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News: For successful AI projects, celebrate your graveyard and be prepared to fail fast

• July 7, 2021
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By streamlining the process to fail fast on infeasible projects, teams can significantly increase their overall success with AI initiatives.

AI teams invest a lot of rigor in defining new project guidelines. But the same is not true for killing existing projects. In the absence of clear guidelines, teams let infeasible projects drag on for months.

They put up a dog and pony show during project review meetings for fear of becoming the messengers of bad news. By streamlining the process to fail fast on infeasible projects, teams can significantly increase their overall success with AI initiatives.

AI projects are different from traditional software projects. They have a lot more unknowns: availability of right datasets, model training to meet required accuracy threshold, fairness and robustness of recommendations in production, and many more.

In order to fail fast, AI initiatives should be managed as a conversion funnel analogous to marketing and sales funnels. Projects start at the top of the five-stage funnel and can drop off at any stage, either to be temporarily put on ice or permanently suspended and added to the AI graveyard. Each stage of the AI funnel defines a clear set of unknowns to be validated with a list of time-bound success criteria.

The AI project funnel has five stages:

Image Credits: Sandeep Uttamchandani

1. Problem definition: “If we build it, will they come?”

This is the top of the funnel. AI projects require significant investments not just during initial development but ongoing monitoring and refinement. This makes it important to verify that the problem being solved is truly worth solving with respect to potential business value compared to the effort to build. Even if the problem is worth solving, AI may not be required. There might be easier human-encoded heuristics to solve the problem.

Developing the AI solution is only half the battle. The other half is how the solution will actually be used and integrated. For instance, in developing an AI solution for predicting customer churn, there needs to be a clear understanding of incorporating attrition predictions in the customer support team workflow. A perfectly powerful AI project will fail to deliver business value without this level of integration clarity.

To successfully exit this stage, the following statements need to be true:

• The AI project will produce tangible business value if delivered successfully.
• There are no cheaper alternatives that can address the problem with the required accuracy threshold.
• There is a clear path to incorporate the AI recommendations within the existing flow to make an impact.

In my experience, the early stages of the project have a higher ratio of aspiration compared to ground realities. Killing an ill-formed project can avoid teams from building “solutions in search of problems.”

2. Data availability : “We have the data to build it.”

At this stage of the funnel, we have verified the problem is worth solving. We now need to confirm the data availability to build the perception, learning and reasoning capabilities required in the AI project. Data needs vary based on the type of AI project  —  the requirements for a project building classification intelligence will be different from one providing recommendations or ranking.

Data availability broadly translates to having the right quality, quantity and features. Right quality refers to the fact that the data samples are an accurate reflection of the phenomenon we are trying to model  and meet properties such as independent and identically distributed. Common quality checks involve uncovering data collection errors, inconsistent semantics and errors in labeled samples.

The right quantity refers to the amount of data that needs to be available. A common misconception is that a significant amount of data is required for training machine learning models. This is not always true. Using pre-built transfer learning models, it is possible to get started with very little data. Also, more data does not always mean useful data. For instance, historic data spanning 10 years may not be a true reflection of current customer behavior. Finally, the right features need to be available to build the model. This is typically iterative and involves ML model design.

To successfully exit this stage, the following statements need to be true:

News: Demand Curve: 10 lies you’ve been told about marketing

• July 7, 2021
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The harsh truth: Some of the advice you read about marketing is incorrect.

The harsh truth: Some of the advice you read about marketing is incorrect.

While not always intentionally misleading, you’re often absorbing content written by:

• Marketers without a breadth of experience: People who’ve marketed a single product and have a limited — or biased — view on a channel.
• Non-practitioners: People who’ve never run experiments, but pass along (sometimes outdated) marketing insights that they’ve read online.

After running thousands of experiments for brands like Microsoft, Segment and Perfect Keto, here are 10 significant lies we’ve realized you’ve been told about marketing (on email marketing, ads and referrals).

1. “Send a welcome email immediately after signup.”

It’s better to avoid sending emails right after people sign up on your site. We’re used to getting generic, unimportant welcome emails every time we sign up for anything online. So most people will reflexively discard your welcome email as spam.

