Monthly Archives: April 2018

While smaller companies are seeing a lot of new options for distributed office space, or can pick up a couple offices in a WeWork, eventually they get big enough and have to find a bigger office — but that can end up as one of the weirdest and most annoying challenges for an early-stage CEO.

Finding that space is a whole other story, outside of just searching on Google and crossing your fingers. It’s why Jonathan Wasserstrum started Squarefoot, which looks to not only create a hub for these vacant offices, but also have the systems in place — including brokers — to help companies eventually land that office space. Eventually companies as they grow have to graduate into increasingly larger and larger spots, but there’s a missing sweet spot for mid-stage companies that are looking for space but don’t necessarily have the relationships with those big office brokers just yet, and instead are just looking through a friend of a friend. The company said today that it has raised $7 million in a new financing round led by Rosecliff Ventures, with RRE Ventures, Triangle Peak Partners, Armory Square Ventures, and others participating.

“If you talk to any CEO and you ask what they think about commercial real estate brokers, they’ll say, ‘oh, the guys that send an email every week,’” co-founder Jonathan Wasserstrum said. “The industry has been slow to adopt because the average person who owns the building is fine. They don’t wake up every morning and say this process sucks. But the people who wake up and say the process sucks are looking for space. That was kind of one fo the early things that we kind of figured out and focused a lot of attention on aggregating that tenant demand.

Squarefoot starts off on the buyer side as an aggregation platform that localizes open office space into one spot. While companies used to have to Google search something along the lines of “Chelsea office space” in New York — especially for early-stage companies that are just starting to outgrow their early offices — the goal is to always have Squarefoot come up as a result for that. It already happens thanks to a lot of efforts on the marketing front, but eventually with enough inventory and demand the hope is that building owners will be coming to Squarefoot in the first place. (That you see an ad for Squarefoot as a result for a lot of these searches already is, for example, no accident.)

Squarefoot is also another company that is adopting a sort of hybrid model that includes both a set of tools and algorithms to aggregate together all that space into one spot, but keep consultants and brokers in the mix in order to actually close those deals. It’s a stance that the venture community seems to be increasingly softening on as more and more companies launch with the idea that the biggest deals need to have an actual human on the other end in order to manage that relationship.

“We’re not trying to remove brokers, we have them on staff, we think there’s a much better way to go through the process,” Wasserstrum said. “When I am buying a ticket to Chicago, I’m fine going to Kayak and I don’t need a travel agent. But when I’m the CEO of a company and about to sign a three-year lease that’s a $1.5 million liability, and I’ve never done this before, shouldn’t I want someone to help me out? I do not see in the near future this e-commerce experience for commercial real estate. You don’t put it in your shopping cart.”

And, to be sure, there are a lot of platforms that already focus on the consumer side, like Redfin for home search. But this is a big market, and there already is some activity — it just hasn’t picked up a ton of traction just yet because it is a slog to get everything all in one place. One of the original examples is 42Floors, but even then that company early on faced a lot of troubles trying to get the model working and in 2015 cut its brokerage team. That’s not a group of people Wasserstrum is looking to leave behind, simply because the end goal is to actually get these companies signing leases and not just serving as a search engine.

When you’re raising venture capital, it helps if you’ve had “exits.” In other words, if your company has been acquired or you’ve taken one public, investors are more inclined to take a bet on anything you do.

Boston -based serial entrepreneur David Cancel has sold not just one, but four companies.  And after a few years running product for HubSpot, he’s in the midst of building number five.

That startup, Drift, managed to raise $47 million in its first three years. Now it’s announcing another $60 million led by Sequoia Capital, with participation from existing investors CRV and General Catalyst. The valuation is undisclosed.

So what is Drift? It’s “changing the way businesses buy from businesses,” said Cancel. He wants to eventually build an alternative to Amazon to make it easier for companies to make large orders.

Currently, Drift subscribers can use chatbots to help turn web visits into sales. It has 100,000 clients including Zenefits, MongoDB, Zuora and AdRoll.

Drift “turns those conversations into customers,” Cancel explained. He said that technology is comparable to what is commonly used for customer service. It’s the “same messaging that was used for support, but used in the sales context.”

In the long-run, Cancel says he hopes Drift will expand its offerings to compete with Salesforce.

The company wouldn’t disclose revenue, but says it is ten times better compared to whatever it was in the past year. And it’s on track to grow another five times this year. This, of course, means little without hard numbers.

