Jul
10
2020
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Daily Crunch: Rackspace is going public again

We look at Rackspace’s finances, a Facebook code change causes numerous app issues and electric vehicle company Rivian raises $2.5 billion. Here’s your Daily Crunch for July 10, 2020.

The big story: Rackspace is going public again

The cloud computing company first went public in 2008, before accepting a $4.3 billion offer to go private from Apollo Global Management. Rackspace says it will use the proceeds from the IPO to lower its debt load.

Alex Wilhelm took a deep dive into Rackspace’s finances, concluding that the proper valuation is a “puzzle”:

The company is tech-ish, which means it will find some interest. But its slow growth rate, heavy debts and lackluster margins make it hard to pin a fair multiple onto.

The tech giants

New report outlines potential roadmap for Apple’s ARM-based MacBooks — Analyst Ming-Chi Kuo said that a 13.3-inch MacBook powered by Apple’s new processors will arrive in the fourth quarter of this year.

Facebook code change caused outage for Spotify, Pinterest and Waze apps — Looks like Facebook was responsible for some crashing apps this morning.

California reportedly launches antitrust investigation into Google — This makes California the 49th state to launch an antitrust investigation into the search giant, according to Politico.

Startups, funding and venture capital

Rivian raises $2.5 billion as it pushes to bring its electric RT1 pickup, R1S SUV to market — The company plans to bring its electric pickup truck and SUV, as well as delivery vans for Amazon, to market in 2021.

A glint of hope for India’s food delivery market as Zomato projects monthly cash burn of less than $1 million — “We’ll only lose $1 million this month” doesn’t feel like a huge accomplishment, but at least things seem to be headed in the right direction.

Advice and analysis from Extra Crunch

How Thor Fridriksson’s ‘Trivia Royale’ earned 2.5 million downloads in 3 weeks — The latest game from the QuizUp founder was (briefly) the top app in the App Store. We talk to Fridriksson about how he did it.

COVID-19 pivot: Travel unicorn Klook sees jump in staycations — With bookings for overseas experiences plummeting, Klook began offering do-it-yourself kits for stay-at-home projects and partnered with landmark sites to offer virtual tours.

Operator Collective brings diversity and inclusion to enterprise investing — The firm, founded last year, said it currently has 130 operator LPs, 90% of them women and 40% of them people of color.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

NASA signs agreement with Japan to cooperate across Space Station, Artemis and Lunar Gateway projects — Japan first expressed its intent to participate in the Lunar Gateway program in October 2019, making it one of the first countries to do so.

Equity: Silicon Valley is built on immigrant innovation — The latest episode of Equity discusses how recent visa changes will affect Silicon Valley.

Five reasons to attend TC Early Stage online — July 21 and 22! I will be there!

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Jul
10
2020
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Rackspace preps IPO after going private in 2016 for $4.3B

After going private in 2016 after accepting a $32 per share, or $4.3 billion, price from Apollo Global Management, Rackspace is looking once again to the public markets. First going public in 2008, Rackspace is taking second aim at a public offering around 12 years after its initial debut.

The company describes its business as a “multicloud technology services” vendor, helping its customers “design, build and operate” cloud environments. That Rackspace is highlighting a services focus is useful context to understand its financial profile, as we’ll see in a moment.

But first, some basics. The company’s S-1 filing denotes a $100 million placeholder figure for how much the company may raise in its public offering. That figure will change, but does tell us that firm is likely to target a share sale that will net it closer to $100 million than $500 million, another popular placeholder figure.

Rackspace will list on the Nasdaq with the ticker symbol “RXT.” Goldman, Citi, J.P. Morgan, RBC Capital Markets and other banks are helping underwrite its (second) debut.

Financial performance

Similar to other companies that went private, only later to debut once again as a public company, Rackspace has oceans of debt.

The company’s balance sheet reported cash and equivalents of $125.2 million as of March 31, 2020. On the other side of the ledger, Rackspace has debts of $3.99 billion, made up of a $2.82 billion term loan facility, and $1.12 billion in senior notes that cost the firm an 8.625% coupon, among other debts. The term loan costs a lower 4% rate, and stems from the initial transaction to take Rackspace private ($2 billion), and another $800 million that was later taken on “in connection with the Datapipe Acquisition.”

The senior notes, originally worth a total of $1,200 million or $1.20 billion, also came from the acquisition of the company during its 2016 transaction; private equity’s ability to buy companies with borrowed money, later taking them public again and using those proceeds to limit the resulting debt profile while maintaining financial control is lucrative, if a bit cheeky.

