Year: 2021

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

For this week’s deep dive, Alex and Natasha took a trip down memory lane to the great WeWork saga. We had WSJ reporter and author Eliot Brown on the show to chat about his new book, The Cult of We, written with his colleague Maureen Farrell. You can snag it here if you haven’t already.

Brown and Farrell were key reporting voices during WeWork’s rise, and fall, covering the company’s growth, hijinks, and demise.

Recently, WeWork has filed to go public via a SPAC, bringing the co-working startup to the public markets years after it initially tried for an IPO. It will debut at a fraction of the value that it once commanded on the private markets.

• For fun, you can read the original WeWork S-1 filing here.
• The WeWork-SPAC deck is here.

While we had Brown on the show, we took the time to dive into how he handled reporting the WeWork story, what his take is on today’s startup market, and how the tech media in general can do a better job. It felt like a masterclass for journalists and founders alike, which we’d argue is Equity’s sweet spot.

What lessons can we take away from WeWork’s rise and fall? At a very basic level, that companies with slim gross margins are not software companies and should not be valued as such. And that allowing founders to have monarchical control of their company goes against historical norms of good corporate governance, which isn’t so smart.

California-grown automotive software company Sonatus raised $35 million in a Series A round that attracted high-profile technology and automotive industry companies including Hyundai Motor Group, SAIC Capital, LG Electronics and Hyundai Mobis.

Silicon Valley VC Translink Capital led the round, with other investors including Marvell, SK hynix, United Microelectronics Corporation (UMC), Mando Corporation and Wanxiang Group Company.

Sonatus, which was founded in 2018, intends to use the new funds to establish itself as a brand through marketing efforts, new partnerships with OEMs and expanding local teams, according to Jeff Chou, Sonatus’s CEO and co-founder. The startup says its product helps to make vehicles into “data centers on wheels” by providing the underlying infrastructure that allows for big data collection, running new applications or adding new features to the car.

“Basically we have two pieces of our product – an in-vehicle portion and a cloud portion, and they kind of work together,” Chou told TechCrunch. “The in-vehicle part of our product allows the OEM to collect any data that the car generates. So whether that be on a traditional [Controller Area Network] bus, whether that be in the infotainment head unit, whether that be on traffic that’s flowing across an in-vehicle network like Ethernet. Anything that gets generated or transmitted across an in-vehicle network is data that we have access to. And depending on what the OEM wants to collect and when they want to collect it, they can inform our software in the vehicle to do the right thing.”

The cloud portion of the software connects to all the vehicles where Sonatus’s underlying architecture resides and  ingests all the data so it can store, analyze or expose it to either the OEM’s own data scientists or to their partners.

Sonatus says its first generation product is already in production with a top global automaker, which will be announced in the coming weeks.

“We actually built the company without any investment money at all, and we grew from a couple of us to now beyond 50 people,” said Chou. “And now we’re already launching and in mass production. Our software has already been incorporated into the vehicles of an OEM and in their dealer showrooms.”

Chou said the first incarnation of Sonatus’ product will be in a combustion engine vehicle, but that the product is drivetrain-agnostic. In fact, Chou thinks the electrification of vehicles has been a tailwind for the company because it’s causing OEMs to rethink in-vehicle architecture and be more open to adopting new technologies.

One of Sonatus’ investors in this round, Hyundai has been pouring money into auto-related technologies. The automaker has invested $20.5 billion (KRW 23.5 trillion) in future technologies for its vehicles, including electrification, connectivity, autonomous driving, fuel cell, UAM, AI and robotics through 2025, according Henry Chung, SVP and head of Hyundai CRADLE Silicon Valley.

“A lot of the technology in our cars is probably 50 years old in some areas, especially on the comms side of things,” Chung told TechCrunch. “There’s four or five decades worth of data center evolution that’s occurred on the IT front, and those technologies and approaches basically need to be brought into vehicles now because of the amount of data that’s being generated, the sensors, the software algorithms that are running, the compute power that’s now involved. They literally are super computers on wheels. We’re asking vehicles to do more and consumers at are asking for services at a greater clip as well, so in order to deliver those services and value added functions, all of that needs supporting infrastructure and that’s what Sonatus delivers essentially. This is long overdue.”

