Powered by $25 million, Arcadia Power looks to expand its distributed renewable energy services

As renewable energy use surges in the U.S. and the effects of global climate change become more visible, companies like Arcadia Power are pitching a nationwide service to make renewable energy available to residential customers.

While states like New York, California and regions across the upper Midwest have access to renewable energy through their utilities and competitive marketplaces, not all states in the country have utilities that are building renewable power generation to offset coal and natural gas energy production.

Enter Arcadia Power and its new $25 million in financing, which will be used to redouble its marketing efforts and expand its array of services in the U.S.

Right now, renewable energy is the fastest growing component of the U.S. energy mix. It’s grown from 15 percent to 18 percent of all power generation in the country, according to a 2018 report from Business Council for Sustainable Energy and Bloomberg New Energy Finance.

And while Arcadia Power is only accounting for 120 megawatts of the 2.9 gigawatts of new renewable energy projects initiated since 2017, its new $25 million in financing will help power new projects.

When we first wrote about the company in 2016, it was just developing solar projects that would generate power for the grid to offset electricity usage from its customers.

Now the company is expanding its array of services. All customers are automatically enrolled in a 50 percent wind energy offset program, where half of their monthly usage is matched in investments in wind farms — and they can upgrade to fully offset their energy usage with wind power. Meanwhile, community solar projects are also available for free or customers can then purchase a panel and receive a guaranteed solar savings on each monthly power bill.

Reduced prices are given to customers through the consolidation of their buying power across multiple competitive energy markets.

Finally, Arcadia is offering new home efficiency upgrades like LED lighting and smart thermostats, along with smart metering and tracking services to improve customers’ payment options, the company said.

“The electricity industry hasn’t changed much in the last hundred years, and we believe that homeowners and renters want a new approach that puts them first. Our platform places clean energy, home efficiency and data insights front and center for residential energy customers in all 50 states,” said chief executive Kiran Bhatraju.

Kiran Bhatraju, chief executive officer Arcadia Power

Funding for the new Arcadia Power financing was led by G2VP, the investment firm that spun out from Kleiner Perkins cleantech investing, ValueAct Spring Fund, McKnight Foundation, Energy Impact Partners, Cendana Capital, Wonder Ventures, BoxGroup and existing investors, according to the company. As a result of the investment, Alex Laskey, Opower’s founder and president; Ben Kortlang, a partner at G2VP; and Dan Leff, a longtime investor in energy technology companies, will all join the Arcadia board of directors.

“We’re taking a piece of the savings that is a part of the power purchase agreement,” says Bhatraju. “Customers get a 5 percent guaranteed savings against the utility rate. In competitive markets like Ohio or Maryland, it’s a shared savings model.”

Beyond the savings, the offsets can do something to reduce the carbon emissions that are exacerbating the problems of global climate change.

“When you build community solar projects you are displacing former fossil fuel plants from being used because these of customers,” Bhatraju said. But the entrepreneur recognizes that they have a long way to go to make a difference. “120 MW is not nearly enough,” Bhatraju said. “We’ve got a long way to go.”

Wonderschool raises $20M to help people start in-home preschools

Educators already don’t get paid enough, and those that work in preschools or daycares often make 48% less. Meanwhile, parents struggle to find great early education programs where kids receive enough attention and there’s space, but they don’t need special connections or to pass grueling admissions interviews to get in.

Any time there’s a lousy experience people have an emotional connection to and spend a lot of money on, there’s an opportunity for a startup. Enter ‘Wonderschool‘, a company that lets licensed educators and caretakers launch in-home preschools or daycares. Wonderschool helps candidates get credentialed, set up their programs, launch their websites, boost enrollment, and take payments in exchange for a 10 percent cut of tuition. The startup is now helping run 140 schools in the SF Bay, LA, and NYC where parents are happy to pay to give their kids an advantage.

That chance to fill a lucrative gap in the education market has attracted a new $20 million Series A for Wonderschool led by Andreessen Horowitz. The round brings the startup to $24.1 million in total funding just two years after launch. With the cash and Andreessen partner Jeff Jordan joining its board, Wonderschool is looking to build powerful lead generation and management software to turn teachers into savvy entrepreneurs.

