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FullStory raises $103M at a $1.8B valuation to combat rage clicks on websites and apps

Published August 4, 2021

Even with all the years of work that have been put into improving how screen-based interfaces work, our experiences with websites, mobile apps and any other interactive service you might use still often come up short: we can’t find what we want, we’re bombarded with exactly what we don’t need or the flow is just buggy in one way or another.

Now, FullStory, one of the startups that’s built a platform to identify when all of the above happens and provide suggestions to publishers for fixing it — it’s obsessed enough with the issue that it went so far as to trademark the phrase “Rage Clicks”, the focus of its mission — is announcing a big round of funding, a sign of its success and ambitions to do more.

The Atlanta-based company has closed a Series D round of $103 million, an oversubscribed round that actually was still growing between me interviewing the company and publishing this story (when we talked last week the figure was $100 million). Permira’s growth fund — which has previously invested in other customer experience startups like Klarna and Nexthink — is leading this round, with previous investors Kleiner Perkins, GV, Stripes, Dell Technologies Capital, Salesforce Ventures and Glynn Capital also participating.

FullStory, which has raised close to $170 million to date, has confirmed that the investment values the company at $1.8 billion.

Scott Voigt, FullStory’s founder and CEO, tells me that FullStory currently has some 3,100 paying customers on its books across verticals like retail, SaaS, finance and travel (customers include Peloton, the Financial Times, VMware and JetBlue), which collectively are on course to rack up more than 15 billion user sessions this year — working out to 1 trillion interactions involving clicks, navigations, highlights, scrolls and frustration signals. It says that annual recurring revenue has to date risen by more than 70% year-on-year.

The plan now will be to continue investing in R&D to bring more real-time intelligence into its products, “and pass those insights on to customers,” and also to “move more aggressively into Europe and Asia Pacific,” he added.

FullStory competes with others like Glassbox and Decibel, although it also claims its tools have more presence on websites than its three biggest competitors combined.

Working across different divisions like product, customer success and marketing, and engineering, FullStory uses machine learning algorithms to analyze how people navigate websites and other digital interfaces.

If approved as part of the “consent gate” you might encounter because of, say, GDPR regulations, it then tracks things like when people are clicking in areas excessively over a short period of time because of delays (the so-called “rage clicks”); or when a click leads nowhere because of, for example, a blip in a piece of JavaScript; or when a person is just scrolling or moving their mouse or cursor or finger in a frustrated (fast) way — again with little or no subsequent activity (or activity from the customer ceasing altogether) resulting from it. It doesn’t use — nor does it have plans to — use eye tracking, or anything like sentiment analysis around data that customers put into, say, customer response windows.

FullStory then packages up the insights that it does collect into data streams that can be used with various visualization tools (having Salesforce as a strategic backer is interesting in this regard, given that it owns Tableau), or spreadsheets, or whatever a customer chooses to put them into. While it doesn’t offer direct remediation (perhaps an area it could tackle in the future), it does offer suggestions for alternative actions to fix whatever problems are arising.

Image Credits: FullStory (opens in a new window)

Part of what has given FullStory a big boost in recent times (this round is by far the biggest fundraise the company has ever done) is the fact that, in today’s world, digital business has become the centerpiece of all business. Because of COVID-19 and the need for social distancing that have taken away some of the traffic of in-person experiences like going to stores, organizations that have natively or built experiences online are seeing unprecedented amounts of traffic; and they are now joined by organizations that have shifted into digital experiences simply to stay in business.

All of that has contributed to a huge amount of content online, and a big shift in mindset to making it better (and in the most urgent of cases, even more basically, simply usable), and that has resulted in the stars aligning for companies like FullStory.

“The category was so nascent to begin with that we had to explain the concept to customers,” Voigt told me of the company’s early days, where selling meant selling would-be customers on to the very idea of digital experience insights. “But digital experience, in the wake of COVID-19, suddenly mattered more than it ever has before, and the continued amount of inbound interest has been afterburner for us.” He noted that demand is increasing among mid-market and enterprise organizations, and something that has also helped FullStory grow is the general movement of talent in the industry.

“Our customers tend to take their tools with them when they change their jobs,” he said. Those tools include FullStory’s analytics.

The evolution of bringing more AI into the world of basically structuring what might otherwise be unstructured data has been a big boost to the world of analytics, and investors are interested in FullStory because of how it’s taken that trend and grown its business on top of it.

“We are very excited to partner with the FullStory team as they continue to expand and build a truly extraordinary technology brand that improves the digital experience for all stakeholders,” said Alex Melamud, who led the transaction on behalf of Permira Growth, in a statement.

“Traditional analytics have been upended by AI- and ML-enabled approaches that can instantly uncover nuanced patterns and anomalies in customer behavior,” said Bruce Chizen, a senior advisor at Permira, in a statement. “Leveraging both structured and unstructured data, FullStory has rapidly established itself as the market and technology leader in DXI and is now the fastest-growing company in the category and the de facto system of record for all digital experience data.” Chizen is joining the FullStory Board with this round.