Instead, try delaying your welcome email by 15 to 45 minutes.

The delay removes the subscriber’s mental connection between signup and your email, bypassing the reflex to ignore.

As a result, you’ll likely get more opens and more engagement.

2. “Only highlight your best product reviews.”

For context, reviews are a big deal:

• 93% of consumers claim product reviews impact purchase decisions.
• The social proof of having 50+ product reviews increases conversion. Shoppers trust peers more than they trust brands.

But imperfect reviews can generate more sales than five-star ones. How?

When a partially negative review weighs your cons versus your pros and concludes that the product was worth purchasing anyway, that sounds authentic and honest.

In contrast, strings of flawless five-star reviews don’t signal authenticity. Psychologically, they’re less likely to sink in as positive social proof.

Here’s what you can do:

• Make sure your post-purchase email flow contains a request for reviews. The more reviews you have, the better.
• Don’t bury slightly negative reviews. If someone leaves a four-star review and offers a fair (and insignificant) critique, showcase it toward the top of your product page.

3. “You have to send a newsletter every week.”

Most newsletters shouldn’t be sent weekly. This goes against what most creator economy entrepreneurs suggest.

But high cadences force newsletter writers to rush and publish lower-quality information to hit self-imposed deadlines.

Instead, consider only sending when you truly have value to add. At a minimum, consider setting a more reasonable cadence like once or twice a month so that you’ll have enough time and content to consistently hit a high-quality bar.

News: Osso VR raises $27 million to turn surgery into a video game

• July 7, 2021
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Virtual reality did not turn into the ultimate office replacement telepresence machine during the pandemic — and it wasn’t for lack of trying — but some startups focused on employee training in VR have found added validation in the past year as professionals across industries were forced to access institutional knowledge in remote settings. Osso

Virtual reality did not turn into the ultimate office replacement telepresence machine during the pandemic — and it wasn’t for lack of trying — but some startups focused on employee training in VR have found added validation in the past year as professionals across industries were forced to access institutional knowledge in remote settings.

Osso VR, a San Francisco-based virtual reality startup focused on medical training, has piqued investor attention as they’ve bulked up on partnerships with medical devices powerhouses like Johnson & Johnson, Stryker and Smith & Nephew during the pandemic. The startup tells TechCrunch they’ve recently closed $27 million in Series B funding led by GSR Ventures with additional participation from SignalFire, Kaiser Permanente Ventures and Anorak Ventures, among others.

CEO Justin Barad tells TechCrunch that the pandemic “created an intense level of urgency” for the startup as customers found new demand for their platform.

Osso VR is looking to upend modern surgical instruction with a virtual reality-based solution that allows surgeons to interact with new medical devices in 3D space, “performing” a surgery over and over on a digital cadaver from the comfort of anywhere they have enough room to stretch out their arms. Osso’s efforts are particularly useful to its medical device customers who can use the platform to boost familiarity with their solutions while helping surgeons gain proficiency in implanting them.

One of the startup’s broader aims is to bring video games’ multiplayer mechanics into the virtual operating room, allowing surgeons and medical assistants to collaborate in real-time so they not only know their responsibility but how they fit into the whole of each operation.

“It’s a lot like a symphony, everyone has a different role to play and you need to communicate with each other.” Barad says.

It’s a process that needs virtual reality’s spatial breadth, Barad notes, though instruction is always supplemented by text and videos as well.

Barad calls the startup’s aim “something unambiguously good,” a quality which has helped the team poach talent as it has scaled to some 100 employees, which includes what he claims is the world’s largest team of medical illustrators. That team has helped scale the platform’s content to more than 100 modules spanning 10 specialties.

Virtual reality founders have struggled in recent years to coax investor attention as consumer and enterprise uptake has proven slower than the early wild ambitions for the technology. In its stead, investors have looked more towards bets on adjacent technologies like gaming and computer vision that don’t require the specialized head-worn hardware. Osso VR’s platform runs on Facebook’s Oculus Quest 2 headset through the company’s Oculus for Business program.

