Hi Marley’s messaging solution aims to streamline communication around claims, underwriting and policyholder service interactions “while simultaneously connecting everyone who touches that insurance experience into a singular, real-time conversation.”

Demand is there, and no doubt the COVID-19 pandemic forcing more people to go digital has led to still more consumer demand for new ways to communicate. Last year, the number of carriers using Hi Marley’s platform doubled, and the company saw a 4x increase in its user base, Greene said. Currently, the startup has over 40 customers live in production — including American Family, MetLife, Auto-Owners, Erie and MAPFRE.

“Unlike horizontal chat solutions, we are tackling the entire communication layer across the insurance enterprise for our carriers and their ecosystem partners,” Greene told TechCrunch.

Greene is no stranger to the space, having worked in the insurance sector for years. He previously co-founded and led Futurity Group, which was acquired by AON, a software and services company focused on monitoring and improving performance in P&C insurance.

Emergence Capital led the Series B round, which brings Hi Marley’s total raised since its 2017 inception to $41.7 million. Existing backers Underscore, True Ventures, Bain Capital Ventures, and Greenspring also participated in the financing, along with additional investors including Brewer Lane.

Emergence Capital Founder & General Partner Gordon Ritter — who took a seat on Hi Marley’s board — said his firm has been focused on finding the next iconic industry cloud company within the vertical for “quite some time.” 

“In the same way Veeva [a company Ritter chaired to a successful IPO in 2013] expanded from CRM to additional software solutions that power the pharma industry, we continue to be bullish on startups building vertically-focused solutions that can power an entire industry,” Ritter said.

Historically, he added, insurance has been viewed as a necessary evil, a purchase made purely for the sake of safety and security. And in today’s environment, carriers using “old” communication strategies will likely see a negative impact on performance, Ritter believes.

“Most of us can likely agree that our experiences dealing with insurers during times of need have been less than ideal, if not unpleasant altogether,” said Ritter, who actually has family with roots in the insurance industry. “But Mike wants to reverse the indifference or negative reputation; he is on a mission to make insurance lovable A new communication fabric between carriers and their ecosystem to benefit end customers is needed.”

Looking ahead, Hi Marley plans to use its new capital to create new features, ensure the platform scales across the enterprise and (naturally) do some hiring.

BlockFi lands a $350M Series D at a $3B valuation for its fast-growing crypto-lending platform

If there were any doubt about a cryptocurrency boom, we need look no further than at the explosion of growth of certain companies in the space.

One such company is BlockFi, which today announced it has closed on a massive $350 million Series D funding that values it at $3 billion. While this news in and of itself is certainly attention-getting, it’s even more impressive when you consider the startup just raised a $50 million Series C last August at a $450 million valuation. The latest financing brings its total equity raised since inception to about $450 million, with the company raising $100 million across its seed and Series C rounds.

Zac Prince — who comes from a background in consumer lending —  founded BlockFi with Flori Marquez in 2017. The Jersey City, New Jersey-based startup raised $1.6 million in a seed round of funding that closed in 2018 and was led by ConsenSys Ventures and included participation from SoFi.  

Prince describes BlockFi as a financial services company for crypto market investors that offers a retail and institutional-facing suite of products. On the retail side of its platform, people can use its mobile app to earn a yield on their crypto holdings (6% on Bitcoin, 8.6% on stablecoins), buy and sell crypto and get low-cost loans secured by the value of their crypto portfolio “so they can get liquidity without selling,” he said. Specifically, clients can buy and sell digital assets (from Bitcoin, Ethereum and Link to Litecoin, PaxG and multiple stablecoins) directly on BlockFi.

The startup is also a lender and provider of trade execution services to institutions participating in digital asset markets. 

It’s a model that seems to be working in a big way. Since the end of 2019, BlockFi has seen its client base grow from 10,000 to more than 225,000. Today, BlockFi has 265,000 funded retail clients and over 200 institutional clients.

And it’s lent over $10 billion to its retail, corporate and institutional clients.

