manufacturing
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Fractory raises $9M to rethink the manufacturing supply chain for metalworks
The manufacturing industry took a hard hit from the Covid-19 pandemic, but there are signs of how it is slowly starting to come back into shape — helped in part by new efforts to make factories more responsive to the fluctuations in demand that come with the ups and downs of grappling with the shifting economy, virus outbreaks and more. Today, a businesses that is positioning itself as part of that new guard of flexible custom manufacturing — a startup called Fractory — is announcing a Series A of $9 million (€7.7 million) that underscores the trend.
The funding is being led by OTB Ventures, a leading European investor focussed on early growth, post-product, high-tech start-ups, with existing investors Trind Ventures, Superhero Capital, United Angels VC, Startup Wise Guys and Verve Ventures also participating.
Founded in Estonia but now based in Manchester, England — historically a strong hub for manufacturing in the country, and close to Fractory’s customers — Fractory has built a platform to make it easier for those that need to get custom metalwork to upload and order it, and for factories to pick up new customers and jobs based on those requests.
Fractory’s Series A will be used to continue expanding its technology, and to bring more partners into its ecosystem.
To date, the company has worked with more than 24,000 customers and hundreds of manufacturers and metal companies, and altogether it has helped crank out more than 2.5 million metal parts.
To be clear, Fractory isn’t a manufacturer itself, nor does it have no plans to get involved in that part of the process. Rather, it is in the business of enterprise software, with a marketplace for those who are able to carry out manufacturing jobs — currently in the area of metalwork — to engage with companies that need metal parts made for them, using intelligent tools to identify what needs to be made and connecting that potential job to the specialist manufacturers that can make it.
The challenge that Fractory is solving is not unlike that faced in a lot of industries that have variable supply and demand, a lot of fragmentation, and generally an inefficient way of sourcing work.
As Martin Vares, Fractory’s founder and MD, described it to me, companies who need metal parts made might have one factory they regularly work with. But if there are any circumstances that might mean that this factory cannot carry out a job, then the customer needs to shop around and find others to do it instead. This can be a time-consuming, and costly process.
“It’s a very fragmented market and there are so many ways to manufacture products, and the connection between those two is complicated,” he said. “In the past, if you wanted to outsource something, it would mean multiple emails to multiple places. But you can’t go to 30 different suppliers like that individually. We make it into a one-stop shop.”
On the other side, factories are always looking for better ways to fill out their roster of work so there is little downtime — factories want to avoid having people paid to work with no work coming in, or machinery that is not being used.
“The average uptime capacity is 50%,” Vares said of the metalwork plants on Fractory’s platform (and in the industry in general). “We have a lot more machines out there than are being used. We really want to solve the issue of leftover capacity and make the market function better and reduce waste. We want to make their factories more efficient and thus sustainable.”
The Fractory approach involves customers — today those customers are typically in construction, or other heavy machinery industries like ship building, aerospace and automotive — uploading CAD files specifying what they need made. These then get sent out to a network of manufacturers to bid for and take on as jobs — a little like a freelance marketplace, but for manufacturing jobs. About 30% of those jobs are then fully automated, while the other 70% might include some involvement from Fractory to help advise customers on their approach, including in the quoting of the work, manufacturing, delivery and more. The plan is to build in more technology to improve the proportion that can be automated, Vares said. That would include further investment in RPA, but also computer vision to better understand what a customer is looking to do, and how best to execute it.
Currently Fractory’s platform can help fill orders for laser cutting and metal folding services, including work like CNC machining, and it’s next looking at industrial additive 3D printing. It will also be looking at other materials like stonework and chip making.
Manufacturing is one of those industries that has in some ways been very slow to modernize, which in a way is not a huge surprise: equipment is heavy and expensive, and generally the maxim of “if it ain’t broke, don’t fix it” applies in this world. That’s why companies that are building more intelligent software to at least run that legacy equipment more efficiently are finding some footing. Xometry, a bigger company out of the U.S. that also has built a bridge between manufacturers and companies that need things custom made, went public earlier this year and now has a market cap of over $3 billion. Others in the same space include Hubs (which is now part of Protolabs) and Qimtek, among others.
One selling point that Fractory has been pushing is that it generally aims to keep manufacturing local to the customer to reduce the logistics component of the work to reduce carbon emissions, although as the company grows it will be interesting to see how and if it adheres to that commitment.