Yet we’re told that the new round means that Drift will have $90 million in the bank. It plans to use some of the funding to make acquisitions in voice and video technology. Drift also plans to expand its teams in both Boston and San Francisco, with new offices for both. The company presently has 130 employees.

Mixcloud, the London startup that offers an audio streaming platform designed for long-form content, has closed its first-ever funding round, TechCrunch has learned. According to a regulatory filing and since confirmed by co-founder Nico Perez, the ten-year old company has raised approximately $11.5 million led by WndrCo, the media and technology holding company based in Los Angeles and San Francisco.

As part of the investment, WndrCo partners Ann Daly (former president of DreamWorks Animation) and Anthony Saleh (an investor and artist manager of hiphop stars Nas and Future) have joined the Mixcloud board. The injection of capital will be used to scale the service globally and for product development, says the company.

This will include doubling down on the U.S., hence Mixcloud’s new backers, and growing the company’s 22-person team, both in London and New York (where Perez is now based). On the product side, I understand the plan is to “diversify the platform,” which would appear to point to a recent licensing deal with Warner and new paid Mixcloud consumer offerings, making the company less reliant on display advertising and other types of brand sponsorship alone.

That Mixcloud has raised a decent sized funding round isn’t surprising in itself. The music streaming site, which originally wanted to be something akin to ‘YouTube for long-form audio’, has carved out a decent following as a place to house archived radio shows and DJ mixes, and counts more than 1 million “curators” uploading content to the platform. However, aside from a couple of U.K. government grants in its formative years, the fact that the company hasn’t taken any outside funding since being founded in 2008 is no-less than remarkable. As is, perhaps, its survival. The history of consumer-facing music startups is littered with companies that raise significant venture capital, before ultimately crashing and burning or being litigated out of existence.

“We are fairly rare, if not unique,” Perez tells me, in his understated way. “We quit our jobs and incorporated the company in 2008 and then the next two years was the challenge of starting any new company, around building the team, trying to raise funding, and in our case doing these innovate types of [music] licenses. And, being straight up honest with you, we couldn’t fundraise. We couldn’t find anybody to put in money. It was a very different time back then”.

To put that period in context, the term ‘Silicon Roundabout,’ used to describe the emerging tech cluster in East London where Mixcloud would eventually relocate, only entered the public domain in July 2008. And although Spotify was founded the same year, it remained very much under the radar. Meanwhile, the spectacular rise and fall of Napster over the previous decade was still fresh in the memories of investors.

“There had been several major collapses — Napster being the largest but also other services like imeem — that had grown and ultimately failed. Investors were very, very wary of the space, or maybe we were just not very good at pitching. Either way we didn’t manage to raise in the early days… For better or worse, we had to figure out how to survive by ourselves”.

This saw Mixcloud initially set up home in a warehouse in an industrial estate near Wembley, a much less fashionable part of London, in a bid to keep costs low. The team also took on “small jobs on the side,” ploughing any surplus money they earned into keeping the service alive. Aside from bootstrapping and those early government grants, the key to survival was growing Mixcloud’s users at roughly the same speed as advertising revenue, alongside pioneering new content licenses and fingerprinting technology to ensure rights-holders were paid.

“Slowly, over the next few years, it started to get traction amongst users and listeners. Then we started to make a little bit of money from Google Adsense and a few different brand partnerships. And then it took a good five or six years until we could support a small team, and we never raised investment along the way”.

That journey instilled a culture at Mixcloud of “being lean and not splashing out huge amounts of money on launch parties”. This not only ensured the lights could be kept on, but in recent years and somewhat ironically, the same financial discipline and non-reliance on venture capital started to attract the attention of investors. As did the latent potential for Mixcloud to go international.

“The next step for us — and actually part of the fund-raise — is how do we move from bringing this very U.K.-centric streaming platform to being a global player,” adds Perez. “We looked at the wider marketplace and the time we’re in right now… and we kinda felt like if we really wanna go for it then we’re gonna need some firepower behind us. So that’s why we did the deal”.

Zuroa’s founder and CEO Tien Tzuo had a vision of a subscription economy long before most people ever considered the notion. He knew that for companies to succeed with subscriptions, they needed a bookkeeping system that understood how they collected and reported money. The company went public yesterday, another clear sign post on the road to SaaS maturation.

