Tag: Thirty Five Ventures

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New bank, who dis? Lifestyle-focused neobank Cogni pivots to web3

Digital banking startup Cogni is joining the ranks of companies hopping on the crypto bandwagon. The mobile-based platform, founded in 2016 out of Barclays’ accelerator program (which is operated by Techstars), launched with the intent to offer personalized banking products suited to the lifestyles of those in the 18-to-35 crowd, CEO and founder Archie Ravishankar told TechCrunch.

Now, Cogni has raised a $23 million funding round led by Hanwha Asset Management and CaplinFO with a new mandate — bringing web2 and web3 services together on one platform, Ravishankar said.  Solana Ventures, FTX Ventures, Ship Capital, Thirty Five Ventures, ROK Capital, Bluewatch Ventures, and Alsara Investment Group also participated in the fundraise.

The company last raised a $1.7 million seed round in November 2018 before it officially launched, and subsequently raised a $5 million seed extension round last year, according to Ravishankar.

“When we first started, crypto was not part of our agenda, because we really wanted to build a financial platform that suited people’s lifestyles. When crypto and blockchain became people’s lifestyle in 2021, that’s when we decided that it’s a lot more attractive to build on web3 than web2,” Ravishankar said.

Cogni founder and CEO Archie Ravishankar

Cogni founder and CEO Archie Ravishankar

The company currently offers core banking services such as deposit accounts for free to its customers through a borrowed bank charter, like many other neobanks including Chime. It also offers two lifestyle-oriented products — discounted digital gift cards to popular brands such as Adidas and Sephora that it sources through an aggregator and a feature that calculates a person’s carbon emissions based on their transactions. Ravishankar said the company serves “tens of thousands” of customers in the United States, though he declined to share a specific figure.

The first crypto-related product it plans to launch is a multi-chain wallet, which Ravishankar estimates will be released in approximately two to three months’ time. The Cogni platform will also offer its users access to an exchange to trade their cryptocurrency through a partnership; Ravishankar said it has narrowed down the contenders for this offering to two major exchanges, but did not share which ones it is considering.

He noted that the company has not yet decided if the wallet will be non-custodial, meaning users would hold and be able to access their own cryptocurrencies to transact directly. For reference, major crypto exchanges such as Coinbase offer both types of wallets, though the Coinbase default product is a custodial wallet wherein users can trade crypto based on its price movements but cannot directly access the currency they own.

After launching the wallet, Cogni plans to offer DeFi savings account on the Solana blockchain with the goal of offering higher yields than traditional savings accounts, a typical feature of DeFi products in their current state. While the company hasn’t officially chosen a partner for this product, it is considering working with its DeFi-focused strategic investor Ship Capital, according to Ravishankar.

In Ravishankar’s view, Cogni’s pivot to web3 still fits within the company’s original goal to build a bank that aims to capture discretionary spend by young consumers. Cogni will use its basic banking services as an onboarding platform for customers and then build more “social and lifestyle services” related to crypto and web3 in the long-term, he noted.

Both the neobank market and the field of web3-focused banking services are highly competitive. Cogni’s pivot to web3 is likely a bid to stand out among the ranks of digital bank competitors each offering its own interface and set of niche products tailored to specific demographics, while ultimately performing the same core functions as traditional banks.

Crypto-focused neobank Cogni's user interface

Lifestyle-focused neobank Cogni’s mobile interface Image Credits: Cogni

On the crypto side, there are plenty of independent providers of DeFi savings accounts, standalone crypto exchanges and custodial and non-custodial wallets on the market today. Ravishankar believes Cogni will be able to stand out by offering all of the above on one platform that also offers traditional banking services. He also pointed to Cogni’s user-friendly interface and focus on customer service as potential advantages in this crowded field.

Most Americans “are looking for a plug-and-play solution from the existing system into web3,” Ravishankar said. “They don’t want to download multiple applications or get to know the jargon,” he continued, explaining that a simple, easy-to-use solution is likely to be more desirable for users.

