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Architect Capital brings alternative capital to the early stage with new $100M fund
Early-stage startups are increasingly looking for alternative ways to access capital, meaning not every company wants to raise money from VCs or take on debt.
In recent years, a flurry of startups have emerged to give companies other options. (Think Pipe, for example.)
And today, San Francisco-based Architect Capital is a new firm that is launching with over $100 million in funds to serve as an “asset-based lender” to “high-growth,” early-stage tech companies. Specifically, the new firm aims to provide non-dilutive or less-dilutive financing options to asset-rich fintech, e-commerce and SaaS companies in the U.S. and Latin America, but with an emphasis on the latter. The region, Architect maintains, does not have a plethora of institutional financing available against assets.
The firm is not out to replace traditional venture capital or venture debt, emphasizes founder and CEO James Sagan, but rather to offer asset-based products that will complement them.
For some context, Sagan is no stranger to the startup world, having co-founded and served as managing partner of Arc Labs, an early-stage credit fund focused on lending to technology-enabled businesses. He’s been investing in Latin America for years, and recognized the need for new forms of financing to fund “novel and underappreciated assets.”
Also, he believes the region is home to “the most prominent fintech ecosystem in the world.”
To Sagan, traditional forms of equity and debt financing in the venture world are vital for things like growing headcount, but he believes they are “not engineered to support the growth of a company’s underlying financial products.”
“VC is highly dilutive and should be used for ROI activities such as hiring engineers and building great teams,” Sagan told TechCrunch. “It’s expensive to use equity to fund assets. Equity should not be put in a loan book. We’ll fund the loan book.”
Image Credits: Architect Capital founder James Sagan / Architect Capital
Architect’s goal is to provide “tailored and less dilutive funding,” especially to companies that produce repeatable revenues, such as SaaS and subscription businesses.
Sagan said he first discovered the strategy in 2015 when he was working for a multifamily office that was lending against a bunch of traditional assets.
“A colleague and good friend of mine started a business and raised some equity and venture debt, but he couldn’t find the asset-specific financing for the receivables he was generating,” Sagan recalls. “He was lending to small businesses and needed asset-specific financing against those receivables.”
Venture debt doesn’t really work for receivables-based lending because venture debt shops typically are underwriting assets, or rather, underwriting the quality of the investors in the company, Sagan believes.
“So we really tailor our underwriting towards those assets themselves right and those assets range from unsecured consumer receivables to secure small business receivables to real estate,” he told TechCrunch. “Essentially, we’re providing an additional instrument for asset-heavy businesses that will allow them to scale in a way that venture debt will not.”
Architect’s LPs are mostly large institutions, as opposed to traditional high net worth individuals. The firm’s average check size will land at around $10 million to $15 million.
“Our portfolio allocation is more concentrated in general,” Sagan said. “We expect to grow our AUM (assets under management) pretty precipitously.”
Architect Capital has invested in six companies since inception, including PayJoy, a company that delivers consumer financing and smartphone technology to customers in emerging markets; Forum Brands, a U.S.-based e-commerce marketplace aggregator; and ADDI, a fintech that aims to give Colombian consumers access to fair and affordable credit through point-of-sale-financing that recently raised $65 million.
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Iterative raises $20M for its MLOps platform
Iterative, an open-source startup that is building an enterprise AI platform to help companies operationalize their models, today announced that it has raised a $20 million Series A round led by 468 Capital and Mesosphere co-founder Florian Leibert. Previous investors True Ventures and Afore Capital also participated in this round, which brings the company’s total funding to $25 million.
The core idea behind Iterative is to provide data scientists and data engineers with a platform that closely resembles a modern GitOps-driven development stack.
After spending time in academia, Iterative co-founder and CEO Dmitry Petrov joined Microsoft as a data scientist on the Bing team in 2013. He noted that the industry has changed quite a bit since then. While early on, the questions were about how to build machine learning models, today the problem is how to build predictable processes around machine learning, especially in large organizations with sizable teams. “How can we make the team productive, not the person? This is a new challenge for the entire industry,” he said.