In the meantime, investors believe that Fractory’s approach and fast growth are strong signs that it’s here to stay and make an impact in the industry.
“Fractory has created an enterprise software platform like no other in the manufacturing setting. Its rapid customer adoption is clear demonstrable feedback of the value that Fractory brings to manufacturing supply chains with technology to automate and digitise an ecosystem poised for innovation,” said Marcin Hejka in a statement. “We have invested in a great product and a talented group of software engineers, committed to developing a product and continuing with their formidable track record of rapid international growth
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6 tips for establishing your startup’s global supply chain
Startups are hard work, but the complexities of global supply chains can make running hardware companies especially difficult. Instead of existing within a codebase behind a screen, the key components of your hardware product can be scattered around the world, subject to the volatility of the global economy.
I’ve spent most of my career establishing global supply chains, setting up manufacturing lines for 3D printers, electric bicycles and home fitness equipment on the ground in Mexico, Hungary, Taiwan and China. I’ve learned the hard way that Murphy’s law is a constant companion in the hardware business.
But after more than a decade of work on three different continents, there are a few lessons I’ve learned that will help you avoid unnecessary mistakes.
Expect cost fluctuations, especially in currency and shipping
Shipping physical products is quite different from “shipping” code — you have to pay a considerable amount of money to transport products around the world. Of course, shipping costs become a line item like any other as they get baked into the overall business plan. The issue is that those costs can change monthly — sometimes drastically.
At this time last year, a shipping container from China cost $3,300. Today, it’s almost $18,000 — a more than fivefold increase in 12 months. It’s safe to assume that most 2020 business plans did not account for such a cost increase for a key line item.
Shipping a buggy hardware product can be exponentially costlier than shipping buggy software. Recalls, angry customers, return shipping and other issues can become existential problems.
Similar issues also arise with currency exchange rates. Contract manufacturers often allow you to maintain cost agreements for any fluctuations below 5%, but the dollar has dropped much more than 5% against the yuan compared to a year ago, and hardware companies have been forced to renegotiate their manufacturing contracts.
As exchange rates become less favorable and shipping costs increase, you have two options: Operate with lower margins, or pass along the cost to the end customer. Neither choice is ideal, but both are better than going bankrupt.
The takeaway is that when you set up your business, you need to prepare for these possibilities. That means operating with enough margin to handle increased costs, or with the confidence that your end customer will be able to handle a higher price.
Overorder critical parts
Over the past year, many businesses have lost billions of dollars in market value because they didn’t order enough semiconductors. As the owner of a hardware company, you will encounter similar risks.
The supply for certain components, like computer chips, can be limited, and shortages can arise quickly if demand increases or supply chains get disrupted. It’s your job to analyze potential choke points in your supply chain and create redundancies around them.
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Japan’s B2B ordering and supply platform CADDi raises $73 million Series B funding
With COVID-19 disrupting the entire manufacturing supply chain including semiconductor shortages, companies across multiple industries have been struggling to seek a procurement solution that can rebalance the gap between supply and demand.
CADDi, a Tokyo-based B2B ordering and supply platform in the manufacturing and procurement industry, helps both procurement (demand side) and manufacturing facilities (supply side) by aggregating and rebalancing supply and demand via its automated calculation system for manufacturing costs and databases of fabrication facilities across Japan.
The company announced this morning a $73 million Series B round co-led by Globis Capital Partners and World Innovation Lab (WiL), with participation from existing investors DCM and Global Brain. Six new investors also have joined the round including Arena Holdings, DST Global, Minerva Growth Partners, Tybourne Capital Management, JAFCO Group and SBI Investment.
CADDi was founded by CEO Yushiro Kato and CTO Aki Kobashi in November 2017.
The post-money valuation is estimated at $450 million, according to sources close to the deal.
The new funding brings CADDi’s total raised so far to $90.5 million. In December 2018, the company closed a $9 million Series A round led by DCM and followed by Globis Capital Partners and WiL and Global Brain.
The funding proceeds will be used for accelerating digital transformation of the platform, hiring and expanding to global markets.
“We enable integrated production of complete sets of equipment consisting of custom-made parts such as sheet metal, machined parts and structural frames. Using an automatic quotation system based on a proprietary cost calculation algorithm, we select the processing company that best matches the quality, delivery date and price of the order and build an optimal supply chain,” CEO and co-founder Yushiro Kato said.
