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Intel has invested $132M in 11 startups this year, on track for $300M-$500M in total

Published May 12, 2020

When it comes to corporate venture capital, semiconductor giant Intel has shaped up to be one of the most prolific and prescient investors in the tech world, with investments in 1,582 companies worldwide, and a tally of some 692 portfolio companies going public or otherwise exiting in the wake of Intel’s backing.

Today, the company announced its latest tranche of deals: $132 million invested in 11 startups. The deals speak to some of the company’s most strategic priorities currently and in the future, covering artificial intelligence, autonomous computing and chip design.

Many corporate VCs have been clear in drawing a separation between their activities and that of their parents, and the same has held for Intel. But at the same time, the company has made a number of key moves that point to how it uses its VC muscle to expand its strategic relationships and also ultimately expand through M&A. Just earlier this month, it acquired Moovit, an Intel Capital portfolio company, for $900 million (a deal that was knocked down to $840 million when accounting for its previous investment).

“Intel Capital identifies and invests in disruptive startups that are working to improve the way we work and live. Each of our recent investments is pushing the boundaries in areas such as AI, data analytics, autonomous systems and semiconductor innovation. Intel Capital is excited to work with these companies as we jointly navigate the current world challenges and as we together drive sustainable, long-term growth,” said Wendell Brooks, Intel senior vice president and president of Intel Capital, in a statement.

The tranche of deals come at a critical time in the worlds of startups and venture investing. Many are worried that the slowdown in the economy, precipitated by the COVID-19 pandemic, will mean a subsequent slowdown in tech finance. Intel says that it plans to invest between $300 million and $500 million in total this year, so this would go some way to refuting that idea, along with some of the other monster deals and big funds that we’ve written out in the last couple of months.

The list announced today doesn’t include specific investment numbers, but in some cases the startups have also announced the fundings themselves and given more detail on round sizes. These still, however, do not reveal Intel’s specific financial stakes.

Here’s the full list:

Anodot uses machine learning to monitor business operations autonomously, covering areas like app performance, customer incidents and more. The idea is that using the platform to monitor for these incidents means detection and response time can be faster. The full $35 million round was announced back in April.
Astera Labs is a fabless semiconductor startup focused on connectivity solutions for data-centric systems to remove performance bottlenecks in compute-intensive workloads in areas like AI. It announced its Series B of an undisclosed amount two weeks ago, and prior to this it had raised just over $6 million, according to PitchBook.
Axonne develops next-generation high-speed automotive Ethernet network connectivity solutions for connected cars: addressing the issue of merging legacy or proprietary systems with the demands of advanced next-generation applications. Intel invested as part of a $9 million round that actually closed in March.
Hypersonix uses big-data analytics to determine and predict customer demand for e-commerce, retail and hospitality customers. One of its customers is Amazon — which uses Hypersonix’s platform in its supply chain division. That may come as a surprise, but according to Hypersonix’s CEO, the e-commerce giant does not have dedicated analytics teams to serve every division in the company, so sometimes they do buy from third parties. The round was actually announced at the beginning of this month: an $11.5 million deal.
KFBIO out of China is one of Intel’s biotechnology bets. The company has designed and built a digital pathology scanner, which aims to replace microscopes with its big data, cloud-based and AI-powered insights. The obvious connection and interest here for Intel is on the processor side, but potentially brings Intel into a sphere where it can flex its muscle around a range of AI and cloud computing applications as well. The deal was closed at the beginning of April and totals around $14.2 million.
Lilt has built an AI-powered language translation platform, not to compete with the likes of Google Translate for consumers, but to help those with international-facing websites and apps localise their services more efficiently. The company announced its round today: a $25 million Series B led by Intel.
MemVerge focuses on “in-memory” computing, an architecture that makes it easier to deploy heavy, data-centric applications. It closed its round of $24.5 million at the beginning of April, and while it’s always worked with Intel processors, Intel’s investment was not public until today.
ProPlus Electronics, also out of China, is an electronic design automation (“EDA”) startup that speeds up chip design and fabrication for semiconductor companies manufacturing a variety of chips at scale. It closed its round also at the beginning of April. The exact amount was undisclosed except to note that it was in the “hundreds of millions of Chinese Yuan” (or tens of millions of U.S. dollars).
Retrace is an under-the-radar dental data startup that uses AI to improve “dental decision making,” but according to its site seems also to focus on other healthcare areas. It’s not clear how big the round is or when it closed.
Spectrum Materials out of China is another stealthy company that supplies gas and other materials to semiconductor makers.
Xsight Labs based in Israel is building chipset designs to accelerate data-intensive workloads that you typically get with AI and analytical applications. Israel has a huge R&D centre focused on autonomous driving, one of the applications that’s going to demand a lot in processing power, so this looks like a clearly strategic bet. The company raised $25 million in February, but Intel was not disclosed in that round previously.