5 predictions for the future of e-commerce

Product-led revenue startup Correlated launches with $8.3M seed

Published August 4, 2021

Correlated on Wednesday announced it raised $8.3 million in seed funding to launch its product-led growth platform for sales teams.

NextView Ventures and Harrison Metal co-led the round and were joined by Apollo Projects, Attentive co-founders Brian Long and Andrew Jones, Cockroach Labs co-founder Ben Darnell and Atrium’s Pete Kazanjy. The round includes funding raised last year and more recent follow-on funding from both NextView and Harrison, co-founder and CEO Tim Geisenheimer told TechCrunch.

The New York-based company was founded in 2020 by Geisenheimer and Diana Hsieh, who overlapped at TimescaleDB, and John Pena, who Geisenheimer met at Facet. In their previous roles, they saw a need to connect product data to sales tools.

While at Timescale, Geisenheimer said there were thousands of free users to talk to, and he and Hsieh built a similar version of a product-led growth platform there, but secretly wished there was something more like Correlated available.

What they saw was data across multiple tools being stored manually on spreadsheets so that actionable insights could be generated. The data would quickly become outdated. Add in that the way customers use products now is different. Traditionally, customers would not be able to use a product until they talked to the sales team. Today, customers start using products for free and either get value from it or not, but sales teams don’t have real-time data on their experience.

“Sales needs to know how customers are using the product and the right time for sales to engage based on maturity of the experience,” Geisenheimer said. “That was the missing piece of it and sales teams ended up talking to the wrong people. With Correlated, they can close more deals efficiently.”

Startups have never had it so good

Correlated’s technology pulls in product usage data from tools and data warehouses and connects to a management platform like Salesforce or HubSpot, stitching it together into a data graph to show how customers are using a product. For example, within a company of 200 to 500 employees, a salesperson can see the frequency employees logged in and be alerted of when the best opportunity is to make the sale.

The company has a SaaS pricing model and is already working with mid-market companies like Ally, Pulumi, ReadMe and LaunchNotes. To support its launch out of beta, Geisenheimer intends to use the new funding for hiring across functions like engineering and go-to-market. The company has 11 employees currently.

There are other product-led growth platforms out there that raised venture capital funding recently, for example, Endgame, and similarly Geisenheimer said the competition is often in-house product teams building their own systems. Correlated’s differentiator is that it has taken on that task itself and enables customers to quickly see value once they are up-and-running, he added.

David Beisel, co-founder and partner at NextView Ventures, said his firm invests in category stage companies and is currently operating out of its fourth fund, infusing business-to-business SaaS and e-commerce companies. Beisel has known Geisenheimer for nearly a decade now, having met him when NextView invested in one of Geisenheimer’s previous companies, TapCommerce.

“At the end of the day with Tim, he knows sales and the company is selling a product that has a strong founder market fit,” Beisel said. “We are moving toward a world where end-user adoption of software — not the initial engagement — is growing over time. Instead, Correlated empowers that initial sale and account expansion and that will align with where the industry is going.”

Bootstrapping, managing product-led growth and knowing when to fundraise

What Square’s acquisition of Afterpay means for startups

Published August 3, 2021

On Sunday Square announced it was gobbling up Afterpay in a deal worth $29 billion at the time of announcement. Alex followed up yesterday with more details on why the deal made sense for Square and Afterpay over here, but we wanted to ask some notable VCs what it means for the startup market.

For context, the Square deal follows a ton of money and interest flowing into the BNPL market. Just this year, VCs have invested in companies like Alma ($59.4 million, January 2021), Scalapay ($48 million, January 2021), Wisetack ($19 million, February 2021), Zilch ($80 million, April 2021) and Dividio ($30 million, June 2021).

Most of the investors we reached out to were generally bullish on the Square and Afterpay integration, but they were less excited about opportunities for other consumer BNPL businesses to emerge.

Then there’s Klarna, which raised $639 million at a post-money valuation of $45.6 billion in June, after raising $1 billion in March at a post-money valuation of $31 billion.

There’s also interest from some major public companies. After a slow start, PayPal is aggressively pushing BNPL services with merchants that offer it as a payment option. And there are reports that Apple is building its own BNPL offering through Apple Pay.

We reached out to Commerce Ventures founder and GP Dan Rosen, Better Tomorrow Ventures founding partner Jake Gibson, Fika Ventures partner TX Zhuo, and Matthew Harris of Bain Capital Ventures to see what they thought of the deal, as well as what it might mean for the opportunity for other BNPL companies and startups.

The main takeaways? “Buy now, pay later” may be effective at driving retail conversion, but scale matters and long-term margins look slim for BNPL startups.

Now, let’s hear from the venture community.

The venture view

Why is the BNPL market so hot?