Cogni has 24 employees in New York and San Francisco today, with another eight across Europe, according to Ravishankar. The company had ~18 employees when it raised its seed round in 2018 and then downsized during the pandemic before growing again to its current size, Ravishankar said. It is focused on making new hires with a background in web3, both on the product and engineering teams, and is also beefing up its compliance team to gear up for the new product launches, he added.

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NBA Top Shot maker Dapper Labs is now worth $2.6 billion thanks to half of Hollywood, the NBA, and Michael Jordan

From the early success of Crypto Kitties to the explosive growth of NBA Top Shot, Dapper Labs has been at the forefront of the cryptocurrency collectible craze known as NFTs.

Now the company is reaping the benefits of its trailblazing status with a new $305 million financing led by some of the biggest names in Hollywood, sports, and investing.

The new round values the company at a whopping $2.6 billion, according to multiple media reports, and comes at a time when NFTs have captured the popular imagination.

Leading the company’s financing was Coatue, the financial services firm that’s behind many of the biggest later stage tech deals. But heavy hitters from the entertainment world also took their cut — these are folks like NBA legend Michael Jordan as well as current players and funds including Kevin Durant, Andre Iguodala, Kyle Lowry, Spencer Dinwiddie, Andre Drummond, Alex Caruso, Michael Carter-Williams, Josh Hart, Udonis Haslem, JaVale McGee, Khris Middleton, Domantas Sabonis, Klay Thompson, Nikola Vucevic, Thad Young, and Richard Seymour’s 93 Ventures.

Entertainment and music heavyweights including Ashton Kutcher and Guy Oseary’s Sound Ventures, Will Smith and Keisuke Honda’s Dreamers VC, Shawn Mendes and Andrew Gertler’s AG Ventures, Shay Mitchell, and 2 Chainz also bought in on the action.

And from the venture world comes other strategic investors like Andreessen Horowitz, The Chernin Group, USV, Version One, and Venrock.

The company said it would use the funds to continue building out NBA Top Shot and expanding the updated digital trading card platform to other sports and a broader creator community.

Top Shot has already notched over $500 million in sales for its animated trading cards featuring things like LeBron James dunking and the sky (at least for now) is seemingly the limit for the collectible applications of blockchain.

It’s like the one thing that cryptocurrency can do really well and it’s been embraced far beyond the world of sports collectibles. The recent $69 million sale of a digital piece of art at Christies also marks a watershed moment for art world.

Beeple’s $69 million NFT sale marks a potentially transformative moment for the art world

“NBA Top Shot is successful because it taps into basketball fandom – it’s a new and more exciting way for people to connect with their favorite teams and players,” said Roham Gharegozlou, CEO of Dapper Labs. “We want to bring the same magic to other sports leagues as well as help other entertainment studios and independent creators find their own approaches in exploring open platforms. NFTs unlock a new model for monetization that benefits the fans much more than advertising or sponsorships.”

Powering the Top Shot system and Dapper Labs’ other offerings is a new blockchain protocol called Flow, which purports to handle mainstream consumer applications at scale, and can support mass adoption.

Flow also allows for transactions using fiat currency and credit cards in addition to provide a much needed ease of cryptocurrency, and can keep customers safe from the fraud or theft common in cryptocurrency systems, according to a statement from Dapper Labs.

The NFT market is just getting started, but where is it headed?

Flow enables NFT marketplaces and other decentralized applications that need to scale to handle mainstream demand without extremely high transaction costs (“gas fees”) or environmental concerns, the company said.

“NBA Top Shot is one of the best demonstrations we’ve seen of how quickly new technology can change the landscape for media and sports fans,” said Kevin Durant, Co-Founder of Thirty Five Ventures. “We’re excited to follow the progress with everything happening on Flow blockchain and use our platform with the Boardroom to connect with fans in a new way.”