Why COVID-19 could delay Interswitch, Africa’s next big IPO

Published May 4, 2020

The economic effects of COVID-19 could delay Africa’s next big IPO — that of Nigerian fintech unicorn Interswitch.

If so, it wouldn’t be the first time the Lagos-based payments company’s plans for going public were postponed; the tech world has been anticipating Interswitch’s stock market debut since 2016.

For the continent’s innovation ecosystem, there’s a lot riding on the digital finance company’s IPO. After e-commerce venture Jumia, it would become only the second listing of a VC-backed African tech company on a major exchange. And Interswitch’s stock market debut — when it occurs — could bring more investor attention and less controversy to the region’s startup scene.

What is Interswitch?

TechCrunch reached out to Interswitch on the window for listing, but the company declined to comment. The tech firm’s path from startup to IPO aspirant traces back to the vision of founder Mitchell Elegbe, a Nigerian electrical engineering graduate whose entire career has pretty much been Interswitch.

Africa’s tech scene is still fairly young, but it does have a timeline with several definitive points. An early one would be the success of mobile money in East Africa, with the launch of Safaricom’s M-Pesa in 2007. Another is the notable wave of VC-backed startups and founders that launched around 2010.

Interswitch CEO Mitchell Elegbe (Photo Credits: Interswitch)

With Interswtich, Elegbe pre-dated both by a number of years, founding his fintech company back in 2002 to connect Nigeria’s largely disconnected banking system. The firm became a pioneer of the infrastructure to digitize Nigeria’s economy.

Interswitch created the first electronic switch whereby Nigerian financial institutions could communicate and thereby operate ATMs and point of sales operations. The company now provides much of the rails for Nigeria’s online banking system.

If we let the US Postal Service die, we’ll be killing small businesses with it

Published April 24, 2020

Laura Behrens Wu
Contributor

Laura Behrens Wu is the co-founder and CEO of Shippo, which is building a shipping platform for 21st century e-commerce.

Since moving to the United States, I’ve come to appreciate and admire the United States Postal Service as a symbol of American ingenuity and resilience.

Like electricity, telephones and the freeway system, it’s part of our greater story and what binds the United States together. But it’s also something that’s easy to take for granted. USPS delivers 181.9 million pieces of First Class mail each day without charging an arm and a leg to do so. If you have an address, you are being served by the USPS — and no one’s asking you for cash up front.

As CEO of Shippo, an e-commerce technology platform that helps businesses optimize their shipping, I have a unique vantage point into the USPS and its impact on e-commerce. The USPS has been a key partner since the early days of Shippo in making shipping more accessible for growing businesses. As a result of our work with the USPS, along with several other emerging technologies (like site builders, e-commerce platforms and payment processing), e-commerce is more accessible than ever for small businesses.

And while my opinion on the importance of the USPS is not based on my company’s business relationship with the Postal Service, I want to be upfront about the fact that Shippo generates part of its revenue from the purchase of shipping labels through our platform from the USPS along with several other carriers. If the USPS were to stop operations, it would have an impact on Shippo’s revenue. That said, the negative impact would be far greater for many thousands of small businesses.

I know this because at Shippo, we see firsthand how over 35,000 online businesses operate and how they reach their customers. We see and support everything from what options merchants show their customers at checkout through how they handle returns — and everything in between. And while each and every business is unique with different products, customers operations and strategies, they all need to ship.

In the United States, the majority of this shipping is facilitated by the USPS, especially for small and medium businesses. For context, the USPS handles almost half of the world’s total mail and delivers more than the top private carriers do in aggregate, annually, in just 16 days. And, it does all of this without tax dollars, while offering healthcare and pension benefits to its employees.

