Meet the Texas startup that wants to decarbonize the chemical industry

Solugen, a startup that has set itself up with no less lofty a goal than the decarbonization of a massive chunk of the petrochemical industry, may be the first legitimate multi-million dollar company to start out in a meth lab.

When company co-founders Gaurab Chakrabarti and Sean Hunt began hunting for a lab to test their process for enzymatically manufacturing hydrogen peroxide they only had a small $10,000 grant from MIT — which was supposed to pay their salaries and cover rent and lab equipment. 

Chakrabarti, who now jokingly calls himself “the Heisenberg of hydrogen peroxide” says that the lab spaces they looked at initially were all too pricey, so through a friend of a friend of a friend, he and Hunt wound up leasing lab space in a facility by the Houston airport for $150 per month.

It was there among the burners and round-bottomed flasks that Hunt and Chakrabarti refined their manufacturing process — using fermentation based on Solugen’s proprietary enzyme made from genetically modified yeast cells to produce hydrogen peroxide. 

“In 2016 I went to visit Solugen’s headquarters in Houston, They were subleasing a small part of a bigger lab and it was one of the sketchiest labs I’d seen, but the Solugen founders liked it because the rent was low” recalls Solugen seed investor, Seth Bannon, a founding partner with the investment firm Fifty Years. “Sean and Gaurab were incredibly impressive. They had their prototype reactor up and running and were already selling 100% of its capacity, so we invested.”

Creating a process that can make thousands of tons of chemicals — without relying on petroleum — would be a hugely important step in the fight against global climate change. And Solugen says it has done exactly that — while getting the chemical industry to subsidize its development.

The chemicals industry is responsible for 10% of global energy consumption and 30% of industrial energy demand, while also contributing 20% of all industrial greenhouse gas emissions, according to the website Global Efficiency Intelligence.

As the world begins to confront the effects of global climate change, curbing emissions from industry will be critically important to ensuring that the world is not irrevocably and catastrophically changed by human activity.

As columnist Ramez Naam wrote in TechCrunch:

Our hardest climate problems – the ones that are both large and lack obvious solutions – are agriculture (and deforestation – its major side effect) and industry. Together these are 45% of global carbon emissions. And solutions are scarce.

Agriculture and land use account for 24% of all human emissions. That’s nearly as much as electricity, and twice as much all the world’s passenger cars combined.

Industry – steel, cement, and manufacturing – account for 21% of human emissions – one and a half times as much as all the world’s cars, trucks, ships, trains, and planes combined.

Greenhouse gas emissions are only one of the dangers associated with the petrochemical industry’s approach to production. The processes by which chemicals are made are also incredibly volatile, and the work is dangerous for both employees and the communities in which these plants operate.

Last week, a chemical plant explosion has led to one of the worst fires in the city’s history. Firefighters in the city spent six days trying to contain a chemical fire that has burned 11 storage tanks managed by Intercontinental Terminals Company.

“They’re moving chemicals exposed to the environment, and those chemicals are not designed to be transported in that way,” Francisco Sanchez, the county’s deputy emergency emergency management coordinator told The Houston Chronicle

Man in protective workwear with Caution cordon tape (Courtesy Getty Images)

By contrast, Solugen’s process is only a little more dangerous than brewing beer.

In the years since Bannon came to visit the company in its first lab, Solugen has built a working production plant capable of making enough hydrogen peroxide to bring in tens of millions of dollars in revenue for the company.

In addition to its current mobile manufacturing facility, a skid mounted 1,000 square foot mini plant, Solugen is using $13.5 million in new financing from investors to build a new, 2,500 modular facility which will produce 5,000 tons of hydrogen peroxide per year. 

That new money came from the investment fund Founders Fund (co-founded by the controversial libertarian investor, Peter Thiel), Fifty Years, and Y Combinator.

Solugen’s secret sauce is its ability to create oxidase enzymes cheaply that can be combined with simple sugars to make oxidation chemicals — which account for roughly half of the $4.3 trillion dollar global chemical industry.

The companies bioreactors have been specifically designed for the chemicals it makes, but the real innovation is looking at enzymes as a tool for oxidation chemistries.

Companies are now able to engineer these enzymes thanks to advances on computational biology and the newfound ability of biochemists to engineer DNA, Chakrabarti says.

Solugen uses CRISPR gene editing technologies to modify yeast cells. It has identified a certain transcription factor which acts like an accelerant to producing the enzyme that Solugen’s process requires. Messenger ribonucleic acid overwhelms most of the typical processes if a celll to force the cell to dedicate most of its function toward enzyme production. The company then uses a contract research organization to cheaply make the enzyme at scale.

Companies also have driven down the cost of manufacturing these specialty enzymes. “The revolution is the commoditization of biomanufacturing specifically enzyme production,” he says. “Instead of our enzymes costing $1,000 per kg… It’s $1 to $10 per kg.”

Once Solugen proves that the new facility can work, the only issue is scaling, according to Chakrabarti. “We use enzyme technologies to create chemical mini-mills [and] each mini-mill can do 5,000 tons of products,” says Chakrabarti.

A typical chemical [lant has a production capacity of 50,000 tons, but the Solugen process is orders of magnitude more inexpensive, says Chakrabarti. That allows the company to build out a network of smaller plants profitably. “These are huge industries where we can make cheaper products,”he says.

And for every ton of product that Solugen makes and sells, it’s the equivalent of removing six tons of carbon from the atmosphere, Chakrabarti says.

Oil and gas companies have already signed contracts and are ordering the company’s products to the tune of several million in sales.

“It’s a nice way of funding us and funding the oil and gas industry’s demise,” says Chakrabarti of the company’s sales to its initial customers, “They give us money and allow us to go after other chemistries that would have been petroleum based… Our ultimate goal is to wipe them out.”

 

Startups Weekly: A much-needed unicorn IPO update

As I’m sure everyone reading this knows, female-founded businesses receive just over 2 percent of venture capital on an annual basis. Most of those checks are written to early-stage startups. It’s extremely difficult for female founders to garner late-stage support, let alone cash $100 million checks.

Maybe that’s finally changing. This week, not one but two female-founded and led companies, Glossier and Rent The Runway, raised nine-figure rounds and cemented their status as unicorn companies. According to PitchBook data from 2018, there are only about 15 unicorn startups with female founders. Though I’m sure that number has increased in the last year, you get the point: There are hundreds of privately held billion-dollar companies and shockingly few of those have women founders (even fewer have female CEOs)…

Moving on…

YC Demo Days

I spent a good part of the week at San Francisco’s Pier 48 in a room full of vest-wearing investors. We listened to some 200 YC companies make their 120-second pitch and though it was a bit of a whirlwind, there were definitely some standouts. ICYMI: We wrote about each and every company that pitched on day 1 and day 2. If you’re looking for the inside scoop on the companies that forwent demo day and raised rounds, or were acquired, before hitting the stage, we’ve got that too.

IPO corner

Lyft: This week, Lyft set the terms for its highly-anticipated initial public offering, expected to be completed next week. The company will charge between $62 and $68 per share, raising more than $2 billion at a valuation of ~$23 billion. We previously reported its initial market cap would be around $18.5 billion, but that was before we knew that Lyft’s IPO was already oversubscribed. Here’s a little more background on the Lyft IPO for those interested.

Uber: The global ride-hailing business flew a little more under the radar this week than last week, but still managed to grab a few headlines. The company has decided to sell its stock on the New York Stock Exchange, which is the least surprising IPO development of 2019, considering its key U.S. competitor, Lyft, has been working with the Nasdaq on its IPO. Uber is expected to unveil its S-1 in April.

Ben Silbermann, co-founder and CEO of Pinterest, at TechCrunch Disrupt SF 2017.

Pinterest: Pinterest, the nearly decade-old visual search engine, unveiled its S-1 on Friday, one of the final steps ahead of its NYSE IPO, expected in April. The $12.3 billion company, which will trade under the ticker symbol “PINS,” posted revenue of $755.9 million in the year ending December 31, 2018, up from $472.8 million in 2017. It has roughly doubled its monthly active user count since early 2016, hitting 265 million last year. The company’s net loss, meanwhile, shrank to $62.9 million in 2018 from $130 million in 2017.

Zoom: Not necessarily the buzziest of companies, but its S-1 filing, published Friday, stands out for one important reason: Zoom is profitable! I know, what insanity! Anyway, the startup is going public on the Nasdaq as soon as next month after raising about $150 million in venture capital funding. The full deets are here.

Seed money

General Catalyst, a well-known venture capital firm, is diving more seriously into the business of funding seed-stage business. The firm, which has investments in Warby Parker, Oscar and Stripe, announced earlier this week its plan to invest at least $25 million each year in nascent teams.

