Nov
21
2019
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Linear takes $4.2M led by Sequoia to build a better bug tracker and more

Software will eat the world, as the saying goes, but in doing so, some developers are likely to get a little indigestion. That is to say, building products requires working with disparate and distributed teams, and while developers may have an ever-growing array of algorithms, APIs and technology at their disposal to do this, ironically the platforms to track it all haven’t evolved with the times. Now three developers have taken their own experience of that disconnect to create a new kind of platform, Linear, which they believe addresses the needs of software developers better by being faster and more intuitive. It’s bug tracking you actually want to use.

Today, Linear is announcing a seed round of $4.2 million led by Sequoia, with participation also from Index Ventures and a number of investors, startup founders and others that will also advise Linear as it grows. They include Dylan Field (Founder and CEO, Figma), Emily Choi (COO, Coinbase), Charlie Cheever (Co-Founder of Expo & Quora), Gustaf Alströmer (Partner, Y Combinator), Tikhon Berstram (Co-Founder, Parse), Larry Gadea (CEO, Envoy), Jude Gomila (CEO, Golden), James Smith (CEO, Bugsnag), Fred Stevens-Smith (CEO, Rainforest), Bobby Goodlatte, Marc McGabe, Julia DeWahl and others.

Cofounders Karri Saarinen, Tuomas Artman, and Jori Lallo — all Finnish but now based in the Bay Area — know something first-hand about software development and the trials and tribulations of working with disparate and distributed teams. Saarinen was previously the principal designer of Airbnb, as well as the first designer of Coinbase; Artman had been staff engineer and architect at Uber; and Lallo also had been at Coinbase as a senior engineer building its API and front end.

“When we worked at many startups and growth companies we felt that the tools weren’t matching the way we’re thinking or operating,” Saarinen said in an email interview. “It also seemed that no-one had took a fresh look at this as a design problem. We believe there is a much better, modern workflow waiting to be discovered. We believe creators should focus on the work they create, not tracking or reporting what they are doing. Managers should spend their time prioritizing and giving direction, not bugging their teams for updates. Running the process shouldn’t sap your team’s energy and come in the way of creating.”

Linear cofounders (from left): KarriSaarinen, Jori Lallo, and Tuomas Artma

All of that translates to, first and foremost, speed and a platform whose main purpose is to help you work faster. “While some say speed is not really a feature, we believe it’s the core foundation for tools you use daily,” Saarinen noted.

A ?K command calls up a menu of shortcuts to edit an issue’s status, assign a task, and more so that everything can be handled with keyboard shortcuts. Pages load quickly and synchronise in real time (and search updates alongside that). Users can work offline if they need to. And of course there is also a dark mode for night owls.

The platform is still very much in its early stages. It currently has three integrations based on some of the most common tools used by developers — GitHub (where you can link Pull Requests and close Linear issues on merge), Figma designs (where you can get image previews and embeds of Figma designs), and Slack (you can create issues from Slack and then get notifications on updates). There are plans to add more over time.

We started solving the problem from the end-user perspective, the contributor, like an engineer or a designer and starting to address things that are important for them, can help them and their teams,” Saarinen said. “We aim to also bring clarity for the teams by making the concepts simple, clear but powerful. For example, instead of talking about epics, we have Projects that help track larger feature work or tracks of work.”

Indeed, speed is not the only aim with Linear. Saarinen also said another area they hope to address is general work practices, with a take that seems to echo a turn away from time spent on manual management and more focus on automating that process.

“Right now at many companies you have to manually move things around, schedule sprints, and all kinds of other minor things,” he said. “We think that next generation tools should have built in automated workflows that help teams and companies operate much more effectively. Teams shouldn’t spend a third or more of their time a week just for running the process.”

The last objective Linear is hoping to tackle is one that we’re often sorely lacking in the wider world, too: context.

“Companies are setting their high-level goals, roadmaps and teams work on projects,” he said. “Often leadership doesn’t have good visibility into what is actually happening and how projects are tracking. Teams and contributors don’t always have the context or understanding of why they are working on the things, since you cannot follow the chain from your task to the company goal. We think that there are ways to build Linear to be a real-time picture of what is happening in the company when it comes to building products, and give the necessary context to everyone.”