Over the past year, BlockFi has also accomplished the following:

  • Increased the number of assets on its platform to $15 billion, compared to $1 billion last March — with a 0% loss rate across its lending portfolio since inception.
  • Bumped its monthly revenue to over $50 million, up from $1.5 million a year prior.
  • Boosted its headcount to about 530 people, compared to 100 last March.

“In less than six months since we completed our Series C, Bitcoin and other digital assets have assumed a central role in many investors’ portfolios and in broader financial markets,” Prince said. “Our conviction that digital assets are the future of finance has been vindicated by our client base, which grew 10 times year over year in 2020 and has more than doubled since the end of 2020.”

New investor Bain Capital Ventures, partners of DST Global, Pomp Investments and Tiger Global co-led the Series D, which included participation from a slew of other firms including existing backer Valar Ventures, Breyer Capital, Susquehanna Government Products, Jump Capital and Paradigm, among many others. BlockFi employees who have been employed for more than one year have the opportunity to receive liquidity on a portion of their equity via a secondary tender offer as part of the financing round.  

BlockFi believes that investor enthusiasm for the Series D round reflects both the company’s strong business growth, as well as “broader conviction in cryptocurrencies as an asset class.” 

“Individual investors, institutional asset managers and corporate treasury departments are all exploring avenues to invest in cryptocurrencies,” the company said.

“Our goal for BlockFi has always been for it to facilitate cryptocurrencies going mainstream – and each day provides more evidence that is exactly what is occurring,” said Marquez, who serves as the company’s SVP of operations.

Bain Capital Ventures Partner Stefan Cohen agrees. He believes there are currently limited banking services available for crypto holders, which puts BlockFi in an opportune position.

“Bitcoin has already eclipsed $1 trillion in market cap and is likely headed higher to fulfill its store of value promise. As wealth accumulates to BTC holders, most will look for ways to earn yield or borrow against their holdings for more traditional asset purchases such as homes, cars and education,” he wrote via email. “BlockFi stands alone as the leader in bringing simple, secure, everyday financial services to cryptocurrency holders.”

The startup’s exponential growth over the past year proves “there was clearly a huge need for BlockFi’s services,” Cohen said.

“Their vision was to build an easy-to-use, trusted platform to bring cryptocurrency to the mainstream, and they’ve truly succeeded,” he added.

Meanwhile, Cohen said Bain Capital has had a long-term thesis on Bitcoin becoming a store of value and has actively invested in “picks-and-shovels businesses” that enable what is now a $1 trillion-plus market. 

“Trusted financial services are a critical pillar of the space, and we view it as a highly strategic component of the market,” he added.

Looking ahead, the startup has plans to launch in the second quarter a Bitcoin Rewards Credit Card, which will give BlockFi clients the ability to earn Bitcoin cash back on every transaction. It plans to use the new capital to continue growing its product suite, expand into new global markets and for strategic acquisitions. The company also plans to double its headcount by year’s end, according to Prince.

BlockFi already has a global presence and retail clients in over 100 countries. Last year, it opened institutional client service offices in London and Singapore.  This year, the startup is looking to add regional support in Europe, APAC and LatAm for its retail clients. 

Over the past week, BlockFi was making headlines for other reasons. The company was the victim of an “unusual assault” on March 7 when an attacker spammed the platform with fake sign-ups and abusive language.

To that end, the company acknowledges that it became aware that an unauthorized third party began attempting bulk sign-ups on its platform on March 7.

“We do not know the origin of the email addresses used for these ‘sign-ups’  but they did not come from us and they were not the emails of BlockFi clients,” the company told TechCrunch. “In general, we would characterize the event as vulgar spam’ and the total number of valid emails affected was less than 1,000.”

The company maintains that no data from BlockFi was accessed and its data was not compromised.  

“Our clients’ funds and data were safeguarded throughout the incident,” the company added. “Since then, our engineering and security teams have taken steps to prevent events like this from happening in the future. In addition, we reached out directly to all of the valid email recipients to apologize for the incident.”

Professor Scott Galloway just raised $30 million for an online school that upskills managers fast

Scott Galloway, the New York University professor, author, and tech entrepreneur, is taking the wraps off a $30 million Series A round for his newest company, Section4, a platform for business “upskilling” that has now raised $37 million altogether.