Finding good childcare has become one of the most difficult experiences for families. I’ve seen parents who are making a livable wage in urban cities like San Francisco and New York still struggle to find and afford quality childcare” says co-founder and CEO Chris Bennett. “We wanted to deliver a solution for parents that also had the potential to create jobs and empower the caregiver — that’s Wonderschool.”

By spawning and uniting programs across the country, Wonderschool could scale as the way software eats preschool. But without vigorous oversight of each educator, Wonderschool is also at risk of a safety mishap at one of its franchises ruining the brand for them all.

Airbnb For Schooling

Wonderschool started when co-founder Arrel Gray was having trouble finding childcare for his daughter close to home. “My little sister went to an in-home preschool, so I suggested he check them out” says Bennett. “But he wasn’t very satisfied with the options – the majority were full and some didn’t meet the expectations for his family. We also found that they didn’t use the internet much so they were hard to find and contact.”

The two were seeking to pivot their social commerce startup Soldsie after Facebook algorithm changes curtailed its growth. Their research led to the discovery of just how much lower preschool and daycare workers’ wages were. “When we had the idea we thought, ‘what the best way to test this?’ Why don’t we start a preschool ourselves'” says Bennett. “So we rented a home in the Berkeley Hills, hired an amazing educator, set up a school and started one. The school ended up being a huge success. Five-star reviews on Yelp. A high NPS. Parents loved the place.” It also netted the teacher a 3X higher salary than before.

With that proof, Wonderschool went on to raise $4.1 million from Josh Kopelman at First Round Capital, Omidyar Network, Cross Culture Ventures, Uncork Capital, Lerer Ventures, FundersClub, and Edelweiss. That let Bennett and Gray flesh out the business. Wonderschool would recruit existing teachers and caregivers or guide people to get licensed so they could become “directors” of in-home schools. Wonderschool acts almost like Airbnb by turning them into small businesses earning money from home.

Teachers can pick whatever schedule, curriculum, or format they want, like Montesori or nature-focused learning. Wonderschool now has over 500 directors working with its software, with some making as much as $150,000 or $200,000. In exchange for its 10 percent cut of tuition, Wonderschool provides directors with a “bootcamp” to prep them for the job. It pairs them with a mentor, then helps them build their website and figure out their pricing options. Coaching guides train the directors to scout for new leads, offer appealing tours, and track their fledgling business.

The $20 million from Andreessen, OmidyarGary Community Investments, and First Round will go to expanding the Wonderschool software. Each student slot it can help director fill, the more it earns. The startup will also have to compete with  companies like Wildflower Schools, which Bennett admits has a similar business model but he says “We are focused on in home and they also focus on Montessori while we are curriculum agnostic.” There’s also Cottage Class which powers homeschooling for students up to age 18, Tinkergarten that concentrates on short-term outdoor education, and VIPKid connects kids in China with U.S. teachers over video chat.

They, like Wonderschool, are trying to scale up to meet the massive existing demand. “The challenge is that there aren’t enough programs for the number of children needing public or private schooling – 1st grade or earlier – and our goal is to provide enough supply for every child” Bennett explains.

Still, safety remains a top concern. Bennett notes that “Wonderschool has a support team that helps school Directors prepare their homes for operation. With regard to safety, each state’s licensing office covers this in their approval process for being granted a license to operate.” But could a problem at one school shake the businesses of all the rest of its franchises? “We have a system of checks in balances in place that we feel confident would allow us to anticipate any potential issues, including regular, weekly check-ins with Directors and a feedback loop with parents. We also email parents on a regular cadence to get feedback from parents and we step in and work with the Director if we find that there are issues” Bennett insists.

If Wonderschool can keep its brand clean through thorough oversight, it could both create better paying jobs in a field rife with undercompensated heroes, and open early schooling to a wider range of students. Bennett’s parents moved to the U.S. from Honduras, pouring their efforts into supporting his and his sister’s education. Now he’s building the next generation of teachers the tools to give more kids a head start in life.

