Monthly Archives: February 2021

News: Why F5 spent $2.2B on 3 companies to focus on cloud native applications

• February 25, 2021
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It’s essential for older companies to recognize changes in the marketplace or face the brutal reality of being left in the dust. F5 is an old-school company that launched back in the 90s, yet has been able to transform a number of times in its history to avoid major disruption. Over the last two years,

It’s essential for older companies to recognize changes in the marketplace or face the brutal reality of being left in the dust. F5 is an old-school company that launched back in the 90s, yet has been able to transform a number of times in its history to avoid major disruption. Over the last two years, the company has continued that process of redefining itself, this time using a trio of acquisitions — NGINX, Shape Security and Volterra — totaling $2.2 billion to push in a new direction.

While F5 has been associated with applications management for some time, it recognized that the way companies developed and managed applications was changing in a big way with the shift to Kubernetes, microservices and containerization. At the same time, applications have been increasingly moving to the edge, closer to the user. The company understood that it needed to up its game in these areas if it was going to keep up with customers.

Taken separately, it would be easy to miss that there was a game plan behind the three acquisitions, but together they show a company with a clear opinion of where they want to go next. We spoke to F5 president and CEO François Locoh-Donou to learn why he bought these companies and to figure out the method in his company’s acquisition spree madness.

Looking back, looking forward

F5, which was founded in 1996, has found itself at a number of crossroads in its long history, times where it needed to reassess its position in the market. A few years ago it found itself at one such juncture. The company had successfully navigated the shift from physical appliance to virtual, and from data center to cloud. But it also saw the shift to cloud native on the horizon and it knew it had to be there to survive and thrive long term.

“We moved from just keeping applications performing to actually keeping them performing and secure. Over the years, we have become an application delivery and security company. And that’s really how F5 grew over the last 15 years,” said Locoh-Donou.

Today the company has over 18,000 customers centered in enterprise verticals like financial services, healthcare, government, technology and telecom. He says that the focus of the company has always been on applications and how to deliver and secure them, but as they looked ahead, they wanted to be able to do that in a modern context, and that’s where the acquisitions came into play.

As F5 saw it, applications were becoming central to their customers’ success and their IT departments were expending too many resources connecting applications to the cloud and keeping them secure. So part of the goal for these three acquisitions was to bring a level of automation to this whole process of managing modern applications.

“Our view is you fast forward five or 10 years, we are going to move to a world where applications will become adaptive, which essentially means that we are going to bring automation to the security and delivery and performance of applications, so that a lot of that stuff gets done in a more native and automated way,” Locoh-Donou said.

As part of this shift, the company saw customers increasingly using microservices architecture in their applications. This means instead of delivering a large monolithic application, developers were delivering them in smaller pieces inside containers, making it easier to manage, deploy and update.

At the same time, it saw companies needing a new way to secure these applications as they shifted from data center to cloud to the edge. And finally, that shift to the edge would require a new way to manage applications.

News: Stori raises $32.5M in a Lightspeed-led Series B to build Mexico’s credit card for the masses

• February 25, 2021
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While credit cards are commonplace in the United States, they are far less ubiquitous in many other countries, particularly those in Latin America. In Mexico in particular, cash remains the dominant method of payment with an estimated 86% of all payments being in the form of cash. But card usage is growing as more people

While credit cards are commonplace in the United States, they are far less ubiquitous in many other countries, particularly those in Latin America. In Mexico in particular, cash remains the dominant method of payment with an estimated 86% of all payments being in the form of cash.

But card usage is growing as more people are shopping online than ever before. According to one recent study, Mexico topped the list of the world’s fastest growing e-commerce markets. Meanwhile, only 37% of Mexicans over 15 years old have a bank account, according to recent World Bank stats.

All these factors clearly make the country ripe for fintech innovation. 

And for the founders of Mexico City-based startup Stori, they spell opportunity.

From left to right, Stori founding team Juan Villaseñor, Marlene Garayzar, Bin Chen, Camila Burne

Stori launched its credit card product in Mexico in January 2020 and has so far had more than 1 million customers apply for a card. 

