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Epic Games acquires Sketchfab, a 3D-model sharing platform

Published July 21, 2021

New York-based startup Sketchfab has been acquired by Epic Games, the company behind Fortnite and Unreal Engine. Sketchfab has been building a platform to upload, download, view, share, sell and buy 3D assets. Essentially, it is the leading repository for 3D files on the web.

Epic Games isn’t disclosing the terms of the deal. Sketchfab will still operate as a separate brand and offering. Epic Games also says that all integrations with third-party tools will remain available, including with Unity.

The deal makes a ton of sense as Epic Games has been developing — and acquiring — some of the most popular creation tools. Unreal Engine has been one of the most popular video game engines of the past couple of decades.

More recently, Unreal Engine has been used for different use cases beyond video games, such as special effects, 3D explorations of virtual worlds, mixed reality projects and more.

But an engine without assets is pretty useless. That’s why creators either design their own 2D and 3D assets, outsource this process or buy assets directly. It led to the creation of an entire ecosystem of assets and creators.

Epic Games has its own Unreal Engine marketplace, but Sketchfab has been working on building the definitive 3D marketplace for many years with three important pillars — technology, reach and collaboration.

On the technology front, Sketchfab lets you view 3D models on any platform. The Sketchfab viewer works with all major browsers on both desktop and mobile — you can see an example on Sketchfab. It also works with VR headsets. You can upload 3D models from your favorite 3D modeling app, such as Blender, 3ds Max, Maya, Cinema 4D and Substance Painter.

Sketchfab can also convert any format into glTF and USDZ file formats. Those formats work particularly well on Android and iOS.

When it comes to reach, Sketchfab has grown tremendously over the years. In 2018, the company shared some metrics — 1 billion views, 2 million members and 3 million 3D models. Around the same time, the company launched a store so that creators can buy and sell assets directly on the platform.

Finally, Sketchfab launched an interesting feature for companies that work with 3D models all the time — Sketchfab for Teams. It’s a software-as-a-service play that lets you share a Sketchfab account with the rest of the team. Essentially, it works a bit like a shared Google Drive folder — but for 3D models.

With today’s acquisition, Epic Games is making some immediate changes. Starting today, store fees have been reduced from 30% to 12% — just like on the Epic Games Store. The company lowered commissions on ArtStation immediately after acquiring ArtStation, as well.

As for Sketchfab users paying a monthly subscription fee, everything is a bit cheaper now. All features in the Plus plan are now available for free, all features in the Pro plan are available to Plus subscribers, etc.

“We built Sketchfab with a mission to empower a new era of creativity and provide a service for creators to showcase their work online and make 3D content accessible,” Sketchfab co-founder and CEO Alban Denoyel said in the announcement. “Joining Epic will enable us to accelerate the development of Sketchfab and our powerful online toolset, all while providing an even greater experience for creators. We are proud to work alongside Epic to build the Metaverse and enable creators to take their work even further.”

With the acquisitions of ArtStation and Capturing Reality, Epic Games has been on an acquisition spree. It’s clear that the company wants to build an end-to-end developer suite for the gaming industry.

As Zynga impresses, rival mobile-gaming shop Jam City looks to list via SPAC

Epic Games buys artist community ArtStation, drops commissions to 12%

Epic Games buys photogrammetry software maker Capturing Reality

Accion Systems raises $42 million in Series C to accelerate development of 4th-gen propulsion system

Published July 21, 2021

Space propulsion developer Accion Systems has closed its most significant funding round yet. The company raised $42 million in a Series C led by Tracker Capital, bringing its valuation to $83.5 million.

Along with the investment, Tracker Capital also acquired a majority stake in the company. This latest injection of capital will facilitate the development and manufacturing of the company’s fourth generation propulsion system, dubbed the tiled ionic liquid electrospray (TILE) system.

The TILE system uses electrical energy to push charge particles (ions) out its back to generate propulsion. While ion engines have been around for decades, Accion uses a liquid propellant, an ionic liquid salt, instead of gas. The liquid is inert and nonpressurized, meaning there’s no risk of explosion. It also results in a product that doesn’t need bulky components like ionization chambers, and an overall smaller and lighter weight system relative to the spacecraft — key considerations in space, where every gram of payload has a high price tag.

