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News: Connected vehicle data startup Wejo partners with Microsoft, Palantir, Sompo

June 29, 2021
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Connected vehicle data startup Wejo has announced partnerships with Microsoft, Palantir and Sompo Holdings to improve its ability to collect, store and analyze data from millions of connected vehicles around the world. This follows the GM-backed startup’s announcement that it would be going public by merging with a special purpose acquisition company, Virtuoso Acquisition Corp.,

This follows the GM-backed startup’s announcement that it would be going public by merging with a special purpose acquisition company, Virtuoso Acquisition Corp., which is expected to close later this year. A $25 million commitment from Microsoft and Sompo, combined with already-committed investors GM and Palantir, bring Wejo’s total PIPE financing to $125 million.

Palantir has been a previous strategic investor in Wejo. In 2019, the software developer launched a Japanese joint venture with insurance provider Sompo. Now this venture’s partnership with Wejo will give the startup the chance to collect connected vehicle data in Japan, and perhaps the greater Asia-Pacific region. The company already has some live vehicles in Korea, but 95% of its data comes from the U.S., according to Richard Barlow, Wejo’s founder and CEO. Sompo will analyze Wejo’s connected vehicle data using the Palantir Foundry data and analytics platform, according to the company.

“The vast majority of cars now sold globally have this ability to be connected, so there’s a huge opportunity,” Barlow told TechCruch. “We have 11 million live cars on our platform out of a supply base of about 50 million vehicles. We have over 17 OEM partners live on the platform, and we’re processing 16 billion data points a day, a peak of about 40,000 per second, which explains why we’re also excited to be backed by Microsoft and to be migrating to their Azure cloud platform.”

Barlow says Wejo can see 7% of all vehicles moving around New York, 6% around California and 20% around Detroit from partnerships with automakers like GM, Daimler and Hyundai. The company can either hand off raw, anonymized data — collected from vehicles with the consent of the owner — to businesses, developers or governments, or it can perform data analytics for them, which is also where the partnership with Microsoft can come in handy.

“Microsoft came up with a really compelling solution about how we can leverage their machine learning and AI capabilities to actually provide even more incredible products back to OEMs and key industries that want to use connected vehicle data,” said Barlow. “So Microsoft’s Azure doing that heavy lifting is really going to speed up our business.”

According to Wejo, initial applications might include traffic solutions, as well as remote diagnostics, integrated payments, advertising, retail and logistics. The two companies are also discussing the potential of using Wejo for Microsoft’s mapping solutions. Barlow says mapping companies are often typical buyers of Wejo’s data and expects to see more insurance providers.

“We’ve seen 11 million instances of two vehicles coming together, and in real time, we’re getting data from both those vehicles,” said Barlow. “So we’re starting to preempt and understand the characteristics or behaviours of before and after that collision or that interaction of vehicles.”

Wejo collects data that can recreate a car crash, from how each driver stomped on the brakes to which airbags were deployed to the speed of impact and which sensors were destroyed. It can then share this kind of data back to the insurer to help speed up the claims and recovery process and make repairs be more accurate, said Barlow.

All of this data demonstrating human driving behaviors in a range of circumstances has been collected over the last seven years, making Wejo an attractive partner for companies developing autonomous technology.

The battle for voice recognition inside vehicles is heating up

News: DevOps platform JFrog acquires AI-based IoT and connected device security specialist Vdoo for $300M

June 29, 2021
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JFrog, the company best known for a platform that helps developers continuously manage software delivery and updates, is making a deal to help it expand its presence and expertise in an area that has become increasingly connected to DevOps: security. The company is acquiring Vdoo, which has built an AI-based platform that can be used to detect and fix vulnerabilities in the software systems that work with and sit on IoT and connected devices. The deal — in a mix of cash and stock — is valued at approximately $300 million, JFrog confirmed to me.

Sunnyvale-based, Israeli-founded JFrog is publicly traded on Nasdaq, where it went public last September, and currently it has a market cap of $4.65 billion. Vdoo, meanwhile, had raised about $70 million from investors that include NTT, Dell, GGV and Verizon (disclaimer: Verizon owns TechCrunch), and when we covered its most recent funding round, we estimated that the valuation was somewhere between $100 million and $200 million, making this a decent return.

Shlomi Ben Haim, JFrog’s co-founder and CEO, said that his company’s turn to focusing deeper on security, and making this acquisition in particular to fill out that strategy, are a natural progression in its aim to built out an end-to-end platform for the DevOps team.

“When we started JFrog, the main challenge was to educate the market on what we saw as most important priorities when it comes to building, testing and deploying software,” he said. Then sometime around 2015-2016 he said they started to realize there was a “crack” in the system, “a crack called security.” InfoSec engineers and developers sometimes work at cross purposes, as “developers became too fast” the work they were doing was inadvertently led to a lot of security vulnerabilities.

JFrog has been building a number of tools since then to address that and to bring the collective priorities together, such as its XRay product. And indeed, Vdoo is not JFrog’s first foray into security, but it represents a significant step deeper into the hardware and systems that are being run on software. “It’s a very important leap forward,” Ben Haim said.

For its part, Vdoo was born out of a realization as well as a challenging mission: IoT and other connected devices — a universe of some 50 billion pieces of hardware as of last year — represents a massive security headache, and not just because of the volume of devices: each object uses and interacts with software in the cloud and so each instance represents a potential vulnerability, with zero-day vulnerabilities, CVEs, configuration and hardening issues, and standard incompliances among some of the most common.

