Feb
24
2021
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Aquarium scores $2.6M seed to refine machine learning model data

Aquarium, a startup from two former Cruise employees, wants to help companies refine their machine learning model data more easily and move the models into production faster. Today the company announced a $2.6 million seed led by Sequoia with participation from Y Combinator and a bunch of angel investors including Cruise co-founders Kyle Vogt and Dan Kan.

When the two co-founders CEO Peter Gao and head of engineering Quinn Johnson, were at Cruise they learned that finding areas of weakness in the model data was often the problem that prevented it from getting into production. Aquarium aims to solve this issue.

“Aquarium is a machine learning data management system that helps people improve model performance by improving the data that it’s trained on, which is usually the most important part of making the model work in production,” Gao told me.

He says that they are seeing a lot of different models being built across a variety of industries, but teams are getting stuck because iterating on the data set and continually finding relevant data is a hard problem to solve. That’s why Aquarium’s founders decided to focus on this.

“It turns out that most of the improvement to your model, and most of the work that it takes to get it into production is about deciding, ‘Here’s what I need to go and collect next. Here’s what I need to go label. Here’s what I need to go and retrain my model on and analyze it for errors and repeat that iteration cycle,” Gao explained.

The idea is to get a model into production that outperforms humans. One customer Sterblue offers a good example. They provide drone inspection services for wind turbines. Their customers used to send out humans to inspect the turbines for damage, but with a set of drone data, they were able to train a machine learning model to find issues. Using Aquarium, they refined their model and improved accuracy by 13%, while cutting the cost of human reviews in half, Gao said.

The 7 person Aquarium startup team.

The Aquarium team. Image: Aquarium

Aquarium currently has 7 employees including the founders, of which three are women. Gao says that they are being diverse by design. He understands the issues of bias inherent in machine learning model creation, and creating a diverse team for this kind of tooling is one way to help mitigate that bias.

The company launched last February and spent part of the year participating in the Y Combinator Summer 2020 cohort. They worked on refining the product throughout 2020, and recently opened it up from beta to generally available.

Feb
18
2021
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Census raises $16M Series A to help companies put their data warehouses to work

Census, a startup that helps businesses sync their customer data from their data warehouses to their various business tools like Salesforce and Marketo, today announced that it has raised a $16 million Series A round led by Sequoia Capital. Other participants in this round include Andreessen Horowitz, which led the company’s $4.3 million seed round last year, as well as several notable angles, including Figma CEO Dylan Field, GitHub CTO Jason Warner, Notion COO Akshay Kothari and Rippling CEO Parker Conrad.

The company is part of a new crop of startups that are building on top of data warehouses. The general idea behind Census is to help businesses operationalize the data in their data warehouses, which was traditionally only used for analytics and reporting use cases. But as businesses realized that all the data they needed was already available in their data warehouses and that they could use that as a single source of truth without having to build additional integrations, an ecosystem of companies that operationalize this data started to form.

The company argues that the modern data stack, with data warehouses like Amazon Redshift, Google BigQuery and Snowflake at its core, offers all of the tools a business needs to extract and transform data (like Fivetran, dbt) and then visualize it (think Looker).

Tools like Census then essentially function as a new layer that sits between the data warehouse and the business tools that can help companies extract value from this data. With that, users can easily sync their product data into a marketing tool like Marketo or a CRM service like Salesforce, for example.

Image Credits: Census

Three years ago, we were the first to ask, ‘Why are we relying on a clumsy tangle of wires connecting every app when everything we need is already in the warehouse? What if you could leverage your data team to drive operations?’ When the data warehouse is connected to the rest of the business, the possibilities are limitless,” Census explains in today’s announcement. “When we launched, our focus was enabling product-led companies like Figma, Canva, and Notion to drive better marketing, sales, and customer success. Along the way, our customers have pulled Census into more and more scenarios, like auto-prioritizing support tickets in Zendesk, automating invoices in Netsuite, or even integrating with HR systems.

Census already integrates with dozens of different services and data tools and its customers include the likes of Clearbit, Figma, Fivetran, LogDNA, Loom and Notion.

Looking ahead, Census plans to use the new funding to launch new features like deeper data validation and a visual query experience. In addition, it also plans to launch code-based orchestration to make Census workflows versionable and make it easier to integrate them into an enterprise orchestration system.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dec
07
2020
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Tecton.ai nabs $35M Series B as it releases machine learning feature store

Tecton.ai, the startup founded by three former Uber engineers who wanted to bring the machine learning feature store idea to the masses, announced a $35 million Series B today, just seven months after announcing their $20 million Series A.

