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Zenput raises $27M Series C to keep multiunit operations flowing no matter the location

Published July 20, 2021

Ensuring food safety compliance can be challenging at one restaurant, let alone across thousands of restaurants. Zenput has developed technology aimed at making sure operating procedures are quickly adapted so that businesses maintain quality.

The San Francisco-based operations execution company raised $27 million in Series C financing, led by Golub Capital, to continue developing its application to automate operation procedures like tracking food safety, public health protocols and changing market conditions.

Restaurants, convenience stores and grocery chain customers can use Zenput to update all of their locations — at the same time — with new processes, promotional campaigns and key initiatives while also gathering data and insights from those locations to find opportunities for improvement.

Joining Golub in the round were existing investors, including Jackson Square Ventures, MHS Capital and Goldcrest Capital. This brings the company’s total funding to more than $47 million, co-founder and CEO Vladik Rikhter told TechCrunch.

Greg Gretsch, founding partner and managing director at Jackson Square Ventures, led Zenput’s Series A round in 2016 and had met Rikhter a year prior. At the time, Rikhter was in the early stages of developing what Gretsch called an organization task manager. While he didn’t invest then, he kept in touch with Rikhter and saw “how much of a grinder he was” in expanding the platform.

“When he sees a problem, he works and works to solve it,” Gretsch said. “Whenever you have a multilocation business, you have a remote management problem. You’re trying to manage everything so your weakest link can perform as best as the best link, but you need a platform to manage that so that you can hold stores accountable to improve the end product.”

Front-line workers use Zenput’s mobile app for onboarding at the beginning of the day and to track safety compliance and fresh food checks, something Rikhter said was historically challenging once a business had thousands of locations. The app can also alert when food has been left out too long to assist in lowering food waste rates.

Since its founding in 2012, Zenput is currently used by customers like Chipotle, Domino’s, P.F. Chang’s, Five Guys, Smart & Final and 7-Eleven in over 60,000 locations across more than 100 countries.

The Series C round comes as the company saw 100% revenue growth over the past year. At the same time, product usage more than doubled at stores, and to date, 1.5 billion questions were answered through Zenput, a figure Rikhter expects to double over the next 12 months as locations aim to find ways to do more things remotely.

“The pandemic inadvertently helped us,” he added. “Initially, it was rough, but then a lot of the brands we dealt with needed to expedite technology and saw an opportunity to invest in our technology. We have more products coming because there is more that can be done to make sure every meal is a safe meal.”

Much of the new funding will go toward building those new products and capabilities and into marketing to expand the customer base. The company recently launched an expansion of its Zenput for Franchisors tool and updates to its food prep labeling and temperature monitoring functions.

Rikhter also plans to double Zenput’s employees over the 16 to 18 months, especially in the product engineering and marketing areas.

All of that is to be ready for customer demand as restaurants, convenience stores and grocery chains do more to change up the way they do business in the future.

“I wouldn’t be surprised to show up at a restaurant and see changes made daily on protocols, which will drive a lot more of the journey than before,” Rikhter said. “We see more operators flexing muscles they didn’t know they had, as it relates to promotions and products, so they can grow faster and run totally different operational features and offer more options for customers.”

As companies accelerate their digital transitions, employees detail a changed workplace

SmartRecruiters raises $110M at a $1.5B valuation to expand its end-to-end recruitment platform

Published July 20, 2021

The global COVID-19 pandemic had a chilling effect on a number of industries and their workforces, resulting in mass furloughs and layoffs. But now, with countries taking steps back to “normal”, that has been leading, in many cases, back to a hiring surge. Today, SmartRecruiters, one of the companies that has built software to handle that process more smoothly, is announcing $110 million in funding to seize the moment.

The funding, a Series E, is coming in at a $1.5 billion valuation, the company confirmed. Silver Lake Waterman is leading this round, with previous backers Insight Partners and Mayfield Fund also participating.

The investment will be used in two areas. First, SmartRecruiters plans to continue expanding business — its primary customers are large enterprises, with Visa, Square, McDonald’s, Ubisoft, FireEye, Biogen, Equinox and Public Storage among them, and the plan will be to bring on more of these globally. Jerome Ternynck, SmartRecruiters’ CEO and founder, pointed out that one of its clients, Pilot Travel Centers, made a move recently in which it had to swiftly ramp up by 10,000 people in 90 days.

“That is the scale of the great rehire that we are aiming to serve,” he said.

And second, it plans to hire and invest more in product. Specifically, Ternynck said the company is looking to build more intelligence into its platform, so that it can help customers find ideal matches for roles and provide them with tools to automate and reduce the busy work of managing a recruitment process.

This is a notable area for growth, and one that smaller startups have also identified and are building to fix: Just yesterday, one of them, Dover, announced a Series A.

Dover raises $20M to bring the concept of ‘orchestration’ to recruitment

Ternynck likes to describe SmartRecruiters as “the Salesforce of recruiting”, by which he means that it provides a system of record for large enterprises that can manage 100% of the process of recruitment, from sourcing candidates to hiring.

“In recruiting tech, we are the mothership,” he said, with some 600 vendors integrated into its platform — a mark of how fragmented the wider industry really is.

