Tailor Brands raises $50M, aims to be one-stop shop for small businesses to launch

Tailor Brands, a startup that automates parts of the branding and marketing process for small businesses, announced Thursday it has raised $50 million in Series C funding.

GoDaddy led the round as a strategic partner and was joined by OurCrowd and existing investors Pitango Growth, Mangrove Capital Partners, Armat Group, Disruptive VC and Whip Media founder Richard Rosenblatt. Tailor Brands has now raised a total of $70 million since its inception in 2015.

“GoDaddy is empowering everyday entrepreneurs around the world by providing all of the help and tools to succeed online,” said Andrew Morbitzer, vice president of corporate development at GoDaddy, in a written statement. “We are excited to invest in Tailor Brands — and its team — as we believe in their vision. Their platform truly helps entrepreneurs start their business quickly and easily with AI-powered logo design and branding services.”

When Tailor Brands, which launched at TechCrunch’s Startup Battlefield in 2014, raised its last round, a $15.5 million Series B, in 2018, the company was focused on AI-driven logo creation.

The company, headquartered in New York and Tel Aviv, is now compiling the components for a one-stop SaaS platform — providing the design, branding and marketing services a small business owner needs to launch and scale operations, and within minutes, Yali Saar, co-founder and CEO of Tailor Brands told TechCrunch.

Over the past year, more users are flocking to Tailor Brands; the company is onboarding some 700,000 new users per month for help in the earliest stages of setting up their business. In fact, the company saw a 27% increase in new business incorporations as the creator and gig economy gained traction in 2020, Saar said.

In addition to the scores of new users, the company crossed 30 million businesses using the platform. At the end of 2019, Tailor Brands started monetizing its offerings and “grew at a staggering rate,” Saar added. The company yielded triple-digit annual growth in revenue.

To support that growth, the new funding will be used on R&D, to double the team and create additional capabilities and functions. There may also be future acquisition opportunities on the table.

Saar said Tailor Brands is at a point where it can begin leveraging the massive amount of data on small businesses it gathers to help them be proactive rather than reactive, turning the platform into a “consultant of sorts” to guide customers through the next steps of their businesses.

“Users are looking for us to provide them with everything, so we are starting to incorporate more products with the goal of creating an ecosystem, like WeChat, where you don’t need to leave the platform at all to manage your business,” Saar said.

 

Sendlane raises $20M to convert shoppers into loyal customers

Sendlane, a San Diego-based multichannel marketing automation platform, announced Thursday it raised $20 million in Series A funding.

Five Elms Capital and others invested in the round to give Sendlane total funding of $23 million since the company was founded in 2018.

Though the company officially started three years ago, co-founder and CEO Jimmy Kim told TechCrunch he began working on the idea back in 2013 with two other co-founders.

They were all email marketers in different lines of business, but had some common ground in that they were all using email tools they didn’t like. The ones they did like came with too big of a price tag for a small business, Kim said. They set out to build their own email marketing automation platform for customers that wanted to do more than email campaigns and newsletters.

When two other companies Kim was involved in exited in 2017, he decided to put both feet into Sendlane to build it into a system that maximized revenue based on insights and integrations.

In late 2018, the company attracted seed funding from Zing Capital and decided in 2019 to pivot into e-commerce. “Based on our personal backgrounds and looking at the customers we worked with, we realized that is what we did best,” Kim said.

Today, more than 1,700 e-commerce companies use Sendlane’s platform to convert more than 100 points of their customers’ data — abandoned carts, which products sell the best and which marketing channel is working — into engaging communications aimed at driving customer loyalty. The company said it can increase revenue for customers between 20% and 40% on average.

The company itself is growing 100% year over year and seeing over $7 million in annual recurring revenue. It currently has 54 employees right now, and Kim expects to be at around 90 by the end of the year and 150 by the end of 2022. Sendlane currently has more than 20 open roles, he said.

That current and potential growth was a driver for Kim to go after the Series A funding. He said Sendlane became profitable last year, which is why it has not raised a lot of money so far. However, as the rapid adoption of e-commerce continues, Kim wants to be ready for the next wave of competition coming in, which he expects in the next year.

He considers companies like ActiveCampaign and Klaviyo to be in line with Sendlane, but says his company’s differentiator is customer service, boasting short wait times and chats that answer questions in less than 15 seconds.

