Author: azeeadmin

BrandProject —a firm that’s backed successful direct-to-consumer commerce startups like Freshly (acquired by Nestlé), Persona (also acquired by Nestlé) and Chef’s Plate (acquired by Hello Fresh) — is announcing that it has raised $43 million for what it says is its first traditional venture fund.

Founded Andrew Black, who previously co-founded Virgin Mobile Canada and served as president of LEGO Americas, BrandProject previously invested from a $12 million fund tied BrandProject Studio, where the money is just a small part of what’s being offered — apparently six of the firm’s eight team members are entirely focused on supporting startups, often serving as de facto CTOs, CFOs and CMOs.

With the new BrandProject Capital fund, the firm will be able to make larger investments in (somewhat) more mature companies. Black estimated that the new fund will be writing checks of between $1 million and $3 million; the goal is for half of the deals to be new investments, while the other half consists of follow-on investments in startups from BrandProject Studio.

“We’re going to be supporting the same type of businesses out of Studio or Capital, but with Studio, nothing’s too early for us — we’re all about team, team, team,” said Partner Hayden Williams. “But if it’s a Capital deal, we’re going to look for some evidence that something working, even if it’s a small scale.”

The focus will continue to be direct-to-consumer brands, and although the pandemic has led to tremendous e-commerce growth, Black said it hasn’t changed the BrandProject strategy.

Image Credits: BrandProject

“We haven’t adjusted our investment focus at all because of COVID,” he said. “We’ve always invested behind categories, brands and segments that we just think the world needs.”

One of the limited partners who invested in the new fund is probably BrandProject’s biggest success story — Freshly co-founder and CEO Michael Wystrach, who sold his healthy meal startup to Nestlé for $1.5 billion. Wystrach recalled reading about BrandProject in TechCrunch and, after looking the firm up, sending unsolicited meals to Partner Jay Bhatti in New York.

At that point, Freshly had only raised friends-and-family funding, and Wystrach admitted, “We would have taken a check from anyone.” But he said he was lucky that Bhatti liked the food and the firm decided to invest, with Black becoming an interim co-CEO, Bhatti serving as interim CTO and Partner Andrew Bridge serving as an interim CMO.

“What I loved about BrandProject is that they never came in and told us what kind of business we’re building,” he continued. “It was never a case where they said, ‘You need to do this.’ It was our business, and they were team members in helping us build the business.”

To illustrate the idea behind the new fund, Wystrach compared the investment ecosystem to the U.S. schools: “Where Andrew and the team come in, they’re K through 8 or maybe K through 6, they’re very hands on … With the new fund, maybe they’re moving to middle school.”

Soona, a startup aiming to satisfy the growing content needs of the e-commerce ecosystem, is announcing that it has raised $10.2 million in Series A funding led by Union Square Ventures.

When I wrote about Soona in 2019, the model focused on staging shoots that can deliver videos and photos in 24 hours or less. The startup still operates studios in Austin, Denver and Minneapolis, but co-founder and CEO Liz Georgi told me that during the pandemic, Soona shifted to a fully virtual/remote model — customers ship their products to Soona, then then watch the shoot remotely and offer immediate feedback, and only pay for the photos ($39 each) and video clips ($93 each) that they actually want.

In some cases, the studio isn’t even necessary — Georgi said that 30% of Soona’s photographers and crew members are working from home.

Soona has now worked with more than 4,000 customers, including Lola Tampons, The Sill, and Wild Earth, with revenue growing 400% last year. Georgi said that even as larger in-person shoots become possible again, this approach still makes sense for many clients.

“There’s nothing we sell online that does not require a visual, but not every single visual requires a massive full day shoot,” she said.

Image Credits: Soona

Georgi also suggested that Soona’s approach has unlocked a “new level of scalability,” adding, “Internally at Soona, we really believe in the remote shoot experience. It’s not only more efficient, it’s a lot more fun not having to fly a brand manager from Miami and have them spend a full day at a warehouse in New York. That’s not only cost-prohibitive, it’s also a time-consuming and exhausting process for everyone.”