As has been the case for many organizations, COVID-19 has significantly impacted the USPS. While e-commerce package shipments continue to rise (+30% since early March based on Shippo data), it has not been enough to overcome the drastic drop in letter mail. With this, I’ve heard opinions of supposed “inefficiency,” calls for privatization, pushes for significant pricing and structural changes, and even indifference to the possibility of the USPS shutting down.

Amid this crisis, we all need the USPS and its vital services now more than ever. In a world with a diminished or dismantled USPS, it won’t be Amazon, other major enterprises, or even Shippo that suffer. If we let the USPS die, we’ll be killing small businesses along with it.

Quite often, opinions on the efficiency (or lack thereof) of the USPS are very narrow in scope. Yes, the USPS could pivot to improve its balance sheet and turn operating losses into profits by axing cumbersome routes, increasing prices and being more selective in who they serve.

However, this omits the bigger picture and the true value of the USPS. What some have dubbed inefficient operations are actually key catalysts to small business growth in the United States. The USPS gives businesses across the country, regardless of size, location or financial resources, the ability to reach their customers.

We shouldn’t evaluate the USPS strictly on balance sheet efficiency, or even as a “public good” in the abstract. We should look at how many thousands of small businesses have been able to get started thanks to the USPS, how hundreds of billions of dollars of commerce is made possible by the USPS annually and how many millions of customers, who otherwise may not have access to goods, have been served by the USPS.

In the U.S., e-commerce accounts for over half a trillion dollars in sales annually, and is growing at double-digit rates each year. When I hear people talk about the growth of e-commerce, Amazon is often the first thing that comes up. What doesn’t shine through as often is the massive growth of small business — which is essential to the health of commerce in general (no one needs a monopoly!). In fact, the SMB segment has been growing steadily alongside Amazon. And with the challenges that traditional businesses face with COVID-19, more small businesses than ever are moving online.

USPS Priority Mail gets packages almost anywhere in the U.S. in two to three days (average transit time is 2.5 days based on Shippo data) and starts at around $7 per shipment, with full service: tracking, insurance, free pickups and even free packaging that they will bring to you.

In a time when we as consumers have become accustomed to free and fast shipping on all of our online purchases, the USPS is essential for small businesses to keep up. As consumers we rarely see behind the curtain, so to speak, when we interact with e-commerce businesses. We don’t see the small business owner fulfilling orders out of their home or out of a small storefront, we just see an e-commerce website. Without the USPS’ support, it would be even harder, in some cases near impossible, for small business owners to live up to these sky-high expectations. For context, 89% of U.S.-based SMBs (under $10,000 in monthly volume) on the Shippo platform rely on the USPS.

I’ve seen a lot of talk about the USPS’s partnership with Amazon, how it is to blame for the current situation, and how under a private model, things would improve. While we have our own strong opinions on Amazon and its impact on the e-commerce market, Amazon is not the driver of USPS’s challenges. In fact, Amazon is a major contributor in the continued growth of the USPS’s most profitable revenue stream: package delivery.

While I don’t know the exact economics of the deal between the USPS and Amazon, significant discounting for volume and efficiency is common in e-commerce shipping. Part of Amazon’s pricing is a result of it actually being cheaper and easier for the USPS to fulfill Amazon orders, compared to the average shipper. For this process, Amazon delivers shipments to USPS distribution centers in bulk, which significantly cuts costs and logistical challenges for the USPS.

Without the USPS, Amazon would be able to negotiate similar processes and efficiencies with private carriers — small businesses would not. Given the drastic differences in daily operations and infrastructure between the USPS and private carriers, small businesses would see shipping costs increase significantly, in some cases by more than double. On top of this, small businesses would see a new operational burden when it comes to getting their packages into the carriers’ systems in the absence of daily routes by the USPS.

Overall, I would expect to see the level of entrepreneurship in e-commerce slow in the United States without the USPS or with a private version of the USPS that operates with a profit-first mindset. The barriers to entry would be higher, with greater costs and larger infrastructure investments required up-front for new businesses. For Shippo, I’d expect to see a much greater diversity of carriers used by our customers. Our technology that allows businesses to optimize across several carriers would become even more critical for businesses. Though, even with optimization, small businesses would still be the group that suffers the most.

Today, most SMB e-commerce brands, based on Shippo data, spend between 10-15% of their revenue on shipping, which is already a large expense. This could rise well north of 20%, especially when you take into account surcharges and pick-up fees, creating an additional burden for businesses in an already challenging space.