Linear is a late entrant in a world filled with collaboration apps, and specifically workflow and collaboration apps targeting the developer community. These include not just Slack and GitHub, but Atlassian’s Trello and Jira, as well as Asana, Basecamp and many more.

Saarinen would not be drawn out on which of these (or others) that it sees as direct competition, noting that none are addressing developer issues of speed, ease of use and context as well as Linear is.

“There are many tools in the market and many companies are talking about making ‘work better,’” he said. “And while there are many issue tracking and project management tools, they are not supporting the workflow of the individual and team. A lot of the value these tools sell is around tracking work that happens, not actually helping people to be more effective. Since our focus is on the individual contributor and intelligent integration with their workflow, we can support them better and as a side effect makes the information in the system more up to date.”

Stephanie Zhan, the partner at Sequoia whose speciality is seed and Series A investments and who has led this round, said that Linear first came on her radar when it first launched its private beta (it’s still in private beta and has been running a waitlist to bring on new users. In that time it’s picked up hundreds of companies, including Pitch, Render, Albert, Curology, Spoke, Compound and YC startups including Middesk, Catch and Visly). The company had also been flagged by one of Sequoia’s Scouts, who invested earlier this year

Sequoia Logo Natalie Miyake

Although Linear is based out of San Francisco, it’s interesting that the three founders’ roots are in Finland (with Saarinen in Helsinki this week to speak at the Slush event), and brings up an emerging trend of Silicon Valley VCs looking at founders from further afield than just their own back yard.

“The interesting thing about Linear is that as they’re building a software company around the future of work, they’re also building a remote and distributed team themselves,” Zahn said. The company currently has only four employees.

In that vein, we (and others, it seems) had heard that Sequoia — which today invests in several Europe-based startups, including Tessian, Graphcore, Klarna, Tourlane, Evervault  and CEGX — has been considering establishing a more permanent presence in this part of the world, specifically in London.

Sources familiar with the firm, however, tell us that while it has been sounding out VCs at other firms, saying a London office is on the horizon might be premature, as there are as yet no plans to set up shop here. However, with more companies and European founders entering its portfolio, and as more conversations with VCs turn into decisions to make the leap to help Sequoia source more startups, we could see this strategy turning around quickly.

Nov
21
2019
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Celonis, a leader in big data process mining for enterprises, nabs $290M on a $2.5B valuation

More than $1 trillion is spent by enterprises annually on “digital transformation” — the investments that organizations make to update their IT systems to get more out of them and reduce costs — and today one of the bigger startups that’s built a platform to help get the ball rolling is announcing a huge round of funding.

Celonis, a leader in the area of process mining — which tracks data produced by a company’s software, as well as how the software works, in order to provide guidance on what a company could and should do to improve it — has raised $290 million in a Series C round of funding, giving the startup a post-money valuation of $2.5 billion.

Celonis was founded in 2011 in Munich — an industrial and economic center in Germany that you could say is a veritable Petri dish when it comes to large business in need of digital transformation — and has been cash-flow positive from the start. In fact, Celonis waited until it was nearly six years old to take its first outside funding (prior to this Series C it had picked up less than $80 million, see here and here).

The size and timing of this latest equity injection is due to seizing the moment, and tapping networks of people to do so. It has already been growing at a triple-digit rate, with customers like Siemens, Cisco, L’Oréal, Deutsche Telekom and Vodafone among them. 

“Our tech has become its own category with a lot of successful customers,” Bastian Nominacher, the co-CEO who co-founded the company with Alexander Rinke and Martin Klenk, said in an interview. “It’s a key driver for sustainable business operations, and we felt that we needed to have the right network of people to keep momentum in this market.”

To that end, this latest round’s participants lines up with the company’s strategic goals. It is being led by Arena Holdings — an investment firm led by Feroz Dewan — with Ryan Smith, co-founder and CEO of Qualtrics; and Tooey Courtemanche, founder and CEO of Procore, also included, alongside previous investors 83North and Accel.

Celonis said Smith will be a special advisor, working alongside another strategic board member, Hybris founder Carsten Thoma. Dewan, meanwhile, used to run hedge funds for Tiger Global (among other roles) and currently sits on the board of directors of Kraft Heinz.

