Nov
14
2019
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Eigen nabs $37M to help banks and others parse huge documents using natural language and ‘small data’

One of the bigger trends in enterprise software has been the emergence of startups building tools to make the benefits of artificial intelligence technology more accessible to non-tech companies. Today, one that has built a platform to apply the power of machine learning and natural language processing to massive documents of unstructured data has closed a round of funding as it finds strong demand for its approach.

Eigen Technologies, a London-based startup whose machine learning engine helps banks and other businesses that need to extract information and insights from large and complex documents like contracts, is today announcing that it has raised $37 million in funding, a Series B that values the company at around $150 million – $180 million.

The round was led by Lakestar and Dawn Capital, with Temasek and Goldman Sachs Growth Equity (which co-led its Series A) also participating. Eigen has now raised $55 million in total.

Eigen today is working primarily in the financial sector — its offices are smack in the middle of The City, London’s financial center — but the plan is to use the funding to continue expanding the scope of the platform to cover other verticals such as insurance and healthcare, two other big areas that deal in large, wordy documentation that is often inconsistent in how its presented, full of essential fine print, and typically a strain on an organisation’s resources to be handled correctly — and is often a disaster if it is not.

The focus up to now on banks and other financial businesses has had a lot of traction. It says its customer base now includes 25% of the world’s G-SIB institutions (that is, the world’s biggest banks), along with others that work closely with them, like Allen & Overy and Deloitte. Since June 2018 (when it closed its Series A round), Eigen has seen recurring revenues grow sixfold with headcount — mostly data scientists and engineers — double. While Eigen doesn’t disclose specific financials, you can see the growth direction that contributed to the company’s valuation.

The basic idea behind Eigen is that it focuses what co-founder and CEO Lewis Liu describes as “small data.” The company has devised a way to “teach” an AI to read a specific kind of document — say, a loan contract — by looking at a couple of examples and training on these. The whole process is relatively easy to do for a non-technical person: you figure out what you want to look for and analyse, find the examples using basic search in two or three documents and create the template, which can then be used across hundreds or thousands of the same kind of documents (in this case, a loan contract).

Eigen’s work is notable for two reasons. First, typically machine learning and training and AI requires hundreds, thousands, tens of thousands of examples to “teach” a system before it can make decisions that you hope will mimic those of a human. Eigen requires a couple of examples (hence the “small data” approach).

Second, an industry like finance has many pieces of sensitive data (either because it’s personal data, or because it’s proprietary to a company and its business), and so there is an ongoing issue of working with AI companies that want to “anonymise” and ingest that data. Companies simply don’t want to do that. Eigen’s system essentially only works on what a company provides, and that stays with the company.

Eigen was founded in 2014 by Dr. Lewis Z. Liu (CEO) and Jonathan Feuer (a managing partner at CVC Capital Partners, who is the company’s chairman), but its earliest origins go back 15 years earlier, when Liu — a first-generation immigrant who grew up in the U.S. — was working as a “data-entry monkey” (his words) at a tire manufacturing plant in New Jersey, where he lived, ahead of starting university at Harvard.

A natural computing whiz who found himself building his own games when his parents refused to buy him a games console, he figured out that the many pages of printouts he was reading and re-entering into a different computing system could be sped up with a computer program linking up the two. “I put myself out of a job,” he joked.

His educational life epitomises the kind of lateral thinking that often produces the most interesting ideas. Liu went on to Harvard to study not computer science, but physics and art. Doing a double major required working on a thesis that merged the two disciplines together, and Liu built “electrodynamic equations that composed graphical structures on the fly” — basically generating art using algorithms — which he then turned into a “Turing test” to see if people could detect pixelated actual work with that of his program. Distill this, and Liu was still thinking about patterns in analog material that could be re-created using math.

Then came years at McKinsey in London (how he arrived on these shores) during the financial crisis where the results of people either intentionally or mistakenly overlooking crucial text-based data produced stark and catastrophic results. “I would say the problem that we eventually started to solve for at Eigen became tangible,” Liu said.

Then came a physics PhD at Oxford where Liu worked on X-ray lasers that could be used to decrease the complexity and cost of making microchips, cancer treatments and other applications.

While Eigen doesn’t actually use lasers, some of the mathematical equations that Liu came up with for these have also become a part of Eigen’s approach.

“The whole idea [for my PhD] was, ‘how do we make this cheaper and more scalable?,’ ” he said. “We built a new class of X-ray laser apparatus, and we realised the same equations could be used in pattern matching algorithms, specifically around sequential patterns. And out of that, and my existing corporate relationships, that’s how Eigen started.”

Five years on, Eigen has added a lot more into the platform beyond what came from Liu’s original ideas. There are more data scientists and engineers building the engine around the basic idea, and customising it to work with more sectors beyond finance. 

There are a number of AI companies building tools for non-technical business end-users, and one of the areas that comes close to what Eigen is doing is robotic process automation, or RPA. Liu notes that while this is an important area, it’s more about reading forms more readily and providing insights to those. The focus of Eigen is more on unstructured data, and the ability to parse it quickly and securely using just a few samples.

Liu points to companies like IBM (with Watson) as general competitors, while startups like Luminance is another taking a similar approach to Eigen by addressing the issue of parsing unstructured data in a specific sector (in its case, currently, the legal profession).

Stephen Nundy, a partner and the CTO of Lakestar, said that he first came into contact with Eigen when he was at Goldman Sachs, where he was a managing director overseeing technology, and the bank engaged it for work.

“To see what these guys can deliver, it’s to be applauded,” he said. “They’re not just picking out names and addresses. We’re talking deep, semantic understanding. Other vendors are trying to be everything to everybody, but Eigen has found market fit in financial services use cases, and it stands up against the competition. You can see when a winner is breaking away from the pack and it’s a great signal for the future.”

