Harrison Metal
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Product-led revenue startup Correlated launches with $8.3M seed
Correlated on Wednesday announced it raised $8.3 million in seed funding to launch its product-led growth platform for sales teams.
NextView Ventures and Harrison Metal co-led the round and were joined by Apollo Projects, Attentive co-founders Brian Long and Andrew Jones, Cockroach Labs co-founder Ben Darnell and Atrium’s Pete Kazanjy. The round includes funding raised last year and more recent follow-on funding from both NextView and Harrison, co-founder and CEO Tim Geisenheimer told TechCrunch.
The New York-based company was founded in 2020 by Geisenheimer and Diana Hsieh, who overlapped at TimescaleDB, and John Pena, who Geisenheimer met at Facet. In their previous roles, they saw a need to connect product data to sales tools.
While at Timescale, Geisenheimer said there were thousands of free users to talk to, and he and Hsieh built a similar version of a product-led growth platform there, but secretly wished there was something more like Correlated available.
What they saw was data across multiple tools being stored manually on spreadsheets so that actionable insights could be generated. The data would quickly become outdated. Add in that the way customers use products now is different. Traditionally, customers would not be able to use a product until they talked to the sales team. Today, customers start using products for free and either get value from it or not, but sales teams don’t have real-time data on their experience.
“Sales needs to know how customers are using the product and the right time for sales to engage based on maturity of the experience,” Geisenheimer said. “That was the missing piece of it and sales teams ended up talking to the wrong people. With Correlated, they can close more deals efficiently.”
Correlated’s technology pulls in product usage data from tools and data warehouses and connects to a management platform like Salesforce or HubSpot, stitching it together into a data graph to show how customers are using a product. For example, within a company of 200 to 500 employees, a salesperson can see the frequency employees logged in and be alerted of when the best opportunity is to make the sale.
The company has a SaaS pricing model and is already working with mid-market companies like Ally, Pulumi, ReadMe and LaunchNotes. To support its launch out of beta, Geisenheimer intends to use the new funding for hiring across functions like engineering and go-to-market. The company has 11 employees currently.
There are other product-led growth platforms out there that raised venture capital funding recently, for example, Endgame, and similarly Geisenheimer said the competition is often in-house product teams building their own systems. Correlated’s differentiator is that it has taken on that task itself and enables customers to quickly see value once they are up-and-running, he added.
David Beisel, co-founder and partner at NextView Ventures, said his firm invests in category stage companies and is currently operating out of its fourth fund, infusing business-to-business SaaS and e-commerce companies. Beisel has known Geisenheimer for nearly a decade now, having met him when NextView invested in one of Geisenheimer’s previous companies, TapCommerce.
“At the end of the day with Tim, he knows sales and the company is selling a product that has a strong founder market fit,” Beisel said. “We are moving toward a world where end-user adoption of software — not the initial engagement — is growing over time. Instead, Correlated empowers that initial sale and account expansion and that will align with where the industry is going.”
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Orbit raises $4M for its community experience platform
Orbit, a startup that is building tools to help organizations build communities around their proprietary and open-source products, today announced that it has raised a $4 million seed funding round led by Andreessen Horowitz’s Martin Casado. A number of angel investors, including Chris Aniszczyk, Jason Warner and Magnus Hillestad, as well as the a16z’s Cultural Leadership Fund, also participated, in addition to previous backers Heavybit and Harrison Metal.
The company describes its service as a “community experience platform.” Currently, Orbit’s focus is on Developer Relations and Community teams, as well as open-source maintainers. There’s no reason the company couldn’t branch out into other verticals as well, though, given that its overall framework is really applicable across all communities.
Orbit team: Patrick Woods, Nicolas Goutay and Josh Dzielak
As Orbit co-founder Patrick Woods told me, community managers have generally had a hard time figuring out who was really contributing to their communities because those contributions can come in lots of forms and often happen across a wide variety of platforms. In addition, the sales and marketing teams also often don’t understand how a community impacts a company’s bottom line. Orbit aggregates all of these contributions across platforms.
