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With former Misfit founder Sonny Vu at the helm, Arevo raises $25 million for its 3D printing tech
Sonny Vu, the former founder and chief executive of the wearable technology company Misfit, has had a busy summer since he was named the new chief executive of 3D printing technology company Arevo.
Vu’s new startup brought on a new executive management team, launched a crowdfunding campaign for its 3D-printed Superstrata bicycle and is now announcing the close of a $25 million financing round to support the growth of its business.
It’d be a lot for anyone to take on even if it didn’t happen in the middle of a global pandemic. But Vu, a serial entrepreneur whose last business went head-to-head with Apple before it was acquired by Fossil for $260 million, doesn’t shy away from challenges.
Vu was first introduced to Arevo in 2019 and was initially going to come on as an advisor to the company. Since the acquisition of Misfit he had been investing from Alabaster, his personal investment vehicle. First introduced by Vinod Khosla, an investor in the business, Vu quickly moved from being an advisor to an executive at the helm of the business and an investor providing bridge financing until the company could close its latest round.
Vu had initially intended to start his own business, but was drawn to Arevo’s potential. “3D printing is about making things slowly and in small quantities. With Arevo’s technology you can make big things quite fast,” Vu said in an interview.
Several companies are attempting to take 3D printing into heavy industry and large-scale manufacturing. Relativity raised $140 million in its most recent financing to make rockets using 3D printers, Velo3D is a supplier of 3D printers to SpaceX and now Arevo has $34 million for its efforts to scale 3D printers. Of course, all of these investments pale in comparison to the whopping $438 million that Desktop Metal has raised for its 3D printing tech.
“Arevo is a compelling opportunity for us as it combines our three main investment foci: consumer internet, enterprise, and smart tech. We see fantastic potential in this market, and have backed Sonny before at Misfit,” said Hans Tung, in a statement. “Arevo is led by an experienced team with solid technological foundation and 3D printing manufacturing know-how at scale – to offer breakthrough products at competitive prices.”
Arevo already has a successful proof of concept with its Superstrata bicycle and manufacturing facilities in Vietnam that are intended to prove that the company’s technology will work as expected.
“We’re making this bike to make a point that we can make complex shapes at a pretty large scale,” Vu said. Unlike other companies that sell their printers to manufacturers, Arevo intends to sell parts. That’s because the printers are a pretty hefty ticket for anyone to buy. At $1 million to $1.4 million, it’s a big ask for a company to acquire if it wants to start using 3D printing.
On top of that cost, Vu said candidly that the company’s Achilles’ heel was the post-manufacturing treatment process required to finish the pieces. And while Arevo already counts automotive and aerospace companies as customers (including Airbus, which previously invested in the business), Vu wants to bring this to consumers. “We’ve had tennis racquet companies, golf clubs, surfboards,” approach Arevo about using the company’s technology, Vu says.
“We can do about two frames per day per machine,” Vu says of the latest production rates. “And coming up with our next-gen system we can do about six frames per day.”
The ascension of Vu to the chief executive position and the new capital infusion marks the latest chapter for Arevo, which is on its third chief executive since it was founded. Two years ago, Jim Miller, a former Amazon and Google executive, was brought on board to take the reins at the company. Miller’s appointment coincided with a $12.5 million investment round led by Asahi Glass, with Sumitomo Corp., Leslie Ventures and Khosla Ventures participating. Miller was involved with collaborating with Studio West on the design of its Superstrata bike.
Now, Defy Partners and GGV Capital are joining to lead the company’s Series B round with participation from Khosla Ventures, Alabaster and others. Brian Shin, a scout with Defy Ventures is joining the board, which now counts Bruce Armstrong, from Khosla Ventures, and Hemant Bheda, Arevo’s co-founder, as directors (along with Vu).
“Arevo’s new platform enables fabrication of high-strength, low-weight carbon fiber parts, currently not possible with today’s standard techniques,” said Trae Vassallo, founding partner at Defy. “We are thrilled to be working with the team to help scale up this incredibly impactful technology.”