The company is premised on the belief that millions of workers need help to stay competitive and employable, yet not all have access to, or interest in, costly graduate school programs. In fact, Section4 thinks more affordable “sprints” — or two- to three-long week courses taught by prominent professors from top schools that can also be mind expanding — is the way to go.

Whether that thesis proves out remains to be seen, but Section4 — whose new round was led by General Catalyst, with participation from Learn Capital and GSV Ventures — says early indications are good and that it already has 10,000 alums from dozens of countries.

We talked with Galloway yesterday about who, specifically, Section4 aims to serve, what percentage of its students is outside the U.S., and how universities feel about their professors participating in a startup that could eat into their own revenue. Excerpts from that chat follow, edited lightly for length.

TC: Why start this company?

SG: Graduate education was transformative in my life, and I enjoy teaching, and we thought there was an opportunity — because of the pandemic and changing behaviors — to start an online ed concept that tried to deliver 50% to 70% of the value of an elite MBA elective at 10% of the cost and 1% of the friction.

TC: Is this competition then for shorter executive MBA programs?

SG: I would say not even exec MBAs, because part-time MBAs  get a certification that is still incredibly valuable in the marketplace. And we don’t offer that. It’s somewhat competitive [instead] with executive education, the bring-50-people-from-Pfizer-in-for-two-days-and-charge-a-bunch-of-money-and- have-them-eat-lunch-together-on-campus-in-Palo Alto-and-throw-some-professors-at-them-for-some learning. I would argue that we’re competitive with that. It’s incredibly expensive, both financially but just trying to gather 40 or 50 executives.

Also, quite frankly, it’s a little bit exclusionary because a company like Verizon can only send 100 people to Wharton’s exec ed, and we’re hoping that we can run thousands of people from these companies through our programs.

TC: So these are companies that are your customers, not individuals seeking betterment for themselves.

SG: It’s both. The funnel is: organically people sign up. And the idea is that the course costs $700, $800 versus $7,000, which is what it costs to take an elective at an elite business school right now. So for example, 120 people have organically, individually signed up on their own who work at Google. Then our expectation is that over time, these companies will approach us and say, ‘We would like to buy a certain number of seats or a membership that covers 100 or 1,000 of our employees.’

TC: You say Section4 has already taught 10,000 students; when did you start offering your programming?

SG: In March of last year. Our first course had 300 people; the course I just wrapped up had 1,500, so it scales pretty well.

What’s different about it is our completion rates, which are 70%-plus. The curse of online ed is that completion rates are really low because video doesn’t capture people or create an intensity, and we try to be a mix of synchronous and asynchronous, so [there is] project work and teams, live streams with the professor, and live one-on-one sessions with a TA. It’s meant to hold people accountable and engage them.

TC: You’re promising students access to top professors like yourself. How do the schools for which they teach feel about this? They’re perhaps helping build the brand of the school, but are there also competitive concerns?

SG: For some yes, for some no. Some universities have asked their faculty to take a pause and not engage in any type of relationship like this, but some universities embrace it. Several students who have taken our course have sent us messages saying they are now going to apply to a full-time MBA program because they see the value and they want the certification. So I’m not sure it’s purely complimentary, but it’s also not purely competitive.

TC: What is your economic relationship with these professors?

SG: I’m not going to disclose the exact economic agreement. What I will say is that we see attracting these superstars and retaining them as key to our value proposition. And so our aim is that this is the greatest compensation per podium hour that they’re going to receive. If you have a course with 800 people, and they’re each paying $800, that’s $640,000. As you can imagine, there is a lot of gross margin capital that can be deployed or can be paid to the professor.

TC: Are most of the students gravitating to this platform coming from inside or outside of the tech industry?

SG: Fifty of the Fortune 100 [companies] have people who’ve taken our class so far, and it’s all walks. It’s pharma, it’s big AG, it’s big tech, it’s big oil. I would say we probably overindex in tech because these organizations are generous in terms of giving employees tuition remission, and I think, to a certain extent, my brand is bigger in the tech community and initially, that was kind of the awareness we had.