“Celonis is the clear market leader in a category with open-ended potential. It has demonstrated an enviable record of growth and value creation for its customers and partners,” said Dewan in a statement. “Celonis helps companies capitalise on two inexorable trends that cut across geography and industry: the use of data to enable faster, better decision-making and the desire for all businesses to operate at their full potential.”

The core of Celonis’ offering is to provide process mining around an organizations’ IT systems. Nominacher said that this could include anything from 5 to over 100 different pieces of software, with the main idea being that Celonis’s platform monitors a company’s whole solar system of apps, so to speak, in order to produce its insights — providing and “X-ray” view of the situation, in the words of Rinke.

Those insights, in turn, are used either by the company itself, or by consultants engaged by the organization, to make further suggestions, whether that’s to implement something like robotic process automation (RPA) to speed up a specific process, or use a different piece of software to crunch data better, or reconfigure how staff is deployed, and so on. This is not a one-off thing: the idea is continuous monitoring to pick up new patterns or problems.

In recent times, the company has started to expand the system into a wider set of use cases, by providing tools to monitor operations and customer experience, and to apply its process mining engine to a wider set of company sizes beyond large enterprises, and by bringing in more AI to its basic techniques.

Interestingly, Nominacher said that there are currently no plans to, say, extend into RPA or other “fixing” tools itself, pointing to a kind of laser strategy that is likely part of what has helped it grow so well up to now.

“It’s important to focus on the relevant parts of what you provide,” he said. “We one layer, one that can give the right guidance.”

Nov
19
2019
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Clumio raises $135M Series C for its backup as a service platform

Clumio, a 100-people startup that offers a SaaS-like service for enterprise backup, today announced that it has raised a $135 million Series C round, led by existing investor Sutter Hill Ventures and new investor Altimeter Captial. The announcement comes shortly after the company’s disclosure in August that it had quietly raised a total of $51 million in Series A and B rounds in 2017 and 2018. The company says it plans to use this new funding to “accelerate its vision to deliver a globally consolidated data protection service in and for the public cloud.”

Given the amount of money invested in the company, chances are Clumio is getting close to a $1 billion valuation, but the company is not disclosing its valuation at this point.

The overall mission of Clumio is to build a platform on public clouds that gives enterprises a single data protection service that can handle backups of their data in on-premises, cloud and SaaS applications. When it came out of stealth, the company’s focus was on VMware on premises. Since then, the team has expanded this to include VMware running on public clouds.

“When somebody moves to the cloud, they don’t want to be in the business of managing software or infrastructure and all that, because the whole reason to move to the cloud was essentially to get away from the mundane,” explained Clumio CEO and co-founder Poojan Kumar.

The next step in this process, as the company also announced today, is to make it easier for enterprises to protect the cloud-native applications they are building now. The company today launched this service for AWS and will likely expand it to other clouds like Microsoft Azure, soon.

The market for enterprise backup is only going to expand in the coming years. We’ve now reached a point, after all, where it’s not unheard of to talk about enterprises that run thousands of different applications. For them, Clumio wants to become the one-stop-shop for all things data protection — and its investors are obviously buying into the company’s vision and momentum.

“When there’s a foundational change, like the move to the cloud, which is as foundational a change, at least, as the move from mainframe to open systems in the 80s and 90s,” said Mike Speiser, Managing Director at Sutter Hill Ventures . “When there’s a change like that, you have to re-envision, you have to refactor and think of the world — the new world — in a new way and start from scratch. If you don’t, what’s gonna end up happening is people make decisions that are short term decisions that seem like they will work but end up being architectural dead ends. And those companies never ever end up winning. They just never end up winning and that’s the opportunity right now on this big transition across many markets, including the backup market for Clumio.”

Speiser also noted that SaaS allows for a dramatically larger market opportunity for companies like Clumio. “What SaaS is doing, is it’s not only allowing us to go after the traditional Silicon Valley, high end, direct selling, expensive markets that were previously buying high-end systems and data centers. But what we’re seeing — and we’re seeing this with Snowflake and […] we will see it with Clumio — is there’s an opportunity to go after a much broader market opportunity.”

