revolution ventures
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Bright Cellars lands more funding to personalize its subscription-based wine collection
Bright Cellars, a six-year-old subscription-based wine seller has, like many upstarts, evolved over time. While it once sent its club members third-party wines that fit their particular profiles, Milwaukee, Wisconsin-based Bright Cellars says it’s now amassing enough data about its customers that it no longer sells wines made by other brands. Instead, while some of its “original” offerings are admittedly sold by other labels under different names, it is increasingly finding success by directing its winemaker partners to tweak the recipe, so to speak.
“We’re optimizing wine like you might optimize a more digital product,” says co-founder and CEO, Richard Yau, a San Francisco native whose startup entered into a regional accelerator program early on and stayed, though the company is now largely decentralized.
We talked earlier today with Yau about that shift, which investors are supporting with $11.2 million in Series B funding, led by Cleveland Avenue, with participation from earlier backers Revolution Ventures and Northwestern Mutual. (The company has now raised roughly $20 million altogether).
Yau also talked about industry trends that he’s seeing because of all that data collection.
TC: You’re building a portfolio of wines. What does that mean?
RY: We don’t own any land. We’re working primarily with suppliers [as do big companies like Gallo and Constellation], but at a larger scale than before, so we now get to shape what wines taste like and look like, and we can optimize across variables like how sweet should this wine be? How acidic? What do we want its color and brand and label to look like and which segment of our customers will really enjoy this wine the most?
TC: What’s one of your concoctions?
RY: We have a sparkling wine that’s produced in the Champagne method — not a Champagne wine; it’s a domestic wine — using grape varietals that no one uses for sparkling wine, and it’s one of the top-rated wines on our platform. Sparkling wine has been really good for us.
TC: How many subscribers do you have?
RY: We can’t share that, but we saw an acceleration in not just new subscribers throughout the pandemic but also in terms of seeing a larger share of [customers’] wallets going to D2C, and that impacted us pretty positively. Even as things eased up over the summer, we saw that people were cooking and eating at home more [and drinking wine].
TC: What’s the average price of a bottle of wine on the platform?
RY: $20 to $25.
TC: Where are your grape suppliers?
RY: A lot are on the West Coast, in Washington and California, but we also have grape suppliers internationally, including in South America and Europe.
TC: How many wines do you offer, and how long do you trial a wine?
RY: We’ve tested around 600, and at any given time, we’ll have 40 to 50 wines on the platform. We don’t stock everything forever; those that don’t do as well, we basically eliminate.
TC: A lot of D2C brands eventually branch into real-world locations. You aren’t doing that. Why not?
RY: It’s possible that we might at some point, but we like being D2C and it makes a lot of sense in a world where our members now work from home and are home to receive packages. It lines up with e-commerce trends in general. If you’re not buying your groceries at the store anymore, you aren’t buying wines at the store, either.
TC: From where are these bottles shipped?
RY: From a variety of places, but primarily from Santa Rosa [in the Bay Area].
TC: Have you seen the impact the weather is having on California winemakers, some of whom are now spraying sunscreen on their grapes to protect them?
RY: [Climate change] has certainly affected the wine industry. One of the fortunate things about us is we have flexibility in the suppliers we’re working with, so from a business-health perspective, we haven’t been as affected by that. Because a lot of our operations are in California, we did a couple of years ago have some interruptions with distribution where we weren’t able to ship some days; we were also impacted by warm temperatures. But fortunately, so far for this year, we haven’t had any operational or supply-chain disruptions.
TC: Have you been approached by one of legacy firms about a partnership or acquisition?
RY: We’ve had conversations, more in terms of partnerships because we have lots of data and can help them. For example, we can launch a new wine and get feedback almost like a focus group to figure out who likes what. We can split test two different blends for a wine and figure out which does better. That’s where conversations with legacy wine companies have happened.
TC: So they’d pay you for your data.
RY: We’re not opposed to selling data in the future, but we’ve approached it more like, here’s an opportunity to learn about how innovation works at a larger wine company. We don’t expect to be able to do what Constellation does well — with its large salesforce and distributors in every state — but what we can do in a complementary way is understand the consumer.