Already companies like Warner Music Group, Ubisoft, Warner Media, and the UFC, as well as thousands of third party developers, artists, and other creators are using the Flow mainnet to sell collectible cards, and develop custodial wallets.

Additional investors in the round include: MLB players like Tim Beckham and Nolan Arenado; NFL players: Ken Crawley, Thomas Davis, Stefon Diggs, Dee Ford, Malcom Jenkins, Rodney McLeod, Jordan Matthew, Devin McCourty, Jason McCourty, DK Metcalf, Tyrod Taylor, and Trent Williams; team ownership including Vivek Ranadive (Kings), and notable sports investors Bolt Ventures.

NFTs could bridge video games and the fashion industry

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Cannabis dispensaries’ online sales are way up, and Dutchie, which connects them to their customers, is a major beneficiary

Dutchie, a nearly three-year-old, Bend, Ore.-based software company focused on connecting consumers with cannabis dispensaries that pay it a monthly subscription fee to create and maintain their websites, process their orders, and track what needs to be ready for pickup, has raised $35 million in Series B funding. The capital came both new investors Thrive Capital and Starbucks founder Howard Schultz, along with earlier backers, including Kevin Durant’s Thirty Five Ventures and the cannabis-focused fund Casa Verde Capital.

The money comes hot on the heels of Dutchie’s first major round of funding — $15 million that it closed last September — and suggests that the cannabis industry has fared better during the COVID-19 pandemic than people outside the industry might imagine.

We had a fast chat yesterday with the company’s cofounder and CEO, Ross Lipson, about the year that Dutchie is having.

TC: I’d seen recently that Dutchie has added contactless payments.

RL: Yes, when the pandemic hit, virtually all of our dispensaries shifted to a curbside pickup model. We built a solution that allows customers to select curbside at checkout, and also includes a way to notify the dispensary when they arrive and provides them information on how to locate their vehicle.

TC: A year ago, there were more than 30 states where cannabis was either medically legal or that had legalized the recreational use of marijuana. How has that changed?

RL: We now work with over 1,300 dispensaries in 32 markets. By comparison, a year ago we were only operating in 9 markets. Nationwide, 47 out of 50 states now allow some form of legal cannabis, and 2020 could bring full legalization in major markets such as New Jersey and Arizona.

TC. Can you put that into context? How many dispensaries are there in the U.S.?

RL: Dutchie processes 10% of all legal cannabis sales worldwide and powers over 25% of dispensaries. That’s more than 75,000 orders a day.

TC: You had 36 employees the last time we talked. What’s that number now?

RL: We currently have 102 employees and we aim to double our team by the end of 2021.

TC: Aside from helping dispensaries shift to a curbside model, how has the pandemic impacted your business?

RL: Virtually all states deemed cannabis dispensaries as essential businesses [once COVID took hold]. Many still had to comply with state laws and close their physical stores, though, leaving only one option for sales – online ordering. We saw dispensaries shift from about 30% of overall sales coming from Dutchie to upwards of 100%, and our business grew 600% in roughly one month.

Overall, we’ve seen a 700% surge in sales volume during the pandemic. We had to scale quickly to deal with six times the load on our technology.

TC: Think those numbers will shift around as some parts of the country open up?

RL: Dispensaries are poised to keep online ordering and e-commerce options available because it is part of what their customers now expect.

Pictured, left to right, above: Ross and Zach Lipson (Zach, Ross’s brother, is the company’s cofounder and chief product officer).

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These brothers just raised $15 million for their startup, Dutchie, a kind of Shopify for dispensaries

Ross Lipson comes from an entrepreneurial family, so perhaps it’s no wonder that as a college student, he dropped out of school to jump into the online food space, including cofounding, then selling, one of Canada’s first online food ordering service startups.

It’s even less surprising that having gone through that experience, Lipson would use what he learned in the service of another startup: Dutchie, a two-year-old, Bend, Oregon-based startup whose software is used by a growing number of cannabis dispensaries that pay the startup a monthly subscription fee to create and maintain their websites, as well as to accept orders and track what needs to be ready for pickup.

