SEC filing indicates big data provider Palantir is raising $961M, $550M of it already secured

Palantir, the secretive big data and analytics provider that works with governments and other public and private organizations to power national security, health and a variety of other services, has reportedly been eyeing up a public listing this autumn. But in the meantime it’s also continuing to push ahead in the private markets.

The company has filed a Form D indicating that it is in the process of raising nearly $1 billion — $961,099,010, to be exact — with $549,727,437 of that already sold, and a further $411,371,573 remaining to be raised.

The filing appears to confirm a report from back in September 2019 that the company was seeking to raise between $1 billion and $3 billion, its first fundraising in four years. That report noted Palantir was targeting a $26 billion valuation, up from $20 billion four years ago. A Reuters article from June put its valuation on secondary market trades at between $10 billion and $14 billion.

The bigger story of that Reuters report was that Palantir confirmed two fundraises from strategic investors that both work with the company: $500 million in funding from Japanese insurance company Sompo Holdings, and $50 million from Fujitsu. Together, it seems like these might account for $550 million already sold on the Form D.

It’s not clear if this fundraise would essentially mean a delay to a public listing, or if it would complement it.

To date Palantir has raised $3.3 billion in funding, according to PitchBook data, with no less than 108 investors on its cap table. But if you dig into the PitchBook data (some of which is behind a paywall) it also seems that Palantir has raised a number of other rounds of undisclosed amounts. Confusingly (but probably apt for a company famous for being secretive) some of that might also be part of this Form D amount.

We have reached out to Palantir to ask about the Form D and will update this post as we learn more.

While Palantir was last valued at $20 billion when it last raised money four years ago, there are some data points that point to a bigger valuation today.

In April, according to a Bloomberg report, the company briefed investors with documents showing that it expects to make $1 billion in revenues this year, up 38% on 2019, and breaking even in the first time since being founded 16 years ago by Peter Thiel, Nathan Gettings, Joe Lonsdale, Stephen Cohen, and current CEO, Alex Karp.

(The Bloomberg report didn’t explain why Palantir was briefing investors, whether for a potential public listing, or for the fundraise we’re reporting on here, or something else.)

On top of that, the company has been in the news a lot around the global novel coronavirus pandemic. Specifically, it’s been winning business, in the form of projects in major markets like the UK (where it’s part of a consortium of companies working with the NHS on a COVID-19 data trove) and the US (where it’s been working on a COVID-19 tracker for the federal government and a project with the CDC), and possibly others. Those projects will presumably need a lot of upfront capital to set up and run, possibly one reason raising money now.

The Mom Project raises $25M for its job site aimed at women returning to work

Women have long had the short end of the stick when it comes to employment, regularly finding themselves struggling to break through the glass ceiling for promotions and on average getting paid less than their male counterparts. That situation often gets compounded when the woman in question is a parent, balancing the needs of professional and home life and more.

But we’re seeing a gradual shift among companies to “do better” on inclusion, and that’s opening the door to new opportunities. And to underscore that, The Mom Project — a Chicago startup that focuses on connecting women, including parents, with jobs from organizations specifically open to employing people who meet that profile — is announcing a $25 million round of funding to expand its business.

The funding comes on the heels of some significant traction for The Mom Project . Since we first profiled the company in December 2018 (when it had raised a round of $8 million led by Initialized Capital) it has grown to 275,000 users (up from 75,000), and doubled the number of organizations posting jobs on the platform to 2,000, including several major tech companies other brands like Facebook, Nike, Uber, Apple, Google and Twitter. The company has also made an acquisition of a startup called Werk to add analytics tools to for its business customers.

The Series B round of funding brings the total raised by the startup to $36 million, and it is being led by 7CG — a VC that has backed the likes of Jio (the Indian juggernaut raising like crazy right now), Cheddar (the media platform acquired by Altice) and fintech Acorns — with participation also from Citi Ventures, Synchrony Financial, SVB and High Alpha, as well as previous investors Initialized Capital, Grotech Ventures, OCA, Aspect Ventures, Wintrust Financial, Irish Angels and Engage VC.

The Mom Project is built around a two-sided platform and both of those sides will be getting a boost with this funding.

On one side, the startup works with businesses to post job listings that specifically target women and those returning to work who might need more flexible terms in their employment engagements, as well as analyse its overall HR strategies around those efforts.

On the other side, it provides a platform to women who fit that basic profile — the average age of its users is between 28 and 44, its CEO and founder Allison Robinson (pictured above with her child) said — providing them both with job listings and other support.

The plan will be to enhance both aspects of the business: more tools for enterprises to better engage The Mom Project’s community, as well as manage the recruitment and employment of people better; and more tools for Mom users, including building out an interactive community (and forums) to better “address the pain points of family and career,” Robinson said.

While there are a lot of job boards online — indeed recruitment dot-coms were some of the earliest successful business in the earliest days of the World Wide Web, meaning there are giant legacy players out there — The Mom Project is a strong example of how that model has been evolving.

Specifically, we’re seeing a flourishing of startups, and sites, focused on identifying and cultivating job opportunities for specific segments of the market, be it specific types of jobs like engineers, or a specific demographic, or both — in ways that more general job boards like those on LinkedIn or Indeed either don’t highlight as well or simply cannot address.