Deal of the week

Earlier this week, Opendoor, the SoftBank -backed real estate startup, filed paperwork to raise even more money. According to TechCrunch’s Ingrid Lunden, the business is planning to raise up to $200 million at a valuation of roughly $3.7 billion. It’s possible this is a Series E extension; after all, the company raised its $400 million Series E only six months ago. Backers of OpenDoor include the usual suspects: Andreessen Horowitz, Coatue, General Atlantic, GV, Initialized Capital, Khosla Ventures, NEA and Norwest Venture Partners.

Startup capital

Backstage Capital founder and managing partner Arlan Hamilton, center.

Debate

Axios’ Dan Primack and Kia Kokalitcheva published a report this week revealing Backstage Capital hadn’t raised its debut fund in total. Backstage founder Arlan Hamilton was quick to point out that she had been honest about the challenges of fundraising during various speaking engagements, and even on the Gimlet “Startup” podcast, which featured her in its latest season. A Twitter debate ensued and later, Hamilton announced she was stepping down as CEO of Backstage Studio, the operations arm of the venture fund, to focus on raising capital and amplifying founders. TechCrunch’s Megan Rose Dickey has the full story.

Pro rata rights

This week, TechCrunch’s Connie Loizos revisited a long-held debate: Pro rata rights, or the right of an earlier investor in a company to maintain the percentage that he or she (or their venture firm) owns as that company matures and takes on more funding. Here’s why pro rata rights matter (at least, to VCs).

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about Glossier, Rent The Runway and YC Demo Days. Then, in a special Equity Shot, we unpack the numbers behind the Pinterest and Zoom IPO filings.

Want more TechCrunch newsletters? Sign up here.

Extra Crunch: What’s the cost of buying users from Facebook and the other ad networks?

This post reveals the cost of acquiring a customer on every ad channel my agency has tested.

The ad channels include Facebook, Instagram, YouTube, Quora, Google Search, Google Shopping, Snapchat, LinkedIn and others.

Using this data, you can reduce your costs by identifying which channels are a likely fit for your own product. Then you can focus on testing just those channels to start.

I’m pulling data from my agency’s experience testing 15+ ad channels and running thousands of ads for dozens of Y Combinator startups.

This post leaves you with a prioritized to-do list of which channels might work for your product, and reference points for how much you can expect to pay if you get those channels to work.

Which ad channels should I use?

Lyft’s IPO is hot, YC Demo Day, two new unicorns and what’s Boy Brow?

  • There were some edit issues in the initial publishing of this week’s Equity episode that have been corrected. The player below will play the corrected episode.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week Kate Clark and Alex Wilhelm took us through an IPO, a big round, 943 startup pitches, two new unicorns and some scooter news. A very 2019 mix, really.

Up first we took a peek at the latest from the Lyft IPO saga. Recall that Lyft is beating Uber to the public markets, and we can report that it’s having a good time doing so. The popular ride-hailing company, second-place by market share in its domestic market, is oversubscribed at an already healthy valuation. If the company will raise its price and the number of shares that it sells isn’t yet known, but early indications hint that Lyft timed its IPO well.

Next, we took a look at the recent OpenDoor round that has been long-rumored. Tipping the scales at $300 million, and valuing the home-buying-and-selling startup at $3.8 billion, the company’s latest equity event was a bit higher than expected. There are other players in its space, and the firm isn’t yet recession-tested. All the same, a Murderers’ Row of capital lined up for the latest round.

Moving on, Kate went to Y Combinator’s Demo Day and got a closer look at the accelerator’s latest batch. There were a ton of two-minute pitches, many of which sounded the same, but chances are we’ll see a few unicorns emerge from the bunch. And, interesting tidbit, some of the companies actually forwent Demo Day and raised capital before they could hit the stage!

Later, we discuss two new unicorns. This week’s unicorns had a theme and one that was new to Equity. This time, both the billion-dollar businesses mentioned on the show were founded by women. As Kate noted, there aren’t too many of those, so to see two in the same week is great.

Glossier, founded by Emily Weiss, brought in a $100 million Series D led by Sequoia Capital . The round values the beauty business at a whopping $1.2 billion, tripling the valuation it garnered with a $52 million Series C in 2018. As for Rent The Runway, a startup founded by Jen Hyman and Jennifer Fleiss, it closed a $125 million round led by Franklin Templeton Investments and Bain Capital Ventures. This round values the company at $1 billion. Hyman took to Twitter to share some inspirational words on raising capital as a woman, a pregnant woman, in heels!

And finally, we took a look at a Parisian scooter tax. Mostly because Alex wanted to talk about Paris.

And that’s Equity for the week. We’ll see you soon!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

To fund Y Combinator’s top startups, VCs scoop them before Demo Day

Hundreds gathered this week at San Francisco’s Pier 48 to see the more than 200 companies in Y Combinator’s Winter 2019 cohort present their two-minute pitches. The audience of venture capitalists, who collectively manage hundreds of billions of dollars, noted their favorites. The very best investors, however, had already had their pick of the litter.

What many don’t realize about the Demo Day tradition is that pitching isn’t a requirement; in fact, some YC graduates skip out on their stage opportunity altogether. Why? Because they’ve already raised capital or are in the final stages of closing a deal.

ZeroDown, Overview.AI and Catch are among the startups in YC’s W19 batch that forwent Demo Day this week, having already pocketed venture capital. ZeroDown, a financing solution for real estate purchases in the Bay Area, raised a round upwards of $10 million at a $75 million valuation, sources tell TechCrunch. ZeroDown hasn’t responded to requests for comment, nor has its rumored lead investor: Goodwater Capital.

Without requiring a down payment, ZeroDown purchases homes outright for customers and helps them work toward ownership with monthly payments determined by their income. The business was founded by Zenefits co-founder and former chief technology officer Laks Srini, former Zenefits chief operating officer Abhijeet Dwivedi and Hari Viswanathan, a former Zenefits staff engineer.

The founders’ experience building Zenefits, despite its shortcomings, helped ZeroDown garner significant buzz ahead of Demo Day. Sources tell TechCrunch the startup had actually raised a small seed round ahead of YC from former YC president Sam Altman, who recently stepped down from the role to focus on OpenAI, an AI research organization. Altman is said to have encouraged ZeroDown to complete the respected Silicon Valley accelerator program, which, if nothing else, grants its companies a priceless network with which no other incubator or accelerator can compete.

Overview .AI’s founders’ resumes are impressive, too. Russell Nibbelink and Christopher Van Dyke were previously engineers at Salesforce and Tesla, respectively. An industrial automation startup, Overview is developing a smart camera capable of learning a machine’s routine to detect deviations, crashes or anomalies. TechCrunch hasn’t been able to get in touch with Overview’s team or pinpoint the size of its seed round, though sources confirm it skipped Demo Day because of a deal.

Catch, for its part, closed a $5.1 million seed round co-led by Khosla Ventures, NYCA Partners and Steve Jang prior to Demo Day. Instead of pitching their health insurance platform at the big event, Catch published a blog post announcing its first feature, The Catch Health Explorer.

“This is only the first glimpse of what we’re building this year,” Catch wrote in the blog post. “In a few months, we’ll be bringing end-to-end health insurance enrollment for individual plans into Catch to provide the best health insurance enrollment experience in the country.”

TechCrunch has more details on the healthtech startup’s funding, which included participation from Kleiner Perkins, the Urban Innovation Fund and the Graduate Fund.

Four more startups, Truora, Middesk, Glide and FlockJay had deals in the final stages when they walked onto the Demo Day stage, deciding to make their pitches rather than skip the big finale. Sources tell TechCrunch that renowned venture capital firm Accel invested in both Truora and Middesk, among other YC W19 graduates. Truora offers fast, reliable and affordable background checks for the Latin America market, while Middesk does due diligence for businesses to help them conduct risk and compliance assessments on customers.

Finally, Glide, which allows users to quickly and easily create well-designed mobile apps from Google Sheets pages, landed support from First Round Capital, and FlockJay, the operator an online sales academy that teaches job seekers from underrepresented backgrounds the skills and training they need to pursue a career in tech sales, secured investment from Lightspeed Venture Partners, according to sources familiar with the deal.

Pre-Demo Day M&A

Raising ahead of Demo Day isn’t a new phenomenon. Companies, thanks to the invaluable YC network, increase their chances at raising, as well as their valuation, the moment they enroll in the accelerator. They can begin chatting with VCs when they see fit, and they’re encouraged to mingle with YC alumni, a process that can result in pre-Demo Day acquisitions.