The new funding follows a $1.2 million seed round. Georgi said the Series A will allow Soona to develop a subscription product with more collaboration tools and more data about what kinds of visual content is most effective.

“There’s an opportunity own the visual ecosystem of e-commerce from beginning to end,” she said.

Georgi also noted that Soona continues to employ its “candor clause” requiring investors to disclose whether they’ve ever faced complaints of sexual harassment or discrimination. In fact, the clause has been expanded to cover complaints around racism, ableism or anti-LGBTQ discrimination.

“In some ways it’s a gate that prevents bad actors from being involved […] but it really drives a deeper connection with the investor and the founder,” Georgi said. “We can have conversation about our values and how we see the world. We get to have a conversation about equality and justice at at time when we’re talking a lot about equity and the cap table.”

Buy now, pay later is a way of paying for purchases via installment loans that generally have no interest. The concept has grown in popularity in recent years, especially in markets such as the United States, Europe and Australia. Numerous players abound, all fighting for market share — from Affirm to Klarna to Afterpay, among others.

But notably, none of these bigger players have yet to penetrate another very large market — Latin America. Enter Nelo, a startup founded by former Uber international growth team leads, which is building buy now, pay later in Mexico. The company is already live with more than 45 merchants and over 150,000 users.

San Francisco-based fintech-focused VC firm Homebrew led its recent seed round of $3 million, which also included participation from Susa Ventures, Crossbeam, Rogue Capital, Unpopular Ventures and others. With the latest capital infusion, Nelo has raised a total of $5.6 million since its 2019 inception.

Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have recently outlined plans for buy now, pay later offerings in the region. But where Nelo has an advantage, believes CEO Kyle Miller, is its established relationships with about 45 merchants.

“What I’m excited about is the relationship with the merchants,” Miller told TechCrunch. “If we find a large global one and increase conversion for them, that is our defensibility [against competitors]. What’s important here is signing on merchants, since they usually only have one offering in their checkout.”

He and co-founder Stephen Hebson used to work for Uber’s international growth team, growing financial services products in India, Mexico, China and Brazil.

“We got to see a cross market where countries were accelerating and where others weren’t,” Miller recalls. “For example, China was a leader in mobile payments and digital finance in India was completely transformed.”

Nelo co-founders Stephen Hebson and Kyle Miller; Image courtesy of Nelo

But in markets like Mexico, the percentage of cash payments for trips was very high. And to Miller and Hebson, this spelled opportunity.

Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a neobank. In the middle of the year, the company launched credit installment loans.

“It became immediately clear that it was going to be our most popular feature,” Miller said. “By the end of the year, it was the vast majority of our business and something that our users were telling their friends about. We were solving a real pain point.”

Indeed, cash remains the dominant method of payment in Mexico, with an estimated 86% of all payments being in the form of cash. According to eMarketer, the region was the fastest-growing e-commerce market in the world in 2020, with 37% year over year growth.

“Access to credit is something we take for granted in the U.S.,” Miller said. “By the end of the year, we realized this was the future of business, and we decided to focus just on credit.”

In March, Nelo launched its first product via an Android app and will be launching a web app soon.

Customers can use its offering like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users are paying for things like utility bills and cell phone bills, turning them from prepaid to postpay.

With its current product, the company has lent about $2 million, and is seeing growth of about 20% month over month.

“We’re seeing massive demand for this new product in the way of organic signups,” Miller said, “for all the reasons Buy Now, Pay Later has been successful in markets like the U.S., Europe and Australia.”

Paying for installments is already common in Latin America, particularly in Brazil, so the concept is not foreign to residents in the region.

“We expected this is soon going to be a competitive market, so we’re hiring data scientists and engineers to continue improving our product, and grow,” Miller said.

Nelo has about 14 employees with an engineering team in New York.

Homebrew Partner Satya Patel says he’s excited about Nelo because he believes the startup “solves a serious problem related to the lack of credit for Mexican consumers.”