He is also ready to go after the next vision, which is to unify data and insights to create meaningful interactions between customers and retailers.

“We want to start carving out a new space,” Kim added. “We have a ton of new products coming out in the next 12 to 18 months and want to be the single source for customer journey data insights that provides flexibility for your business to grow.”

Two upcoming tools include Audiences, which will unify customer data and provide insights, and an SMS product for two-way communications and enabled campaign-level sending.

 

Andreessen Horowitz funds Vitally’s $9M round for customer experience software

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.”

 

Ethos picks up $100M at a $2.7B+ valuation for a big data platform to improve life insurance accessibility

More than half of the U.S. population has stayed away from considering life insurance because they believe it’s probably too expensive, and the most common way to buy it today is in person. A startup that’s built a platform that aims to break down those conventions and democratize the process by making life insurance (and the benefits of it) more accessible is today announcing significant funding to fuel its rapidly growing business.

Ethos, which uses more than 300,000 data points online to determine a person’s eligibility for life insurance policies, which are offered as either term or whole life packages starting at $8/month, has picked up $100 million from a single investor, SoftBank Vision Fund 2. Peter Colis, Ethos’s CEO and co-founder, said that the funding brings the startup’s valuation to over $2.7 billion.

This is a quick jump for the company: It was only two months ago that Ethos picked up a $200 million equity round at a valuation of just over $2 billion.

It has now raised $400 million to date and has amassed a very illustrious group of backers. In addition to SoftBank they include General Catalyst, Sequoia Capital, Accel, GV, Jay-Z’s Roc Nation, Glade Brook Capital Partners, Will Smith and Robert Downey Jr.

This latest injection of funding — which will be used to hire more people and continue to expand its product set into adjacent areas of insurance like critical illness coverage — was unsolicited, Colis said, but comes on the heels of very rapid growth.

Ethos — which is sold currently only in the U.S. across 49 states — has seen both revenues and user numbers grow by over 500% compared to a year ago, and it’s on track to issue some $20 billion in life insurance coverage this year. And it is approaching $100 million in annualized growth profit. Ethos itself is not yet profitable, Colis said.

There are a couple of trends going on that speak to a wide opportunity for Ethos at the moment.

The first of these is the current market climate: Globally we are still battling the COVID-19 global health pandemic, and one impact of that — in particular given how COVID-19 has not spared any age group or demographic — has been more awareness of our mortality. That inevitably leads at least some part of the population to considering something like life insurance coverage that might not have thought about it previously.

However, Colis is a little skeptical on the lasting impact of that particular trend. “We saw an initial surge of demand in the COVID period, but then it regressed back to normal,” he said in an interview. Those who were more inclined to think about life insurance around COVID-19 might have come around to considering it regardless: It was being driven, he said, by those with pre-existing health conditions going into the pandemic.

That, interestingly, brings up the second trend, which goes beyond our present circumstances, and Colis believes will have the more lasting impact.

While there have been a number of startups, and even incumbent providers, looking to rethink other areas of insurance such as car, health and property coverage, life insurance has been relatively untouched, especially in some markets like the U.S. Traditionally, someone taking out life insurance goes through a long vetting process, which is not all carried out online and can involve medical examinations and more, and yes, it can be expensive: The stereotype you might best know is that only wealthier people take out life insurance policies.

Much like companies in fintech that have rethought how loan applications (and payback terms) can be rethought and evaluated afresh using big data — pulling in a new range of information to form a picture of the applicant and the likelihood of default or not — Ethos is among the companies that is applying that same concept to a different problem. The end result is a much faster turnaround for applications, a considerably cheaper and more flexible offer (term life insurance lasts only as long as a person pays for it), and generally a lot more accessibility for everyone potentially interested. That pool of data is growing all the time.

“Every month, we get more intelligent,” said Colis.

There is also the matter of what Ethos is actually selling. The company itself is not an insurance provider but an “insuretech” — similar to how neobanks use APIs to integrate banking services that have been built by others, which they then wrap with their own customer service, personalization and more — Ethos integrates with third-party insurance underwriters, providing customer service, more efficient onboarding (no in-person medical exams for example) and personalization (both in packages and pricing) around them. Given how staid and hard it is to get more traditional policies, it’s essentially meant completely open water for Ethos in terms of finding and securing new customers.

