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With $8 million to consolidate Amazon’s top marketplace sellers, Perch makes its first deals
After raising $8 million in November to roll up top Amazon marketplace companies, the new Boston-based startup Perch has begun putting that money to work in its first few deals.
The brainchild of Chris Bell, formerly Wayfair’s head of logistics and a Bain & Co. principal, Perch is well-positioned to serve as unifier of a bevy of disparate products in one nest.
The company’s recent acquisitions include brands selling a sand anchor for beach umbrellas (Beachr), a waterproof apron for cooking, a hip sciatica brace (Bodymate) and other similar products that wouldn’t be out of place in a late-night infomercial or on the Home Shopping Network.
“We believe that the future of product R&D is entrepreneurs that are closest to the problems,” says Bell in an interview. “We look for products that are top three in their niche… [Their founders] want some liquidity and we can bring that onto our platform and add price optimization, ad-spend optimization and cross-geography marketing.”
In a way, Perch is tapping into a similar urge to give America’s huge population of tinkerers and inventors better access to market and a chance to monetize their ideas à la Quirky, the failed attempt by GE to turn gadget ideas into new product lines for GE.
By contrast, Perch waits for the businesses to gain traction, then offers to buy the products from their owners and give them up to two years of participation in any upside that the product generates at certain milestones that Perch sets for the participating entrepreneurs.
“Three years ago I would not have started this business,” says Bell. “Amazon has made this a much more defensible place.”
The Amazon marketplace remains somewhat of the Wild West, where intellectual property rights are often ignored and successful products are copied at lightning speed by vendors with access to the same commoditized supply chains. It’s really marketing muscle and an ability to get better margins through scale that creates winners, it seems, and Perch is using its technical know-how to get to the top.
Acquisitions can range from $750,000 to $2 million upfront with the upside on the back end still to come, according to Bell. Financing this operation is a $4.5 million equity round and $3.5 million in debt financing by some of the nation’s leading venture firms. Perch won’t buy any company that’s doing less than $250,000 in revenue.
Spark Capital led the deal for Perch, with general partner Alex Finkelstein taking a seat on the company’s board of directors. Tectonic Ventures also participated. Finkelstein, who led Spark’s investment in Wayfair, was introduced to Bell through Wayfair’s chief operating officer. He immediately saw the potential in Perch’s pitch.
“If you look at it from a macro standpoint. Amazon is growing very quickly and the third-party marketplace is growing very quickly. Within the next year we’re going to have a large portfolio and it’ll do well in any environment,” Finkelstein said.
Amazon’s third-party sellers are a $200 billion market and the largest single vendor is a $500 million seller, Bell noted, and that is an opportunity that a well-capitalized company can exploit.
“We’re going to be managing hundreds of micro-brands and the only way to do that is through a technology platform,” Bell said. “They’re generally niche products that are not big enough that Amazon Basics would come into that category. We’re competing in smaller categories, but even some of these niche categories are tens of millions to hundreds of millions in revenue.”
While Perch has seen some impacts from the economic shutdown caused by the government response to the COVID-19 epidemic, the company expects the shift in consumer behavior to be the wind beneath its wings, rather than against its branches.
“Medium-term it’s pushing more people to buy online,” says Bell. And Perch isn’t slowing its pace of acquisitions. “We made two acquisitions in March and we’re likely going to close another two in the next two weeks.”
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Sila Nano’s battery tech is now worth over $1 billion with Daimler partnership and $170 million investment
Sila Nanotechnologies and its battery materials manufacturing technology are now worth more than $1 billion.
The company, which announced a $170 million funding led by Daimler and a partnership with the famed German automaker, started building out its first production lines for its battery materials last year. That first line is capable of producing the material to supply the equivalent of 50 megawatts of lithium-ion batteries, according to Sila Nano’s chief executive officer Gene Berdichevsky.
That construction, made on the heels of a $70 million investment round, is now going to be expanded with the new cash from Daimler and 8VC along with previous investors Bessemer Venture Partners, Chengwei Capital, Matrix Partners, Siemens Next47 and Sutter Hill Ventures.
