Austin-based iFly.vc closes $46M second fund from legendary tech founders

To compete with the myriad venture capital firms in Silicon Valley, iFly.vc has a unique vantage point.

Its founder Han Shen has straddled the United States and China for several decades. He was the first hire on the investment team of Formation 8, the VC firm co-founded by Palantir’s Joe Lonsdale. After iFly.vc backed Weee! in a Series A round in 2018, Shen arranged for the grocery startup to meet with China’s produce delivery leaders — two of which recently went public in the U.S. — to learn what was applicable to the American market.

Weee! has since become the go-to grocery app for America’s Asian communities and raised hundreds of millions of dollars from Lightspeed Venture Partners, DST Global, Blackstone, Tiger Global and other major institutions. IFly.vc is still Weee!’s second-largest shareholder, and its first fund recorded a 10x rate of return, Shen told TechCrunch during an interview.

On the back of its cross-continental experiences and portfolio performance, iFly.vc recently closed its second fund with over $46 million, boosting the firm’s assets under management to more than $95 million.

The limited partners in Fund II include family offices across the U.S. and Asia as well as high-profile entrepreneurs such as Zhang Tao, founder of China’s Yelp counterpart Dianping, Free Wu, a founding member of Tencent who now manages Welight Capital, Joe Lonsdale, co-founder of Palantir, and Aayush Phumbhra, co-founder of Chegg.

IFly.vc made another big move during the pandemic, relocating its office from San Francisco to Austin, joining a wave of Californians fleeing the expensive area.

When it comes to investment focus, Shen said he tries to seek out the underdogs in North America’s trillion-dollar consumer market.

“On the one hand, enterprise services are growing very quickly. But on the other hand, the rise of enterprise software is helping consumer tech to grow even more quickly and easily. The consumer market is very diverse and serves an array of minority groups, so there is always a new opportunity.”

With this premise in mind, iFly.vc recently invested in Cheese Financial‘s seed round, a digital bank that started out by serving the underbanked Asian American populations.

IFly.vc prefers backing startups early on and seeing them through by providing hands-on, post-investment support. Rather than spray and pray, iFly.vc has invested in just about a dozen companies five years after its founding.

Shen’s background of growing up in China and working in Silicon Valley, where he eventually became a partner at Formation 8, led him to appreciate entrepreneurs with a similarly international background because they can learn from mistakes and successes on both sides. They also know how to leverage the different fields of talent across the world.

Cheese Financial, for instance, is setting up an engineering force in the founder’s hometown, Shenzhen, to take advantage of the Chinese city’s large pool of engineers at costs much lower than those of Silicon Valley.

It’s not just about hiring cheaper programmers, though. As Shen puts it: “In the past, American companies were simply outsourcing technical tasks to China. Now Chinese engineers actually have valuable lessons to bring to American companies because many have worked at large, successful Chinese tech companies themselves.”

#asia, #blackstone, #chegg, #china, #digital-bank, #dst-global, #formation-8, #funding, #joe-lonsdale, #palantir, #private-equity, #shenzhen, #tc, #tencent, #venture-capital, #welight-capital

Terraformation gets $30M to fight climate change with rapid reforesting

Every startup is trying to fix something but Terraformation is tackling the only problem that must matter to all of us: Climate change.

This is why it’s in such a big huge hurry. Its mission — as a ‘forest tech’ startup — is to accelerate tree planting by applying a startup-y operational philosophy of scalability to the pressing task of rapidly, sustainably reforesting denuded landscapes — bringing back native trees species to revive former wastelands and shrinking our carbon emissions in the process.

Forests are natural carbon sinks. The problem is we just don’t have enough trees with roots in the ground to offset our emissions. So that at least means the mission is simple: Plant more trees, and plant more trees fast.

Terraformation’s goal is to restore three billion acres of global native forest ecosystems by scaling tree replanting projects in parallel, scaling the use of existing techniques, and working with all the partners it can. (For a little context, the U.S. contains some 2.27BN acres of total land area, per Wikipedia).