Ethos’s rise comes at a time when we are seeing other startups approaching and rethinking life insurance also in the U.S. and further afield. Last week, YuLife in the U.K. raised a big round to further build out its own take on life insurance, which is to sell policies that are linked to an individual’s own health and wellness practices — the idea being that this will make you happier and give more reason to pay for a policy that otherwise feels like some dormant investment; but also that it could help you live longer (Sproutt is another also looking at how to emphasize the “life” aspect of life insurance). Others like  DeadHappy and BIMA are, like Ethos, rethinking accessibility of life insurance for a wider set of demographics.

There are some signs that Ethos is catching on with its mission to expand that pool, not just grow business among the kind of users who might have already been considering and would have taken out life insurance policies. The startup said that more than 40% of its new policy holders in the first half of 2021 had incomes of $60,000 or less, and nearly 40% of new policy holders were under the age of 40. The professions of those customers also speak to that democratization: The top five occupations, it said, were homemaker, insurance agent, business owner, teacher and registered nurse.

That traction is likely one reason why SoftBank came knocking.

“Ethos is leveraging data and its vertically integrated tech stack to fundamentally transform life insurance in the U.S.,” said Munish Varma, managing partner at SoftBank Investment Advisers, in a statement. “Through a fast and user-friendly online application process, the company can accurately underwrite and insure a broad segment of customers quickly. We are excited to partner with Peter Colis and the exceptional team at Ethos.”

Yoobic raises $50M for its chat and communications app app aimed at frontline and service workers

Slack set the standard in many ways for what knowledge workers want and expect out of a workplace collaboration app these days, but a lot has been left on the table when it comes to frontline workers. Today, one of the software companies that has built a popular app for that frontline crowd to become a part of the conversation is announcing a funding round that speaks to the opportunity to do more.

Yoobic, which provides an app for frontline and service workers to manage tasks, communicate with each other and management, and also go through training, development and and other e-learning tasks, has picked up $50 million.

Highland Europe led the round, a Series C, with previous investors Felix Capital, Insight Partners, and a family office advised by BNF Capital Limited also participating. (Felix led Yoobic’s Series A, while Insight Partners led the Series B in 2019.) Yoobic is not discussing valuation but from what I understand from a reliable source, it is now between $300 million and $400 million.

The funding comes at a time of strong growth for the company.

Yoobic works with some 300 big brands in 80 countries altogether covering a mammoth 335,000 locations in sectors like retail, hospitality, distribution and manufacturing. Its customers include the likes of the Boots pharmacy chain, Carrefour supermarkets, Lancôme, Lacoste, Logitech, Lidl, Peloton, Puma, Vans, VF Corp, Sanofi, Untuckit, Roots, Canada Goose, Longchamp, Lidl, Zadig & Voltaire, and Athletico.

But that is just the tip of the iceberg. It’s estimated that there are 2.7 billion “deskless” (frontline and service) workers globally, accounting for no less than 80% of the world’s workforce. But here is the shocker: only 1% of IT budgets is currently spent on them. That speaks of huge opportunity for startups to build more here, but only if they (or the workers themselves( can manage to convince those holding the purse strings that it’s worth the investment.

So to that end, the funding will be used to hire more talent, to expand geographically — founded in London, the company is now headquartered in New York — and to expand its product. Specifically, Yoobic plans to build more predictive analytics to improve responsiveness and give more insight to companies about their usage, and to build out more tools to cater to specific verticals in the world of frontline work, such as manufacturing, logistics and transportation, Fabrice Haiat, CEO and co-founder of YOOBIC, told TechCrunch in an interview.

Yoobic started life several years ago with a focus specifically on retail — an area that it was concentrating on as recently as its last round in 2019, providing tools to help with merchandizing, communicating about stock between stores and more. While retail is still a sizeable part of its business, Yoobic saw an opening to expand into a wider pool of verticals with frontline and service employees that had many of the same demands as retail.

That turned out to be a fortunate pivot as the pandemic struck.

“Covid-19 had a big impact on us,” said Haiat, who co-founded the company with brothers Avi and Gilles. “The first two months we were in panic mode. But what happened was that businesses realized that frontline employees were critical to the success of their operations.”