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Mobile banking app Empower Finance just closed a $20 million Series A round
Another afternoon, another round of funding for a mobile banking app. This time, it’s Empower Finance, a San Francisco-based company that’s headed up by former Sequoia Capital partner Warren Hogarth and which just closed on $20 million in Series A funding from Icon Ventures and Defy Ventures.
David Velez, who is the founder and CEO of Nubank, the largest fintech in Latin America, also joined the round.
We’d first written about the company in 2017, when Hogarth was just getting the business off the ground. Fast-forward a bit and Empower now employs 35 people and has attracted more than 600,000 active users to its platform, says Hogarth. What has drawn them in: the company’s promise of combining AI and actual human financial planners to help millennials in particular accrue some wealth, including, more newly, through its own checking account product and through a savings account that’s currently promising 1.60% in annual percentage yield with no minimums, no overdraft fees and unlimited withdrawals.
It’s all part of an overall offering that crunches through account holders’ bank and credit card accounts, and recommends how much they save into which account, how much they should spend given their overall picture, various ways they can cut costs and where and when they’ve surpassed their pre-configured budgets.
Of course, the company has so much competition it’s dizzying, but like the various upstarts against which it’s battling for mindshare, the opportunity that Empower is chasing is enormous, too. Though companies like Chime can seem overpriced given how fast investors have marked up their rounds — Chime’s newest financing, announced in December, was done at a $5.8 billion post-money valuation, which was four times more than the company was worth at the outset of 2019 — digital banks are still tiny fish in an ocean of institutional financial services, representing something like 3% of the market.
They’re gaining more market share by the day, too, including by charging far lower fees for much more.
In Empower’s case, users pay $6 a month, but Hogarth says they also save $300 a year in additional fees they would pay a brick-and-mortar bank. He insists that on average, it also helps them save $1,300 more annually, too.
As for all those other companies — Mint, Acorns, the list goes on — Hogarth sounds surprisingly sanguine. “If you look at it from the outside, it looks crowded. But the consumer financial services in the U.S. is a $2 trillion business, and we haven’t had a fundamental shift since maybe Schwab came along 30 years ago.”
Indeed, says Hogarth, because Empower and its rivals are mobile and branchless and don’t have legacy software to contend with, they’re able to take 60 to 70% of the cost structure out of the business.
What that means on an individual company level is that even if each upstart can attract 2 to 3 million customers, they can get to a multibillion-dollar market cap. At least, that kind of math is “why there’s so much interest in this space,” says Hogarth.
It’s also why people like Nubank’s Velez, who have seen this story play out in Europe and Latin America and who are seeing the early phases of it in the U.S., are apparently keeping the money spigot open for now.
Empower had earlier raised an undisclosed amount of seed funding from Sequoia, followed by a $4.5 million round led by Initialized Capital.
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Skubana raises $5.4M for its e-commerce operations software
Skubana, a startup promising to help e-commerce business manage what can be a dizzying array of logistical challenges, is announcing that it has raised $5.4 million in Series A funding.
The round was led by Defy Partners, with participation from Advancit Capital and FJ Labs. Early Skubana backer Brian Lee — who co-founded The Honest Company, ShoeDazzle and LegalZoom, and is also involved as a Defy Sage — is joining Skubana’s board of directors.
“When I first launched Shoedazzle and The Honest Company, one of our primary challenges was understanding how our products performed across channels,” Lee said in a statement. “Skubana solves a core problem that thousands of brands face and no other competitor solves well.”
CEO Chad Rubin said these were issues he faced when he started his own e-commerce business, Crucial Vacuum, a decade ago. In fact, Rubin’s co-founder and CTO DJ Kunovac (who was working at McKesson health IT) recalled visiting Rubin’s warehouse and saying, “What you’re experiencing right now is effectively where healthcare was a decade or two ago.”
The problem, Kunovac argued, is that there was separate software and systems for every part of the process. What was needed was a “horizontal platform of commerce.”
So with Skubana, Rubin and Kunovac have built a software platform that handles shipping, inventory management, restocking and more. The main thing Skubana doesn’t handle is the creating the actual online storefront and shopping cart. Instead, it’s built to take care of everything that a business needs to do once those orders start coming in.
As Rubin put it, “If Shopify is a city, then we’re everything underneath the ground.”