This year, Elph, a blockchain infrastructure startup, was bought by Brex, a buzzworthy fintech unicorn that itself graduated from YC only two years ago. The deal closed just one week before Demo Day. Brex’s head of engineering, Cosmin Nicolaescu, tells TechCrunch the Elph five-person team — including co-founders Ritik Malhotra and Tanooj Luthra, who previously founded the Box-acquired startup Steem — were being eyed by several larger companies as Brex negotiated the deal.

“For me, it was important to get them before batch day because that opens the floodgates,” Nicolaescu told TechCrunch. “The reason why I really liked them is they are very entrepreneurial, which aligns with what we want to do. Each of our products is really like its own business.”

Of course, Brex offers a credit card for startups and has no plans to dabble with blockchain or cryptocurrency. The Elph team, rather, will bring their infrastructure security know-how to Brex, helping the $1.1 billion company build its next product, a credit card for large enterprises. Brex declined to disclose the terms of its acquisition.

Hunting for the best deals

Y Combinator partners Michael Seibel and Dalton Caldwell, and moderator Josh Constine, speak onstage during TechCrunch Disrupt SF 2018. (Photo by Kimberly White/Getty Images)

Ultimately, it’s up to startups to determine the cost at which they’ll give up equity. YC companies raise capital under the SAFE model, or a simple agreement for future equity, a form of fundraising invented by YC. Basically, an investor makes a cash investment in a YC startup, then receives company stock at a later date, typically upon a Series A or post-seed deal. YC made the switch from investing in startups on a pre-money safe basis to a post-money safe in 2018 to make cap table math easier for founders.

Michael Seibel, the chief executive officer of YC, says the accelerator works with each startup to develop a personalized fundraising plan. The businesses that raise at valuations north of $10 million, he explained, do so because of high demand.

“Each company decides on the amount of money they want to raise, the valuation they want to raise at, and when they want to start fundraising,” Seibel told TechCrunch via email. “YC is only an advisor and does not dictate how our companies operate. The vast majority of companies complete fundraising in the 1 to 2 months after Demo Day. According to our data, there is little correlation between the companies who are most in demand on Demo Day and ones who go on to become extremely successful. Our advice to founders is not to over optimize the fundraising process.”

Though Seibel says the majority raise in the months following Demo Day, it seems the very best investors know to be proactive about reviewing and investing in the batch before the big event.

Khosla Ventures, like other top VC firms, meets with YC companies as early as possible, partner Kristina Simmons tells TechCrunch, even scheduling interviews with companies in the period between when a startup is accepted to YC to before they actually begin the program. Another Khosla partner, Evan Moore, echoed Seibel’s statement, claiming there isn’t a correlation between the future unicorns and those that raise capital ahead of Demo Day. Moore is a co-founder of DoorDash, a YC graduate now worth $7.1 billion. DoorDash closed its first round of capital in the weeks following Demo Day.

“I think a lot of the activity before demo day is driven by investor FOMO,” Moore wrote in an email to TechCrunch. “I’ve had investors ask me how to get into a company without even knowing what the company does! I mostly see this as a side effect of a good thing: YC has helped tip the scale toward founders by creating an environment where investors compete. This dynamic isn’t what many investors are used to, so every batch some complain about valuations and how easy the founders have it, but making it easier for ambitious entrepreneurs to get funding and pursue their vision is a good thing for the economy.”

This year, given the number of recent changes at YC — namely the size of its latest batch — there was added pressure on the accelerator to showcase its best group yet. And while some did tell TechCrunch they were especially impressed with the lineup, others indeed expressed frustration with valuations.

Many YC startups are fundraising at valuations at or higher than $10 million. For context, that’s actually perfectly in line with the median seed-stage valuation in 2018. According to PitchBook, U.S. startups raised seed rounds at a median post-valuation of $10 million last year; so far this year, companies are raising seed rounds at a slightly higher post-valuation of $11 million. With that said, many of the startups in YC’s cohorts are not as mature as the average seed-stage company. Per PitchBook, a company can be several years of age before it secures its seed round.

Nonetheless, pricey deals can come as a disappointment to the seed investors who find themselves at YC every year but because their reputations aren’t as lofty as say, Accel, aren’t able to book pre-Demo Day meetings with YC’s top of class.

The question is who is Y Combinator serving? And the answer is founders, not investors. YC is under no obligation to serve up deals of a certain valuation nor is it responsible for which investors gain access to its best companies at what time. After all, startups are raking in larger and larger rounds, earlier in their lifespans; shouldn’t YC, a microcosm for the Silicon Valley startup ecosystem, advise their startups to charge the best investors the going rate?

Gig workers need health & benefits — Catch is their safety net

One of the hottest Y Combinator startups just raised a big seed round to clean up the mess created by Uber, Postmates and the gig economy. Catch sells health insurance, retirement savings plans and tax withholding directly to freelancers, contractors, or anyone uncovered. By building and curating simplified benefits services, Catch can offer a safety net for the future of work.

“In order to stay competitive as a society, we need to address inequality and volatility. We think Catch is the first step to offering alternatives to the mandate that benefits can only come from an employer or the government,” writes Catch co-founder and COO Kristen Tyrrell. Her co-founder and CEO Andrew Ambrosino, a former Kleiner Perkins design fellow, stumbled onto the problem as he struggled to juggle all the paperwork and programs companies typically hire an HR manager to handle. “Setting up a benefits plan was a pain. You had to become an expert in the space, and even once you were, executing and getting the stuff you needed was pretty difficult.” Catch does all this annoying but essential work for you.

Now Catch is getting its first press after piloting its product with tens of thousands of users. TechCrunch caught wind of its highly competitive seed round closing, and Catch confirms it has raised $5.1 million at a $20.5 million post-money valuation co-led by Khosla Ventures, Kindred Ventures, and NYCA Partners. This follow-up to its $1 million pre-seed will fuel its expansion into full heath insurance enrollment, life insurance and more.

“Benefits, as a system built and provided by employers, created the mid-century middle class. In the post-war economic boom, companies offering benefits in the form of health insurance and pensions enabled familial stability that led to expansive growth and prosperity,” recalls Tyrrell, who was formerly the director of product at student debt repayment benefits startup FutureFuel.io. “Emboldened by private-sector growth (and apparent self-sufficiency), the 1970s and 80s saw a massive shift in financial risk management from the government to employers. The public safety net contracted in favor of privatized solutions. As technological advances progressed, employers and employees continued to redefine what work looked like. The bureaucratic and inflexible benefits system was unable to keep up. The private safety net crumbled.”

That problem has ballooned in recent years with the advent of the on-demand economy, where millions become Uber drivers, Instacart shoppers, DoorDash deliverers and TaskRabbits. Meanwhile, the destigmatization of remote work and digital nomadism has turned more people into permanent freelancers and contractors, or full-time employees without benefits. “A new class of worker emerged: one with volatile, complex income streams and limited access to second-order financial products like automated savings, individual retirement plans, and independent health insurance. We entered the new millennium with rot under the surface of new opportunity from the proliferation of the internet,” Tyrrell declares. “The last 15 years are borrowed time for the unconventional proletariat. It is time to come to terms and design a safety net that is personal, portable, modern and flexible. That’s why we built Catch.”

Catch co-founders Andrew Ambrosino and Kristen Tyrrell

Currently Catch offers the following services, each with their own way of earning the startup revenue:

  • Health Explorer lets users compare plans from insurers and calculate subsidies, while Catch serves as a broker collecting a fee from insurance providers
  • Retirement Savings gives users a Catch robo-advisor compatible with IRA and Roth IRA, while Catch earns the industry standard 1 basis point on saved assets
  • Tax Withholding provides an FDIC-insured Catch account that automatically saves what you’ll need to pay taxes later, while Catch earns interest on the funds
  • Time Off Savings similarly lets you automatically squirrel away money to finance “paid” time off, while Catch earns interest

These and the rest of Catch’s services are curated through its Guide. You answer a few questions about which benefits you have and need, connect your bank account, choose which programs you want and get push notifications whenever Catch needs your decisions or approvals. It’s designed to minimize busy work so if you have a child, you can add them to all your programs with a click instead of slogging through reconfiguring them all one at a time. That simplicity has ignited explosive growth for Catch, with the balances it holds for tax withholding, time off and retirement balances up 300 percent in each of the last three months.

In 2019 it plans to add Catch-branded student loan refinancing, vision and dental enrollment plus payments via existing providers, life insurance through a partner such as Ladder or Ethos and full health insurance enrollment plus subsidies and premium payments via existing insurance companies like Blue Shield and Oscar. And in 2020 it’s hoping to build out its own blended retirement savings solution and income-smoothing tools.