Several members of the founding team spent years at Capital One honing their skills in underwriting underserved populations while others worked at the likes of Mastercard, Morgan Stanley, GE Money, HSBC and Intel in Mexico and the U.S.

Now the company has raised a $32.5 million Series B round with the goal of “becoming Mexico’s leading credit card issuer for the rising middle class.”

Lightspeed Venture Partners led the company’s financing, which brings Stori’s total raised since its early 2018 inception to $50 million. According to Lightspeed Partner Mercedes Bent, the investment marked her firm’s first large investment in the Latin American region “with more to come.”

Existing backers Vision Plus Capital, BAI Capital and Source Code Capital also participated in the round.

Stori provides credit cards with “a 100% mobile app-based experience” to the rising middle income population in Mexico. The team spent its first two years building out the startup’s infrastructure and platform. 

In January 2021, the fintech’s monthly new customer growth was 14 times than what it saw in January 2020 and 6 times the company’s monthly average for 2020, according to co-founder Bin Chen. He declined to reveal its current total of customers.

Because the Mexican market is so huge (the country has a population of nearly 130 million), Stori is currently only focused on serving the country.

Just as in other parts of the world, Stori saw tailwinds in the COVID-19 pandemic in that it fueled customer demand for a way to pay digitally. 

“Consumers in Mexico are increasingly using e-commerce and app-based services like ride hailing and delivery and credit cards are the preferred payment methods in those channels,” Chen said. “They’re experiencing more cash flow fluctuation and irregular expenses and need access to flexible credit that can meet short term needs.”

And of course, during pandemic-related lockdowns, more people are turning to digital financial offerings to avoid visiting bank branches in person.

One commonality among all of Stori’s co-founders, according to Chen, is that each “comes from a modest background.”

“We all experienced the feeling of being excluded from the traditional financial service world. As an international student pursuing my master’s degree in Illinois more than twenty years ago, I was relying solely on teaching assistantship to cover my study and living expenses,” Chen recalled. “I often ran out of money, and had a hard time to make ends meet – I received many rejections before I got my first credit card.”

Similar to TomoCredit’s mission in the U.S., Stori’s founders are working to give middle and low-income customers that are “new to the formal financial system” an opportunity to access credit.

The company plans to use its new capital to grow its customer base, boost headcount and invest in product design, technology infrastructure and underwriting, said Chen, who previously worked at Capital One and Mastercard in both U.S. and emerging markets. Today, Stori has 80 employees spread across offices in Mexico, U.S. and China, up from 40 a year ago.

“Our goal is to become a leading digital bank for the underserved population in the region,” he said.

For its part, Lightspeed first met the company’s founders over a year ago.

“We were struck by the depth of their experience. They navigated the pitfalls of Covid masterfully — without the benefit of a US style stimulus — and showed that their underwriting models were strong and improving,” Bent said. “That is a reflection of the quality of the team.”

Yiran Liu, a partner at China-based Vision Plus Capital, says the firm led Stori’s Series A round and “continues to be super pro rata in this round.”

“We have a structural thesis on digital fintech models and are investing in these models globally, particularly in emerging markets,” Liu said in a written statement. “We are impressed by the team’s execution and excited by the local market opportunity as evidenced by the rapid growth.”

News: DataJoy raises $6M seed to help SaaS companies track key business metrics

• February 25, 2021
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Every business needs to track fundamental financial information, but the data typically lives in a variety of silos making it a constant challenge to understand a company’s overall financial health. DataJoy, an early stage startup, wants to solve that issue. The company announced a $6 million seed round today led by Foundation Capital with help

Every business needs to track fundamental financial information, but the data typically lives in a variety of silos making it a constant challenge to understand a company’s overall financial health. DataJoy, an early stage startup, wants to solve that issue. The company announced a $6 million seed round today led by Foundation Capital with help from Quarry VC, Partech Partners, IGSB, Bow Capital and SVB.

Like many startup founders, CEO Jon Lee has experienced the frustration first hand of trying to gather this financial data, and he decided to start a company to deal with it once and for all. “The reason why I started this company was that I was really frustrated at Copper, my last company because it was really hard just to find the answers to simple business questions in my data,” he told me.

