All posts in “Startups”

Stitch Fix has filed for an IPO, and the numbers look good

Stitch Fix has filed to go public, finally revealing the financial guts of the startup which will be a test of modern e-commerce businesses that are looking to hit the market — and the numbers look pretty great!

Let’s start off really quick with profits: aside from the last two quarters, Stitch Fix posted a six-quarter streak of positive net income. We talk a lot about companies that are planning to go public that show pretty consistent (or even increasing) losses, but Stitch Fix looks like a company that has actually managed to build a healthy business. The company finally lost money in the last two quarters, but even then, its losses decreased quarter-over-quarter — with the company only losing around $4.5 million in the second quarter this year.

Let’s get to the chart!

(A quick note on the above: Stitch Fix considered its fiscal 2017 year beginning in July of 2016, while the above chart is labeled based on dates, with Q2 2017 meaning the quarter ended July this year.)

So, as we can see, profits! Stitch Fix is a modern spin on e-commerce where the company gathers your interests and information about your personal style, and then delivers a bunch of options to your door. You can pick the articles you want to buy, and the ones you want to return, and in theory, it’s a product that helps take away some of the anxiety around choices when it comes to online shopping. Instead of clicking around on Amazon, Stitch Fix tries to understand what you like and stick a bunch of options in front of you, as well as make it really easy to buy.

TechCrunch reported in July that the company had filed confidentially to go public. Stitch Fix is part of a wave of try-before-you-buy startups like Le Tote, MM.LaFleur, as well as others. So, naturally, it’s an area that’s going to be competitive — the most obvious one being Amazon. The company is experimenting with its recent launch of Prime Wardrobe, and the company is well known for bulldozing into segments where it sees an opportunity. Stitch Fix, as we can see, exposed a business that has a run rate of nearly $1 billion counting the year between July 30, 2016, and July 30, 2017.

Founded out of CEO Katrina Lake’s apartment in Massachusetts in 2011, Stitch Fix’s financials clearly expose a massive business that continues to scale methodically while keeping its burn under control. The last financing round in 2014 valued the company at $309.31 million, according to data from PitchBook, and it was widely pegged to be a big consumer IPO this year.

This IPO is also going to be another pretty big win for Benchmark Capital and Baseline Ventures, each of which have a more than 25 percent stake in the company. Lightspeed Venture Partners has an 11.8 percent stake, while Lake has a 16.6 percent ownership stake in the company. What’s very much worth noting, however, is that Stitch Fix in its entire lifetime has only raised $42.5 million in venture financing.

Here’s the full cap table:

We won’t dig into all of the risk factors, but Stitch Fix is in kind of a unique position as both an e-commerce startup and a brand built around fashion. As such, it faces a pretty unique set of challenges, one of which is keeping up with modern fashion trends. Here’s one of the risk factors below:

Data is the name of the game, as Intel Capital puts $60M in 15 startups, $566M in 2017 overall

Intel Capital, the investment arm of the processor giant, is today announcing its latest tranche of investments, a total of nearly $60 million going in to 15 startups that are working on solving different problems in the bigger area of big data (with a full rundown below). The investments come on the back of a big year for the group: In 2017 so far, Intel says that it’s invested $566 million in startups in its portfolio.

The focus on big data in this latest group of startups comes out of a new turn for Intel and how it’s been making strategic investments in recent times.

Intel Capital is one of the bigger names when it comes corporate tech investing. In total, it has invested $12.2 billion in 1,500 companies since 1991. But the operation went through a rocky patch in 2016 — where its parent considered selling its portfolio for $1 billion in 2016, yet instead opted instead to restructure.

Part of the outcome of that has been a lot more strategic focus for Intel Capital, where the investments are made to fit more closely with how Intel would like to position its wider business. And as Intel looks for new areas of business like connected cars and healthcare where it can carve out a position for its chipmaking operations, data is one of the pervasive themes.

“The world is undergoing a data explosion,” said Wendell Brooks, Intel SVP and president of Intel Capital, in a statement. “By 2020, every autonomous vehicle on the road will create 4 TB of data per day. A million self-driving cars will create the same amount of data every day as 3 billion people. As Intel transitions to a data company, Intel Capital is actively investing in startups across the technology spectrum that can help expand the data ecosystem and pathfind important new technologies,” Brooks said. (If you’re wondering about “pathfind” — this might help).

Another outcome has been a push for more diversity: Intel says that now 10 percent of its portfolio is led by women and other underrepresented groups in the tech industry. The cohort today meanwhile hails from the United States, Canada, China, Israel and Japan.

There have been other recent announcements that point to Intel’s more focused investing approach. For example, in September the company announced that it had invested over $1 billion in AI companies.

Intel’s making a bigger presentation about the investments in its CEO Showcase today. You can watch that event here. Here’s a rundown of the companies, and we have reached out to Intel to get an idea of the full size of the round for each, although generally Intel doesn’t break out its own individual investments. We’ll update as and when we learn more:

Amenity Analytics (New York, U.S.): text analytics platform to identify actionable signals from unstructured data using machine learning, sentiment analysis and predictive analytics.

