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Locals share why Vilnius, Lithuania is becoming an international startup hub
There are plenty of reasons why Vilnius, Lithuania’s capital city, has an increasingly visible startup sector. The country’s startup-friendly regulatory environment, a beautiful medieval town center, over 20 business hubs and accelerators and strong rankings in intellectual property production are most obvious at a high level. But what are the locals excited about on the ground?
Our survey respondents said the city was strong across a broad range of tech industries, particularly those with practical applications: cybersecurity, energy and sustainability, fintech, health care and medtech, edtech and silver tech among others.
Respondents said the effect of the pandemic on working practices would mean that many expats would be moving back to the city, which is affordable, and more foreign companies are relocating there due to favorable government policies, although “rental prices are going through the roof.”
In addition, the oppressive regime in nearby Belarus has provided an influx of significant tech companies, such as Wargaming, as well as the associated talent.
In five years, respondents said the city and country will continue to generate and attract great tech startups, but also tech talent and entrepreneurs. However, one said: “The ecosystem still lacks local funding for the late Series A and beyond rounds.”
We surveyed:
• Gerda Sakalauskaitė, managing director, The Lithuanian Private Equity and Venture Capital Association
• Lukas Inokaitis, business development, NFQ Technologies
• Andrius Milinavicius, founder, Baltic Sandbox
• Gytenis Galkis, partner, 70V
• Gabriele Poteliunaite, associate, Change Ventures
• Rokas Tamošiūnas, partner, Open Circle Capital
• Donatas Keras, founding partner, Practica Capital
• Tomas Martunas, founding partner, Iron Wolf Capital
• Alex Gibb, partner, Katalista Ventures
• Jone Vaituleviciute, partner, Startup Wise Guys
• Lukas Kaminskis, CEO, Turing College
Gerda Sakalauskaitė, managing director, The Lithuanian Private Equity and Venture Capital Association
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
The Vilnius startup ecosystem is mainly dominated by startups developing business management systems (B2B, SaaS) and financial technologies. Vilnius is becoming a solid hot spot of fintech companies in Europe having more than 200 fintech companies established here. Other growing industries would be deep tech, life sciences, mobility, and the game industry.
Which are the most interesting startups in your city?
Vinted (first Lithuanian unicorn, secondhand fashion online marketplace which raised €128 million in an equity funding round, valuing the company at over €1 billion in 2019).
Other notable startups: NordVPN, CGTrader, TransferGo, Trafi, Kilo Health, CityBee, Brolis Semiconductors, PIXEVIA, Oxipit.
Rising stars that also should be looked at: PVcase, Droplet Genomics, ZITICITY.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
I think local tech investors are taking more risks and becoming global scene players. Investors had their 10 years of market experience and now they are ready to invest into ideas and businesses that would change the global scene or even tackle issues as complex as they come — environmental, biotechnology or deep tech industries. Moreover, the local investor community is quite dynamic. We seek to have our investor landscape as diverse as possible, so we are working toward gender equality in VC and other important diversity causes to accomplish that.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
I think COVID-19 created more opportunities for Vilnius than risks in this regard. The coronavirus crisis, in general, hasn’t affected the Vilnius startup ecosystem in the same way as the rest of Europe. In addition, Vilnius has made headlines worldwide with its creative solutions to tackle the pandemic challenges. For instance, Vilnius became one large open air cafe. This shows Vilnius being a quirky, hip and interesting city to live in, so we are expecting more expats to lay their eyes on Vilnius. Especially expats from our Eastern neighbors who are negatively affected by an ongoing political crisis (Belarus).
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Founders:
Justas Janauskas, Milda Mitkutė, Mantas Mikuckas (Vinted)
Henrikas Urbonas, Simona Andrijauskaitė (Interactio)
Dalia Lašaite (CGTrader)
Tomas Okmanas, Eimantas Sabaliauskas (Tesonet)
Tadas Burgaila (Kilo Health)
Daumantas Dvilinskas (TransferGo; Forbes 30 under 30)
Martynas Gudonavičius (Trafi)
VC investors:
Rokas Peciulaitis (Contrarian Ventures)
Donatas Keras (Practica Capital), Arvydas Bložė (Practica Capital)
Jone Vaituleviciute, Dmitrij Susunov (Startup Wise Guys)
Kasparas Jurgelionis (Iron Wolf Capital)
Gytenis Galkis (70Ventures)
Viktorija Vaitkevičienė (Coinvest)
Legal experts:
Rūta Armone (Ellex)
Akvilė Bosaite (COBALT Legal)
Eva Suduiko (COBALT Legal)
Mantas Petkevičius (Sorainen)
Laimonas Skibarka (Sorainen)
Linas Sabaliauskas (TRINITI JUREX)
Andrius Ivanauskas (GLIMSTEDT)
Where do you see your city’s tech scene in five years?
Vilnius will definitely gain momentum as the tech startup city of the region. The number of startup people they employ will grow exponentially. We will have one or two extra unicorns born here. And of course quite more foreign talent coming to Vilnius to work in startups!
Lukas Inokaitis, business development, NFQ Technologies
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Mobility, fintech, energy, cybersecurity, healthcare. Weak in AI, data science.
Which are the most interesting startups in your city?
Vinted, Tesonet, Kilo Health, Pored Banda, Hostinger.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
Local and with small funds, mostly subsidized by government and EU. Need large private ones and more angel investors.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
The city [has been] growing for a decade each year. No reason to slow down as more international talent is moving to Vilnius from other EU and Asian countries.
Where do you see your city’s tech scene in five years?
One-two unicorns every year and leading EU in fintech, mobility and energy.
Andrius Milinavicius, founder, Baltic Sandbox
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Sustainability, silver tech, women in tech.
Which are the most interesting startups in your city?
Tesonet (NordVPN), Vinted, Traffi, Kilo Health.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
Deep tech, SaaS, sustainability.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Everyone stays. Vilnius is a very green and vibrant ecosystem, with multiple co-working [locations] and easy access to forests, parks and nearby lakes.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Many of them, starting from Contrarian Ventures — Rokas Peciulaitis, Practica Capital — Arvydas Bloze, continuing to Tesonet co-founder — Tomas Okmanas, Eimantas Sabaliauskas, followed with Kilo Health — Tadas Burgaila and more.
Where do you see your city’s tech scene in five years?
4x at least. Very rapid growth
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Gytenis Galkis, partner, 70V
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
1. Lithuania is now fourth in the global fintech ranking after the U,S,, the U,K, and Singapore.
2. Lithuania’s life sciences sector is gaining prominence.
3. Life sciences companies in Lithuania are among the most profitable in the country, with 90% of their output exported worldwide, yet the market remains unsaturated. Lithuania is 16th in the Global Innovation in Biotechnology ranking according to Scientific American WORLDVIEW international biotechnology ranking 2019.
According to McKinsey study on B2B startups, Lithuania’s B2B startups generate more value per funding than the U.S. and other European counterparts, resulting in the highest capital efficiency in the region!
Which are the most interesting startups in your city?
Larger ones would be: Vinted, Tesonet, Kilo Health, Bored Panda, Brolis Semiconductors, Cujo. Interactio recently has raised a $31 million Series A round — the largest ever Series A for a company headquartered in the Baltics. Upcoming stars: Whatagraph, Ondato, ZITICITY, Eneba, Robolabs, CAST AI, Foros, Billo, Biomatter Designs, #walk15, Boommio.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
The tech investment ecosystem has been evolving very rapidly during the past five years. The early-stage companies are able to get funding from the Lithuanian Business Angel Network (LitBAN), which unites over 150 active private investors. Coinvest Capital invests along angel investors and provides them lucrative leverage. This is how the Lithuanian government supports the angel ecosystem. Then there are two active accelerators — 70V (Revenue Accelerator) and Startup Wise Guys providing funding in the pre-seed/seed stages. Other local funds — Practica Capital, Iron Wolf Capital, Verslo Angelu Fondas and Open Circle Capital provide seed and Series A funding. The ecosystem still lacks local funding for the late series A and beyond rounds. Most of it is covered by foreign funds. The local ecosystem is too small to have a specific focus. However, I’d say that a lot of focus goes to B2B/enterprise software.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Since 2012 Vilnius’ population has been steadily growing 0.3% every year. I believe that during COVID and events related to Belarus have even further boosted the growth of Vilnius, especially in terms of the tech ecosystem. There had been major moves from Minsk to Vilnius. For example, Wargaming has moved a significant amount of their employees with families to Vilnius and even bought 76 luxury flats in downtown Vilnius. Other Belarusian companies are following. Furthermore, Vilnius is one of the greenest capitals in Europe with a unique medieval old town, which makes it one of the coziest places to live. It is estimated that Lithuania still lacks over 10,000 tech talents, which could be a great opportunity for savvy explorers to join the rapidly growing tech scene!
