Techstars CEO Maëlle Gavet outlines the accelerator’s newest program in Africa

In April, startup accelerator Techstars, in partnership with ARM Labs, a Lagos-based innovation program focusing on fintech startups, announced the launch of ARM Labs Lagos Techstars Accelerator Program

As Techstars’ newest accelerator program in Africa, the announcement re-emphasized the expansion plans Techstars touted when it hired Maëlle Gavet as CEO last January. The Lagos accelerator adds to the long list of dedicated generalist and specialist programs the firm has managed to create globally over the past couple of years. 

Companies that get accepted into any of these three-month programs receive $20,000 plus a $100,000 convertible note in exchange for 6% common stock, access to the Techstars network and other resources. In 2021, the Colorado-based accelerator ran up to 50 accelerator programs across 18 countries, most of which were based in North America and Europe. 

In Africa, the accelerator test-ran an accelerator program in Cape Town between 2016 and 2017. Techstars has invested in more than a dozen African-based startups through other programs. Thus, it was only a matter of time before one of them hit Africa — and where better to start than in Nigeria. Most of the startups backed by the accelerator on the continent are based in the country, including Farmcrowdy, Healthtracka, TalentQL, Quidax, OurPass, Rentsmallsmall and Treepz

The Nigerian tech ecosystem has grown tremendously in the past five years, with the influx of venture capital reaching over $1.8 billion in 2021. Lagos is at the epicenter of this growth. According to this data, the city is one of the fastest growing ecosystems worldwide and the number one African startup city as of last year. By partnering with ARM Labs, Techstars hopes to capitalize on the immense opportunity created by the city’s startups. The program’s inaugural class starts in December and culminates in a Demo Day next March.

TechCrunch caught up with Gavet on her trip to Lagos and spoke at length on how the program would work, opportunities for founders and why the accelerator is bullish on Africa. 

TC: There are many Techstars programs, from London to Seattle to Riyadh to Oak Ridge-Knoxville, and sometimes it’s hard to keep count. But before launching in Lagos, it seemed only the Toronto program took actual notice of Africa, as evident in the 15 startups represented from the region in its program. Why is this the case?

MG: Techstars has been active in Africa since 2011. We have run 350 local ecosystem-building events, primarily in Kenya, Nigeria, Ghana and South Africa. We also had a Barclays Accelerator program in South Africa for two years, and we have made close to 100 investments in African founders. But you’re right. The most recent Toronto cohort was heavily focused on Africa, honestly, more because I think Canada has a very welcoming visa system for African founders. So it just makes it much easier for them to go to the Toronto program than it would be to many other Western programs. But Techstars has been actively looking at Africa in general. The discussion last year was that we should, given how vibrant the tech ecosystem here is, have accelerators here in Africa. 

I am in Nigeria this week — I’m also going to Kenya — because I’m here to figure out the right way to do it, where we will open them and so on. We decided last year to open one in Lagos and we are very much hoping to be able to double down and explore other options in terms of different hubs across Africa. 

Why partner with ARM for this program in Lagos, and can you describe the structure?

We have pretty high standards regarding the type of company we partner with and the three-month program we put in place. Any founder going to apply to these and then be accepted into this program here in Lagos will benefit from the experience we have accumulated over the last few years, from the playbook that we have to run this program, from the international network that we have. That model has worked out for the last 15 years, so I’m pretty confident. 

Soon, we’re going to announce the new managing director for Lagos, some with local experience as an entrepreneur and experience working with the regulators as well. Now, we decided to partner with ARM because we wanted someone who was embedded into Nigeria and understood the country better than us from a business perspective.

Image Credits: lARM Labs Lagos Techstars Accelerator Program.

We wanted a business partner who understands Africa and what it means to do business across Africa. And I think we’re realistic enough to realize that we don’t know everything and can provide much better service to founders when we combine each other’s strengths — the global network of experts, or playbook, all the infrastructure we have, and the knowledge and experience and local network of a partner like ARM.

Can international founders apply for this program and would they need to come to Lagos to participate?

All of our programs are international, we usually have between 20%-40% of local founders, and the rest are international founders. With the Lagos program, we expect this ratio to be about the same. 

While there is so much knowledge and energy from founders in Nigeria, we also expect that there will be many African founders. For them, it would be easier and more appropriate because they’re mainly focused on the African market and so it will be better for them actually to come to the Lagos accelerator. That’s part of why I’m going to Kenya next because I think that there are quite a few Kenyan founders who would prefer coming to Lagos than going to Europe or North America. 

And then, quite a few founders in Europe and the U.S. are looking at Africa as a tremendous market for their businesses. And so I expect we will have applications from them and those who get in will have to come down. At the end of the day, we’ll select twelve of the best.

