Finite State lands $30M Series B to help uncover security flaws in device firmware

Columbus, Ohio-based Finite State, a startup that provides supply chain security for connected devices and critical infrastructure, has raised $30M in Series B funding. 

The funding lands amid increased focus on the less-secure elements in an organizations’ supply chain, such as Internet of Things devices and embedded systems. The problem, Finite State says, is largely fueled by device firmware, the foundational software that often includes components sourced from third-party vendors or open-source software. This means if a security flaw is baked into the finished product, it’s often without the device manufacturers’ knowledge. 

“Cyber attackers see firmware as a weak link to gain unauthorized access to critical systems and infrastructure,” Matt Wyckhouse, CEO of Finite State, tells TechCrunch. “The number of known cyberattacks targeting firmware has quintupled in just the last four years.”

The Finite State platform brings visibility to the supply chains that create connected devices and embedded systems. After unpacking and analyzing every file and configuration in a firmware build, the platform generates a complete bill of materials for software components, identifies known and possible zero-day vulnerabilities, shows a contextual risk score, and provides actionable insights that product teams can use to secure their software.

“By looking at every piece of their supply chain and every detail of their firmware — something no other product on the market offers — we enable manufacturers to ship more secure products, so that users can trust their connected devices more,” Wyckhouse says.

The company’s latest funding round was led by Energize Ventures, with participation from Schneider Electric Ventures and Merlin Ventures, and comes a year after Finite State raised a $12.5 million Series A round. It brings the total amount of funds raised by the firm to just shy of $50 million. 

The startup says it plans to use the funds to scale to meet the demands of the market. It plans to increase its headcount too; Finite State currently has 50 employees, a figure that’s expected to grow to more than 80 by the end of 2021.  

“We also want to use this fundraising round to help us get out the message: firmware isn’t safe unless it’s safe by design,” Wyckhouse added. “It’s not enough to analyze the code your engineers built when other parts of your supply chain could expose you to major security issues.”

Finite State was founded in 2017 by Matt Wyckhouse, founder and former CTO of Battelle’s Cyber Business Unit. The company showcased its capabilities in June 2019, when its widely-cited Huawei Supply Chain Assessment revealed numerous backdoors and major security vulnerabilities in the Chinese technology company’s networking devices that could be used in 5G networks. 

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America’s “Smart City” didn’t get much smarter

In 2016, Columbus, Ohio, beat out 77 other small and midsize US cities for a pot of $50 million that was meant to reshape its future. The Department of Transportation’s Smart City Challenge was the first competition of its kind, conceived as a down payment to jump-start one city’s adaptation to the new technologies that were suddenly everywhere. Ride-hail companies like Uber and Lyft were ascendant, car-sharing companies like Car2Go were raising their national profile, and autonomous vehicles seemed to be right around the corner.

“Our proposed approach is revolutionary,” the city wrote in its winning grant proposal, which pledged to focus on projects to help the city’s most underserved neighborhoods. It laid out plans to experiment with Wi-Fi-enabled kiosks to help residents plan trips, apps to pay bus and ride-hail fares and find parking spots, autonomous shuttles, and sensor-connected trucks.

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In its first funding in 7 years, profitable fintech Lower raises $100M Series A led by Accel

Lower, an Ohio-based home finance platform, announced today it has raised $100 million in a Series A funding round led by Accel.

This round is notable for a number of reasons. First off, it’s a large Series A even by today’s standards. The financing also marks the previously bootstrapped Lower’s first external round of funding in its seven-year history. Lower is also something that is kind of rare these days in the startup world: profitable. Silicon Valley-based Accel has a history of backing profitable, bootstrapped companies, having also led large Series A rounds for the likes of 1Password, Atlassian, Qualtrics, Webflow, Tenable and Galileo (which went on to be acquired by SoFi). 

In fact, Galileo founder Clay Wilkes introduced the VC firm to Dan Snyder, Lower’s founder and CEO. The two companies have a few things in common besides being profitable: they were both bootstrapped for years before taking institutional capital and both have headquarters outside of Silicon Valley.

“We were immediately intrigued because Ohio-based Lower echoes both of these themes,” said Accel partner John Locke, who led the firm’s investment in Lower and is taking a seat on the company’s board as part of the investment. “Like Galileo, Lower will be one of the most successful bootstrapped fintech companies globally. The combination of a company built in a nontraditional region across the globe and a bootstrapped company reminds us of [other] companies we have partnered with for a large Series A.”

