05 Sep

WSJ reports that Theranos will finally dissolve

Theranos is reportedly finally closing down for good, nearly three years after a Wall Street Journal investigation called its blood testing technology into question. The WSJ said the company, whose dramatic downfall spawned a best-selling book that’s set to be filmed with Jennifer Lawrence starring as Theranos founder and CEO Elizabeth Holmes, sent shareholders an email saying it will formally dissolve and seek to pay unsecured creditors its remaining cash in the coming months.

Holmes resigned as CEO in June after she and Theranos’ former president, Ramesh “Sunny” Balwani, were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud in June.

Both Holmes and Balwani had already been charged with fraud by the Securities and Exchange Commission (the criminal charges are separate from the civil ones filed by the SEC). In its complaint, the SEC said the two engaged in “an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance,” which ultimately enabled them to raise more than $700 million from investors.

Holmes and the SEC settled the charges by having Holmes agree to pay a $500,000 penalty and be barred from serving as an officer or director of a public company for 10 years. She was also required to return the remaining 18.9 million shares she obtained while engaging in fraud and relinquish voting control of Theranos.

TechCrunch has sent an email to Theranos’ public relations address asking for comment.


Source: TechCrunch – Startups

07 Aug

Don’t fear the big company ‘kill zones’

Do you worry about the so-called “kill zones” of big tech companies? The Economist thinks you should. The theory basically suggests that if your product or service is anyway threatening or accretive to one of these incumbents,  they will either force-buy your company or clone it and destroy your market.

Any entrepreneur that believes this should probably pack up now before it’s too late —  if it’s not a “kill-shot,” it will be some other perceived death-knell that ruins your company.

Starting a company has never been easier. But growing a sustainable business is still difficult  —  as it should be. If you build something customers will pay for ,  you’re going to attract competition from copycats and incumbents. Consider it another type of validation, like product-market fit: competitors think we’re right.

Welcome to being an entrepreneur  —  you are going to be constantly battling  –  lack of cash, lack of customers, aggressive competition, better-funded competitors, underperforming staff, slow-moving sales cycle, or some other as-yet-unknown. The list of pitfalls is long. But enough willpower and perseverance — “blood, sweat and tears” —  will get you to the other side. Eventually. Remember  –  the product of an overnight success is years of hard work.

If this is sounds too daunting  –  don’t do it!

If you enter a market large enough, with deep pocketed and dominant incumbents, you have your work cut out for you. Maybe a nice UI and faster workflow attracted customers and some early adopters  – but guess what  – they are copyable features. Features alone are rarely enough to win a defensible market position.

Try to ignore advice that says you should focus on building the best product as your differentiator — this does not set you up with the highest chance of success. Instead, focus on finding and serving a targeted segment of customers, with a unique set of needs, and tailor your product and service experience specifically for them.

It’s easy for features to be copied  –  but you can’t be both custom and generic at the same time. Custom is a great approach that new entrants can take to get a toehold in a larger market with larger players that must be generic (i.e. Salesforce is a generic CRM, but there are lots of vertical CRMs that successfully compete  — Wise Agent for realtors, Lead Heroes for health insurance).

Presenting a Total Addressable Market (TAM) is the bane of potentially good startups that have been schooled in “anything less than a billion-dollar opportunity isn’t interesting.” Maybe we should reframe it as Potentially Ownable Market (POM). What are the details you can build in the beginning — where your tailored approach gives you instant leadership?

Project management for chefs

Let’s use project management as an example. Maybe a new entrant starts as an app for restaurants, which helps chefs build new menus. Each task list is a “recipe,” each recipe has “ingredients,” with amounts and timing, kitchen location, suppliers, alternatives and “garnishes and sauces.” The app integrates with the stock system and POS, and helps chefs predict inventory needs and staffing based on recipe times/complexity.

The founder has looked around and this is the only project management app that focuses on chefs, giving him an instant potentially ownable market. The business might be able to thrive in this segment alone and become the dominant player with its own kill zone.

Maybe this is the first step; the company gets profitable early growth and becomes sustainable, which funds development to grow the business into other vertical and complementary areas. Over time the business will grow into a large TAM  —  a far better approach than starting off in a large market with clear winners already.

Avoid the battle entirely by creating your own category.


Source: TechCrunch – Startups

11 Jul

GrubMarket gobbles up $32M led by GGV for its healthy grocery ordering and delivery service

As consumers become more discerning about the food they eat, a wave of startups has emerged that is catering to that demand with convenient alternatives to the more ubiquitous options that are available today. One of these, GrubMarket — which sources organic and healthy food directly from producers and then delivers it to other businesses (Whole Foods is a customer) as well as consumers at a discount of 20-60 percent over other channels — is today announcing a $32 million round to grow its already profitable business, including making acquisitions and expanding on its own steam as it eyes a public listing.