One of the capabilities that may soon be realized in the automotive industry is Vehicle-to-Everything (V2X) technology, in which the vehicle communicates to other vehicles and surrounding infrastructure to provide better driver assistance systems, which could lead to autonomous driving one day. Sonatus says it provides the architecture upon which V2X can be utilized.

“That’s part of this edge cloud architecture that we’re delivering for vehicles, but in this case the edge instead of being data center, it’s really an edge on wheels,” said Chou.

Sonatus’s data center, which the company says is incredibly secure, and its architecture allow automakers to remotely add in features, manage vehicle usage data and remedy problems quicker and more efficiently because it doesn’t use over-the-air software updates that require time and a full upload. Rather, automakers can send the software specific messages to enact changes in real time.

“Imagine a scenario where on the fly somebody detects that there could be something wrong with brakes for vehicles that they shipped in North America, and they need to send out an update right away to get real time data on braking and engine of certain models when an accident occurs,” said Chou. “They might say, ‘Send me information 60 seconds before the accident and 60 seconds after and I only want this information.’ That can be done in real time, without an OTA update. It’s what we call codeless updates.”

There are many use cases where OEMs will benefit from having access to so much data, especially as they continue to innovate. For Sonatus’s part, the company wants to move in the direction wherein it can also collect and analyze the data from automakers to perhaps use records of driver behavior in the development of autonomous technology, but Chou said they’re not doing anything about it just yet.

Loop Returns, a software company looking to handle the costly and inefficient process of retail/ecommerce returns, has announced the close of a $65 million Series B financing round. The round was led by CRV, with participation from Shopify, Renegade Partners, as well as existing investors FirstMark Capital, Ridge Ventures, Peterson Ventures, and Lerer Hippeau.

It paid off. The company has grown its team from 20 employees in 2019 to 100, with 41 percent of the team identifying as female and 16 percent identifying as BIPOC.

In terms of traction, the company has gone from 200 to 700 customers, and from $26 million in returns processed to just over $100 million in the same time frame.

Poma told TechCrunch that the greatest challenge for the startup is scaling the team.

“It’s about bringing great people and keeping them aligned toward a common goal, especially in this remote first world,” said Poma.

Coding is not just for engineers and computer programmers anymore: the pace of technology and its growing ubiquity mean that even non-tech roles will require workers to have some degree of knowledge to do their jobs in the future. Today a company called Sololearn — which has built a popular mobile-first education platform to meet that demand, now with over 21 million users across some 25 curriculum categories like Python, JavaScript, Java, C++, HTML, and SQL — is announcing $24 million in funding to expand its business.

Drive Capital led the round, with participation from past backers from Sololearn’s previous $1.2 million Series A round in 2016. They include Learn Capital and Prosus Ventures.

Of note, Drive Capital was co-founded by two alums from Sequoia out of Columbus, Ohio, with a mission to focus on founders outside of the “usual” hubs. That’s precisely what they have done here: Sololearn comes from Yerevan, Armenia, which has produced a lot of engineering talent, but interestingly not as many startups. (PicsArt, which is actually also HQ’d in San Francisco, may the biggest name to come out of there.)

Sololearn was founded and is currently led by Yeva Hyusyan, who tells me that the impetus for the company came out of a previous project she worked on while working for Microsoft in the country, a startup accelerator.

One side effort to that was a coding bootcamp they put together to help upskill would-be entrepreneurs. The bootcamp took on a life of its own eventually, with tech companies in the country, and specifically the capital city, approaching Hyusyan to source interesting candidates for jobs, and soon after to take and train people in specific areas on behalf of the tech companies themselves. In the process, the accelerator started building tools that could be used outside of the classroom. Through all of that, Hyusyan said she realised that there was an opportunity in itself to focus just on this. And thus Sololearn was born.

Now I know what you must be thinking at this point: aren’t there already dozens, maybe hundreds, of decent online coding courses and tools out in the market already? Why fund Yet One More?

