Y Combinator
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CaptivateIQ raises $46M for its no-code sales commissions platform
CaptivateIQ, which has developed a no-code platform to help companies design customized sales commission plans, has raised $46 million in a Series B round led by Accel.
Existing backers Amity, S28 Capital, Sequoia and Y Combinator also participated in the financing, which brings the San Francisco-based company’s total raised to $63 million since its 2017 inception.
CaptivateIQ must be doing something right. While it is not yet profitable, the startup’s revenue has grown 600% year-over-year. To date, it has processed more than $2 billion in commissions on its platform across hundreds of enterprise customers, including Affirm, TripActions, Udemy, Intercom, Newfront Insurance and JMAC Lending.
“A big part of our growth is that we can help any company that offers a performance-based compensation plan, so we don’t have any restrictions with the types of businesses we work with,” said co-CEO Mark Schopmeyer. “We typically see conversations start with teams that have a minimum of 25 sales people, though we easily serve enterprises and public companies as well.”
The number of payees — defined as someone receiving a payout in CapitvateIQ’s system — was up four times in December 2020 from the year prior. Plus, the company had “back-to-back record months” from September through the end of the year in 2020, according to Schopmeyer.
He, co-CEO Conway Teng and CTO Hubert Wong founded CaptivateIQ after coming out of Y Combinator’s Winter 2017 cohort.
Left to right: CaptivateIQ co-founders Hubert Wong, Mark Schopmeyer and Conway Teng. Image Credits: CaptivateIQ
The company touts its SaaS platform as a combination of the familiarity of spreadsheets with the scalability and performance of software, so that users can configure any commission plan “entirely on their own,” according to Teng.
“Calculating commissions is really complicated and mission-critical — think of it like a very complicated form of payroll — each company has a unique commission plan that involves a lot more calculations and data than your typical salary payroll math,” Teng said. “Also, in recent years, companies have access to more data than ever, giving them room to incentive employees on more performance metrics.”
Today, CaptivateIQ has 90 employees, more than triple what it did one year ago.
In 2020, the startup saw a bump in the number of non-high-technology companies buying its software, and as a result, CaptivateIQ is going to increase its efforts into those other verticals, according to Teng. So far, it has found success in particular in financial services, manufacturing and business services, among other sectors.
The pandemic served as a tailwind to its business. Sales teams generally rely on in-person interactions to stay productive, Schopmeyer points out. Without those activities over the past year, “having the right incentives in place became ever more critical as companies required new ways to motivate teams during the shift to remote work.”
“We saw our product usage skyrocket at the beginning of the pandemic as businesses quickly adjusted incentives, team quotas, SPIFs and other components of their comp plans to stay competitive,” he said.
The company plans to use its new capital to improve upon the user experience. Specifically, Teng said, it plans to introduce “more powerful data transformations, a richer set of formulas and off-the-shelf templates.”
Another goal is to automate and streamline the commissions process from beginning to end, he added. The startup is expanding its data integrations to support “all major data systems” and introducing new dashboarding capabilities. It’s also enhancing existing collaboration workflows around approvals, inquiries and contracts.
Looking ahead, CaptivateIQ is exploring the potential of applying its technology to solve for use cases outside the world of commissions — something that it says its customers are already doing.
“It’s exciting to see what people have been building, and we’re looking forward to enabling new solutions as we continue to release more of our core technology platform,” Teng said.
Accel Partner Ben Fletcher said the pain point of calculating and reporting sales commissions kept coming up among portfolio companies, with CaptivateIQ frequently referenced. Those companies, he said, tried more enterprise-grade solutions — “spending hundreds of thousands on implementation to ultimately find that their products did not work.” They also tried other newer tools that also just didn’t work well.
“As we dug in and talked with more and more customers, it was abundantly clear — CaptivateIQ was the best product in the space,” Fletcher said.
Besides ease of use, the fact that CaptivateIQ is a no-code tool, is a big deal to Accel.
“Similar to UIPath, Webflow, and Ada, CaptivateIQ is able to bring the power of customer development and automation to an easy to use, drag-and-drop product,” Fletcher said.
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PingPong is a video chat app for product teams working across multiple time zones
From the earliest days of the pandemic, it was no secret that video chat was about to become a very hot space.
Over the past several months investors have bankrolled a handful of video startups with specific niches, ranging from always-on office surveillance to platforms that encouraged plenty of mini calls to avoid the need for more lengthy team-wide meetings. As the pandemic wanes and plenty of startups begin to look toward hybrid office models, there are others who have decided to lean into embracing a fully remote workforce, a strategy that may require new tools.
PingPong, a recent launch from Y Combinator’s latest batch, is building an asynchronous video chat app for the workplace. We selected PingPong as one of our favorite startups that debuted last week.
The company’s central sell is that for remote teams, there needs to be a better alternative to Slack or email for catching up with co-workers across time zones. While Zoom calls might be able to convey a company’s culture better than a post in a company-wide Slack channel, for fully remote teams operating on different continents, scheduling a company-wide meeting is often a nonstarter.
PingPong is selling its service as an addendum to Slack that helps remote product teams collaborate and convey what they’re working on. Users can capture a short video of themselves and share their screen in lieu of a standup presentation and then they can get caught up on each other’s progress on their own time. PingPong’s hope is that users find more value in brainstorming, conducting design reviews, reporting bugs and more inside while using asynchronous video than they would with text.