Neat is a challenger bank for early-stage startups and SMEs

With the growth in cross-border payment services and ‘challenger’ bank cards for consumers, you’d be forgiven for wondering where the options are for small business — where cash is particularly precious.

They do exist. One of the newer options is Neat, which is nested in Hong Kong but open for business worldwide.

The startup started off following the same track as the likes of Monzo, Starling and Revolut in Europe, developing a ‘new’ kind of account free of branch-based banking and tedious paperwork. But quickly the team realized that its service was being adopted in large by startups and SMEs as a way to get more flexible financing and perks like install balance/billing.

Neat still offers a consumer service in Hong Kong, but it places a heavy focus on developing its business service. Right now, that helps companies who can’t apply for credit cards get a Neat Mastercard which can be used for trivial (but important!) items such as monthly bills for services, flights, hotels and more. There’s no credit involved since the cards and account are debit-based.

Beyond the basics, Neat Business customers can use their account to handle employee payroll, business invoices, receive money and really pay all other bills that would require a credit card without using their personal one, as is so often the case for early-stage startups. More advanced features include expense cards for employees, while detailed company reporting and automated accounts are planned for introduction soon.

The company is based in Hong Kong, but Neat’s service can be used overseas, and indeed it already is.

Co-founder and CEO David Rosa, a former managing director of Citi Bank Asia Pacific, told TechCrunch that the company has customers in over 100 countries since account holders don’t need to be resident in, or incorporated in Hong Kong, to qualify for the service.

That said, a large portion is based in or associated with Hong Kong as it stands today, but Rosa — who started the business in 2015 alongside CTO Igor Wos — said he wants to change that and grow the userbase globally. The fact that Neat is working on introducing multi-currency solutions, as well as accountancy software integrations, is sure to help widen its appeal to those based outside of Hong Kong.

(Left to right) Neat co-founders Igor Wos (CTO) and David Rosa (CEO)

In a further validation, Neat recently snagged $2 million in funding to develop its tech and increase marketing. Those investors included Singapore’s Dymon Asia and Portag3 Ventures, which is the VC arm of Canada-based Power Corp, a public listed international management firm with a market cap of $9 billion. The Neat deal represents the Portag3 Ventures’ first investment in Asia and its CEO is bullish on how the duo can work together.

“From Hong Kong, we can reach the world. There’s a lot to be done here especially because of the China angle,” Rosa, who has lived in Hong Kong for 17 years, said.

Slack is raising $400M+ with a post-money valuation of $7B or more

Slack — the app that lets coworkers and others in professional circles chat with each other and call in data from hundreds of integrated apps in the name of getting more work done (or at least procrastinating in an entertaining way) — has been on a growth tear in the last few years, most recently passing 8 million daily active users, 3 million of them paying. Now, the company is planning to capitalise on that with some more funding.

TechCrunch has learned that Slack is raising another round, this time in the region of $400 million or possibly more, with a post-money valuation of at least $7 billion — adding a whopping $2 billion on top of the company’s last valuation in September 2017, when SoftBank led a $250 million round at a $5.1 billion valuation.

We’ve heard from multiple sources that a new investor, General Atlantic, is leading this round, with possibly another new backer, Dragoneer, also in the mix. It’s not clear which other investors might be involved; the company counts no less than 41 other backers on its cap table already, according to PitchBook. (You might even say Several People Are Funding…) We also don’t know whether this round has closed.

At $400 million, this would make it Slack’s biggest round to date. That size underscores a few different things.

First, it points to the existing opportunity in enterprise messaging. Consumerisation has taken hold, and apps that let users easily start and carry on a mix of serious and diverting conversations, infused with GIFs or whatever data they might need from other applications, are vying to replace other ways that people communicate in the workplace, such as email, phone conferences and in-person chats, even when people are in the same vicinity as each other. With consumer messaging apps like WhatsApp topping 1.5 billion users, there’s plenty of room for enterprise messaging to grow.