The other big cohort is middle-market companies, 10- to 500-people companies where a director there either didn’t have the opportunity or the inclination to go back to business school, but still would like a taste of supply chain from an MIT professor.

TC: What percentage of your students are outside the U.S.?

SG: I think it’s about 30% international. We have every continent covered.

We also try to reserve at least 10% of our class for scholarships. We have a rigorous scholarship process, where you send us an email saying you can’t afford it, and you get a scholarship. And a lot of our scholarships go to people internationally, because $800 in Rwanda is real money.

Forward Health raises $225M from investors including The Weeknd as it looks to expand nationwide

Primary care startup Forward Health is looking to expand its tech-powered, personalized healthcare model across the U.S., and will use a new $225 million Series D raise to help make it happen. The new capital comes from Founders Fund, Khosla Ventures, SoftBank, Mark Benioff – and recording artist The Weeknd – among others. I spoke to Forward Health co-founder and CEO Adrian Aoun about his company’s plans for this fresh capital, and we also chatted briefly about how The Weeknd got involved.

Forward, which currently operates clinics in select U.S. markets including LA, New York, Chicago, SF and Washington, D.C., has a number of distinguishing features, but most notable are likely its tech-first approach that includes a full biometric assessment upon first visit, and its business model, which eschews insurance providers altogether and instead works based on a single flat membership fee.

Aoun and his co-founders created Forward Health with the idea of building a healthcare business that’s aligned with its customers in terms of incentives, which is why they sidestepped insurance altogether. That’s led to a focus on customer service and long-term patient relationships and outcomes, which Aoun says are stronger because they’re not bound by an individual’s relationship with their employer, for instance, which is often the case when an employer foots the bill for healthcare via company-provided insurance.

“The average person in the Bay Area is with their employer for about two and a quarter years,” Aoun told me. “So your employer is kind of sitting there thinking, if you get the flu, you’re missing three days of work – I’m out some money.” That means they’ll do things like institute programs to remind employees constantly to get their annual flu vaccine, and do other things to make that happen like provide on-premise shots. But Aoun says they’re optimizing for short-term outcomes, not long-term health – because that’s where their incentives tell them to optimize.

Image Credits: Forward Health

But when long-term healthcare programs, like lifestyle shifts that can lessen the potential of truly dangerous outcomes like heart disease and cancer, come into play, an employer who expects you to stick around for a few years at most is far less incentivized to want to fund that. Forward Health, which aims to attract subscribers and, for lack of a better term, minimize churn, actually is incentivized to make those long-term outcomes positive for everyone who comes through the door.

That’s part of why one focus with this new funding is to debut new doctor-led programs tailored to treating conditions that individual patients might be predisposed to – like heart health, if heart disease runs in your family, or specific types of cancer, if there’s a history of that, for instance.

“We’ve got our [in-clinic] body scanners, our blood tests, our gene sequencing – we basically collect on the order of about 500 biometric data points,” Aoun said. “The idea is you and your doctor then figure out which which kind of programs make sense for you based upon those.”

For example, Aoun says he’s actually at fairly high risk for developing heart disease, so there’s a Forward program that includes doing a heart risk analysis, blood tests, and regular at-home monitoring of key risk factors like blood pressure and weight. Another program for cancer prevention includes measures designed to help lessen the risk of contracting the top five cancers in terms of prevalence — so Forward created a dermatoscope for that, which is essentially a skin scanner to map out an individual’s moles and skin features and alert them of any changes.

This builds on work that Forward began at the outset of COVID-19 — its ‘Forward at Home’ program, which includes sending patients home with specialized sensors for remote care. Another specialized program tailored to COVID-19 actually offers monitoring specific to the disease in order to track a patient’s progress safely.

“We’re now launching programs for all the top diseases to help you get ahead of them,” Aoun said. “And whatever kind of programs you’re using, you walk away with plans that are tailored to you, again, to counsel you not only on the potential risks for the things like the cancer and heart disease, but also to be proactive, with guidance from diet, to exercise, to stress, and to sleep, etc.”

