ClassTag raises $5M for parent-teacher communication

Like many working parents, Vlada Lotkina, the founder and CEO of ClassTag, wanted to be more involved in her daughter’s preschool education. A paper notice about an upcoming field trip, squeezed between messy folders in a backpack, begged for smart technology around parent-teacher communication, she recalls.

Lotkina turned to other parents in the preschool class and found similar stresses. So, she teamed up with a fellow parent, Jason Olim, and launched ClassTag, a free parent-teacher communication platform that supports more than 60 languages.

Today, the company announced it has raised $5 million in seed funding from a group of investors that include AlleyCorp, Contour Ventures, Founder Collective, John Martinson, Newark Venture Partners, Smart Hub and TMT Investments. The platform says it has grown to 2 million users across 25,000 schools in the United States.

ClassTag has two end users: parents and teachers. Parents can use ClassTag for information on events, field trips, fundraisers and more. For teachers, ClassTag is an easy way to engage with parents, schedule parent-teacher conferences and share resources. Additionally, teachers can look at a parent engagement dashboard to see which families are more engaged, and which may need extra pings or attention.

With ClassTag, parents can get communications, without downloading an app, in their preferred channel via email, SMS, app, web or even paper if they are entirely offline. Any announcements or messaging will be automatically translated in numerous languages.

The company makes money by letting educational and family-friendly companies advertise on ClassTag. In general, an edtech platform pumping out advertisements might raise concerns for parents, but because ClassTag is not a platform for children, it is less controversial. ClassTag says it does not share any personally identifiable information with advertisers, but does share aggregated general data, like how many users are in certain grades or particular ZIP codes.

A portion of proceeds from brand revenue is also donated to classrooms for supplies. The company describes this brand relationship as “brands becoming sponsors versus advertisers.”

The simplicity of the platform is stress-tested by ClassTag’s other goal of ensuring access for any parent, regardless of socioeconomic class or work schedule. Even though the digital divide has slightly lessened, lower socioeconomic families may struggle with digital access beyond their phones. A parent who works an hourly job, therefore, might be easier to reach through text than through an email.

Another platform that tries to digitize classroom communications is ClassDojo, which is a communication platform for kids, students and parents. ClassDojo is used by 95% of schools in the United States.

Lotkina says that ClassDojo focuses more on the behavior aspect of kids. ClassDojo, for example, lets teachers give points to kids to help parents be alerted about behavior, and focuses on classroom engagement and management. ClassTag, by contrast, is more focused on information dissemination.

Lotkina, who is originally from Ukraine, began in the startup world at the age of 17. She traveled around Western Europe selling Ukrainian designers from a catalog. She then applied to the University of Pennsylvania’s Wharton School of Business, got accepted, and came to the United States. She says that starting a company in the United States is easier than in Ukraine because of investor risk in banking companies before they are profitable.

“On top of that, there’s obviously a lot of corruption and regulatory pressure that exists in Ukraine and many other countries. Unfortunately, creating an impactful business that solves a real problem is not enough to be successful in countries like Ukraine,” Lotkina said in a Medium post.

Two million users, and a fresh $5 million in funding later, Lotkina’s choice has been so far, so good.

Founder Collective barrels forward, closing its fourth and newest fund with $85 million

Founder Collective, a seed-stage fund formed 11 years ago in Cambridge, Ma., has closed its newest fund with $85 million.

Earlier today, we talked with the firm’s general partners — Eric Paley, David Frankel, Micah Rosenbloom — to learn more about it. Among our first questions: whether the three are themselves the largest investors in the new vehicle, as was the case with the firm’s third fund, which closed with $75 million in capital commitments four years ago. (The three have long prided themselves on their ability to tell founders who they take the firm’s money that they are truly are taking investors’ money.)

We also talked exits, geography, and investing through the coronavirus, a time when a lot of personal investors are being more cautious with their dollars.

TC: Eric, you wrote a seed check to Uber and I spied you on the Midas list this year. Still, it’s a scary time to be investing one’s capital aggressively. Are you and David and Micah again the biggest investors in this new fund?