If any of this sounds boring, that’s kind of the point. Instead of sorting through this mind-numbing stuff unassisted, Catch holds your hand. Its benefits Guide is available on the web today and it’s beta testing iOS and Android apps that will launch soon. Catch is focused on direct-to-consumer sales because “We’ve seen too many startups waste time on channels/partnerships before they know people truly want their product and get lost along the way,” Tyrrell writes. Eventually it wants to set up integrations directly into where users get paid.

Catch’s biggest competition is people haphazardly managing benefits with Excel spreadsheets and a mishmash of healthcare.gov and solutions for specific programs. Twenty-one percent of Americans have saved $0 for retirement, which you could see as either a challenge to scaling Catch or a massive greenfield opportunity. Track.tax, one of its direct competitors, charges a subscription price that has driven users to Catch. And automated advisors like Betterment and Wealthfront accounts don’t work so well for gig workers with lots of income volatility.

So do the founders think the gig economy, with its suppression of benefits, helps or hinders our species? “We believe the story is complex, but overall, the existing state of the gig economy is hurting society. Without better systems to provide support for freelance/contract workers, we are making people more precarious and less likely to succeed financially.”

When I ask what keeps the founders up at night, Tyrrell admits “The safety net is not built for individuals. It’s built to be distributed through HR departments and employers. We are very worried that the products we offer aren’t on equal footing with group/company products.” For example, there’s a $6,000/year IRA limit for individuals while the corporate equivalent 401k limit is $19,000, and health insurance is much cheaper for groups than individuals.

To surmount those humps, Catch assembled a huge list of angel investors who’ve built a range of financial services, including NerdWallet founder Jake Gibson, Earnest founders Louis Beryl and Ben Hutchinson, ANDCO (acquired by Fiverr) founder Leif Abraham, Totem founder Neal Khosla, Commuter Club founder Petko Plachkov, Playable (acquired by Stripe) founder Tad Milbourn and Synapse founder Bruno Faviero. It also brought on a wide range of venture funds to open doors for it. Those include Urban Innovation Fund, Kleiner Perkins, Y Combinator, Tempo Ventures, Prehype, Loup Ventures, Indicator Ventures, Ground Up Ventures and Graduate Fund.

Hopefully the fact that there are three lead investors and so many more in the round won’t mean that none feel truly accountable to oversee the company. With 80 million Americans lacking employer-sponsored benefits and 27 million without health insurance and median job tenure down to 2.8 years for people ages 25 to 34 leading to more gaps between jobs, our workforce is vulnerable. Catch can’t operate like a traditional software startup with leniency for screw-ups. If it can move cautiously and fix things, it could earn labor’s trust and become a fundamental piece of the welfare stack.

Skymind raises $11.5M to bring deep learning to more enterprises

Skymind, a Y Combinator-incubated AI platform that aims to make deep learning more accessible to enterprises, today announced that it has raised an $11.5 million Series A round led by TransLink Capital, with participation from ServiceNow, Sumitomo’s Presidio Ventures, UpHonest Capital and GovTech Fund. With this, the company has now raised a total of $17.9 million in funding.

The inclusion of TransLink Capital gives a hint as to how the company is planning to use the funding. One of TransLink’s specialties is helping entrepreneurs develop customers in Asia. Skymind believes that it has a major opportunity in that market, so having TransLink lead this round makes a lot of sense. Skymind also plans to use the round to build out its team in North America and fuel customer acquisition there.

“TransLink is the perfect lead for this round, because they know how to make connections between North America and Asia,” Skymind CEO Chris Nicholson told me. “That’s where the most growth is globally, and there are a lot of potential synergies. We’re also really excited to have strategic investors like ServiceNow and Sumitomo’s Presidio Ventures backing us for the first time. We’re already collaborating with ServiceNow, and Skymind software will be part of some powerful new technologies they roll out.”

It’s no secret that enterprises know that they have to adapt AI in some form but are struggling with figuring out how to do so. Skymind’s tools, including its core SKIL framework, allow data scientists to create workflows that take them from ingesting the data to cleaning it up, training their models and putting them into production. The promise here is that Skymind’s tools eliminate the gap that often exists between the data scientists and IT.

“The two big opportunities with AI are better customer experiences and more efficiency, and both are based on making smarter decisions about data, which is what AI does,” said Nicholson. “The main types of data that matter to enterprises are text and time series data (think web logs or payments). So we see a lot of demand for natural-language processing and for predictions around streams of data, like logs.”

Current Skymind customers include the likes of ServiceNow and telco company Orange, while some of its technology partners that integrate its services into their portfolio include Cisco and SoftBank .

It’s worth noting that Skymind is also the company behind Deeplearning4j, one of the most popular open-source AI tools for Java. The company is also a major contributor to the Python-based Keras deep learning framework.

Here are the 88 companies that launched at YC’s W19 Demo Day 2

Today was the second half of Y Combinator’s two-day Demo Day for its Winter 2019 class. Over 85 startups pitched on stage yesterday, and another huge batch launched today.

Previously held at the Computer History Museum in Mountain View, this YC Demo Day instead took over a massive warehouse in San Francisco. Like yesterday’s pitches, today’s were split across two stages (“Pioneer” and “Mission”) running in parallel — so even if you were there, you couldn’t see everything alone.

Here are all of the companies that launched today, and our notes from their presentations.

Pioneer Stage:

YSplit: Splitting utility bills and other recurring payments with roommates or loved ones is a huge pain where one person has to front the money and then nag the others to get paid back. YSplit offers virtual debit cards that make it easy to automatically split bills and collect cash from users’ bank accounts. By charging a 2 percent interchange fee to merchants, YSplit could build a solid business from the 26 million shared homes in the US alone.

The Juggernaut: A subscription publication focusing on South Asian stories. They hire freelance writers, publish one story per day, and charge users $5 a month. We wrote about The Juggernaut here.

 

Searchlight: Reference checks can screen out bad hires, yet many businesses wait until the very end of the interview cycle or don’t do extensive checks. Searchlight offers reference checks as a service. Job candidates invite their references to submit testimonials, which Searchlight collects and organizes into reports about someone’s work style, ideal environment, and skillset. Searchlight earns an average of $250 per job hopes to investigate all 30 million skilled hires in the US per year.

Allo: Connects local parents and helps them help each other with things like babysitting and errand-running through a “Karma” point system. Average user returns 12x per week.

 

Coursedog: Universities employ full time scheduling administrators to place faculty into courses and rooms. Coursedog automates this process by plugging into a school’s data to eliminate this busy work. Coursedog already has 8 university clients paying over $100,000 for a three-year contract. Next it wants to move into modernizing the process of booking spaces on campus as well as instructor and tuition payments.

 

AI Insurance: Cloud-based software for insurance claims. By moving things to the cloud rather than filing cabinets, the founders say they can save “thousands of hours per claim”. Their goal, once they’ve got enough claim data, is to use AI to determine things like how much a claim might ultimately cost.

 

Nebullam: Growing crops indoors can produce more food per acre that’s not dependent on weather, but the problems are the high labor costs and payback times for expensive equipment. Nebullam wants to be the John Deere of indoor farming. It sells a vertical farming cube and other equipment that can maximize yield and minimize costs. With a CEO who grew up on a farm, it’s already managed a 3 year payback time for its equipment vs an industry standard for 7 years.

Pronto: Ride-sharing for smaller cities in Latin America. Co-founder Miguel Martinez Cano says that the Uber model doesn’t work in these cities, as would-be riders don’t have credit cards and instead want to pay cash. Drivers pay a subscription fee of $59-99 per month. Currently doing 62,000 trips per month.

 

LEAH Labs: People spend $500 million per year on chemotherapy for their dogs, even though the treatment only extends their life temporarily without curing their disease. LEAH Labs wants to cure B-cell lymphoma cancer in dogs using Car T cells, a powerful new treatment method. There have been $20 billion in recent Car T cell company exits, but none of the big players are focused on dogs. LEAH Labs falls under the USDA instead of the FDA, so it requires less investment to get approved, which translate into $5,000 treatments.

 

Balto: A platform for fantasy sports league managers to make money from their work. As fantasy sports betting moves toward legality in more states, they want to capture the audience already making bets through other means.

 

Visly: Developers waste a ton of time rebuilding the same product for iOS, Android, and web and Visly says only 15 percent of developers use tools to simplify this. Visly’s cross-platform UI development suite makes it quick and easy to create consistent apps for different devices. The CEO worked on Facebook’s version called Yoga, but it always failed. Visly has fixed those problems so developers can focus on their invention, not porting it to other operating systems.

