Jan
15
2021
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Extra Crunch roundup: Antitrust jitters, SPAC odyssey, white-hot IPOs, more

Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled “A theory about the current IPO market”, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: Thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: This week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: Many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Image Credits: Getty Images/Andriy Onufriyenko

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

Image Credits: monsitj/Getty Images

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

Image Credits: Ana Maria Serrano/Getty Images

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Image Credits: George Frey/Bloomberg/Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Image Credits: MirageC/Getty Images

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these nontraditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window)/Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

Jan
13
2021
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Germany’s Xentral nabs $20M led by Sequoia to help online-facing SMBs run back offices better

Small enterprises remain one of the most underserved segments of the business market, but the growth of cloud-based services — easier to buy, easier to provision — has helped that change in recent years. Today, one of the more promising startups out of Europe building software to help SMEs run online businesses is announcing some funding to better tap into both the opportunity to build these services, and to meet a growing demand from the SME segment.

Xentral, a German startup that develops enterprise resource planning software covering a variety of back-office functions for the average online small business, has picked up a Series A of $20 million.

The company’s platform today covers services like order and warehouse management, packaging, fulfillment, accounting and sales management, and the majority of its 1,000 customers are in Germany — they include the likes of direct-to-consumer brands like YFood, KoRo, the Nu Company and Flyeralarm.

But Benedikt Sauter, the co-founder and CEO of Xentral, said the ambition is to expand into the rest of Europe, and eventually other geographies, and to fold in more services to its ERP platform, such as a more powerful API to allow customers to integrate more services — for example in cases where a business might be selling on their own site, but also Amazon, eBay, social platforms and more — to bring their businesses to a wider market.

Mainly, he said, the startup wants “to build a better ecosystem to help our customers run their own businesses better.”

The funding is being led by Sequoia Capital, with Visionaires Club (a B2B-focused VC out of Berlin) also participating.

The deal is notable for being the prolific, high-profile VC’s first investment in Europe since officially opening for business in the region. (Sequoia has backed a number of startups in Europe before this, including Graphcore, Klarna, Tessian, Unity, UiPath, n8n and Evervault — but all of those deals were done from afar.)

Augsburg-based Xentral has been around as a startup since 2018, and “as a startup” is the operative phrase here.

Sauter and his co-founder Claudia Sauter (who is also his co-founder in life: she is his wife) built the early prototype for the service originally for themselves.

The pair were running a business of their own — a hardware company they founded in 2008, selling not nails, hammers and wood, but circuit boards they designed, along with other hardware to build computers and other connected objects. Around 2013, as the business was starting to pick up steam, they decided that they really needed better tools to manage everything at the backend so that they would have more time to build their actual products.

But Bene Sauter quickly discovered a problem in the process: smaller businesses may have Shopify and its various competitors to help manage e-commerce at the front end, but when it came to the many parts of the process at the backend, there really wasn’t a single, easy solution (remember this was eight years ago, at a time before the Shopifys of the world were yet to expand into these kinds of tools). Being of a DIY and technical persuasion — Sauter had studied hardware engineering at university — he decided that he’d try to build the tools that he wanted to use.

The Sauters used those tools for years, until without much outbound effort, they started to get some inbound interest from other online businesses to use the software, too. That led to the Sauters balancing both their own hardware business and selling the software on the side, until around 2017/2018 when they decided to wind down the hardware operation and focus on the software full time. And from then, Xentral was born. It now has, in addition to 1,000 customers, some 65 employees working on developing the platform.

The focus with Xentral is to have a platform that is easy to implement and use, regardless of what kind of SME you might be as long as you are selling online. But even so, Sauter pointed out that the other common thread is that you need at least one person at the business who champions and understands the value of ERP. “It’s really a mindset,” he said.

The challenge with Xentral in that regard will be to see how and if they can bring more businesses to the table and tap into the kinds of tools that it provides, at the same time that a number of other players also eye up the same market. (Others in the same general category of building ERP for small businesses include online payments provider Sage, NetSuite and Acumatica.) ERP overall is forecast to become a $49.5 billion market by 2025.

Sequoia and its new partner in Europe, Luciana Lixandru — who is joining Xentral’s board along with Visionaries’ Robert Lacher — believe however that there remains a golden opportunity to build a new kind of provider from the ground up and out of Europe specifically to target the opportunity in that region.

“I see Xentral becoming the de facto platform for any SMEs to run their businesses online,” she said in an interview. “ERP sounds a bit scary especially because it makes one think of companies like SAP, long implementation cycles, and so on. But here it’s the opposite.” She describes Xentral as “very lean and easy to use because you an start with one module and then add more. For SMEs it has to be super simple. I see this becoming like the Shopify for ERP.”

