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Choco bites into $100M Series B, at a $600M valuation, to build a more transparent, sustainable food supply chain
The United States estimates of the food produced here approximately 40% is wasted. Globally, $2.6 trillion annually is lost.
Berlin-based Choco, which has built ordering software for restaurants and their suppliers, is working to digitize the food supply chain and announced $100 million in Series B funding, led by Left Lane Capital, to give it a $600 million post-market valuation. Joining in is new investor Insight Partners and existing investors Coatue Management and Bessemer Venture Partners.
The new round comes just over a year after Choco’s $63.7 million Series A, raised at two different periods, a $33.5 million round in 2019 and a $30.2 million round in 2020 — at a $230 million valuation — to bring total funding to $171.5 million since the company was founded in 2018.
The company’s core food procurement technology digitizes ordering workflow and communications for restaurants and suppliers. During the global pandemic, Khachab said Choco became the go-to tool for operators to be more efficient around procurement processes and reducing expenses as they adapted to the changing market conditions.
With the food industry a $6 trillion market, Choco CEO Daniel Khachab told TechCrunch he aims to make the food supply chain more transparent and sustainable in order to help increase margins in the food service sector and combat climate change.
The company did 14 months of food waste research and found that it was central to a lot of other global problems: Food waste is the third-largest driver of climate change and is causing deforestation — as evident by news from the Amazon last year — and the extinction of animals.
“It makes sense to try and solve it,” he added. “The food system is highly fragile, and what was shown in the first and second waves of the pandemic is how fragile and inflexible it was. It made the industry realize that it has to step up and that it can’t continue to work on pen and paper.”
Between the farmer and the end point, there are some nine parties involved, Khachab said. None are connected to another, which often means nine data silos and data not collected along the chain. It is important to connect them on one single platform so decision-making can be data-driven, he added.
As uncertainty swept across the food industry at the beginning of the pandemic, Khachab said Choco could either lay low and wait or invest in the company. He chose the latter, pumping up the team, regions and technology. As a result, Choco’s technology is stronger than it was 15 months ago and proved to be flexible amid the inflexible environment.
Choco saw orders quadruple on the platform in the past year, and gross merchandise value grew to $900 million annualized, up from $230 million, Khachab said.
As the company continues to learn how it can provide value to the food supply chain, half of the Series B funding will go into technology development. It will also go toward doubling its headcount, especially on the engineering side. Choco recently brought on ex-Uber and Facebook executive Vikas Gupta as chief technology officer, and Khachab said Gupta’s expertise will enable the company “to build the best technology team in Europe” and scale faster.
Choco is already operating in six markets, including the United States, Germany, France, Spain, Austria and Belgium. Khachab expects to expand in those markets and gain a footprint in new markets like Latin America, the Middle East and Asia.
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Gorillas, the on-demand grocery delivery startup, raises $290M and ‘surpasses’ $1B valuation
Gorillas, the Berlin-HQ’d startup that promises to let you order groceries and other “every day” items for delivery in as little as 10 minutes, has raised $290 million in Series B funding, at a valuation that surpasses $1 billion.
The round — which was first reported by BI — is led by Coatue Management, DST Global and Tencent, with participation from Green Oaks, Fifth Wall and Dragoneer. Previous backer Atlantic Food Labs also followed on.
Noteworthy, Gorillas CEO and co-founder Kağan Sümer tells TechCrunch the round is “100% equity” (i.e. without a debt component). Asked if it includes any secondary funding — seeing existing shareholders liquidate a portion of their shares — Gorillas declined to comment.
Having become one of the fastest European startups to have achieved so-called “unicorn” status — a valuation of $1 billion or more — Gorillas says it will reward its rider crew and warehouse staff with $1 million in bonuses. However, the company isn’t disclosing how this one-off bonus breaks down per worker, and it isn’t clear if the bonus is cash or stock or a mixture of both. The move comes at a time when Gorillas riders in Germany are reportedly organising to unionise.
“In contrast to established gig economy models, we employ more than a thousand riders directly,” says Sümer. “Therefore, we invest in a strong career development program, rider security and a healthy working environment. Beyond that, all riders will receive a once-off payment”.
