Collective, a back-office for the self-employed, raises $20M from Ashton Kutcher’s VC

With so much focus on the ‘creator economy’, and countries hit by the effects of the pandemic, the self-employed market is ‘booming’, for good or for ill. So it’s not too much of a surprise that
Collective,a subscription-based back-office for the self-employed has raised a $20 million Series A funding after launching only late last year.

The round was led by General Catalyst and joined by Sound Ventures (the venture capital fund founded by Ashton Kutcher and Guy Oseary). Collective has now raised a total of $28.65 million. Other notable investors include: Steve Chen (Founder YouTube), Hamish McKenzie (Founder Substack), Aaron Levie (founder Box), Kevin Lin (founder Twitch), Sam Yam (founder Patreon), Li Jin (Atelier Ventures), Shadiah Sigala (founder HoneyBook), Adrian Aoun (founder Forward), Holly Liu (founder Kabam), Andrew Dudum (founder Hims) and Edward Hartman (founder LegalZoom).

Ashton Kutcher said in a statement: “We’re proud to be supporting a company that’s making it easier for creators to focus on what they do best by taking care of the back office work that creates so much friction for so many early entrepreneurs. I would have loved something like this when I was getting started.”

Launched in September 2020 by CEO Hooman Radfar, CPO Ugur Kaner and CTO Bugra Akcay, Collective offers “tailored” financial services, access to advisors that oversee accounting, tax, bookkeeping, and business formation needs. There are currently 59 million self-employed workers in the U.S. (36% of US workforce) who mostly do all their own admin. So Collective hopes to be their online back office platform.

Speaking to me over email, Radfar said that the start-up fintech market tends to serve companies like them – other start-ups and growing SMBs: “Companies like Pilot have done an amazing job at building a back-office platform that handles taxes, bookkeeping and finances for start-ups. We want to offer that same great value to the underserved business-of-one community, since they are the largest group of founders in the country.”

He added: “Before Collective, consultants, freelancers, and other solo founders had to string together their back-office solution using DIY platforms like Quickbooks, Gusto, and LegalZoom. If they were lucky, they had the help of a part-time accountant to advise them. Collective makes handling finances easy with the first all-in-one platform that not only bundles these tools into one platform, but also provides the technology and team to optimize their tax savings like the pros.”

According to some estimates, the number of lone freelancers in the US is projected to make up 86.5 million, 50% of the US workforce by 2027, with the freelancer space projected to grow three times faster than the traditional workforce.

Niko Bonatsos, Managing Director of General Catalyst said: “Collective is serving the $1.2 trillion business-of-one industry by building the first back-office platform that saves individuals significant time and money, while providing them with the appropriate tools and resources they need to help them succeed,” said “We’re excited to support Collective as they expand their team and build an exceptional service for the business-of-one community.”

#aaron-levie, #adrian-aoun, #advisors, #andrew-dudum, #ashton-kutcher, #atelier-ventures, #ceo, #collective, #cto, #finance, #financial-services, #freelancer, #general-catalyst, #guy-oseary, #hamish-mckenzie, #hooman-radfar, #kabam, #kevin-lin, #legalzoom, #li-jin, #niko-bonatsos, #pilot, #quickbooks, #sam-yam, #sound-ventures, #steve-chen, #tc, #twitch, #united-states, #upwork

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How Pilot charted a course of not raising too much money

A few weeks ago, we wrote about fintech Pilot raising a $100 million Series C that doubled the company’s valuation to $1.2 billion.

Bezos Expeditions — Amazon founder Jeff Bezos’ personal investment fund — and Whale Rock Capital joined the round, adding $40 million to a $60 million raise led by Sequoia about one month prior.

That raise came after a $40 million Series B in April 2019 co-led by Stripe and Index Ventures that valued the company at $355 million.

Both raises were notable and warranted coverage. But sometimes it’s fun to take a peek at the stories behind the raises and dig deeper into the numbers.

So here we go.

First off, San Francisco-based Pilot — which has a mission of affordably providing back-office services such as bookkeeping to startups and SMBs — apparently had term sheets that offered “2x the $40M” raised in its Series B. But it chose not to raise so much capital. 

I also heard that the same investor that ended up leading a now defunct competitor’s $60 million raise first asked to invest $60 million in Pilot as a follow-on to that Series B prior to making the other investment. While I don’t know for sure, I can only presume that what is being referred to is ScaleFactor’s $60 million Series C raise in August 2019 that was led by Coatue Management. (ScaleFactor crashed and burned last year.)

According to CFO Paul Jun: “There were many periods when Pilot turned away new customers and growth capital instead of absolutely maximizing short-term growth…Pilot prioritized building the foundational investments needed for scalability, reliability and high velocity. When it was presented with the opportunity for additional funding towards further growth in 2019, it declined to do so.”

Co-founder and CEO Waseem Daher elaborates, pointing out that the first company that Pilot’s founding team ran, Ksplice, was bootstrapped before getting acquired by Oracle in 2011. (It’s also worth noting that the founding team are all MIT computer scientists.)