“We have a lot to do before we can replace Slack, so right now we kind of emphasize playing nice with Slack,” PingPong CEO Jeff Whitlock tells TechCrunch. “Our longer-term vision is that what young people are doing in their consumer lives, they bring into the enterprise when they graduate into the workforce. You and I were using Instant Messenger all the time in the early 2000s and then we got to the workplace, that was the opportunity for Slack… We believe in the next five or so years, something that’s a richer, more asynchronous video-based Slack alternative will have a lot more interest.”
Building a chat app specifically designed for remote product teams operating in multiple time zones is a tight niche for now, but Whitlock believes that this will become a more common problem as companies embrace the benefits of remote teams post-pandemic. PingPong costs $100 per user per year.
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Extra Crunch roundup: Clubhouse UX teardown, YC Demo Day favorites, proptech VC survey, more
Since the pandemic began, I have been pushing the limits of my imagination to try to picture what cities will look and feel like in the coming years.
If your town looks like San Francisco, where I live, it’s a pressing question: Our once-bustling financial district is a ghost town, but even in outer neighborhoods, the number of vacant storefronts is unsettling. People are starting to emerge after sheltering in place for a year, but we are a long way from fully restoring our shared spaces.
What’s going to happen to those semi-vacant office towers, some of which are still under construction? There’s been renewed talk of converting some skyscrapers into residential housing, but there are real economic/logistic hurdles to clear before that can be broadly applied. Scores of restaurants have closed in recent months; who will take over those spaces? I spend a lot of time walking around, and it’s been a long time since I’ve noticed a “Grand Opening” sign.
Seeking answers, Managing Editor Eric Eldon interviewed 10 VCs who are active in proptech and found that most were generally “optimistic.”
Several expressed genuine uncertainty about the future of offices, but most were bullish about prospects for remote work, the rebirth of physical retail and the emergence of “third spaces” that will fill the gap between work and home.
In a companion article on TechCrunch, Eric explores these broader shifts, concluding, “you can start to see a world emerging that sounds a lot more like the fantasies of a New Urbanist than the world before the pandemic.”
Here’s who he interviewed:
- Clelia Warburg Peters, venture partner, Bain Capital Ventures
- Christopher Yip, partner and managing director, RET Ventures
- Zach Aarons, co-founder and general partner, MetaProp
- Casey Berman, general partner, Camber Creek
- Vik Chawla, partner, Fifth Wall
- Adam Demuyakor, co-founder and managing partner, Wilshire Lane Partners
- Robin Godenrath and Julian Roeoes, partners, Picus Capital
- Stonly Baptiste, founding partner, and Shaun Abrahamson, managing partner, Urban Us
- Andrew Ackerman, managing director, Dreamit
Thanks very much for reading Extra Crunch this week. Have a great weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
It’s time to abandon business intelligence tools
Image Credits: Jon Feingersh Photography Inc / Getty Images
Ideally, BI transforms raw data into actionable information, but according to Charles Caldwell, VP of product management at Logi Analytics, “a gap exists between the functionalities provided by current BI and data discovery tools and what users want and need.”
Few BI tools actually integrate with existing workflows and most offer clunky user experiences, “leaving many individuals feeling like they need an advanced computer science degree to actually be able to pull insights out.”
Instead of requiring workers to abandon workflow applications to access data, embedded analytics are more efficient and easier to use, says Caldwell.
In short, “it’s time to abandon BI — at least as we currently know it.”
Pre-seed round funding is under scrutiny: Is VC pandemic posturing here to stay?
Image Credits: nadia_bormotova / Getty Images
Amid the pandemic, investors became laser-focused on sections of the pitch deck that address monetization and business viability — signs that founders need to come to the table with better-defined businesses in order to succeed.
Investors’ heightened expectations for monetization potential and a company’s positioning within its competitive landscape are unlikely to lessen in the years to come, even in a post-COVID economy.
Clubhouse UX teardown: A closer look at homepage curation, follow hooks and other features
Image Credits: Rafael Henrique/SOPA Images/LightRocket via Getty Images
Clubhouse’s hockey-stick growth is something most startups would kill for.
However, it also means that UX problems can only be addressed while in “full flight” — and that changes to the user experience will be felt at scale rather under the cover of a small, loyal and (usually) forgiving user base.
Our favorite companies from Y Combinator’s W21 Demo Day
We’re not investors, so we’re not pretending to sort the unicorns from the goats.
But TechCrunch reporters spend a lot of time talking with startups, hearing pitches and telling their stories; if you’re curious about which companies stood out from Y Combinator’s W21 Demo Day, read on.
A look at 4 IPO updates and 2 late-stage funding rounds
Image Credits: Nigel Sussman (opens in a new window)
There’s a lot going on: The venture capital market is redlining its engines while public markets remain sympathetic to growing, unprofitable companies.
Let’s round up IPO news from DigitalOcean, Kaltura, Robinhood and Zymergen, and big rounds for Lattice and goPuff.
Dear Sophie: When can I finally come to Silicon Valley?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I’m a startup founder looking to expand in the U.S. I was originally looking at opening an office in Silicon Valley to be close to software engineers and investors, but then … COVID-19 🙂
A lot has changed over the last year — can I still come?
— Hopeful in Hungary
Staying ahead of the curve on Google’s Core Web Vitals
Image Credits: Aleksei Naumov / Getty Images
Aside from improved SEO, small business websites optimizing for Google’s new Core Web Vitals will reap the rewards of an improved user experience for their site visitors.