Key to what Sololearn is doing is that it has taken a realistic approach: on mobile people want short bursts of content, so coding education on that platform should follow from that. The “lessons” such as they are come in bite-size engagements, which can be run through in minutes if needed. Its target users are equally distributed among those who are focused on learning deeply about coding, and non-tech people who are trying to learn some specific skills for their jobs, and she said that both have taken to the format.

“Everyone was critical about the idea of learning coding on a mobile screen, so we built a compiler a few years ago,” she said. “But believe me, the younger generation prefers to code on mobile. It’s as normal as a desktop. You’d be amazed at the thousands of lines of code they put together, all on a phone.”

The Duolingo-like approach to the curriculum further followed by the fact that there are no formal “teachers” but if people need help they can turn to others in the Sololearn community. Helpers are incentivized, Hyusyan said, “because they learn and they get recognition from the community.”

“The best helpers are community influencers, experts that work with us for free and basically help everyone out. They are our best and most influential members,” she added.

The formula seems to have worked. Sololearn is adding between 200,000 and 300,000 new users every month, she said, with active users up 300% over last year. The 21 million people who are already using the platform essentially gravitated to it by word of mouth. (That will surely change now that Sololearn has raised this big round…)

The potential audience is a massive one. “Billions will need to re-skill in the next 10 years,” Hyusyan said, with the implication being that Sololearn (and others like it) will take on that re-skilling role. “We think the era of institutional learning is over. No one institution, not even a consortium, could cope with that demand.”

With the company also seeing a lot of traction for learning in platform-specific languages, such as C# and Swift for Apple iOS, Kotlin for Android, and Go for Google cloud computing, it will be using the funding both to continue expanding into more languages, but also more learning tailored to specific job categories.

With Dulingo and other bite-sized content players seeing huge growth, that speaks to a lot of potential in the educational realm, and with Sololearn specifically.

“Sololearn provides bite-sized habit-forming instruction at scale, a warm and supportive community, and amazing user-generated content,” said Masha Khusid, Partner at Drive Capital, in a statement. “And with Sololearn bringing that same proven approach to a subject matter with such a profound impact on millions of peoples’ financial futures, it’s particularly exciting and rewarding to be their Series B lead.”

Amid the chaos of the COVID-19 pandemic and the murky path to profitability for shared electric micromobility, an increasing number of companies have turned to subscriptions. It’s a business model that some founders and investors argue hits the profit center sweet spot — an approach that appeals to customers who are wary of sharing as well as paying upfront to own a scooter or e-bike, all while minimizing overhead costs and depreciation of assets.

Across the United States, Europe, some of Canada and at least one Middle Eastern city, existing mobility companies are adding a subscription business line to their repertoire, and entirely new companies are being formed on the basis of the hardware-as-a-service model. But will this new playbook push the unit economics of micromobility in a positive direction? And what will determine which companies win at the subscription game?

In general, subscriptions for everything from groceries and streaming video to exercise equipment and clothing are on an upward slope. Subscription businesses are expected to grow at a rate of 30% this year, according to a 2021 study by digital services monetization company Telecoming.

Micromobility vendors keen to follow other industries into this model are focused on several factors, according to experts following the industry: the ease of scaling, return on investment and cost-per-mile to operate.

“Subscription services for a single vehicle are far more interesting and scalable than the subscription model that was trialed by the shared mobility services,” Oliver Bruce, angel investor and co-host of the Micromobility Podcast with Horace Dediu, told TechCrunch. “The cost per kilometer is just an order of magnitude smaller, and it’s not constrained by citywide caps.”

Shawn Carolan, managing director at Menlo Ventures, is also bullish on the micromobility subscription model because it makes more sense for the consumer, as most people will prefer to pay a low monthly fee rather than a higher upfront fee.

“The best customers are repeat customers, commuters or local neighborhood trips,” Carolan said. “Repeatedly paying per ride is both expensive and cognitively taxing. People want low friction in transportation. Getting from here to there shouldn’t require a lot of thought.”