EP:  The three of us were the largest investors in [our third fund] and we’re significantly bigger investors in Fund IV. While we’re fortunate to have some of the best LPs in the world, we believe that being our own largest investor allows us to make decisions that better align with our founders.  We also hope it sends a signal to founders that we’re honest brokers. When we were running our startups, it frustrated us when VCs would add a punitive clause to a term sheet citing “fiduciary responsibilities” to their LPs as the justification. We’re principals and stewards of our capital, not agents of LPs.

TC: How many investors are now involved in the day-to-day of the firm and how has this changed at all in the past years? 

DF: We have ten people full-time with offices in Soho in New York and Harvard Square in Cambridge. There are three partners and a principal on the investment team. We also have a Founder Partner program with some of the best entrepreneurs covering a variety of geographies and domains. [Editor’s note: some of these include Raj DeDatta of Bloomreach, Jack Groetzinger of SeatGeek, Andy Palmer of Tamr, Zach Klein of DIY, James Tamplin of Firebase, Nadia Boujarwah of Dia&Co, Elliot Cohen of PillPack and Noah Glass  of Olo.

Caterina [Fake], who was a Founder Partner with us for 10 years, recently founded Yes.vc, and our first principal, Gaurav Jain, started Afore, a pre-seed VC.

TC: What are some of the most recent exits for the firm?

DF: Over the last couple of years, we’ve been fortunate to see Uber go public and PillPack join Amazon. CoverWallet and Hotel Tonight were another pair of outstanding outcomes. We were fortune to have backed ten companies that have either exited or been valued at more than $1 billion in our first two funds, but we’re also proud of $100 million M&A events. They often go unreported, but because of our fund size, they make a material impact to us – and, more importantly, the founders.

Have seed-stage check sizes changed? I imagine they were getting bigger and now I’d guess they might get smaller again?

EP: From the beginning of Founder Collective, we’ve done two kinds of investing, $1 million to $2 million checks, where we lead and take a board seat, and around $400,000 investments, where we participate. We’ve seen the average valuations rise over the last five years, but we’ve tried to stay disciplined.

MR: So far in the COVID era, check sizes aren’t that different. It’s been more of a binary situation where startups that are deemed as “on-trend” can still command healthy valuations. The companies that are pre-market, or in an out-of-favor category that might have gotten funded in February are having a hard time getting funded. But we try not to be influenced by thematic trends.

DF: One pleasant surprise has been how quickly most of our companies have responded to the “new normal.” Some have reopened rounds to put a little more capital on the balance sheet, while others have found strategic investors to help tide them over. By and large, they’re acting responsibly.

TC: Remind me of where Founder Collective invests — does it have a focus mostly on the Northeast?

MR: We invest primarily in four geographies: New York, Boston, the Bay Area, and Southern California. That said, we’ve invested in startups as far afield as Nigeria, South Korea, and Israel, and genuinely unusual and fun places like Wisconsin, Winnipeg, and Boise.

EP: The reality is that startup geography is changing. For example, the most valuable software startup in the Western world to launch after Facebook is Shopify, which currently has a $90 billion market cap and is based in Ottawa. It would be foolhardy for investors not to broaden their view on where great startups can be built.

That said, there are powerful network effects around startup centers. It’s absolutely possible to build a multi-billion dollar tech business anywhere; it’s orders of magnitude easier when there’s a deep talent pool to hire from, local mentors who have seen scale before, and a broad ecosystem of knowledgeable service providers that can provide guidance.

DF: Also, while we invest globally, we feel the East Coast is an undervalued startup hub. Over the past 20 years, Boston has had more billion-dollar exits than any Western city aside from San Francisco, and New York has produced multiple $10 billion-plus startups in spaces as diverse as consumer hardware, SaaS, dev tools, and craft marketplaces.

TC: How has the pandemic changed your outlook for the next year?