(Salesforce, incidentally, is an investor in SmartRecruiters, and while right now it’s not directly working with its portfolio company to build recruitment into what it operates as essentially a massive CRM behemoth, it’s an interesting prospect and seems like a no-brainer that it might try to some day. Ternynck would not comment…)

There are already a lot of application tracking systems in the market that can handle the basics of logging candidates and managing their progress through the screening, interview, references and hiring/rejection cycle — Ternynck, in fact founded and sold one of the pioneers in that space. But the problem with these is that they are limited and often work within their own silos. He refers to these ATS systems as “the first generation” of recruitment software, a generation that is now getting replaced.

There are some big changes driving that evolution, and specifically SmartRecruiters’ growth. One key area is the bigger shift in “digital transformation”, precipitated by the pandemic but also a bigger shift to cloud-based computing and evolutions in big data management. Fragmentation is rife in recruiting, but we now are equipped in the world of IT with many, many ways of navigating that and using the wide amount of information out there to our advantage.

But there is another, more epistemological shift, too. Recruitment, and talent in general, has become a critical part of how a company conceives of its future success. Get the right people on board and you will grow. Fail to hire correctly and you will not, and you might even fail.

“This round and our progression signals the fact that CEOs have been forced to care more about recruiting,” he said. They want want to hire the best, he added, but that is fundamentally different from how recruiting has traditionally been approached, which is focused on cost per hire.

“This means recruiting is coming out of the administration function and into value add and sales and marketing,” he added. (That’s another interesting parallel with Dover, which has gone so far as to conceive of its recruitment approach as “orchestration”, a word more commonly associated with sales software.)

The pandemic has had an impact here, too: employees and “hires” today are not what they used to be. It has become more acceptable to work remotely, and what people have come to expect out of jobs, and what roles they are coming from when applying, are all so different, and that also demands a different kind of platform to engage with them.

Why CEOs should spend up to half their time recruiting

Indeed, that bigger area — sometimes referred to as “the future of work” — is part of what attracted this investment.

“Hiring talent and building human capital is more complex and important than ever, and SmartRecruiters is well positioned to help companies attract and land top talent,” said Shawn O’Neill, managing director and group head, Silver Lake Waterman, in a statement. “Their scale and customer growth are testament to their strong leadership and industry leading platform. We are excited to help fuel SmartRecruiters’ next growth chapter.”

Interestingly, Ternynck noted that even despite the mass layoffs and furloughs experienced in some industries in the last year and a half, SmartRecruiters has seen business grow, even through some of the worst moments of COVID-19. Over the last 12 months, bookings have grown by 70%, he said. That’s a mark of how recruiting priorities are indeed changing, regardless of whether it’s a SmartRecruiters, or another kind of company entirely — and there are many, from Taleo and Cornerstone, through to smaller hopefuls like Dover, and even Salesforce — who might reap the spoils longer term.

Choco bites into $100M Series B, at a $600M valuation, to build a more transparent, sustainable food supply chain

Published July 20, 2021

The United States estimates of the food produced here approximately 40% is wasted. Globally, $2.6 trillion annually is lost.

Berlin-based Choco, which has built ordering software for restaurants and their suppliers, is working to digitize the food supply chain and announced $100 million in Series B funding, led by Left Lane Capital, to give it a $600 million post-market valuation. Joining in is new investor Insight Partners and existing investors Coatue Management and Bessemer Venture Partners.

The new round comes just over a year after Choco’s $63.7 million Series A, raised at two different periods, a $33.5 million round in 2019 and a $30.2 million round in 2020 — at a $230 million valuation — to bring total funding to $171.5 million since the company was founded in 2018.

The company’s core food procurement technology digitizes ordering workflow and communications for restaurants and suppliers. During the global pandemic, Khachab said Choco became the go-to tool for operators to be more efficient around procurement processes and reducing expenses as they adapted to the changing market conditions.

With the food industry a $6 trillion market, Choco CEO Daniel Khachab told TechCrunch he aims to make the food supply chain more transparent and sustainable in order to help increase margins in the food service sector and combat climate change.

The company did 14 months of food waste research and found that it was central to a lot of other global problems: Food waste is the third-largest driver of climate change and is causing deforestation — as evident by news from the Amazon last year — and the extinction of animals.

“It makes sense to try and solve it,” he added. “The food system is highly fragile, and what was shown in the first and second waves of the pandemic is how fragile and inflexible it was. It made the industry realize that it has to step up and that it can’t continue to work on pen and paper.”

Between the farmer and the end point, there are some nine parties involved, Khachab said. None are connected to another, which often means nine data silos and data not collected along the chain. It is important to connect them on one single platform so decision-making can be data-driven, he added.

As uncertainty swept across the food industry at the beginning of the pandemic, Khachab said Choco could either lay low and wait or invest in the company. He chose the latter, pumping up the team, regions and technology. As a result, Choco’s technology is stronger than it was 15 months ago and proved to be flexible amid the inflexible environment.

Choco saw orders quadruple on the platform in the past year, and gross merchandise value grew to $900 million annualized, up from $230 million, Khachab said.

As the company continues to learn how it can provide value to the food supply chain, half of the Series B funding will go into technology development. It will also go toward doubling its headcount, especially on the engineering side. Choco recently brought on ex-Uber and Facebook executive Vikas Gupta as chief technology officer, and Khachab said Gupta’s expertise will enable the company “to build the best technology team in Europe” and scale faster.