Big companies (like Microsoft) were able to build their own proprietary tooling and processes to build their AI operations, Petrov noted, but that’s not an option for smaller companies.
Currently, Iterative’s stack consists of a couple of different components that sit on top of tools like GitLab and GitHub. These include DVC for running experiments and data and model versioning, CML, the company’s CI/CD platform for machine learning, and the company’s newest product, Studio, its SaaS platform for enabling collaboration between teams. Instead of reinventing the wheel, Iterative essentially provides data scientists who already use GitHub or GitLab to collaborate on their source code with a tool like DVC Studio that extends this to help them collaborate on data and metrics, too.
Image Credits: Iterative
“DVC Studio enables machine learning developers to run hundreds of experiments with full transparency, giving other developers in the organization the ability to collaborate fully in the process,” said Petrov. “The funding today will help us bring more innovative products and services into our ecosystem.”
Petrov stressed that he wants to build an ecosystem of tools, not a monolithic platform. When the company closed this current funding round about three months ago, Iterative had about 30 employees, many of whom were previously active in the open-source community around its projects. Today, that number is already closer to 60.
“Data, ML and AI are becoming an essential part of the industry and IT infrastructure,” said Leibert, general partner at 468 Capital. “Companies with great open-source adoption and bottom-up market strategy, like Iterative, are going to define the standards for AI tools and processes around building ML models.”
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How Expensify hacked its way to a robust, scalable tech stack
Take a close look at any ambitious startup and you’ll find pugnacity nestled in its core. Stubbornness and a bullheaded belief in the worth of what a company wants to bring to fruition is often the biggest driver of its success, and the people at such companies also tend to share this quality.
So it wouldn’t be too far off the mark to say the people at Expensify are a stubborn lot — to the company’s ultimate benefit. This group of P2P pirates/hackers that set out to build an expense management app stuck to their gut, made their own rules. They asked questions few thought of, like: Why have lots of employees when you can find a way to get work done and reach impressive profitability with a few? Why work from an office in San Francisco when the internet lets you work from anywhere, even a sailboat in the Caribbean?
It makes sense in a way: If you’re a pirate, to hell with the rules, right? And even more so when nobody can explain the rules in the first place.
With that in mind, one could assume Expensify decided to ask itself: Why not build our own totally custom tech stack? Indeed, Expensify has made several tech decisions that were met with disbelief — from having an open-source frontend and cross-platform mobile development to hiring contractors to train its AI and recruiting open-source contributors — but its belief in its own choices has paid off over the years, and the company is ready to IPO any day now.
How much of a tech advantage Expensify enjoys owing to such choices is an open question, but one thing is clear: These choices are key to understanding Expensify and its roadmap. Let’s take a look.
Built on Bedrock
I think another question Expensify also decided to ask in its early days was something like: Why not have our database on top of a technology that’s built for small-scale application software?
It may sound incredible, but Expensify actually runs on a custom database built on top of SQLite. This is surprising, because despite being one of the most widely deployed database engines, SQLite is known for running on small, embedded systems like smartphones and web browsers, not powering enterprise-scale databases.
It may sound incredible, but Expensify actually runs on a custom database built on top of SQLite.
This custom database is called Bedrock, and its architecture is as unique as they come. Expensify explains it as an “RDBMS optimized for self-healing replication across relatively slow, relatively unreliable WAN (internet) connections, enabling extremely high availability/high performance multi-datacenter deployments without any single point of failure.” RDBMS means relational database management system, describing SQLite and other row-based databases where entries are interconnected with each other.
But why would Expensify build this instead of going for any number of widely available enterprise database solutions?
To answer that question, we need to go back to the early days of the company, which was originally a side project for its founder and CEO, David Barrett. His initial idea was to develop a prepaid card for the homeless, but this required putting a server on the Visa network, which brought several strict requirements and challenges. “I would say one of the most difficult [parts] was that I needed the ability to automatically replicate and failover,” Barrett told TechCrunch when we interviewed him a couple of months ago.
