Nov
27
2018
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Red Hat acquires hybrid cloud data management service NooBaa

Red Hat is in the process of being acquired by IBM for a massive $34 billion, but that deal hasn’t closed yet and, in the meantime, Red Hat is still running independently and making its own acquisitions, too. As the company today announced, it has acquired Tel Aviv-based NooBaa, an early-stage startup that helps enterprises manage their data more easily and access their various data providers through a single API.

NooBaa’s technology makes it a good fit for Red Hat, which has recently emphasized its ability to help enterprise more effectively manage their hybrid and multicloud deployments. At its core, NooBaa is all about bringing together various data silos, which should make it a good fit in Red Hat’s portfolio. With OpenShift and the OpenShift Container Platform, as well as its Ceph Storage service, Red Hat already offers a range of hybrid cloud tools, after all.

“NooBaa’s technologies will augment our portfolio and strengthen our ability to meet the needs of developers in today’s hybrid and multicloud world,” writes Ranga Rangachari, the VP and general manager for storage and hyperconverged infrastructure at Red Hat, in today’s announcement. “We are thrilled to welcome a technical team of nine to the Red Hat family as we work together to further solidify Red Hat as a leading provider of open hybrid cloud technologies.”

While virtually all of Red Hat’s technology is open source, NooBaa’s code is not. The company says that it plans to open source NooBaa’s technology in due time, though the exact timeline has yet to be determined.

NooBaa was founded in 2013. The company has raised some venture funding from the likes of Jerusalem Venture Partners and OurCrowd, with a strategic investment from Akamai Capital thrown in for good measure. The company never disclosed the size of that round, though, and neither Red Hat nor NooBaa are disclosing the financial terms of the acquisition.

Nov
24
2018
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Upflow turbocharges your invoices

Meet Upflow a French startup that wants to help you deal with your outstanding invoices — the company first started at eFounders. If you’re running a small business, chances are you’re either wasting a ton of time or a ton of money on accounts receivable.

Most companies currently manage invoices using Excel spreadsheets, outdated banking interfaces and unnecessary conversations. Every time somebody signs a deal, they generate an invoice and file it in a spreadsheet somewhere.

Some companies will pay a few days later. But let’s be honest. Too many companies wait 30 days, 40 days or even more before even thinking about paying past due invoices. You end up sending emails, calling your clients and wasting a ton of time just collecting money. You might even feel bad about asking for money even though you already signed a deal.

In France, most companies use bank transfers to pay invoices. But business banking APIs are not there yet. It means that you have to log in to a slow banking website every day to check if somebody paid you. You can then tick a box in an Excel spreadsheet.

If everything I described resonates with you, Upflow wants to manage your invoices for you. It doesn’t replace your bank account, it doesn’t generate invoices for you. It integrates seamlessly with your existing workflow.

After signing up, you can send invoices to your client and cc Upflow in your email thread. Upflow then uses optical character recognition and automatically detects relevant data — the customer name, the amount, the due date, etc.

You can view all your outstanding invoices in Upflow’s interface to see where you stand. The service gives you a list of actionable tasks to get your money. For instance, Upflow tells you if you have overdue payments and tells you to contact your client again.

You can set up different rules depending on your clients. For instance, if you have many small clients, you can automate some of those messages. But if you only work with a handful of clients, you want to make sure that somebody has manually reviewed each message before Upflow sends them.

By default, you write your emails in Upflow so that your other team members can see what happened. You can browse invoices by client to see if somebody has multiple unpaid invoices. Upflow lets you assign actions to a particular team member if they’re more familiar with this specific client.

But all of this is just one part of the product. Upflow also generates banking information with the help of Treezor. This way, you can put your Upflow banking information on your invoices.

When a customer pays you, Upflow automatically matches invoices with incoming payments. This feature alone lets you save a ton of time. The startup transfers money back to your company’s bank account every day.

Upflow co-founder and CEO Alexandre Louisy drew me the following chart when we met. It’s probably easier to understand after reading my explanations:

In other words, Upflow has created a brick that sits between your company’s back office and your customers. Eventually, you could imagine more services built on top of this brick as Upflow is learning many things on your company.

