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Lacework lands $525M investment as revenue grows 300%

Published January 7, 2021

As the pandemic took hold in 2020, companies accelerated their move to cloud services. Lacework, the cloud security startup, was in the right place at the right time as customers looked for ways to secure their cloud native workloads. The company reported that revenue grew 300% year over year for the second straight year.

It was rewarded for that kind of performance with a $525 million Series D today. It did not share an exact valuation, only saying that it exceeded $1 billion, which you would expect on such a hefty investment. Sutter Hill and Altimeter Capital led the round with help from D1 Capital Management, Coatue, Dragoneer Investment Group, Liberty Global Ventures, Snowflake Ventures and Tiger Global Management. The company has now raised close to $600 million.

Lacework CEO Dan Hubbard says one of the reasons for such widespread interest from investors is the breadth of the company’s security solution. “We enable companies to build securely in the cloud, and we span across multiple different categories of markets, which enable the customers to do that,” he said.

He says that encompasses a range of services, including configuration and compliance, security for infrastructure as code, build time and runtime vulnerability scanning and runtime security for cloud native environments like Kubernetes and containers.

Orca Security scores $6.5M seed round to solve cloud native security

As the company has grown revenue, it has been adding employees quickly. It started the year with 92 employees and closed with more than 200, with plans to double that by the end of this year. As he looks at hiring, Hubbard is aware of the need to build a diverse organization, but acknowledges that tech in general hasn’t done a great job so far.

He says they are working with the various teams inside the company to try and change that, while also working to support outside organizations that are helping educate underrepresented groups to get the skills they need and then building from that. “If you can help solve the problem at an earlier stage, then I think you’ve got a bigger opportunity [to have a base of people to hire] there,” he said.

The company was originally nurtured inside Sutter Hill and is built on top of the Snowflake platform. It reports that $20 million of today’s total comes from Snowflake’s new venture arm, which is putting some money into an early partner.

“We were an alpha Snowflake customer, and they were an alpha customer of ours. Our platform is built on top of the Snowflake data cloud and their new venture arm has also joined the round with an investment to further strengthen the partnership there,” Hubbard said.

As for Sutter Hill, investor Mike Speiser sees Lacework as one of his firm’s critical investments. “[Much] like Snowflake at a similar point in its evolution, Lacework is growing revenue at over 300% per year making Lacework one of Sutter Hill Ventures’ most important and promising portfolio companies,” he said in a statement.

A quick peek at Snowflake’s IPO filing

Revenue-based financing: The next step for private equity and early-stage investment

Published January 6, 2021

Thomas Rush
Contributor

Thomas Rush is founder of Bootstrapp and Head of Investment Platform at ConsenSys Mesh.

Revenue-based investing (RBI), also known as revenue-based financing, or revenue-share investing,¹ is a natural next step for the private equity and early-stage venture investment industry. However, due to RBI being a relatively new model, publicly available data is limited.

To address this foundational gap in market information, we have developed a proprietary data set of 32 RBI investment firms, 57 distinct funds and 134 companies that have secured revenue-based investing.

Bootstrapp developed this extensive analysis on revenue-based investing for the purpose of accelerating the shift toward greater transparency and standardization within the industry.

Upon thoroughly analyzing the data, we’ve been able to identify the total number of investment firms and amount of capital that comprise the RBI industry, the specific verticals and business models that are most actively leveraging RBI, and the typical profile of companies that access this form of capital.

These findings are summarized below; a full industry-spanning report that defines the overall revenue-based investing market as it stands today is available to download here.

As context, the financial structures used by VCs haven’t evolved much since they first emerged in 1957. Today, the model is almost precisely the same, with only incremental changes such as more efficient capital markets and industry standards for structuring deals, pricing companies and more.

More recently, we have seen numerous new investment models and financing instruments, including shared earnings agreements and point-of-sale capital. One of the most prominent and popular new models for investors is revenue-based investing (RBI).

However, because the model is new, there is a lack of publicly available data, industry standards have not yet been fully established, and similarly to the equity investment market, there is little transparency into the cost of capital that investees truly pay in exchange for taking on a revenue-based investment.

Thankfully, there have been some notable efforts to drive transparency in the RBI market. For example, Bigfoot Capital open-sourced its RBI model, outlining it in a blog post and sharing their RBI financial model and anonymized term sheet, but a thorough, quantitative, industry-wide analysis has not been conducted until now.