These include basic questions like how the business is doing this quarter, if there are any surprises that could throw the company off track and where are the best places to invest in the business to accelerate more quickly.

The company has decided to concentrate its efforts for starters on SaaS companies and their requirements. “We basically focus on taking the work out of revenue intelligence, and just give you the insights that successful companies in the SaaS vertical depend on to be the largest and fastest growing in the market,” Lee explained.

The idea is to build a product with a way to connect to key business systems, pull the data and answer a very specific set of business questions, while using machine learning to provide more proactive advice.

While the company is still in the process of building the product and is pre-revenue, it has begun developing the pieces to ultimately help companies answer these questions. Eventually it will have a set of connectors to various key systems like Salesforce for CRM, HubSpot and Marketo for marketing, Netsuite for ERP, Gainsight for customer experience and Amplitude for product intelligence.

Lee says the set of connectors will be as specific as the questions themselves and based on their research with potential customers and what they are using to track this information. Ashu Garg, general partner at lead investor Foundation Capital says that he was attracted to the founding team’s experience, but also to the fact they were solving a problem he sees all the time sitting on the boards of various SaaS startups.

“I spend my life in the board meetings. It’s what I do, and every CEO, every board is looking for straight answers for what should be obvious questions, but they require this intersection of data,” Garg said. He says to an extent, it’s only possible now due to the evolution of technology to pull this all together in a way that simplifies this process.

The company currently has 11 employees with plans to double that by the middle of this year. As a long-time entrepreneur, Lee says that he has found that building a diverse workforce is essential to building a successful company. “People have found diversity usually [results in a company that is] more productive, more creative and works faster,” Lee said. He said that that’s why it’s important to focus on diversity from the earliest days of the company, while being proactive to make that happen. For example, ensuring you have a diverse set of candidates to choose from when you are reviewing resumes.

For now, the company is 100% remote. In fact, Lee and his co-founder Chief Product Officer Ken Lee, who was previously at Tableau, have yet to meet in person, but they are hoping that changes soon. The company will eventually have a presence in Vancouver and San Mateo whenever offices start to open.

News: Terminus raises $90M to grow its B2B marketing platform, now valued at around $400M

• February 25, 2021
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Sales and marketing are often considered a single category on a business plan, but ironically, when it comes to building apps and services to help with them, they usually become separate entities, and so too do the teams that address sales and marketing in organizations. Today, however, a startup called Terminus — which is building

Sales and marketing are often considered a single category on a business plan, but ironically, when it comes to building apps and services to help with them, they usually become separate entities, and so too do the teams that address sales and marketing in organizations. Today, however, a startup called Terminus — which is building a platform that views sales and marketing in a more integrated way, through account-based marketing — is announcing funding and growth, a sign of how its approach is gaining more traction.

The startup has closed a Series C of $90 million, at a valuation we understand from sources to be around $400 million. This is a huge jump on Terminus’s valuation in its last round, which was $96 million post-money in 2018, according to PitchBook data.

Part of the reason for the hike is likely because of the huge focus that digital marketing has had especially in the last year — a time when, because of the pandemic, a lot of more legacy and traditional channels have ceased to be as visible). Account-based marketing alone was estimated, in 2018, to be a $458 billion market opportunity.

Another reason for interest in Terminus specifically is because of its customer record within that. It has around 1,000 enterprise customers, including divisions of IBM, Salesforce, Thomson Reuters, and more.

“We’re building the new marketing automation,” said CEO Tim Kopp in an interview. “We think account-based marketing is the most important thing to have happened in sales software. Teams are switching from lead-based to account-based approaches, and we’ve now moved into addressing all points of engagement, a modern B2B marketing cloud.”

The equity round is being led by Great Hill Partners, with previous investors Atlanta Ventures and Edison Partners, and new backer Hallet Capital also participating. The funding brings the total raised by Terminus — co-headquartered in Atlanta, GA and Indianapolis, IN — to about $120 million.

The world of marketing has seen a huge shift in the two decades, with the rise in internet consumption, and the proliferation of digital services, driving a big business in what is now collectively called “martech”.