Tzuo was an early employee at Salesforce and their first CMO. He worked there in the early days in the late 90s when Salesforce’s Marc Benioff famously rented an apartment to launch the company. Tzuo was at Salesforce 9 years, and it helped him understand the nature of subscription-based businesses like Salesforce.

“We created a great environment for building, marketing and delivering software. We rewrote the rules, the way it was built, marketed and sold,” Tzuo told me in an interview in 2016.

He saw a fundamental problem with traditional accounting methods, which were designed for selling a widget and declaring the revenue. A subscription was an entirely different model and it required a new way to track revenue and communicate with customers. Tzuo took the long view when he started his company in early 2007, leaving a secure job at a growing company like Salesforce.

He did it because he had the vision, long before anyone else, that SaaS companies would require a subscription bookkeeping system, but before long, so would other unrelated businesses.

Building a subscription system

As he put it in that 2016 interview, if you commit to pay me $1 for 10 years, you know that $1 was coming in come hell or high water, that’s $10 I know I’m getting, but I can’t declare the money until I get it. That recurring revenue still has value though because my investors know that I’m secure for 10 years, even though it’s not on the books yet. That’s where Zuora came in. It could account for that recurring revenue when nobody else could. What’s more, it could track the billing over time, and send out reminders, help the companies stay engaged with their customers.

As Ray Wang, founder and principal analyst at Constellation Research put it, they pioneered the whole idea of a subscription economy, and not just for SaaS companies. Over the last several years, we’ve heard companies talking about selling services and SLAs (service/uptime agreements) instead of a one-time sale of an item, but not that long ago it wasn’t something a lot of companies were thinking about.

“They pioneered how companies can think about monetization,” Wang said. “So large companies like a GE could go from selling a wind turbine one time to selling a subscription to deliver a certain number of Kw/hr of green energy at peak hours from 1 to 5 pm with 98 percent uptime.” There wasn’t any way to do this before Zuora came along.

Jason Lemkin, founder at SaaStr, a firm that invests in SaaS startups, says Tzuo was a genuine visionary and helped create the underlying system for SaaS subscriptions to work. “The most interesting part of Zuora is that it is a “second” order SaaS play. It could only thrive once SaaS became mainstream, and could only scale on top of other recurring revenue businesses. Zuora started off as a niche player helping SaaS companies do billing, and it dramatically expanded and thrived as SaaS became … Software.”

Market catches up with idea

When he launched the company in 2007, perhaps he saw that extension of his idea out on the distant horizon. He certainly saw companies like Salesforce needing a service like the one he had decided to create. The early investors must have recognized that his vision was early and it would take a slow, steady climb on the way to exiting. It took 11 years and $242 million in venture capital before they saw the payoff. The revenue after 11 years was a reported $167 million. There is plenty of room to grow.

But yesterday the company had its initial public offering, and it was by any measure a huge success. According TechCrunch’s Katie Roof, “After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.” Today it was up a bit more as of this writing.

When you consider the Tzuo’s former company has become a $10 billion company, that companies like Box, Zendesk, Workday and Dropbox have all gone public, and others like DocuSign and Smartsheet are not far behind, it’s pretty clear that we are in a golden age of SaaS — and chances are it’s only going to get better.

While companies’ operations become increasingly fragmented into a wide variety of different spots — especially if they exist somewhere in a group of different cloud tools — making sure those operations are still healthy has become more and more critical.

And for companies whose lifeblood is directly keeping that software online longer, it’s even more important. Uptime maps directly to revenue, and that’s why Caleb Hailey — who previously worked on this as a consultancy — decided to start Sensu to try to piece together the monitoring operations into a single spot where a company can keep an eye on the health of their operations. The company said it has raised $10 million in a new financing round led by Battery Ventures, with existing investor Foundry Group participating. Battery’s General Partner Dharmesh Thakker is joining the company’s board of directors.

“Big enterprises are hesitant to work on startups, they’re risk averse, and it reduces the risk exposure to double down on an open source stack,” Hailey said. ” But this open source technology, it’s used in the largest institutions in the world, and we have found that by delivering cost savings in a competitive market we have already established a rapidly growing developer stream.”

