Subscribe to the SA国际传媒 Daily

UserTesting鈥檚 Human Insight Platform lets companies get feedback from customers on-demand so they can learn more about how to improve customer experiences. led the Series C round, with previous investors , and also participating.

UserTesting, which is based in San Francisco, now has more than $148 million in, according to SA国际传媒. It last raised $45.5 million in a round led by Accel in January 2015.

鈥淐ustomer centricity has evolved from being an aspiration to an expectation,鈥� Insight Partners Vice President Rebecca Liu-Doyle said in a statement. 鈥淐ompanies across industries are now expected to absorb feedback鈥攐n a continuous basis鈥攖o deliver an ever-improving experience.鈥�

The new money will be used to expand UserTesting鈥檚 presence in Europe and Asia and speed up product development.

Along with the new funding, UserTesting announced Thursday that it acquired, a European startup that provides multilingual experience testing for customer feedback, according to a statement. The acquisition of Teston will help with UserTesting鈥檚 push to expand in Europe. UserTesting opened a European headquarters in Edinburgh, Scotland last year.

鈥淭eston fits nicely within our product portfolio and reinforces our ability to give customers the fastest access to the human perspective, globally,鈥� UserTesting CEO Andy MacMillan said in a statement. 鈥淭hey have built a playbook for localization that will enable us to serve our customers who wish to get feedback in European languages and beyond.鈥�

UserTesting also acquired two companies last year, according to SA国际传媒. It purchased in January 2019 and in October 2019.

Teston, which is based in Oslo, Norway, had $2.8 million in seed funding, according to SA国际传媒.

Illustration Credit:

Subscribe to the SA国际传媒 Daily

Existing backers , , , and also put money in the round. The Toronto, Ontario-based company has now raised a total of just over $60 million since its 2014 inception, according to SA国际传媒 data. This latest financing is more than triple the amount raised in its , led by New York-based FirstMark, in December 2018, according to SA国际传媒.

The company declined to disclose the valuation at which the Series B was raised.

Ada, a SaaS operator, has built an AI chatbot onto its ACX platform with the goal of helping companies such as , , and save money and improve customer satisfaction. It currently has more than 100 customers.

I hopped on the phone with CEO and co-founder to get a better understanding of what the company does.

鈥淲e鈥檙e on a mission to strengthen customer relationships through an incredibly easy-to-use automation platform,鈥� he said. 鈥淣on-technical teams use a Lego-like block building experience to build a chatbot that automates upwards of 80 percent of all customer conversations.鈥�

Ada can train its chatbot to understand and address topics specific to each business while getting up and running in weeks. A proprietary Natural Language Understanding engine helps the chatbot to understand meaning and context without perfectly constructed sentences, 鈥渁llowing it to navigate around jargon, typos, spelling errors and more than 100 different languages,鈥� according to the company.

The Ada advantage

The benefits of using Ada, Murchison said, include a dramatic reduction in customer service wait times. For example, one customer, AirAsia (with more than 100 million passengers) said the use of Ada cut down its wait time from one hour to less than 60 seconds.

It also increases customer satisfaction for an increase of 50 to 60 percent in rates in some cases, according to Murchison. Plus, it allows 鈥渁 perfect memory of clients.鈥�

鈥淲henever you talk to an Ada-powered bot, it always remembers who you are,鈥� he told SA国际传媒 News. 鈥淎nd then it鈥檚 always improving based on the conversation you had.鈥�

Additionally, it can automate the purchase of software for SaaS (software-as-a-service) companies.

鈥淲e鈥檙e turning what used to be a customer service cost center into a revenue generator,鈥� Murchison said. 鈥淲e鈥檝e built an operating system for the customer experience.鈥�

The company claims it helps automate over tens of millions conversations annually, and has: reduced customer wait time up to 98 percent; solved more than 70 percent of customer inquiries 鈥渋nstantly鈥�; and achieved customer satisfaction scores of 90 percent.

Growth

While Ada is not yet profitable, it鈥檚 been seeing ARR (annual recurring revenue) growth. According to Murchison, ARR tripled in 2018 and 2019, and he expects it to triple again this year.

The company has 150 employees, 100 of whom were hired over the past year, and its new capital will go toward deepening the sophistication of Ada鈥檚 technology.

鈥淲e doubled our average automation rate last year, and we have a long roadmap of new ML features we鈥檙e going to accelerate the growth of with this new round,鈥� Murchison told me. 鈥淲e also want to expand our capabilities so we can support greater diversity and use cases, and types of customers.鈥�

Ada also plans to use its new funds to 鈥済o more global.鈥� Currently, 30 percent of its business is outside North America.

鈥淚 think it will be a lot more than that in the next couple of years,鈥� Murchison said.

Investor POV

础肠肠别濒鈥檚 said his firm was impressed with the origin of Ada. The co-founders, Murchison and , actually created the product to solve a pain point around scaling customer support they were facing at another company.

鈥淭hey pivoted the business to solve the problem,鈥� Fletcher said. 鈥淎nd they have done it in such a way that gives customer service reps as well as business users and owners an opportunity to make their own tweaks–even if they are not technical. That not needing to have access to a development team is empowering.鈥�

Accel invested in another Toronto-based SaaS company, , last year. In that case, Accel wrote its largest initial check ever, leading a $200 million round for the company in its first external funding in its 14-year history.

Blog Roll Illustration:

Mobile World Congress. F8. Google I/O.

And in turn, companies that support remote meetings are flourishing. Virtual conference platform is the latest to join the roster of businesses benefiting from increased demand for services that facilitate working and networking remotely.

Subscribe to the SA国际传媒 Daily

Three weeks ago, Hopin had 10,000 organizers on its waiting list, Hopin CEO Johnny Boufarhat said in an interview with SA国际传媒 News. Now, that number is up to 18,000 organizers.

鈥淧eople heard of Hopin, saw our tweets, thought 鈥榦h that鈥檚 a good idea for our events鈥�… and then as soon as this happened I think they sort of just jumped through,鈥� Boufarhat said.

Hopin came out of stealth about three weeks ago and raised $6.5 million in seed funding from investors including and last month.