While connected-device security up to now has typically focused on monitoring activity on the hardware, how data is moving in and out of it, Vdoo’s approach has been to build a platform that monitors the behavior of the devices themselves on top of that, using AI to compare that behavior to identify when something is not working as it should. Interestingly, this mirrors the kind of binary analysis that JFrog provides in its DevOps platform, making the two complementary to each other.

But what’s notable is that this will give JFrog a bigger play at the edge, since part of Vdoo’s platform works on devices themselves, “micro agents” as the company has described them to me previously, to detect and repair vulnerabilities on endpoints.

While JFrog has built a lot of its own business from the ground up, it has made a number of acquisitions to bolt on technology (one example: Shippable, which it used to bring continuous integration and delivery into its DevOps platform). In this case, Netanel Davidi, the co-founder and CEO of Vdoo (who previously co-founded and sold another security startup, Cyvera, to Palo Alto Networks) said that this was a good fit because the two companies are fundamentally taking the same approaches in their work (another synergy and justification for DevOps and InfoSec being more closely knitted together too I might add).

“In terms of the fit between the companies, it’s about our approach to binaries,” Davidi said in an interview, noting that the two being on the same page with this approach was fundamental to the deal. “That’s only the way to cover the entire pipeline from the very beginning, when they go you develop something, all the way to the device or to the server or to the application or to the mobile phone. That’s the only way to truly understand the context and contextual risk.”

He also made a note not just of the tech but of the talent that is coming on with the acquisition: 100 people joining JFrog’s 800.

“If JFrog chose to build something like this themselves, they could have done it,” he said. “But the uniqueness here is that we have built the best security team, the best security researchers, the best vulnerability researchers, the best reverse engineers, which focus not only on embedded systems, and IoT, which is considered to be the hardest thing to learn and to analyze, but also in software artifacts. We are bringing this knowledge along with us.”

JFrog said that Vdoo will continue to operate as a standalone SaaS product for the time being. Updates that are made will be in aid of supporting the JFrog platform and the two aim to have a fully integrated, “holistic” product by 2022.

Along with the deal, JFrog reiterated financial guidance for the next quarter that will end June 30, 2021. It expects revenues of $47.6 million to $48.6 million, with non-GAAP operating income of $0.5 million to $1.5 million and non-GAAP EPS of $0.00 to $0.01, assuming approximately 104 million weighted average diluted shares outstanding. For Full Year 2021, revenues are expected to be $198 million to $204 million, with non-GAAP operating income between $5 million and $7 million and an approximately 3% increase in weighted average diluted shares. JFrog anticipates consolidated operating expenses to increase by approximately $9-10 million for the remainder of 2021, subject to the acquisition closing.

News: 2U set to acquire non-profit edX for deal north of $600M

June 29, 2021
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2U, a SaaS platform that helps non-profits and colleges run online universities, plans to acquire all the assets of Harvard and MIT-founded edX for a deal north of $600 million, according to multiple sources. 2U did not immediately respond to requests for comment, and its unclear if this is an all-cash deal. The combined forces

Update: 2U confirmed the deal, expected to close within 120 days subject to regulatory and governmental approvals, in a press release post-publication. It also confirmed that the price of the acquisition which will be an $800 million all-cash deal.

The deal gives 2U, a company that filed to go public in 2014 and continues to be one of the rare U.S. edtech companies listed on the stock market, a new wave of collaboratively-built content to its software. Plus, 2U just acquired with stronger name recognition thanks to its Ivy League backers, which some see as a branding move that could help the public company with its own chunk of the market. The company’s last big acquisition was in 2019, when it paid $750 million to acquire Trilogy education, a company that builds in-person and online bootcamps in collaboration with universities.

EdX was founded in 2012 amid a crop of massive open online course (MOOC) offerings, including Udacity and Coursera. The company, set up as a non-profit, had an alluring promise upon launch: it would help anyone in the world take a Harvard or MIT class, for free. The institutions, of course, have thrown in a cumulative $80 million in donations into edX to keep the operation free. Its own launch came weeks after Coursera announced that Princeton, Stanford, UPenn, and the University of Michigan would host courses on its own online learning platform. Now, edX’s acquisition comes months after Coursera went public.

A first look at Coursera’s S-1 filing

Today, edX, led by president and professor Anant Agarwal, hosts over 3,000 courses led by 15,000 instructors and used by 35 million users. Open edX, the platform’s open source platform, is used by 2,400 learning sites worldwide, according to the organization’s website.

EdX will turn into a public benefit corporation as part of this transaction. Per sources, proceeds from the transaction will go into another non-profit managed by Harvard and MIT, and the institutions will not profit off of the transaction. That said, an MIT statement reveals. that edX took a line of credit from MIT and Harvard, and those funds will be returned to both institutions.

“Because edX is a public charity, the proceeds from its sale can only be distributed for a purpose consistent with edX’s mission, not to compensate those who contributed to the nonprofit,” the statement reads.