According to Louisy, small and medium companies really need this kind of product — and not necessarily tech companies. Those companies don’t have a lot of money on their bank accounts, don’t have a big staff and need to save as much time as possible.

Now let’s see if it’s easy to sell a software-as-a-service solution to a family business that has been around for decades.

Nov
23
2018
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BlueCargo optimizes stacks of containers for maximum efficiency

Meet BlueCargo, a logistics startup focused on seaport terminals. The company was part of Y Combinator’s latest batch and recently raised a $3 million funding round from 1984 Ventures, Green Bay Ventures, Sound Ventures, Kima Ventures and others.

If you picture a terminal, chances are you see huge piles of containers. But current sorting methods are not efficient at all. Yard cranes end up moving a ton of containers just to reach a container sitting at the bottom of the pile.

BlueCargo wants to optimize those movements by helping you store containers at the right spot. The first container that is going to leave the terminal is going to be at the top of the pile.

“Terminals spend a lot of time making unproductive or undesired movements,” co-founder and CEO Alexandra Griffon told me. “And yet, terminals only generate revenue every time they unload or load a container.”

Right now, ERP-like solutions only manage containers according to a handful of business rules that don’t take into account the timeline of a container. Empty containers are all stored in one area, containers with dangerous goods are in another area, etc.

The startup leverages as much data as possible on each container — where it’s coming from, the type of container, if it’s full or empty, the cargo ship that carried it, the time of the year and more.

Every time BlueCargo works with a new terminal, the startup collects past data and processes it to create a model. The team can then predict how BlueCargo can optimize the terminal.

“At Saint-Nazaire, we could save 22 percent on container shifting,” Griffon told me.

The company will test its solution in Saint-Nazaire in December. It integrates directly with existing ERP solutions. Cranes already scan container identification numbers. BlueCargo could then instantly push relevant information to crane operators so that they know where to put down a container.

Saint-Nazaire is a relatively small port compared to the biggest European ports. But the company is already talking with terminals in Long Beach, one of the largest container ports in the U.S.

BlueCargo also knows that it needs to tread carefully — many companies already promised magical IT solutions in the past. But it hasn’t changed much in seaports.

That’s why the startup wants to be as seamless as possible. It only charges fees based on shifting savings — 30 percent of what it would have cost you with the old model. And it doesn’t want to alter workflows for people working at terminals — it’s like an invisible crane that helps you work faster.

There are six dominant players managing terminals around the world. If BlueCargo can convince those companies to work with the startup, it would represent a good business opportunity.

Nov
20
2018
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Our 3 favorite startups from Morgan Stanley’s 2nd Multicultural Innovation Lab Demo Day 

The Morgan Stanley Multicultural Innovation LabMorgan Stanley’s in-house accelerator focused on companies founded by multicultural and female entrepreneurs, hosted its second Annual Showcase and Demo Day. The event also featured companies from accelerators HearstLab, Newark Venture Partner Labs and PS27 Ventures. (Note: I was formerly employed by Morgan Stanley and have no financial ties.)

The showcase represented the culmination of the program’s second year, which followed an initial five-company class that has already seen two acquisitions. Through the six-month program, Morgan Stanley provides early-stage companies with a wide range of benefits, including an equity investment from Morgan Stanley, office space at Morgan Stanley headquarters, access to Morgan Stanley’s extensive network and others. Applications are now open for its third cohort of companies, with the application window closing on January 4th, 2019.

The 16 presenting startups, all led by a female or multicultural founder, offered solutions to structural inefficiencies across a wide array of categories, including fintech, developer tools and health. Though all of the companies offered impressive presentations and strong value propositions, here are three of the companies that stood out to us.

Hatch Apps

In hopes of democratizing software and app development, Hatch Apps provides a platform that allows users and companies to build iOS, Android and web applications without any code through pre-built templates and custom plug-and-play functions. In essence, Hatch Apps provides a solution for application building similar to what Squarespace or Wix provide for websites.

In the modern economy, every company is in one way or another a tech or tech-enabled company. Now the demand for strong engineers has made the fight for talent increasingly competitive and has made engineering quite costly, even when only needed for simple tasks. 