When we spoke to the company in April, it was working with early customers in a beta version of the product, but today, in addition to the funding, they are also announcing the general availability of the platform.

As with their Series A, this round has Andreessen Horowitz and Sequoia Capital co-leading the investment. The company has now raised $60 million.

The reason these two firms are so committed to Tecton is the specific problem around machine learning the company is trying to solve. “We help organizations put machine learning into production. That’s the whole goal of our company, helping someone build an operational machine learning application, meaning an application that’s powering their fraud system or something real for them […] and making it easy for them to build and deploy and maintain,” company CEO and co-founder Mike Del Balso explained.

They do this by providing the concept of a feature store, an idea they came up with and which is becoming a machine learning category unto itself. Just last week, AWS announced the Sagemaker Feature store, which the company saw as major validation of their idea.

As Tecton defines it, a feature store is an end-to-end machine learning management system that includes the pipelines to transform the data into what are called feature values, then it stores and manages all of that feature data and finally it serves a consistent set of data.

Del Balso says this works hand-in-hand with the other layers of a machine learning stack. “When you build a machine learning application, you use a machine learning stack that could include a model training system, maybe a model serving system or an MLOps kind of layer that does all the model management, and then you have a feature management layer, a feature store which is us — and so we’re an end-to-end life cycle for the data pipelines,” he said.

With so much money behind the company it is growing fast, going from 17 employees to 26 since we spoke in April, with plans to more than double that number by the end of next year. Del Balso says he and his co-founders are committed to building a diverse and inclusive company, but he acknowledges it’s not easy to do.

“It’s actually something that we have a primary recruiting initiative on. It’s very hard, and it takes a lot of effort, it’s not something that you can just make like a second priority and not take it seriously,” he said. To that end, the company has sponsored and attended diversity hiring conferences and has focused its recruiting efforts on finding a diverse set of candidates, he said.

Unlike a lot of startups we’ve spoken to, Del Balso wants to return to an office setup as soon as it is feasible to do so, seeing it as a way to build more personal connections between employees.

Nov
11
2020
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Fishtown Analytics raises $29.5M Series B for its data engineering platform

Fishtown Analytics, the Philadelphia-based company behind the dbt open-source data engineering tool, today announced that it has raised a $29.5 million Series B round led by Sequoia Capital, with participation from previous investors Andreessen Horowitz and Amplify Partners.

The company is building a platform that allows data analysts to more easily create and disseminate organizational knowledge. Its focus is on data modeling, with its dbt tool allowing anybody who knows SQL to build data transformation workflows. Dbt also features support for automatically testing data quality and documenting changes, but maybe most importantly it uses standard software engineering techniques to help engineers collaborate on code and integrate changes continuously.

If this all sounds a bit familiar, it’s probably because you saw that Fishtown Analytics also announced a $12.9 million Series A round in April. It’s not often we see both a Series A and B round within half a year, but that goes to show how the market for Fishtown’s service is expanding as companies continue to grapple with how to best make use of their data — and how much investors want to be part of that. 

Image Credits: Fishtown

“This was a very productive thing for us,” Fishtown Analytics co-founder and CEO Tristan Handy told me when I asked him why he raised again so quickly. “It’s standard best practice to do quarterly catch-ups with investors and eventually you’ll be ready to fundraise. And Matt Miller from Sequoia showed up to one of these quarterly catch-ups and he shared the 40-page memo that he had written to the Sequoia partnership — and he came with the term sheet.”

Initially, Handy declined. “We’re very bullheaded people, I think, as many founders are. It took some real reflection and thinking about, ‘is this what we want to be doing right now?’ ”

In the end, though, the team decided to go ahead with this round — mostly because this round allowed the team to think long-term and provided stability and certainty.

One thing Handy has always been very clear about is that he did not found Fishtown to purely build the largest possible company but to solve its users’ problems, even as the market looked at companies like Databricks and Snowflake — and their financial success — as potential analogs. “My worry was that the financial markets were driving things that weren’t necessarily going to be good for our users,” Handy said.

Oct
29
2020
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Redpoint and Sequoia are backing a startup to copyedit your shit code

Code is the lifeblood of the modern world, yet the tooling for some programming environments can be remarkably spartan. While developers have long had access to graphical programming environments (IDEs) and performance profilers and debuggers, advanced products to analyze and improve lines of code have been harder to find.