Starting next year, Clumio will expand that market by adding support for data protection for a first SaaS app, with more to follow, as well as support for backup in more regions and clouds. Right now, the service’s public cloud tool focuses on AWS — and only in the United States. Next year, it plans to support international regions as well.

Kumar stressed that he wants to build Clumio for the long run, with an IPO as part of that roadmap. His investors probably wouldn’t mind that, either.

Nov
19
2019
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SocialRank sells biz to Trufan, pivots to a mobile LinkedIn

What do you do when your startup idea doesn’t prove big enough? Run it as a scrawny but profitable lifestyle business? Or sell it to a competitor and take another swing at the fences? Social audience analytics startup SocialRank chose the latter and is going for glory.

Today, SocialRank announced it’s sold its business, brand, assets, and customers to influencer marketing campaign composer and distributor Trufan which will run it as a standalone product. But SocialRank’s team isn’t joining up. Instead, the full six-person staff is sticking together to work on a mobile-first professional social network called Upstream aiming to nip at LinkedIn.

SocialRank co-founder and CEO Alex Taub

Started in 2014 amidst a flurry of marketing analytics tools, SocialRank had raised $2.1 million from Rainfall Ventures and others before hitting profitability in 2017. But as the business plateaued, the team saw potential to use data science about people’s identity to get them better jobs.

“A few months ago we decided to start building a new product (what has become Upstream). And when we came to the conclusion to go all-in on Upstream, we knew we couldn’t run two businesses at the same time” SocialRank co-founder and CEO Alex Taub tells me. “We decided then to run a bit of a process. We ended up with a few offers but ultimately felt like Trufan was the best one to continue the business into the future.”

The move lets SocialRank avoid stranding its existing customers like the NFL, Netflix, and Samsung that rely on its audience segmentation software. Instead, they’ll continue to be supported by Trufan where Taub and fellow co-founder Michael Schonfeld will become advisors.

“While we built a sustainable business, we essentially knew that if we wanted to go real big, we would need to go to the drawing board” Taub explains.

SocialRank

Two-year-old Trufan has raised $1.8 million Canadian from Round13 Capital, local Toronto startup Clearbanc’s founders, and several NBA players. Trufan helps brands like Western Union and Kay Jewellers design marketing initiatives that engage their customer communities through social media. It’s raising an extra $400,000 USD in venture debt from Round13 to finance the acquisition, which should make Trufan cash-flow positive by the end of the year.

Why isn’t the SocialRank team going along for the ride? Taub said LinkedIn was leaving too much opportunity on the table. While it’s good for putting resumes online and searching for people, “All the social stuff are sort of bolt-ons that came after Facebook and Twitter arrived. People forget but LinkedIn is the oldest active social network out there”, Taub tells me, meaning it’s a bit outdated.

Trufan’s team

Rather than attack head-on, the newly forged Upstream plans to pick the Microsoft-owned professional network apart with better approaches to certain features. “I love the idea of ‘the unbundling of LinkedIn’, ala what’s been happening with Craigslist for the past few years” says Taub. “The first foundational piece we are building is a social professional network around giving and getting help. We’ll also be focused on the unbundling of the groups aspect of LinkedIn.”

Taub concludes that entrepreneurs can shackle themselves to impossible goals if they take too much venture capital for the wrong business. As we’ve seen with SoftBank, investors demand huge returns that can require pursuing risky and unsustainable expansion strategies.

“We realized that SocialRank had potential to be a few hundred million dollar in revenue business but venture growth wasn’t exactly the model for it” Taub says. “You need the potential of billions in revenue and a steep growth curve.” A professional network for the smartphone age has that kind of addressable market. And the team might feel better getting out of bed each day knowing they’re unlocking career paths for people instead of just getting them to click ads.

Nov
18
2019
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Ohi raises $2.75M to power same-day delivery for brands that aren’t Amazon

The world has gotten so much faster. Amazon has made two-day shipping the standard and same- or next-day shipping commonplace. And that doesn’t even include the collection of on-demand players that can get us everything from groceries to alcohol to services like concierge storage and in-home cleaning with the press of a button.

But the logistics around same- or next-day delivery are incredibly complicated, which usually means that only the biggest, most successful brands and platforms can pull it off.

Enter Ohi.