“Credit card penetration is less than 10% in Mexico and other forms of credit are effectively non-existent,” he wrote via email. “Nelo makes it possible for Mexicans to easily and inexpensively increase their purchasing power at the point of sale. And importantly, Nelo is delivering this solution online, supporting growing interest in e-commerce, and also offline, where consumers regularly shop today.”

Patel adds that what Nelo is building is valuable because he is not aware of any reliable, comprehensive consumer credit rating data set in Mexico.

“They are building underwriting models based on proprietary data and growing the merchant network at an incredible rate,” he said. “This buy now, pay later opportunity is untapped in Mexico but requires a very different approach than what has been successful in other markets.”

The Nelo team, according to Patel, understands the nuances of the market and “is executing at an exceptional pace.”

“If you build it, they will come” is a mantra that’s been repeated for more than three decades to embolden action. The line from “Field of Dreams” is a powerful saying, but I might add one word: “If you build it well, they will come.”

America’s Lifeline program, a monthly subsidy designed to help low-income families afford critical communications services, was created with the best intentions. The original goal was to achieve universal telephone service, but it has fallen far short of achieving its potential as the Federal Communications Commission has attempted to convert it to a broadband-centric program.

The FCC’s Universal Service Administrative Company estimates that only 26% of the families that are eligible for Lifeline currently participate in the program. That means that nearly three out of four low-income consumers are missing out on a benefit for which they qualify. But that doesn’t mean the program should be abandoned, as the Biden administration’s newly released infrastructure plan suggests.

Rather, now is the right opportunity to complete the transformation of Lifeline to broadband and expand its utilization by increasing the benefit to a level commensurate with the broadband marketplace and making the benefit directly available to end users. Instead, the White House fact sheet on the plan recommends price controls for internet access services with a phaseout of subsidies for low-income subscribers. That is a flawed policy prescription.

If maintaining America’s global competitiveness, building broadband infrastructure in high-cost rural areas, and maintaining the nation’s rapid deployment of 5G wireless services are national goals, the government should not set prices for internet access.

Forcing artificially low prices in the quest for broadband affordability would leave internet service providers with insufficient revenues to continue to meet the nation’s communications infrastructure needs with robust innovation and investment.

Instead, targeted changes to the Lifeline program could dramatically increase its participation rate, helping to realize the goal of connecting Americans most in need with the phone and broadband services that in today’s world have become essential to employment, education, healthcare and access to government resources.

To start, Lifeline program participation should be made much easier. Today, individuals seeking the benefit must go through a process of self-enrollment. Implementing “coordinated enrollment” — through which individuals would automatically be enrolled in Lifeline when they qualify for certain other government assistance benefits, including SNAP (the Supplemental Nutrition Assistance Program, formerly known as food stamps) and Medicaid — would help to address the severe program underutilization.

Because multiple government programs serve the same constituency, a single qualification process for enrollment in all applicable programs would generate government efficiencies and reach Americans who are missing out.

Speaking before the American Enterprise Institute back in 2014, former FCC Commissioner Mignon Clyburn said, “In most states, to enroll in federal benefit programs administered by state agencies, consumers already must gather their income-related documentation, and for some programs, go through a face-to-face interview. Allowing customers to enroll in Lifeline at the same time as they apply for other government benefits would provide a better experience for consumers and streamline our efforts.”

Second, the use of the Lifeline benefit can be made far simpler for consumers if the subsidy is provided directly to them via an electronic Lifeline benefit card account — like the SNAP program’s electronic benefit transfer (EBT) card. Not only would a Lifeline benefit card make participation in the program more convenient, but low-income

Americans would then be able to shop among the various providers and select the carrier and the precise service(s) that best suits their needs. The flexibility of greater consumer choice would be an encouragement for more program sign-ups.