So far it says it’s planted “thousands” of trees — with live projects in North America, South America, Africa and Europe which it hopes will yield up to 20,000 replanted acres. It’s also in talks with partners about more projects that could clad hundreds of thousands of acres with carbon-consuming (and biodiversity-prompting) trees, if they come to full fruition.

That’s still a long way off the 3BN-acre-wooded moonshot, of course. But Terraformation claims it’s been able to achieve a forestry restoration work-rate that’s 5x the average already. And that’s definitely the kind of ‘gas stepping’ that climate change needs.

Its elevator pitch is also punchy: “Our mission is explicitly to solve climate change through mass reforestation,” says founder Yishan Wong — whose name may be familiar as the ex-Reddit CEO (and also a former early-stage engineer at PayPal/Facebook). So it’s getting trees in the ground and getting faster at getting trees in the ground.”

It’s not going it alone, either. It’s just announced a first closing of a $30 million Series A funding round, led by Sam & Max Altman at Apollo Projects, the brothers’ ‘moonshot’ fund; plus several high-profile institutional investors (whose names aren’t being disclosed); along with nearly 100 angel investors, including Sundeep Ahuja, Lachy Groom, Sahil Lavingia, Joe Lonsdale, Susan Wu, and OVN Cap.

“The [Series A] was a bit larger than we anticipated and the idea is to get us to the next stage of planting orders of magnitude more trees every year,” says Wong. “So it’ll be used both for supporting forestry projects directly, as well as for the development and deployment of forestry acceleration products and technology.”

“The very, very nice thing about mass reforestation or mass restoration as a solution to climate change is that it’s extremely parallelizable,” he adds. “You can plant any tree at the same time as your planting some other tree. This is the primary reason why this solution can potentially be implemented within the timetable that we have left. But in order to do so we have to start and drive an enormous, decentralized reforestation campaign across multiple continents and countries.”

The funding follows a $5M seed last year, as the young startup worked to hone its approach.

Terraformation is targeting the main barriers to successful reforesting: Through early research and pilots it says it’s identified three key bottlenecks to large-scale forest restoration — namely, land availability, freshwater, and seed. It then seeks to address each of these pinch-points to viable reforesting — identifying and fashioning modular, sharable solutions (tools, techniques, training etc) that can help shave off friction and build leafy, branching success.

These products include a seed bank unit it’s devised, housed in a standard shipping container and kitted out with all the equipment (plus solar off-grip capability, if required) to take care of on-site storage for the thousands of native seeds each projects needs to replant a whole forest.

It also offers a nursery kit which also ships in a shipping container — a flat-packed greenhouse that it says a couple of people can put together, and where thousands of seedlings can then be tended and irrigated in pots until they’re ready to plant out.

A third support it offers to the replanting projects it wants to work with is expertise in building solar-powered desalination rigs so young trees can be supplied with adequate water to survive in locations where poor land management may have made conditions for growth difficult and harsh.

It goes without saying that planted trees which fail because of poor processes won’t help cut carbon emissions. Badly managed replanting is at best wasteful — and may be closer to cynical greenwashing in some cases. (Poor quality projects can be a known problem where claims of corporate carbon offsetting are being made, for example.)

Terraformation is thus zeroing in on repeatable ways to scale and accelerate the successful planting and nurturing of trees, from seed to sapling and beyond, to accelerate sustainable reforesting.

Ultimately, it’s the only kind of tree planting that will really count in the fight against climate change.

Its first pilot restoration projects begun in Hawai’i in 2019 — where it’s been able to plant thousands of trees at a site called Pacific Flight, reviving a native tropical sandalwood forest that had been logged unsustainably. To enable the young trees to grow in land which had also become arid as a result of cattle grazing, the team built the world’s largest fully off-grid, solar-powered desalination system to supply sustainable freshwater to the baby forest.