Part of this transaction, which has been in the works since February 2021, is colored by the fact that edX has been transparent with its own financial woes and journey to becoming a self-sustaining business. Then MIT Provost Rafael Reif, now the president of the school, had hinted at eventual revenue generation the program first launched, saying in 2012 that “the drive is not to make money..that said, we intend to find a way to support those activities. There are several approaches we are considering, and we don’t want this project to become a drain on the budgets of MIT or Harvard.”

In 2018, the same fiscal year it had $37 million in revenue, edX introduced a support fee, alongside its ongoing offering that asks students to pay for a verified certification upon course completion. In announcement, the company wrote that “we believe that we need to move toward a financial model that allows edX and our partners to achieve sustainability and we acknowledge that means moving away from our current model of offering virtually everything for free.” The edX board also considered other options, MIT. said, but decided those were “not as beneficial to edX, its learners, or its partner institutions as the transaction with 2U.”

The new transaction and edX’s choice to turn into a public benefit corporation might become the financial model that it itself was looking for, indicating just how. hard it may be to monetize a MOOC. While 2U has committed to continuing edX’s free coursework for at least five years, as well as seeding a new non-profit, edX as it currently stands – a massive education non-profit – will no longer function as it currently does in the future.

Edtech valuations aren’t skyrocketing, but investors see more exit opportunities

News: Google debuts a new website and set of resources for Americans experiencing food insecurity

June 29, 2021
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Google today is launching a new suite of resources for people struggling with food insecurity across the U.S. The project includes the launch of a new website, “Find Food Support,” that connects people to food support resources, including hotlines, SNAP information, and a Google Maps locator tool that points people to their local food banks,

In an announcement, Google explains how the Covid-19 pandemic fueled a worsening food crisis in the U.S., which led to some 45 million people — or 1 in 7 Americans — experiencing food insecurity at some point during 2020. That figure was up 30% over 2019, the company noted. And of those 45 million people, 15 million were children.

While the pandemic’s impacts are starting subside as businesses are reopening and in-person activities are resuming, many children will still go hungry during the summer months when school lunch programs become unavailable.

To help address this need and others related to food insecurity, Google’s new website available at g.co/findfoodsupport offers a combination of food support resources, YouTube videos about the problem of food insecurity in the U.S., and a Google Maps locator tool that will direct people to their nearby food bank or other food support locations.

Google says it worked with organizations including No Kid Hungry, FoodFinder, and the U.S. Department of Agriculture to capture 90,000 places offering free food support across the 50 U.S. states. Using the online tool, website visitors can type in their location to see school meal program pickup sites, food banks and food pantries in their area.

Image Credits: Google

The tool will display the location’s address, phone number and other details — like which days it’s open or business hours.

Although you can find this information in Google Maps directly, it can be more difficult if you don’t know the right keywords to use. For example, a search “food support” returned a combination of charities, food banks and public services alongside businesses with matching keywords, like “Food Lion” and “Lowe’s Foods.” A search for “food assistance” was more complete, but also returned unrelated results, like the “US Food & Drug Administration.” The online tool’s search results will be more precise and accurate.

The new website also highlights other food support information, including SNAP benefit information; support for specific groups, like seniors, children, and families; state-by-state benefit guidelines; and food support hotlines. For those not facing food support issues, it offers information on how to donate money, time or food to those in need.

The site additionally features a handful of YouTube videos published by organizations across the country who are working to address food insecurity issues in their own communities. The videos aim to destigmatize food insecurity by showing how all types of people use food support — including military families, children, and seniors. Google says 1 in 9 active-duty military families experience food insecurity, as do 1 in 6 children, 1 in 3 college students, and over 5 million seniors, for example.

The new site is the result of an effort by Google’s “Food for Good,” headed by Emily Ma. Food for Good originally began as an early stage moonshot project (from Alphabet’s X, formerly Google[x]) known as Project Delta, which focused on creating a smarter food system. The team wanted to find ways to keep food waste out of landfills by better directing food to those who need it most. In December 2020, Ma announced Project Delta would be moving to Google to scale up its work. The core team then joined Google as “Food for Good,” while the food traceability team remained at X to work on broader issues.

Google says it will continue to add more food support locations to the food locator tool going forward, beyond the 90,000 it offers today.

News: Accel closes on $3B across three funds as it ramps up global investing

June 29, 2021
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Accel announced Tuesday the close of three new funds totaling $3.05 billion, money that it will be using to back early-stage startups, as well as growth rounds for more mature companies. Notably, the 38-year-old Silicon Valley-based venture firm is doubling down on global investing. The announcement underscores both the robust confidence investors continue to have

The announcement underscores both the robust confidence investors continue to have for backing startups in the tech sector and the amount of money available to startups these days.

Specifically, today Accel is announcing its fifteenth early-stage U.S. fund at $650 million; its seventh early-stage European and Israeli fund also at $650 million and its sixth global growth stage fund at $1.75 billion. The latter fund is in addition, and designed to complement, a previously unannounced $2.3 billion global “Leaders” fund that is focused on later-stage investing that Accel closed in December.

Accel expects to invest in about 20 to 30 companies per fund on average, according to Partner Rich Wong. Its average investment in its growth fund will be in the $50 million to $75 million range, and $75 million and $100 million out of its global Leaders fund.

But the firm is also still eager and “excited” to incubate companies, Wong said.

“We’ll still write $500,000 to $1 million seed checks,” he told TechCrunch. “It’s important to us to work with companies from the very beginning and support them through their entire journey.”