And, the current Lifeline subsidy amount — $9.25 per month — isn’t enough to pay for a broadband subscription. For the subsidy to be truly meaningful, an increase in the monthly benefit is needed. Last December, Congress passed the temporary Emergency Broadband Benefit to provide low-income Americans up to a $50 per month discount ($75 per month on tribal lands) to offset the cost of broadband connectivity during the pandemic. After the emergency benefit runs out, a monthly benefit adequate to defray the cost of a broadband subscription will be needed.

In order to support more than a $9.25 monthly benefit, the funding source for the Lifeline program must also be reimagined. Currently, the program relies on the FCC’s Universal Service Fund, which is financed through a “tax” on traditional long-distance and international telephone services.

As greater use is made of the web for voice communications, coupled with less use of traditional telephones, the tax rate has increased to compensate for the shrinking revenues associated with landline phone services. A decade ago, the tax, known as the “contribution factor,” was 15.5%, but it’s now more than double that at an unsustainable 33.4%. Without changes, the problem will only worsen.

It’s easy to see that the financing of a broadband benefit should no longer be tied to a dying technology. Instead, funding for the Lifeline program could come from a “tax” shared across the entire internet ecosystem, including the edge providers that depend on broadband to reach their customers, or from direct congressional appropriations for the Lifeline program.

These reforms are realistic and straightforward. Rather than burn the program down, it’s time to rebuild Lifeline to ensure that it fulfills its original intention and reaches America’s neediest.

Facebook’s self-styled and handpicked ‘Oversight Board’ will make a decision on whether or not to overturn an indefinite suspension of the account of former president Donald Trump within “weeks”, it said in a brief update statement on the matter today.

The high profile case appears to have attracted major public interest, with the FOB tweeting that it’s received more than 9,000 responses so far to its earlier request for public feedback.

Also today it said it’s extended the deadline for comments on the case in line with its bylaws, saying its commitment to “carefully reviewing all comments” is responsible for the extension of the case timeline.

It’s not clear exactly how much more time people will have to submit views on whether or not Trump should get his social media megaphone back from Facebook. (We’ve asked.)

The Board’s statement merely notes that it will provide more information “soon”.

Trump’s indefinite suspension from Facebook and Instagram was announced by Facebook founder Mark Zuckerberg on January 7, after the then-president of the U.S. incited his followers to riot at the nation’s Capitol — an insurrection that led to chaotic and violent scenes and a number of deaths as his supporters clashed with police.

However Facebook quickly referred the decision to the FOB for review — opening up the possibility that the ban could be overturned in short order as Facebook has said it will be bound by the case review decisions issued by the Board.

After the FOB accepted the case for review it initially said it would issue a decision within 90 days of January 21 — a deadline that would have fallen next Wednesday.

However it now looks like the high profile, high stakes call on Trump’s social media fate could be pushed into next month.

It’s a familiar development in Facebook-land. Delay has been a long time feature of the tech giant’s crisis PR response in the face of a long history of scandals and bad publicity attached to how it operates its platform. So the tech giant is unlikely to be uncomfortable that the FOB is taking its time to make a call on Trump’s suspension.

After all, devising and configuring the bespoke case review body — as its proprietary parody of genuine civic oversight — is a process that has taken Facebook years already.

In related FOB news this week, Facebook announced that users can now request the board review its decisions not to remove content — expanding the Board’s potential cases to include reviews of ‘keep ups’ (not just content takedowns).

If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.

But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.

To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often-unprofitable unicorns of the world.

Recall that we’re in the midst of a slightly more turbulent IPO window than we saw during the last quarter. After seemingly watching every company’s IPO price above-range and then charge higher on opening day, several companies pulled their offerings as the second quarter started. It was a surprise.

Since then we’ve seen Compass go public, but not at quite the level of performance it might have anticipated, and, then, this week, much has happened.

What follows is a mini-digest of IPO news from the week, tagged with our best read of just how bullish (or not) the happening really was:

• UiPath’s first IPO price interval: Neutral to bearish. Though we anticipate that UiPath will set a higher IPO price interval before it begins to trade, that its first swing at-bat was a valuation cut of around $9 billion did not set our hearts aflame. And we could be wrong about it getting valued more richly before starting to trade.
  