The area that Terminus specifically focuses on within that is account-based marketing. In short, this is a way for B2B sales and marketing teams to conceive of potential targets at a business not as individual entities but collective groups. This means a more joined up effort to work across whole organizations, providing a way to market something to more than one person, increasing the chances of connecting with someone to then make the sale.

Terminus’ platform and approach, CEO Kopp points out, essentially brings the functions of sales and marketing together, instead of needing to hand off work from one to the other (eliminating the admin and cost of working across different software within those groups as part of that).

“We see an overwhelming opportunity in bringing together marketing and sales,” he said in an interview. “Marketing is joining in on sales meetings and sales has become a part of the client success, where you are marketing to your own customers. It’s an area where customers stink because they typically come at it from the sales or marketing side.”

Terminus’ platform today consists of a “data studio” that brings together sales intelligence, account information, and other data sources to help compile a list of would-be targets. On top of this, it also has been building out a marketing engine that includes the ability to build advertising, email and web campaigns, and chatbot management. Some of this has been built in-house, and some has come to the company by way of acquisitions (for example the chat functionality comes by way of its acquisition of Ramble last April).

Terminus is by far not the only company working in this area. Others include Marketo (part of Adobe), 6sense, Sendoso and many others. Terminus’s approach is to bring different aspects of the marketing and sales process (analytics, orchestration, automation and execution) into one platform.

Fittingly, the startup’s name was based on an early nickname for Atlanta, and used as a reference to its aim of being the single for its customers’ various marketing and sales activities.

This is one reason why investors have been knocking.

“Terminus continues to redefine how teams go to market, innovating how companies generate revenue in a digital-first environment,” said Derek Schoettle, a growth partner at Great Hill. “We’ve been so impressed with this team, the company’s significant growth over the last year, its continued product innovation, and the huge market opportunity ahead.”

News: Lob raises $50M for its direct mail platform

• February 25, 2021
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Lob is a startup promising to help businesses deliver physical mail more quickly and affordably, and with more personalization. The company estimates that its platform has been used to deliver mail to one in two U.S. households. And today, it’s announcing that it has raised $50 million in Series C funding. CEO Leore Avidar told

Lob is a startup promising to help businesses deliver physical mail more quickly and affordably, and with more personalization.

The company estimates that its platform has been used to deliver mail to one in two U.S. households. And today, it’s announcing that it has raised $50 million in Series C funding.

CEO Leore Avidar told me he founded Lob with Harry Zhang nearly a decade ago to “allow people to send mail programmatically.” Over time, the company has become increasingly focused on enterprise clients — its 8,500-plus customers include Twitter, Expedia and Oscar Health — although Avidar said it will always offer a product for small businesses as well.

Avidar explained that in a digital age, there are two main categories of physical mail that Lob continues to support for its customers. First, there’s mail sent for “a regulatory purpose, a compliance purpose” — in other words, mail that businesses are legally required to send in printed form. Second, there’s direct mail sent as marketing, which Avidar said many companies are rediscovering.

“Marketing as a whole is always trying to find a unique channel in order to make their customer aware of whatever their call to action is,” he said. “Right now, social is really expensive, Google AdWords is super expensive, with email you can easily unsubscribe. No one’s been paying attention to direct mail, and the prices don’t scale with supply and demand.”

Lob says that it can reduce the execution time on a direct mail campaign by 95%, from 90 days to less than a day. For the actual printing and delivery, it has built out a network of partners across the country. And other companies like PostPilot and Postalaytics are building on top of the Lob platform.

The startup has now raised $80 million in total funding. The new round was led by Y Combinator Continuity Fund — Lob participated in the YC accelerator and the Continuity Fund also led the startup’s previous funding.

Avidar said the company is planning to triple the amount of physical mail delivered through the platform this year, which means the round will allow it to continue expanding the Print Delivery Network, as well as increasing headcount to more than 260 employees.

“Lob is leading the digital transformation of direct mail, a business process used by every company on Earth that has remained virtually untouched by software,” said YC Managing Partner and Lob board member Ali Rowghani in a statement. “Lob’s platform delivers exceptional value to some of the world’s largest senders of direct mail by lowering cost and improving deliverability, tracking, reporting, and ROI. Even for the most sophisticated senders of direct mail, Lob’s API-driven product is vastly superior to legacy approaches.”