The key players: E-bikes

Bird and Lime might dominate the shared micromobility space, but they’re not leading the subscription market, largely because their bikes and scooters are built to be heavier and more robust in order to handle city usage. Their operating systems are also designed to manage fleets and keep the vehicles in specific territories within a city. Bird and Spin have announced intentions to offer subscriptions, but so far there’s only been a chance to sign up for a waitlist.

Meanwhile, subscription services tend to offer lighter-weight vehicles that can be carried up flights of stairs or even folded down.

Swapfiets, the bike-sharing company with the distinctive blue front wheel, is one of the pioneers in the world of bike-sharing. In 2015, Richard Burger, Martijn Obers and Dirk de Bruijn started the Dutch company as university students in Delft when they realized that owning a bike could be somewhat of a hassle. The Netherlands is renowned for having more bicycles than people, but that doesn’t make it any easier to buy, sell and maintain them, especially with such high fees at bike shops.

“We asked how we could shift this and get only benefits from using a bike to go from A to B and not have all this hassle,” Burger told TechCrunch. “And for us, the subscription model was really the realization that would fix that.”

An old rule of thumb for building a startup is to find a group of professionals who use spreadsheets to do their work and then build an app to replace their spreadsheet usage. Presto, you have a startup, and perhaps even a new software category.

Spreadsheet.com, however, is doing the opposite. Instead of turning spreadsheets into apps, the startup wants to put apps in your spreadsheets.

TechCrunch caught up with the company when it reached out, disclosing that it raised $5.5 million last June. That round, wrought from the coffers of Spark Capital, First Round Capital and Firebolt Ventures, is now a pretty dated event. (PitchBook details a valuation of around $22 million, post-money, for that funding event.) But what Spreadsheet.com is up to is neat. Let’s talk about it.

People love spreadsheets

Spreadsheets are a blend of database (structured data storage), calculator (averages, sums and all sorts of other goodies), and programming interface (functions and more). That hybrid feature set has kept traditional spreadsheet tools like Microsoft’s venerable Excel relevant amid a growing sea of applications.

Jokes abound concerning just how much spreadsheets hold up the world. This meme remains stuck in my mind, for example:

The movement to replace spreadsheets has yet to strike a lethal blow against their general usage. That reality forms part of Spreadsheet.com’s thesis. CEO Matt Robinson told TechCrunch that companies that break out parts of their workflow from spreadsheets into tailored apps wind up merely running both sets of software at the same time. So, Robinson and co-founder Murali Mohan want to build a spreadsheet that helps companies avoid running more apps at one time than they must.

What does the company’s product do? Robinson answered that question with a question of his own: What do we currently do with spreadsheets? He offered up managing data, assigning tasks and linking to docs as examples. Using his startup’s service, he said, those are things that you can do in a spreadsheet, without having to use a separate app.

“We designed Spreadsheet.com to be the best of both worlds,” he explained in a follow-up Q&A. “It works just like the traditional spreadsheet you already know, but with a whole new set of capabilities.”

The company’s software can display spreadsheets in various formats like a timeline-style perspective, something that should be familiar to Airtable fans. Robinson also emphasized that Spreadsheet.com can handle formulas that folks already know, adding that it will be able to handle if-then functions to send data to other apps or trigger emails. The CEO argued that his company is building first-party features instead of third-party plugins.

Notably, Spreadsheet.com is not generally available today, so if you haven’t heard of it, don’t consider yourself behind. The company told TechCrunch that it currently has a 16,000-person waiting list, which it plans to open to others on October 17, which, it turns out, is Spreadsheet Day.

Asked how the company managed to build such a large waitlist while being in something akin to stealth mode, Robinson noted that Fast Company did cover the company back in 2019. Not a bad result.

What’s ahead?

When a startup flies out of the ether to announce a historical funding round, our first question is whether it’s about to fundraise again. TechCrunch doesn’t want to play patsy to a company’s next funding cycle. In this case, Robinson said that his startup has received inbound Series A interest and may raise in the next 12 months. Because that’s not tomorrow, I’m content to yammer about them in the interim.