“Ultimately, the reason to raise money is you believe that you can deploy the capital, to grow the company or to basically cause the company to grow at the rate you’d like to grow. And it doesn’t make sense to raise money if you don’t need it, or don’t have a good plan for what to do with it,” Daher told TechCrunch. “Too much capital can be bad because it sort of leads you to bad habits…When you have the money, you spend the money.”

So despite what he describes as “a great deal of institutional interest” in 2019, Pilot opted to raise just $40 million, instead of $80 million to $100 million, because it was the amount of capital the company had confidence that it could deploy successfully.

Also, Jun shared some numbers beyond the recent raise amount and valuation.

  • The company has tripled revenue every year since inception, except for 2020 when it doubled revenue.
  • Pilot claims to have had a cash burn of $800,000 per month in 2020 against a starting balance of $40 million.
  • The startup touts a 60% GAAP gross margin. Daher notes: “We feel really good about having long-term unit economics that will work for this business without resorting to offshoring or outsourcing in a way that could compromise quality and compromise relationships.”

Bottom line is companies don’t have to accept all the capital that’s offered to them. And maybe in some cases, they shouldn’t.

#bezos-expeditions, #bookkeeping, #finance, #fintech, #funding, #fundings-exits, #index-ventures, #jeff-bezos, #mit, #pilot, #recent-funding, #san-francisco, #startup, #startups, #tc, #venture-capital, #waseem-daher, #whale-rock-capital

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Jeff Bezos’ investment fund is backing a startup hoping to be the AWS for SMB accounting

One of the biggest pain points for startups and small businesses is keeping up with back office tasks such as bookkeeping and managing taxes.

QuickBooks, it seems, just doesn’t always cut it.

Three-time co-founders Waseem Daher, Jeff Arnold, and Jessica McKellar formed Pilot with the mission of affordably providing back office services to startups and SMBs. With over 1,000 customers, it has gained serious traction over the years. And Pilot has now also received validation from some big-name investors. On Friday, the company announced a $100 million Series C that doubles the company’s valuation to $1.2 billion.

Bezos Expeditions — Amazon founder Jeff Bezos’ personal investment fund — and Whale Rock Capital (a $10 billion hedge fund) co-led the round, which also included participation from Sequoia Capital, Index Ventures, Authentic Ventures and others. 

Stripe and Index Ventures co-led Pilot’s $40 million Series B in April 2019. The latest financing brings the company’s total funding raised to over $158 million since its 2017 inception.

The founding team certainly has an impressive track record, having founded and sold two previous companies: Ksplice  (to Oracle) and Zupli (to Dropbox).

Pilot’s pitch is about more than just software. The company combines its software with accountants to do things such as provide “CFO Services” to SMBs without a full-stack finance team. It also provides monthly variance analysis for all its bookkeeping customers, essentially serving as a controller for those companies, so they can make better budgeting and spending decisions.

It also helps companies access small business tax credits they may not have otherwise known about. 

Last year, Pilot completed more than $3 billion in bookkeeping transactions for its customers, which range from pre-revenue startups to larger companies with more than $30M of revenue a year. Customers include Bolt, r2c and Pathrise, among others.

Pilot has also inked a number of co-marketing partnerships with companies such as American Express, Bill.com, Brex, Carta, Gusto, Rippling, Stripe, SVB, and Techstars.

Ironically, Pilot says it aspires to the “AWS of SMB backoffice.” (In fact, co-founder Waseem Daher started his career as an intern at Amazon). Put simply, Pilot wants to take care of all those back office tasks so companies can focus more on growth and winning business.

Pilot strives to offer an “exceptional customer experience,” which is reflected in the fact that over 80% of the company’s business is driven by customer referrals and organic interest, according to Daher.

Whale Rock Partner Kristov Paulus said that white-glove customer service experience and Pilot’s “carefully-engineered” software make a powerful combination.

“We look forward to supporting Pilot in their vision to make back office services as easy-to-use, scalable, and ubiquitous as AWS has with the cloud,” he said.

Pilot’s model reminds me a lot of that of ScaleFactor’s, an Austin-based startup that raised $100 million in a year before it crashed and burned. But the difference in this case is that Pilot seems to have satisfied customers.

#amazon-web-services, #bezos-expeditions, #finance, #funding, #fundings-exits, #jeff-bezos, #jessica-mckellar, #pilot, #recent-funding, #saas, #startups, #stripe, #venture-capital, #waseem-daher

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TikTok partners with Whisk to pilot a recipe-saving feature on food videos

TikTok is expanding its integrations with third-party services, with the launch of a test that allows creators in the food space to link directly to recipes found on the Whisk app. This is being made possible by way of a new “recipe” button overlaid on related TikTok food videos. The feature makes a TikTok cooking video more actionable as it encourages viewers to not just watch the content, but also take the next step to save the content for later use.

The new button could also potentially drive significant traffic to Whisk — especially if a particular recipe went viral — like the “TikTok Pasta” videos have, in recent days.