News: Berlin’s MorphAIs hopes its AI algorithms will put its early-stage VC fund ahead of the pack

• February 25, 2021
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MorphAIs is a new VC out of Berlin, aiming to leverage AI algorithms to boost its investment decisions in early-stage startups. But there’s a catch: it hasn’t raised a fund yet. The firm was founded by Eva-Valérie Gfrerer who was previously head of Growth Marketing at FinTech startup OptioPay and her background is in Behavioural

MorphAIs is a new VC out of Berlin, aiming to leverage AI algorithms to boost its investment decisions in early-stage startups. But there’s a catch: it hasn’t raised a fund yet.

The firm was founded by Eva-Valérie Gfrerer who was previously head of Growth Marketing at FinTech startup OptioPay and her background is in Behavioural Science and Advanced Information Systems.

Gfrerer says she started MorphAIs to be a tech company, using AI to assess venture investments and then selling that as a service. But after a while, she realized the platform could be applied an in-house fund, hence the drive to now raise a fund.

MorphAIs has already received financing from some serial entrepreneurs, including: Max Laemmle, CEO & Founder Fraugster, previously Better Payment and SumUp; Marc-Alexander Christ, Co-Founder SumUp, previously Groupon (CityDeal) and JP Morgan Chase; Charles Fraenkl, CEO SmartFrog, previously CEO at Gigaset and AOL; Andreas Winiarski, Chairman & Founder awesome capital Group.

She says: “It’s been decades since there has been any meaningful innovation in the processes by which venture capital is allocated. We have built technology to re-invent those processes and push the industry towards more accurate allocation of capital and a less-biased and more inclusive start-up ecosystem.”

She points out that over 80% of early-stage VC funds don’t deliver the minimum expected return rate to their investors. This is true, but admittedly, the VC industry is almost built to throw a lot of money away, in the hope that it will pick the winner that makes up for all the losses.

She now plans to aim for a pre-seed/seed fund, backed by a team consisting of machine learning scientists, mathematicians, and behavioral scientists, and claims that MorphAIs is modeling consistent 16x return rates, after running real-time predictions based on market data.

Her co-founder is Jan Saputra Müller, CTO and Co-Founder, who co-founded and served as CTO for several machine learning companies, including askby.ai.

There’s one problem: Gfrerer’s approach is not unique. For instance, London-based Inreach Ventures has made a big play of using data to hunt down startups. And every other VC in Europe does something similar, more or less.

Will Gfrerer manage to pull off something spectacular? We shall have to wait and find out.

News: With Atlanta rising as a new hub for tech, early stage firm Tech Square Ventures gets a new partner

• February 25, 2021
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Atlanta is coming up in the tech world with several newly minted billion-dollar businesses hailing from the ATL and the city’s local venture capital community is taking notice. Even as later stage firms like the newly minted BIP Capital rebrand and  with increasingly large funds, earlier stage firms like Tech Square Ventures are staffing up

Atlanta is coming up in the tech world with several newly minted billion-dollar businesses hailing from the ATL and the city’s local venture capital community is taking notice.

Even as later stage firms like the newly minted BIP Capital rebrand and  with increasingly large funds, earlier stage firms like Tech Square Ventures are staffing up and adding new partners.

The firm’s latest hire is Vasant Kamath, a general partner who joins the firm from Primus Capital, a later stage investment vehicle based out of Atlanta. Before that, he was managing investments for the private office of the Cox family.

Originally from Augusta, Ga. Kamath left the south to attend Harvard and then went out west for a stint at Stanford Business School.

In between his jaunts North and West Kamath spent time in Atlanta as an investment banker with Raymond James in the early 2000s, the beginnings of a lifelong professional career in technology. Before business school, Kamath worked at Summit Equity Partners in Boston investing in later stage technology companies.

Kamath settled in Atlanta in 2010 just as a second wave of technology companies began making their presence felt in the city.