Dec
17
2020
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Spryker raises $130M at a $500M+ valuation to provide B2Bs with agile e-commerce tools

Businesses today feel, more than ever, the imperative to have flexible e-commerce strategies in place, able to connect with would-be customers wherever they might be. That market driver has now led to a significant growth round for a startup that is helping the larger of these businesses, including those targeting the B2B market, build out their digital sales operations with more agile, responsive e-commerce solutions.

Spryker, which provides a full suite of e-commerce tools for businesses — starting with a platform to bring a company’s inventory online, through to tools to analyse and measure how that inventory is selling and where, and then adding voice commerce, subscriptions, click & collect, IoT commerce and other new features and channels to improve the mix — has closed a round of $130 million.

It plans to use the funding to expand its own technology tools, as well as grow internationally. The company makes revenues in the mid-eight figures (so, around $50 million annually) and some 10% of its revenues currently come from the U.S. The plan will be to grow that business as part of its wider expansion, tackling a market for e-commerce software that is estimated to be worth some $7 billion annually.

The Series C was led by TCV — the storied investor that has backed giants like Facebook, Airbnb, Netflix, Spotify and Splunk, as well as interesting, up-and-coming e-commerce “plumbing” startups like Spryker, Relex and more. Previous backers One Peak and Project A Ventures also participated.

We understand that this latest funding values Berlin -based Spryker at more than $500 million.

Spryker today has around 150 customers, global businesses that run the gamut from recognised fashion brands through to companies that, as Boris Lokschin, who co-founded the company with Alexander Graf (the two share the title of co-CEOs) put it, are “hidden champions, leaders and brands you have never heard about doing things like selling silicone isolations for windows.” The roster includes Metro, Aldi Süd, Toyota and many others.

The plan will be to continue to support and grow its wider business building e-commerce tools for all kinds of larger companies, but in particular Spryker plans to use this tranche of funding to double down specifically on the B2B opportunity, building more agile e-commerce storefronts and in some cases also developing marketplaces around that.

One might assume that in the world of e-commerce, consumer-facing companies need to be the most dynamic and responsive, not least because they are facing a mass market and all the whims and competitive forces that might drive users to abandon shopping carts, look for better deals elsewhere or simply get distracted by the latest notification of a TikTok video or direct message.

For consumer-facing businesses, making sure they have the latest adtech, marketing tech and tools to improve discovery and conversion is a must.

It turns out that business-facing businesses are no less immune to their own set of customer distractions and challenges — particularly in the current market, buffeted as it is by the global health pandemic and its economic reverberations. They, too, could benefit from testing out new channels and techniques to attract customers, help them with discovery and more.

“We’ve discovered that the model for success for B2B businesses online is not about different people, and not about money. They just don’t have the tooling,” said Graf. “Those that have proven to be more successful are those that are able to move faster, to test out everything that comes to mind.”

Spryker positions itself as the company to help larger businesses do this, much in the way that smaller merchants have adopted solutions from the likes of Shopify .

In some ways, it almost feels like the case of Walmart versus Amazon playing itself out across multiple verticals, and now in the world of B2B.

“One of our biggest DIY customers [which would have previously served a mainly trade-only clientele] had to build a marketplace because of restrictions in their brick and mortar assortment, and in how it could be accessed,” Lokschin said. “You might ask yourself, who really needs more selection? But there are new providers like Mano Mano and Amazon, both offering millions of products. Older companies then have to become marketplaces themselves to remain competitive.”

It seems that even Spryker itself is not immune from that marketplace trend: Part of the funding will be to develop a technology AppStore, where it can itself offer third-party tools to companies to complement what it provides in terms of e-commerce tools.

“We integrate with hundreds of tech providers, including 30-40 payment providers, all of the essential logistics networks,” Lokschin said.

Spryker is part of that category of e-commerce businesses known as “headless” providers — by which they mean those using the tools do so by way of API-based architecture and other easy-to-integrate modules delivered through a “PaaS” (clould-based Platform as a Service) model.

It is not alone in that category: There have been a number of others playing on the same concept to emerge both in Europe and the U.S. They include Commerce Layer in Italy; another startup out of Germany called Commercetools; and Shogun in the U.S.

Spryker’s argument is that by being a newer company (founded in 2018) it has a more up-to-date stack that puts it ahead of older startups and more incumbent players like SAP and Oracle.

That is part of what attracted TCV and others in this round, which was closed earlier than Spryker had even planned to raise (it was aiming for Q2 of next year) but came on good terms.

“The commerce infrastructure market has been a high priority for TCV over the years. It is a large market that is growing rapidly on the back of e-commerce growth,” said Muz Ashraf, a principal at TCV, to TechCrunch. “We have invested across other areas of the commerce stack, including payments (Mollie, Klarna), underlying infrastructure (Redis Labs) as well as systems of engagement (ExactTarget, Sitecore). Traditional offline vendors are increasingly rethinking their digital commerce strategy, more so given what we are living through, and that further acts as a market accelerant.

