All posts in “Craft Ventures”

With a $3.5 million haul, Dray Alliance joins a booming logistics startup scene in LA

With an angle on a long-neglected part of the shipping industry — the short-haul movement of cargo from docks to logistics centers — Dray Alliance is joining a growing startup scene for logistics businesses based in Los Angeles.

With some of the nation’s largest ports in Los Angeles and Long Beach, the Southern California region is now fertile ground for businesses hoping to tackle what amounts to a trillion-dollar industry.

Companies like Shippabo, a provider of shipping tracking and logistics for international small cargo transport, and NEXT Trucking, which handles long-haul and short-haul trucking, have both launched in the Los Angeles area to tackle different areas of the shipping industry. And now Dray Alliance is joining them, trying to take a piece of the market transporting cargo from the docks to logistics centers.

The company has raised $3.5 million in seed funding from David Sacks’ Craft Ventures and has already signed contracts with the toy company Mattel and CMA CGM Group.

“Drayage is currently the most neglected area of the transit supply chain. The nuances of drayage create distinct challenges and opportunities that are quite different from other trucking segments such as FTL and LTL,” said Jeff Fluhr, general partner at Craft Ventures, in a statement. “Focus on drayage is what sets Dray Alliance apart. That focus, combined with deep industry expertise, technical skills, and entrepreneurial grit is why we believe this team will emerge as the leader in the sector.”

Founded by middle school friends Steve Wen, Hank Cui and Jason Yu, Dray Alliance leverages years of work that Yu and Wen had done as founders of their own trucking company. Cui was brought on board to start developing the technology product — which Wen says is exactly like an Uber for trucking.

Wen says the company has thousands of truckers who have signed up for the service — most of whom are now on a wait list as the company builds up supply before opening the floodgates on the demand side.

For every successful shipment, Dray Alliance takes 15 percent to 30 percent of the total cost of the shipment, which Wen acknowledged was a bit higher than the industry norm. The reason for that, he said, was because of the massive savings that shippers can realize.

Fines for late pickup on cargo can range from $100 to $1,000 per day. Working with Mattel, for instance, Dray Alliance was able to save the toy manufacturer nearly a quarter of a million dollars through its service.

“The drayage trucking industry still depends on emails and spreadsheets for its daily operations — leading to massive inefficiencies that result in lower earnings for truckers, less predictability in delivery times and 20-50 pefrcent increases in the drayage trucking cost of freight deliveries for shippers. This is not in the best interest of anyone involved,” said Steve Wen, CEO of Dray Alliance. “Dray Alliance wants to bring Uber-like airport pickup efficiency to the drayage industry by providing a seamless mobile experience, more predictability in delivery time and better economics for shippers, carriers and truckers.”

E-scooter startup Bird is raising another $300M

Electric scooter startup Bird is said to be nearing a deal to extend its Series C funding with an additional $300 million led by cross-over investor Fidelity, according to an Axios report. Bird declined to comment.

Fidelity has not previously invested in Bird and is reportedly doing so at a flat pre-money valuation of $2 billion, which Bird earned with a $300 million Sequoia-led financing in June. Santa Monica-based Bird has raised more than $400 million in venture capital funding to date from investors, including Accel, CRV, Greycroft, Index Ventures, Upfront Ventures, Craft Ventures and Tusk Ventures.

The investment comes at a time when many investors are losing faith in scooter startups’ claims to be the solution to the problem of last-mile transportation, as companies in the space display poor unit economics, faulty batteries and a general air of undependability. Lime, Bird’s biggest e-scooter competitor, has at least expanded its suite of micro-mobility offerings from bikes and scooters to LimePods, a line of shareable vehicles available in Seattle, to peak investor interest. San Francisco-based Lime has been seen pitching to investors in Silicon Valley recently, too, with reports indicating it’s looking for a $400 million investment at a $3 billion valuation — more than three times the valuation it garnered with a $335 million round in July.