There were other unnamed participants in the round, but Accel provided the “majority” of the investment, according to Lower.

Snyder co-founded Lower in 2014 with the goal of making the homebuying process simpler for consumers. The company launched with Homeside, its retail brand that Snyder describes as “a tech-leveraged retail mortgage bank” that works with realtors and builders, among others. In 2018, the company launched the website for Lower, its direct-to-consumer digital lending brand with the mission of making its platform a one-stop shop where consumers can go online to save for a home, obtain or refinance a mortgage and get insurance through its marketplace. This year, it launched the Lower mobile app with a savings account.

Sitting (L to R): Co-founders Dan Snyder, Grayson Hanes
Standing (L to R): Co-founders Mike Baynes, Chris Miller
Not pictured: Robert Tyson; Image credit: Lower

Over the years, Lower has funded billions of dollars in loans and notched an impressive $300 million in revenue in 2020 after doubling revenue every year, according to Snyder.

“Our history is maybe a little atypical of fintech companies today,” he told TechCrunch. “We’ve had a view going back to the start of the company that we wanted to run it profitably. That’s been one of our pillars, so that’s what we’ve done. Also, we all grew up in the mortgage industry, so we saw firsthand the size of the market, but also how broken it was, so we wanted to change it.”

In launching the direct-to-consumer digital lending brand, the company was working to make the homebuying process more “digital, transparent and easier for consumers to access,” Snyder said.

At the same time, the company didn’t want to lose the human touch.

“We tried to design the app flow in a way where you can get as far along as you can in the application but if you want, at any point in time, to talk or chat with someone, we’re available,” Snyder added.

Image Credits: Lower

Lower’s typical customer is the millennial and now Gen Z who’s aspiring to own their first home, according to Snyder.

“They might be thinking, ‘OK, I might be living in an apartment now, but in the next few years I’m going to meet someone and/or have a child and I want to unlock the investment that is a home,’ ” he told TechCrunch. “And we’ll help them on that journey.”

Lower’s recently launched new app offers a deposit account it’s dubbed “HomeFund.” The interest-bearing FDIC-insured deposit account offers a 0.75% Annual Percentage Yield and is designed to help consumers save for a home with a “dollar-for-dollar match in rewards” up to the first $1,000 saved, Snyder said.

Lower works with more than 35 major insurance carriers nationally, including Nationwide, Liberty Mutual and Allstate. It has more than 1,600 employees, about half of which are based in Lower’s home state. That’s up from about 650 employees in June of 2020.

Looking ahead, the company plans to add more services and has an “aggressive roadmap” for adding new features to its platform. Today, for example, Lower sells primarily to Fannie Mae and Freddie Mac. And while it services the majority of its loans, like many large lenders, it uses a subservicer. That will change, however, in early 2022, when Lower intends to launch its own native servicing platform. 

And while the company intends to continue to run profitably, Snyder said he and his co-founders “think the time is now to gain share.”

“We want to become a global brand, raise money and gain market share,” he added. “We’re going to continue to double down on product and build out our capabilities. We are the best-kept secret in fintech and plan to change that with smart branding, advertising and sponsorships.”

And last but not least, Lower is eyeing the public markets as part of its longer-term roadmap.

“Ultimately, we know we can build a great public company,” Snyder told TechCrunch. “We’re of the scale to be a public company right now, but we’re going to keep our heads down and we’re going to keep building for the next few years and then I think we can be in a spot to be a strong public business.”

Accel’s Locke points out that in the U.S., mortgage and home finance are among the largest financial service markets, and they have primarily been handled by large banks.

“For most consumers, getting a mortgage through these banks continues to be an overly complex, slow-moving process,” Locke told TechCrunch. “We believe by providing consumers a great mobile experience, Lower will gain share from incumbent banks, in the same way that companies like Monzo have in banking or Venmo in payments or Trade Republic and Robinhood in stock trading.” 

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Branch raises $50M to offer bundled auto & home insurance via an API

Branch Insurance, a startup offering bundled home and auto insurance, has raised $50 million in a Series B funding round led by Anthemis Group.

Acrew, Cherry Creek Holdings and existing backers Greycroft, HSCM Bermuda, American Family Ventures, SignalFire, SCOR P&C Ventures, Foundation Capital and Tower IV also participated in the round. With this latest financing, Columbus, Ohio-based Branch has raised $82.5 million in total funding since its 2017 inception.