“The arid environment, high winds, and degraded soils meant that if a team could restore a forest there, they could do it anywhere,” is the pitch on its website.

The Series A will go toward spinning up lots more such native species forest restoration projects — working via partnerships, with organizations such as Environmental Defenders in Uganda, and other groups in Ecuador, Haiti and Tanzania — as well as on more R&D (additional products are in the pipeline, we’re told); and on expanding headcount so its team has the legs to run faster.

Interestingly, for a startup with Silicon Valley engineering pedigree at its core, the team’s approach is intentionally light on technology — leaning only on vital tech (like solar and desalination), rather than experimental bells and whistles (drones, robotics etc) to ensure the processes it’s packaging up for massive replanting parallelism remain as simple, accessible and reliable as possible. So they are able to scale all over the globe.

It’s clear that sci-fi robotic gadgetry isn’t the answer here. It’s sweating toil plus tried and tested horticulture processes, done systematically and repeatedly, in mass parallelism all over the world that’s required, argues Wong, whose years in tech have given him a healthy scepticism on the issue of over-engineering. (“The biggest lesson I learned was, you want to solve a big problem? You want to use as little technology as possible… Technology’s always breaking, it’s always got flaws. The biggest problem with technology is technology.”)

“I would say that the key contribution that ‘tech’ — if you think of a monolith or a culture or whatever — will make to climate change, is not in fact some new invention or some gadget or some sort of special magical technology… I think it really is the practice of scalability,” he goes on. “Which is an organizational end. A management way of thinking. Because that is actually something that has been carefully and painfully developed… over the past 20 years in Silicon Valley. How to take small working solutions, how to solve very big problems, how to scale them. And it isn’t a very glamorous thing — which is why I think it’s one of the more pure disciplines.

“It just has been less corrupt… Scalability is just people thinking hard and grinding it out to address really hard big problems. And I think that practice and all the little tips and rules that we have to doing that is the real contribution that tech is going to make — with one of those principles being use as little tech as you can.”

Terraformation is building software tools too — such as a mobile app to help with cataloguing and monitoring seeds. But the really critical technologies involved, solar and desalination, are very much at the ‘tried and tested’ end of the tech scale (“very, very reliable and refined”.).

Wong points out that a key development for solar and desalination is related to the unit economics — with falling costs allowing for scalability and thus speed.

Asked whether Terraformation is a business in the typical startup sense, Wong says it’s been set up in a familiar way — as a Delaware C Corp — but purely because he says that’s just the quickest way to be able to operate. Doing stuff as a non-profit would be way too slow, he says, describing it thusly as a “non non-profit” (rather than a business with a for-profit mission).

Aka: “It’s a corporate with investors but primarily the aim is to solve climate change.”

Startup investors are of course often betting their money on the chance of a quick and meaty return. But not here, confirms Wong. “When we raised funding all of our investors invested primarily because they wanted to see climate change solved,” he tells TechCrunch. “To many of them this was the first time that a plausible, full-scale solution to solving climate change had been presented.

“It’s still very, very hard. It’s very, very large. It’s really daunting. But it’s the first time someone has mapped out a path that could actually get us there. And so all of our investors invested because they want to see that happen.”

So how will a ‘non non-profit’ startup (even with $30M just banked) get its hands on enough land to plant enough trees? A variety of ways, per Wong. (Perhaps even, in some instances, landowners could end up paying it to turn their dirt into beautiful woodland.)

“The short answer is anywhere we can!” he adds. “The solution is structured to give us maximum flexibility, given that we can use a large variety of land. We don’t want to count on any particular land owning entity — and I use that very broad term to mean like people, communities, governments, municipalities — we don’t want to rely on any one particular land-owning entity wanting to work with us or allowing us to reforest the land, because you can’t guarantee that.”