As an African founder, why would I apply to Techstars Lagos rather than Toronto, New York, or other Western programs?

We have 60 programs and accept founders from around the world. So if you’re a Nigerian founder and want to apply to any Techstars accelerator, you can do that anywhere in the world you want. 

Now, the way we recommend people to do it is to think about first, is there a sector that you’re interested in and follow through with that. So, for instance, if you’re in the music industry, we have a music accelerator in LA where you may want to apply. If you are much more on the agriculture and food tech side, we have an accelerator in Minnesota for that. You can also decide that, for whatever reason, you want to experience North America and have a different experience of how business is being done elsewhere, so you may want to apply to Toronto or New York; these are generalists program. 

You may also decide to go to a market close to Africa with a local connection, for example, the U.K. and European markets. And so you can apply to the London one or the Paris one. When you look at the 20+ investments we’ve made in African founders, they came from all around. You’re very well aware of Toronto, but again, we have Nigerian founders who went through New York, London and Bangalore, so that’s not going to change. 

Now, you may also decide that you want to stay in Africa. And for you like being either for a personal reason or business reason, like actually, Lagos is the place where you want to be because you can’t leave your family for three months, or because again, like you want to really focus on the Nigerian market, and then you should apply to the Lagos accelerator.

Is the Lagos accelerator sector agnostic?

The one we’re doing with ARM is focused on fintech and prop tech. There’s a robust industry growing up in Nigeria around these two topics. So we expect that there’s going to be a lot of founders. 

Also, if you look at ARM, they’re great partners for founders. And so, I would recommend those founders who apply to this accelerator to look at how ARM can help them. And as a result of that, if you’re not sure they can help you, then maybe you should look at another accelerator program. But if you think that they can, you absolutely should apply. If you don’t know, you should contact us and talk to us.

Will the startups in the Lagos accelerator be able to assess follow-on capital? 

After they go through the accelerator, we’ll support some to raise money from other investors depending on where they are in their development, their fundraising stage, etc. We have a fund called Techstars Ventures, which is the fund that we use to do follow-on checks in seed, Series A and sometimes Series B.

With what’s happening with venture capital slowdown and economic downturn, is this the best time to launch a program in a new region? Also, how do you advise founders to deal with this current situation?

I think the program is even more relevant now that there’s a downturn and the economy is slowing down than ever before. So what we do at Techstars is help founders build real, healthy, sustainable businesses. This is even more important during a downturn because you need support, network and capital more than ever in this period. So from that perspective, no concern whatsoever. 

I think that when it comes to the advice I give founders in general, don’t forget that nobody succeeds alone. It even holds more true during a crisis. And that may be an additional reason to apply to Techstars because you will need more than ever to support the capital program and the mentorship to succeed during the economic downturn.

One of the seeming objectives behind Techstars starting a Lagos accelerator is to create unicorns from the continent. Lagos is also home to some of Africa’s unicorns like Flutterwave and Interswitch, but how do you hope to achieve that, seeing that the accelerator is yet to mint one after years of investing?

We are what we call universal investors. We try to have a portfolio representing all industries and all types of people in the world. The reason why I’m convinced that there are going to be a lot of unicorns in the future is that just look at the African market. You can even take Nigeria as an example: huge population, growing consumption and various problems and challenges entrepreneurs are tackling. 

This is like a recipe for creating the next generation of very wealthy entrepreneurs and legacy companies. Now, will it be a bunch of unicorns, or will it be a bunch of $100 million companies? We’ll see. But I can see so much potential both in terms of the quality of entrepreneurs and the size of the problem they’re trying to solve that I can’t imagine anything but a lot of very wealthy entrepreneurs and important companies in the future for Nigeria and Africa in general.

Investors feed the meter for curb management startup Automotus

The curbside is being squeezed as the number of commercial vehicle operators and gig economy workers battle over this increasingly scarce real estate — a problem that has been compounded by an uptick in on-demand delivery services fueled by the pandemic.

A number of startups such as Coord and curbflow have popped up in recent years, all aiming to solve this supply and demand problem. One entrant, the three-year-old startup Automotus, is beginning to rack up deployments in zones within cities like Santa Monica, Pittsburgh, Bellevue, Washington and Turin, Italy. A project in Los Angeles is also in the works.

Investors have taken notice as well. The company, which developed video analytics technology to monitor and manage curbsides for cities, said in February it had raised $1.2 million in a seed round led by Quake Capital, Techstars Ventures, Kevin Uhlenhaker (the co-founder & CEO at NuPark, which was acquired by Passport) and Baron Davis. CEO Jordan Justus told TechCrunch the company’s total raise is now $2.3 million. New investors include Ben Bear, Derrick Ko, and Zaizhuang Cheng of micromobility company Spin.