Robinson indicated that Spreadsheet.com has around 2.5 years of capital in the bank and is not cash-constrained. If it does raise in 2021, then, it should be able to extract a pound of flesh in the form of a strong valuation; raise when you don’t need to, another startup rule of thumb states.

Why raise more capital inside the next year if the company doesn’t need cash? Robinson said that if his startup wants to scale its non-engineering roles — it is currently around 92% engineers by headcount — and wants to hire the best, and those folks won’t come cheap. And the CEO noted that some competing players have raised hundreds of millions of dollars. Competing won’t be cheap, either.

In the larger universe that Spreadsheet.com plays in, there are many competing companies. Airtable is the obvious mention; the unicorn has raised more than $600 million, per Crunchbase data. Layer wants to make spreadsheets more collaboration-friendly. Stacker wants to help no-code developers build apps from spreadsheets, something akin to the antithesis of Spreadsheets.com. So does Rows, which was known as dashdash earlier in life. Flowhaven wants to do brand work outside of spreadsheets, an example of the market trend that Spreadsheet.com wants to combat. And Fivetran wants to “bring spreadsheets into the modern age and make it easier for users to work with messy data and analyze large amounts of information,” per our own reporting.

So, we now wait for Spreadsheet.com to open its doors and let the world get a better look at its tech. Are spreadsheets going apps, or are apps going spreadsheets? We’ll find out.

While markets grapple with the concept that the pandemic might not be entirely in the rear view mirror, investors are continuing to seek out investment opportunities outside public markets as they seek to diversify.

Vincent, an alternative asset aggregation hub, is hoping to capture some of that investor attention, allowing users to scour multiple types of assets across vertical-specific platforms and build up a diverse portfolio. Vincent CEO Slava Rubin says that more than 100 thousand people have used the platform since its launch in November, and that they now have 75 partner platforms integrated with the site.

Rubin, who previously co-founded the crowdfunding platform Indiegogo, tells TechCrunch that Vincent has just closed a $6 million Series A led by LAUNCH with additional investment from 8VC and Digital Currency Group, among others.

Vincent is looking to approach both accredited and unaccredited investors and the platform is currently a pretty even split between the two, Rubin tells us. The platform’s partner offerings span several alternative asset classes including venture capital, real estate, debt, crypto, art and collectibles. Vincent makes money by facilitating discovery on its partner platforms and earning fees.

We covered the company’s launch back in December when the alternative asset market was taking off but would proceed to get hotter by the week. At the moment, venture capital and real estate deals make up more than half of the capital flowing through the platform while crypto investments have seemed to slide in popularity amid the broader market sell-off there. Unaccredited investors gaining access to VC deals via equity crowdfunding has been a big onramp for the platform, especially amid loosening restrictions which have made that fundraising method more popular among some founders.

Today, there are more $3.5 billion worth of searchable deals on the Vincent platform spread across supported platforms like WeFunder, Groundfloor, Republic, SharesPost, Rally Rd. and Otis.

“The ecosystem of potential investors is bigger than it’s ever been,” Rubin tells us.

Stripe, with its $95 billion valuation, has been taking on the payment landscape with a whole platform approach, bringing in dozens of adjacent services to snag a wider and deeper set of customers that use these services by way of APIs. But in the world of so-called “embedded finance” there still remains a lot of room for smaller players to bring a more sophisticated approach to the business of building complicated financial processes that can be integrated by third parties to carry out their own businesses, and today one of them is announcing some funding to support its own mission.

Dwolla, which provides an API that allows companies to build and facilitate fast payments, specifically with a focus on ACH (automated clearing house, or payments or transfers between banks or other financial institutions), has closed $21 million in funding, money that it will be using to continue building out the functionality of its service and specifically how it integrates and provides more of the responsiveness of card payments; hiring more talent; and starting the process of taking its rails to more markets outside of the U.S., most likely looking at Canada, the U.K. and Australia first.