The addition is being made available in partnership with Whisk and is currently in “alpha testing,” TikTok confirmed to TechCrunch. TikTok says its also worked with Whisk to help identify food content creators who could serve as the first adopters of the new functionality.

We found the feature in action on one of TikTok’s top food creators profiles, The Korean Vegan, aka Joanne L. Molinaro.

Image Credits: TikTok screenshot

 

The button was also first spotted by social media consultant Matt Navarra on the @feelgoodfoodie TikTok account.

The way the feature works, from the TikTok viewer’s side, is fairly simple.

A user who’s in the test group may come across a video on the app that includes the new button that reads: “See full recipe.” The button appears just above the creator name and video description on the bottom left of the screen  — the same spot where the “Green Screen” button would otherwise appear. When tapped, you’re directed to a Whisk page where you can view the recipe photos, ingredients, and choose to save the recipe to your own collection, if you’re a Whisk user.

This all takes place while still inside the TikTok app.

On the creator’s side, adding the recipe button to a video is done during the posting workflow via a new “add link” option.

The ability to add a “save recipe” feature to a TikTok video wouldn’t necessarily have to be limited to food content creators, however. Whisk allows anyone to create a recipe community on its platform, which means people can grow their followings simply by curating their favorite recipes around some sort of category or theme — like Instant Pot meals or favorite smoothie ideas or comfort baking, for example.

Image Credits: Whisk

Whisk has also been working more recently to expand its recipe communities to serve as a home for curators and creators alike by allowing them to point to their websites, if they have one, or link out to their social media profiles, including Instagram, YouTube, and of course, TikTok.

The idea is that fans would view the content on social media and be inspired, then visit Whisk as the next step in terms of saving the recipe, creating a shopping list, or actually trying the recipe at home. This sort of “actionable” content could present a challenge to Pinterest, which has been expanding into short-form video through Story Pins. The feature allows Pinterest creators to share video content in the tappable “story” format — including recipe and cooking videos.

Pinterest hoped to use Story Pins as a way to differentiate its short-form videos from rivals, noting during its earnings last week that Story Pins are “not as focused on entertainment,” but rather “what the Pinner could do to enrich their own lives.”

TikTok’s selection of Whisk as a new partner makes sense as the recipe app has gained a rapid following since its late 2019 launch. Today, Whisk sees over 1.5 million interactions per month on its platform. It also just won a “Best of 2020″ Google Play award.

Whisk’s TikTok button, however, is not the first integration of its kind.

Last month, learning platform Quizlet announced a similar TikTok feature aimed at creators in the education space. In its case, the buttons overlaid on top of videos would link directly to Quizlet’s study sets, like its digital flashcards. At the time, it wasn’t clear that the new Quizlet feature was a part of a larger effort to connect TikTok videos more directly with related apps and services — an addition that could lead to an expansion in TikTok content and, perhaps, influencer sponsorships, further down the road.

There’s potential for TikTok to form other partnerships like this as well, given the app’s ability to drive trends across a number of content categories, effectively becoming the video alternative to Pinterest’s image bookmarking site.

At year-end, for example, TikTok published lists of 2020’s “top trends” in cooking, music, beauty, and style. On the style front, TikTok already ran a livestreamed video shopping pilot with Walmart that used influencers to drive purchases, demonstrating the potential in connecting video inspiration to consumer action in an even more timely fashion.

#apps, #cooking, #creators, #media, #mobile, #partnership, #pilot, #recipes, #social-media, #tiktok, #video, #whisk

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UpEquity raises $25 million in equity and debt for its cash-pay mortgage lending service

With a stated goal of aligning the mortgage industry with consumer interests, Austin-based UpEquity has raised $25 million in equity and debt funding to expand its business.

Chief executive Tim Herman started the mortgage lending company to take advantage of what he saw as inefficiencies in the $2 trillion U.S. housing market.

Existing financial services and property technology companies treat the symptom and not the cause of market inefficiencies, said Herman.

The company makes free cash offers but charges 2.5% on the loans it makes to homebuyers to give them the cash they need to make an offer before having to go through the traditional process of taking out a home loan through a bank. Then the homeowners can make payments directly to UpEquity to pay off the mortgage on the house.

“Our cash offer works like a guarantee that during the escrow period we will be able to get the mortgage in place,” Herman said.

A U.S. Naval Academy graduate and former fighter pilot, Herman saw real estate as the only avenue to true wealth creation open to him and his family given their years on the road and lack of available investment capital.

After the Navy, Herman went to Harvard Business School and met his co-founder Louis Wilson. It was in Boston while in B-School that the two men started UpEquity.

They since relocated to Austin because of its booming housing market and relatively more relaxed regulatory environment.

Ultimately, the pitch to customers is the ability to make an all-cash offer, which dramatically improves the likelihood of closing on a house. It’s a luxury that roughly 90 percent of Americans can’t afford, Herman said. There’s no downside for selling homeowners, if a purchaser doesn’t end up buying the home then UpEquity owns the house.