“We are looking to buy companies to make more revenues ahead of an upcoming IPO,” said Mike Xu, the founder and CEO. He said GrubMarket is “in proactive steps” to expand from its home base in California to the East Coast, starting in New York and New Jersey, by October this year. The plan, he said, will be to file with the SEC sometime between the end of this year and early 2019, with the IPO taking place in the second half of 2019.

E-commerce, and in particular food-related businesses with perishable items and associated waste, can be tricky when it comes to margins, and indeed, there have been many casualties in the world of food startups. Xu said in an interview that GrubMarket is already profitable and working at a $100 million run rate.

One of the reasons it’s profitable may also be the same reason you may have never heard of GrubMarket. Currently, between 60 and 70 percent of its business is in the B2B space. Xu says that customers number in the thousands and include offices, grocery stores and restaurants across the San Francisco Bay Area, Los Angeles, Orange County and San Diego.

And so, if you don’t know GrubMarket, you might know some of its customers, which include all WeWorks between San Diego and San Francisco, Whole Foods, Blue Apron, Hello Fresh and Chipotle. GrubMarket has also cornered some very specific niches: It has become the biggest mushroom supplier in all of Northern California, and it’s the biggest supplier of Hawaiian farm produce in the Bay Area.

Another point in the company’s favor is the technology it uses. Working directly with farmers and other producers, GrubMarket has built apps that allow it and its partners to manage the logistics of the business in an efficient way. The idea will be to bring more AI to the platform over time: for example, to be able to run better modelling to figure out how much fruit and veg might sell during a given season, and how to price items.

GrubMarket also is dabbling in areas that you might not normally associate with a grocery-on-demand delivery company: it built an educational app called Farmbox, which — when you play it — can be used to collect points to spend on GrubMarket; and it’s also exploring how blockchain technology can be used in a “next-generation open platform for direct farm-to-table.”

Xu says that as the company continues to grow, it will shift more into direct-to-consumer deliveries to complement its wholesale business.

This latest round is a mixture of equity and debt and is being led by GGV with other previous investors Fusion Fund (formerly New Gen Capital) and Great Oaks Venture Capital participating, along with new investors Max Ventures, Castor Ventures, Bascom Ventures, Millennium Technology Value Partner, Trinity Capital Investment, Investwide Capital and others. The company is not publicly disclosing its valuation; it has raised around $64 million to date.

Many eyes are on Amazon these days, and what moves it might make next in groceries after acquiring Whole Foods, ramping up its own Pantry offerings, courting restaurants for delivery and making its own meal kits. This is not a question that keeps up Xu at night, however.

“Food is the largest and biggest opportunity in e-commerce,” he said, estimating that today the total value for the global food and agricultural industry is around $9 trillion (versus $8 trillion in 2017), with only about one percent of buying done online. “That’s a big enough opportunity to have a few giant companies, and not just Amazon.”

It’s also an opportunity that could sustain some slightly smaller companies, too: One of my favorite e-commerce businesses in England is a service that I’ve been using for years, an organic grocery delivery called Abel & Cole that brings us a box of organic fruit and vegetables (and whatever else I order on top of that) each week. Like GrubMarket, it’s working directly with smaller producers who might have otherwise found it hard-going to find a way of selling their produce directly to buyers (and buyers would have found it hard-going to ever buy directly from these producers). Unlike GrubMarket, it takes a more modest approach that doesn’t involve eventually becoming a leviathan itself. May they all be around for years to come.


Source: TechCrunch – Startups

12 Jun

Jane.ai raises $8.4M to bring a digital assistant into your office software

Even as AI assistants delve deeper into consumer hardware, companies still seem a bit reticent to bring them deep into their office software workflows.

Jane.ai is aiming to bring natural language processing and intelligence into an employee-facing solution that lets people query a digital assistant to give them information about documents, meetings and general company knowledge.

The St. Louis startup announced today that it is raising an $8.4 million Series A from private investors to power this vision.

Jane lives inside apps like Slack and Skype for Business (in addition to its own web app) where users are already chatting with co-workers and may need to surface information quickly that they don’t have ready access to. With Jane, employees can just message the assistant directly and the system will comb through information and apps that were uploaded and connected to the system in order to find answers. You can ask for a file by name and quickly get a link. You can ask for a specific department’s phone number and Jane will slack it to you.

The startup currently supports integrations with Office 365, Slack, Salesforce and Zenefits, and has more partnerships “on the horizon.”

The big focus will be outsourcing some of the more basic questions that you would ordinarily ask HR or IT so you don’t have to bombard the same person’s email to get the latest phone number for the workaround for a particular problem.