The startup is still small, with just 11 full-time employees. However, Justus said the newly raised funds are being used to expand into new markets and to hire more employees.

Automotus uses computer vision technology to capture video of parking zones — places that might be designated for only zero-emissions vehicles or commercial deliveries. Their software handles a variety of functions, including analysis and enforcement. Cities are able to access analytics through a web app. Commercial fleets are able to access information about parking zones via open APIs and in some cases a mobile app, according to Justus.

Automotus Dashboard

Image Credits: Automotus

For instance, one newly announced pilot project with Santa Monica and Los Angeles Cleantech Incubator will monitor a one-square-mile zero-emissions delivery zone in the city. Automotus will provide anonymized data for evaluating the zone’s impacts on delivery efficiency, safety, congestion and emissions, and will make real-time parking availability data available to all zero-emissions delivery zone drivers.

The startup, which was founded in late 2017 and is a Techstars alum, makes its money primarily through revenue sharing on its enforcement feature. Automotus gets a slice of the payment commercial customers are automatically charged when parking in specific zones, as well as transaction fees on parking violations. While the analytics might help cities set policy or designate pick-up and drop-off zones, it’s the enforcement feature that Justus says offers the biggest opportunity.

Loyola Marymount University in Los Angeles used Automotus’ tech to fully automate parking enforcement. Automotus said enforcement efficiency and revenue increased by more than 500%, and added that implementing these measures led to a 24% increase in parking turnover and a 20% reduction in traffic.

“The enforcement component is really critical to the fleet operators because they need to know that these zones are managed efficiently and managed well so that they’re available for commercial use, if that’s what they’re intended for,” he said.

San Diego’s Trust & Will raises $6 million for online estate planning

Estate planning in the U.S. is a $180 billion industry and unlike many of the other areas in the multi-trillion dollar financial services market, it’s one that has yet to see a slew of technology companies come in to try and improve efficiencies.

One notable exception is Trust & Will, the San Diego-based startup that has announced a new $6 million investment to expand sales and marketing, product development and partnerships.

The company joins services like Quicken’s WillMaker and startups like Everplans as relatively new entrants into the technology-enabled estate planning business.

Timing seems good for the company and its other competitors. The $180 billion estate planning business is expected to surge as millennials start having children and begin thinking about their wills. It joins other staid businesses like life insurance and home insurance as a category that’s traditionally been overlooked by entrepreneurs who now see increasingly digital customers make demands of industry participants.

Right now, half of all adults in the U.S. have no will and millions more have out-of-date estate plans, according to Trust & Will. In addition, 45 million parents with minor children have no form of estate plan.

Since its launch in April, Trust & Will has had 60,000 members enroll in the company’s platform and those enrollments represent $15.1 billion in total assets, $2.7 billion in reported life insurance policies, $137 million in charitable commitments and 88% holding real estate assets.

The company has a tiered subscription model offering a $399-$499 service plus an annual subscription fee for the creation of a trust-based estate plan that the company says can avoid probate for the protection and transfer of assets; a $69-$129 level, which includes plans for surviving beneficiaries and asset distribution; and a $39-$49 plan for parents with minor children who aren’t ready to complete a will.

While customers may be able to draft a will themselves and just store it in a safe place, some people will likely gravitate to a digital will. At least, that’s what Link Ventures, Revolution’s Rise of the Rest Seed Fund, Western Technology Investment, Techstars Ventures, Luma Launch and Halogen Ventures are hoping for with their commitment to the company’s Series A financing.

In January the company closed its first electronic will with help from its industry partner, Notarize. Co-founded by serial entrepreneur Cody Barbo, former product ad marketing strategist, Daniel Goldstein, and product designer Brian Lamb, the company now counts eleven people on staff.

“Trust & Will is another example of how digital services are disrupting traditional industries by offering a convenient and lower cost estate planning solution that helps consumers protect their valuable assets and loved ones,” said Rob Chaplinsky, a managing director at Trust & Will’s series A lead investor, Link Ventures. “We have been following this category for quite some and feel that Trust and Will’s product and rapid market traction are second to none. We look forward to leveraging our big data assets to help them scale.”

Patch Homes locks in $5m Series A to give homeowners financial freedom without debt

Homeownership has long been touted as the American dream. But rising rates of mortgage debt, student loan debt, or otherwise are making the pursuit of homeownership a nightmare. Debt burdened individuals or those with inconsistent or tight cash flow can not only struggle to get credit loan approval when buying a home but also struggle to satisfy monthly mortgage payments even after purchase. 