“There is a lack of understanding around the ways in which community impacts go-to-market and business value,” Woods told me when I asked him about the genesis of the idea. “There’s a big gap in terms of the tooling associated with that. Many companies agree that community is important, but if you put $1 in the community machine today, it’s hard to know where that’s going to come out — and is it going to come out in terms of $0.50 or $100? This was a set of challenges that we noticed across companies of all sizes.”
Image Credits: Orbit
Especially in open-source communities, there will always be community members who create a lot of value but who don’t have a commercial relationship with a company at all. That makes it even harder for companies to quantify the impact of their communities, even if they agree that community is an important way to grow their business and that, in Orbit’s words, “community is the new pre-sales.”
At the core of Orbit (the company) is Orbit the open-source community framework. The founding team of Woods (CEO) and Josh Dzielak (CTO) developed this framework to help organizations understand how to best build what the team calls a “high gravity community” to attract new members and retain existing ones — and how to evaluate them. You can read more about the concept here.
Image Credits: Orbit
“We’re trying to reframe the discussion away from an extractive worldview that says how much value can we generate from this lead? It’s actually more about how much love can we generate from these community members,” Woods said. “Because, if you think about the culture associated with what we’re trying to do, it’s fundamentally creative and generative. And our goal is really to help people think less about value extraction and more about value creation.”
At the end of the day, though, no matter the philosophy behind your community-building efforts, there has to be a way to measure ROI and turn some of those community members into paying customers. To do that, Orbit currently pulls in data from sources like GitHub, Twitter and Discourse, with support for Slack and other tools coming soon. With that, the service makes it far easier for community managers to keep tabs on what is happening inside their community and who is participating.
Image Credits: Orbit
In addition to the built-in dashboards, Orbit also provides an API to help integrate all of this data into third-party services as well.
“One of the key understandings that drives the Orbit vision is that a community is not a funnel and building a community is not about conversions, but making connections; cultivating dialog and engagement; being open and giving back; and creating value versus trying to capture it,” a16z’s Casado writes. “The model has proven to be very effective, and now Orbit has built a product around it. We strongly believe Orbit is a must-have product for those building developer-focused companies.”
The company is already working with just under 150 companies and its users include the likes of Postman, CircleCI, Kubernetes and Apollo GraphQL.
The company will use the new round, which closed a few weeks ago, to, among other things, build out its go-to-market efforts and develop more integrations.
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Raising VC in Silicon Valley as a female POC
Nathan Beckord is CEO of Foundersuite.com, a software platform for raising capital and managing investors that has helped entrepreneurs raise over $2 billion since 2016. He is also the host of Foundersuite’s How I Raised It podcast.
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As the world grows increasingly digital, the craving for face-to-face connections is surging. Squad, an invite-only community and app, is trying to fill the need for offline connections by curating tight-knit events for Gen Z and Millennials.
“It mimics building relationships in real life,” says founder and CEO Isa Watson.
It’s an idea that investors are already backing: Squad closed a $3.5 million seed round and plans to raise its Series A in early 2020, but the road to securing that round was anything but easy. During a conversation on the How I Raised It podcast, Watson shared the ups and downs of her unique path to fundraising.
Establish credibility for a few years before fundraising
She started by putting some of the earliest capital into the business herself with support from her family. She then worked her way through more than 200 meetings in Silicon Valley to build up her credibility as a founder — a step that she can’t stress enough — before Squad even started its official seed round.
“Despite the fact that I went to MIT, despite the fact that I managed a billion-dollar product at JPMorgan Chase and even built a huge digital product, I was still a Silicon Valley outsider,” Watson says.
People sometimes have the perception that being an alumni at a top U.S. university will mean they can go to Silicon Valley and just be “in,” Watson explains, but that’s not quite how it works.
“It takes a lot of work and a lot of credibility building,” she says. “That’s what I was doing for a few years before we actually did our official seed round. By the time I did it, it was like my reputation preceded me and there was enough familiarity with me.”
Isa Watson, Squad founder and CEO
Don’t do the cold outreach thing — warm introductions only
Despite taking more than 200 meetings in her efforts to crack Silicon Valley, Watson never took a cold meeting.
“Cold outreach is a tactic that I see a lot of founders using,” she says, “whereas I would argue that the more effective introduction comes from someone who knows someone.”