Hopin aims to replicate the experience and benefits of attending a conference without the expenses and other hoops like travel, logistics and environmental impact. People want to go to conferences to meet others, not just to watch presentations, Boufarhat said.

鈥淭hat鈥檚 why people go to events, it鈥檚 not for live streaming,鈥� he said. 鈥淵ou go physically to network with people, to interact with people. And that鈥檚 what we solve.鈥�

How it works

Boufarhat walked me through a demo of the platform on Wednesday. Users can watch what鈥檚 being presented on the 鈥渟tage,鈥� join sessions, or network with other attendees.

About 100,000 people can tune in to presentations happening on the stage–a figure the company wants to get to 1 million soon. The 鈥渟essions鈥� feature lets users join gatherings with other people, raise their hand and ask questions. And 鈥渘etworking鈥� works something like chat roulette for events–organizers can put groups together or keep them apart if, say, they don鈥檛 think reporters want to be networking with salespeople.

Hopin is still in early-access mode and has hosted about 1,100 events so far, 800 of which have been in the past six weeks, Boufarhat said. The number of attendees at events from January to February grew nine times.

The company has 20 employees and is planning to double its team to keep up with the product and demand.

Said Boufarhat, 鈥淲e鈥檙e still product focused, we鈥檙e always going to be product focused 鈥� but at the same time, we need to be able to help people who want to have these events.鈥�

Illustration:

Subscribe to the SA国际传媒 Daily

, 1 and others also participated in the round.

Australian-born came up with the idea for Process Street when running a distributed marketing agency through contractors all over the world. The spreadsheets and project management tools were causing more problems than solutions, he said.

So, the concept behind Process Street was born. Initially, it was an internal tool to structure and manage internal workflows by doing things like documenting and tracking simple checklist-based processes for Patankar鈥檚 company.

But then Patankar teamed up with to form a company based on that initial concept while both were staying at a hostel in Argentina.

Today, Process Street has evolved into 鈥渁 fully-fledged no-code workflow builder with an easy-to-use interface that can handle almost any type of business process, from client implementation to employee onboarding and content approvals,鈥� according to Patankar. And it does this by giving small-and-medium-sized businesses (SMBs) and enterprises the ability to create those workflows without having to write code. (Customers are mostly SMBs, with 10 to 20 percent being enterprises.)

The company services over 450,000 registered users 鈥� both free and paid 鈥� including enterprise customers like , , and , as well as institutions like and .

鈥淧rocess Street lets you build these workflows and plug them into other SaaS products, all without engineering,鈥� Patankar told SA国际传媒 News. 鈥淚t鈥檚 the same as a SAP workflow, for example, but for those you need an engineer to come in and design the flow, build integrations and connect the whole thing. Instead, we sell directly into sales or to a customer success manager.鈥�

Over time, the company realized that remote team use was still a 鈥減retty small market,鈥� despite growing fast. So it began to focus on an even greater market–enterprises with distributed teams 鈥渓ooking to standardize and automate work across vast geographical areas.鈥�

鈥淪o, while some of these companies are not technically remote, they have a lot of the same challenges as a larger, distributed team,鈥� Patankar said.

As a fully distributed company itself, Process Street has 45 employees working across North America and Europe. It鈥檚 grown its revenue to the $3 million to $4 million range and previously raised about $3 million across two seed rounds.

The strategy

The choice of investors was largely strategic, according to Patankar. As part of the financing, Accel Partner will join Process Street鈥檚 board. Accel, Patankar said, made sense to lead the round considering its understanding of the SaaS space.

鈥� is a very intriguing story of a fully distributed team building no-code workflow tools for all types of other distributed teams around the world,鈥� Wong told me.

The company鈥檚 customers integrate with hundreds of different SaaS products, and Salesforce, and are among the most popular, according to Patankar. As such, Salesforce Ventures and Atlassian were 鈥渙bvious partners.鈥�

鈥淧rocess Street workflows are tightly integrated with other SaaS products and rely on the data and activity happening in these systems to automate work,鈥� he said.

Looking ahead

Process Street鈥檚 ultimate goal 鈥渋s to be the no-code workflow solution for teams everywhere.鈥�

As part of that mission–and what some of its new capital will go toward–the company will be launching a mobile app, introducing more enterprise features and opening up greater API access so that users can control their data and build custom automations.

Process Street also has a large library of premade plug-and-play process templates created by its team, customers and partners. It plans to grow that library with the goal of making it 鈥渢he largest repository in the world for all business processes and operational playbooks.鈥�

Illustration:

Subscribe to the SA国际传媒 Daily

The financing values the Santa Clara, Calif.-based company at nearly $3 billion, it said, and brings its, according to SA国际传媒 data. Netskope鈥檚 last funding–a $168.7 million –closed in November 2018, propelling it to unicorn status.

New investors and participated in its latest round, as well as all existing investors including (which led its Series F), , , , , and .

Netskope describes itself as an alternative to “legacy, outdated security solutions that have failed to keep up with enterprises’ rapid adoption of new cloud and mobile technology, which have dissolved the ‘perimeter’ of a business’ network that traditional solutions were originally built for.”

Put more simply, Netskope鈥檚 Security Cloud offering aims to give companies visibility and real-time data and threat protection when accessing cloud services, websites and private apps from anywhere, on any device.

Netskope CEO said that when he started the company in 2012, 鈥渋t was clear that the cloud was changing everything, but few saw how it would disrupt security.鈥�

, managing partner at Sequoia Capital Global Equities, said his firm believes Netskope is the 鈥渦nrivaled leader driving innovation鈥� across cloud, data and network security.鈥�

Besides seeing 80 percent enterprise customer growth (25 percent of which is among the Fortune 100), the company says it has boosted its headcount by 50 percent with a focus on engineering and sales. Specifically, Netspoke says it has 1,000 customers and added 300 employees in less than a year’s time. It now has nearly 1,000 employees.

In addition to its new headquarters in Santa Clara, Netskope has opened new offices in Paris, S茫o Paulo, Seattle, New York, St. Louis, San Francisco and Tokyo. It鈥檚 also expanded into new markets including Australia, Singapore, Chile, Colombia, Brazil, Mexico, Italy, Spain and Germany.