“It lets us build really, really small systems,” Accion co-founder Natalya Bailey explained to TechCrunch. “Instead of trying to take an existing ion engine the size of a Prius and shrink it down, we can start with very small systems because of this propellant.” And she does mean small — each thruster tile is about the size of a postage stamp.

The TILE system is also scalable and modular, meaning it could feasibly be used on anything from CubeSats to propelling an interplanetary spacecraft, Accion CEO Peter Kant added in a recent interview with TechCrunch. “It’s one of the few occasions where the total addressable market and the actual addressable market that we can serve are pretty closely aligned and almost overlap,” he said.

The newest generation of the TILE system is the same size as its predecessors, but Accion is increasing the number of emitters on a given chip — emitters being the technology that actually shoots out the ions, generating the momentum — by almost tenfold. “We get more ions per area and that gives us a whole lot more thrust with the same amount of space,” Kant said.

Accion is looking to ship the first fourth-gen thruster systems in the middle to late summer of 2022.

The TILE system was developed by Accion co-founders Natalya Bailey and Louis Perna while the two were at the Massachusetts Institute of Technology. The tech generated a ton of interest from big aerospace companies, but they decided to found Accion in 2014 rather than sell. The company manufactures and assembles its product at its facility in Charlestown, Massachusetts.

The TILE system was onboard commercial spacecraft, one with Astra Digital and one with NanoAvionics, that went up on SpaceX’s Transporter-2 launch at the end of June. Accion started by focusing on serving smaller spacecraft first, like CubeSats, but Bailey said that was just the beginning.

“We’re going after that segment initially, and then intending to reinvest our learnings in building larger and larger systems that eventually can do big geostationary satellites and interplanetary missions and so on. The systems that went up on the most recent launcher [is] probably good for a satellite up to about 50 kilograms [ … ] For us, it’s on the smaller end of where we intend to go.”

As launch market matures, space opportunities on the ground take off

Loop Returns locks in $65 million Series B led by CRV

Published July 21, 2021

Loop Returns, a software company looking to handle the costly and inefficient process of retail/e-commerce returns, has announced the close of a $65 million Series B financing round. The round was led by CRV, with participation from Shopify and Renegade Partners, as well as existing investors FirstMark Capital, Ridge Ventures, Peterson Ventures and Lerer Hippeau.

The deal values the company at $340 million post-money.

Loop Returns was co-founded by Jonathan Poma after he was working at an agency and consulting with a big Shopify brand to help them with returns and exchanges. He partnered with longtime friend Corbett Morgan to start Loop Returns.

The software works with the Shopify platform to reduce the cost and difficulty with a commonplace issue in retail, which is returns. In fact, according to Shopify, returns account for 20 to 30% of e-commerce sales. For big and small brands alike, this is a trend that not only costs money, but potentially loses a customer and future revenue.

Loop approaches the return by navigating the user through a series of questions aimed at keeping their business. It starts with questions around sizing of the item, and then moves to the notion of an exchange, and then offers the customer credit with the brand over a return.

Loop Returns picks up $10 million in Series A led by FirstMark Capital

If a return is all the customer wants, Loop handles some of the stickier pieces of that process, such as shipping labels and refunds for the brand.

The company had big plans around international expansion, platform expansion and product expansion ahead of the pandemic. Ultimately, that Black Swan moment led the company to focus on its core offering and taking care of its customers, and it paid off, especially on the heels of the acceleration of e-commerce.

The company has grown its team from 20 employees in 2019 to 100, with 41% of the team identifying as female and 16% identifying as BIPOC.

In terms of traction, the company has gone from 200 to 700 customers, and from $26 million in returns processed to just over $100 million in the same time frame.

5 predictions for the future of e-commerce

Poma told TechCrunch that the greatest challenge for the startup is scaling the team.

“It’s about bringing great people and keeping them aligned toward a common goal, especially in this remote first world,” said Poma.

Andreessen Horowitz funds Vitally’s $9M round for customer experience software

Published July 21, 2021

Customer success company Vitally raised $9 million in Series A funding from Andreessen Horowitz to continue developing its SaaS platform automating customer experiences.

Co-founder and CEO Jamie Davidson got the idea for Vitally while he was at his previous company, Pathgather. As chief customer officer, he was looking at tools and “was underwhelmed” by the available tools to automate repetitive tasks. So he set out to build one.