Bigstream (Mountain View, California, U.S.): “hyper-acceleration technology” for performance gains on Apache Spark using hardware and software accelerators. Uses advanced compiler technology and transparent support for FPGAs. “Unlike other approaches, Bigstream requires no application code changes or special APIs.”

LeapMind (Tokyo, Japan): focused on improving the accuracy of neural network models and is researching and developing innovative algorithms to reduce the computational complexity of deep learning and original chip architectures for use in small computing environments.

Synthego (Redwood City, California, U.S.): genome engineering solutions. Products include software and synthetic RNA kits designed for CRISPR genome editing and research.  

AdHawk Microsystems (Kitchener, Ontario, Canada): focuses on human-computer interaction using a camera-free eye tracking system, aimed to be used in AR/VR experiences.

Trace (Los Angeles, U.S.): sports AI startup currently focused on soccer, mountain sports and water sports using sensors, video and AI to make performance insights and video highlights.

Bossa Nova Robotics (San Francisco, U.S.): autonomous service robots for the global retail industry.

EchoPixel (Mountain View, California, U.S.): 3D medical visualization software that allows medical professionals to interact with organs and tissues in a 3D space. Its product True 3D is in use at UC San Francisco, Stanford, Cleveland Clinic, Lahey Clinic and Hershey Medical Center.

Horizon Robotics (Beijing, China): integrated and open embedded AI solutions, designing “robot brains” for 1,000 categories of devices.

Reniac (Mountain View, California, U.S.): IO bottleneck solutions. Its Distributed Data Engine “is architected to benefit databases, file systems, networking and storage solutions while freeing more CPU resources to creating business value.”

TileDB Inc. (Cambridge, Massachusetts, U.S.): manages the TileDB project created at the Intel Science and Technology Center for Big Data, a collaboration between Intel Labs and MIT, focused on “managing massive, multidimensional array data that frequently arise from scientific applications.”

Alcide (Tel Aviv, Israel): network security platform for any combination of container, VM and bare metal data centers operated by multiple orchestration systems, aimed at cyberattacks. Startup is in stealth mode.

Eclypsium (Portland, Oregon, U.S.): technology for organizations to defend their systems against firmware, hardware and supply chain attacks, offering visibility for monitoring systems in their infrastructure for firmware threats and supply chain compromise.

Intezer (Tel Aviv, Israel): cybersecurity solutions for biological immune system concepts, applying a “DNA approach to code.” The world’s first “Code Genome Database” that maps “billions of small fragments of malicious and trusted software.”

Synack (Redwood City, California, U.S.): scalable, continuous, “hacker-powered” testing platform for uncovering security vulnerabilities. It’s hitting a lot of other buzzwords…. Its “on-demand crowdsourced” security platform offers practical insights, analytics and actionable data.

The first episode of ‘Bubbleproof’ sets the stage for chaos on Sand Hill Road

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Bubbleproof is a new mockumentary series following the misadventures of founder Michael Fertik and venture capitalist David Cowan as they launch a new fund.

But I’m getting ahead of myself. In this first episode, Fertik (who co-wrote the series with Cowan and director Martin Sweeney) is dealing with newfound celebrity as the visionary behind “femto management,” and as one of the few people to predict the success of Donald Trump. However, Fertik is increasingly dissatisfied with his current life — to the point where he wants to blow it all up.

“On Wings of Disruption” also features cameos from investors like David Hornik, Ann Miura-Ko and Jason Pressman, who get a chance to show off their dramatic/comedic chops.

Watch the first episode of Bubbleproof above. And if you like it, good news: We’ve already published the next three episodes.

Two Google alums just raised $60M to rethink documents

When you open a Google doc or a spreadsheet, you get a blank spreadsheet and some documentation as to what you can do with it — and that’s pretty much where we’ve been for quite some time.

But two MIT graduates, coming in from Microsoft and Google, have built up a team that for the past three years has quietly been trying to rethink how we approach documents. CEO Shishir Mehrotra spent his life in documents, and now he and co-founder Alex DeNeui have raised $60 million for a startup called Coda that’s trying to start the concept of an online document or spreadsheet from scratch. Greylock Partners, Khosla Ventures, and General Catalyst participated in the financing, with LinkedIn co-founder Reid Hoffman and General Catalyst’s Hemant Taneja joining the board of directors.

“We like to describe it as a new document that blends flexibility of documents, the power of spreadsheets, and the utility of applications into a single new canvas,” Mehrotra said. “It really started from an observation that we think that the world is full of all these different types of applications but most work gets done on documents and spreadsheets. Every team we looked at, you’d ask them what they use to run things they’d name off all these different applications. They have task trackers, CRM tools, inventory tools, but if you looked over their shoulders they’d spend all day in documents and spreadsheets.”