For an implementation and subscription fee, Hatch Apps allows companies with less sophisticated engineering DNA to reduce entering costs by launching native apps on their own, across platforms and often on faster timelines than those seen through third-party developers. Once an app is launched, Hatch Apps provides customers with detailed analytics and allows them to send targeted push notifications, export data and make in-app changes that can automatically go live in app stores.

The company initially took a bootstrapping approach to financing and raised funds by selling a 2016 election-themed “Cards Against Humanity”-style game created on the platform. Since then, Hatch Apps has already received funding from the Y Combinator Fellowship, Morgan Stanley and a number of other investors.

FreeWill

While estate planning is a topic many don’t like to think about, it’s a critical issue for managing cross-generational wealth. But will drafting can often be very complex, time-consuming and costly, requiring hours of legal consultation and coordination between various parties.

Founded by two former classmates at Stanford Business School, FreeWill looks to simplify the estate-planning process by providing a free online platform that automates will drafting, in a similar function to what TurboTax does for taxes. Using FreeWill, users can quickly set allocations for their estate and select personal recipients, charitable donations, executor specifications and other ancillary requests. The platform then creates a finalized legal document that is legally valid in all 50 states, to which users can also quickly make changes and replace without incurring expensive legal costs.

FreeWill is able to provide the platform to consumers for free due to the proceeds it receives from its nonprofit customers, who pay to be featured on the platform as a partner organization. FreeWill offers a compelling value proposition for partnering companies. By acting as a channel to funnel user donations to listed organizations, FreeWill has been able to drive a 600 percent increase in charitable giving to partner organizations on average. FreeWill also provides partner organizations with backing analytics that allow nonprofits to track bequests and donors through monthly reports. 

FreeWill currently boasts an impressive roster of 75 paying nonprofit partners that include American Red Cross, Amnesty International and many others. In the long-run it hopes to be the go-to solution for financial and legal end-of-life planning for investment advisors, life insurance and employee benefits providers.

Shoobs

Shoobs is looking to be the go-to platform for local “urban” events, which the company defined as events centered on local nightlife, comedy and concerts in the hip-hop, R&B and reggae genres to name a few. But unlike the genre-agnostic, transaction-focused event management platforms that can make the space seem pretty crowded, Shoobs focused on providing genre-specific even discovery. Shoobs matches urban event goers with artists of their choice and related smaller-scale events that can be harder to discover, acting as a form of curation, quality control and discovery.

For event organizers, Shoobs helps provide digital ticketing and promotion services, with event recommendation capabilities that target the most promising potential customers. Through its offering to event organizers, Shoobs is able to monetize its services through ticket sale commission, advertising and brand partnerships.

Since its initial launch in London, Shoobs notes it has become one of the top urban events platforms in the city, with an extensive base of recurring registered users and event organizers. After previously working with AEG for its London launch, Shoobs is looking to expand stateside with the help of organizers like Live Nation. Shoobs joins a long list of promising Y Combinator alumni companies with YC also acting as one of Shoobs’ initial investors.

Other presenting companies included:

Morgan Stanley Multicultural Innovation Lab

  • BeautyLynk “is an on-demand hair and makeup service provider, specializing in customizable services for women.”
  • Broadway Roulette “is an events marketplace that pairs consumers with surprise cultural events, beginning with Broadway theater.”
  • CariClub “is an enterprise software platform to connect young professionals with nonprofit opportunities.”
  • COI Energy Services “is an integrated platform for electric utilities and business users to optimize and manage energy usage.”
  • CoSign “is an API and application that allows anyone to create, distribute and monetize visual content.”
  • Goalsetter “is a goals-based gifting, savings and investing platform designed for children.”
  • myLAB Box “offers customizable at-home health-test kits and relevant telemedicine consultations / prescription services.”

HearstLab

  • Priori “is a global legal marketplace changing the way in-house teams find, hire and manage outside counsel.”
  • TRENCH “is an online fashion marketplace that makes use of the unworn items in every woman’s closet.”