The new Tech Square Village general partner pointed to Atlanta’s underlying tech infrastructure as one reason for the move to early stage. One pillar of that infrastructure is Georgia Tech itself. The school, whose campus abuts the Tech Square Ventures offices, is one of the top engineering universities in the country and the breadth of talent coming out of that program is impressive, Kamath said.

There’s also the companies like Airwatch, MailChimp, Calendly and others that represent the resurgence of Atlanta’s tech scene, Tech Square Ventures’ newest general partner said.

Not only are young companies reinvesting in the city, but big tech giants and telecom players like T-Mobile, Google, and Microsoft are also establishing major offices, accelerators, and incubators in Atlanta.

“There’s a lot of momentum here in early stage and i think it’s building. It’s the right time for a firm like TSV to take advantage of all of the things,” Kamath said. 

Another selling point for making the jump to early stage investing was the relationship that Kamath had established with Tech Square Ventures founder, Blake Patton. A serial entrepreneur who’s committed to building up Atlanta’s startup ecosystem, Patton has been the architect of Tech Square Ventures’ growth through two separate initiatives.

In all, the firm has $90 million in assets under management. What began with a small pilot fund, Tech Square Ventures Fund 1, (a $5 million investment vehicle) has expanded to include two larger funds raised in conjunction with major industrial corporate partners like AT&T, Chick-Fil-A, Cox Enterprises, Delta, Georgia-Pacific, Georgia Power, The Home Depot, UPS, Goldman Sachs, and Invesco, under the auspices of a program called Engage. Those funds total $54 million in AUM and the firm is halfway toward closing a much larger second flagship fund under the Tech Square Ventures name with a $75 million target.

All this activity has led to a blossoming entrepreneurial community that early stage funds like Tech Square Ventures hopes to tap.

“We see a fair number of folks from these large corporations spinning out and starting things themselves,” said Kamath. “For a decade plus, you have multiple entrepreneurs doing really well and increasing acceleration in terms of climate and exits.”

And more firms from outside of the region are beginning to take notice.

“I think that is happening,” said Kamath. “You might seen investment from outside the region. At the seed stage it’s harder you do need to have feet on the ground right when they’re starting and building their business. Once they’ve been vetted and had that early round of investment you will definitely see a lot of activity. We’re seeing more investment at the Series A and B from out of town. That’s the strategy.”

It all points to a burgeoning startup scene that’s based in a collaborative approach, which should be good not only for Tech Square Ventures, but the other early stage funds like Atlanta Ventures, Outlander Labs, BLH Ventures, Knoll Ventures and Overline, that working to support the city’s entrepreneurs, Kamath said.

News: New Facebook ad campaign extols the benefits of personalized ads

• February 25, 2021
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Online advertising can be a “pretty dry topic,” as Facebook’s head of brand marketing Andrew Stirk acknowledged, but with a new campaign of its own, the social networking giant is looking to “bring to life how personalized ads level the playing field” for small businesses. The Good Ideas Deserve To Be Found campaign will include

Online advertising can be a “pretty dry topic,” as Facebook’s head of brand marketing Andrew Stirk acknowledged, but with a new campaign of its own, the social networking giant is looking to “bring to life how personalized ads level the playing field” for small businesses.

The Good Ideas Deserve To Be Found campaign will include TV, radio and digital advertising. Individual businesses will also be able to promote it using a new Instagram sticker and the #DeserveToBeFound hashtag on Facebook.

The campaign will highlight specific small businesses on Facebook, including bag and luggage company House of Takura, whose founder Annette Njau spoke about the benefits of digital advertising at a press event yesterday.

“What those platforms allow us to do is, they allow us to tell stories,” Njau said. “I can’t tell this story on TV, I can’t tell this story in a huge magazine because it costs money and I don’t know who will see it.”

These sentiments are similar to a campaign that Facebook launched last year in opposition to Apple’s upcoming App Tracking Transparency feature, where apps will have to ask for permission before sharing user data for third-party ad targeting. In response, Facebook claimed that it was “standing up to Apple for small businesses everywhere,” though the social network also pointed to these changes as one of the “more significant advertising headwinds” that it expects to face this year. (Apple’s Tim Cook, in contrast, has said that these changes provide consumers with the control that they’ve been asking for.)