“Having tracked Spryker for a while now, we think their solution meets the needs of enterprises who are increasingly looking for modern solutions that allow them to live in a best-of-breed world, future-proofing their commerce offerings and allowing them to provide innovative experiences to their consumers.”

Dec
04
2020
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3 ways the pandemic is transforming tech spending

Ever since the pandemic hit the U.S. in full force last March, the B2B tech community keeps asking the same questions: Are businesses spending more on technology? What’s the money getting spent on? Is the sales cycle faster? What trends will likely carry into 2021?

Recently we decided to join forces to answer these questions. We analyzed data from the just-released Q4 2020 Outlook of the Coupa Business Spend Index (BSI), a leading indicator of economic growth, in light of hundreds of conversations we have had with business-tech buyers this year.

A former Battery Ventures portfolio company, Coupa* is a business spend-management company that has cumulatively processed more than $2 trillion in business spending. This perspective gives Coupa unique, real-time insights into tech spending trends across multiple industries.

Tech spending is continuing despite the economic recession — which helps explain why many startups are raising large rounds and even tapping public markets for capital.

Broadly speaking, tech spending is continuing despite the economic recession — which helps explain why many tech startups are raising large financing rounds and even tapping the public markets for capital. Here are our three specific takeaways on current tech spending:

Spending is shifting away from remote collaboration to SaaS and cloud computing

Tech spending ranks among the hottest boardroom topics today. Decisions that used to be confined to the CIO’s organization are now operationally and strategically critical to the CEO. Multiple reasons drive this shift, but the pandemic has forced businesses to operate and engage with customers differently, almost overnight. Boards recognize that companies must change their business models and operations if they don’t want to become obsolete. The question on everyone’s mind is no longer “what are our technology investments?” but rather, “how fast can they happen?”

Spending on WFH/remote collaboration tools has largely run its course in the first wave of adaptation forced by the pandemic. Now we’re seeing a second wave of tech spending, in which enterprises adopt technology to make operations easier and simply keep their doors open.

SaaS solutions are replacing unsustainable manual processes. Consider Rhode Island’s decision to shift from in-person citizen surveying to using SurveyMonkey. Many companies are shifting their vendor payments to digital payments, ditching paper checks entirely. Utility provider PG&E is accelerating its digital transformation roadmap from five years to two years.

The second wave of adaptation has also pushed many companies to embrace the cloud, as this chart makes clear:

Similarly, the difficulty of maintaining a traditional data center during a pandemic has pushed many companies to finally shift to cloud infrastructure under COVID. As they migrate that workload to the cloud, the pie is still expanding. Goldman Sachs and Battery Ventures data suggest $600 billion worth of disruption potential will bleed into 2021 and beyond.

In addition to SaaS and cloud adoption, companies across sectors are spending on technologies to reduce their reliance on humans. For instance, Tyson Foods is investing in and accelerating the adoption of automated technology to process poultry, pork and beef.

All companies are digital product companies now

Mention “digital product company” in the past, and we’d all think of Netflix. But now every company has to reimagine itself as offering digital products in a meaningful way.

Nov
13
2020
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Kyklo raises $8.5M to bring electrical distributors online

Kyklo, a startup that helps wholesale distributors of electrical and automation products launch e-commerce stores, is announcing that it has raised $8.5 million in seed funding.

The industry may sound a bit arcane, but it’s one that founders Remi Ducrocq (Kyklo’s CEO) and Fabien Legouic (CTO) know from having worked at Schneider Electric. Ducrocq said that the process of selling these products to manufacturers and electricians remains cumbersome, relying largely on PDF catalogs.

Shifting these businesses to digital is a much bigger challenge than creating your standard online store, both because of the number of products being sold and the needs for accurate listings.

“Even the small folks sell 100,000 SKUs [distinct products], up to 1 million SKUs,” Ducrocq told me. “If you choose the wrong product, your factory gets shut down. [It’s essential] to have accurate information present on the web store to have a transaction happen.”

Kyklo doesn’t automate the process completely, Ducrocq added, because “you can’t just create content or apply AI to something that is so unstructured.” Creating these stores remains a manual process for the Kylo team, but the company has built “technology to make that manual process as easy as possible.”

That includes standardized data structures and a variety of scripts to create these product listings more quickly. Ultimately, Ducrocq said Kyklo can get distributors up and running with an online store within 30 days, and sometimes as quickly as two weeks.

In total, Kyklo has created a catalog of more than 2.5 million products for more than 35 distributors. It’s also been endorsed by manufacturers like Schneider Electric, Wago, Festo US and Mitsubishi Electric Automation as their preferred e-commerce partner.

Ducrocq suggested that going digital with Kyklo helps these businesses both by allowing them to reach new customers with improved SEO and by giving them tools to expand their sales with existing customers. For example, IEC Supply says that its online sales increased 500% for the first six months after launching with Kyklo, while new customer interactions tripled.

