Tag: The Raine Group

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Dorian’s no-code, interactive storytelling app turns fiction writers into game developers

As an interactive storytelling platform, Dorian is building a new way for writers to make money off of their fiction by turning their tales into choose-your-own-adventure mobile games. As users navigate the free-to-play app, they can spend in-app currency to unlock alternative story routes, directly putting a cut of the payment in the author’s pocket.

Today, Dorian is announcing that it raised a $14 million Series A round led by the Raine Group with participation from March Gaming, VGames, Gaingels and London Venture Partners, where Dorian co-founder and CEO Julia Palatovska was once an investor. Before that, she spent seven years at G5 Games, where she was Head of Business Development & Licensing.

“I spent about two years investing in some early stage startups, and I was very inspired and itching to go back into building, which is how the idea for Dorian came together,” Palatovska told TechCrunch. “I think the biggest inspiration and the idea here is, how can we enable more people to participate in the games industry?”

6 technologists discuss how no-code tools are changing software development

Available on iOS and Android, the no-code app allows anyone to turn their stories into interactive games, even if they have no experience with game design. Instead of publishing a short story, where writers are usually awarded a flat fee (or no pay at all, for smaller markets), Dorian offers a more continuous revenue stream. But the trade off is that nothing is guaranteed, especially on an emerging platform.

But Palatovska is optimistic about Dorian’s potential to support creatives.

“We have around 250 monetizing creators, and that’s growing quite fast compared to most creator platforms, where it takes years to start monetizing,” she told TechCrunch. “I think that’s exciting in light of this round, because we can reach significantly more creators, and fans who will be willing to support them. In terms of revenue, top creators are currently making around $15,000 in annualized revenue. We have a couple of creators who already started making Dorian their full time job, and this is just the beginning.”

Image Credits: Dorian

Dorian is similar to Episode, a viral interactive storytelling app produced by Pocket Gems. But on Episode, in order to monetize, writers need to accumulate at least 500,000 reads in a 60 day period, which is no easy feat. Dorian has no readership requirements before a creator can start monetizing. Any user over the age of 13 can monetize on Dorian through Tipalti, the same payout provider that Twitch and Roblox use.

When a reader makes an in-app purchase to follow a paywalled route on a story, the payment is split 50-50 between Dorian and the author. But Dorian is different from other platforms (and the online fan fiction market more broadly) because creators are encouraged to make fan works from stories that already exist on Dorian. This is because of the creator agreement that writers sign before publishing a story on Dorian — writers retain their own IP, Palatovska says, but they are also giving permission for their stories to be iterated upon by other users.

Fan fiction writers tend to be on high alert any time monetization of their works is brought up. Last year, Tumblr users lashed out against the platform because they suggested that bloggers might paywall their fan art with its new subscription feature. Fan creators can also be skeptical because historically, they’ve been exploited. In 2006, a platform called FanLib raised $3 million in venture capital to launch a platform where copyright owners could host fan fiction contests to boost excitement among fans. But FanLib required submitters — even those who didn’t win the contest — to forfeit the rights to their work, allowing it to be used for commercial purposes (the platform was sold to Disney and shut down two years later). Then, Amazon’s Kindle Worlds tried another version of this, authorizing self-published writers to create stories in licensed fictional worlds if they gave up a cut of sales. It didn’t work either.

Dorian is targeting a different market — it’s not about writing “Harry Potter” fan fiction, but rather, building off of the stories of peer writers on the platform while helping the original authors retain some financial stake in the derivative works they inspire.

“Dorian owns the technology, but the creators keep ownership of the IP,” Palatovska explained. She said that if someone posted an original story on Dorian, and then down the line, the author decided that they want to publish a novel that draws from their Dorian story, that would be allowed.

In select cases, writers can monetize fan fiction based on more popular works — Dorian worked with Lionsgate to license the “Blair Witch Project” for a limited-time event last October. But, for example, if someone tried to profit off of “Supernatural” fan fiction on Dorian, that wouldn’t fly, since the IP owner hasn’t licensed that content to Dorian.

“The majority of creators on the platform have been writing fiction and fan fiction for years, and they have never monetized anything,” Palatovska said.