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Vilnius is a small town and it is well connected, there are a lot of people that made this ecosystem flourish. Just to name a few: Jean-Baptiste Daguenè, Donatas Keras, Mantas Mikuckas, Tomas Okmanas, Rita Sakus, Vladas Lašas, Viktorija Vaitkevičienė, Tomas Martunas, Dmitrij Sosunov, Evaldas Remeikis, Evaldas Petraitis, and many more that I should mention.
Where do you see your city’s tech scene in five years?
I strongly believe that Vilnius will further expand on its unique angle of tech entrepreneurship. I strongly estimate further growth in fintech, life sciences and B2B ecosystem. In my vision, I believe exports driven by Lithuanian startups will at least double within the next five years while bringing a few new unicorns.
Gabriele Poteliunaite, associate, Change Ventures
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Well, probably most people will give the same answer, but Vilnius is huge on fintech. However, I would also go on to highlight other prospering sectors, such as edtech, AI-driven companies, medtech, energy tech — you name it … There are numerous sectors that we are quite strong in. As a generalist investor, we are mostly excited about driven and passionate founders. This brings me to another point that I would say the weakest link of the ecosystem is lack of entrepreneurial training and lack of educational initiatives inspiring youngsters (and not only) to go on to found their own companies and take risks. Risk aversiveness is the key weakness here. We are still lacking huge success stories, but this is slowly changing (Vinted, Tesonet).
Which are the most interesting startups in your city?
Interactio, Vinted, Memby and so many others — could go on listing them for days.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
As it is a very tight-knit community, local tech investors are very collaborative and helpful with each other and entrepreneurs. However, I would say the main areas local investors still need to improve on is internationalizing and diversifying their investment teams (it’s 2021 already) and discouraging founders to be aggressive in their expansion to foreign markets and thinking globally very early on. Most investors are generalists, focusing on all three Baltic countries and doing mostly seed investments in software (some hardware) B2B companies.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
STAY and MOVE IN — no question there! I think COVID-19 pandemic has been a great stimulus for most expats — including myself, to move back to Vilnius and join forces in building this flourishing ecosystem. As far as I can tell, most people will stay, (rental prices are going through the roof) and more foreign companies are relocating here due to very favorable policies.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Ugh, so many great people to highlight … which is obviously a sign that Vilnius has simply an overwhelming number of absolute stars! (Not a biased opinion obviously.)
Where do you see your city’s tech scene in five years?
I would venture to say something as daring as Vilnius becoming the global leader in generating and attracting not only world-class tech startups, but also tech talent and outstanding entrepreneurs. I might be getting a tad too excited, but I see so much authenticity in this region — and if we manage to cherish it, we may go really far!
Rokas Tamošiūnas, partner, Open Circle Capital
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Strong: Marketplaces, fintech, life sciences, tech diversity (prop, fin, gov, mobility, AI). Weak: Internationalization, sales, marketing.
Which are the most interesting startups in your city?
Vinted, Tesonet, Traffi, Omnisend, Billo, Whatagraph.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
We have some generalists (Practica Capital), deep tech (Open Circle Capital and Iron Wolf Capital), green/energy (Contrarian Ventures) and accelerators (70ventures and Startup Wise Guys).
Investors are still early pre-seed/seed but are gradually maturing up. ICT (especially AI) still dominates, but other areas, such as photonics (lasers), new space and others.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Gradually everyone moved to full remove in the tech community. Now people are back in offices (and mostly enjoying it), but I think most companies will do a mixed model from now on. Remote working did a lot of good in recognizing virtual teams and especially teams that have members based in different countries.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Top are startup founders like J. Janauskas from Vinted, T. Okman from Tesonet, R. Lauris from Omnisend.
Where do you see your city’s tech scene in five years?
We are going on a patch of diversity — dozens of microecosystems of different tech. I think we will have a very colorful scene in a few years.
Donatas Keras, founding partner, Practica Capital
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
As our young tech ecosystem matures, we can see an increasing number of startups from different industry sectors that are founded and headquartered in Vilnius are becoming global leaders in their categories. If we look more closely at specific industries, I would highlight:
Marketplaces (Vinted, CGTrader, Ovoko); cybersecurity (NordVPN); fintech (TransferGo, Ondato, Revolut EU headquarters); gaming (Nordcurrent, Game Insight, Wargaming); mobility (Trafi, ZITICITY); biotechnology (Biomatter Designs, Droplet Genomics); space (NanoAvionics); health tech (Kilo Health, Oxipit).
The strengths of our tech ecosystem are the fast growth of startups, global first mindset, seek for innovation and the resilience of the founders. And these are some of the things that excite me as an investor. Of course, with such fast growth, we can already see increasing competition for local talent. That can be considered as a weakness, which should be addressed right now at the state level.
Which are the most interesting startups in your city?
The most notable startups are – Vinted (The first Lithuanian unicorn), NordVPN, CGTrader, Interactio, TransferGo, Trafi, Kilo Health, CarVertical, Omnisend and many more. But I would also like to mention some of the rising stars that we should not overlook: Ondato, Ovoko, Biomatter Designs, Droplet Genomics, ZITICITY.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
The investment scene shows the same signs of maturing as the whole ecosystem. And that is noticeable at all investment stages. It seems that now we are starting to “pick the fruits” of 10 years of hard work — companies becoming much more fundable, and investors tend to take risks and are more ready to do so. Business angels are becoming more active than ever, with 100+ deals made per year. And if a few years back the majority were experienced entrepreneurs of the so-called “old economy,” now an increasing number of tech entrepreneurs are picking up and investing in new startups at the very early stage. Business accelerators and pre-seed funds also playing an important role in the development of the ecosystem. They are mostly backed by the government and became very active in the last 3-4 years. Most notable: 70ventures, Startup Wise Guys, Baltic Sandbox.
Venture capital has around 10+ years of history in Vilnius and Lithuania. First, it was stimulated by EIF and the state money, now it’s picking up strongly and plays a crucial role in startups development at an early stage.
Most notable VCs:
Practica Capital is one of the most experienced and most active VCs in Vilnius and the whole region. With 10+ years of history, it grew together with the ecosystem, startups and the founders right from the start. The most notable deals are — Interactio, TransferGo, CGTrader, Trafi, Eneba, PVcase. The team has a high level of know-how and proven record in fintech, mobility, SaaS, marketplaces.
Open Circle Capital and Iron Wolf Capital are first-time funds, both active and doing a good job.
Contrarian Ventures is a small but active “green” tech-focused VC making a noticeable mark in the development of the ecosystem too.
Regional and international colleagues are also present at the events and co-investing quite actively with local investors (Karma Ventures, Trind VC, Change Ventures, Tera VC, ZGI and global powerhouses such as Intel, Accel, Creandum, Insight Venture Partners, Inreach).
Most of the VCs are generalists and looking into a broad spectrum of startups active in different sectors, with a few exceptions. Of course, some of the investors have a better-proven record in some categories than others.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Lithuania is a small country, and Vilnius being the capital city, is still the center of attraction of everything in the country, and talent is not an exception. With further development and growth of the tech ecosystem, even more talent will be drawn to Vilnius. It is a great city to live in, work and build global tech companies.
Where do you see your city’s tech scene in five years?
We will have more than five unicorns born/raised here, and Vilnius will become one of the European “hot spots” for tech investing. The tech ecosystem will grow at least three times. Vilnius will become a center of attraction for talent from all the region, CIS and other parts of Europe.
Tomas Martunas, founding partner, Iron Wolf Capital
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Lithuania, and especially Vilnius, has established a very strong position in fintech being the No. 4 in Global Fintech Ranking. Vilnius has created a favorable environment for fintech startups to be established and developed, and managed to attract one of the largest fintech players, Revolut. Vilnius is also especially advanced in the laser industry. While lasers constitute only a small part of Lithuania’s export, their quality is making the country famous around the world. It is very exciting as the demand for lasers is forecasted to only increase. We believe that Lithuania’s laser industry has a very positive outlook and thus, we invested in laser manufacturer Litilit. Vilnius also boasts many strong SaaS startups with, for example, Interactio, which recently raised $30 million after seeing 12x growth between 2019 and 2020. I believe there is still a lot of untapped potential in deep tech and edtech in the Vilnius ecosystem and it is starting to uncover. With the Wargaming office opening, also together with the Unity branch, Game Insights office and independent game studios, the gaming cluster has good fundamentals to blossom.