The Jane.ai team

The basic goal of the system is to learn over time and give appointed admins the ability to be called on to answer certain questions when Jane doesn’t have an answer so that Jane will learn from the company experts and get more informed over time.

“Pitting humans against machines is one of the big design flaws of a lot of AI systems,” Jane.ai CEO David Karandish told TechCrunch.

The startup will also have a general knowledge base where users can call on some quickly available info that will also grow over time. It takes time for these solutions to gather the information to be accessible enough to turn to, but Jane.ai is hoping that by ensuring that data is cleaned up for every customer, a lot of employees’ frequent questions are answered on day 1.


Source: TechCrunch – Startups

15 May

MemSQL raises $30M Series D round for its real-time database

MemSQL, a company best known for the real-time capabilities of its eponymous in-memory database, today announced that it has raised a $30 million Series D round, bringing the company’s overall funding to $110 million. The round was led by GV (the firm you probably still refer to as Google Ventures) and Glynn Capital. Existing investors Accell, Caffeinated Capital, Data Collective and IA Ventures also participated.

The MemSQL database offers a distributed, relational database that uses standard SQL drivers and queries for transactions and analytics. Its defining feature is the combination of its data ingestions technology that allows users to push millions of events per day into the service while its users can query the records in real time. The company recently showed that its tools can deliver a scan rate of over a trillion rows per second on a cluster with 12 servers.

The database is available for deployments on the major public clouds and on-premises.

https://www.youtube.com/embed/emcsC_hmN8s?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent

MemSQL recently announced that it saw its fourth-quarter commercial booking hit 200 percent year-over-year growth — and that’s typically the kind of growth that investors like to see, even as MemSQL plays in a very competitive market with plenty of incumbents, startups and even open-source projects. Current MemSQL users include the likes of Uber, Akamai, Pinterest, Dell EMC and Comcast.

“MemSQL has achieved strong enterprise traction by delivering a database that enables operational analysis at unique speed and scale, allowing customers to create dynamic, intelligent applications,” said Adam Ghobarah, general partner at GV, in today’s announcement. “The company has demonstrated measurable success with its growing enterprise customer base and we’re excited to invest in the team as they continue to scale.”


Source: TechCrunch – Startups

18 Apr

Funding Societies, a Southeast Asian lending platform, gets $25M Series B led by Softbank Ventures Korea

Funding Societies co-founders Reynold Wijaya and Kelvin Teo.

Funding Societies, a peer-to-peer lending platform in Southeast Asia, said today that it has raised a $25 million Series B led by Softbank Ventures Korea, the Japanese tech conglomerate’s early-stage venture capital unit. The round included returning investors Sequoia India, which led the Singapore-based startup’s Series A two years ago, Golden Gate Ventures and Alpha JWC Ventures, as well as new backers Qualgro and LINE Ventures.

Funding Societies also said it has raised credit lines from banks and financial institutions to lend to small- to medium-sized businesses. Founded in 2015 by Kelvin Teo and Reynold Wijaya, the startup’s name represents its “vision of financial inclusion in Southeast Asia.”

Its Series B was oversubscribed, says Funding Societies, which operates in Singapore, Indonesia, where it is called Modalku, and Malaysia.

When it announced its $7.5 million Series A in August 2016, Funding Societies had disbursed $8.7 million Singaporean dollars, a number that has since grown to $145 million SGD, chief executive officer Teo tells TechCrunch. Since its launch, the startup has increased its lender base to more than 60,000 and now claims a default rate of less than 1.5%, down from about 2% to 3% two years ago, thanks to improvements in its underwriting model.

In a press statement, Softbank Ventures Korea partner and managing director Sean Lee said the firm “has been actively investing across Southeast Asia. SME digital lending across Southeast Asia is where we saw huge growth potential. Among many players, we were most impressed with Funding Societies for what it has achieved in a short period of time and its potential to continue to become the number one player.”

Though Teo says Funding Societies is “always exploring other markets, there is still tons of work we need to do in our current three markets.” Despite its considerable growth over the past three years, the startup’s mantra is “slow and steady,” a phrase Teo repeated often during our interview.

“One of the key things we highlight is that it’s more important for us to grow slowly and steadily instead of fast and recklessly, because it’s a trust-based industry,” says Teo.

“We need to give out loans and be able to collect them back, so we focus on learning the market, understanding the market and solving key pain points instead of giving out a bunch of loans to chalk up high numbers and attract VCs.”

For example, though the platform may offer personal loans in the future, Teo said it currently only lends to SMEs because “we believe that we are strategically better suited to serving small businesses and, in terms of our company’s values, we think that serving SMEs is an expansionary effort. Consumer financing, in our personal view, is more consumptive finance. It doesn’t help grow economies.”

Many of the SMEs the company serves are very small. Some of its Indonesian borrowers, for example, make annual revenue of about $5,000 USD per year.