He also notes that Terraformation’s plan to fix climate change is based on “worse case scenarios” — where “no one who owns any land that gets enough natural rainfall for forest restoration will allow it to reforest it”. “We use the least valuable land — basically desertified, degraded land,” he adds. “Is there enough of that? And it turns out there is.”

Even though personal financial upside clearly isn’t front of mind for Terraformation’s investors, Wong still believes there’s plenty of ‘value’ to be unlocked as a byproduct of spreading leafy-green goodness all over the planet vs funding more extractive exploitation.

“It turns out that solving climate change is actually a huge value creating act,” he argues. “My experience in Silicon Valley is if you have people who believe in you and believe in the thing that you’re creating is ultimately value-creating then it’s actually also wealth creating. If you do something that is fundamentally very, very valuable and you’re right next to it, you will be able to monetize it in some way. You will capture some of that value for your shareholders. So it’s a bet that if you really can solve climate change, that’s super valuable, both for the world and to the entity that’s [investing].”

Of course climate change is more than just a problem; it’s an existential threat to all life on Earth — one which affect humans and every other living creature and thing on the planet.

Given such terminal stakes, reversing climate change should be the highest global priority. Instead, humans have procrastinated — putting dealing with rises in atmospheric CO2 on the back-burner and worse (cutting down existing forests like the Amazon Rainforest, for one).

Set against that backdrop, Terraformation’s answer to humanity’s greatest crisis looks compellingly simple. Its bet is that climate change can be fixed by scaling the most proven technology possible (trees) to capture carbon emissions. Who can argue with that? 

But it does also seem clear that reforesting will need to go hand in hand with a mainstreaming of conservation, as a prevailing societal attitude, if the mission is to be pulled off — otherwise all these beautiful baby trees could just meet the same sad fate as all the Earth’s already lost forests.

Nonetheless, conservation is something Wong’s team is deliberately not focusing on.

Not because they don’t care. Rather their hope is that by building the baby forests, the protective partners will come — to watch over and get value from the trees as they grow. 

“I don’t want to make it seem like we don’t care about [forestry conservation] but one of the things that I try to do is figure out where people are already doing work and things are already moving in the right direction — and then go work on the thing that other people are not working on,” he says when we ask about this. “When I talk to people in the forestry world many, many people are working on avoiding deforestation, helping solve the broader socioeconomic issues that result in deforestation. And so I feel like there is momentum moving in that direction — so we have to work on this other issue that other people aren’t working on.”

Wong also argues that forests are naturally more valuable than the denuded waste/scrub ground they’re replanting — implying that pure economic interest should help these baby forests survive and thrive far into the future.

However the history of humanity shows that unequal wealth distribution can wreak all sorts of havoc on a resource-rich natural environment. And people who live in poverty may well be disproportionately more likely to like in a rural location, on or near land that Terraformation hopes to target for replanting. So if these forests can’t provide — in crude terms — ‘value’ for their local communities the risk is the same cycle of short-term economic harm will rip all this hard work (and hope) out of the ground once again.

Wealth inequality lies at the core of much of humanity’s counterproductive destruction of the environment. So, seen from that angle, reforesting the planet may require just as much effort toward tackling — root and branch — the wider socioeconomic fault-lines of our world, as it will washing, sorting and storing seed, watering seedlings and nurturing and planting saplings.

And that further dials up an already massive climate challenge. But, again, Wong is quietly hopeful.

“People aren’t cutting down trees because they’re evil, they’re cutting down trees because they need to make a living. So we have to provide them with ways to make a living that is more valuable than cutting down the trees. I think that recognition is moving in the correct direction — so I’m hopeful there,” he says.

Asked what keeps him up at night, he also has a straightforward answer to hand — one we’ve heard many times already from a new generation of climate campaigners, like Greta Thunberg, whose futures will be irrevocably stamped by the effects of climate change: Humanity simply isn’t moving fast enough.

