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Pry Financials raises $4.2M to make startup accounting more approachable
Pry Financials wants to make startup finances approachable for its entire team, not just the people in charge of its accounting spreadsheets. The Y Combinator alum announced today it has raised $4.2 million from Global Founders Capital, Pioneer Fund, NOMO VC, Liquid2 and Hyphen Capital.
Launched in March, Pry now has more than 200 customers and claims it has grown 35% month-over-month since YC’s Demo Day. It was founded by Alex Sailer, Tiffany Wong, Hayden Jensen and Andy Su.
Before starting Pry, Su was co-founder of InDinero, another YC alum that started as a “Mint for small businesses” before pivoting to a full-service accounting company. InDinero launched while he was still a student at UC Berkeley, and Su eventually became responsible for its financial planning.
Pry Financials’ team. Image Credits: Pry Financials
He told TechCrunch that most startups can’t afford accounting software like Workday Adaptive Planning. Instead, they sometimes work with outsourced CFO services, but mostly rely on spreadsheets for everything: three-way forecasts, predicting runway, hiring and contractor budgets and investor updates.
“I was the chief technical officer and over the years, I also took on the finance function, so it was kind of a dual CTO/CFO role. This was 2010 through 2020 and as technology grew, the engineering and product teams got all sorts of new tools every six months or so, whereas the finance team was just stuck in Excel,” he said.
Started as a side project while Su was still at InDinero, Pry starts at just $50 a month and replaces those spreadsheets with easy-to-understand dashboards for accounting, financial planning and scenario modeling. The dashboards connect to QuickBooks, Xero or bank accounts, so numbers are continuously updated.
Pry’s clients typically start using it after they raise seed funding, because “for most first-time founders, that’s the most amount of money you have ever received, so you need to spend more time managing it and reviewing it every month. And you’re spending a lot of time on payroll each month,” Su said. Second-time founders, meanwhile, sign up for Pry because they are sick of Excel spreadsheets.
“Reviewing a spreadsheet is mind-numbingly hard,” said Su. “If you see a number that’s off, you get this weird formula if you didn’t do it yourself. Then you basically have to write a long email to the financial analyst who wrote it and hope that they get back to you before closing time.” For founders who need to update lenders or investors every month, this means a lot of work.
Pry makes the process more efficient by turning three-way reports — combinations of balance sheets, profit and loss statements and cashflow — into Financial Report dashboards, and then adding features like hiring plans, financial modeling and scenario planning.
The scenario planning feature serves as a sandbox, giving startup teams and their investors a way to predict how different situations will impact finances: for example, how much runway they have if they raise a certain amount of funding or adjust product pricing.
Fundraising dashboards created with Pry Financials. Image credits: Pry Financials
“We’re improving upon and trying to make decisions about the company in a collaborative way. The analogy we have is Git branching, where you have your main plan, and want to try something like a new revenue model or acquiring a business, but don’t want to mess with your current strategy,” said Su. “What you can do is create a completely new branch with, say, a new pricing strategy. You can make all the changes you want and then switch back to your old branch without worrying about overriding or conflicting with it.”
Those speculative branches are also continuously updated with the company’s most recent bank account and payroll information, so founders don’t need to recreate them from scratch if they want to revisit a potential scenario later.
Pry plans to build more complex predictive tools and also integrate industry standards, like statistic and benchmarks, into templates to help founders understand what targets they should set.
Because Pry is easier to manage than a set of Excel spreadsheets, Su said it’s helped startups spot important things. For example, one founder was able to find a way to save $15,000 by catching a tax issue. Pry also helps everyone at a startup understand its finances’ even if they haven’t worked with accounting spreadsheets before. The platform will add roles and permissions soon, so founders can give or restrict access to different people, like leaders of specific departments.
Su said Pry does not compete with the accounting services many startups rely on until they can hire a head of finance, but makes it easier for startups to collaborate with them since they can share their dashboards.
“Usually early on, you can outsource to a CFO firm. That’s the norm in the business and it works pretty well for most companies. You get a part-time CFO to work really hard for a month and get your fundraising structure done,” said Su, adding “we fit into that ecosystem well.”
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Mixlab raises $20M to provide purrfect pharmacy experience for pet parents
Pet pharmacy Mixlab has developed a digital platform enabling veterinarians to prescribe medications and have them delivered — sometimes on the same day — to pet parents.
The New York-based company raised a $20 million Series A in a round of funding led by Sonoma Brands and including Global Founders Capital, Monogram Capital, Lakehouse Ventures and Brand Foundry. The new investment gives Mixlab total funding of $30 million, said Fred Dijols, co-founder and CEO of Mixlab.