Which are the most interesting startups in your city?
Vinted, Tesonet, Turing College, Omnisend, Millo Appliances, NanoAvionics, Pixevia, Monimoto, Redtrack.io, Interactio, Litilit, Foros.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
First, there are significant sums of EU funding available for early-stage startups, especially for the ones having a strong technical foundation and innovative solutions. Overall, the Vilnius ecosystem has grown significantly over the past five years with many more VCs being established, a strong business angels network (LitBAN), accelerators launched and more focus dedicated to early stage and bolder investment ideas.
Many investors remain focused on the Baltics and CEE and still have some way to go to establish more global mindsets that are more prevalent in Nordics and Western Europe. But the Vilnius ecosystem is still growing and more foreign investors entering shows the attractiveness of the ecosystem in this way also providing founders with more opportunities.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Vilnius is a very attractive destination. It boasts affordable housing (which many European capitals cannot offer), and when COVID-19 is reshaping our lives to remote work becoming a standard, many people will move out of expensive cities to more affordable ones, such as Vilnius. Also, it is an innovative city that has advanced a lot to easily compare with other European capitals (and overtake some of them) in terms of standard of living and career opportunities.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Mantas Mikuckas, Tomas Okmanas, Eimantas Sabaliauskas, Toma Sabaliauskiene, Rytis Lauris, Vladas Lašas, Rita Sakus, Tadas Burgaila, Inga Langaitė, Roberta Rudokiene and of course Iron Wolf Capital founders 😉
Where do you see your city’s tech scene in five years?
I believe that Vilnius will continue on growing and advancing to become one of the key European startup hubs. With favorable business conditions and a good standard of living it is expected to attract more talents who will contribute to fostering the ecosystem. However, Lithuania is already experiencing a brain drain and should take some special efforts to bring talents back and retain them.
Alex Gibb, partner, Katalista Ventures
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
We’ve seen an explosion of companies offshoring from Scandinavia over the past 10+ years in LT, which has led to the growth of competence centers and specialist R&D facilities for intangible services. I’m excited by the tech sector’s growth, which is primarily software, development and engineering. We’re too small to really have specific sectors but lasers have a trusted pedigree in LT.
Which are the most interesting startups in your city?
Cogastro is servicing insect farms with CRM systems — that’s pretty original and niche! Bored Panda was No. 1 on the App Store last year and continues to boom, Tinggly (disclosure — I’m a co-founder) is growing again rapidly after COVID, serving the U.S. market primarily. Vinted is of course head and shoulders above the others — both in valuation terms, but also the positive impact on recycling and reusing.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
We have a growing angel network with LitBAN that is boosted by the government’s co-invest fund — which recently facilitated a 34x return for early investors in Interactio. There is a good range of early-stage VCs in town, the gap comes in the 2 million+ space where startups need to go abroad for deeper pockets. The focus tends to be B2B but as we’re a small geography there are very few investors with a tight sector focus.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Move in! Vilnius is a compact and cool city [with a] high quality of life here and [it’s] easy to get out to the lakes and forests to relax. I still think we’re figuring out the hybrid nature of work from here onward, so people will mix and match to what suits their lifestyles. The positive shift is more power to employees and employers taking into account what employees need for positive mental health.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Greta Monstavice, CEO at Katalista Ventures — she’s top of the tree on all things sustainability related and passionate about empowering startups. JB Daguené at 70V is powering B2B startups with explosive growth tools. Sarune Smalakyte, head of Rockit, is nurturing fintech companies at their co-working space and blasting out many great (free) events for the community.
Where do you see your city’s tech scene in five years?
I’m excited about the city’s prospects. We have a lot ahead of us with many new startups coming through. The key challenge will be to get the next generation of tech talent trained properly and ready for the demands of an already squeezed workforce.
Jone Vaituleviciute, partner, Startup Wise Guys
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Vilnius is of course known on a global scale for its fintech ecosystem — though the majority of fintech “perks” come on a governmental/country level, Vilnius boasts a high number of banking, insurance and other financial services professionals, as well as fintech-focused startup hubs and a number of events. I am particularly excited to see a number of big foreign names (e.g., Revolut, SumUp and many other) moving their operations here; this way building up the ecosystem and level of fintech professionals. Gaming, edtech are also a few other up-and-coming areas, which signals that B2C is becoming more usual than not. On the improvement side, we still have not figured out how to include deep tech/R&D startups into the ecosystem and funding mechanisms. This is a challenge many cities have, but we hope Vilnius will move to the right direction, thanks to collaborations among universities and venture capital funds.
Which are the most interesting startups in your city?
Well-known names: Vinted, Trafi, TransferGo and several not backed by venture capital — Bored Panda, Kilo Health.
Up-and-coming: ZITICITY (mobility), kevin. (fintech), Ondato (fintech), Turing College (edtech).
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
Vilnius is a good representation of all Baltic venture capital ecosystems. We have several pre-seed/seed stage venture capital funds that are coming in with experience and good understanding of various verticals. However, for a long time we lacked a proper early-stage funding ecosystem. This is changing right now with accelerators supporting idea-stage startups and a number of business angels appearing from successful startups who are ready to invest decent tickets resembling more Western Europe rather than Baltic funding trends.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
I believe the pandemic has been rather favorable for small ecosystems like Vilnius. Mainly because remote investing/pitching/selling became an absolute norm and founders do not have to fly hundreds of miles for an event or a meeting to close a deal. Thus, I see many entrepreneurs sticking to Vilnius due to its great life quality and well-knitted ecosystem.
Where do you see your city’s tech scene in five years?
We should be talking pre-seed/seed on the same level as West Europe or even the U.S. We are catching up with the standard, but with the maturity of the venture capital ecosystem, Vilnius should be a perfect city to kick-start your startup and take it to Series A with the same funding available. We should see more areas like fintech emerging with strong value proposition for foreign companies as well as initiatives for local ones to stay. Talent will be expensive, but this is how it should be. Second- and third-time founders will be creating more and more startups that will attract a number of foreign funds too.
Lukas Kaminskis, CEO, Turing College
What industry sectors is your tech ecosystem strong in? What are you most excited by? What is it weak in?
Vilnius is well known for its fintech and blockchain ecosystems — companies such as Revolut have banking licenses registered here in Vilnius. We have several strong players in medtech and cybersecurity — Kilo Health and Nord Security — which are growing super fast. Nevertheless, we’re lacking behind with education. Explicitly speaking, most IT programs in Lithuanian universities aren’t focused on preparing students for international competition. This is why a lot of companies are establishing their internal academies to upskill students from universities.
Which are the most interesting startups in your city?
Omnisend, Nord Security, Attention Insight, Turing College.
What are the tech investors like? What is the investment scene like in your city? What’s their focus?
Lithuania has quite a good pre-seed/seed investment scene with investors like Iron Wolf Capital, Startup Wise Guys, Practica Capital, etc. Moreover, there is a VC fund — Co-invest Fund, which invests the sum equivalent to the multiplier of any accredited angel investor’s investment sum by 3x-5x. Investors in Lithuania are mostly industry agnostic.
With the shift to remote working during the COVID-19 pandemic, will people stay in your city, move out, or will others move in?
Tendencies in Lithuania are quite similar to the ones we see in the global scene. Companies plan to adapt hybrid type of work post-COVID, while maintaining remote type of work as primary while the pandemic is happening.
Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Giedrius Kolesnikovas is the guy to know from the legal industry — he is the partner of Motieka & Audzevicius legal firm. From the investor’s perspective, there are several of them — Jone Vaituleviciute, Rytis Vitkauskas, Kasparas Jurgelionis and Arvydas Bložė. These guys can open doors to most of European/U.S. capitals.
Where do you see your city’s tech scene in five years?
I see that Vilnius will become a tech talent center of Northern Europe. Edtech startups and private training initiatives are emerging in our market to solve educational problems that we face because of the poor performance of public education policies in the last 20 years. As well, I see that the current government is making a huge effort to attract international tech companies to establish their branches here in Lithuania. Great examples are Wargaming, Moody’s, which established huge centers here in Lithuania.