Of all of the 300 deals the company has done so far, only two have failed.

That’s why a company like UpEquity can raise $7.5 million in venture and $17.5 million in venture debt to start making loans.

The company’s A round was led by Next Coast Ventures and UpEquity said it would use the money to fund product development that can slash the time-to-close for the real estate agents that act as the company’s sales channel to ten days.

“Our goal is to finally align the mortgage industry with consumer interests,” said UpEquity Co-Founder and CEO Tim Herman. “This funding is validation that consumers, real estate agents and venture investors understand the power of removing friction from the homebuying process, not only for personal advancement, but to attain the American Dream.”

So far the company has expanded its operations from Texas into Colorado, Florida and California, where it has originated $100 million in mortgages in 2020.

“As real estate continues to evolve in the face of limited supply and tight competition, UpEquity is at the helm of PropTech’s growing capabilities,” said Thomas Ball, managing director at Next Coast Ventures. “Most innovation has focused on the front end, but until now, nobody has expedited what happens after the borrower submits an application. UpEquity has the team, talent and technology to not only succeed, but to disrupt and emerge as the leader in the mortgage lending marketplace.”

 

#austin, #bank, #boston, #california, #co-founder, #colorado, #economy, #finance, #financial-services, #florida, #harvard-business-school, #leader, #loans, #money, #mortgage, #navy, #next-coast-ventures, #pilot, #real-estate, #real-estate-agents, #tc, #texas, #united-states

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SpaceX and NASA successfully launch four astronauts to space for first operational Dragon crew mission

SpaceX has become the first private company to launch astronauts to the International Space Station, marking the culmination of years of work in partnership with NASA on developing human spaceflight capabilities. At 7:27 PM EST (4:27 PM PST), NASA astronauts Shannon Walker, Victor Glover, and Michael Hopkins, and JAXA astronaut Soichi Noguchi left launch pad 39-A at Kennedy Space Center in Florida bound for the ISS.

SpaceX’s human launch program was developed under the Commercial Crew program, which saw NASA select two private companies to build astronaut launch systems for carrying astronauts to the ISS from U.S. soil. SpaceX was chosen alongside Boeing by NASA in 2014 to create their respective systems, and SpaceX’s Dragon capsule and Falcon 9 rocket became the first to achieve actual human flight certification from NASA earlier this year with the successful completion of its final, Demo-2 test mission, which flew to the ISS with two U.S. astronauts on board.

To get to this point, SpaceX had to complete a number of milestones successfully, including a fully automated uncrewed ISS rendez-vous mission, and a demonstration of both a launch pad abort and post-launch abort emergency safety system for the protection of the crew. During the Demo-1 mission, while all actual launch, docking and landing was handled by SpaceX’s fully autonomous software and navigation, astronauts also took over manual control briefly to demonstrate that this human-piloted backup would operate as intended, if required.

So far, Crew-1 is proceeding as expected, with a picture-perfect takeoff from Florida, and a successful recovery of the first-stage booster used on the Falcon 9 rocket used to launch Dragon. Crew Dragon ‘Resilience’ also departed from the second-stage of the Falcon 9 as planned at just after 10 minutes after liftoff, and there will be a 27 hour trip in orbit before the Dragon meets up with the ISS for its docking, which is scheduled to take place at around 11 PM EST (8 PM PST) on Monday night. Once fully docked, the astronauts will disembark and go over to the station to begin their active duty stay, which is set to last until next June.

From left, the crew of Crew-1: NASA’s Shannon Walker, Victor Glover and Michael Hopkins; JAXA’s Soichi Noguchi Image Credits: SpaceX

Three of the four astronauts on this mission have been to space previously, but for pilot Victor Glover, it’s his first time. These four will join NASA’s Kate Rubins, and Roscosmos cosmonauts Sergey Ryzhikov and Sergey Kud-Sverchkov on the station, bringing the total staff complement to seven (an increase from its usual six that NASA says will free up more time for the astronauts to perform experiments, as opposed to their tasks related to regular daily maintenance of the station).

This is the first time that astronauts have launched to space during a regular operational NASA mission since the end of the Shuttle program in 2011. It marks an official return of U.S. human spaceflight capabilities, and should hopefully become the first in many human flight missions undertaken by SpaceX and Dragon – across both NASA flights, and those organized by commercial customers.

#aerospace, #astronaut, #boeing, #commercial-crew-program, #dragon, #falcon, #falcon-9, #florida, #international-space-station, #outer-space, #pilot, #private-spaceflight, #science, #space, #spacecraft, #spaceflight, #spacex, #tc, #united-states

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Honda to mass-produce Level 3 autonomous cars by March

Honda claims it will be the first automaker to mass-produce vehicles with autonomous capabilities that meet SAE Level 3 standards, with plans to begin producing and selling a version of its Honda Legend luxury sedan with fully approved automated driving equipment in Japan from next March. Honda announced the news via press release (via Reuters) and this follows the approval by the Japanese government of the company’s ‘Traffic Jam Pilot’ autonomous tech, which for the first time will allow drivers to actually take their eyes off the road while it’s engaged.