In order to raise RBI, the company must normally be generating revenue, but is not necessarily required to be profitable, although profitability, or at least a near-term path to profitability, is often an important criteria for many investors. “For startups with revenue, RBI may be a good option because, even though the startup may not be profitable, it can reduce dilution — especially for founders,” said Emily Campbell of The Campbell Firm PLLC, a law firm that represents serial entrepreneurs and venture-backed businesses.

“Taking in some smart equity or convertible debt and balancing that money with other financing can be a good strategy for a startup,” she said. Profitability decreases the risk of default and assures that the investee has the ability to service the debt.

In regards to the applications that are best suited to RBI, B2B software-as-a-service (SaaS) companies rise to the top of the list primarily because one is able to — in essence — securitize the revenue being generated by a company and then lend capital against that theoretical security. In addition to SaaS companies, RBI is being used quite frequently in the impact investing community as it solves the problem of a lack of normal M&A or IPO exit paths for impact-driven companies and are sometimes marketed as a nonextractive form of investment structure.

Beyond B2B SaaS and impact investing, many other verticals are adopting the model as well, including e-commerce/D2C, consumer software, food and beverage, and more. It ought to be noted, however, that regardless of the specific business model a company employs, the investee is typically required to have repeatable sales and a track record that demonstrates a strong revenue stream, and therefore a clear ability to return the capital to the investors.

The U.S. RBI landscape

We have identified 32 U.S.-based firms actively investing via a revenue-based investing instrument, with those firms managing 57 distinct funds representing an estimated $4.31 billion in capital. Through our analysis of those firms, funds and investees, we found that:

The number of firms and the amount of capital committed to RBI is increasing, and we forecast that this trend will continue.
B2B software was not surprisingly the largest consumer of RBI,
There was a surprising amount of activity across industries that are not yet typically associated with revenue-based investing such as food and beverage, consumer products, fashion, and healthcare.

Firms were included in the data set (and by extension, determined to be actively making revenue-based investments) if they:

Invest in companies using an instrument where the return is generated from the principal plus a flat fee that is paid back via a fixed percentage of revenue.
Payments to investors are made on a monthly (or longer) basis.
The payback period is expected to be longer than 12 months.

The specific number of firms we believe to be quite accurate, representing only active, U.S.-based revenue-based investing firms. The number of funds, however, may be underestimated. This is due to the fact that, although each firm is associated with at least one fund, we did not include additional funds beyond that unless they were confirmed through other sources, such as the firms’ public communications, their SEC Form D or other sources as outlined in the methodology section at the conclusion of the full report.

The total amount of RBI capital that has already been allocated to companies across all firms and all years is $2.1 billion. However, it should be noted that this includes the outliers in our dataset, namely Kapitus, Clearbanc, Braavo and United Capital Source. Once we remove those firms, the remaining 28 firms, representing 51 funds, have allocated $592.8 million.

This figure of $592.8 million is almost certainly an underestimate due to the fact that only 19 of 32 firms had a known “amount of allocated capital,” whereas the remaining 13 firms have unknown values (i.e., zeros) for the amount of capital they have allocated thus far. Therefore, if all 32 firms had a valid and confirmed amount of allocated capital, we can logically conclude that the number would rise dramatically from the current figure of $592.8 million.

Increasing popularity of RBI

New RBI firms have been founded every year since 2013. In 2010, five firms were founded and in 2015 four additional firms were founded, then from 2014-2019, two or more firms were founded each year.

Image Credits: Bootstrapp (opens in a new window)

Clearly, there has been a major uptick in RBI firms being founded since 2005, with a relatively consistent number of new firms being founded over the 15 years since then. In the last 10 years alone, 25 RBI firms have been founded.

Why VC funding is falling out of favor with top D2C brands

Published January 6, 2021

Ali Kriegsman
Contributor

Ali Kriegsman is co-founder and COO of Bulletin, a B2B wholesale marketplace. A Forbes 30 Under 30 recipient, her first book, “How to Build a Goddamn Empire,” comes out in April 2021.

In 2020, venture capitalists unceremoniously broke up with D2C brands and product-based businesses.

Many watched as the consumer brands in their portfolios rushed to make hefty layoffs and eke out more runway and grew more concerned with their business models.

Some simply monitored the “lackluster” Casper IPO or skimmed articles about Brandless and others “imploding” and started pulling a slow fade on D2C brands — not taking pitches, not following up.

