Flybridge Capital Partners

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BetterCloud scores $75M Series F as SaaS management needs grow

BetterCloud gives IT visibility into its SaaS tools providing the means to discover, manage and secure those tools. In the middle of a crisis that has forced most companies to move workers home, being able to manage SaaS usage in this way is growing increasingly significant.

Today the company announced a $75 million Series F. Warburg Pincus led the way with participation from existing investors Bain Capital Ventures, Accel, Greycroft Partners, Flybridge Capital Partners, New Amsterdam Growth Capital and e.ventures. Today’s round brings the total raised to $187 million, according to the company.

While CEO David Politis acknowledges the gravity of the current situation, he also recognizes that giving companies a way to manage their SaaS usage is more pertinent than ever. “What has happened in the last two months has been terrible for the world, but in some crazy way it has just made what we do a lot more relevant,” Politis told TechCrunch .

He says the pandemic has really accelerated the market opportunity because of the reliance on cloud services and the services his company provides.

Those services began as an operational layer on top of G Suite. Later it added support for Office 365 and in 2016 it moved to more general SaaS management. It now offers direct integrations into multiple SaaS apps including Box, Dropbox, Salesforce, Zendesk and more. The set of tools in Bettercloud gives IT control over security, configuration, spend optimization and auditability across SaaS applications.

In normal times after a large Series F round, we might be talking about this being the last round before an IPO, but Politis isn’t ready to commit to that just yet, especially in this economy. He does say, however, that he’s in it for the long haul and sees an opportunity to build a long-term, sustainable company.

“The last couple of months I’ve been thinking about this a lot, and when you take a $75 million round at the stage you’re not doing that because you want to sell the business. You’re doing that because you want to build something and build something really special,” he said.

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Top investors predict what’s ahead for Boston’s VC scene in Q1

Before the COVID-19 pandemic shook up the world and reshaped the economy, Boston was quietly setting records.

According to new venture data compiled by TechCrunch, the region set what was at least a local maximum in venture capital raised in the space of a single quarter in Q1 2020.

But while Boston’s startup market announced a number of huge rounds that bolstered its total venture dollars raised in the first quarter, there were signs of weakness: Deal volume was its best since Q2 2019, according to a set of data compiled and released by PwC and CB Insights, but was still a little under the pace set in 2018.

So Boston’s startups raised lots of money, but couldn’t match prior highs when it came to the number of checks written. And those results were largely recorded before COVID-19 shuttered the city. Since then, we’ve seen a number of area startups lay off staff, something we explored last week.

Now, with fresh data in hand, we can take a closer look at the city’s first quarter of 2020. To better understand what we’re unpacking, we asked a number of local venture capitalists to weigh in. Let’s look back at Boston’s Q1 as we stride into Q2 with the help of Venture Lane, .406 Ventures, Volition Capital and Flybridge Capital Partners.

The data

Starting with a programming note is counter-flow, but bear with us. TechCrunch is starting a regular, monthly series on Boston and its startup market. This is a second prelude of sorts. Normally we’d hold news and interviews for a later date so that we’d have plenty of material for a column. In the face of relentless change, however, we didn’t want to hold off on reporting and synthesizing new information. When things are more normal, our pace will follow.

Per PwC and CB Insights, here’s the last few quarters of data, along with a few yearly totals to draw you the picture we can now see:

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Omni storage & rentals fails, shutters, sells engineers to Coinbase

$35 million-funded Omni is packing up and shutting down after struggling to make the economics of equipment rentals and physical on-demand storage work out. It’s another victim of a venture capital-subsidized business offering a convenient service at an unsustainable price.

The startup fought for a second wind after selling off its physical storage operations to competitor Clutter in May. Then sources tell me it tried to build a whitelabel software platform for letting brick-and-mortar merchants rent stuff like drills or tents as well as sell them so Omni could get out of hands-on logistics. But now the whole company is folding, with Coinbase hiring roughly 10 of Omni’s engineers.

“They realized that the core business was just challenging as architected” a source close to Omni tells TechCrunch. “The service was really great for the consumer but when they looked at what it would take to scale, that would be difficult and expensive.” Another source says Omni’s peak headcount was around 70.

The news follows TechCrunch’s report in October that Omni had laid off operations teams members and was in talks to sell its engineering team to Coinbase. Omni had internally discussed informing its retail rental partners ahead of time that it would be shutting down. Meanwhile, it frantically worked to stop team members from contacting the press about the startup’s internal troubles.

We’ll be winding down operations at Omni and closing the platform by the end of this year. We are proud of what we built and incredibl y thankful for everyone who supported our vision over the past five and a half years” an Omni spokesperson says. Omni CEO Tom McLeod did not respond to multiple requests for comment. Oddly, Omni was still allowing renters to pay for items as of this morning, though it’s already shut down its blog and hasn’t made a public announcement about its shut down.