As far as vertical markets are concerned, Beri told SA国际传媒 News that “there is not an industry that is immune to the security concerns” Netspoke addresses.

“That in mind, we continue to see massive uptake in regulated industries such as financial services, healthcare, and retail,” he said.

Illustration:

Subscribe to the SA国际传媒 Daily

Other existing backers , , and all participated in the latest round, along with new investor .

The investment brings The Zebra鈥檚 since its 2012 inception. The Austin-based company last raised $40 million in an Accel-led Series B in September 2017. As part of that funding round, Accel and The Zebra tapped , former president of travel metasearch engine as its new CEO.

鈥淲e like to think of The Zebra as the 鈥楰ayak of Insurance,鈥欌�� Melnick told me. 鈥淲e鈥檙e basically creating a virtual insurance agency.鈥�

The Zebra started out as a comparison site for people looking for auto insurance. And it鈥檚 partners with nine of the 10 top auto insurance carriers in the U.S.听Over time, it鈥檚 also 鈥渘aturally鈥� evolved to offer homeowners insurance with the goal of eventually branching out into renters and life insurance.

鈥淯ltimately, as people evolve through their insurance needs, we can be there for them,鈥� said Melnick, who invested in the company’s Series B and C rounds.

Meanwhile, the company says it did not intentionally raise less in its Series C than its Series B but instead aimed to raise just what it needed to keep up with its momentum. (For more on companies that are not trying to grow at all costs, read my story on the increased focus on profitability here.) Also, to read about another company that also took that approach (raising less in its Series C than B), head here.

How it works

The Zebra offers a real-time quote tool that compares more than 100 insurance companies.

Despite being an online company, The Zebra prides itself on offering customer service help via telephone as well in acknowledgement of how 鈥渃omplicated鈥� of a product insurance is.

鈥淚f someone gets stuck, we have licensed insurance agents in all 50 states that can talk to them,鈥� he said. 鈥淲e want to make it as easy and as transparent as possible.鈥� Or, just like a zebra, more 鈥渂lack and white.鈥�

After Melnick joined, The Zebra killed off the lead generation side of its business, going as far as to eliminate any requirements for a user鈥檚 phone number to protect the privacy of its users. It also revamped its mobile and desktop platforms. Its headcount has surged from about 50-60 people to close to 200 across its offices in Austin and New York. It also works with a team of developers in Lagos, Nigeria.

鈥淲e invested a ton in product management and engineering and became really user-focused,鈥� Melnick said. 鈥淲e鈥檝e also developed much deeper relationships with carriers.鈥�

The company’s efforts seem to be paying off in the way of growth. The Zebra is that rare transparent startup that actually divulges revenue figures. Last year, Melnick said, the startup saw its revenue surge by nearly 200 percent year over year to nearly $37 million in 2019. The company also says it ended the year with a revenue run rate approaching $60 million, 鈥渕ore than half of which was driven by users coming organically to The Zebra鈥檚 website.鈥� Melnick projects revenue to grow 鈥渨ell over鈥� 100 percent in 2020.

The flexibility of The Zebra鈥檚 model means it鈥檚 鈥渁gnostic to a carrier鈥檚 business model鈥� Melnick said.

鈥淲e can refer people to agencies such as or or we can also work with direct insurance agencies like or insurtech startups such as ,鈥� he added. 鈥淲e can offer a bigger breadth of product than most places.”

Looking ahead, the startup plans to increase its use of machine learning 鈥渢o better serve customers and bind more policies in-house.鈥� It also plans to add more customization so it can serve a wider audience.

Investor POV

For Accel Partner John Locke, The Zebra is 鈥渢he most interesting company in insurtech鈥� and one of the fastest-growing consumer businesses his firm works with globally. Also, Accel believes insurance is one of the most interesting consumer markets in general in tech right now.

鈥淚t’s the largest consumer market yet to shift digital,鈥� he said. In fact, he points out that the auto insurance market in the U.S. is expected this year with just an estimated 20.7 percent of insurance being purchased.

鈥淲e believe over the next 5 years that will flip to 80/20 digital (versus the other way around), just like all other major consumer markets such as banking and travel,鈥� Locke added.

He believes old-line carriers realize that consumers want to engage online, so will spend more money acquiring customers digitally versus via agents. Locke also believes there’s a 鈥渢errific amount of startup energy in the market and very talented entrepreneurs building new, fully digital ‘carriers’ like in auto, in renters and (another Accel company) in life insurance.鈥�

For his part, Silverton Partners鈥� General Partner Morgan Flager has been impressed with The Zebra鈥檚 ability to aggressively scale its business 鈥渨hile maintaining a vibrant culture and identity.鈥�

鈥淭hey’ve grown revenue and headcount quickly, while maintaining their status as one of Austin’s best places to work because they have stayed true to their values and purpose,” he added.

Note: This story was revised post-publication to change Accel Partners to Accel.

Blog Roll Illustration:

Subscribe to the SA国际传媒 Daily

Key takeaways

Seed funds are highly selective. Seed funds do not scatter their investment and hope something takes off. On average, seed funds invest in 8-20 new companies each year, but meet with hundreds and get sent thousands of pitches. Seed funds tend to have one or more sector theses about the market driving their investment strategy.

Seed folks like to stick to seed. Why? They could move up the stack, raise a bigger fund and make more money. However, seed investors like seed because it provides an opportunity for them to see themselves making a return — provided their thesis and network is strong.

Seed funds raise like it’s 2009. Seed funds prefer to raise a new fund every 3 to 4 years, unlike more recent trends in venture with larger funds raising every other year. This time horizon for raising funds is fitting since the companies in a seed fund鈥檚 most recent portfolio will take time to prove product market fit and grow their valuation.