These are not only connecting with specific talent groups, but speaking to the needs of businesses that are trying to make more of an effort to boost their workforce diversity as part of larger inclusion policies: they are also struggling, in their case to find effective ways to target specific kinds of candidates.

As we noted when we previously profiled The Mom Project, it was started when Robinson herself struggled to return to work — her previous career had he working as an executive at Pampers — after having a child, and it’s a problem that she is not alone in having identified, and the focus on addressing that and executing well on it is one reason The Mom Project has grown.

Needless to say, recent events have had a huge impact on how all those general employment trends, and the recruitment industry, have been going. We’ve seen unprecedented job losses, hiring freezes, a push for remote working all suddenly become the norm. All of that has had a mixed impact on The Mom Project.

In some ways, it plays into what the startup has been building all along: currently some two-thirds of all jobs posted and that people are looking to do are focused on fixed-term projects, rather than permanent positions, and so as companies slow down their normal recruiting, it leaves a space for the kind of work that people who need more flexible schedules may be able to do. That’s at the same time that the companies themselves may be reducing headcount overall for all kinds of work, however.

Another big theme of the last several months has been the big shift to inclusiveness when it comes to racial diversity, and that too has direct relevance in the female workforce, Robinson noted. “Sixty percent of the job losses in the pandemic have been women, and the statistics have been even worse for women of color,” she said. “It’s like a canary in the coalmine.”

While The Mom Project doesn’t have any tools today to surface candidates that meet more diverse profiles, Robinson said that they are considering it and how to approach that in a way that works.

Meanwhile, The Mom Project is also trying to do more to speak to the other side of its marketplace and the struggles they are having. It’s launched a $500,000 fund, distributing grants specifically to small businesses that are its customers (that is, hiring via The Mom Project) the are finding it especially tough right now. (And indeed, many have pointed to the especially hard hit that SMBs are taking at the moment.)

All of this is to say that there remains a huge market opportunity here and there is an argument to be made that companies that good at identifying clever ways of targeting gaps, and executing on that well, are strong candidates for identifying and filling other gaps in the future, one reason why investors are knocking.

“There is a material disconnect between senior female talent and executive roles at major corporations, not for lack of interest, however the difficulty to institutionalize in large enterprise. The Mom Project’s platform enables corporates to source, onboard and manage variable labor at the highest skill level, a function historically which has been offline and manual for FTEs and even more so difficult for flexible employees,” said Jack Leeney, founding partner at 7GC, in an emailed interview. “In our diligence, the value add to senior HR managers of an analytic platform which enables the oversight of a variable work force was the single most important factor to integrating The Mom Project initially and at scale. There is no other growth company, digital first HR company or large scale talent agency that is addressing the female exec population with an enterprise grade digital solution.”

Artlist raises $48M led by KKR for its royalty-free music, video and sound effect library

Like it or loathe it, video has proven to be the most engaging of all mediums across the web, and today a company out of Israel called Artlist — which provides royalty-free libraries of music, sound effects and even video itself to enhance video content — is announcing a significant growth round of $48 million, both to continue its expansion, and to build better technology to help navigate users to the perfect clip.

The funding is being led by KKR, with participation also from Elephant Partners, a VC out of Boston that has also backed Allbirds, Scopely and Keelvar among others. This is the first funding that Artlist has ever announced, although Elephant had backed it with a previously undisclosed amount previously. Ira Belsky, Artlist’s co-CEO who co-founded the company with Itzik Elbaz, and Eyal Raz and started as a filmmaker himself, said the company has mostly been bootstrapped since being founded in 2016. It’s not disclosing the total amount raised to date, nor its valuation except to say that it’s on the rise.

“We have been 100% cash flow positive since the day we started,” he said. “We just want to accelerate growth because there is an opportunity to cater to a wider audience.”

The market gap that Artlist is tackling is a byproduct of how the internet is used and evolving. According to a recent report from Sandvine, video accounts for just under 58% of online traffic globally, with video, social and gaming (with the latter two also being very video-heavy) together accounting for some 80% of traffic. That speaks to a huge amount of content being made available not just from premium media provides like Netflix or Disney, but popular a vast array of user-generated content on channels like YouTube, TikTok, Facebook and Twitter.

While some of these may be building their own sound and video content, a large part of those, to speed up production and focus on whatever aspect of their work that they can better individualise and control, many creators turn to stock audio and video footage in their work.

Indeed, there are a number of others in this same space, including the likes of Getty, Epidemic Sound, Shutterstock, Artgrid, the platforms themselves and many others, but Belsky said that in his time as a filmmaker, he found that many of these were not quite what he was looking for himself in terms of connecting him with just the right music that he was looking for, which was part of the impetus behind building Artlist.

What’s interesting is that Covid-19 has had a double impact on that market. Not only has there been a huge boost in online video usage as more people are spending time at home and staying away from public places, but in terms of creators, Belsky notes that many of them have found it harder either to shoot certain kinds of footage, or collaborate with people create music and other sound effects, all of which has led to a surge of usage for platforms like Artlist.