When a fan wants to tell a story based on a game originally published on Dorian, the original author would be able to choose what percentage of royalties to give to fan writers if their derivative stories make money. As long as these derivative creations exist within the Dorian ecosystem, it’s fair game. Still, if a fan writer were to take their derivative works outside of Dorian to monetize them, that’s where they might run into legal issues.

Dorian offers an additional monetization option through live streaming. Users can livestream themselves playing their own story to generate hype, or they can play through another user’s story (again, the original IP owner could decide the royalty split).

Image Credits: Dorian

Though the live stream feature helps creators develop an audience, it’s a bit of a bold move for a relatively new app with a small team. The app, rated for ages 12+, has a predominantly Gen Z audience, and if content moderation tools aren’t in place, something can go wrong very quickly.

“We’re new, so [content moderation] is definitely something that is on our minds,” Palatovska said. “We are very happy and lucky to have an extremely well-behaved and collaborative community. It’s nearly 100% female, including the streamers, so we have never had any issues yet. Of course, as we are growing, this might happen, but we’re building some protections.”

Currently, hosts can kick people out of their streams if they misbehave, and viewers can report harmful users. Dorian also has its own human moderation team that helps out when possible.

With its new infusion of capital, Dorian plans to grow its team and license IP to host more in-app events like its collaboration with Lionsgate. But as the Ukrainian founder grows her company from San Francisco, she is also coping with the brutal attacks on her home country and trying to help her family who remains in Ukraine.

Many tech startups are helping support Ukrainian refugees, but Palatovska’s connection to the conflict is deeply personal. Dorian donated $10,000 to the Ukrainian Army and an additional $10,000 to the 1K Project, which helps families impacted by the war. It’s estimated that over three million Ukrainians refugees have fled their country since February 24, and as Dorian creates more roles, the company says it will proactively seek out talent who fled Ukraine or want to relocate when it’s safe to do so.

Dorian raises $3.25M for its no-code, interactive storytelling platform

Inside the Realms of Ruin

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Heyday raises $555M to buy up and scale more D2C brands on the Amazon marketplace universe

Consolidation to have better economies of scale is one of the biggest themes in the world of e-commerce, and today a player in the world of online retail is announcing a large round of funding to double down on its approach to the concept. San Francisco-based Heyday — which buys up and then grows direct-to-consumer merchants and brands that have found initial traction, leveraging the Amazon marketplace — has raised $555 million, a Series C that it will be using to continue expanding its technology, investing in business development, and to buy up more assets. Specifically, it will also be opening deepening its engagement in Asia (with a seventh office in China); hiring more brand management experts and other talent; investing in more product development; and building out its marketing, supply chain, data science and M&A tech stacks.

The Raine Group and Premji Invest co-led this round, with previous backers General Catalyst, Victory Park Capital, and Khosla Ventures also participating.

Heyday competes against a large field of startups also raising huge amounts of money to follow their own Amazon marketplace roll-up strategies. Other big names out of the U.S. include Thrasio (which picked up a cool $1 billion in October) and Perch ($775 million in May). Heyday has been moving at a fast clip to keep up since being founded in 2020. This latest round comes on the heels of a $70 million Series B that was raised only in May of this year, with the total capital raised by Heyday to $800 million, a mix of equity and debt (Heyday did not specify the proportions of equity and debt in this latest Series C).

“Our pace is insane,” said Sebastian Rymarz, Heyday’s co-founder and CEO, in an interview. “We were born 16 months ago and are already crossing $200 million in revenues.” (That’s an annual run rate figure.) The company said its brands are currently growing at a rate of 64% year-on-year compared to the broader e-commerce market.

Heyday has never disclosed its valuation, and Rymarz would only say that this latest round was made at “a very good valuation.”

That lack of detail is intentional. “I don’t want the team thinking or me getting into my head that ‘we’ve won,'” he continued. “We’re only 16 months in to what we think will be a multi-decade journey. I don’t want to celebrate valuations at this stage.”

However, as a point of reference, Thrasio is now valued at about $5 billion; Razor Group out of Berlin was valued at over $1 billion last week; and Perch also is now in the 9-figure range. As with all of these, Heyday is also profitable on an Ebitda basis, Rymarz confirmed to me.