Leveraging the connections she built was critical in connecting Watson to her eventual funders. “They’re all referring you to the next three people to talk to,” Watson says. “It becomes like tree branches and then a network that’s growing in a multiplicative fashion.”
One of Squad’s earliest investors was Steven Aldrich, who at the time was working as chief product officer at GoDaddy . Both Aldrich and Watson grew up in North Carolina, and Steven’s father shared hometown roots with her, which helped her make the initial connection.
“It was about consistently making connections like that,” she says. “Steven introduced me to three people, and then those three other people introduced me to two people. And that’s essentially how I got the ball rolling.”
Not all meetings need to be about meeting for coffees or lunches, either — Watson took plenty of calls while expanding her network, as well. But the important step was making those connections, which was “a really hard hustle and grind, head down,” for the first two years.
Be really specific when asking for advice
When meeting people in Silicon Valley or expanding her network of prospective funders, Watson didn’t tease future funding rounds or send off vague meeting requests.
In trying to build out her network, she first researched a couple of key things: who did she need to know in order to build a really strong product, and who did she need to know in order to have solid distribution or growth marketing? Once she identified those folks, she would reach out to them individually and ask them for specific advice in their area of expertise.
“People always say, ‘When you want money, ask for advice. If you want advice, ask for money,’” Watson says. “Being super-explicit in the ask and explaining how you’ll spend their time and their brain space is super important.” No one has time for a generic request like, “Hey, can I pick your brain?”
When you’ve connected with someone, you should always ask them for recommendations for experts in specific areas — like growth marketing, product, etc. If they volunteer a few names, ask if you can send an email that they could forward on to introduce you to those individuals.
Following the introductions, it’s important to remember that it’s not just a “one and done,” as she says. Once you’ve met with someone through an introduction, follow up: let them know how the meetings went and thank them again.
“It’s like really, really intense relationship management, and it’s something that people with the highest EQ do best,” says Watson. “I would identify my needs, make specific asks … and then I would make sure to explicitly ask if they did not offer for three other intros for people that could be helpful, that would be excited about what we’re doing.”
Secret weapon: your fundraising quarterback
When she realized it was time to start raising money for Squad, her first move was to identify her “quarterback for fundraising” — in this case, Charles Hudson from Precursor Ventures. It’s helpful, according to Watson, to not have “too many cooks in the kitchen,” or else you’ll end up with far too many opinions that don’t align.
Hudson had already invested a small amount of money in Squad at the time, but he quickly became the person Watson went to for feedback on her pitches. He counseled her on other aspects of running a process.
“One thing Charles tells me is that, with fundraising, you’re likely only going to be successful if that’s your core focus at that time,” Watson says. “It’s not something you can do passively.”
So Hudson and Watson sat down and came up with a list of 35 target venture capitalists. He introduced her to five who she didn’t expect to be a good fit. They first went with the ones they didn’t expect would be a perfect match so she could gather feedback and see if Squad was actually ready to raise capital.
Of those first five meetings, one or two “were complete dings” and turned Squad down outright — but Watson made it to partner meetings in the three other meetings, a sign that VCs were seriously considering Squad.
Based on that feedback, Hudson introduced Watson to 10 more VCs — and shortly after, she met Michael Dearing at Harrison Metal, who led Squad’s seed round.
Choose your seed funders carefully
After Dearing offered up a term sheet of $3 million, Watson quickly had offers from other VCs.
“It’s funny because it took me deliberately being in the market for fundraising for like two and a half months to get that ‘yes’ from Michael. Before that, I had no cash really committed,” she says. “And then after just a few days of letting people know I had a term sheet for $3 million, I had like $6 million on a table. VCs are such followers.”
With that many offers on the table following Dearing’s lead, Watson was in the enviable position of needing to pick who she’d let into the seed round. So how did she choose?
“The first thing is value add,” Watson says. She asked herself: “did I feel like I had the right assortment of value? I maybe want someone in there who’s really strong on product; I may want someone who’s really strong at growth, strong at marketing.”
Her second criteria for making the decision was a less resume-focused. Simply put, she went with her gut.