By bringing all the data together from various sales channels and applying and machine learning, the company says it can improve profitability and reduce issues like selling more product that you have in the inventory. There’s also an app store to integrate Skubana with other systems.
“We’re completely replacing these siloed, fragmented pieces of software,” Rubin said.
Brands already using the software include Bird Rides, Valvoline, and Deathwish Coffee. Kunovac noted that Skubana isn’t “entry-level software” — when brands sign up to use it, they’ve usually a growing a commerce business, which is when “the laws of physics have started to take over.” In other words: “They come to us from pain.”
With the new funding, Skubana says it will double its size in the next 18 months, build a number of new products and continue to invest in its app store ecosystem.
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Meet Projector, collaborative design software for the Instagram age
Mark Suster of Upfront Ventures bonded with Trevor O’Brien in prison. The pair, Suster was quick to clarify, were on site at a correctional facility in 2017 to teach inmates about entrepreneurship as part of a workshop hosted by Defy Ventures, a nonprofit organization focused on addressing the issue of mass incarceration.
They hit it off, sharing perspectives on life and work, Suster recounted to TechCrunch. So when O’Brien, a former director of product management at Twitter, mentioned he was in the early days of building a startup, Suster listened.
Less than two years later, O’Brien is ready to talk about the idea that captured the attention of the Bird, FabFitFun and Ring investor. It’s called Projector.
It’s the brainchild of a product veteran (O’Brien) and a gaming industry engineer turned Twitter’s vice president of engineering (Projector co-founder Jeremy Gordon), a combination that has given way to an experiential and well-designed platform. Projector is browser-based, real-time collaborative design software tailored for creative teams that feels and looks like a mix of PowerPoint, Google Docs and Instagram . Though it’s still months away from a full-scale public launch, the team recently began inviting potential users to test the product for bugs.
“We want to reimagine visual communication in the workplace by building these easier to use tools and giving creative powers to the non-designers who have great stories to tell and who want to make a difference,” O’Brien told TechCrunch. “They want change to happen and they need to be empowered with the right kinds of tools.”
Today, Projector is a lean team of 13 employees based in downtown San Francisco. They’ve kept quiet since late 2016 despite closing two rounds of venture capital funding. The first, a $4 million seed round, was led by Upfront’s Suster, as you may have guessed. The second, a $9 million Series A, was led by Mayfield in 2018. Hunter Walk of Homebrew, Jess Verrilli of #Angels and Nancy Duarte of Duarte, Inc. are also investors in the business, among others.
O’Brien leads Projector as chief executive officer alongside co-founder and chief technology officer Gordon. Years ago, O’Brien was pursuing a PhD in computer graphics and information visualization at Brown University when he was recruited to Google’s competitive associate product manager program. He dropped out of Brown and began a career in tech that would include stints at YouTube, Twitter, Coda and, finally, his very own business.
O’Brien and Gordon crossed paths at Twitter in 2013 and quickly realized a shared history in the gaming industry. O’Brien had spent one year as an engineer at a games startup called Mad Doc Software, while Gordon had served as the chief technology officer at Sega Studios. Gordon left Twitter in 2014 and joined Redpoint Ventures as an entrepreneur-in-residence before O’Brien pitched him on an idea that would become Projector.
Projector co-founders Jeremy Gordon (left), Twitter’s former vice president of engineering, and Trevor O’Brien, Twitter’s former director of product management
“We knew we wanted to create a creative platform but we didn’t want to create another creative platform for purely self-expression, we wanted to do something that was a bit more purposeful,” O’Brien said. “At the end of the day, we just wanted to see good ideas succeed. And with all of those good ideas, succeeding typically starts with them being presented well to their audience.”
Initially, Projector is targeting employees within creative organizations and marketing firms, who are frequently tasked with creating visually compelling presentations. The tool suite is free for now and will be until it’s been sufficiently tested for bugs and has fully found its footing. O’Brien says he’s not sure just yet how the team will monetize Projector, but predicts they’ll adopt Slack’s per user monthly subscription pricing model.