Newark Venture Partners Labs

  • Floss Bar “is a new type of preventive brand for oral health care. The company offers high-quality, routine dental care across flexible locations at thoughtful prices.”
  • Upsider “is a software solution allowing recruiters to leverage AI technology to identify a comprehensive set of candidates who align with their business and role requirements, resulting in a more strategic understanding of the best possible talent for the job.”

PS27 Ventures

  • BlueWave Technologies “is a cleantech company and the creators of the BlueWave™ Cleaning System — a water-free, detergent-free and chemical-free plasma device that cleans items that are extremely hard or impossible to clean with a washer and dryer.”
  • OnPay Solutions “focuses exclusively on business-to-business payments. They create payment software and offer payment web services to enhance efficiency and productivity for Accounts Payable and Accounts Receivable.”

Nov
15
2018
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Propel accelerates with $18M Series B to manage product lifecycle

We hear so much about managing the customer relationship, but companies have to manage the products they sell, too. Propel, a Santa Clara startup, is taking a modern cloud approach to the problem, and today it landed an $18 million Series B investment.

The round was led by Norwest Venture Partners. Previous investors Cloud Apps Capital Partners, Salesforce Ventures and SignalFire also participated. Today’s investment brings the total raised to more than $28 million.

“We are focused on helping companies design and launch products, based on how you go through the life cycle of a product from concept to design to make, model, sell, service where everybody in a company gets involved in product processes at different points in time,” company co-founder and CEO Ray Hein told TechCrunch.

Hein says the company has three core products to help customers track products through their life. For starters, there is the product life cycle management tool (PLM), used by engineering and manufacturing. Next, they have product information management for sales and marketing. Finally, they have service personnel using the quality management component.

The company is built on top of the Salesforce platform, which could account for Salesforce Ventures’ interest in the startup. While Propel looks purely at the product, Salesforce is more interested in the customer, whether from a sales, service or marketing perspective.

These same employees need to understand the products they are developing and selling and that is where Propel comes into play. For instance, when sales people are filling out an order, they need access to the product catalog to get the right numbers or marketing needs to understand the products they are adding to an online store in an e-commerce environment.

Traditional PLM tools from companies like SAP and Oracle are on-prem or have been converted from on-prem to cloud services. Propel was born in the cloud and Sean Jacobsohn, partner at Norwest Venture Partners, who will be joining the Propel board, sees this as a key differentiator for the startup.

“With Propel’s solution, companies can get up and running faster than with on-premise alternatives and pivot products in a matter of seconds based on real-time feedback gathered from marketing, engineering, sales, customers and the entire supply chain,” Jacobsohn said in a statement.

The company was founded in 2015. It currently has 35 employees; flush with these new funds, Hein intends to boost to 50 in the coming months.

Nov
14
2018
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Meet Jennifer Tejada, the secret weapon of one of Silicon Valley’s fastest-growing enterprise software startups

PagerDuty, an eight-year-old, San Francisco-based company that sends companies information about their technology, doesn’t receive a fraction of the press that other fast-growing enterprise software companies receive. In fact, though it counts as customers heavyweight companies like Capital One, Spotify and Netflix; it employs 500 employees; and it has five offices around the world, it has largely operated out of the spotlight.

That’s changing. For one thing, the company is now a so-called unicorn, after raising $90 million in a September round led by Wellington and T. Rowe Price that brought its total funding to $173 million and its valuation to $1.3 billion. Crowded as the unicorn club may be these days, that number, and those backers, makes PagerDuty a startup of interest to a broader circle of industry watchers.

Another reason you’re likely to start hearing more about PagerDuty is its CEO of three years, Jennifer Tejada, who is rare in the world of enterprise startups because of her gender, but whose marketing background makes her even more of an anomaly — and an asset.

In a world that’s going digital fast, Tejada knows PagerDuty can appeal to a far wider array of customers by selling them a product they can understand.

It’s a trick she first learned at Proctor & Gamble, where she spent seven years after graduating from the University of Michigan with both a liberal arts and a business management degree. In fact, in her first tech job out of P&G, working for the bubble-era supply chain management startup I2 Technologies (it went public and was later acquired), Tejada says she became “director of dumb it down.”