TC: What have you learned that might surprise outsiders?
RY: Petite sirah [offerings] do as well, if not better than, cabernet and pinot noir on the platform. Cab and pinot are fully 50 times the market size of petite sirah, but we see that our members really like it.
People also like merlot a lot more than they think — pretty much across all demographics. People like to hate merlot, but when we look at red blends that do well . . .
TC: What do people have against merlot?
RY: [Laughs.] Have you ever seen “Sideways?” That has something to do with it, still. Meanwhile, pinot noir remains popular, but people don’t like it as much as [other wine sellers] think.
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Sila banks $13M to offer single API for developing financial products, services
Sila announced Monday it raised $13 million in Series A funding for its banking and payment platform that gives software teams tools to build the next generation of financial products and services.
Revolution Ventures led the round and was joined by existing investors Madrona Venture Group, Oregon Venture Fund and Mucker Capital, as well as Wise co-founder Taavet Hinrikus. The funding brings the total investment to date for Portland, Oregon-based Sila to $20 million.
The company was founded in 2018 by Shamir Karkal, Angela Angelovska, Isaac Hines and Alex Lipton to simplify digital payments and storage in a regulatory compliant way and build on blockchain technology. CEO Karkal has a long history in the fintech space, co-founding Simple, an app unifying various accounts into one accessible bank card, in 2009. It was acquired by BBVA in 2014 for $117 million and shuttered earlier this year.
Karkal told TechCrunch that the idea for Sila was born out of frustration while starting another bank. He saw a need for financial application development, but was hindered by a banking system “still stuck in the 20th century.” He thought consumers expected a different level of service, which is why many flock to fintechs.
However, whenever a business tried to connect existing banking systems, fintechs and cryptocurrency innovators, as it built and scale, would always run into technology and compliance issues, Karkal said.
“The problem with working with banks, is that you have to figure out how to integrate with their mainframe,” he added. “In the process, you end up having to also be compliance experts just to be able to do it.”
Whereas it took Karkal three years to get bank processes set up for other companies, it took Sila 18 months. Its banking APIs enable developers to create their own digital wallets, replacing the need to integrate with legacy financial institutions. Sila also has partnerships with fintech platforms, including Plaid, Alloy, Lithic and Arcus to move money, and is backed by Evolve Bank and Trust.
Sila can now get customers up-and-running in six to eight weeks. And unlike competitors that focus almost exclusively on e-commerce, most of Sila’s customers are doing regulated payments within the fintech, insurtech, commercial real estate and cryptocurrency spaces that tend to be more complex from a compliance basis, Karkal said.
Since the company launched its platform, business was building steadily, and took off in the second half of 2020. The company raised a $7.7 million seed round earlier in the year. In the last 12 months, Sila grew its revenue 10 times and customers’ end users grew over 500% in the last seven months.
Sila will use the new funding to increase headcount, target additional partners and expand product features, including its Ethereum MainNet stablecoin issuance and interoperability between FedWire and the Nacha Automated Clearing House network.
“There is a massive wave of fintechs emerging in the U.S., and we have barely scratched the surface,” Karkal said. “Places like India, Africa and Latin America could accelerate at the same time because they are mainly starting from zero. We are here to ‘arm the rebels’ and help those innovators build applications to give all end users a much better financial experience.”
As part of the investment, Clara Sieg, partner at Revolution Ventures, is joining the company’s board. She told TechCrunch she met the company’s co-founders through the Portland ecosystem.
Revolution tends to look at fintech startups from a consumer angle. Recognizing that the problem with building infrastructure meant dealing with banks, the firm set out how to find a company building the pipes to solve it, she said.
In the landscape of fintech, she considers Dwolla to be a competitor to Sila. Last week, the company raised $21 million to continue developing its API that allows companies to build and facilitate fast payments, specifically with a focus on ACH. However, it comes down to actually signing up customers, and that competitive landscape is pretty thin, Sieg added.