“One thing that founders really, really underestimate is — is this person a good human being? I went with the people that I had felt most comfortable with, the people who I felt I could trust based on my interactions with them, and who were just supportive along the way.”
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ClearBrain launches analytics tools focused on connecting cause and effect
Businesses need to understand cause and effect: Someone did X and it increased sales, or they did Y and it hurt sales. That’s why many of them turn to analytics — but Bilal Mahmood, co-founder and CEO of ClearBrain, said existing analytics platforms can’t answer that question accurately.
“Every analytics platform today is still based on a fundamental correlation model,” Mahmood said. It’s the classic correlation-versus-causation problem — you can use the data to suggest that an action and a result are related, but you can’t draw a direct cause-and-effect relationship.
That’s the problem that ClearBrain is trying to solve with its new “causal analytics” tool. As the company put it in a blog post, “Our goal was to automate this process [of running statistical studies] and build the first large-scale causal inference engine to allow growth teams to measure the causal effect of every action.”
You can read the post for (many) more details, but the gist is that Mahmood and his team claim they can draw accurate causal relationships where others can’t.
The idea is to use this in conjunction with A/B testing — customers look at the data to prioritize what to test next, and to make estimates about the impact of things that can’t be tested. Otherwise, Mahmood said, “If you wanted to measure the actual impact of every variable on your website and your app — the actual impact it has on conversation — it could take you years.”
When I wrote about ClearBrain last year, it was using artificial intelligence to improve ad targeting, but Mahmood said the company built the new analytics technology in response to customer demand: “People didn’t just want to know who was going to convert, they wanted to know why, and what caused them to do so.”
The causal analytics tool is currently available to early access users, with plans for a full launch in October. Mahmood said there will be a number of pricing tiers, but they’ll be structured to make the product free for many startups.
In addition to launching the analytics tool in early access, ClearBrain also announced this week that it’s raised an additional $2 million in funding from Harrison Metal and Menlo Ventures.
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CEO Jennifer Tejada just took PagerDuty public; we talked about the roadshow, the IPO and what comes next
PagerDuty debuted on the New York Stock Exchange today, and as we type, shares of the nine-year-old, San Francisco-based incident response software company are trading at nearly $39.
That’s up more than 60 percent above their IPO range of $24 per share, which was itself adjusted from the range of $21 to $23 that had been expected earlier and gives the company a valuation of close to $3 billion. That’s an awful lot for a company whose software helps technical teams at 11,000 companies spot problems with applications and respond to incidents. Though it’s growing quickly — revenue was up 48 percent last year — it still pulled in just $117.8 million in 2018. Meanwhile, its net loss widened last year, to $40.7 million from $38.1 million in 2017.
Certainly, its performance has to make the company’s investors — who last assigned the company a valuation of $1.3 billion back in September — very happy. Some of the VCs poised to win big if PagerDuty’s shares continue flying high include Andreessen Horowitz, which owned 18.4 percent of PagerDuty’s shares sailing into the IPO; Accel, which owned 12.3 percent; and Bessemer, which owned 12.2 percent. Other winners include Baseline Ventures (6.7 percent) and Harrison Metal (5.3 percent).
It’s also exciting for CEO Jennifer Tejada, a proven operator who was brought in to lead PagerDuty in 2016 and now becomes part of a small — but growing — club of women CEOs to take their tech companies public, including Katrina Lake of Stitch Fix and Julia Hartz of Eventbrite.
We talked with Tejada earlier today about the company’s big day. In addition to crediting company co-founders (and shareholders) Andrew Miklas and Baskar Puvanathasan, both of whom have since left the company, Tejada thanked PagerDuty co-founder Alex Solomon, who remains the company’s CTO. She also told us a little bit about what today has been like, and how the IPO changes things — and doesn’t. Our chat has been edited for length.
TC: First and foremost, how are you feeling?
JT: It’s been an incredible day. It’s been an incredible several months. You have to enjoy it when it’s going well.
TC: How does the vision for the company change now that it’s public? Have you been thinking ahead to possible acquisitions?