Extra Crunch roundup: Square buys Afterpay, paid search basics, career advice for devs

Published August 3, 2021

Square paid around a quarter of its present-day value for Afterpay, Alex Wilhelm notes in The Exchange. That seems like a lot. But was it too much?

“Afterpay brings global revenues, global users and a more diverse merchant network to Square,” Alex notes. “It would have had to spend to derive those assets over time. Square is willing to pay up to snag them now.”

Dana Stalder, a partner at Matrix Partners and Afterpay’s only institutional investor, describes the deal as part of a recurring “critical innovation cycle” in fintech that “determines the winners and losers” for decades to come.

“I’ve never seen a combination that has such potential to deliver extraordinary value to consumers and merchants,” says Stalder. “Even more so than eBay + PayPal.”

Thanks very much for reading Extra Crunch this week!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

The next generation of global payments: Afterpay + Square

Why Square is shelling out $29B to snag BNPL player Afterpay

The best way to grow your career? Treat it like an app

Decision making: Wooden figurine thinking about the path to take to reach the target

Image Credits: jayk7 (opens in a new window) / Getty Images

Developers may delight in solving complex technical problems, but the problem of a career path is one many don’t think much about, Juniper Networks CTO Raj Yavatkar writes in a guest column.

He offers a solution that should appeal to developers and engineers: “Treat career advancement as you would a software project.”

The best way to grow your tech career? Treat it like an app

Design expert Scott Tong outlines 4 concepts founders should consider when designing products

Image Credits: Scott Tong

At Early Stage 2021, design expert Scott Tong shared some ways founders should think about design and branding.

If you can link your brand with your company’s reputation, I think it’s a really great place to start when you’re having conversations about brands. What is the first impression? What are the consistent behaviors that your brand hopes to repeat over and over? What are the memorable moments that stand out and make your brand, your reputation memorable?

Design expert Scott Tong outlines 4 concepts founders should consider when designing products

You can’t afford to make poor decisions about incentive stock options

Image of a piggy bank, clock, and calculator on blue and yellow background to represent financial advice.

Image Credits: Nora Carol Photography (opens in a new window) / Getty Images

If you’re fortunate enough to be considering cashing in on vested stock options, this guest column is worth a read.

“Most companies admit they need to be better at explaining how ISOs work in general, but they can’t legally work one-on-one with employees to help them exercise and sell shares the right way,” Wealthramp’s Pam Krueger and John Chapman write.

“That’s why, when the time is right, many employees actively look for help from a qualified fiduciary financial adviser who can walk these could-be ‘options millionaires’ through various cash-in scenarios.”

You can’t afford to make poor decisions about incentive stock options

Demand Curve: Questions you need to answer in your paid search ads

Retail and technology. Retail as a Service.

Image Credits: metamorworks (opens in a new window) / Getty Images

At some point, almost every early-stage startup will use paid search ads to connect with customers and throw down the gauntlet with their competitors.

Most of these initial attempts at paid search are unsuccessful. There’s a steep learning curve when it comes to transforming passive searchers into paying customers, and almost no one gets it right the first time.

In a comprehensive guest post, growth marketing expert Stewart Hillhouse identified “14 questions your paid search should answer to ensure you’re only paying for the highest-intent shoppers.”

Question 1? “What’s in it for me?”

Demand Curve: Questions you need to answer in your paid search ads

5 lessons from Duolingo’s bellwether edtech IPO of the year

Image Credits: Duolingo

Duolingo’s debut last week was a bright spot, Alex Wilhelm and Natasha Mascarenhas write, with the language learning app’s stock price landing above a raised IPO range.

Alex and Natasha detail five lessons to take from Duolingo’s flotation:

The IPO event will bring “more sophistication” to Duolingo’s core service.
Roadshow investors didn’t view Duolingo as an edtech company.
China’s edtech crackdown will have a “neutral” impact on Duolingo.
In certain cases, post-COVID growth declines aren’t lethal.
Growth can still absolve rising losses.

5 lessons from Duolingo’s bellwether edtech IPO of the year

Can your startup support a research-based workflow?

Image Credits: Andriy Onufriyenko (opens in a new window) / Getty Images

In the U.S. alone, yearly spending on AI R&D is expected to reach $100 billion by 2025.

But can your humble startup attract and retain users while it conducts research and product development?

“For obvious reasons, companies want to make things that matter to their customers, investors and stakeholders. Ideally, there’s a way to do both,” says João Graça, CTO and co-founder of Unbabel, an AI-powered language operations platform.

Can your startup support a research-based workflow?

Kodiak Robotics’ founder says tight focus on autonomous trucks is working

Image Credits: Bryce Durbin

As part of an ongoing series with transportation startup founders, Rebecca Bellan interviews Kodiak Robotics CEO and co-founder Don Burnette about why the autonomous trucking company remains private when so many of its rivals have gone public.

“I think there’s also lots of opportunity within the VCs and the private markets,” said Burnette.

“Kodiak is one of the only remaining serious AV trucking companies still in the private sector, and so I think that gives us some advantages in a lot of ways.”