 

Mudrex: Lets people do algorithmic trading without programming knowledge, beginning with cryptocurrency. Last week, they saw a trading volume of $150,000. They charge users $300 a year for access to a drag and drop interface for building trading models, which the user can then test against historical trading data.

Brain Key: Diagnosis for brain diseases using 3D MRI data. Whereas many doctors use 2D slices from MRIs for diagnosis, Brain Key says they’re able to analyze data in 3D to do things like identify Parkinsons subtypes 35% more accurately than experts. They’re aiming to be in hospitals worldwide within 2 years.

 

Switchboard: It’s tough to efficiently match available trucks with freight needing to be shipped if you don’t know where the trucks are. Switchboard’s on-board truck sensors collect real time data on a truck’s location, destination, and more. Switchboard’s trucking freight marketplace launched three months ago and is already gathering data that could unlock more revenue streams.

Shef: Two months ago, California passed the first law in the country legalizing the sale of home cooked food. Shef creates a marketplace where home chefs can find nearby customers. Shef’s meals cost around $6.50 compared to $20 per meal for traditional food delivery, and the startup takes a 22 percent cut of every transaction. It’s been growing 50 percent month over month thanks to deals with large property management companies that offer the marketplace as a perk to their residents. Shef wants to be the Airbnb of home cooked food.

Qwest: Lets people pay money to skip lines at venues like clubs and bars. They’re currently at 10 venues in 2 cities, and say they should be at 100 venues in 6 cities this year. They aim to expand to events like music festivals and sporting events.

 

Circumvent Pharmaceuticals: Brain disease Batten, the Alzheimer’s of children, has no adequate treatment. Circumvent says its treatment can replace the missing enzyme at the root of the disease and has already been shown to be effective in mice. If it can get through expedited approval thanks to incentives for treating rare diseases, Circumvent wants to sell its medicine for $100,000 which is covered by insurance. Once it clears that hurdle, Circumvent will be much closer to working on Alzheimer’s treatments which could be hugely lucrative and a big win for humanity.

Withfriends: Membership programs for small businesses like bars, theaters, and barbershops. So far they have 80 small businesses on the platform, with over 5000 members working out to $400,000 in revenue. By integrating right into PoS machines, they say 15% of customers convert into members.

 

Askdata: Non-technical employees rarely use company data because it’s difficult to find and understand. Askdata offers a natural language search engine for internal data that translates words into SQL queries. Making data conveniently accessible could help businesses make better decisions.

 

Modern Labor: Pays people $10,000 to learn to code in exchange for 15% of their income for 2 years thereafter. Founder Francis Larson says Modern Labor’s first group of students is going through the program now, with 10,000 students on a waiting list.

NALA: Making mobile payments in Africa can require an internet connection and typing in a complex 46-digit code like the one above. NALA makes a mobile money app for easily paying friends and merchants as well as buying Internet airtime to capture the $300 billion in yearly mobile payments in Africa. Co-founder Benjamin Fernandes says NALA is 7X faster than competitors and has 5,000 active users. NALA earns money off commissions on airtime and bill payments, interest on savings, sending leads to insurance companies and other services. 

 

Vice Lotteries: A lottery platform that’s trying to “take the loss” out of lotteries. Amongst other things, they limit the bets users are allowed to make based on their wealth to prevent betting too much. Founder Matthew Curtis notes that their model is currently not legal, but they’re actively trying to change that.

 

GoLinks: Long, complex URLs make it tough to access internal company tools. GoLinks makes links short and easy to remember for clients like Reddit and Lyft. Its tool can programmatically generate URLs that are single sign-on compliant, and teams get a dashboard of analytics. Whether employees are setting up a new computer or working while traveling, GoLinks means they won’t be locked out.

Allure Systems:  Fashion brands spend $8 billion per year on models and photographers. Allure Systems uses AI to programatically produce apparel images for shopping sites. The technology can take one photo of a jacket and show it in a variety of poses on a range of models across different sizes. By increasing shopping conversion rates by 14 percent, the team has already racked up $1.4 million in annual recurring revenue with an average SAAS contract costing over $200,000 per year.

Spiral Genetics: Software built to compare large sets of human genome data to help cure diseases. Founder Adina Mangubat says existing software can’t analyze genome data at the massive scale it’ll be at in the coming years. They’ve generated $250K in revenue so far, with $1M in Letters of Intent.

 

Rune: Voice chat and automated friend/squad finder for players on mobile games (like Fortnite, PUBG.) In 10 days since launch, the company says it’s got 5,000 users who spend an average of 30 minutes per day on the platform. Friendships are handled within Rune, allowing users to switch from game to game.

 

Truora:  Truora offers fast and reliable background checks for Latin America at $3 per check. Truora also collects reports of fraud by workers from its clients to create a valuable database employers will pay to access. It already has Uber, Rappi, and other top regional marketplaces using their service.

Aura Vision: Like Google Analytics for physical stores. By pulling a video feed from “any camera” in a store, Aura provides customer age, gender, and how long customers have lingered with a method they say is anonymous and doesn’t require facial recognition. The company founders say they’ll charge stores an average of $9,600 per year.

 

GeoPredict: GeoPredict aims to remove the middlemen from oil and gas real estate sales, and use AI and historical data to help evaluate acreage. They transacted roughly $100,000 last week, and charge a 5% fee.

 

Union Apartment: It’s hard for international students to find housing if they don’t speak the language, don’t have local friends, and might not even have a bank account. Union Apartment offers furnished co-living apartments for international students starting with those from China. Beyond dwellings, Union Apartment provides events like karaoke nights and services like help with banking. It’s already profitable with $130,000 in gross profit in February which makes this a $24 billion gross profit potential business.

 

jet.law: Charges flat legal fees for employment litigation, using court records to predict the workload and how much they should charge up front (rather than charging by billable hours). Co-founder Jesse Unruh previously worked in big business litigation, while co-founder Kyle Harris was a manufacturing design engineer at Apple.

Friendshop:  Friendshop lets you recruit friends to buy with you to get deals. Friendshop wants to be the US version of Pinduoduo, a $24 billion Chinese group buying company. And after its virality helps Friendshop grow in beauty, it plans to move into other consumer goods businesses.

 

Pulse Active Stations Network: Health kiosks for India, meant to be installed in train stations. Co-founder Joginder Tanikella says that there are 600,000 preventable deaths in India as many in the region don’t get regular doctor checkups. “But everyone takes train,” he says. Their in-station kiosk measures 21 health parameters. The company made $28,000 in revenue last month. Charging $1 per test, Tanikella says each machine pays for itself within 3 months. In the future, the kiosks will allow them to sell insurance and refer users to doctors.

 

Pyxai: Employers don’t have scalable ways to screen for soft skills and culture fit. Pyxai gives job applicants a 30 minute quiz that it analyzes with natural language processing to assess what they can do and if they’ll mesh with existing staff. Deemphasizing resumes could decrease discrimination in hiring. Pyxai charges $6 per screening and wants to be part of how all 36 million knowledge job openings get filled.

 

Mage: An app built specifically for buying and selling cards from Magic: The Gathering — the largest trading card game in the world. Aiming to do for Magic what GOAT did for shoe resales, their app scans, recognizes, and prices cards and helps users to list them. The company says their average customer spends $120 per month on Magic cards.

 

Geosite: Businesses that need satellite imagery have to piece it together from 40 providers, manually download the content, and upload it to their system. Geosite is a marketplace for immediately usable spatial imagery. Clients pay an annual fee, and Geosite already has $3 million in contracts with the US Air Force.

 

Community Phone: Community Phone aims to be a friendlier wireless carrier, aggregating three existing wireless networks behind a company focused on a positive customer service experience. Co-Founder James Graham says they’re currently seeing $230k in annual recurring revenue, and are profitable with a 45% margin.

Superb AI: To build artificial intelligence, you need accurately labeled training data, but services like Mechanical Turk can be slow and inaccurate. Superb AI has built an AI that assists in the labeling process to speed it up 10X, and creates its own in-house AI algorithms. Superb AI has already done $1 million in revenue in the past 7 months. For most businesses to keep up with the AIs from Google, Facebook, and the other tech giants, they’ll need help generating training data that Superb can provide.

Termius: Termius makes an SSH client that works on desktop and mobile and already has 11,000 paying customers including employees at Disney and NASA. The freemium business model is propelled by its #1 ranking in app stores for “SSH”. Next, Termius wants to expand to teams to become a full collaboration platform.