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Seqera Labs grabs $5.5M to help sequence COVID-19 variants and other complex data problems
Bringing order and understanding to unstructured information located across disparate silos has been one of the more significant breakthroughs of the big data era, and today a European startup that has built a platform to help with this challenge specifically in the area of life sciences — and has, notably, been used by labs to sequence and so far identify two major COVID-19 variants — is announcing some funding to continue building out its tools to a wider set of use cases, and to expand into North America.
Seqera Labs, a Barcelona-based data orchestration and workflow platform tailored to help scientists and engineers order and gain insights from cloud-based genomic data troves, as well as to tackle other life science applications that involve harnessing complex data from multiple locations, has raised $5.5 million in seed funding.
Talis Capital and Speedinvest co-led this round, with participation also from previous backer BoxOne Ventures and a grant from the Chan Zuckerberg Initiative, Mark Zuckerberg and Dr. Priscilla Chan’s effort to back open source software projects for science applications.
Seqera — a portmanteau of “sequence” and “era”, the age of sequencing data, basically — had previously raised less than $1 million, and quietly, it is already generating revenues, with five of the world’s biggest pharmaceutical companies part of its customer base, alongside biotech and other life sciences customers.
Seqera was spun out of the Centre for Genomic Regulation, a biomedical research center based out of Barcelona, where it was built as the commercial application of Nextflow, open source workflow and data orchestration software originally created by the founders of Seqera, Evan Floden and Paolo Di Tommaso, at the CGR.
Floden, Seqera’s CEO, told TechCrunch that he and Di Tommaso were motivated to create Seqera in 2018 after seeing Nextflow gain a lot of traction in the life science community, and subsequently getting a lot of repeat requests for further customization and features. Both Nextflow and Seqera have seen a lot of usage: the Nextflow runtime has been downloaded more than 2 million times, the company said, while Seqera’s commercial cloud offering has now processed more than 5 billion tasks.
The COVID-19 pandemic is a classic example of the acute challenge that Seqera (and by association Nextflow) aims to address in the scientific community. With COVID-19 outbreaks happening globally, each time a test for COVID-19 is processed in a lab, live genetic samples of the virus get collected. Taken together, these millions of tests represent a goldmine of information about the coronavirus and how it is mutating, and when and where it is doing so. For a new virus about which so little is understood and that is still persisting, that’s invaluable data.
So the problem is not if the data exists for better insights (it does); it is that it’s nearly impossible to use more legacy tools to view that data as a holistic body. It’s in too many places, and there is just too much of it, and it’s growing every day (and changing every day), which means that traditional approaches of porting data to a centralized location to run analytics on it just wouldn’t be efficient, and would cost a fortune to execute.
That is where Segera comes in. The company’s technology treats each source of data across different clouds as a salient pipeline which can be merged and analyzed as a single body, without that data ever leaving the boundaries of the infrastructure where it already exists. Customised to focus on genomic troves, scientists can then query that information for more insights. Seqera was central to the discovery of both the Alpha and Delta variants of the virus, and work is still ongoing as COVID-19 continues to hammer the globe.
Seqera is being used in other kinds of medical applications, such as in the realm of so-called “precision medicine.” This is emerging as a very big opportunity in complex fields like oncology: cancer mutates and behaves differently depending on many factors, including genetic differences of the patients themselves, which means that treatments are less effective if they are “one size fits all.”
Increasingly, we are seeing approaches that leverage machine learning and big data analytics to better understand individual cancers and how they develop for different populations, to subsequently create more personalized treatments, and Seqera comes into play as a way to sequence that kind of data.
This also highlights something else notable about the Seqera platform: it is used directly by the people who are analyzing the data — that is, the researchers and scientists themselves, without data specialists necessarily needing to get involved. This was a practical priority for the company, Floden told me, but nonetheless, it’s an interesting detail of how the platform is inadvertently part of that bigger trend of “no-code/low-code” software, designed to make highly technical processes usable by non-technical people.
It’s both the existing opportunity and how Seqera might be applied in the future across other kinds of data that lives in the cloud that makes it an interesting company, and it seems an interesting investment, too.
“Advancements in machine learning, and the proliferation of volumes and types of data, are leading to increasingly more applications of computer science in life sciences and biology,” said Kirill Tasilov, principal at Talis Capital, in a statement. “While this is incredibly exciting from a humanity perspective, it’s also skyrocketing the cost of experiments to sometimes millions of dollars per project as they become computer-heavy and complex to run. Nextflow is already a ubiquitous solution in this space and Seqera is driving those capabilities at an enterprise level – and in doing so, is bringing the entire life sciences industry into the modern age. We’re thrilled to be a part of Seqera’s journey.”
“With the explosion of biological data from cheap, commercial DNA sequencing, there is a pressing need to analyse increasingly growing and complex quantities of data,” added Arnaud Bakker, principal at Speedinvest. “Seqera’s open and cloud-first framework provides an advanced tooling kit allowing organisations to scale complex deployments of data analysis and enable data-driven life sciences solutions.”
Although medicine and life sciences are perhaps Seqera’s most obvious and timely applications today, the framework originally designed for genetics and biology can be applied to any a number of other areas: AI training, image analysis and astronomy are three early use cases, Floden said. Astronomy is perhaps very apt, since it seems that the sky is the limit.
“We think we are in the century of biology,” Floden said. “It’s the center of activity and it’s becoming data-centric, and we are here to build services around that.”
Seqera is not disclosing its valuation with this round.
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Ledgy is an equity management tool for European startups
Every startup founder faces the same issue — how do you manage your cap table and equity plans in a transparent and lightweight manner? If you’re based in the U.S., chances are you’re using an equity management solution like Carta. But if you’re not based in the U.S., you don’t have a ton of options.
Ledgy wants to become the ownership management tool for the rest of the world. Based in Switzerland, several well-known European startups are already using Ledgy, such as Wefox, Kry, Bitpanda, Gorillas and Trade Republic.
The company recently closed a $10 million Series A funding round led by Sequoia Capital. Other investors in the round include Xavier Niel, Harry Stebbings, Visionaries Club, UiPath’s Daniel Dines and Front’s Mathilde Collin. Some of Ledgy’s existing investors also invested once again, such as Myke Näf, Paul Sevinç, btov Partners, Creathor Ventures and VI Partners.
A few years ago, when Ledgy co-founder and CEO Yoko Spirig talked with an entrepreneur, the founder showed her how he managed ownership. He opened an Excel spreadsheet and scrolled, scrolled, scrolled… “Each line represented a share. You can imagine how error-prone it is,” she told me.
While the implementation was odd, most companies in Europe are still using Excel spreadsheets to manage ownership. And Ledgy wants to convince those companies that switching to a software solution that has been specifically designed to solve this issue could be beneficial.
“The key has really been to focus on the software infrastructure. What we do is that we have implemented automation workflows that are adaptable depending on countries,” Spirig said. “We’re not focusing on one regulation and we’re really offering the infrastructure layer,” she added.
That’s why Ledgy already supports 32 countries. It has tweaked its product even more specifically for Germany, Austria and Switzerland. There will be more country-specific releases in the near future for startups based in the U.K. and France. 1,500 companies are using Ledgy right now.
When you switch to Ledgy, there are three main advantages. First, like other software-as-a-service products, Ledgy acts as a single source of truth for all stakeholders — the HR team, the finance team, investors, lawyers and employees.
The second selling point is that you can automate some of the most tedious tasks. For instance, Ledgy can automatically generate documents based on templates and different variables. Signed documents are stored on Ledgy. You can export data every quarter or every year for compliance reasons.
Third, it fosters transparency across the company. Employees can check the value of their options. They can see how much their options could be worth if the leadership team is in the process of raising a new round of funding.
With today’s funding round, Ledgy plans to expand into new markets. The company also plans to roll out support for public companies so that some of its existing customers can go public and keep using Ledgy.
Image Credits: Ledgy
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Gamestry gets $5M to give games video creators a sweeter deal
Barcelona-based gaming video platform Gamestry has snatched up $5 million in seed funding, led by Goodwater Capital, Target Global and Kibo Ventures — turning investors’ heads with a 175x growth rate over the past 12 months.
While the (for now) Spanish-language gaming video platform launched a few years back, in 2018, last year the founders decided to shift away from an initial focus on curating purely learning content around gaming — allowing creators to upload and share entertainment-focused games videos, too.