Founded last May by Kağan Sümer and Jörg Kattner in Berlin, Gorillas has already expanded to more than 12 cities, including Amsterdam, London and Munich. The company lets you order groceries and other household items on-demand with an average delivery time of 10 minutes.
To do this, it operates a vertical or “dark store” model, seeing it set up its own micro fulfillment centers, which currently total 40, spread across Germany, the U.K. and the Netherlands. Customers are charged just over $2 per delivery and can order from “more than 2,000 essential items at retail prices”.
“We believe that the weekly grocery run is outdated because people’s lives are increasingly spontaneous and shopping habits change accordingly,” says Sümer, noting that while access to supermarkets has increased, the space we have to store goods has decreased as people in cities are living in smaller spaces.
“Additionally, this pandemic has accelerated the need for grocery deliveries. If we can order clothes and trinkets and have them delivered to our door, the same should be said for our essential needs. Gorillas helps customers get what they need when they need it, whether this is their weekly grocery list or the tomatoes they forgot for tonight’s pasta recipe”.
Sümer says the service initially attracted typical early adopters because it was a radically new experience and the app was only available in English. He claims that Gorillas has since gained a “very broad” base of users that are “extremely loyal”. “With geographical expansion and the rapid increase of word-of-mouth, we now cater to pretty much anyone you’d meet in a supermarket,” he says.
Asked to share what a typical basket looks like, and therefore what kind of existing grocery habits Gorillas is displacing, Sümer says that users increase their basket size over time as they gain trust in the service and its products. “Simultaneously, customers are integrating an increasing share of their typical supermarket purchases within their Gorillas orders. This includes fresh goods like fruit and vegetables, as well as products of local suppliers”.
Meanwhile, dark store competition in cities like London — where Gorillas recently expanded and counts as a key market — continues to ramp up. This is seeing operators issue vouchers and offer sizeable discounts in a bid to acquire customers fast, while VCs are pumping huge amounts of early-stage cash into a space where unit economics aren’t yet definitively proven.
Earlier this month, Berlin-based Flink announced that it had raised $52 million in seed financing in a mixture of equity and debt. The company didn’t break out the equity-debt split, though one source told me the equity component was roughly half and half.
Others in the space include London’s Jiffy, Dija and Weezy, and France’s Cajoo. There’s also London-based Zapp, which remains in stealth, and heavily backed Getir, which started in Turkey but recently also came to London.
Meanwhile, U.S.-founded goPuff — which this week raised another $1.15 billion in funding at a whopping $8.9 billion valuation (compared to $3.9 billion in October) — is also looking to expand into Europe and has held talks to acquire or invest in the U.K.’s Fancy.
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Sources: Hinge Health has raised $310M Series D at a $3B valuation
Hinge Health, the San Francisco-based company that offers a digital solution to treat chronic musculoskeletal (MSK) conditions — such as back and joint pain — has closed a $310 million in Series D funding, according to sources.
The round is led by Coatue and Tiger Global, and values 2015-founded Hinge at $3 billion post-money, people familiar with the investment tell me. It comes off the back of a 300% increase in revenue in 2020, with investors told to expect revenue to nearly triple again in 2021 based on the company’s booked pipeline.
I also understand that Hinge’s founders — Daniel Perez and Gabriel Mecklenburg — retain voting control of the board. I’ve reached out to CEO Perez for comment and will update this post should I hear back.
Hinge’s existing investors include Bessemer Venture Partners, which backed the company’s $90 million Series C round in February, along with Lead Edge Capital, Insight Partners (which led the Series B), Atomico (which led the Series A), 11.2 Capital, Quadrille Capital and Heuristic Capital.
Originally based in London, Hinge Health primarily sells into U.S. employers and health plans, billing itself as a digital healthcare solution for chronic MSK conditions. The platform combines wearable sensors, an app and health coaching to remotely deliver physical therapy and behavioral health.
The basic premise is that there is plenty of existing research to show how best to treat chronic MSK disorders, but existing healthcare systems aren’t up to the task due to funding pressures and for other systematic reasons. The result is an over tendency to use opioid-based painkillers or surgery, with poor results and often at even greater cost. Hinge wants to reverse this through the use of technology and better data, with a focus on improving treatment adherence.