Starting with a blank slate, Coda aims to begin with the familiar look and feel of a document. From there, it kind of spins off in a different direction to allow a lot of flexible collaboration and UI elements and new ways to organize data that you might find across different platforms like spreadsheets or documents. Mehrotra said the team built up a new kind of programming language for it as a refinement of the tools you’d find in Google Sheets or Office 365. The hope is that Coda can be flexible enough to stitch together the problems that span all those kinds of products into a single flow — sheets, docs, and other kinds of places where people collaborate and store information.

Part of the origin story can actually be traced back to one of his daughters looking over Mehrotra shoulder while he worked on a spreadsheet, Mehrotra said. Explaining a spreadsheet to a 6-year-old, it turns out, is pretty difficult and he says he had to come up with a convoluted example to describe how to use it rather than starting from the primitives. Fast forward to launching Coda, he says they’ve rethought it in such a way that his daughter can figure it out fast enough to start planning a competition on it.

“If you step back and think about it, I can’t quite explain what [a spreadsheet] is, I have to find a contrived use case,” Mehrotra said. “What we’re trying to do with Coda is building a new set of primitives. Some we built to be intentionally familiar. We start with a frame that feels like a document, but the set of primitives are really built to be building blocks. They’re reimagined in a way that we think it should be done in the first place. If we started again, pretended we didn’t know how those work, what would we come up with?”

Taneja has known Mehrotra and DeNeui for some time since their days from college when he recalled that Mehrotra was already thinking about cloud infrastructure before cloud infrastructure was a thing.

“If you were to think first principles today as to what a modern surface, doing work should be, that’s what they’ve tried to conceive,” Taneja said. “It’s a very complicated engineering problem, Shashir [Mehrotra] and Alex [DeNeui] have built one of the best engineering teams that can be built at the earliest stages. [Mehrotra’s] trend is to make really complex problems and turn them into simple products.”

Part of the challenge might be getting people off their spreadsheets in the first place. But Mehrotra said that Coda generally works side-by-side with them. The goal of Coda is to satisfy the use cases that span across multiple applications and to discover new kinds of use cases that would require something flexible like Coda.

That kind of “we’ll play nice” argument probably works for now, but as more and more teams adopt it, we’ll see if people start seeing it as a complete replacement or if it’ll be an “over my dead body” situation in terms of getting people to drop their spreadsheets. At the end of the day, it’s normally the user base that figures out the killer use case for an app — which might be completely perpendicular from what the company originally anticipated.

Of course, there are a lot of attempts at rethinking how we view online documents. Dropbox Paper is probably one of the biggest and more radical attempts at trying to figure out how to approach the whole “blank slate on the internet.”Mehrotra argues that products out there still rely on the same “metaphors” that led to the construction of the original document services. Time will tell whether or not Coda proves out to be as flexible, or more, to satisfy the needs for a wide array of teams that all have different demands.

PayKey raises $10M for its millennial-targeted “social banking” smartphone keyboard

PayKey’s team

Banks face an increasingly crowded battlefield in the fight for millennial customers. Not only do they have to compete with services like Venmo, but many messaging apps are adding their own peer-to-peer payment services. Tel Aviv-based startup PayKey thinks it has the solution with a smartphone keyboard that lets bank customers access financial services without having to log onto a banking app. Today PayKey announced that it has raised a $10 million Series B led by MizMaa, with participation from other investors including SBI Group, Siam Commercial Bank’s financial tech subsidiary Digital Ventures, SixThirty and FinTech71.

This brings PayKey’s total funding raised to $16 million. PayKey chief marketing officer Guy Talmi says the company started as a social blockchain app, but after seeing the problems banks faced in engaging younger customers, the founders “had a lightbulb moment about how we can solve this problem for financial institutions by utilizing one of the most valuable and most used pieces of real-estate on the smartphone-the keyboard.”

After banks integrate PayKey’s white-label smartphone keyboard API (which keeps each institution’s own security and authentication systems) with their mobile apps, their customers can install it onto their smartphones and use it to send payments, check their balances and access other services from inside any app. The keyboards have a key with the bank’s logo that opens a menu of services when it’s tapped.

The idea is that by moving an extra layer of friction and not forcing customers to leave their favorite social media or messenger apps, PayKey can help financial institutions hold onto younger customers who are accustomed to the convenience of Venmo, Square Cash and Zelle and peer-to-peer payment services in messaging apps like Facebook Messenger and Snapchat.

“As these platforms develop and enhance their own financial services there will be barely any reasons left for users to use any other apps,” says Talmi. “We act as a bridge between the bank and the user’s most used apps, enabling banks to have their brand become a part of the social and messaging experience.”

PayKey has already signed commercial agreements with seven banks, including Westpac, UOB, Bank Leumi and an unnamed financial services provider that it says is one of the world’s biggest, which are now rolling out their versions of the keyboard. PayKey plans to double its customers over the next six months, with a focus on Asia, where many of its Series B investors are based. The startup also wants to start looking in other verticals, including telecom providers.

Featured Image: PayKey