Indeed, as TechCrunch recently reported, Accel has a history of backing companies that were previously bootstrapped (and often profitable) -– the latest example being Lower, a Columbus, Ohio-based fintech, which just raised a $100 million Series A.

Interestingly, Accel is often referred to some of these companies by existing portfolio companies (also in the case of Lower, whose CEO was referred to Accel by Galileo Clay Wilkes). More often than not, companies that Accel backs out of its early-stage and growth funds are bootstrapped and located outside of Silicon Valley.

The venture firm has long looked outside of Silicon Valley for opportunities, and has had offices not only in the Bay Area, but in London and Bangalore for years. Part of its investment thesis is to “invest early and locally,” according to Wong. Examples of this philosophy include investments in companies based all over the world — from Mexico to Stockholm to Tel Aviv to Munich.

Since the time of its last fund closure in 2019, the firm has seen 10 portfolio companies go public, including Slack, Austin-based Bumble, Bucharest-based UiPath, CrowdStrike, PagerDuty, Deliveroo and Squarespace, among others.

UiPath’s IPO filing suggests robotic process automation is booming

It also had 40 companies experience an M&A, including Utah-based Qualtrics’s $8 billion acquisition by SAP and Segment’s $3.2 billion acquisition by Twilio. Also, just last week, Rockwell Automation announced it was buying Michigan-based Plex Systems for $2.22 billion in cash. Accel first invested in Plex, which has developed a subscription-based smart manufacturing platform, in 2012.

Recent investments include a number of fintech companies such as LatAm’s Flink, Berlin-based Trade Republic, Unit and Robinhood rival Public. Accel has also backed as existing portfolio companies such as Webflow, a software company that helps businesses build no-code websites and events startup Hopin.

Wong says Accel is “open-minded but thematic” in its investment approach.

Accel Partner Sonali de Rycker, who is based out of London, agrees.

“For example, we’ll look at automation companies, consumer businesses and security companies, but at a global scale. Our goal is to find the best entrepreneurs regardless of where they are,” she said.

That has only been intensified by the recent rise of the smartphone and cloud, Wong said.

“Before, companies were mostly selling to the consumer in their own country,” he added. “But now the size of the market is so dramatically bigger, allowing them to become even larger, which is one of the reasons why I believe we’re seeing investment pace at this speed.”

To support this, it’s notable that Accel’s global Leaders fund is “dramatically” larger than the $500 million Leaders fund the firm closed in 2019.

Also, de Rycker points out, companies are staying private longer so the opportunity to invest in them until they sell or go public is greater.

Accel is also patient. In some cases, the firm’s investors will develop “years-long” relationships with companies they are courting.

“1Password is an example of this approach,” Wong said. “Arun [Mathew] had that relationship for at least six years before that investment was made. Finally, 1Password called and said ‘We’re ready, and we want you to do it.’ ”

And so Accel led the Australian company’s first external round of funding in its 14-year history — a $200 million Series A — in 2019.

While the firm is open-minded, there are still some industries it has not yet embraced as much as others. For example, Wong said, “We’re not announcing a $2.2 billion crypto fund, but we have done crypto investments, and see some very interesting trends there. We’ll look at where crypto takes us.”

Fourteen years after launching, 1Password takes a $200M Series A

News: 10club raises $40 million seed funding to replicate Thrasio-model in India

June 29, 2021
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10club, a one-year-old Indian startup that is building a Thrasio-like venture, said on Tuesday it has raised $40 million in what is one of the largest seed financing rounds in the South Asian market. The round was co-led by Fireside Ventures (a prominent Indian investor in consumer and hardware tech space) and an unnamed global

10club, a one-year-old Indian startup that is building a Thrasio-like venture, said on Tuesday it has raised $40 million in what is one of the largest seed financing rounds in the South Asian market.

The round was co-led by Fireside Ventures (a prominent Indian investor in consumer and hardware tech space) and an unnamed global investor, the Indian startup said, without revealing the other firm’s name. HeyDay, PDS International, Class 5 Global, Secocha Ventures, and founders of hardware startup boAt (Aman Gupta and Sameer Mehta) also participated in the round. It’s not clear whether the round also includes debt — as is popular among Thrasio-like ventures — and if the entire financing is being wired in one tranche.

10club acquires small brands that sell their products on e-commerce platforms and scales those businesses.

“Great businesses are growing on the backs of e-commerce giants like Amazon, Flipkart, Nykaa and more. They get their foundational years right but find it difficult to scale, and understand that competition is hard to curb.That’s where we step in, allowing you – the entrepreneurs – to enjoy an exit and benefit from years of hard work,” the startup describes on its LinkedIn page.

10club is one of a few dozen firms that is attempting to replicate what is popularly known as the Thrasio-model in India. Mensa Brands, a similar venture by former fashion e-commerce Myntra chief executive, recently raised $50 million in equity and debt. TechCrunch reported earlier this month that UpScale, another prominent player in this space, is in advanced talks with Germany’s Razor Group to raise capital.

Pity the folks at Thrasio that must be scratching their heads wondering why they’re getting so many hits/mentions from India. https://t.co/N9r2JYWCyp

— Osborne Saldanha (@os7borne) June 16, 2021

Like Thrasio, several of these firms are trying to acquire brands that sell mid-range to high-end products in categories where competition is limited. In fact, some of the categories that are common among these brands are so under-appreciated that even Amazon and other e-commerce firms have not explored them through their private label ecosystems.

