Jan
21
2021
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Cloud infrastructure startup CloudNatix gets $4.5 million seed round led by DNX Ventures

CloudNatix founder and chief executive officer Rohit Seth

CloudNatix founder and chief executive officer Rohit Seth. Image Credits: CloudNatix

CloudNatix, a startup that provides infrastructure for businesses with multiple cloud and on-premise operations, announced it has raised $4.5 million in seed funding. The round was led by DNX Ventures, an investment firm that focuses on United States and Japanese B2B startups, with participation from Cota Capital. Existing investors Incubate Fund, Vela Partners and 468 Capital also contributed.

The company also added DNX Ventures managing partner Hiro Rio Maeda to its board of directors.

CloudNatix was founded in 2018 by chief executive officer Rohit Seth, who previously held lead engineering roles at Google. The company’s platform helps businesses reduce IT costs by analyzing their infrastructure spending and then using automation to make IT operations across multiple clouds more efficient. The company’s typical customer spends between $500,000 to $50 million on infrastructure each year, and use at least one cloud service provider in addition to on-premise networks.

Built on open-source software like Kubernetes and Prometheus, CloudNatix works with all major cloud providers and on-premise networks. For DevOps teams, it helps configure and manage infrastructure that runs both legacy and modern cloud-native applications, and enables them to transition more easily from on-premise networks to cloud services.

CloudNatix competes most directly with VMware and Red Hat OpenShift. But both of those services are limited to their base platforms, while CloudNatix’s advantage is that it is agnostic to base platforms and cloud service providers, Seth told TechCrunch.

The company’s seed round will be used to scale its engineering, customer support and sales teams.

 

Jan
21
2021
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Soci raises $80M for its localized marketing platform

Soci, a startup focused on what it calls “localized marketing,” is announcing that it has raised $80 million in Series D funding.

National and global companies like Ace Hardware, Anytime Fitness, The Hertz Corporation and Nekter Juice Bar use Soci (pronounced soh-shee) to coordinate individual stores as they promote themselves through search, social media, review platforms and ad campaigns. Soci said that in 2020, it brought on more than 100 new customers, representing nearly 30,000 new locations.

Co-founder and CEO Afif Khoury told me that the pandemic was a crucial moment for the platform, with so many businesses “scrambling to find a real solution to connect with local audiences.”

One of the key advantages to Soci’s approach, Khoury said, is to allow the national marketing team to share content and assets so that each location stays true to the “national corporate personality,” while also allowing each location to express  a “local personality.” During the pandemic, businesses could share basic information about “who’s open, who’s not” while also “commiserating and expressing the humanity that’s often missing element from marketing nationally.”

“The result there was businesses that had to close, when they had their grand reopenings, people wanted to support that business,” he said. “It created a sort of bond that hopefully lasts forever.”

Khoury also emphasized that Soci has built a comprehensive platform that businesses can use to manage all their localized marketing, because “nobody wants to have seven different logins to seven different systems, especially at the local level.”

The new funding, he said, will allow Soci to make the platform even more comprehensive, both through acquisitions and integrations: “We want to connect into the CRM, the point-of-sale, the rewards program and take all that data and marry that to our search, social, reviews data to start to build a profile on a customer.”

Soci has now raised a total of $110 million. The Series D was led by JMI Equity, with participation from Ankona Capital, Seismic CEO Doug Winter and Khoury himself.

“All signs point to an equally difficult first few months of this year for restaurants and other businesses dependent on their communities,” said JMI’s Suken Vakil in a statement. “This means there will be a continued need for localized marketing campaigns that align with national brand values but also provide for community-specific messaging. SOCi’s multi-location functionality positions it as a market leader that currently stands far beyond its competitors as the must-have platform solution for multi-location franchises/brands.”

Jan
19
2021
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StackPulse announces $28M investment to help developers manage outages

When a system outage happens, chaos can ensue as the team tries to figure out what’s happening and how to fix it. StackPulse, a new startup that wants to help developers manage these crisis situations more efficiently, emerged from stealth today with a $28 million investment.

The round actually breaks down to a previously unannounced $8 million seed investment and a new $20 million Series A. GGV led the A round, while Bessemer Venture Partners led the seed and also participated in the A. Glenn Solomon at GGV and Amit Karp at Bessemer will join the StackPulse board.

Nobody is immune to these outages. We’ve seen incidents from companies as varied as Amazon and Slack in recent months. The biggest companies like Google, Facebook and Amazon employ site reliability engineers and build customized platforms to help remediate these kinds of situations. StackPulse hopes to put this kind of capability within reach of companies, whose only defense is the on-call developers.