Artlist’s royalty-free model means that people pay subscription fees to Artlist to use its platform — prices range between $149 and $599 per year, depending on usage and whether you are taking the music, video, sound effects or combined plans — but then nothing more for individual clips. On the other side of the marketplace, the company does not disclose how much its artists are making from the service, but the basic model is that it varies depending on how much a track is used, and generally they are very competitive. “Our artists make more from us than they do from other platforms,” Belsky said. There are no plans to switch that business model include non-royalty-free, nor outright sales of exclusive rights, he added.
On royalty-free alone, the funding comes on the back of significant growth for the company in the last couple of years, with both users and amount of content both on exponential growth curves, respectively now standing at 1.1 million subscribers and 25.8 million pieces of content (mostly music at the moment, Belsky said).

While many users will incorporate one kind of media, either video or music, into a bigger video project — such as this Mercedes Benz commercial that uses Artlist audio — others looking to see how creative they can be when leaning on both, which speaks to how we might see video continue to evolve as the market matures and yet more video content gets produced:

That brings us to the company’s next steps. Belsky said that while today there are already various taxonomies for searching for just the right piece of content, the plan is to try to make that process more intuitive. Being based in Israel, the company has been tapping some interesting data science talent, and the country is well-known for producing some of the more interesting startups using AI and all of that is feeding into Artlist’s development, too.

“We want to invest in AI for personalisation,” he said. “We see ourselves in the creative tech space, a combination of content and technology. The aim is to find the best piece of music, but also the best user experience when finding it, to make it fast and intuitive.”

One experiment has involved people uploading examples of what they’d like, and Artlist searching for “matches” in its own catalogue, and there are others to come, he said. (Indeed, given what we’ve seen with the advances in semantic search, there is a potentially very interesting opportunity to start to explore how to, for example, ingest a video clip to try to match the mood of a piece of audio to it, which is not something that the company is exploring today, but could be an avenue down the line.)

Meanwhile, given Artlist’s traction and revenue growth, the opportunities and the needs of creators today are interesting enough to make this an interesting bet, despite the stiff competition.

“The growth of digital content creation – and the evolving way in which it is consumed – has generated a tremendous amount of opportunities for creators, but the process of licensing digital assets remains a significant challenge for small and large creators alike,” said Patrick Devine, a member of KKR’s Next Generation Technology Growth investment team, in a statement. “What impresses us most about Artlist is the management team’s dedication to helping creators focus on what they do best and removing friction from the process of discovering and accessing content.”

SevenRooms raises $50M to double down on reservations, ordering and other tools for hospitality businesses

Restaurants, hotels and other public venues where we spend leisure and business time have started to reopen in many parts of the world after a period of going dark to try to slow down the spread of the coronavirus pandemic. Now, a startup called SevenRooms, which builds software to help those venues with their guest management is announcing a growth round of $50 million — to double down on providing tools for venues that now have to handle a whole new layer of management to implement social distancing and more.

The funding, a Series B, is coming from a single investor, Providence Strategic Growth, the company tells me. SevenRooms has some notable backers on its cap table already: Amazon (who invested via its Alexa Fund and directly), Comcast (via Comcast Ventures) and BoxGroup, along with a number of individuals.

The company has now raised about $75 million in total and it’s not disclosing its valuation, but CEO Joel Montaniel (who co-founded the company with Allison Page, CPO; and Kinesh Patel, CTO) said in an interview that it’s a significant upround. (PitchBook estimates that its previous valuation was a modest $28 million.)

SevenRooms serves restaurants, hotels and other venues, although food service establishments account for about 95% of its business in terms of customers and revenues. Another new opportunity has emerged out of the need for a lot of other in-person venues, like shops, needing to consider how to implement reservations to help with social distancing.

Today, it counts a number of large chains, including 70% of the restaurants along the Las Vegas Strip (because MGM is a customer), among its users. In all some 500 million bookings globally have been made through its software since it was founded in 2011, and other customers include Bloomin’ Brands, Mandarin Oriental Hotel Group, Wolfgang Puck, Michael Mina, D&D London, Corbin & King, Jumeirah Group, Black Sheep Restaurants, Zuma, and Topgolf.

Montaniel described the last three months of business as something like a “tale of two cities” — a reference to the Charles Dickens novel, which starts out with the famous line, “It was the best of times, it was the worst of times…”

In the context of SevenRooms, that has played out as a big drop in its mainstay business, which was focused around reservations, customer loyalty and other services sold as white label services directly to the venues (or the operators, as Montaniel calls them) who in turn customised them for their customers, and created experiences across multiple platforms, including their own sites and apps, as well as Google Maps.

“It’s been really tough to see the industry go through the pandemic,” he said. “A lot of operators closed doors overnight. It created a lot of challenges for businesses.”

On the other side of the issue, necessity has been the mother of invention for SevenRooms and its customers. The company has built out a new tool for letting its customers take online orders for delivery — something it had been planning to launch later in the year but decided to launch earlier, given the state of things. It’s sold with a licensing fee, with no commission to SevenRooms, and links in with SevenRooms’ marketing and loyalty tools, and it has done well, so much so that Montaniel said it and the longer-term customer relationships it’s building offset the drop in its other business.