New York-headquartered Thrasio, which has raised over $1.3 billion in equity and debt since December last year, had acquired or otherwise consolidated about 6,000 third party sellers on Amazon as of earlier this year.

“India and online-first brands are at the cusp of the next revolution. We, at Fireside, believe that both VC and acquisition driven model will co-exist going forward and can turbocharge the growth of early-stage brands. Together with the team at 10Club, we will be able to drive this change and enable e-commerce entrepreneurs to realize the full potential of their brands,” said Vinay Singh, Partner at Fireside Ventures, in a statement. As part of the deal, Singh is also joining 10club’s board.

Bhavna Suresh, co-founder of 10club and former chief executive of real-estate marketplace Lamudi, said the startup has already built its foundational pillars of the centralized platform and signed letters of intent worth $15 million from several firms and will deploy the fresh capital to operate the new businesses.

“Thrasio for India” has the opportunity to be a feature not a product
Insurgent, well funded consumer brands can expand mkt + sub-cats by acquiring emerging brands
Marketplaces needn’t launch Pvt labels- they can invest in their partner brands instead
Co-founders of…

— Suchita (@suchitasalwan) June 23, 2021

News: ShipBob nabs $200M at a $1B+ valuation to help e-commerce companies run logistics like Amazon’s

June 29, 2021
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E-commerce saw a massive surge of activity and growth in 2020; and while we may hear a lot about how big companies like Amazon got even bigger during the Covid-19 pandemic, that rising tide also lifted a lot of smaller boats. And that, in turn, has had a big impact on the wider e-commerce ecosystem.

In the latest development, ShipBob, which has built an operation and tech platform that today works with some 5,000 e-commerce businesses to run shipping and logistics like their bigger rivals, has raised $200 million. ShipBob is already profitable, but it will be using this money to double down on newer areas of business: both in terms of expanding geographically, and technically, with more R&D around software, robotics, and autonomous systems.

“We constantly evaluate the needs of our merchants today, where we believe their needs will evolve in the future, and prioritize what can drive the most impact to help make them successful and differentiate from their competitors,” said Dhruv Saxena, the company’s CEO, in an interview.

Chicago-based ShipBob has confirmed that the round pushes its valuation to over $1 billion, doubling its valuation compared to its last round, a Series D that it closed in September 2020.

Bain Capital Ventures is leading this Series E round, with SoftBank, Menlo Ventures, Hyde Park Venture Partners, Hyde Park Angels and Silicon Valley Bank also participating. Several of these are repeat investors in the company.

ShipBob brings in $40M to help e-commerce businesses compete with Amazon

ShipBob’s business is part infrastructure play, and part tech play, in what Saxena, who co-founded the company with Divey Gulati, described to us as a “full-stack approach.” On the infrastructure front, the company operates warehouses across around 20 locations in the U.S., Canada, Europe and Australia (with plans to use some of this hefty round to expand that list to 10 more centers), from which its customers can store and distribute the goods that they are selling online.

The company then provides a merchant application to its customers to help track that inventory and to help liaise with the warehouses to select items to pick and send to fill orders.

Thirdly, it integrates with a number of shipping companies to then actually send out those orders to customers. Altogether it says it integrates with some 40 partners, ranging from the likes Walmart (to power two-day delivery) and Pachama (to carbon off-set deliveries), plus Amazon, Walmart, Shopify, BigCommerce, Wix, Square and Squarespace so that people setting up sites or selling through those platforms can use ShipBob to handle the orders once a customer has clicked on “buy.”

Fulfillment and logistics are not the most obvious “face” of e-commerce, but to companies that are selling items online (or indeed, offline) that need to be delivered to someone after purchasing, they can be a make or break part of the business model, nearly as important as having a good storefront that works quickly, gets people where they want to be, and offering them things they want to buy. In logistics, the many, various items that are calculated as part of that operation — setting, intake and storage, pick and pack, shipping, and return fees are just some of those items — potentially rack up to a significant cost for the sellers, which they either pass on to the buyers or stomach to compete on price against much bigger players like Amazon. On top of that, it’s almost inevitable that shipping and logistics are not “core competencies” of the companies that heavily rely on them.

And as many have pointed out, Amazon’s success is built in large part on economies of scale, by making a better return because of how much it’s passing through the same system, distributing the cost of operation across more goods.

Companies like ShipBob — and it is not the only one in this space, with others including Amazon, ShipHero, Byrd, OceanX, Shippo, and many more — have essentially built a logistics operation that lets those companies outsource the work of doing that themselves, much as they would use a payments provider like Stripe rather than building a payments flow from the ground up. ShipBob also, by virtue of working with many businesses, creates that economy of scale by bringing their orders and work all together, mimicking essentially what Amazon does for itself.

Saxena says that ShipBob already has a “Prime” style offering for customers — by which he means, a way to provide low-cost or even “free” faster shipping for orders over a certain amount of money — but it will be interesting to see how and if it ever looks to move up the stack and see how it can leverage its logistics control and command to move up the stack and work on loyalty or membership programs for the most dedicated customers.