Ohi was founded last year by Ben Jones, with a mission to democratize e-commerce by offering Amazon-level speed to smaller brands. The company today announced the close of a $2.75 million seed round led by Flybridge Capital Partners .

Ohi partners with landlords to turn what would normally be leased as commercial retail property or office space into micro-warehouses within major cities. The company then offers those warehouses on flexible leases that can be as short as three months, which help D2C brands distribute their inventory and power same- or next-day delivery of their products. Ohi employs 1099 workers to handle pick and pack at warehouses, and partners with Postmates and Doordash for last-mile courier services.

Eventually, Ohi has plans to turn this into a full-fledged platform, paying landlords based on volume. For now, however, the startup is doing traditional leases with landlords, taking on more of a financial risk with the spaces, as it scales up the brand side of the platform.

Ohi charges brands a fixed monthly access fee to the platform, which starts at $750/month. More expensive tiers unlock premium intelligence features around matching inventory to warehouse location, as well as access to more spaces. At the transaction level, Ohi asks for a fee of $2.50 for pick and pack.

Jones says that delivery is actually a higher cost for brands than storage, and that same-day shipping can cost upwards of $50/package for a brand, with same-day pick and pack costing about $10/item. The hope is that Ohi can bring down the price of same-day and next-day delivery by using this Ohi network of commercial space, pick and pack and courier services to compete with Amazon.

Moreover, Ohi believes that the platform can go well beyond bringing down the price of same-day delivery. The company says its brands are also seeing a decrease in cart abandonment when customers see that same-day or next-day delivery option.

Plus, through the data it collects by handling fulfillment for brands, Ohi expects to be able to use its tech to predict demand based on geography and category, helping brands understand their own customers and customers shopping in their particular category.

“There is a lot of positive momentum behind what we’re doing,” said Jones. “Every brand we talk to knows this is the future.”

Jones came up with the idea for Ohi after suffering a serious back injury that left him for more than a year unable to get around easily or carry things. This forced him into a situation where e-commerce was his only option for just about everything. Many of the orders he placed offered three- to five-day shipping, leaving him waiting for what he needed.

He started to investigate how a service could democratize the convenience of same-day and next-day delivery for brands and their customers. And Ohi was born.

Ohi currently offers its service in Manhattan and Brooklyn in New York City, and is launching in Los Angeles this week.

“The greatest challenge we face is how to scale quickly without making mistakes,” said Jones. “It’s not quite as simple as a piece of software that has one-to-many distribution. We’re actually holding brands’ inventory and there’s a physical aspect to this business that makes it more complex. Making sure we can scale that efficiently without making mistakes is going to be one of the biggest challenges.”

Nov
15
2019
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Three of Apple and Google’s former star chip designers launch NUVIA with $53M in series A funding

Silicon is apparently the new gold these days, or so VCs hope.

What was once a no-go zone for venture investors, who feared the long development lead times and high technical risk required for new entrants in the semiconductor field, has now turned into one of the hottest investment areas for enterprise and data VCs. Startups like Graphcore have reached unicorn status (after its $200 million series D a year ago) while Groq closed $52M from the likes of Chamath Palihapitiya of Social Capital fame and Cerebras raised $112 million in investment from Benchmark and others while announcing that it had produced the first trillion transistor chip (and who I profiled a bit this summer).

Today, we have another entrant with another great technical team at the helm, this time with a Santa Clara, CA-based startup called NUVIA. The company announced this morning that it has raised a $53 million series A venture round co-led by Capricorn Investment Group, Dell Technologies Capital (DTC), Mayfield, and WRVI Capital, with participation from Nepenthe LLC.

Despite only getting started earlier this year, the company currently has roughly 60 employees, 30 more at various stages of accepted offers, and the company may even crack 100 employees before the end of the year.

What’s happening here is a combination of trends in the compute industry. There has been an explosion in data and by extension, the data centers required to store all of that information, just as we have exponentially expanded our appetite for complex machine learning algorithms to crunch through all of those bits. Unfortunately, the growth in computation power is not keeping pace with our demands as Moore’s Law slows. Companies like Intel are hitting the limits of physics and our current know-how to continue to improve computational densities, opening the ground for new entrants and new approaches to the field.