Choco is already operating in six markets, including the United States, Germany, France, Spain, Austria and Belgium. Khachab expects to expand in those markets and gain a footprint in new markets like Latin America, the Middle East and Asia.

What SOSV’s Climate Tech 100 tells founders about investors in the space

Founders: How well do you really understand seed-stage financing?

Published July 19, 2021

Yin Wu
Contributor

Yin Wu, a three-time YC alum, is founder of Pulley, which offers cap table management tools that help companies better understand and optimize their equity.

How financing works: SAFEs versus equity rounds

As a founder, you will understand less than investors when it comes to fundraising.

Venture financing takes place in rounds. The first stage is the pre-seed or seed round, then a Series A, then a Series B, then a Series C and so on. You can continue to raise funding until the company is profitable, gets acquired or goes public.

We will focus here on seed-stage funding — your very first funding round.

SAFEs

Post-money SAFEs are the most common way to raise funding. These documents are used by Y Combinator, angel investors and most early-stage funds. You should raise on post-money SAFEs using standard documents created by YC. Standard documents have consistent terms that have been drafted to be fair to both investors and founders.

By using the standard post-money SAFE, your negotiation can focus on the two terms that matter:

Principal: The amount you want to raise per investor.
Valuation cap: The value of your business.

Dover raises $20M to bring the concept of ‘orchestration’ to recruitment

Published July 19, 2021

Despite being one of the earliest adopters of using the world wide web to disrupt how its business is done and connect with more potential customers, the recruitment industry ironically remains one of the more fragmented and behind the times when it comes to using new, cloud-based services to work more efficiently. A new startup is hoping to change that, and it’s picked up some funding on strong, early signs of traction.

Dover, which has built what CEO and co-founder Max Kolysh describes as a “recruitment orchestration platform” — aimed at recruiters, it helps them juggle and aggregate multiple candidate pools to source suitable job candidates automatically, and then manage the process of outreach (including using tools to automatically re-write job descriptions, as well as to write recruitment and rejection letters) — has raised $20 million from an impressive list of investors.

Tiger Global led the Series A round, with Founders Fund, Abstract Ventures and Y Combinator also investing. Dover was part of YC’s Summer 2019 class (which debuted in August 2020), and Founders Fund led its seed round. Since leaving the incubator, it has picked up more than 100 customers, mostly from the world of tech, including ClearCo, Lattice, Samsara and others, even larger companies that you might have assumed would have their own in-house orchestration and automation platforms in place already.

“Orchestration” in the world of business IT is commonly used for software built for the fields of sales and marketing: In both of these, there is a lot of fragmentation and work involved in sourcing good leads to become potential customers, and so tech companies have built platforms both to source interesting contacts and handle some of the initial steps needed to reach out to them, and get them engaged.

That, it turns out, is a very apt way to think of the recruitment industry, too, not least because it also, to a degree, involves a company “selling” itself to candidates to get them interested.

“I would say recruiting is sales and marketing,” Kolysh said. “We’re comparable to sales ops, but sales is five-10 years ahead in terms of technology.”

Recruiters and hiring managers, especially those working in industries where talent is at a premium and therefore proactively hiring good people can be a challenge, are faced with a lot of busy work to find interesting candidates and engage them to consider open jobs, and subsequently handling the bigger process of screening, reaching out to them and potentially rejecting some while making offers to others.

This is mainly because the process of doing all of these is typically very fragmented: Not only are there different tools built to handle these different processes, but there is an almost endless list of sources today where people go to look for work, or get their names out there.

Dover’s approach is based on embracing that fragmentation and making it easier to handle. Using AI, it taps platforms like LinkedIn, Indeed and Triplebyte — a likely list, given its initial focus on tech — to source candidates that it believes are good fits for a particular opening at a company.

Dover does this with a mix of AI and understanding what a recruiter is looking for, plus any extra parameters if they have been set by the recruiter to carry this out (for example, diversity screening, if the employer would like to have a candidate pool that is in line with a company’s inclusion targets).

Dover also uses data science and AI to help calibrate a recruiter’s communications with would-be candidates, from the opening job description through to job offer or rejection letters. (Why dwell on rejection letters? Because these candidates are already in a short list, and so even if they didn’t get one particular job, they are likely good prospects for future roles.)

“No human wants to write 100 cold emails per week, but on the other hand, there are many people to hit up and connect with,” Kolysh said of the challenges that recruiters face. “When a company is seeing a lot of growth, it needs to scale fast. You just can’t do that without technology anymore.” Kolysh — who co-founded the company with Anvisha Pai (CTO) and George Carollo (COO) — said all three founders experienced that firsthand working at previous startups and trying to recruit while also building the other aspects of the business. (They are pictured above, along with founding engineer John Holliman.)

Given how much orchestration has caught on in the world of sales, there is a strong opportunity here for Dover to bring a similar approach to recruitment, based on what seems to be a very close understanding of the flawed recruitment process as it exists today. Whether that brings more competitors to the space — or more tools from some of the bigger players in, say, candidate sourcing — will be one factor to watch, as will how and if Dover manages to make the leap to other industries beyond tech.