As original and user-friendly as it may be, Projector is up against great competition right out of the gate. In the startup landscape, it’s got Canva, a graphic design platform valued at $2.5 billion earlier this week with a $70 million financing. On the old-guard, it’s got Adobe, which sells a widely used suite of visual communication and graphic design tools. Not to mention Prezi, Figma and, of course, Microsoft’s PowerPoint, which is total crap but still used by millions of people.
“There are many tools scratching at the surface, but there’s not one visual communications tool that wins them all,” Suster said of his investment in Projector.
Projector is still in its very early days. The company currently has just two integrations: Unsplash for free stock images and Giphy for GIFs. O’Brien would eventually like to incorporate iconography, typography and sound to liven up Projector’s visual presentation capabilities.
The ultimate goal, aside from generally improving workplace storytelling, is to make crafting presentations fun, because shouldn’t a corporate slideshow or even a startup’s pitch be as entertaining as scrolling through your Instagram feed?
“We wanted to try to create something that doesn’t feel like work,” O’Brien said.
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Pioneer Square Labs is invigorating Seattle’s startup ecosystem
Three miles from Seattle’s South Lake Union neighborhood — better known as Amazonia to locals — sits Pioneer Square. The original heart of the city, the area has managed to hold on to its decades-old charm as other parts of town are besieged by Amazon-contracted architects.
On a mission to champion Seattle’s unique entrepreneurial DNA, startup studio Pioneer Square Labs has not only adopted the neighborhood’s moniker but established its fast-growing HQ at its center.
Pioneer Square Labs, or PSL, cropped up in 2015 to create, launch and fund technology companies headquartered in the Pacific Northwest. Operating under the startup studio model, PSL’s team of former founders and venture capitalists, including Rover and Mighty AI founder Greg Gottesman, collaborate to craft and incubate startup ideas, then recruit a founding CEO from their network of entrepreneurs to lead the business. The team uses an innovative method of rapidly ideating, testing and, if necessary, scrapping ideas, dubbed its “validation engine.”
The model differs from an accelerator or incubator. Y Combinator, for example, admits existing business into its months-long program, deploying its expertise and capital to bolster early-stage startups. PSL, on the other hand, creates startups and provides would-be founders with a derisked platform for company building.
“It’s a dream job,” PSL co-founder Greg Gottesman told TechCrunch. “If someone would say to you ‘hey, you can come into work every day, think about all the problems that are interesting to solve, all the tech that’s available and you have the resources to build companies,’ that’s just a dream come true … It’s just been a very fun ride.”
Xiao Wang, the CEO of Pioneer Square Labs spin-out Boundless, pitching at TechCrunch Disrupt SF 2017
The startup studio model is working for PSL. To date, it has raised $27.5 million in equity funding to build out its platform, in addition to an $80 million fundraise for its debut venture fund, which invests in PSL companies and other Pacific Northwest businesses. Of the 13 companies to emerge from PSL in the last three years, all have raised follow-on rounds from venture capital firms at an aggregate valuation of $200 million. According to PitchBook, PSL companies comprised 14.3 percent of all early-stage VC deals in Washington state in 2018.
Among PSL’s portfolio companies are cloud security compliance platform Shujinko, which closed a $2.8 million seed round from Unusual Ventures, Defy Ventures, Vulcan Capital and more last year. Plus, Boundless, a platform that facilitates the process of applying for immigrant status in the U.S., and Tally, a sports-prediction app spearheaded by football star Russell Wilson. Other recent spin-outs include Remarkably, a marketing and analytics software provider, and Attunely, a debt-collection-tech platform.
Meet the team
Pioneer Square Labs’ growing team of former operators, VCs, data scientists, engineers and more
Greg Gottesman, a former managing director at Seattle VC fund Madrona Venture Group, and the founder of its startup studio Madrona Venture Labs, leads PSL alongside a team of seasoned Pacific Northwest investors and entrepreneurs.
Rounding out PSL’s team of managing directors is Julie Sandler, a former investor at Madrona; Geoff Entress, a former venture partner with Voyager Capital and Madrona; Mike Galgon, the founder of the Microsoft-acquired digital agency aQuantive; and T.A. McCann, a serial entrepreneur behind Google-acquired Senosis and BlackBerry-acquired Gist. Ben Gilbert, who runs product at PSL, is another Madrona alum.