“Market maturity accelerated because of the pandemic,” he added. “These B2B traditional businesses were reluctant to go towards digitization, with only visionaries embarking on the journey. But during the pandemic, salespeople haven’t been able to see their customers in person for six months, so many distributors are reassessing how they should effectively go to market.”

Kyklo has now raised a total of $10.2 million. The new funding was led by Felicis Ventures and IA Ventures, with participation from Jungle Ventures, partners at Wavemaker, Seedplus and strategic angel investors.

“With 80% of the $640 billion electrical, industrial and automation distribution industry still relying on PDF catalogs and phone and emails for its operations, distributors face a challenge in the market,” said Felicis Managing Director Sundeep Peechu in a statement. “KYKLO’s platform helps these companies keep pace with crucial industry needs and reassess how digital tools can transform their sales force.”

Oct
27
2020
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SimilarWeb raises $120M for its AI-based market intelligence platform for sites and apps

Israeli startup SimilarWeb has made a name for itself with an AI-based platform that lets sites and apps track and understand traffic not just on their own sites, but those of its competitors. Now, it’s taking the next step in its growth. The startup has raised $120 million, funding it will use to continue expanding its platform both through acquisitions and investing in its own R&D, with a focus on providing more analytics services to larger enterprises alongside its current base of individuals and companies of all sizes that do business on the web.

But not, it seems, necessarily an IPO at the moment.

“We will pursue whatever we feel is necessary to grow, so that decision will come from delivering value, not chasing an IPO,” Or Offer, SimilarWeb’s founder and CEO, said in an interview.

Co-led by ION Crossover Partners and Viola Growth, the round doubles the total amount that the startup has raised to date to $240 million. Offer said that it was not disclosing its valuation this time around except to say that his company is now “playing in the big pool.” It counts more than half of the Fortune 100 as customers, with Walmart, P&G, Adidas and Google, among them.

For some context, it hit an $800 million valuation in its last equity round, in 2017.

SimilarWeb’s technology competes with other analytics and market intelligence providers ranging from the likes of Nielsen and ComScore through to the Apptopias of the world in that, at its most basic level, it provides a dashboard to users that provides insights into where people are going on desktop and mobile. Where it differs, Offer said, is in how it gets to its information, and what else it’s doing in the process.

For starters, it focuses not just how many people are visiting, but also a look into what is triggering the activity — the “why”, as it were — behind the activity. Using a host of AI tech such as machine learning algorithms and deep learning — like a lot of tech out of Israel, it’s being built by people with deep expertise in this area — Offer says that SimilarWeb is crunching data from a number of different sources to extrapolate its insights.

He declined to give much detail on those sources but told me that he cheered the arrival of privacy gates and cookie lists for helping ferret out, expose and sometimes eradicate some of the more nefarious “analytics” services out there, and said that SimilarWeb has not been affected at all by that swing to more data protection, since it’s not an analytics service, strictly speaking, and doesn’t sniff data on sights in the same way. It’s also exploring widening its data pool, he added:

“We are always thinking about what new signals we could use,” he said. “Maybe they will include CDNs. But it’s like Google with its rankings in search. It’s a never ending story to try to get the highest accuracy in the world.”

The global health pandemic has driven a huge amount of activity on the web this year, with people turning to sites and apps not just for leisure — something to do while staying indoors, to offset all the usual activities that have been cancelled — but for business, whether it be consumers using e-commerce services for shopping, or workers taking everything online and to the cloud to continue operating.

That has also seen a boost of business for all the various companies that help the wheels turn on that machine, SimilarWeb included.

“Consumer behavior is changing dramatically, and all companies need better visibility,” said Offer. “It started with toilet paper and hand sanitizer, then moved to desks and office chairs, but now it’s not just e-commerce but everything. Think about big banks, whose business was 70% offline and is now 70-80% online. Companies are building and undergoing a digital transformation.”

That in turn is driving more people to understand how well their web presence is working, he said, with the basic big question being: “What is my marketshare, and how does that compare to my competition? Everything is about digital visibility, especially in times of change.”

Like many other companies, SimilarWeb did see an initial dip in business, Offer said, and to that end the company has taken on some debt as part of Israel’s Paycheck Protection Program, to help safeguard some jobs that needed to be furloughed. But he added that most of its customers prior to the pandemic kicking off are now back, along with customers from new categories that hadn’t been active much before, like automotive portals.

That change in customer composition is also opening some doors of opportunity for the company. Offer noted that in recent months, a lot of large enterprises — which might have previously used SimilarWeb’s technology indirectly, via a consultancy, for example — have been coming to the company direct.

“We’ve started a new advisory service [where] our own expert works with a big customer that might have more deep and complex questions about the behaviour we are observing. They are questions all big businesses have right now.” The service sounds like a partly-educational effort, teaching companies that are not necessarily digital-first be more proactive, and partly consulting.