Company co-founder and CEO Ofer Smadari says that in the midst of a crisis with signals coming at you from Slack and PagerDuty and other sources, it’s hard to figure out what’s happening. StackPulse is designed to help sort out the details to get you back to equilibrium as quickly as possible.

First off, it helps identify the severity of the incident. Is it a false alarm or something that requires your team’s immediate attention or something that can be put off for a later maintenance cycle? If there is something going wrong that needs to be fixed right now, StackPulse can not only identify the source of the problem, but also help fix it automatically, Smadari explained.

After the incident has been resolved, it can also help with a post-mortem to figure out what exactly went wrong by pulling in all of the alert communications and incident data into the platform.

As the company emerges from stealth, it has some early customers, and 35 employees based in Portland, Oregon and Tel Aviv. Smadari says that he hopes to have 100 employees by the end of this year. As he builds the organization, he is thinking about how to build a diverse team for a diverse customer base. He believes that people with diverse backgrounds build a better product. He adds that diversity is a top level goal for the company, which already has an HR leader in place to help.

Glenn Solomon from GGV, who will be joining the company board, saw a strong founding team solving a big problem for companies and wanted to invest. “When they described the vision for the product they wanted to build, it made sense to us,” he said.

Customers are impatient with down time and Solomon sees developers on the front line trying to solve these issues. “Performance is more important than ever. When there is downtime, it’s damaging to companies,” he said. He believes StackPulse can help.

Jan
19
2021
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UK’s WhiteHat rebrands as Multiverse, raises $44M to build tech apprenticeships in the US

University education is getting more expensive, and at the moment it feels a bit like a Petri dish for infections, but the long-term trends continue to show a dramatic growth in the number of people worldwide getting degrees beyond high school, with one big reason for this being that a college degree generally provides better economic security.

But today, a startup that is exploring a different route for those interested in technology and knowledge worker positions — specifically by way of apprenticeships to bring in and train younger people on the job — is announcing a significant round of growth funding to see if it can provide a credible, scalable alternative to that model.

Multiverse, a U.K. startup that works with organizations to develop these apprenticeships, and then helps source promising, diverse candidates to fill those roles, has raised $44 million, funding that it will be using to spearhead a move into the U.S. market after picking up some 300 clients in the U.K. and thousands of apprentices.

The Series B is being led by General Catalyst (which has been especially active this week with U.K. startups: it also led a large round yesterday for Bloom & Wild), with GV (formerly known as Google Ventures), Audacious Ventures, Latitude and SemperVirens also participating. Index Ventures and Lightspeed Venture Partners, which first invested in the company in its $16 million Series A in 2020, also participated.

Valuation is not being disclosed, but for what it’s worth, the round was one that generated a lot of interest. In between getting pitched this story and publishing it, the size of the Series B grew by $8 million (it was originally closed at $36 million). The FT notes that the valuation was around $200 million with this round, but the company says that is “speculation on the FT’s part.”

The company was originally co-founded as WhiteHat and is officially rebranding today. Co-founder Euan Blair (who happens to be the son of the former U.K. Prime Minister Tony Blair and his accomplished barrister wife Cherie Booth Blair) said the name change was because the original name was a reference to how the startup sought to “hack the system for good.”

However, he added, “The scale has become bigger and more evolved.” The new name is to convey that — as in gaming, which is probably the arena where you might have heard this term before — “anything is possible.”

There are “multiple universes” one can inhabit as a post-18 young adult, Blair continued. While it’s been assumed that to get into tech, the obvious route was a two-to-four year (and often more) tour through college or university to pick up a higher education degree, the bet that Multiverse is making here is that apprenticeships can easily, and widely, become another. “We want to build an outstanding alternative to university and college,” he said. These typically last 1.5 years. 

The idea of an “outstanding alternative” is especially important when thinking of how to target more marginalized groups and how this ties up with how tech companies are looking to be more diverse in the future, without cutting down on the quality of what people are getting out of the experience, or the resulting talent that is getting recruited.

There’s long been a stigma attached to less prestigious institutions, and putting money or effort into another channel to perpetuate that doesn’t really make sense or point to progress.

Blair said that currently over half of the people making their way through Multiverse are people of color, and 57% are women, and the plan is to build tools to make that an even firmer part of its mission. 

The startup sees itself as part tech company and part education enterprise.