Since Covid hit last year, he said that activity on the platform rose by 200%, and earlier this year it passed 1 million activities per month on its platform. “We are growing like crazy,” Haiat said.

There are a number of reasons why building for frontline workers is important. Roaming round without a fixed desk, spending more time with customers than looking at a screen or in meetings, and generally having different business priorities and practices are just a few of the reasons why software built for the former doesn’t necessarily work for the latter.

There have been a number of companies that have aimed to build services to address that gap — they stretch back years, in fact. And there have been some interesting moves to consolidate in the market among those building some of the more successful tools for people in the field: Crew recently got acquired by Square; ServiceMax acquired Zinc; and Facebook’s Workplace has been on a march to amass some of the world’s biggest companies as customers of its own communications platform with a strong play for frontline workers.

Haiat argues that while all of these are fine and well, none of them understand the full scope of the kinds of tools that those in the field really need. That ranges from practical features (such as a way to handle inventory management), through to features that companies would love to have for their employees as long as they can be delivered in an easy way (such as professional development and training). In that context, the basic communications that all of the current crop of apps for frontline workers offer feel like basic tablestakes.

That close understanding of the gap in the market and what is needed to fix it is one reason why the company has seen such strong growth, as well as interest from investors.

“We’re excited to partner with YOOBIC, which, thanks to the highly impressive team led by Fabrice, Avi and Gilles, has clearly established itself as a leader in the digital workplace space with demonstrable market traction and impressive growth.” said Jean Tardy-Joubert, partner at Highland Europe, in a statement. “While companies have historically focused on digital investments for deskbound employees, the world is becoming distributed and decentralized.  We anticipate a seismic shift that will see huge resources, technology, and capital shifted toward frontline teams.” Tardy-Joubert will be joining the YOOBIC Board with this round.

Serial Swatter Who Caused Death Gets Five Years in Prison

A 18-year-old Tennessee man who helped set in motion a fraudulent distress call to police that led to the death of a 60-year-old grandfather in 2020 was sentenced to 60 months in prison today.

60-year-old Mark Herring died of a heart attack after police surrounded his home in response to a swatting attack.

Shane Sonderman, of Lauderdale County, Tenn. admitted to conspiring with a group of criminals that’s been “swatting” and harassing people for months in a bid to coerce targets into giving up their valuable Twitter and Instagram usernames.

At Sonderman’s sentencing hearing today, prosecutors told the court the defendant and his co-conspirators would text and call targets and their families, posting their personal information online and sending them pizzas and other deliveries of food as a harassment technique.

Other victims of the group told prosecutors their tormentors further harassed them by making false reports of child abuse to social services local to the target’s area, and false reports in the target’s name to local suicide prevention hotlines.

Eventually, when subjects of their harassment refused to sell or give up their Twitter and Instagram usernames, Sonderman and others would swat their targets — or make a false report to authorities in the target’s name with the intention of sending a heavily armed police response to that person’s address.

For weeks throughout March and April 2020, 60-year-old Mark Herring of Bethpage, Tenn. was inundated with text messages asking him to give up his @Tennessee Twitter handle. When he ignored the requests, Sonderman and his buddies began having food delivered to Herring’s home via cash on delivery.

At one point, Sonderman posted Herring’s home address in a Discord chat room used by the group, and a minor in the United Kingdom quickly followed up by directing a swatting attack on Herring’s home.

Ann Billings was dating Mr. Herring and was present when the police surrounded his home. She recalled for the Tennessee court today how her friend died shortly thereafter of a heart attack.

Billings said she first learned of the swatting when a neighbor called and asked why the street was lined with police cars. When Mr. Herring stepped out on the back porch to investigate, police told him to put his hands up and to come to the street.

Unable to disengage a lock on his back fence, Herring was instructed to somehow climb over the fence with his hands up.

“He was starting to get more upset,” Billings recalled. “He said, ‘I’m a 60-year-old fat man and I can’t do that.’”

Billings said Mr. Herring then offered to crawl under a gap in the fence, but when he did so and stood up, he collapsed of a heart attack. Herring died at a nearby hospital soon after.