Meanwhile, Hinge’s jump in valuation is significant. According to sources, the company’s February round produced a valuation of around $420 million, so the new valuation is more than a 6x increase.
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Robot lawyer startup DoNotPay now lets you file FOIA requests
DoNotPay, the consumer advice company that started out helping people easily challenge parking tickets, has come a long way since it launched. It’s expanded to help consumers cancel memberships, claim compensation for missed flights and even sue companies for small claims. In the early days of the pandemic, the startup helped its users file for unemployment, where many state benefit sites crashed.
Now the so-called “robot lawyer” has a new trick. The startup now lets you request information from U.S. federal and state government agencies under the Freedom of Information Act.
FOIA allows anyone to request information from the government, with some exceptions. But ask anyone with experience in filing FOIAs (hello!) and they can tell you that requesting data requires skill and practice to avoid having the request thrown out for being too broad, or not being specific enough. And when you do eventually get something back, it might not be what you expect.
That’s where DoNotPay wants to help. The new feature guides you through how to file a request for information, as well as wrangle the fee waivers and option to expedite processing — which is up to you to convince the government department why you should get the information for free and faster than regular FOIA requests. (In reality, the FOIA system is massively under-resourced, and responses can take months or years to get back.) After asking you a series of questions and what you want to request, DoNotPay generates a formal FOIA request letter using your answers and files it to the government agency on your behalf.
Do Not Pay’s website. (Screenshot: TechCrunch)
DoNotPay’s founder and chief executive Joshua Browder said he’s hoping the new feature can help consumers “beat bureaucracy.”
“Hundreds of users have requested a FOIA product, because the government makes it deliberately difficult and bureaucratic to exercise these rights,” Browder told TechCrunch.
Browder said that DoNotPay “would not exist” without FOIA laws. “When we got started appealing parking tickets, we used previous requests to see the top reasons why parking tickets were dismissed,” he said. Browder said he’s hoping the feature will help consumers uncover more injustices — just like with parking tickets — to feed his product with more features. “The overall strategy is to use any interesting FOIA data to build great new DoNotPay products,” he said.
DoNotPay raised $12 million in its Series A earlier this year, led by investment firm Coatue Management, with participation from Andreessen Horowitz, Founders Fund and and Felicis Ventures. The startup has 10 employees, including Browder, and is valued at about $80 million, the company confirmed.
The FOIA filing feature is free for academics and journalists, and is included as part of the company’s subscription service of $3 per month for everyone else.
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Facebook’s former PR chief explains why no one is paying attention to your startup
At TechCrunch Early Stage, I spoke with Coatue Management GP Caryn Marooney about startup branding and how founders can get people to pay attention to what they’re building.
Marooney recently made the jump into venture capital; previously she was co-founder and CEO of The Outcast Agency, one of Silicon Valley’s best-regarded public relations firms, which she left to become VP of Global Communications at Facebook, where she led comms for eight years.
While founders often may think of PR as a way to get messaging across to reporters, Marooney says that making someone care about what you’re working on — whether that’s customers, investors or journalists — requires many of the same skills.
One of the biggest insights she shared: at a base level, no one really cares about what you have to say.
Describing something as newsworthy or a great value isn’t the same as demonstrating it, and while big companies like Amazon can get people to pay attention to anything they say, smaller startups have to be even more strategic with their messaging, Marooney says. “People just fundamentally aren’t walking around caring about this new startup — actually, nobody does.”
Getting someone to care first depends on proving your relevance. When founders are forming their messaging to address this, they should ask themselves three questions about their strategy, she recommends:
- Why should anyone care?
- Is there a purchase order existing for this?
- Who loses if you win?
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Impossible Foods gobbles up another $200 million
Impossible Foods has raised $200 million more for its meat replacements.
The new round values the company at a Whopper-sized $4 billion valuation, according to the data tracker PrimeUnicorn Index.
The new round was led by Coatue, a technology-focused hedge fund; another New York-based hedge fund, XN, also participated in the round.