New customer segments, and new priorities in the world of business, are two of the things that drove this round, say investors.

“SimilarWeb was always an incredible tool for any digital professional,” said Gili Iohan of ION Crossover Partners, in a statement. “But over the last few months it has become apparent that traffic intelligence — the unparalleled data and digital insight that SimilarWeb offers — is an absolute essential for any company that wants to win in the digital world.”

As for acquisitions, SimilarWeb has historically made these to accelerate its technical march. For example, in 2015 it acquired Quettra to move deeper into mobile analytics and it acquired Swayy to move into content discovery insights (key for e-commerce intelligence). Offer would not go into too much detail about what it has identified as a further target but given that there are quite a lot of companies building tech in this area currently, that there might be a case for some consolidation around bigger platforms to combine some of the features and functionality. Offer said that it was looking at “companies with great data and digital intelligence, with a good product. There are a lot of opportunities right now on the table.”

The company will also be doing some hiring, with the plan to be to add 200 more people globally by January (it has around 600 employees today).

“Since we joined the company three years ago, SimilarWeb has executed a strategic transformation from a general-purpose measurement platform to vertical-based solutions, which has significantly expanded its market opportunity and generated immense customer value,” said Harel Beit-On, Founder and General Partner at Viola Growth, in a statement. “With a stellar management team of accomplished executives, we believe this round positions the company to own the digital intelligence category, and capitalize on the acceleration of the digital era.”

Oct
22
2020
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Facebook adds hosting, shopping features and pricing tiers to WhatsApp Business

Facebook has been making a big play to be a go-to partner for small and medium businesses that use the internet to interface with the wider world, and its messaging platform WhatsApp, with some 50 million businesses and 175 million people messaging them (and more than 2 billion users overall) has been a central part of that pitch.

Now, the company is making three big additions to WhatsApp to fill out that proposition.

It’s launching a way to shop for and pay for goods and services in WhatsApp chats; it’s going head to head with the hosting providers of the world with a new product called Facebook Hosting Services to host businesses’ online assets and activity; and — in line with its expanding product range — Facebook said it will finally start to charge companies using WhatsApp for Business.

Facebook announced the news in a short blog post light on details. We have reached out to the company for more information on pricing, availability of the services and whether Facebook will provide hosting itself or work with third parties, and we will update this post as we learn more.

Update: Facebook responded and we are putting the replies below, in-line where it makes sense.

Here is what we know for now:

In-chat Shopping: Companies are already using WhatsApp to present product information and initiate discussions for transactions. One of the more recent developments in that area was the addition of QR codes and the ability to share catalog links in chats, added in July. At the same time, Facebook has been expanding the ways that businesses can display what they are selling on Facebook and Instagram, most recently with the launch in August of Facebook Shop, following a similar product roll out on Instagram before that.

Today’s move sounds like a new way for businesses in turn to use WhatsApp both to link through to those Facebook-native catalogs, as well as other products, and then purchase items, while still staying in the chat.

At the same time, Facebook will be making it possible for merchants to add “buy” buttons in other places that will take shoppers to WhatsApp chats to complete the purchase. “We also want to make it easier for businesses to integrate these features into their existing commerce and customer solutions,” it notes. “This will help many small businesses who have been most impacted in this time.”

Although Facebook is not calling this WhatsApp Pay, it seems that this is the next step ahead for the company’s ambitions to bring payments into the chat flow of its messaging app. That has been a long and winding road for the company, which finally launched WhatsApp Payments, using Facebook Pay, in Brazil, in June of this year only to have it shut down by regulators for failing to meet their requirements. (The plan has been to expand it to India, Indonesia and Mexico next.)

Facebook Hosting Services: These will be available in the coming months, but no specific date to share right now. “We’re sharing our plans now while we work with our partners to make these services available,” the company said in a statement to TechCrunch.

No! This is not about Facebook taking on AWS. Or… not yet at least? The idea here appears that it is specifically aimed at selling hosting services to the kind of SMBs who already use Facebook and WhatsApp messaging, who either already use hosting services for their online assets, whether that be their online stores or other things, or are finding themselves now needing to for the first time, now that business is all about being “online.”

“Today, all businesses using our API are using either an on-premise solution or leverage a solutions provider, both of which require costly servers to maintain,” Facebook said. “With this change, businesses will be able to choose to use Facebook’s own secure hosting infrastructure for free, which helps remove a costly item for every company that wants to use the WhatsApp Business API, including our business service providers, and will help them all save money.” It added that it will share more info about where data will be hosted closer to launch.

This is a very interesting move, since the SMB hosting market is pretty fragmented with a number of companies, including the likes of GoDaddy, Dream Host, HostGator, BlueHost and many others also offering these services. That fragmentation spells opportunity for a huge company like Facebook with a global profile, a burgeoning amount of connections through to other online services for these SMBs and a pretty extensive network of data centers around the world that it has built for itself and can now use to provide services to others — which is, indeed, a pretty strong parallel with how Amazon and AWS have done business.