Eaze co-founder Keith McCarty raises $5M for his new B2B cannabis startup

Keith McCarty couldn’t stay out of the booming weed business for long.

The co-founder and former chief executive officer of the well-funded marijuana delivery startup Eaze has launched WAYV, a B2B cannabis logistics and compliance platform that delivers inventory to cannabis retailers. Today, the company is announcing its first round of funding, a $5 million seed round led by David Sacks at Craft Ventures. The round represents the former PayPal executive’s first investment in the cannabis technology sector.

Other investors in the round declined to be named.

McCarty and Sacks previously worked together at Yammer, a private social networking tool used by businesses created by Sacks in 2008. The company sold to Microsoft in 2012 for $1.2 billion, giving McCarty and several others enough cash to experiment. For McCarty, that meant exploring the hazy and uncharted territory that was marijuana delivery.

McCarty, however, mysteriously left Eaze right as the company gained significant traction. Neither the company nor McCarty ever explained the shake-up; McCarty was quickly replaced by another former Yammer employee, Jim Patterson, the founder and former CEO of Zinc. In a conversation with TechCrunch, McCarty didn’t clarify the nature of his exit.

He did say that the idea for WAYV came from observing the difficulties of cannabis supply chain logistics during his time at Eaze .

Headquartered in Los Angeles, WAYV connects licensed cannabis companies to licensed brands and provides next-day delivery of cannabis products — it’s essentially Eaze for the cannabis enterprise not the average cannabis consumer. The startup was founded last year and has so far delivered to retailers in California only.

As a second-time cannabis founder, McCarty said building WAYV has been a lot different than launching Eaze, which was one of the first big-name marijuana tech companies.

“Back in 2014, [Eaze was] one of the first to raise venture capital, it was kind of unheard of,” McCarty told TechCrunch. “Now, the majority of Americans favor legalization. For medical, it’s 90 percent and for adult recreational, it’s more than 60 percent. As we Americans continue to favor legalization and that stigma is removed, not just medical but also adult use, it’s going to draw attention and also investment.”

Venture capital investment in cannabis startups has continued to climb, most notably after the state of California voted to legalize recreational marijuana use in 2016. According to Crunchbase, $700 million has been funneled into the space since 2014.

“The industry is moving at such a fast cadence, it’s really exciting to be a part of,” McCarty added.

This former Uber (and Lyft) exec just raised $15 million for his controversial e-scooter startup: Bird

Travis VanderZanden. If you’ve been following the fast-changing transportation industry, it’s a name that may sound familiar. Until September 2016, VanderZanden was VP of growth at Uber and before that, COO of its fierce rival Lyft, which had acquired his on-demand car wash company, Cherry, in 2013.

It was a dramatic few years for VanderZanden, once he joined the ride-hailing race. Not only were his employers experiencing growing pains, but Lyft sued him for allegedly breaking a confidentiality agreement when he joined Uber, with the two sides later settling for undisclosed terms. Little wonder that after leaving Uber, VanderZanden wanted to take some time off to decompress with his wife and two daughters.

That was the idea, anyway. The thing is, VanderZanden, whose mother drove a public bus for 30 years, says he couldn’t stop thinking about transportation. Within six months, he was testing out different short-range electric vehicles. By last summer, he’d quietly launched his newest company, Bird.

Now, VanderZanden’s dockless electric scooter company is the talk of Santa Monica, Ca., where it’s based. That’s largely because over the last six months, Bird has plunked roughly 1,000 “Birds” on the streets of the city — and people are riding them: 50,000 people so far have taken 250,000 rides, he says.

But Bird, which just moved into Westwood and is easing its way into San Diego, also has local officials in all three places somewhat flummoxed — and not entirely delighted. A Washington Post piece published earlier this week characterized Santa Monica Mayor Ted Winterer as highly irked that VanderZanden reached out to him — via a LinkedIn message — after putting Bird’s scooters on the streets.