Second, the round and valuation emphasize Slack’s position as a leader in this area. While there were other enterprise social networking apps in existence before Slack first launched in 2013 — Yammer, Hipchat and Socialcast among them — nothing had struck a chord quite as Slack did. “Things have been going crazy”, was how co-founder and CEO Stewart Butterfield described it to me when Slack exited beta: teams trialling it were seeing usage from “every single team member, every day.”

That growth pace has continued. Today, the company counts 70,000 paid teams including Capital One, eBay, IBM, 21st Century Fox, and 65 percent of Fortune 100 companies among its bigger users; and with customers in 100 countries, half of its DAUs are outside North America (UK, Japan, Germany, France and India are its biggest international markets).

But thirdly — and this could be key when considering how this funding will be used — Slack is not the only game in town.

Software giant Microsoft has launched Teams, and social networking behemoth Facebook has Workplace. Using their respective dominance in enterprise software and social mechanics, these two have stolen a march on picking up some key customer wins among businesses that have opted for products that are more natural fits with what their employees were already using. Microsoft reported 200,000 paying organizations earlier this year, and Facebook has snagged some very large customers like Walmart.

Slack’s bottom-up distribution strategy could give it an edge against these larger companies and their broader but more complex products. The lightweight nature of Slack’s messaging-first approach allows it more easily be inserted into a company’s office stack. Nearly every type of employee needs office messaging, creating potential for Slack to serve as an identity layer for enterprise software. It’s own Slack Fund invests in potential companies that plug in, as the company hopes to build an ecosystem of partners that can fill in missing functionality.

AUSTIN, TX – MARCH 15: Stewart Butterfield, CEO of Slack speaks onstage at ‘Stewart Butterfield in Conversation with Farhad Manjoo’ during the 2016 SXSW Music, Film + Interactive Festival at Austin Convention Center on March 15, 2016 in Austin, Texas. (Photo by Mindy Best/Getty Images for SXSW)

Alongside dozens of other, smaller rivals offering comparative mixes of tools, it’s no surprise that last month Slack tightened up its bootlaces to take on the role of consolidator, snapping up IP and shutting down Hipchat and Stride from Atlassian, with the latter taking a stake in Slack as part of the deal.

Slack, which has a relatively modest 1,000+ employees, has ruled out an IPO this year, so this latest round will help it shore up cash in the meantime to continue growing, and competing.

Contacted for this story, Slack said that it does not comment on rumors or speculation.

Andreessen-funded dYdX plans ‘short Ethereum’ token for haters

Crypto skeptics rejoice! A new way to short the cryptocurrency market is coming from dYdX, a decentralized financial derivatives startup. In two months it will launch its protocol for creating short and leverage positions for Ethereum and other ERC20 tokens that allow investors to amp up their bets for or against these currencies.

To get the startup there, dYdX recently closed a $2 million seed round led by Andreessen Horowitz and Polychain, and joined by Kindred and Abstract plus angels, including Coinbase CEO Brian Armstrong and co-founder Fred Ehrsam, and serial investor Elad Gil.

“The main use for cryptocurrency so far has been trading and speculation — buying and holding. That’s not how sophisticated financial institutions trade,” says dYdX founder Antonio Juliano. “The derivatives market is usually an order of magnitude bigger than the spot trading or buy/sell market. The cryptocurrency market is probably on the order of $5 billion to $10 billion in volume, so you’d expect the derivatives market would be 10X bigger. I think there’s a really big opportunity there.”

How dYdX works

The idea is that you buy the short Ethereum token with ETH or a stable coin from an exchange or dYdX. The short Ethereum’s token price is inversely pegged to ETH, so it goes up in value when ETH goes down and vice versa. You can then sell the short Ethereum token for a profit if you correctly predicted an ETH price drop.

On the backend, lenders earn an interest rate by providing ETH as collateral locked into smart contracts that back up the short Ethereum tokens. Only a small number of actors have to work with the smart contract to mint or close the short Tokens. Meanwhile, dYdX also offers leveraged Ethereum tokens that let investors borrow to boost their profits if ETH’s price goes up.