EP: Over the years, we’ve written a lot about capital efficiency for entrepreneurs and even made warning labels that we send to founders alerting them to the dangers of too much money, too soon. Historically, we’ve pushed this message because capital was overabundant, and it damaged startups. The principles of capital efficiency are even more critical in a tight capital market. We’ll be increasingly focused on helping founders understand efficient entrepreneurship and how to build models that are tuned to scale without burning capital.

We’ll also put a premium on founders who have demonstrated the flexibility to operate amid unprecedented levels of uncertainty. In this environment, companies need to focus on their customers’ needs as they are now and not fixate on their pre-existing strategy. For instance, our portfolio company Formlabs sells 3D printers mostly to engineers and designers. After they started printing a novel nasal swab design for COVID tests, hospitals became an important new customer category. The world is changing rapidly, and founders need to keep pace.

TC: What are a few of the firm’s most recent bets and what do they say about Founder Collective’s investing style?

MR: A few recent examples are TrueWork [which sells HR-focused software-as-a-service), Trusted Health [a nursing marketplace], Lovevery [which makes learning toys] and ULesson [which makes consumer education software for African students].

On the surface, it’s a diverse group of companies, but the common thread is a founding team that is all over it. The founders were obsessed with the problems they were solving, had spent meaningful time in these industries, and proved out a lot before seeking funding. There’s no way we can be experts in all those fields, but we do think we know how to spot the founders who are.

TC: Presumably, you’ve already sorted your startups into these red, yellow, and green groups that VCs like to talk about. What are happening to the startups in the red group? Are you helping them to unwind their businesses? 

MR: It’s still so early, it’s hard to say what the ultimate impact will be, and the longer it goes, the worse it will likely get. So far, COVID was the nail in the coffin for a few of our startups, and we’ve tried to help the founders find soft landings for the teams and assets. Some of our distance-learning companies and our health-oriented companies have benefited due to the growing need for their products.

Most of our startups are somewhere in the middle. We try to help entrepreneurs on a case-by-case basis, sometimes that means organizing peer discussion groups about cash management in a time of crisis. Other times, it takes the form of making introductions to potential acquirers. When possible, we help to catalyze new rounds of funding.

TC: What’s one new area of interest for founder collective and why?

DF: One of our core beliefs is that the best startups are built by founders approaching weird and wonderful spaces.We’ve backed ad tech for the flooring industry, IoT-based offshore oyster farming robots, crypto, cologne, doggy DNA tests, data management tools. We’re proudly anti-thematic, and historically, that’s led to good outcomes.

Grain, a startup built expressly atop of Zoom for note-taking and video-clip making, raises $4 million

Whenever a platform breaks out, companies emerge to seize on its reach by building their services or products atop it. It happened with Facebook and Twitter and Slack. Now, it’s happening with Zoom, the video conferencing company that took the world by storm earlier this year as the coronavirus sent people around the globe indoors and into self-imposed isolation.

It’s not a brand-new trend. Plenty of companies are selling their wares through the Zoom App Marketplace, which launched in the fall of 2018 and now features 18 pages of providers. But Grain, founded in 2018 in San Francisco, is among the first to build its entire business around it, at least as a starting point.

What is that business? According to cofounder and CEO Mike Adams, the idea is to capture content in Zoom calls that can be saved and shared across platforms, including Twitter, DIscord, Notion, Slack and iMessages.

Say a student wants to take notes; he or she can record part of what a teacher is saying to save or share with classmates, without having to rewatch an entire lecture. The same is true in work setting. By using Grain, a colleague can flag the most important bits of information that was conveyed, then share just those bits via a clip that has its own unique URL. (Grain also transcribes content in clips and allows users to turn on closed captions if they choose.)

The video clips can range from 30 seconds up to 10 minutes. They can also be strung together into reels to create summary highlights and these have no time limit. Not last, users can also trim or adjust the length of the highlight after it has been recorded, as well as control who else can edit the video afterward to prevent nefarious actors from turning snippets into misinformation.