Fun fact: Hunter Walk on theYouTube acquisition by Google back in 2006. 鈥淚t was called Google鈥檚 folly. They鈥檙e spending a billion and a half dollars for dogs on skateboards. Is this even legal? The hosting and streaming costs were high. At one of the internal TGIF versions, [Schmidt] announced the acquisition. Somebody asked Eric, 鈥榶ou paid a lot of money, how do you know that was the right amount?鈥� Eric paused for a second and said: ‘It鈥檚 definitely not the right amount. It鈥檚 either way too high or way too low. And we will know in 10 years.’ 鈥�

Highlights from seed investors

7: Satya Patel and Hunter Walk, Homebrew Founders

Hunter on the market gap at venture

鈥淚 was surprised to find that the market gap at venture was returning emails, showing up for meetings [and] spending more than 51 percent of your calendar with the companies that you funded versus that next company, that next fund to raise, that next conference to speak at. We took a model that basically says we will pick up the phone, we will answer the email, we will be on the whiteboard with you.鈥�

Satya on the three things companies have to do well

鈥淎ll companies at this stage really have to do three things well: they have to build a product, distribute that product and build a team. So that鈥檚 where we spent a lot of time.鈥�

Satya defines a Homebrew company

鈥淎 Homebrew company is one in which there is a mission-driven founder who has a firm belief about how the world should operate and a strong set of hypotheses for how to help get there. He or she has experienced the pain being addressed firsthand, has empathy for the customer and a deep appreciation for the target industry, disrupting it with love rather than contempt. The founders want to build a cap table that acts as extensions of the team, helping them increase the scale, velocity or probability of the company鈥檚 success. The company is building something that democratizes access to products, services, data or customers for constituencies and industries that haven鈥檛 had access previously. When we come across like-minded founders operating in industries in which we feel we have expertise, relationships or know-how, we think of those as Homebrew companies.鈥�

8: Jana Messerschmidt and Katie Stanton, Founding Team #Angels

Jana on founder terms

鈥淲hen you鈥檙e a founder, the terms that are set are ultimately driven by your ability to negotiate. Certain founders may only get one term sheet, so that鈥檚 the deal they have to accept because they don鈥檛 have as much negotiation leverage. But other founders might go to Sand Hill Road and get six term sheets in a week; they鈥檙e going to drive the negotiation, they鈥檙e going to have lower dilution and higher valuations, and they鈥檙e going to set the terms. That鈥檚 something we talked about a lot in our group. Do women have as many options when they go out raising? Are they able to command and demand that same sort of excitement about the companies that they鈥檙e building where they鈥檙e able to drive the negotiation process and set those terms?鈥�

9: Katie Rae, The Engine CEO

On the second thing

鈥淭he second thing I learned is that the effort you put into this and the love you show for the entrepreneurs is so fundamental to great outcomes. You really learn to trust each other, because without that trust people just block each other off and stop telling the truth or stop revealing what鈥檚 actually happening. It was so shockingly apparent to me that you have to be genuine in these relationships. It鈥檚 not a transactional business, and certainly not in the seed stage. These are early companies where a hundred things could go wrong, but only one needs to go really right to win. If you鈥檙e focused on all the wrong, you will kill these companies. That鈥檚 what I learned.

鈥淚t鈥檚 a lesson that gets replayed in almost every piece of life, whether it鈥檚 your relationship with a spouse or your children. It鈥檚 always the same lesson.鈥�

On the time frame for patient capital

鈥淲hatever the biggest technical risk is, you want to take that out in the first four years. That鈥檚 what opens all kinds of capital to the company, whether it鈥檚 venture capital, non-dilutive capital or project finance capital. Most funds are 10 years, which means you must be in the market truly deeply within the first four years. Otherwise, you鈥檙e not going to get to exit within 10 years. We like to have a slightly longer time frame than that, ours is up to 18 years. And that allows us to take a different set of risks in technologies that we think are really important.鈥�

10: Vas Natarajan, Partner at Accel

On the Rise of Cloud and APX

鈥淭he cloud is redefining how end users are working together and collaborating with one another. We spend a lot of time thinking about the future of work [and] the rise of new collaboration productivity systems, and how the cloud has been a major enabler for that.

鈥淧art and parcel with the cloud is the rise of the API economy we call APX: the X means everything. What APIs do is actually integrate multiple different subsystems, so data is no longer siloed and workflows are no longer siloed. You can actually stitch together work across multiple different things. It has allowed entrepreneurs to create new cloud categories that are almost super-sets of individual pieces of workflow.

鈥淭he rise of cloud and, in particular, the rise of APIs, are big themes for us right now. We think the combination of those two is going to create a next set of cloud companies, both at the application tier, but also the APIs themselves will become interesting businesses.鈥�

11: Shuly Galili, Co-founder of UpWest

On the challenges of building distributed teams

鈥淚t takes specific founders. Ultimately the sacrifice is on the CEO who has to be very communicative. He needs to create a cohesive environment, even though the team is distributed, ultimately live on an airplane, and not say 鈥榃e鈥檙e a U.S. company, and you over there are some sort of an offshore.鈥� It鈥檚 actually the other way around; our goal is for our CEOs to share best practices with each other.鈥�

12: Beezer Clarkson, Managing Director, Sapphire Partners

On returns for early-stage funds

鈥淲e look to听 underwrite Series A funds with 3x net, and a seed fund [with] 5x net. We have to believe that鈥檚 possible. We will look at when you鈥檝e made investments, how many of them have become a 5x or 10x return and how many of those need to be true. And who鈥檚 in the team? How big is the team and what are the team dynamics?

鈥淣othing guarantees you returns. We have yet to find a fund that has had a significant return, call it 5x, that has not had either a decacorn type exit or multiple billion-dollar exits. If you鈥檙e a $50 [million] or a $75 million size fund, you still need to have multiple billion-dollar exits.鈥�

On fast in Venture

鈥淭he feeling of fast in venture is actually the growth of the companies, and not the management of the funds.鈥�

Main photo courtesy of Frank Vessia via Unsplash.

Subscribe to the SA国际传媒 Daily

To quickly recap, we talked with Accel, #Angels, BBG Ventures, Cowboy Ventures, The Engine, Floodgate, Homebrew, Lerer Hippeau, NFX, UnCork Capital and UpWest.听Here is the customized SA国际传媒 Pro list of organized by last equity funding amount from smallest to largest.听

Vas Natarajan: Partner, Accel

Natarajan pointed to , a site reliability engineering platform that addresses those instances when a company鈥檚 site goes down, potentially costing millions of dollars in lost revenue.

led the seed in 2018. Blameless raised a in March 2019 led by Accel and .