This was no easy feat in 2007, but Barrett was up for the challenge. “I just hit a moment where the technology available off the shelf just wasn’t that good. And I happened to be a peer-to-peer software developer who had tons of spare time and really wanted to build this thing to put on the Visa backend,” he said. The P2P aspect was important, as Barrett had the skills to make it work. His first hires for Expensify, P2P engineers he had worked with at Red Swoosh and Akamai, were also unusually suited for the job.
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Once a buzzword, digital transformation is reshaping markets
The notion of digital transformation evolved from a buzzword joke to a critical and accelerating fact during the COVID-19 pandemic. The changes wrought by a global shift to remote work and schooling are myriad, but in the business realm they have yielded a change in corporate behavior and consumer expectation — changes that showed up in a bushel of earnings reports this week.
TechCrunch may tend to have a private-company focus, but we do keep tabs on public companies in the tech world as they often provide hints, notes and other pointers on how startups may be faring. In this case, however, we’re working in reverse; startups have told us for several quarters now that their markets are picking up momentum as customers shake up their buying behavior with a distinct advantage for companies helping customers move into the digital realm. And public company results are now confirming the startups’ perspective.
The accelerating digital transformation is real, and we have the data to support the point.
What follows is a digest of notes concerning the recent earnings results from Box, Sprout Social, Yext, Snowflake and Salesforce. We’ll approach each in micro to save time, but as always there’s more digging to be done if you have time. Let’s go!
Enterprise earnings go up
Kicking off with Yext, the company beat expectations in its most recent quarter. Today its shares are up 18%. And a call with the company’s CEO Howard Lerman underscored our general thesis regarding the digital transformation’s acceleration.
In brief, Yext’s evolution from a company that plugged corporate information into external search engines to building and selling search tech itself has been resonating in the market. Why? Lerman explained that consumers more and more expect digital service in response to their questions — “who wants to call a 1-800 number,” he asked rhetorically — which is forcing companies to rethink the way they handle customer inquiries.
In turn, those companies are looking to companies like Yext that offer technology to better answer customer queries in a digital format. It’s customer-friendly, and could save companies money as call centers are expensive. A change in behavior accelerated by the pandemic is forcing companies to adapt, driving their purchase of more digital technologies like this.
It’s proof that a transformation doesn’t have to be dramatic to have pretty strong impacts on how corporations buy and sell online.
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Extra Crunch roundup: first-check myths, Miami relocation checklist, standout SaaSy startups
This may seem like a great time to launch a SaaS startup, but the landscape is crowded with well-designed applications that promise “blazingly fast and delightfully simple” experiences, according to seed-stage investor John Chen of Fika Ventures.
Most SaaS startups will fail, but not because of a sour marketing campaign or server downtime. The majority of these companies will fall victim to what Chen calls “the myth of frictionless onboarding.”
Despite the hype about ease of use, enterprise companies always ask customers to abandon familiar tools so they can learn something new.
“Just like with a new fitness program, participants feel good after completing the workout, but it takes a lot of activation energy to start and hard work to get there,” Chen notes.
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Instead of putting the onus on customers to roll up their sleeves, he suggests that SaaS startups learn from cryptocurrency culture and find ways to “incentivize users to do the necessary work to have the right experience.”
But how do you encourage users to put in the time and effort required to produce an optimal customer experience?
“In a world where there is a surplus of alternatives for every job to be done, the scarce resource is not content, tooling, or hacks and tricks,” says Chen. “It’s attention.”
We’re off on Monday, May 31 in observance of Memorial Day; I hope you have a relaxing weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Dismantling the myths around raising your first check
Image Credits: Klaus Vedfelt (opens in a new window) / Getty Images
As startups and venture capital grow in tandem, fundraising has gone from a formal affair on Sand Hill Road to a process that can happen anywhere from Twitter to Zoom.