 

Verto FX: Helps businesses in Africa obtain foreign currencies needed to work with international companies. They currently support the exchange of 18 currencies. The company has seen $26M transaction volume in 5 months of private beta, with $30k monthly revenue. Co-founders Anthony Oduwole and Ola Oyetayo both have backgrounds in building technology platforms for large banks.

Inito: This app lets you measure fertility hormones using a hardware dongle that plugs into your phone. Inito can perform a hormone test and use that data to diagnose and treat conditions, and aid in planning procedures like IVF and IUI. Inito claims it can help people get pregnant faster while earning a 65 percent margin on its hardware, and that its data could help diagnose illnesses earlier.

Woke: Finances ad campaigns for budding eCommerce brands and helps them grow in exchange for a cut of the profits. In one month, they’ve onboarded 4 merchants who are giving them 50% of profits on each sale.

 

 

PNOE: They’ve built a compact breath analysis device for fitness facilities, to provide athletes with information about their cardiac/metabolic health. It’s $6,000, and is meant to replace massive $60,000 alternatives. Revenue is growing 40% per month. After fitness facilities, they aim to bring the device into healthcare centers to help with heart disease, obesity. and breathing problems.

Mission Stage:

WeatherCheck: Measures weather damage for insurance companies. The company has secured 4.7 million in annual bookings in the five months since it launched to help insurance carriers reduce their overall claims expense. To use the service, insurers upload data about their properties. WeatherCheck then monitors the weather and sends notifications to insurance companies, if, for example, a property has been damaged by hail.

 

EatGeek: After selling their last startup to GrubHub, the co-founders of Eatgeek are looking to help restaurants pull in more large-scale catering orders. Most restaurants aren’t focused on courting those looking to cater events; EatGeek opens them up to an audience of people looking specifically for these larger orders. The company takes a 20 percent commission on every order that moves through their systems, but they don’t have to worry about dealing with the food preparation or delivery.

 

Avo: Prevents human error when implementing analytics. The company says humans suck at implementing analytics. Their team of engineers and data scientists previously built QuizUp, a startup backed by Sequoia Capital that garnered 100 million users. Avo is currently being used by Skip Scooters, among other businesses.

 

Adventurous Co: Adventurous is building an augmented reality scavenger hunt that partners live actors with a mobile app that can create an interactive family activity that’s a lot more engaging than regular “screen time.” They’re launching in San Francisco with 45-60min experiences that cost $15 per person. We previously wrote about Adventurous here.

 

Globe: The startup, which has dubbed itself the “Coinbase for derivatives,” has built a cryptocurrency-derivative exchange that supports high-frequency trading. The platform allows crypto holders to trade global markets with bitcoin and grants users the same access to data leveraged by institutional investors.

 

XGenomes: XGenomes is aiming to revolutionize DNA sequencing with a low-cost, high-efficiency solution that saves time and money. The company’s solution involves laying out samples on glass slides, identifying individual sequences and using machine learning to stitch together the high resolution photos and turn these images into a full DNA sequence. The team from Oxford and Harvard say that the market XGenomes is targeting is now larger than $6.5 billion.

 

Habitat Logistics: A food delivery startup that doesn’t have a consumer mobile app but helps restaurants make deliveries. What sets them apart from competitors?  The company only delivers to restaurants that are within 10 minutes of a customer’s home, saving them time on long deliveries. Restaurants ping Habitat when they have delivery needs and the company sends a driver to complete the delivery. Habitat says they are growing 17 percent month over month, currently collecting $110,000 monthly revenue by charging restaurants per delivery.

 

WorkClout: WorkClout is building software to help manufacturers manage their operations in a cohesive product. The team says 56 percent of all manufacturers still manage their software on paper and Excel, WorkClout makes it much easier to spot inefficiencies and improve workflows. The team is focusing on customers in the packaging manufacturing space first, and is looking to tackle food and beverage companies and textile manufacturers next.

 

PadPiper: A marketplace for finding monthly housing and compatible roommates. The company helps interns find the right place to live, with the right roommates, partnering with big companies who need to help their interns navigate the housing market. The founders say they had to move 35 times in five years for academic reasons and were disappointed by Craigslist and other options. PadPiper has $10,000 in monthly revenue and says it’s growing 37 percent week-over-week.

 

DevFlight: DevFlight wants to revamp the business model for open-source software. They’re building a marketplace to pair open-sourced developer with companies. DevFlight works with the company and developers to create a plan that helps both parties understand the scope of the project. DevFlight takes a 25 percent transaction on the deals.

Handle.com: Automates the collection process of unpaid construction invoices. Construction companies are often forced to pay for their own jobs when customers are late on payments. According to Handle, there are $104 billion in unpaid construction invoices every year. Handle launched six weeks ago and is currently collecting $22,800 in monthly revenue. The founders previously launched an Andreessen Horowitz-backed company called Tenfold.

 

Gerostate Alpha: Gerostate Alpha is tackling human aging, an ambitious goal. The three co-founders are all academics at the Buck Institute where they’ve spent years researching aging. They’ve used their proprietary platform for drug discovery to quickly parse 90,000 compounds and identify 150 hits for further research.

 

Trestle: Founded by a former employee of Stripe, a fellow Y Combinator grad, Trestle provides companies a home page/easy-to-use intranet with profiles of each employee. The company is already working with Brex, Plaid and others to help employees feel less isolated and work more productively amongst each other.

Green Energy Exchange: Green Energy Exchange wants to give consumers a choice in where they get their energy. The virtual utility co. plans to let consumers choose where their renewable energy comes from — at least in the 12 states where that’s legal. The founder previously ran a large multi-billion dollar energy company and now wants to make choosing your energy supplier as easy as paying for Netflix by partnering directly with solar and wind generators. The startup is launching in Texas next month.

 

rct studio: Led by a team of YC alums behind Raven, an AI startup acquired by Baidu in 2017, rct studio is a creative studio for immersive and interactive film. The platform provides a real time “text to render “engine (so the text “A man sits on a sofa” would generate 3D imagery of a man sitting on a sofa) that supports mainstream 3D engines like Unity and Unreal, as well as a creative tool for film professionals to craft immersive and open-ended entertainment experiences called Morpheus Engine.

 

CredPal: CredPal is building a credit card company for Africa that looks to help the 200 million in Africa’s neglected middle class that lack access to formal credit, the startup says. The company hopes to become the next American Express and bring African consumers more convenience and freedom in how they purchase goods.

 

Calii: The company helps consumers in Latin America save money by directly connecting them to producers of fruits and vegetables. Cutting out the middlemen saves consumers lots of cash, say the founders. The Latin American companies are taking Chinese behemoth Pinduoduo’s business model and applying it to a different geography, like Rappi and Grin have done before them.

 

Nabis: Nabis is tackling the cannabis shipping and logistics business, working with suppliers to ship out goods to retailers reliably. It’s illegal for FedEx to ship weed so Nabis has swooped in and is helping ship and connect while taking cuts of the proceeds, a price the suppliers are willing to pay due to their 98 percent on-time shipping record.

 

Nettrons: A no-human-in-the-loop AI talent sourcer meant to make the recruiting process more efficient. The company has three paying companies who they’ve helped make six hires to date. Nettrons, founded by a pair of engineers, says their target market is worth $1 billion.

 

Fuzzbuzz: Fuzzing is the process of throwing mountains of invalid data at code to find bugs. Fuzzbuzz is looking to simplify the process of fuzzing for developers, taking a long complicated setup and turning it into a 30 minute process that automates the easy parts and connects with existing services like Jira, Github and Slack.

 

Interprime: Provides “Apple level” treasury services to startups. Startups are raising a lot of money with no way to manage it, says Interprime. They want to help these businesses by managing these big investments. They take a .25 percent advisory fee for all the investment they oversee. So far, they have $10 million in investment capital they are servicing.

Taali Foods: Taali Foods is looking to create a new healthy snack food, starting off with a popcorn replacement made from popped water lily seeds. The snacks ditch artificial flavoring, ingredients or preservatives and delivers serial snackers a healthier option with 67% less fat and 20% less calories than regular popcorn.

 

Gordian Software: An API for travel booking companies to sell seat selection and checked bags. Right now, Gordian is profitable and earning $65,000 per month offering online travel agencies tools to help them sell seating, baggage and other ancillary products. Gordian has three major pilots in the works, including one with lastminute.com.

 

Shiok Meats: A cell-based clean shrimp meat provider founded by a team of scientists. Compared to other shrimp on the market, Shiok says their cell-based shrimp meat is more sustainable and taste the same as regular shrimp. The shrimp meat is grown in bioreactors, similar to brewing beer. The startup is targeting the Asia-Pacific shrimp market, which it says is worth $25 billion.