Nov
08
2019
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Alpaca nabs $6M for stocks API so anyone can build a Robinhood

Stock trading app Robinhood is valued at $7.6 billion, but it only operates in the U.S. Freshly funded fintech startup Alpaca does the dirty work so developers worldwide can launch their own competitors to that investing unicorn. Like the Stripe of stocks, Alpaca’s API handles the banking, security and regulatory complexity, allowing other startups to quickly build brokerage apps on top for free. It has already crossed $1 billion in transactions within a year of launch.

The potential to power the backend of a new generation of fintech apps has attracted a $6 million Series A round for Alpaca led by Spark Capital . Instead of charging developers, Alpaca earns its money through payment for order flow, interest on cash deposits and margin lending, much like Robinhood.

“I want to make sure that people even outside the U.S. have access” to a way of building wealth that’s historically only “available to rich people” Alpaca co-founder and CEO Yoshi Yokokawa tells me.

Alpaca co-founder and CEO Yoshi Yokokawa

Hailing from Japan, Yokokawa followed his friends into the investment banking industry, where he worked at Lehman Brothers until its collapse. After his grandmother got sick, he moved into day-trading for three years and realized “all the broker dealer business tools were pretty bad.” But when he heard of Robinhood in 2013 and saw it actually catering to users’ needs, he thought, “I need to be involved in this new transformation” of fintech.

Yokokawa ended up first building a business selling deep learning AI to banks and trading firms in the foreign exchange market. Watching clients struggle to quickly integrate new technology revealed the lack of available developer tools. By 2017, he was pivoting the business and applying for FINRA approval. Alpaca launched in late 2018, letting developers paste in code to let their users buy and sell securities.

Now international developers and small hedge funds are building atop the Alpaca API so they don’t have to reinvent the underlying infrastructure themselves right away. Alpaca works with clearing broker NTC, and then marks up margin trading while earning interest and payment for order flow. It also offers products like AlpacaForecast, with short-term predictions of stock prices, AlpacaRadar for detecting price swings and its MarketStore financial database server.

AlpacaForecast

The $6 million from Spark Capital, Social Leverage, Portag3, Fathom Capital and Zillionize adds to $5.8 million in previous funding from investors, including Y Combinator. The startup plans to spend the cash on hiring to handle partnerships with bigger businesses, supporting its developer community and ensuring compliance.

One major question is whether fintech businesses that start to grow atop Alpaca and drive its revenues will try to declare independence and later invest in their own technology stack. There’s the additional risk of a security breach that might scare away clients.

Alpaca’s top competitor, Interactive Brokers, offers trading APIs, but other services as well that distract it from fostering a robust developer community, Yokokawa tells me. Alpaca focuses on providing great documentation, open-source contribution and SDKs in different languages that make it more developer-friendly. It will also have to watch out for other fintech services startups like DriveWealth and well-funded Galileo.

There’s a big opportunity to capitalize on the race to integrate stock trading into other finance apps to drive stickiness because it’s a consistent, voluntary behavior rather than a chore or something only done a few times a year. Lender SoFi and point-of-sale system Square both recently became broker dealers as well, and Yokokawa predicts more and more apps will push into the space.

Why would we need so many stock trading apps? “Every single person is involved with money, so the market is huge. Instead of one-player takes all, there will be different players that can all do well,” Yokokawa tells me. “Like banks and investment banks co-exist, it will never be that Bank of America takes 80% of the pie. I think differentiation will be on customer acquisition, and operations management efficiency.”

The co-founder’s biggest concern is keeping up with all the new opportunities in financial services, from cash management and cryptocurrency that Robinhood already deals in, to security token offerings and fractional investing. Yokokawa says, “I need to make sure I’m on top of everything and that we’re executing with the right timing so we don’t lose.”

The CEO hopes that Alpaca will one day power broader access to the U.S. stock market back in Japan, noting that if a modern nation still lags behind in fintech, the rest of the world surely fares even worse. “I want to connect this asset class to as many people as possible on the earth.”

Oct
10
2019
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Clari snags $60M Series D on valuation of around $500M

Clari uses AI to help companies find key information like the customers most likely to convert, the state of orders in the sales process or the next big sources of revenue. As its revenue management system continues to flourish, the company announced a $60 million Series D investment today.

Sapphire Ventures led the round with help from newcomer Madrona Venture Group and existing investors Sequoia Capital, Bain Capital Ventures and Tenaya Capital. Today’s investment brings the total raised to $135 million, according to the company.

The valuation, which CEO and co-founder Andy Byrne pegged at around a half a billion, appears to be a hefty raise from what the company was likely valued at in 2018 after its $35 million Series C. As TechCrunch’s Ingrid Lunden wrote at the time:

For some context, Clari, according to Pitchbook, had a relatively modest post-money valuation of $83.5 million in its last round in 2014, so my guess is that it’s now comfortably into hundred-million territory, once you add in this latest $35 million.

Byrne says the company wasn’t even really looking for a new round, but when investors came knocking, he couldn’t refuse. “On the fundraise side, what’s really interesting is how this whole thing went down. We weren’t out looking, but we had a massive amount of interest from a lot of firms. We decided to engage, and we got it done in less than three weeks, which the board was kind of blown away by,” Byrne told TechCrunch.

What’s motivating these companies to invest is that Clari is helping to define this revenue operations category, and has attracted companies like Okta, Zoom and Qualtrics as customers. What they are providing is this AI-fueled way to see where the best sales opportunities are to drive revenue, and that’s what every company is looking for. At the same time, Byrne says that he’s moving companies away from a spreadsheet-driven record keeping system, enabling them to see all of the data in one place.