While fundraising may no longer require a trip to California, it might depend on whether you got an invite to a private audio app. And while you may not need to be an insider, second-time founders — largely male and white — still have a competitive advantage.
The growing complexity of fundraising has the opportunity to make tech either inclusive or exclusive.
VC is the flashy gold medal, but the rapid growth of emerging fund managers means that a first check can be piecemealed together from a variety of different sources. The options for financing are seemingly endless: syndicates, public crowdfunding, VC firms, accelerators, debt financing, rolling funds, and, for the profitable few, bootstrapping.
Doximity’s S-1 may explain why healthcare exits are heating up
Image Credits: Nigel Sussman (opens in a new window)
Telehealth startup Doximity filed to go public earlier today. Notably, the company has not fundraised since 2014, a year in which it attracted just under $82 million at a valuation of $355 million, per PitchBook data.
How has it managed to not raise money for so long? By generating lots of cash and profit over the years. Healthtech communications, it turns out, can be a lucrative endeavor.
What Vimeo’s growth, profits and value tell us about the online video market
Image Credits: Avishek Das/SOPA Images/LightRocket via Getty Images
The spin-out of video platform Vimeo from IAC completed this week, and the smaller company is now trading as an independent entity under the ticker ‘VMEO’.
If you missed the news that the internet conglomerate was spinning out the video service, don’t feel bad; it slipped past many radars. But with the company now trading, our access to its historical results, and our minds still enthralled by YouTube’s recent financial performance for Alphabet, it’s worth taking a moment to digest the company’s health.
Flywire’s flotation suggests the IPO slowdown is behind us
Image Credits: Nigel Sussman (opens in a new window)
The Flywire IPO is neat from a financial perspective and notable in that it’s a Boston exit as opposed to yet another New York or San Francisco-based flotation. It’s nice to see some other cities put points on the board.
But more than that, this IPO is a useful measuring stick for keeping tabs on the IPO market as a whole. This year and the last are shaping up to be key exit periods for startups and unicorns of all shapes and sizes; many a venture capital fund return rests on these public debuts.
Dear Sophie: Any unique immigration strategies for quick hiring?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I do recruitment for tech startups. With a surge of VC investing, many startups are urgently hiring.
Which visas offer the quickest options for international talent? Are there any unique strategies that you would recommend we explore?
— Maverick in Milpitas
7 questions to ask before relocating your startup to Florida
Image Credits: Artur Debat (opens in a new window) / Getty Images
Cities like Miami, Pittsburgh and Austin have been drawing talent and wealth from Silicon Valley for years, but the COVID-19 pandemic accelerated the trend.
In recent months, many investors and entrepreneurs have noisily departed for Miami, citing the region’s favorable business climate and quality of life.
It’s always good to consider one’s options, but before booking a moving van for the Sunshine State — or any emerging tech hub, for that matter — here are some basic questions entrepreneurs should ask themselves.
Vise CEO Samir Vasavada and Sequoia’s Shaun Maguire break down the art of the pitch
Image Credits: Sequoia Capital / Wolfe + Von / TechCrunch
In just a few short years, Vise has gone from launching on the Disrupt Battlefield stage to a unicorn. Co-founders Samir Vasavada and Runik Mehrotra met Sequoia’s Shaun Maguire at an after-party at the event, and Maguire ended up leading a seed and Series A round while Sequoia led the Series B.
Last week, Vise raised its Series C of $65 million and was officially valued at $1 billion post-money.
We spoke to the pair about the early fundraising process for Vise, what Vasavada has learned about delivering a good fundraising pitch, and what stood out about the pitch and the product for Maguire.
Acorns’ SPAC listing depicts a consumer fintech business with a SaaSy revenue mix
Image Credits: Nigel Sussman (opens in a new window)
Another day, another unicorn public offering.
On Thursday, it was Acorns, a consumer fintech service that blends saving and investing into a freemium product.
Acorns fits inside the larger savings-and-investing boom seen over the last four or five quarters as consumers buffeted by the economic changes brought on by COVID-19 turned to stashing cash and boosting their equities investing cadence.