“Delivery and pickup grew like crazy,” Montaniel said. And like some of the other “digital transformation” we’ve seen where retailers have accelerated their e-commerce strategies simply to stay in business, he believes that the switches and packages they we were proud to generate tens of thousands per month of savings. 

There are a lot of companies that have built out tools to serve the hospitality industry, and specifically to help with bookings, with some of the bigger names including OpenTable and Yelp. Montaniel believes that SevenRooms stands out because of its focus primarily on its operators, rather than providing a business in being the interface between operators and their customers, and on how it views its role in not just helping perform functions but expanding the wider business, by way of data that it can use to help grow customer loyalty and help people who are regulars feel like it.

There remain a lot of potential competitors who are also sometimes partners. Google, and Google Maps, is perhaps the most obvious, although these days Montaniel says Google Maps and the entry point it gives to discovering restaurants is a great boost to its business.

“Google is a company that every company in the world thinks about and talks about in their strategy sessions,” he said. “But there are others too. Big companies always can be competition: they do so many things so well, and they are a team away and a cash infusion away from competing with you, and those who don’t think they are are rivals are not thinking big enough.”

All the same, there are also two potential allies in SevenRooms’ corner that make this bet a little more interesting.

Amazon’s Alexa Fund is about strategic investments: SevenRooms used the backing to build out an Alexa integration into its white-label tools. But there are other ways in which that connection might potentially develop. The company has dabbled in travel services (including bookings) in the past, via Amazon Destinations, and although that was short-lived, the company continues to serve a number of hospitality and travel businesses via AWS, and frankly you can’t really count Amazon out of any vertical with an online component, which is to say, you can’t really count Amazon out of any vertical at all.

Meanwhile, Comcast has been making a number of investments into the kinds of services that it could potentially resell as part of larger business connectivity packages, which includes a focus on local businesses, spelling out another opportunity for how SevenRooms might expand.

Interestingly, SevenRooms is already close to profitability, and it didn’t need this funding — in contrast to a lot of other startups that have found it hard to make ends meet in these difficult months. Montaniel said that it raised because it had a list of “seven things we wanted to do, and without the extra cash we could only do three of them,” without elaborating on what those product features will be.

It’s a big area, though, and now that so much activity has been cut off for so many of us, we’re only now starting to realise how critical it can be, one reason why investors were interested.

“SevenRooms is a category-defining company that provides a vital solution to hospitality operators worldwide,” said Adam Marcus, Managing Director at PSG. “Joel and the talented SevenRooms management team have built the only vertically-integrated solution in the hospitality industry, which has enabled them to scale into a global powerhouse. SevenRooms is uniquely positioned, and we are excited to partner with the team to support their next phase of growth.”

Amazon and Valentino team up in joint lawsuit against New York counterfeiter over Rockstud knock-offs

Amazon is ramping up its efforts to tackle counterfeiting on its platform by aiming for the higher end of the fashion market. Today the e-commerce giant announced that it has jointly filed a lawsuit with Italian luxury brand Valentino against Buffalo, New York-based Kaitlyn Pan Group, LLC and New York resident Hao Pan for copying a famous Valentino shoe style — the Garavani Rockstud, pictured above — and subsequently selling those products on Amazon and Kaitlyn Pan’s own site, “in violation of Amazon’s policies and Valentino’s intellectual property rights.”

Amazon said that any proceeds that result from the suit will go straight to Valentino itself. We’ve asked how much the companies are seeking in damages and will update this post with more information as we get it. We are embedding the suit below the article.

Notably, this is the first time that Amazon has teamed up with a luxury brand to go after counterfeiters in the courts, although it has partnered with other brands in the past. As with those previous cases, it’s important for Amazon to work with the brands to show it’s a friend to legitimate commerce by working actively to stop illicit sales.

Alongside that, however, Amazon has been making huge efforts to raise its game in fashion, and so it’s extremely important that it fights against the image that its a fertile ground for selling and buying illegal knock-off items of famous brands.

Getting off on the right foot — so to speak — with Valentino is part of that. The Garavani Rockstud (“Garavani” comes from Valentino’s full name, Valentino Clemente Ludovico Garavaniis one of Valentino’s most iconic styles, with its metallic lines of studs making an appearance on a range of Valentino footwear including sandals, heels and flats. They were first introduced in 2010 and Valentino has design patents on the style.

Kaitlyn Pan currently sells a number of models that riff on that basic concept. Typically, authentic Valentino Rockstud shoes retail for between $425 and $1,100, while the Pan versions sell for significantly less, around $100.

You can see where the problem lies.

While the shoes are not being sold as Valentino and do not use the Rockstud branding, they could easily be mistaken for them (and may have even been promoted using that keyword when they were still being sold on Amazon):

One thing that isn’t really covered in the Amazon/Valentino suit, but you have to wonder about, is the role that other play in enabling the illicit sales of the items. In the case of Kaitlyn Pan, the site is powered by none other than Shopify, for example.

“The vast majority of sellers in our store are honest entrepreneurs but we do not hesitate to take aggressive action to protect customers, brands, and our store from counterfeiters,” said Dharmesh Mehta, vice president, Customer Trust and Partner Support, in a statement. “Amazon and Valentino are holding this company accountable in a court of law and we appreciate Valentino’s collaboration throughout this investigation.”