Why CEOs should spend up to half their time recruiting

But for now, its usefulness for a particular segment of the market is also what caught the eye of Tiger Global.

John Luttig, the partner who led the investment for Founders Fund, noted in an interview that most recruiting tools in the market today might best be described as point solutions, addressing scheduling or interviews, for example.

“It’s the full stack here that is appealing,” he told me. “And it’s automated, which is particularly valuable for early and mid-stage tech companies, to keep candidates from falling through the cracks. It also saves time from having to build up big recruiting departments. And because Dover owns all that work, those working in recruitment can instead focus on culture building, or assessing the candidates.”

Updated to note that Luttig is at Founders Fund, and to correct that the customer is ClearCo.

JLL, Khosla lead Jones’ $12.5M Series A for real estate vendor compliance

Published July 19, 2021

Commercial real estate tenants and property managers have to abide by strict liability rules that any vendor entering the property must have insurance certificates and meet other requirements. The approval process for this currently can take days and is still largely done on paper.

Enter Jones. The New York-based commercial real estate startup is curating a marketplace of pre-approved vendors for tenants and property managers to find and hire the people they need in a compliant way.

To continue advancing its network, the company announced Monday it raised $12.5 million in Series A funding led by JLL Spark and Khosla Ventures that also included strategic investors Camber Creek, Rudin Management, DivcoWest and Sage Realty. This new investment brings Jones’ total raised to $20 million, according to Crunchbase data.

Jones, founded in 2017, also manages certifications and approvals, moving the whole process online. Its technology can process an insurance certificate in less than an hour and reduce the overall vendor approval time to 2.5 days — from 12 days — with 99.9% accuracy, co-founder and CEO Omri Stern told TechCrunch.

The accuracy portion is key. With much of the work being done by hand, current accuracy is at about 30%, he added. In addition, the certifications are lengthy, and it is typically up to property managers to parse through the insurance documents to identify what is missing rather than spending time with tenants.

“In the consumer world, a homeowner expects to go on a marketplace and find a service and hire them,” Stern said. “Office managers and tenants can’t get their preferred vendors through the approval process, so we want to provide a similar digital experience that they can consume and use in real estate.”

He says Jones’ differentiator from competitors is that all of the stakeholders are in place: a group of high-profile real estate customers, including Lincoln Property Co., Prologis, DivcoWest, Rudin Management, Sage Realty and JLL.

Yishai Lerner, co-CEO of JLL Spark, agrees, telling TechCrunch that commercial real estate is one of the largest and last asset classes that is undergoing a technology transformation, similar to what fintech was 20 years ago.

He estimates the U.S. market to be $16 trillion, of which technology could unlock a lot of the value. That opportunity was one of the drivers for JLL to create JLL Spark, where Jones is one of the first investments.

Though Lerner spent time with property management teams on the ground, he became up close and personal with the problem when his wife, while moving offices, found out her vendors were not allowed in the building because they didn’t have the right insurance.

“We learned that property managers spend half of their time just working to verify the compliance of vendors coming into their building,” Lerner said. “We wondered why there wasn’t technology for this. Jones was doing construction at the time, and we brought them into commercial real estate because they had an example of how technology could solve the problem.”

Meanwhile, the Series A comes at a time when Stern is seeing Jones’s SaaS tool take off in the past 10 months. He would not get specific with growth metrics, but did say that what is driving growth is “competing against the status quo” as companies are searching for and adapting workflow solutions.

The company intends to use the new funds on product development in both quicker and easier approvals and bringing on new vendors. Jones already works with tens of thousands of vendors. It will also focus on integration, offering an API that could be used in other industry verticals where compliance is necessary.

Stern would also like to continue building the team. Having brought in real estate experts, he is now also looking for people with backgrounds in fintech, cybersecurity and insurtech to bring in additional perspectives.

“We are building an incredible company with the opportunity to be the next big digital marketplace,” he added.

9 top real estate and proptech investors: Cities and offices still have a future

Rise Gardens grows with $9M Series A to help anyone be an indoor farmer

Published July 19, 2021

As more consumers embrace plant-based diets and sustainable food practices, Rise Gardens is giving anyone the ability to have a green thumb from the comfort of their own home.

The Chicago-based indoor, smart hydroponic company raised $9 million in an oversubscribed Series A round, led by TELUS Ventures, with existing investors True Ventures and Amazon Alexa Fund and new investor Listen Ventures joining in. The company has a total of $13 million in venture-backed investments since Rise was founded in 2017, founder and CEO Hank Adams told TechCrunch.

Though he began in 2017, Adams, who has a background in sports technology, said he spent a few years working on prototypes before launching the first products in 2019. Rise’s IoT-connected systems are designed to grow vegetables, herbs and microgreens year-round.

Customers can choose between three system levels and get started with their first garden for about $300.

There is a “kind of joyousness” in being able to grow something, but people are looking for assistance because they don’t want to get into a hobby that will become demanding or stressful, Adams said. As a result, Rise’s accompanying mobile app monitors water levels and plant progress, then alert users when it’s time to water, fertilize or care for their plants.

“People are paying attention to food, and they care about what they eat,” he added. “Then the global pandemic played a part in this, with people leaning into growing their own food.”