While many are looking at the Core Web Vitals as a big hoop to jump through to please the search powers that be, others are seeing — and seizing — the opportunities that come along with this change.
Steady’s Adam Roseman and investor Emmalyn Shaw outline what worked (and what was missing) in the Series A deck
Image Credits: Steady
When it comes to Steady — the platform that helps hourly workers manage and maximize their income and access deals on things like benefits and financial services — the strengths of the business are clear.
But it took time for founder and CEO Adam Roseman to clearly define and communicate each of them in his quest for fundraising.
Discord’s reported $10B exit; Compass and Intermedia Cloud Communications set IPO price ranges
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm dug into Discord’s possible $10 billion exit to Microsoft and explored IPO price ranges for real estate tech company Compass and Intermedia Cloud Communications, a unified-communications-as-a-service company.
“It’s a lot,” he noted, “but if we don’t get through it all now, we’ll fall behind and feel silly later.”
Will fading YOLO sentiment impact Robinhood, Coinbase and other trading platforms?
Image Credits: Nigel Sussman (opens in a new window)
The consumer trading frenzy could be slowing.
What would happen to Robinhood and its cohorts if the apparent cooling in consumer trading demand continues?
How VC and private equity funds can launch portfolio-acceleration platforms
Image Credits: Miguel Navarro (opens in a new window) / Getty Images (Image has been modified)
Almost every private equity and venture capital investor now advertises that they have a platform to support their portfolio companies, “however, most of us don’t have the budget of an Andreessen Horowitz to support almost every major need” for each startup they’ve bet on, says Versatile VC founder David Teten.
If you’re prioritizing a platform buildout for your firm, consider using the framework he’s outlined.
Automakers, suppliers and startups see growing market for in-vehicle AR/VR applications
Image Credits: Bryce Durbin
Despite all of the pomp and promises about the potential for AR and VR, there isn’t a clear understanding of market demand for bringing the technology to cars, trucks and passenger vans.
Estimates of the global market range from $14 billion by 2027 to as much as $673 billion by 2025, showing just how nascent the market currently is and how much opportunity is present.
Amid pandemic, Middle East adtech startups play essential role in business growth
Image Credits: phototechno / Getty Images
The Middle East is a promising region with growing digital advertising solutions despite locals’ attachment to traditional means of advertising.
In recent years, there has been a shift to the active use of social media and online shopping, meaning the Middle East embodies great potential for adtech startups.
Social+ payments: Why fintechs need social features
Image Credits: Getty Images
Social+ products are seeing mass adoption because they marry community with functionality.
This applies even to fintech companies as taboos around money fall away.
The lightning-fast Series A that was 3 years in the making
Image Credits: Mironov Konstantin / Getty Images
It took Christine Tao, founder of Sounding Board, just over three years to recognize the value of executive coaching and get her company to a Series A.
Here’s how she did it.
NFTs could bridge video games and the fashion industry
Image Credits: Amber J. Dickinson (opens in a new window)
Music companies, celebrities and fashion brands are some of the latest entities to dip a toe into the burgeoning NFT market.
In part two of a three-part series, we take a look at why NFTs are “the next chapter of digital art history.”
Where is the e-commerce app ecosystem headed in 2021?
Image Credits: Charday Penn (opens in a new window) / Getty Images
The pandemic-induced growth of e-commerce is, by now, well documented.
What is happening in the app ecosystem that supports e-commerce? Is it growing, or are we more likely to see consolidations and IPOs?
Let’s explore.
ironSource is going public via a SPAC and its numbers are pretty good
Image Credits: Nigel Sussman (opens in a new window)
You’ll want to pay attention to this one: Israel’s ironSource, an app-monetization startup, is going public via a SPAC.
It’s the second SPAC-led debut from an Israeli company in recent weeks worth more than $10 billion, and ironSource is actually a pretty darn interesting company from a financial perspective.
Coursera set to roughly double its private valuation in impending IPO
Image Credits: Bryce Durbin / TechCrunch
The market views Coursera’s edtech business warmly ahead of its impending public offering.
Coursera is being valued as a software company, likely a breathe-easy moment for still-private edtech companies, since the debut could be an industry bellwether.
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Y Combinator-backed Vue Storefront aims to be the ‘glue’ for e-commerce
“Headless commerce” is a phrase that gets thrown around lot (I’ve typed it several times today already), but Vue Storefront CEO Patrick Friday has an especially vivid way of using the concept to illustrate his startup’s place in the broader ecosystem.
“Vue Storefront is the bodiless front end,” Friday said. “We are the walking head.”
In other words, while most headless commerce companies are focused on creating back-end infrastructure, Vue powers the front end, namely the progressive web applications with which consumers actually interact. The company describes itself as “the lightning-fast front-end platform for headless commerce.”
Friday said that he and CTO Filip Rakowski created the Vue Storefront technology as an open-source project while working at e-commerce agency Divante, before eventually spinning it out into a separate startup last year. The company was also part of the latest class at accelerator Y Combinator, and it recently raised $1.5 million in seed funding led by SMOK Ventures and Movens VC.
“We had to set up a new entity in the middle of COVID, we had to raise in the middle of COVID and we had to convince the agency to get rid of the product in the middle of COVID,” Friday said. He even recalled signing papers with an investor one morning in early December and doing an interview with Y Combinator that evening.