Patch Homes is hoping to keep the proverbial American dream alive. Patch looks to provide homeowners with cash flow and liquidity by allowing them to monetize their homes without taking on debt, interest or burdensome monthly payments. 

Today, Patch took another big step in making its vision a far-reaching reality. The company has announced it’s raised a $5 million Series A round led by Union Square Ventures (USV)  with participation by from Tribe Capital and previous investors Techstars Ventures, Breega Capital, and Greg Schroy.

Patch Home looks to partner with homeowners by investing up to $250,000 (with an average investment of ~$100,000) for an equity stake in the home’s value, generally in the 5% to 20% range. Homeowners aren’t subject to any interest or recurring payments and have ten years to pay back Patch’s investment. Upon doing so, the only incremental money Patch receives is its portion of the change in the home’s value over the course of the ten year period. If the value of the home goes down in value, Patch willingly takes a loss on its investment.

According to Patch Homes CEO and cofounder Sahil Gupta, one of the major motivations behind the company’s model is to align Patch’s incentives with the homeowners, allowing both parties to think of each other as trusted partners even after financing. After Patch’s investment, the company provides a number of ancillary services to homeowners such as credit score monitoring, as well as home value and property tax tracking.

In one instance recounted by Gupta in an interview with TechCrunch, Patch even covered three months of an owner’s mortgage during a liquidity crunch for his small business, allowing him to maintain his home and credit score. Patch is incentivized to provide all services that can help ensure an increase in home value, benefitting both Patch and the homeowner, with the homeowner earning the majority of the asset’s appreciated value.  

Additionally, since Patch’s model isn’t focused on a homeowner’s ability to pay back a loan, interest or periodic payments, Patch is able to provide financing to more people. Patch is able to help those with more variable qualifications that struggle to get traditional loans — such as a 1099 contracted worker — monetize their illiquid assets with less harsh or restrictive terms and without increasing their debt burden. Gupta described this as solving the core problem of providing liquidity to asset-rich but cash-flow sensitive people. 

Patch is not only looking to provide easier liquidity to more homeowners, but they’re trying to do so faster than traditional lenders. Interested customers can first receive a free estimate of whether Patch will invest in their home or not, how much its willing to invest and what percentage equity it will take — primarily based on Patch’s machine learning models that focus on asset, market, and location level attributes. 

After the initial estimate, a Patch home advisor will educate the customer on the product and start a formal application process, which includes your standard income and credit score verification and otherwise, that takes 5-10 days. All-in, homeowners have the ability to get money in as little as 14 days, a significantly shorter timeline than your standard home credit process. Once the investment is made, owners have full freedom with how they use the money.

According to Patch, while its customers come from a diverse set of backgrounds, many either accumulated debt have to pay down the net or may struggle making monthly payments. The average Patch homeowner uses 40% of the investment to eliminate debt, adds 40% to their savings account or passive income, and invests 20% into home improvements.

To date, Patch has raised a total of $6 million and believes the latest round of funding will help scale its operations as they team up with advisors like USV that have experience scaling fintech companies (such as a Lending Club or Carta). The funds will be used to invest in product and Patch’s clearing technology in order to further speed up Patch’s lending process.

Patch also hopes to use the investment to help them gradually expand their footprint, with the goal of eventually having a presence all 50 states. (Patch is currently available in 11 regional markets within California and Washington and expects to be in 18 regional markets by the end of the year including those in Utah, Colorado and Oregon.)

Patch Homes Co Founders Sundeep Ambati L and Sahil Gupta R

Image via Patch Homes

What makes homeownership so galvanizing for the Patch team? Patch CEO Sahil Gupta spent years putting his Carnegie Mellon financial engineering degree to work in banking and finance, as well as in financial products and strategy positions at fintech startups backed by heavy hitters such as YC to Goldman Sachs.

After realizing the majority of the US population were homeowners, but were struggling to make monthly payments or save for the future, Sahil wanted to figure out how we could take an illiquid asset like a home and make it easily accessible. 

Around the same time, Sahil’s cofounder Sundeep Ambat was working as a contractor on a new business venture of his and was struggling to get a home equity loan. While these circumstances ultimately led Sahil and Sundeep to found Patch Homes in 2016 out of the TechStars New York accelerator program, the deeper motivation behind Patch can be traced back nearly 30 years when Sahil’s father made an equity sharing agreement with his brother as they were building his family’s home in India.