JT: The vision doesn’t change. We intend to do exactly what we’ve been doing, which is to provide the best real-time operations platform available to companies as they undergo digital transformation to meet the growing demands of their customers. We think we’re [facing] an early and very large opportunity that will be available to us for a long time. So our job continues to be to build great products, stay close to our customers, expand regionally and continue doing what has allowed us to be a successful private company.
TC: You and I had talked about the challenges of retaining employees in San Francisco when we sat down together in November. It’s a battle for every local company. How do you keep employees beyond the lock-up period? How do you ensure they stay focused on performance and not your share price?
JT: I think that mindset of, ‘It’s all over when you go public,’ is kind of a Silicon Valley fable. If you look at the most successful SaaS companies on the planet, they’ve gained 10x, 20x, 30x their value post their IPO. I also think what employees look for ahead of their financial success is career success. Am I being developed and recognized and can I build my career at this company? And we’ve worked really hard to create those career opportunities for our employees who [I think see, as I do] the IPO like a racing boat pushing off the dock, across the starting line, and into the open ocean, where the next adventure awaits.
In the meantime, we’ve already lessened our reliance on [overheated job markets] by opening offices in Toronto and Atlanta and Seattle and London and Sydney, even while we’re still hiring in San Francisco and Seattle.
TC: Obviously, Lyft’s shares have been up and down, owing to short sellers. Have you been monitoring short interest? Are you at all concerned about investors driving the price sky high, then selling it on the way down?
JT: I haven’t even looked at the stock price in the last several hours . . . There are a lot of things outside of my control, and the free market is one of them.
TC: PagerDuty is rare in that is doesn’t have a dual-class structure, which can greatly empower leaders over everyone else associated with a company. Presumably, this is a great relief to your investors; I just wonder whether it was ever a consideration?
JT: I’m a little bit of a traditionalist. I’ve been around long enough to know how checks and balances work, and a single-class structure made sense for PagerDuty. Also, dual-class structures tend to emerge more when you have deeply involved founders, and though Alex is still very much a part of the business, PagerDuty’s other two founders have worked outside of the business for some time.
TC: You have plenty of operating experience, including previously running Keynote Systems, but you’ve never taken a company public. Were there ways in which you found the roadshow experience surprising?
JT: I was surprised by how fun it was! [Laughs.] When you have a great story, and a great partner helping you tell it — in my case that’s [PagerDuty CFO] Howard Wilson, who I’ve worked with for 10 years — it’s great. We had a great reception from investors. I loved our IPO team; our Top were both led by women and whenever I had a question, they [had the answer]. I also had this cocoon of experience surrounding me thanks to our board. If anyone tells you that [in this position] they are super comfortable, they’re either lying or [clueless] but I was very lucky. I also have a whole bunch of buddies who are CEOs [and other executives] in SaaS and I’ve been shaking them down for advice for months, so I felt well-prepared.
TC: What was some of the advice you received from those friends about how your life is about to change?
JT: Some of it was about the need to keep people focused and not get distracted, to remind everyone that this is a milestone, not the goal. [Some centered on] surrounding yourself with a great team and the importance of great investor relations, a function you don’t have as a private company but that can create huge value and provide support and understanding of the market.
One CEO said to just make sure you keep having fun, to try and stay “you,” to find joy in the same things as before. There will be stressful moments and tough questions — that’s true of any company that’s scaling — but I heard a lot of advice about just taking care of myself, including on the roadshow. In fact, there were a lot of really supportive notes and private tweets that, in a job that can feel lonely, made me feel not alone, and I’m very appreciative of that.
TC: People call IPOs just another funding event, but that’s kind of baloney, isn’t it? If you had to list the most meaningful moments in your life on a scale from 1 to 10, 1 being the most important, where might today fall? Would today be up there on that list?
JT: When I think of most meaningful moments, I think of the day my daughter was born, and my wedding. Another day that was very meaningful to me was when I approved our pledge to donate one percent [of PagerDuty’s equity, one percent of its product and one percent of employees’ time] to social impact. We did it a lot later in the game than some companies; our equity was already valuable. But we knew that it was going to create meaningful impact over time.