As they’ve created a business around the core open-source technology, Friday and his team have realized that Vue has more to offer than just building web apps, because it connects e-commerce platforms like Magento and Shopify with headless content management systems like Contentstack and Contentful, payments systems like PayPal and Stripe and other third-party services.
Image Credits: Vue Storefront
In fact, Friday said customers have been telling them, “You are like the glue. Headless was so complex to me, and then I got this Vue Storefront thing to come in on top everything else and be the glue connecting things.”
The platform has been used to create more than 300 stores worldwide. Friday said adoption has accelerated as the pandemic and resulting growth in e-commerce have driven businesses to realize they’re using “this legacy platform, using outdated frameworks and technologies from a good four or five years ago.”
Rakowski added, “We also see that many customers actually come to us deciding that Vue Storefront can be the first step of migration to another platform. We can quickly migrate the front end and write back-end agnostic code.”
Because it had just raised funding, the Vue Storefront team did not participate in the recent YC Demo Day, and it will be presenting at the next Demo Day instead. In the meantime, the company will be holding its own virtual Vue Storefront Summit on April 20.
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Y Combinator’s biotech startups incubate a new generation of therapies and tools
Medical and biotech had a strong showing at Y Combinator’s latest demo day, with nearly a dozen companies in the space catching my eye. The things a startup can accomplish in this space are astonishing these days, so don’t be surprised if a few of these companies are headline news in the next year.
Startups take on big pharma
Atom Bioworks has one of the shortest timelines and highest potential impacts; as I wrote in our second set of favorites from demo day, the company seems to be fairly close to one of the Holy Grails of biochemistry, a programmable DNA machine. These tools can essentially “code” a molecule so that it reliably sticks to a specific substance or cell type, which allows a variety of follow-up actions to be taken.
For instance, a DNA machine could lock onto COVID-19 viruses and then release a chemical signal indicating infection before killing the virus. The same principle applies to a cancer cell. Or a bacterium. You get the picture.
Atom’s founders have published the details of their techniques in Nature Chemistry, and the company says it’s working on a COVID-19 test as well as therapies for the virus and other conditions. It expects sales in the nine-figure range.
Another company along these lines is LiliumX. This company is going after “biospecific antibodies,” which are kind of like prefab DNA machines. Our own antibodies learn to target various pathogens, waste and other items the body doesn’t want, and customized, injected antibodies can do the same for cancer cells.
LiliumX is taking the algorithmic approach to generating potential antibody structures that could be effective, as many AI-informed biotech companies have before it. But the company is also using a robotic testing setup to thin the herd and get in vitro results for its more promising candidates. Going beyond lead generation is a difficult step, but one that makes the company that much more valuable.
Entelexo is one step further down the line, having committed to developing a promising class of therapeutics called exosomes that could help treat autoimmune diseases. These tiny vesicles (think packages for inter-cell commerce) can carry all kinds of materials, including customized mRNA that can modify another cell’s behavior.
Modifying cell behavior systematically could help mitigate conditions like multiple sclerosis, though the company did not elaborate on the exact mechanism — probably not something that can be explained in less than a minute. They’re already into animal testing, which is surprising for a startup.
One step further, at least mechanically, is Nuntius Therapeutics, which is working on ways to deliver cell-specific (i.e. to skeletal muscle, kidney cells, etc.) DNA, RNA and CRISPR-based therapies. This is an issue for cutting-edge treatments: while they can be sure of taking the correct action once in contact with the target cell type, they can’t be sure that the therapeutic agent will ever reach those cells. Like ambulance drivers without an address, they can’t do their jobs if they can’t get there.
Nuntius claims to have created a reliable way to deliver genetic therapy payloads to a variety of target cells, beyond what major pharma companies like Moderna have accomplished. The company also develops and licenses its own drugs, so it’s practically a one-stop shop for genetic therapies if its techniques pan out for human use.
Beyond providing therapeutics, there is the evolving field of artificial organs. These are still highly experimental, partly due to the risk of rejection even when using biocompatible materials. Trestle Biotherapeutics is taking on a specific problem — kidney failure — with implantable lab-grown kidney tissue that can help get these patients off dialysis.
While the plan is to eventually create full kidney replacements, the truth is that for people with this condition, every week and month counts. Not only does it improve their chances of finding a donor or moving up the list, but regular dialysis is a horrible process by all accounts. Anything that reduces the need to rely on it would be welcomed by millions.
This Yale-Harvard tie-up comes from a team with quite a bit of experience in stem cell science and tissue engineering, including 3D printing human tissues — which no doubt is part of the approach.
Beyond therapy
Moving beyond actual techniques for fighting various conditions, the YC batch had quite a few dedicated to improving the process of researching and understanding those conditions and techniques.
Many industries rely on cloud-based document platforms like Google Docs for sharing and collaboration, but while copywriters and sales folks probably find the standard office suite sufficient, that’s not necessarily the case for scientists whose disciplines demand special documentation and formatting.
Curvenote is a shared document platform built with these folks in mind; it integrates with Jupyter, SaturnCloud and Sagemaker, supports lots of import and export options, integrates visualization plug-ins like Plotly, and versions through Git. Now you just have to convince the head of your department it’s worth paying for.
Image Credits: Curvenote
A more specialized cloud tool can be found in Pipe | bio, which does hosted bioinformatics for developing antibody drugs like LiliumX. It’s hard to get into details here beyond that the computational and database needs of companies in biotech can be very specific and not everyone has a bioinformatics specialist on staff.