Kodiak Robotics’ founder says tight focus on autonomous trucks is working

How public markets can help address venture capital’s limitations

Image Credits: Nigel Sussman (opens in a new window)

After interviewing Draper Esprit co-founder Stuart Chapman, Alex Wilhelm and Anna Heim took a look at the trend of European VCs floating themselves.

Traditional VC models “can foist artificial time constraints on investors and force them to focus their deal flow into particular stages for fund-construction reasons,” Alex and Anna write for The Exchange.

“As we found out researching this piece, the public venture model highlights some of these limitations — and may be able to alleviate them in part.”

How public markets can help address venture capital’s limitations

Robinhood’s CFO says it was ready to go public

Image Credits: Nigel Sussman (opens in a new window)

After Robinhood failed to burn up the stock charts, Alex Wilhelm wondered why, exactly, the investing and trading app’s IPO didn’t live up to expectations.

He spoke to Robinhood CFO Jason Warnick, who shared a few reasons why it was time for the company to float:

… Warnick indicated that there were a few factors at play, including that Robinhood had built out its leadership team and its internal processes, and that it had worked on user-safety-related tasks and expanded the site’s use cases. All of that is true.

Robinhood’s CFO says it was ready to go public

Demand Curve: Tested tactics for growing newsletters

Published August 3, 2021

Stewart Hillhouse
Contributor

Stewart Hillhouse writes actionable growth marketing insights as senior content lead at Demand Curve. By night, he interviews marketers and creatives on his podcast, Top Of Mind. Before getting into marketing, Stewart was a semi-professional lumberjack. He also writes at stewarthillhouse.com.

Increase popup conversion using the 60% rule

While they’re often thought of as intrusive, pop-ups work. On average, they convert 3% of site visitors, and strategic, high-performing pop-ups can reach conversion of about 10%.

To make higher-converting, less intrusive pop-ups, try the 60% rule.

Choose a page you’d like to put a pop-up on. We recommend pages that aren’t conversion-focused (like product pages, checkout and sign-ups). We’ve found content pages work the best and they can act as a signal for visitors who are looking for something specific.
Open your website’s analytics and see what the average time spent on that page is.
Set your pop-up to appear after 60% of the average time of that page has elapsed.

So if the average time spent on a page is 50 seconds, set your pop-up to appear 30 seconds (60% of total time) after visitors land on that page.

Why 60%? Readers have shown interest in your content, but are nearing the end of their session. Prompting them to join your newsletter to see more relevant content in exchange for their email will feel fair.

To encourage new subscribers to open your welcome email, try breaking the welcome email pattern using delayed gratification and a recognizable sender.

Give samples of your newsletter to prove quality

If a visitor is new to your content, asking them to sign up for your newsletter can be a big step, and most new visitors won’t convert. To narrow the gap between a new reader and subscriber, provide a sample on the sign-up page. Use your most engaging newsletter as a sample to prove that your content is high quality.

To source your most engaging content, filter by open rate and replies. In your email service provider, sort your previous editions by open rate. This will help you identify which subject lines are most popular with existing readers. Modify your most popular subject line to turn it into a header on your newsletter sign-up page.

Next, go into your inbox and sort by replies to your newsletter. Identify which newsletter got the most replies from your readers. This is a positive signal that the content from that edition resonated the most and would be a solid choice for your free sample.

Image Credits: Demand Curve

Emails from real people are opened more often

People reflexively ignore welcome emails after they sign up. But, those who do open your welcome email are more likely to consistently open your newsletters.

To encourage new subscribers to open your welcome email, try breaking the welcome email pattern using delayed gratification and a recognizable sender.

Delay your welcome email by 45 minutes. This will bypass the reflex that new subscribers have to ignore an email that pings them seconds after signing up. We’ve found 45 minutes to be ideal, because the delay is long enough that it breaks the pattern, but not so long that your email gets buried in their inbox.

Send your welcome from a person, not from a business account. We’ve found this tactic to be especially effective when the sender is the founder of the business or someone with an established audience. Use a photo of that person and not your company logo to help the email stand out.

To avoid overflowing the sender’s real inbox, create a subdomain for your website that will be used exclusively for sending emails. Create an account for your sender and begin using it for your newsletter. This avoids overwhelming their inbox and maintains the health of your sending domain.

Emails from real people get opened more frequently

Image Credits: Demand Curve

Send a superissue to new subscribers

A new subscriber will be keen to receive their first issue. To ensure they’re satisfied, piece together your best content from past issues into a superissue. But be careful not to use the same content you included as samples on your sign-up page.

Send this first superissue with the welcome email so that your new subscribers are immediately receiving value from your newsletter. Starting with your best content first will get your subscribers excited to open future emails.

We’ve found that shorter welcome emails perform better than long-winded ones. Keep your welcome message short and your opening issue tight. Once they’ve received the welcome email and the first superissue, add them to the regular email cadence.