Mary Frances Herring, who was married to Mr. Herring for 28 years, said her late husband was something of a computer whiz in his early years who secured the @Tennessee Twitter handle shortly after Twitter came online. Internet archivist Jason Scott says Herring was the creator of the successful software products Sparkware and QWIKMail; Scott has 2 hours worth of interviews with Herring from 20 years ago here.

Perhaps the most poignant testimony today came when Ms. Herring said her husband — who was killed by people who wanted to steal his account — had a habit of registering new Instagram usernames as presents for friends and family members who’d just had children.

“If someone was having a baby, he would ask them, ‘What are your naming the baby?’,” Ms. Herring said. “And he would get them that Instagram name and give it to them as a gift.”

Valerie Dozono also was an early adopter of Instagram, securing the two-letter username “VD” for her initials. When Dozono ignored multiple unsolicited offers to buy the account, she and many family and friends started getting unrequested pizza deliveries at all hours.

When Dozono continued to ignore her tormentors, Sonderman and others targeted her with a “SIM-swapping attack,” a scheme in which fraudsters trick or bribe employees at wireless phone companies into redirecting the target’s text messages and phone calls to a device they control. From there, the attackers can reset the password for any online account that allows password resets via SMS.

But it wasn’t the subsequent bomb threat that Sonderman and friends called in to her home that bothered Dozono most. It was the home invasion that was ordered at her address using strangers on social media.

Dozono said Sonderman created an account on Grindr — the location-based social networking and dating app for gay, bi, trans and queer people — and set up a rendezvous at her address with an unsuspecting Grindr user who was instructed to waltz into her home as if he was invited.

“This gentleman was sent to my home thinking someone was there, and he was given instructions to walk into my home,” Dozono said.

The court heard from multiple other victims targeted by Sonderman and friends over a two-year period. Including Shane Glass, who started getting harassed in 2019 over his @Shane Instagram handle. Glass told the court that endless pizza deliveries, as well as SIM swapping and swatting attacks left him paranoid for months that his assailant could be someone stalking him nearby.

Judge Mark Norris said Sonderman’s agreement to plead to one count of extortion by threat of serious injury or damage carries with it a recommended sentence of 27 to 33 months in prison. However, the judge said other actions by the defendant warranted up to 60 months (5 years) in prison.

Sonderman might have been eligible to knock a few months off his sentence had he cooperated with investigators and refrained from committing further crimes while out on bond.

But prosecutors said that shortly after his release, Sonderman went right back to doing what he was doing when he got caught. Investigators who subpoenaed his online communications found he’d logged into the Instagram account “FreeTheSoldiers,” which was known to have been used by the group to harass people for their social media handles.

Sonderman was promptly re-arrested for violating the terms of his release, and prosecutors played for the court today a recording of a phone call Sonderman made from jail in which he brags to a female acquaintance that he wiped his mobile phone two days before investigators served another search warrant on his home.

Sonderman himself read a lengthy statement in which he apologized for his actions, blaming his “addiction” on several psychiatric conditions — including bipolar disorder. While his recitation was initially monotone and practically devoid of emotion, Sonderman eventually broke down in tears that made the rest of his statement difficult to hear over the phone-based conference system the court made available to reporters.

The bipolar diagnoses was confirmed by his mother, who sobbed as she simultaneously begged the court for mercy while saying her son didn’t deserve any.

Judge Norris said he was giving Sonderman the maximum sentenced allowed by law under the statute — 60 months in prison followed by three years of supervised release, but implied that his sentence would be far harsher if the law permitted.

“Although it may seem inadequate, the law is the law,” Norris said. “The harm it caused, the death and destruction….it’s almost unspeakable. This is not like cases we frequently have that involve guns and carjacking and drugs. This is a whole different level of insidious criminal behavior here.”

Sonderman’s sentence pales in comparison to the 20-year prison time handed down in 2019 to serial swatter Tyler Barriss, a California man who admitted making a phony emergency call to police in late 2017 that led to the shooting death of an innocent Kansas resident.

Zenput raises $27M Series C to keep multiunit operations flowing no matter the location

Ensuring food safety compliance can be challenging at one restaurant, let alone across thousands of restaurants. Zenput has developed technology aimed at making sure operating procedures are quickly adapted so that businesses maintain quality.

The San Francisco-based operations execution company raised $27 million in Series C financing, led by Golub Capital, to continue developing its application to automate operation procedures like tracking food safety, public health protocols and changing market conditions.