The switch looks to have paid off as a growth tactic. Gamestry says it now has 4M monthly active users (MAUs) and 2,000 active creators in Spain and Latin America (its main markets so far) — and is gunning to hit 20M MAUs by the end of the year.
While Twitch continues to dominate the market for live-streaming games — catering to the esports boom — Gamestry, which says it’s focused on “non-live video content”, reckons there’s a gap for a dedicated on-demand video platform that better supports games-focused video creators and provides games fans with a more streamlined discovery experience than catch-all user-generated content giants like YouTube.
For games video creators, it’s dangling the carrot of a better revenue share than other UGC video platforms — talking about having “a fair ads revenue share model”, and a plan to add more revenue streams for creators “soon”. It also pledges “full transparency on how the monetization structure works”, and a focus on supporting creators if they have technical issues.
So, basically, the sorts of issues creators have often complained that YouTube fails them on.
For viewers, the pitch is a one-stop-shop for finding and watching videos about games and connecting with others with the same passion (gaming chat) — so the platform structures content around individual games titles.
The startup also claims to present viewers with better info about a video to help them decide whether or not to click on it (aka, tools to help them find “quality instead of clickbait”), beyond basics like title, thumbnail and videos. (Albeit to my admittedly unseasoned eye for assessing the calibre of games video content, there is no shortage of clickbaity-looking stuff on Gamestry. But I am definitely not the target audience here…). So the viewer pitch also sounds like another little dig at YouTube.
“Despite being the de-facto place for uploading content, YouTube is a generic platform that is not optimized for gaming and therefore doesn’t cater to the needs of gaming creators,” argue founders — brothers Alejo and Guillermo Torrens — adding: “Vertical or specialized platforms emerge whenever markets become large enough that current platforms can’t serve their users’ needs and we believe that’s exactly what’s happening today.”
Target Global’s Lina Chong led the international fund’s investment in Gamestry. Asked what piqued her interest here, she flagged the recent growth spurt and the platform having onboarded scores of highly engaged games content creators in short order.
“The problem Gamestry is addressing is that the vast majority of creators don’t make much money on those platforms because they are ads/eyeball driven businesses,” she told TechCrunch. “Gamestry provides a space where creators, despite audience size, can find new ways to engage with their audience and make a living. This problem among creators is so big that Gamestry now has over 2k highly engaged creators uploading multiple content pieces and millions of their viewers on the platform every month.”
It will surely surprise no one to learn that the typical Gamestry user is a male, aged between 18 and 24.
The startup also told us the “most trending” games on its platform are Minecraft, Free Fire, and Fortnite, adding that “IRL (In Real Life) content is also very successful”.
As well as YouTube Gaming, other platforms competing for similar games-mad eyeballs include Facebook Gaming and Booyah.
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Fractory raises $9M to rethink the manufacturing supply chain for metalworks
The manufacturing industry took a hard hit from the Covid-19 pandemic, but there are signs of how it is slowly starting to come back into shape — helped in part by new efforts to make factories more responsive to the fluctuations in demand that come with the ups and downs of grappling with the shifting economy, virus outbreaks and more. Today, a businesses that is positioning itself as part of that new guard of flexible custom manufacturing — a startup called Fractory — is announcing a Series A of $9 million (€7.7 million) that underscores the trend.
The funding is being led by OTB Ventures, a leading European investor focussed on early growth, post-product, high-tech start-ups, with existing investors Trind Ventures, Superhero Capital, United Angels VC, Startup Wise Guys and Verve Ventures also participating.
Founded in Estonia but now based in Manchester, England — historically a strong hub for manufacturing in the country, and close to Fractory’s customers — Fractory has built a platform to make it easier for those that need to get custom metalwork to upload and order it, and for factories to pick up new customers and jobs based on those requests.
Fractory’s Series A will be used to continue expanding its technology, and to bring more partners into its ecosystem.
To date, the company has worked with more than 24,000 customers and hundreds of manufacturers and metal companies, and altogether it has helped crank out more than 2.5 million metal parts.
To be clear, Fractory isn’t a manufacturer itself, nor does it have no plans to get involved in that part of the process. Rather, it is in the business of enterprise software, with a marketplace for those who are able to carry out manufacturing jobs — currently in the area of metalwork — to engage with companies that need metal parts made for them, using intelligent tools to identify what needs to be made and connecting that potential job to the specialist manufacturers that can make it.
The challenge that Fractory is solving is not unlike that faced in a lot of industries that have variable supply and demand, a lot of fragmentation, and generally an inefficient way of sourcing work.
As Martin Vares, Fractory’s founder and MD, described it to me, companies who need metal parts made might have one factory they regularly work with. But if there are any circumstances that might mean that this factory cannot carry out a job, then the customer needs to shop around and find others to do it instead. This can be a time-consuming, and costly process.
“It’s a very fragmented market and there are so many ways to manufacture products, and the connection between those two is complicated,” he said. “In the past, if you wanted to outsource something, it would mean multiple emails to multiple places. But you can’t go to 30 different suppliers like that individually. We make it into a one-stop shop.”
On the other side, factories are always looking for better ways to fill out their roster of work so there is little downtime — factories want to avoid having people paid to work with no work coming in, or machinery that is not being used.
“The average uptime capacity is 50%,” Vares said of the metalwork plants on Fractory’s platform (and in the industry in general). “We have a lot more machines out there than are being used. We really want to solve the issue of leftover capacity and make the market function better and reduce waste. We want to make their factories more efficient and thus sustainable.”
The Fractory approach involves customers — today those customers are typically in construction, or other heavy machinery industries like ship building, aerospace and automotive — uploading CAD files specifying what they need made. These then get sent out to a network of manufacturers to bid for and take on as jobs — a little like a freelance marketplace, but for manufacturing jobs. About 30% of those jobs are then fully automated, while the other 70% might include some involvement from Fractory to help advise customers on their approach, including in the quoting of the work, manufacturing, delivery and more. The plan is to build in more technology to improve the proportion that can be automated, Vares said. That would include further investment in RPA, but also computer vision to better understand what a customer is looking to do, and how best to execute it.
Currently Fractory’s platform can help fill orders for laser cutting and metal folding services, including work like CNC machining, and it’s next looking at industrial additive 3D printing. It will also be looking at other materials like stonework and chip making.
Manufacturing is one of those industries that has in some ways been very slow to modernize, which in a way is not a huge surprise: equipment is heavy and expensive, and generally the maxim of “if it ain’t broke, don’t fix it” applies in this world. That’s why companies that are building more intelligent software to at least run that legacy equipment more efficiently are finding some footing. Xometry, a bigger company out of the U.S. that also has built a bridge between manufacturers and companies that need things custom made, went public earlier this year and now has a market cap of over $3 billion. Others in the same space include Hubs (which is now part of Protolabs) and Qimtek, among others.
One selling point that Fractory has been pushing is that it generally aims to keep manufacturing local to the customer to reduce the logistics component of the work to reduce carbon emissions, although as the company grows it will be interesting to see how and if it adheres to that commitment.
In the meantime, investors believe that Fractory’s approach and fast growth are strong signs that it’s here to stay and make an impact in the industry.
“Fractory has created an enterprise software platform like no other in the manufacturing setting. Its rapid customer adoption is clear demonstrable feedback of the value that Fractory brings to manufacturing supply chains with technology to automate and digitise an ecosystem poised for innovation,” said Marcin Hejka in a statement. “We have invested in a great product and a talented group of software engineers, committed to developing a product and continuing with their formidable track record of rapid international growth
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Mobius Labs nabs $6M to help more sectors tap into computer vision
Berlin-based Mobius Labs has closed a €5.2 million (~$6.1M) funding round off the back of increased demand for its computer vision training platform. The Series A investment is led by Ventech VC, along with Atlantic Labs, APEX Ventures, Space Capital, Lunar Ventures plus some additional angel investors.
The startup offers an SDK that lets the user create custom computer vision models fed with a little of their own training data — as an alternative to off-the-shelf tools which may not have the required specificity for a particular use-case.
It also flags a ‘no code’ focus, saying its tech has been designed with a non-technical user in mind.
As it’s an SDK, Mobius Labs’ platform can also be deployed on premise and/or on device — rather than the customer needing to connect to a cloud service to tap into the AI tool’s utility.
“Our custom training user interface is very simple to work with, and requires no prior technical knowledge on any level,” claims Appu Shaji, CEO and chief scientist.