“Our customers are the brands and we built ShipBob to support their business growth,” he said. “A requisite to supporting their growth is offering fast and affordable shipping across any channel that they want to sell, so we do offer a ‘Prime’ style offering to the brands that we support today. For example, ShipBob merchants can offer affordable 2-day shipping directly through their website and through the marketplaces where they sell, like Amazon, Walmart, Facebook, and Google.”

What will also be interesting to see is how and if the growth we’ve seen in e-commerce in the last year — fueled by a very particular set of circumstances that either closed stores, or kept people away from them, or both — will be sustained, and how that will impact ShipBob. As we pointed out yesterday, there was a 44% bump in COVID-19 online spending in 2020, but in the year before that the U.S. has had e-commerce growth of around 15% as it’s a pretty penetrated market already.

“Due to Covid, e-commerce penetration in the US got pulled forward by 5-7 years and while some of it will revert back as the economy opens up, it is still higher than the pre-COVID levels across nearly all verticals,” Saxena said, citing the company’s own stats that appear to bear this out. “Many consumers who were forced to adapt to online buying are continuing to buy things online. For example, older demographics bought online for the first time and will continue to do so, while younger demographics who bought a considerable percentage of their goods online already, increased that percentage while the size of their buying power increased as well.”

It’s for this reason, and the fact that ShipBob is profitable, that investors are happy to make a bullish investment now.

“The fastest growing ecommerce brands recognize that world-class fulfillment increases revenue and builds customer loyalty,” said Ajay Agarwal, partner at Bain Capital Ventures and a board member, said in a statement.. “These leading brands are partnering with ShipBob as the one-stop cloud logistics platform to manage and deliver their merchandise

News: Ghana’s Jetstream lands $3M to build the digital infrastructure for Africa’s trade corridors

June 29, 2021
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The share of exports from Africa to the rest of the world ranged from 80% to 90% between 2000 and 2017. This has created a growing demand for Africa to be less dependent on commodity exports and focus on regional commerce. Not only does this decrease export dependence, but it also forms new markets for

Yet, Africa is home to the slowest and costliest ports in the world. Reports say that sometimes it is logistically cheaper and faster for African businesses to trade goods with distant overseas partners than via Africa’s intracontinental trade corridors. That’s a big problem and Jetstream, a Ghanaian-based company proposing to change that just closed a $3 million seed round.

Local and international investors participated in the round. They include Alitheia IDF, Golden Palm Investments, 4DX Ventures, Lightspeed Venture Partners, Asia Pacific Land, Breyer Labs, and MSA Capital.

The startup was founded by Miishe Addy and Solomon Torgbor in 2018. The founders started Jetstream to enable African businesses to see and control their own cross-border supply chains. It aggregates private sector logistics providers at African ports and borders, and brings them online.

Initially, the founders’ insight was around fragmentation problems and lack of coordination at African ports; an experience Torgbor was all too familiar with. He had worked at Maersk’s freight forwarding subsidiary Damco for eight years. There, he saw cargoes sitting for weeks at container terminals without moving forward in the supply chain. The delays were due to errors and incorrect paperwork at customs, importers, and exporters not having working capital at the right time to pay their logistics bills and poor coordination on the ground. For exports, the cargo volumes were sometimes too small to ship cost-effectively by sea freight.

L-R: Miishe Addy (CEO) and Solomon Torgbor (COO)

Meanwhile, Addy taught business at Meltwater Entrepreneurial School of Technology (MEST), a Pan-African incubator and entrepreneur training program. Before MEST, the law graduate from Stanford worked for management consulting company Bain & Company.

As Torgbor spoke with Addy about the challenges he noticed at Damco, she immediately thought they were worth tackling. “As he was talking, a light bulb went off and I thought. ‘These are exactly the types of problems that technology solves,’” the CEO said to TechCrunch. “We discussed and tried lots of different solutions for about a year and discovered that cargo aggregation generated strong traction almost immediately.”

Jetstream started operations in Ghana in March 2019 with a Less Than Container Load (LCL) aggregation service. The service allowed agricultural exporters to group their shipments into shared sea freight containers. Then in November of that year, Jetstream added trade finance for customers who found it difficult to fill large purchase orders.

Today, Jetstream is white labeling the systems built internally to manage shipments and financing for customers.

“We are different from a more siloed freight management system because we are leveraging financing to integrate the customs brokers, freight forwarders, shipping lines, airlines, and container terminals all onto the Jetstream platform so that shipments can be managed and tracked every step of the way. We are bringing many of the local providers online for the first time,” Addy said of the changes Jetstream has had to make along the way.

Jetstream’s business model is straightforward. It charges for the freight, clearance, and financial services offered. For freight, it charges a per-container or per-kilogram fee. For customs clearance, it charges a flat fee that varies depending on the tax category and location of the shipment. And for financing and insurance services, it charges a commission on the value of the goods being shipped.

During the pandemic, inefficiencies and a lack of coordination between providers around the ports were made more evident and created stronger growth for Jetstream as its logistics service revenue significantly grew 512% from March 2020 to March 2021. Addy believes that the pandemic further intensified Jetstream’s vision to bring cross-border trade corridors online and drive toward an inflection point in the speed and growth of commerce on the continent.

“We see a future where trade running on Jetstream’s digital rails has a powerful competitive edge on logistics. Jetstream is to cross-border logistics what Flutterwave is to fintech in Africa,” she continued.