Sitting in PagerDuty’s expansive second floor office space in San Francisco — space that the company will soon double by taking over the first floor — Tejada recalls acting “like a filter for very technical people who were very proud of the IP they’d created” but who couldn’t explain it to anyone without relying on jargon. “I was like, ‘How are you going to get someone to pay you $2 million for that?’”

Tejada found herself increasingly distilling the tech into plain English, so the businesspeople who have to sign big checks and “bet their careers on these investments” could understand what they were being pitched. She’s instilling that same ethos at PagerDuty, which was founded in 2009 to help businesses monitor their tech stacks, manage disruptions and alert engineers before things catch on fire but, under Tejada’s watch, is evolving into a service that flags opportunities for its customers, too.

As she tells it, the company’s technology doesn’t just give customers insights into their service ecosystem and their teams’ health, and it doesn’t just find other useful kernels, like about which operations teams are the most productive and why. PagerDuty is also helping its clients become proactive. The idea, she says, is that “if you see traffic spiking on a website, you can orchestrate a team of content marketers or growth hackers and get them in that traffic stream right then, instead of reading about it in a demand-gen report a week later, where you’re, like, ‘Great, we totally missed that opportunity.’”

The example is a bit analogous to what Tejada herself brings to the table, which includes strong people skills (she’s very funny) and a knack for understanding what consumers want to hear, but also a deep understanding of financing and enterprise software.

As corny as it sounds, Tejada seems to have been working toward her current career her whole life.

Not that, like the rest of us, she knew exactly what she was doing at all times. On the contrary, one part of her path started when, after spending four years as the VP of global marketing for I2 — four years during which the dot-com bubble expanded wildly, then popped — Tejada quit her job, went home for the holidays and, while her baffled family looked on, booked a round-trip ticket to Australia to get away and learn about yachts.

She left the experience not only with her skipper certification but in a relationship with her now-husband of 16 years, an Australian with whom she settled in Sydney for roughly 12 years.

There, she worked for a private equity firm, then joined Telecom New Zealand as its chief marketing officer for a couple of years, then landed soon after at an enterprise software company that catered to asset-intensive industries, including mining, as its chief strategy officer. When that private-equity backed company was sold, Tejada took a breath, then was recruited to lead, for the first time, another company: Keynote Systems, a publicly traded internet and mobile cloud testing and monitoring company that she steered to a sale to the private equity firm Thomas Bravo a couple of years later.

The move gave her an opportunity to spend time with her now teenage daughter and husband, but she also didn’t have a job for the first time in many years, and Tejada seems to like work. Indeed, within one year, after talking with investors who’d gotten to know her over the years, as well as eager recruiters, Tejada —  who says she is “not a founder but a great adoptive parent” — settled on the 50th of 51 companies she was asked to consider joining. It was PagerDuty.

She has been overseeing wild growth ever since. The company now counts more than half of the Fortune 50 as its customers. It has also doubled its headcount a couple of times since she joined roughly 28 months ago, and many of its employees (upwards of 43 percent) are now women, as well as engineers from more diverse backgrounds than you might see at a typical Silicon Valley startup.

That’s no accident. Diversity breeds diversity, in Tejada’s view, and diversity is good for business.

“I wouldn’t say we market to women,” offers Tejada, who says diversity to her is not just about gender but also age and ethnic background and lifestyle choice and location and upbringing (and functional expertise).

“We’ve made a conscious effort to build an inclusive culture where all kinds of people want to work. And you send that message out into the market, there’s a lot of people who hear it and wonder if it could possibly be true. And then they come to a PagerDuty event, or they come into the office, and they see something different than they’ve seen before. They see people they can relate to.”

Why does it matter when it comes to writing code? For one thing, because a big part of coding is problem-solving, says Tejada. “When you have people from diverse backgrounds chunking through a big hairy problem together, those different perspectives will get you to a more insightful answer.” Tejada also believes there’s too much bias in application development and user experience. “There’s a lot of gobbledygook in our app that lots of developers totally understand but that isn’t accessible to everyone — men, women, different functional types of users, people of a different age. Like, how accessible is our mobile app to someone who’s not a native-first mobile user, who started out on an analog phone, moved to a giant desktop, then to a laptop and is now using a phone? You have to think about the accessibility of your design in that regard, too.”