  

GM and LG Chem announced Friday plans to build a second U.S. battery cell factory — a $2.3 billion facility in Spring Hill, Tennessee that will supply the automaker with the cells needed for the 30 electric vehicle models it plans to launch by mid decade.

Construction on the plant, which is located next to GM’s existing Spring Hill factory, will begin immediately, the company’s CEO and Chairman Mary Barra said in a press conference. The battery factory, which is expected to be complete by late 2023, and create 1,300 jobs.

Once fully operational, the joint venture’s two battery factories will have production capacity of more than 70 gigawatt hours, which LG Chem Energy Solutions CEO Jong Hyun Kim noted is two times bigger than the Tesla gigafactory in Nevada. Tesla’s factory in Sparks, Nevada, which is part of a partnership with Panasonic, has a 35 GW-hour capacity.

The foundation of GM’s shift to EVs is its Ultium platform, and the Ultium lithium-ion batteries, which will be built at the Spring Hill factory. These new batteries will use less of the rare earth material cobalt and feature a single common cell design that can be configured more efficiently for higher energy density and a smaller space than our current batteries, Barra said.

“This versatility means we can put more battery power into a wider variety of vehicles, and at a better price for customers,” Barra said. “It’s truly a revolution in electric vehicle technology that will help democratize EV ownership for millions of customers, which will change lives and change the world.”

GM has used LG Chem as a lithium-ion and electronics supplier for at least a decade. The companies began working together in 2009. That relationship deepened as GM developed and then launched the Chevy Bolt EV.  In 2019, GM and LG Chem formed a joint venture to mass produce battery cells as the automaker began to shift towards more electric vehicles. The two companies said at the time that they would invest up to a total of $2.3 billion into the new joint venture and establish a battery cell assembly plant on a greenfield manufacturing site in the Lordstown area of Northeast Ohio that will create more than 1,100 new jobs.

Steel construction began in July 2020 on the Ultium Cells LLC battery cell manufacturing facility in Lordstown, a nearly 3-million-square-foot factory that will mass produce Ultium battery cells and packs. The Lordstown factory will be able produce 30 gigawatts hours of capacity annually.

The batteries produced at the Lordstown factory along with GM’s underlying electric architecture will be used in a broad range of products across its Cadillac, Buick, Chevrolet and GMC brands, as well as the Cruise Origin autonomous shuttle that was revealed in January 2020. The Cadillac Lyriq EV flagship and an all-electric GMC Hummer, which will be revealed this fall and go into production in the fourth quarter of 2021, will use the Ultium battery system. GM plans to reveal the Lyriq at a virtual event August 6.

This modular architecture, called “Ultium,” (same as the battery) will be capable of 19 different battery and drive unit configurations, 400-volt and 800-volt packs with storage ranging from 50 kWh to 200 kWh, and front, rear and all-wheel drive configurations. At the heart of the new modular architecture will be the large-format pouch battery cells manufactured at this new factory.

Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising. It’s hard to say that a company looking to go public at a valuation north of $25 billion is a letdown, but compared to preceding levels of hype, the numbers were a bit of a shock.

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Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors; the number of unicorns being minted or repriced higher feels higher than ever, and late-stage money has never been more active in the venture-backed startup world than it has been recently.

If UiPath were about to eat about $10 billion in worth to go public, it wouldn’t be the best indicator of how some of those late-stage bets will perform.

But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.

That should either limit or close its private/public valuation gap, and, we imagine, lower a few investors’ blood pressure. Let’s look at the numbers.

UiPath’s fascinating 2020

The top-line numbers for UiPath’s 2020 are impressive. As we’ve discussed, the company grew its revenues from $336.2 million in 2019 to $607.6 million in 2020, while boosting its gross profit margin by 7 percentage points to 89% last year. That’s great!

And it improved its net margins from -155% in 2019 to just -15% in 2020. The company’s rapid growth, improving revenue quality and extreme deficit reduction were among the reasons it was a bit surprising to see its estimated public-market value come in so far underneath its final private price.