With a growing family and a pregnant wife, Sunil’s father was adamant about living debt-free and so his brother provided an investment in exchange for an equity stake in the house. According to Sahil, the home is still in the family and has appreciated substantially in value to the benefit of both Sahil’s father and his brother. Longer-term, Patch wants to be the preferred partner for homeownership, helping reduce cash tight owners’ financial anxiety without the debilitating weight of debt. 

“Some companies want to help people buy or sell homes, but homeownership really begins after that point. Patch is built to be inside the home with you and everything that comes thereafter,” Gupta told TechCrunch.

“Patch was created to partner with homeowners to help them unlock their home equity so they can achieve their financial goals along every step of their homeownership journey.

LevelTen Energy raises $20.5 million for its renewable energy marketplace

LevelTen Energy, a marketplace that consolidates renewable energy projects and potential buyers to lower prices for aggregated buyers and expand the market for sellers, has raised $20.5 million in a new round of funding.

Investors in the round included the venture arms of utility and energy companies like Constellation Technology Ventures (the investment arm of Exelon Corp.), Equinor Energy Ventures and Total Ventures. The financing was led by Prelude Ventures, with participation from other financial investment firms including Element 8 Fund, Founders’ Co-op, Techstars Ventures and Wireframe Ventures.

Founded in 2016 and accelerated by TechStars as a clearinghouse for clean energy projects for corporate and utility energy buyers the company expanded its services in 2018 with the launch of the LevelTen marketplace — providing details on every clean energy, utility-scale project in North America.

That launch was followed by the release of a price matching and request for proposal automation tool to give companies the ability to post their own projects and find available projects more efficiently.

Overall, companies have procured more than $1 billion of renewable energy through LevelTen. The company has also aggregated a procurement deal for Bloomberg, Cox Enterprises, Gap, Salesforce, and Workday.

The company said it would use the money to expand its footprint internationally.

“Historically, excessive market opacity, cost, and risk prevented all but a select group of Fortune 500 buyers from signing utility-scale power purchase agreements. This exclusionary problem is one we’re committed to addressing,” said Bryce Smith, CEO and founder of LevelTen Energy.

Taking the pain out of accounting and payroll for small businesses, ScaleFactor raises $10 million

ScaleFactor, the Techstars alumnus that’s selling accounting and payroll management software as a service, has raised $10 million in a new round of funding as it looks to scale up its sales and marketing efforts.

Founded by longtime accountant, Kurt Rathmann, the Austin-based company has created a software service that collects and analyzes data from point of sale systems, bank accounts, credit cards and billing systems, to automate recordkeeping and payroll functions.

Rathmann, a former KPMG employee, started ScaleFactor after seeing the lack of innovation in the backoffice functions that are really the engine of any small business.

“Around the tech stack, accounting and financials were lacking the most,” Rathmann says. So he left his job at KPMG and started ScaleFactor Consulting out of his garage in Austin in 2014.

After a few years of basically going door-to-door (a throwback to Rathmann’s first company as an 18-year-old selling outdoor lighting in suburban Dallas) to find out what small businesses needed from an accounting software solution, ScaleFactor developed the API toolkit and management software that would become the services it’s pitching today.

After graduating from TechStars’ Austin accelerator, the company was able to nab $2.5 million in a seed financing round that included TechStars Ventures, NextCoast Ventures, and two Kansas City-based investment firms — Firebrand Ventures and Flyover Capital.

While the initial services business holds a lot of value and has managed to attract scores of small businesses, both Rathmann and his new investors led by Canaan Partners and including Citi Ventures and Broadhaven Capital see bigger opportunities down the road for ScaleFactor.

With the window that the company has into the operations of small businesses around the country, ScaleFactor can serve as an unimpeachable source of information for small business lenders.

With insight of (and control over) payroll management, billpay, cash approvals, cash accounting, and an ability to project forward cash flows (along with invoicing and tax management for part time employees), ScaleFactor will be able to offer lending services to smooth bumps in a company’s progress. 

“Bookkeeping and accounting is really the nucleus,” says Michael Gilroy, a principal with Canaan Partners. 

While Square has moved into lending services (and now is on the hunt for a banking license) through its window into a company’s revenues through point-of-sale devices, a company like ScaleFactor has a more holistic view of the health of a business, says Gilroy.

Equipped with that information ScaleFactor software can do things — like prompt business owners of the revenue targets they need to hit each month or suggest lending options to cover shortfalls — that better equip business owners to handle disruptions. 

“With our foundation established, a big part of our Series A is how do we power the business owner past bookkeeping & accounting? We see many opportunities to help further and our next steps will include things like lending, payments and many other activities that take a business owner/operators focus away from driving their business forward,” Rathmann wrote in an email.