Rackspace intends to use IPO proceeds to lower its debt-load, including both its term loan and senior notes. Precisely how much Rackspace can put against its debts will depend on its IPO pricing.

Those debts take a company that is comfortably profitable on an operating basis and make it deeply unprofitable on a net basis. Observe:

Image Credits: SEC

Looking at the far-right column, we can see a company with material revenues, though slim gross margins for a putatively tech company. It generated $21.5 million in Q1 2020 operating profit from its $652.7 million in revenue from the quarter. However, interest expenses of $72 million in the quarter helped lead Rackspace to a deep $48.2 million net loss.

Not all is lost, however, as Rackspace does have positive operating cash flow in the same three-month period. Still, the company’s multi-billion-dollar debt load is still steep, and burdensome.

Returning to our discussion of Rackspace’s business, recall that it said that it sells “multicloud technology services,” which tells us that its gross margins will be service-focused, which is to say that they won’t be software-level. And they are not. In Q1 2020 Rackspace had gross margins of 38.2%, down from 41.3% in the year-ago Q1. That trend is worrisome.

The company’s growth profile is also slightly uneven. From 2017 to 2018, Rackspace saw its revenue expand from $2.14 billion to $2.45 billion, growth of 14.4%. The company shrank slightly in 2019, falling from $2.45 billion in revenue in 2018 to $2.44 billion the next year. Given the economy that year, and the importance of cloud in 2019, the results are a little surprising.

Rackspace did grow in Q1 2020, however. The firm’s $652.7 million in first-quarter top-line easily bested in its Q1 2019 result of $606.9 million. The company grew 7.6% in Q1 2020. That’s not much, especially during a period in which its gross margins eroded, but the return-to-growth is likely welcome all the same.

TechCrunch did not see Q2 2020 results in its S-1 today while reading the document, so we presume that the firm will re-file shortly to include more recent financial results; it would be hard for the company to debut at an attractive price in the COVID-19 era without sharing Q2 figures, we reckon.

How to value Rackspace is a puzzle. The company is tech-ish, which means it will find some interest. But its slow growth rate, heavy debts and lackluster margins make it hard to pin a fair multiple onto. More when we have it.

Jul
10
2020
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Operator Collective brings diversity and inclusion to enterprise investing

When Mallun Yen started Operator Collective last year, she wanted to build an investment firm for people who didn’t have a voice in Silicon Valley. That meant connecting women and people of color with operators who have been intimately involved in building companies from the ground up, then providing early-stage investment.

She then brought in Leyla Seka as a partner. Seka helped build the AppExchange at Salesforce into a powerful marketplace for companies built on top of the Salesforce platform, or that plugged into the platform in some meaningful way to sell their offerings directly to Salesforce customers. Through that role, she met a lot of people in the startup world, and she saw a lot of inequities.

Yen, whose background includes eight years as a VP at Cisco, and co-founder of Saastr with Jason Lemkin, wanted to build a different kind of firm, one that connected these operators — women like herself and Seka, who had walked the walk of running substantial businesses — with people who didn’t typically get heard in the corridors of VC firms.

Those operators themselves tend to be underrepresented at investment shops. The firm today consists of 130 operator LPs, 90% of whom are women and 40% people of color (which includes Asians). One way that the company can do this is by removing rigid buy-in requirements. LPs can contribute as little as $10,000, all the way up to millions of dollars, depending on their means, and that makes for a much more diverse pool of LPs.

While Seka admits they are far from perfect, she says they are fighting the good fight. So far, the company has invested in 18 startups with a more diverse set of founders and executives than you find at most firms that invest in enterprise startups. That means that 67% of their investments include people of color (which breaks down to 44% Asian, 17% Latinx and 6% Black), 56% include a female founder, 56% have an immigrant founder and 33% have a female CEO.

I sat down with Yen and Seka to discuss their thinking about enterprise investing. While they have a far more inclusive philosophy than most, their general approach to enterprise investing isn’t all that different than what we’ve seen in previous surveys with enterprise investors.

Which trends are you most excited about in the enterprise from an investing perspective?

Jul
10
2020
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What do investors bidding up tech shares know that the rest of us don’t?

The biggest story to come out of the post-March stock market boom has been explosive growth in the value of technology shares. Software companies in particular have seen their fortunes recover; since March lows, public software companies’ valuations have more than doubled, according to one basket of SaaS and cloud stocks compiled by a Silicon Valley venture capital firm.