These days, the most typical tool in the kit is a linter, which scans through code pointing out flaws that might cause issues. For instance, there might be too many spaces on a line, or a particular line might have a well-known ambiguity that could cause bugs that are hard to diagnose and would best be avoided.

What if we could expand the power of linters to do a lot more though? What if programmers had an assistant that could analyze their code and actively point out new security issues, erroneous code, style problems and bad logic?

Static code analysis is a whole interesting branch of computer science, and some of those ideas have trickled into the real-world with tools like semgrep, which was developed at Facebook to add more robust code-checking tools to its developer workflow. Semgrep is an open-source project, and it’s being commercialized through r2c, a startup that wants to bring the power of this tool to the developer masses.

The whole project has found enough traction among developers that Satish Dharmaraj at Redpoint and Jim Goetz at Sequoia teamed up to pour $13 million into the company for its Series A round, and also backed the company in an earlier, unannounced seed round.

The company was founded by three MIT grads — CEO Isaac Evans and Drew Dennison were roommates in college, and they joined up with head of product Luke O’Malley. Across their various experiences, they have worked at Palantir, the intelligence community, and Fortune 500 companies, and when Evans and Dennison were EIRs at Redpoint, they explored ideas based on what they had seen in their wide-ranging coding experiences.

The r2c team, which I assume only writes bug-free code. Image by r2c.

“Facebook, Apple, and Amazon are so far ahead when it comes to what they do at the code level to bake security [into their products compared to] other companies, it’s really not even funny,” Evans explained. The big tech companies have massively scaled their coding infrastructure to ensure uniform coding standards, but few others have access to the talent or technology to be on an equal playing field. Through r2c and semgrep, the founders want to close the gap.

With r2c’s technology, developers can scan their codebases on-demand or enforce a regular code check through their continuous integration platform. The company provides its own template rulesets (“rule packs”) to check for issues like security holes, complicated errors and other potential bugs, and developers and companies can add their own custom rulesets to enforce their own standards. Currently, r2c supports eight programming languages, including JavaScript and Python, and a variety of frameworks, and it is actively working on more compatibility.

One unique focus for r2c has been getting developers onboard with the model. The core technology remains open-sourced. Evans said that “if you actually want something that’s going to get broad developer adoption, it has to be predominantly open source so that developers can actually mess with it and hack on it and see whether or not it’s valuable without having to worry about some kind of super restrictive license.”

Beyond its model, the key has been getting developers to actually use the tool. No one likes bugs, and no developer wants to find more bugs that they have to fix. With semgrep and r2c though, developers can get much more immediate and comprehensive feedback — helping them fix tricky errors before they move on and forget the context of what they were engineering.

“I think one of the coolest things for us is that none of the existing tools in the space have ever been adopted by developers, but for us, it’s about 50/50 developer teams who are getting excited about it versus security teams getting excited about it,” Evans said. Developers hate finding more bugs, but they also hate writing them in the first place. Evans notes that the company’s key metric is the number of bugs found that are actually fixed by developers, indicating that they are offering “good, actionable results” through the product. One area that r2c has explored is actively patching obvious bugs, saving developers time.

Breaches, errors and downtime are a bedrock of software, but it doesn’t have to be that way. With more than a dozen employees and a hefty pool of capital, r2c hopes to improve the reliability of all the experiences we enjoy — and save developers time in the process.

Aug
24
2020
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Sutter Hill strikes ice-cold, $2.5B pre-market return with Snowflake’s IPO filing

Today is the day for huge VC returns.

We talked a bit about Sequoia’s coming huge win with the IPO of game engine Unity this morning. Now, Sequoia might actually have the second largest return among companies filing to go public with the SEC today.

Snowflake filed its S-1 this afternoon, and it looks like Sutter Hill is going to make bank. The long-time VC firm, which invests heavily in the enterprise space and generally keeps a lower media profile, is the big winner across the board here, coming out with an aggregate 20.3% stake in the data management platform, which was last privately valued at $12.4 billion earlier this year. At its last valuation, Sutter Hill’s full stake is worth $2.5 billion. My colleagues Ron Miller and Alex Wilhelm looked a bit at the financials of the IPO filing.

Sutter Hill has been intimately connected to Snowflake’s early build-out and success, providing a $5 million Series A funding back in 2012, the year of the company’s founding, according to Crunchbase.