But yes, it is a gratifying day, especially for the co-founders who were pulling the idea together for PagerDuty a couple of years before they even launched it, and for employees who’ve been with the company for nearly as long and who turned down safer and higher-paying jobs along the way. Seeing their joy today — that is a memory that will be in my top 10 for sure.
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FanDuel co-founder Tom Griffiths just closed a seed round for his decidedly noncontroversial new startup, Hone
Tom Griffiths has founded four companies, two of which “weren’t much to write home about,” he jokes. The third captured the world’s attention: FanDuel, the fantasy sports company that was routinely in the press — not always for desirable reasons — from nearly the day it launched, to its near merger with rival DraftKings, to its ultimate sale last May to the European betting giant Paddy Power Betfair in a deal that reportedly saw FanDuel’s founders, along with its employees, walk away with almost nothing at the end of their roller coaster ride.
Little wonder that Griffith’s new, fourth company, Hone, is targeting the comparatively undramatic world of workforce training. Specifically, Hone and his small team have built a platform for modern and distributed teams, inspired largely by FanDuel’s experience of becoming a unicorn at one point in just six years’ time, and growing its team from 5 to 500 people in the process. Looking back, says Griffiths, “We really didn’t have the manager training we wanted or needed.”
In fact, Griffiths had already left the company by the time it was acquired, around his 10th anniversary last year, to “go back to the start.” It was time, he says. FanDuel had grown like a weed. He was exhausted by the many regulators wrestling with whether FanDuel provided a legally acceptable form of gambling. He knew he wanted to work in education, too. “My mom was a teacher,” he offers simply.
Enter Griffith’s newest act, which is just 10 months old at this point. The goal of the San Francisco-based company is to improve people’s skills around leadership management and people management, specifically at companies that already have hundreds of employees and that are dealing with increasingly distributed and diverse teams.
Hone is obviously not the first company tackling the remote management training or team building. The market already attracts tens of billions of dollars each year. But he insists it will be one of the best, including because it’s unlike a lot of what’s available currently. For one thing, Hone is very anti-traditional workshop. Hone also eschews pre-recorded video, working instead with qualified professional coaches who have to audition for Hone and who are already teaching a growing number of customers 12 different modules, typically in online class sizes of eight to a dozen people.
A company simply signs up, chooses from the programs (these include an intensive manager bootcamp, for example, as well as a manager 101 program), then embarks on what are 60- to 90-minute sessions each week for seven weeks.
The idea, in part, is for the learnings to stick. According to Griffiths, trainees forget 70 percent of what they are taught within 24 hours of a training experience. Instilling new lessons and reiterating old ones produces a greater return on investment for Hone’s customers, he suggests.
Hone’s underlying platform is also a differentiator, he says. It contains a reporting interface, so companies can not only see who is in attendance, but they can measure learner feedback through students who are asked afterward to provide the company with details about what they’ve learned. Hone’s software can also track how many questions were asked to assess engagement.
The self-learning platform gives Hone an easier way to assess how successful, or not, a particular module proves to be, and it allows Hone to continue sharpening its products. In fact, Griffiths says that by working with early, paying customers that include WeWork, Clear, App Annie, Dashlane, Omada Health, SoulCycle and others, Hone has already learned much that it intends to bake into future products,.
“We were in pilot mode last year to get product-market fit.” Now, the company is ready for its close-up, he suggests.
Some new funding should help. In addition to taking the wraps off Hone and opening more widely for business, the company just raised $3.6 million in seed funding led by Cowboy Ventures and Harrison Metal. Other participants in the round include Slack Fund, Reach Capital, Rethink Education, Day One Ventures, Entangled Ventures and numerous relevant angel investors, like Masterclass CEO David Rogier and Guild Education CEO Rachel Carlson.
What the 10-month-old company isn’t sharing publicly just yet is its pricing, which may remain flexible in any case. Says Griffiths, “We work with customers to diagnose their needs, then we create a package, one that’s far more reasonable than classroom training. There’s no travel. No instructor having to come to you.”
Griffiths is more forthcoming when it comes to lessons learned at FanDuel. Among these is aligning one’s self with investors who share a company’s values. He points to Cowboy Ventures founder Aileen Lee, calling her a “towering pillar of progressive values, equality, inclusion and diversity.” What he saw at FanDuel, he says, is that “investors can influence culture. So from the board down, you want people who share your same values.”