The global pandemic thrust customer satisfaction into the limelight as brands realized that the same ways they were engaging with customers had to change now that everyone was making the majority of their purchases online. Previously, a customer service representative may have managed a dozen accounts, but nowadays with product-led growth, they tackle a portfolio of thousands of customers, Davidson told TechCrunch.

New York-based Vitally, founded in 2017, unifies all of that customer data into one place and flows it through an engine to provide engagement insights, like what help customers need, which ones are at risk of churning and which to target for expanded revenue opportunities. Its software also provides automation to balance workflow and steer customer success teams to the tasks with the right customers so that they are engaging at the correct time.

Andreessen approached Davidson for the Series A, and he liked the alignment in customer success vision, he said. Including the new funding, Vitally raised a total of $10.6 million, which includes $1.2 million in September 2019.

From the beginning, Vitally was bringing in strong revenue growth, which enabled the company to focus on building its platform and hold off on fundraising.

“A Series A was certainly on our mind and road map, but we weren’t actively fundraising,” Davidson said. “However, we saw a great fit and great backing to help us grow. Tools have lagged in the customer success area and how to manage that. Andreessen can help us scale and grow with our customers as they manage the thousands of their customers.”

Davidson intends to use the new funding to scale Vitally’s team across the board and build out its marketing efforts to introduce the company to the market. He expects to grow to 30 by the end of the year to support the company’s annual revenue growth — averaging 3x — and customer acquisition. Vitally is already working with big customers like Segment, Productboard and Calendly.

As part of the investment, Andreessen general partner David Ulevitch is joining the Vitally board. He saw an opportunity for the reimagining of how SaaS companies delivered customer success, he told TechCrunch via email.

Similar to Davidson, he thought that customer success teams were now instrumental to growing SaaS businesses, but technology lagged behind market need, especially with so many SaaS companies taking a self-serve or product-led approach that attracted more orders than legacy tools.

Before the firm met Vitally, it was hearing “rave reviews” from its customers, Ulevitch said.

“The feedback was overwhelmingly positive and affirmed the fact that Vitally simply had the best product on the market since it actually mapped to how businesses operated and interacted with customers, particularly businesses with a long-tail of paying customers,” he added. “The first dollar into a SaaS company is great, but it’s the renewal and expansion dollars that really set the winners apart from everyone else. Vitally is in the best position to help companies get that renewal, help their customers expand accounts and ultimately win the space.”

SaaS needs to take a page out of the crypto playbook

Ethos picks up $100M at a $2.7B+ valuation for a big data platform to improve life insurance accessibility

Published July 21, 2021

More than half of the U.S. population has stayed away from considering life insurance because they believe it’s probably too expensive, and the most common way to buy it today is in person. A startup that’s built a platform that aims to break down those conventions and democratize the process by making life insurance (and the benefits of it) more accessible is today announcing significant funding to fuel its rapidly growing business.

Ethos, which uses more than 300,000 data points online to determine a person’s eligibility for life insurance policies, which are offered as either term or whole life packages starting at $8/month, has picked up $100 million from a single investor, SoftBank Vision Fund 2. Peter Colis, Ethos’s CEO and co-founder, said that the funding brings the startup’s valuation to over $2.7 billion.

This is a quick jump for the company: It was only two months ago that Ethos picked up a $200 million equity round at a valuation of just over $2 billion.

It has now raised $400 million to date and has amassed a very illustrious group of backers. In addition to SoftBank they include General Catalyst, Sequoia Capital, Accel, GV, Jay-Z’s Roc Nation, Glade Brook Capital Partners, Will Smith and Robert Downey Jr.

This latest injection of funding — which will be used to hire more people and continue to expand its product set into adjacent areas of insurance like critical illness coverage — was unsolicited, Colis said, but comes on the heels of very rapid growth.

Ethos — which is sold currently only in the U.S. across 49 states — has seen both revenues and user numbers grow by over 500% compared to a year ago, and it’s on track to issue some $20 billion in life insurance coverage this year. And it is approaching $100 million in annualized growth profit. Ethos itself is not yet profitable, Colis said.

Insurtech is hot on both sides of the Atlantic

There are a couple of trends going on that speak to a wide opportunity for Ethos at the moment.