“Clari is allowing a rep to really understand where they should spend time, automating a lot of things for them to close deals faster, while giving managers new insights they’ve never had before to allow them to drive more revenue. And then we’re getting them out of ‘Excel hell.’ They’re no longer in these spreadsheets. They’re in Clari, and have more predictability in their forecasting,” he said.

Clari was founded in 2012 and is headquartered in Sunnyvale, Calif. It has more than 300 customers and just passed the 200 employee mark, a number that should increase as the company uses this money to begin to accelerate growth and expand the product’s capabilities.

Oct
02
2019
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A startup factory? $1.2B-exit team launches $65M super{set}

Think Jack Dorsey’s jobs are tough? Well, Tom Chavez is running six startups. He thinks building businesses can be boiled down to science, so today he’s unveiling his laboratory for founding, funding and operating companies. He and his team have already proven they can do it themselves after selling their startups Rapt to Microsoft and Krux to Salesforce for a combined $1.2 billion. Now they’ve raised a $65 million fund for “super{set}”, an enterprise startup studio with a half-dozen companies currently in motion.

The idea is that {super}set either conceptualizes a company or brings in founders whose dream they can make a reality. The studio provides early funding and expertise while the startup works from their shared space in San Francisco, plus future ones in New York and Boston. The secret sauce is the “super{set} Code,” an execution playbook plus technological tools and building blocks that guide the strategy and eliminate redundant work. “Our belief is that we can make the companies 10x faster and increase capital efficiency by 5X,” says Chavez of his partnership with {super}set co-founders Vivek Vaidya, who acts as CTO, and Jae Lim who manages the fund.

Superset Team

The {super}set team (from left): Tom Chavez, Jae Lim, Jen Elena and Vivek Vaidya

Perhaps the question isn’t whether the portfolio startups can scale, but if the humans behind them can without breaking. It’s stressful running a single company, let alone six. Even with the order of operations nailed down, each encounters unique challenges and no plan is one-size-fits-all. But after delivering 17.5X returns to their past investors, Chavez et al. have proven their power to repeatedly recognize what enterprises need and build admittedly boring but bountiful products in customer data management, and advertising yield.

The studio’s playbooks cover business plan formation, pitch strategies, go to market, revenue, machine learning, management principles, HR processes, sales methods, pipeline measurement, product sequencing, finance, legal and more. There’s also shared engineering code it provides, so each startup doesn’t have to reinvent the wheel. “I don’t think you can systemize it but I do think you can accelerate and de-risk the path,” Chavez explains.

Superset Code 1

{super}set Code

Today, the first {super}set company is coming out of stealth. Eskalera helps enterprises retain top talent by tracking diversity and inclusion stats of employees to engage them with career growth and community programs. Chavez is the CEO, but plans to install a new one shortly so he can focus more time on founding more startups. There are 55 employees across the first six companies, with two already generating revenue and most ready to emerge in the next nine months.

The funding for Eskalera and other {super}set companies comes with unique terms. Because Chavez and the team aren’t just board members you hear from once a quarter but “shoulder to shoulder with the entrepreneurs” as he repeats several times in our interview, the startups pay more equity for the cash.

The hope is having seasoned leadership aboard is worth it. “We’re product people first and foremost,” Chavez tells me. “What are you going to build? Who’s going to buy it? Why? What’s the technical moat? We’re not people doing jazz hands.” The {super}set team has plenty of skin in the game, though, given Chavez himself put in a big chunk of the $65 million, and the fund sticks to a standard management fee.

Eskalera

Eskalera

To supercharge the companies, {super}set brings in expert staffers in artificial intelligence, data science and more, who then align with the most relevant companies in the portfolio. They get equity grants to incentivize them to work hard on the startups’ behalf. “The worry I have about these larger funds is that they have an incentive disconnect where they work for the fees” Chavez says. His fund hopes to win through follow-on funding of its winners.

Tom Chavez Superset

{super}set co-founder Tom Chavez

If portfolio companies hit hard times, Chavez says {super}set will stick with them. “My first company had multiple layoffs and a major pivot. We had an enterperenur that walked away. They lost conviction, but we brought that company to an $180 million exit after people said there was no effing way and that felt really good,” Chavez says of staying the course. “The good entrepreneurs have that demonic energy.” But if everyone involved agrees a project isn’t working, they’ll shutter it. “It comes back to opportunity cost of people’s time.”

Chavez has respect for studios taking different approaches, like Atomic in consumer startups, Science in e-commerce and Pioneer Square Labs, which maintains a larger fund staff. “What excites me is moving entrepreneurship a step forward. Why couldn’t we franchise this in other cities?” He hopes {super}set can attract top talent that “just want to work on cool shit” rather than getting sucked into a single company.

Can {super}set keep all the plates spinning and really lower their risk? “If we’re wrong there will be a giant orange plume streak across the sky. The early returns are promising but we have to prove it,” Chavez says. But after accruing plenty of wealth for himself, he says the thrill that keeps him in the startup game is seeing life-changing outcomes for his teams. “I have spreadsheets showing the wealth generated by employees of companies I’ve built and nothing makes me happier than seeing them pay for tuitions, property, or retiring.”

Sep
24
2019
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Fundbox raises $176 million Series C to build ‘Visa’ for B2B payments

Credit cards have become all but ubiquitous for consumer transactions, and it isn’t hard to see why. By intermediating payments, networks like Visa allow buyers and sellers to exchange money for goods and services without knowing the financial risk profile of the counter-party. Rather than applying for credit at every merchant you shop at, you apply once at your issuing institution, and then can transact with every merchant on the network. It’s the simple formula: reducing friction means more sales, and therefore more profits.