The message reportedly offered to introduce Winterer to Bird’s “exciting new mobility strategy for Santa Monica.”  Winterer says he responded: “If you’re talking about those scooters that are out there already, there are some legal issues we have to discuss.”

Legal issues and other complications, as it turns out. For example, according to that same post story, local police officers issued 97 citations involving Bird scooters in the first six weeks of this year; the city’s fire department has responded to eight related accidents, some including minors and adults; and according to a senior marketing and communications manager for downtown Santa Monica, there have been been numerous complaints of the scooters being left in front of doorways, in the middle of driveways and on wheelchair ramps.

Despite outward appearances, VanderZanden insists he hasn’t stolen from the playbook of his last employer, which under the leadership of longtime CEO Travis Kalanick taught employees to ask forgiveness — not permission.

He paints a rosier picture of that exchange with Winterer, for example, telling TechCrunch that the “first week we put Birds out in the wild [in early September], I emailed the mayor directly about how excited we were and the impact we thought we could have.”

Bird employees have since met with Santa Monica’s director of transportation and mobility and had “a series of really productive conversations,” says VanderZanden, noting that with “any new innovation, you have to work with the city to figure out how you best fit into the regulatory model.”

In Bird’s case, he says there isn’t an existing permit scheme currently, though the city plainly disagrees. It filed a criminal complaint last month, citing Bird’s failure to obtain the same kind of permit it asks food vendors to secure; the two sides meet in court later this month.

Naturally, VanderZanden thinks the focus instead should be on the benefits of Bird’s scooters, which can be used by anyone over the age of 18 who has a valid driver’s license, who agrees to wear a helmet,  and who will stay off the sidewalk (not that Bird can enforce the last two).

For starters, they are cheap to use, he notes. In addition to a driver’s license, new customers need only plug a credit card number into the app. After that, it’s $1 per ride, plus 15 cents per minute, and riders can go as far as the scooter’s electric charge will take them at a top speed of 15 miles per hour. VanderZanden says some have made it to LAX. Others have ridden from Santa Monica into downtown L.A.

VanderZanden says that Bird is willing to share some of the data it’s collecting with cities. “We really want to work with cities and go in early with figure out how Bird best fits in. We realize we’re just one part of the transportation puzzle.”

VanderZanden, who says Bird ships riders free helmets when they request one from the app, also says it does its best to educate riders, including on where to park Birds (near bike racks, ideally), where to ride them (bike lanes), and via stickers that it plasters on the floorboards of the scooters that list safety regulations.

He stresses, too, that Bird employees begin collecting the scooters at 8 p.m. every night, clearing all of them off the street and only returning them to the fronts of coffee shops and other local businesses — at their own request, he says — by 6 a.m. the next day.

As for what happens if someone when injured, we gather that Bird pays if one of its scooters breaks on someone but not if a rider is being reckless. VanderZanden declines to get into specifics, offering instead that, “Every mode of transportation is dangerous . . . but you can’t protect against people not obeying traffic laws.”

At any rate, investors don’t mind at all that Bird is still figuring things out. It just closed on $15 million in Series A funding, including from Tusk Ventures, Valor, Lead Edge Capital, and Goldcrest Capital.

Somewhat unsurprisingly, the round was led by Craft Ventures, the new venture fund cofounded by serial entrepreneur David Sacks. Before Cherry (and Lyft and Uber), VanderZanden was VP of revenue at the enterprise software company Yammer, where Sacks was cofounder and CEO. In fact, when VanderZanden left to start Cherry, Sacks wrote him a check for $500,000 — the biggest check Sacks had written to a single company as an angel investor at that point.

Indeed, if the company starts looking for another round of funding very soon, it will be even less surprising. While VanderZanden calls Bird “first to do dockless electric scooters,” competition is springing up around it — fast.

Last week, Spin, a dockless bike-sharing company that brought its wares to South San Francisco last August, announced that it’s working to launch stationless electric-scooter sharing. Two days later, LimeBike, a Spin competitor, similarly revealed plans to build its own dockless electric scooters. Bird’s own scooters are made via an exclusive manufacturing agreement with an unnamed company.