Now, there are some caveats on that number. Sutter Hill Ventures (aka “the fund”) owns roughly 55% of the firm’s total stake, with the balance owned by other entities owned by the firm’s management committee members. Michael Speiser, the firm’s partner who sits on Snowflake’s board, owns slightly more than 10% of Sutter Hill’s stake directly himself according to the SEC filing.

In addition to Sutter Hill, Sequoia also got a large slice of the data computing company: its growth fund is listed as having an 8.4% stake in the coming IPO. That makes for two Sequoia Growth IPOs today — a nice way to start the week this Monday afternoon.

Finally, Altimeter Capital, which did the Series C, owns 14.8%; ICONIQ owns 13.8%; and Redpoint, which did the Series B, owns 9.0%.

To see the breakdown in returns, let’s start by taking a look at the company’s share price and carrying values for each of its rounds of capital:

On top of that, what’s interesting is that Snowflake broke down the share purchases by firm for the last four rounds (D through G-1) the company fundraised:

That level of detail actually allows us to grossly compare the multiples on invested capital for these firms.

Sutter Hill, despite owning large sections of the company early on, continued to buy up shares all the way through the Series G, investing an additional $140 million in the later-stage rounds of the company. Adding in the entirety of its $5 million Series A round and a bit from the Series B assuming pro rata, the firm is looking on the order of a 16x return (assuming the IPO price is at least as good as the last round price).

Outside Sutter Hill, Redpoint has the best multiple return profile, given that it only invested $60 million in these later-stage rounds while still maintaining a 9.0% ownership stake. Both Sutter Hill and Redpoint purchased roughly 20% of their overall stakes in these later-stage rounds. Doing some roughly calculating, Redpoint is looking at a return of about 12-13x.

Sequoia’s multiple on investment is capped a bit given that it only invested in the most recent funding rounds. Its 8.4% stake was purchased for nearly $272 million, all of which came in these late-stage rounds. At Snowflake’s last round valuation of $12.4 billion, Sequoia’s stake is valued at $1.04 billion — a return of slightly less than 4x. That’s very good for mezzanine capital, but nothing like the multiple that Sutter Hill or Redpoint got for investing early.

Doing the same back-of-the-envelope math and Altimeter is looking at a better than 6x return, and ICONIQ got 7x. As before, if the stock zooms up, those returns will look all the better (and of course, if the stock crashes, well…)

One final note: The pattern for these last four funding rounds is unusual for venture capital: Snowflake appears to have “spread the love around,” having multiple firms build up stakes in the startup over several rounds rather than having one definitive lead.

Jun
22
2020
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Canva raises $60 million on a $6 billion valuation

Sydney-based Canva, the design platform for non-designers, has today announced the close of a $60 million funding round, bringing its valuation to $6 billion, according to the company.

The startup has raised a total of more than $300 million, including this latest round of financing, from investors like Bond, General Catalyst, Sequoia Capital China, Felicis Ventures and Blackbird Ventures .

Canva COO and co-founder Cliff Obrecht explained that the round was 10x oversubscribed with interest from angels and new VCs, but that the company resisted taking extra capital.

“At our stage, investors are looking to deploy $50 million+ in capital,” said Obrecht. “Even our existing investors were looking to deploy between $50 million and $100 million, but we said ‘Oh, gee, we really don’t want to be diluted that much because we have a lot of conviction in the business and we don’t need that much money.’ ”

He also said the company wanted to remain with existing investors — Blackbird and Sequoia Capital China led this round — because those investors bet on the company when it was in its infancy, founded by three people in an isolated part of the world with no technical chops.

At the beginning of the pandemic, Canva made a commitment to continue paying all of its contracted workers, but froze hiring. The company also made quick moves to shut down the office and move to remote work. However, Canva is one of the few companies that is getting a boost from the world moving to work from home.

The company has seen a 50% uptick in shared designs, and around a 25% increase in designs created each month. Overall, Canva is growing 100% year over year in both revenue and users, with 30 million monthly active users across 190 countries.

Canva was founded in 2012 with the mission of democratizing design tools. While many non-designers can navigate their way around Google Slides or PowerPoint, or maybe even crop an image, going more in-depth on a design project can be daunting, as the suite of tools provided to designers can be incredibly complex.

The company’s tools are meant to simplify the design process for folks who don’t work in the design department, whether it’s the sales team putting together sales materials, marketers working on content or other departments working on internal materials to send to the broader organization. The drag-and-drop interface gives folks a way to create something beautiful and impressive without having to learn Photoshop.