“Over the years, a trend we have observed is that often the people who get the maximum value from AI are non technical personas like a content manager in a press and creative agency, or an application manager in the space sector. Our no-code AI allows anyone to build their own applications, thus enabling these users to get close to their vision without having to wait for AI experts or developer teams to help them.”
Mobius Labs — which was founded back in 2018 — now has 30 customers using its tools for a range of use cases.
Uses include categorisation, recommendation, prediction, reducing operational expense, and/or “generally connecting users and audiences to visual content that is most relevant to their needs”. (Press and broadcasting and the stock photography sector have unsurprisingly been big focuses to date.)
But it reckons there’s wider utility for its tech and is gearing up for growth.
It caters to businesses of various sizes, from startups to SMEs, but says it mainly targets global enterprises with major content challenges — hence its historical focus on the media sector and video use cases.
Now, though, it’s also targeting geospatial and earth observation applications as it seeks to expand its customer base.
The 30-strong startup has more than doubled in size over the last 18 months. With the new funding it’s planning to double its headcount again over the next 12 months as it looks to expand its geographical footprint — focusing on Europe and the US.
Year-on-year growth has also been 2x but it believes it can dial that up by tapping into other sectors.
“We are working with industries that are rich in visual data,” says Shaji. “The geospatial sector is something that we are focussing on currently as we have a strong belief that vast amounts of visual data is being produced by them. However, these huge archives of raw pixel data are useless on their own.
“For instance, if we want to track how river fronts are expanding, we have to look at data collected by satellites, sort and tag them in order to analyse them. Currently this is being done manually. The technology we are creating comes in a lightweight SDK, and can be deployed directly into these satellites so that the raw data can be detected and then analysed by machine learning algorithms. We are currently working with satellite companies in this sector.”
On the competitive front, Shaji names Clarifai and Google Cloud Vision as the main rivals it has in its sights.
“We realise these are the big players but at the same time believe that we have something unique to offer, which these players cannot: Unlike their solutions, our platform users can be outside the field of computer vision. By democratising the training of machine learning models beyond simply the technical crowd, we are making computer vision accessible and understandable by anyone, regardless of their job titles,” he argues.
“Another core value that differentiates us is the way we treat client data. Our solutions are delivered in the form of a Software Development Kit (SDK), which runs on-premise, completely locally on clients’ systems. No data is ever sent back to us. Our role is to empower people to build applications, and make them their own.”
Computer vision startups have been a hot acquisition target in recent years and some earlier startups offering ‘computer vision as a service’ got acquired by IT services firms to beef up their existing offerings, while tech giants like Amazon and (the aforementioned) Google offer their own computer vision services too.
But Shaji suggests the tech is now at a different stage of development — and primed for “mass adoption”.
“We’re talking about providing solutions that empower clients to build their own applications,” he says, summing up the competitive play. “And that [do that] with complete data privacy, where our solutions run on-premise, and we don’t see our clients data. Coupled with that is the ease of use that our technology offers: It is a lightweight solution that can be deployed on many ‘edge’ devices like smartphones, laptops, and even on satellites.”
Commenting on the funding in a statement, Stephan Wirries, partner at Ventech VC, added: “Appu and the team at Mobius Labs have developed an unparalleled offering in the computer vision space. Superhuman Vision is impressively innovative with its high degree of accuracy despite very limited required training to recognise new objects at excellent computational efficiency. We believe industries will be transformed through AI, and Mobius Labs is the European Deep Tech innovator teaching machines to see.”
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Spain’s Factorial raises $80M at a $530M valuation on the back of strong traction for its ‘Workday for SMBs’
Factorial, a startup out of Barcelona that has built a platform that lets SMBs run human resources functions with the same kind of tools that typically are used by much bigger companies, is today announcing some funding to bulk up its own position: the company has raised $80 million, funding that it will be using to expand its operations geographically — specifically deeper into Latin American markets — and to continue to augment its product with more features.
CEO Jordi Romero, who co-founded the startup with Pau Ramon and Bernat Farrero — said in an interview that Factorial has seen a huge boom of growth in the last 18 months and counts more than anything 75,000 customers across 65 countries, with the average size of each customer in the range of 100 employees, although they can be significantly (single-digit) smaller or potentially up to 1,000 (the “M” of SMB, or SME as it’s often called in Europe).
“We have a generous definition of SME,” Romero said of how the company first started with a target of 10-15 employees but is now working in the size bracket that it is. “But that is the limit. This is the segment that needs the most help. We see other competitors of ours are trying to move into SME and they are screwing up their product by making it too complex. SMEs want solutions that have as much data as possible in one single place. That is unique to the SME.” Customers can include smaller franchises of much larger organizations, too: KFC, Booking.com, and Whisbi are among those that fall into this category for Factorial.
Factorial offers a one-stop shop to manage hiring, onboarding, payroll management, time off, performance management, internal communications and more. Other services such as the actual process of payroll or sourcing candidates, it partners and integrates closely with more localized third parties.
The Series B is being led by Tiger Global, and past investors CRV, Creandum, Point Nine and K Fund also participating, at a valuation we understand from sources close to the deal to be around $530 million post-money. Factorial has raised $100 million to date, including a $16 million Series A round in early 2020, just ahead of the Covid-19 pandemic really taking hold of the world.
That timing turned out to be significant: Factorial, as you might expect of an HR startup, was shaped by Covid-19 in a pretty powerful way.
The pandemic, as we have seen, massively changed how — and where — many of us work. In the world of desk jobs, offices largely disappeared overnight, with people shifting to working at home in compliance with shelter-in-place orders to curb the spread of the virus, and then in many cases staying there even after those were lifted as companies grappled both with balancing the best (and least infectious) way forward and their own employees’ demands for safety and productivity. Front-line workers, meanwhile, faced a completely new set of challenges in doing their jobs, whether it was to minimize exposure to the coronavirus, or dealing with giant volumes of demand for their services. Across both, organizations were facing economics-based contractions, furloughs, and in other cases, hiring pushes, despite being office-less to carry all that out.
All of this had an impact on HR. People who needed to manage others, and those working for organizations, suddenly needed — and were willing to pay for — new kinds of tools to carry out their roles.
But it wasn’t always like this. In the early days, Romero said the company had to quickly adjust to what the market was doing.
“We target HR leaders and they are currently very distracted with furloughs and layoffs right now, so we turned around and focused on how we could provide the best value to them,” Romero said to me during the Series A back in early 2020. Then, Factorial made its product free to use and found new interest from businesses that had never used cloud-based services before but needed to get something quickly up and running to use while working from home (and that cloud migration turned out to be a much bigger trend played out across a number of sectors). Those turning to Factorial had previously kept all their records in local files or at best a “Dropbox folder, but nothing else,” Romero said.
It also provided tools specifically to address the most pressing needs HR people had at the time, such as guidance on how to implement furloughs and layoffs, best practices for communication policies and more. “We had to get creative,” Romero said.
But it wasn’t all simple. “We did suffer at the beginning,” Romero now says. “People were doing furloughs and [frankly] less attention was being paid to software purchasing. People were just surviving. Then gradually, people realized they needed to improve their systems in the cloud, to manage remote people better, and so on.” So after a couple of very slow months, things started to take off, he said.
Factorial’s rise is part of a much, longer-term bigger trend in which the enterprise technology world has at long last started to turn its attention to how to take the tools that originally were built for larger organizations, and right size them for smaller customers.
The metrics are completely different: large enterprises are harder to win as customers, but represent a giant payoff when they do sign up; smaller enterprises represent genuine scale since there are so many of them globally — 400 million, accounting for 95% of all firms worldwide. But so are the product demands, as Romero pointed out previously: SMBs also want powerful tools, but they need to work in a more efficient, and out-of-the-box way.
Factorial is not the only HR startup that has been honing in on this, of course. Among the wider field are PeopleHR, Workday, Infor, ADP, Zenefits, Gusto, IBM, Oracle, SAP and Rippling; and a very close competitor out of Europe, Germany’s Personio, raised $125 million on a $1.7 billion valuation earlier this year, speaking not just to the opportunity but the success it is seeing in it.
But the major fragmentation in the market, the fact that there are so many potential customers, and Factorial’s own rapid traction are three reasons why investors approached the startup, which was not proactively seeking funding when it decided to go ahead with this Series B.
“The HR software market opportunity is very large in Europe, and Factorial is incredibly well positioned to capitalize on it,” said John Curtius, Partner at Tiger Global, in a statement. “Our diligence found a product that delighted customers and a world-class team well-positioned to achieve Factorial’s potential.”