The first of these is the current market climate: Globally we are still battling the COVID-19 global health pandemic, and one impact of that — in particular given how COVID-19 has not spared any age group or demographic — has been more awareness of our mortality. That inevitably leads at least some part of the population to considering something like life insurance coverage that might not have thought about it previously.

However, Colis is a little skeptical on the lasting impact of that particular trend. “We saw an initial surge of demand in the COVID period, but then it regressed back to normal,” he said in an interview. Those who were more inclined to think about life insurance around COVID-19 might have come around to considering it regardless: It was being driven, he said, by those with pre-existing health conditions going into the pandemic.

That, interestingly, brings up the second trend, which goes beyond our present circumstances, and Colis believes will have the more lasting impact.

While there have been a number of startups, and even incumbent providers, looking to rethink other areas of insurance such as car, health and property coverage, life insurance has been relatively untouched, especially in some markets like the U.S. Traditionally, someone taking out life insurance goes through a long vetting process, which is not all carried out online and can involve medical examinations and more, and yes, it can be expensive: The stereotype you might best know is that only wealthier people take out life insurance policies.

Much like companies in fintech that have rethought how loan applications (and payback terms) can be rethought and evaluated afresh using big data — pulling in a new range of information to form a picture of the applicant and the likelihood of default or not — Ethos is among the companies that is applying that same concept to a different problem. The end result is a much faster turnaround for applications, a considerably cheaper and more flexible offer (term life insurance lasts only as long as a person pays for it), and generally a lot more accessibility for everyone potentially interested. That pool of data is growing all the time.

“Every month, we get more intelligent,” said Colis.

There is also the matter of what Ethos is actually selling. The company itself is not an insurance provider but an “insuretech” — similar to how neobanks use APIs to integrate banking services that have been built by others, which they then wrap with their own customer service, personalization and more — Ethos integrates with third-party insurance underwriters, providing customer service, more efficient onboarding (no in-person medical exams for example) and personalization (both in packages and pricing) around them. Given how staid and hard it is to get more traditional policies, it’s essentially meant completely open water for Ethos in terms of finding and securing new customers.

Ethos’s rise comes at a time when we are seeing other startups approaching and rethinking life insurance also in the U.S. and further afield. Last week, YuLife in the U.K. raised a big round to further build out its own take on life insurance, which is to sell policies that are linked to an individual’s own health and wellness practices — the idea being that this will make you happier and give more reason to pay for a policy that otherwise feels like some dormant investment; but also that it could help you live longer (Sproutt is another also looking at how to emphasize the “life” aspect of life insurance). Others like DeadHappy and BIMA are, like Ethos, rethinking accessibility of life insurance for a wider set of demographics.

YuLife nabs $70M at a $346M valuation for its gamified, wellness-oriented approach to life insurance

There are some signs that Ethos is catching on with its mission to expand that pool, not just grow business among the kind of users who might have already been considering and would have taken out life insurance policies. The startup said that more than 40% of its new policy holders in the first half of 2021 had incomes of $60,000 or less, and nearly 40% of new policy holders were under the age of 40. The professions of those customers also speak to that democratization: The top five occupations, it said, were homemaker, insurance agent, business owner, teacher and registered nurse.

That traction is likely one reason why SoftBank came knocking.

“Ethos is leveraging data and its vertically integrated tech stack to fundamentally transform life insurance in the U.S.,” said Munish Varma, managing partner at SoftBank Investment Advisers, in a statement. “Through a fast and user-friendly online application process, the company can accurately underwrite and insure a broad segment of customers quickly. We are excited to partner with Peter Colis and the exceptional team at Ethos.”

Samsung will announce new foldables on August 11

Published July 21, 2021

Samsung just sent out invites for its next Unpacked event. There are those companies that like to sneak hints into their invites — and then there’s Samsung. The note leads with the big, bold words “Get ready to unfold” and features a pair of flat-colored objects that can reasonably be said to resemble the form factors of the Galaxy Z Fold and Flip, respectively.

In keeping with…the general state of the world over the past year-and-a-half, the event will be held virtually on Wednesday, August 11. Interestingly, the company is also opening up preorders on its “next flagship,” sights and specs unseen. Perks for early preorders include “12 free months of Samsung Care+, up to an extra $200 trade-in credit and a special pre-order offer.”

But honestly, it’s generally best to wait until you actually see the thing and maybe even read a review or two.