Yet for all the innovation in the consumer side of the economy, there has been an astonishingly limited amount of innovation in the B2B world. Payments between businesses are still conducted through invoices, with net payment terms that can exceed 90 days and with little knowledge of the financial risk of the counter-parties. There is no FICO score for business as there is with consumers, nor is there a system that can intermediate those transactions and reduce their friction.

That’s where Fundbox comes in. The SF-headquartered startup wants to ultimately transform B2B payments by creating a Visa-like payments network that allows businesses to transact with each other without having to know counter-party risk while also getting everyone paid faster.

It’s a vision that has pulled in the attention of even more venture capital. The company, which was founded in 2013, announced today that it has raised $176 million in a series C equity financing led by a consortium of funders, including Allianz X, Healthcare of Ontario Pension Plan, HarbourVest and a litany of others. Existing backers Khosla, General Catalyst, and Spark Capital Growth also participated. With this new round of capital, the company’s total equity funding reaches upwards of $300 million.

In addition to the equity capital, the company also announced that it has raised a $150 million credit facility to underwrite its product.

Fundbox CEO Eyal Shinar said that a priority in this fundraise was to select backers who not only could invest in equity, but also had large balance sheets who could expand the company’s underwriting capability as it scales.

Today, Fundbox’s core product is a revolving line of credit for small businesses. Cash flow is a huge concern for many companies, since they often have to wait for a payment from an invoice to arrive before investing in their next projects or hiring more employees. A revolving line of credit allows companies to flexibly draw down and pay back a loan, while only paying fees on what a company uses.

To apply for the loan, companies connect Fundbox to their financial data store (for example, QuickBooks), and Fundbox slurps in the data and offers a credit decision in as fast as minutes. Companies can then tap their line of credit almost immediately and use it as working capital. As invoices are paid, companies can then pay off their line of credit and stop paying fees.

From that product base, Shinar ultimately sees Fundbox as a GDP-scale startup, given the value it could potentially unlock for companies and the economy at large. “There are more than $3 trillion locked in those invoices,” he explained to me, “$3.4 trillion flows through consumer credit cards, but $23 trillion are in invoices … and even if you focus on [just] small and medium business, it’s $9 trillion.”

As the company collects data from all the players in the market, it wants to build upon those data network effects to ultimately operate the payment rails for B2B transactions. So instead of offering a line of credit to the seller, it could facilitate both sides of the transaction and get rid of the root complexity in the first place.

It’s a bold vision, and certainly one that has attracted a variety of players. In the startup world, Kabbage (whose co-founder and president Kathryn Petralia I will be interviewing at TechCrunch Disrupt SF next week) has built a business around line of credit lending and has similarly raised large amounts of venture capital.

Larger companies like Square, PayPay, and Intuit (which owns the popular accounting software QuickBooks) have introduced various lending products to B2B customers. And in terms of payments, Stripe through its new credit card and Brex offer the means for companies to empower their employees to make purchases on behalf of the company.

Shinar said that a huge priority for Fundbox has been to make underwriting more efficient. He said that a large percentage of the current employee base at the company is data scientists, and the company has built upon the wave of digitalization that has taken place among small and medium businesses. “Every company has at least one set of APIs … and it is accessible, and it is granular,” Shinar said. By just tapping into those existing data feeds, Fundbox is able to avoid the human underwriting common with much of business lending today.

One initiative the company has undertaken is a tool dubbed “X-Ray” to better describe how the company’s machine learning models are really underwriting its loan products. Shinar noted that payments is a highly-regulated space, and that the company has to be able to explain its decisions and how they are unbiased to any regulator that might start asking questions.

The company today has 240 employees spread across SF, Tel Aviv, and a recently launched office in Dallas. Shinar says that he wants to use the new funds to “go on the offensive” and “double and triple down on what is working.”

Sep
17
2019
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IEX’s Katsuyama is no flash in the pan

When you watch a commercial for one of the major stock exchanges, you are welcomed into a world of fast-moving, slick images full of glistening buildings, lush crops and happy people. They are typically interspersed with shots of intrepid executives veering out over the horizon as if to say, “I’ve got a long-term vision, and the exchange where my stock is listed is a valuable partner in achieving my goals.” It’s all very reassuring and stylish. But there’s another side to the story.

I have been educated about the realities of today’s stock exchange universe through recent visits with Brad Katsuyama, co-founder and CEO of IEX (a.k.a. The Investors Exchange). If Katsuyama’s name rings a bell, and you don’t work on Wall Street, it’s likely because you remember him as the protagonist of Michael Lewis’s 2014 best-seller, Flash Boys: A Wall Street Revolt, which explored high-frequency trading (HFT) and made the case that the stock market was rigged, really badly.

Five years later, some of the worst practices Lewis highlighted are things of the past, and there are several attributes of the American equity markets that are widely admired around the world. In many ways, though, the realities of stock trading have gotten more unseemly, thanks to sophisticated trading technologies (e.g., microwave radio transmissions that can carry information at almost the speed of light), and pitched battles among the exchanges, investors and regulators over issues including the rebates stock exchanges pay to attract investors’ orders and the price of market data charged by the exchanges.

I don’t claim to be an expert on the inner workings of the stock market, but I do know this: Likening the life cycle of a trade to sausage-making is an insult to kielbasa. More than ever, trading is an arcane, highly technical and bewildering part of our broader economic infrastructure, which is just the way many industry participants like it: Nothing to see here, folks.