What about the design of PagerDuty’s funding? We ask Tejada about the money PagerDuty raised a couple of months ago, and what it means for the company.

Unsurprisingly, as to whether the company plans to go public any time soon, her answers are variously, “I’m just building an enduring company,” and, “We’re still enjoying the benefits of being a private company.”

But Tejada also seems mindful of not raising more money for PagerDuty than it needs to scale, even while there’s an ocean of capital surrounding it.

“Going back to the early ’90s, in my career I have not seen a market where there has been more ready availability to capital, between tax reforms and sovereign cash and big corporates and low interest rates and huge venture funds, not to mention the increased willingness of big institutional investors to become LPs.” But even while the “underlying drivers and secular trends and leading indicators” suggest a healthy market for SaaS technology for a long time to come, that “doesn’t mean the labor markets are going to stay the same. It doesn’t mean the geopolitical environments are not going to change. When you let the scarcity issue in the market drive your valuation, you’re also responsible for growing into that valuation, no matter what happens in the macro environment.”

Where Tejada doesn’t necessarily want to be so measured is when it comes to PagerDuty’s place in its market. And that can be challenging as the company gains more traction — and more attention.

“If you do the right thing for your customers, and you do the right thing by your employees, all the rest will fall into place,” she says. “But the minute you take your eye off the ball, the minute you don’t earn the trust of your customer every day, the minute you stop innovating in service of them, you’re gonna start going backwards,” she says with a shrug.

Tejada recalls a conversation she had with her executive team last week, including with Alex Solomon, the company’s CTO and the one of three PagerDuty founders who remains actively engaged with the company. (Co-founder Andrew Miklas moved on to venture capital last year; Baskar Puvanathasan meanwhile left the company in March.) “They probably wanted to kill me,” she says laughing. “I told them I don’t think we’re disrupting ourselves enough. They’re like, ‘Jenn, let up.’ But that’s what happens to companies. They have their first success and they miss that second wave or third wave, and the next thing you know, you’re Kodak.”

PagerDuty, she says, “is not going to be Kodak.”

Nov
14
2018
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This startup got $2.3M to identify physical objects using diamond dust

Imagine coating an expensive part with a layer of diamond dust the width of a human hair, capturing its light pattern as a unique identifier, then storing that identifier in a traditional database or on the blockchain. That’s precisely what Dust Identity, a Boston-based startup is trying to do, and today it got $2.3 million in seed money led by Kleiner Perkins with participation from New Science Ventures, Angular Ventures, and Castle Island Ventures.

The science behind Dust Identity was nurtured inside MIT, but the company has been at work for two years trying to build a solution based on that idea after receiving early support from DARPA. What these folks do is manufacture extremely tiny diamonds. They dust an object such as a circuit board with a coating of this and capture the diamonds in a polymer, company CEO and co-founder Ophir Gaathon explained.

“Once the diamonds fall on the surface of a polymer epoxy, and that polymer cures, the diamonds are fixed in their position, fixed in their orientation, and it’s actually the orientation of those diamonds that we developed a technology that allows us to read those angles very quickly,” Gaathon told TechCrunch.

For all the advanced technology at play here, Dust Identity is truly an identity company, but instead of identifying an individual, its purpose is to provide a trusted identity for an object using a physical anchor — in this case, diamond dust. You may be thinking that diamonds are kind of an expensive way to achieve this, but as it turns out, the company is actually creating the coating materials from low-cost diamond industrial waste.

“We start with diamond waste (for example, [from] the abrasive industry), but we developed a proprietary process (that’s of course highly scalable and economical) to purify and engineer the diamond waste into dust,” a company spokesperson explained.