Dijols and Stella Kim, chief experience officer, co-founded Mixlab in 2017 to provide a better pharmacy experience, with the veterinarian at the center.
Dijols’ background is in medical devices as well as healthcare investment banking, where he became interested in the pharmacy industry, following TruePill and PillPack, which he told TechCrunch were “creating a modern pharmacy model.”
As more pharmacy experiences revolved around at-home delivery, he found the veterinary side of pharmacy was not keeping up. He met Kim, a user experience expert, whose family owns a pharmacy, and wanted to bring technology into the industry.
“The pharmacy industry is changing a lot, and technology allows us to personalize the care and experience for the veterinarian, pet parent and the pet,” Kim said. “Customer service is important in healthcare as is dignity and empathy. We kept that in mind when starting Mixlab. Many companies use technology to remove the human element, but we use it to elevate it.”
Mixlab’s technology includes a digital service for veterinarians to streamline their daily medication workflow and gives them back time to spend with patient care. The platform manages the home delivery of medications across branded, generic and over-the-counter medications, as well as reduces a clinic’s on-site pharmacy inventories. Veterinarians can write prescriptions in seconds and track medication progress and therapy compliance.
The company also operates its own compound pharmacy where it specializes in making medications on-demand that are flavored and dosed.
On the pet parent side, they no longer have to wait up to a week for medications nor have to drive over to the clinic to pick them up. Medications come in a personalized care package that includes a note from the pharmacist, clear and easy-to-read instructions and a new toy.
Over the past year, adoptions of pets spiked as more people were at home, also leading to an increase in vet visits. This also caused the global pet care industry to boom, and it is now projected to reach $343 billion by 2030, when it had been valued at $208 billion in 2020.
Pet parents are also spending more on their pets, and a Morgan Stanley report showed that they see pets as part of their family, and as a result, 37% of people said they would take on debt to pay for a pet’s medical expenses, while 29% would put a pet’s needs before their own.
To meet the increased demand in veterinary care, the company will use the new funding to improve its technology and expand into more locations where it can provide same-day delivery. Currently it is shipping to 47 states and Dijols expects to be completely national by the end of the year. He also expects to hire more people on both the sales team and in executive leadership positions.
The company is already operating in New York and Los Angeles and growing 3x year over year, though Dijols admits operating during the pandemic was a bit challenging due to “a massive surge of orders” that came in as veterinarians had to shut down their offices.
As part of the investment, Keith Levy, operating partner at Sonoma Brands and former president of pet food manufacturer Royal Canin USA, will join Mixlab’s board of directors. Sonoma Brands is focused on growth sectors of the consumer economy, and pets was one of the areas that investors were interested in.
Over time, Sonoma found that within the veterinary community, there was space for a lot of players. However, veterinarians want to home in on one company they trust, and Mixlab fit that description for many because they were getting medication out faster, Levy said.
“What Mixlab is doing isn’t completely unique, but they are doing it better,” he added. “When we looked at their customer service metrics, we saw they had a good reputation and were relentlessly focused on providing a better experience.”
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FamPay, a fintech aimed at teens in India, raises $38 million
How big is the market in India for a neobank aimed at teenagers? Scores of high-profile investors are backing a startup to find out.
Bangalore-based FamPay said on Wednesday it has raised $38 million in its Series A round led by Elevation Capital. General Catalyst, Rocketship VC, Greenoaks Capital and existing investors Sequoia Capital India, Y Combinator, Global Founders Capital and Venture Highway also participated in the new round, which brings FamPay’s to-date raise to $42.7 million.
TechCrunch reported early this month that FamPay was in talks with Elevation Capital to raise a new round.
Founded by Sambhav Jain and Kush Taneja (pictured above) — both of whom graduated from Indian Institute of Technology, Roorkee in 2019 — FamPay enables teenagers to make online and offline payments.
The thesis behind the startup, said Jain in an interview with TechCrunch, is to provide financial literacy to teenagers, who additionally have limited options to open a bank account in India at a young age. Through gamification, the startup said it’s making lessons about money fun for youngsters.
Unlike in the U.S., where it’s common for teenagers to get jobs at restaurants and other places and understand how to handle money at a young age, a similar tradition doesn’t exist in India.
After gathering the consent from parents, FamPay provides teenagers with an app to make online purchases, as well as plastic cards — the only numberless card of its kind in the country — for offline transactions. Parents credit money to their children’s FamPay accounts and get to keep track of high-ticket spendings.