Image Credits: Demand Curve

Consider sending fewer emails

We polled over 24,000 marketers on Twitter asking whether people suffer from “newsletter fatigue,” causing them to unsubscribe.

The results: 80% of respondents unsubscribe when they get too many emails.

To avoid overwhelming your subscribers:

Give your subscribers control over how often they are emailed: Some subscribers want them weekly, while others want monthly. In the footer of your email, create opt-out links that allow subscribers to customize the cadence they’ll receive emails. Giving them the opportunity to opt out of frequent emails while still remaining subscribed keeps them as valid contacts on your email list. You want to avoid losing them completely as a subscriber.

Send fewer emails: Putting a constraint on how many emails you’re allowed to send every quarter will force you to be more thoughtful about the contents of those emails. A high volume of emails just for the sake of being in your subscribers’ inbox can burn you and your readers out. We’ve seen very little correlation between volume of emails and the resulting conversion rate.

Make your emails fun — not just educational

Most emails in your inbox are serious. To stand out, consider injecting some lighthearted memes, jokes or interesting links from around the web.

We’ve found this tactic works extremely well, because it gives your readers a dopamine hit in every email. Not every piece of newsletter content you write will resonate with every subscriber. Humor, on the other hand, can have broad appeal. Including interesting and fun content will ensure that every reader is left feeling satisfied.

It also helps build a habit. If every edition is slightly different, your reader will never be sure what they’re opening when a new edition hits their inbox. We’ve found that including something fun at the bottom of the newsletter gives readers a reward: Read the serious stuff, then get rewarded with the fun stuff.

We add a meme to each issue. People reply to tell us how much they appreciate it.

Add a funny meme or interesting content to engage your readers

Image Credits: Demand Curve

Make referrals seamless

Referrals are a free way to grow your newsletter. To increase the chances of subscribers referring you to others, make sure the process takes no longer than 25 seconds.

Remind readers at the end of each issue that they can refer others. A simple way is to ask them to forward the email to a friend who would find it interesting. Include a short sentence in the intro to your newsletter telling people being referred where they can subscribe. Include a link.

An advanced tactic is to include a subscriber’s unique link to a referral program so they can track how many people they’ve invited. Give them the option to share through email or social media.

You should also have a web version of every issue so that your content can be easily shared outside of email. Most email service providers will automatically generate a web link that you can promote through social media or elsewhere. You can also copy the content and post it to your website as a blog post to generate traffic from search engines.

Consider providing rewards to those who refer your newsletter. Merchandise will likely only work as an incentive if your brand is well known or very unique. We suggest incentivizing referrals using exclusive content. Send a monthly bonus issue to subscribers who have referred five or more friends. This will keep your costs down and give your subscribers more of what they already want.

Note that you will need a critical mass of subscribers before referrals will prove to be effective. We’ve found the threshold is about 10,000 subscribers. But if your audience is extremely engaged or the community you serve is active, implementing a free referral program has virtually no downside.

How to turn followers into subscribers

Your subscribers will likely become aware of your content through a social media channel, but social media audiences are rented from the platform — you do not own a direct channel to communicate with them. Converting followers into newsletter subscribers is one way to control a direct line of communication and deepen your relationship with your audience.

When pitching your followers to subscribe to your newsletter, include a link in your bio. This may sound obvious, but many people don’t do it. When someone comes across your social media profile, make signing up for your newsletter the call to action. Otherwise, they’ll have no idea that you even have a newsletter.

You could also cut a Twitter thread or LinkedIn post short and tell people to subscribe for the rest of the insights. You probably don’t want to overuse this tactic.

Create an offer or unique piece of content that can only be accessed through the newsletter. This will motivate your followers to join your email list to get access to exclusive content or unique offers.

Recap

Getting new subscribers: Use pop-ups that are relevant and only to high-intent readers on your site. Provide proof of why they should subscribe to your newsletter with sample content. Make your welcome email stand out and front-load the first issue with your best content.

Keeping subscribers: To keep your subscribers wanting more, send fewer emails. Sprinkle in humor and interesting links to turn your newsletter into a habit.

Promoting your newsletter: Use exclusivity and offers to hook your social media followers into subscribing to your newsletter. Ask your subscribers to refer your newsletter to others to grow your subscriber base.

Demand Curve: 7 ad types that increase click-through rates

India’s BharatPe valued at $2.85 billion in Tiger Global-led $370 million funding

Published August 3, 2021

Indian fintech startup BharatPe has raised $370 million in a new round of financing as it looks to aggressively scale its business in the next two years. It’s the nineteenth Indian startup to become a unicorn this year (up from 11 last year) as several high-profile global investors double down in the South Asian market.

The new round — a Series E — was led by Tiger Global and valued the New Delhi-based startup at $2.85 billion (post-money), it said in a statement Tuesday evening. Dragoneer Investor Group and Steadfast Capital also participated in the new round, which brings the startup’s to-date raise to over $580 million against equity.