The plan is to offer short and leveraged tokens for any ERC20 currency in the future. dYdX is building its own user-facing application for buying the tokens, but is also partnering with exchanges to offer the margin tokens “where people are already trading,” says Juliano.

“We think of it as more than just shorting your favorite shitcoin. We think of them as mature financial products.”

Infrastructure to lure big funds into crypto

Coinbase has proven to be an incredible incubator for blockchain startup founders. Juliano was employed there as a software engineer after briefly working at Uber and graduating in computer science from Princeton in 2015. “The first thing I started was a search engine for decentralized apps. I worked for months on it full-time, but nobody was building decentralized apps so no one was searching for them. It was too early,” Juliano explains.

But along the way he noticed the lack of financial instruments for decentralized derivatives despite exploding consumer interest in buying and selling cryptocurrencies. He figured the big hedge funds would eventually come knocking if someone built them a bridge into the blockchain world.

Juliano built dYdX to create a protocol to first begin offering margin tokens. It’s open source, so technically anyone can fork it to issue tokens themselves. But dYdX plans to be the standard-bearer, with its version offering the maximum liquidity to investors trying to buy or sell the margin tokens. His five-person team in San Francisco with experience from Google, Bloomberg, Goldman Sachs, NerdWallet and ConsenSys is working to find as many investors as possible to collateralize the tokens and exchanges to trade them. “It’s a race to build liquidity faster than anyone else,” says Juliano.

So how will dYdX make money? As is common in crypto, Juliano isn’t exactly sure, and just wants to build up usage first. “We plan to capture value at the protocol level in the future likely through a value adding token,” the founder says. “It would’ve been easy for us to rush into adding a questionable token as we’ve seen many other protocols do; however, we believe it’s worth thinking deeply about the best way to integrate a token in our ecosystem in a way that creates rather than destroys value for end users.”

“Antonio and his team are among the top engineers in the crypto ecosystem building a novel software system for peer-to-peer financial contracts. We believe this will be immensely valuable and used by millions of people,” says Polychain partner Olaf Carlson-Wee. “I am not concerned with short-term revenue models but rather the opportunity to permanently improve global financial markets.”

Timing the decentralized revolution

With the launch less than two months away, Juliano is also racing to safeguard the protocol from attacks. “You have to take smart contract security extremely seriously. We’re almost done with the second independent security audit,” he tells me.

The security provided by decentralization is one of dYdX’s selling points versus centralized competitors like Poloniex that offer margin trading opportunities. There, investors have to lock up ETH as collateral for extended periods of time, putting it at risk if the exchange gets hacked, and they don’t benefit from shared liquidity like dYdX will.

It also could compete for crypto haters with the CBOE that now offers Bitcoin futures and margin trading, though it doesn’t handle Ethereum yet. Juliano hopes that since dYdX’s protocol can mint short tokens for other ERC20 tokens, you could bet for or against a certain cryptocurrency relative to the whole crypto market by mixing and matching. dYdX will have to nail the user experience and proper partnerships if it’s going to beat the convenience of centralized exchanges and the institutional futures market.

If all goes well, dYdX wants to move into offering options or swaps. “Those derivatives are more often traded by sophisticated traders. We don’t think there are too many traders like that in the market right now,” Juliano explains. “The other types of derivatives that we’ll move to in the future will be really big once the market matures.” That “once the market matures” refrain is one sung by plenty of blockchain projects. The question is who’ll survive long enough to see that future, if it ever arrives.

[Featured Image via Nuzu and Bryce Durbin]

Golden Gate Ventures hits first close on new $100M fund for Southeast Asia

One of the fascinating things about watching an emerging startup ecosystem is that it isn’t just companies that are scaling, the very VC firms that feed them are growing themselves, too. That’s perhaps best embodied by Golden Gate Ventures, a Singapore-based firm founded by three Silicon Valley entrepreneurs in 2011 which is about to close a huge new fund for Southeast Asia.

Golden Gate started out with a small seed investment fund before raising a second worth $60 million in 2015. Now it is in the closes stages of finalizing a new $100 million fund, which has completed a first close of over $65 million in commitments, a source with knowledge of discussions told TechCrunch.