In other markets, including the U.S., a number of startups including Greenlight, Step and Till Financial are chasing to serve the teenagers, but in India, there currently is no startup looking to solve the financial access problem for teenagers, said Mridul Arora, a partner at Elevation Capital, in an interview with TechCrunch.
It could prove to be a good issue to solve — India has the largest adolescent population in the world.
“If you’re able to serve them at a young age, over a course of time, you stand to become their go-to product for a lot of things,” Arora said. “FamPay is serving a population that is very attractive and at the same time underserved.”
The current offerings of FamPay are just the beginning, said Jain. Eventually the startup wishes to provide a range of services and serve as a neobank for youngsters to retain them with the platform forever, he said, though he didn’t wish to share currently what those services might be.
Image Credits: FamPay
Teens represent the “most tech-savvy generation, as they haven’t seen a world without the internet,” he said. “They adapt to technology faster than any other target audience and their first exposure with the internet comes from the likes of Instagram and Netflix. This leads to higher expectations from the products that they prefer to use. We are unique in approaching banking from a whole new lens with our recipe of community and gamification to match the Gen Z vibe.”
“I don’t look at FamPay just as a payments service. If the team is able to execute this, FamPay can become a very powerful gateway product to teenagers in India and their financial life. It can become a neobank, and it also has the opportunity to do something around social, community and commerce,” said Arora.
During their college life, Jain and Taneja collaborated and built an app and worked at a number of startups, including social network ShareChat, logistics firm Rivigo and video streaming service Hotstar. Jain said their work with startups in the early days paved the idea to explore a future in this ecosystem.
Prior to arriving at FamPay, Jain said the duo had thought about several more ideas for a startup. The early days of FamPay were uniquely challenging to the founders, who had to convince their parents about their decision to do a startup rather than joining firms or startups as had most of their peers from college. Until being selected by Y Combinator, Jain said he didn’t even fully understand a cap table and dilutions.
He credited entrepreneurs such as Kunal Shah (founder of CRED) and Amrish Rau (CEO of Pine Labs) for being generous with their time and guidance. They also wrote some of the earliest checks to the startup.
The startup, which has amassed over 2 million registered users, plans to deploy the fresh capital to expand its user base and product offerings, and hire engineers. It is also looking for people to join its leadership team, said Jain.
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Una Brands launches with $40M to roll up brands on multiple Asia-Pacific e-commerce platforms
Una Brands’ co-founders (from left to right): Tobias Heusch, Kiren Tanna and Kushal Patel. Image Credits: Una Brands
One of the biggest funding trends of the past year is companies that consolidate small e-commerce brands. Many of the most notable startups in the space, like Thrasio, Berlin Brands Group and Branded Group, focus on consolidating Amazon Marketplace sellers. But the e-commerce landscape is more fragmented in the Asia-Pacific region, where sellers use platforms like Tokopedia, Lazada, Shopee, Rakuten or eBay, depending on where they are. That is where Una Brands comes in. Co-founder Kiren Tanna, former chief executive officer of Rocket Internet Asia, said the startup is “platform agnostic,” searching across marketplaces (and platforms like Shopify, Magento or WooCommerce) for potential acquisitions.
Una announced today that it has raised a $40 million equity and debt round. Investors include 500 Startups, Kingsway Capital, 468 Capital, Presight Capital, Global Founders Capital and Maximilian Bitner, the former CEO of Lazada who currently holds the same role at secondhand fashion platform Vestiaire Collective.
Una did not disclose the ratio of equity and debt in the round. Like many other e-commerce aggregators, including Thrasio, Una raised debt financing to buy brands because it is non-dilutive. The round will also be used to hire aggressively in order to evaluate brands in its pipeline. Una currently has teams in Singapore, Malaysia and Australia and plans to expand in Southeast Asia before entering Taiwan, Japan and South Korea.
Tanna, who also founded Foodpanda and ZEN Rooms, launched Una along with Adrian Johnston, Kushal Patel, Tobias Heusch and Srinivasan Shridharan. He estimates that there are more than 10 million third-party sellers spread across different platforms in the Asia-Pacific.
“Every single seller in Asia is looking at multiple platforms and not just Amazon,” Tanna told TechCrunch. “We saw a big gap in the market where e-commerce is growing very quickly, but players in the West are not able to look at every platform, so that is why we decided to focus on APAC, launch the business there and acquire sellers who are selling on multiple platforms.”