“It is now clear that labor markets around the world have shifted over the past 18 months,” added Reid Christian, general partner at CRV, which led its previous round, which had been CRV’s first investment in Spain. “This has strained employers who need to manage their HR processes and properly serve their employees. Factorial was always architected to support employers across geographies with their HR and payroll needs, and this has only accelerated the demand for their platform. We are excited to continue to support the company through this funding round and the next phase of growth for the business.”
Notably, Romero told me that the fundraising process really evolved between the two rounds, with the first needing him flying around the world to meet people, and the second happening over video links, while he was recovering himself from Covid-19. Given that it was not too long ago that the most ambitious startups in Europe were encouraged to relocate to the U.S. if they wanted to succeed, it seems that it’s not just the world of HR that is rapidly shifting in line with new global conditions.
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Europe’s top court slaps down ‘zero rating’ again
Europe’s top court has dealt another blow to “zero rating” — ruling for a second time that the controversial carrier practice goes against the European Union’s rules on open internet access.
“Zero rating” refers to commercial offers that can be made by mobile network operators to entice customers by excluding the data consumption of certain (often popular) apps from a user’s tariff.
The practice is controversial because it goes against the “level playing field” principle of the open internet (aka “net neutrality”).
EU legislators passed the bloc’s first set of open internet/net neutrality rules back in 2015 — with the law coming into application in 2016 — but critics warned at the time over vague provisions in the regulation which they suggested could be used by carriers to undermine the core fairness principle of treating all internet traffic the same.
Some regional telcos have continued to put out zero rating offers — which has led to a number of challenges to test the robustness of the law. But the viability of zero rating within the EU must now be in doubt, given the double slap-down by the CJEU.
In its first major decision last year — relating to a challenge against Telenor in Hungary — the court found that commercial use of zero rating was liable to limit the exercise of end users’ rights within the meaning of the regulation.
Its ruling today — which relates to a challenge against zero rating by Vodafone and Telekom Deutschland in Germany (this time with a roaming component) — comes to what looks like an even clearer conclusion, with the court giving the practice very short shrift indeed.
“By today’s judgments, the Court of Justice notes that a ‘zero tariff’ option, such as those at issue in the main proceedings, draws a distinction within internet traffic, on the basis of commercial considerations, by not counting towards the basic package traffic to partner applications. Such a commercial practice is contrary to the general obligation of equal treatment of traffic, without discrimination or interference, as required by the regulation on open internet access,” it writes in a (notably brief) press release summarizing the judgement.
“Since those limitations on bandwidth, tethering or on use when roaming apply only on account of the activation of the ‘zero tariff’ option, which is contrary to the regulation on open internet access, they are also incompatible with EU law,” it added.
We’ve reached out to Vodafone and Telekom Deutschland for comment on the ruling.
In a statement welcoming the CJEU’s decision, the European consumer protection association BEUC’s senior digital policy officer, Maryant Fernández Pérez, subbed the ruling “very positive news for consumers and those who want the internet to stay open to all”.
“When companies like Vodafone use these ‘zero tariff’ rates, they essentially lock-in consumers and limit what the Internet can offer to them. Zero-rating is detrimental to consumer choice, competition, innovation, media diversity and freedom of information,” she added.
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Sphere raises $2M to help employees lobby for green 401(k) plans
In the United States, a 401(k) plan is an employer-sponsored defined-contribution pension account. However, with legacy institutional investing, most of these have at least some level of fossil fuel involvement, and, let’s face it, very few of us really know. Now a startup plans to change that.
California-based startup Sphere wants to get employees to ask their employers for investment options that are not invested in fossil fuels. To do that it’s offering financial products that make it easier — it says — for employers to offer fossil-free investment options in their 401(k) plans. This could be quite a big movement. Sphere says there are more than $35 trillion in assets in retirement savings in the U.S. as of Q1 2021.
It’s now raised a $2 million funding round led by climate tech-focused VC Pale Blue Dot. Also participating were climate-focused investors including Sundeep Ahuja of Climate Capital. Sphere is also a registered “Public Benefit Corporation,” allowing it to campaign in public about climate change.
Alex Wright-Gladstein, CEO and founder of Sphere said: “We are proud to be partnering with Pale Blue Dot on our mission to reverse climate change by making our money talk. Heidi, Hampus, and Joel have the experience and drive to help us make big changes on the short seven-year time scale that we have to limit warming to 1.5°C.” Wright-Gladstein has also teamed up with sustainable investing veteran Jason Britton of Reflection Asset Management and BITA custom indexes.
Wright-Gladstein said she learned the difficulty of offering fossil-free options in 401(k) plans when running her previous startup, Ayar Labs. She tried to offer a fossil-free option for employees, but found out it took would take three years to get a single fossil-free option in the plan.
Heidi Lindvall, general partner at Pale Blue Dot, said: “We are big believers in Sphere’s unique approach of raising awareness through a social movement while offering a range of low-cost products that address the structural issues in fossil-free 401(k) investing.”
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LastPad is a reusable menstrual pad that does away with disposable towels
Direct to consumer online sales have helped a number of female-focused startups get products to market in recent years — often pitching better designed and generally more thoughtful feminine hygiene products than mainstream staples.
The lack of innovation in the mainstream market for feminine hygiene has certainly created a gap for startups to address. Examples in recent years include companies like Thinx (absorbent panties for menstruation) and Flex (a disc-shaped tampon alternative for wearing during sex). Or Daye — which makes CBD tampons for simultaneously treating period cramps.
Even so, there still hasn’t been a critical mass of product innovation in the category — to the point where alternatives can trickle down (no pun intended) and influence the trajectory of the mainstream market. The core products on shelves are, all too often, depressingly familiar — disposable pads and tampons — even if they may (sometimes) now be made of organic cotton or have some other mild design tweaks.
The most notable change to the available product mix is probably period pants — which have recently started to appear on mainstream shop shelves and seem to be selling well in markets like the U.K., as The Guardian reported recently.
In the average drug store, the other non-disposable alternative you’ll most likely see is the menstrual cup. Which is not at all new — but has finally got traction beyond its original (very) niche community of users, which is another signal that consumers are more open to trying different solutions to deal with their monthly bleeding versus the same old throwaway wadding.
While free bleeding — an old movement which has also seen a bit of wider pickup in recent years — can also be seen, at least in part, as a protest against the poor quality of mainstream products for periods.
All of which makes this forthcoming product launch rather interesting: Meet LastPad, a reusable (rather than disposable) sanitary towel.
Image Credits: LastPad
The first thing you’ll likely notice is that the pad is black in color — which certainly rings the changes versus the usual white stick-on fodder. The company behind LastPad says it worked with an unnamed “luxury lingerie manufacture” on look and feel — and, well, judging by the product shots alone it shows.
The bigger behind-the-scenes change is that it’s been designed for sustained, repeat usage. So each LastPad comes with its own fabric pouch (in a range of colors) for folding up and storing after use (and until you get a chance to pop it in the wash). The pad can also stay in its pouch for washing so there’s no need for additional handling until you’re getting it out of the washing machine to dry.
LastPad is the brainchild of Danish designer and entrepreneur Isabel Aagaard, whose company LastObject has — for the past three years — been taking aim at the wastefulness of single-use hygiene and beauty products, designing reusable alternatives for what are unlovely but practical items — like Q-Tips and tissues*.
In total, LastObject has sold around 1.5 million products so far — across its existing range of beauty, hygiene and travel-focused items. But LastPad marks its first push into a really female-focused product category.
A reusable (washable) sanitary pad is clearly a big step up on the design challenge front versus making reusable (silicone) Q-Tips or (cotton) tissues or makeup rounds — because of the complexity involved with designing a wearable, intimate hygiene product that can handle the variable and often messy nature of periods, and keep doing so, use after use.
It needs to be both comfortable and reliable — as so many disposable pads actually aren’t.
So it’s not too surprising that, per Aagaard, the company has been working on designing and prototyping LastPad for two years. Now they’re finally ready to bring it to market — launching the LastPad on Kickstarter today — with a goal of shipping to early backers next February.
“We’re seeing amazing conversions [for the LastPad pre-campaign],” she says, discussing how much demand they’re expecting. “This is our sixth [crowdfunder] campaign — and it’s looking really good. So I think the demand is bigger than I actually imagined. Because this is also the first product that is only for women. And we were very much in doubt that we should put it on Kickstarter because it’s a very male-dominated platform but it’s looking really positive.”