Facebook already has an “app store” of sorts with partners it works with to provide marketing and related services to businesses using its platform. It looks like it plans to expand this, and will sell the hosting alongside all of that, with the kicker that hosting natively on Facebook will speed up how everything works.

“Providing this option will make it easier for small and medium size businesses to get started, sell products, keep their inventory up to date, and quickly respond to messages they receive – wherever their employees are,” it notes.

Charging tiers: As you would expect, to encourage more adoption, Facebook has not been charging for WhatsApp Business up to now, but it has charged for some WhatsApp business messages — for example when businesses send a boarding pass or e-commerce receipt to a customer over Facebook’s rails. (These prices vary and a list of them is published here.) Now, with more services coming into the mix, and businesses tying their fates more strongly to how well they are performing on Facebook’s platforms, it’s no surprise to see Facebook converting that into a pay to play scenario.

“What we’ve heard over the past couple years is how the conversational nature of business messaging is really valuable to people. So in the future we may look at ways to update how we charge businesses that better reflect how it’s used,” the company told us. Important to note that this will relate to how businesses send messages. “As always, it’s free for people to send a business a message,” Facebook added.

Frustratingly, there seems so far to be no detail on which services will be charged, nor how much, nor when, so this is more of a warning than a new requirement.

“We will charge business customers for some of the services we offer, which will help WhatsApp continue building a business of our own while we provide and expand free end-to-end encrypted text, video and voice calling for more than two billion people,” it notes.

For those who might find that annoying, on the plus side, for those who are concerned about an ever-encroaching data monster, it will, at the least, help WhatsApp and Facebook continue to stick to its age-old commitment to stay away from advertising as a business model.

Doubling-down on SMBs

The new services come at a time when Facebook is doubling down on providing services for businesses, spurred in no small part by the coronavirus pandemic, which has driven physical retailers and others to close their actual doors, shifting their focus to using the internet and mobile services to connect with and sell to customers.

Citing that very trend, last month the company’s COO Sheryl Sandberg announced the Facebook Business Suite, bringing together all of the tools it has been building for companies to better leverage Facebook, Instagram and WhatsApp profiles both to advertise themselves as well as communicate with and sell to customers. And the fact that Sandberg was leading the announcement says something about how Facebook is prioritizing this: it’s striking while the iron is hot with companies using its platform, but it sees/hopes that business services can a key way to diversify its business model while also helping buffer it — since many businesses building Pages may also advertise.

Facebook has also been building more functionality across Facebook and Instagram specifically aimed at helping power users and businesses leverage the two in a more efficient way. Adding in more tools to WhatsApp is the natural progression of all of this.

To be sure, as we pointed out earlier this year, even while there is a lot of very informal use of WhatsApp by businesses all around the world, WhatsApp Business remains a fairly small product, most popular in India and Brazil. Facebook launching more tools for how to use it will potentially drive more business not just in those markets but help the company convert more businesses to using it in other places, too.

Smaller businesses have been on Facebook’s radar for a while now. Even before the pandemic hit, in many cases retailers or restaurants do not have websites of their own, opting for a Facebook Page or Instagram Profile as their URL and primary online interface with the world; and even when they do have standalone sites, they are more likely to update people and spread the word about what they are doing on social media than via their own URLs.

Facebook’s also made a video to help demonstrate how it sees these WhatsApp Business in action, which you can here:

Oct
07
2020
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DoorDash introduces a new corporate product, DoorDash for Work

Delivery service DoorDash is giving employers a way to feed their remote employees through a new suite of products called DoorDash for Work.

There are four main products, starting with DashPass for Work, where employers can fund employee memberships to DashPass, a program that eliminates delivery fees on orders from thousands of restaurants. In fact, DoorDash says it already worked with Mt. Sinai to offer free DashPass subscriptions to 42,000 healthcare employees, and that other DashPass for Work customers include Charles Schwab, Hulu and Stanford Research Park.

DoorDash for Work also includes the ability for employers to provide credits for meal orders — there are options for day and time restrictions, so employers can be sure they’re paying for food while someone is working. For teams that are working in-person, there’s the ability to combine individual meal orders into a larger group order. And the service also includes employee gift cards (Zoom, for example, is providing these on employee birthdays).

In a blog post, Broderick McClinton, the head of DoorDash for Work, noted that COVID-19 has had “a profound impact on our daily routines, including the way we eat.”

“Instead of meeting our favorite barista on the way into the office or socializing with our colleagues in the lunch room, we’re spending a lot more time in the kitchen and eating solo at home, missing out on those moments to engage with peers and support our favorite restaurants,” McClinton wrote. “In this new normal, companies are adapting and looking for ways to support their employees’ wellbeing and productivity through new work-from-home corporate wellness benefits, including food perks.”