With so many players in the insurtech space, it can get tough distinguishing the various offerings. Branch claims that it is unique in that it is able to provide customers with “an instant insurance offer” for bundled home and auto insurance “within seconds” using just a few pieces of information.

Co-founder and CEO Steve Lekas began his career at Allstate, where he went on to hold roles in underwriting, technology and product management. He then went on to build Esurance’s first online home insurance business.

But in the back of his mind, Lekas yearned to figure out a way to make insurance more accessible for more people. And so he teamed up with Joe Emison, and Branch was born.

“The industry is structurally flawed and it harms consumers. Complicated policies, rising costs and marketing warfare all contribute to a vicious cycle that results in overpriced insurance,” said Lekas. “We are a full-stack insurance company transforming the way people think about their home and car insurance.”

Branch, he claims, is the only insurance company that he is aware of that can bind insurance through an API, and the only one that can bundle auto and home insurance in a single transaction.

Another way Branch is unique, according to Lekas, is that it can be embedded into the buying experience. In other words, the company has partnered with companies such as Rocket Mortgage and ADT to integrate insurance at the point of sale in their products. For example, if a person is closing on a home, they have the option of purchasing Branch insurance at the same time.

Branch co-founder and CEO Steve Lekas. Photo: Robb McCormick Photography

“Every home or car policy starts with another transaction,” Lekas said. “Insurance is a product that exists only because of the other transaction. It’s never before been possible to embed in that primary purchase before.”

This distribution model means that Branch shells out less to acquire customers and thus, it claims, is able to offer premiums for a lower price than competitors.

“In just two clicks, a consumer can have home and car insurance or just home and we’ll cancel the old insurance on their closing date, and transmit all the data to their existing mortgage,” Lekas said.

Branch also offers its insurance direct-to-consumer and through agencies.

The company plans to use its new capital in part to accelerate its rollout across the U.S. so that it can sign more such partnerships where it can embed its offering. Currently, Branch has more than 30 partnerships of varying sizes, and is “adding more every week” as it launches in more states.

“It’s really hard to move quickly,” Lekas said. “The system is built to make you move slowly. Every state regulator has to approve individually and independently with their own rules.”

Lekas predicts Branch will be available in more than 80% of the U.S. before the year’s out.

Branch has seen increased momentum since its $24 million Series A in July 2020.

Specifically, the startup says it has achieved a 435% growth in its partner channel, 660% growth in active policies and a 734% increase in active premium less than one year after its last raise.

Anthemis Group Partner Ruth Foxe Blader notes that Branch marks her firm’s first investment from its new growth fund.

Blader says she has invested in insurance innovation over the past decade, and is particularly attracted to insurtech businesses that represent three things: significant technology and data science innovation; significant product innovation and significant cultural innovation.

“Branch easily ticks those boxes,” Blader told TechCrunch. “Branch’s products are both embedded and bundled, making them less expensive and more convenient to purchase, and less likely to leave customers with critical protection gaps.”

The startup, she added, effectively combines data science and technology to create “unique, automatic product bundles.”

With what it describes as a “built-for-savings” structure, Branch said it has created connected home discounts as well as programs that reward members for making referrals and practicing safe driving behaviors, for example.

Branch also has formed a nonprofit, SafetyNest, to help those who are un- or underinsured.

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Three dimensional search engine Physna wants to be the Google of the physical world

In June of 1999, Sequoia Capital and Kleiner Perkins invested $25 million into an early stage company developing a new search engine called Google, paving the way for a revolution in how knowledge online was organized and shared.

Now, Sequoia Capital is placing another bet on a different kind of search engine, one for physical objects in three dimensions, just as the introduction of three dimensional sensing technologies on consumer phones are poised to create a revolution in spatial computing.

At least, that’s the bet that Sequoia Capital’s Shaun Maguire is making on the Cincinnati, Ohio-based startup Physna.

Maguire and Sequoia are leading a $20 million bet into the company alongside Drive Capital, the Columbus, Ohio-based venture firm founded by two former Sequoia partners, Mark Kvamme and Chris Olsen.