Amazon said that it shut down Kaitlyn Pan’s seller account in September 2019, and it did not specify how many pairs of Pan’s shoes were sold via Amazon before then. As of today, the Pan models are still being sold directly on Kaitlyn Pan.

And rather audaciously, despite getting forced out of Amazon’s marketplace and being slapped with cease and desist orders from Valentino, Kaitlyn Pan has applied to the USPTO to trademark the style.

Valentino, like other expensive luxury brands, regularly gets copied and counterfeited, and that has been the case for decades. But arguably, the rise of e-commerce, where it can be harder to trace sellers and products have a higher chance of being disseminated more widely, has compounded that problem.

So the company has made a more concerted effort to fight back. In the past three years, it’s worked with US Customs to seize more than 2,000 counterfeit products and work on a surveillance system to detect counterfeit products on sale in the US market, leading to the removal of more than 7,000 listings across multiple marketplaces, 360 websites and more than 1,000 social media accounts.

“The Maison Valentino is one of the main protagonists of International fashion and plays a major role in the luxury division by sustaining Made in Italy,” Valentino said in a statement. “The brand represents in the global market, one of the Italian excellences in the execution of the industrial process in Italy and of the artisanal and handmade workmanship that are entirely produced in the historic Atelier of Piazza Mignanelli in Rome. We consider Made in Italy to be a fundamental value to be fully endorsed, respected and at the forefront of our business and creations. Valentino is an Italian brand operating globally and is a mirror of society. One of our core missions is to safeguard our brand and protect the Valentino Community by celebrating inclusivity and with creativity at the heart of everything we do. We feel this connection with Amazon will highlight the importance also in fashion for greater awareness, knowledge and understanding by shielding the brand online and its resources.”

Amazon’s role in creating an avenue for counterfeit items to be sold has been a problematic one for the company for years: it has invested in building technology to tackle the problem — in 2019, it said that it had invested over $500 million and dedicated 8,000 employees working on fraud and abuse (which includes IP infringement and counterfeit goods) — and it works with law enforcement and collaborates with authorities to build cases against infringing companies and people. But its critics continue to call out the company and its track record, saying it still has not done enough to address the issue — which of course still results in sales, and thus revenues — on its platform.

We’ll update this post as we learn more.

Outreach nabs $50M at a $1.33B valuation for software that helps with sales engagement

CRM software has become a critical piece of IT when it comes to getting business done, and today a startup focusing on one specific aspect of that stack — sales automation — is announcing a growth round of funding underscoring its own momentum. Outreach, which has built a popular suite of tools used by salespeople to help identify and reach out to prospects and improve their relationships en route to closing deals, has raised $50 million in a Series F round of funding that values the company at $1.33 billion. 

The funding will be used to continue expanding geographically — headquartered in Seattle, Outreach also has an office in London and wants to do more in Europe and eventually Asia — as well as to invest in product development.

The platform today essentially integrates with a company’s existing CRM, be it Salesforce, or Microsoft’s, or Kustomer, or something else — and provides an SaaS-based set of tools for helping to source and track meetings, have to-hand information on sales targets, and a communications manager that helps with outreach calls and other communication in real-time. It will be investing in more AI around the product, such as its newest product Kaia (an acronym for “knowledge AI assistant”), and it has also hired a new CFO, Melissa Fisher, from Qualys, possibly a sign of where it hopes to go next as a business.

Sands Capital is leading the round, Outreach noted, with “strong participation” also Salesforce Ventures. Other investors include Operator Collective and repeat backers Lone Pine Capital, Spark Capital, Meritech Capital Partners, Trinity Ventures, Mayfield, and Sapphire Ventures. The company has raised $289 million to date, and for some more context, this is definitely an upround: Outreach was last valued at $1.1 billion in its previous round in April 2019.

The funding comes on the heels of strong growth for the company: more than 4,000 businesses now use its tools, including Adobe, Tableau, DoorDash, Splunk, DocuSign, and SAP, making Outreach the biggest player in a field that also includes Salesloft (which also raised a significant round last year on the heels of Outreach’s), ClariChorus.aiGongConversica, and Afiniti. Its sweet spot has been working with technology-led businesses and that is a market that is continuing to expand, even as so much more of the economy has contracted in recent months. 

“You are seeing a cambric explosion of B2B startups happening everywhere,” Manny Medina, CEO and co-founder of Outreach, said in a phone interview this week. “It means that sales roles are being created as we speak.” And that translates to a growing pool of potential customers for Outreach.

It wasn’t always this way.

When Outreach was first founded in 2011 in Seattle, it wasn’t a sales automation company. It was a recruitment startup called GroupTalent working on software to help source and hire talent, aimed at tech companies. That business was rolling along, until it wasn’t: it hit a wall in 2015 and the startup saw it had only two months of runway left, with little hope of raising more. 

“We were not hitting our stride, and growth was hard. We didn’t make the numbers in 2014 and then had two months of cash left and no prospects of raising more,” Medina recalled. “So I sat down with my co-founders,” — Gordon Hempton, Andrew Kinzer and Wes Hather, none of whom are at the company anymore — “and we decided to sell our way out of it. We thought that if we generated more meetings we could gain more opportunities to try to sell our recruitment software.