Berdichevsky would not comment on how much production capacity would increase, but did say that the company’s battery materials would find their way into consumer devices before the end of 2020. That means the potential for longer-lasting batteries in smart watches, earbuds and health trackers, initially.
From its headquarters in Alameda, Calif., Sila Nanotechnologies has developed a silicon-based anode to replace graphite in lithium-ion batteries. The company claims that its materials can improve the energy density of batteries by 20 percent.
“If you can increase energy density by 20 percent… you can use 20 percent fewer cells and each pack can cost 20 percent less,” says Berdichevsky. “The subtext of it is that it is the way to drive price of energy storage down. And that’s the way for the electric vehicle market to sand more and more on its own.”
That kind of cost reduction is what brought BMW and Daimler to partner with the company — and what led to the massive funding round and the company’s newfound unicorn status.
“Our valuation is over $1 billion dollars now,” Berdichevsky says.
Image courtesy of Sila Nanotechnologies
For Daimler, the materials that Sila Nanotechnologies are developing will give the company’s commitment to electrification a much needed boost.
Mercedes-Benz has plans to electrify its entire product suite by 2022, the company has said. That means Daimler has to accelerate its production of electrified alternatives to its fuel-powered fleet — everything from its 48-volt electrical system (the EQ Boost), to its plug-in hybrids (EQ-Power) and the more than 10 fully electric vehicles powered by batteries or fuel cells. The company is projecting that between 15 percent and 25 percent of its total sales will be electric by 2025 — depending on customer preferences, infrastructure development and the regulatory environment in each of the markets in which it sells vehicles, the company said.
In all, Mercedes-Benz cars has committed to investing €10 billion ($11.3 billion) in the production of vehicles and another $1.3 billion into a global battery production network. The global battery production network of Mercedes-Benz Cars will in the future consist of nine factories on three continents.
“We are on our way to a carbon free future mobility. While our all-new EQC model enters the markets this year we are already preparing the way for the next generation of powerful battery electric vehicles,” said Sajjad Khan, executive vice president for Connected, Autonomous, Shared & Electric Mobility, Daimler AG in a statement.
Still, consumers shouldn’t expect to see vehicles with Sila Nano’s technology until at least the mid 2020s, as automakers look to prove that the company’s battery technology meets their quality assurance standards. “The qualification time means there’s many years of work to make sure it is reliable for next 10 to 20 years,” says Berdichevsky. “Our partnership is geared towards mid-2020s production targets, but the qualification is something that takes quite a while.”
The company’s latest round brings its total financing to just under $300 million since its launch in 2011. And as a result of the latest funding, former General Electric chief executive Jeff Immelt will take a seat on the company’s board of directors.
“Advancements in lithium-ion batteries have become increasingly limited, and we are fighting for incremental improvements,” said Immelt. “I’ve seen first-hand that this is a huge opportunity that is also incredibly hard to solve. The team at Sila Nano has not only created a breakthrough chemistry, but solved it in a way that is commercially viable at scale.”
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ServiceTitan is LA’s least likely contender to be the next billion-dollar startup
The city of Glendale, Calif. seems like an unlikely place to grow one of the next billion-dollar startups in the booming Los Angeles tech ecosystem.
Located at the southeastern tip of the San Fernando Valley, the Los Angeles suburb counts its biggest employers as the adhesive manufacturer Avery Dennison; the Los Angeles industrial team for the real estate developer CBRE; the International House of Pancakes; Disney Consumer Products; DreamWorks Studios; Walt Disney Animation and Univision. “Silicon Beach” this ain’t.
But it’s here in the (other) Valley’s southernmost edge that investors have found a startup they consider to be the next potential billion-dollar “unicorn” that will come out of Los Angeles. The company is ServiceTitan, and its market… is air conditioners.
More specifically, it’s the contractors that service equipment like the heating, ventilation and cooling systems at commercial and residential properties across the U.S.