News: Pakistan’s growing tech ecosystem is finally taking off

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The emergence of Pakistan’s tech ecosystem has been driven by three major factors: an improving security situation, quickly growing mobile connectivity, and critical legal changes and deregulation.

Pakistan, the world’s fifth most populous country, has been slow to adapt to the internet economy. Unlike other emerging economies such as China, India and Indonesia, which have embraced digitization and technology, Pakistan has trailed the region in the adoption of technology and startup formation.

Despite this, investors have dreamed for years of the huge opportunities in unlocking Pakistan’s potential as a digital economy. As a country of 220 million people, almost two-thirds of whom are under the age of 30, Pakistan draws natural comparisons to Indonesia — which has rapidly emerged as one of the most vibrant technology ecosystems outside the U.S. and China.

After years of lagging behind, over the course of the past 18 months, Pakistan’s technology ecosystem has come to life in unprecedented fashion. In 2021, Pakistani startups are on track to raise more money than the previous five years combined. Even more excitingly, a large portion of this capital is coming from international investors from across Asia, the Middle East and even famed investors from Silicon Valley.

Image Credits: Mikal Khoso

The rapid emergence of Pakistan’s technology ecosystem on the international stage has been no accident — it’s the result of a confluence of changing facts on the ground and shifting dynamics in the startup and investing world as a result of the pandemic.

Unlocking Pakistan’s potential

The sudden emergence of Pakistan’s tech ecosystem on the international stage has been driven by three major factors: an improving security situation, quickly growing mobile connectivity, and critical legal changes and deregulation.

As a frontline state and coalition partner in the United States’ invasion of Afghanistan, Pakistan saw fatalities from terrorist violence soar from 295 in 2001 to a peak of over 11,000 in 2009. This climate of instability and violence scared away international business and investors from Pakistan for much of the first two decades of the 21st century.

News: WellSaid attracts $10M A round for higher quality synthetic speech

• July 7, 2021
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WellSaid Labs, whose tools create synthetic speech that could be mistaken for the real thing, has raised a $10M Series A to grow the business. The company’s home-baked text-to-speech engine works faster than real time and produces natural-sounding clips of pretty much any length, from quick snippets to hours-long readings. WellSaid came out of the

WellSaid Labs, whose tools create synthetic speech that could be mistaken for the real thing, has raised a $10M Series A to grow the business. The company’s home-baked text-to-speech engine works faster than real time and produces natural-sounding clips of pretty much any length, from quick snippets to hours-long readings.

WellSaid came out of the Allen Institute for AI incubator in 2019, and its goal was to make synthetic voices that didn’t sound so robotic for common business purposes like training and marketing content.

It achieved that first by basing its solution on Tacotron, a speech engine developed by Google and academic researchers. But soon it had built its own that was more efficient, resulted in more convincing voices and could produce clips of arbitrary lengths. Speech engines often trip up after a couple sentences, descending into babble or losing tone, but WellSaid’s read the entirety of Mary Shelley’s “Frankenstein” without a hiccup.

The voices were good enough that they were rated as human or as good as human by listeners — not something you could really say about the usual virtual assistant suspects when they speak more than a handful of words. Not only that, but the speech was generated considerably faster than real time, where other high-quality options often operated at a tenth real time or slower — meaning three minutes of speech would take one minute to generate by WellSaid and half an hour or more by Tacotron.

Lastly, the system allows for new “Voice Avatars” to be created based on existing voice talent, like a trusted company spokesperson or voiceover artist. Originally about 20 hours of audio was needed to build a model of their quirks and voice style, but now it can do so with as little as two hours, CEO Matt Hocking said.

The company is strictly business-focused right now, which is to say there’s no user-facing app to digitize your voice into an avatar or anything. There are attendant risks and no realistic business model for it, so that’s off the table for now.

Such a realistic voice might still be of enormous help to people with disabilities, however, something Hocking acknowledges but admits they’re not quite ready to tackle yet.

Image Credits: WellSaid Labs

“We are committed to expanding access to this technology so that nonverbal communicators, nonprofits and others can benefit from it,” he said.