“In order to do this we have to make order of magnitude improvements in both speed and scale — which is technically a thing that we know how to do but is among the most daunting things that you ever try to undertake. So… are we moving fast enough? Are we doing enough? Because time is running out,” warns Wong.

“The timeframe that we have left is very small when compared to the planetary scale of the problem. And so I think the only way that we’re going to get there is with proven solutions, moving, growing at exponential speed.”

“I am [hopeful],” he adds. “I’m a big fan of humans working together. People can really do it. I’m very I guess what you’d call pro-human. We have a lot of flaws, we fight amongst ourselves a lot, but I really think that when people work together they can really do amazing, amazing things… Trees gave us life and so now it’s our time to repay that debt.”

 

#carbon-offset, #climate-change, #forestry, #greentech, #joe-lonsdale, #lachy-groom, #paypal, #recent-funding, #reforesting, #sahil-lavingia, #scalability, #startups, #tanzania, #tc, #terraformation, #uganda, #yishan-wong

Brazil’s Loft adds $100M to its accounts, $700M to its valuation in a single month

Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.

At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.

Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.

Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Zach Frenkel), GoPuff, Instacart, Kavak and Sweetgreen.

Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process. 

Image courtesy of Loft

In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.

“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”

The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.

“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”

Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”

While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.

The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”

Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.

In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.

In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.

This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.

Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.

This article was updated post-publication to reflect accurate investor information

#andreessen-horowitz, #baillie-gifford, #better-mortgage, #better-com, #brazil, #co-founder, #d1-capital-partners, #david-velez, #dst, #finance, #financial-services, #funding, #fundings-exits, #instacart, #instagram, #joe-lonsdale, #latin-america, #loft, #max-levchin, #mike-krieger, #money, #new-york, #nubank, #palantir, #paypal, #proptech, #real-estate, #real-estate-tech, #recent-funding, #sao-paulo, #startup, #startups, #tc, #tiger-global, #united-states, #venture-capital, #zillow

Pipe, which aims to be the ‘Nasdaq for revenue,’ raises more money at a $2B valuation

Fast-growing fintech Pipe has raised another round of funding at a $2 billion valuation, just weeks after raising $50M in growth funding, according to sources familiar with the deal.

Although the round is still ongoing, Pipe has reportedly raised $150 million in a “massively oversubscribed” round led by Baltimore, Md.-based Greenspring Associates. While the company has signed a term sheet, more money could still come in, according to the source. Both new and existing investors have participated in the fundraise.

The increase in valuation is “a significant step up” from the company’s last raise. Pipe has declined to comment on the deal.

A little over one year ago, Pipe raised a $6 million seed round led by Craft Ventures to help it pursue its mission of giving SaaS companies a funding alternative outside of equity or venture debt.

The buzzy startup’s goal with the money was to give SaaS companies a way to get their revenue upfront, by pairing them with investors on a marketplace that pays a discounted rate for the annual value of those contracts. (Pipe describes its buy-side participants as “a vetted group of financial institutions and banks.”)

Just a few weeks ago, Miami-based Pipe announced a new raise — $50 million in “strategic equity funding” from a slew of high-profile investors. Siemens’ Next47 and Jim Pallotta’s Raptor Group co-led the round, which also included participation from Shopify, Slack, HubSpot, Okta, Social Capital’s Chamath Palihapitiya, Marc Benioff, Michael Dell’s MSD Capital, Republic, Alexis Ohanian’s Seven Seven Six and Joe Lonsdale.

At that time, Pipe co-CEO and co-founder Harry Hurst said the company was also broadening the scope of its platform beyond strictly SaaS companies to “any company with a recurring revenue stream.” This could include D2C subscription companies, ISP, streaming services or a telecommunications companies. Even VC fund admin and management are being piped on its platform, for example, according to Hurst.

“When we first went to market, we were very focused on SaaS, our first vertical,” he told TC at the time. “Since then, over 3,000 companies have signed up to use our platform.” Those companies range from early-stage and bootstrapped with $200,000 in revenue, to publicly-traded companies.