The programs are supported by Forward’s 24/7 worldwide care support team, which subscribers can access via their mobile app. It’s also complemented by the check-ins with your physician via the ‘Forward at Home’ in-home virtual visits.

Image Credits: Forward Health

While Forward is already rolling these out, it has plans to continue to develop new ones, and it’s also monitoring results in order to understand how they’re working for users, and will be sharing that data once it has collected a significant sample. I asked Aoun how Forward can scale this kind of personalized care – especially now that the startup plans to open additional locations in other parts of the country.

Basically, Aoun said that Forward approached it as an engineering problem. He argues that most solutions in healthcare see the fundamental issue as a labor problem — but trying to scale that, with the salaries that medical professionals command, and the limited availability of skilled talent, makes no sense. Especially because consumers are naturally looking for improvements in their standard of care over time, in the same way they expect improvements in the products they buy or services they use.

Rather than relying on a chain of increasingly specific medical professionals to address individual health risks and needs, Aoun said Forward identified that there’s a massive amount of overlap in preventative care courses of action. The Forward team focused on breaking the fundamental elements down into what equate roughly to reusable Lego blocks, which can be recombined with relative speed and repeatability to produce a program that’s nonetheless tailored to an individual’s needs.

Combined with Forward Health’s longitudinal approach to care, these programs and their recombinant nature should prove a good dataset from which to assess how a direct, client-focused primary care model affects overall health.

And, because I promised, I’ll leave you with how Aoun says The Weeknd got involved in the Series D.

“He literally just walked by one of our locations, and walked in and was like, ‘This is awesome,’ and then asked a friend, who asked a friend, who asked a friend to get connected,” he told me.

Arist adds $2M to its seed round to grow its SMS-based training service

This morning Arist, a startup that sells software allowing other organizations to offer SMS-based training to staff, announced that it has extended its seed round to $3.9 million after adding $2 million to its prior raise.

TechCrunch has covered the company modestly before this seed-extension, noting that it was part of the CRV-backed Liftoff List, and reporting on some of its business details when it took part in a recent Y Combinator demo day.

Something that stood out in our notes on the company when it presented at the accelerator’s graduation event was its economics, with our piece noting that the startup “already [has] several big ticket clients and [says it] will soon be profitable.” Profitable is just not a word TechCrunch hears often when it comes to early-stage, high-growth companies.

So, when the company picked up more capital, we picked up the phone. TechCrunch spoke with the company’s founding team, including Maxine Anderson, the company’s current COO; Ryan Laverty, its president; and Michael Ioffe, its CEO, about its latest round.

According to the trio, Arist raised its initial $1.9 million around the time it left Y Combinator, a round that was led by Craft Ventures at a $15 million valuation. Following that early investment, the company’s business with large clients performed well, leading to it closing $2 million more last December. The founders said that the new funds were raised at a higher price-point than its previous seed tranche.

The second deal was led by Global Founders Capital.

The company’s enterprise adoption makes sense, as all large companies have regular training requirements for their workers; and as anyone who has worked for a megacorp knows, current training, while improved in recent years, is far from perfect. Arist is a bet that lots of corporate training — and the training that emanates from governments, nonprofits and the like — can be sliced into small pieces and ingested via text-message.

For that the company charges around $1,000 per month, minimum.

Arist did catch something of a COVID wave, with its founding team telling TechCrunch that pitching its service to large companies got easier after the pandemic hit. Many concerns better realized how busy their staff was when they moved to working from home, the trio explained, and with some folks suffering from limited internet connectivity, text-based training helped pick up slack.

We were also curious about how the startup onboards customers to the somewhat new text-based learning world; is there a steep learning curve to be managed? As it turns out, the startup helps new customers build their first course. And, in response to our question about the expense of that effort, the Arist crew said that they use freelancers for the task, keeping costs low.

Recently Arist has expanded its engineering staff, and plans to scale from around 11 people today to around 30 by the end of the year. And while Anderson, Laverty and Ioffe are based in Boston, they are hiring remotely. The startup serves global customers via a WhatsApp integration. So Arist should be able to scale its staff and customer base around the world effectively from birth. (This is the new normal, we reckon.)