Meanwhile, Katsuyama, company president Ronan Ryan and the IEX team have turned IEX into the eighth largest stock exchange company, globally, by notional value traded, and have transformed the concept of a “speed bump” into a mainstream exchange feature.

Brad Aug 12

Brad Katsuyama. Image by Joshua Blackburn via IEX Trading

Despite these and other accomplishments, IEX finds itself in the middle of a vicious battle with powerful incumbents that seem increasingly emboldened to use their muscle in Washington, D.C. What’s more, new entrants, such as The Long-Term Stock Exchange and Members Exchange, are gearing up to enter the fray in US equities, while global exchanges such as the Hong Kong Stock Exchange seek to bulk up by making audacious moves like attempting to acquire the venerable London Stock Exchange.

But when you sell such distinct advantages to one group that really can only benefit from that, it leads to the question of why anyone would want to trade on that market. It’s like walking into a playing field where you know that the deck is stacked against you.

As my discussion with Katsuyama reveals, IEX may have taken some punches in carving out a position for itself in this high-stakes war characterized by cutting-edge technology and size. However, the IEX team remains girded for battle and confident that it can continue to make headway in offering a fair and transparent option for market participants over the long term.

Gregg Schoenberg: Given Flash Boys and the attention it generated for you on Main Street, I’d like to establish something upfront. Does IEX exist for the asset manager, the individual, or both?

Brad Katsuyama: We exist primarily for the asset manager, and helping them helps the individual. We’re one step removed from the individual, and part of that is due to regulation. Only brokers can connect to exchanges, and the asset manager connects to the broker.

Schoenberg: To put a finer point on it, you believe in fairness and being the good guy. But you are not Robinhood. You are a capitalist.

Katsuyama: Yes, but we want to make money fairly. Actually, we thought initially about starting the business as a nonprofit, But once we laid out all the people we would need to convince to work for us, we realized it would’ve been hard for us to attract the skill sets needed as a nonprofit.

Schoenberg: Do you believe that the US equity market today primarily serves investors or traders?

Sep
13
2019
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Ten questions for 2020 presidential candidate John Delaney

In November 2020, America will go to the polls to vote in perhaps the most consequential election in a generation. The winner will lead the country amid great social, economic and ecological unrest. The 2020 election will be a referendum on both the current White House and the direction of the country at large.

Nearly 20 years into the young century, technology has become a pervasive element in all of our lives, and will continue to only grow more important. Whoever takes the oath of office in January 2021 will have to answer some difficult questions, raging from an impending climate disaster to concerns about job loss at the hands of robotics and automation.

Many of these questions are overlooked in day to day coverage of candidates and during debates. In order to better address the issues, TechCrunch staff has compiled a 10-part questionnaire across a wide range of tech-centric topics. The questions have been sent to national candidates, regardless of party. We will be publishing the answers as we receive them. Candidates are not required to answer all 10 in order for us to publish, but we will be noting which answers have been left blank.

First up is former Congressman John Delaney. Prior to being elected to Maryland’s 6th Congressional District, Delaney co-founded and led healthcare loan service Health Care Financial Partners (HCFP) and  commercial lender CapitalSource. He was elected to Congress in 2013, beating out a 10-term Republican incumbent. Rumored to be running against Maryland governor Larry Hogan for a 2018 bid, Delaney instead announced plans to run for president in 2020.

1. Which initiatives will you prioritize to limit humankind’s impact on climate and avoid potential climate catastrophe?

My $4 trillion Climate Plan will enable us to reach the goal of net zero emissions by 2050, which the IPCC says is the necessary target to avoid the worst effects of climate change. The centerpiece of my plan is a carbon-fee-and-dividend that will put a price on carbon emissions and return the money to the American people through a dividend. My plan also includes increased federal funding for renewable energy research, advanced nuclear technologies, direct air capture, a new Climate Corps program, and the construction of the Carbon Throughway, which would transport captured carbon from all over the country to the Permian Basin for reuse and permanent sequestration.

2. What is your plan to increase black and Latinx startup founders’ access to funding?

As a former entrepreneur who started two companies that went on to be publicly traded, I am a firm believer in the importance of entrepreneurship. To ensure people from all backgrounds have the support they need to start a new business, I will create nonprofit banks to serve economically distressed communities, launch a new SBIC program to help provide access to capital to minority entrepreneurs, and create a grant program to fund business incubators and accelerators at HBCUs. Additionally, I pledge to appoint an Entrepreneurship Czar who will be responsible for promoting entrepreneurship-friendly policies at all levels of government and encouraging entrepreneurship in rural and urban communities that have been left behind by venture capital investment.

3. Why do you think low-income students are underrepresented in STEM fields and how do you think the government can help fix that problem?

I think a major part of the problem is that schools serving low-income communities don’t have the resources they need to provide a quality STEM education to every student. To fix that, I have an education plan that will increase investment in STEM education and use Title I funding to eliminate the $23 billion annual funding gap between predominantly white and predominantly black school districts. To encourage students to continue their education after they graduate from high school and ensure every student learns the skills they need, my plan also provides two years of free in-state tuition and fees at a public university, community college, or technical school to everyone who completes one year of my mandatory national service program.

4. Do you plan on backing and rolling out paper-only ballots or paper-verified election machines? With many stakeholders in the private sector and the government, how do you aim to coordinate and achieve that?

Making sure that our elections are secure is vital, and I think using voting machines that create a voter-verified paper record could improve security and increase voters’ confidence in the integrity of our elections. To address other facets of the election security issue, I have proposed creating a Department of Cybersecurity to help protect our election systems, and while in Congress I introduced election security legislation to ensure that election vendors are solely owned and controlled by American citizens.