Una looks for brands with annual revenue between $300,000 to $20 million and is open to many categories, as long as they have strong SKUs and low seasonality (for example, it avoids fast fashion). Its offering prices range from about $600,000 to $3 million.
Tanna said Una will maintain acquisitions as individual brands “because what’s working, we don’t change it.” How it adds value is by doing things that are difficult for small brands to execute, especially those run by just one or two people, like expanding into more distribution channels and countries.
“For example, in Indonesia there are at least five or six important platforms that you should be on, and many times the sellers aren’t doing that, so that’s something we do,” Tanna explained. “The second is cross-border in Southeast Asia, which sellers often can’t do themselves because of regulations around customs, import restrictions and duties. That’s something our team has experience in and want to bring to all brands.”
Amazon FBA roll-up players have the advantage of Amazon Marketplace analytics that allow them to quickly measure the performance of brands in their pipeline of potential acquisitions. Since it deals with different marketplaces and platforms, Una works with much more fragmented sources of data for revenue, costs, rankings and customer reviews. To scale up, the company is currently building technology to automate its valuation process and will also have local teams in each of its markets. Despite working with multiple e-commerce platforms, Tanna said Una is able to complete a deal within five weeks, with an offer usually happening within two or three days.
In countries where Amazon is the dominant e-commerce player, like the United States, many entrepreneurs launch FBA brands with the goal of flipping them for a profit within a few years, a trend that Thrasio and other Amazon roll-up startups are tapping into. But that concept is less common in Una’s markets, so it offers different team deals to appeal to potential sellers. Though Una acquires 100% of brands, it also does profit-sharing models with sellers, so they get a lump sum payment for the majority of their business first, then collect more money as Una scales up the brand. Tanna said Una usually continues working with sellers on a consulting basis for about three to six months after a sale.
“Something that Amazon players know very well is that they can find a product, sell it for four to five years, and then ideally make a multi-million deal exit and build another product or go on holiday,” said Tanna. “That’s something Asian sellers are not as familiar with, so we see this as an education phase to explain how the process works, and why it makes sense to sell to us.”
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Sorbet raises $6M seed led by Viola Ventures to tackle the thorny financials of paid time off
A U.S./Israeli startup, Sorbet — which is tackling what companies do with the financial risks as employees accrue paid time off (PTO) — has raised $6 million in a seed funding round led by Viola Ventures, with participation by Global Founders Capital and Meron Capital.
The economics of paid time off is relatively hidden in the business world, but essentially, Sorbet takes on the burden of this PTO from employers and then allows employees to spend it. This gives the employers far more control over the whole process and the ability to forecast its impact on the business.
Sorbet says that in the U.S., employees use only 72% of PTO balances, even though it’s the most sought-after benefit. But this, effectively, comes out at 768 million unused days off a year, worth around $224 billion. This creates a difficult problem for CFOs and accountants because its creates balance sheet liabilities on the company’s books, says Sorbet. If the employee doesn’t use all of their PTO, the employer can end up owing them a lot of money, which creates a cash flow liability on the company’s books. So Sorbet buys out these PTO liabilities from employees, then loads the cash value of the PTO on prepaid credit cards for the employees.
Speaking to me on a call, CEO and co-founder Veetahl Eilat-Raichel, said: “We researched this whole idea of paid time off and found this huge, massive market failure and inefficiency around the way that PTO is constructed. It’s kind of one of those things where, on the face of it, there’s this boring bureaucratic payroll item that turns into a boring balance sheet item. But under it is a $224 billion problem for U.S. businesses… If you think about it, employers are borrowing money from their employees at the worst terms possible and employees aren’t benefitting either. So everyone’s hurting here.”
She said: “Sorbet assumes the liability on ourselves and so then we can allow the company to control their cash flow and decide when they want to pay us back. They gain a lot of financial value because we are able to be very, very attractive on our funding. So it saves costs, it provides them with complete control of their cash flow and it allows them to give out amazing financial benefits to employees at a time where we can all use some extra cash right now.”
The platform Sorbet has built will, it says, sync with calendars, HR and payroll systems, identify habits and then proactively suggest personalized, pre-approved 3-6 hour “Micro Breaks”, 1-4 day “Micro Vacations” and +1 week Vacations. This, says the startup, increases PTO used by as much as 15%.
Employers can constantly renegotiate the terms of the loan with Sorbet, thus matching future cash flow, insulating themselves against salary raises (wage inflation), and take advantage of other benefits.
The co-founders are Eilat-Raichel, who previously worked at L’Oréal, Lockheed Martin and a fintech entrepreneur; Eliaz Shapira, co-founder and CPO; and Rami Kasterstein, co-founder and board member.