鈥淲hat Blameless is building is a command and control for engineers, DevOps leaders, product leaders to be able to collaborate by Slack, pull in all the relevant metrics that they’re seeing from different infrastructure monitoring problems, and then push fixes as quickly as possible.鈥澨� said Natarajan.

Secondly is , a data privacy technology company that raised a in April 2019 from Accel.

Every technology company needs to know where their users are logging in from around the globe, and the laws of that country. 鈥淭hat is a whole set of infrastructure solutions, and front end consumer facing tools that Transcend will build and sell for any company,鈥� said Natarajan. 鈥淚f you go to privacy.trulia.com or privacy.hoteltonight.com, I as an end user can see your privacy policy, I can log in and see what data you’ve collected on me and then I can hit delete. Transcend powers all that.鈥�

Jana Messerschmidt and Katie Stanton: Founding Team #Angels

The #Angels founders have their eyes on , a marketplace that matches celebrities with consumers for personalized video shoutouts. Cameo raised a $50 million Series B in June 2019 led by .

鈥淭he consumer will script what they want the celebrity to say. So it could be a happy birthday message. It could be an engagement message. It could be congratulations on your job promotion. Whatever you want it to be. And then the celebrity decides whether they want to fulfill it. The celebrity also sets their price. You have everything from cameos for $25 all the way up to slots charging a few thousand dollars,鈥� said Stanton.

Next is that helps women track their fertility at a fraction of the cost. Modern Fertility raised ain June 2019 led by of . 鈥淭hey’ve helped demystify fertility, and giving you more power towards understanding how fertile am I right now?鈥� said Stanton.

Susan Lyne: Co-founder, BBG Ventures

鈥� is a marketplace for very large farms to sell the 30 percent of produce that gets ploughed under, because it doesn’t meet cosmetic standards for grocery,鈥� said Lyne who invested in its seed round. Full Harvest connects large farms to food businesses. led its in August 2018.

Then there is .

鈥淕oTenna allows you to send a text message and your location when there is no wireless coverage, no cell coverage, nothing. It was really developed initially for rock and roll concerts, and off-grid sports,鈥� said Lyne. Since its early days it has been adapted for more critical use. 鈥淚t’s just a great communications protocol that allows anyone to communicate in a disaster.鈥�

Lyne invested in GoTenna鈥檚 seed round back in 2013. Most recently it has raised a in June 2019 led by .

Ted Wang: Partner, Cowboy Ventures

is an AI platform for accounting firms to automate routine tasks.

鈥淲hat you鈥檙e really stopping humans from doing is reading and typing. This makes people more effective in their jobs. I can’t imagine anyone is going to be unhappy about not having to do that,鈥� said Wang.

Vic.ai raised an in September 2019 led by .

鈥� is a company that currently has a product that looks at your job postings, and is able to analyze the text of the job postings and help you to write them in a way that they’ll be more effective,鈥� said Wang. 鈥淵ou can send a posting through the Textio system, and it will send you an augmented version of the same text with suggested changes or highlights.鈥�

Textio raised a in June 2017 led by .

Katie Rae: CEO, The Engine

鈥� is miniaturising a fusion plant with an invention that allows them to get to net positive energy,鈥� said Rae of this fusion energy company built on top of decades of research. 鈥淲e believe what they’ve invented will allow you to get there. If that’s true, you basically have endless clean energy. This is a team that has already proven out a bunch of the most significant milestones, and will continue to do that over the next two to three years.鈥�

Commonwealth Fusion raised a in June 2019 led by , with , , and along with other investors.

Next up is , a company that develops technologies to engineer human primary cells and iPSC’s for both discovery and clinical manufacturing of advanced therapies. According to Rae, 鈥淭hey looked at the biotech industry and asked, 鈥榃hy are there PhDs basically injecting things into cells?鈥� Would there be a way to speed this up in the biotech industry by ten thousand X?鈥�

Kytopen raised a in May 2019 led by and .

Iris Choi: Partner, FloodGate

has built software for simulation testing of autonomous vehicles. Applied Intuition raised its Series B of $40 million led by in September 2019.

鈥淚nstead of physically having to run autonomous vehicles in Arizona in a quarantined off area, you can do billions of test runs, in various scenarios, using software. There is a benefit to having a mutual third party, instead of everyone building it in-house whether you are an OEM or a rideshare provider. This is only going to become increasingly necessary in the future,鈥� said Choi.

Another company worth watching is , which offers business owners a simple procurement app for their daily supplies, reducing time spent on managing their inventory, and helping lower waste. Cheetah last raised its in October 2018 led by and .

Satya Patel and Hunter Walk: Homebrew Founders

鈥溙� was started by two brothers, one who was a Navy Seal and the other who was an engineer at MIT. And the brother who was a Navy Seal came back for his tour of duty in Iraq and Afghanistan, and he came to the realization that none of his colleagues, fellow soldiers died in battle,鈥� said Patel.

鈥淭hey died when they were doing reconnaissance into areas where there was no information about the building or the terrain that they were going into. And it seemed crazy to him that that can鈥檛 be solved in some different way. And so he got together with his brother, and they decided to build a company called Shield AI, which is developing fully autonomous drones for the public sector. These drones can by themselves navigate into buildings and caves. Collect intelligence about what’s going on inside through thermal cameras, regular cameras and then communicate that back to people who can do analysis on it,鈥� said Patel.

鈥淪hield AI is a company that has such a powerful mission around ensuring the safety of civilian and military lives.鈥�

Shield AI raised a $25 million Series B in August 2019 led by .

Also on his radar is , which听 creates software infrastructure for any software company to become a payments company. Finix raised a in July 2019 led by .

鈥淲e think of it as democratizing access to a financial services infrastructure, helping a whole generation of software companies create more value for themselves and their employees and their customers,鈥� said Patel.

Eric Hippeau: Co-founder, Lerer Hippeau

is an AI powered app for personalized health information

鈥淭hey can answer pretty precisely all your health questions. If you use the app then you have the choice of very quickly getting on in a telemedicine way talking to an experienced doctor,鈥� said Hippeau.