In fact, customers leaned into growing food so much that Rise Gardens saw its sales eclipse seven figures in 2020, and gardens sold out three times during the year. Customers purchased close to 100,000 plants and have harvested 50,000.

The company estimates it helped keep more than 2,000 pounds of food from being wasted and saved 250,000 gallons of water since launching in 2019.

The concept of an indoor farm is not new. Incumbents include AeroGarden, AeroGrow, which was acquired by Scotts-Miracle Gro last November, and Click & Grow. Rise is among a new crop of startups that have raised funds that include Gardyn.

However, Rise Gardens is differentiating itself from those competitors by making its gardens from powder-coated metals and glass and are designed to be a focal point in the room. It is also offering ways for people to experiment with their gardens.

“We wanted something that would be flexible because once you have mastered a hobby, you will get bored,” he added. “You can start at one level and they swap out tray lids to grow more densely. We have a microgreens kit you can add, or add plant supports for tomatoes and peppers. You can also build a trellis to vine snap peas.”

Adams will focus the Series A dollars into product development, inventory, manufacturing, expansion into new markets and building up the team, especially in the areas of customer service and marketing. Rise has about 25 employees and plans to bring on another eight this year.

In addition, Rise Gardens’ products will soon be available on Amazon — its first channel outside of its website. The company is also expanding into schools in what Adams calls “version 2.0” of the school garden.

When Rich Osborn, president and managing partner of TELUS Ventures, evaluated the indoor garden space, he told TechCrunch that Adams and his team rose to the top of the list because of their background, data experience and syndication with Amazon.

Not only was consumer demand there for these kinds of products, but the sustainability and social impact created from these kinds of investments couldn’t be overemphasized, he said.

Nishan Majarian, co-founder and CEO of TELUS Agriculture, said he sees a future where there is a spectrum of food growth, and crop management will be at the plant level.

“Ever since Climate Corp. was acquired by Monsanto, there has been a massive influx into agriculture to get to the next billion-dollar exit,” Majarian added. “Agrifood is the last segmented supply chain. Every crop is different, every market is different. That makes it local, complex and fertile soil — pun intended — for startups who get capital to solve those issues and scale.”

Farmland could be the next big asset class modernized by marketplace startups

Zoom buys cloud call center firm Five9 for $14.7 billion

Published July 19, 2021

Zoom is taking advantage of the impressive rise in its stock price in the past year to make its first major acquisition. The popular video conferencing firm, which was valued at about $9 billion at its IPO two years ago, said Sunday evening it has agreed a deal to buy cloud call centre service provider Five9 for about $14.7 billion in an all-stock transaction.

20-year-old Five9 will become an operating unit of Zoom after the deal, which is expected to close in the first half of 2022, the two firms said.

The proposed acquisition is Zoom’s latest attempt to expand its offerings. In the past year, the video conferencing software has added several office collaboration products, a cloud phone system, and an all-in-one home communications appliance.

The acquisition of Five9 — which has amassed over 2,000 customers worldwide including Citrix and Under Armour and processes over 7 billion minutes of calls annually — will help Zoom enter the “$24 billion” market for contact centers, the company said.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, founder and chief executive of Zoom, in a statement.

So grateful for this journey, and the fantastic outcome for all. Ty @rowantrollope for the opportunity! https://t.co/niGaOhHeev

— Anand C (@anandc) July 19, 2021

Joining forces will offer both firms “significant” cross-selling opportunities in each other’s respective customer bases, the two firms said.

“Businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers,” said Rowan Trollope, chief executive of Five9.

“It has always been Five9’s mission to make it easy for businesses to fix that problem and engage with their customers in a more meaningful and efficient way. Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, that will enable them to realize more value and deliver real results for their business. This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”

The two firms will do a joint Zoom call Monday to share more about the transaction.

How pitch training can help startups get their story right

Published July 16, 2021

When you hire a marketing consultant, you don’t necessarily expect to wind up discussing your life’s purpose. Yet, that is what Spanish marketing expert and entrepreneur Alex Barrera often ends up doing with startup founders who hire him to help improve their pitch. They think they are going to get help convincing investors, and they do, but the byproduct of the process is that they reframe their startup’s vision.

In this context, ethical and philosophical considerations aren’t that far away, because more often than not, this includes a deep look at how their company impacts society. “The days where you could do whatever you wanted and dive into grey legal or moral areas are dwindling,” Barrera says. “Growth companies need to be careful about the potential fallouts of pursuing such strategies. While there are still plenty of investors that push for “growth at any cost,” the social pressure is changing and it’s suddenly becoming costlier to take such stances.”

You may have spotted Barrera’s cowboy hat at one of the many startup conferences he is involved with as a mentor, judge, host or speaker — and he does wear many hats.

Having previously co-founded two startup accelerators and Europe-focused tech publication Tech.eu, he now authors The Aleph Report, a periodical publication on cutting-edge technology and its implications. But it is through his Press42 venture that he collaborates with startups and corporations on organizational storytelling and strategic communications, and it is also what we discussed in the interview below (which has been edited for length and clarity).

TechCrunch is asking founders who have worked with growth marketers to share a recommendation in this survey. We’ll use your answers to find more experts to interview.

What do people often misunderstand about pitch training?