The goal of CADDi’s ordering platform is to transform the manufacturing industry from a multiple subcontractor pyramid structure to a flat, connected structure based on each manufacturers’ individual strengths, thus creating a world where those on the front lines of manufacturing can spend more time on essential and creative work, Kato said.
CADDi’s ordering platform, backed by its unique technology including automatic cost calculation system, optimal ordering and production management system, and drawing management system, offers a 10%-15% cost reduction, stable capacity and balanced order placement to its more than 600 Japanese supply partners spanning a multitude of industries.
“The demand for CADDi’s services has seen significant acceleration. Our business has been growing very fast, and our latest orders have grown more than six times compared to the previous year, leading to the company’s expanded presence into both eastern and western Japan in order to meet this increase in demand,” Kato said.
“Going forward, in addition to continuously expanding our ordering platform, we will also start to provide purchases (manufacturers) and supply partners with our technology directly to promote digital transformation of their operations, for example, the production management system and drawing management system,” Kato continued.
“As a start point, in the near future, we are thinking about selling ‘Drawing Management SaaS,’” which has been used internally for CADDi’s ordering operation, to help customers solve operational pains in handling piles of drawings. “Our ‘Drawing Management SaaS’ technology will not only help manage drawings as documents properly but also allow utilization of data of drawings in a practical way for future decision-making and action in their procurement process.”
CADDi’s next axis of growth will be other growing markets, especially in Southeast Asia, Kato pointed out. “Many of our Japanese customers have subsidiaries and branches in these countries, so it’s a natural expansion opportunity for us to strengthen our value proposition and provide more continuity and seamless service to our customers,” Kato added.
Kato also said it wants to continue investing in hiring, especially engineers, to further the development of its platform CADDi and new business. It plans to hire 1,000 employees in the next three years. CADDi had 102 employees as of March 2021.
The company aims to become a global platform with sales of USD 9.1 billion (that is 1 trillion YEN) by 2030, Kato said.
COVID-19 had a different impact on different industries in the procurement and manufacturing sector, with “the automobile and machine tool industries were negatively affected by the pandemic and experienced an up to 90% temporary drop in sales, while other industries such as the medical and semiconductor industries have experienced explosive growth in demand. The overall result of COVID-19 is that the company has captured more demand because CADDi’s system rebalances receipts across multiple industries,” according to Kato.
Masaya Kubota, partner at World Innovation Lab, told TechCrunch, “CADDi’s solution of aggregating and rebalancing supply and demand has once again proven to be indispensable to both purchasers and manufacturers, with the pandemic disrupting the entire supply chain in manufacturing. We first invested in CADDi in 2018, because we strongly believed in their mission of digitally transforming one of the most analog industries, the $1 trillion procurement market.”
Another investor principal at DCM, Kenichiro Hara, also said in an email interview with TechCrunch, “The pandemic made the manufacturing industry’s supply chain vulnerabilities quite clear early on. For example, if a country is on lockdown or a factory stalls the operations, their customers cannot procure necessary parts to produce their products. This impact amplifies, and the entire supply chain is affected. Therefore, the demand for finding new, available and accessible suppliers in a timely manner increased in importance, which is CADDi’s primary value-add.”
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Construct Capital’s Dayna Grayson will be a Startup Battlefield Judge at Disrupt 2021
Dayna Grayson has been in venture capital for more than a decade and was one of the first VCs to build a portfolio around the transformation of industrial sectors of our economy.
At NEA, where she was a partner for eight years, she led investments in and sat on the boards of companies including Desktop Metal, Onshape, Framebridge, Tulip, Formlabs and Guideline. She left NEA to start her own fund, Construct Capital, that focuses exclusively on early-stage startups, with a portfolio that includes Copia, ChargeLab, Tradeswell and Hadrian.
It should come as no surprise, then, that we’re absolutely thrilled to have Grayson join us at TechCrunch Disrupt 2021 in September.
Grayson has more than proven that she has a keen eye for transformational technology. Desktop Metal went public in 2020 — she still sits on the board as chair of the compensation committee. Onshape, another NEA-era investment, was acquired by PTC in 2019 for a whopping $525 million. Framebridge was also acquired by Graham Holdings in 2020.
Grayson saw an opportunity to develop a venture brand more hyperfocused on the types of deals she was doing at NEA, which centered around manufacturing and digitizing industrial verticals. That’s where Construct Capital came in. It’s a $140 million fund helmed by Grayson and former Uber exec Rachel Holt.