 

Hatch: Hatch is looking to keep the conversations between franchise businesses and their customers moving along and driving sales all the while. The team is focusing on text, email and voice automation to push revenue at their customers which includes Jeep, Ashley Homestore and Rent-A-Center. The company is profitable and earning $119,000 per month.

 

Bot Orange: A customer communication system built on WeChat that integrates sales, marketing and more. WeChat currently offers no tools to companies to manage customers. Bot Orange will be that customer management tool within the app, helping businesses manage various channels without having to navigate another third-party tool.

 

Postscript: Postscript is working with online commerce brands to contact customers on smartphones via SMS. The startup wants to be a Mailchimp for texts, automating conversations between mobile-savvy millennial consumers and companies that are increasingly focused on direct-to-consumer and subscription models. We wrote about Postscript on TechCrunch here.

 

Tailor-ED: Launched by a pair of Stanford grads, the startup helps teachers create tailored lesson plans by sending short quizzes to groups of students to figure out the best lesson plans for those students. In the last four weeks, 2,500 students have received lessons from Tailor-ED. Operating under a freemium model, the company says they are targeting a $1.5 billion market.


Wallets Africa: African debit cards often don’t let users pay for international services like Netflix. Wallets Africa is building a digital bank that brings support to many of these online purchases via a partnership with Visa. The team is currently processing $3.5 million in purchases every month.

 

AuroraQ: A developer of a “practical” quantum computer. The founder has a Ph.D. in quantum physics and says AuroraQ will be the “Dell of quantum computing,” building integrated computers from quantum components, which is must less costly.

 

Probably Genetic: Probably Genetic is selling direct-to-consumer DNA tests, aiming to help Americans diagnose whether they are one of the 15 million undiagnosed people in the country that have a rare genetic disease. The co-founders say that on average it takes people more than 7 years to get diagnosed, and Probably Genetic hopes to change that with their $1,200 test which they will be launching in 12 weeks.

 

Viosera Therapeutics: Uses AI to predict and block drug resistance in cancer and bacteria. The startup has treated its solution with mice infected with MRSA and were able to cure 100 percent of the infected mice. The company is targeting MRSA patients initially with its drug discovery platform. Viosera says it is beginning clinical trials in the next six months.

 

Upsolve: Upsolve wants to helps low-income individuals file for bankruptcy more easily. The non-profit service gets referral fees from pointing non low-income families to bankruptcy lawyers and is able to offer the service for free. The company says that medical bills, layoffs and predatory loans can leave low-income families in dire situations and that in the last 6 months, their non-profit has alleviated customers from $24 million in debt.

 

AllSome:  Virtual warehouses and fulfillment for online sellers in Southeast Asia. How it works: customers ship their inventory to AllSome’s warehouse space, and AllSome handles quality assurance, storage, labelling, packaging and shipping. AllSome’s founders say the company is profitable.

 

BearBuzz: BearBuzz is building an influencer marketplace that moves things along much more quickly than today’s negotiation slog. They’ve standardized ad formats and can automatically verify the video ads via image and voice recognition. The team plans to make money by facilitating these quicker connections and taking 25 percent of adspend.

 

Point: A digital bank offering a debit card with rewards and a better user experience. The company is going live with virtual debit cards and checking accounts next month. 

 

MyScoot: MyScoot wants to help urban millennials make friends in India with their platform for home-hosted social events. Users can search the service and pay to attend events. MyScoot looks to keep things safe for attendees through background checks, peer reviews and what they’re calling a “social trust scoring algorithm.” They have had more than 1000 bookings through their app, with 60% of users returning after booking their first event.

 

Memfault: A developer of tools for engineers at embedded hardware companies that they say are as good as tools available for mobile engineers. Memfault is used for deployment, monitoring and analytics. So far, they have four customers and $5,500 in monthly recurring revenue.

 

Board: Board is a mortgage company that lets home buyers lock down a house with an all-cash offer. Cash buyers are 4 times more likely to win in a bidding war and often save tens of thousands off of a property’s purchase price compared to those with mortgages. They’re looking to be a cash buyer for the 80 percent of people who need a mortgage, by approving people for these massive loans and then making 2 percent off the mortgage.

 

Portal Entryways: Portal automatically opens doors for wheelchair users and keeps them open until they’ve gone through. Many existing accessibility buttons are out of reach, or too far from doors to be helpful; Portal uses a smartphone app on the user’s phone to control these existing buttons (modified with Portal’s hardware), effectively hitting the button for them. Portal is focusing on public places with many doors at first, like universities and malls.   We wrote about Portal Entryways on TechCrunch here.

 

Blueberry Medical: A pediatric telemedicine company that provides medical care instantly to families. Blueberry provides constant contact, the ability to talk to a pediatrician 24/7 and at-home testing kits for a total of $8 per month. They’ve just completed a paid consumer pilot and were able to resolve 50 percent of issues without in-person care. They’ve partnered with insurance providers to reduce ER visits.

 

Maitian.ai: Maitian is building the next generation of vending machines, taking notes from the hotel mini-bar fridge and allowing businesses to sell food in a way that’s friendlier than the average vending machine. Users swipe their credit card, open the door to the machine and pick out what they want. The team is focusing on South East Asia and has launched in 2 locations.

 

Emi Labs: Is developing a virtual assistant for human resources workers that automates the hiring process for low-skilled jobs. The startup counts Burger King and PwC as customers, with a total market size of $2.4 billion. Emi Labs improves the candidate experience by making the hiring process more personalized to them using AI.

 

Latchel: Latchel is building a maintenance platform for property managements that helps them free up their time by processing requests and dispatching contractors to fix the issues. Latchel makes up to $10 per unit per month for property managers and charges a 10 percent referral fee to contractors when they source them for jobs.

 

Alpaca: Is developing an API for free stock trading to replace legacy software. The founders say Alpaca’s commission-free stock trading API is the first and only broker dealer that understands developers, and it allows customers to build and trade with real-time market data free of cost.

 

 

Launching from YC, Eclipse Foods casts a long shadow over the $336 billion dairy industry

Eclipse Foods may be the company that finally takes milk out of the dairy business.

Ever since the acquisition of WhiteWave Foods by the French dairy giant Danone for over $10 billion investors have been thirsting for a technology that would give consumers a better tasting, more milky (for lack of a better word), milk substitute than the highly valuable (but not very tasty) almond, soy, and other plant based dairy alternatives.

There are at least $37.5 billion worth of other reasons for investors’ interest in the milk alternative category. That’s how much money will be spent on dairy alternatives by 2025, according to a newly released study by the market research firm Global Market Insights.

Enter Eclipse Foods. Founded by two veterans of the alternative sugars and proteins business, the company is going after the whole dairy industry, starting with a line of spreads and select additives for restaurants around San Francisco.

“We had an oh shit moment when we got our plant based milk to act just like the real thing,” says Thomas Beaumon, Eclipse Foods co-founder and the former director of product development at Hampton Creek (now known as Just Foods). “We’re not pureeing nuts or seeds or legumes. We asked, ‘What are the properties of milk?’ and built this dairy base of the exact amino acids and fat profile.”

Thomas Beaumon in the kitchen (Courtesy Eclipse Foods)

Joining Beaumon on the journey to create the perfect milk substitute is Aylon Steinhart, a former specialist working with the Y Combinator aligned food technology incubator and think tank, the Good Food Institute.

The two men met at the launch event for Just Egg, the fourth product to debut from Just after the release of the company’s mayonnaise alternative, cookie dough, and porridge.

“We started talking about ideas and landed on this dairy platform,” recalls Steinhart. “It’s a place where we can make a big change very fast given the technological breakthroughs that we solved for early on.”

The demand is certainly coming on strong. According to Steinhart about 80% of millennials are consuming dairy replacements at least once a week.

Aylon Steinhart (Courtesy Eclipse Foods)

Humans didn’t start out drinking milk. Over the 300,000 odd years that some form of homo sapien has been stalking the planet, it has only been in the past 10,000 odd years that people decided to squirt the liquid out of a cow’s udders to consume it.

At first, humans couldn’t even consume the stuff without getting at least a little nauseous. They needed to develop a genetic mutation to even process the lactose sugars properly.

“The first time that we see the lactase persistence allele in Europe arising is around 5,000 years BP [before present] in southern Europe, and then it starts to kick in in central Europe around 3,000 years ago,” assistant professor Laure Ségurel of the Museum of Humankind in Paris, told the BBC earlier this year.

Segurel speculates that the health benefits of consuming milk might have been related to the exposure (and potential inoculation) to various diseases that may have otherwise spread from the animals to the humans that were raising them.