Such gains are good news for startups of all sizes. For later-stage upstarts, software share appreciation helps provide a welcoming public market for exits. And, strong public valuations can help guide private dollars into related startups, keeping the capital flowing.


The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, and now you can receive it in your inbox. Sign up for The Exchange newsletter, which drops every Friday starting July 24.


For software-focused startup companies, especially those pursuing recurring revenue models like SaaS, it’s a surprisingly good time to be alive.

Indeed, after COVID-19 hit the United States, layoffs and rising software sales churn were key, worrying indicators coming out of startup-land. Since then, the data has turned around.

As TechCrunch reported in June, startup layoffs have declined and software churn has recovered to the point that business and enterprise-focused SaaS companies are on the bounce.

But instead of merely recovering to near pre-COVID levels, software stocks have continued to rise. Indeed, the Bessemer Cloud Index (EMCLOUD), which tracks SaaS firms, has set an array of all-time highs in recent weeks.

There’s some logic to the rally. After speaking to venture capitalists over the past few weeks, notes from EQT VenturesAlastair Mitchell, Sapphire’s Jai Das, and Shomik Ghosh from Boldstart Ventures paint the picture of a possibly accelerating digital transformation for some software companies, nudged forward by COVID-19 and its related impacts.

The result of the trend may be that the total addressable market (TAM) for software itself is larger than previously anticipated. Larger TAM could mean bigger future sales for and more substantial future cash flows for some software companies. This argument helps explain part of the market’s present-day enthusiasm for public tech equities, and especially the shares of software companies.

We won’t be able explain every point that Nasdaq has gained. But the TAM argument is worth understanding if we want to grok a good portion of the optimism that is helping drive tech valuations, both private and public.

Jul
09
2020
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Docker partners with AWS to improve container workflows

Docker and AWS today announced a new collaboration that introduces a deep integration between Docker’s Compose and Desktop developer tools and AWS’s Elastic Container Service (ECS) and ECS on AWS Fargate. Previously, the two companies note, the workflow to take Compose files and run them on ECS was often challenging for developers. Now, the two companies simplified this process to make switching between running containers locally and on ECS far easier.

docker/AWS architecture overview“With a large number of containers being built using Docker, we’re very excited to work with Docker to simplify the developer’s experience of building and deploying containerized applications to AWS,” said Deepak Singh, the VP for compute services at AWS. “Now customers can easily deploy their containerized applications from their local Docker environment straight to Amazon ECS. This accelerated path to modern application development and deployment allows customers to focus more effort on the unique value of their applications, and less time on figuring out how to deploy to the cloud.”

In a bit of a surprise move, Docker last year sold off its enterprise business to Mirantis to solely focus on cloud-native developer experiences.

“In November, we separated the enterprise business, which was very much focused on operations, CXOs and a direct sales model, and we sold that business to Mirantis,” Docker CEO Scott Johnston told TechCrunch’s Ron Miller earlier this year. “At that point, we decided to focus the remaining business back on developers, which was really Docker’s purpose back in 2013 and 2014.”

Today’s move is an example of this new focus, given that the workflow issues this partnership addresses had been around for quite a while already.

It’s worth noting that Docker also recently engaged in a strategic partnership with Microsoft to integrate the Docker developer experience with Azure’s Container Instances.

Jul
09
2020
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Freshworks acquires IT orchestration service Flint

Customer engagement company Freshworks today announced that it has acquired Flint, an IT orchestration and cloud management platform based in India. The acquisition will help Freshworks strengthen its Freshservice IT support service by bringing a number of new automation tools to it. Maybe just as importantly, though, it will also bolster Freshworks’ ambitions around cloud management.

Freshworks CPO Prakash Ramamurthy, who joined the company last October, told me that while the company was already looking at expanding its IT services (ITSM) and operations management (ITOM) capabilities before the COVID-19 pandemic hit, having those capabilities has now become even more important, given that a lot of these teams are now working remotely.

“If you take ITSM, we allow for customers to create their own workflow for service catalog items and so on and so forth, but we found that there’s a lot of things which were repetitive tasks,” Ramamurthy said. “For example, I lost my password or new employee onboarding, where you need to auto-provision them in the same set of accounts. Flint had integrated with Freshservice to help automate and orchestrate some of these routine tasks and a lot of customers were using it and there’s a lot of interest in it.”

He noted that while the company was already seeing increased demand for these tools earlier in the year, the pandemic made that need even more obvious. And given that pressing need, Freshworks decided that it would be far easier to acquire an existing company than to build its own solution.