Having a tool you can just pay for instead of getting a data science grad student to moonlight for your lab is almost always preferable. (Also preferable is not using special characters in your company name — just saying, it’s going to come up.)
Special tools can be found on the benchtop as well as the laptop, though, and the remaining companies are firmly in meatspace.
Forcyte is another company I highlighted in our favorite demo day companies roundups: It’s less about chemistry and molecular biology than the actual physical phenomena experienced by cells. This is a difficult thing to observe systematically, but important for many reasons.
The company uses a micropatterned surface to observe individual cells and watch specifically for contraction and other shape changes. Physical constriction or relaxation of cells is at the heart of several major diseases and their treatments, so being able to see and track it will be extremely helpful for researchers.
The company has positioned itself as a way to test drugs at scale that affect these properties and claims to have already found promising compounds for lung fibrosis. Forcyte’s team is published in Nature, and received a $2.5 million SBIR award from the NIH, a pretty rare endorsement.
Image Credits: Kilobaser
Kilobaser is taking aim at the growing DNA synthesizing space; companies often contract with dedicated synthesizing labs to create batches of custom DNA molecules, but at a small scale this might be better done in-house.
Kilobaser’s benchtop machine makes the process as simple as using a copier, even for people with no technical know-how. As long as it has some argon, a reagent supply and microfluidic chip (sold by the company, naturally), it can replicate DNA you submit digitally in less than two hours. This could accelerate testing in many a small lab that’s held back by its reliance on a separate facility. The company has already sold 15 machines at €15,000 each — but like razor blades, the real money is in the refills.
Image Credits: Reshape Biotech
Reshape Biotech is perhaps the most straightforward of the bunch. Its approach to automating common lab tasks is to create custom robots for each one. That’s it! Of course, that’s easier said than done, but given the similarity of many lab layouts and equipment, a custom robotic sampler or autoclave could be adopted by thousands as (again) an alternative to hiring another part-time grad student.
There were several other companies in the biotech and medical space worth looking at in the batch, but not enough space here to highlight them individually. Suffice it to say that the space is increasingly welcoming to startups as advances in tech and software are brought to bear where insuperable barriers to entry once left such possibilities remote.
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A look at 4 IPO updates and 2 late-stage funding rounds
Covering YC Demo Day yesterday was good fun, but I missed a few items while watching several hundred startup pitches. A few years ago, these stories might have been the biggest news of the week.
But with the venture capital market redlining its engines while public markets remain sympathetic to growing, unprofitable companies, there’s lots going on. So, as a follow-up to our first late-stage roundup that we published yesterday morning, here’s another.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
This time we’re discussing IPO news from DigitalOcean (context), Kaltura (context), Robinhood (context) and Zymergen, and big rounds for Lattice and goPuff. That’s a lot to chew on, but I’ll be brief and to the point.
We’ll commence with the IPO news and then pivot into the late-stage rounds, just in case more drops this morning while we’re typing our way through yesterday’s news. Let’s go!
IPO updates
Today’s most pressing news is that DigitalOcean, a provider of cloud services to small businesses, priced its IPO at $47 per share last night. That was right at the top of its public-offering price range of $44 to $47. Before counting shares reserved for its underwriters, DigitalOcean is worth just under $5 billion.
And the company raised a gross $775.5 million in the offering, giving DigitalOcean a massive war chest to pursue its vision. As the company has proved increasingly unprofitable on a GAAP basis in recent years, the extra cash isn’t a problem: DigitalOcean plans to reduce its aggregate debt load with some of the proceeds, which will improve its profitability.
The company won’t trade for hours, so we’re done with DigitalOcean for now. File it in your mind as a win, as the company raised $50 million last year at a $1.1 billion valuation (PitchBook data). That’s a quick 5x.
Next up from the IPO treadmill is Kaltura, which released a first guess of its market value as a public company. Targeting $14 to $16 per share in its impending debut, the video software company is worth around $2 billion at the top end of its range, not counting shares reserved for its underwriting banks or other shares tied up in vested options and recruited stock units (RSUs).
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Our favorite companies from Y Combinator’s W21 Demo Day: Part 2
We’ve reached the end of Y Combinator’s biggest Demo Day, which saw more than 300 companies pitching back-to-back over eight hours.
Earlier, we highlighted some of the companies that caught our eye in the first half of the day. Now we’re back with our favorite companies from the second half. From a marketplace to help you resell formalwear to a startup that offers self-driving street cleaners, it’s quite the mix.
If you’d like to browse all of the companies from this batch YC has a catalog of publicly-launched W21 companies here.
Terra
Heading into this particular demo day, I had my eyes peeled for startups focused on delivering services via an API instead of offering managed software. Happily, there have been a number to dig into, including Pitbit.ai, Bimaplan, Enode and Terra.
Terra stood out to me because it solves a problem I care deeply about, namely fitness data siloization. My running data is stuck in one app, biking data in another, and my weight-lifting data is stuck in my head, though I doubt Terra has an API for that interface quite yet.
What Terra does is permit fitness app developers to better connect their services, which permits the sharing of data back and forth. Presenters likened their startup to Plaid — a popular thing to do in recent quarters — saying that what the fintech startup did for banking data, Terra would do for fitness and health information.
Getting developers to sign on will be tricky, as I presume all of the apps I use in an exercise context would prefer to be my main workout home. But I don’t want that, so here’s hoping Terra realizes its vision.