What’s ahead? Arist wants to grow its revenues by 5x to 10x by the end of the year, hire, and might share if it wants to raise more capital around the end of the year.

Oh, and it partners with Twilio to some degree, though the group was coy on just what sort of discounts it may receive; the founding team merely noted that they liked the SMS giant and deferred further commentary.

All told, Arist is what we look for in an early-stage startup in terms of growth, vision and potential market scale — the startup thinks that 80% of training should be via SMS or Slack and Teams, the latter two of which are a hint about its product direction. But Arist feels a bit more mature financially than some of its peers, perhaps due to its price point. Regardless, we’ll check back in at the mid-point of the year and see how growth is ticking along at the company.

DataGrail snares $30M Series B to help deal with privacy regulations

DataGrail, a startup that helps customers understand where their data lives in order to help comply with a growing body of privacy regulations, announced a $30 million Series B today.

Felicis Ventures led the round with help from Basis Set Ventures, Operator Collective and previous investors. One of the interesting aspects of this round was the participation from several strategic investors including HubSpot, Okta and Next47, the venture firm backed by Siemens. The company has now raised over $39 million, according to Crunchbase data.

That investor interest could stem from the fact that DataGrail helps organizations find data by building connectors to popular applications and then helps ensure that they are in compliance with customer privacy regulations such as GDPR, CCPA and similar laws.

“DataGrail [is really] the first integrated solution with over 900 integrations (up from 180 in 2019) to different apps and infrastructure platforms that allow the product to detect when new apps or new infrastructure platforms are added, and then also perform automated data discovery across those applications,” company CEO and co-founder Daniel Barber explained to me. This helps users find customer data wherever it lives and enables them to comply with legal requirements to manage and protect that data.

Victoria Treyger, general partner at lead investors Felicis Ventures says that one of the things that attracted her to DataGrail was that she had to help implement GDPR regulations at a previous venture and felt the pain first hand. She said that her firm tends to look for startups in large markets where the product or service being offered is a critical need, rather an option, and she believes that DataGrail is an example of that.

“I really liked the fact that privacy management is such a hard problem, and it is not optional. As a business, you have to manage privacy requests, which you may do manually or you may do it with a solution like DataGrail,” Treyger told me.

HubSpot’s Andrew Lindsay, who is SVP of corporate and business development, says his company is both a customer and an investor because DataGrail is helping HubSpot customers navigate the complexity of privacy regulation. “DataGrail’s unique ecosystem approach, where they are integrating with key Saas and business applications is an easy way for many of our joint customers to protect their customers’ privacy,” Lindsay said.

The company has 40 employees today with plans to grow to 90 or 100 by the end of this year. It’s worth noting that Treyger is joining the Board, which already has 3 other women. That shows shows a commitment to gender diversity at the board level that is not typical for startups.

LatAm corporate spend-management startup Clara raises $3.5M, comes out of stealth

This morning Clara, a corporate spend-management startup focused on the Latin American market, announced its product launch and a $3.5 million pre-seed round led by General Catalyst.

The company’s funding caught TechCrunch’s eye as there has been a flurry of funding for related companies serving the United States market. From Divvy to Brex to Ramp to Airbase to Teampay, investors have poured capital into startups working to help companies better track and manage their spend.

Companies working in the fintech niche tend to monetize in one of two ways, namely interchange revenues and software incomes. Or more simply, some in the corporate spend category generate revenues when users swipe cards, earning a slice of the transaction. And some also charge for the software that they have wrapped around their cards and other methods of payment.

Clara is in the first camp, making its revenues today from interchange incomes, according to Gerry Giacomán Colyer and Diego Iván García Escobedo, the company’s co-founders. Colyer is the company’s CEO, while García Escobedo heads its product and tech work.

The pair told TechCrunch that the Mexican interchange market is more akin to the United States’ own (lucrative) than Europe’s own (less lucrative), meaning that if the company can sign up a host of customers for its free service — empieza hoy – sin costo, its website intones — it could post the same sort of revenue growth that has spurred some of its American comps to huge venture capital raises.