Image Credits: Shutterstock (opens in a new window)

Reports estimate that the market for cross-border logistics services in Africa is about $32 billion in revenue. It is predicted to double in size over the next decade. For Jetstream, starting with Ghana is the perfect place to capture as much value and expand vis-a-vis the continent’s growth. As a Ghanaian native, COO Torgbor hammers home this point. In a statement, he calls Ghana a springboard to intracontinental trade and intercontinental trade with other fast-growing emerging markets. The West African nation currently sits at the helm of Africa’s newly enacted, continent-wide free trade zone AfCFTA. Ghana is also home to Port Tema, the largest container terminal in West and Central Africa that plans to handle one million containers a year.

In addition to Port Tema, Jetstream counts an unnamed Asia-based global shipping line as a major early adopter and customer of its technology. This has seen Jetstream’s business generate seven-figure revenue and Addy claims the startup grows more than 100% year on year.

Per reports, women-led startups in Africa attract less than 15% of the total VC investments that flow into the continent. However, many female-targeted funds have launched in the last couple of years to fill this gap and one of such participated in this round. Alitheia IDF, a VC firm focused on gender-diverse startups, usually invests five- to seven-figure sums and is one of the few venture capital firms in Africa tackling the low access to funding for women-led teams. Thus, Jetstream’s funding presents a rare win for this demographic (investors and founders alike) especially for the latter who are based in Ghana where few female tech CEOs exist.

Addy tells me she looks forward to when more African female-led teams are well funded, wishing Jetstream could help set off the trend. “I especially hope that our business growth encourages the investor side of the tech ecosystem to take a second look at all of the women leaders who aren’t being adequately funded,” she commented.

That aside, Jetstream also has operations in Nigeria with agents present in South Africa, China, the U.S., the U.K., and Europe. This talent placement is one of Jetstream’s moves geared towards 2028 when the CEO says the company hopes to have a presence at ports and borders in Africa comprising 80% of the continent’s total global trade.

These investors want to back ‘ridiculously early’ female-led African startups

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News: Harness Wealth raises $15 million to democratize the power of family offices

June 28, 2021
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Family offices have existed since the 1800s, but they’ve never been so manifold as in recent years. According to a 2019 Global Family Office Report by UBS and Campden Wealth, 68% of the 360 family offices surveyed were founded in 2000 or later. Their rise owes to numerous factors, including the tech startups that mint

Their rise owes to numerous factors, including the tech startups that mint new centi-millionaires and billionaires each year, along with the increasingly complex choices that people with so much moolah encounter. Think household administration, legal matters, trust and estate management, personal investments, charitable ventures.

Still, family offices tend to cater to people with investable assets of $1 billion or more, according to KPMG. Even multi-family offices, where resources are shared with other families, are more typically targeting people with at least $20 million to invest. That high bar means there are still a lot of people with a lot of resources who need hand-holding.

Enter Harness Wealth, a three-year-old, New York-based outfit that was founded by David Snider and Katie Prentke English to cater to individuals with increasingly complex financial pictures, including following liquidity events. The two understand as well as anyone how one’s vested interests can abruptly change — and how hard these can be to manage when working full-time.

Snider got his start out of school as an associate with Bain & Company and later as an associate with Bain Capital before becoming the first business hire at the real estate company Compass and getting promoted to COO and CFO after the company’s $25 million Series A raise in 2013. That little company grew, of course, and now, less than four months after its late-March IPO, Compass boasts a market cap of nearly $27 billion.

Indeed, over the years, Snider, who rejoined Bain as an executive-in-residence after 4.5 years with Compass, began to see a big opportunity in bringing together the often siloed businesses of tax planning and estate planning and investment planning, including it because “it resonated with me personally. Despite all these great things on my resume, every six months I found something I could or should have been doing differently with my equity.”

Prentke English is also like a lot of the clients to which Harness Wealth caters today. After spending more than six years at American Express, she spent two years as the CMO of London-based online investment manager Nutmeg. She left the role to start Harness after being introduced to Snider through a mutual friend; in the meantime, Nutmeg was just acquired by JPMorgan Chase.

While there is no shortage of wealth managers to whom such individuals can turn, Harness says it does far more than pair people with independent registered investment advisors — which is a key part of its business. It also helps its customers, depending on their needs, connect with a team of pros across an array of verticals — not unlike the access an individual might have if they were to have a family office.

As for how Harness makes money, it shares revenue with the advisers on the platform. Snider says the percentage varies, though it’s an “ongoing revenue share to ensure alignment with our clients.” In other words, he adds, “We only do well if they find long-term success with the advisers on our platform,” versus if Harness merely collected a lead generation fee.

Ultimately, the company thinks it can replace a lot of the do-it-yourself services available in the market, like Personal Capital and Mint. That confidence is rooted in part in Snider’s experience with Compass, which, in its earlier days, though it could navigate around real estate agents but “found that while people wanted better data insights and a better user interface, they also wanted that coupled with someone who’d had many clients who looked like them,” says Snider.

He adds that Prentke English joined forces with him after discovering that Nutmeg, too, was “running into the limitations of a non-human-powered solution.”