There are millions of third-party sellers using Amazon as their primary route to market, and Heyday and others like it have seized on a prime opportunity to target them: often, these merchants lack the capital or appetite to take their businesses to the next level of growth. At the same time, as Amazon and other marketplaces mature, there are more sophisticated ways and more technology that could be used in aid of improving how to leverage them to find more buyers for products, amid a pool of me-too brands that are also finding ways to game Amazon’s algorithms.

The pitch that Heyday makes is that it has built technology that evaluates this sea of merchants to identify the most interesting of them all. Rymarz said that for every 100 merchants it looks at, it might consider buying just one.

When Heyday buys these companies, and their intellectual property, the idea is that it reaps the rewards of doing that scaling itself. It does so by integrating the business into a larger platform to manage marketing and sales analytics, production and distribution, and retail channels; and by following the company’s initial trajectory to continue developing more products to take along on that journey.

Given the number of third-party merchants and the gating factors for them scaling, this has become an area ripe for consolidation, and so, unsurprisingly, it has also become an area ripe for competition among consolidators.

In addition to Thrasio, Razor Group and Perch, others that have recently raised both equity and debt for the same ends include Heroes, which raised $200 million in August; Olsam with $165 million; Suma Brands ($150 million); Elevate Brands ($250 million); factory14 ($200 million); as well as Branded, SellerX, Berlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia. There are dozens more.

How Heyday differs from these others is that, at least up to now, it has focused not on quantity of merchants, but quality.

Rymarz said that Heyday currently has only 15 brands in its stable, compared to, say, 200+ for Thrasio and 150+ for Razor Group. Again, this is also intentional: “We have much larger brands, with five of them making up over 70% of our revenues.”

He positively bristles when Heyday is described a rollup play. “Amazon is a launchpad, and we are not an aggregator,” he said.

For competitive reasons, Heyday has never publicly disclosed any of the names of the brands that it owns, but they are products in categories like home and lifestyle. And the bigger strategy is not just to build up their profiles on Amazon but to extend to a variety of other channels, including placement in household-name brick and mortar chains. (Rymarz showed me several brands under the condition that I would not publish their names, but just so that I could get a better idea of what it owned. At least two of them gearing up to sell in stores like Target.)

Heyday’s pitch these days typically does not bring on any of the teams involved with the brands that it buys up (there are sometimes exceptions to that, Rymarz said), but it has been bringing on more people with extensive e-commerce experience into the team to build out its wider operation. In addition to hiring more branding and retailing teams, it has included adding a number of new executives, including a CFO (Navid Veiseh, previously at Amazon and Coupang); a CMO (Reema Batta, formerly of Opendoor and Expedia), and a chief administrative officer (Todd Heeter, formerly of Doma and Anixter).

It’s been interesting to see how so many investors have piled into the opportunity in the last couple of years. (Other big names that have been backing Amazon marketplace consolidators include SoftBank, BlackRock, Silver Lake, Target Global, Tiger Global and more.) Part of the appeal is that it gives investors a look into some of the massive e-commerce growth that we’ve seen over the last decade, in a landscape that has otherwise been dominated not by startups, but by big players like Amazon. That, of course, has become an even more acute opportunity in the last two years with the rise of Covid-19 and the accelerate shift we’ve seen to more people shopping online than ever before.

“We have been exceptionally impressed with Sebastian and his team, their vision, and commitment to operational excellence for the next generation of consumer brands,” said Jake Vachal, MD at The Raine Group, in a statement. “Heyday’s innovative approach to growing and incubating brands provides entrepreneurs access to leading technology, as well as deep-rooted expertise spanning operations and marketing. We are excited to be partnering with this team as they continue building a differentiated platform for quality, digital-first brands.”

Investors in this round said that Heyday’s particular approach was also a factor.

“Heyday’s differentiated strategy and world-class team stand-out in what is playing out to be one of the most explosive new industries,” said Sandesh Patnam, Managing Partner Premji Invest, in a statement. “We are excited to partner with the leadership team to help Heyday leave a mark on the e-commerce space.”