By now this is old news, but we haven’t had a clear picture of the economics of consumer fintech startups accelerated by the pandemic. Now that Acorns has decided to list via a SPAC — more on that in a moment — we do.
Poor onboarding is the enemy of good hiring
Image Credits: Olga Strelnikova (opens in a new window) / Getty Images
The world of hybrid work is here, and the usual 10-minute intro call, swag bag and first-day team lunch are just not enough to make your new employee feel welcome.
While many companies have found a way to interview and select candidates in a fully remote environment, few have spent time and resources on aligning the “pre-boarding” and onboarding process for the new hybrid world of work. Many employers still rely on old ways of welcoming new hires, despite our totally changed work environment.
It’s important to capitalize on candidates’ enthusiasm and eagerness from the moment the offer is signed instead of when they log in on Day One, because first impressions can make or break a candidate’s chances of staying at a company.
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Box beats expectations, raises guidance as it looks for a comeback
Box executives have been dealing with activist investor Starboard Value over the last year, along with fighting through the pandemic like the rest of us. Today the company reported earnings for the first quarter of its fiscal 2022. Overall, it was a good quarter for the cloud content management company.
The firm reported revenue of $202.4 million, up 10% compared to its year-ago result, numbers that beat Box projections of between $200 million to $201 million. Yahoo Finance reports the analyst consensus was $200.5 million, so the company also bested street expectations.
The company has faced strong headwinds the past year, in spite of a climate that has been generally favorable to cloud companies like Box. A report like this was badly needed by the company as it faces a board fight with Starboard over its direction and leadership.
Company co-founder and CEO Aaron Levie is hoping this report will mark the beginning of a positive trend. “I think you’ve got a better economic climate right now for IT investment. And then secondarily, I think the trends of hybrid work, and the sort of long-term trends of digital transformation are very much supportive of our strategy,” he told TechCrunch in a post-earnings interview.
While Box acquired e-signature startup SignRequest in February, it won’t actually be incorporating that functionality into the platform until this summer. Levie said that what’s been driving the modest revenue growth is Box Shield, the company’s content security product and the platform tools, which enable customers to customize workflows and build applications on top of Box.
The company is also seeing success with large accounts. Levie says that he saw the number of customers spending more than $100,000 with it grow by nearly 50% compared to the year-ago quarter. One of Box’s growth strategies has been to expand the platform and then upsell additional platform services over time, and those numbers suggest that the effort is working.
While Levie was keeping his M&A cards close to the vest, he did say if the right opportunity came along to fuel additional growth through acquisition, he would definitely give strong consideration to further inorganic growth. “We’re going to continue to be very thoughtful on M&A. So we will only do M&A that we think is attractive in terms of price and the ability to accelerate our roadmap, or the ability to get into a part of a market that we’re not currently in,” Levie said.
A closer look at the financials
Box managed modest growth acceleration for the quarter, existing only if we consider the company’s results on a sequential basis. In simpler terms, Box’s newly reported 10% growth in the first quarter of its fiscal 2022 was better than the 8% growth it earned during the fourth quarter of its fiscal 2021, but worse than the 13% growth it managed in its year-ago Q1.
With Box, however, instead of judging it by normal rules, we’re hunting in its numbers each quarter for signs of promised acceleration. By that standard, Box met its own goals.
How did investors react? Shares of the company were mixed after-hours, including a sharp dip and recovery in the value of its equity. The street appears to be confused by the results, weighing the report and working out whether its moderately accelerating growth is sufficiently enticing to warrant holding onto its equity, or more perversely if its growth is not expansive enough to fend off external parties hunting for more dramatic changes at the firm.
Sticking to a high-level view of Box’s results, apart from its growth numbers Box has done a good job shaking fluff out of its operations. The company’s operating margins (GAAP and not) improved, and cash generation also picked up.