When asked how this fits into the broader dispute with Apple, Stirk said that while Facebook has been publicly opposed to Apple’s changes, this campaign is part the company’s longer-term support for small business.

“There is a degree of urgency in the fact that … small businesses are hurting right now,” he said.

Head of Facebook Business Products Helen Ma added that this is “very much an extension of the work that we did on the product side at the very start of the COVID period,” which included the launch of the Businesses Nearby section and a #SupportSmallBusiness hashtag.

In addition to launching the campaign today, Facebook is announcing several product changes, including a simplified Ads Manager dashboard, new options for restaurants to provide more information about their dining experiences and more information about personalized ads in Facebook’s Business Resource hub and Instagram’s Professional Dashboard.

The company also said it will continue to waive fees on transactions through Checkouts on Shops through June 2021, and will do the same for fees collected on paid online events until August 2021 at the earliest.

News: Boosted by the pandemic, meeting transcription service Otter.ai raises $50M

• February 25, 2021
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Over the past year or so, voice transcription startup Otter.ai doubled down on the future of remote work by integrating its product with meeting apps like Zoom and Google Meet. With the COVID-19 pandemic having sent so many to work from home, those investments have paid off — the company has transcribed over 100 million

Over the past year or so, voice transcription startup Otter.ai doubled down on the future of remote work by integrating its product with meeting apps like Zoom and Google Meet. With the COVID-19 pandemic having sent so many to work from home, those investments have paid off — the company has transcribed over 100 million meetings with more than 3 billion minutes, and has seen an 8x increase in revenues during 2020. Now, Otter.ai is announcing its next steps, fueled by a new $50 million Series B round of investment.

The new round was led by Spectrum Equity, with participation from existing investors Horizons Ventures, Draper Associates, GGV Ventures, Draper Dragon Fund, and others. The $50 million figure also includes a $10 million convertible note, announced last year.

Otter.ai’s service offers an easy way to record meetings, whether in-person through an app on your phone, or online through its integrations with popular web conferencing apps. But it’s the latter that really came into play over the course of 2020, when suddenly entire workforces were sent home from the office and forced into endless Zoom calls.

With convenient timing, Otter.ai added Zoom integration back in April 2020 — the early days of the pandemic. It has now become the most popular platform for Otter.ai’s web conferencing users.

“I think with the pandemic, we’ve seen a huge shift in consumer behavior — especially in meeting behavior and education behavior, which are two key use cases for Otter,” says Otter.ai CMO Kurt Apen. “You see a lot of teams that are using Otter in the business and you see a lot of students and universities that are using Otter for accessible. And we think that shift in behavior is going to be permanent,” he notes.

Though the company doesn’t talk user numbers or revenues, specifically, it claims to have “many millions” on its standalone product, not counting the users it reaches through Zoom. And as those users discover Otter.ai’s free service, many later upgrade to its premium plans, which include the ability to record more minutes and access other business-grade features.

To date, this sort of backdoor entry point to the corporate market — through individual employees first, not the companies — has somewhat mirrored the trajectories of other popular business apps, the company believes.

“Actually, if we look at our growth trajectory in the last few year, it matches pretty well against the growth trajectory of Slack and Zoom,” said Otter.ai founder and CEO, Sam Liang. “So we’re pretty confident that, in the next few year, we’re continuing to grow.”

In other words, Otter.ai’s adoption may have been accelerated by the pandemic, but the larger impacts to business culture that took place in 2020 aren’t going away even when the pandemic ends. Not everyone will be going back to the office. But for those who do, Otter can work there, too.

The company has found some traction with businesses like professional services, pharmaceutical companies, financial services, and other multinationals where employees work across time zones. Longer-term, Otter.ai aims to better serve its corporate use cases by extending beyond meeting transcripts into an area it likes to call “conversation intelligence.”

That involves leveraging A.I. technology to extract meaning from the transcripts by allowing the system to learn what’s important based on the time spent on topics, the intonation of voices, and the sentiment of the conversations. It would do this in an automated way, as well, much like it works today.