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Jackpocket raises $120M to expand its lottery app into mobile gaming

Apps that let people do virtually what they would have previously had to carry out in person have seen a boom in the last 20 months of pandemic living, and one of them today is announcing a big fundraise on the back of its own strong growth. Jackpocket, which currently has 2.5 million active users who use its app to buy tickets to play lotteries in 10 U.S. states, has picked up $120 million in a Series D round, funding that CEO and founder Peter Sullivan said it plans to use to expand from its core business of lottery ticket sales into a wider array of mobile gaming, and to take its business to more markets both in the U.S. and further afield, both on its own and in partnership with others.

“We expect by the end of Q1 to be in at least five other states,” Sullivan said, adding that technology investments are also on the to-do list, by bringing in more “best practices” from the worlds of e-commerce, subscriptions and mobile wallet services, alongside exploring other forms of gaming.

“What a lot of people don’t know about the lottery is that a percentage goes to good causes,” he said. New areas that Jackpocket wants explore include raffles, sweepstakes, bingo, social casino games. “We want to provide more fun game play and chances to win, and more ways to give back.”

This is what Jackpocket’s expansion strategy looks like according to its most recent pitch deck:

Left Lane Capital is leading the investment, with comedian Kevin Hart, Whitney Cummings, Mark Cuban and Manny Machado, among the individuals participating, alongside previous backers Greenspring Associates, The Raine Group, Anchor Capital, Gaingels, Conductive Ventures and Blue Run Ventures; and new backer Santa Barbara Venture Partners. (Jackpocket was founded in New York but also has an operation out of Santa Barbara, CA; that’s where CEO and founder Peter Sullivan is based and was speaking from when I interviewed him for this story.)

Sullivan said the company would not be disclosing its valuation with this round, which brings the total raised by the company to just under $200 million.

For some more context: Jackpocket last raised money only in February of this year, a $50 million Series C round, when it was valued at $160 million post-money, according to PitchBook data. But it has grown since then: its current 2.5 million active user figure is up 300% in the last eight months.

Sullivan said that the idea for Jackpocket came to him in part because of his father, who was, in his words, “a blue collar guy born in Brooklyn who played the state lottery in New York, but was computer illiterate.”

The year was 2012, and one of the big themes in the world of tech at the time was the rise of apps that were bringing previously-offline services into the digital world; another big theme was the surge of interest in mobile gaming. Putting those trends together, Sullivan saw an opportunity to build an app to order lottery tickets — something that typically required people to go into convenience stores that could be done instead from the phone.

“We positioned ourselves as the Uber or Instacart for lottery,” he said.

Jackpocket is part lottery ticket storefront, but also part virtualizer of the whole lottery experience. As Sullivan described it to me, people use the mobile app to order lottery tickets. At the back end, Jackpocket is doing the actual buying in advance, using proprietary software that it built to take “scans” of each ticket that the player buys. Players can see the ticket, which is watermarked by Jackpocket to keep it unique and authentic.

As with all kinds of other real-money online gaming, Jackpocket is built with various levers so that it complies with different regulations around age, geographical location (you have to be a resident of the state where you are playing). This includes using GPS technology to identify users’ locations, but also checks to determine whether people are using VPNs, or are tied to computers via other applications. Players also need to upload identification to verify themselves and their ages.

The company has also made a play for being a more “responsible” player in the gambling world. It monitors user spending and doesn’t let anyone spend more than $100 per day, or whatever limit under that amount they choose to set.

Its business model is based on taking a 9% cut on any transactions it makes itself. That means, if you put money into the app to buy tickets, you’re charged 9%, but if you use your winnings to play, you do not. Nor are you charged to withdraw money.

All the same, and even with a clear market opportunity (its biggest competition at the time was the fragmented convenience store market) the startup found it very hard initially to raise money.

“It was considered taboo to do real money gaming at the time,” Sullivan said of his experience of knocking on doors in Sand Hill Road in the early days, one reason why the company raised relatively little (around $25 million) before this year’s Series C. “Nine years ago investors wouldn’t talk to us, but I knew lottery would hbe the key here,” he said. “It is the largest amount of real money gaming, largest net and lightest touch point and it works well cross-selling it to other formats.”