The startup’s potential has caught the eye of more than General Catalyst, a well-known venture capital firm. The two co-founders of Ramp are also investors in Clara. The startup’s round also included funds from a host of smaller firms and angels, including Canary Ventures, Adapt Ventures and Picus Capital, among others.

The co-founders want to bridge the gap in technology-enabled financial services that they found in Mexico. Colyer worked for G2 after a stint at Stanford, eventually moving back to Mexico and working on a micromobility startup called Uva Scooters. He discovered during the process that Mexican and other Latin American firms lacked some digital tools, like low- and zero-cost corporate spend software, to which American companies had ample access.

So, the pair of founders, who met at Grin Scooters, which had acquired Uva, set out to build Clara, tuning a model with proven success in America to work in Mexico. What sort of tweaking was needed? Local compliance to ensure high-levels of card acceptance, support for local tax law and receipt management, the pair said.

Thus far the company has only worked with around 100 customers, with the co-founders telling TechCrunch they have seen traction with high-growth companies, some of which are startups. That echoes what Brex tapped into when it was a more youthful upstart itself.

Today the company operates in Mexico only, but intends to support other markets over time.

Regarding the company’s $3.5 million raise, like many pre-seed and seed deals, the funds were acquired in a few tranches, including one in May of 2020. The rest of the capital came later in the year.

Seeing successful startup models that are familiar in the United States pop up in Latin America is a regular trend. Belvo, for example, is following in the tracks that Plaid laid down, bringing fintech APIs to the LatAm market. Given rising smartphone penetration, and rising card usage, perhaps Clara will find a good fit in its home market.

Looking ahead, TechCrunch is curious how quickly Clara can accrete new customer companies now that it has formally launched. If it can, and the interchange game proves successful, expect to hear from it again soon.


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Cheese raises $3.6M for its digital bank aimed at the Asian-American community

Many things have accelerated in the world of fintech over the past year, not the least of which is the trend of digital banks aimed at specific communities in the U.S.

In the past few months alone, a number of neobanks targeting the Black and Latinx communities have emerged. Most recently, we covered the $5 million raise of one such bank — First Boulevard.

Today, Cheese announced the launch of its digital banking platform that is aimed at primarily serving the Asian-American community. Co-founder and CEO Ken Lian came to the United States from China in 2008 to attend college. In the years after his move, Lian said he paid thousands of dollars in bank fees and got rejected “multiple times” for basic bank accounts, despite having a FICO score over 800.

Those experiences led him to come up with the concept behind Cheese, which he said will offer its banking services via a multi-language platform. The one-year-old startup also has a social component, giving customers a way to support Asian-American businesses and organizations. Lian is no stranger to the world of entrepreneurship, having also founded Moolah Science, a startup that helped consumers find out if online stores owed them a refund that got acquired by a Fortune 500 company in 2019.

Lian founded Cheese along with Zhen Wang and Qingyi Li under the premise that Asian-Americans are often subject to discrimination and “an unequal playing field” in America despite being among the most educated in the country.

“We understand Asian users much better than anybody else because we are the user,” Lian told TechCrunch. “[Traditional] banking didn’t understand me or my culture or my lifestyle or what matters to me. Our needs are different.”

“A lot of challenger banks also never focused on Asian communities and immigrants,” he added. “We want to provide a great product to welcome these people to the U.S. and make it easy for them to bank.”

Over the past year, Cheese has raised a total of $3.6 million in funding from investors such as iFly.vc; Amplify; Adam Nash, former CEO of Wealthfront; Zillow co-founder Spencer Rascoff and VC firms Wedbush Ventures, Idealab and Operate Venture Studio. The startup has also partnered with actor Jimmy Wong, an advocate for Asian rights. He will serve as Cheese’s chief community ambassador.

Cheese’s platform provides a debit Mastercard (issued by Coastal Community Bank), which is available to those with no credit history. (If this sounds familiar, it’s a similar offering as that of TomoCredit, a startup that recently raised $7 million to scale its debit card product for those with little or no credit history.)