Well, it depends on their experience level. When first-time entrepreneurs hear about pitching, they immediately think of the infamous “elevator pitch,” roll their eyes and moan. For those with a bit more experience, pitching is about a set of slides to achieve a certain goal, mostly funding. However, seasoned managers end up discovering that telling the story of their product or service is not a one-way street. Having to sell a future vision of where the company is heading invariably affects your conception of the product in the now and what you need to build to achieve it. The vision impacts the product, because you need consistency between the product and storytelling.

What type of companies do you help?

I have been helping startups with pitching for years. This used to be mostly early-stage startups, and in groups, with accelerators and startup competitions calling me to help their entire batch or portfolio. I still provide that sort of training, but these days I will more often work one-on-one with a single client that is at a later stage. And I also sometimes work with tech companies getting ready for M&As, as well as large corporations.

“I don’t work with companies that sell smoke and mirrors or hurt society because they shamelessly disregard any responsibility for their impact on others.”

What is your sweet spot for startups you work with?

For one-on-one work, I have a preference for David versus Goliath, and less sexy spaces. I love these companies that were built without the noise: There’s a lack of hubris, they are really humble, but the numbers are there — the founders could be obnoxious, but it’s the opposite. I don’t work with companies that sell smoke and mirrors or hurt society because they shamelessly disregard any responsibility for their impact on others.

Luckily, that’s rarely the case of people who call me. Usually, they are a bit out of the circuit, and they often have impostor syndrome. So my work is also about helping them understand what they can be proud of what they do, and then how to show that in their pitch. They value talking to someone who understands them and their challenges. I spend a lot of time doing research on all verticals and thinking about the future, so the conversation will typically go like this: “Dude, you get it!”

What is one of your favorite things about one-on-one pitch-related consulting work?

I find it very fulfilling to see how much value it brings to those involved. I am also a developer, and I do project management, but most of the consulting I do is not the kind of growth marketing stuff that takes more time to show results. When you do growth hacking at the product level, it takes time to see the impact, and even then, it’s not always easy to connect the dots.

When we work together on their pitch, CEOs can instantly see if the new pitch resonates or not; and they also know if the exercise itself worked for them. Working on a pitch requires a lot of reflection and it entails a lot of tension between you and the CEO.

This is especially true at the beginning, when you keep questioning why they did this or that, what the product provides and to whom, or why it grew here and not there. All these questions force many founders and managers to stop and think hard about the product, the market or the roadmap. Sometimes it pushes them to provide data to back up certain claims. The process pushes them to revisit old biases, beliefs or even myths around their company. Many people are surprised by how much clarity they gain into their company when they work on a pitch.

Do you only work with founders and executives?

Sometimes, the clarity and the strategic insight that working on a pitch provides to founders or CXOs becomes a trigger for them wanting to provide that level of understanding to other areas of the company, like sales, customer support or even the product team. In my case, being a developer myself enables me to switch and adapt my process to any layer of the organization, including the development team.

This is rare, but it eventually turns me into a kind of translator of the challenges of different parts of an organization, acting ultimately as the connector bridging different perceptions. In the end, that’s exactly what storytelling provides. It’s not just a tool for pitching, it’s a brutally effective way to communicate between humans, especially around challenging topics.

How would you describe the value that executives get from your collaboration?

One of the usual and even surprising values for most executives is the insight the process provides. When someone is running either a big company or a scaleup, their day to day is all about growing. They rarely have time to sit down and think about where they’re heading in terms of future product. They do have a roadmap, and their KPIs, but I rarely see a strong future vision broken down into steps.

The pitching process provides them with two valuable things: time and perception. Time because as they’re paying me, they’re stuck with me and need to allocate time for our sessions. That bubble, and the need to build a coherent story that tells why the company is at that particular point, create tremendous insight for most. And then, there’s perception. It’s funny because they’re the ones that provide all the pieces of the picture, I just help them put them together and then point at the obvious.

This process is very rewarding at a personal level for them. It helps them build a confidence that, while it was always there, it rarely shone through the pitch before. It also makes them reflect on where they want to go next, not just from a product perspective, but from a mission’s perspective. It reconnects them with that side that most of us care about, and the personal questions we ask ourselves about life and meaning.

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How do you bridge the gap between what your clients already know and what’s next?

My clients already know how to grow a company. I always keep this in mind, not just with startups, but also with big corporations — too often, I see consultants talking to them and starting by telling: “You are doing it wrong!” Well, they got to where they are, didn’t they? It doesn’t mean that they don’t need help, but you can make them see that, you don’t have to dismiss what they have achieved. I see myself as the person that helps them get to the next level and build on top of what they have already done. Sometimes it takes some bruising to get there, but there is always massive respect for their achievements.

These people are very good professionals. It’s not that they don’t see or can’t see the vision. It’s that the need to connect the dots in detail allows for the emergence of a strategic vision of the organization. Now, here is where the real “coaching” kicks in. When such a picture emerges, many founders or executives tend to shy away from it. They have a hard time believing that they might be onto something groundbreaking or actually winning in their respective markets.

This is especially true for many scaleup companies. They’ve been fighting, first for market fit, and later on for market share, that they freeze at the possibility that they might be doing a fantastic job. Part of my role is precisely to break through their impostor syndrome and encourage them to be bolder, to believe in themselves, to trust the data.