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4 keys to international expansion
During my five years with Global Founders Capital, Rocket Internet’s $1 billion VC arm, I saw more than a hundred of Rocket’s incubated companies attempt to internationalize. For background, Rocket Internet has helped launch some very successful businesses internationally, including HelloFresh ($12.9 billion market cap), Lazada ($1 billion exit to Alibaba), Jumia ($3.2 billion market cap), Zalando ($21.2 billion market cap) and many others. Rocket often followed the Blitzscaling model popularized by Reid Hoffman — earning them an appearance in his book of the same name.
After an initial success helping Groupon scale internationally via a merger with Rocket’s incubation firm CityDeal, Rocket’s team have aggressively scaled businesses from Algeria to Zimbabwe — sometimes in a matter of weeks. No surprise, Rocket also has a graveyard of failed companies that were victims of bad internationalization efforts.
Many companies make the costly mistake of launching abroad too soon.
My personal observations on Rocket’s successes and failures start with this crucial point: These learnings might not apply to your unique combination business model, market and timing. No matter how well you prepare and plan your internationalization, in the end you need to be agile, alert and smart as you dip your toes into your first foreign market.
Fail fast and cheaply
Internationalization can be a big driver of growth and consequently enterprise value, which is why investors always push for it. But going abroad can also destroy value just as quickly. As a founder, it’s your job to manage financial and operational risks. Finding the right balance between keeping costs in check and not underinvesting can mean doing things more slowly than your board would like. For example, you might launch new markets sequentially instead of rolling 10 out at the same time.
Adopt a “hire slow, fire fast” mentality for your expansion strategy. Don’t be afraid to pull the plug if things don’t work out.
Our team at Heartcore Capital use the following framework and learnings to guide internationalization strategies for our portfolio companies. A successful internationalization strategy needs to answer and address the “Four Ws”: When, Where, Which and With whom to internationalize. (Regarding the fifth W from journalism, you should not need to ask the “Why” question if you want to build a large business!)
1. When is the right time to start?
Many companies make the costly mistake of launching abroad too soon. They look at internationalization as a detached function, isolated from the rest of the business and then launch their second market prematurely. Follow this simple rule: Wait to internationalize until you hit product/market fit.
How do you know exactly when you’ve reached product/market fit? According to Marc Andreessen, “Product/market fit means being in a good market with a product that can satisfy that market.” He adds that experienced entrepreneurs can usually feel if they’ve reached this point.
Let’s take the man for his word and move on to the actual argument: Until you have product/market fit, you will not be able to distinguish between what you’ve learned from your business model and what you’ve learned from your in-country experience. Mistakes will compound. Complexities and costs will multiply. I contend that insufficient understanding of their business and operating model is the main reason why companies fail with their expansion strategies.
Founders should also consider the underlying costs of internationalizing before they decide to expand (more about this in the “What” section below). Some companies are global by default — think mobile gaming companies — or simply require language localization. Others need to build new warehouses, hire local teams or build entirely new products. The costs and respective risks of expanding prematurely depend heavily on the business model.
There are edge cases where companies need to move quickly to internationalize for strategic reasons — despite uncertainty about their market fit. For instance, companies like Groupon or those engaged in food delivery face winner-takes-most markets, where opportunities for product differentiation are limited. “Blitzscaling” makes sense in cases like these.
However, you should tread carefully if your only reason to start scaling abroad is a large fundraise or to match a competitor’s internationalization efforts. Scaling prematurely for the wrong reasons might just cost you your entire company.
When Rocket Internet announced it would launch the Homejoy model into European markets with Helpling, the American “original” company launched quickly in Germany in an effort to squash their new competitor. In the early days of “on-demand everything,” a managed marketplace for cleaning services sounded like the next unicorn in the making.
In 2013, Homejoy had a fresh $24 million Series A from Google Ventures and First Round — considered a huge round at a time when Instacart had just raised an $8 million Series A and Snapchat had done a $13 million Series A round. It must have seemed like a good idea to squash the German competition early.
As it turned out, Homejoy’s product was not yet ready to scale internationally. Just 13 months after launching in Germany, Homejoy had to cease operations globally, while Rocket’s Helpling is still alive and kicking. Helpling focused carefully on product, automation and making their unit economics work. A rush to crush an international competitor caused the demise of a would-be unicorn.