“Even in early January, we felt this was a space where we had to have a time-to-market advantage,” he said. “So acquiring and aggressively integrating it into our product lines seemed to be the most optimal thing to do than take our time to build it — and we are super fortunate that we placed the right bet because of what has happened since then.”

The acquisition helps Freshworks build out some of its existing services, but Ramamurthy also stressed that it will really help the company build out its operations management capabilities to go from alert management to also automatically solving common IT issues. “We feel there’s natural synergy and [Flint’s] orchestration solution and their connectors come in super handy because they have connectors to all the modern SaaS applications and the top five cloud providers and so on.”

But Flint’s technology will also help Freshworks build out its ability to help its users manage workloads across multiple clouds, an area where it is going to compete with a number of startups and incumbents. Since the company decided that it wants to play in this field, an acquisition also made a lot of sense given how long it would take to build out expertise in this area, too.

“Cloud management is a natural progression for our product line,” Ramamurthy noted. “As more and more customers have a multi-cloud strategy, we want to give them a single pane of glass for all the work workloads they’re running. And if they wanted to do cost optimization, if you want to build on top of that, we need the basic plumbing to be able to do discovery, which is kind of foundational for that.”

Freshworks will integrate Flint’s tools into Freshservice and likely offer it as part of its existing tiered pricing structure, with service orchestration likely being the first new capability it will offer.

Jul
09
2020
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LogDNA announces $25M Series C investment and new CEO

LogDNA, a startup that helps DevOps teams dig through their log data to find issues, announced a $25 million Series C investment today along with the promotion of industry vet Tucker Callaway to CEO.

Let’s start with the funding. Emergence Capital led the round with participation from previous investors Initialized Capital and Providence Equity. New investors TI Platform Management, Radianx Capital, Top Tier Capital and Trend Forward Capital also joined the round. Today’s investment brings the total raised to $60 million, according to the company.

Current CEO and co-founder Chris Nguyen says the company provides a centralized way to manage log data for DevOps teams with an eye toward troubleshooting issues and getting applications out faster.

New CEO Callaway, whose background includes executive stints at Chef and Sauce Labs, came on board in January as president and CRO with an eye toward moving him into the top spot when the time was right. Nguyen, who will move to the role of chief strategy officer, says everyone was on board with the move, and he was ready to step back into a more technical role.

“When we closed the latest round of funding and looked at what the journey forward looks like, there was just a lot of trust and confidence from my co-founder, the board of directors, all of the investors on the team that Tucker is the right leader,” Nguyen said.

As Callaway takes over in the midst of the pandemic, the company is in reasonably good shape, with 3,000 customers using the product and a strategic partnership with IBM to provide logging services for IBM Cloud. Having $25 million in additional capital certainly helps, but he sees a company that’s still growing and intends to keep hiring.

As he brings more people on board to lead the company of approximately 100 employees, he says that diversity and inclusion is something he is passionate about and takes very seriously. For starters, he plans to put the entire company through unconscious bias training. They have also hired someone to review their hiring practices to date and they are bringing in a consultant to help them design more diverse and inclusive hiring practices and hold them accountable to that.

The company was a member of the same Y Combinator winter 2015 cohort as GitLab. It actually started out building a marketing technology product, only to realize they had built a powerful logging tool on the back end. That logging tool became the basis for LogDNA .

Jul
09
2020
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WhatsApp Business, now with 50M MAUs, adds QR codes and catalog sharing

The global COVID-19 health pandemic has raised the stakes for businesses when it comes to using digital channels to connect with customers, and today WhatsApp unveiled its latest tools to help businesses use its platform to do just that.

The Facebook-owned messaging behemoth is expanding the reach and use of QR codes to let customers easily connect with businesses on the platform, providing them also with a series of stickers (pictured below) to kick off “we’re open for business” campaigns; and it’s made it possible for businesses to start sharing WhatsApp-based catalogs — dynamic lists of items that can in turn be ordered by users — as links outside of the WhatsApp platform itself.

The new launches come as WhatsApp’s business efforts pass some significant milestones.

WhatsApps’ profile as a formal platform for doing business is growing, albeit slowly. The WhatsApp Business app — used by merchants to interface with customers over WhatsApp and use the platform to market themselves — now has 50 million monthly active users, according to Facebook. Its two biggest markets for the service are India at over 15 million MAUs and Brazil at over 5 million MAUs, while catalogs specifically have had 40 million viewers.

On the other hand, WhatsApp has hit some stumbling blocks with features it’s tried to put into place to grow those numbers faster and boost usage among businesses.