Otter.ai, however, is not a service meant for highly confidential conversations. The recorded conversation is encrypted in transit and at rest, but is decrypted while processing. The conversations also have to be decrypted to create the index. Plus, Otter.ai transcripts are used as training data to improve its accuracy — learning from users’ manual corrections, from new accents, and the like.

This could ultimately prove to be a limiting factor to large-scale adoption within more sensitive business contexts. But Otter, nevertheless, remains focused more so on its work-related uses cases for the time being, rather than the numerous other areas where its technology can be used —  like podcast transcriptions, integrations with social audio apps (like Clubhouse), online events, and more. Otter.ai is serving these markets, but it’s preparing to staff up in sales to gain more corporate clients.

In addition to sales, where it also expects to hire a VP of Sales, Otter plans to grow its now 25-person team with additions across R&D, marketing, A.I. science, backend and frontend engineering, design, and product management. By year-end, it believes it will triple its headcount with the new hires — some of which may be remote workers.

Otter.ai will also invest the new funds into raising awareness for its app through channels like social and search, content marketing, organic social and more. And it will work to grow revenues through continued free to paid conversations and develop its technology.

John Connolly, Managing Director at Spectrum Equity, has now joined Otter’s board.

“As the workplace has evolved and online meetings are the new normal, Otter.ai is at the
forefront leading the transformational shift of the future of work and more effective online
interactions,” he said, in a statement. “We are thrilled to be partnering with Sam and the entire team at Otter.ai to support the company’s continued market leadership. We look forward to providing the guidance and strategic resources to drive focused product innovation and operational growth.”

News: Coinbase files to go public in a key listing for the cryptocurrency category

• February 25, 2021
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This morning Coinbase, an American cryptocurrency exchange, released an S-1 filing ahead of its direct listing. The company’s public debut has been hotly anticipated thanks to recent activity amongst bitcoin and other blockchain-based assets, the company’s controversial political positions, and its spiking valuation on private exchanges. Coinbase’s financials show a company that grew rapidly from

This morning Coinbase, an American cryptocurrency exchange, released an S-1 filing ahead of its direct listing. The company’s public debut has been hotly anticipated thanks to recent activity amongst bitcoin and other blockchain-based assets, the company’s controversial political positions, and its spiking valuation on private exchanges.

Coinbase’s financials show a company that grew rapidly from 2019 to 2020. More than that, the company also crossed the threshold into unadjusted profitability; it’s common amongst quickly-growing tech companies to lean more heavily on adjusted profit and other more flattering metrics.

In 2019 Coinbase $30.4 million against $533.7 million in revenue. In 2020 the company’s net income rose to $127.5 million against $1.28 billion in revenue.

The crypto unicorn grew just over 139% in 2020, a massive improvement on its 2019 results. The company’s scale and growth help us understand why some investors are bidding its value up to as much as $100 billion on the private markets.

Coinbase has highly variable revenues. The company posted revenues of $190.6 million in Q1 2020, a number that dipped to $186.4 million in the second quarter. Then Coinbase’s topline accelerated in Q3 2020 to $315.4 million, and $585.1 million in the final quarter of 2020.

It’s easy to see why Coinbase is moving forward with its direct listing now; the company just posted an excellent quarter.

In that outsized fourth-quarter period, Coinbase generated operating income of $226.6 million, and net income of $176.8 million. Those represent high-quality profitability improvements from preceding periods, and provide Coinbase with attractive end-of-year profit margins.

The cryptocurrency exchange generates the vast majority of its revenues from transaction revenues, as anticipated. Coinbase also has a comparatively modest “subscription and services” revenue category, which was worth around $20.7 million in Q4 2020 revenues.

Finally, Coinbase swun from operating cash flow negative in 2019 to incredibly cash-flow positive in 2020. However, the $3.0 billion in positive operating cash flow that Coinbase generated last year includes “$2.7 billion related to cash from the change in custodial funds due to customers,” diminishing the number to a more understandable scale.

This is a first look, but Coinbase is a quickly growing, profitable unicorn that looks more than ready for its direct listing. The question ahead of investors is merely how to value Coinbase’s revenue growth as it does track with broader market interest in cryptocurrencies, a historically fluid quantity.