— Alex
AgendaPro
Calling itself “Shopify for beauty and wellness” in Latin America, AgendaPro wants to help small businesses in the region book customers online and collect payments.
The company’s idea isn’t as radical as some companies that we heard from today — Carbon capture! Faster drug discovery! — but the company did share several metrics that made us sit up. First, AgendaPro has reached $152,000 in MRR, or just over $1.8 million in ARR. And representatives shared that its gross margins are 89%. As far as software margins goes, that’s pretty damn good.
The startup has more than 3,000 merchants using its service at the moment, and it claims that there are more than four million businesses that it could service. If AgendaPro can get software and payments revenues from even a respectable fraction of those companies, it will be a big, big business. And who doesn’t love vertical SaaS?
— Alex
Atom Bioworks
One of the holy grails of biochemistry is a programmable DNA machine. These tools can essentially “code” a molecule so that it reliably sticks to a specific substance or cell type, which allows a variety of follow-up actions to be taken.
For instance, a DNA machine could lock onto COVID-19 viruses and then release a chemical signal indicating infection before killing the virus. The same principle applies to a cancer cell. Or a bacterium. You get the picture — and it looks like Atom Bioworks has something a lot like this.
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Y Combinator widens its bet in edtech in latest batch
Y Combinator is slowly growing its stake in education companies, as the sector balloons with newfound demand from remote learners. In its latest batch, the famed accelerator had its highest number of edtech startups yet: 14 companies from around the world, working on everything from teacher monetization to homework apps to ways to train software engineers in an affordable fashion.
While Y Combinator isn’t the definitive source on what success in early-stage startups looks like — it quite literally has a post-mortem dinner after Demo Day to celebrate failure — it does serve well in providing an illustrative glance of how entrepreneurs are thinking about certain sectors in a given moment in time. Managing director Michael Seibel said that the number of startups in each sector isn’t a Y Combinator choice, but is in line with the concentration of applicants in each sector. In other words, YC is backing more edtech companies because more edtech companies are applying to the accelerator.
One dynamic worth pointing out here is that, of the 14 edtech startups in this batch, only two have a woman founder, UPchieve and Degrees of Freedom. Y Combinator provided aggregate batch diversity, stating that 19% of companies in W21 include a woman founder, and 10% of founders in the entire batch are women. It’s a slight uptick from the last batch, but not an immense jump.
diversity of the @ycombinator w21 batch:
19% of the companies have a woman founder (16% S20)
— natasha (@nmasc_) March 23, 2021
With this context, I will use the current edtech cohort within the batch to sketch out one version of the future of education in the eyes of this specific demographic of early-stage founders.
Internationalization is a factor
The current YC batch has 50% of its startups based outside of the United States, a first for the accelerator. The growing internationalization of Y Combinator might help partially explain the uptick in edtech companies. The growth of companies like India’s Byju’s, one of the most valuable edtech companies in the world, shows how consumer spending in education companies internationally is impressive, and it’s clear that early-stage edtech startups are taking note.
Only two of Y Combinator’s 14 edtech investments are from the United States, with the highest concentrations in South America and India.
- Manara: A marketplace to connect Middle East talent to tech jobs.
- Prendea: Peru-based startup that offers live, online after-school classes for Spanish-speaking kids.
- Avion School: The education startup teaches Filipino students to be remote software engineers around the world.
- Poliglota: A language school for Latin America.
The future is consumer over B2B
The vast majority of startups in the current edtech batch charge consumers, instead of institutions or enterprises, for services. In some ways, edtech startups going for consumers instead of institutions isn’t new: it’s always been easier to convince a parent instead of a public school to pay for a service simply due to red tape. Consumers are an easier way to reach a venture-demanded scale, and that’s always been a truth of edtech.
- Kidato: Targeting the middle class of Africa, Kidato is an online school for K-12 students. The startup has a focus on quality and affordability.
- Codingal: An afterschool program for Indian kids to learn coding.
Still, it’s noteworthy that we’re not seeing too much experimentation in business model here, despite the pandemic and that some schools have begun to invest more in edtech services.
A potential hurdle that these companies might face is access. If it costs to use your service, you can only educate so many people from specific income groups. As a result, income share agreements, or ISAs, were especially present in this batch, a set-up that allows a student to hold off on paying for an education until they are employed. Upon employment, said student has to give a percentage of their income to the company until their debt is paid. While the model is controversial, it was popularized by YC graduate Lambda School and continues to be one way to make the upfront cost of school more popular.
- Pragmatic Leaders: The startup wants to build a more cost-effective MBA, which is free until the student is hired post-grad.
- Awari: The São Paulo-based startup uses income share agreements to help students in Brazil afford a tech education. Courses range from data analytics to product UX and growth marketing.
Acadpal, mentioned later, is an outlier here selling to schools in India. Before I move on to our next section, I do want to shout out two startups that I think embody the most ambitious bets in business model:
- UPchieve: A nonprofit for low-income high school students to access free, 24/7 virtual tutoring.
- Degrees of Freedom: The startup wants to offer low-cost higher education experience that is flexible and community-oriented. It costs about $9,000 to attend.
Zoom University lives on
Despite the struggles of “Zoom University,” this batch of edtech founders clearly believe that the future of instruction is through online courses. This was perhaps the most overwhelming thread tying together all the companies in the sector: a bet on one of these companies is a bet that remote education will become status quo.