Restaurants, convenience stores and grocery chain customers can use Zenput to update all of their locations — at the same time — with new processes, promotional campaigns and key initiatives while also gathering data and insights from those locations to find opportunities for improvement.

Joining Golub in the round were existing investors, including Jackson Square Ventures, MHS Capital and Goldcrest Capital. This brings the company’s total funding to more than $47 million, co-founder and CEO Vladik Rikhter told TechCrunch.

Greg Gretsch, founding partner and managing director at Jackson Square Ventures, led Zenput’s Series A round in 2016 and had met Rikhter a year prior. At the time, Rikhter was in the early stages of developing what Gretsch called an organization task manager. While he didn’t invest then, he kept in touch with Rikhter and saw “how much of a grinder he was” in expanding the platform.

“When he sees a problem, he works and works to solve it,” Gretsch said. “Whenever you have a multilocation business, you have a remote management problem. You’re trying to manage everything so your weakest link can perform as best as the best link, but you need a platform to manage that so that you can hold stores accountable to improve the end product.”

Front-line workers use Zenput’s mobile app for onboarding at the beginning of the day and to track safety compliance and fresh food checks, something Rikhter said was historically challenging once a business had thousands of locations. The app can also alert when food has been left out too long to assist in lowering food waste rates.

Since its founding in 2012, Zenput is currently used by customers like Chipotle, Domino’s, P.F. Chang’s, Five Guys, Smart & Final and 7-Eleven in over 60,000 locations across more than 100 countries.

The Series C round comes as the company saw 100% revenue growth over the past year. At the same time, product usage more than doubled at stores, and to date, 1.5 billion questions were answered through Zenput, a figure Rikhter expects to double over the next 12 months as locations aim to find ways to do more things remotely.

“The pandemic inadvertently helped us,” he added. “Initially, it was rough, but then a lot of the brands we dealt with needed to expedite technology and saw an opportunity to invest in our technology. We have more products coming because there is more that can be done to make sure every meal is a safe meal.”

Much of the new funding will go toward building those new products and capabilities and into marketing to expand the customer base. The company recently launched an expansion of its Zenput for Franchisors tool and updates to its food prep labeling and temperature monitoring functions.

Rikhter also plans to double Zenput’s employees over the 16 to 18 months, especially in the product engineering and marketing areas.

All of that is to be ready for customer demand as restaurants, convenience stores and grocery chains do more to change up the way they do business in the future.

“I wouldn’t be surprised to show up at a restaurant and see changes made daily on protocols, which will drive a lot more of the journey than before,” Rikhter said. “We see more operators flexing muscles they didn’t know they had, as it relates to promotions and products, so they can grow faster and run totally different operational features and offer more options for customers.”

 

Commercial real estate lending startup Lev brings in $30M on a $130M valuation

Commercial real estate has been slow to embrace technology; though it has an addressable financing market of more than $40 billion, putting together a deal is still mostly manual, paper-heavy and complicated.

New York-based Lev is taking on this problem by automating workflows online and gathering hundreds of millions of data points into machine learning software to ensure financing accuracy. To do this, the commercial real estate financing transaction platform raised $30 million to give it a $130 million valuation just two years into its inception.

The latest financing comes four months after the company raised $10 million in seed funding led by NFX. Greenspring led the latest round, with participation from First American Title. Existing investors NFX, Canaan Partners, JLL Spark, Animo Ventures and Ludlow Ventures also joined in to give Lev total investments of more than $34 million, according to Crunchbase data.

Lev founder and CEO Yaakov Zar previously co-founded Boston-based Dispatch, which built tools for home services businesses. It was when he and his wife went through the homebuying process — and their mortgage fell through — that Zar decided to look at real estate financing.

He channeled his frustration into becoming a licensed mortgage loan originator. After relocating to New York, Zar was helping a friend at a nonprofit organization refinance their building and got a firsthand look at what he said was a fragmented commercial real estate mortgage industry.

Companies like Blend are addressing the problem of real estate lending, Zar told TechCrunch, but very few are focusing on commercial real estate, where lending is sensitive to interest rates and total amortization. In addition, property owners have a burden of refinancing every five to 10 years.