鈥淚t’s also a B2B business where you’ll see it appear at the front end to a number of different kinds of service providers, who would rather have something like this, as the first point of contact. It might be a hospital or it might be a clinic so that they can better direct the patient to the right service,鈥� said Hippeau.

K Health last raised ain December 2018 led by , and .

Also up is , which automates retirement plans for small to medium sized companies. 鈥淭hey basically offer a very easy, low cost for SMBs. It’s really low cost,鈥� said Hippeau. 鈥淭hey do all this hard work for about $8 per employee per month. And so they now originate a huge percentage of all new 401K plans in the United States.鈥�

Guideline raised their in December 2018 led by .

James Currier: Co-founder, NFX

New York-based centers on financial products in the real estate sector.

鈥淭hey allow people to buy residential houses for cash,鈥� said Currier. 鈥淩ibbon gives the cash for two to eight weeks for the transition to take place and then the home buyer gets a mortgage. It really helps when you want to buy a home before you sell your other one.鈥�

Ribbon raised a led by 听 in October 2019.

is the largest repository of in the world, for disease detection. 鈥淭hey’ve created a platform play, and then they’re working with pharma and agricultural companies to develop diagnostics and therapies to edit change in a responsible way,鈥� said Currier.

Mammoth Biosciences raised its in June 2018 led by the .

Jeff Clavier: Founder, Uncork Capital

鈥� is a hardware company that makes air purification technology for allergy, asthma or respiratory disease,鈥� said Clavier. 鈥淚t has a huge potential market. When you think about pollution in India and China this is a big market.鈥�

Molekule raised their in November 2018 led by .

Another on the watchlist is , a chat inbox for teams. 鈥淐ompanies can aggregate a bunch of email, text accounts and any communication into one single chat inbox where teams can collaborate and have way more efficient customer support,鈥� said Clavier.听 Front raised a led by in 2018.

Shuly Galili: Co-Founder, UpWest

is a company automating accounts payable to decrease time spent chasing invoice approval. Stampli raised a in October 2019 led by .

鈥淭hey’re dealing with customers who have thousands and thousands of invoices, are inundated with paperwork, with a paper trail, with not knowing where the invoice started, and when is it going to be paid,鈥� said Galili. Customers include retailers through to companies that have many outsourced vendors.

Also up is , a cybersecurity startup that addresses the risks in a company鈥檚 IT systems. CyCognito recently raised an funding in Nov 2019 led by .

鈥淭he attack surface has changed because it’s no longer just the technology that is on your laptop. There are many ways that servers, mobile technologies, customer lists and credit cards are being exposed today,鈥� said Galili. CyCognito monitors these shadow risks an IT team might not be aware of to minimize exposure to attack.

Pro Tip. SA国际传媒 Pro subscribers can save this to their account to track changes over time, and get alerts.听

To Note: Some of the investors mentioned in this article are 听

Illustration: .

News that had invested $200 million into the erstwhile-bootstrapped landed this week with a bang. The story was picked up by a , including SA国际传媒 News. We dug into the founding story of 1Password and peeked at the larger Canadian startup scene (the password-focused security company is based in Toronto).

Subscribe to the SA国际传媒 Daily

However, lost in nearly every story covering the round was the fact that the $200 million wasn’t all a primary investment into the company. Instead, a fraction of the money went to shares issued by the company while a large portion went to existing shareholders.

As :

At least one-third of the funds are going into the company and the balance to the founders, with the new investors getting a minority stake.

One-third of $200 million is between $66 and $67 million, still a huge check for a company that historically eschewed external capital. But the sum invested in the company itself is smaller than the headline figure would have you believe; the rest of the money effectively allowed existing shareholders to cash out a portion of their holdings.

Which, naturally, likely allows for a delayed liquidity event, such as an IPO.

Late-Stage Liquidity

Secondary sales allowing founders to cash out were once far more taboo than they are today; as companies stay private longer the pressure to keep founders and other executives has changed the narrative surrounding partial cash-outs of holdings before an often-delayed IPO.

While 1Password’s round does stick out a bit due to its utter lack of prior investment and reported consistent profitability, there are other examples of later-stage secondary sales that caught our memory this morning.

Let’s refresh our minds:

• : SoftBank became the company’s largest shareholder in a deal that involved SoftBank buying shares from existing shareholders and employees, according to .
• : CEO Travis VanderZanden sold some shares just one year in, according to
• : A little over two years ago, SoftBank invested $4.4 billion in WeWork, with $3 billion of that through primary and secondary shares, according to .
• : Qualtrics insiders cashed out $75 million in shares in the year preceding the company’s $8 billion sales, according to .

Startups are staying private now much longer than they had before. That’s in part because of the JOBS Act in 2012, which changed the point at which companies had to disclose certain information to the Securities and Exchange Commission, among other things. It made it easier for companies to raise more money and stay private longer.

Companies participating in liquidity efforts earlier in their lifecycle is a growing trend, according to a听 by , a platform that helps private companies with liquidity. The median age for a private company was 10 years for the past couple of years, but the “most common age range” for companies that came to the Nasdaq Private Market for liquidity solutions was six to seven years.

What triggers liquidity is a company not wanting to dilute itself too much, , Nasdaq Private Market’s head, told SA国际传媒 News recently. And once liquidity became more of a norm in the market, the cost of not addressing it earlier was employees leaving, Folkemer said.

So, we can infer from this whole situation that with there being so much capital in the market, investors want to put it to work, and are willing to buy secondary.

1Password stands out in this crowd, but more of it was secondary than we thought, and while that’s normal today, it’s not historically normal. The market has changed, that’s for sure.

Illustration:听 H/T

Subscribe to the SA国际传媒 Daily

Gen茅: Welcome to Vas Natarajan a partner at Accel since 2010? Vas how did you become an investor?

Vas: I have a technical background. I went to Penn, where I also studied finance and entrepreneurship. was one of the few places that hired out of undergrad. They gave you a platform to learn about company creation, and the impact of software technology on business problems worldwide. There was no better place to learn what it was like to invest in companies, to build companies. This was 2008. Venture was still very much a cottage industry. It didn’t have the size and scale that it has today. We were at the dawn of software and technology, refactoring and reorienting all aspects of the economy.