Many product-based brands, as it turns out, are no longer interested in chasing venture capital.

Last year, investors adopted a wait-and-see approach to all new investments and prayed portfolio brands could cut their burn significantly enough, stay relevant and ride things out.

Product-based businesses fell out of favor and venture capitalists, if they did invest last year, mainly focused on AI startups, or companies focused on data collaboration, data privacy and healthcare (mostly founded by men, might I add).

From a distance, it sounds like direct-to-consumer founders were left destitute and desperate for financing, wounded by every slow fade or hard pass, beholden as ever to the whims of Silicon Valley.

But as Hal Koss so eloquently shared in his “DTC playbook” post-mortem, this wasn’t a one-way breakup; this parting of ways is actually mutual. Many product-based brands, as it turns out, are no longer interested in chasing venture capital, playing the “grow-at-all-costs” game and relinquishing partial control to investors, despite the pandemic and the uncertain circumstances many founders find themselves facing.

Through my work running and scaling Bulletin, I’ve followed thousands of product-based businesses ranging from indie beauty brands selling clean serums and cleansers to sex tech companies making couples’ vibrators and foreplay accessories. I’ve followed them on Instagram, in the press and across various platforms, and in many cases, I’ve spoken to their founders directly.

Over the past two years, I interviewed executives at more than 30 women-owned businesses for my upcoming book, “How to Build a Goddamn Empire,” and had long phone calls with dozens of independent brands and makers as Bulletin got a handle on how the pandemic was impacting customers. And I noticed something new and remarkable about what founders want now, in 2021, compared to what they wanted in years past.

Back then, I’d get dozens of cold emails and DMs asking how I successfully raised VC and what the unspoken rules might be. I’d hear from business owners who were considering a raise or gearing up for one. Product-based entrepreneurs approached me at panels or Bulletin events and say they wanted to be the “Glossier for X” or the “Away for Y.” Many younger founders didn’t even know what venture capital really was, but they saw it as symbolic validation for the business, or the only way to get “big.”

Now, brands would rather scrape by than pursue an injection of funding on someone else’s terms; just ask the Gorjana founders or Scott Sternberg. Many brands that saw astronomical growth in 2020, like Rosen, Golde, Entireworld and others that spurred similar growth for Etsy and Shopify are fully bootstrapped businesses, and proudly so.

Some founders I’ve spoken to have even outright rejected offers for investment. A lot of D2C brands are interested in learning about alternative forms of financing like bank loans, lines of credit and crowdfunding, and ask about iFundWomen or Kickstarter, observing the success of other fully crowdfunded brands like Dame and Pepper.

Venture capital, from my vantage point, has lost its sheen for a lot of product-based brands. They’re not destitute and desperate for financing. They’re actually scoffing at the prospect and trusting they can succeed, scale and maintain long-term profitability without swapping equity for cash. They’re tripped up by what they’ve been reading in the media, or they’ve survived or even thrived during COVID, as a fully bootstrapped company, and feel more conviction than ever that the “grow slow” approach is the right move.

They’re reading the same stories about layoffs and tenuous unit economics at massive D2C companies and agreeing with Sam Kaplan that the old playbook — pricey customer acquisition practices, rapid scale, endless rounds of funding — is out of date. It’s 2021 and we’re midpandemic. These brands want to turn a profit.

At $35 to $39 per share, Poshmark’s IPO could 5x its last private valuation

Published January 6, 2021

The new year is off to a busy IPO start. As The Exchange reported a few weeks ago, investors anticipate a busy Q1 IPO cycle, followed by a slower Q2 and a busy Q3 and Q4.

With Affirm releasing an initial IPO price range last night and Poshmark repeating the feat this morning, private-market investor expectations are holding up thus far.

Secondhand fashion marketplace Poshmark anticipates its IPO could price between $35 and $39 per share. Using its simple share count, the former startup could be worth nearly $3 billion. So, we’ve seen two multiunicorns set early pricing terms this week. That’s comfortably busy.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

As we did with Affirm, we’ll dig into Poshmark’s new pricing interval, calculate valuations for the company using both simple and fully diluted share counts, and figure out how they compare to its most-recent financial results and final private valuation. For the last bit, we’ll pull from PitchBook data and the S-1/A filing itself.

But for those of you in a hurry, the short gist is that for Mayfield, GGV, Menlo Ventures, Inventus Capital and Temasek, the company’s first pricing estimate looks like a win.