Since its launch the company has raised $1.5 billion from investors, including Mirae Asset Global Investments and Temasek. The presence of these new public/private investment firms on Impossible Foods’ cap table could mean that the company is readying itself for an initial public offering, but that’s just speculation.
Impossible previously raised money from investment firms including Horizon Ventures and Khosla Ventures, as well as some of the biggest celebrities in the U.S., like: Jay Brown, Common, Kirk Cousins, Paul George, Peter Jackson, Jay-Z, Mindy Kaling, Trevor Noah, Alexis Ohanian, Kal Penn, Katy Perry, Questlove, Ruby Rose, Phil Rosenthal, Jaden Smith, Serena Williams, will.i.am and Zedd.
The most recent price per share is $16.15, an up round from Series F at $15.4139, according to PrimeUnicorn.
The company said it would use the funding to increase its research and development efforts and work on new products like pork, steak and milk, as well as expand its internationalization efforts and build out its manufacturing capacity.
“The use of animals to make food is the most destructive technology on Earth, a leading driver of climate change and the primary cause of a catastrophic global collapse of wildlife populations and biodiversity,” said the incredibly credentialed Dr. Patrick O. Brown, MD, PhD, CEO and founder of Impossible Foods, in a statement. “Impossible Foods’ mission is to replace that archaic system by making the most delicious, nutritious and sustainable meats in the world, directly from plants. To do that, Impossible Foods needs to sustain our exponential growth in production and sales, and invest significantly in R&D. Our investors believe in our mission to transform the global food system — and they recognize an extraordinary economic opportunity.”
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Rippling nabs $145M at a $1.35B valuation to build out its all-in-one platform for employee data
Big news today the world of IT startups targeting businesses. Rippling, the startup founded by Parker Conrad to take on the ambitious challenge of building a platform to manage all aspects of employee data, from payroll and benefits through to device management, has closed $145 million in funding — a monster Series B that catapults the company to a valuation of $1.35 billion.
Parker Conrad, the CEO who co-founded the company with Prasanna Sankar (the CTO), said in an interview that the plan will be to use the money to continue its own in-house product development (that is, bringing more tools into the Rippling mix organically, not by way of acquisition) but also to have it just in case, given everything else going on at the moment.
“We will double down on R&D but to be honest we’re trying not to change the formula too much,” Conrad said. “We want to have that discipline. This fundraising was opportunistic amid the larger macroeconomic risk at the moment. I was working at startups in 2008-2009 and the funding markets are strong right now, all things considered, and so we wanted to make sure we had the stockpile we needed in case things went bad.”
This latest round included Greenoaks Capital, Coatue Management and Bedrock Capital, as well as existing investors including Kleiner Perkins, Initialized Capital and Y Combinator. Founders Fund partner Napoleon Ta will join Rippling’s board of directors. Founders Fund had also backed Zenefits when Parker was at the helm, and from what we understand, this round was oversubscribed — also a big feat in the current market, working against a lot of factors, including a wobbling economy.
It is a big leap for the company: it was just a little over a year ago that it raised a Series A of $45 million at a valuation of $270 million.
This latest round is notable for a few reasons.
First is the business itself. HR and employee management software are two major areas of IT that have faced a lot of fragmentation over the years, with many businesses opting for a cocktail of services covering disparate areas like employee onboarding, payroll, benefits, device management, app provisioning and permissions and more. That’s been even more the case among smaller organizations in the 2-1,000 employee range that Rippling targets.
Rippling is approaching that bigger challenge as one that can be tackled by a single platform — the theory being that managing HR employee data is essentially part and parcel of good management of IT data permissions and device provision. This funding is a signal of how both investors and customers are buying into Rippling and its approach, even if right now the majority of customers don’t onboard with the full suite of services. (Some 75% are usually signing up with HR products, Conrad noted.)
“We like to think of ourselves as a Salesforce for employee data,” Conrad said, “and by that, we think that employee data is more than just HR. We want to manage access to all of your third-party business apps, your computer and other devices. It’s when you combine all that that you can manage employees well.”