Perhaps most importantly, Box raised its guidance from “the range of $840 million to $848 million” to “$845 to $853 million.” Is that a lot? No. It’s +$5 million to both the lower and upper-bounds of its targets. But if you squint, the company’s Q4 to Q1 revenue acceleration, and upgraded guidance, could be an early indicator of a return to form.
Levie admitted that 2020 was a tough year for Box. “Obviously, last year was a complicated year in terms of the macro environment, the pandemic, just lots of different variables to deal with…” he said. But the CEO continues to think that his organization is set up for future growth.
Will Box manage to perform well enough to keep activist shareholders content? Levie thinks if he can string together more quarters like this one, he can keep Starboard at bay. “I think when you look at the next three quarters, the ability to guide up on revenue, the ability to guide up on profitability. We think it’s a very very strong earnings report and we think it shows a lot of the momentum in the business that we have right now.”
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Roofr just nailed down a second seed round to make new roofing sales a cinch to close
Roofer Pro. Roof Snap. Acculynx. There’s suddenly no shortage of companies offering software to make easier the lives of roofers and their customers. Among these is Roofr, a five-year-old, San Francisco-based, 31-person sales platform for roofing contractors that just raised $4.25 million in post-seed funding led by Bullpen Capital, with participation from Avidbank and previous backer Crosslink Capital.
Co-founder and CEO Rich Nelson is aware of the competition. But as a third-generation roofer by trade, he also knows well that the industry is far from overcoming its reputation as rife with sketchy, flaky contractors whose customers often question whether they need a new roof or suspect the estimates they are given are wildly inflated.
He also knows — as do his investors — how big a market opportunity Roofr and its rivals are chasing. “It’s a massive, massive market,” says Nelson. “On average, every year, roughly five million buildings in the U.S. have their roof replaced,” and they spend $50 billion toward that end, he says.
Right now, Roofr is focused exclusively on helping close that initial sale. It all starts with a picture of a roof that Roofr obtains from partner companies like Nearmap, whose planes cover cities at low altitude to take high-definition pictures, including of roofs. Roofr software then allows these contractors to draw their own roof measurement reports through these drone, blueprint and satellite images and produce a report, or they can pay Roofr $10 per report to measure the roof for them.
Unsurprisingly, COVID-19 made the software more attractive to both roofing contractors and customers who weren’t keen on being in close proximity during the pandemic. Offerings like Roofr’s made it possible to quickly and easily send a potential customer a quote without visiting the job site. The bet now is that growing awareness over the product will continue to fuel that momentum.
The company also has new offerings in the pipeline that may make it more compelling to both roofers and their clients. In addition to quickly providing roofers with measurement data, for example, roofers can now pay a monthly fee to have Roofr auto-populate an estimate based on a specific materials list, as well as the profit margin the roofer wants to incorporate; it also now provides and preserves digital contracts.
As for its current customer base, Nelson says that it includes the largest roofing contractors in North America, but that Roofr is even more interested in small businesses, which, while fragmented, represent a much bigger opportunity. He says that there are more than 100,000 registered roofing businesses in the U.S., and that the vast majority are comprised of five employees or fewer. (Roofr also sells its software to independent insurance adjusters.)
The new round brings Roofr’s total funding to $8.25 million. Crosslink led its initial seed round in early 2019. Roofr also raised money from Y Combinator when it passed through the accelerator program in 2017.
Pictured above from left to right: Roofr co-founders Kevin Redman and Rich Nelson. Redman is the company’s CTO; Nelson is its CEO.
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Dabbel gets $4.4M to cut CO2 by automating HVAC for commercial buildings
Düsseldorf-based proptech startup Dabbel is using AI to drive energy efficiency savings in commercial buildings.
It’s developed cloud-based self-learning building management software that plugs into the existing building management systems (BMS) — taking over control of heating and cooling systems in a way that’s more dynamic than legacy systems based on fixed set-point resets.
Dabbel says its AI considers factors such as building orientation and thermal insulation, and reviews calibration decisions every five minutes — meaning it can respond dynamically to changes in outdoor and indoor conditions.