I urge our lawmakers and leaders to see the full picture: that the USPS is a critical service that enables small businesses to survive and thrive in tough times, and gives citizens access to essential services, no matter where they reside.

This also means providing government support — both financially and in spirit — as we all navigate the COVID-19 crisis. This will allow the USPS to continue to serve both small businesses and citizens while protecting and keeping their employees safe — which includes ensuring that they are equipped to handle their front-line duties with proper safety and protective gear.

In the end, if we continue to view the USPS as simply a balance sheet and optimize for profitability in a vacuum, we ultimately stand to lose far more than we gain.

Will China’s coronavirus-related trends shape the future for American VCs?

Published April 21, 2020

Rocio Wu
Contributor

Rocio Wu is a second-year MBA candidate at Harvard Business School and a venture capitalist.

For the past month, VC investment pace seems to have slacked off in the U.S., but deal activities in China are picking up following a slowdown prompted by the COVID-19 outbreak.

According to PitchBook, “Chinese firms recorded 66 venture capital deals for the week ended March 28, the most of any week in 2020 and just below figures from the same time last year,” (although 2019 was a slow year). There is a natural lag between when deals are made and when they are announced, but still, there are some interesting trends that I couldn’t help noticing.

While many U.S.-based VCs haven’t had a chance to focus on new deals, recent investment trends coming out of China may indicate which shifts might persist after the crisis and what it could mean for the U.S. investor community.

Image Credits: PitchBook

Shippo raises a $30M Series C after posting rapid 2019 growth

Published April 7, 2020

Early this afternoon Shippo, a shipping software and services company, announced that it has closed a $30 million Series C. The funding round roughly doubles the capital that the firm has raised to-date, from a little over $29 million to just under $60 million.

The round, however, wasn’t put together recently. As is often the case with funding events, Shippo raised its capital a while back and is only announcing it now. According to its CEO, Laura Behrens Wu, her startup started raising its Series C in late Q4 2019, with the capital hitting its accounts the day after Christmas. So, Shippo started 2020 well capitalized, and should have a comfortable capital base heading into this year’s economic uncertainty.

The funding round was led by a new investor, D1 Capital Partners, and participated in by a number of prior investors including Uncork Capital (which led a 2014 Seed investment into the company), Union Square Ventures (which led the company’s Series A in 2016) and Bessemer (which led its 2017 Series B).

Growth, margins

Shippo sits between retailers and consumers, helping sellers ship goods to buyers quickly and, it promises, inexpensively. The startup works with nearly five dozen shipping partners around the world, and plugs into the merchant worlds of Amazon, Shopify, Wix and others.

Like a number of successful startups, Shippo is trying to take something that is complex, and make it simple while generating revenue along the way. There are a number of loose examples we can lean on. For example, Plaid took all the complexity of talking to different financial institutions and shoved it into an accessible API. Twilio did something similar for telephony. Stripe made payments simple for others to integrate. You get the idea. Shippo wants to the same for shipping.

How SaaS startups should plan for a turbulent Q2

So far its model has good momentum. Heading into its funding round the firm had doubled (“100% growth,” Behrens Wu) in the preceding year, the sort of expansion that investors covet. It’s never bad to raise on the back of aggressive growth, as Shippo’s Series C shows; the company’s new valuation is “slightly higher” than TechCrunch’s estimate of $150 million, according to its CEO.

And even more, Shippo’s hybrid software and sales model (it charges for access to its shipping software and generates revenue from select shipping spend) creates attractive economics. Shippo’s gross margins are right around 80%, according to the startup, putting the company in the middle-upper tier of SaaS firms. Its growth isn’t based on the upselling shipping by a few points at volume; Shippo does have venture-ready economics.

It might seem odd to stress that point, but after WeWork’s implosion, it’s worth checking to make sure that startups raising as if they have strong revenue quality actually do.

Shippo has big aspirations, as you’d expect. “When you think about shipping software,” Behrens Wu told TechCrunch during an interview, “most people, even in tech, can’t name a single shipping software company, but everyone can name one or two payment companies. Everyone knows PayPal, Stripe, maybe Adyen or Braintree.” She wants to make Shippo as well known for shipping as Stripe is for payments.

