All posts in “Fundings & Exits”

Childcare benefits startup Kinside launches with $4 million from investors including Initialized Capital

Childcare is one of the biggest expenses for American parents and it’s not just families who are taking a hit. Childcare issues cost the United States’ economy an estimated $4.4 billion in lost productivity each year and also impacts employee retention rates. Kinside wants to help with a platform that not only enables families to get the most out of their family care benefits, but also find the right providers for their kids. The startup announced the public launch of its platform today, along with $3 million in a new funding round led by Initialized Capital.

This brings Kinside’s total raised since it was founded 18 months ago to $4 million. Its other investors include Precursor Ventures, Kairos, Jane VC and Escondido Ventures.

Founded by Shadiah Sigala, Brittney Barrett and Abe Han, Kinside began its private beta with 10 clients while participating in Y Combinator last summer. Over the past year, it has signed up over a thousand employers, underscoring the demand for childcare benefits.

“Getting meetings with employers has not been the hard part,” Sigala, Kinside’s CEO, tells TechCrunch. “Any subject line that says ‘do you want childcare for your employees?’ immediately gets a response. We a hit a nerve there and when we talked with them, we found that the biggest pain they expressed was that their employees were having a hard time finding childcare.”

Kinside co-founders SShadiah Sigala, Brittney Barrett and Abe Han

Kinside co-founders SShadiah Sigala, Brittney Barrett and Abe Han

The U.S. is the only industrialized country without a national law that guarantees paid parental leave. Companies like Microsoft, Netflix and Deloitte offer strong family benefits in order to recruit and retain talent, but offering similar packages remains a challenge, especially for small- to medium-sized businesses. As a result, many employees, especially women, leave their jobs to care for their children, even if they had planned to continue working.

“The worst case for bigger, more mature companies is a delayed return to work, which has a real impact on the bottom line because of lost productivity, but the deeper pain is when we lose the women,” Sigala says. “It’s documented that 43% of women in the professional sector will leave the workforce within one to two years of having a baby.”

Other startups focused on early childhood care that have recently raised funding include Winnie, for finding providers, Wonderschool, which helps people start in-home daycares and preschools and London-based childcare platform Koru Kids.

Before Kinside, Sigala co-founded Honeybook, a business management platform for small businesses and freelancers. When she got pregnant, Sigala began developing the company’s family benefit policies and became familiar with the hurdles small companies face.

While in Y Combinator, Kinside focused on streamlining the process of using dependent care flexible spending accounts (FSA), or pre-tax benefits for caregiving costs, after its founders saw that the complicated claims process meant only a fraction of eligible parents get full use of the program. Kinside still helps parents with their accounts by partnering with FSA administrators. Now their app also includes a network of pre-screened early childcare providers ranging from home-based daycares to large preschools across the country.

The startup pre-negotiates reserved spots and discounted rates for its users and gives them access to a “concierge” made up of childcare professionals to answer questions. Parents can search for providers based on location, cost and childcare philosophy. Sigala says the startup’s team found that many childcare providers have a 20% to 30% vacancy rate, which Kinside addresses by helping them manage openings and find families who are willing to commit to a spot. In addition to its app, Kinside also plans to integrate into human resources systems.

Initialized was co-founded by Alexis Ohanian, also a founder of Reddit, and a vocal advocate of paid parental leave. One of the areas the firm focuses on is “family tech” and its portfolio also includes startups like the Mom Project, a job search platform for mothers returning to work.

In an email, Initialized partner Alda Leu Dennis said the firm invested in Kinside because “we have this fundamental problem of gender inequality which can be partially attributed to imbalances in the workplace and at home. We have a gender wage gap and domestic responsibilities, still, largely falling on the mother. By solving a problem that men and women have—access to affordable and high-quality childcare—we can improve this situation.”

Dennis added, “the business model innovation that Kinside brings to the table is to involve employers in the process of bringing peace of mind and stability to their employees’ home lives and in turn making their employees more productive.”

Sigala says Kinside sees itself as part of the benefits equity movement, including paid parental leave and, eventually universal childcare, for all working parents. The platform’s users are split equally between men and women, highlighting that the need for caregiving benefits cross gender lines and impact an entire household.

“It’s a complex issue. Our infrastructure and society is still designed for single breadwinner households and yet the economy means that for most households, being able to pay the bills depends on having two parents working,” she adds. “I see this as a movement. It’s the right time.”

Accel and Index back Tines, as the cybersecurity startup adds another $11M to its Series A

It was just a couple of months ago that Tines, the cybersecurity automation startup, raised $4.1 million in Series A funding led by Blossom Capital, and now the Dublin-based company is disclosing an $11 million extension to the round.

This additional Series A funding is led by venture capital firm Accel, with participation from Index Ventures and previous backer Blossom Capital. The extra cash will be used to continue developing its cybersecurity automation platform and for further expansion into the U.S. and Europe.