The company is gradually adding more tools. Most recently, it’s been launching new tools to help with job costing, helping companies track where employees are spending time when working on different projects, a tool critical for IT, accounting and other companies where employees work across a number of clients. Other new tools include SMS communications for “desk-less” workers and more accounting integrations.
Second is the founder. You might recall that Conrad was ousted from his previous company, Zenefits (taking on a related, but smaller, challenge in payroll and benefits), over a controversy linked to compliance issues and also misleading investors. But if Zenefits was finished with Conrad, Conrad was not finished with Zenefits — or at least the problem it was tackling. This funding is a testament to how investors are putting a big bet on Conrad himself, who says that a lot of what he has been building at Rippling was what he would have done at Zenefits if he’d stayed there.
“Once you’re lucky, twice you’re good,” said Mamoon Hamid, a partner at Kleiner Perkins, in a separate statement. “Parker is a true product visionary, and he and his team are solving an enormous pain point for businesses everywhere. We’re thrilled to continue partnering with Rippling as demand for their platform dramatically increases in this era of remote work.”
“Rippling is not just a superior payroll company, but something much broader: they’ve built the system of record for all employee data, creating an entirely new software category. Rippling’s massive market opportunity is to streamline the employee life cycle, from software to payroll to benefits, and fundamentally improve the way businesses hire and manage their employees,” said Ta in a statement.
Third is the context in which this round is coming. We’re in the midst of an economic downturn caused in part by a global health pandemic, and that’s leading to a lot of companies curtailing budgets, reducing headcount and potentially shutting down altogether. Ironically, that force is also propelling companies like Rippling full steam ahead.
Its SaaS model — priced at a flat $8 per person per month — not only fits with how many businesses are being run at the moment (primarily remotely), but Rippling’s purpose is specifically geared to helping businesses both onboard and offboard employees more efficiently, the kind of software that companies need to have in place to fit how they are working right now.
Updated with commentary from an interview with Conrad.
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Oscar’s health insurance platform nabs another $225 million
The direct-to-consumer health insurer Oscar has raised another $225 million in its latest, late-stage round of funding as its vision of tech-enabled healthcare services to drive down consumer costs becomes more and more of a reality.
In an effort to prevent a patient’s potential exposure to the novel coronavirus, COVID-19, most healthcare practices are seeing patients remotely via virtual consultations, and more patients are embracing digital health services voluntarily, which reduces costs for insurers and potentially provides better access to basic healthcare needs. Indeed, Oscar now has a $2 billion revenue base to point to and now a fresh pile of cash from which to draw.
“Transforming the health insurance experience requires the creation of personalized, affordable experiences at scale,” said Mario Schlosser, the co-founder and chief executive of Oscar.
Oscar’s insurance customers have the distinction of being among the most active users of telemedicine among all insurance providers in the U.S., according to the company. Around 30% of patients with insurance plans from the company have used telemedical services, versus only 10% of the country as a whole.
The new late-stage funding for Oscar includes new investors Baillie Gifford and Coatue, two late-stage investor that typically come in before a public offering. Other previous investors, including Alphabet, General Catalyst, Khosla Ventures, Lakestar and Thrive Capital, also participated in the round.
With the new funding, Oscar was able to shrug off the latest criticisms and controversies that swirled around the company and its relationship with White House official Jared Kushner as the president prepared its response to the COVID-19 epidemic.
As the Atlantic reported, engineers at Oscar spent days building a standalone website that would ask Americans to self report their symptoms and, if at risk, direct them to a COVID-19 test location. The project was scrapped within days of its creation, according to the same report.
The company now offers its services in 15 states and 29 U.S. cities, with more than 420,000 members in individual, Medicare Advantage and small group products, the company said.
As Oscar gets more ballast on its balance sheet, it may be readying itself for a public offering. The insurer wouldn’t be the first new startup to test public investor appetite for new listings. Lemonade, which provides personal and home insurance, has already filed to go public.
Oscar’s investors and executives may be watching closely to see how that listing performs. Despite its anemic target, the public market response could signal that more startups in the insurance space could make lemonade from frothy market conditions — even as employment numbers and the broader national economy continue to suffer from pandemic-induced economic shocks.