A filing lodged with the SEC in June first showed the firm’s intent to raise $100 million. The source told TechCrunch that a number of LPs from Golden Gate’s previous funds have already signed up, including Naver, while Mistletoe, the firm run by SoftBank Chairman Masayoshi Son’s brother Taizo, is among the new backers joining.

Golden Gate’s existing LP base also includes Singapore sovereign fund Temasek, Facebook co-founder Eduardo Saverin, and South Korea’s Hanwha.

A full close for the fund is expected before the end of the year.

The firm has made over 40 investments to date and its portfolio includes mobile classifieds service Carousell, automotive sales startup Carro, real estate site 99.co, and payment gateway Omise. TechCrunch understands that the firm’s investment thesis will remain the same with this new fund. When it raised its second fund, founding partner Vinnie Lauria told us that Golden Gate had found its match at early-stage investing and it will remain lean and nimble like the companies it backs.

One significant change internally, however, sees Justin Hall promoted to partner at the fund. He joins Lauria, fellow founding partner Jeffrey Paine, and Michael Lints at partner level.

Hall first joined Golden Gate in 2012 as an intern while still a student, before signing on full-time in 2013. His rise through the ranks exemplifies the growth and development within Southeast Asia’s startup scene over that period — it isn’t just limited to startups themselves.

The Golden Gate Ventures team circa 2016 — it has since added new members

With the advent of unicorns such as ride-sharing firms Grab and Go-Jek, travel startup Traveloka, and e-commerce companies like Tokopedia, Southeast Asia has begun to show potential for homegrown tech companies in a market that includes over 650 million consumers and more than 300 million internet users. The emergence of these companies has spiked investor interest, which provides the capital that is the lifeblood for VCs and their funds.

Golden Gate is the only one raising big. Openspace, formerly NSI Ventures, is raising $125 million for its second fund, Jungle Ventures is said to be planning a $150 million fund, and Singapore’s Golden Equator and Korea Investment Partners have a joint $88 million fund, while Temasek-linked Vertex closed a record $210 million fund last year.

Growth potential is leading the charge but at the same time funds are beginning to focus on realizing returns for LPs through exits, which is challenging since there have been few acquisitions of meaningful size or public listings out of Southeast Asia so far. But, for smaller funds, the results are already promising.

Data from Prequin, which tracks investment money worldwide, shows that Golden Gate’s first fund has already returned a multiple of over 4X, while its second is at 1.3 despite a final close in 2016.

Beyond any secondary sales — it is not uncommon for early-stage backers to sell a minority portion of equity as more investment capital pours in — Golden Gate’s exits have included the sale of Redmart to Lazada (although not a blockbuster), Priceline’s acquisition of Woomoo, Line’s acquisition of Temanjalan and the sale of Mapan (formerly Ruma) to Go-Jek.

Blockchain media project Civil turns to Asia with fund to kickstart 100 new media ventures

Civil, the blockchain-based journalism organization, is casting its eye to Asia after it set up a $1 million fund that’s aimed at seeding 100 new media projects across the continent over the next three years. The organization has teamed up with Splice, a Singapore-based media startup which will manage the fund, according to an announcement.

There’s been a lot of attention lavished on Civil for its promise to make media work more efficiently using blockchain technology and its upcoming crypto token, CVL. The organization has raised $5 million in financing from ConsenSys, the blockchain corporation led by Ethereum co-creator Joe Lubin, and its ICO takes place next month with the goal of raising around $32 million to launch its network and actively onboard new media companies worldwide.

But the company is waiting around. Civil has already actively jumped into the media space — providing financial backing to the newly-formed The Colorado Sun — but the scope of the project in Asia is different in trying to kickstart a wave of new media organizations by giving them money to get off the ground.

Alan Soon, co-founder and CEO of Splice, told TechCrunch that it hasn’t been decided whether the financing will be in the form of grants or equity-based investments. Despite that, he said deals will be “pre-seed, micro-investments to help entrepreneurs take their ideas to prototype stage.”