Pipe’s platform assesses a customer’s key metrics by integrating with its accounting, payment processing and banking systems. It then instantly rates the performance of the business and qualifies them for a trading limit. Trading limits currently range from $50,000 for smaller early-stage and bootstrapped companies, to over $100 million for late-stage and publicly traded companies, although there is no cap on how large a trading limit can be.

In the first quarter of 2021, tens of millions of dollars were traded across the Pipe platform. Between its launch in late June 2020 through year’s end, the company also saw “tens of millions” in trades take place via its marketplace. Tradable ARR on the platform is currently in excess of $1 billion.

#alexis-ohanian, #baltimore, #banking, #chamath-palihapitiya, #corporate-finance, #craft-ventures, #finance, #funding, #fundings-exits, #greenspring-associates, #hubspot, #investment, #isp, #joe-lonsdale, #marc-benioff, #maryland, #miami, #okta, #payment-processing, #pipe, #raptor-group, #recent-funding, #saas, #shopify, #siemens, #social-capital, #startups, #streaming-services, #tc, #telecommunications, #venture-capital

Quaestor is reinventing business metric collaboration for the startup party round era

Business is the foundation, of, well, business. For startups, finding a working business model and honing it through decision-making, smart hires, and relentless focus on the right metrics can be the difference between building a scalable company and collapsing into the next Luckin Coffee.

Given how important business performance and finance is, it’s not uncommon in the early days of a startup to hire an “outsourced CFO” — a part-time financial professional who helps with budgeting, basic forecasting, and preparing reports for investors. Those reports though are static, and don’t lead to great conversations around how a business is performing, how it can change, and what should happen next for all parties involved.

Quaestor wants to upend the static spreadsheets and PDFs sent to dozens if not hundreds of people on cap tables today with a software-first solution that allows executives and their investors to hold better, more intelligent conversations about business performance.

The idea for the company congealed in the offices of 8VC, where the firm’s partners like Joe Lonsdale and Alex Moore repeatedly watched companies struggling to present all of their business information to their investors in a time-efficient way. 8VC has a history of incubating projects just like Quaestor, such as CRM tool Affinity.

For Quaestor, the firm eventually brought together a trio of co-founders, with Lonsdale also officially co-founding the company. John Melas-Kyriazi is CEO, and formerly was with Spark Capital for five years as a VC. He left earlier this year, and is maintaining his board seats there. Kevin Hsu is head of product and was a product manager at cap table management startup Carta before joining 8VC as an EIR. Finally, Deny Khoung is head of operations and was formerly the director of design at 8VC.

The group has been riffing on the idea of improving collaboration around the fundamentals of startup metrics for months, but officially spun out of 8VC in March and raised $5.8 million led by 8VC with participation from Melas-Kyriazi’s former firm Spark as well as Abstract Ventures, Riot Ventures, Fathom Ventures and GFC.

Let’s head back to the product though. Quaestor connects founders, company executives, and investors all together to discuss a business and make sure everyone is on the same page regarding targets and metrics. “How do VCs and their companies interact around financial data, whether it’s documents like P&L / balance sheet / cash flow statement [or] individual financial KPIs like revenue, gross margin, net income, ARR, etc.,” Melas-Kyriazi explained. “How do companies share that information with their investors to keep them updated? How do investors support their companies in understanding what goals they should be setting?”

The goal with the platform is two-fold. One is to ingest financial data and automatically prepare it so that all those annoying Excel mistakes disappear and everyone can read from one consistent set of metrics. The other is to help guide everyone to focus on the metrics that matter. “Most entrepreneurs come from a product background or engineering or sales and they might not necessarily have worked in in finance before,” Melas-Kyriazi said. The goal with Quaestor is to help push them to think carefully about their finances.

Over time as cap tables get more complicated and more investors add their capital, the goal is that Quaestor can offer a single source of truth for all financial data, without requiring the CEO or an outsourced CFO to prepare individual reports for each firm.