How do you promote your services?

Well, it would be very hard for me to do cold calling. I wouldn’t be able to say: “It’s not just about pitching, you are going to see the future of your company!” — so I stopped even trying to market that. My best marketing tool is word of mouth from my clients, or even from people that see me perform on stage. But even then, people call for help with a specific milestone, like raising a round. It’s only through the process that they see that there’s way more to it. They begin to understand other parts about themselves that either enhance their capacity to raise more funds, or even take them to the next level like an acquisition or the development of a major breakthrough.

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What do you end up actually working on with founders?

Going higher up the chain, the pitch becomes a very powerful tool not just for fundraising, but also for thinking about your company strategically. It’s a place where founders can reach clarity about their strategy and what really matters — questions they don’t have time for on a day-to-day basis. They allocate time to it because they think it will help with fundraising, and then they find out that it helps them understand their company.

So typically, they will call me because they are raising a Series B round, or a very large A round. They realize that to unlock the next milestone, they need to fine-tune what they say. The game is different; it’s not about market fit anymore, or just about gaining market share, and what worked for them just no longer works — especially if they were semi-bootstrapped up to that point. They need to talk to someone who understands them and can help them prepare for the future, for instance by researching certain pitfalls or trends. I’m not just the guy that “pitches” but the guy that’s going to provide you with ammo to help you build a compelling case for your audience, whatever it is. The pitch is just an excuse!

“The thing is, scaleups and growth-stage startups have a choice in how they market themselves; so they need to be aware of ethical concerns that may arise sooner than later.”

What’s your take on comparing your startup to another one when pitching; for instance, calling yourself the “Uber for X”?

Analogies are very powerful. The major challenge when you are pitching any company, even a late-stage one, is that people have a tendency to put you in a box. So you have two options: either you let them do it, or you provide the tools to put you in a box. That’s where analogies work really well.

But then, who do you compare yourself to? It’s a challenge, because two elements are becoming increasingly important: capturing the right trends of the moment, and the ethics of how you do what you do. You want to control which box they place you, ideally one that’s trendy but at the same time one that doesn’t position you in apparently direct competition with someone you don’t want to be associated with.

Why do startups need to be careful when communicating?

Over the last few years, we have seen how startups are no longer seen as innocent by society; they no longer have “carte blanche,” and society is becoming a lot more sensitive. There’s a polarization issue around many topics, and we are increasingly going to see a clash between society and startups. It is even going to increase post-COVID, with tensions around automation versus jobs. And the thing is, scaleups and growth-stage startups have a choice in how they market themselves; so they need to be aware of ethical concerns that may arise sooner than later.

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Society is going to ask you for responsibility. What’s happening with big brands is trickling down, and scaleups are hitting that threshold sooner. Typically, it catches them unprepared, because they reach that stage only knowing local feelings about what they do, and suddenly getting national or regional blowback. Or they expand internationally with local operations led by really young people with no experience in dealing with politics, who suddenly face strong local blowback.

All of this has a lot to do with pitching, because it’s not about product anymore. So for instance, it’s about convincing public authorities at different levels to let you operate, when their incentives are very different from investors. It’s B2G2C — business to government to consumer. And we are seeing more and more startups, with regulation as a factor in their operations.

How can you talk to public authorities, customers and investors in a unified pitch?

The major pitch needs to bring all elements together. It needs to be clear on what you do, and hit the right notes on ethical concerns. It’s important both for regulators and for fundraising; because from the investors’ perspective, it also reduces uncertainty around your business. As a scaleup, your ability to scale is a concern, so it helps to show that you are thinking and planning around societal impact.

I have to say that an increasing amount of investors do genuinely care about this. It may be because they have been burned, for instance from seeing regulatory blowback firsthand, or just because they are growing conscious. There are still some investors that have the “Uber mindset” and only care about muscle — grow first, and only then, deal with regulators — but more and more, VCs are aware that this might not fly, because society is changing. The pandemic is just highlighting this even more.

What about startups? Do they also care more about their societal impact?

I think it’s a pendulum, and the current generation is a child of the previous regulatory blowback. Crypto might still be on the other side, but increasingly, startups are aware that there are societal implications they will have to deal with. I also try to bring that message across when I prepare my clients to pitch — and warn that it sometimes happens very quickly: We’ve seen how one prohibition in one place can spread like wildfire. So you need to regulate your initial message and also be prepared to adapt quickly.

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With open banking on the horizon, the fintech-SME love story is just beginning

Published July 16, 2021

Lee Li
Contributor

Lee Li is a project manager and B2B copywriter with a decade of experience in the Chinese fintech startup space as a PM for TaoBao, MeitTuan and DouYin (now TikTok).

The fintech sector has been hugely successful (and hugely profitable) for much of the last decade, and even more so during the pandemic. But it might come as a surprise to learn that many in the industry believe that the story is just beginning and the sector is poised to achieve much more, with fintech’s next decade expected to be radically different from the last 10 years.

Long before the pandemic, the way in which banks were regulated was changing. Initiatives like Open Banking and the Revised Payment Services Directive (PSD2) were being proposed as a way to promote competition in the banking industry — allowing smaller challenger firms to break into a market that has long been dominated by corporate titans.