There’s a lot to unpack (so to speak) ahead of the event. First, I’m probably not alone in expecting that the company would focus its next big event on the upcoming Galaxy Watch. The big event at MWC was a bit of a dud (not unlike MWC itself), offering up more information on the upcoming wearable partnership with Google, in lieu of announcing any hardware.

As the company noted at the time, “The upcoming One UI Watch will debut at an upcoming Unpacked event later this summer, sporting the new UI, as well as the forthcoming joint Samsung/Google platform.”

It seems reasonably likely that this will be the event where that will occur, even if the new watch doesn’t get top billing. For one thing we’re running out of summer. For another, rumors have the new Galaxy Watch set for a late-August (the 27^th) release.

pic.twitter.com/cLlE0ot4fO

— Evan Blass (@evleaks) July 10, 2021

All told, this could well be a pretty huge summer event for the company, bucking last year’s trend of meting out devices one by one at virtual invents. Word on the street is we could be seeing a Galaxy Watch 4, Galaxy Z Fold 3, Galaxy Z Flip 3, Galaxy S21 FE (“Fan Edition” — basically the latest version of the company’s budget flagship) and even the Galaxy Buds Pro, which will more directly take on the AirPods Pro (which are getting a bit long in the tooth).

What’s missing in all of this? No points if you said the Note. Samsung’s well-loved phablet is reportedly not coming this year, as chip shortages continue to plague the industry. That would be a big hit to Samsung’s six-month cycle, though we’ll see how that all plays out soon enough.

The August 11^th event kicks off at 10AM ET / 7AM PT.

Pivot Bio rakes in $430M round D as modified microbes prove their worth in agriculture

Published July 20, 2021

Pivot Bio makes fertilizer — but not directly. Its modified microorganisms are added to soil and they produce nitrogen that would otherwise have to be trucked in and dumped there. This biotech-powered approach can save farmers money and time and ultimately may be easier on the environment — a huge opportunity that investors have plowed $430 million into in the company’s latest funding round.

Nitrogen is among the nutrients crops need to survive and thrive, and it’s only by dumping fertilizer on the soil and mixing it in that farmers can keep growing at today’s rates. But in some ways we’re still doing what our forebears did generations ago.

“Fertilizer changed agriculture — it’s what made so much of the last century possible. But it’s not a perfect way to get nutrients to crops,” said Karsten Temme, CEO and co-founder of Pivot Bio. He pointed out the simple fact that distributing fertilizer over a thousand — let alone ten thousand or more — acres of farmland is an immense mechanical and logistical challenge, involving many people, heavy machinery and valuable time.

Not to mention the risk that a heavy rain might carry off a lot of the fertilizer before it’s absorbed and used, and the huge contributions of greenhouse gases the fertilizing process produces. (The microbe approach seems to be considerably better for the environment.)

Yet the reason we do this in the first place is essentially to imitate the work of microbes that live in the soil and produce nitrogen naturally. Plants and these microbes have a relationship going back millions of years, but the tiny organisms simply don’t produce enough. Pivot Bio’s insight when it started more than a decade ago was that a few tweaks could supercharge this natural nitrogen cycle.

“We’ve all known microbes were the way to go,” he said. “They’re naturally part of the root system — they were already there. They have this feedback loop, where if they detect fertilizer they don’t make nitrogen, to save energy. The only thing that we’ve done is, the portion of their genome responsible for producing nitrogen is offline, and we’re waking it up.”

Other agriculture-focused biotech companies like Indigo and AgBiome are also looking at modifying and managing the plant’s “microbiome,” which is to say the life that lives in the immediate vicinity of a given plant. A modified microbiome may be resistant to pests, reduce disease or offer other benefits.

Illustration showing stages of modifying and deploying nitrogen-producing microbes.

Image Credits: Pivot Bio

It’s not so different from yeast, which as many know from experience works as a living rising agent. That microbe has been cultivated to consume sugar and produce a gas, which leads to the air pockets in baked goods. This microbe has been modified a bit more directly to continually consume the sugars put out by plants and put out nitrogen. And they can do it at rates that massively reduce the need for adding solid fertilizer to the soil.