At Disrupt, Grayson will serve as a Startup Battlefield judge. The Battlefield is one of the world’s most prestigious and exciting startup competitions. Twenty+ early-stage startups hop on our stage and present their wares to a panel of expert VC judges, who then grill the founders on everything about the business, from the revenue model to the go-to-market strategy to the team to the technology itself.
The winner walks away with $100,000 in prize money and the glory of being a Battlefield winner. Households names in tech have gotten their start in the Battlefield, from Dropbox to Mint.
Grayson joins plenty of other seasoned investors on the Battlefield stage, including Camille Samuels, Deena Shakir, Terri Burns, Shauntel Garvey and Alexa Von Tobel.
Disrupt 2021 goes down from September 21 to 23 and is virtual. Snag a ticket here starting under $100 for a limited time!
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Cutting out carbon emitters with bioengineering at XTC Global Finals on July 22
Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. Utilizing natural and engineered biological process has led to low-carbon textiles from AlgiKnit, cell-cultured premium meats from Orbillion and fuels captured from waste emissions via LanzaTech — and leaders from those companies will be joining us onstage for the Extreme Tech Challenge Global Finals on July 22.
We’re co-hosting the event, with panels like this one all day and a pitch-off that will feature a number of innovative startups with a sustainability angle.
I’ll be moderating a panel on using bioengineering to create change directly in industries with large carbon footprints: textiles, meat production and manufacturing.
AlgiKnit is a startup that is sourcing raw material for fabric from kelp, which is an eco-friendly alternative to textile crop monocultures and artificial materials like acrylic. CEO Aaron Nesser will speak to the challenge of breaking into this established industry and overcoming preconceived notions of what an algae-derived fabric might be like (spoiler: it’s like any other fabric).
Orbillion Bio is one of the new crop of alternative protein companies offering cell-cultured meats (just don’t call them “lab” or “vat” grown) to offset the incredibly wasteful livestock industry. But it’s more than just growing a steak — there are regulatory and market barriers aplenty that CEO Patricia Bubner can speak to, as well as the technical challenge.
LanzaTech works with factories to capture emissions as they’re emitted, collecting the useful particles that would otherwise clutter the atmosphere and repurposing them in the form of premium fuels. This is a delicate and complex process that needs to be a partnership, not just a retrofitting operation, so CEO Jennifer Holmgren will speak to their approach convincing the industry to work with them at the ground floor.
It should be a very interesting conversation, so tune in on July 22 to hear these and other industry leaders focused on sustainability discuss how innovation at the startup level can contribute to the fight against climate change. Plus it’s free!
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SightCall raises $42M for its AR-based visual assistance platform
Long before COVID-19 precipitated “digital transformation” across the world of work, customer services and support was built to run online and virtually. Yet it too is undergoing an evolution supercharged by technology.
Today, a startup called SightCall, which has built an augmented reality platform to help field service teams, the companies they work for, and their customers carry out technical and mechanical maintenance or repairs more effectively, is announcing $42 million in funding, money that it plans to use to invest in its tech stack with more artificial intelligence tools and expanding its client base.
The core of its service, explained CEO and co-founder Thomas Cottereau, is AR technology (which comes embedded in their apps or the service apps its customers use, with integrations into other standard software used in customer service environments including Microsoft, SAP, Salesforce and ServiceNow). The augmented reality experience overlays additional information, pointers and other tools over the video stream.
This is used by, say, field service engineers coordinating with central offices when servicing equipment; or by manufacturers to provide better assistance to customers in emergencies or situations where something is not working but might be repaired quicker by the customers themselves rather than engineers that have to be called out; or indeed by call centers, aided by AI, to diagnose whatever the problem might be. It’s a big leap ahead for scenarios that previously relied on work orders, hastily drawn diagrams, instruction manuals and voice-based descriptions to progress the work in question.
“We like to say that we break the barriers that exist between a field service organization and its customer,” Cottereau said.
The tech, meanwhile, is unique to SightCall, built over years and designed to be used by way of a basic smartphone, and over even a basic mobile network — essential in cases where reception is bad or the locations are remote. (More on how it works below.)
Originally founded in Paris, France before relocating to San Francisco, SightCall has already built up a sizable business across a pretty wide range of verticals, including insurance, telecoms, transportation, telehealth, manufacturing, utilities and life sciences/medical devices.