Tuesday’s news confirms a TechCrunch scoop from June in which we reported that the four-year-old startup was looking to raise about $250 million at a pre-money valuation of $2.5 billion. BharatPe was valued at about $900 million in its Series D round in February this year, and $425 million last year.

BharatPe co-founder Ashneer Grover confirmed that the startup was indeed looking to raise $250 million until inbound requests from investors prompted an oversubscription. The new investment also includes some secondary transactions.

Tiger Global in talks to back BharatPe at $2.5 billion valuation

BharatPe, which counts Coatue, Ribbit Capital and Sequoia Capital India among its existing investors, operates an eponymous service to help offline merchants accept digital payments and secure working capital.

Even as India has already emerged as the second-largest internet market, with more than 650 million users, much of the country remains offline.

Among those outside of the reach of the internet are merchants running small businesses, such as roadside tea stalls and neighborhood stores. To make these merchants comfortable with accepting digital payments, BharatPe relies on QR codes and point of sale machines that support government-backed UPI payments infrastructure.

Scores of giants and startups are attempting to serve neighborhood stores in India. Image Credits: Bank of America Research

The startup, which serves more than 7 million merchants in over 130 Indian cities, said it has disbursed close to $300 million to merchant partners. It does not charge merchants for universal QR code access, but is looking to make money by lending.

The startup plans to expand its product offerings as well as work with Centrum Financial Services, with which it was recently granted the license by India’s central bank (Reserve Bank of India) to set up a small finance bank. (Centrum Financial Services has collaborated with BharatPe for the license, and the Indian startup says the two are “equal” partners.)

Tuesday’s development further illustrates the growing interest of Tiger Global in India. The New York-headquartered firm has backed dozens of Indian startups, including social commerce startup DealShare, edtech Classplus, Apna (an app that helps blue-collar workers connect with recruiters) and home services platform Urban Company in recent months.

On Tuesday, Infra.Market, an Indian startup that helps construction and real estate companies procure materials and handle logistics for their projects, said it had raised $125 million in a round led also by Tiger Global.

India’s Infra.Market valued at $2.5B in Tiger Global-led $125M funding

India poised for record VC year as unicorns head for decisive IPOs

Edtech startup bina raises $1.4M to teach 4- to 12-year-olds, launch School-as-a-Service

Published August 3, 2021

With the pandemic wreaking havoc amongst early years education amid school lockdowns, it’s no wonder edtech startups have piled into the space. But it has also served to highlight the abysmal nature of early years teaching: Some 40 million teachers across the globe are leaving the sector, according to the World Bank. Of the 1.5 billion primary-age children, only a few can access high-quality education, and approximately 58 million primary-age children are out of education, most of whom are girls.

So the opportunity to make a difference, using online teaching, in these very young years, is great, because classes sizes can be reduced online, and the quality of teaching improved.

This is the idea behind bina, which bills itself as a “digital primary education ecosystem”. It has now raised $1.4 million to aim at the education of 4- to 12-year-olds.

The funding round was led by Taizo Son, one of Japan’s billionaires. Other investors and advisors include Jutta Steiner, founder at Parity Technologies, the company behind Polkadot decentralized protocol, and Lord Jim Knight, ex-Minister of Education (U.K.).

Bina’s “schtick” is that it has very small online class sizes of six students (3x smaller than the OECD average).

It also boasts of “adaptive learning paths” that cover international standards; teachers with a minimum of eight years of digital teaching experience; and data-driven decision making for its pedagogical approach.

Noam Gerstein, bina’s CEO and founder said: “I’ve interviewed students, teachers and parents globally for years, and it is clear a new systemic design is needed. With our founding families, we are building a world in which every child has access to quality education, educators’ skills are valued and continuously developed, and parents don’t need to choose between their work and family life.”

He says it also grants pupils company shares (RSUs) as they grow with the school. Currently available to English-speaking students in the CET time zone, the bina School is planning a SaaS product for governments, NGOs and school systems.

“We right now compete against companies like Outschool, Pearson’s online Academy, Primer and Prisma,” he told me over a call. “So these are the big names of the last year for the first phase. But the strategy is that we’re building it in two phases. The first phase is actually building a school that we operate as a ‘lab’ school. And the second phase is what we call ‘bina as a service’. So it’s a SaaS ‘school as a service’. The idea is that we offer collaboration with NGOs and governments, doing accreditation and training and licencing of the product. So for that second part we’re actually competing against the big accreditation system.”

The 2021 edtech avalanche has just begun

CELA Innovation holds a master class on Lean Startup Methodology for the Startup Alley+ cohort

Published August 3, 2021

Startup Alley is the place to be at TechCrunch Disrupt 2021 on September 21-23. The sold-out expo area is the virtual home to hundreds of innovative startups ready to demo their tech and talent. While exhibiting offers plenty of opportunity for all, a VIP experience kicked off in July for 50 startup exhibitors the TechCrunch staff chose to form the first Startup Alley+ cohort.