“Legacy businesses like JLL, which is an investor, Cushman Wakefield and CBRE work on lending, but they are much more ‘relationship focused’ than tech focused,” Zar said. “We think that it is a necessary part because the deals are so large and complex that you need a relationship for them, but transactions less than $1 billion are pretty straightforward. On experience and product, no one is close to us.”

Initially, Zar and his team wanted to build the “Rocket Mortgage of commercial real estate lending,” but found that to be difficult because real estate brokers are putting together their own pitch books for lenders. Instead, Lev is building a technology platform of more than 5,000 lenders with information on what projects they like to finance. It then analyzes a customer’s portfolio and connects them in minutes with the right lender, taking 1% of the loan amount for each transaction as payment. Lev is also working to be able to close deals online.

Zar wasn’t looking for funding when he was approached by investors, but said he was introduced to some people who liked the company’s growth and trajectory and decided to accept the funding offer.

He intends to use the new funding on product development, with the aim of giving a term sheet in seconds and closing a loan in seven days. Right now it can take a week or two to get the term sheet and 45 to 90 days to close a loan.

The company has about 40 employees currently in its New York headquarters, Miami R&D center, Los Angeles outpost and remotely. Continued investments will be made to expand the team.

Lev grew 10 times in volume in the past year, closing approximately $100 million of loans in 2020. Zar expects to close over $1 billion in 2021.

“Customers come back to us repeatedly, and there are a ton of referrals,” Zar said. “We want to be the platform on which capital market transactions are processed. You need an advantage to network and find great deals. I don’t want to mess with that, but when you find it, bring it to us, we will close it and provide the asset management with the best option to close online and manage the deal from a single platform.”

Meanwhile, Pete Flint, general partner at NFX, told TechCrunch that he got to know the Lev team over the last 18 months, checking in on the company during various stages of the global pandemic, and was impressed at how the company navigated it.

As co-founder of Trulia, he saw firsthand the problems in the real estate industry over search and discovery, but as that problem was being solved, the focus shifted to financing. NFX is also an investor in Tomo and Ribbon, which both focus on residential financing.

Wanting to see what opportunities were on the commercial real estate side, Flint heard Lev’s name come up more and more among brokers and industry insiders.

“As we got to know the Lev team, we recognized that they were the best team out there to solve this problem,” Flint said. “We are also among an amazing group of people complementing the round. The folks that are deep industry insiders will put a helpful lens on strategy and business development opportunities.”

 

Pillar VC closes $192M for two funds targeting SaaS, crypto, biotech, manufacturing

As its name suggests, venture firm Pillar VC is focused on building “pillar” companies in Boston and across the Northeast.

The Boston-based seed-stage firm closed a raise of $192 million of capital that was split into two funds, $169 million for Pillar III and $23 million for Pillar Select. More than 25 investors are backing the new fund, including portfolio founders.

Jamie Goldstein, Sarah Hodges and Russ Wilcox are Pillar VC’s three partners, and all three lead investments for Pillar. The trio all have backgrounds as entrepreneurs: Goldstein, who has spent the past two decades in VC, co-founded speech recognition company PureSpeech, which was acquired by Voice Control Systems; Hodges was at online learning company Pluralsight; and Wilcox was CEO of electronic paper company E Ink, which he sold in 2009.

Pillar typically invests in a range of enterprise and consumer startups and aims to target Pillar III at startups focused on biology, enterprise SaaS, AI/ML, crypto, fintech, hardware, manufacturing and logistics. The firm will make pre-seed investments of $50,000 to $500,000 and seed-round investments of $2 million to $6 million.

One of the unique aspects of the firm is that it will buy common stock so that it will be aligned with founders and take on the same risks, Goldstein told TechCrunch.

The firm, founded in 2016, already has 50 portfolio companies from its first two funds — Pillar I, which raised $57 million, and Pillar $100 million. These include cryptocurrency company Circle, which announced a SPAC earlier this month, 3D printing company Desktop Metal that went public, also via SPAC, last year, and PillPack, which was bought by Amazon in 2018.

“Pillar is an experiment, answering the question of ‘what would happen if unicorn CEOs came in and helped bootstrap the next generation’,” Wilcox said. “The experience is working, and Pillar does what VCs ought to do, which is back first-of-its-kind ideas.”