Adams says he and his brother, Jake, a former software engineer at Branch Metrics with whom he cofounded the company, are even using Grain to save snippets of precious moments on Zoom involving nieces and nephews, though the focus is very much on the companies and schools that will pay on a per-seat basis for the software.

Indeed, Adams says the idea for Grain was really born at the last company he cofounded: MissionU, a Zoom-based one-year alternative to a traditional college whose students weren’t asked for tuition but instead agreed to hand over up to 15 percent of their incomes for three years once they landed a job that pays $50,000 or more.

MissionU — which was founded in 2016 and raised $11.5 million from investors — sold to WeWork in 2018 in a stock deal before its students earned anything (they were released from their income-sharing agreements). Still, the experiment was long enough that Adams, who left MissionU at the time of the sale, says he saw firsthand the need for better tools to help students capture what’s important in their online content.

The question, of course, is whether Zoom also sees the opportunity. Relying so heavily on another company is always a risk (see Facebook and Twitter and the long list of third party developers that have been burned by both companies).

Zoom, which is starting to make venture-like bets, is not an investor in Grain, which might help inoculate it from some competition.

For now, other investors are willing to bet Zoom will prove friend and not foe. In fact, late last year, Grain raised $4 million over two rounds from a long list of notable investors, including Acrew Capital, Founder Collective, Peterson Partners, Slack Fund, Scott Belsky, Sriram Krishnan, Andreas Klinger, Scooter Braun and others.

Now its 11-person team is ready to take the wraps off what they’ve been building with some of that capital.

Certainly, the startup — which plans to eventually integrate with numerous other companies — could do worse as springboards go than Zoom, one of the rare new breakout platform companies in memory.

Zoom has long been powered by viral-end user adoption, enjoying growth internally and externally because of the nature of video conferencing across companies. Now, its pick-up as a consumer company is following a similar trajectory, with a high percentage of people who are invited to Zoom calls eventually signing for the service so that they can themselves host a call.

If Grain gets lucky, some percentage of that percentage will also discover Grain.

Despite winter’s chill, the Northeast’s tech ecosystem is white-hot

Hello and welcome back to our regular morning look at private companies, public markets and the grey space in between.

Today, we’re digging into a host of data concerning the East Coast venture capital scene, specifically looking into the performance of its two key startup markets.

It’s 12 degrees Fahrenheit as I write this in my office situated between Boston and New York City — a perfect vantage point for studying these vibrant tech ecosystems. Let’s see what the data tells us.

The information we’re examining today comes from White Star Capital (often via CBInsights), a venture capital firm that describes itself as “transatlantic” and takes part in seed, Series A and Series B rounds around the globe. The group last raised a $180 million fund that TechCrunch covered here, noting at the time that capital pool was “oversubscribed from an initial target of $140 million” and would be invested into “around 20 new companies from the new fund, writing opening cheques of between $1 million and $6 million.”

With boots on the ground in New York, White Star cares about the East Coast, so the fund’s put dossier on the region isn’t unexpected. What it includes, however, is.

We’ll start with NYC and its surprising 2019 before turning to Boston, digging into its super-giant venture totals and hearing from Founder Collective’s Eric Paley on the state of things in urban Massachusetts.

New York City

White Star’s report details record-breaking figures for NYC’s current year. Off of effectively flat deal volume (New York City sees around 775 venture deals per year at the moment, or a little more than two per day), the overgrown town should set record venture dollar volume in 2019.

Observe the following, astounding chart detailing the abnormality of 2019 from a comparative venture dollar perspective:

By smashing 2017’s local maximum, 2019 appears set to crush the city’s record — and rich — venture investment totals. The graphic also manages to point out (somewhat embarrassingly) that Gotham will manage to best a number of European countries’ aggregate venture dollar investments by itself this year.

That’s is a useful bit of context as in the United States, New York City is always Number Two to Silicon Valley. But, this chart argues, being number two in the number-one market is still a hell of a lot of capital.