SightCall has some 200 big-name enterprise customers on its books, including the likes of Kraft-Heinz, Allianz, GE Healthcare and Lincoln Motor Company, providing services on a B2B basis as well as for teams that are out in the field working for consumer customers, too. After seeing 100% year-over-year growth in annual recurring revenue in 2019 and 2020, SightCall’s CEO says it’s looking like it will hit that rate this year as well, with a goal of $100 million in annual recurring revenue.
The funding is being led by InfraVia, a European private equity firm, with Bpifrance also participating. The valuation of this round is not being disclosed, but I should point out that an investor told me that PitchBook’s estimate of $122 million post-money is not accurate (we’re still digging on this and will update as and when we learn more).
For some further context on this investment, InfraVia invests in a number of industrial businesses, alongside investments in tech companies building services related to them such as recent investments in Jobandtalent, so this is in part a strategic investment. SightCall has raised $67 million to date.
There has been an interesting wave of startups emerging in recent years building out the tech stack used by people working in the front lines and in the field, a shift after years of knowledge workers getting most of the attention from startups building a new generation of apps.
Workiz and Jobber are building platforms for small business tradespeople to book jobs and manage them once they’re on the books; BigChange helps manage bigger fleets; and Hover has built a platform for builders to be able to assess and estimate costs for work by using AI to analyze images captured by their or their would-be customers’ smartphone cameras.
And there is Streem, which I discovered is a close enough competitor to SightCall that they’ve acquired AdWords ads based on SightCall searches in Google. Just ahead of the COVID-19 pandemic breaking wide open, General Catalyst-backed Streem was acquired by Frontdoor to help with the latter’s efforts to build out its home services business, another sign of how all of this is leaping ahead.
What’s interesting in part about SightCall and sets it apart is its technology. Co-founded in 2007 by Cottereau and Antoine Vervoort (currently SVP of product and engineering), the two are long-time telecoms industry vets who had both worked on the technical side of building next-generation networks.
SightCall started life as a company called Weemo that built video chat services that could run on WebRTC-based frameworks, which emerged at a time when we were seeing a wider effort to bring more rich media services into mobile web and SMS apps. For consumers and to a large extent businesses, mobile phone apps that work “over the top” (distributed not by your mobile network carrier but the companies that run your phone’s operating system, and thus partly controlled by them) really took the lead and continue to dominate the market for messaging and innovations in messaging.
After a time, Weemo pivoted and renamed itself as SightCall, focusing on packaging the tech that it built into whichever app (native or mobile web) where one of its enterprise customers wanted the tech to live.
The key to how it works comes by way of how SightCall was built, Cottereau explained. The company has spent 10 years building and optimizing a network across data centers close to where its customers are, which interconnects with Tier 1 telecoms carriers and has a lot of latency in the system to ensure uptime. “We work with companies where this connectivity is mission critical,” he said. “The video solution has to work.”
As he describes it, the hybrid system SightCall has built incorporates its own IP that works both with telecoms hardware and software, resulting in a video service that provides 10 different ways for streaming video and a system that automatically chooses the best in a particular environment, based on where you are, so that even if mobile data or broadband reception don’t work, video streaming will. “Telecoms and software are still very separate worlds,” Cottereau said. “They still don’t speak the same language, and so that is part of our secret sauce, a global roaming mechanism.”
The tech that the startup has built to date not only has given it a firm grounding against others who might be looking to build in this space, but has led to strong traction with customers. The next steps will be to continue building out that technology to tap deeper into the automation that is being adopted across the industries that already use SightCall’s technology.
“SightCall pioneered the market for AR-powered visual assistance, and they’re in the best position to drive the digital transformation of remote service,” said Alban Wyniecki, partner at InfraVia Capital Partners, in a statement. “As a global leader, they can now expand their capabilities, making their interactions more intelligent and also bringing more automation to help humans work at their best.”
“SightCall’s $42M Series B marks the largest funding round yet in this sector, and SightCall emerges as the undisputed leader in capital, R&D resources and partnerships with leading technology companies enabling its solutions to be embedded into complex enterprise IT,” added Antoine Izsak of Bpifrance. “Businesses are looking for solutions like SightCall to enable customer-centricity at a greater scale while augmenting technicians with knowledge and expertise that unlocks efficiencies and drives continuous performance and profit.”