In the meantime the company has expanded from its first market, corporate training videos, to marketing, longer copy, interactive products with considerable text and app experiences. One hopes that the talent these avatars are based on are being properly compensated for helping create a digital likeness of their voice.

The oversubscribed $10M round was led by FUSE, with participation from repeat investor Voyager, Qualcomm Ventures LLC and GoodFriends, all of whom were likely impressed by the product and business growth. Synthetic voices have served a handful of popular use cases but content has not been a big one — so there’s plenty of room to grow. The company will invest the money in deepening its product offering and growing the team along with it.

News: Investors find European unicorns reluctant to join SPAC boom

• July 7, 2021
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European SPAC creation is modest compared to what’s been going on in the U.S, but it still represents material growth and a new avenue for European tech startups still hungry for exit opportunities.

The U.S. SPAC market kept rolling along this week with news that Satellogic will go public on the Nasdaq stock exchange thanks to a merger with a blank check company. The Earth-imagery-focused company is standard SPAC fare, with strong capital needs and distant revenues. It was not alone in pursuing the transaction type Tuesday, with news breaking that Nextdoor will also go public on the Nasdaq via a SPAC.

Nextdoor’s projections, as TechCrunch noted, were more modest and thus more believable than what we’ve seen from many other SPAC-led debuts.

These companies represent the two poles of blank-check-powered public offerings: Some startups taking the SPAC route are more speculative, banking on revenues to come, while others feature more established companies with a history of material revenue growth. It’s easy to find more examples of both varieties. Acorns’ deal fits the established trend. Lidar SPACs? Less so.

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Given the breadth of companies pursuing blank-check deals, the SPAC boom isn’t over even if there has been chatter that the party is breaking up. Bessemer partner Mary D’Onofrio told The Exchange, for example, that while the “pace of SPAC IPOs” and combinations have slowed, “there is still $128 billion of SPAC dry powder in the market seeking acquisitions and incentivized to transact.”

Matt Murphy, a partner at Menlo Ventures, helped explain the SPAC pace deceleration that D’Onofrio discussed, telling The Exchange that the pace of SPAC deals “has slowed as they’ve gotten more scrutiny and don’t seem quite as ‘easy’ as they once were.”

But this week’s U.S. SPAC news tells us that blank-check companies are still finding a diverse set of companies to take public. But what about other regions? Unicorns are hardly unique to the U.S. startup ecosystem. Are we seeing similar SPAC interest in Europe?

The Exchange tried to find out, given that we’ve seen huge rounds from the region and a few IPOs over various types. Is the SPAC game afoot in Europe?

Hunting European targets

There’s a huge number of SPACs trading in the United States currently hunting for a deal. And there is historical precedent for U.S.-listed blank-check companies taking on European targets. Global law firm Skadden counts 16 U.S. SPAC-led transactions with European companies from 2015 through February of this year, for example.

“For the past few weeks, we’ve been approached on a recurring basis, much like all known French and European scaleups,” Aircall’s co-founder Jonathan Anguelov told French financial newspaper Les Échos last March (translation: TechCrunch). However, being approached doesn’t necessarily mean that European unicorns are entertaining the offers.

News: Citi Ventures head honcho Arvind Purushotham is coming to TC Early Stage

• July 7, 2021
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Corporate venture capital used to get a bad rap. The money flowed from corporations into startups when times were good, and quickly disappeared when the market turned. But startups and corporations discovered something over time: They’re a lot stronger together no matter the market conditions. Most big companies can’t gain enough insight into what’s bubbling

Corporate venture capital used to get a bad rap. The money flowed from corporations into startups when times were good, and quickly disappeared when the market turned.

But startups and corporations discovered something over time: They’re a lot stronger together no matter the market conditions. Most big companies can’t gain enough insight into what’s bubbling up in the market without deep ties to founders; meanwhile, founders benefit greatly from having a renowned corporation on the balance sheet. Not only can a big brand give an upstart near-instant credibility, a corporate partner can also open doors and provide startups with a far better understanding about the needs of established companies.