Now that these initiatives are in place, however, we’re seeing that their effect goes way beyond opening up a gap for challenger banks. Since open banking requires that banks make valuable data available via APIs, it is leading to a revolution in the way that small and mid-size enterprises (SMEs) are funded — one in which data, and not hard capital, is the most important factor driving fintech success.

Open banking and data freedom

In order to understand the changes that are sweeping fintech and reconfiguring the way that the industry works with small businesses, it’s important to understand open banking. This is a concept that has really taken hold among governmental and supranational banking regulators over the past decade, and we are now beginning to see its impact across the banking sector.

Allowing third parties access to the data held at banks will allow the true financial position of SMEs to be assessed, many for the first time.

At its most fundamental level, open banking refers to the process of using APIs to open up consumers’ financial data to third parties. This allows these third parties to design, build and distribute their own financial products. The utility (and, ultimately, the profitability) of these products doesn’t rely on them holding huge amounts of capital — rather, it is the data they harvest and contain that endows them with value.

Open-banking models raise a number of challenges. One is that the banking industry will need to develop much more rigorous systems to continually seek consumer consent for data to be shared in this way. Though the early years of fintech have taught us that consumers are pretty relaxed when it comes to giving up their data — with some studies indicating that almost 60% of Americans choose fintech over privacy — the type and volume shared through open-banking frameworks is much more extensive than the products we have seen up until now.

Despite these concerns, the push toward open banking is progressing around the world. In Europe, the PSD2 (the Payment Services Directive) requires large banks to share financial information with third parties, and in Asia services like Alipay and WeChat in China, and Tez and PayTM in India are already altering the financial services market. The extra capabilities available through these services are already leading to calls for the U.S. banking system to embrace open banking to the same degree.

Serving SMEs

If the U.S. banking industry can be convinced of the utility of open banking, or if it is forced to do so via legislation, several groups are likely to benefit:

Consumers will be offered novel banking and investment products based on far more detailed data analysis than exists at present.
The fintech companies who design and build these products will also see the use of their products increase, and their profit margins alongside this.
Arguably, even banks will benefit, because even in the most open models it is banks who still act as the gatekeepers, deciding which third parties have access to consumer data, and what they need to do to access.

By far the biggest beneficiary of open banking, however, will be SMEs. This is not necessarily because open-banking frameworks offer specific new functionality that will be useful to small and medium-sized businesses. Instead, it is a reflection of the fact that SMEs have historically been so poorly served by traditional banks.

SMEs are underserved in a number of ways. Traditional banks have an extremely limited ability to view the aggregate financial position of an SME that holds capital across multiple institutions and in multiple instruments, which makes securing finance very difficult.

In addition, SMEs often have to deal with dated and time-consuming manual interfaces to upload data to their bank. And (perhaps worst of all) the B2B payment systems in use at most banks provide very limited feedback to the businesses that use them — a lack of information that can cost businesses dearly.

New capabilities

Given these deficiencies, it’s not surprising that fintech startups are keen to lend to small businesses, and that SMEs are actively looking for novel banking products and services. There have, of course, already been some success stories in this space, and the kinds of banking systems available to SMEs today (especially in Europe) are leagues ahead of the services available even 10 years ago.

However, open banking promises to accelerate this transformation and dramatically improve the financial services available to the average SME. It will do this in several ways. Allowing third parties access to the data held at banks will allow the true financial position of SMEs to be assessed, many for the first time.

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Via APIs, fintech companies will be able to access information on different types of accounts, insurance, card accounts and leases, and consolidate data from multiple countries into one overall picture.

This, in turn, will have major effects on the way that credit-worthiness is assessed for SMEs. At the moment, there is a funding gap facing many SMEs, largely because banks have been hesitant to move away from the “balance sheet” model of assessing credit risk. By using real-time analytics on an SME’s current business activities, banks will be able to more accurately assess this risk and lend to more businesses.

In fact, this is already happening in countries where open banking is well advanced – in the U.K., Lloyds’ Business ToolBox offers unlimited credit checks on companies and directors in addition to account transaction data.

Open banking will also allow peer comparison analytics far ahead of what we have seen until now. APIs can be used to provide SMEs real-time feedback on how they are performing within their market sector. Again, this ability is already available in the U.K., with Barclays’ SmartBusiness Dashboard offering marketing effectiveness tools as part of a customizable business dashboard.

These capabilities will be so useful to SMEs that they are likely to drive the popularity of any fintech product that offers them. For SMEs, this value will lie mainly in intelligent data-analytics-based insights, recommendations and automatic prompts that can be built on top of account aggregation.

Then, additional insights generated from these same monitoring tools could enable banks and alternative lenders to be more proactive with their lending — offering preapproved lines of credit, in a timely manner, to SMEs that would have previously found it difficult to access funding.

The bottom line

Crucially for the fintech sector, it’s almost a certainty that SMEs will be willing to pay fees for data-analytics-based value-added services that help them grow. This is why some startups in this space are already attracting huge levels of funding, and why open banking is at the heart of the relationship between tech and the economy.

So if fintech has had a good year, this is likely to be just the start of the story. Backed by open-banking initiatives, the sector is now at the forefront of a banking revolution that will finally give SMEs the level of service they deserve and unleash their true potential across the economy at large.