Homejoy expanded internationally in 2014 in a rush to squash a new German competitor Helpling. Their websites in 2020 show starkly different outcomes. Image Credits: Homejoy/Helpling
2. Where should you internationalize?
When deciding which new international market to tackle, it is vital to do your homework. Analyze the competitive environment, partner availability, infrastructure, culture, regulation and synergies with your home market.
In the early days of e-commerce, it was rather easy to analyze if a market was an expansion target. In the absence of professional competition, Rocket chose new countries based solely on GDP and internet penetration.
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SouSmile raises $10M to grow its anti-braces aligner brand
Amid expectations that early-stage funding and valuations will decline due to an economic downturn caused by the novel coronavirus outbreak, young startups like the Brazilian dental company SouSmile, which raised in the time before COVID-19, are feeling grateful for secured runway.
SouSmile is a direct to consumer dental company based in São Paulo. SouSmile has raised $10 million in Series A funding from Global Founders Capital, Kaszek Ventures and Canary, bringing the company’s total funding to $11.4 million. The two-year-old startup sells an invisible aligner and whitening gels through five retail stores in shopping malls across São Paulo and Rio.
SouSmile is a new option for Brazilians hoping to get started on orthodontic work. The process consists of an evaluation by a licensed dentist that includes a panoramic X-ray, 3D scan and a clinical exam. Then, the company approves customers for treatment. SouSmile’s follow-up process includes bimonthly appointments, and costs approximately $1,000, which co-founder Michael Ruah says is 60% cheaper than comparable treatments, and can be paid in installments. Treatment is fast, taking between three to nine months.
SouSmile has a six-person co-founding team. The 100-person startup is made up of 50% licensed dentists.
Ruah anticipates that the coronavirus pandemic will have a negative short-term revenue impact for the company, as they anticipate less foot traffic in retail stores over the coming weeks, possibly months. He hopes that because the business is still young, macro indicators won’t have a huge impact on the bottom line in the medium-to-long term. Ruah says that the most important thing is that SouSmile employees and customers are safe and healthy at this point.
Why is Brazil a good market for a D2C dental startup?
With 2 million orthodontic cases per year, highly populous Brazil is one of the largest dental markets globally, yet the penetration of invisible aligners is less than 2% due to prohibitive prices. Ruah compares this to the 40% penetration in the U.S. for adults, citing Invisalign’s numbers. There’s still a dent to be made, as SouSmile says it saw more than 10,000 bookings last year.
Ruah also cites a cultural reason as to why Brazil is a smart market for a product like this: Brazilians care a lot about both beauty and their oral health. “Brazilians brush their teeth three times a day. They’ll go out for lunch, they’ll come back to the office and brush their teeth. Everybody has their toothbrush and toothpaste with them all the time,” he explains.
SouSmile’s invisible aligner costs around $1,200. Treatment lasts between 3-9 months.
Branding: Cosmetic versus health
SmileDirectClub raised nearly $440 million at a $3.2 billion valuation before going public in 2019. The teeth-straightening company built its brand by leveraging the celebrity beauty angle with Instagram influencer campaigns that marketed the visual results of its product. While SouSmile hopes to see big numbers like its U.S.-based predecessor, it wants to take more of a healthcare-first approach to its branding, rather than cosmetic.
SouSmile is up against some big challenges. Physical retail costs are expensive. Manufacturing is hard, and the company doesn’t appear to be particularly tech-enabled, relying mainly on physical retail presence for customer acquisition.
SouSmile isn’t the only Latin American startup working on an anti-braces dental solution, either. Moons, a Mexican invisible aligner startup that just launched out of Y Combinator, may have a head start. Moons delivers a similar product as SouSmile for around the same cost, and is also using 3D printing to manufacture its aligners. Moons is targeting the Latin America market with $5 million in funding and the Y Combinator stamp of approval. Moons has already opened 18 locations across Mexico and Colombia.
But Brazilian tech can operate like a separate ecosystem apart from adjacent Spanish-speaking Latin America due to country regulations, language barriers and shipping complications. Consumer startups that can deliver products that improve the daily lives of Brazil’s massive middle class are the ones that succeed, and SouSmile now has the capital to shoot its shot.
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Pachama launches to support global reforestation through carbon markets
The world’s forests are ablaze, under threat from illegal logging and disappearing due to the less dramatic environmental degradation wrought by drought and other signs of climate change.
It’s part of the negative feedback loop that seems to be accelerating climate change as greenhouse gases accumulate in the atmosphere, but one startup company is trying to facilitate reforestation by supporting carbon offsets that specifically target the world’s flora.