“Many of these borrowers are seeking their first business loan and do not have other sources of financing. A lot of financial institutions take a collateral underwriting approach and a lot of budding businesses would not be able to secure financing that way,” says Teo.

“But we also see some of them come to us as a form of top-up. They already have a bank loan, but it is insufficient for them, so they come to us because they are limited by the size of their collateral. Also, we are able to process financing faster than traditional institutions.”

Funding Societies was created to give SMEs, many of which had previously relied mostly on friends and family loans, access to more means of financing. The company points to a recent study by Ernst & Young, UOB and Dun & Bradstreet that says 65.2% of SMEs in Southeast Asia do not have easy access to traditional business financing, even though most are open to other options, including peer-to-peer lending platforms.

The company says it was the first online peer-to-peer lending platform in Malaysia and that based on third-party data, it is now the leading SME lending platform there, as well as one of Singapore’s three largest peer-to-peer lending platforms. It also holds sizable market share in Indonesia.

Though its platform uses algorithms for initial application screening, a significant portion of work, depending on loan size, is still done by Funding Societies’ employees, who have grown in number from 70 in 2016 to 165 now (Teo says the company is currently hiring in earnest and willing to pay relocation costs for promising talent). Almost all applicants talk directly to someone from the company. Micro-loans, which range in size from $500 USD to $40,000 USD, usually take about two business hours to approve and disburse, while applicants for larger loans may have to wait a few days to about a week.

“We’ve debated and discussed internally a lot if we leave too much money on the table, because our default rate is lower than certain banks in the markets we are serving, but given that we are still at a relatively nascent stage in the lending market and have no control over financial crises, it is more important to stay prudent than to grow recklessly,” says Teo.

This methodical approach is also important when entering new markets. Though many outside observers take the umbrella term “Southeast Asia” a little too literally, ignoring cultural differences between each country, Teo says it is still a fragmented market, so financial service companies need to localize carefully. When Funding Societies enters a new market, it can probably port about 50% of its tech and business model from its previous market, but the other half has to be built from ground up to account for economic and cultural differences, he adds.

“SME financing is a very localized business. With sufficient capital you can win the market and it’s really driven by subsidies and strong marketing,” Teo says. “But for SMEs, you really, really need to understand the local market.”


Source: TechCrunch – Startups

21 Mar

CryptoKitties raises $12M from Andreessen Horowitz and Union Square Ventures

CryptoKitties, the virtual collectible kitten game that turned into a viral sensation has raised $12M in funding and will be spun out from Axiom Zen, the Vancouver and San Francisco-based design studio that originally built the game.

The round is being led by Andreessen Horowitz and Union Square Ventures, both of which have quickly developed a reputation for backing fast-growing cryptocurrency startups like Coinbase. A bunch of notable angels also participated, including Naval Ravikant (CEO and founder of AngelList), Mark Pincus (founder of Zynga) and Fred Ehrsam (founder of Coinbase) among others.

So what are CryptoKitties? They’re essentially digital collectibles built on top of the Ethereum blockchain. Each one is unique and has certain attributes that make them rare and desirable, almost like a digital beanie baby. And users are spending tons of real money on them, with some of the rarest kitties fetching over $100,000 when the game first launched.

While the startup is being pretty mum on what the future looks like and what they’re planning on using this funding for, it’s almost certain that the long term goal is to expand beyond CryptoKitties and use the same Ethereum ERC-721 collectible standard to create other game experiences, especially ones that can be played by regular people who are unfamiliar with cryptocurrency.

To this note, Fred Wilson of USV quickly outlined the firm’s thesis behind investing in CryptoKitties, saying “we think digital collectibles is one of many amazing things that blockchains enable that literally could not be done before this technology emerged. We also think digital collectibles and all of the games they enable will be one of the first, if not the first, big consumer use cases for blockchain technologies.” 

If you want to find out more about how CryptoKitties works check out our original story here.


Source: TechCrunch – Startups

23 Jan

Facebook acquires biometric ID verification startup Confirm.io

 Facebook has confirmed to TechCrunch that it’s acquired… Confirm.io. The startup offered an API that let other companies quickly verify someone’s government-issued identification card, like a driver’s license, was authentic. The Boston-based startup will shut down as both its team and technology are rolled into Facebook. Read More
Source: TechCrunch – Startups

26 Dec

HQ Trivia is coming soon to Android

 HQ Trivia is letting Android users pre-register for the live-streamed trivia game built by the makers of Vine, Rus Yusupov and Colin Kroll. Pre-registering means you’ll get notified the moment HQ Trivia is available for download. HQ, which opened up pre-registration on December 24, had previously marketed its Android app as being available “this Christmas.” To me, that means… Read More
Source: TechCrunch – Startups