Soon said that all kinds of media are in play, ranging from the more obvious suspects such as publishers, reporting websites and podcasts to behind-the-scenes tech like automation, bots and adtech.

Notably, though, he clarified that the beneficiaries of the fund will be under no obligation to adopt Civil’s protocol, the technology that will be funded by the upcoming ICO. Splice itself, however, has committed to doing so which will mean it gains access to the network’s content, licensing opportunities and more.

“I’m with Civil because I really believe in their values,” Soon added. “They want to do the right thing for this space.”

Two ex-Uber execs have an investor syndicate to fund Uber alum

Josh Mohrer (pictured above) and William Barnes, two former Uber executives, are working on an investor syndicate to invest in startups led by fellow former Uber employees, Axios reported and TechCrunch has confirmed.

“We believe that people who help build transformative companies will go on to do other awesome things,” Mohrer told TechCrunch about the syndicate’s thesis to invest in Uber alumni. “The idea is that we can really move the needle for companies who are doing things that are Uber-adjacent — thing that are in our wheelhouse.”

Mohrer and Barnes have been working on this for the last nine months or so. While a lot of the emphasis is on backing startups led by former Uber employees, that’s not a strict requirement, Mohrer said.

The syndicate, which is made up of around 100 former Uber employees, “started pretty organically,” Mohrer said. So far, about 50 people have taken part in at least one investment. The check sizes have been modest — in the hundreds of thousands of dollars.

The focus of the syndicate is on two-sided marketplaces and transportation startups like Lime and Cargo, which partnered with Uber last week to enable drivers to sell passengers goods during rides. The syndicate’s other investments are in Replicated, Service and Salido.

“In the fall, we’re strongly considering what a traditional VC angle on this would look like,” Mohrer said. Likely, that would be called Moving Capital.

Last May, Mohrer left Uber to join Tusk Ventures as its managing director. Before joining Tusk, Mohrer spent about five years at Uber. While at Tusk, Mohrer led the firm’s Series A and B investments in Lime competitor Bird. Barnes, on the other hand, formerly led Uber’s West Coast operations for almost six years.

Doughbies’ cookie crumbles in a cautionary tale of venture scale

Doughbies should have been a bakery, not a venture-backed startup. Founded in the frothy days of 2013 and funded with $670,000 by investors, including 500 Startups, Doughbies built a same-day cookie delivery service. But it was never destined to be capable of delivering the returns required by the VC model that depends on massive successes to cover the majority of bets that fail. The startup became the butt of jokes about how anything could get funding.

This weekend, Doughbies announced it was shutting down immediately. Surprisingly, it didn’t run out of money. Doughbies was profitable, with 36 percent gross margins and 12 percent net profit, co-founder and CEO Daniel Conway told TechCrunch. “The reason we were able to succeed, at this level and thus far, is because we focused on unit economics and customer feedback (NPS scoring). That’s it.”

Many other startups in the on-demand space missed that memo and vaporized. Shyp mailed stuff for you and Washio dry cleaned your clothes, until they both died sudden deaths. Food delivery has become a particularly crowded cemetery, with Sprig, Maple, Juicero and more biting the dust. Asked his advice for others in the space, Conway said to “Make sure your business makes sense — that you’re making money, and make sure your customers are happy.”

Doughbies certainly did that latter. They made one of the most consistently delicious chocolate chip cookies in the Bay Area. I had them cater our engagement party. At roughly $3 per cookie plus $5 for delivery, it was pricey compared to baking at home, but not outrageous given SF restaurant rates. From its launch at 500 Startups Demo Day with an “Oprah” moment where investors looked beneath their seats to find Doughbies waiting for them, it cared a lot about the experience.

But did it make sense for a bakery to have an app and deliver on-demand? Probably not. There was just no way to maintain a healthy Doughbies habit. You were either gunning for the graveyard yourself by ordering every week, or like most people you just bought a few for special occasions. Startups like Uber succeed by getting people to routinely drop $30 per day, not twice a year. And with the push for nutritious and efficient offices, it was surely hard for enterprise customers to justify keeping cookies stocked.