If you want to read our first dig into the company’s IPO filing that is more focused on performance than pricing, head here. Let’s go!

Poshmark’s hugely “up” IPO

Poshmark’s $35 to $39 per-share IPO price interval could change, but even if it fails to rise, the company’s implied valuation is a dramatic step up from prior rounds.

For example, the company’s S-1 filings note that during its 2017 venture round — the last that it raised per the IPO filing and PitchBook data — Poshmark sold shares at $8.37 per share. That’s a fraction of the price that the company now expects public-market investors to pay.

As with Affirm, let’s calculate Poshmark’s valuation using both simple and fully diluted share counts. The latter takes into account shares that have been earned, but not yet exercised or converted.

Here’s the company’s valuation range using a simple share count, inclusive of its underwriters’ option to purchase 990,000 shares at its IPO price:

Poshmark valuation, low-end of range: $2.6 billion.
Poshmark valuation, high-end of range: $2.9 billion.

If we expand the company’s share count to include vested options and RSUs, the numbers go up. Again, the following math is inclusive of the underwriters’ option:¹

Poshmark valuation, low-end of range: $2.95 billion billion.
Poshmark valuation, high-end of range: $3.29 billion.

So, are those good numbers? Yes.

Extra Crunch Live is back in 2021, connecting founders with tech giants and each other

Published January 6, 2021

In April 2020, when the entire world was laser-focused on the coronavirus pandemic, we realized that startupland was in unprecedented territory. How should startups navigate fundraising, operations, and better understand the market?

In a matter of a couple weeks, we spun up a little series called Extra Crunch Live, giving Extra Crunch members the chance to hear from and connect with leaders across the industry. We brought on some of the biggest names in tech and VC, including the likes of Roelof Botha, Kirsten Green, Zach Perret, Charles Hudson, Aileen Lee, Mark Cuban, Howard Lerman, Niko Bonatsos and Alexa Von Tobel — and the list could go on and on and on.

Somehow, we did 44 episodes of the show in 2020, the year of our Lord.

By any measure, it’s been a huge success. But we’re not ones to rest on our laurels here at TechCrunch. Which is why I’m thrilled to announce Extra Crunch Live 2.0.

In 2021, we’ll be tweaking the format of ECL to provide even more interactivity between founders and audience members and the speakers we host on the show. You’re going to love it.

What’s New:

Series A – Learn how others have fundraised! We’ll have a segment dedicated to hearing from founder/investor duos who walk us through the Series A pitch deck that led to investment.
Pitch Deck Teardowns – Extra Crunch members will have the opportunity to submit their pitch deck and get feedback from our guests, which will include VCs and founders (EC members can submit their pitch decks right here!).
Live Pitch-offs – Audience members can raise their hand to practice their elevator pitch in front of the audience and get real-time feedback from VCs.
Networking!! – The Extra Crunch membership is a community. ECL will be an opportunity to meet your fellow audience members, even in a virtual environment. Who knows? Maybe you’ll meet your next co-founder or investor!
Consistency – ECL will always be at 12pm PT/3pm ET on Wednesdays. When it comes to your calendar, set it and forget it.

We’re super excited about our ECL plans for 2021 and we hope you are, too. More on upcoming speakers soon.

Remember, Extra Crunch Live events are for EC members only, so if you haven’t joined Extra Crunch, get over here!

Dear Sophie: Banging my head against the wall understanding the US immigration system

Published January 6, 2021

Sophie Alcorn
Contributor

Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.

Perfect Corp., developer of virtual beauty app YouCam Makeup, closes $50 million Series C led by Goldman Sachs

Published January 6, 2021

Spending on cosmetics has usually weathered economic crises, but that changed during the COVID-19 pandemic, with stay-at-home orders and masks tempering people’s desire to wear makeup. This forced retailers to accelerate their online strategies, finding new ways to capture shoppers’ attention without in-store samples. Virtual beauty try-on technology, like the ones developed by Perfect Corp., will play an important role in this shift to digital. The company announced today it has raised a Series C of $50 million led by Goldman Sachs.

Based in New Taipei City, Taiwan and led by chief executive officer Alice Chang, Perfect Corp . is probably best known to consumers for its beauty app YouCam Makeup, which lets users “try on” virtual samples from more than 300 global brands, including ones owned by beauty conglomerates Estée Lauder and L’Oréal Paris. Launched in 2014, YouCam Makeup now counts about 40 million to 50 million monthly active users and has expanded from augmented selfies to include livestreams and tutorials from beauty influencers, social features and a “Skin Score” feature.