“We’ve taken what is traditionally tons and tons of physical materials, and shrunk that into a powder, like baker’s yeast, that you can fit in your hand,” Temme said (though, to be precise, the product is applied as a liquid). “All of a sudden managing that farm gets a little easier. You free up the time you would have spent sitting in the tractor applying fertilizer to the field; you’ll add our product at the same time you’d be planting your seeds. And you have the confidence that if a rainstorm comes through in the spring, it’s not washing it all away. Globally about half of all fertilizer is washed away… but microbes don’t mind.”

Instead, the microbes just quietly sit in the soil pumping out nitrogen at a rate of up to 40 pounds per acre — a remarkably old-fashioned way to measure it (why not grams per square centimeter?), but perhaps in keeping with agriculture’s occasional anachronistic tendencies. Depending on the crop and environment, that may be enough to do without added fertilizers at all, or it might be about half or less.

Whatever the proportion provided by the microbes, it must be tempting to employ them, because Pivot Bio tripled its revenue in 2021. You might wonder why they can be so sure only halfway through the year, but as they are currently only selling to farmers in the northern hemisphere and the product is applied at planting time early in the year, they’re done with sales for the year and can be sure it’s three times what they sold in 2020.

With fresh support from its billionaire backers Pivot Bio is ushering in a farming revolution

The microbes die off once the crop is harvested, so it’s not a permanent change to the ecosystem. And next year, when farmers come back for more, the organisms may well have been modified further. It’s not quite as simple as turning the nitrogen production on or off in the genome; the enzymatic pathway from sugar to nitrogen can be improved, and the threshold for when the microbes decide to undertake the process rather than rest can be changed as well. The latest iteration, Proven 40, has the yield mentioned above, but further improvements are planned, attracting potential customers on the fence about whether it’s worth the trouble to change tactics.

The potential for recurring revenue and growth (by their current estimate they are currently able to address about a quarter of a $200 billion total market) led to the current monster D round, which was led by DCVC and Temasek. There are about a dozen other investors, for which I refer readers to the press release, which lists them in no doubt a very carefully negotiated order.

Temme says the money will go toward deepening and broadening the platform and growing the relationship with farmers, who seem to be hooked after giving it a shot. Right now the microbes are specific to corn, wheat and rice, which of course covers a great deal of agriculture, but there are many other corners of the industry that would benefit from a streamlined, enhanced nitrogen cycle. And it’s certainly a powerful validation of the vision Temme and his co-founder Alvin Tamsir had 15 years ago in grad school, he said. Here’s hoping that’s food for thought for those in that position now, wondering if it’s all worth it.

Anuvia raises $103 million to commercialize its novel fertilizer

How we built an AI unicorn in 6 years

Published July 20, 2021

Alex Dalyac
Contributor

Alex Dalyac is the CEO and co-founder of Tractable, which develops artificial intelligence for accident and disaster recovery.

Today, Tractable is worth $1 billion. Our AI is used by millions of people across the world to recover faster from road accidents, and it also helps recycle as many cars as Tesla puts on the road.

And yet six years ago, Tractable was just me and Raz (Razvan Ranca, CTO), two college grads coding in a basement. Here’s how we did it, and what we learned along the way.

Build upon a fresh technological breakthrough

In 2013, I was fortunate to get into artificial intelligence (more specifically, deep learning) six months before it blew up internationally. It started when I took a course on Coursera called “Machine learning with neural networks” by Geoffrey Hinton. It was like being love struck. Back then, to me AI was science fiction, like “The Terminator.”

Narrowly focusing on a branch of applied science that was undergoing a paradigm shift which hadn’t yet reached the business world changed everything.

But an article in the tech press said the academic field was amid a resurgence. As a result of 100x larger training data sets and 100x higher compute power becoming available by reprogramming GPUs (graphics cards), a huge leap in predictive performance had been attained in image classification a year earlier. This meant computers were starting to be able to understand what’s in an image — like humans do.

The next step was getting this technology into the real world. While at university — Imperial College London — teaming up with much more skilled people, we built a plant recognition app with deep learning. We walked our professor through Hyde Park, watching him take photos of flowers with the app and laughing from joy as the AI recognized the right plant species. This had previously been impossible.

I started spending every spare moment on image classification with deep learning. Still, no one was talking about it in the news — even Imperial’s computer vision lab wasn’t yet on it! I felt like I was in on a revolutionary secret.

Looking back, narrowly focusing on a branch of applied science undergoing a breakthrough paradigm shift that hadn’t yet reached the business world changed everything.