Cottereau said that the company has had a number of acquisition offers over the years — not a surprise when you consider the foundational technology it has built for how to architect video networks across different carriers and data centers that work even in the most unreliable of network environments.
“We want to stay independent, though,” he said. “I see a huge market here, and I want us to continue the story and lead it. Plus, I can see a way where we can stay independent and continue to work with everyone.”
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Vista Equity takes minority stake in Canada’s Vena with $242M investment
Vena, a Canadian company focused on the Corporate Performance Management (CPM) software space, has raised $242 million in Series C funding from Vista Equity Partners.
As part of the financing, Vista Equity is taking a minority stake in the company. The round follows $25 million in financing from CIBC Innovation Banking last September, and brings Vena’s total raised since its 2011 inception to over $363 million.
Vena declined to provide any financial metrics or the valuation at which the new capital was raised, saying only that its “consistent growth and…strong customer retention and satisfaction metrics created real demand” as it considered raising its C round.
The company was originally founded as a B2B provider of planning, budgeting and forecasting software. Over time, it’s evolved into what it describes as a “fully cloud-native, corporate performance management platform” that aims to empower finance, operations and business leaders to “Plan to Grow” their businesses. Its customers hail from a variety of industries, including banking, SaaS, manufacturing, healthcare, insurance and higher education. Among its over 900 customers are the Kansas City Chiefs, Coca-Cola Consolidated, World Vision International and ELF Cosmetics.
Vena CEO Hunter Madeley told TechCrunch the latest raise is “mostly an acceleration story for Vena, rather than charting new paths.”
The company plans to use its new funds to build out and enable its go-to-market efforts as well as invest in its product development roadmap. It’s not really looking to enter new markets, considering it’s seeing what it describes as “tremendous demand” in the markets it currently serves directly and through its partner network.
“While we support customers across the globe, we’ll stay focused on growing our North American, U.K. and European business in the near term,” Madeley said.
Vena says it leverages the “flexibility and familiarity” of an Excel interface within its “secure” Complete Planning platform. That platform, it adds, brings people, processes and systems into a single source solution to help organizations automate and streamline finance-led processes, accelerate complex business processes and “connect the dots between departments and plan with the power of unified data.”
Early backers JMI Equity and Centana Growth Partners will remain active, partnering with Vista “to help support Vena’s continued momentum,” the company said. As part of the raise, Vista Equity Managing Director Kim Eaton and Marc Teillon, senior managing director and co-head of Vista’s Foundation Fund, will join the company’s board.
“The pandemic has emphasized the need for agile financial planning processes as companies respond to quickly-changing market conditions, and Vena is uniquely positioned to help businesses address the challenges required to scale their processes through this pandemic and beyond,” said Eaton in a written statement.
Vena currently has more than 450 employees across the U.S., Canada and the U.K., up from 393 last year at this time.
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Hong Kong startup ICW eyes supply chain diversification demand amid trade war
For American importers, finding suppliers these days can be challenging not only due to COVID-19 travel restrictions. The U.S. government’s entity list designations, human-rights-related sanctions, among other trade blacklists targeting Chinese firms have also rattled U.S. supply chains.
One young company called International Compliance Workshop, or ICW, is determined to make sourcing easier for companies around the world as it completed a fresh round of funding. The Hong Kong-based startup has just raised $5.75 million as part of its Series A round, boosting its total funding to around $10 million, co-founder and CEO Garry Lam told TechCrunch.
ICW works like a matchmaker for suppliers and buyers, but unlike existing options like Alibaba’s B2B platform or international trade shows, ICW also vets suppliers over compliance, product quality and accreditation. It gathers all that information into its growing database of over 40,000 suppliers — 80% of which are currently in China — and recommends them to customers based on individual needs.
Founded in 2016, ICW’s current client base includes some of the world’s largest retailers, including Ralph Lauren, Prenatal Retail Group, Blokker, Kmart and a major American pharmacy chain that declined to be named.
ICW’s latest funding round was led by Infinity Ventures Partners with participation from Integrated Capital and existing investors MindWorks Capital and the Hong Kong government’s $2 billion Innovation and Technology Venture Fund.
Supply chain shift
In line with the ongoing shift of sourcing outside China, in part due to the U.S.-China trade war and China’s growing labor costs, ICW has seen more customers diversifying their supply chains. But the transition has limitations in the short run.