Right now, the company is focusing its product on early-stage startups, but hopes to grow up with those companies as they scale, expanding its services to other types of companies over time. The company’s product has been in beta as it tests out its MVP.

Quaestor is now a team of eight, with several offer letters in motion (so that number is actively growing as I write this article). Melas-Kyriazi said that product development and early scaling are the key goals for the startup over the next year or two.

#8vc, #finance, #funding, #fundings-exits, #joe-lonsdale, #john-melas-kyriazi, #startups, #venture-capital

Linking combat veterans and Valley engineers, Reveal’s drone technology wins DoD contracts, VC cash

When Garrett Smith graduated from Stanford University to take a job with the drone startup Kespry, he’d not only wrapped up studying at one of the nation’s most prestigious universities, but also had already completed several combat tours in Southeast Asia and South America with the Marine Corps.

At Kespry, Smith met fellow veteran Andrew Dixon, and fellow Stanford graduates John Laxson, and  Parker Clark, Kespry’s co-founder and chief technology officer.

Together, the four men realized that the tools and technology Kespry was developing for commercial use could be used by the military as well. And so, Reveal Technology was born.

“The deep familiarity with the market and leadership and chops around the business problem, combined with the creme de la creme in terms of technical capability came together in this ideal mixture of military veteran talent and entrepreneurial spirit and technologists interested in serving a mission greater than themselves,” said Smith in an interview. “There’s a strong cohort of military veterans who have a deep understanding of the requirements and the gaps and the opportunities, when they’re married up with top-tier technical talent, when there’s some synergy there, that’s where true magic can happen.”

Reveal’s “magic” is creating detailed maps of areas using data stitched from short drone flights to create a more accurate picture of an area. The company has also designed some machine learning algorithms that can provide predictive analysis of potential threats, according to Smith.

The company has already been able to sign initial contracts with the U.S. military thanks to its connections to the Defense Innovation Unit, an initiative designed to connect early stage technology companies and entrepreneurs in to the needs of the Defense Department and its supply chain. Several companies have received millions in early grants and contracts through the program.

“One of the exciting things about these innovation programs — like the SBIR programs and others — [all the military branches] have been using those prolifically and they represent ways that companies that are small, like us, can get real revenue going that’s non-dilutive and gives you rapid access to the market in ways that are normally not afforded,” said Smith.

Helping the company navigate the Defense Department’s procurement process and develop strategies to enter new markets associated with the DOD are General Peter Pace, former United States Marine Corps general who served as the 16th Chairman of the Joint Chiefs of Staff and Kevin Mandia, CEO of FireEye — who are both joining the company as advisors.  

These military contracts actually give companies like Reveal access to additional markets as well. Through the DOD, the company is primed to work with the state of California on drone mapping services for natural disaster response. It’s another way that city and state governments are turning to technology to help prepare for natural disasters — and it’s a potentially lucrative business.

“What happens is drones or other aircraft generating video or images from an aerial perspective pipe that information down to a ground control device or mobile device. Our app Farsight software will be running on those devices generating the context-rich maps so people on the ground and in control centers can make decisions in an ever evolving natural disaster environment,” said Smith. 

The technology has won investment support from Defy Ventures, the investment firm founded by former General Catalyst managing director Neil Sequeira and KPCB managing partner, Trae Vassallo; and 8VC, the venture capital shop set up by Palantir co-founder Joe Lonsdale.

“Investment in Reveal – and in their generation of ‘defense-first, dual-use’ technology companies – ensures an advantage as future generations of companies replace the old,” said Sequeira. “We believe that their incredible team has potential to make a huge impact and we are excited to support them and see the long-term innovation pay off for this industry and for our country.”

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With an ex-Uber exec as its new CEO, digital mental health service Mindstrong raises $100 million

Daniel Graf has had a long career in the tech industry. From founding his own startup in the mid-2000s to working at Google, then Twitter, and finally Uber, the tech business has made him extremely wealthy.