Specifically, last month WhatsApp launched payments in Brazil, its first market, aimed not just at users sending each other money but merchants selling goods and services over the platform. But just nine days later, Brazilian regulators blocked the service over competition concerns, and it has yet to be restored pending further review. (India, which many had thought would be the first market for payments, is now part of a bigger global roadmap for rolling out payments.)

To put WhatsApp Business app’s usage numbers into some context, WhatsApp itself passed 2 billion users in February of this year. In that regard, hitting 50 million MAUs of the WhatsApp business app in the two years since it’s launched doesn’t sound like a whole lot (and in particular considering that it has competitors like Google offering payment services to merchants). Still, there has always been a lot of informal usage of the app, especially by smaller merchants, and that speaks to monetising potential if they can be lured into more of WhatsApps’ — and Facebook’s — products.

All the more reason that Facebook is expanding other features to make WhatsApp more useful for businesses, and especially smaller businesses — capitalising on a moment when many of them are turning to numerous digital channels (some for the first time ever) like social media, messaging services, websites and third-party delivery platforms to get their products and services out to the masses, in a period when visiting physical storefronts has been severely curtailed because of the health pandemic.

QR codes got a little boost last week from WhatsApp on the consumer side, with the company introducing a way for contacts to swap details for the first time by sharing codes rather than manually entering phone numbers — not unlike Snap Codes and shortcuts for adding contacts created on other social apps. That is now getting the business treatment.

Now, if you need to reach a business for customer support, to ask a question or order something, instead of manually entering a business phone number, you can scan a QR code from a receipt, a business display at the storefront, a product or even posted on the web, in order to connect with the company. Businesses that are using these can also set up welcome messages to start conversations once they’ve been added by a user. (They will have to use the WhatsApp Business app or the WhatsApp Business API to do this, of course.)

The catalog sharing feature, meanwhile, is an expansion on a feature that the company first launched in November 2019, which will now allow businesses to create and share links to their catalogs to post elsewhere. To be frank, the lack of ability to share catalogs at launch felt like a feature omission, considering that businesses often use multiple channels to market themselves, although it might have been an intentional move: there has long been questions about how tight links are between Facebook and WhatsApp, so slowly introducing features that share and cross-market from the start might be the preferred route for the company.

The idea now will be that those links can now be shared on Facebook, Instagram and other places.

Although all of these services, and WhatsApp Business, remain free to use, they continue to lay the groundwork for how Facebook might monetise the features in the future, not least through payments but also through stronger pushes to advertise on Facebook, now with more ways of linking a company’s WhatsApp profile to those ads.

Jul
08
2020
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PQShield raises $7M for quantum-ready cryptographic security solutions

A deep tech startup building cryptographic solutions to secure hardware, software, and communications systems for a future when quantum computers may render many current cybersecurity approaches useless is today emerging out of stealth mode with $7 million in funding and a mission to make cryptographic security something that cannot be hackable, even with the most sophisticated systems, by building systems today that will continue to be usable in a post-quantum future.

PQShield (PQ being short for “post-quantum”), a spin out from Oxford University, is being backed in a seed round led by Kindred Capital, with participation also Crane Venture Partners, Oxford Sciences Innovation and various angel investors, including Andre Crawford-Brunt, Deutsche Bank’s former global head of equities.

PQShield was founded in 2018, and its time in stealth has not been in vain.

The startup claims to have the UK’s highest concentration of cryptography PhDs outside academia and classified agencies, and it is one of the biggest contributors to the NIST cybersecurity framework (alongside academic institutions and huge tech companies), which is working on creating new cryptographic standards, which take into account the fact that quantum computing will likely make quick work of breaking down the standards that are currently in place.

“The scale is massive,” Dr Ali El Kaafarani, a research fellow at Oxford’s Mathematical Institute and former engineer at Hewlett-Packard Labs, who is the founder and CEO of PQShield said of that project. “For the first time we are changing the whole of public key infrastructure.”

And according to El Kaafarani, the startup has customers — companies that build hardware and software services, or run communications systems that deal with sensitive information and run the biggest risks from being hacked.

They include entities in the financial and government sectors that it’s not naming, as well as its first OEM customer, Bosch. El Kaafarani said in an interview that it is also in talks with at least one major communications and messaging provider exploring more security for end-to-end encryption on messaging networks. Other target applications could include keyless cars, connected IoT devices, and cloud services.