Perfect Corp.’s technology is also used for in-store retail, e-commerce and social media tools. For example, its tech helped create a new augmented reality-powered try-on tool for Google Search that launched last month (its was previously used for YouTube’s makeup try-on features, too). It also worked with Snap to integrate beauty try-on features into Snapchat.

Google now lets you virtually try on makeup using AR, shop from influencer videos

The new funding brings Perfect Corp.’s total raised so far to about $130 million. Its last funding announcement was a $25 million Series A in October 2017. The Series C will be used to further develop Perfect Corp.’s technology for multichannel retail and open more international offices (it currently has operations in 11 cities).

In a press statement, Xinyi Feng, a managing director in the Merchant Banking Division of Goldman Sachs, said, “The integration of technology through artificial intelligence, machine learning and augmented reality into the beauty industry will unlock significant advantages, including amplification of digital sales channels, increased personalization and deeper consumer engagement.”

Perfect Corp. will also be part of the investment firm’s Launch with GS, a $500 million investment initiative to support a diverse, international cohort of entrepreneurs.

The company uses facial landmark tracking technology, which creates a “3D mesh” around users’ faces so beauty try-ons look more realistic. In terms of privacy, chief strategy officer Louis Chen told TechCrunch that no user data, including photos or biometrics, is saved, and all computing is done within the user’s phone.

The vast majority, or about 90%, of Perfect Corp.’s clients are cosmetic or skincare brands, while the rest sell haircare, hair coloring or accessories. Chen said the goal of Perfect Corp.’s technology is to replicate as closely as possible the experience of trying on makeup in a store. When a user virtually applies lipstick, for example, they don’t just see the color on their lips, but also the texture, like matte, glossy, shimmer or metallic (the company currently offers seven lipstick textures, which Chen said is the most in the industry).

While sales of makeup have dropped during the pandemic, interest in skincare has grown. A September 2020 report from the NPD Group found that American women are buying more types of products than they were last year, and using them more frequently. To help brands capitalize on that, Perfect Corp. recently launched a tool called AI Skin Diagnostic solution, which it says is verified by dermatologists and grades facial skin on eight metrics, including moisture, wrinkles and dark circles. The tool can be used on skincare brand websites to recommend products to shoppers.

Before COVID-19, YouCam Makeup and the company’s augmented reality try-on tools appealed to Gen Z shoppers who are comfortable with selfies and filters. But the pandemic is forcing makeup and skincare brands to speed up their adaption of technology for all shoppers. As a McKinsey report about the impact of COVID-19 on the beauty industry put it, “the use of artificial intelligence for testing, discovery and customization will need to accelerate as concerns about safety and hygiene fundamentally disrupt product testing and in-person consultations.”

“Depending on the geography of the brand, in the past probably only 10%, no more than 20%, of their business was direct to consumer, while 80% was going through retail distribution and distribution partnerships, the network they already built over the year,” said Chen. But beauty companies are investing more heavily in e-commerce now, and Perfect Corp. capitalizes on that by offering its technology as a SaaS.

Another way Perfect Corp. has adapted its offerings during the pandemic is offering remote consultation tools, which means beauty and skincare consultants who usually work in salons or a store like Ulta can demonstrate makeup looks on clients through video calls instead.

“Every single thing we are building now is not a siloed technology,” said Chang. “It’s now always combined with video-streaming.” In addition to one-on-one chats, this also means live-cast shopping, which is extremely popular in China and gradually taking off in other countries, and the kind of AR technology that was integrated into YouTube and Snapchat.

COVID-19 pandemic accelerated shift to e-commerce by 5 years, new report says

Plant-centered prepared food delivery startup Thistle raises $10.3 million

Published January 6, 2021

Eating less meat is the easiest way for anyone to lower their carbon footprint, and the prepared food delivery startup Thistle has just raised $10.3 million to make that choice even easier for consumers.

The company delivers plant-based full menus (with meat options available for customers that want them) for its customers, along with a range of juices and sides.

That pitch of making tweaks to customer behavior for more conscious consumerism and healthy eating was enough to attract Series B funding from PowerPlant Ventures, with participation from Siddhi Capital, Alumni Ventures Group and the venture arm of Rich Products Corp.

The company said it would use the financing to expand geographically — setting up a production facility on the East Coast to bring its healthy prepared meals to potential customers along the Eastern seaboard.