“We already started working on this two years ago so it’s really been a process. And also because we wanted it to be really innovative. Because right now you can see on the market there’ll be pads that are more like home sewn or do it yourself — and we wanted to really make an exclusive, very, very innovative version of that — that has a lot of the benefits that the single-use version has.”
Image Credits: LastPad
Each LastPad is made up of three layers: A woven top to help keep the pad feeling dry against the skin by quickly funnelling menstrual fluids down into — layer two — a central absorbent section (made of bamboo) — which sits above a TPU base to ensure no risk of leaks.
“The first layer is a woven material that is really, really fine — it has a little bit of silver in it so that the odours will disappear. It’s also woven with small funnels so that the blood disappears very quickly into the middle layer — because it’s so important that you’re not like wet. Because that’s awful. So it dries quite quickly when you’re wearing it,” explains Aagaard. “And then the middle layer is 100% bamboo — it’s absorbent like crazy; 40% more absorbent than, for example, cotton. And it also has anti-bacterial properties. And then the bottom layer is a TPU [Thermoplastic Polyurethane] — which is just a leakproof cover; it’s comfortable, it’s not like a plastic bag but it does make sure that you cannot bleed through it.”
While disposable sanitary towels rely on an adhesive layer to enable the consumer fix the pad to their panties, LastPad has to do that a bit differently too given it’ll be going through the wash. So the pads have wings — which wrap around the gusset of the panties and fix together underneath with a (soft) Velcro fastening.
That’s not all: There’s a (sticky) silicone strip running around the back side of the pad which helps prevent it from moving around — and, per Aagaard, will happily survive repeat washing (in fact if it’s not used for a time, she says dust may temporarily reduce the stickiness — but says that immediately resolves just by wetting it again).
“Where I felt that we really made a huge difference is that on the back side of the pad — it has wings [with] a Velcro [fastener] that’s completely soft and you don’t feel it; even if you’re biking — that was like the big test — and then it has a silicone strip in the back and at the bottom, like a sticky silicone… so it doesn’t move around in your pants.”
Practically speaking, it won’t be possible for a LastPad user to use just one LastPad to see them through their period — given the need to wash and dry them between uses. So a pack of several reusable pads will be necessary to entirely replace disposable pads and ensure there’s always a clean towel available to swap out the used pad.
But LastObject’s idea is, much like you own several pairs of socks and briefs, you’ll have a set of LastPads to see you through until after laundry day.
The product comes in three different sizes and thicknesses to cater to different flow levels, too. So the consumer may end up owning a range of reusable LastPads — from a panty liner option to a day flow and heavier-duty night pads.
Image Credits: LastPad
“It wasn’t as simple as I thought it was going to be — but that’s also because you have to understand the viscoses of blood, for example, compared to water,” Aagaard tells TechCrunch. “And also a flow — it’s not just blood. There’s a lot of other stuff that come out. So it’s taking all of these things into consideration.”
“We’ve been testing it for so long,” she goes on. “That was our main thing with this product. A lot of the other [LastObject products] were very much about printing it, looking at it. Using it of course — but it took us long before we had it in actually a silicone form. Because that is also expensive. Whereas [LastPad] we could sew quite quickly just here at the office and [test it]… So we’ve just been testing it constantly — how’s the feeling? Getting it out to a lot of different women that wear different panties that have different cycles. So it’s really been about testing.”
Pricing for LastPad will be around $60 for three pads — so around $20 per pad. Which is obviously a lot more expensive than the per unit cost of disposable towels. But LastObject says it will offer packs so if a consumer buys more pads it should shrink the per pad cost a little.
Aagaard says the product has been tested to withstand at least 240 washes — which she suggests will mean it’s able to last at least a couple of years, saving likely hundreds of disposable pads from being consumed in its stead.
Although it’s maybe less likely to save consumers money — depending on which disposable pads you’d buy and how many you’d used per cycle (basic disposable pads can cost as little as ~20c each) — as LastObject recommends owning nine of its LastPads which could cost around $80 or more). But the target user is evidently someone with enough disposable income to be able to pay a premium for an eco alternative.
Given the price-point, it does also look more expensive than the menstrual cup — an existing and highly practical alternative to disposable menstrual products — which can cost around $30 (for one reusable cup; and you can get away with owning just one) and, typically, a cup will also last for years as it’s made of silicone.
However the menstrual cup won’t suit every woman — and does require access to clean water to rinse and sanitize — so having more non-disposable alternatives for periods is great.
Aagaard says she’s a fan of the menstrual cup but suggests LastPad can still be useful for its users as a back-up to catch any leaks and/or provide an added layer of reassurance.
While, with period pants, she says the issue she finds unpleasant is the feeling of wetness when wearing them.
On LastPad’s environmental credentials, the washing process required to keep reusing the pad does obviously require some resources (water, soap etc.) but — as is the case with other LastObject products — the company’s claim is that it’s still substantially greener to wash and reuse its non-disposable products versus consuming and binning single-use items that have to be continually produced and shipped out (generating ongoing CO2). Such products can also pollute the environment after they’ve been thrown away — and plastic waste is of course a huge global problem (including from thrown-away sanitary products).
LastObject will be publishing a third-party LCA (lifecycle assessment) for LastPad to back up its eco claims for the reusable product — comparing it to using disposable sanitary pads. But Aagaard is confident it will be substantially better when compared against most disposable alternatives.
“You’ll be putting a wash on anyway; [LastPads] don’t take up that much space; you’re not going to wash them just them; it is with your other laundry; and if you wash them at a cold wash I think that the LCA report will look really good,” she suggests when we ask about the eco credentials.
“We’re doing this with all our products where we’re taking them through a third party who’s testing everything and putting them up against [alternatives] and having these considerations with CO2, with water, with chemicals — with the whole pack… So we’ll be doing that more specifically; right now… the alternative of a [disposable] pad — they are so differently produced. It’s crazy. So I could say the worst [for comparative purposes] or I could say the best — and ours is about 12x better than that.”
“When we got the LCA report for the LastTissue and LastSwab they were so much better than I have imagined,” she adds.
From this year the European Union has started banning the sale of some single-use plastic items (such as Q-tips and disposable cutlery) as reducing plastic waste is one of the goals for regional lawmakers. And — globally — regulators are increasingly looking for quick wins to shrink the environmental impact of the fast moving consumer goods market’s long standing love affair with plastic.
But some disposable product categories are simply more essential than others — which makes it hard for lawmakers to just ban plenty of wasteful, polluting products. So developing innovative, reusable alternatives is one way to help lighten the usage load.
“The most sustainable pad that you can ever have is actually the one that you don’t produce but that would just be free bleeding — and I think that 99% of women are not ready for that,” adds Aagaard. “So can we make some solutions on some of the things that we actually have to take care of?”
While LastObject is sticking with Kickstarter to get LastPad to market, Aagaard confirms that once they see how much early adopter demand it’s getting they plan to produce enough to also sell via some of the other outlets where they currently sell their products — such as e-commerce sites like Amazon and of course their own web shop.
So far, the U.S. has been the main market for LastObject’s reusable wares, per Aagaard — which she attributes to mostly using Kickstarter to build a community of users. But she adds that the company is starting to see more traction in Europe as it’s increased the number of regional distributors it works with.
So what’s next for the company after LastPad? The product direction they’ll take is an active discussion, she says.
“We can keep going the beauty way, we can go more personal care but we have to also [not] go in too many directions. I personally have a lot of fun things I want to do in the bathroom still, because I feel like it’s a space where not a lot of designers have actually really been investigating some of the products that we’re using. Both in beauty but also in personal care. Like in the floss and toothbrush but also in diapers and wipes and all of that. So I think that there’s some innovation that could be really fun. But… this one took two years and I’m so happy about the result and I couldn’t have spent two months less on it. Then we wouldn’t have had the solutions that we’ve gotten to. So that feels very important.”
Image Credits: LastPad
*Washable tissues are also of course not new. Indeed, Wikipedia credits the invention of pocket squares to wipe the nose to King Richard II of England who reigned in the 14th century. But the traditional (fabric) handkerchief — which was used, laundered and reused — became yet another casualty of the switch to single-use, disposable, cheap consumer goods that’s since been shown to have such high environmental costs. So perhaps reversing this damaging default will bring more ‘historical product innovation’ back into fashion as societies look to apply a modern ‘circular economy’ lens.
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