Coinbase has reached an agreement with Omni to hire members of its engineering team. We’re always looking for top-tier engineering talent and look forward to welcoming these new team members to Coinbase” a Coinbase spokesperson tells us. The team was looking for more highly skilled engineers they could efficiently hire as a group, though it’s too early to say what they’ll be working on.

Omni originaly launched in 2015, offering to send a van to your house to pick up and index any of your possession, drive them to a nearby warehouse, store them, and bring them back to you whenever you needed for just a few dollars per month. It seemed too good to be true and ended up being just that.

Eventually Omni pivoted towards letting you rent out what you were storing so you and it could earn some extra cash in 2017. Sensing a better business model there, it sold its storage business to Softbank-funded Clutter and moved to helping retail stores run rental programs. But that simply required too big of a shift in behavior for merchants and users, while also relying on slim margins.

Omni Rentals

One major question is whether investors will get any cash back. Omni raised $25 million from cryptocurrency company Ripple in early 2018. Major investors include Flybridge, Highland, Allen & Company, and Founders Fund, plus a slew of angels.

The implosion of Omni comes as investors are re-examining business fundamentals of startups in the wake of Uber’s valuation getting cut in half in the public markets and the chaos at WeWork ahead of its planned IPO. VCs and their LPs want growth, but not at the cost of burning endless sums of money to subsidize prices just to lure customers to a platform.

It’s one thing if the value of the service is so high that people will stick with a startup as prices rise to sustainable levels, as many have with ride hailing. But for Omni, ballooning storage prices pissed off users as on-demand became less afforable than a traditional storage unit. Rentals were a hassle, especially considering users had to pick-up and return items themselves when they could just buy the items and get instant delivery from Amazon.

Startups that need a ton of cash for operations and marketing but don’t have a clear path to ultra-high lifetime value they can earn from customers may find their streams of capital running dry.

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Ohi raises $2.75M to power same-day delivery for brands that aren’t Amazon

The world has gotten so much faster. Amazon has made two-day shipping the standard and same- or next-day shipping commonplace. And that doesn’t even include the collection of on-demand players that can get us everything from groceries to alcohol to services like concierge storage and in-home cleaning with the press of a button.

But the logistics around same- or next-day delivery are incredibly complicated, which usually means that only the biggest, most successful brands and platforms can pull it off.

Enter Ohi.

Ohi was founded last year by Ben Jones, with a mission to democratize e-commerce by offering Amazon-level speed to smaller brands. The company today announced the close of a $2.75 million seed round led by Flybridge Capital Partners .

Ohi partners with landlords to turn what would normally be leased as commercial retail property or office space into micro-warehouses within major cities. The company then offers those warehouses on flexible leases that can be as short as three months, which help D2C brands distribute their inventory and power same- or next-day delivery of their products. Ohi employs 1099 workers to handle pick and pack at warehouses, and partners with Postmates and Doordash for last-mile courier services.

Eventually, Ohi has plans to turn this into a full-fledged platform, paying landlords based on volume. For now, however, the startup is doing traditional leases with landlords, taking on more of a financial risk with the spaces, as it scales up the brand side of the platform.

Ohi charges brands a fixed monthly access fee to the platform, which starts at $750/month. More expensive tiers unlock premium intelligence features around matching inventory to warehouse location, as well as access to more spaces. At the transaction level, Ohi asks for a fee of $2.50 for pick and pack.

Jones says that delivery is actually a higher cost for brands than storage, and that same-day shipping can cost upwards of $50/package for a brand, with same-day pick and pack costing about $10/item. The hope is that Ohi can bring down the price of same-day and next-day delivery by using this Ohi network of commercial space, pick and pack and courier services to compete with Amazon.

Moreover, Ohi believes that the platform can go well beyond bringing down the price of same-day delivery. The company says its brands are also seeing a decrease in cart abandonment when customers see that same-day or next-day delivery option.

Plus, through the data it collects by handling fulfillment for brands, Ohi expects to be able to use its tech to predict demand based on geography and category, helping brands understand their own customers and customers shopping in their particular category.

“There is a lot of positive momentum behind what we’re doing,” said Jones. “Every brand we talk to knows this is the future.”

Jones came up with the idea for Ohi after suffering a serious back injury that left him for more than a year unable to get around easily or carry things. This forced him into a situation where e-commerce was his only option for just about everything. Many of the orders he placed offered three- to five-day shipping, leaving him waiting for what he needed.

He started to investigate how a service could democratize the convenience of same-day and next-day delivery for brands and their customers. And Ohi was born.

Ohi currently offers its service in Manhattan and Brooklyn in New York City, and is launching in Los Angeles this week.

“The greatest challenge we face is how to scale quickly without making mistakes,” said Jones. “It’s not quite as simple as a piece of software that has one-to-many distribution. We’re actually holding brands’ inventory and there’s a physical aspect to this business that makes it more complex. Making sure we can scale that efficiently without making mistakes is going to be one of the biggest challenges.”