While all those different tools may have their own way of monitoring the health of a system, Sensu tries to get all this into one place to make things a little easier than checking things one-by-one. The aim is to be more proactive and try to flag problems before they are even noticed by the people using Sensu, plugging directly into services like Slack or sending emails to flag potential issues before they end up becoming larger problems. Like others like Cloudera, Sensu builds its business around helping companies deploy this otherwise open source technology efficiently.

Sensu’s backstory starts as a consultancy for Hailey, which was focused on infrastructure and automation — especially as more and more companies moved to a hybrid cloud model that existed partially in some box somewhere on Azure or AWS. Starting off as an open source project is one way that he hopes to convince larger enterprises that might already be using similar tools to adopt a known entity rather than just giving some random startup the keys to maintaining their operations.

The monitoring space is still a competitive — and crowded — one. There are tools like AppDynamics or New Relic, but Hailey argues that Sensu can be competitive with those as they are very bundled while his startup helps companies piece together a more complete solution. For example, a company might need higher granularity in their reports, and Sensu aims to try to provide a robust toolkit for companies that have many disparate operations they need to keep online and running smoothly.

Founded in 2010 as an online loyalty card service, Punchh has since grown into a marketing platform serving more than 115 restaurant chains, including Pizza Hut and Quiznos. Now it’s raised a $20 million Series B to expand into more retail verticals and increase the use of artificial intelligence and machine learning in its cloud software. The funding was led by Sapphire Ventures, with participation from returning investor Cervin Ventures.

Along with its angel and Series A financing, this brings Punchh’s total funding so far to about $31 million. The startup says its goal is to give brick-and-mortar stores the same level of data analytics as e-commerce giants like Amazon.

Punchh’s platform enables restaurants to digitize their customer loyalty programs and complements that with tools like Punchh Acquire, which is designed to help businesses turn casual customers into regulars by promoting offers through multiple channels, including email, SMS, social media, Apple Pay and eClub.

The company currently has 145 employees and is based in San Mateo, California, with offices in Austin, Texas and Delhi. This is Punchh’s first funding announcement in three years and the startup’s largest round of financing by far (it raised $9.5 million Series A in 2015).

Co-founder and chief executive officer Shyam Rao says the time was right for Punchh to raise again because it already serves many of the biggest restaurant chains, with 34,000 locations between them, and wanted to tap into demand from retailers in other verticals.

Punchh is now focusing on convenience stores, gas stations and health and beauty brands (clients already include Fantastic Sams hair salons and TruFusion, a chain of fitness studios). The company competes with other digital loyalty and marketing platforms like Stamp Me, LoyalZoo and Stocard. Rao says Punchh’s ability to create campaigns that target a very specific audience sets it apart from rivals. Punchh’s algorithms pulls together data from several sources, including event calendars, weather, local demographics and the purchasing history of individual customers, for what it describes as “micro-moment marketing.”

For example, if cold weather is expected over a holiday weekend, it might send offers for a discounted hot soup and tea set to mothers between the ages of 30 to 55. Punchh claims it increases spending at its customers’ restaurants by 10% to 20%.

“Imagine trying to manage that process of using mountains of data to build customer relationships and tailor every experience, at scale across hundreds of locations. That’s what Punchh does,” says Rao.

In a statement, Jai Das, Sapphire Ventures managing director said “Punchh is already a global leader in digital marketing solutions for restaurants, which alone would be a fantastic reason to invest in the company, but the scope of their technology goes far beyond just restaurants and encompasses all brick-and-mortar stores with a POS.”

TravelTriangle, a startup that is digitizing travel agencies and travel bookings in India, has raised a $12 million Series C round led by Fundamentum.

The startup operates like a travel booking platform to allow holidaymakers to choose and secure their travel plans online. It also works with offline travel agents to help them offer services, such as tailoring a trip, to customers as they do when they walk into their offices in person. The company also offers a suite of back-office services designed for agencies to help bring them on to its platform and generate additional revenue.

The deal marks the first investment from Fundamentum, a new $100 million fund established by Nandan Nilekani, a co-founder and the former CEO of $33 billion IT services giant Infosys, and Helion Ventures partner Sanjeev Aggarwal .

When the fund launched last July, Nilekani told TechCrunch it is aimed at turning promising Indian startups into unicorns. Notably, Nilekani confirmed that Fundamentum has looked over some 50 deals before electing to back TravelTriangle.

Fundamentum led the round — and may perhaps hog the limelight a little given the circumstances — but the firm was joined by existing TravelTriangle backers SAIF Partners, Bessemer Venture Partners and RB investments who also took part.