While free food might seem relatively low on the list of priorities during the pandemic (at least for those of us who have been fortunate enough to keep our jobs), DoorDash says it conducted a survey of 1,000 working Americans last month and found that 90% of them said they miss at least one food-related benefit from the office.

So DoorDash for Work is designed to help employers continue offering benefits in this area, and also it opens up a new source of revenue for DoorDash.

 

Oct
06
2020
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Tone raises $4M to help e-commerce brands text with their customers

While many companies are using chatbots and other forms of automation to manage their communication with customers, Boston-based Tone is betting that humans will remain a key part of the equation.

“The traditional models of bots and humans is, ‘Hello, I’m a bot, now you get to battle with me to finally get to a human,’ ” said Tone CEO Tivan Amour. “Our version of that is, ‘I’m a human using AI to get you the answers you need more quickly.’ ”

Amour and his co-founders Vlad Pick and Kyle Weidman previously created a bicycle startup called Fortified Bicycle, and he said they “figured out that the best way to close our customers on these $750 to $1,000 orders was to actually engage them in text message conversations.”

After all, when it comes to “high consideration” purchases like bicycles, people usually want to discuss their questions and concerns with another human being. Over time, the Fortified team built what Amour said was a “semi-automated system” to help its sales team stay on top of these conversations.

“We started bragging to our friends about it, ‘You’ve gotta do this, it’s the future of mobile commerce,’ ” he recalled. “And they’d say, ‘Okay, that’s cool, but we don’t have any of the systems of doing that, we don’t have the salespeople.’ ”

Tone’s founders

So after selling Fortified Bicycle, Amour and Pick created Tone to help any e-commerce business manage similar text message conversations. Tone employs its own team of human agents to actually do the texting, assisted by software that helps them find the information they need.

It integrates with e-commerce systems like Shopify and Magento, and it’s already working with more than 1,000 brands like ThirdLove, Peak Design and Usual Wines — which are seeing as much as a 26% increase in revenue and a 15% increase in order size.

Amour also noted that specific Tone agents are assigned to specific brands, which means that customers will be talking to the same person whenever they have a question for that business. In some cases, customers have been talking to the same agent for months or years. (Update: Tone clarified that this isn’t a person, but a single persona that’s probably an amalgamation of multiple agents.)

“Particularly in a post-COVID world, it’s pretty clear that online shopping has become the dominant form of shopping, but I think nobody has thought about how you replace that human experience that you get in traditional retail,” he said.

Tone is announcing today that it has raised $4 million in seed funding led by Bling Capital, with participation from Day One Ventures, One Way Ventures, TIA Ventures and executives from Google, Facebook, Dropbox and Uber.

With the new funding, Amour said Tone will be able to build out the “relationship automation” aspect of the product. He also suggested that the platform could eventually expand beyond text messaging, but it sounds like that’s not a big priority.

“In theory, we’re a conversational sales platform more than we are an SMS company,” he said. “However there are a bunch of trends right now [such as the growth of mobile commerce] that make SMS the most obvious place for this sort of innovation.”

Oct
05
2020
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GrubMarket raises $60M as food delivery stays center stage

Companies that have leveraged technology to make the procurement and delivery of food more accessible to more people have been seeing a big surge of business this year, as millions of consumers are encouraged (or outright mandated, due to COVID-19) to socially distance or want to avoid the crowds of physical shopping and eating excursions.

Today, one of the companies that is supplying produce and other items both to consumers and other services that are in turn selling food and groceries to them, is announcing a new round of funding as it gears up to take its next step, an IPO.

GrubMarket, which provides a B2C platform for consumers to order produce and other food and home items for delivery, and a B2B service where it supplies grocery stores, meal-kit companies and other food tech startups with products that they resell, is today announcing that it has raised $60 million in a Series D round of funding.

Sources close to the company confirmed to TechCrunch that GrubMarket — which is profitable, and originally hadn’t planned to raise more than $20 million — has now doubled its valuation compared to its last round — sources tell us it is now between $400 million and $500 million.

The funding is coming from funds and accounts managed by BlackRock, Reimagined Ventures, Trinity Capital Investment, Celtic House Venture Partners, Marubeni Ventures, Sixty Degree Capital and Mojo Partners, alongside previous investors GGV Capital, WI Harper Group, Digital Garage, CentreGold Capital, Scrum Ventures and other unnamed participants. Past investors also included Y Combinator, where GrubMarket was part of the Winter 2015 cohort. For some context, GrubMarket last raised money in April 2019 — $28 million at a $228 million valuation, a source says.

Mike Xu, the founder and CEO, said that the plan remains for the company to go public (he’s talked about it before), but given that it’s not having trouble raising from private markets and is currently growing at 100% over last year, and the IPO market is less certain at the moment, he declined to put an exact timeline on when this might actually happen, although he was clear that this is where his focus is in the near future.