Honda’s Pro Pilot Assist is the feature that predates this forthcoming one, but it’s a Level 2 feature per the SAE scale, which means that while it can automatically control both speed and steering, drivers behind the wheel have to be constantly ready to take over manual control should the system require it. SAE Level 3 is the first that falls under a categorization that most experts feels qualifies as actually autonomous – wherein a driver can fully allow their vehicle to take over control. Level 3 still requires that a driver be able to take over driving when the system requests, while Levels 4 and 5 have no such requirement.

Tesla has also launched its own ‘full self-driving’ feature in its vehicles in a beta program that it’s expanding to more drivers gradually, but critics suggest that despite it’s name, it’s not actually a fully autonomous system, and it isn’t yet classified as such according to regulations. Honda’s launch of its Level 3 Legend in March 2021 will be one watched by regulators and ordinary drivers alike around the world as one of the first true tests of a mass-produced and regulator-approved autonomous vehicle system.

#artificial-intelligence, #automation, #automotive, #cars, #driver, #driving, #emerging-technologies, #honda, #japan, #japanese-government, #legend, #pilot, #robotics, #self-driving-car, #tc, #tesla, #transport, #transportation

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White Castle becomes the first fast food chain to test out the robot fry cook, Flippy, from Miso Robotics

The next time Harold and Kumar go to a White Castle, there may be a robot making their French Fries.

In one of the first trials of a robotic fry cook at a national burger chain, White Castle said it would work with Pasadena, Calif.-based Miso Robotics to test that company’s robotic chef at a restaurant in the Chicago area. It’s a  trial run for potentially bringing the robot to other White Castle kitchens across the country, the company said.

White Castle first began talking about using the Miso Robotics robots in its kitchens about nine months ago according to White Castle’s vice president of shareholder relations, Jamie Richardson. For the company, it was a question of, “How can we start to make the kitchen of tomorrow today?” 

Already a success on social media, where videos of Miso Robotics’ Flippy robot have racked up hundreds of thousands of views, White Castle was intrigued about the prospects of a burger flipping, chicken, onion, and french frying robot in its locations, Richardson said.

“I think automation is here to stay and this is the first example of a really large credible player starting down that journey,” said Miso Robotics chief executive Buck Jordan of the new collaboration with White Castle. 

White Castle has a fairly interesting track record when it comes to working with startups. The company was the first fast food chain to embrace Impossible Foods for its sliders.

At an undisclosed restaurant in the Chicago area, Miso Robotics is already working to install the latest version of its Flippy robot. The robotic fry cook will be integrated with the company’s point of sale system so that the robot can begin preparation as soon as an order is taken at the register.

That first robot will be coming online in September, according to Richardson.

And Richardson said that White Castle employees don’t need to worry about a robot coming for all of their jobs… yet. 

“It’s going to save us money in food costs because there will be less waste,” said Richardson.  “The other savings will be in terms of output… that’s going to be helpful.. If you maintain speed of service that’s getting a little bit better and a little better you do see more visits… that’s where we see it having the biggest impact… we’re not looking at this as a way to reduce people power.” 

A typical installation of a Miso Robotics system in a kitchen would cost a restaurant $30,000 upfront and then another $15,000 per year. However, with White Castle, the terms (which were undisclosed) were a little different.

Jordan said the goal is to bring the cost of the robotic system down to $15,000 for the entire system, obviating the need for any upfront costs, and convincing restaurants and franchisors that the robot can pay for itself right out of the gate.

There’s a clear path to getting that down to 20K,” said Jordan. “I’m trying to chisel that down to 15K,… at that kind of price and these things have lifetimes of seven to ten years we can afford to take the loss upfront.”

The robots have taken on new significance in the post COVID-19 era as restaurants like White Castle become essential services even as they struggle to keep the lights on with fewer customers. 

At White Castle that meant pay cuts for executives in order to retain staff. “We cut a lot of investment and we didn’t want to lose one job,” Richardson said. However, even with the strategic cuts, the implementation of at least this first robotic system remained a priority.

“There were things that we thought, COVID or no COVID were important,” Richardson said. “This project falls under that banner.”

White Castle’s decision to pilot Flippy in the kitchen creates an avenue for reduced human contact with food during the cooking process – reducing potential for transmission of food pathogens. The implementation also brings intelligence to cooking, tapping into sensors, intelligent monitoring and anticipated kitchen needs to keep food temperatures consistent, that ensure optimal quality and a perfect bite for customers. With Flippy in the kitchen automating repetitive, time consuming and dangerous tasks like frying, team members can be redeployed to more customer-experience driven tasks.