Search for complementary co-founders who will become your best friends

I’d previously been rejected from Entrepreneur First (EF), one of the world’s best incubators, for not knowing anything about tech. Having changed that, I applied again.

The last interview was a hackathon, where I met Raz. He was doing machine learning research at Cambridge, had topped EF’s technical test, and published papers on reconstructing shredded documents and on poker bots that could detect bluffs. His bare-bones webpage read: “I seek data-driven solutions to currently intractable problems.” Now that had a ring to it (and where we’d get the name for Tractable).

That hackathon, we coded all night. The morning after, he and I knew something special was happening between us. We moved in together and would spend years side by side, 24/7, from waking up to Pantera in the morning to coding marathons at night.

But we also wouldn’t have got where we are without Adrien (Cohen, president), who joined as our third co-founder right after our seed round. Adrien had previously co-founded Lazada, an online supermarket in South East Asia like Amazon and Alibaba, which sold to Alibaba for $1.5 billion. Adrien would teach us how to build a business, inspire trust and hire world-class talent.

Find potential customers early so you can work out market fit

Tractable started at EF with a head start — a paying customer. Our first use case was … plastic pipe welds.

It was as glamorous as it sounds. Pipes that carry water and natural gas to your home are made of plastic. They’re connected by welds (melt the two plastic ends, connect them, let them cool down and solidify again as one). Image classification AI could visually check people’s weld setups to ensure good quality. Most of all, it was real-world value for breakthrough AI.

And yet in the end, they — our only paying customer — stopped working with us, just as we were raising our first round of funding. That was rough. Luckily, the number of pipe weld inspections was too small a market to interest investors, so we explored other use cases — utilities, geology, dermatology and medical imaging.

Pillar VC closes $192M for two funds targeting SaaS, crypto, biotech, manufacturing

Published July 20, 2021

As its name suggests, venture firm Pillar VC is focused on building “pillar” companies in Boston and across the Northeast.

The Boston-based seed-stage firm closed a raise of $192 million of capital that was split into two funds, $169 million for Pillar III and $23 million for Pillar Select. More than 25 investors are backing the new fund, including portfolio founders.

Jamie Goldstein, Sarah Hodges and Russ Wilcox are Pillar VC’s three partners, and all three lead investments for Pillar. The trio all have backgrounds as entrepreneurs: Goldstein, who has spent the past two decades in VC, co-founded speech recognition company PureSpeech, which was acquired by Voice Control Systems; Hodges was at online learning company Pluralsight; and Wilcox was CEO of electronic paper company E Ink, which he sold in 2009.

Pillar typically invests in a range of enterprise and consumer startups and aims to target Pillar III at startups focused on biology, enterprise SaaS, AI/ML, crypto, fintech, hardware, manufacturing and logistics. The firm will make pre-seed investments of $50,000 to $500,000 and seed-round investments of $2 million to $6 million.

One of the unique aspects of the firm is that it will buy common stock so that it will be aligned with founders and take on the same risks, Goldstein told TechCrunch.

The firm, founded in 2016, already has 50 portfolio companies from its first two funds — Pillar I, which raised $57 million, and Pillar $100 million. These include cryptocurrency company Circle, which announced a SPAC earlier this month, 3D printing company Desktop Metal that went public, also via SPAC, last year, and PillPack, which was bought by Amazon in 2018.

Cryptocurrency company Circle to go public in SPAC deal

“Pillar is an experiment, answering the question of ‘what would happen if unicorn CEOs came in and helped bootstrap the next generation’,” Wilcox said. “The experience is working, and Pillar does what VCs ought to do, which is back first-of-its-kind ideas.”

In addition to leading investments, Hodges leads the Pillar VC platform for the firm’s portfolio companies. Many of the portfolio companies are spinouts from universities, and need help turning that technology into a company. Pillar provides guidance to recruit a CEO or partner on the business side, leadership development, recruit talent and makes introductions to potential customers.

Pillar also intends to invest a third of the new fund into that biology category, specifically looking at the convergence of life science and technology, Wilcox said.

In its second fund, the firm started Petri, a pre-seed bio accelerator focused on biotech, and brought in founders using computation and engineering to develop technologies around the areas of agriculture, genetics, cell and gene therapies, medical data and drug discovery. The third fund will continue to support the accelerator through both pre-seed and seed investments.