“The only success criteria of my startup career is whether GrubMarket can eventually make $100 billion of annual sales,” he said to me over both email and in a phone conversation. “To achieve this goal, I am willing to stay heads-down and hardworking every day until it is done, and it does not matter whether it will take me 15 years or 50 years.”

I don’t doubt that he means it. I’ll note that we had this call in the middle of the night his time in California, even after I asked multiple times if there wasn’t a more reasonable hour in the daytime for him to talk. (He insisted that he got his best work done at 4:30 a.m., a result of how a lot of the grocery business works.) Xu on the one hand is very gentle with a calm demeanor, but don’t let his quiet manner fool you. He also is focused and relentless in his work ethic.

When people talk today about buying food, alongside traditional grocery stores and other physical food markets, they increasingly talk about grocery delivery companies, restaurant delivery platforms, meal kit services and more that make or provide food to people by way of apps. GrubMarket has built itself as a profitable but quiet giant that underpins the fuel that helps companies in all of these categories by becoming one of the critical companies building bridges between food producers and those that interact with customers.

Its opportunity comes in the form of disruption and a gap in the market. Food production is not unlike shipping and other older, non-tech industries, with a lot of transactions couched in legacy processes: GrubMarket has built software that connects the different segments of the food supply chain in a faster and more efficient way, and then provides the logistics to help it run.

To be sure, it’s an area that would have evolved regardless of the world health situation, but the rise and growth of the coronavirus has definitely “helped” GrubMarket not just by creating more demand for delivered food, but by providing a way for those in the food supply chain to interact with less contact and more tech-fueled efficiency.

Sales of WholesaleWare, as the platform is called, Xu said, have seen more than 800% growth over the last year, now managing “several hundreds of millions of dollars of food wholesale activities” annually.

Underpinning its tech is the sheer size of the operation: economies of scale in action. The company is active in the San Francisco Bay Area, Los Angeles, San Diego, Seattle, Texas, Michigan, Boston and New York (and many places in between) and says that it currently operates some 21 warehouses nationwide. Xu describes GrubMarket as a “major food provider” in the Bay Area and the rest of California, with (as one example) more than 5 million pounds of frozen meat in its east San Francisco Bay warehouse.

Its customers include more than 500 grocery stores, 8,000 restaurants and 2,000 corporate offices, with familiar names like Whole Foods, Kroger, Albertson, Safeway, Sprouts Farmers Market, Raley’s Market, 99 Ranch Market, Blue Apron, Hello Fresh, Fresh Direct, Imperfect Foods, Misfit Market, Sun Basket and GoodEggs all on the list, with GrubMarket supplying them items that they resell directly, or use in creating their own products (like meal kits).

While much of GrubMarket’s growth has been — like a lot of its produce — organic, its profitability has helped it also grow inorganically. It has made some 15 acquisitions in the last two years, including Boston Organics and EJ Food Distributor this year.

It’s not to say that GrubMarket has not had growing pains. The company, Xu said, was like many others in the food delivery business — “overwhelmed” at the start of the pandemic in March and April of this year. “We had to limit our daily delivery volume in some regions, and put new customers on waiting lists.” Even so, the B2C business grew between 300% and 500% depending on the market. Xu said things calmed down by May and even as some B2B customers never came back after cities were locked down, as a category, B2B has largely recovered, he said.

Interestingly, the startup itself has taken a very proactive approach in order to limit its own workers’ and customers’ exposure to COVID-19, doing as much testing as it could — tests have been, as we all know, in very short supply — as well as a lot of social distancing and cleaning operations.

“There have been no mandates about masks, but we supplied them extensively,” he said.

So far it seems to have worked. Xu said the company has only found “a couple of employees” that were positive this year. In one case in April, a case was found not through a test (which it didn’t have, this happened in Michigan) but through a routine check and finding an employee showing symptoms, and its response was swift: the facilities were locked down for two weeks and sanitized, despite this happening in one of the busiest months in the history of the company (and the food supply sector overall).

That’s notable leadership at a time when it feels like a lot of leaders have failed us, which only helps to bolster the company’s strong growth.

“Having a proven track record of sustained hypergrowth and net income profitability, GrubMarket stands out as an extraordinarily rare Silicon Valley startup in the food technology and ecommerce segment,” said Jay Chen, managing partner of Celtic House Venture Partner. “Scaling over 15x in 4 years, GrubMarket’s creativity and capital efficiency is unmatched by anyone else in this space. Mike’s team has done an incredible job growing the company thoughtfully and sustainably. We are proud to be a partner in the company’s rapid nationwide expansion and excited by the strong momentum of WholesaleWare, their SaaS suite, which is the best we have seen in space.”
Updated with more detail on the valuation.

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