It works with tech companies and others to open up opportunities for people who have not had any higher education or any training, where fresh high school graduates can come in, learn the ropes of a job while getting paid and then continue on working their way up the ladder with that knowledge base in place.

Apprenticeships on the platform right now range from data analysts through to exhibition designers, and the idea is that by opening up and targeting the U.S. market, the breadth, number and location of roles will grow.

This is not just a social enterprise: There is actual money in this area. Blair said that prices it charges the companies it works with range by qualification, “but are broadly around the $15,000 mark.” (The individuals applying don’t pay anything, and they will also be paid by the companies providing the apprenticeships.)

On the educational front, Multiverse doesn’t just connect people as a recruiter might: it has a team in place to build out what the “curriculum” might be for a particular apprenticeship, and how to deliver and train people with the requisite skills alongside the practice experience of working, and more.

That latter role, of course, has taken on a more poignant dimension in the last year: Concepts like remote training and virtual mentorship have very much come into their own at a time when offices are largely standing empty to help reduce the spread of COVID-19.

Regardless of what happens in the year ahead — fingers crossed that vaccinations and other efforts will help us collectively move past where we are right now — many believe that the infrastructure that has been put into place to keep working virtually will continue to be used, which bodes well for a company like Multiverse that is building a business around that, both with technology it creates itself and will bring in from third parties and partners.

Indeed, the ecosystem of companies building tools to deliver educational content, provide training and work collaboratively has really boomed in the pandemic, giving companies like Multiverse a large library of options for how to bring people into new work situations. (Google, which is now an investor in Multiverse, is very much one of the makers of such education tools.)

Apprenticeships are an interesting area for a startup to tackle. Traditionally, it’s a term that would have been associated mainly with skilled labor positions, rather than “knowledge workers.”

But you can argue that with the bigger swing that the globe has seen away from industrial and towards knowledge economies, there is an argument to be made for building more enterprises and opportunities for an ever wider pool of users, rather than expecting everyone to be shoehorned into the models of the last 50 years. (The latter would essentially imply that college is possibly the only way up.)

You might also be fair to claim that Blair’s connections helped him secure funding and open doors with would-be customers, and that might well be the case, but ultimately the startup will live or die by how well it executes on its premise, whether it finds a good way to connect more people, engage them in opportunities and keep them on board.

This is what really attracted the investors, said Joel Cutler, managing director and co-founder of General Catalyst.

“Euan has a genuine belief that this is important, and when you talk to him, you get a  feeling of manifest destiny,” Cutler said in an interview. In response to the question of family connections, he said that this was precisely the kind of issue that the technology industry should be tackling to fight.

“Of all the industries to break the mold of where you went to school, it should be the tech world that will do that, since it is far more of a meritocracy than others. This is the perfect place to start to break that mold,” he said. “Education will be super valuable but apprenticeships will also be important.” He noted that another company that General Catalyst invests in, Guild Education, is addressing similar opportunities, or rather the gaps in current opportunities, for older people.

Jan
18
2021
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Salesforce leads $15M investment in Asian HR tech platform Darwinbox

Darwinbox, which operates a cloud-based human resource management platform, has raised $15 million in a new financing round as the Indian startup looks to further expand in the country and Southeast Asian markets.

The new round — a Series C — for the Hyderabad-headquartered startup was led by Salesforce Ventures, the venture arm of the American enterprise giant. This is one of Salesforce Ventures’ rare investments in Asia. Existing investors, including Lightspeed India and Sequoia Capital India, also participated in the round, which brings the five-year-old startup’s raise to-date to about $35 million.

More than 500 firms — including Tokopedia, Indorama, JG Summit Group, Zilingo, Zalora, Fave, Adani, Mahindra, Kotak, TVS, National Stock Exchange, Ujjivan Small Finance Bank, Dr.Reddy’s, Nivea, Puma, Swiggy and Bigbasket — use Darwinbox’s HR platform to provide more than a million employees of theirs with a range of features in 60 nations, up from about 200 firms across 50 nations in late 2019, said Chaitanya Peddi, co-founder of Darwinbox, in an interview with TechCrunch.

Peddi said the startup has always looked up to Salesforce for inspiration, and investment from the enterprise giant is “nothing sort of a child receiving validation from their father,” he said.

The fundraise caps the most successful year for the startup that started with uncertainty as the coronavirus spread across Asian nations. The startup initially took a hit as its customers scrambled to navigate through the global pandemic, but the last two quarters have been its best to date, said Peddi.