Image Credit: Miso Robotics

#california, #chicago, #flippy, #food, #food-and-drink, #impossible-foods, #kitchen, #miso, #miso-robotics, #pilot, #restaurants, #robot, #robotics, #social-media, #tc

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R&D tax credits are due July 15th. Neo.tax wants to help startups apply, and raised $3M to do it

All founders love “free” money, but with the global pandemic going on, the necessity of free money has taken on a whole new meaning this year. First, there was the scramble to secure PPP loans a few weeks back for U.S.-based startups, and then the second wave of PPP loans when Congress offered a second tranche of funding. Two weeks ago, I covered a company called MainStreet, which is helping startups apply for local economic development credits which cities offer to businesses relocating to their regions.

In the same vein, Neo.tax wants to help startups secure R&D research credits from the federal government — which tend to be fairly easy to acquire for most software-based startups given the current IRS rules for what qualifies as “research.”

The free money is good, but what sets this startup apart is its ambitious vision to bring machine learning to company accounting — making it easier to track expenses and ultimately save on costs.

It’s a vision that has attracted top seed investors to the startup. Neo.tax announced today that it raised $3 million in seed funding from Andy McLoughlin at Uncork Capital and Mike Maples at Floodgate, with Michael Ma at Liquid2 and Deena Shakir at Lux Capital participating. The round closed last week.

Neo.tax was founded by Firas Abuzaid, who spent the past few years focused on a PhD in computer science from Stanford, where he conducted research in machine learning. He’s joined by Ahmad Ibrahim, who most recently was at Intuit launching small business accounting products; Stephen Yarbrough, who was head of tax at Kruse Consulting, a popular consultancy for startups on accounting and financial issues; and Leonardo De La Rocha, who was creative director of Facebook Ads for nearly five years.

Neo.tax’s Stephen Yarbrough, Firas Abuzaid, and Ahmad Ibrahim. Photos via Neo.tax

Or in short, a perfect quad of folks to tackle small business accounting issues.

Neo.tax wants to automate everything about accounting, and that requires careful application of ML techniques to an absolutely byzantine problem. Abuzaid explained that AI is in some ways a perfect fit for these challenges. “There’s a very clearly defined data model, there’s a large set of constraints that are also clearly defined. There’s an obvious objective function, and there’s a finite search space,” he said. “But if you wanted to develop a machine-learning-based solution to automate this, you have to make sure you collect the right data, and you have to make sure that you can handle all of the numerous edge cases that are going to pop up in the 80,000 page U.S. tax code.“

That’s where Neo.tax’s approach comes in. The software product is designed to ingest data about accounting, payroll, and other financial functions within an organization and starts to categorize and pattern match transactions in a bid to take out much of the drudgery of modern-day accounting.

One insight is that rather than creating a single model for all small businesses, Neo.tax tries to match similar businesses with each other, specializing its AI system to the particular client using it. “For example, let’s train a model that can target early-stage startups and then another model that can target Shopify businesses, another one that can target restaurants using Clover, or pizzerias or nail salons, or ice cream parlors,” Abuzaid said. “The idea here is that you can specialize to a particular domain and train a cascade of models that handle these different, individual subdomains that makes it a much more scalable solution.”

While Neo.tax has a big vision long-term to make accounting effortless, it wanted to find a beachhead that would allow it to work with small businesses and start to solve their problems for them. The team eventually settled on the R&D tax credit.

“That data from the R&D credit basically gives us the beginnings of the training data for building tax automation,” Ibrahim explained. “Automating tax vertical-by-vertical basically allows us to be this data layer for small businesses, and you can build lots of really great products and services on top of that data layer.“

So it’s a big long-term vision, with a focused upfront product to get there that launched about two months ago.

For startups that make less than $5 million in revenue (i.e. all early-stage startups), the R&D tax credit offers up to a quarter million dollars per year in refunds from the government for startups who either apply by July 15th (the new tax date this year due to the novel coronavirus) or who apply for an extension.

Neo.tax will take a 5% cut of the tax value generated from its product, which it will only take when the refund is actually received from the government. In this way, the team believes that it is better incentive-aligned with founders and business owners than traditional accounting firms, which charge professional services fees up front and often take a higher percentage of the rebate.

Ibrahim said that the company made about $100,000 in revenue in its first month after launch.

The startup is entering what has become a quickly crowded field led by the likes of Pilot, which has raised tens of millions of dollars from prominent investors to use a human and AI hybrid approach to bookkeeping. Pilot was last valued at $355 million when it announced its round in April 2019, although it has almost certainly raised more funding in the interim.

Ultimately, Neo.tax is betting that a deeper technical infrastructure and a hyper-focus on artificial intelligence will allow it to catchup and compete with both Pilot and incumbent accounting firms, given the speed and ease of accounting and tax preparation when everything is automated.

#accounting, #finance, #funding, #fundings-exits, #mainstreet, #pilot, #recent-funding, #startups, #tax-credits

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The Station: Audi punts on Level 3, Lyft layoffs and Nio’s $1 billion deal

The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station — to receive it every Saturday in your inbox.

Hi readers. Welcome back to The Station, a weekly newsletter dedicated to the future (and present) of transportation. I’m your host Kirsten Korosec, senior transportation reporter at TechCrunch .