Foundry Group is leading this round, with Park West Asset Management LLC, Union Square Ventures, Detroit Venture Partners, Firebrand Ventures and Next Level Ventures also participating. Jeremy Andrus, the CEO of Traeger, is also in the round as an individual investor. Other investors in the company include Andreesen Horowitz, High Alpha, Thrive Capital and Ludlow Ventures, and CEO Brady Harris in an interview said Dwolla would not be disclosing its valuation at the moment, but described it as “competitive in what’s happening with transactions and payments overall.”

Dwolla is based out of Des Moines, Iowa, and has been somewhat under the radar over the years. Since 2009 it had only raised just over $50 million before this round, a relatively modest amount for a fintech these days. This $21 million is its biggest-single round to date.

But it’s also been quietly seeing a lot of growth. In 2019, Dwolla processed $11 billion in gross payment volume over its platform. In 2020, that grew to $20 billion. This year it’s projected to be $30 billion, said Harris. Customers include both larger institutions and fintechs that want to incorporate faster and more efficient ACH-based payments into their own services without going through the grunt work of building them from the ground up, as well as businesses that want these also in their stack, with particular requirements around how they would like the white labelled and customised.

In total the company has some 3 million end users on its platform, which are channelled through some 500 customers using its services.  Those customers include real estate companies, educational institutions, and retailers and brands like GOAT, Ibotta, and Rally. Some of those customers are bigger than you might think. Harris noted to me that one of its customers using the Dwolla API in a white-label service is a fintech that sees some $9 trillion in gross transactions. (Dwolla is under NDA so cannot disclose the name.) That 3 million number, Harris said, is currently growing by 1.5 million each quarter, so it’s really seeing a lot of transaction traffic right now.

And $30 billion is, of course, just a small part of the payments pie, with transactions estimated to be valued at $5.4 trillion in 2020 and projected to grow to $11.29 trillion by 2026.

As Harris describes it, while there are a lot of options out there in the market today for companies that want to incorporate payments and specifically bank transfer-based payments into their stack, Dwolla’s unique approach is that it’s made this particular service more efficient, and easily customizable for those that want to add more features into the process. (That could include more timing, incorporating a blended approach including card payments or other payment methods, or something else altogether.)

“ACH products are something that a consumer can pull off the shelf at a payments company like Stripe, but this is about creating more customization,” said Harris. “We get a lot of people who are mid integration with another provider but it can’t do it what they would like it to, and so they come to us. We like to think of ourselves as programmatic and flexible.”

This focus and mastery of its space has helped Dwolla’s star rise not just with customers but also investors.

Much has been made of the rise of the “creator economy” in the last year. With the Pandemic biting, millions flooded online, looking for a way to make money or promote themselves. The podcasting world has exploded, and with it platforms like Patreon, Clubhouse, and many others. But the thorny problem remains: Do you really own your audience as a creator, or does the platform own you? Companies like Mighty Networks, Circle and Tribe have tried to address this, giving creators greater control than social networks do over their audiences. Now another joins the fray.

Disciple Media bills itself as a SaaS platform to enable online creators to build community-led businesses. It’s now raised $6 million in funding in what it calls a ‘large Angel round’. It already claims to have garnered 2 million members and 500 communities since launching in 2018. Investors include Nick Mason (drummer in Pink Floyd), Sir Peter Michael (CEO of Cray Computers, founder of classic FM, Quantel and Cosworth Engineering), Rob Pierre (founder and CEO of Jellyfish), and Keith Morris (ex. chairman Sabre Insurance). It’s also announced a new Chairman, Eirik Svendsen, a expert in online marketplaces, SaaS and the publishing and media industry.

On its communities so far it has American country star and American Idol judge Luke Bryan, Gor Tex, and Body by Ciara. The platform is also available on iOS and Android and comes with community management tools, a CRM, and monetization options. The company claims its creators are now “earning millions in revenue each year.”

Benji Vaughan, Founder and CEO said: “The scale and rapid growth of the creator economy is extraordinary, and today that growth is being driven by entrepreneurial creators looking to build independent businesses outside of Youtube and the social networks.”