Overall, the startup’s revenue has ballooned by 300% since September 2019, when it last raised money, he said. “In HR tech and SaaS space, we are now only behind SAP and Oracle in India in terms of revenue,” he said.

Dev Khare, a partner at Lightspeed India, an early backer of the startup, said that Darwinbox has become the preferred human capital management solution for Asian conglomerates, governments and high-growth businesses and multi-national corporations operating in Asia as they witness digital transformation.

Image Credits: Darwinbox

Darwinbox’s platform is built to take care of the entire “hiring to retiring” cycle needs of employees. It handles onboarding of new hires, keeps a tab on their performance, monitors attrition rate, and provides an ongoing feedback loop.

It also provides its customers with a social network for their employees to remain connected with one another and an AI assistant to apply for a leave or set up meetings with quick voice commands from their phones.

Peddi said the startup will deploy the fresh capital to expand to several more countries, especially in more emerging markets in the Middle East Asia and Africa, and broaden its offerings. “We will be leveraging the power of our platform to do a lot more. We are a product-led firm and our focus will remain on innovation in that space,” he said. The startup is also open to exploring opportunities to acquire smaller firms for inorganic growth, he said.

“India is home to one of the world’s youngest populations, and by 2050, it is expected to account for over 18% of the global working age population,” said Arundhati Bhattacharya, chairperson and CEO, Salesforce India, in a statement. “This makes technology platforms like Darwinbox, that focuses on workforces, incredibly important. I’m proud that Salesforce is supporting Darwinbox on their journey as they continue to grow and innovate in this space.”

Alex Kayyal, partner and head of international at Salesforce Ventures, told TechCrunch in an interview that the firm helps its partners in a number of ways, including exposing them to the firm’s customers, executives and their networks, and helping startups scale their business.

“We have one of the most innovative and disruptive customer bases that are looking for cloud solutions and digital transformation. So the opportunity to expose companies like Darwinbox to our customer base is something we get really excited about,” said Kayyal. Salesforce Ventures is exploring more investment opportunities in India, he said.

Jan
15
2021
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GitLab oversaw a $195 million secondary sale that values the company at $6 billion

GitLab has confirmed with TechCrunch that it oversaw a $195 million secondary sale that values the company at $6 billion. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”

GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’

 

Jan
14
2021
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Harness snags $85M Series C on $1.7B valuation as revenue grows 3x

Harness, the startup that wants to create a suite of engineering tools to give every company the kind of technological reach that the biggest companies have, announced an $85 million Series C today on a $1.7 billion valuation.

Today’s round comes after 2019’s $60 million Series B, which had a $500 million valuation, showing a company rapidly increasing in value. For a company that launched just three years ago, this is a fairly remarkable trajectory.

Alkeon Capital led the round with help from new investors Battery Ventures, Citi Ventures, Norwest Venture Partners, Sorenson Capital and Thomvest Ventures. The startup also revealed a previously unannounced $30 million B-1 round raised after the $60 million round, bringing the total raised to date to $195 million.

Company founder and CEO Jyoti Bansal previously founded AppDynamics, which he sold to Cisco in 2017 for $3.7 billion. With his track record, investors came looking for him this round. It didn’t hurt that revenue grew almost 3x last year.

“The business is doing very well, so the investor community has been proactively reaching out and trying to invest in us. We were not actually planning to raise a round until later this year. We had enough capital to get through that, but there were a lot of people wanting to invest,” Bansal told me.

In fact, he said there is so much investor interest that he could have raised twice as much, but didn’t feel a need to take on that much capital at this time. “Overall, the investor community sees the value in developer tools and the DevOps market. There are so many big public companies now in that space that have gone out in the last three to five years and that has definitely created even more validation of this space,” he said.

Bansal says that he started the company with the goal of making every company as good as Google or Facebook when it comes to engineering efficiency. Since most companies lack the engineering resources of these large companies, that’s a tall task, but one he thinks he can solve through software.

The company started by building a continuous delivery module. A cloud cost-efficiency module followed. Last year the company bought open-source continuous integration company Drone.io and they are working on building that into the platform now, with it currently in beta. There are additional modules on the product roadmap coming this year, according to Bansal.

As the company continued to grow revenue and build out the platform in 2020, it also added a slew of new employees, growing from 200 to 300 during the pandemic. Bansal says that he has plans to add another 200 by the end of this year. Harness has a reputation of being a good place to work, recently landing on Glassdoor’s best companies list.