But let’s dig into the company’s quarterly results — a big thanks to the reader who sent us in this direction — to get a clearer picture of UiPath. Here’s the data:

Image Credits: UiPath filing

Level, a startup that aims to give companies a more flexible way to offer benefits to employees, has raised $27 million in a Series A funding round led by Khosla Ventures and Lightspeed Venture Partners.

Operator Collective and leading angels also participated in the financing, along with previous backers First Round Capital and Homebrew. The round was raised at a “nine-figure” valuation, according to founder and CEO Paul Aaron, who declined to be more specific.

Founded in 2018, New York City-based Level says it’s “rebuilding insurance from the ground up” via flexible networks and real-time claims with the goal of helping employers and employees get the most out of their benefit dollars. 

Employers can customize plans to do things like offer 100% coverage across treatments. The company also touts the ability to process claims in four hours. 

“That’s lightning fast when compared to 30- to 60-day claims often processed by traditional payers,” said Aaron, who as one of the first employees at Square, led the network team at Oscar Health and is an inventor of several patents in the payments space.

Level first launched employer-sponsored dental benefits in the summer of 2019 and started serving its first beta customers that fall. It also now offers vision plans. The company has more than 10,000 members from companies such as Intercom, Udemy, KeepTruckin and Thistle that have paid for care via its platform. 

“Insurance is confusing and often feels unfair. Networks restrict where you can go, billing takes weeks and you always seem to owe more than you expect,” Aaron said. “We believe paying with insurance should be as easy as any other purchase.”

Level says it is taking a full-stack approach and building end-to-end tools, from automated underwriting to real-time benefit analytics. 

It plans to launch a new insurance product aimed at “helping smaller businesses offer bigger benefits” that typically only enterprises have the ability to offer. The company also aims to help employers get money back for any unused benefits after paying a fixed amount each month. Ultimately, the goal is to be able to offer a full suite of products that will allow companies of all sizes — from two employees to 20,000 — provide better benefits for their teams. 

Level claims that its self-insured dental and vision products let companies offer more coverage to their teams while often cutting nearly 20% from their benefits budget. 

“Employers already spend so much money on benefits, and neither they nor their teams get enough out of it,” said Jana Messerschmidt from Lightspeed Venture Partners, in a written statement. “Businesses of all sizes need to compete for talent with innovative benefits that help people get more from their paychecks. Level offers a far superior employee experience, and you’re getting bang for your buck.” 

Meanwhile, Khosla’s Samir Kaul said he believes Level can do for insurance and benefits “what Square Cash did for person-to-person payments.”

Investor First Round Capital claims to have saved 47% by switching from fully insured to Level. And, Thistle says it saw 41% in savings by switching to Level. 

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

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another busy week, but that just means we had a great time putting the show together and recording it. Honestly we have a lot of fun this week, and we hope that you crack a smile while we dig through the latest as a team.

Ready? Here’s the rundown:

• The Coinbase direct listing! Here’s our notes on its S-1, its direct listing reference price, and its results. And we even wrote about the impact that it might have on other startup verticals!
• Grab’s impending SPAC! As it turns out Natasha loves SPACs now, and even Danny and Alex had very little to say that was rude about this one.
• Degreed became a unicorn, proving yet again that education for the enterprise is a booming sub-sector.
• Outschool also became an edtech unicorn, thanks to a new round led by Coatue and everyone’s rich cousin, Tiger Global. The conversation soon devolved into how Tiger Global is impacting the broader VC ecosystem, thanks to a fantastic analysis piece that you have to read here. 
• Papa raised $60 million, also from Tiger Global. What do you call tech aimed at old folks? Don’t call it elder tech, we have a brand new phrase in store. Let’s see if it catches on.
• AI chips! Danny talks the team through grokking Groq, so that we can talk about TPUs without losing our minds. He’s a good egg.
• And, finally, Slice raised more money. Not from Tiger Global. We have good things to say about it.

And that is our show! We are back on Monday morning!