“There’s been this open problem in mathematics, which is how you do three dimensional search. How do you define a metric that gives you other similar three dimensional objects. This has a long history in mathematics,” Maguire said. “When I first met [Physna founder] Paul Powers, he had already come up with a wildly novel distance metric to compare different three dimensional objects. If you have one distance metric, you can find other objects that are a distance away. His thinking underlying that is so unbelievably creative. If I were to put it in the language of modern mathematics… it just involves a lot of really advanced ideas that actually also works.”

Powers’ idea — and Physna’s technology — was a long time coming.

A lawyer by training and an entrepreneur at heart, Powers came to the problem of three dimensional search through his old day job as an intellectual property lawyer.

Powers chose IP law because he thought it was the most interesting way to operate at the intersection of technology and law — and would provide good grounding for whatever company the serial entrepreneur would eventually launch next. While practicing, Powers hit upon a big problem, while some intellectual property theft around software and services was easy to catch, it was harder to identify when actual products or parts were being stolen as trade secrets. “We were always able to find 2D intellectual property theft,” Powers said, but catching IP theft in three dimensions was elusive.

From its launch in 2015 through 2019, Powers worked with co-founder and chief technology officer Glenn Warner Jr. on developing the product, which was initially intended to protect product designs from theft. Tragically just as the company was getting ready to unveil its transformation into the three dimensional search engine it had become, Warner died.

Powers soldiered on, rebuilding the company and its executive team with the help of Dennis DeMeyere, who joined the company in 2020 after a stint in Google’s office of the chief technology officer and technical director for Google Cloud.

“When I moved, I jumped on a plane with two checked bags and moved into a hotel, until I could rent a fully furnished home,” DeMeyere told Protocol last year.

Other heavy hitters were also drawn to the Cincinnati-based company thanks in no small part to Olsen and Kvamme’s Silicon Valley connections. They include Github’s chief technology officer, Jason Warner, who has a seat on the company’s board of directors alongside Drive Capital’s co-founder Kvamme, who serves as the chairman.

In Physna, Kvamme, Maguire, and Warner see a combination of Github and Google — especially after the launch last year of the company’s consumer facing site, Thangs.

That site allows users to search for three dimensional objects by a description or by uploading a model or image. As Mike Murphy at Protocol noted, it’s a bit like Thingiverse, Yeggi or other sites used by 3D-printing hobbyists. What the site can also do is show users the collaborative history of each model and the model’s component parts — if it involves different objects.

Hence the GitHub and Google combination. And users can set up profiles to store their own models or collaborate and comment on public models.

What caught Maguire’s eye about the company was the way users were gravitating to the free site. “There were tens of thousands of people using it every day,” he said. It’s a replica of the way many successful companies try a freemium or professional consumer hybrid approach to selling products. “They have a free version and people are using it all the time and loving it. That is a foundation that they can build from,” said Maguire.

And Maguire thinks that the spatial computing wave is coming sooner than anyone may realize. “The new iPhone has LIDAR on it… This is the first consumer device that comes shipped with a 3D scanner with LIDAR and I think three dimensional is about to explode.”

Eventually, Physna could be a technology hub where users can scan three dimensional objects into their phones and have a representational model for reproduction either as a virtual object or as something that can be converted into a file for 3D printing.

Right now, hundreds of businesses have approached the company with different requests for how to apply its technology, according to Powers.

One new feature will allow you to take a picture of something and not only show you what that is or where it goes. Even if that is into a part of the assembly. We shatter a vase and with the vase shards we can show you how the pieces fit back together,” Powers said.

Typical contracts for the company’s software range from $25,000 to $50,000 for enterprise customers, but the software that powers Physna’s product is more than just a single application, according to Powers.

“We’re not just a product. We’re a fundamental technology,” said Powers. “There is a gap between the physical and the digital.”

For Sequoia and Drive Capital, Physna’s software is the technology to bridge that gap.

 

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Two ex-Sequoia VCs: the most ‘compelling emerging market’ may be America, outside of Silicon Valley

Roughly eight years ago, investors Mark Kvamme and Chris Olsen left Silicon Valley to open a venture firm, Drive Capital, in Columbus, Ohio. It wasn’t an easy decision. Leaving California wasn’t exactly fashionable at the time. In fact, While Olsen had grown up in Cincinnati, the Yale grad had landed at Sequoia Capital a couple of years out of college — a dream job — and had no interest in going anywhere. Meanwhile, Kvamme is a California native who attended UC Berkeley, grew up immersed in the world of startups (his dad was also a VC), and cofounded four companies before himself landing at Sequoia, where among his deals, he led the firm’s investment in LinkedIn.