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Confluent lands another big round with $250M Series E on $4.5B valuation
The pandemic may feel all-encompassing at the moment, but Confluent announced a $250 million Series E today, showing that major investment continues in spite of the dire economic situation at the moment. The company is now valued at $4.5 billion.
Today’s round follows last year’s $125 million Series D. At that point the company was valued at a mere $2.5 billion. Investors obviously see a lot of potential here.
Coatue Management led the round, with help from Altimeter Capital and Franklin Templeton. Existing investors Index Ventures and Sequoia Capital also participated. Today’s investment brings the total raised to $456 million.
The company is based on Apache Kafka, the open-source streaming data project that emerged from LinkedIn in 2011. Confluent launched in 2014 and has gained steam, funding and gaudy valuations along the way.
CEO and co-founder Jay Kreps reports that growth continued last year when sales grew 100% over the previous year. A big part of that is the cloud product the company launched in 2017. It added a free tier last September, which feels pretty prescient right about now.
But the company isn’t making money giving stuff away, so much as attracting users, who can become customers at some point as they make their way through the sales funnel. The beauty of the cloud product is that you can buy by the sip.
The company has big plans for the product this year. Although Kreps was loath to go into detail, he says that there will be a series of changes coming up this year that will add significantly to the product’s capabilities.
“As part of this we’re going to have a major new set of capabilities for our cloud service, and for open-source Kafka, and for our product that we’re going to announce every month for the rest of the year,” Kreps told TechCrunch. These will start rolling out the first week in May.
While he wouldn’t get specific, he says that it relates to the changing nature of cloud infrastructure deployment. “This whole infrastructure area is really evolving as it moves to the cloud. And so it has to become much, much more elastic and scalable as it really changes how it works. And we’re going to have announcements around what we think are the core capabilities of event streaming in the cloud,” he said.
While a round this big with a valuation this high and an institutional investor like Franklin Templeton involved typically means an IPO could be the next step, Kreps was not ready to talk about that, except to say the company does plan to begin behaving in the cadence of a public company with a set of quarterly earnings, just not for public consumption yet.
The company was founded in 2014. It has 1,000 employees and has plans to continue to hire and to expand the product. Kreps sees plenty of opportunity here in spite of the current economics.
“I don’t think you want to just turtle up and hang on to your existing customers and not expand if you’re in a market that’s really growing. What really got this round of investors excited is the fact that we’re onto something that has a huge market, and we want to continue to advance, even in these really weird uncertain times,” he said.
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The 7 deadly sins of startups
Caryn Marooney is general partner at Coatue Management and sits on the boards of Zendesk and Elastic. An advisor to Airtable, in prior roles she oversaw communications for Facebook, Instagram, WhatsApp and Oculus and co-founded The OutCast Agency, which served clients like Salesforce.com and Amazon.
Pride. Greed. Lust. Envy. Gluttony. Wrath. Sloth.
You’ve probably heard of the Seven Deadly Sins, but I bet you’ve never wondered how they apply to starting a company. The answer: surprisingly well!
Over the years, I’ve talked about the seven habits every company should try to avoid and the seven (non-biblical) virtues each company should strive for. Done right, they will help founders focus, save time and avoid some common — and painful — mistakes.
For the purpose of this post, I’ve paired each sin with its closest corresponding virtue.
Sin No. 1: Lust (don’t focus on what other companies have)
As a founder, you have to pay attention to your competitors. Just don’t let that attention turn into lust for what they have — whether it’s a flashy marketing campaign, a fancy office or a killer staff.
Executive lust: Lusting after leadership can be especially tempting. So your competitor hired a rockstar executive who seems to be doing all the right things. It’s easy to think you need your own COO, or CRO, or CCO right now — and they need to be just like the person filling that role at the other successful company that looks nothing like yours.
Think carefully about what you need, why and what role that person will play day in and day out. What strengths and weaknesses do they have? What gaps do you need to fill? And what matters most to your customers and your business? It’s also important to think about your stage and your go-to-market model. When it comes to personnel, one size never fits all.
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