“With this funding, we’ll be able to support even more people through scientific, evidence-based principles of nutrition that lead to optimal wellness, enjoyable eating, and a healthier planet,” said Ashwin Cheriyan, co-founder and CEO of Thistle in a statement.

Since its launch seven years ago, Thistle has served more than 5 million meals, and is intent to not just launch in new geographies, but provide more robust services for its customers. Those services will include virtual consultations with an in-house registered Thistle dietitian who can give customers guidance on the best diet for their needs, the company said.

The new offering was born from customer feedback, according to chief operating officer and Thistle co-founder Shiri Avnery.

“We tested the program last fall, and the responses were overwhelmingly positive. We’re excited to be able to officially roll out the program to our customers this month, with the primary goal to further support our customers along each stage of their wellness journey,” Avnery said.

The husband and wife duo offer menu plans starting at $42 a week or $11.50 per meal, according to the company’s website, and all meals are gluten and dairy-free (with vegan options available).

The financing for Thistle comes during a plant-based food boom that’s been sweeping the nation — and the nation’s investors.

“Eating a plant-forward diet is the single most impactful way to reduce your overall environmental footprint, reducing climate change, pollution, resource consumption, and species extinction,” said Dan Gluck, managing partner of PowerPlant Ventures, in a statement. “Consumer demand for plant-based foods is outperforming total food growth today, and this trend is expected to increase over the next decade as more people realize that eating more plants is a critical component to the long-term health of both the planet and our population.”

Startups making meat alternatives are gaining traction worldwide

Veo raises $25M for AI-based cameras that record and analyze football and other team sports

Published January 6, 2021

Sports have been among some of the most popular and lucrative media plays in the world, luring broadcasters, advertisers and consumers to fork out huge sums to secure the chance to watch (and sponsor) their favorite teams and athletes.

That content, unsurprisingly, also typically costs a ton of money to produce, narrowing the production and distribution funnel even more. But today, a startup that’s cracked open that model with an autonomous, AI -based camera that lets any team record, edit and distribute their games, is announcing a round of funding to build out its business targeting the long tail of sporting teams and fixtures.

Veo Technologies, a Copenhagen startup that has designed a video camera and cloud-based subscription service to record and then automatically pick out highlights of games, which it then hosts on a platform for its customers to access and share that video content, has picked up €20 million (around $24.5 million) in a Series B round of funding.

The funding is being led by Danish investor Chr. Augustinus Fabrikker, with participation from U.S.-based Courtside VC, France’s Ventech and Denmark’s SEED Capital. Veo’s CEO and co-founder Henrik Teisbæk said in an interview that the startup is not disclosing its valuation, but a source close to funding tells me that it’s well over $100 million.

Teisbæk said that the plan will be to use the funds to continue expanding the company’s business on two levels. First, Veo will be digging into expanding its U.S. operations, with an office in Miami.

Second, it plans to continue enhancing the scope of its technology: The company started out optimising its computer vision software to record and track the matches for the most popular team sport in the world, football (soccer to U.S. readers), with customers buying the cameras — which retail for $800 — and the corresponding (mandatory) subscriptions — $1,200 annually — both to record games for spectators, as well as to use the footage for all kinds of practical purposes like training and recruitment videos. The key is that the cameras can be set up and left to run on their own. Once they are in place, they can record using wide-angles the majority of a soccer field (or whatever playing space is being used) and then zoom and edit down based on that.

Image Credits: Veo Technologies

Now, Veo is building the computer vision algorithms to expand that proposition into a plethora of other team-based sports, including rugby, basketball and hockey, and it is ramping up the kinds of analytics that it can provide around the clips that it generates, as well as the wider match itself.

Even with the slowdown in a lot of sporting activity this year due to COVID — in the U.K. for example, we’re in a lockdown again where team sports below professional leagues, excepting teams for disabled people, have been prohibited — Veo has seen a lot of growth.

The startup currently works with some 5,000 clubs globally ranging from professional sports teams through to amateur clubs for children, and it has recorded and tracked 200,000 games since opening for business in 2018, with a large proportion of that volume in the last year and in the U.S.

For a point of reference, in 2019, when we covered a $6 million round for Veo, the startup had racked up 1,000 clubs and 25,000 games, pointing to customer growth of 400% in that period.