It’s the kind of battle that VanderZanden has seen before and seems prepared to fight — though he takes a far softer tone publicly than the famously combative Kalanick.

“People are taking notice of how quickly Bird is growing and they want to pivot in and clone us,” says VanderZanden. Yes, that could eventually create clutter for cities, he acknowledges. Still, it’s better than all the greenhouse gases being generated by cars and trucks.

“Preventing car ownership is the goal of all these companies,” he says. ” I think if all of us are successful, that’s fine.”

David Sacks’s new startup wants to make it safer for old-guard industries to jump into crypto


SEC chairman Jay Clayton made clear today that his agency, along with the Commodity Futures Trading Commission, remains acutely concerned about initial coin offerings and cryptocurrency trades. In fact, toward that end, they’d like more expansive powers when it comes to protecting customers on cryptocurrency exchanges from fraud.

“When you have an unregulated exchange, the ability to manipulate prices goes up significantly,”  Clayton told the Senate Banking Committee earlier today.

Clayton’s testimony is pretty convenient timing for Harbor, a new blockchain technology company that just raised $10 million from an interesting group of investors, including Chicago-based Valor Equity Partners; the real estate tech-focused venture firm Fifth Wall Ventures; the Dubai venture firm Vy Capital; and Craft Ventures, a new venture fund created by serial entrepreneur David Sacks — who also helped incubate Harbor.

Broadly speaking, what Harbor claims to do is protect issuers and investors by making it easier for them to operate in accordance with securities, tax and other regulations when issuing and trading crypto-securities.

But Harbor isn’t looking to cater to the types of decentralized file storage startups we’ve seen raise money through token sales. It’s chasing what many see as the next wave of issuers and investors — people  from old-guard institutions like real estate and venture capital and private equity who want in on the game.

Harbor might work, for example, with a company that owns and operates commercial properties and that regularly issues real estate securities like bonds or stock in a building, but which also needs to deal with complex legal stuff, like tax withholdings and minimum investor requirements.

How it all works is a bit complicated, but according to Harbor co-founder and chief product officer Arisa Amano, Harbor’s first project is what it’s calling the Regulated Token (or “R-Token”) Standard, an open-source project that addresses the compliance problem for secondary trading.

It’s built on the token standard ERC-20, which is widely supported by the existing Ethereum ecosystem. And the R-Token Standard ostensibly provides an interface that embeds compliance at the token level and can be implemented in a way that ensures that specified requirements like investor caps and holding periods are met before a trade is approved. (When a trade is requested, the R-Token checks with an on-chain regulator service to make sure that the investor has been verified and the trade meets all the legal requirements.) The token will throw off an error message otherwise and won’t transfer.

Amano says the R-Token Standard can enforce compliance across any trading platform that supports ERC-20 tokens. She adds that it enables tokens to trade everywhere, in centralized and decentralized exchanges, all over the world. For good measure, Amano reminds that “as the number of tokens and exchanges increase, the ability to apply compliance across trading platforms and jurisdictions will become increasingly necessary.”

It’s hard to dispute that last observation. Whether Harbor is the platform to which its target customers turn is another question.

It’s certainly easy to see the appeal of its founding team, which is very much threaded together by Sacks. Amano and co-founder Bob Remeika worked for Sacks at his earlier company, Yammer. They then joined Zenefits as VPs during Sacks’s short stint as CEO of the formerly high-flying HR software company. When Sacks decided to leave Zenefits and hand off the reins to someone else, they both hightailed it out the door behind him.

While Amano has taken the title of chief product officer, Remeika is the company’s chief technology officer. Meanwhile, Sacks’s title is co-founder and chairman. What the nine-person company still lacks, interestingly, is a CEO. One guesses that with its newly raised round  and the founding team’s pedigree, that won’t be the situation for long.