Vaughan, a Techno DJ and artist-turned-entrepreneur, says he came up with the idea after building similar communities for clients. He says the data created on Disciple communities is owned entirely by the host who built the network, “removing third-party risk and allowing insights to be actioned immediately”.

He told me: “We are moving from a position of effectively having ‘gig economy workers for social networks’ to owners of businesses who use social networks for their needs, not the other way around. Therefore, these people are starting to leave social networks to build their businesses and using social networks as marketing channels, as the rest of the world does. Once that migration happens where they move away from social networks as their prime platform, they need a hub where their data is going to get pulled together, they have an audience, which we see as a community that connects with itself as much as they do with the host.”

He thinks the equivalent of Salesforce or HubSpot in the creative economy is going to be a community platform: “That’s where they’re going to aggregate all the information about their valuable audience or community engagement. So, we are looking to, over time, to build out something very akin to what HubSpot sites they have for tech companies or SaaS businesses: a complete package, a complete platform to manage your engagement with your users, grow your user base and then convert that into revenue.”

Rob Pierre, founder and CEO Jellyfish said: “Creating and engaging with your community digitally has never been more important. Disciple allows you to do both of those things with a fully functional, feature-rich platform which requires very little upfront capital expenditure. It also provides numerous options to monetize your community.”

Customer success company Vitally raised $9 million in Series A funding from Andreessen Horowitz to continue developing its SaaS platform automating customer experiences.

Co-founder and CEO Jamie Davidson got the idea for Vitally while he was at his previous company, Pathgather. As chief customer officer, he was looking at tools and “was underwhelmed” by the available tools to automate repetitive tasks. So he set out to build one.

The global pandemic thrust customer satisfaction into the limelight as brands realized that the same ways they were engaging with customers had to change now that everyone was making the majority of their purchases online. Previously, a customer service representative may have managed a dozen accounts, but nowadays with product-led growth, they tackle a portfolio of thousands of customers, Davidson told TechCrunch.

New York-based Vitally, founded in 2017, unifies all of that customer data into one place and flows it through an engine to provide engagement insights, like what help customers need, which ones are at risk of churning and which to target for expanded revenue opportunities. Its software also provides automation to balance workflow and steer customer success teams to the tasks with the right customers so that they are engaging at the correct time.

Andreessen approached Davidson for the Series A, and he liked the alignment in customer success vision, he said. Including the new funding, Vitally raised a total of $10.6 million, which includes $1.2 million in September 2019.

From the beginning, Vitally was bringing in strong revenue growth, which enabled the company to focus on building its platform and hold off on fundraising.

“A Series A was certainly on our mind and road map, but we weren’t actively fundraising,” Davidson said. “However, we saw a great fit and great backing to help us grow. Tools have lagged in the customer success area and how to manage that. Andreessen can help us scale and grow with our customers as they manage the thousands of their customers.”

Davidson intends to use the new funding to scale Vitally’s team across the board and build out its marketing efforts to introduce the company to the market. He expects to grow to 30 by the end of the year to support the company’s annual revenue growth — averaging 3x — and customer acquisition. Vitally is already working with big customers like Segment, Productboard and Calendly.

As part of the investment, Andreessen general partner David Ulevitch is joining the Vitally board. He saw an opportunity for the reimagining of how SaaS companies delivered customer success, he told TechCrunch via email.

Similar to Davidson, he thought that customer success teams were now instrumental to growing SaaS businesses, but technology lagged behind market need, especially with so many SaaS companies taking a self-serve or product-led approach that attracted more orders than legacy tools.

Before the firm met Vitally, it was hearing “rave reviews” from its customers, Ulevitch said.

“The feedback was overwhelmingly positive and affirmed the fact that Vitally simply had the best product on the market since it actually mapped to how businesses operated and interacted with customers, particularly businesses with a long-tail of paying customers,” he added. “The first dollar into a SaaS company is great, but it’s the renewal and expansion dollars that really set the winners apart from everyone else. Vitally is in the best position to help companies get that renewal, help their customers expand accounts and ultimately win the space.”