The COVID-19 pandemic has indeed altered the playing field — literally and figuratively — for sports in the past year. Spectators, athletes and supporting staff need to be just as mindful as anyone else when it comes to spreading the coronavirus.

That’s not just led to a change in how many games are being played, but also for attendance: witness the huge lengths that the NBA went to last year to create an extensive isolation bubble in Orlando, Florida, to play out the season, with no actual fans in physical seats watching games, but all games and fans virtually streamed into the events as they happened.

That NBA effort, needless to say, came at a huge financial cost, one that any lesser league would never be able to carry, and so that predicament has led to an interesting use case for Veo.

Pre-pandemic, the Danish startup was quietly building its business around catering to the long tail of sporting organizations which — even in the best of times — would be hard-pressed to find the funds to buy cameras and/or hire videographers to record games, not just an essential part of how people can enjoy a sporting event, but useful for helping with team development.

“There is a perception that football is already being recorded and broadcast, but in the U.K. (for example) it’s only the Premier League,” Teisbæk said. “If you go down one or two steps from that, nothing is being recorded.” Before Veo, to record a football game, he added, “you need a guy sitting on a scaffold, and time and money to then cut that down to highlights. It’s just too cumbersome. But video is the best tool there is to develop talent. Kids are visual learners. And it’s a great way to get recruited, sending videos to colleges.”

Those use cases then expanded with the pandemic, he said. “Under coronavirus rules, parents cannot go out and watch their kids, and so video becomes a tool to follow those matches.”

‘We’re a Shopify, not an Amazon’

The business model for Veo up to now has largely been around what Teisbæk described as “the long tail theory”, which in the case of sports works out, he said, as “There won’t be many viewers for each match, but there are millions of matches out there.” But if you consider how a lot of high school sports will attract locals beyond those currently attached to a school — you have alumni supporters and fans, as well as local businesses and neighborhoods — even that long tail audience might be bigger than one might imagine.

Veo’s long-tail focus has inevitably meant that its target users are in the wide array of amateur or semi-pro clubs and the people associated with them, but interestingly it has also spilled into big names, too.

Veo’s cameras are being used by professional soccer clubs in the Premier League, Spain’s La Liga, Italy’s Serie A and France’s Ligue 1, as well as several clubs in the MLS such as Inter Miami, Austin FC, Atlanta United and FC Cincinnati. Teisbæk noted that while this might never be for primary coverage, it’s there to supplement for training and also be used in the academies attached to those organizations.

The plan longer term, he said, is not to build its own media empire with the trove of content that it has amassed, but to be an enabler for creating that content for its customers, who can in turn use it as they wish. It’s a “Shopify, not an Amazon,” said Teisbæk.

“We are not building the next ESPN, but we are helping the clubs unlock these connections that are already in place by way of our technology,” he said. “We want to help them capture and stream their matches and their play for the audience that is there today.”

That may be how he views the opportunity, but some investors are already eyeing up the bigger picture.

Vasu Kulkarni, a partner at Courtside VC — a firm that has focused (as its name might imply) on backing a lot of different sports-related businesses, with The Athletic, Beam (acquired by Microsoft) and many others in its portfolio — said that he’d been looking to back a company like Veo, building a smart, tech-enabled way to record and parse sports in a more cost-effective way.

“I spent close to four years trying to find a company trying to do that,” he said.

“I’ve always been a believer in sports content captured at the long tail,” he said. Coincidentally, he himself started a company called Krossover in his dorm room to help somewhat with tracking and recording sports training. Krossover eventually was acquired by Hudl, a competitor to Veo.

“You’ll never have the NBA finals recorded on Veo, there is just too much at stake, but when you start to look at all the areas where there isn’t enough mass media value to hire people, to produce and livestream, you get to the point where computer vision and AI are going to be doing the filming to get rid of the cost.”

He said that the economics are important here: the camera needs to be less than $1,000 (which it is) and able to produce something demonstrably better than “a parent with a Best Buy camcorder that was picked up for $100.”

Kulkarni thinks that longer term there could definitely be an opportunity to consider how to help clubs bring that content to a wider audience, especially using highlights and focusing on the best of the best in amateur games — which of course are the precursors to some of those players one day being world-famous elite athletes. (Think of how exciting it is to see the footage of Michael Jordan playing as a young student for some context here.) “AI will be able to pull out the best 10-15 plays and stitch them together for highlight reels,” he said, something that could feasibly find a market with sports fans wider than just the parents of the actual players.