Pachama has raised $4.1 million to create a marketplace where companies can support carbon offset projects. The company is backed by some big names in tech investment, like former Uber executive Ryan Graves, through his private investment firm, Saltwater, and Chris Sacca, a prominent early investor in Uber, through his Lowercase Capital firm.
Founded by Diego Saez-Gil, a serial entrepreneur whose last company was a startup selling a “smart-suitcase,” Pachama is aiming to bring reforestation projects to the carbon markets whose impacts can be independently verified by the company’s monitoring software to ensure their ability to offset emissions.
“We were making a smart connected suitcase which got banned,” says Saez-Gil. “After that I decided to take some time off and I was quite burnt out. I wanted to do some soul searching and tried to decide what I wanted to put my efforts [into].”
He traveled to South America and did a trip through the Amazon rain forest in Peru. It was there that Saez-Gil saw the effects of deforestation in an area that represents a huge carbon dioxide offset for the planet.
“There are about 1 billion hectares on the planet that could be reforested,” says Saez-Gil.
That opportunity — to contribute to the perpetuation of independently validated carbon markets around the world — is what convinced investors like Paul Graham, Justin Kan, Daniel Kan, Gustaf Alströmer, Peter Reinhardt, Jason Jacobs and Chris Sacca from Lowercase Capital, as well as funds such as Social+Capital, Global Founders Capital and Atomico, to contribute to the company’s $4.1 million funding.
It’s a pretty big consortium to finance what amounts to a small capital commitment (given the size of the funds under management that these investors have at their disposal), but investors are right to be a little wary.
Carbon markets are driven by policy, and policymakers have been reluctant to draft legislation that would put a high enough price on carbon emissions to make those markets viable.
“Pachama’s carbon credit marketplace is launching at a pivotal moment when awareness of the climate crisis is reaching an all-time high, and businesses are increasingly looking to become carbon neutral,” said Ryan Graves, Pachama’s lead investor and new director said in a statement. “What attracted me to Pachama was the company’s use of technology to bring trust to an industry that desperately needs it, and gives the verifiable results to the purchasers of carbon credits.”
Awareness doesn’t equal political action, however, and Pachama needs the political will of both governments and consumers to move the needle on creating viable carbon trading markets.
Pachama’s business becomes profitable only when the price of carbon moves beyond $15 per ton of carbon dioxide (or similar emissions) offset. Currently, there are only two markets in the world where that threshold has been reached — the California market and Europe, according to Saez-Gil.
For Pachama’s founder, forest preservation and reforestation projects can have outsized benefits. “There are only 500 forest projects that are certified today… we need tens of thousands,” says Saez-Gil. “There are one billion hectares on the planet available for reforestation without competing with agriculture.”
The restoration of native forests can contribute to replenishing global biodiversity, and captures more carbon than cultivating forests for industrial use, but both are better than destruction to grow row crops or support animal husbandry, Saez-Gil says.
Pachama sources projects that are approved by existing certification bodies, but offers its customers monitoring and management services through access to satellite imagery and sensors that provide information on emissions and carbon capture on reforested land.
It’s a potential solution to the problem of deforestation that’s plaguing countries like Brazil. “The government in Brazil, they want to generate income for the country,” says Saez-Gil. If carbon markets paid as much as ranching, it would reduce the need for animal husbandry and plantation farming in Brazil, Indonesia or places like Peru.
Today, most investments in reforestation projects are done through middlemen, which increases opacity and the chance that projects are being double-counted or sold, according to Saez-Gil. Pachama has a person who is contacting forest project developers so that they can list the projects independently. Then the company verifies the offsets with satellite imaging systems.
The company currently has 23 forest projects — three in the Amazon rain forest in Brazil and Peru and projects in the U.S. in California, Vermont, New Jersey, Connecticut and Maine .
Saez-Gil has high hopes for the future of carbon markets based on demand coming, in part, from new regulations like those imposed on the airline industry.
“Airlines will have to offset part of their emissions as part of CORSIA,” says Saez-gil. That’s an offset of 160 million tons of emission per year. “There is all this demand coming for different offsets for different markets that will make the price go up.”
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Reliance Industries acquires a majority stake in SaaS startup NowFloats for $20M
Reliance Industries, one of India’s largest industrial houses, has acquired a majority stake in NowFloats, an Indian startup that helps businesses and individuals build online presence without any web developing skills.
In a regulatory filing on Thursday, Reliance Strategic Business Ventures Limited said (PDF) it has acquired an 85% stake in NowFloats for 1.4 billion Indian rupees ($20 million).