Founded by Ara Mahdessian and Vahe Kuzoyan in 2012, ServiceTitan is very much an up-and-coming billion-dollar business that’s a family (minded) affair.
Mahdessian and Kuzoyan met on a ski trip organized by the Armenian student associations at Stanford and the University of Southern California back when both men were in college.
Both programmers, the two reconnected after doing stints as custom developers during and after college, and then when they were developing tools for their families’ businesses as residential contractors in the Los Angeles suburb of Glendale.
The two men built a suite of services to help contractors like their fathers manage their businesses. Now following a $62 million round of funding led by Battery Ventures last month, the company is worth roughly $800 million, according to people with knowledge of the investment, and is on its way to becoming Los Angeles’ next billion-dollar business.
Battery isn’t the only marquee investor to find value in ServiceTitan’s business developing software managing day labor.
Iconiq Capital, the investment firm managing the wealth of some of Silicon Valley’s most successful executives (the firm counts Facebook chief executive Mark Zuckerberg, and senior staff like Dustin Moskovitz and Sheryl Sandberg; Twitter chief Jack Dorsey; and LinkedIn founder and chief executive Reid Hoffman among its clients, according to a 2014 Forbes article), has also taken a shine to the now-gargantuan startup from Glendale.
It was Iconiq that put a whopping $80 million into ServiceTitan just last year — and while the 2017 cash infusion may have been larger, the company’s valuation has continued to rise.
That’s likely due to a continually expanding toolkit that now boasts a customer relationship management system, efficient dispatching and routing, invoice management, mobile applications for field professionals and marketing analytics and reporting tools.
“ServiceTitan’s incredibly fast growth is a testament to the brisk demand for new mobile and cloud-based technology that is purpose-built for the tradesmen and women in our workforce,” said Battery Ventures general partner Michael Brown — who’s taking a seat on the ServiceTitan board.
What distinguishes the ServiceTitan business from other point solutions is that they’ve taken to targeting not mom-and-pop small businesses but franchises like Mr. Rooter and George Brazil. Gold Medal Service, John Moore Services, Hiller Plumbing, Casteel Air, Baker Brothers Plumbing and Air Conditioning and Bonney may not be household names, but they’re large providers of contractors who work under those brands.
The company counts 400 employees on staff, and will look to use the money to continue to grow out its suite of products and services, according to a March statement announcing the funding.
And as Battery Ventures investor Sanjiv Kalevar noted in a blog post last year, the opportunity for software companies serving blue-collar workers is huge.
For people sitting at our desks and working behind laptops on programs like Microsoft Office, it can be easy to overlook the large, sometimes forgotten, workforce out there in construction, manufacturing, transportation, hospitality, retail and many other multi-billion dollar industries. Indeed, more than 60% of U.S. workers and even more globally fall into these “blue collar” industries.
By and large, these workers have not benefitted much from recent technology improvements available to office-based workers—think new email and workplace-collaboration technologies, or advanced sales and HR systems. Never mind the long-term opportunities for companies in these sectors from technologies like artificial intelligence, drones, and virtual or augmented reality; hourly and field workers are dealing with much more basic on-the-job challenges, like finding work, getting their jobs done on time and getting paid. These more basic needs can be solved with seemingly simple technologies—software for billing, scheduling, navigation and many other business workflows. These kinds of technologies, unlike AI, don’t automate away workers. Instead, they empower them to be more efficient and productive.
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In spite of digital transformation, 2017 did not yield the desired financial results for GE
GE is a great example of a traditional company that has recognized the need to transform into a digital organization, but by all measures 2017 has been a tough year for the industrial giant financially. The company stock price has tumbled, and last week it announced that it was laying off 12,000 employees in its power business worldwide. While you can’t attribute all of the… Read More
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GE acquires Wise.io to deepen its machine learning stack
GE Digital today announced that it has acquired Wise.io, a machine-learning powered service that helps businesses find patterns and trends in their vast data stores. At first glance, that may seem like an odd acquisition for a company like GE. It’s important to keep in mind, though, that with Predix, GE already offers its customers a service that focuses on helping them monitor their… Read More
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