The idea behind all of this is to prove that an object is valid and hasn’t been tampered with. The dust is applied at some point during the manufacturing process. The unique identifier is captured with some kind of commercial scanner and stored in the database. It provides a physical anchor for blockchain supply chain solutions that’s currently lacking. When the part makes its way to the buyer, they can run the part under a scanner and make sure it matches. If the dust pattern has been disturbed, there’s a good chance the piece was tampered with.

Finding a way to create uncopyable tags for physical objects is a kind of supply chain holy grail. Ilya Fushman, a partner at Kleiner Perkins says his firm recognized the potential of this solution. “We have a pretty strong hard tech practice. We understand the value of supply chain and supply chain integrity,” he said.

The company is not alone in trying to find a way to attach a physical anchor to items in the supply chain. In fact, you can go back to RFID tags and QR codes, but Gaathon says the security of these approaches has degraded over time as hackers figure out how to copy them. IBM and others are working on tiny chips to attach to objects, but the diamond dust approach could be the most secure if it can scale because it works with an entirely random light pattern that can never be reproduced.

The startup intends to take the money and try to prove this idea can be commercialized for government and manufacturing use cases. It certainly gets points for creativity here and it could be onto something that could transform how we track the integrity of items as they move through a supply chain.

Nov
13
2018
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WeWork picks up ANOTHER $3B from SoftBank

WeWork has picked up another $3 billion in financing from SoftBank Corp, not to be confused with SoftBank Vision Fund. The deal comes in the form of a warrant, allowing SoftBank to pay $3 billion for the opportunity to buy shares before September 2019 at a price of $110 or higher, ultimately valuing WeWork at $42 billion minimum.

In August, SoftBank Corp invested $1 billion in WeWork in the form of a convertible note.

According to the Financial Times, SoftBank will pay WeWork $1.5 billion on January 15, 2019 and another $1.5 billion on April 15.

SoftBank is far and away WeWork’s biggest investor, with SoftBank Vision Fund having poured $4.4 billion into the company just last year.

The real estate play out of WeWork is just one facet of the company’s strategy.

More than physical land, WeWork wants to be the central connective tissue for work in general. The company often strikes deals with major service providers at “whole sale” prices by negotiating on behalf of its 300,000 members. Plus, WeWork has developed enterprise products for large corporations, such as Microsoft, who tend to sign longer, more lucrative leases. In fact, these types of deals make up 29 percent of WeWork’s revenue.

The biggest issue is whether or not WeWork can sustain its outrageous growth, which seems to have been the key to its soaring valuation. After all, WeWork hasn’t yet achieved profitability.

Can the vision become a reality? SoftBank seems willing to bet on it.

Nov
13
2018
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Cognigo raises $8.5M for its AI-driven data protection platform

Cognigo, a startup that aims to use AI and machine learning to help enterprises protect their data and stay in compliance with regulations like GDPR, today announced that it has raised an $8.5 million Series A round. The round was led by Israel-based crowdfunding platform OurCrowd, with participation from privacy company Prosegur and State of Mind Ventures.

The company promises that it can help businesses protect their critical data assets and prevent personally identifiable information from leaking outside of the company’s network. And it says it can do so without the kind of hands-on management that’s often required in setting up these kinds of systems and managing them over time. Indeed, Cognigo says that it can help businesses achieve GDPR compliance in days instead of months.

To do this, the company tells me, it’s using pre-trained language models for data classification. That model has been trained to detect common categories like payslips, patents, NDAs and contracts. Organizations can also provide their own data samples to further train the model and customize it for their own needs. “The only human intervention required is during the systems configuration process, which would take no longer than a single day’s work,” a company spokesperson told me. “Apart from that, the system is completely human-free.”

The company tells me that it plans to use the new funding to expand its R&D, marketing and sales teams, all with the goal of expanding its market presence and enhancing awareness of its product. “Our vision is to ensure our customers can use their data to make smart business decisions while making sure that the data is continuously protected and in compliance,” the company tells me.

Nov
13
2018
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Rent tech-focused RET closes first fund; pours $5M into management platform SmartRent

Today, Real Estate Technology Ventures (RET Ventures) announced the final close of $108 million for its first fund. RET focuses on early-stage investments in companies that are primarily looking to disrupt the North American multifamily rental industry, with the firm boasting a roster of LPs made up of some of the largest property owners and operators in the multifamily space.