To think how much value has been created by the technology industry just over the last 10 years. In 2008 we didn’t realize what we were about to embark on. Technology is touching every corner of the economy, every dollar within the GDP of the world is ultimately going to flow through some technology system. We’re in the earliest, earliest innings of that transition.

Gen茅: Are the skills of an operator a different skill set from an investor?

Vas: Jim and Arthur, our founders, would always say the people you hire is the company. Understanding what a really great VP of Marketing looks like, or a really great Head of Engineering, or a great CFO. We have honed that barometer for talent over many, many companies. And we spend so much time with great operators. A lot of what we counsel and help our founders on, is just understanding how to surround themselves with excellence. That is a skill set that venture uniquely gives you, because we have a portfolio of 50 to 100 companies. I’m on 13 boards. I interview multiple execs throughout the week for our companies. I think that is a valuable skill set for an operator, because ultimately, the company you’re going to build is based on people.

Gen茅: How do you balance the early stage and late stage side of your business?

Vas: The commonality between those two sides of the business are that we want to be the first institutional investor. We want to be the founding investor in business. Whether we are coming in at a seed stage level, where we are writing a $2 to $3 million check and it’s literally the first capital into business. Or it’s a company like Atlassian. We were the first institutional investor in that business that was a $60 million Series A. We want to be the founding investor on a company’s cap table. That is the inherent commonality between our early stage practice and late stage practice.

Many companies that I work with right now I intersect on day one. Many of the founders I work with haven’t even left their companies. They’re just starting to incorporate. We just wanted to structure ourselves so that we could be the founding investor. Early stage and late stage might seem like conflicting ideologies to certain firms, but I think the most important thread there is that we want to be the founding investor.

Gen茅: You have two separate teams?

Vas: We do, but we share a lot. We share an office. A big part of our philosophy, and something that we inherited from our founders, Jim and Arthur, is this idea of the prepared mind methodology. We spend a lot of time understanding and dissecting markets, talking to customers, meeting with CIOs. We share that data. We are actively investing right now in the low code no code movement. It’s the idea of delivering technology abstractions to non-technical users so that they can build products and services. They can build software. We’ve looked at a number of early stage businesses following that theme. We’ve made one or two seed investments in that space. We just led a big $75 million around in a company called . A later stage investment, but still the first institutional investor in.

Gen茅: Accel has raised $2.5 billion across three funds. $525 million for early stage, $1.5 million for growth stage, and $500 million for the leaders fund. Why invest in seed at all if you have to deploy that much capital?

Vas: What matters is that we are the first founding investor behind really great entrepreneurs that are chasing big spaces. How do we do seed differently? We’re very selective. We tend not to do seed deals where we’re just passively participating in a deal. Don’t get me wrong, we’d love to be collaborative, and we are collaborative with many other seed firms. If we have the conviction to do a deal, we want to put as much money into it and potentially even take a board seat and work actively like a Series A investment. It’s not 50 seed investments that we hope five work out, and then we’ll maybe lead Series A in a couple of them. We lean into seeds with a lot of intentionality. We treat our seeds like Series As. And so for a certain set of founder, I think they appreciate that philosophy. They get the resources, and the attention of a Series A firm or a classic venture firm. We will lean into a seed when we have a strong perspective.

Gen茅: Is there a framework for how many seed versus Series A investments?

Vas: We’d like to target 30 to 35 new investments out of a fund, whether those are 30 to 35 seeds or 30 to 35 Series A. It’s hard for us to be prescriptive out of the gate to say what that mixture looks like. And anywhere from $1 to $4 million on the seed side, and then the Series A side anywhere from $6 to $12 million.

Accel invented the concept of the EIR twenty to twenty five years ago. We were coming across great operators, great technologists within our existing portfolio companies. We wanted ways to engage operators or technologists who were thinking about what they want to do next. We do our best to open our Rolodex to our network of customers, operators, and partners so that they can accelerate validation of their hypothesis. We try and surround them with as much high signal data as possible. And the goal would be to seed them, and build a small team to go out and prosecute an idea that they have.

Gen茅: How is the Entrepreneur in Residence (EIR) program structured?

Vas: At any time we have two to three EIRs. Their ideas will gestate for three to six months. We’re doing market exploration together. It’s very much a collaborative process. And the outcome of that can be any number of things. We could seed an idea. In the course of their journey they [could] meet a company that is in the Accel family that they want to join. That’s happened as well.

Gen茅: Do you have a scouting program?

Vas: We work with a handful of operators within our network, who will invest on our behalf. We call them starters. They tend to invest anywhere from $25k to $50k. It exposes us to diversity of opportunities. It’s a learning mechanism for us. It gives them an opportunity to participate in the success of their friends and their family that are going out starting companies. We keep it very small. It’s not a scale program by any means. We have 10 or 15 at any time. And these are the folks that we know very well, we trust, they are in our network. It’s a very collaborative process. We pull a group portfolio review a couple times a year. They begin to see what we’re looking at. We get a chance to see what they’re seeing.

Gen茅: Anything stand out about your network?

Vas: I have inherited a wonderful portfolio of companies that have been invested in, and founded before I got started here. And so if you look at in 2005, , , in 2008, those networks propagate and spawn additional sets of founders and entrepreneurs. A couple of the original founders from Cloudera were ex-Facebook. That network advantage is an important part of our platform. It’s the people that we get to know, and surround ourselves with.

Gen茅: How many partners in the fund?

Vas: US venture includes five early stage partners, , , , and . The other five do US venture as well as growth.

Gen茅: What wave of technology are you riding?

Vas: There are a few broad forces that we pay a lot of attention to. We’re still so early in the migration to cloud. The cloud is redefining how end users are working together, and collaborating with one another. We spend a lot of time thinking about the future of work, the rise of new collaboration productivity systems, and how the cloud has been a major enabler for that.