“Sila is building an easy way for people to program money and taking a regulatory eye to things,” Sieg said. “When Shamir was building Simple, he could see how challenging it was for incumbents to provide the tools developers need to embed financial services, and this is why we have confidence in his ability to win.”
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Wagmo raises $12.5M to offer pet insurance (and a lot more)
The pet care industry has boomed over the past several years. From Chewy’s IPO to the various veterinarian startups that have sprung up, VC money (and consumer cash) is flowing into the space.
Wagmo is no different. The pet insurance and perks startup has closed on a $12.5 million Series A financing, led by Revolution Ventures with participation from Female Founders Fund, Clocktower Technology Ventures, and Vestigo Ventures. Angels, including Jeffrey Katzenberg, Jim Grube, Marilyn Hirsch, David Ronick, and Michael Akkerman, also participated in the round.
The company was founded by Christie Horvath and Ali Foxworth, who both came from the world of finance and insurance and realized the gap in the market when it comes to pet insurance. Most pet insurance providers cover the big emergencies, such as surgeries, broken bones, etc. But anyone with a pet, and especially a new puppy (like myself), knows that the costs of basic care can add up very quickly.
Wagmo offers the same basic coverage as your usual pet insurance, but also offers a wellness service. The Wellness Program reimburses pet parents for the more basic stuff, like vaccinations, grooming, regular vet visits, fecal tests, and bloodwork.
Users simply pay anywhere between $20/month and $59/month and submit photos of their receipts in the app. Wagmo then reimburses what’s covered via Venmo, PayPal, or direct deposit within 24 hours.
The premise here is two-fold. A healthy dog, who has access to all the basics listed above, is less likely to have major issues later on. The second piece is that the earliest costs associated with owning a dog are these basic ones, like vaccinations, vet visits, fecal tests and grooming.
Wagmo offers the wellness plan without an insurance plan. That means that users can onboard to the platform with what they need first, and upgrade to an insurance plan later on.
Wagmo generates revenue through both the wellness and insurance plan, but is actively looking into an enterprise model, as well, signing on larger organizations as part of their benefits package to employees.
The now-14-person team has onboarded thousands of users, with 20 percent user growth month over month since the beginning of the pandemic, and has processed 30,000 wellness claims.
The team is 58 percent female identifying, with Black, Asian and Latinx each making up 17 percent of the workforce.
“The greatest challenge is figuring out how to break down the opportunity ahead of us, particularly in the employer benefit space,” said Horvath. “What keeps us up at night is thinking about where to start, what to prioritize, how to allocate limited resources and limited time.”
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Layoffs are disproportionately impacting startup satellite offices
Layoffs have struck the startup world swiftly, hurting hospitality and travel startups, as well as recruitment and scooter companies. New data shows that some of those layoffs, brought on by COVID-19, might be disproportionately impacting satellite campuses.
By nature, satellite offices are secondary to a startup’s headquarters. Opening smaller offices is a strategic move when a company gets a fresh round of funding or wants to expand to a new market. We’ve seen satellite offices pop up in cities like Portland, Phoenix or Austin, which has satellite offices for Apple, Facebook and Oracle, for example.
While most layoffs are coming from companies whose headquarters are located in the main entrepreneurial hubs of the Bay area and New York, the actual staff members are located in the satellite cities, according to data from Layoffs.fyi, a tracker created by former Y Combinator grad Roger Lee.
EasyPost in San Francisco laid off 75 employees, nearly all in Salt Lake City and Louisville. U.K.-based Challenger bank Monzo laid off 165 customer support employees recently in Las Vegas.
Toast, based in Boston, laid off 1,300 employees, or 50% of its entire staff. Per Layoffs.fyi data, 12% of those layoffs were in Omaha, and another 10% were in Chicago.
KeepTruckin, based in San Francisco and last valued at $1.25 billion, laid off around 350 employees, and 33% of those employees were located in Nashville or Chicago.
These numbers are only a fraction of the total layoffs across the country, as Layoffs.fyi’s data set only includes publicly disclosed actions and tips. But even if the data is just serving as an anecdotal snapshot, it’s an important one to note.