RET is one of the latest in a rising number of venture firms focused on the real estate sector, which by many accounts has yet to experience significant innovation or technological disruption. 

The firm was founded in 2017 by managing director John Helm, who possesses an extensive background as an operator and investor in both real estate and real estate technology. Helm’s real estate journey began with a position right out of college and eventually led him to the commercial brokerage giant Marcus & Millichap, where he worked as CFO before leaving to build two venture-backed real estate technology companies.  After successfully selling both companies, Helm worked as a venture partner at Germany-based DN Capital, where he invested in companies such as PurpleBricks and Auto1. 

Speaking with investors and past customers, John realized there was a need for a venture fund specifically focused on the multifamily rental sector. RET points out that while multifamily properties have traditionally fallen under the commercial real estate umbrella, operators are forced to deal with a wide set of idiosyncratic dynamics unique to the vertical. In fact, outside of a select group, most of the companies and real estate investment trusts that invest in multifamily tend to invest strictly within the sector.

Now, RET has partnered with leading multifamily owners to help identify innovative startups that can help the LPs better run their portfolios, which account for nearly a million units across the country in aggregate. With its deep sector expertise and its impressive LP list, RET believes it can bring tremendous value to entrepreneurs by providing access to some of the largest property owners in the U.S., effectively shortening a notoriously lengthy sales cycle and making it much easier to scale.

Photo: Alexander Kirch/Shutterstock

One of the first companies reaping the benefits of RET’s deep ties to the real estate industry is SmartRent, the startup providing a property analytics and automation platform for multifamily property managers and renters. Today, SmartRent announced it had closed $5 million in series A financing, with seed investor RET providing the entire round. 

SmartRent essentially provides property managers with many of the smart home capabilities that have primarily been offered to consumers to date, making it easier for them to monitor units remotely, avoid costly damages and streamline operations, all while hopefully enhancing the resident experience through all-in-one home controls.

By combining connected devices with its web and mobile platform, SmartRent hopes to provide tools that can help identify leaks or faulty equipment, eliminate energy waste and provide remote access control for door locks. The functions provided by SmartRent are particularly valuable when managing vacant units, in which leaks or unnecessary energy consumption can often go unnoticed, leading to multimillion-dollar damage claims or inflated utility bills. SmartRent also attempts to enhance the leasing process for vacant units by pre-screening potential renters that apply online and allowing qualified applicants to view the unit on their own without a third-party sales agent.

Just like RET, SmartRent is the brainchild of accomplished real estate industry vets. Founder and CEO Lucas Haldeman was still the CTO of Colony Starwood’s single-family portfolio when he first rolled out an early version of the platform in around 26,000 homes. Haldeman quickly realized how powerful the software was for property managers and decided to leave his C-suite position at the publicly traded REIT to found SmartRent.

According to RET, the strong industry pedigree of the founding team was one of the main drivers behind its initial investment in SmartRent and is one of the main differentiators between the company and its competitors.

With RET providing access to its leading multifamily owner LPs, SmartRent has been able to execute on a strong growth trajectory so far, with the company on pace to complete 15,000 installations by the end of the year and an additional 35,000 apartments committed for 2019. And SmartRent seems to have a long runway ahead. The platform can be implemented in any type of rental property, from retrofit homes to high rises, and has only penetrated a small portion of the nearly one million units owned by RET’s LPs alone.

SmartRent has now raised $10 million to date and hopes to use this latest round of funding to ramp growth by broadening its sales and marketing efforts. Longer-term, SmartRent hopes to permeate throughout the entire multifamily industry while continuing to improve and iterate on its platform.

“We’re so early on and we’ve made great progress, but we want to make deep penetration into this industry,” said Haldeman. “There are millions of apartment units and we want to be over 100,000 by year one, and over a million units by year three. At the same time, we’re continuing to enhance our offering and we’re focused on growing and expanding.”

As for RET Ventures, the firm hopes the compelling value proposition of its deep LP and industry network can help RET become the go-to venture firm startups looking to disrupt the real estate rental sector.

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