The gap in the market the PQShield is aiming to address is the fact that while there are already a number of companies exploring the cutting edge of cryptographic security in the market — they include large tech companies like Amazon and MicrosoftHub Security, Duality, another startup out of the UK focused on post-quantum cryptography called Post Quantum and a number of others — the concern is that quantum computing will be utilised to crack even the most sophisticated cryptography such as the RSA and Elliptic Curve cryptographic standards.

This has not been much of a threat so far since quantum computers are still not widely available and used, but there have been a number of signs of a breakthrough on the horizon.

El Kaafarani says that PQShield is the first startup to approach that predicament with a multi-pronged solution aimed at a variety of use cases, including solutions that encompass current cryptographic standards and provide a migration path the next generation of how they will look — meaning, they can be commercially deployed today, even without quantum computers being a commercial reality, but in preparation for that.

“Whatever we encrypt now can be harvested, and once we have a fully functioning quantum computer people can use that to get back to the data and the sensitive information,” he said.

For hardware applications, it’s designed a System on Chip (SoC) solution that will be licensed to hardware manufacturers (Bosch being the first OEM). For software applications, there is an SDK that secures messaging and is protected by “post-quantum algorithms” based on a secure, Signal-derived protocol.

Thinking about and building for the full spectrum of applications is central to PQShield’s approach, he added. “In security it’s important to understand the whole ecosystem since everything is about connected components.”

Some sectors in the tech world have been especially negatively impacted by the coronavirus and its consequences, a predicament that has been exacerbated by uncertainties over the future of the global economy.

I asked El Kaafarani if that translated to a particularly tricky time to raise money as a deep tech startup, given that deep tech companies so often work on long-term problems that may not have immediate commercial outcomes.

Interestingly, he said that wasn’t the case.

“We talked to VCs that were interested in deep tech to begin with, which made the discussion a lot easier,” he said. “And the fact is that we’re a security company, and that is one of the areas that is doing well. Everything has become digitised, and we have all become more heavily reliant on our digital connections. We ultimately help make the digital world more secure. There are people who understand that, and so it wasn’t too difficult to talk to them and understand the importance of this company.”

Indeed, Chrysanthos Chrysanthou, partner at Kindred Capital, echoed that sentiment:

“With some of the brightest minds in cryptography, mathematics and engineering, and boasting world-class software and hardware solutions, PQShield is uniquely positioned to lead the charge in protecting businesses from one of the most profound threats to their future,” he said. “We couldn’t be happier to support the team as it works to set a new standard for information security and defuse risks resulting from the rise of quantum.”

Jul
08
2020
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Slack snags corporate directory startup Rimeto to up its people search game

For the second time in less than 24 hours, an enterprise company bought an early-stage startup. Yesterday afternoon DocuSign acquired Liveoak, and this morning Slack announced it was buying corporate directory startup Rimeto, which should help employees find people inside the organization who match a specific set of criteria from inside Slack.

The companies did not share the purchase price.

Rimeto helps companies build directories to find employees beyond using tools like Microsoft Active Directory, homegrown tools or your corporate email program. When we covered the company’s $10 million Series A last year, we described what it brings to directories this way:

Rimeto has developed a richer directory by sitting between various corporate systems like HR, CRM and other tools that contain additional details about the employee. It of course includes a name, title, email and phone like the basic corporate system, but it goes beyond that to find areas of expertise, projects the person is working on and other details that can help you find the right person when you’re searching the directory.

In the build versus buy equation that companies balance all the time, it looks like Slack weighed the pros and cons and decided to buy. You could see how a tool like this would be useful to Slack as people try to build teams of employees, especially in a world where so many are working from home.

While the current Slack people search tool lets you search by name, role or team, Rimeto should give users a much more robust way of searching for employees across the company. You can search for the right person to help you with a particular problem and get much more granular with your search requirements than the current tool allows.

Image Credit: Rimeto

At the time of its funding announcement, the company, which was founded in 2016 by three former Facebook employees, told TechCrunch it had bootstrapped for the first three years before taking the $10 million investment last year. It also reported it was cash-flow positive at the time, which is pretty unusual for an early-stage enterprise SaaS company.

In a company blog post announcing the deal, as is typical in these deals, the founders saw being part of a larger organization as a way to grow more quickly than they could have alone. “Joining Slack is a special opportunity to accelerate Rimeto’s mission and impact with greater reach, expanded resources, and the support of Slack’s impressive global team,” the founders wrote in the post.

The acquisition is part of a continuing trend around enterprise companies buying early-stage startups to fill in holes in their product road maps.

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