The first investments from Pillar III are being finalized, but Hodges expects to infuse capital into another 50 companies.

“We are super bullish on Boston,” she added. “So many companies here are growing to be household names, and an exciting energy is coming out.”

How VC and private equity funds can launch portfolio-acceleration platforms

Commercial real estate lending startup Lev brings in $30M on a $130M valuation

Published July 20, 2021

Commercial real estate has been slow to embrace technology; though it has an addressable financing market of more than $40 billion, putting together a deal is still mostly manual, paper-heavy and complicated.

New York-based Lev is taking on this problem by automating workflows online and gathering hundreds of millions of data points into machine learning software to ensure financing accuracy. To do this, the commercial real estate financing transaction platform raised $30 million to give it a $130 million valuation just two years into its inception.

The latest financing comes four months after the company raised $10 million in seed funding led by NFX. Greenspring led the latest round, with participation from First American Title. Existing investors NFX, Canaan Partners, JLL Spark, Animo Ventures and Ludlow Ventures also joined in to give Lev total investments of more than $34 million, according to Crunchbase data.

Lev founder and CEO Yaakov Zar previously co-founded Boston-based Dispatch, which built tools for home services businesses. It was when he and his wife went through the homebuying process — and their mortgage fell through — that Zar decided to look at real estate financing.

He channeled his frustration into becoming a licensed mortgage loan originator. After relocating to New York, Zar was helping a friend at a nonprofit organization refinance their building and got a firsthand look at what he said was a fragmented commercial real estate mortgage industry.

Companies like Blend are addressing the problem of real estate lending, Zar told TechCrunch, but very few are focusing on commercial real estate, where lending is sensitive to interest rates and total amortization. In addition, property owners have a burden of refinancing every five to 10 years.

“Legacy businesses like JLL, which is an investor, Cushman Wakefield and CBRE work on lending, but they are much more ‘relationship focused’ than tech focused,” Zar said. “We think that it is a necessary part because the deals are so large and complex that you need a relationship for them, but transactions less than $1 billion are pretty straightforward. On experience and product, no one is close to us.”

Digital lending platform Blend valued at over $4B in its public debut

Initially, Zar and his team wanted to build the “Rocket Mortgage of commercial real estate lending,” but found that to be difficult because real estate brokers are putting together their own pitch books for lenders. Instead, Lev is building a technology platform of more than 5,000 lenders with information on what projects they like to finance. It then analyzes a customer’s portfolio and connects them in minutes with the right lender, taking 1% of the loan amount for each transaction as payment. Lev is also working to be able to close deals online.

Zar wasn’t looking for funding when he was approached by investors, but said he was introduced to some people who liked the company’s growth and trajectory and decided to accept the funding offer.

He intends to use the new funding on product development, with the aim of giving a term sheet in seconds and closing a loan in seven days. Right now it can take a week or two to get the term sheet and 45 to 90 days to close a loan.

The company has about 40 employees currently in its New York headquarters, Miami R&D center, Los Angeles outpost and remotely. Continued investments will be made to expand the team.

Lev grew 10 times in volume in the past year, closing approximately $100 million of loans in 2020. Zar expects to close over $1 billion in 2021.

“Customers come back to us repeatedly, and there are a ton of referrals,” Zar said. “We want to be the platform on which capital market transactions are processed. You need an advantage to network and find great deals. I don’t want to mess with that, but when you find it, bring it to us, we will close it and provide the asset management with the best option to close online and manage the deal from a single platform.”

Meanwhile, Pete Flint, general partner at NFX, told TechCrunch that he got to know the Lev team over the last 18 months, checking in on the company during various stages of the global pandemic, and was impressed at how the company navigated it.

As co-founder of Trulia, he saw firsthand the problems in the real estate industry over search and discovery, but as that problem was being solved, the focus shifted to financing. NFX is also an investor in Tomo and Ribbon, which both focus on residential financing.

Wanting to see what opportunities were on the commercial real estate side, Flint heard Lev’s name come up more and more among brokers and industry insiders.

“As we got to know the Lev team, we recognized that they were the best team out there to solve this problem,” Flint said. “We are also among an amazing group of people complementing the round. The folks that are deep industry insiders will put a helpful lens on strategy and business development opportunities.”

This is a good time to start a proptech company