What the data means
Once the economy does recover to a new normal, it’s unclear whether HQ cities or satellite cities will be in a better position to bounce back. We caught up with some investors in Boston, a top startup hub that has recently faced its own flurry of layoffs, to hear their thoughts.
According to Lily Lyman, a partner at Boston-based venture capital firm Underscore, satellite offices are often where a company might locate the sales, customer success and business development staff. Logistically, those roles are the most vulnerable as consumer activity slows. For a lot of businesses, there are no sales and deals to be done right now.
“[These roles are getting] disproportionately affected in [reduction of forces] as companies expect a slowdown on the commercial side,” Lyman said. “While a logical decision to extend the cash runway, it does come with the risk that this withdrawal can damage relationships with customers that may be hard to recover.”
Not everyone sees cuts hitting satellite offices the hardest. Michael Skok, another partner at Underscore, said that “in some cases, we’ve seen that satellite offices are established in emerging markets which come with cost savings, so these offices may actually be more protected in these times.” In other words, if you’re cutting costs, San Francisco employee expenses might be higher than Denver employee expenses by sheer nature of the former having exorbitantly high living costs. Revolution Ventures, which invests in startups in emerging tech scenes, said it has not heard about satellite office layoffs from its portfolio as of recently.
And finally, to put it crassly, layoffs in a non-HQ city might quell some of the negative signaling that founders and venture capitalists are trying so hard to avoid (well, most of them at least). Slimming down operations is becoming a proactive response, not a reactive strategy as the pandemic continues to evolve.
Today’s data reminds us that layoffs are rarely an isolated occurrence, and staff cuts appear to be landing harder on less robust tech ecosystems.
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Bloomscape raises $7.5M to sell you plants of all sizes
Direct-to-consumer plant retailer Bloomscape has raised $7.5 million in Series A funding, with several high-profile D2C startup founders signing on as investors.
Founder and CEO Justin Mast told me that his family has five generations of experience as greenhouse owners and operators, and that he first tried to get Bloomscape off the ground more than a decade ago. Since then, Mast has worked at other startups, but he said, “Bloomscape was the one that got away. I would find myself dreaming about it.”
The current version of the startup launched just over a year ago, and has shipped more than 100,000 plants since then. The company is headquartered in Detroit, and ships plants from its greenhouses near Grand Rapids, Mich.
When asked what’s wrong with the existing brick-and-mortar plant-buying process, Mast said convenience is a big factor, particularly once you start talking about plants that are too big to carry in one hand — he said Bloomscape’s packing and shipping methods can accommodate everything from a 10-inch aloe plant to a five-foot bird of paradise.
Bloomscape also helps people care for their plants through its Plant Mom service, allowing customers to ask for advice from an expert. The Plant Mom is, in fact, Mast’s mother Joyce, who has more than 40 years of horticulture experience.
Mast said the service is designed to replicate his own experience texting his Mom for help when his plants weren’t doing well: “We wanted to figure out how to do this in a way that didn’t feel like tech support, that actually felt convenient, warm and helpful.” (Bloomscape has since hired other experts to support her.)
Mast added that he sees the free service as “this tremendous opportunity to create value,” particularly since “people who feel confident that they’re going to be able to keep their plants alive go and buy more plants.”
Ultimately, Mast’s vision is for Bloomscape to be involved in “plant life in every area of the home and garden.”
The new round was led by Revolution Ventures, with participation from Endeavor, as well as Allbirds co-founder Joey Zwillinger, Away co-founder Jen Rubio, Eventbrite co-founder Kevin Hartz, Harry’s co-founder Jeff Raider, Quora co-founder Charlie Cheever and Warby Parker co-founders Neil Blumenthal and Dave Gilboa.
“Plants are a highly fragmented, fast growing industry, but the market has been slow to come online – warehousing and shipping living things is hard,” Revolution Ventures partner Clara Sieg said in a statement. “Drawing on five generations of horticultural experience, Justin and the Bloomscape team combines the ease of e-commerce with care and maintenance resources in a beautifully branded, consumer-centric experience that empowers even the least green thumbed among us to be successful plant parents.”
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