There was secular movement towards her vision even before the pandemic. Today, online shopping — the grist for Shippo’s mill — is even more important. And it’s likely to become even more so over time, if growth shown by Amazon and Shopify in recent quarters is any indication of what’s to come, which means that the market for Shippo’s services will grow in time, and it’s always easier to grow in an expanding market than to claw for share in a stagnant pool.

Finally, in addition to its new capital and raised valuation, Shippo also announced that it has hired Catherine Stewart, former chief business officer at WordPress juggernaut Automattic, to be its COO. If Shippo is hiring a COO now, then we expect to see a CFO added around the time of its Series D. And then we get to start annoying the company about its IPO timeline.

Shippo is one of the lucky startups that raised right before the world changed. Now it’s up to the startup to conserve cash while continuing to grow while the global economy struggles. Let’s see how it performs.

Rebecca Minkoff has some advice for e-commerce companies right now

Published March 30, 2020

When Rebecca Minkoff first moved to New York City, the then-18-year-old was making $4.75 an hour.

“I just kept working for this designer and someone was telling me what to do every day. I just didn’t like that. And I thought if I’m going to work as hard, it’s going to be for myself and I want to call my own shots,” she said. “I didn’t want to be told what to do, frankly.”

Self-employment for Minkoff turned out just fine; in 2001, she redesigned the iconic “I Love New York” shirt and it appeared on The Tonight Show. After a shout-out from Jay Leno, Minkoff spent the next eight months making T-shirts on the floor of her apartment and quit her job to start designing full time.

We caught up with Minkoff to learn more about how she grew her brand into a global fashion company with the help of her brother, her problem with the unicorn mentality and why she thinks the “invisible barrier” is the future of retail tech.

This interview was edited for brevity and clarity.

TechCrunch: What gave you the energy and drive to become an entrepreneur?

Rebecca Minkoff: Long story. My mom would sell these cast covers, like decorative covers for people with broken arms at the flea market. And I was like, I am going to have a booth here. So I made all these tie-dye shirts and no one bought anything but it was just this idea of like, I can make something I can sell. My mom always taught that. When I wanted a dress, she taught me how to sew a dress instead of buying the dress. And so, I just got this bug for creating things out of nothing.

The constant thread was, “I’m not going to pay for this. You’re going to learn how to do it.”

Grocery delivery apps see record downloads amid coronavirus outbreak

Published March 16, 2020

As the COVID-19 pandemic spreads across the U.S., grocery delivery apps have begun seeing record numbers of daily downloads, according to new data from app store intelligence firm Apptopia. On Sunday, online grocery apps, including Instacart, Walmart Grocery and Shipt, hit yet another new record for daily downloads for their respective apps, the firm says.

Comparing the average daily downloads in February to yesterday (Sunday, March 15), Instacart, Walmart Grocery and Shipt have seen their daily downloads surge by 218%, 160% and 124%, respectively.

Typically, these apps (except for Shipt) see tens of thousands to as many as 20,000+ downloads per day. But on Sunday, Instacart saw more than 38,500 downloads and Walmart Grocery saw nearly 54,000 downloads, the firm says. Shipt, though hitting record numbers, saw only 7,285 downloads on Sunday. To some extent, its lower figures could be due to Target’s move to integrate Shipt’s grocery delivery service, which it owns, into its main app.

In fact, the Target app has also broken records for daily downloads, the report found. On Sunday, Target’s app saw more than 53,100 daily downloads; a month ago, it was seeing 25,000+.

Walmart very recently announced it would merge its grocery delivery service into its main app, as Target has done. But for now, consumers are still seeking and downloading its standalone grocery app at record levels.

These grocery delivery apps are in demand more than ever during this health crisis.

With government mandates to practice “social distancing,” U.S. consumers have been stocking up for long weeks to be spent at home. Stores were cleared of key supplies, like toilet paper, and several also saw long lines and crowds as panic-buying set in. Grocery delivery and pickup, meanwhile, presents an easier option — as well as one where you could limit your exposure to other people. With grocery pickup, consumers only have to interact with a single store employee from their curbside parking space. And with grocery delivery, most orders can simply be left on the doorstep with no person-to-person contact required.

Several grocery delivery services, including Instacart and others, promoted the fact they would add a “contactless” delivery option, which helps contribute to the huge sales boost. On Thursday, Instacart said its sales growth rates for the week was 10 times higher than the week before, and had increased by as much as 20 times in areas like California, New York, Washington and Oregon.