Putting New York City’s venture into even sharper comparative perspective, observe the following table:

No one knows how effective digital therapies are, but a new tool from Elektra Labs aims to change that

Depending on which study you believe, the wearable and digital health market could be worth anywhere from $30 billion to nearly $90 billion in the next six years.

If the numbers around the size of the market are a moving target, just think about how to gauge the validity and efficacy of the products that are behind all of those billions of dollars in spending.

Andy Coravos, the co-founder of Elektra Labs, certainly has.

Coravos, whose parents were a dentist and a nurse practitioner, has been thinking about healthcare for a long time. After a stint in private equity and consulting, she took a coding bootcamp and returned to the world she was raised in by taking an internship with the digital therapeutics company, Akili Interactive.

Coravos always thought she wanted to be in healthcare, but there was one thing holding her back, she says. “I’m really bad with blood.”

That’s why digital therapeutics made sense. The stint at Akili led to a position at the U.S. Food and Drug Administration as an entrepreneur in residence, which led to the creation of Elektra Labs roughly two years ago.

Now the company is launching Atlas, which aims to catalog the biometric monitoring technologies that are flooding the consumer health market.

These monitoring technologies, and the applications layered on top of them, have profound implications for consumer health, but there’s been no single place to gauge how effective they are, or whether the suggestions they’re making about how their tools can be used are even valid. Atlas and Elektra are out to change that. 

The FDA has been accelerating its clearances for software-driven products like the atrial fibrillation detection algorithm on the Apple Watch and the ActiGraph activity monitors. And big pharma companies like Roche, Pfizer and Novartis have been investing in these technologies to collect digital biomarker data and improve clinical trials.

Connected technologies could provide better care, but the technologies aren’t without risks. Specifically the accuracy of data and the potential for bias inherent in algorithms which were created using flawed datasets mean that there’s a lot of oversight that still needs to be done, and consumers and pharmaceutical companies need to have a source of easily accessible data about the industry.

”The increase in FDA clearances for digital health products coupled with heavy investment in technology has led to accelerated adoption of connected tools in both clinical trials and routine care. However, this adoption has not come without controversy,” said Coravos, co-founder and CEO of Elektra Labs, in a statement. “During my time as an Entrepreneur in Residence in the FDA’s Digital Health Unit, it became clear to me that like pharmacies which review, prepare, and dispense drug components, our healthcare system needs infrastructure to review, prepare, and dispense connected technologies components.

The analogy to a pharmacy isn’t an exact fit, because Elektra Labs currently doesn’t prepare or dispense any of the treatments that it reviews. But Atlas is clearly the first pillar that the digital therapeutics industry needs as it looks to supplant pharmaceuticals as treatments for some of the largest and most expensive chronic conditions (like diabetes).

Coravos and here team interviewed more than 300 professionals as they built the Atlas toolkit for pharmaceutical companies and other healthcare stakeholders seeking a one-stop-shop for all of their digital healthcare data needs. Like a drug label, or nutrition label, Atlas publishes labels that highlight issues around the usability, validation, utility, security and data governance of a product.

In an article in Quartz earlier this year, Coravos made her pitch for Elektra Labs and the types of things it would monitor for the nascent digital therapeutics industry. It includes the ability to handle adverse events involving digital therapies by providing a single source where problems could be reported; a basic description for consumers of how the products work; an assessment of who should actually receive digital therapies, based on the assessment of how well certain digital products perform with certain users; a description of a digital therapy’s provenance and how it was developed; a database of the potential risks associated with the product; and a record of the product’s security and privacy features.

As the projections on market size show, the problem isn’t going to get any smaller. As Google’s recent acquisition bid for FitBit and the company’s reported partnership with Ascension on “Project Nightingale” to collect and digitize more patient data shows, the intersection of technology and healthcare is a huge opportunity for technology companies.

“Google is investing more. Apple is investing more… More and more of these devices are getting FDA cleared and they’re becoming not just wellness tools but healthcare tools,” says Coravos of the explosion of digital devices pitching potential health and wellness benefits.