“It’s still very difficult to find suppliers of certain product categories, for example, Bluetooth devices and power banks, in other countries,” observed Lam. “But for garment and textile, the transition already began to happen a decade ago.”
In Southeast Asia, which has been replacing a great deal of Chinese manufacturing activity, each country has its slight specialization. Whereas Vietnam abounds with wooden furniture suppliers, Thailand is known for plastic goods and Malaysia is a good source for medical supplies, said Lam.
When it comes to trickier compliance burdens, such as human rights sanctions, ICW relies on third-party certification institutes to screen and verify suppliers.
“There is a [type of] qualification standard that verifies whether a supplier has fulfilled its corporate social responsibility … like whether the factory fulfills the labor law, the minimum labor rights or the payroll, everything,” Lam explained.
ICW plans to use the fresh proceeds to further develop its products, including its compliance management system, product testing platform and B2B-sourcing site.
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Forsaking funding at a $1 billion valuation, Solugen preps a new green chemical product and a big 2021
Late last year, Solugen, a startup using synthetic biology to take hydrocarbons out of the chemicals industry, decided against pursuing a new round of funding that would have valued the company at over $1 billion, TechCrunch has learned.
Instead, the Houston-based bio-manufacturing company raised an internal round of roughly $30 million from existing investors and continued working on its latest project — a new bio-based manufacturing process for a high-value specialty chemical that can act as an anti-corrosive agent.
That work represents a potentially lucrative new product line for the company and charts a course for a host of other businesses that are refashioning the basic building blocks of life in an attempt to supplant chemistry with biology for manufacturing and production.
If Solugen can get its high-value chemical into commercial production, the company can follow the path that sustainable tech companies like Tesla have mastered — moving from a pricy specialty product into the mass market. And rather than over-promise and underdeliver, Solugen wanted to get the product line right first before raising big bucks, according to people familiar with the company’s thinking.
As the world looks to move away from oil and its byproducts to reduce greenhouse gas emissions and slow down or reverse global climate change, the chemicals industry is in the crosshairs as a huge target for disruption. Vehicle electrification solves only one part of the oil problem. The extractive industry doesn’t just produce fuel, but also the chemicals that make up most of the products that defined consumer goods in the twentieth century.
Chemicals are everywhere and they’re a huge business.
Companies like Zymergen raised hundreds of millions of dollars last year to develop industrial applications for synthetic biology, and they’re not alone. Startups including Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all raised significant amounts of capital to reduce the environmental footprint of food, chemicals, ingredients and plastics through synthetic biology.
Some of these companies are seeing early success in food replacements and ingredients, but the promise of biologically based chemicals have been elusive — until now.
Solugen’s new product will produce glucaric acid, a tough-to-make chemical that can be used in water treatment facilities and as an anti-corrosive agent — and the company can make it with a zero carbon (or potentially carbon negative) manufacturing process, according to Solugen co-founder and chief technology officer, Sean Hunt.
The glucaric acid from Solugen is cheaper to produce and more environmentally friendly than existing phosphonates that are used for water treatment — and the company has the benefit of competing against chemicals manufacturers in China.
Given the continuing tensions between the two countries, the U.S. is looking to make more high-value products — including chemicals — domestically, and Solugen’s technology is a good way forward to have home-grown supplies of critical materials.
Solugen still intends to raise more capital, the company just wanted to wait until its latest production plant for the acid came online, according to Hunt.
It’s also the fruit of years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, first realized they could potentially use the technology they’d developed to make specialty chemicals back in 2017, according to Hunt. But first the company had to make the hydrogen peroxide as a precursor chemical, Hunt said.
“It’s advantageous for us to focus on this,” said Hunt. “As we scale, we can enter more commodity-type markets down the road.”
It’s all part of the notable strides the entire industry is making, said Hunt. “Synthetic biology has really made significant strides,” he said. “We have our commercial plant coming online this summer [and it proves] synthetic biology has gotten to the point where we can compete on price and performance.”
So the capital infusion will come as the company gets closer to the completion of these commercial scale facilities.
“It’s not like we were sitting on a term sheet and we said no,” Hunt said. “We want to make sure that we are hitting the milestones and the goals at a commensurate pace which is this year. I’m extremely bullish and optimistic of 2021.”
Solugen’s co-founder sees the path that his company is on as one that other startups working in the synthetic biology space will pursue to bring profitable products to market at the higher end before competing with more sustainable versions of commodity chemicals.