Even after a series of developments would lead them to take the leap, the early ride was bumpy. There was no venture community. Midwestern startups were still few and far between. More, Kvamme, first lured to Ohio by his longtime friend John Kasich to take an economic development job that he thought would be temporary, was soon deemed a little too cozy with the state’s power players.

Looking back now, it’s a wonder they stayed. Yet it’s because they did that Columbus is primed for more VCs to join them, they convincingly argue. Indeed, Drive, which now manages $650 million and features nine investors, is receiving interest from 7,000 startups each year, and some of its portfolio companies are beginning to break out. The very first company to attract a check from Drive, an eight-year-old, Columbus-based hospital software maker called Olive AI, was assigned a $1.5 billion valuation just last month in a funding round led by Tiger Global. Another investment, in the five-year-old car insurance startup Root, also appears promising. Root, which went public in November, currently boasts a market cap of $4.7 billion, and Drive owns 26.6% of the company. (Olsen says it hasn’t sold a share.)

We talked late last week with Kvamme and Olsen about what they are building — and why VCs who may be thinking about leaving California for Austin or Miami might pay more attention. You can hear that conversation in full here. In the meantime, following are some excerpts from our chat edited lightly for length and clarity.

TC: Everyone is threatening to ditch California. What’s the argument for heading to Columbus? How did Mark convince you to join him, Chris?

CO: The early case that Mark made is: there’s an enormous amount of money that’s spent on research here. In Silicon Valley, the venture dollars ratio to research dollars is massively too many VC dollars for too little research; the opposite is true here in Ohio. This is more what Silicon Valley looked like in the late 1990s.

At first, I was like, “Nope, not falling for it. There’s no way I’m believing that data. It’s a terrible idea” to move. But I was very much a numbers guy — still am — and when I started looking at the data, [I could see the] economy of Ohio is bigger than Turkey. The economy of the Midwest would be the fourth-biggest economy in the world. It’s bigger than Brazil. It’s bigger than Russia. It’s bigger than India. And it has this legacy educational infrastructure that’s been producing more engineers than any other corner of the planet. It was kind of like, wait a minute. If this thesis is right, maybe emerging markets are the most compelling place for venture capitalists to invest. But maybe the most compelling emerging market is America, just outside of Silicon Valley.

TC: I imagine that you had your pick of companies when you first launched Drive. Is that true and has that changed in this new COVID era, when everybody is striking deals online? Who is showing up that you didn’t see a few years ago?

CO: It might surprise you but we actually didn’t have our pick of the companies when we first got here, largely because it was unusual to be a venture capitalist. In Ohio, there just aren’t a lot of them. And so a lot of entrepreneurs were in non-obvious places. Unlike in Silicon Valley, where you have entrepreneurs sign up on this superhighway of capital, where you go from Y Combinator to the seed investor and then to the A investor, that infrastructure didn’t exist here. What was a little bit surprising to us was how much we ended up having to work to originate investment opportunities here in the Midwest and not because people weren’t here but because that kind of activity just hasn’t been built yet.

We’ve had to spend a lot of time going into the universities and putting new seed managers in business and helping them fundraise and sort of building all of this infrastructure from scratch so that the next entrepreneur is out here [versus moves away], and it works. In our first year, we had inbound interest from 1,800 [startups], then it went to about 3,000 and now it’s up to about 7,000, which is more than I’ve heard any other venture firms say that they see in California. And I don’t think it’s because we’re great. I think that’s more [a reflection of the] scale of the opportunity that’s here now. One of the things that we would love to see more of is more venture capitalists coming here, because there’s certainly more opportunity than we can invest in.

TC: You don’t worry that you’ve teed up the market for other VCs to come and steal your deals?

MW: Not at all. I’m the old guy here, so I remember when Sequoia was started in 1972; my father worked with Don Valentine and National Semiconductor, and it was then Kleiner, Perkins, NEA, [just] a couple of firms. And what happens is you create this network effect. And the more capital, the more folks [who are building stuff in close proximity to you]. Right now, if we don’t invest in a Series A, there’s a couple of local folks, but primarily, [that capital has] got to come from the coasts.