Elektra Labs is already working with undisclosed pharmaceutical companies to map out the digital therapeutic environment and identify companies that might be appropriate partners for clinical trials or acquisition targets in the digital market.

“The FDA is thinking about these digital technologies, but there were a lot of gaps,” says Coravos. And those gaps are what Elektra Labs is designed to fill. 

At its core, the company is developing a catalog of the digital biomarkers that modern sensing technologies can track and how effective different products are at providing those measurements. The company is also on the lookout for peer-reviewed published research or any clinical trial data about how effective various digital products are.

Backing Coravos and her vision for the digital pharmacy of the future are venture capital investors including Maverick Ventures, Arkitekt Ventures, Boost VC, Founder Collective, Lux Capital, SV Angel, and Village Global.

Alongside several angel investors, including the founders and chief executives from companies including: PillPack, Flatiron Health, National Vision, Shippo, Revel and Verge Genomics, the venture investors pitched in for a total of $2.9 million in seed funding for Coravos’ latest venture.

“Timing seems right for what Elektra is building,” wrote Brandon Reeves, an investor at Lux Capital, which was . one of the first institutional investors in the company. “We have seen the zeitgeist around privacy data in applications on mobile phones and now starting to have the convo in the public domain about our most sensitive data (health).” 

If the validation of efficacy is one key tenet of the Atlas platform, then security is the other big emphasis of the company’s digital therapeutic assessment.  Indeed, Coravos believes that the two go hand-in-hand. As privacy issues proliferate across the internet, Coravos believes that the same troubles are exponentially compounded by internet-connected devices that are monitoring the most sensitive information that a person has — their own health records.

In an article for Wired, Koravos wrote:

Our healthcare system has strong protections for patients’ biospecimens, like blood or genomic data, but what about our digital specimens? Due to an increase in biometric surveillance from digital tools—which can recognize our face, gait, speech, and behavioral patterns—data rights and governance become critical. Terms of service that gain user consent one time, upon sign-up, are no longer sufficient. We need better social contracts that have informed consent baked into the products themselves and can be adjusted as user preferences change over time.

We need to ensure that the industry has strong ethical underpinning as it brings these monitoring and surveillance tools into the mainstream. Inspired by the Hippocratic Oath—a symbolic promise to provide care in the best interest of patients—a number of security researchers have drafted a new version for Connected Medical Devices.

With more effective regulations, increased commercial activity, and strong governance, software-driven medical products are poised to change healthcare delivery. At this rate, apps and algorithms have the opportunity to augment doctors and complement—or even replace—drugs sooner than we think.

Accion Systems raises $7.5 million in Series A to accelerate production of miniature space thrusters

Accion Systems thruster / Image courtesy of Accion Systems Accion Systems, the company developing miniature space propulsion systems, has raised $7.5 million in Series A funding led by Shasta Ventures. RRE Ventures, Founder Collective, and Slow Ventures also participated in the round. The company had previously raised $2 million from seed funding and $6.5 million from partnerships with the Department of Defense. While perhaps best known for their… Read More

Kuvee raises $6 million for smart wine bottles, sells out preorders in 3 hours

Kuvee

Drink up! Or not. Now, you can save as much wine as you want for up to 30 days after opening a bottle — if you drink out of Kuvee‘s new smart wine bottle.

The Boston-based winery startup announced today that it served itself a $6 million investment led by General Catalyst and Founder Collective.

Kuvee’s system works as a wine dispenser that prevents oxygen from getting inside your wine, allowing the removable bottles to stay fresh. The Kuvee also allows you to order new wine supplies directly from a small screen on the face of its bottle.

Preorders for the Kuvee bottle started today in Indiegogo, for which the $179 super early bird offer is already sold out. The Kuvee kit will retail al $349, including the smart bottle and four different wine choices.

Kuvee will start shipping to California and Massachusetts in October. Other states will have to wait until December and early 2017.

Bolt and other angel investors also participated in the round.


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