As an experienced entrepreneur, Bansal takes building a diverse company with a welcoming culture very seriously. “Yes, you have to provide equal opportunity and make sure that you are open to hiring people from diverse backgrounds, but you have to be more proactive about it in the sense that you have to make sure that your company environment and company culture feels very welcoming to everyone,” he said.

It’s been a difficult time building a company during the pandemic, adding so many new employees, and finding a way to make everyone feel welcome and included. Bansal says he has actually seen productivity increase during the pandemic, but now has to guard against employee burnout.

He says that people didn’t know how to draw boundaries when working at home. One thing he did was introduce a program to give everyone one Friday a month off to recharge. The company also recently announced it would be a “work from anywhere” company post-COVID, but Bansal still plans on having regional offices where people can meet when needed.

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.”

Jan
13
2021
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Vdoo raises $25M more to develop its AI-based security for IoT and connected devices

It’s estimated that there were some 50 billion connected devices globally in 2020, and while that really says a lot about how far we’ve come in tech, for many it also speaks to a big issue: security vulnerabilities, with the devices themselves, plus all the components and services running on them, all potential targets for anything from malicious hackers to not-so-intentional data leaks.

Today, Israeli startup Vdoo — which has been developing AI-based services to detect and fix those kinds of vulnerabilities in IoT devices — is announcing $25 million in funding, money that it plans to use to help it better address the wider issue as it applies to all connected objects. With its initial focus on large industrial deployments, medical systems, communications infrastructure and automotive, Vdoo also is looking more deeply now at the wider network of devices that use communications chips, providing quick (as in minutes) assessments to identify and remediate or directly fix various issues: it cites zero-day vulnerabilities, CVEs, configuration and hardening issues, and standard incompliances among them.

The funding — an extension to the $32 million round that Vdoo announced in April 2019 — is coming from two investors, Israel’s Qumra Capital and Verizon Ventures (the investing arm of Verizon, which — by way of its acquisition of Aol many years ago — also owns TechCrunch).

Verizon’s interest in Vdoo is strategic and speaks to the opportunity in the market. As CEO Netanel Davidi (who co-founded the company with Uri Alter and Asaf Karas) describes it, operators like Verizon are interested because of their role as a distributer and reseller of hardware as part of their wider services play, be it for broadband access, or a telematics service or something for the connected home or connected office.

“They sell connected devices to enterprises and home users that are not made by them, yet the carriers are responsible for the security,” he said, “so the solution is to bake that into devices” to make it work more seamlessly, he said.

Verizon is not the startup’s only strategic backer. Others in the first tranche of this round included another carrier, Japan’s NTT Docomo, MS&AD Ventures (the venture arm of the global cyber insurance firm) and Dell Technology Capital, the VC arm of Dell.

The company has now raised around $70 million, and while it’s not disclosing valuation, Davidi confirmed that it has more than doubled this year.

(In April 2019, PitchBook estimated that it was just under $100 million, which would make it now at over $200 million if that figure is accurate.)

Davidi said that the decision to raise this money as an extension to the previous round rather than a new round was strategic: it gave the company the chance to raise funding more quickly, and to take more time to prepare for a bigger funding round in the near future.

And the reason for raising quickly was to address what was a quickly moving target: One of the by-products of the COVID-19 pandemic has been a dramatic shift to people working from home, buying new devices to enable that and in general using their communications networks much more heavily than before.

Connected-device security typically focuses on monitoring activity on the hardware, how data is moving in and out of it. Vdoo’s approach has been to build a platform that monitors the behavior of the devices themselves, using AI to compare that behavior to identify when something is not working as it should. 

“For any kind of vulnerability, using deep binary analysis capabilities, we try to understand the broader idea, to figure out how a similar vulnerability can emerge,” is how Davidi described the process when we talked about the first part of this round back in 2019.

Vdoo generates specific “tailor-made on-device micro-agents” to continue the detection and repair process, which Davidi likens to a modern approach to some cancer care: preventive measures such as periodic monitoring checks, followed by a “tailored immunotherapy” based on prior analysis of DNA.

Vdoo is a play on the Hebrew word that sounds like “vee-doo” and means “making sure”, and points to the basic idea of how it approaches the verification around its device monitoring. It also feels somewhat like the next step in endpoint security, which was the focus of Davidi and Alter’s previous startup, Cyvera, which was eventually acquired by Palo Alto Networks.

The focus on devices, in some ways, is a significantly more complex approach, given that it’s not just about the device, but the many components that go into them. As we have seen with Meltdown and Spectre, vulnerabilities might exist at the processor level.