All of that then feeds a bigger market for what has started to feel like an insatiable appetite for sports, one that, if anything, has found even more audience at a time when many are spending more time at home and watching video overall. “The more video you get from the sport, the better the sport gets, for players and fans,” Teisbæk said.

Senti Bio raises $105 million for its new programmable biology platform and cancer therapies

Published January 6, 2021

Senti Biosciences, a company developing cancer therapies using a new programmable biology platform, said it has raised $105 million in a new round of financing led by the venture arm of life sciences giant Bayer.

The company’s technology uses new computational biological techniques to manufacture cell and gene therapies that can more precisely target specific cells in the body.

Senti Bio’s chief executive, Tim Lu, compares his company’s new tech to the difference between basic programming and object-oriented programming. “Instead of creating a program that just says ‘Hello world’, you can introduce ‘if’ statements and object-oriented programming,” said Lu.

By building genetic material that can target multiple receptors, Senti Bio’s therapies can be more precise in the way they identify genetic material in the body and deliver the kinds of therapies directly to the pathogens. “Instead of the cell expressing a single receptor… now we have two receptors,” he said.

The company is initially applying its gene circuit technology platform to develop therapies that use what are called chimeric antigen receptor natural killer (CAR-NK) cells that can target cancer cells in the body and eliminate them. Many existing cell and gene therapies use chimeric antigen receptor T-cells, which are white blood cells in the body that are critical to immune response and destroy cellular pathogens in the body.

However, T-cell-based therapies can be toxic to patients, stimulating immune responses that can be almost as dangerous as the pathogens themselves. Using CAR-NK cells produces similar results with fewer side effects.

That’s independent of the gene circuit, said Lu. “The gene circuit gets you specificity… Right now when you use a CAR-T cell or a CAR-NK cell… you find a target and hope that it doesn’t affect normal cells. We can build logic in our gene circuits in the cell that means a CAR-NK cell can identify two targets rather than one.”

That increased targeting means lower risks of healthy cells being destroyed alongside mutations or pathogens that are in the body.

For Lu and his co-founders — fellow MIT professor Jim Collins, Boston University professor Wilson Wong and longtime synthetic biology operator Phillip Lee — Senti Bio is the culmination of decades of work in the field.

“I compare it to the early days of semiconductor work,” Lu said of the journey to develop this gene circuit technology. “There were bits and pieces of technology being developed in research labs, but to realize the scale at which you need, this has to be done at the industrial level.”

So licensing work from MIT, Boston University and Stanford, Lu and his co-founders set out to take this work out of the labs to start a company.

“When the company was started it was a bag of tools and the know-how on how to use them,” Lu said. But it wasn’t a fully developed platform.

That’s what the company now has and with the new capital from Leaps by Bayer and its other investors, Senti is ready to start commercializing.

The first products will be therapies for acute myeloid leukemia, hepatocellular carcinoma and other, undisclosed, solid tumor targets, the company said in a statement.

“Leaps by Bayer’s mission is to invest in breakthrough technologies that may transform the lives of millions of patients for the better,” said Juergen Eckhardt, MD, head of Leaps by Bayer. “We believe that synthetic biology will become an important pillar in next-generation cell and gene therapy, and that Senti Bio’s leadership in designing and optimizing biological circuits fits precisely with our ambition to prevent and cure cancer and to regenerate lost tissue function.”

Lu and his co-founders also see their work as a platform for developing other cell therapies for other diseases and applications — and intend to partner with other pharmaceutical companies to bring those products to market.

“Over the past two years, our team has designed, built and tested thousands of sophisticated gene circuits to drive a robust product pipeline, focused initially on allogeneic CAR-NK cell therapies for difficult-to-treat liquid and solid tumor indications,” Lu said in a statement. “I look forward to continued platform and pipeline advancements, including starting IND-enabling studies in 2021.”

The new financing round brings Senti’s total capital raised to just under $160 million and Lu said the new money will be used to ramp up manufacturing and accelerate its work partnering with other pharmaceutical companies.

The current time frame is to get its investigational new drug permits filed by late 2022 and early 2023 and have initial clinical trials begun in 2023.

Developing gene circuits is a new and expanding field with a number of players, including Cell Design Labs, which was acquired by Gilead in 2017 for up to $567 million. Other companies working on similar therapies include CRISPR Therapeutics, Intellius and Editas, Lu said.

Cell and gene therapy startup ElevateBio raises $170M