Apptopia’s report didn’t analyze the impact of the coronavirus outbreak on Amazon’s grocery delivery business, which includes Amazon Fresh and Whole Foods deliveries. This is more difficult to do because Amazon grocery orders aren’t placed inside a dedicated app, as with Instacart. However, Amazon confirmed a technical glitch on Sunday affected online orders through both its grocery delivery services, which the company attributed to the increase in online shopping.

“As COVID-19 has spread, we’ve seen a significant increase in people shopping online for groceries,” an Amazon spokeswoman explained, in a statement shared with Bloomberg. “This resulted in a systems impact affecting our ability to deliver Amazon Fresh and Whole Foods Market orders [on Sunday night]. We’re contacting customers, issuing concessions, and are working around the clock to quickly to resolve the issue,” they added.

Amazon Prime is also expected to experience delays and shortages as consumers stock up on non-grocery household items, the company says.

But even as grocery delivery booms, the market for food delivery apps has not seen the same results.

Despite promises for contactless delivery from several providers, including Uber Eats, food delivery apps are not experiencing a similar surge in daily downloads. According to Apptopia, the food delivery market earlier in March was starting to cool off. It later began to pick up but then cooled off again as consumers realized the expense of ordering food compared with home cooking, and because some consumers view restaurant delivery as not being as safe as cooking at home.

Connie Chan of Andreessen Horowitz discusses consumer tech’s winners and losers

Published March 2, 2020

Last week, I sat down with Connie Chan, a general partner with Andreessen Horowitz who focuses on investing in consumer tech. She joined the firm in 2011 after working at HP in China.

From her temporary offices located in a modest skyscraper with unobscured views of San Francisco, we talked about where she sees the biggest opportunities right now, along with how big of an impact fears over coronavirus could have on the startup industry — and for how long.

Our conversation has been edited for length. You can also find a longer version of our chat in podcast form.

TechCrunch: There’s so much money flowing into the Bay Area and startups generally from all over the world. What happens if that slows down because of the coronavirus?

Connie Chan: It’s interesting, I was just talking to a friend of mine who is an investor in Asia, in China. And she said that some industries are going to suffer significantly. Restaurants, for example, are hurting [along with] any store that relies on foot traffic [like] bookstores, so forth. Yet you see a lot of companies also doing really well in this time. You’ll see grocery delivery as something that’s in high demand. Insurance is in very high demand. People are spending more time at home, so whether it’s games or streaming or whatever they’re doing at home is doing well. Lots of my counterparts in China are also taking all their pitches via video conference. They’re still doing work, but they’re all just working from home.

Where do you think we’ll see the biggest impact most immediately?

Nomagic, a startup out of Poland, picks up $8.6M for its pick-and-place warehouse robots

Published February 4, 2020

Factories and warehouses have been two of the biggest markets for robots in the last several years, with machines taking on mundane, if limited, processes to speed up work and free up humans to do other, more complex tasks. Now, a startup out of Poland that is widening the scope of what those robots can do is announcing funding, a sign not just of how robotic technology has been evolving, but of the growing demand for more automation, specifically in the world of logistics and fulfilment.

Nomagic, which has developed way for a robotic arm to identify an item from an unordered selection, pick it up and then pack it into a box, is today announcing that it has raised $8.6 million in funding, one of the largest-ever seed rounds for a Polish startup. Co-led by Khosla Ventures and Hoxton Ventures, the round also included participation from DN Capital, Capnamic Ventures and Manta Ray, all previous backers of Nomagic.

There are a number of robotic arms on the market today that can be programmed to pick up and deposit items from Point A to Point B. But we are only starting to see a new wave of companies focus on bringing these to fulfilment environments because of the limitations of those arms: they can only work when the items are already “ordered” in a predictable way, such as on an assembly line, which has mean that fulfilment of, for example, online orders is usually carried out by humans.

Nomagic has incorporated a new degree of computer vision, machine learning and other AI-based technologies to elevate the capabilities of those robotic arm. Robots powered by its tech can successfully select items from an “unstructured” group of objects — that is, not an assembly line, but potentially another box — before picking it up and placing it elsewhere.