And as Davidi pointed out to me this week, at times those issues aren’t even intentional but still mean data can leak out, and at worst that can be exploitable by bad actors.

“Backdoors are being built into many devices, and some are not even intentional,” he said. “It may be that the developer wanted to create a shortcut to make something else easier in the future. Some will see that as a back door, and some will not.”

The fractal-like nature of the issue is what Vdoo is digging into with its widening approach.

“Initially we wanted to serve the ecosystem of manufacturers, since they are the cause of the problem and the origin of the security issues,” he said. “We started there with Fortune 500 customers in areas like automotive and industrial and medical and telco and aviation. The idea was to make a platform that could serve and protect security stakeholders. But then we saw that this was a big unserved market.”

Indeed, Vdoo quotes figures from research firm MarketsandMarkets that forecast that the global device security market will grow to $36.6 billion by 2025 from $12.5 billion in 2020.

“The number of connected IoT devices is rapidly growing, creating greater opportunities for security breaches,” said Boaz Dinte, managing partner of Qumra Capital, in a statement. “Vdoo’s unique device-centric, deep technology automated approach has already brought immediate value to vendors in a very short period of time. We believe the market opportunity is huge, and with newly infused growth capital, Vdoo is well-positioned to become the leading global player for securing connected devices.”

“With the expansion of 5G networks and mobile edge compute, there’s a need for an end-to-end, device-centric security approach to IoT,” added Verizon Ventures MD Tammy Mahn in a statement. “As the venture arm of a leading telco, Verizon Ventures is proud to invest in Vdoo and its world-class team on their journey to solve this global need, while ushering in a new era of security by design in our increasingly connected world.”

Jan
13
2021
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Stacklet raises $18M for its cloud governance platform

Stacklet, a startup that is commercializing the Cloud Custodian open-source cloud governance project, today announced that it has raised an $18 million Series A funding round. The round was led by Addition, with participation from Foundation Capital and new individual investor Liam Randall, who is joining the company as VP of business development. Addition and Foundation Capital also invested in Stacklet’s seed round, which the company announced last August. This new round brings the company’s total funding to $22 million.

Stacklet helps enterprises manage their data governance stance across different clouds, accounts, policies and regions, with a focus on security, cost optimization and regulatory compliance. The service offers its users a set of pre-defined policy packs that encode best practices for access to cloud resources, though users can obviously also specify their own rules. In addition, Stacklet offers a number of analytics functions around policy health and resource auditing, as well as a real-time inventory and change management logs for a company’s cloud assets.

The company was co-founded by Travis Stanfield (CEO) and Kapil Thangavelu (CTO). Both bring a lot of industry expertise to the table. Stanfield spent time as an engineer at Microsoft and leading DealerTrack Technologies, while Thangavelu worked at Canonical and most recently in Amazon’s AWSOpen team. Thangavelu is also one of the co-creators of the Cloud Custodian project, which was first incubated at Capital One, where the two co-founders met during their time there, and is now a sandbox project under the Cloud Native Computing Foundation’s umbrella.

“When I joined Capital One, they had made the executive decision to go all-in on cloud and close their data centers,” Thangavelu told me. “I got to join on the ground floor of that movement and Custodian was born as a side project, looking at some of the governance and security needs that large regulated enterprises have as they move into the cloud.”

As companies have sped up their move to the cloud during the pandemic, the need for products like Stacklets has also increased. The company isn’t naming most of its customers, but it has disclosed FICO a design partner. Stacklet isn’t purely focused on the enterprise, though. “Once the cloud infrastructure becomes — for a particular organization — large enough that it’s not knowable in a single person’s head, we can deliver value for you at that time and certainly, whether it’s through the open source or through Stacklet, we will have a story there.” The Cloud Custodian open-source project is already seeing serious use among large enterprises, though, and Stacklet obviously benefits from that as well.

“In just 8 months, Travis and Kapil have gone from an idea to a functioning team with 15 employees, signed early Fortune 2000 design partners and are well on their way to building the Stacklet commercial platform,” Foundation Capital’s Sid Trivedi said. “They’ve done all this while sheltered in place at home during a once-in-a-lifetime global pandemic. This is the type of velocity that investors look for from an early-stage company.”

Looking ahead, the team plans to use the new funding to continue to developed the product, which should be generally available later this year, expand both its engineering and its go-to-market teams and continue to grow the open-source community around Cloud Custodian.

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