“How do you start a company that has this level of capital intensity?” Hunt asked. “You can start in the fine chemicals space where everything sells for tens to hundreds of dollars per pound. For us, glucaric acid is that specialty chemical and then we will do commodity.”
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Senti Bio raises $105 million for its new programmable biology platform and cancer therapies
Senti Biosciences, a company developing cancer therapies using a new programmable biology platform, said it has raised $105 million in a new round of financing led by the venture arm of life sciences giant Bayer.
The company’s technology uses new computational biological techniques to manufacture cell and gene therapies that can more precisely target specific cells in the body.
Senti Bio’s chief executive, Tim Lu, compares his company’s new tech to the difference between basic programming and object-oriented programming. “Instead of creating a program that just says ‘Hello world’, you can introduce ‘if’ statements and object-oriented programming,” said Lu.
By building genetic material that can target multiple receptors, Senti Bio’s therapies can be more precise in the way they identify genetic material in the body and deliver the kinds of therapies directly to the pathogens. “Instead of the cell expressing a single receptor… now we have two receptors,” he said.
The company is initially applying its gene circuit technology platform to develop therapies that use what are called chimeric antigen receptor natural killer (CAR-NK) cells that can target cancer cells in the body and eliminate them. Many existing cell and gene therapies use chimeric antigen receptor T-cells, which are white blood cells in the body that are critical to immune response and destroy cellular pathogens in the body.
However, T-cell-based therapies can be toxic to patients, stimulating immune responses that can be almost as dangerous as the pathogens themselves. Using CAR-NK cells produces similar results with fewer side effects.
That’s independent of the gene circuit, said Lu. “The gene circuit gets you specificity… Right now when you use a CAR-T cell or a CAR-NK cell… you find a target and hope that it doesn’t affect normal cells. We can build logic in our gene circuits in the cell that means a CAR-NK cell can identify two targets rather than one.”
That increased targeting means lower risks of healthy cells being destroyed alongside mutations or pathogens that are in the body.
For Lu and his co-founders — fellow MIT professor Jim Collins, Boston University professor Wilson Wong and longtime synthetic biology operator Phillip Lee — Senti Bio is the culmination of decades of work in the field.
“I compare it to the early days of semiconductor work,” Lu said of the journey to develop this gene circuit technology. “There were bits and pieces of technology being developed in research labs, but to realize the scale at which you need, this has to be done at the industrial level.”
So licensing work from MIT, Boston University and Stanford, Lu and his co-founders set out to take this work out of the labs to start a company.
“When the company was started it was a bag of tools and the know-how on how to use them,” Lu said. But it wasn’t a fully developed platform.
That’s what the company now has and with the new capital from Leaps by Bayer and its other investors, Senti is ready to start commercializing.
The first products will be therapies for acute myeloid leukemia, hepatocellular carcinoma and other, undisclosed, solid tumor targets, the company said in a statement.
“Leaps by Bayer’s mission is to invest in breakthrough technologies that may transform the lives of millions of patients for the better,” said Juergen Eckhardt, MD, head of Leaps by Bayer. “We believe that synthetic biology will become an important pillar in next-generation cell and gene therapy, and that Senti Bio’s leadership in designing and optimizing biological circuits fits precisely with our ambition to prevent and cure cancer and to regenerate lost tissue function.”
Lu and his co-founders also see their work as a platform for developing other cell therapies for other diseases and applications — and intend to partner with other pharmaceutical companies to bring those products to market.
“Over the past two years, our team has designed, built and tested thousands of sophisticated gene circuits to drive a robust product pipeline, focused initially on allogeneic CAR-NK cell therapies for difficult-to-treat liquid and solid tumor indications,” Lu said in a statement. “I look forward to continued platform and pipeline advancements, including starting IND-enabling studies in 2021.”
The new financing round brings Senti’s total capital raised to just under $160 million and Lu said the new money will be used to ramp up manufacturing and accelerate its work partnering with other pharmaceutical companies.
The current time frame is to get its investigational new drug permits filed by late 2022 and early 2023 and have initial clinical trials begun in 2023.
Developing gene circuits is a new and expanding field with a number of players, including Cell Design Labs, which was acquired by Gilead in 2017 for up to $567 million. Other companies working on similar therapies include CRISPR Therapeutics, Intellius and Editas, Lu said.
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