After nearly two decades investing in early-stage startups at Madrona, Gottesman made a peaceful exit with ambitions to launch a scalable startup studio independent of any existing VC firm. Madrona, alongside an additional 13 venture firms and Seattle angel investors, like Jeff Bezos and Zillow -founder Rich Barton, bolstered PSL with seed capital right off the bat.
The validation engine
Pioneer Square Labs’ network of entrepreneurs
To differentiate itself from competing company builders and maintain a high level of efficiency, PSL uses a proprietary strategy of rapidly testing and validating business ideas dubbed its “validation engine.” Its special sauce, PSL leverages digital marketing to validate customer demand before they begin real work on any of their ideas.
Long-time marketer Peter Denton leads the effort. Denton, who joined PSL in early 2017, manages day-to-day market validation, growth strategies and market research for the firm’s portfolio companies.
“We joke in some ways [Denton] is the grim reaper,” PSL’s Ben Gilbert told TechCrunch. “He’s responsible for much more kills than anyone else.”
Among the validation engine’s strategies is to build a website for a “company” to test demand for a potential product. Denton and his team market the website to target customer segments through a variety of digital channels, then measure customer resonance with the messaging. They ask potential customers if they are interested in learning more about a new concept or product when it “becomes available” to help understand how much interest a potential business might have before PSL allocates additional time and resources to a project.
To date, PSL has killed more than 100 ideas.
“A lot of studios ultimately won’t be successful because they don’t kill things fast enough,” Gottesman explained. “We kill nine out of 10 of the companies we start. Most of our ideas don’t make it to the promised land.”
In a sense, they are catfishing potential customers, luring them in with a new idea that more than likely will never come to fruition. But the strategy saves PSL the heartache that comes with investing a lot of time into a business idea that never finds its market.
This way, when an idea does pass the tests posed by the validation engine, PSL and its team of engineers and data scientists are ready to build with knowledge of market demand in tow.
By the numbers
A glimpse of Seattle’s Pioneer Square neighborhood where Pioneer Square Labs is headquartered
In three years, PSL has spun-out 13 companies, ideas for six of which came from the PSL team and seven originated from founders in the PSL network. All of those companies have secured venture funding — $71 million in total for an aggregate valuation of $200 million.
“The most important lesson we learned is it’s all about the people and the talent,” Gottesman said. “If we have an A-plus idea and partner with a B team, the company isn’t going to be successful. On the other hand, if we partner with the best talent, we are likely to be successful even if we fail on other dimensions.”
PSL’s goal is to invigorate the Seattle tech ecosystem and given the aforementioned stats (PSL companies comprised 14.3 percent of all early-stage VC deals in Washington state in 2018) they are well on their way. In 2019, PSL hopes to spin out between six and nine additional businesses.
“We believe we are building the center for early-stage tech innovation in the Pacific Northwest,” PSL’s Julie Sandler told TechCrunch.
Seattle, home to two of the most valuable businesses in the world, has not created as many founders as anticipated. Amazon’s entrepreneurial culture has succeeded in keeping top talent from pursuing their own businesses. PSL’s derisked platform, the firm hopes, will entice those founders, like Boundless CEO Xiao Wang, a former senior product manager at Amazon.
“The studio model lends itself really well to people who are 99 percent there, thinking ‘damn, I want to start a company,’” Gilbert said. “These are people that are incredible entrepreneurs but if not for the studio as a catalyst, they may not have [left].”
Venture capital investment in Washington state is increasing year-over-year, reaching a high of nearly $3 billion in 2018 across roughly 400 deals, per PitchBook. The Seattle tech scene, given its proximity to tech heavyweights and a growing number of satellite engineering offices, only has room to grow.
“We do think Seattle is the most exciting market in the country because of the amount of technical talent you have,” Gottesman said. “You have to believe that if engineering is at the heart of these startups then Seattle will ultimately be a key city in the world in terms of creating great technology startups.”
“We think part of the issue is a lack of capital and a lack of help,” Gottesman added. “If we can provide a little bit of both of those things, we can really put Seattle where it deserves to be, should be and will be.”
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