“So we built the engine to do that, and we saw that we were getting 40% reply rates to our own outreaching emails. It was so successful we had a 10x increase in productivity. But we ran out of sales capacity, so we started selling the meetings we had managed to secure with potential talent directly to the tech companies themselves, who would have become their employers.”

That quickly tipped over into a business opportunity of its own. “Companies were saying to us, ‘I don’t want to buy the recruitment software. I need that sales engine!” The company never looked back, and changed its name to work for the pivot.

Fast forward to 2020, and times are challenging in a completely different way, defined as we are by a global health pandemic that affects what we do every day, where we go, how we work, how we interact with people, and much more. 

Medina says that impact of the novel coronavirus has been a significant one for the company and its customers, in part because it fits well with two main types of usage cases that have emerged in the world of sales in the time of COVID-19.

“Older sellers now working from home are accomplished and don’t need to be babysat,” he said, but added but they can’t rely on their traditional touchpoints “like meetings, dinners, and bar mitzvahs” anymore to seal deals. “They don’t have the tools to get over the line. So our product is being called in to help them.”

Another group is at the other end of the spectrum, he said, are “younger and less experienced salespeople who don’t have the physical environment [many live in smaller places with roommates] nor experience to sell well alone. For them it’s been challenging not to come into an office because especially in smaller companies, they rely on each other to train, to listen to others on calls to learn how to sell.” That’s the other scenario where Outreach is finding  up for a job and come into office.

Although a lot of sales tools are essentially taking on some of the more mundane jobs of salespeople, Medina doesn’t believe that we’re anywhere close to replacing the humans, even at this time when we’re seeing so many layoffs.

“We are at the early innings,” he said. “There are 6.8 million sales people and we only have north of 100,000 users, not even 2% of the market. There may be a redefinition of the role, but not a reduction.”

Stockwell, the AI-vending machine startup formerly known as Bodega, is shutting down July 1

Stockwell AI entered the world with a bang but it is leaving with a whimper. Founded in 2017 by ex-Googlers, the AI vending machine startup formerly known as Bodega first raised blood pressures — people hated how it referenced and poorly ‘disrupted’ mom-and-pop shops in one fell swoop — and then raised a lot of money. But ultimately, it was no match for COVID-19 and the hit it has had on how we live.

TechCrunch has learned and confirmed that Stockwell will be shutting down at the end of this month, after it was unable find a viable business for its in-building app-controlled “smart” vending machines stocked with convenience store items.

“Regretfully, the current landscape has created a situation in which we can no longer continue our operations and will be winding down the company on July 1st,” co-founder and CEO Paul McDonald wrote in an email to TechCrunch. “We are deeply grateful to our talented team, incredible partners and investors, and our amazing shoppers that made this possible. While this wasn’t the way we wanted to end this journey, we are confident that our vision of bringing the store to where people live, work and play will live on through other amazing companies, products and services.”

We originally reached out after we were tipped off by someone who had received an email about the closure. Stockwell’s vending boxes were distributed primarily in apartment and office buildings, and it has been contacting those customers for the past week to break the news.

For what it’s worth, the building operator that was using Stockwell vending machines said it is actively in search of a replacement provider, so it seems it did get some use, but more pointedly it’s been very hard for the vending machine industry, where some distributors have seen business losses of up to 90%.

Stockwell’s closure is notable because it underscores how in the current climate, having a strong list of backers and a very decent amount of funding cannot always guarantee insulation for everyone.

As of last September, Stockwell had raised at least $45 million in funding from investors that included NEA, GV, DCM Ventures, Forerunner, First Round, and Homebrew. Its network had grown to 1,000 “stores”, smart vending machines that work a little like advanced hotel minibars: sensors detect and charge you for what you take out, and you use a smartphone app both to track what you buy and to pay for it.

As of last autumn, the company appeared to be gearing up for a widening of its business model, allowing its customers (building, office and apartment managers) to have a bigger say in what got stocked beyond the items Stockwell itself put into its machines, which included water and other beverages, savoury and sweet snacks, and a few home basics like laundry detergent and pain killers.

By December, it seems that McDonald’s co-founder, Ashwath Rajan, had quietly left the startup, and then as 2020 kicked into gear, COVID-19 took its toll.

First, consumers found themselves spending much more time working and simply being at home, going out less and bulk buying to minimise shopping efforts. That, in turn, had a big impact on the sustainability of business models based on casual, small purchases, such as the kind that one would typically make from vending machines like Stockwell’s.

Second, at a time when many are trying to minimise the spread of infection by wearing face masks, washing hands and minimising touching random objects, a big question mark hangs over the whole concept of unattended vending machines, and whether they can ever be properly sanitised. That’s impacted not only people buying items, but the workforce that’s meant to help stock and maintain these kiosks.

There have been some interesting twists in how the vending industry has handled COVID-19. Some are swapping out pretzels and Snickers and replacing them with PPE equipment, and others are finding opportunity in stocking them with healthy food specifically for front-line workers who have no other options and need quick but nutritious fixes during critical times.