If that was the rationale, it’s increasingly unnecessary for modern living, and may indeed be more of a hazard to human health.

Global meat and dairy producers could count among the largest contributors to climate change if their growth remains unchecked, according to a report from the non-profit Grain.

They estimate that meat and dairy consumption should be reduced by 81 percent in order to meet global emissions reduction targets.

 

With the production of Eclipse’s dairy alternative, there’s no animal required.

“We have an off-the-shelf platform right now. The only additive will be water,” says Beaumon.

And unlike other alternative dairy products, Beaumon and Steinhart claim that theirs actually tastes good. And, as a Michelin starred chef, Beaumon should know.

The company’s first line of products will be a line of cream cheeses, including one for the bagel-and-schmear loving crowd. However, the majority will be more millennial focused, according to Steinhart.

“There will be various unique flavors that are culinarily focused,” he said.

Expect the first products to debut in an exclusive pilot with Wise Sons and through the ice cream maker Humphry Slochombe, a leader in high end ice cream in SF.

However companies decide to label their Eclipse-based products, they certainly shouldn’t call them vegan, according to Beaumon.

“Vegan cheese is gross,” he says.

The top 10 startups from Y Combinator W19 Demo Day 1

Electric vehicle chargers, heads up displays for soldiers, and the Costco of weed were some of our favorites from presitigious startup accelerator Y Combinator’s Winter 2019 Demo Day 1. If you want to take the pulse of Silicon Valley, YC is the place to be. But with over 200 startups presenting across 2 stages and 2 days, it’s tough to keep track.

You can check out our write-ups of all 85 startups that launched on Demo Day 1 here, and come back later for our full index and picks from Day 2. But now, based on feedback from top investors and TechCrunch’s team, here’s our selection of top 10 companies from the first half of this Y Combinator batch, and why we picked each.

Ravn

Looking around corners is one of the most dangerous parts of war for infantry. Ravn builds heads-up displays that let soldiers and law enforcement see around corners thanks to cameras on their gun, drones, or elsewhere. The ability to see the enemy while still being behind cover saves lives, and Ravn already has $490,000 in Navy and Air Force contracts. With a CEO who was a Navy Seal who went on to study computer science plus experts in augmented reality and selling hardware to the Department Of Defense, Ravn could deliver the inevitable future of soldier heads-up displays.

Why we picked Ravn: The AR battlefield is inevitable, but right now Microsoft’s HoloLens team is focused on providing mid-fight information like how many bullets a soldier has in their clip and where there squad mates are. Ravn’s tech was built by a guy who watched the tragic consequences of getting into those shootouts. He wants to help soldiers avoid or win these battles before they get dangerous, and his team includes an expert in selling hardened tech to the US government.

Middesk

It’s difficult to know if a business’ partners have paid their taxes, filed for bankruptcy, or are involved in lawsuits. That leads businesses to write off $120 billion a year in uncollectable bad debt. Middesk does due diligence to sort out good businesses from the bad to provide assurance for B2B deals loans, investments, acquisitions, and more. By giving clients the confidence that they’ll be paid, Middesk could insert itself into a wide array of transactions.

Why we picked Middesk: It’s building the trust layer for the business world that could weave its way into practically every deal. More data means making fewer stupid decisions, and Middesk could put an end to putting faith in questionable partners.

Convictional

Convictional helps direct-to-consumer companies approach larger retailers more simply. It takes a lot of time for a supplier to build a relationship with a retailer and start selling their products. Convictional wants to speed things up by building a B2B self-service commerce platform that allows retailers to easily approach brands and make orders.

Why we picked Convictional: There’s been an explosion of D2C businesses selling everthing from suitcases to shaving kits. But to drive exposure and scale, they need retail partners who’re eager not to be cut out of this growing commerce segment. Playing middleman could put Convictional in a lucrative position while also making it a nexus of valuable shopping data.

Dyneti Technologies

Has invented a credit card scanner SDK that uses a smartphone’s camera to help prevent fraud by over 50 percent and improve conversion for businesses by 5 percent. The business was started by a pair of former Uber employees including CEO Julia Zheng, who launched the fraud analytics teams for Account Security and UberEATS. Dyneti’s service is powered by deep learning and works on any card format. In the two months since it launched, the company has signed contracts with Rappi, Gametime and others.

Why we picked Dyneti: Cybersecurity threats are growing and evolving, yet underequipped businesses are eager to do more business online. Dyneti is one of those fundamental B2B businesses that feels like Stripe — capable of bringing simplicity and trust to a complex problem so companies can focus on their product.

AmpUp

The “Airbnb for electric vehicle chargers.” AmpUp, preparing for a world in which the majority of us drive EVs, operates a mobile app that connects a network of thousands of EV chargers and drivers. Using the app, an electric vehicle owner can quickly identify an available and compatible charger and EV charger owners can earn cash sharing their charger at their own price and their own schedule. The service is currently live in the Bay Area.

Why we picked AmpUp: Electric vehicles are inevitable, but reliable charging is one of the leading fears dissuading people from buying. Rather than build out some massive owned network of chargers that will never match the distributed gas station network, AmpUp could put an EV charger anywhere there’s someone looking to make a few bucks.

FlockJay

Operates an online sales academy that teaches job seekers from underrepresented backgrounds the skills and training they need to pursue a career in tech sales. The 12-week long bootcamp offers trainees coaching and mentorship. The company has launched its debut cohort with 17 students, 100 percent of which are already in job interviews and 40 percent of which have already secured new careers in the tech industry.

Why we picked FlockJay: Unlike coding bootcamps that can require intense prerequisites, killer salespeople can be molded from anyone with hustle. Those from underrepresented backgrounds already know how to expertly sell themselves to attain opportunities others take for granted. FlockJay could provide economic mobility at a crucial juncture when job security is shaky.

Deel

20 million international contractors work with US companies but it’s difficult to onboard and train them. Deel handles the contracts, payments, and taxes in one interface to eliminate paperwork and wasted time. Deel charges businesses $10 per contractor per month and a 1% fee on payouts, which earns it an average of $560 per contractor per year.

Why we picked Deel: The destigmatization of remote work is opening new recruiting opportunities abroad for US businesses. But unless teams can properly integrate these distant staffers, the cost savings of hiring overseas are negated. As the globalization megatrend continues, businesses will need better HR tools.

Glide

There has been a pretty major trend towards services that make it easier to build web pages or mobile apps. Glide lets customers easily create well-designed mobile apps from Google Sheets pages. This not only makes it easy to build the pages, but simplifies the skills needed to keep information updated on the site.

Why we picked Glide: While desktop website makers is a brutally competitive market, it’s still not easy to make a mobile site if you’re not a coder. Rather than starting from visual layout tool many people would still be unfamiliar with, Glide starts with a spreadsheet that almost everyone has used before. And as the web begins to feel less personal with all the brands and influencers, Glide could help people make bespoke apps that put intimacy and personality first.

Docucharm

The platform, co-founded by former Uber product manager Minh Tri Pham, turns documents into structured data a computer can understand to accurately automate document processing workflows and to take away the need for human data entry. Docucharm’s API can understand various forms of documents (like paystubs, for example) and will extract the necessary information without error. Its customers include tax prep company Tributi and lending businesses Aspire.

Why we picked Docucharm: Paying high-priced, high-skilled workers to do data entry is a huge waste. And optical character recognition like Docucharm’s will unlock new types of businesses based on data extraction. This startup could be the AI layer underneath it all.

The Flower Co

Flower Co.: Memberships for cheaper weed sales and delivery. Most dispensaries cater to high-end customers and newbies that want expensive products and tons of hand-holding. In contrast, The Flower Co caters to long-time marijuana enthusiasts who want huge quantities for at low prices. They’re currently selling $200k in marijuana per month to 700 members. They charge $100 a year for membership, and take 10% on product sales.

Why we picked The Flower Co: Marijuana is the next gold rush, a once in a generation land grab opportunity. Yet most marijuana merchants have focused on hyper-discerning high-end customers despite the long-standing popularity of smoking big blunts of cheap weed with a bunch of friends. For those who want to make cannabis consumption a lifestyle, and there will be plenty, The Flower Co could become their wholesaler.

Honorable Mentions

Atomic Alchemy – Filling the shortage of nuclear medicine

YourChoice – Omni-gender non-hormonal birth control

Prometheus – Turning CO2 into gas

Lumos – Medical search engine for doctors

Heart Aerospace – Regional electric planes

Boundary Layer Technologies – Super-fast container ships

Additional reporting by Kate Clark, Greg Kumparak, and Lucas Matney