Seven-and-a-half-year old, Hyderabad-headquartered NowFloats operates an eponymous platform that allows individuals and businesses to easily build an online presence. Using NowFloats’ services, a mom and pop store, for instance, can build a website, publish their catalog, as well as engage with their customers on WhatsApp.
The startup, which has raised about 12 million in equity financing prior to today’s announcement, claims to have helped over 300,000 participating retail partners. NowFloats counts Blume Ventures, Omidyar Network, Iron Pillar, IIFL Wealth Management, and Hyderabad Angels among its investors.
Last year, NowFloats acquired LookUp, an India-based chat service that connects consumers to local business — and is backed by Vinod Khosla’s personal fund Khosla Impact, Twitter co-founder Biz Stone, Narayana Murthy’s Catamaran Ventures and Global Founders Capital.
Reliance Strategic Business Ventures Limited, a wholly-owned subsidiary of Reliance Industries, said that it would invest up to 750 million Indian rupees ($10.6 million) of additional capital into the startup, and raise its stake to about 89.66%, if NowFloats achieves certain unspecified goals by the end of next year.
In a statement, Reliance Industries said the investment will “further enable the group’s digital and new commerce initiatives.” NowFloats is the latest acquisition Reliance has made in the country this year. In August, the conglomerate said it was buying a majority stake in Google-backed Fynd for $42.3 million. In April, it bought a majority stake in Haptik in a deal worth $100 million.
There are about 60 million small and medium-sized businesses in India. Like hundreds of millions of Indians, many in small towns and cities, who have come online in recent years thanks to world’s cheapest mobile data plans and inexpensive Android smartphones, businesses are increasingly building online presence as well.
But vast majority of them are still offline, a fact that has created immense opportunities for startups — and VCs looking into this space — and major technology giants. New Delhi-based BharatPe, which helps merchants accept online payments and provides them with working capital, raised $50 million in August. Khatabook and OkCredit, two digital bookkeeping apps for merchants, have also raised significant amount of money this year.
In recent years, Google has also looked into the space. It has launched tools — and offered guidance — to help neighborhood stores establish some presence on the web. In September, the company announced that its Google Pay service, which is used by more than 67 million users in India, will now enable businesses to accept digital payments and reach their customers online.
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Los Angeles-based BuildOps, subcontracting software for real estate, raises $5.8 million
Software development companies tackling services for niche industries, like commercial real estate subcontracting, continue to find Los Angeles to be fertile ground for development.
The latest company to raise funding from a clutch of investors is BuildOps, which raised $5.8 million in seed financing from some big names in the Los Angeles tech ecosystem.
Led by Fika Ventures, with additional investments from MetaProp VC, Global Founders Capital, CrossCut Ventures, TenOneTen, IGSB, 1984 Ventures, L2 Ventures, GroundUp, NBA all-star Metta World Peace, Oberndorf Enterprises, Wolfson Group and scouts from Sequoia Capital, the new financing will be used to support the company’s continued growth.
BuildOps sells software that integrates scheduling, dispatching, inventory management, contracts, workflow and accounting into a single software package for commercial real estate contractors with staff ranging from a few dozen to several hundred employees.
Software for the service industry is nothing new for Los Angeles entrepreneurs. The unicorn ServiceTitan hails from the greater Los Angeles area and a number of other software as a service businesses are calling the greater Los Angeles area home.
It’s hard to argue with the size of the commercial construction market. Over the past three years, commercial construction spending grew from $626 billion to $807 billion, according to data provided by the company. And while most large vendors — architects, general contractors and property management companies — have some project management software, the fragmented group of subcontractors that provide services to those customers has remained resistant to adopting new technologies, the company said.
The firm was co-founded by former ServiceTitan developer Neeraj Mittal; Microsoft, Nextag, Swurv and Fundly former executive Steve Chew; and Alok Chanani, who previously founded a commercial real estate company and was a former commander of a transportation unit of the Army in Iraq.
“At BuildOps, we are on a mission to bring a true all-in-one solution on the latest technology to the people who keep America’s hospitals, power plants and commercial real estate running. We are privileged to be working closely with some of the country’s top commercial contractors,” said Chanani.
That sentiment is echoed by Liquid 2 Ventures managing partner and former National Football League superstar, Joe Montana .
“Liquid 2 Ventures has an investment thesis in supporting America’s working class and I just love the idea of making their lives far easier and better. You have one solution that does it all and talks seamlessly to every single part of their business from parts to ordering to inventory and more,” said Montana in a statement. “There are very few world-class technology solutions for commercial subcontractors like this and we believe in the founders.”
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