The investment tide really started to turn on the back of the success of companies like FanDuel and other real-money gaming has changed the tune for lottery, and Jackpocket, too. The company cites figures from industry group North American State and Provincial Lotteries that estimate that the total annual spend from consumers on lotteries is $85.6 billion. This is more than the combined spend in several other leisure categories: print and digital books ($1.8 billion), movie tickets ($11.9 billion), video games ($31.5 billion), concert tickets ($10.4 billion) and sporting events ($17.7 billion).

“I saw my dad buy these tickets, but I never knew how big it was,” Sullivan said. And that’s not considering also the changing demographics of lottery ticket buyers, where some 70% of buyers are under the age of 45 years old. “It’s a more tech-savvy and affluent buyer,” Sullivan said, which also plays well into an app-based experience.

The past two years’ particular set of circumstances, meanwhile, has also given a big fillip to companies like Jackpocket, with the consumers who would have previously visited their corner shops to buy items like lottery tickets spending more time at home to socially distance and avoid the spread of Covid-19, and many of those small stores that remained open switching to delivery services, or making it generally less easy to pop in to buy tickets.

The “cross-selling” other formats, as Sullivan describes it, will be an important area to watch. It could be about selling other kinds of lottery-style experiences, but also potentially partnering with the companies like, say instant grocery delivery startups, which are the digital extensions of the convenience stores that have been lottery’s retail bread and butter up to now, or other gaming companies. That potential is one reason to raise so much right now.

“Mobile gaming and lottery is experiencing an exciting and unprecedented level of growth and expansion.  At Left Lane, it’s clear to us that Jackpocket is spearheading this progress and innovating at a pace never seen before in this industry,” said Harley Miller, founder and managing partner of Left Lane Capital, in a statement. “We were invigorated by the opportunity to take part in this historic moment and look forward to supporting Jackpocket’s role in this landscape.” 

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PubNub raises $65M to build and run data streams for messaging, presence and other real-time aspects of ‘virtual spaces’

Data streams with continual, real-time updates of information are a critical building block of how apps and sites function today, and now a startup that has built a platform to power those data streams is announcing a growth round of funding on the back of strong growth in its business into a wider set of use cases. PubNub, which provides APIs to power messaging and data updates for apps and other digital businesses, has picked up $65 million, a Series E that the San Francisco-based startup will be using to continue expanding the functionality on its platform, as well as for geographical expansion: first up will be a new Asia Pacific office in Singapore.

PubNub tells me that its messaging, presence, and other data-based APIs today are used across some 600 million devices in more than 70 countries, with some 900,000 developer projects generating some 21 petabytes of data on a monthly basis. Its “thousands” of customers include the likes of Adobe, Atlassian, DocuSign and RingCentral. More widely, verticals where it is seeing strong traction include gaming, virtual events, enterprise collaboration, chat, rideshare/delivery services, telehealth applications, connected fitness, and smart home products — a range of areas that rely on the concept of “virtual spaces” where regularly updated streams of data — be it the progress of a delivery, or how many steps you’ve taken, how much energy you’ve used, or who is participating or chatting in an online meeting — are a core part of the user experience.

“We are seeing an explosion in what customers are doing using PubNub,” PubNub’s CEO and co-founder Todd Greene said in an interview. “From the time we started PubNub the vision was what software is needed to power virtual spaces. At first it was messaging, but over time we saw from customers that communication wasn’t enough.”

The funding is being led by Raine Group with others including Sapphire Ventures, Scale Ventures, HPE, and Bosch also participating. PubNub is not disclosing its valuation, but for some context, it has raised more than $130 million, and it was estimated by PitchBook to be valued at around $220 million in its last equity round in 2019.

I have confirmed with Greene that the San Francisco-based startup’s valuation now is “much higher” than that, although it’s hard to quantify PubNub’s growth since it has not disclosed how much data it has worked with on a monthly basis, just the number of messages — 1.3 trillion messages in 2019 — a figure it’s not updating this time around. It says that customer bookings have grown 200% year-over-year in 2021.

PubNub works very much behind the scenes — you will never see a “powered by PubNub” message come across your screen when its APIs are being used — but it is also working in what has become a central and critical part of how all digital services operate.

More and more aspects of our day-to-day lives are carried out, or dependent in some way, on digital experiences, and part of the reason why is because those digital experiences themselves have come a long way. Apps, sites and connected devices have more functionality, more data, and better user experience built into them than ever before, and so we use (and rely) on them more as a result. Unsurprisingly, those providing the infrastructure to make all that work as it should are seeing a boost of business growth and investor interest.