But more generally, the vending machine industry has been hit hard by the pandemic.

The wider market in a normal year is estimated to be worth some $30 billion annually — one reason why Stockwell nee Bodega likely caught the eye of investors — but business has fallen off a cliff for many key operators.

The president of the European Vending Association, in an appeal in April to government leaders for financial assistance, said that business had dropped off by 90% and described COVID-19 as having a “devastating effect” on the sector. Difficult numbers for the Pepsi’s and Mondelez’s (nee Kraft) of the world, but surely the nail in the coffin for a young, promising AI-based vending machine startup that nonetheless some doubted from the word go.

UK competition watchdog launches investigation into Facebook’s $400M acquisition of Giphy

Facebook wants to be the go-to platform for all of your social needs, but a big move it made last month to take ownership in the world of GIFs — the short, looping videos that people use to convey sentiments in online conversations — may not go as it hopes. The UK Competition and Markets Authority — the country’s antitrust watchdog — today announced that it has launched an investigation into Facebook’s acquisition of Giphy, the popular GIF repository and search engine that it announced last month it would be acquiring, reportedly for $400 million, to integrate into its Instagram team. Specifically, it’s looking to see how and if the deal will lessen competition in the two companies’ respective markets.

“The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” it notes in the announcement.

The CMA is now opening up the case for comments from third parties, to be submitted by July 3, 2020.

The CMA further noted that while its investigation is ongoing, Facebook can’t continue with activities related to the acquisition, unless it has prior written approval from the CMA. This includes integrating the products, integrating the teams, working on business deals or contracts together. Facebook and Giphy both have confirmed to the CMA that they are complying with the order.

GIFs are so ubiquitous on the web, and so easy (and free) to import and use, that the business model behind them is not that immediately obvious. Their place in the business of the internet, however, is potentially both direct and general. On the direct side, while Giphy up to now has not made any money, there is an obvious opportunity to move into the area of sponsored GIFs, and more services to create and disseminate GIF-based content. For a company like Facebook ever looking for more innovative and varied advertising formats that work in a social media context, the allure of a popular platform to fill out that commercial vision is obvious.

On the more general side, they are a key way to create more engagement in social media, another major goal of Facebook — again, as a route to fuelling more audience and eyeballs to drive more ad business. The two already had an integration before Facebook ever made a move to buy it: a full 50% of Giphy’s traffic came from its integrations with Facebook properties Instagram, Messenger and WhatsApp, as well as Facebook itself, speaking to just how linked the use cases already are for the two.

Facebook has had mergers investigated by the CMA before, although it’s never really been given a hard ride through any of them. Perhaps most notably was the company’s $19 billion acquisition of WhatsApp, the hugely popular messaging platform: given how both platforms, and others at Facebook, have continued to grow, you could argue that there was some antitrust regret over the no-strings-attached nod that the deal got when it closed. It will be interesting to see if the CMA exercises more foresight, or at least better hindsight, with this deal rather than just going through the motions.

 

Kahoot raises $28M for its user-generated educational gaming platform, now valued at $1.4B

As schools stay closed and summer camp seems more like a germscape than an escape, students are staying at home for the foreseeable future and have shifted learning to their living rooms. Now, Norwegian educational gaming company Kahoot — the popular platform with 1.3 billion active users and over 100 million games (most created by users themselves) — has raised a new round of funding of $28 million to keep up with demand.

The Oslo-based startup, which started to list some of its shares on Oslo’s Merkur Market in October 2019, raised the $28 million in a private placement, and said it also raised a further $62 million in secondary shares. The new equity investment included participation from Northzone, an existing backer of the startup, and CEO Eilert Hanoa. While it’s not a traditional privately held startup in the traditional sense, at the market close today, the company’s valuation was $1.39 billion (or 13.389 billion Norwegian krone).

Existing investors in the company include Disney and Microsoft, and the company has raised $110 million to date.

Kahoot launched in 2013 and got its start and picked up most of its traction in the world of education through its use in schools, where teachers have leaned on it as a way to provide more engaging content to students to complement more traditional (and often drier) curriculum-based lessons. Alongside that, the company has developed a lucrative line of online training for enterprise users as well.

The global health pandemic has changed all of that for Kahoot, as it has for many other companies that built models based on classroom use. In the last few months, the company has boosted its content for home learning, finding an audience of users who are parents and employers looking for ways to keep students and employees more engaged.

The company says that in the last 12 months it had active users in 200 countries, with more than 50% of K-12 students using Kahoot in a school year in that footprint. On top of that, it is also used in some 87% of “top 500” universities around the world, and that 97% of Fortune 500 companies are also using it, although it doesn’t discuss what kind of penetration it has in that segment.

It seems that the coronavirus outbreak has not impacted business as much as it has in some sectors. According to the midyear report it released earlier this week, Q2 revenue is expected to be $9 million, 290% growth compared to last year and 40% growth compared to the previous quarter, and for the full year 2020, it expects revenue between $32 million and $38 million, with a full IPO expected for 2021.