Griffiths also stresses the “importance of establishing a strong culture and a vision from the start, and to live that every day as you grow.
“It’s something we did well at FanDuel at some times,” he says, “and not so well at other times.”
Hone founders, left to right: Savina Perez, who was formerly a VP of marketing at CultureIQ, a platform that aims to helps companies strengthen their culture; Tom Griffiths; and Jeremy Hamel, who was formerly the head of product at CultureIQ.
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Even raises $40M to transform the working class to the savings class
The working class of the United States doesn’t get many breaks these days. It’s not just a function of low pay and long hours, but also the incredible uncertainty of income and expenses that makes surviving week-to-week so challenging. One in five Americans have a negative net wealth, even in an economy where the unemployment rate is the lowest in almost two decades. Banks, meanwhile, are actively dissuading the working class from banking with them, creating a permanent class of unbanked and underbanked citizens.
For Jon Schlossberg, CEO and co-founder of Even.com, improving the plight of ordinary Americans and their finances is a deeply personal and professional mission. And now that mission has a huge new bucket of capital behind it, with Keith Rabois of Khosla Ventures leading a $40 million Series B round into the Oakland-based startup. Rabois is a return investor, having previously backed the company in its late 2014 seed round. With this latest round of capital, Even.com has now raised $50.5 million.
When Even.com first launched its eponymous app, the goal was to offer income smoothing for workers, helping them avoid usurious payday loans to make ends meet. Since that first launch several years ago, Schlossberg and his team learned that the only way to improve the finances for the working class is to help them budget better — ending the need for loans in the first place. “To do anything with your life, unless you are just born to the right family, you need to spend your money wisely, but we never teach you how to do that,” Schlossberg explained to me.
Last year, Even.com announced that it had stopped evening through its Pay Protection product. Instead, Schlossberg said that Even.com has evolved and wanted to “build a new kind of financial institution with products that fit your life.” It still has a feature it brands as Instapay, which allows users to request their earned pay in advance of their payday.
But Even.com is increasingly focused on improving the quality of its intelligent budgeting feature. Using artificial intelligence models honed over the past few years, the company now gives users of its Even app an “Okay to spend” figure that helps them think through their cash flow. By giving a predictive figure rather than a checking account balance, Even can help its users avoid sudden surprise expenses that can trigger the kind of financial death spiral that has become a familiar story in America. The company will also soon launch an automatic savings feature similar to Digit or Acorns that helps people build up regular savings.
Even’s Okay to spend feature gives insight into future cash flows before it is too late
While the company offers an increasingly comprehensive suite of financial tools, it has decided to avoid charging users specific use fees, opting instead for a subscription model. Schlossberg explained that “We are a mission-oriented company, but talk is cheap and where the rubber hits the road, it’s how you make money.” Even is free for users participating through partner employers, or $2.99 a month for individuals without a sponsor.
The company’s highest expense feature is Instapay due to underwriting, and so the company makes higher profits when fewer of its customers need access to payday credit. In other words, the better that its users budget, the fewer loans it will underwrite, and the more money the company makes. We are “directly incentivized to help people with their financial health,” Schlossberg noted.
Even has proven attractive to corporate customers, including Walmart, which partnered with the startup last December to offer its service to all 1.4 million employees at the retailer. Since the launch of that partnership, more than 200,000 Walmart employees regularly use the app, according to Even, and the typical active user checks their Okay to spend balance four times a week. A majority of active users have also taken out an Instapay through Even.
More interestingly, salaried employees at Walmart used the app slightly more than hourly workers, proving that just having a guaranteed income isn’t necessarily a panacea to financial trouble for many American households.
Even.com’s Series B round is all about expansion and growth for the company. Even intends to open an East Coast office this year, and intends to expand its product further into the Fortune 500 with partnerships similar to its Walmart deal. The company currently has 37 employees. In addition to Khosla, the startup raised funding from Valar Ventures, Allen & Company, Harrison Metal, SV Angel, Silicon Valley Bank and others.
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