Investors think the thesis makes sense, certainly. Harness just closed on $15 million in Series A funding led by Jackson Square Ventures, a round that brings the company’s total funding to $19 million. (Both new and existing investors include Bain Capital; Torch Capital; Activant; GingerBread Capital; FJ Labs; i2BF Ventures; First Minute Capital; Liquid2 Ventures; Alleycorp, Marc Benioff; Compass founder Ori Allon; and Paul Edgerley, who is the former co-head of Bain Capital Private Equity.

As for what Harness Wealth does with that fresh capital, part of it, interestingly, will be used to develop its own captive business line called Harness Tax. As Snider explains it, more of its clients are finding that tax planning is among their biggest concerns, given all that is happening on the IPO front, with SPACs, with remote work, and also with cryptocurrencies, into which more people are pouring money but around which the tax code has been playing catch-up.

It makes sense, given that tax planning can be time-sensitive and often dictate the overall financial planning strategy. At the same time, it’s fair to wonder whether some of Harness Wealth’s adviser partners will be turned off from working with the outfit if it thinks its partner is evolving into a rival.

Snider insists that Harness Wealth — which currently employs 22 people and is not-yet profitable — has no such designs. “Our goal is only to help people where we can add value, and we saw an opportunity to lean in on tax side.”

Harness has a “a very large population of people who may not understand their tax liabilities” because of the crypto boom in particular, he explains, adding, “We want to make sure we’re front and center” and ready to help as needed.

News: Duolingo filed to go public

June 28, 2021
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Duolingo, a Pittsburgh-based language learning business last valued at $2.4 billion, has officially filed to go public. The 400-person company, which we explored in great detail in our EC-1, was co-founded by Luis von Ahn, the inventor of CAPTCHA and reCAPTCHA, and Severin Hacker. One of the most revealing bits of its story? It’s a

Duolingo, a Pittsburgh-based language learning business last valued at $2.4 billion, has officially filed to go public.

The 400-person company, which we explored in great detail in our EC-1, was co-founded by Luis von Ahn, the inventor of CAPTCHA and reCAPTCHA, and Severin Hacker. One of the most revealing bits of its story? It’s a route to monetization as a then rare edtech consumer business based outside of Silicon Valley. The company has had a somewhat circuitous journey — full of trial and error — on finding the perfect business model. It eventually landed on subscriptions, despite an original distaste for it thanks to its mission to provide free education.

Luckily, the S-1 reveals that its earlier decisions led to sharp revenue growth at the company.

The vast majority of Duolingo’s revenue comes from subscriptions. In the most recent calendar year, for example, the edtech giant generated 73% of its total top line from subscription incomes. That revenue was followed by advertising incomes and the Duolingo English Test (DET), which represented 17% and 10% of its top line in 2020. (Notably, von Ahn hoped that the DET would be 20% of Duolingo’s revenue by 2019, a figure that it failed to reach by some margin.)

The product-led growth behind edtech’s most downloaded app

Its multi-part business model appears to be paying off. The company’s revenue grew from $70.8 million in 2019 to $161.7 million in 2020, a 129% increase. Of course some of that growth would have happened sans the recent global pandemic, but it’s not hard to see some COVID-related acceleration in the figures. Duolingo also reported $55.4 million in revenue during the first quarter of 2021, representing a 97% growth from the year-ago period.

The company recently turned profitable on an adjusted basis.

But in more strict accounting terms, net losses have grown for Duolingo. In the three months ended March 31, 2021, for example, the company had net losses of 13.5 million, a sharp increase compared to the same period last year when it had net losses of $2.2 million. And from 2019 to 2020, the company’s GAAP net losses expanded from $13.6 million to $15.8 million.

It should be noted that the company’s net margin improved in 2020, as its revenue more than doubled and its losses barely crept higher. The company’s profitability or lack thereof should not prove to be a problem during its impending listing.

In its S-1 filing, Duolingo provided a placeholder $100 million figure for the funds it expects to raise; we’ll get a better idea of how much capital the edtech unicorn may onboard during its IPO when it sets an IPO price range after its roadshow.

The former startup is effectively the kick-off to the Q3 2021 IPO season, one that several inventors have told TechCrunch will be more than active.

Duolingo has raised $183.3 million in venture capital to date. Investors that have meaningful stakes in the company include NewView Capital, Union Square Ventures, CapitalG, Kleiner Perkins, and General Atlantic, which recently got a spot on the cap table through a secondary transaction.

At a run rate of around $220 million today and growth of more than 100%, Duolingo should not have a problem clearing its privately set $2.4 billion price tag. Unless public-market investors are concerned that the edtech market’s growth is mostly behind it. That Duolingo grew by nearly 100% in the first quarter could temper such concerns.

How Duolingo became fluent in monetization

Factoids and other joy

TechCrunch is still digging its way through Duolingo’s IPO filing, but we’ve found a number of details that add more than a little color to its recent growth and business results. Here are some standouts:

A “record low” attrition rate in 2020 in which only four employees, or 2% of its workforce left the company.
The company eventually plans to launch a “Duolingo Proficiency Score” across its offered languages, with the hopes of creating a “widely accepted indicator of language proficiency level and make Duolingo a global proficiency standard.”
It cited Apple’s “Translate” tool, an iOS app launched in 2020 that allows users to translate text sentences or speech between several languages, as a competitor in the ‘risk factors’ section.
And finally, it confirmed that it is seeking potential acquisition candidates to add complementary services to its startup.

Duolingo plans to list on the NASDAQ stock exchange using the ticker symbol DUOL.

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