CO: My attitude is, ‘Come on [over] because the worst thing that is happening right now is that I know for sure there are multibillion-dollar investments that are not getting made still because they’re based here. The problem that we have right now is [that] a Redpoint comes in and invests in one company in Ann Arbor, or Benchmark comes into this one company in Indianapolis, or, Sequoia comes in [for a deal here or there] but they aren’t making this their primary business. And until we see more venture capitalists showing up here saying, “This is all I do every single day,” I fear that that next opportunity that we’re missing won’t get its funding. We’re just out of whack in terms of the number of opportunities versus the number of venture capitalists here . . .

[Also] some of the very best investments in Silicon Valley are done with venture firms that can partner and then entrepreneurs have access to a larger Rolodex, a larger pool of capital, more diversity of thought — all the things that they need to grow their business.

TC: You’re competing with other hotspots like Austin for attention. Make the case for Columbus specifically.

MW: If you put a circle around Columbus, a one-day car drive, you’re talking about 60% of the GDP of American, over 50% or 60% of the population, and [access to] a huge percentage of all the top customers. Columbus is in the middle of it all. What we’re able to do then is easily travel to Chicago and Indianapolis and Pittsburgh, Cleveland, Cincinnati; it’s a quick flight to Minneapolis, and so on and so forth. And the Midwest is a spectacular place to build companies.

TC: Drive’s team includes a director of engineering and several software engineers. Why?

CO: One of the things you learn very quickly that’s different about the Midwest is, it’s not a city; it’s a nation. And you have to set up your infrastructure differently if you’re going to be successful investing into that nation [because] there’s just a lot of ground cover.

One of the things that we have been able to do is to look at venture capital and say, “Look, there are a lot of rote, repetitive tasks that venture capitalists do, and what if we could eliminate those tasks, so that we don’t need to hire the boiler room of Ivy League grads to cold call the entire phone book and annoy all the entrepreneurs and do all that kind of stuff. We can do more homework in an automated fashion.” So that was kind of the idea that we had. And so we built this software platform that we’re able to use now to not only identify which entrepreneurs have the highest probability of turning into an investment but also [who are] the people for our portfolio companies who have the highest probability of joining a certain startup, or, which venture capitalists have the highest probability of investing in that follow-on round of capital.

TC: You had the chance to reinvent the VC model when you started your own firm. Are there any things that you did in setting up Drive that were different than what you’d experienced at Sequoia?

MK: We were very fortunate to have worked at Sequoia. Sequoia is by far the best firm out there, in my opinion. And we often use the phrase, What would Sequoia do? And we built a lot of things around that. But we weren’t Sequoia, so there were many things that we had to do that Sequoia had maybe done 40 or 50 years ago  but today doesn’t have to do. That includes building a lot of these capabilities Chris had mentioned before, building some of the infrastructure, helping lawyers understand how to do Series A term sheets or finding headhunters.

We’re also not in a situation where everyone is coming into the office [unlike at Sequoia]; they see a lot of wonderful companies that just ring them up. That’s why we had to be very focused on our outbound efforts. So I’d say that 60% to 70% of what we’ve done, we learned at Sequoia, but the rest we had to make specific to what we’re doing here at Drive.

TC: How big a net are you casting geographically?

CO: At this point, it’s massive. If you were to look at our portfolio, we have companies in Denver, Washington, Atlanta, Toronto, Austin. I think what we’re finding is that this opportunity is a broader phenomenon that we’re investing in.

Before we will invest into any of these cities, we’ve had to go in the same way we did into Columbus. And we’ve had to meet with the landlords, because landlords out here are not built for startups. They’re built for legacy companies, and they want to see five years of trailing financials, and they want a massive security deposit. And it’s like, “Well, I don’t have that.” So too with the headhunters. There are phenomenal headhunters in Ohio. They’re totally different than the ones who are successful in Denver or in Atlanta because those talent networks are very localized.

But now that done that and we’ve been invested in an infrastructure and we’ve got a density of companies in a lot of the cities that I just mentioned, now we can help and we can be very different from a venture firm that’s just going to zoom in for quarterly board meetings. We’ve got a partnership now that’s expanded where we’re investing people resources, and we’re in the cities on a weekly basis.