But after leaving Uber, he wasn’t necessarily interested in working at another business… at least, not until he spent an afternoon in the spring of 2019 with an old friend, General Catalyst managing director Hemant Taneja, walking in San Francisco’s South Park neighborhood and hearing Taneja talk about a new startup called Mindstrong Health.

Taneja told Graf that by the fall of that year, he’d be working at Mindstrong… and Taneja was right.

“I was intrigued by healthtech previously,” said Graf. “The problem always was… and it sounds a little too money-oriented… but if there’s no clear visibility around who pays who in a startup, the startup isn’t going to work,” and that was always his issue with healthcare businesses. 

NEW YORK, NY – MAY 21: Daniel Graf accepts a Webby award for Google Maps for iPhone at the 17th Annual Webby Awards at Cipriani Wall Street on May 21, 2013 in New York City. (Photo by Bryan Bedder/Getty Images for The Webby Awards)

With Mindstrong, which announced today that it has raised $100 million in new financing, the issue of who pays is clear.

So Graf joined the company in November as chief executive, taking over from Paul Dagum, who remains with Mindstrong as its chief scientific officer.

“Daniel joined the company as it was moving from pure R&D into being something commercially available,” said Taneja, in an email. “In healthcare, it’s increasingly important to understand how to build for the consumer and that’s where Daniel’s experience and background comes in. Paul remains a core part of the team because none of this happens without the science.”

The company, which has developed a digital platform for providing therapy to patients with severe mental illnesses ranging from schizophrenia to obsessive compulsive disorders, is looking to tackle a problem that costs the American healthcare system $20 billion per month, Graf said.

Unlike companies like Headspace and Calm, which have focused on the mental wellness market for the mass consumer, Mindstrong is focused on people with severe mental health conditions, said Graf. That means people who are either bipolar, schizophrenic or have major depressive disorder.

It’s a much larger population than most Americans think, and they face a critical problem in their ability to receive adequate care, Graf said.

“1 in 5 adults experience mental illness, 1 in 25 experience serious mental illness, and the pandemic is making these numbers worse. Meanwhile, more than 60% of US counties don’t have a single practicing psychiatrist,” said Joe Lonsdale, the founder of 8VC, and an investor in the latest Mindstrong Health round, in a statement.  

Dagum, Mindstrong Health’s founder, has been working on the issue of how to provide better access and monitoring for indications of potential episodes of distress since 2013. The company’s technology provides a range of monitoring and measurement tools using digital biomarkers that are currently being validated through clinical trials, according to Graf.

“We’re passively measuring the usage of the phone and the timing of the keyboard strokes to measure how [a patient] is doing,” Graf said. These smartphone interactions can provide data around mental acuity and emotional valence, according to Graf — and can provide signs that someone might be having problems.

The company also provides access to therapists via phone and video consultations or text-based asynchronous communications, based on user preference.

“Think of us more as a virtual hospital… our care pathways are super complex for this population,” said Graf. “We’re not aware of other startups working with this population. These folks, the best you get right now is the county mental health.”

Mindstrong’s Series C raise included participation from new and existing investors, including General Catalyst, ARCH Ventures, Optum Ventures, Foresite Capital, 8VC, What If Ventures and Bezos Expeditions, along with other, undisclosed investors.  

And while mental health is the company’s current focus, the platform for care delivery that the company is building has broader implications for the industry, especially in the wake of the COVID-19 epidemic, according to Taneja.

“I expect that we’ll see discoveries in biomarker tech like Mindstrong’s that could be applied horizontally across almost any area of healthcare,” Taneja said in an email. “Because healthcare is so broad and varied, going vertical like Mindstrong is makes a lot of sense. There’s opportunity to become a successful and very impactful company by staying narrowly focused and solving some really hard problems for even a smaller part of the overall population.”

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