Founded in February 2018 by ex-eBay, PayPal and DocuSign security engineer Eoin Hinchy, and subsequently joined by former eBay and DocuSign colleague Thomas Kinsella, Tines automates many of the repetitive manual tasks faced by security analysts so they can focus on other high-priority work. The pair had bootstrapped the company as recently as October.

“It was while I was at DocuSign that I felt there was a need for a platform like Tines,” explained Hinchy at the time of the initial Series A. “We had a team of really talented engineers in charge of incident response and forensics but they weren’t developers. I found they were doing the same tasks over and over again so I began looking for a platform to automate these repetitive tasks and didn’t find anything. Certainly nothing that did what we needed it to, so I came up with the idea to plug this gap in the market.”

To remedy this, Tines lets companies automate parts of their manual security processes with the help of six software “agents,” with each acting as a multipurpose building block. The idea is that, regardless of the process being automated, it only requires combinations of these six agent types configured in different ways to replicate a particular workflow.

In addition, the platform doesn’t rely on pre-built integrations to interact with external systems. Instead, Tines is able to plug in to any system that has an API. “This means integration with commercial, off-the-shelf products, or existing in-house tools is quick and simple, with most security teams automating stories (workflows) within the first 24 hours,” says the startup. Its software is also starting to find utility beyond cybersecurity processes, with several Tines customers using it in IT, DevOps, and HR.

“We heard that Eoin, a senior member of the security team at DocuSign (another Accel portfolio company), had recently left to start Tines, so we got in touch,” Accel’s Seth Pierrepont tells TechCrunch. “They were in the final stages of closing their Series A. However, we were so convinced by the founders, their product approach, and the market timing, that we asked them to extend the round”.

Pierrepont also points out that a unique aspect of the Dublin ecosystem is that many of the world’s largest tech companies have their European headquarters in the country (often attracted by relatively low corporation tax), “so it’s an incredibly rich talent pool despite being a relatively small city”.

Asked whether Accel views Tines as a cybersecurity automation company or a more general automation play that puts automation in the hands of non-technical employees for a multitude of possible use cases, Pierrepont says, given Hinchy and Kinsella’s backgrounds, the cybersecurity automation sector should be the primary focus for the company in the short term. However, longer term it is likely that Tines will be adopted across other functions as well.

“From our investment in Demisto (which was acquired by Palo Alto Networks earlier this year), we know the security automation or SOAR category (as Gartner defines it) very well,” he says. “Demisto pioneered the category and was definitively the market leader when it was acquired. However, we think the category is just getting started and that there is still a ton of whitespace for Tines to go after”.

Meanwhile, in less than a year, Tines says it has on-boarded 10 enterprise customers across a variety of industries, including Box, Auth0 and McKesson, with companies automating on average 100 thousand actions per day.

Wefox, the Berlin-based insurtech, raises $110M Series B extension at a $1.65B pre-money valuation

Wefox Group, the Berlin-based insurtech startup behind the consumer-facing insurance app and carrier One and the insurance platform Wefox, is disclosing $110 million in a second tranche of Series B funding. Sources tell TechCrunch that this gives the company a pre-money valuation of $1.65 billion. WeFox Group declined to comment on the financials.

The Series B extension is led by Omers Ventures, the venture capital arm of Canadian pension fund Omers. Merian Chrysalis and Samsung Catalyst Fund, also participated, along with existing investors.

It follows an earlier Series B of $125 million in March, led by Abu Dhabi government-owned Mubadala Ventures, with participation from Chinese investor Creditease. Wefox’s other existing investors include Target Global, Salesforce Ventures, Seedcamp, Idinvest and Hollywood actor Ashton Kutcher’s investment vehicle Sound Ventures.

In a call, Wefox co-founder and CEO Julian Teicke told me the Wefox Group has grown revenues to over $100 million, and now services more than 500,000 customers, claiming that this makes it Europe’s “leading insurtech”.

He also revealed that the company has grown to 400 employees, which, he says means he can no longer remember every employee’s name. “That sucks,” he tells me, revealing that it was only this summer when the company was smaller that he won a company-wide bet for being able to do just that.

Breaking WeFox Group’s revenue down further, the company’s direct to consumer insurance brand, One Insurance, has increased annual revenues by nearly tenfold this year to $30 million. It also claims to be Germany’s fastest growing provider for household and private liability insurance.

Perhaps more significantly, Teicke says One’s loss ratio (what percentage of premiums earned is subsequently paid out in claims) is below 40%, which is much better than the industry as a whole. He pinned that on WeFox’s use of data, which, he says, enables One to understand risk in a much more technology-driven and granular way.

Meanwhile, Teicke says the new funding will be used to continue ramping up international expansion in 2020. Wefox is active in Germany, Austria, Switzerland and Spain, and I understand has quietly launched in Italy.