The 2018-founded startup claims this approach of layering AI-powered predictive modelling atop legacy BMS to power next-gen building automation is able to generate substantial energy savings — touting reductions in energy consumption of up to 40%.
“Every five minutes Dabbel reviews its decisions based on all available data,” explains CEO and co-founder, Abel Samaniego. “With each iteration, Dabbel improves or adapts and changes its decisions based on the current circumstances inside and outside the building. It does this by using cognitive artificial intelligence to drive a Model-Based Predictive Control (MPC) System… which can dynamically adjust all HVAC setpoints based on current/future conditions.”
In essence, the self-learning system predicts ahead of time the tweaks that are needed to adapt for future conditions — saving energy vs a pre-set BMS that would keep firing the boilers for longer.
The added carrot for commercial building owners (or tenants) is that Dabbel squeezes these energy savings without the need to rip and replace legacy systems — nor, indeed, to install lots of IoT devices or sensor hardware to create a ‘smart’ interior environment; the AI integrates with (and automatically calibrates) the existing heating, ventilation, and air conditioning (HVAC) systems.
All that’s needed is Dabbel’s SaaS — and less than a week for the system to be implemented (it also says installation can be done remotely).
“There are no limitations in terms of Heating and Cooling systems,” confirms Samaniego, who has a background in industrial engineering and several years’ experience automating high tech plants in Germany. “We need a building with a Building Management System in place and ideally a BACnet communication protocol.”
Average reductions achieved so far across the circa 250,000m² of space where its AI is in charge of building management systems are a little more modest but a still impressive 27%. (He says the maximum savings seen at some “peak times” is 42%.)
The touted savings aren’t limited to a single location or type of building/client, according to Dabbel, which says they’ve been “validated across different use cases and geographies spanning Europe, the U.S., China, and Australia”.
Early clients are facility managers of large commercial buildings — Commerzbank clearly sees potential, having incubated the startup via its early-stage investment arm — and several schools.
A further 1,000,000m² is in the contract or offer phase — slated to be installed “in the next six months”.
Dabbel envisages its tech being useful to other types of education institutions and even other use-cases. (It’s also toying with adding a predictive maintenance functionality to expand its software’s utility by offering the ability to alert building owners to potential malfunctions ahead of time.)
And as policymakers around the global turn their attention to how to achieve the very major reductions in carbon emissions that are needed to meet ambitious climate goals the energy efficiency of buildings certainly can’t be overlooked.
“The time for passive responses to addressing the critical issue of carbon emission reduction is over,” said Samaniego in a statement. “That is why we decided to take matters into our own hands and develop a solution that actively replaces a flawed human-based decision-making process with an autonomous one that acts with surgical precision and thanks to artificial intelligence, will only improve with each iteration.”
If the idea of hooking your building’s heating/cooling up to a cloud-based AI sounds a tad risky for Internet security reasons, Dabbel points out it’s connecting to the BMS network — not the (separate) IT network of the company/building.
It also notes that it uses one-way communication via a VPN tunnel — “creating an end-to-end encrypted connection under high market standards”, as Samaniego puts it.
The startup has just closed a €3.6 million (~$4.4M) pre-Series A funding round led by Target Global, alongside main incubator (Commerzbank’s early-stage investment arm), SeedX, plus some strategic angel investors.
Commenting in a statement, Dr. Ricardo Schaefer, partner at Target Global, added: “We are enthusiastic to work with the team at Dabbel as they offer their clients a tangible and frictionless way to significantly reduce their carbon footprint, helping to close the gap between passive measurement and active remediation.”
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WalkMe is going public: Let’s stroll through its numbers
Hot off the heels of our look into Marqeta’s IPO filing and dives into SPACs for Bright Machines and Bird, we’re parsing the WalkMe IPO filing. Later this week, Squarespace will direct list and we’ll see IPOs from Oatly and Procore. It’s a super busy time for public debuts of all sorts.