While COVID-related stay-at-home orders have been extended in places like the San Francisco Bay area, officials in other counties and states in the U.S. have decided to open up for business. The rest of us are watching and waiting to see how these two experiments play out.

These opposing approaches have managed to create even more tension in the United States. If politics didn’t divide us before, how and when to open amid a health pandemic is proving to be an effective wedge.

The “how” is as important, or even more so, than the “when.” What will life and business look like? Wuhan, China, a transportation and manufacturing metropolis of 11 million people and where COVID-19 started, offers a view into one approach. (The photo below shows a worker disinfecting a bus in Wuhan on April 30.)

China-wuhan-bus-covid

A staff member sprays disinfectant on a bus at a long-distance bus station in Wuhan in China’s central Hubei province on April 30, 2020, ahead of the Labor Day holiday which started May 1.

When those stay-at-home orders are finally lifted, returning to work won’t be quick or easy. Wuhan was placed on lockdown January 23. Wuhan officials eased outgoing travel restrictions April 8. While the strictest component of that lockdown has been lifted, many businesses remain closed. Didi didn’t reopened its ride-hailing services in the city until April 30.

In short, it’s going to be complex. Ford’s back-to-work playbook is a case in point. The plan includes a number of daily measures such as online health self-certifications completed before work every day, face masks and no-touch temperature scans upon arrival. But that’s just a sliver of what it will take. Check it out their complete playbook.

Here’s a friendly reminder to reach out and email me at kirsten.korosec@techcrunch.com to share thoughts, opinions or tips or send a direct message to @kirstenkorosec.

I’ll alrighty folks, shall we dig in? Vamos. 

Micromobbin’

the station scooter1a

It was a rough week for micromobility. Over at Lyft, the company laid off 982 employees and furloughed 288 amid the COVID-19 pandemic. Lyft also permanently ceased scooter operations in Oakland, San Jose and Austin.

“We’re focusing our resources where we can have the biggest impact and best serve cities and riders,” a Lyft spokesperson said in a statement to TechCrunch. “We’re continuing to invest in our bike and scooter business, but have made the tough decision to shift resources away from three scooter markets and toward opportunities where we are set up for longer-term success.”

At Lime, the startup let go 13% of its staff while the very next day relaunching its electric scooters in Baltimore and Ogden, Utah.

“Almost overnight, our company went from being on the eve of accomplishing an unprecedented milestone — the first next-generation micromobility company to reach profitability — to one where we had to pause operations in 99% of our markets worldwide to support cities’ efforts at social distancing,” Lime CEO Brad Bao wrote in a note to employees.

Just one day after those layoffs, the company relaunched scooters in Baltimore to help support essential medical workers as well as in Ogden.

Uber is weighing its own layoffs. The Information reported that the company could cut up to 20% of its staff. That translates to more than 5,000 jobs. Those cuts could be announced in stages over the next several weeks. Meanwhile, Thuan Pham, who was hired as Uber’s chief technology officer by former CEO Travis Kalanick back in 2013, is leaving the company in three weeks, the ride-share giant revealed in an SEC filing.

— Megan Rose Dickey

Deal of the week

money the station

Chinese electric vehicle startup Nio secured a $1 billion investment from several state-owned companies in Hefei in return for agreeing to establish headquarters in the city’s economic development hotspot and giving up a stake in one of its business units.

The injection of capital comes from several investors, including Hefei City Construction and Investment Holding Group, CMG-SDIC Capital and Anhui Provincial Emerging Industry Investment Co.

Why deal of the week? The deal alleviates some concerns about Nio’s liquidity. It also marks the latest Chinese EV startup to turn to the state as private capital has shrunk.

There is no free lunch, however. The deal itself is complex and involves some asset shuffling. Nio is transferring its core businesses in China into a new company called Nio China. The investors will get a 24.1% stake in Nio China. The shareholding structure of the parent company is unchanged.

Other deals announced this week are below. Keep in mind that just because a deal is announced that doesn’t mean it closed amid the COVID-19 pandemic. Fundraising rounds often close weeks and even months before they’re announced.

Otonomo, an automotive data services startup based in Israel, raised $46 million in a Series C funding round that included investments from SK Holdings, Avis Budget Group and Alliance Ventures. Existing investors Bessemer Venture Partners also participated. Otonomo has raised $82 million, to date.

The company has a software platform that captures and anonymizes vehicle data so it can then be used to create apps to provide services such as electric vehicle management, subscription-based fueling, parking, mapping, usage-based insurance and emergency service.

KlearNow, a startup that has built a software platform to automate the customs clearance process, raised $16 million in a Series A funding round led by GreatPoint Ventures, with additional participation from Autotech Ventures, Argean Capital and Monta Vista Capital. Ashok Krishnamurthi, managing partner at GreatPoint Ventures, will join KlearNow’s board. Daniel Hoffer from Autotech Ventures is joining as a board observer.

Skycell, a Switzerland-based startup that builds hardware and operates a logistics network designed to transport pharmaceuticals has raised $62 million.