As previous sections show, a number of startups are offering online coding platforms for specific demographics. Now, I always have my inbox filled with different “Lambda School for X” startups, so seeing a variety of these startups pop up yet again isn’t exactly exciting. However, the pandemic did show how much community and network enhances a school experience. If these online schools can pull off strong partnerships with employers and alumni, I think there’s a huge opportunity here.
- Turing College: The Lithuania-based online data science school uses income-share agreements to bring affordability to education.
- Coderhouse: An Argentina-based startup that wants to build a live, online tech education for the Spanish-speaking populations of the world.
That said, where there’s big opportunity there’s always a lot of competition. These startups will have to find a way to differentiate themselves, like the one below:
- Unschool: The startup wants to tie higher education to employment outcomes, so it’s building a platform to increase completion rates in India with a guarantee of internships.
There were bets on the infrastructure of how courses get done online, from course creation to completion.
- Pensil: A platform that helps YouTube teachers in India monetize their courses.
- Acadpal: A learning app for teachers in India to create and share homework, and for students to complete and discuss assignments.
- CreatorOS – Questbook: This company wants to make it easier for teachers to teach online courses. It gives professionals the tools they need to launch a course within minutes, with a focus on a bite-sized end-product.
In conclusion
To end, the edtech startups in the current YC batch are more complementary to each other than competitive. For a homework platform like Acadpal to succeed, it would be good news for a company like Codingal, which helps bring afterschool learning online, to get funding as well. For Unschool, which ties higher-ed to employment, a company like Degrees of Freedom could be a key partner or integration for students from a low-income background.
Edtech is growing — and fast — so the fragmentation of different plays is somewhat expected. And while this batch’s hard work starts now, it’s illuminating to understand where the earliest entrepreneurs out there are seeing promise.
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Our favorite companies from Y Combinator’s W21 Demo Day: Part 1
It’s that time again! Today is Demo Day for Y Combinator’s latest accelerator batch — its largest to date, with more than 300 teams getting a minute each to pitch their companies to an audience of investors.
This is the third time YC has held its Demo Day via a Zoom livestream and the second time the entire program was entirely virtual. YC president Geoff Ralston outlined their thinking for this latest batch — and how/why they’ve expanded the program to over 300 companies — in a post this morning.
Want to see all of the companies? YC has a catalog of the entire Winter 2021 batch here (minus those that haven’t publicly launched), filterable by industry and region.
If you don’t have time to skim through it all, we’ve aggregated some of the companies that really managed to catch our eye. This is part one of two, covering our favorites from the companies that launched in the first half of the day.
As Alex Wilhelm put it last time we did one of these, “we’re not investors, so we’re not pretending to sort the unicorns from the goats.” But we do spend a lot of time talking with startups, hearing pitches and telling their stories; if you’re curious about which companies stood out, read on.
Prospa
Prospa is building a neobank for small companies in Nigeria. The startup charges customers $7 per month and has reached $50,000 in monthly recurring revenue. That’s some pretty darn good traction. We found Prospa notable because Nigeria’s economy and population are rapidly growing, neobanks have succeeded in a number of markets thus far, and the company’s clear business model and early traction stood out.
And Prospa isn’t targeting a small market. It said during its presentation that there are 37 million so-called “microbusinesses” in its target country. That’s a lot of scale to grow into, and it’s really nice to hear from a neobank that isn’t going to merely pray that interchange revenues will eventually stack to the moon.
— Alex
Blushh
Image Credits: Blushh
Blushh, built by a team of ex-Google, Amazon, Harvard and BCG professionals, is creating a directory of short, sensual audio stories for women in Asia. The startup believes that there is a massive unmet need for adult content created for women, instead of men, signing up 100 paying subscribers within its first month on the market.
During their pitch, co-founder Soy Hwang said Blushh wants to do for sexual wellness what “Spotify and Audible did for music and audio books.” This startup stands out because it is taking on an untapped market ridden with stigma and lack of innovation. It’s a risk on several levels, and considering the fact that many venture capitalists today still have a “vice” clause that prevents them from investing in sex tech, it will be key to see how Blushh funds itself to keep growing.
— Natasha
BrioHR
TechCrunch caught up with BrioHR a few weeks ago when the startup announced that it had closed a $1.3 million round. During its presentation, the company announced that it had reached $13,000 in monthly recurring revenue (MRR), or $156,000 in annual recurring revenue (ARR).
The company is building human resources software for companies in Southeast Asia, a market it considers fraught with old software and outdated business processes. The company is doing two things. First, building software to help manage and pay workers. The latter part of its work requires lots of localization, so it’s rolling out more slowly than the rest of its software.
If Southeast Asia is as fertile ground for modern HR software as the United States has been shown to be, BrioHR could find more than enough room to grow. I’m excited to see how far the company can scale its ARR with the round that we recently covered.
— Alex
Charge Running
Strava walked so Charge Running could, well, run. The startup, founded by a former Navy SEAL, app connoisseur and kinesiology specialist, is an app that offers live virtual running classes. The consumer play is being framed by the team as a “Peloton for running” with motivation and social engagement during the run.
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This Y Combinator startup is taking lab-grown meat upscale with elk, lamb and Wagyu beef cell lines
Last week a select group of 20 employees and guests gathered at an event space on the San Francisco Bay, and, while looking out at the Bay Bridge, dined on a selection of choice elk sausages, Wagyu meatloaf and lamb burgers — all of which were grown from a petri dish.