#columbus, #drive-capital, #gecko-robotics, #ipo, #root-insurance, #sequoia-capital, #tc, #venture-capital

Kroger, one of America’s largest grocery chains, experiments with ghost kitchens and delivery in the Midwest

The Kroger Co., one of the biggest grocery chains in the Midwest is dipping its toe into on-demand delivery and the ghost kitchen craze through a partnership with an Indianapolis-based startup, ClusterTruck.

Supermarkets would seem to be logical places to site the kinds of ghost kitchens that have caught investor’s eye over the past few years and it wouldn’t be the first time that business models from startup companies bubbled up into large national brands, who are better positioned to capitalize on the trends.

Think about the various meal prep kits that launched and raised millions of dollars before being taken over or copied by big retail groceries. Meal prep kits are everywhere in the grocery store these days and supermarkets have had hot food counters dating back decades at least.

Through the partnership with ClusterTruck, Kroger is expanding on a pilot conducted last year, where the grocer set aside 1,000 square feet at participating stores in Carmel and Indianapolis, Indiana and Columbus, Ohio for ClusterTruck staff to cook meals for delivery and in-store pickup.

“Kroger remains focused on providing our customers with fresh food and experiences enabled by industry-leading insights and transformative technology,” said Dan De La  Rosa, Kroger’s group vice president of fresh merchandising, in a statement. “The new on-premise  kitchen, in partnership with ClusterTruck, is an innovation that streamlines ordering,  preparation and delivery, supporting Kroger as we meet the sustained customer demand for quick, fresh restaurant-quality meals, especially as we navigate an unprecedented health crisis that has affected every aspect of our lives, including  mealtime.” 

The idea, according to Kroger, is to continue to capitalize on the shift to digital deliveries and sales. In the second quarter of the year, the company said it saw over 100% growth in its digital sales.

Ghost kitchens (or cloud kitchens) caught investors’ attention when Uber co-founder and former chief executive Travis Kalanick raised over a hundred million dollars to make the idea his next big bet after Uber. Interest and investment into the model, which sees companies offer food prep and storage spaces for would-be food truck and delivery entrepreneurs, soared. Kalanick’s CloudKitchens have gone on to raise several hundreds of millions of dollars and spawned competitors like the Pasadena, Calif.-based company Kitchen United.

Not everyone is convinced that the dark kitchen or cloud kitchen trend is all that it’s made out to be. My colleagues at TechCrunch have taken the idea to task for its reliance on some WeWork -ian assumptions around margins.

But if anything could make the model go, it’s the combination of existing infrastructure and digital efficiencies. That’s likely what Kroger is hoping to leverage.

It’s an interesting experiment at least and one worth tracking.

#california, #co-founder, #columbus, #indiana, #indianapolis, #industries, #kitchen-united, #kroger, #meals, #ohio, #online-food-ordering, #retailers, #tc, #travis-kalanick, #uber, #wework

Spin restarts scooter business in four markets

Spin, the electric scooter startup acquired by Ford in 2019 for nearly $100 million, has restarted operations in four U.S. markets as COVID-19 related closures begin to ease.

The company has resumed operations in Orlando, Nashville, Columbus, Ohio and St. Louis. The ramp up of operations will depend on the city, the company said. In Columbus, Spin has deployed its entire 200-scooter fleet, the largest number allowed under the city’s permit. Spin is putting fewer scooters than permits allow in other cities. The company said it will scale up its scooter numbers based on demand.

Spin was operating in about 70 markets, a figure that includes college campuses and cities, up until the COVID-19 pandemic caused governments to issue stay-at-home orders. The company has maintained operations in some areas that have allowed it.

Spin said it has “enhanced” its safety protocols, which includes disinfecting scooters more often and requiring employees to wear gloves and face shields during their shifts.

The scooters are now disinfected every time they’re picked up for charging or enter a warehouse, the company said. Scooters with higher usage will be cleaned more frequently — as much as twice a day or more, a spokesperson said when asked for more details.

At warehouses, where Spin scooters are maintained, charged and cleaned, workers are supplied with disinfectant materials to properly clean high-traffic surfaces between every shift. Employees also carry disinfectant materials with them out in the field to clean scooters on the spot.
Spin said it has been working directly with cities to fill transportation gaps and deploy scooters where they are most needed.

Separately, the company said it has extended through May 31 a program that gives essential healthcare workers free 30-minute rides and helmets.

#bird, #columbus, #ford, #nashville, #ohio, #orlando, #scooter, #spin, #spokesperson, #st-louis, #transport, #transportation, #united-states