As it has been doing even prior to the coronavirus outbreak, Kahoot has also continued to invest in inorganic growth to fuel its expansion. In May, it acquired math app maker DragonBox for $18 million in cash and shares. The company also runs an accelerator, Kahoot Ignite, to spur more development on its platform.

However, Hanoa said that Kahoot is shifting its focus to now also work with more mature edtech businesses.

“When we started out, we were primarily receiving requests on early stage products,” he said. “Now we have the opportunity to consider mature services for either integration or corporation. It’s a different focus.”

Update: A previous version of this story said that DragonBox was acquired in March. It was acquired in May. The story has been updated to reflect this change. 

Sentropy emerges from stealth with an AI platform to tackle online abuse, backed by $13M from Initialized and more

Online abuse in its many forms on social media is in the spotlight these days as it has never been before: not only can strong and hateful words be directly harmful to individuals, but their use fans the flames around hate groups and other extremists, fomenting even stronger (and often tragic) responses offline, too. Today, a startup called Sentropy that believes it has developed the most sophisticated, yet easy to implement, system yet to help identify, track and ultimately purge online abuse by way of its AI-based platform, is launching to take on the issue.

The idea behind Sentropy as much philosophical as it is technical: John Redgrave, the CEO who cofounded the startup Michele Banko, Taylor Rhyne, and Ethan Breder, said that it was about using what he and his cofounders knew about how to manipulate and “read” unstructured data, to apply it to online abuse, which finally, really needed to be taken seriously.

“Every week I was watching the impact that online conversations were having on the real world,” he said in an interview. “They were creating a lasting impact. There is a link between URL and IRL. For the younger generation, the difference between their digital and physical selves will be indistinguishable. That is powerful, but also problematic.”

The startup is coming out of stealth mode with $13 million in funding from a pretty illustrious list of backers — they include Alexis Ohanian, the co-founder of Reddit, his VC firm Initialized Capital, King River Capital, Horizons Ventures and Playground Global, founders and executives from Riot Games, Nextdoor, OpenAI, Twitch, Twitter, and a “former head of government” (whose name is not disclosed).

Although Sentropy is emerging into the open today, it’s actually been active for a while, working with a number of tech companies while in a private beta since June for the first of its products, an API-based abuse detection engine branded Defend. That is coming out as a generally available product, along with an out-of-the-box version called Detect. Redgrave would not disclose which tech companies it’s been working with so far, although it’s notable that until just this week, Ohanian still sat on the board of Reddit and would have been an obvious strategic connection into working with it, and of course Reddit is a prime example of the kind of platform that faces the kind of abuse that Sentropy is tackling.

“I’ve seen first-hand the difficulty of manually moderating online communities,” said Ohanian, in a statement. “The breadth and depth of this issue require serious resources and machine learning chops. Sentropy has built the tech that is much needed across social media communities. User safety has become a competitive differentiator for those willing to take a stand against abuse.”

Another reason Sentropy has likely had some early and strong interest in its product is because of the track record of the founders. Their previous company, Lattice Data, was a specialist the larger general area of unstructured, dark data, albeit for different ends. It was acquired by Apple in 2017, with several on the current team going on to work there after the sale. Redgrave said that the idea of tackling online abuse as an unstructured data problem was something that they had actually started to identify while Lattice was still a startup, although it was not something that they developed there.

Sentropy is sold both as an API-based product for developers to implement and customise and as one that can be used out of the box to manage communities online, respectively branded Detect and Defend. Both implementations today are based on providing tools to humans to ultimately make moderation decisions for their respective platforms, although over time there could be a service added in that will automate more of the work.

There are a number of problems today when dealing with online abuse and the task of trying to stem and moderate it, Redgrave pointed out. The sheer volume of comments on popular sites makes the task of human triage very complicated an practically insurmountable (and potentially harmful in its own right) task. Meanwhile, a lot of the current systems for automating and flagging keywords and phrases are often not sophisticated enough to catch the right things. This leads to a small dent in the problem, but in actual fact some 75% of online harassment goes unreported, the company said, citing Pew Research.

Rhyne said that the “brain” that underpins the service was built by ingesting many, many pages of conversations from across the open web, the grey web and the dark web. As you would expect with an AI system, Sentropy also “learns” how specific customers use it to adapt to them. In turn, those learnings are also fed into the bigger brain to continue teaching it as well. (The way that Sentropy has parsed all that data to make its own reading of it more “intelligent” is of course the secret sauce here.)

There are a lot of questions and untapped areas that will likely need to be addressed over time, even with the headway it’s making here. For one, Sentropy is making its start by focusing on text. For now, there is no product that parses audio or video content, which would need to today be run through a transcriber in order to be “read” by Sentropy’s algorithms. Over time, given the prevalence of video apps and the popularity of sites like YouTube and video on other platforms like Facebook, this is an area it will have to reckon with.

Similarly, there are question marks still over how much customising a site might want to make around certain terminology and how and if that might be abused at some point. Rhyne notes that for now, Sentropy decides the terms so it can’t itself be abused and used as a tool of political censorship, as one example. It raises interesting questions, of course, about what is universally “right” and “wrong.”

“We do have a choice of who our customers are,” said Redrave. “It’s not open source technology, and they have to interact with us and we will learn specific use cases.”