It’s because the corporate venture relationship has become so key to founders that we’re thrilled to be welcoming Arvind Purushotham to TC Early Stage — Marketing & Fundraising happening tomorrow, July 8-9. Purushotham is a longtime VC who started his career as a circuit designer with Intel before spending nearly a decade with Menlo Ventures. Then, in 2011, he helped found Citi’s corporate venture capital group, where he remains the outfit’s global head of venture investing and sets the group’s overall strategy.

Indeed, having since partnered with all kinds of companies over this last decade with Citi  —  just some of its checks have gone to Square, DocuSign, Honey, Plaid, Betterment, Jet.com, DataRobot, Tanium, Pindrop and Digit — Purushotham knows what it takes to drive a business forward and how corporate VCs can help in the mission.

He’ll share what his own team looks for when meeting with a founding team and how Citi specifically identifies, then invests in startups as a way to bring cutting-edge tech to Citi’s businesses and functions.

He’ll also share what not to do and why, how much to reveal and when, and how to think about a corporate venture partner once that investment is made.

It’s going to be one of the highlights of our event, which is coming up quickly and is a must-see if your startup or a startup that you’re advising is looking for insights into how to better approach the key pillars of both marketing and fundraising. Get your ticket today before prices increase tonight.

News: The single vendor requirement ultimately doomed the DoD’s $10B JEDI cloud contract

• July 7, 2021
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When the Pentagon killed the JEDI cloud program yesterday, it was the end of a long and bitter road for a project that never seemed to have a chance. The question is why it didn’t work out in the end, and ultimately I think you can blame the DoD’s stubborn adherence to a single vendor

When the Pentagon killed the JEDI cloud program yesterday, it was the end of a long and bitter road for a project that never seemed to have a chance. The question is why it didn’t work out in the end, and ultimately I think you can blame the DoD’s stubborn adherence to a single vendor requirement, a condition that never made sense to anyone, even the vendor that ostensibly won the deal.

In March 2018, the Pentagon announced a mega $10 billion, decade-long cloud contract to build the next generation of cloud infrastructure for the Department of Defense. It was dubbed JEDI, which aside from the Star Wars reference, was short for Joint Enterprise Defense Infrastructure.

The idea was a 10 year contract with a single vendor that started with an initial two year option. If all was going well, a five year option would kick in and finally a three year option would close things out with earnings of $1 billion a year.

While the total value of the contract had it been completed was quite large, a billion a year for companies the size of Amazon, Oracle or Microsoft is not a ton of money in the scheme of things. It was more about the prestige of winning such a high-profile contract and what it would mean for sales bragging rights. After all, if you passed muster with the DoD, you could probably handle just about anyone’s sensitive data, right?

Regardless, the idea of a single-vendor contract went against conventional wisdom that the cloud gives you the option of working with the best-in-class vendors. Microsoft, the eventual winner of the ill-fated deal acknowledged that the single vendor approach was flawed in an interview in April 2018:

Leigh Madden, who heads up Microsoft’s defense effort, says he believes Microsoft can win such a contract, but it isn’t necessarily the best approach for the DoD. “If the DoD goes with a single award path, we are in it to win, but having said that, it’s counter to what we are seeing across the globe where 80 percent of customers are adopting a multi-cloud solution,” Madden told TechCrunch.

Perhaps it was doomed from the start because of that. Yet even before the requirements were fully known there were complaints that it would favor Amazon, the market share leader in the cloud infrastructure market. Oracle was particularly vocal, taking its complaints directly to the former president before the RFP was even published. It would later file a complaint with the Government Accountability Office and file a couple of lawsuits alleging that the entire process was unfair and designed to favor Amazon. It lost every time — and of course, Amazon wasn’t ultimately the winner.

While there was a lot of drama along the way, in April 2019 the Pentagon named two finalists, and it was probably not too surprising that they were the two cloud infrastructure market leaders: Microsoft and Amazon. Game on.

The former president interjected himself directly in the process in August that year, when he ordered the Defense Secretary to review the matter over concerns that the process favored Amazon, a complaint which to that point had been refuted several times over by the DoD, the Government Accountability Office and the courts. To further complicate matters, a book by former defense secretary Jim Mattis claimed the president told him to “screw Amazon out of the $10 billion contract.” His goal appeared to be to get back at Bezos, who also owns the Washington Post newspaper.