Flanked by Instacart and Uber Eats, there weren’t many ripe adjacent markets for Doughbies to conquer. It was stuck delivering baked goods to customers who were deterred from growing their cart size by a sense of gluttony.

Without stellar growth or massive sales volumes, there aren’t a lot of exciting challenges to face for people like Conway and his co-founder Mariam Khan. “Ultimately we shut down because our team is ready to move on to something new,” Conway says.

The startup just emailed customers explaining that “We’re currently working on finding a new home for Doughbies, but we can’t make any promises at this time.” Perhaps a grocery store or broader food company will want its logistics technology or customer base. But delivery is a brutal market to break into, dominated by those like Uber who’ve built economies of scale through massive fleets of drivers to maximize routing efficiency. 

In the end, Doughbies was a lifestyle business. That’s not a dirty word. A few co-founders with a dream can earn a respectable living doing what they care about. But they have to do it lean, without the advantage of deep-pocketed investors.

As soon as a company takes venture funding, it’s under pressure to deliver adequate returns. Not 2X or 5X, but 10X, 100X, even 1,000X what they raise. That can lead to investors breathing down their neck, encouraging big risks that could tank the business just for a shot at those outcomes. Two years ago we saw a correction hit the ecosystem, writing down the value of many startups, and we continue to see the ripple effect as companies funded before hit the end of their runway.

Desperate for cash, founders can accept dirty funding terms that screw over not just themselves, but their early employees and investors. FanDuel raised more than $416 million at a peak valuation of $1.3 billion. But when it sold for $465 million, the founders and employees received zero as the returns all flowed to the late-stage investors who’d secured non-standard liquidation preferences. After nearly 10 years of hard work, the original team got nothing.

Not every business is a startup. Not every startup is a rocket ship. It takes more than just building a great product to succeed. It can require suddenly cutting costs to become profitable before you run out of funding. Or cutting ambitions and taking less cash at a lower valuation so you can realistically hit milestones. Or accepting a low-ball acquisition offer because it’s better than nothing. Or not raising in the first place, and building up revenues the old-fashioned way so even modest growth is an accomplishment.

Investors are often rightfully blamed for inflating the bubble, pushing up raises and valuations to lure startups to take their money instead of someone else’s. But when it comes to deciding what could be a fast-growing business, sometimes its the founders who need the adjustment.

SessionM customer loyalty data aggregator snags $23.8 M investment

SessionM announced a $23.8 million Series E investment led by Salesforce Ventures. A bushel of existing investors including Causeway Media Partners, CRV, General Atlantic, Highland Capital and Kleiner Perkins Caufield & Byers also contributed to the round. The company has now raised over $97 million.

At its core, SessionM aggregates loyalty data for brands to help them understand their customer better, says company co-founder and CEO Lars Albright. “We are a customer data and engagement platform that helps companies build more loyal and profitable relationships with their consumers,” he explained.

Essentially that means, they are pulling data from a variety of sources and helping brands offer customers more targeted incentives, offers and product recommendations “We give [our users] a holistic view of that customer and what motivates them,” he said.

Screenshot: SessionM (cropped)

To achieve this, SessionM takes advantage of machine learning to analyze the data stream and integrates with partner platforms like Salesforce, Adobe and others. This certainly fits in with Adobe’s goal to build a customer service experience system of record and Salesforce’s acquisition of Mulesoft in March to integrate data from across an organization, all in the interest of better understanding the customer.

When it comes to using data like this, especially with the advent of GDPR in the EU in May, Albright recognizes that companies need to be more careful with data, and that it has really enhanced the sensitivity around stewardship for all data-driven businesses like his.

“We’ve been at the forefront of adopting the right product requirements and features that allow our clients and businesses to give their consumers the necessary control to be sure we’re complying with all the GDPR regulations,” he explained.

The company was not discussing valuation or revenue. Their most recent round prior to today’s announcement, was a Series D in 2016 for $35 million also led by Salesforce Ventures.

SessionM, which was founded in 2011, has around 200 employees with headquarters in downtown Boston. Customers include Coca-Cola, L’Oreal and Barney’s.