Given how hectic the IPO market is, we’re going to skip our usual throat clearing and dig into WalkMe’s IPO document. As always, we’ll start with a brief overview of its product and then move into discussing its financial performance.
Image Credits: Alex Wilhelm
WalkMe is the second Israel-based technology company to file to go public this week: No-code startup Monday.com is also pursuing an American IPO.
Alright! Into the breach.
What does WalkMe do?
WalkMe’s software provides visual overlays on websites that help users navigate the product in question. I base that explanation on my time at Crunchbase, which was a customer during at least part of my time there. WalkMe is popular with marketing teams who want to introduce users to a new or refreshed experience.
Per the company’s F-1 filing, other elements of its service that matter include its onboarding system and what WalkMe calls Workstation, or its “single interface to the applications within an enterprise and simplifies task completion through a natural language conversational interface and automation.” We’re including that last feature because it says “automation,” which, in the wake of the UiPath IPO, is a word worth watching. Investors are.
At a high level, WalkMe is a SaaS business, which means that when we digest its results we are digging into a modern software company. Let’s do just that.
WalkMe’s numbers
From 2019 to 2020, WalkMe grew its revenues from $105.1 million to $148.3 million, a gain of 41%. In its most recent quarter, the company’s growth rate slowed: From Q1 2020 to Q1 2021, WalkMe’s top line grew 25% from $34.2 million to $42.7 million.
In SaaS terms, WalkMe calculates that its annual recurring revenue, or ARR, grew from $131.2 million at the end of 2019 to $164.3 million in 2020. In more granular terms, the company’s ARR grew from $137.8 million to $177.5 million in the first quarters of 2020, and 2021, respectively.
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How Expensify got to $100M in revenue by hiring “stem cells” and not “cogs in a wheel”
The influence of a founder on their company’s culture cannot be overstated. Everything from their views on the product and business to how they think about people affects how their company’s employees will behave, and since behavior in turn informs culture, the consequences of a founder’s early decisions can be far-reaching.
So it’s not very surprising that Expensify has its own take on almost everything it does when you consider what its founder and CEO David Barrett learned early in his life: “Basically everyone is wrong about basically everything.” As we saw in part 1 of this EC-1, this led him to the revelation that it’s easier to figure things out for yourself than finding advice that applies to you. Eventually, these insights — and the adventurous P2P hacker attitude he nurtured alongside his colleagues and Travis Kalanick at Red Swoosh — would inform how he would go about shaping Expensify.
Expensify’s culture can’t be separated from its hiring and growth processes — by joining the company, employees self-select into a group that isn’t likely to get hung up about trade-offs.
It’s striking how Expensify has managed to maintain this character 13 years later, even on the threshold of an IPO. How did this happen? During a series of interviews in February and early March, we found the answer is tied to the level of thought and effort this expense management business puts into its culture.
You see, the people at Expensify are prepared to invent their own playbook, develop it and, if needed, rewrite it completely. Its HR policies and strategy are tailored to find people who would have fun building an expense management product. It has a unique growth and recognition scheme to offset the drawbacks of a flat organizational structure. It’s even got a “Senate” that vets all major decisions. No kidding.
All this, and more, has ultimately helped Expensify reach more than 10 million users and achieve $100 million in annual revenue with just 130 employees. Let’s take a closer look at how Expensify makes it happen.
“We want the fewest people necessary to get the job done”
It’s clear Expensify’s unusually high employee-to-revenue ratio is intentional: “We want the fewest people necessary to get the job done,” Barrett says. But how do you actually achieve it? How do you hire and keep people who can deliver such results? Barrett had to learn how the hard way.
Expensify’s first team was based in San Francisco and comprised Barrett’s old Red Swoosh and Akamai colleagues, who joined a few months after Akamai fired him. A small team was enough to get started, but it was much more difficult to hire additional people. Barrett is eager to clarify the Valley is not really the best place to recruit talent: “Sure, Silicon Valley has a ton of really awesome people, but all of them have jobs!,” he says.
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