Kacper Nowicki, the ex-Googler CEO of Nomagic who co-founded the company with Marek Cygan (an academic) and Tristan d’Orgeval (formerly of Climate Corporation), noted that while there has been some work on the problem of unstructured objects and industrial robots — in the US, there are some live implementations taking shape, with one, Covariant, recently exiting stealth mode — it has been mostly a “missing piece” in terms of the innovation that has been done to make logistics and fulfilment more efficient.

That is to say, there has been little in the way of bigger commercial roll outs of the technology, creating an opportunity in what is a huge market: fulfilment services are projected to be a $56 billion market by 2021 (currently the US is the biggest single region, estimated at between $13.5 billion and $15.5 billion).

“If every product were a tablet or phone, you could automate a regular robotic arm to pick and pack,” Nowicki said. “But if you have something else, say something in plastic, or a really huge diversity of products, then that is where the problems come in.”

Nowicki was a longtime Googler who moved from Silicon Valley back to Poland to build the company’s first engineering team in the country. In his years at Google, Nowicki worked in areas including Google Cloud and search, but also saw the AI developments underway at Google’s DeepMind subsidiary, and decided he wanted to tackle a new problem for his next challenge.

His interest underscores what has been something of a fork in artificial intelligence in recent years. While some of the earliest implementations of the principles of AI were indeed on robots, these days a lot of robotic hardware seems clunky and even outmoded, while much more of the focus of AI has shifted to software and “non-physical” systems aimed at replicating and improving upon human thought. Even the word “robot” is now just as likely to be seen in the phrase “robotic process automation”, which in fact has nothing to do with physical robots, but software.

“A lot of AI applications are not that appealing,” Nowicki simply noted (indeed, while Nowicki didn’t spell it out, DeepMind in particular has faced a lot of controversy over its own work in areas like healthcare). “But improvements in existing robotics systems by applying machine learning and computer vision so that they can operate in unstructured environments caught my attention. There has been so little automation actually in physical systems, and I believe it’s a place where we still will see a lot of change.”

Interestingly, while the company is focusing on hardware, it’s not actually building hardware per se, but is working on software that can run on the most popular robotic arms in the market today to make them “smarter”.

“We believe that most of the intellectual property in in AI is in the software stack, not the hardware,” said Orgeval. “We look at it as a mechatronics problem, but even there, we believe that this is mainly a software problem.”

Having Khosla as a backer is notable given that a very large part of the VC’s prolific investing has been in North America up to now. Nowicki said he had a connection to the firm by way of his time in the Bay Area, where before Google, Vinod Khosla backed a startup of his (which went bust in one of the dot-com downturns).

While there is an opportunity for Nomagic to take its idea global, for now Khosla’s interested because of the a closer opportunity at home, where Nomagic is already working with third-party logistics and fulfilment providers, as well as retailers like Cdiscount, a French Amazon-style, soup-to-nuts online marketplace.

“The Nomagic team has made significant strides since its founding in 2017,” says Sven Strohband, Managing Director of Khosla Ventures, in a statement. “There’s a massive opportunity within the European market for warehouse robotics and automation, and NoMagic is well-positioned to capture some of that market share.”

Legacy, a sperm testing and freezing service, just raised $3.5 million to send the message to men: get checked

Published January 31, 2020

Legacy, a male fertility startup, has just raised a fresh, $3.5 million in funding from Bill Maris’s San Diego-based venture firm, Section 32, along with Y Combinator and Bain Capital Ventures, which led a $1.5 million seed round for the Boston startup last year.

We talked earlier today with Legacy’s founder and CEO Khaled Kteily about his now two-year-old, five-person startup and its big ambitions to become the world’s preeminent male fertility center. Our biggest question was how Legacy and similar startups convince men — who are generally less concerned with their fertility than women — that they need the company’s at-home testing kits and services in the first place.

“They should be worried about [their fertility],” said Kteily, a former healthcare and life sciences consultant with a master’s degree in public policy from the Harvard Kennedy School. “Sperm counts have gone down 50 to 60% over the last 40 years.” More from our chat with Legacy, a former TechCrunch Battlefield winner, follows; it has been edited lightly for length.

TC: Why start this company?

KK: I didn’t grow up wanting to be the king of sperm [laughs]. But I had a pretty bad accident — a second-degree burn on my legs after having four hot Starbucks teas spill on my lap in a car — and between that and a colleague at the Kennedy School who’d been diagnosed with cancer and whose doctor suggested he freeze his sperm ahead of his radiation treatments, it just clicked for me that maybe I should also save my sperm. When I went into Cambridge to do this, the place was right next to the restaurant Dumpling House and it was just very awkward and expensive and I thought, there must be a better way of doing this.