A merger between UK’s JustEat and the Netherlands’ Takeaway.com has been approved by regulators. The merged company announced that it had raised €700 million ($756 million) in new outside funding in the form of new shares and convertible bonds.

Cheetah, a San Francisco-based startup that provided a wholesale delivery service and has pivoted to selling to consumers during COVID-19, raised $36 million in Series B funding.

Innovation of the week

Computer vision company Eyesight Technologies has tweaked its driver monitoring system so it can detect driver distraction and drowsiness even while wearing a medical face mask.

This “innovation of the week” gets back to my opening remarks about “how” we get back to work. Face masks will likely be a part of our world for some time.

Driver monitoring systems, which are increasingly being used by commercial fleets, are trained to detect and monitor facial features of the driver. The system will take in data points like head pose, mouth, eyes and eyelids and use the gathered visual data to detect signs of drowsiness and distraction. If the sensor can’t read one or more of these features the system could fail to detect a drowsy truck driver or inattentive transit worker.

Driver Monitoring with mask

Eyesight Technologies

Eyesight Technologies says that its computer vision and AI algorithms have been trained to detect distraction and drowsiness even if a driver is wearing a mask and glasses.

“We are living in unprecedented times,” Eyesight Technologies CEO David Tolub said. “Without a concrete end date to the current situation, wearing medical masks may be a reality for the foreseeable future. Eyesight Technologies is forging ahead and adapting to provide a reliable solution to help guarantee safety even under less than ideal circumstances.”

Audi punts on Level 3

Audi has scrapped plans to roll out a Level 3 automated driving system in its A8 flagship sedan. Automotive News Europe broke the story.

The feature, which is branded Traffic Jam Pilot, theoretically allows the vehicle to operate on its own without the human driver keeping their eyes on the road. But it’s never been commercially deployed.

Traffic Jam Pilot was supposed to be in the latest-generation A8 that debuted in 2017. It’s now 2020. What happened? Regulations, or lack of them, have been the primary scapegoat. But it’s not quite the whole story.

TechCrunch reached out to Audi to dig into why? In short, the company told us, that it’s complicated. The lack of a legal framework has raised concerns about liability. To further complicate the problem, the A8 is now progressing through its generational life cycle. And Audi was faced with continuing to pour money into the feature to adapt it without promise of framework progressing.

Here’s a few tidbits from the folks at Audi.

On the legal framework:

As of now, there is no legal framework for Level 3 automated driving. Consistently it is not possible to homologate such function anywhere in the world in a series production car. It is still very challenging to plan the exact introduction scenarios for level 3 systems, as we continuously moving in an intensive interplay between the findings from ongoing testing and the requirements that legislators and approval authorities are now defining for conditional automated driving.

On development costs:

As these clarifications and safeguards continue to take time, we also monitor economic aspects in addition. This includes development costs, which are summing up continuously. Secondly, the remaining life of the determined target model A8 combined with the forecasted installation rate and the expected market greediness in the individual countries are playing an important role.

This has brought us to the following decision: We will not see the traffic jam pilot on the road with its originally planned level 3 series function in the current model generation of the Audi A8 because our luxury sedan has already gone through a substantial part of its model life cycle.

Audi’s belief in automated driving:

We still believe in the technology of automated driving and today we know better than almost anyone when it comes to the decisive technological key factors. During the development phase we continuously learned more and more technical “unknown unknowns” and developed approaches how to handle the fact, that there will appear more.

Together with the above mentioned dependencies concerning legislation and type approval, we believe that actually it is not the right moment to deliver the function to the customer. This is our attitude of responsibility.

How Audi is moving forward:

An important part of the truth, which the industry is now facing: development of automated driving is extremely complex and cost-intensive. Our aim more than ever before is to generate the greatest possible synergies.

Within the VW group we therefore have the best preconditions. We have consolidated our efforts to further develop level 3 automated driving in the Car.Software organization. This is a new organization within the Volkswagen Group .

Former Audi managers will be head of two out of the five domains within this new organization: Thomas Müller will manage the automated driving area, and Dr. Klaus Büttner will manage the Intelligent Body&Cockpit area. Together with the specialists coming from Audi, Volkswagen and Porsche, this ensures that the current expertise in this cross-brand organization is available for the greatest possible benefit to everyone in the Volkswagen Group.

#audi, #audi-a8, #austin, #automation, #automotive, #autotech-ventures, #baltimore, #bessemer-venture-partners, #cars, #chief-technology-officer, #china, #covid-19, #driver, #ford, #greatpoint-ventures, #here, #israel, #kirsten-korosec, #klearnow, #labor-day, #lyft, #monta-vista-capital, #netherlands, #oakland, #otonomo, #pharmaceuticals, #pilot, #porsche, #san-francisco, #san-jose, #sedans, #skycell, #software-platform, #takeaway-com, #techcrunch, #thuan-pham, #transportation, #travis-kalanick, #u-s-securities-and-exchange-commission, #uber, #united-kingdom, #united-states, #utah, #volkswagen, #volkswagen-group, #vw-group

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