The product started out as a freemium product for individual consumers but eventually started offering enterprise products, as well as a video editing tool that comes complete with video templates, easy-to-use animation tools and a library of stock video, music, etc.

The company has also launched an educational platform called Canva for Education, which integrates with G Suite and Google Classroom to get students started on design early. Canva also offers a developer platform for startups that want to integrate with the company, which currently includes Dropbox, Google Drive, PhotoMosh and Instagram, among others.

Most recently, Canva partnered with FedEx Office to offer easy design-to-print products that let users pick up print designs from one of more than 2,000 locations in the U.S. as the Sydney-based company looks to secure a foothold in this market.

Canva plans on using the funding to grow the company, make a push into collaboration and continue making acquisitions.

On the heels of the funding, Canva is looking to hire — the company currently has 1,000+ employees, of which more than 40% are female. (Canva did not disclose the percentage of its workforce that are non-white.)

Obrecht says that one of the greatest challenges for the company and for leadership personally is the burden of not feeling like they’re doing enough to make the world a better place. He explained that the company has a number of initiatives focused on this core tenet, including free access to the platform for more than 50,000 nonprofit organizations, education initiatives, anti-discrimination policies within its TOS and more.

“But it just never really feels like enough,” said Obrecht. “You see what’s happening and it’s a bit of a shit show and it’s not aspirational at all. It doesn’t look like it’s getting fixed quickly by the adults who are in government. They’re not doing the right thing, and if they’re not, who will? So we really believe we should have a heavy part in trying our best to make sure the shit show doesn’t continue.”

May
20
2020
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Identity management startup Truework raises $30M to help you verify your work history

As organizations look for safe and efficient ways of running their services in the new global paradigm of increased social distancing, a startup that has built a platform to help people verify their work details in a secure way is announcing a round of growth funding.

Truework, which provides a way for banks, apartment-rental agencies, and others to check the employment details of an applicant in a quick and secure manner online, has raised $30 million, money that CEO and co-founder Ryan Sandler said in an interview that it would use both grow its existing business, as well to explore adding more details — both via its own service and via third-party partnerships — to the identity information that it shares.

The Series B is being led by Activant Capital — a VC that focuses on B2B2C startups — with participation also from Sequoia Capital and Khosla Ventures, as well as a number of high profile execs and entrepreneurs — Jeff Weiner (LinkedIn); Tom Gonser (Docusign); William Hockey (Plaid); and Daniel Yanisse (Checkr) among them.

The LinkedIn connection is an interesting one. Both Sandler and co-founder Victor Kabdebon were engineers at LinkedIn working on profile and improving the kind of data that LinkedIn sources on its users (the third co-founder, Ethan Winchell, previously worked elsewhere), and while Sandler tells me that the idea for Truework came to them after both left the company, he sees LinkedIn “as a potential partner here,” so watch this space.

The problem that Truework is aiming to solve is the very clunky, and often insecure, nature of how organizations typically verify an individual’s employment information. Details about salary and where you work, and the job you do, are typically essential for larger financial transactions, whether it’s securing a mortgage or another financing loan, or renting an apartment, or for others who might need to verify that information for other purposes, such as staffing agencies.

Typically that kind of information gathering is time-consuming both to reach out to get and to confirm (Sandler cites statistics that say on average an HR person spends over 1,000 hours annually answering questions like these). And some of the systems that have been put in place to do that work — specifically consumer reporting agencies — have been proven not be as watertight in their security as you would hope.

“Your data is flowing around lots of third party platforms,” Sandler said. “You’re releasing a lot of information about yourself and you don’t know where the data is going and if it’s even accurate.”

Truework’s solution is based around a platform, and now an API, that a company buys into. In turn, it gives its employees the ability to consent to using it. If the employee agrees, Truework sources a worker’s place of employment and salary details. Then when a third party wants to verify that information for the person in question, it uses Truework to do so, rather than contacting the company directly.

Then, when those queries come in, Truework contacts the individual with an email or text about the inquiry, so that he/she can okay (or reject) the request. Truework’s Sandler said that it uses ISO27001, SOC2 Type 1 & 2 protections, but he also confirmed that it does store your data.

Currently the idea is that if you leave your job, your next employer would need to also be a Truework customer in order to update the information it has on you: the startup makes money by charging both larger enterprises to make the platform accessible to employees as well as those organizations that are querying for the information/verifications (small business employers using the platform can use it for free).