Finding and building a dream team with a “chip” on their shoulder

There are two halves to the NUVIA story. First is the story of the company’s founders, which include John Bruno, Manu Gulati, and Gerard Williams III, who will be CEO. The three overlapped for a number of years at Apple, where they brought their diverse chip skillsets together to lead a variety of initiatives including Apple’s A-series of chips that power the iPhone and iPad. According to a press statement from the company, the founders have worked on a combined 20 chips across their careers and have received more than 100 patents for their work in silicon.

Gulati joined Apple in 2009 as a micro architect (or SoC architect) after a career at Broadcom, and a few months later, Williams joined the team as well. Gulati explained to me in an interview that, “So my job was kind of putting the chip together; his job was delivering the most important piece of IT that went into it, which is the CPU.” A few years later in around 2012, Bruno was poached from AMD and brought to Apple as well.

Gulati said that when Bruno joined, it was expected he would be a “silicon person” but his role quickly broadened to think more strategically about what the chipset of the iPhone and iPad should deliver to end users. “He really got into this realm of system-level stuff and competitive analysis and how do we stack up against other people and what’s happening in the industry,” he said. “So three very different technical backgrounds, but all three of us are very, very hands-on and, you know, just engineers at heart.”

Gulati would take an opportunity at Google in 2017 aimed broadly around the company’s mobile hardware, and he eventually pulled over Bruno from Apple to join him. The two eventually left Google earlier this year in a report first covered by The Information in May. For his part, Williams stayed at Apple for nearly a decade before leaving earlier this year in March.

The company is being stealthy about exactly what it is working on, which is typical in the silicon space because it can take years to design, manufacture, and get a product into market. That said, what’s interesting is that while the troika of founders all have a background in mobile chipsets, they are indeed focused on the data center broadly conceived (i.e. cloud computing), and specifically reading between the lines, to finding more energy-efficient ways that can combat the rising climate cost of machine learning workflows and computation-intensive processing.

Gulati told me that “for us, energy efficiency is kind of built into the way we think.”

The company’s CMO did tell me that the startup is building “a custom clean sheet designed from the ground up” and isn’t encumbered by legacy designs. In other words, the company isn’t building on top of ARM or other existing chip architectures.

Building an investor syndicate that’s willing to “chip” in

Outside of the founders, the other half of this NUVIA story is the collective of investors sitting around the table, all of whom not only have deep technical backgrounds, but also deep pockets who can handle the technical risk that comes with new silicon startups.

Capricorn specifically invested out of what it calls its Technology Impact Fund, which focuses on funding startups that use technology to make a positive impact on the world. Its portfolio according to a statement includes Tesla, Planet Labs, and Helion Energy.

Meanwhile, DTC is the venture wing of Dell Technologies and its associated companies, and brings a deep background in enterprise and data centers, particularly from the group’s server business like Dell EMC. Scott Darling, who leads DTC, is joining NUVIA’s board, although the company is not disclosing the board composition at this time. Navin Chaddha, an electrical engineer by training who leads Mayfield, has invested in companies like HashiCorp, Akamai, and SolarCity. Finally, WRVI has a long background in enterprise and semiconductor companies.

I chatted a bit with Darling of DTC about what he saw in this particular team and their vision for the data center. In addition to liking each founder individually, Darling felt the team as a whole was just very strong. “What’s most impressive is that if you look at them collectively, they have a skillset and breadth that’s also stunning,” he said.

He confirmed that the company is broadly working on data center products, but said the company is going to lie low on its specific strategy during product development. “No point in being specific, it just engenders immune reactions from other players so we’re just going to be a little quiet for a while,” he said.

He apologized for “sounding incredibly cryptic” but said that the investment thesis from his perspective for the product was that “the data center market is going to be receptive to technology evolutions that have occurred in places outside of the data center that’s going to allow us to deliver great products to the data center.”

Interpolating that statement a bit with the mobile chip backgrounds of the founders at Google and Apple, it seems evident that the extreme energy-to-performance constraints of mobile might find some use in the data center, particularly given the heightened concerns about power consumption and climate change among data center owners.