TC: How do you get started on something like this?

KK: This was before Ro and Hims began taking off, but people were increasingly comfortable doing things from their own homes, so I started doing research around the idea. I joined the American Society of Reproductive Medicine. I started taking continuing education classes about sperm…

TC: Women are under so much pressure from the time they turn 30 to monitor their fertility. Aside from extreme circumstances, as with your friend, do men really think about testing their sperm?

KK: Men should be worried about it, and they should be taking responsibility for it. What a lot of folks don’t know is for every one in seven couples that are actively trying to get pregnant, the man is equally responsible [for their fertility struggles]. Women are taught about their fertility but men aren’t, yet the quality of their sperm is degrading over the years. Sperm counts have gone down by 50 to 60% over the last 40 years, too.

TC: Wait, what? Why?

KK: [Likely culprits are] chemicals in plastics, chemicals in what we eat eat and drink, changes in lifestyle; we move less and eat more, and sperm health relates to overall health. I also think mobile phones are causing it. I will caveat this by saying there’s been mixed research, but I’m convinced that cell phones are the new smoking in that it wasn’t clear that smoking was as dangerous as it is when the research was being conducted by companies that benefited by [perpetuating cigarette use]. There’s also a generational decline in sperm quality [to consider]; it poses increased risk to the mother but also the child, as the risk of gestational diabetes goes up, as well as the rate of autism and other congenital conditions.

TC: You’re selling directly to consumers. Are you also working with companies to incorporate your tests in their overall wellness offerings?

KK: We’re investing heavily in business-to-business and expect that to be a huge acquisition channel for us. We can’t share any names yet, but we just signed a big company last week and have a few more in the works. These are mostly Bay Area companies right now; it’s an area where our experience as a YC alum was valuable because of the founders who’ve gone through and now run large companies of their own.

TC: When you’re talking with investors, how do you describe the market size?

KK: There are four million couples that are facing fertility challenges and in all cases, we believe the man should be tested. So do [their significant others]. Almost half of purchases [of our kits] are by a female partner. We also see men in the military freezing their sperm before being deployed, same-sex couples who plan to use a surrogate at some point and transgender patients who are looking at a life-changing [moment] and want to preserve their fertility before they start the process. But we see this as something that every man might do as they go off to college, and investors see that bigger picture.

TC: How much do the kits and storage cost?

KK: The kit costs $195 up front, and if they choose to store their sperm, $145 a year. We offer different packages. You can also spend $1,995 for two deposits and 10 years of storage.

TC: Is one or two samples effective? According to the Mayo Clinic, sperm counts fluctuate meaningfully from one sample to the next, so they suggest semen analysis tests over a period of time to ensure accurate results.

KK: We encourage our clients to make multiple deposits. The scores will be variable, but they’ll gather around an average.

TC: But they are charged for these deposits separately?

KK: Yes.

TC: And what are you looking for?

KK: Volume, count, concentration, motility and morphology [meaning the shape of the sperm].

TC: Who, exactly, is doing the analysis and handling the storage?

KK: We partner with Andrology Labs in Chicago on analysis; it’s one of the top fertility labs in the country. For storage, we partner with a couple of cryo-storage providers in different geographies. We divide the samples into four, then store them in two different tanks within each of two locations. We want to make sure we’re never in a position where [the samples are accidentally destroyed, as has happened at clinics elsewhere].

TC: I can imagine fears about these samples being mishandled. How can you assure customers this won’t happen?

KK: Trust and legitimacy are core factors and a huge area of focus for us. We’re CPPA and HIPAA compliant. All [related data] is encrypted and anonymized and every customer receives a unique ID [which is a series of digits so that even the storage facilities don’t know whose sperm they are handling]. We have extreme redundancies and processes in place to ensure that we’re handling [samples] in the most scientifically rigorous way possible, as well as ensuring the safety and privacy of each [specimen].

TC: How long can sperm be frozen?

KK: Indefinitely.

TC: How will you use all the data you’ll be collecting?

KK: I could see us entering into partnerships with research institutions. What we won’t do is sell it like 23andMe.