TravelTriangle closed a $10 million Series B in February 2017, since then it has seen its site traffic jump from two million to 2.5 million per month, while it has grown the number of active travel agents on its platform to “close to 700.”

Sankalp Agarwal, TravelTriangle’s CEO and one of three co-founders behind the business, told TechCrunch that the money will be spent on product R&D. In particular, he said, a recommendation engine is being developed that will help customers get holiday ideas based both on their own history and the type of trips and destinations that other customers who are similar to them have taken.

On that front, TravelTriangle is also working to broaden its selection of destinations that it offers from the current total of 65. That means finding new partners outside of India.

Agarwal said, too, that a chunk of the new capital will go towards marketing campaigns aimed at growing Travel Triangle’s brand and generating awareness among consumers.

He said there’s no immediate plan to focus on expanding the business overseas. He did acknowledge, though that already the service has picked up some overseas customers — particularly in Sri Lanka — and that, as an online platform, it would be possible to replicate overseas.

Most likely, international expansion would be something that is two to three years away, he added, as Travel Triangle is aiming to reach double-figures of market share within India’s travel industry. Outbound tourism alone is tipped to reach $45 billion by 2022, according to research, while in-country travel accounts for the majority of trips.

It’s April, that means tax returns for people in the U.S. very soon. Given the breakout year that crypto had in 2017 — despite prices cooling down in recent months — and well-intended individuals might be thinking about whether to file taxes based on gains they enjoyed from bitcoin or other cryptocurrencies.

It’s good timing, then, for CoinTracker — a San Francisco-based startup currently tracking $200 million in crypto assets — to pop its head above the parapet and announce that it has raised a $1.5 million seed round.

We wrote about the company earlier this year when it was part of Y Combinator’s winter cohort, and now it has spread its wings with a round led by Initialized Capital — a seed investor in billion-dollar crypto exchange Coinbase — with Y Combinator and a host of angel investors joining in for the ride. Some of those include Protocol Labs CEO Juan Benet and Paul Buchheit, the engineer who created Gmail.

CoinTracker is (as the name suggests) a product that lets you track your crypto portfolio.

Sure, there are a tonne of such services and apps on the market but, having bought and used most of them, there’s none that really fits snuggly. That’s because a lot of the data input is manual. That’s important if you truly want to track the success of your investing, you need to know obvious information like what the price of bitcoin was when you bought. When you factor in crypto-to-crypto trading — e.g. trading bitcoin for ethereum — and the price changes that happen, suddenly your manual attempt to track performance is lacking.

That’s just speaking as a hobbyist. More serious investors are even more underserved, and that is where CoinTracker is aiming to make its mark.

The service tracks your crypto across wallet addresses — using public information, nothing private — while it throws in API keys from the top 14 crypto exchanges. That helps fill in more gaps and give you a fuller read on how your crypto investment has performed. A transfer matching algorithm is in place to help figure out trades on decentralized exchanges, which are more complicated to track.

By pulling that information, CoinTracker is also in a position to help those well-intended individuals I mentioned earlier give the taxman an accurate read on they crypto gains to remain IRS compliant.

Going forward, the plan is to tap into that holistic picture of crypto portfolios to offer more services, CoinTracker co-founder Chandan Lodha told TechCrunch in an interview.

Lodha, formerly a product manager with Google X, started the service alongside co-founder and former TextNow CTO Jon Lerner because both were looking for something to track their crypto investment hobby. When they realized a whole lot more people — both on the more serious and casual end of the spectrum — were too, they made it their main focus.

Lodha said the service aims to set itself apart with a focus on ease of use and simplicity, and he expects that to continue and be reflected in future services that could include trading via exchanges inside the app.

“The key reason we’ve had some success to date is due to focusing on the UX,” Lodha said. “There are tonnes of other tools but one thing that really resonates with our users is that we’ve made it easy to use for mainstream people, not just expert cryptography folks.”

Indeed, gathering and acting on user feedback is a common theme with Lodha, who said the money will go towards adding to CoinTracker’s developer team to work on the “large number” of user requests received. 

Now to price: the basic tracking service is free, but users pay from $49 up to $999 per year for more advanced features centered around optimizing tax filings by computing capital gains reports using FIFO, LIFO or HIFO accounting.

Disclosure: Writer owns a small amount of cryptocurrency.