In spite of all these claims that the process favored Amazon, when the winner was finally announced in October 2019, late on a Friday afternoon no less, the winner was not in fact Amazon. Instead, Microsoft won the deal, or at least it seemed that way. It wouldn’t be long before Amazon would dispute the decision in court.

By the time AWS re:Invent hit a couple of months after the announcement, former AWS CEO Andy Jassy was already pushing the idea that the president had unduly influenced the process.

“I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal,” Jassy said at that time.

Then came the litigation. In November the company indicated it would be challenging the decision to choose Microsoft charging that it was was driven by politics and not technical merit. In January 2020, Amazon filed a request with the court that the project should stop until the legal challenges were settled. In February, a federal judge agreed with Amazon and stopped the project. It would never restart.

In April the DoD completed its own internal investigation of the contract procurement process and found no wrong-doing. As I wrote at the time:

While controversy has dogged the $10 billion, decade-long JEDI contract since its earliest days, a report by the DoD’s Inspector General’s Office concluded today that, while there were some funky bits and potential conflicts, overall the contract procurement process was fair and legal and the president did not unduly influence the process in spite of public comments.

Last September the DoD completed a review of the selection process and it once again concluded that Microsoft was the winner, but it didn’t really matter as the litigation was still in motion and the project remained stalled.

The legal wrangling continued into this year, and yesterday The Pentagon finally pulled the plug on the project once and for all, saying it was time to move on as times have changed since 2018 when it announced its vision for JEDI.

The DoD finally came to the conclusion that a single vendor approach wasn’t the best way to go, and not because it could never get the project off the ground, but because it makes more sense from a technology and business perspective to work with multiple vendors and not get locked into any particular one.

“JEDI was developed at a time when the Department’s needs were different and both the CSPs’ (cloud service providers) technology and our cloud conversancy was less mature. In light of new initiatives like JADC2 (the Pentagon’s initiative to build a network of connected sensors) and AI and Data Acceleration (ADA), the evolution of the cloud ecosystem within DoD, and changes in user requirements to leverage multiple cloud environments to execute mission, our landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains,” said John Sherman, acting DoD Chief Information Officer in a statement.

In other words, the DoD would benefit more from adopting a multi-cloud, multi-vendor approach like pretty much the rest of the world. That said, the department also indicated it would limit the vendor selection to Microsoft and Amazon.

“The Department intends to seek proposals from a limited number of sources, namely the Microsoft Corporation (Microsoft) and Amazon Web Services (AWS), as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements,” the department said in a statement.

That’s not going to sit well with Google, Oracle or IBM, but the department further indicated it would continue to monitor the market to see if other CSPs had the chops to handle their requirements in the future.

In the end, the single vendor requirement contributed greatly to an overly competitive and politically charged atmosphere that resulted in the project never coming to fruition. Now the DoD has to play technology catch-up, having lost three years to the histrionics of the entire JEDI procurement process and that could be the most lamentable part of this long, sordid technology tale.

News: Trump is suing Twitter, Facebook and Google over censorship claims

• July 7, 2021
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In his first press event since ignominiously leaving office earlier this year, former President Donald Trump announced that he is launching a volley of class action lawsuits against Twitter, Facebook, Google and their CEOs, claiming that the three companies violated his First Amendment rights. “We’re demanding an end to the shadow-banning, a stop to the

In his first press event since ignominiously leaving office earlier this year, former President Donald Trump announced that he is launching a volley of class action lawsuits against Twitter, Facebook, Google and their CEOs, claiming that the three companies violated his First Amendment rights.

“We’re demanding an end to the shadow-banning, a stop to the silencing and a stop to the blacklisting, banishing and canceling that you know so well,” Trump said at the press conference, held at his Bedminster, New Jersey golf club.

Following the January 6 attack on the Capitol, social media platforms swiftly revoked then President Trump’s posting privileges. For years, Trump tested the boundaries of platforms’ policies around misinformation and even violent threats, but his role in the events of that day crossed a line. Trump soon found himself without a megaphone with which to reach his many millions of followers across Twitter, Facebook and YouTube.