The decision is looking like a smart one right now. Dutchie says it’s now being used by 450 dispensaries across 18 states and that it’s seeing $140 million in gross merchandise volume. The company also just locked down $15 million in Series A funding led by Gron Ventures, a new cannabis-focused venture fund with at least $117 million to invest. Other participants in the round include earlier backers Casa Verde Capital, Thirty Five Ventures (founded by NBA star Kevin Durant and sports agent Rich Kleiman), Sinai Ventures and individual investors, including Shutterstock founder and CEO Jon Oringer.

Altogether, Dutchie (named after the song), has now raised $18 million. We talked earlier today with Lipson about the company, its challenges, and working with his big brother Zach, himself a serial entrepreneur who cofounded Dutchie and today serves as its chief product officer while Ross serves as CEO.

TC: It’s always interesting when siblings team up. Did you always get along with your brother?

RL: We complement each other strongly. I’m energy, I’m sales and business development. I’m fast moving by nature and the guy who wants to drive the car as fast as possible. Zach is the one who wants to make sure that we’re doin everything right. He’s the methodical one. We really do understand each other quite well and appreciate each other’s strengths and weaknesses, which enables us to meet in the middle on a lot of things.

TC: It’s also interesting that you’ve both been founders beginning around the time you were in college. Were your parents entrepreneurs?

RL: Our father is a founder and has run his own business for the last 35 years. Our parents also always pitched us that anything is possible and encouraged us to go for it. He was the dreamer and our mom was the cheerleader, which is a pretty nice combination.

TC: You started Dutchie a couple of years ago. Is running this startup more or less challenging than your experience in the food delivery business?

RL:  It’s our second year in business, and we’ve seen some explosive, unprecedented growth. As for whether it’s harder or easier than food, we’re very product and user centric, and by that we mean consumers but also dispensaries. We’re focused on the customer all day, every day, with a team that ensures that they have support, that they receive their orders, that the orders are out the door quickly or at least, ready for pickup. We make sure the photos work, that different potencies are marked. Our system is kind of like a Shopify of the cannabis space maybe meets DoorDash.

TC: You don’t deliver, though.

RL: No. We don’t do delivery for legal reasons; the dispensaries [handle this piece].

TC: You’re charging like other software-as-service businesses. Do you also take a cut of each sale?

RL: We don’t charge on transaction volume.

TC: You’re working with 450 dispensaries. Is there any way to know what percentage of the overall market that is, and how much is left for you to chase after?

RL: First, there are more than 30 states where cannabis is either medically legal or that have legalized the recreational use of marijuana and we operate in both types of markets. It’s hard to know the actual count [of dispensaries], because they are always being formed, getting acquired, or going out of business, but counting registered dispensaries, we work with more than 15 percent of them right now.

TC: Who are you biggest competitors? Eaze? Leafly? They also help consumers find cannabis and, in Eaze’s case, deliver it, too.

RL: Eaze is more focused on delivery where we’re more focused on pickup. It’s also only avaiable in California and Oregon, whereas we’re in 18 states. They educate the consumer about online ordering, which is great, but they also own the consumer experience, where we’re really powering the dispensary.

Leafly and Weedmaps are really different types of platforms; they’re mostly known for their dispensary and strain reviews, where we’re strictly an online ordering service.

TC: You’ve raised a big Series A for a company in the cannabis space. Do you have concerns about there being later-stage funding available when you need it?

RL: It’s true the most investors still haven’t touched cannabis, though you are seeing bigger deals. Thrive Capital led that [$35 million] round in [the online cannabis inventory and ordering platform] LeafLink [last month]. You saw Tiger Global [lead a $17 million round ] in [the software platform for cannabis dispensaries] Green Bits last summer. It’s a big advantage to the funds that can right now invest because there are these barriers to entry and they are finding deals that are promising and they can get in early and without competition.

Pictured, left to right, above: Ross and Zach Lipson