DTC has been a frequent investor in next-generation silicon, including joining the series A investment of Graphcore back in 2016. I asked Darling whether the firm was investing aggressively in the space or sort of taking a wait-and-see attitude, and he explained that the firm tries to keep a consistent volume of investments at the silicon level. “My philosophy on that is, it’s kind of an inverted pyramid. No, I’m not gonna do a ton of silicon plays. If you look at it, I’ve got five or six. I think of them as the foundations on which a bunch of other stuff gets built on top,” he explained. He noted that each investment in the space is “expensive” given the work required to design and field a product, and so these investments have to be carefully made with the intention of supporting the companies for the long haul.

That explanation was echoed by Gulati when I asked how he and his co-founders came to closing on this investor syndicate. Given the reputations of the three, they would have had easy access to any VC in the Valley. He said about the final investors:

They understood that putting something together like this is not going to be easy and it’s not for everybody … I think everybody understands that there’s an opportunity here. Actually capitalizing upon it and then building a team and executing on it is not something that just anybody could possibly take on. And similarly, it is not something that every investor could just possibly take on in my opinion. They themselves need to have a vision on their side and not just believe our story. And they need to strategically be willing to help and put in the money and be there for the long haul.

It may be a long haul, but Gulati noted that “on a day-to-day basis, it’s really awesome to have mostly friends you work with.” With perhaps 100 employees by the end of the year and tens of millions of dollars already in the bank, they have their war chest and their army ready to go. Now comes the fun (and hard) part as we learn how the chips fall.

Nov
14
2019
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Moveworks snags $75M Series B to resolve help desk tickets with AI

Moveworks, a startup using AI to help resolve help desk tickets in an automated fashion, announced a $75 million Series B investment today.

The round was led by Iconiq Capital, Kleiner Perkins and Sapphire Ventures. Existing investors Lightspeed Venture Partners, Bain Capital Ventures and Comerica Bank also participated. The round also included a personal investment from John W. Thompson, a partner at LightSpeed Venture Partners and chairman at Microsoft. Today’s investment brings the total raised to $105 million, according to the company.

That’s a lot of money for an early-stage company, but CEO and co-founder Bhavin Shah says his company is solving a common problem using AI. “Moveworks is a machine learning platform that uses natural language understanding to take tickets that are submitted by employees every day to their IT teams for stuff they need, and we understand [the content of the tickets], interpret them, and then we take the actions to resolve them [automatically],” Shah explained.

He said the company decided to focus on help desk tickets because they saw data when they were forming the company that suggested a common set of questions, and that would make it easier to interpret and resolve these issues. In fact, they are currently able to resolve 25-40% of all tickets autonomously.

He says this should lead to greater user satisfaction because some of their problems can be resolved immediately, even when IT personnel aren’t around to help. Instead of filing a ticket and waiting for an answer, Moveworks can provide the answer, at least part of the time, without human intervention.

Aditya Agrawal, a partner at Iconiq, says that the company really captured his attention. “Moveworks is not just transforming IT operations, they are building a more modern and enlightened way to work. They’ve built a platform that simplifies and streamlines every interaction between employees and IT, enabling both to focus on what matters,” he said in a statement.

The company was founded in 2016, and in the early days was only resolving 2% of the tickets autonomously, so it has seen major improvement. It already has 115 employees and dozens of customers (although Shah didn’t want to provide an exact number).

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
13
2019
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Freshworks raises $150M Series H on $3.5B valuation

Freshworks, a company that makes a variety of business software tools, from CRM to help-desk software, announced a $150 million Series H investment today from Sequoia Capital, CapitalG (formerly Google Capital) and Accel on a hefty $3.5 billion valuation. The late-stage startup has raised almost $400 million, according to Crunchbase data.

The company has been building an enterprise SaaS platform to give customers a set of integrated business tools, but CEO and co-founder Girish Mathrubootham says they will be investing part of this money in R&D to keep building out the platform.

To that end, the company also announced today a new unified data platform called the “Customer-for-Life Cloud” that runs across all of its tools. “We are actually investing in really bringing all of this together to create the “Customer-for-Life Cloud,” which is how you take marketing, sales, support and customer success — all of the aspects of a customer across the entire life cycle journey and bring them to a common data model where a business that is using Freshworks can see the entire life cycle of the customer,” Mathrubootham explained.