5. What, if any, federal regulation should be enacted for autonomous vehicles?

I was proud to be the founder of the Congressional Artificial Intelligence Caucus, a bipartisan group of lawmakers dedicated to understanding the impacts of advances in AI technology and educating other legislators so they have the knowledge they need to enact policies that ensure these innovations benefit Americans. We need to use the legislative process to have a real conversation involving experts and other stakeholders in order to develop a comprehensive set of regulations regarding autonomous vehicles, which should include standards that address data collection practices and other privacy issues as well as more fundamental questions about public safety.

6. How do you plan to achieve and maintain U.S. superiority in space, both in government programs and private industry?

Space exploration is tremendously important to me as a former Congressman from Maryland, the home of NASA’s Goddard Space Flight Center, major space research centers at the University of Maryland, and many companies that develop crucial aerospace technologies. As president, I will support the NASA budget and will continue to encourage innovation in the private sector.

7. Increased capital in startups founded by American entrepreneurs is a net positive, but should the U.S. allow its businesses to be part-owned by foreign governments, particularly the government of Saudi Arabia?

I am concerned that joint ventures between U.S. businesses and foreign governments, including state-owned enterprises, could facilitate the theft of intellectual property, potentially allowing foreign governments to benefit from taxpayer-funded research. We need to put in place greater protections that defend American innovation from theft.

8. Will U.S.-China technology decoupling harm or benefit U.S. innovation and why?

In general, I am in favor of international technology cooperation but in the case of China, it engages in predatory economic behavior and disregards international rules. Intellectual property theft has become a big problem for American businesses as China allows its companies to steal IP through joint ventures. In theory, U.S.-China collaboration could advance technology and innovation but without proper IP and economic protections, U.S.-China joint ventures and partnerships can be detrimental to the U.S.

9. How large a threat does automation represent to American jobs? Do you have a plan to help train low-skilled workers and otherwise offset job loss?

Automation could lead to the disruption of up to 54 million American jobs if we aren’t prepared and we don’t have the right policies. To help American workers transition to the high-tech, high-skill future economy, I am calling for a national AI strategy that will support public/private AI partnerships, develop a social contract with the communities that are negatively impacted by technology and globalization, and create updated education and job training programs that will help students and those currently in the workforce learn the skills they need.

To help provide jobs to displaced workers and drive economic growth in communities that suffer negative effects from automation, I have proposed a $2 trillion infrastructure plan that would create an infrastructure bank to facilitate state and local government investment, increase the Highway Trust Fund, create a Climate Infrastructure Fund, and create five new matching funds to support water infrastructure, school infrastructure, deferred maintenance projects, rural broadband, and infrastructure projects in disadvantaged communities in urban and rural areas. In addition, my proposed national service program will create new opportunities that allow young adults to learn new skills and gain valuable work experience. For example, my proposal includes a new national infrastructure apprenticeship program that will award a professional certificate proving mastery of particular skill sets for those who complete the program.

10. What steps will you take to restore net neutrality and assure internet users that their traffic and data are safe from manipulation by broadband providers?

I support the Save Net Neutrality Act to restore net neutrality, and I will appoint FCC commissioners who are committed to maintaining a fair and open internet. Additionally, I would work with Congress to update our digital privacy laws and regulations to protect consumers, especially children, from their data being collected without consent.

Sep
10
2019
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Work Life Ventures raises $5M for debut enterprise SaaS seed fund

Brianne Kimmel had no trouble transitioning from angel investor to general partner.

Initially setting out to garner $3 million in capital commitments, Kimmel, in just two weeks’ time, closed on $5 million for her debut venture capital fund Work Life Ventures. The enterprise SaaS-focused vehicle boasts an impressive roster of limited partners, too, including the likes of Zoom chief executive officer Eric Yuan, InVision CEO Clark Valberg, Twitch co-founder Kevin Lin, Cameo CEO Steven Galanis, Andreessen Horowitz general partners Marc Andreessen and Chris Dixon, Initialized Capital GP Garry Tan and fund-of-funds Slow Ventures, Felicis Ventures and NFX.

At the helm of the new fund, Kimmel joins a small group of solo female general partners: Dream Machine’s Alexia Bonatsos is targeting $25 million for her first fund; Day One Ventures’ Masha Drokova raised $20 million for her debut effort last year; and Sarah Cone launched Social Impact Capital, a fund specializing in impact investing, in 2016, among others.

Meanwhile, venture capital fundraising is poised to reach all-time highs in 2019. In the first half of the year, a total of $20.6 billion in new capital was introduced to the startup market across more than 100 funds.

For most, the process of raising a successful venture fund can be daunting and difficult. For well-connected and established investors in the Bay Area, like Kimmel, raising a fund can be relatively seamless. Given the speed and ease of fund one in Kimmel’s case, she plans to raise her second fund with a $25 million target in as little as 12 months.

“The desire for the fund is to take a step back and imagine how do we build great consumer experiences in the workplace,” Kimmel tells TechCrunch.

Kimmel has been an active angel investor for years, sourcing top enterprise deals via SaaS School, an invite-only workshop she created to educate early-stage SaaS founders on SaaS growth, monetization, sales and customer success. Prior to launching SaaS School, which will continue to run twice a year, Kimmel led go-to-market strategy at Zendesk, where she built the Zendesk for Startups program.

 

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“You start by advising, then you start with very small angel checks,” Kimmel explains. “I reached this inflection point and it felt like a great moment to raise my own fund. I had friends like Ryan Hoover, who started Weekend Fund focused on consumer, and Alexia is one of my friends as well and I saw what she was doing with Dream Machine, which is also consumer. It felt like it was the right time to come out with a SaaS-focused fund.”