Part of that experience includes a series of master classes in the run-up to Disrupt. Case in point, on August 24, Dan Olsen will lead a master class called “How to Create Product-Market Fit.” Now, we’re ready to share the next presentation, and it’s another great one, folks.

On August 17th, John Lynn, co-founder of CELA Innovation, and Jade Kearney, Lean Startup expert and co-founder and CEO of She Matters, will present a master class called, “The Key Principles of the Lean Startup Methodology.”

A quick tangent: If you’re not already familiar with CELA or what it does, the NYC-based company matches early-stage startups to world-class accelerators and incubators that align with a startup’s vertical and business goals. Last year, at Disrupt 2020, CELA connected the winners of our Pitchers and Pitches mini pitch-off competitions with an accelerator to boost their business.

Meanwhile, back at the master class: Change — positive or negative — is inevitable, and this master class will focus on what founders can do when change arrives on their doorstep. Examples of change can include receiving funding, running out of funding, losing a co-founder or a key customer or anything else that’s shaking up their situation.

John and Jade will help each cohort founder produce a Lean Startup transformation for one current business situation. Founders can then use it as a template for optimizing anything in their business the next time change comes calling.

The session begins by examining why you should use the Lean Startup methodology at inflection points — when there is a sudden change to your company, good or bad.

You’ll learn how you can use the Lean Startup methodology to create resources when you are overwhelmed by opportunity or just feel like you have gone as far as you can go with what you have.

Next, John and Jade will show how this methodology makes the difference between knowing what you want to build and learning what you need know about your customers, industry or product.

Lastly, Team CELA will isolate some of your key business activities as they exist right now. Then they will walk you through a process to turn that activity into a Lean Startup experiment that produces insights, new value and new opportunities.

TechCrunch Disrupt 2021 takes place September 21-23. Don’t miss your opportunity to meet the Startup Alley+ cohort and hundreds of other innovative startups in our expo area. Opportunity is knocking — buy your TC Disrupt 2021 pass and go kick down the door.

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

How public markets can help address venture capital’s limitations

Published August 3, 2021

British venture capital firm Draper Esprit recently moved its listing from the AIM to the main board in London, the LSE. The investing group also moved its secondary listing from Dublin’s Euronext Growth Market to its larger sister exchange, Euronext Dublin, which makes sense given its long connection to Irish capital.

Draper has always felt like something of an anomaly from our perspective, a generalist venture capital firm that was itself public. But this July, Forward Partners listed its shares on the AIM, and there are other venture firms in Europe that are also listed.

At first blush, the setup may seem odd; venture capital firms invest in companies that they hope to see go public one day — why would they float themselves? But Draper Esprit co-founder Stuart Chapman told TechCrunch in an interview that he finds it shocking “that venture capital backs some of the most mind-blowing tech advances in our history over the last 70 years, using the same legal structure as a 1958 property vehicle in New York.” It’s a reasonable point.

Perhaps fundraising success is part of why the venture model has not seen much disruption in recent decades, apart from rising fund sizes. But the model is not perfect. It can foist artificial time constraints on investors and force them to focus their deal flow into particular stages for fund-construction reasons. As we found out researching this piece, the public venture model highlights some of these limitations — and may be able to alleviate them in part.

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And yet we can’t come up with a single U.S. venture capital firm, for example, that has publicly listed in the same manner as Draper Esprit or Forward Partners.

To better understand why we’re seeing European VCs float, and not their peers in other markets, The Exchange reached out to Draper Esprit, Forward Partners, and fellow listed venture investors Mercia and Augmentum Fintech. From the group, we’ve learned that there are plenty of reasons why the model may be popular in the U.K. and not in the U.S.

But there are also reasons why being a public venture capitalist can make the VC game a rather different, longer-term effort. The firms in question did not go public on a whim.

So let’s talk about the good, the bad, and the regulatory concerning publicly listed venture capital firms. The future? Or just a regional quirk?

From exception to trend?

Following its move, Draper Esprit is now the largest “purely tech VC” listed on London’s Main Market. Its initial listing had also been a market milestone: “Listing Draper Esprit five years ago was a radical and unusual step for a venture capital business,” Chapman said of Draper’s 2016 dual-listing on London’s AIM and Dublin’s Enterprise Securities Market (ESM) — now Euronext Growth.

Why Draper Esprit doubled down on its status as a publicly listed VC

Just last month, two tech-related investment funds IPO’d on the London Stock Exchange: space-focused Seraphim Capital and Nic Brisbourne’s Forward Partners. In both cases, Draper Esprit was happy to assist with information, Chapman told us, adding that the firm also invested in Forward via its fund-of-funds effort.

The news adds up to a roster of listed investors that also includes fintech fund Augmentum Fintech, asset manager Mercia Asset Management PLC and intellectual property commercialization company IP Group. “We’re supportive of others following in our footsteps and we will be big fans of having much wider diversity,” Chapman told TechCrunch in an interview, which you can read in full here.