Part and parcel with the cloud is the rise of the API economy, we call APX. The X means everything. What APIs do is they actually integrate multiple different subsystems. So data is no longer siloed. Workflows are no longer siloed. You can actually stitch together work across multiple different things. It’s allowed entrepreneurs to create new cloud categories that are almost super-sets of individual pieces of workflow.

I led an investment, along with my partner Steve, in a company called , which is a cloud platform for contract management. A lot of the early value proposition was — let’s use the APIs that are now readily available to us to stitch together DocuSign, Salesforce, Dropbox, and Box. So now all of these subsystems can speak to one another because they all have a common language and they have a continuity to one another. Let’s orchestrate contract management across these different subsystems. If you’re a legal ops professional you’re locking into each of those different systems, and you’re hoping that everything coheres and connects. Ironclad sits above those systems, and makes sure that everything is synchronizing correctly. From there Ironclad can start to layer on its own logic, and start to deliver more of an automated feel to a legal team, so that they are not so burdened by the crush of work.

The rise of cloud, and in particular the rise of APIs are big themes for us right now. We think the combination of those two is going to create a next set of cloud companies, both at the application tier, but also the APIs themselves will become interesting businesses.

I led an investment in which is in the customer data infrastructure space. They’re collecting, and cohering all the customer data that a company will collect. And through their integration platform, they’re structuring the data. Those API’s themselves are becoming big and important companies. And so between Segment, , , , and , we’ve probably invested in five to ten API companies that are becoming big businesses.

Gen茅: Two of the areas you invest in are collaboration software and workflow automation. So how do you differentiate?

Vas: Collaboration software to me is how do you stitch together users, data, and conversation in one single pane of glass so that they can be well coordinated and in sync. That is happening across many horizontal spaces as well as many vertical spaces.

I led the seed and Series A in , which is a video post production collaboration system. Right now, video editors and post production teams are sharing files across Dropbox and email. The video files themselves are very dense, they’re large, it’s hard to move those into the cloud. And then when you want to comment or collaborate on those video files you actually have to synchronize your comments with a timestamp. So there’s another dimension to that data that is hard to parse out. It’s what Frame.io does. It pulls all of that content into one system. It pulls all those users into one system and then the conversation can be synchronized into one single pane of glass. And that’s what collaboration software is. It’s pulling together those three dimensions into a system that is much more coherent.

If you layer on cloud software plus APIs, what you now have is the opportunity to automate workflows. That software can now speak to other systems, and so work exists across multiple different subsystems.

In Ironclad if a contract might come in that has a specific clause, well, anytime we see this clause, let’s make sure that it fires off an event to Slack to notify our chief legal officer. That approval workflow can now be automated because you have cloud systems that can speak to one another through APIs. That’s what we think about from a workflow automation standpoint. It’s the ability to put work on rails, because systems can now speak the same language.

Gen茅: Who are Ironclad’s initial customers?

Vas: Ironclad is going after legal operations teams, general counsels, the legal team within a technology company like Dropbox, which is one of the early customers. The fascinating thing is that contracts touch every constituent within an organization. So you are signing contracts for procurement, offer letters, sales contracts. There’s so many different constituents that touch contracts within an organization. And companies themselves are built on a lattice of different contracts. We can insert with the legal team. But that legal team will then pull in so many other constituents. And that’s what’s really exciting about collaboration software companies is they almost sub-propagate within organizations. You solve a workflow for a specific set of power users, but then those power users ultimately have to speak with other people in the company. Those end up being additional seats that you can upsell.

Gen茅: Are there any other companies that you’re excited by and why?

Vas: I led the seed in a company called , which is a site reliability engineering platform. SRE is a concept that merges principles behind DevOps with principles behind product management. The whole concept behind SRE is that every company goes down. It’s in those acute moments that you need to synchronize the relevant users around your product stack, and make sure that they are pushing a fix as quickly as possible. If Salesforce goes down, if Amazon goes down, that’s millions of dollars of revenue, that’s upset customers. You need to make sure that the right people inside of your organization are coordinated and collaborating around how to get systems back up and running. And so what Blameless is building is a command and control for engineers, DevOps leaders, product leaders to be able to collaborate by Slack, pull in all the relevant metrics that they’re seeing from different infrastructure monitoring problems, and then push fixes as quickly as possible. And over time, they’ll allow you to build playbooks around those fixes, so that the next time you see an error, the next time you see downtime, hopefully you can automate some of those workflows.

Gen茅: And another portfolio company you are excited by?

Vas: I also led the seed investment in a very interesting company called . We’ve been fascinated by data privacy technology. The atmospheric pressure on privacy has been building for probably 18 to 24 months. Europe has codified GDPR. California is just about to launch CCPA. Nation by nation, they’re all starting to define their own sets of data governance laws, and data privacy laws. If you are a technology company, that is serving end users around the world, you have to know where the end user is logging in from, and you have to understand the laws of their home country.

For any company that has to be GDPR compliant, you have to give your end users the right to know what data you’ve collected and how the data is being used and you have to give them the right to be forgotten. You have to give them the opportunity to delete their data. This is any company that is serving users from Europe. That is a whole set of infrastructure solutions, front end consumer facing tools that Transcend will build and sell for any company. And so if you go to privacy.trulia.com or privacy.hoteltonight.com, I as an end user can see your privacy policy, I can log in and see what data you’ve collected on me and then I can hit delete. Transcend powers all that. We’re starting to see companies that need to be compliant and privacy conscious have a new set of workflows that they need to encode in their companies and those workflows are creating the opportunity for new products.

Gen茅: The fund in India and in the UK are separate funds? Is there cross investing between funds?

Vas: Despite our global perspective our seed strategy is still very local. Every one of our companies that ends up being a long term investment, by year four or five of their journey, they’re probably doing 20 to 40 percent of their revenue or have 20 to 40 percent of their users in global markets.

My partner Ryan and I led the Series A in a company called , which is a consumer photography platform. Half of our users are global. And so we can’t just be thinking in the vein of Silicon Valley or the United States. We’re thinking globally from day one. And so that team at VSCO has access to our partnership in London, our partnership in India. They’re thinking about how they capture the global opportunity for VSCO.

Gen茅: Vas, thank you.

SA国际传媒 Links:

Illustration: .