Emerging from stealth today, Work Life Ventures will invest up to $150,000 per company. To date, Kimmel has backed three companies with capital from the fund: Tandem, Dover and Command E. The first, Tandem, was amongst the most coveted deals in Y Combinator’s latest batch of companies. The startup graduated from the accelerator with millions from Andreessen Horowitz at a valuation north of $30 million.

Dover, another recent YC alum, provides recruitment software and is said to be backed by Founders Fund in addition to Work Life. Command E, currently in beta, is a tool that facilities search across multiple desktop applications. Kimmel is also an angel investor in Webflow, Girlboss, TechCrunch Disrupt 2018 Startup Battlefield winner Forethought, Voyage and others.

Work Life is betting on the consumerization of the enterprise, or the idea that the next best companies for modern workers will be consumer-friendly tools. In her pitch deck to LPs, she cites the success of Superhuman and Notion, a well-designed email tool and a note-taking app, respectively, as examples of the heightened demand for digestible, easy-to-use B2B products.

“The next generation of applications for the workplace sees people spinning out of Uber, Coinbase and Airbnb,” Kimmel said. “They’ve faced these challenges inside their highly efficient tech company so we are seeing more consumer product builders deeply passionate about the enterprise space.”

But Kimmel doesn’t want to bury her thesis in jargon, she says, so you won’t find any B2B lingo on Work Life’s website or Instagram.

She’s focusing her efforts on a more important issue often vacant from conversations surrounding investment in the future of work: diversity & inclusion.

Kimmel meets with every new female hire of her portfolio companies. Though it’s “increasingly non-scalable,” she admits, it’s part of a greater effort to ensure her companies are thoughtful about D&I from the beginning: “Because I have a very focused fund, it’s about maintaining this community and ensuring that people feel like their voices are heard,” she said.

“I want to be mindful that I am a female GP and I feel [proud] to have that title.”

Sep
06
2019
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APIs are the next big SaaS wave

While the software revolution started out slowly, over the past few years it’s exploded and the fastest-growing segment to-date has been the shift towards software as a service or SaaS.

SaaS has dramatically lowered the intrinsic total cost of ownership for adopting software, solved scaling challenges and taken away the burden of issues with local hardware. In short, it has allowed a business to focus primarily on just that — its business — while simultaneously reducing the burden of IT operations.

Today, SaaS adoption is increasingly ubiquitous. According to IDG’s 2018 Cloud Computing Survey, 73% of organizations have at least one application or a portion of their computing infrastructure already in the cloud. While this software explosion has created a whole range of downstream impacts, it has also caused software developers to become more and more valuable.

The increasing value of developers has meant that, like traditional SaaS buyers before them, they also better intuit the value of their time and increasingly prefer businesses that can help alleviate the hassles of procurement, integration, management, and operations. Developer needs to address those hassles are specialized.

They are looking to deeply integrate products into their own applications and to do so, they need access to an Application Programming Interface, or API. Best practices for API onboarding include technical documentation, examples, and sandbox environments to test.

APIs tend to also offer metered billing upfront. For these and other reasons, APIs are a distinct subset of SaaS.

For fast-moving developers building on a global-scale, APIs are no longer a stop-gap to the future—they’re a critical part of their strategy. Why would you dedicate precious resources to recreating something in-house that’s done better elsewhere when you can instead focus your efforts on creating a differentiated product?

Thanks to this mindset shift, APIs are on track to create another SaaS-sized impact across all industries and at a much faster pace. By exposing often complex services as simplified code, API-first products are far more extensible, easier for customers to integrate into, and have the ability to foster a greater community around potential use cases.

Screen Shot 2019 09 06 at 10.40.51 AM

Graphics courtesy of Accel

Billion-dollar businesses building APIs

Whether you realize it or not, chances are that your favorite consumer and enterprise apps—Uber, Airbnb, PayPal, and countless more—have a number of third-party APIs and developer services running in the background. Just like most modern enterprises have invested in SaaS technologies for all the above reasons, many of today’s multi-billion dollar companies have built their businesses on the backs of these scalable developer services that let them abstract everything from SMS and email to payments, location-based data, search and more.

Simultaneously, the entrepreneurs behind these API-first companies like Twilio, Segment, Scale and many others are building sustainable, independent—and big—businesses.

Valued today at over $22 billion, Stripe is the biggest independent API-first company. Stripe took off because of its initial laser-focus on the developer experience setting up and taking payments. It was even initially known as /dev/payments!

Stripe spent extra time building the right, idiomatic SDKs for each language platform and beautiful documentation. But it wasn’t just those things, they rebuilt an entire business process around being API-first.

Companies using Stripe didn’t need to fill out a PDF and set up a separate merchant account before getting started. Once sign-up was complete, users could immediately test the API with a sandbox and integrate it directly into their application. Even pricing was different.

Stripe chose to simplify pricing dramatically by starting with a single, simple price for all cards and not breaking out cards by type even though the costs for AmEx cards versus Visa can differ. Stripe also did away with a monthly minimum fee that competitors had.

Many competitors used the monthly minimum to offset the high cost of support for new customers who weren’t necessarily processing payments yet. Stripe flipped that on its head. Developers integrate Stripe earlier than they integrated payments before, and while it costs Stripe a lot in setup and support costs, it pays off in brand and loyalty.

Checkr is another excellent example of an API-first company vastly simplifying a massive yet slow-moving industry. Very little had changed over the last few decades in how businesses ran background checks on their employees and contractors, involving manual paperwork and the help of 3rd party services that spent days verifying an individual.

Checkr’s API gives companies immediate access to a variety of disparate verification sources and allows these companies to plug Checkr into their existing on-boarding and HR workflows. It’s used today by more than 10,000 businesses including Uber, Instacart, Zenefits and more.