While Mathrubootham was not ready to commit to an IPO, he said they are in the process of hiring a CFO and are looking ahead to one day becoming a public company. “We don’t have a definite timeline. We want to go public at the right time. We are making sure that as a company that we are ready with the right processes and teams and predictability in the business,” he said.

In addition, he says he will continue to look for good acquisition targets, and having this money in the bank will help the company fill in gaps in the product set should the right opportunity arise. “We don’t generally acquire revenue, but we are looking for good technology teams both in terms of talent, as well as technology that would help give us a jumpstart in terms of go-to-market.” It hasn’t been afraid to target small companies in the past, having acquired 12 already.

Freshworks, which launched in 2010, has almost 2,500 employees, a number that’s sure to go up with this new investment. It has 250,00 customers worldwide, including almost 40,000 paying customers. These including Bridgestone Tires, Honda, Hugo Boss, Toshiba and Cisco.

Nov
12
2019
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Loop Returns picks up $10 million in Series A led by FirstMark Capital

Loop Returns, the startup that helps brands handle returns from online purchases, has today announced the close of a $10 million Series A funding round led by FirstMark Capital. Lerer Hippeau and Ridge Ventures also participated in the round.

Loop started when Jonathan Poma, a co-founder and COO and president, was working at an agency and consulting with a big Shopify brand on how to improve their system for returns and exchanges. After partnering with longtime friend Corbett Morgan, Loop Returns was born.

Loop sits on top of Shopify to handle all of a brand’s returns. It first asks the customer if they’d like a different size in the item they bought, quickly managing an exchange. It then asks if the customer would prefer to exchange for a new item altogether, depositing the credit in that person’s account in real time so they can shop for something new immediately.

If an exchange isn’t in the cards, Loop will ask the customer if they’d prefer credit with this brand over a straight-up refund.

The goal, according to Poma and Morgan, is to turn the point of return into a moment where brands can create a life-loyal customer when handled quickly and properly.

The more we shop online, the more brands extend themselves financially, and returns are a big part of that. Returns account for 20 to 30% of e-commerce sales, which can become a terrible financial burden on a growing direct-to-consumer brand. And what’s more, the cost of acquiring those users in the first place also goes down the drain.

Loop Returns hopes to keep that customer in the fold by giving them post-purchase options that are more sticky and more lucrative for the brand than a refund.

The company thinks of it as Connection Infrastructure. Most brands already have a customer acquisition architecture, and Shopify and Amazon are ahead when it comes to the infrastructure around customer convenience. But the ties that bind customers to brands haven’t been optimized for the many D2C brands out there looking to make an impact.

“The big problem we’re trying to solve long term is connection infrastructure,” said Morgan. “Why does this brand matter? Why does it mean something to me? Why does the product matter? We want to enforce more mindfulness and meaning into buying.”

Of course, a more mindful shopper doesn’t yield as many returns. Poma and Morgan admit that the goal of their software is to minimize returns, the very reason for the software’s existence. After all, return volume is one of a handful of variables that help Loop Returns determine what it will charge its brand clients.

But the team is thinking about other layers of the connection infrastructure, with plans to launch a product in 2020 that also focuses on the connection point after purchase. Poma and Morgan believe, with an almost religious reverence, that the brands themselves will help lead shoppers and infrastructure providers to a better, more connected shopping experience.

“Brands are the torch bearers,” said Poma. “They will lead us to a more enlightened era of how we think about buying. Empowerment of the brand will lead us to a better consumerism.”

The co-founders stayed mum on any specific plans for the 2020 product, but did say they will use the funding to expand operations and further build out its current and future products.

Of course, Loop is playing in a crowded space. Not only are there other players thinking about post-purchase connection, but Shopify has itself built out tools to help with exchanges and returns, and even acquired Return Magic, a similar service, in the summer of 2018.

That said, Loop Returns believes there is a long way to go as it builds the “connection infrastructure,” and that one clear path forward is actual personalization. With data from returns and exchanges, Loop Returns is relatively well-positioned to take on personalization in a meaningful way.

For now, Loop Returns has more than 200 customers and has handled more than 2 million returns, working with brands like Brooklinen, Allbirds, PuraVida and more.

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