The dinner was a coming out party for Orbillion Bio, a new startup pitching today in Y Combinator’s latest demo day, that’s looking to take lab-grown meats from the supermarket to high-end, bespoke butcher shops.
Instead of focusing on pork, chicken and beef, Orbillion is going after so-called heritage meats — the aforementioned elk, lamb and Wagyu beef to start.
By focusing on more expensive-end products, Orbillion doesn’t have as much pressure to slash costs as dramatically as other companies in the cellular meat market, the thinking goes.
But there’s more to the technology than its bougie beef, elite elk and luscious lamb meat.
“Orbillion uses a unique accelerated development process producing thousands of tiny tissue samples, constantly iterating to find the best tissue and media combinations,” according to Holly Jacobus, whose firm, Joyance Partners, is an early investor in Orbillion. “This is much less expensive and more efficient than traditional methods and will enable them to respond quickly to the impressive demand they’re already experiencing.”
The company runs its multiple cell lines through a system of small bioreactors. Orbillion couples that with a high throughput screening and machine learning software system to build out a database of optimized tissue and media combinations. “The key to making lab grown meat work scalably is choosing the right cells cultured in the most efficient way possible,” Jacobus wrote.
Orbillion is co-founded by a deeply technical and highly experienced team of executives that’s led by Patricia Bubner, a former researcher at the German pharmaceutical giant Boehringer Ingelheim. Joining Bubner is Gabriel Levesque-Tremblay, a former director of the American Institute of Chemical Engineers, who was a post-doc at Berkeley with Bubner and serves as the company’s chief technology officer. Rounding out the senior leadership is Samet Yildirim, the chief operating officer and a veteran executive of Boehringer Ingelheim (he actually served as Bubner’s boss).
Orbillion Bio co-founders Gabriel Levesque-Tremblay, CTO; Patricia Bubner, CEO; and Samet Yildirim, COO. Image Credit: Orbillion Bio
For Bubner, the focus on heritage meats is as much a function of her background growing up in rural Austria as it is about economics. A longtime, self-described foodie and a nerd, Bubner went into chemistry because she ultimately wanted to apply science to the food business. And she wants Orbillion to make not just meat, but the most delicious meats.
It’s an aim that fits with how many other companies have approached the market when they’re looking to commercialize a novel technology. Higher-end products, or products with unique flavor profiles that are unique to the production technologies available, are more likely to be commercially viable sooner than those competing with commodity products. Why focus on angus beef when you can focus on a much more delicious breed of animal?
For Bubner, it’s not just about making a pork replacement, it’s about making the tastiest pork replacement.
“I’m just fascinated and can see the future in us being able to further change the way we produce food to be more efficient,” she said. “We’re at this inflection point. I’m a nerd, I’m a foodie, and I really wanted to use my skills to make a change. I wanted to be part of that group of people that can really have an impact on the way we eat. For me there’s no doubt that a large percentage of our food will be from alternative proteins — plant based, fermentation and lab-grown meat.”
Joining Boehringer Ingelheim was a way for Bubner to become grounded in the world of big bioprocessing. It was preparation for her foray into lab-grown meat, she said.
“We are a product company. Our goal is to make the most flavorful steaks. Our first product will not be whole cuts of steak. The first product is going to be a Wagyu beef product that we plan on putting out in 2023,” Bubner said. “It’s a product that’s going to be based on more of a minced product. Think Wagyu sashimi.”
To get to market, Bubner sees the need not just for a new approach to cultivating choice meats, but a new way of growing other inputs as well, from the tissue scaffolding needed to make larger cuts that resemble traditional cuts of meat, or the fats that will need to be combined with the meat cells to give flavor.
That means there are still opportunities for companies like Future Fields, Matrix Meats and Turtle Tree Scientific to provide inputs that are integrated into the final, branded product.
Bubner’s also thinking about the supply chain beyond her immediate potential partners in the manufacturing process. “Part of my family were farmers and construction workers and the others were civil engineers and architects. I hold farmers in high respect… and think the people who grow the food and breed the animals don’t get recognition for the work that they do.”
She envisions working in concert with farmers and breeders in a kind of licensing arrangement, potentially, where the owners of the animals that produce the cell lines can share in the rewards of their popularization and wider commercial production.
That also helps in the mission of curbing the emissions associated with big agribusiness and breeding and raising livestock on a massive scale. If you only need a few animals to make the meat, you don’t have the same environmental footprint for the farms.
“We need to make sure that we don’t make the mistakes that we did in the past that we only breed animals for yield and not for flavor,” said Bubner.
Even though the company is still in its earliest days, it already has one letter of intent, with one of San Francisco’s most famous butchers. Guy Crims, also known as “Guy the Butcher,” has signed a letter of intent to stock Orbillion Bio’s lab-grown Wagyu in his butcher shop, Bubner said. “He’s very much a proponent of lab-grown meat.”
Now that the company has its initial technology proven, Orbillion is looking to scale rapidly. It will take roughly $3.5 million for the company to get a pilot plant up and running by the end of 2022, and that’s in addition to the small $1.4 million seed round the company has raised from Joyant and firms like VentureSouq.
“The way I see an integrated model working later on is to have the farmers be the breeders of animals for cultivated meat. That can reduce the number of cows on the planet to a couple of hundred thousand,” Bubner said of her ultimate goal. “There’s a lot of talking about if you do lab-grown meat you want to put me out of business. It’s not like we’re going to abolish animal agriculture tomorrow.”
Image Credit: Getty Images
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