Like Checkr and Stripe, Plaid provides a similar value prop to applications in need of banking data and connections, abstracting away banking relationships and complexities brought upon by a lack of tech in a category dominated by hundred-year-old banks. Plaid has shown an incredible ramp these past three years, from closing a $12 million Series A in 2015 to reaching a valuation over $2.5 billion this year.

Today the company is fueling an entire generation of financial applications, all on the back of their well-built API.

Screen Shot 2019 09 06 at 10.41.02 AM

Graphics courtesy of Accel

Then and now

Accel’s first API investment was in Braintree, a mobile and web payment systems for e-commerce companies, in 2011. Braintree eventually sold to, and became an integral part of, PayPal as it spun out from eBay and grew to be worth more than $100 billion. Unsurprisingly, it was shortly thereafter that our team decided to it was time to go big on the category. By the end of 2014 we had led the Series As in Segment and Checkr and followed those investments with our first APX conference in 2015.

Plaid, Segment, Auth0, and Checkr had only raised Seed or Series A financings! And we are even more excited and bullish on the space. To convey just how much API-first businesses have grown in such a short period of time, we thought it would be useful perspective to share some metrics over the past five years, which we’ve broken out in the two visuals included above in this article.

While SaaS may have pioneered the idea that the best way to do business isn’t to actually build everything in-house, today we’re seeing APIs amplify this theme. At Accel, we firmly believe that APIs are the next big SaaS wave — having as much if not more impact as its predecessor thanks to developers at today’s fastest-growing startups and their preference for API-first products. We’ve actively continued to invest in the space (in companies like, Scale, mentioned above).

And much like how a robust ecosystem developed around SaaS, we believe that one will continue to develop around APIs. Given the amount of progress that has happened in just a few short years, Accel is hosting our second APX conference to once again bring together this remarkable community and continue to facilitate discussion and innovation.

Screen Shot 2019 09 06 at 10.41.10 AM

Graphics courtesy of Accel

Sep
03
2019
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Kabbage acquires Radius Intelligence, the marketing tech firm with a database of 20M small businesses

Data is the new oil, as the saying goes, and today Kabbage — a fintech startup backed by SoftBank that has built a business around lending up to $250,000 to small and medium enterprises, using AI-based algorithms to help determine the terms of the loan — is picking up an asset to expand its own data trove as it looks to expand into further SMB financial services. The company has acquired Radius Intelligence, the marketing technology firm that has built a database of information on some 20 million small and medium businesses in the U.S.

Terms of the deal are not being disclosed, but notably, it comes on the heels of a sightly tumultuous period for Radius . Last year, the company announced a merger with its big competitor Leadspace, only to quietly cancel the deal three months later. Then two months after that, it replaced its longtime CEO.

Radius — which is backed by some $120 million from investors that include Founders Fund, David Sacks, Salesforce Ventures, AME Cloud Ventures and the actor Jared Leto, among others — last had a valuation of around $200 million, according to PitchBook, but that was prior to these events. Kabbage, meanwhile, has raised hundreds of millions in equity and debt and is valued at more than $1 billion. The deal will be financed off Kabbage’s own balance sheet and will not require the company to raise more funds, I understand.

Rob Frohwein, Kabbage’s co-founder and CEO, said in an interview that the plan is to integrate Radius’ tech and IP into the Kabbage platform — the task will be overseen by Radius’ current CEO, Joel Carusone — as well as Radius’ tech team of 20 engineers, who will work for the Atlanta-based startup out of its office in San Francisco.

He also added that Radius’ current products — which include market intelligence and contact information for employees at SMBs in the U.S., along with a host of related solutions, which up to now had been gathered both via public sources and the businesses updating the information themselves; as well as the technology for merging disparate sources of data and ferreting out the “valid” pieces that are worth retaining and throwing out what is out of date — will not be sold any longer via Radius. From now on, there will be only one customer for all that data: Kabbage itself (the company had already been a user of Radius’ data to help its own marketing team connect with new and and existing customers).

“We have known the company for a long time,” said Frohwein. Other customers that Radius lists on its site include Square, American Express, LendingTree, FirstData, MetLife, Sam’s Club, Yahoo and more.

This doesn’t mean that Kabbage might not offer the SMB intelligence in a format to businesses directly via its own platform at some point, but it also means that as Kabbage expands into services that might compete with some of Radius’ now-former customers — payments and merchant acquirer services, as well as tools to help SMBs grow their own customer funnels are some that are on the cards for the coming months — it will have an edge on them because of the data on users that it will now own.

The deal underscores two bigger trends among startups that focus on enterprise customers. First, it points to  ongoing consolidation in the world of marketing tech, in part as businesses look for ways to better compete against the likes of Microsoft and Salesforce, which are also continually building out their stacks of services. And we likely will see more activity from stronger fintech companies keen to expand their platforms to provide more touchpoints and revenue streams from existing customers, as well as more services to expand the customer base overall.

“We’re thrilled to join the Kabbage team. As a company dedicated to small business analytics and data management, we’ve always had a deep respect for Kabbage’s data-driven technology and focus,” Radius CEO Carusone said in a statement. “Our companies have complementary technical architectures and domain experience for decision making. With Kabbage, we can build a more sophisticated analytics solution to identify, reach and serve small businesses.”

Kabbage itself is not looking for new funding at the moment, Frohwein said, but he added also that it is on a fast trajectory at the moment but still a ways away from an IPO, so I wouldn’t discount more raises in the future. The company is currently on track to see revenues up 40% versus last year, with customers up 60%.

“We’re always looking to grow,” he said.

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