Cheese cardholders can use the virtual cards instantly through their mobile wallets, the company said. Other features include offering advance pay up to two days early with direct deposit, a 3% deposit bonus for referring friends, 0.3% annual percentage yield (APY) and up to 10% cash back on purchases at more than10,000 merchants. 

Image Credits: Cheese

Han Shen, founding partner of iFly, believes Cheese can help the underbanked community in the United States.

They don’t necessarily get the same kind of service or product for their banking needs and they face all kinds of pain points,” he wrote. “Cheese has a list of products they want to develop for that type of customer…We know there is a product market fit based on our research and we know this is a strong team.”

The investment marks iFly’s first in the consumer fintech space in which it acted as a lead investor.

We were already determined to invest on the mission side. They wanted to make things easier and better for the underbanked, including immigrants,” Shen continued. “People deserve a better service. In Cheese’s case, the question is not whether or not to provide it, the question is about how to do it right to address their pain points.”

In conjunction with its launch, Cheese has pledged $100,000 to the Cheese Giveback Fund, 100% of which will be donated to nonprofits and community service programs in support of Asian neighborhoods and businesses impacted by violence and economic hardship during the COVID-19 pandemic.

Cloud cybersecurity startup Lumu raises a $7.5 million Series A

Miami-based cybersecurity startup Lumu today announced the closing of its $7.5 million Series A. The round was co-led by SoftBank Group Corp.’s SB Opportunity Fund and Panoramic Ventures.

Lumu, co-founded and headed by Colombian native Ricardo Villadiego, offers a cloud-based service that helps companies continually scan and react to data compromises in real time. The company collects and standardizes metadata from across the network, including DNS queries, network traffic, access logs from perimeter proxies, firewalls and spam box filters, then applies AI to correlate threat intelligence from these disparate data sources to isolate confirmed points of compromise.

Lumu CEO Ricardo Villadiego. Image Credits: Lumu

Villadiego described it in lay terms: “If you’re speaking with a bad guy, there’s no good that’s going to come from that. So we apply the same idea with cybersecurity. If your phone or your laptop is talking to an adversary, you don’t really need to understand what the conversation is about,” he said. What you do need to do, he says, is shut it down and prevent it from happening again.

He explained that Lumu not only helps companies prevent breaches but also allows them to automate their responses.

Lumu launched in February 2020 at the RSA cybersecurity conference in San Francisco, and already has 1,300 enterprise customers and targets small to large corporations. In just over 12 months, the company said it has analyzed more than 55 billion metadata records and detected more than 11 million adversarial contacts.

Villadiego was born and raised in the colonial port town of Cartagena, Colombia. With a degree in electrical engineering, he found his passion for cybersecurity while working at Unisys, which, through its cybersecurity excellence program, is how he ended up in the United States.

During his time at Unisys — and later at IBM — he said he was exposed to merger and acquisition deals, motivating him to start his own business. He founded his first cybersecurity company, Easy Solutions, in Miami in 2009, focused on preventing fraud. Easy Solutions caught the eye of tech heavyweight — and Miami local — Manny Medina of the eponymous Medina Capital, who invested in the company’s first round.

“I told him we were looking to raise $5 million and he said, ‘I’m in, but it has to be $10 million,’” Villadiego told TechCrunch.

The two eventually agreed on $11 million, and about a decade later Medina’s own company — Cyxtera — bought Easy Solutions for an undisclosed sum. Cyxtera announced last month that it’s going public at a $3.4 billion valuation through a merger with a SPAC.

Villadiego said Lumu, which has 35 full-time employees, will use the funds to fuel growth in the United States.

“In the U.S., I understand all the issues that we have — especially with diversity — but if you work hard, you have the chance to change your story,” said Villadiego. “At the end of the day, you have to build a business. The hardest part for any entrepreneur is getting access to capital.”

With funding help from SoftBank’s Opportunity Fund, which helps Black, Latinx and Native American founders and entrepreneurs in the U.S., Villadiego said he can focus entirely on the work.

“Once you have access to SoftBank, you sort of forget about the money part, because you know you’ll have access to capital to build your company,” he said. “Now your focus can be on execution — to make sure you’re solving the problem.”