Over time, the plan will be to configure a way to update your profiles regardless of where you work.

So far, the concept has seen a lot of traction: there are 20,000 small businesses using the platform, as well as 100 enterprises, with the number of verifiers (its term for those requesting information) now at 40,000. Customers include The College Board, The Real Real, Oscar Health, The Motley Fool, and Tuft & Needle.

While all of this was built at a time before COVID-19, the global health pandemic has highlighted the importance of having more efficient and secure systems for doing work, especially at a time when many people are not in the office.

“Our biggest competitor is the fax machine and the phone call,” Sandler said, “but as companies move to more remote working, no one is manning the phones or fax machines. But these operations still need to happen.” Indeed, he points out that at the end of 2019, Truework had 25,000 verifiers. Nearly doubling its end-user customers speaks to the huge boost in business it has seen in the last five months.

That is part of the reason the company has attracted the investment it has.

“Truework’s platform sits at the center of consumers’ most important transactions and life events – from purchasing a home, to securing a new job,” said Steve Sarracino, founder and partner at Activant Capital, in a statement. “Up until now, the identity verification process has been painful, expensive, and opaque for all parties involved, something we’ve seen first-hand in the mortgage space. Starting with income and employment, Truework is setting the standard for consent-based verifications and unlocking the next wave of the digital economy. We’re thrilled to be partnering with this exceptional team as they continue to scale the platform.” Sarracino is joining the board with this round.

While a big focus in the world of tech right now may be on building more and better ways of connecting goods and services to people in as contact-free a way as possible, the bigger play around identity management has been around for years, and will continue to be a huge part of how the internet develops in the future.

The fax and phone may be the primary tools these days for verifying employment information, but on a more general level, there are companies like Facebook, Google and Apple already playing a big role in how we “log in” and use all kinds of services online. They, along with others focused squarely on the identity and verification space (and Truework works with some of them), and using a myriad of approaches that include biometrics, ‘wallet’-style passports that link to information elsewhere, and more, will all continue to try to make the case for why they might be the most trusted provider of that layer of information, at a time when we may want to share less and especially share less with multiple parties.

That is the bigger opportunity that investors are betting on here.

“The increasing momentum Truework has seen since its founding in 2017 demonstrates the critical need for transformation in this space,” said Alfred Lin, partner at Sequoia, in a statement. “Privacy, especially around identity data, is becoming increasingly top of mind for consumers and how they make transactions online.”

Truework has now raised close to $45 million, and it’s not disclosing its valuation.

May
10
2020
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Sequoia’s Roelof Botha is more optimistic about startups today than he was a year ago

“I just think change unfairly favors the startup, the nimble small company,” says Roelof Botha.

The Sequoia partner, whose portfolio includes Unity, 23andMe, Instagram, Instacart, Xoom and YouTube, says he’s hopeful about the opportunities this pandemic has created for companies across a variety of sectors, including healthcare, cloud computing, social and others.

We spoke for an hour with Botha about several topics, including how user behavior is rapidly evolving, trends he’s seeing, his outlook on economic recovery, how he’s evaluating new investments and how fundraising itself is changing. Fun fact: Sequoia has made 10 investments over Zoom since the coronavirus pandemic forced us to stay at home.

The full conversation was broadcast on YouTube, and the embed appears below.

Side note: Extra Crunch Live is our new virtual speaker series for Extra Crunch members. Folks can ask their own questions live during the chat, with guests that include Aileen Lee, Kirsten Green, Mark Cuban and many, many more. You can check out the schedule here.

Below, you’ll find a lightly edited transcript of our recent chat with Botha. Enjoy!

The differences in fundraising based on stage

When you’re listening to a seed-stage company, it’s often about the story. The founders paint a vision of the future. That’s part of what I love about my job, by the way. You’re sitting there and you’re trying to imagine what the world is going to look like one day and whether this company is on the right side of history. Or is it implausible that this will happen? It’s so much fun to sit there and think about that. At the seed stage, it’s about the story.

As you get to a Series A or Series B stage, the company will definitely start to have some metrics: usage numbers, early adoption numbers. If it’s an enterprise company, what are people willing to pay for your product? You start to get a sense of the metrics that back up the story. If the metrics don’t support the story, then you start to wonder if that company makes sense. In the long run, you need to have financials that flow from the metrics. But that’s typically at a Series C or later stage. And clearly, by the time a company goes public, you need to have connected story to metrics to financials.

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