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Aliro comes out of stealth with $2.7M to ‘democratize’ quantum computing with developer tools

It’s still early days for quantum computing, but we’re nonetheless seeing an interesting group of startups emerging that are helping the world take advantage of the new technology now. Aliro Technologies, a Harvard startup that has built a platform for developers to code more easily for quantum environments — “write once, run anywhere” is one of the startup’s mottos — is today coming out of stealth and announcing its first funding of $2.7 million to get it off the ground.

The seed round is being led Flybridge Capital Partners, with participation from Crosslink Ventures and Samsung NEXT’s Q Fund, a fund the corporate investor launched last year dedicated specifically to emerging areas like quantum computing and AI.

Aliro is wading into the market at a key moment in the development of quantum computing.

While vendors continue to build new quantum hardware to be able to tackle the kinds of complex calculations that cannot be handled by current binary-based machines, for example around medicine discovery, or multi-variabled forecasting — just today IBM announced plans for a 53-qubit device — even so, it’s widely acknowledged that the computers that have been built so far face a number of critical problems that will hamper wide adoption.

The interesting development of recent times is the emergence of startups that are tackling these specific critical problems, dovetailing that progress with that of building the hardware itself. Take the fact that quantum machines so far have been too prone to error when used for extended amounts of time: last week, I wrote about a startup called Q-CTRL that has built firmware that sits on top of the machines to identify when errors are creeping in and provide fixes to stave off crashes.

The specific area that Aliro is addressing is the fact that quantum hardware is still very fragmented: each machine has its own proprietary language and operating techniques and sometimes even purpose for which it’s been optimised. It’s a landscape that is challenging for specialists to engage in, let alone the wider world of developers.

“We’re at the early stage of the hardware, where quantum computers have no standardisation, even those based on the same technology have different qubits (the basic building block of quantum activity) and connectivity. It’s like digital computing in 1940s,” said CEO and chairman Jim Ricotta. (The company is co-founded by Harvard computational materials science professor Prineha Narang along with Michael Cubeddu and Will Finigan, who are actually still undergraduate students at the university.)

“Because it’s a different style of computing, software developers are not used to quantum circuits,” said Ricotta, and engaging with them is “not the same as using procedural languages. There is a steep on-ramp from high-performance classical computing to quantum computing.”

While Aliro is coming out of stealth, it appears that the company is not being specific with details about how its platform actually works. But the basic idea is that Aliro’s platform will essentially be an engine that will let developers work in the languages that they know, and identify problems that they would like to solve; it will then assess the code and provide a channel for how to optimise that code and put it into quantum-ready language, and suggest the best machine to process the task.

The development points to an interesting way that we may well see quantum computing develop, at least in its early stages. Today, we have a handful of companies building and working on quantum computers, but there is still a question mark over whether these kinds of machines will ever be widely deployed, or if — like cloud computing — they will exist among a smaller amount of providers that will provide access to them on-demand, SaaS-style. Such a model would seem to fit with how much computing is sold today in the form of instances, and would open the door to large cloud names like Amazon, Google and Microsoft playing a big role in how this would be disseminated.

Such questions are still theoretical, of course, given some of the underlying problems that have yet to be fixed, but the march of progress seems inevitable, with forecasts predicting that quantum computing is likely to be a $2.2 billion industry by 2025, and if this is a route that is taken, the middlemen like Aliro could play an important role.

“I have been working with the Aliro team for the past year and could not be more excited about the opportunity to help them build a foundational company in Quantum Computing software, “ said David Aronoff, general partner at Flybridge, in a statement. “Their innovative approach and unique combination of leading Quantum researchers and a world-class proven executive team, make Aliro a formidable player in this exciting new sector.

“At Samsung NEXT we are focused on what the world will look like in the future, helping to make that a reality,” said Ajay Singh, Samsung NEXT’s Q Fund, in a statement. “We were drawn to Prineha and her team by their impressive backgrounds and extent of research into quantum computing. We believe that Aliro’s unique software products will revolutionize the entire category, by speeding up the inflection point where quantum becomes as accessible as classical computing. This could have implications on anything from drug discovery, materials development or chemistry. Aliro’s ability to map quantum circuits to heterogeneous hardware in an efficient way will be truly transformative and we’re thrilled to be on this journey with them.”

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Flexible retail startup Bulletin raises $2.2M

Bulletin close up Bulletin, the startup that describes itself as “WeWork for retail space,” is announcing that it has raised $2.2 million in seed funding. The idea is to give businesses — particularly online brands — access to brick-and-mortar retail space without the cost or commitment of a traditional lease. Read More

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Flybridge adds a General Partner in NYC, WeWork Labs cofounder Jesse Middleton

Flybridge General Partner and WeWork Labs cofounder Jesse Middleton. A Boston-based venture fund, Flybridge Capital Partners, is ramping up its presence in New York City, bringing on WeWork Labs’ cofounder Jesse Middleton as a full-time General Partner. Known for its bullish view on Boston’s tech scene, Flybridge’s portfolio includes 21 Boston-area startups out of 52 total, and just 9 in New York. The firm, which has done mostly… Read More

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