Having recently joined the club, Forward Partners’ founder and CEO Nic Brisbourne gave us a good overview of the three high-level reasons that could lead a fund to list: open opportunities to create more value from new initiatives that sit outside traditional investment capital; breaking the cycle of fundraising; and opening access to the early-stage venture capital asset class. Let’s take a closer look.

Rani Therapeutics’ $73M IPO will fund upcoming clinical trials

Published August 3, 2021

Rani Therapeutics, a San Jose-based company developing a pill to replace medical injections, went public on Friday.

According to S-1 filings, shares were estimated to price between $14 and $16 last week. On Friday, shares debuted slightly lower, around $11. Rani raised about $73 million in its debut.

Rani’s debut comes amidst a flurry of IPO activity in therapeutics. In 2020, 71 biotech companies went public. Already in 2021, 59 companies have IPO’ed, and even more are on the way. On July 30 alone, eight biotech companies were expected to begin trading, including Rani Therapeutics.

Rani Therapeutics, is, as founder Mir Imran puts it, “laser focused” on itself, rather than the IPO activity around it. The decision to go public was partially bolstered by the results of a phase I study — early evidence that the RaniPill, the company’s flagship product, could be brought into the clinic.

“We are already in humans, and clearly on a strong path to make oral biologics [a] reality. This is a hot and unique market for life science direction and we’re excited to be driving innovation in this area,” Imran tells TechCrunch.

Rani Therapeutics’ flagship product is RaniPill, essentially, a capsule designed to deliver medicines that would usually be delivered via injections. TechCrunch covered the pill in more detail here, but it works according to a few basic steps.

The pill is covered by a coating resistant to stomach acid. Once the pill enters the small intestine, the coating dissolves, allowing for a small balloon to inflate. Once that small balloon inflates, medication is delivered by a microneedle (which dissolves after the drug is administered). Then, the rest of the balloon is “excreted through normal digestive processes,” per the company’s S-1 filing.

How Rani Therapeutics’ robotic pill could change subcutaneous injection treatment

This whole process occurs in a pill that, on the outside, looks like a gel capsule.

There is evidence for some conditions suggesting patients prefer oral drugs to injections: for example, studies on cancer patients have illuminated patient preference for oral therapies rather than regular injections. That’s not the case for every condition. Some patients show preference to long-acting medicines delivered via injection rather than having to take lots of pills (this is the case for some HIV patients).

However, it’s fair to say that needles aren’t exactly pleasant. A 2019 review and meta analysis of 35 studies found that between 20% and 30% of young adults are afraid of needles, a fear that can lead some people to avoid medical treatments or vaccines.

Rani Therapeutics has been developing capsules for drugs that have already been approved by the FDA, but are often administered via regular injections. They include:

Octreotide for acromegaly or neuroendocrine tumors in the GI tract (NETs)
TNF-alpha inhibitors for psoriatic arthritis
Parathyroid hormone (PTH) for osteoporosis
Human growth hormone (HGH) for HGH deficiency
Parathyroid hormone for hypothyroidism

The product furthest along in the research cycle is the pill developed to administer octreotide (called RT-101), which was tested in a phase I clinical trial on 62 participants. The trial results, partially reported in the S-1 filing, showed 65% bioavailability of the octreotide drug, compared to an injection. That suggests that the pills can get the drugs into the body efficiently, though these results are early.

Next year, the company plans to initiate two additional Phase I studies on PTH for osteoporosis, and human growth hormone. Studies on the rest of the drugs in the pipeline are scheduled for 2023.

Ultimately, the company’s goal is to validate the RaniPill independently of specific drugs. The company is pursuing an Investigational Device Exemption (IDE), which would allow the company to test RaniPill in a clinical study without a drug involved. This study aims to establish how safe the product is for repeated dosing, and is slated to begin next year.

“I think we want to continue to generate data with drugs, because we will be making drugs. But nonetheless, it’s important to establish what the platform’s safety and tolerability is,” said Imran. So that’s quite important as well.”

In an increasingly hot biotech market, protecting IP is key

The company’s leadership does have a track record of successful exits in the biotech space.

Rani Therapeutics was founded in 2012 by Mir Imran, who has already overseen several exits and acquisitions of medical device companies. In 1985, Imran developed an implantable cardiac defibrillator as part of his first company, Intec Systems, which was later acquired by Eli Lilly. Since, he has started 20 medical device companies, of which 15 have either IPOed or been acquired.

However, for now, Rani Therapeutics financials report significant losses. Net losses for 2019 and 2020 totaled $26.6 million and $16.7 million, respectively. As of March 2021, the company was running a deficit of $119.6 million.

In total, the company has raised about $211.5 million in funding since inception, without counting cash generated from today’s IPO. Rani Therapeutics has plans to use the $73 million raised during the IPO to fund the IDE study and pursue additional clinical trials.