In addition to leading investments, Hodges leads the Pillar VC platform for the firm’s portfolio companies. Many of the portfolio companies are spinouts from universities, and need help turning that technology into a company. Pillar provides guidance to recruit a CEO or partner on the business side, leadership development, recruit talent and makes introductions to potential customers.

Pillar also intends to invest a third of the new fund into that biology category, specifically looking at the convergence of life science and technology, Wilcox said.

In its second fund, the firm started Petri, a pre-seed bio accelerator focused on biotech, and brought in founders using computation and engineering to develop technologies around the areas of agriculture, genetics, cell and gene therapies, medical data and drug discovery. The third fund will continue to support the accelerator through both pre-seed and seed investments.

The first investments from Pillar III are being finalized, but Hodges expects to infuse capital into another 50 companies.

“We are super bullish on Boston,” she added. “So many companies here are growing to be household names, and an exciting energy is coming out.”

 

How we built an AI unicorn in 6 years

Today, Tractable is worth $1 billion. Our AI is used by millions of people across the world to recover faster from road accidents, and it also helps recycle as many cars as Tesla puts on the road.

And yet six years ago, Tractable was just me and Raz (Razvan Ranca, CTO), two college grads coding in a basement. Here’s how we did it, and what we learned along the way.

Build upon a fresh technological breakthrough

In 2013, I was fortunate to get into artificial intelligence (more specifically, deep learning) six months before it blew up internationally. It started when I took a course on Coursera called “Machine learning with neural networks” by Geoffrey Hinton. It was like being love struck. Back then, to me AI was science fiction, like “The Terminator.”

Narrowly focusing on a branch of applied science that was undergoing a paradigm shift which hadn’t yet reached the business world changed everything.

But an article in the tech press said the academic field was amid a resurgence. As a result of 100x larger training data sets and 100x higher compute power becoming available by reprogramming GPUs (graphics cards), a huge leap in predictive performance had been attained in image classification a year earlier. This meant computers were starting to be able to understand what’s in an image — like humans do.

The next step was getting this technology into the real world. While at university — Imperial College London — teaming up with much more skilled people, we built a plant recognition app with deep learning. We walked our professor through Hyde Park, watching him take photos of flowers with the app and laughing from joy as the AI recognized the right plant species. This had previously been impossible.

I started spending every spare moment on image classification with deep learning. Still, no one was talking about it in the news — even Imperial’s computer vision lab wasn’t yet on it! I felt like I was in on a revolutionary secret.

Looking back, narrowly focusing on a branch of applied science undergoing a breakthrough paradigm shift that hadn’t yet reached the business world changed everything.

Search for complementary co-founders who will become your best friends

I’d previously been rejected from Entrepreneur First (EF), one of the world’s best incubators, for not knowing anything about tech. Having changed that, I applied again.

The last interview was a hackathon, where I met Raz. He was doing machine learning research at Cambridge, had topped EF’s technical test, and published papers on reconstructing shredded documents and on poker bots that could detect bluffs. His bare-bones webpage read: “I seek data-driven solutions to currently intractable problems.” Now that had a ring to it (and where we’d get the name for Tractable).

That hackathon, we coded all night. The morning after, he and I knew something special was happening between us. We moved in together and would spend years side by side, 24/7, from waking up to Pantera in the morning to coding marathons at night.

But we also wouldn’t have got where we are without Adrien (Cohen, president), who joined as our third co-founder right after our seed round. Adrien had previously co-founded Lazada, an online supermarket in South East Asia like Amazon and Alibaba, which sold to Alibaba for $1.5 billion. Adrien would teach us how to build a business, inspire trust and hire world-class talent.

Find potential customers early so you can work out market fit

Tractable started at EF with a head start — a paying customer. Our first use case was … plastic pipe welds.

It was as glamorous as it sounds. Pipes that carry water and natural gas to your home are made of plastic. They’re connected by welds (melt the two plastic ends, connect them, let them cool down and solidify again as one). Image classification AI could visually check people’s weld setups to ensure good quality. Most of all, it was real-world value for breakthrough AI.

And yet in the end, they — our only paying customer — stopped working with us, just as we were raising our first round of funding. That was rough. Luckily, the number of pipe weld inspections was too small a market to interest investors, so we explored other use cases — utilities, geology, dermatology and medical imaging.