Added to all that, the “metaverse” has definitely picked up some hype as a concept in recent times, which might also give a push to companies that talk about powering virtual spaces as PubNub does, although the bigger picture is a little less buzzy and just how these services have evolved and operate already.

PubNub is not the only one seeing its star rise in that context. Others like Twilio, SendBird, MessageBird and Sinch also are providing API-based messaging and other communications services used by third-party apps, sites and other digital businesses. More directly competitive with PubNub are others providing API-based routes to build any kind of data updates, messaging or otherwise, that turn the wheels of any real-time services. They include Ably out of London, Techstars-incubated Cometchat, and Google’s Firebase.

Within that wider context, PubNub’s selling points have been its geographical reach with global points of presence, making it compliant with a variety of regional data protection rules including HIPAA, GDPR, and SOC 2 Type 2; and the fact that it is adding more functionality, both natively and by way of integrations with other services, all of which it lets developers control and monitor by way of a centralized dashboard. Services that it currently covers include in-app chat, geolocation, virtual events, push notifications and IoT services.

One might think that the current shift in digital culture towards less, not more, notifications overall might prove to be a challenging climate for the likes of PubNub. After all, information overload is not really a contested topic anymore, nor is the concept of apps draining your data or monitoring you all the time whether or not you are using them, even if how best to handle these issues, and whether the overall effects are bad or good, still may be. But Greene says that is not the case.

“Even back when we just did messaging, with the push notification feature, 99% of the messages were in-app. If you are ordering a car and watching it move on the screen, it’s effectively many messages [data pushes] coming to show you that. Companies like Apple and Google aren’t blocking that, so the shift with notifications hasn’t effected us at all,” he said, adding, “It has impacted in a positive way. In the past apps may have provided pushes to let you know something has happened. Now, they are not watching that anymore [by default] so now focusing on the in-app experience is more important.”

Lead investor Raine Group is an interesting backer for the startup as it continues to grow. The company is not just a prolific investor — but also counts a very extensive list of customers among those it advises, where it has been involved in a ton of M&A deals involving companies like Apple, Tencent, ByteDance, Warner Music, SoftBank, Uber and more. This opens the door for PubNub to leverage that network for business development and to make more customer inroads.

“We are excited to be partnering with PubNub, powering the future of real-time digital and social experiences in a world where constraints on developer time and engineering resources are placing an increasing demand for software solutions and APIs,” said, Christopher Donini, MD of The Raine Group, in a statement. “PubNub’s leading solution provides easy-to-implement reliability, security, and low-latency, which we believe solves a pervasive problem at the intersection of Raine’s global network across technology, media, and telecommunications.” Donini and managing partner Kevin Linker are joining PubNub’s board of directors with this round.

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Moonbug nabs $145M to buy up kids’ digital media brands

Moonbug, a kid-focused media business founded by a pair of entertainment executives, has brought in a $145 million Series A investment led by The Raine Group, a merchant bank that supports technology, media and telecom efforts.

Venture capital firms Felix Capital and Fertitta Capital also participated in the financing.

Moonbug, headquartered in London, acquires and distributes media content made for kids. Recently, the company completed its first IP acquisition of Little Baby Bum, a children’s sing-along show popular on YouTube, Amazon and Netflix. According to a Los Angeles Times report, one of the show’s videos is the 20th most popular video in YouTube history, boasting 2.1 billion views. In total, Moonbug says Little Baby Bum has clocked in 23 billion views across multiple platforms.

With its Series A investment, Moonbug will amp up its M&A activity to expand its portfolio of content that “helps children build essential life skills.” Moonbug chief executive officer René Rechtman, who spent the last three years as the head of digital studios at The Walt Disney Co., says they plan to acquire eight media businesses.

Rechtman and John Robson, a former senior vice president of digital distribution at Paramount Pictures and vice president of global content at HTC, launched Moonbug earlier this year.

“I see an independent creator and I put them in very simple brackets: one is high viewership and engagement and one is quality of IP,” Rechtman told TechCrunch. “If they have both of those, I am very interested.”