Trump’s fate on Twitter is known: the former president faces a lifetime ban there. But on Facebook and YouTube, there’s a possibility that his accounts could be restored. Facebook is still deliberating that decision after its external policy making body, the Facebook Oversight Board, kicked the issue back to the company. Facebook now needs to determine the length of Trump’s indefinite suspension, whether permanent or for a fixed period of time.

Trump will be the lead plaintiff in the suits, which are being filed in the U.S. District Court for the Southern District of Florida. The lawsuits seek “compensatory and punitive damages” and the restoration of Trump’s social media accounts.

News: r2c raises $27M to scale its security-focused code analysis service

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This morning r2c, a startup building a SaaS service around the Semgrep open-source project, announced that it has closed a $27 million Series B. Felicis led the round, which the company said was a pre-emptive deal. Prior investors firms Redpoint and Sequoia also participated in the fundraising event; r2c last raised a $13 million Series

This morning r2c, a startup building a SaaS service around the Semgrep open-source project, announced that it has closed a $27 million Series B. Felicis led the round, which the company said was a pre-emptive deal.

Prior investors firms Redpoint and Sequoia also participated in the fundraising event; r2c last raised a $13 million Series A in October of 2020.

The startup fits into several trends that TechCrunch has explored in recent quarters, including what appears to be a growing number of open-source (OSS) grounded startups raising capital, more rounds coming to exist thanks to investors looking to get the jump on inside rounds before they can form.

On the OSS point, r2c works with Semgrep, which the company likens to a “code-aware grep.” Still confused? Don’t worry, this is all a bit technical, but interesting. Grep is a tool for searching through plain-text that has been around for decades. Semgrep is related, but focused on finding things inside of written code.

Given the sheer volume of code that is written daily in the world, you can imagine that there is an ever-rising demand for finding particular bits of text quickly; Semgrep is an evolution of the original project, that was initially built inside of Facebook.

Per r2c CEO Isaac Evans, however, the project failed to attract much awareness. His startup has built what Evans described to TechCrunch has the “canonical” Semgrep fork, or version, and has crafted a software service around the code to make it easier for other companies to use.

The r2c team, via the company.

There are many ways to generate revenue from open-source software. Two popular monetization routes are througuh support services or offers to host particular projects. But, R2c is a doing something a bit different. The startup sells a monthly, per-developer subscription (SaaS) that packages a broad set of security-focused rules across different coding languages, allowing companies to easily check their own software for possible security issues.

Or as Evans succinctly explained it, r2c offers something akin to application security in a box.

Focusing on cybersecurity is a reasonable tack for the company. Given the ever-growing number of breaches that the public endures, helping companies leak less data, and suffer fewer intrusions is big business.

You don’t have to pay r2c, however. Semgrep is OSS and the rules associated with various languages are available under a LGPL license — more on that definition here. Developers could build their own version of what the company offers. But, Evans argued, it won’t be ready to help you pick which rules you may want to apply to your code, something that his company is happy to help with for a fee.

From a wide lens, r2c fits into the developer tools category. It is content to land and expand inside of companies, perhaps allowing it a lower cost of acquiring customers than we see at some SaaS startups. But that doesn’t mean that the company won’t go to market to sell its service. Per Evans, the startup has historically underinvested in marketing, something that it may now be able to focus more on thanks to its recent financing.

It is not uncommon to see companies with technically-minded founders initially spend too little on the sales and marketing parts of operating a software business. But our impression after discussing the company’s plans with Evans is that r2c intends to get that part of its house in order.

Evans told TechCrunch that his company took aboard more cash because it doesn’t want to build the best search tool for, say, the C programming language. It wants to go broad, fusing what the CEO described as the “customizability of Semgrep” and wide language support.

Let’s see how quickly the company can staff up, bolster its marketing efforts, and take on enterprise clients. Raising a Series C puts the company somewhere past its startup adolescence, so from here on out we can pester the company for concrete growth numbers.