Adds Henry Gladwyn, principal at OMERS Ventures, in a statement: “We are thrilled to continue our support of Julian and the incredibly ambitious Wefox Group team as they continue to disrupt and re-invent the insurance industry. We believe wefox Group’s approach to revolutionizing insurance – empowering the consumer and prioritizing solutions for secured data-driven experiences – will deliver significant value for the entire trade”.

Soci raises $12M to help big brands manage local marketing

According to CEO Afif Khoury, we’re in the middle of “the third wave of social” — a shift back to local interactions. And Khoury’s startup Soci (pronounced soh-shee) has raised $12 million in Series C funding to help companies navigate that shift.

Soci works with customers like Ace Hardware and Sport Clips to help them manage the online presence of hundreds or thousands of stores. It allows marketers to post content and share assets across all those pages, respond to reviews and comments, manage ad campaigns, and provide guidance around how to stay on-brand.

It sounds like most of these interactions are happening on Facebook. Khoury told me that Soci integrates with “40 different APIs where businesses are having conversations with their customers,” but he added, “Facebook was and continues to be the most prominent conversation center.”

Khoury and CTO Alo Sarv founded Soci back in 2012. Khoury said they spent the first two years building the product, and have subsequently raised around $30 million in total funding.

“What we weren’t building was a point solution,” he said. “What we were building was a massive platform … It took us 18 months to two years to really build it in the way we thought was going to be meaningful for the marketplace.”

Soci has also incorporated artificial intelligence to power chatbots that Khoury said “take that engagement happening on social and move it downstream to a call or a sale or something relevant to the local business.”

The new round was led by Vertical Venture Partners, with participation from Grayhawk Capital and Ankona Capital. Khoury said the money will allow Soci to continue developing its AI technology and to build out its sales and marketing team.

“Ours is a very consultative sale,” he said. “It’s a complicated world that you’re living in, and we really want to partner and have a local presence with our customers.”

Airbnb invests as Zeus corporate housing raises $55M at $205M

As Airbnb absorbs more and more of the demand for housing, it’s exploring how to monetize opportunities beyond vacation rentals. A marketplace for longer term corporate housing could be a huge business, but rather than build that itself, Airbnb is making a strategic investment in one of the market leaders called Zeus Living and will list its homes on the Airbnb site.

In just four years of redecorating landlords’ homes and renting them for 30+ day stays to relocated workers, Zeus Living has grown to a $100 million revenue run rate. It grew revenue 300% in 2019, and now has 250 employees and over 2000 homes under management. Zeus make money by charging landlords one free month of usage, and marking up the rent charged to customers. It could rent out a $4,000 per month home for $5,000 plus take the extra month to earn $16,000 in a year.

Zeus CEO and co-founder Kulveer Taggar tells me “I fundamentally believe that a lot of human potential is bound by location. At Zeus, we’re deeply committed to making it easier for people to live where opportunity takes them.” It’s already hosted 27,000 residents for a total of 650,000 nights.

Strong margins, swift momentum, and that megatrend of more mobile workforces have earned Zeus Living a new $55 million Series B round it’s announcing today. The funding comes from Airbnb, Comcast, CEAS Investments, and TI Platform Management, plus existing investors Alumni Ventures Group, Initialized Capital, NFX, and Spike Ventures. The funding comes at a $205 million post-money valuation.

“The opportunity here is huge, consumer spend is going toward housing and everyone needs to stay somewhere. But it’s Kulveer and Zeus’s go-to-market strategy that is impressive” says Initialized co-founder and managing partner Garry Tan. “Zeus decided to start with corporate rentals, which we believe is the best go-to-market since it is the highest margin, and capital efficiency wins in a space with many competitors. Corporate needs are longer term, consistent and predictable, and partnering with Airbnb strengthens this approach as they expand to build a platform for every city.”

Zeus co-founder and CEO Kulveer Taggar

Zeus had previously raised a $2.5 million seed and then an $11.5 million Series A led by Initialized, as well as $10 million in debt to cover taking on properties in the San Francisco Bay, Los Angeles, New York, Seattle, and D.C. Now that it’s scaling up, Zeus could add a sizable debt facility to cover the risk of filling apartments with employees from clients like Brex, Disney, ServiceTitan, and Samsara.

Instead of moving into a bland corporate housing block, struggling to find a place themselves, or ending up in expensive long-term Airbnbs, workers moving to new cities can work with Zeus. It takes over apartments, handles maintenance, and fills them with branded comforts like Parachute bedding and Helix mattresses Zeus gets at bulk rates. The startup is betting that as workers move between jobs and cities more frequently, fewer will own furniture and instead look for furnished homes like Zeus offers.

Thanks to the premium stay it offers, Zeus charge can clients a lucrative rates while Taggar claims his service is still about half the price of standard corporate housing. For property owners, Zeus makes it easy to get a consistent rent paycheck with none of the traditional landlord work. Zeus takes care of cleaning and key exchanges so owners don’t need to do any chores like if they were running an Airbnb. Its goal is to get the first renters in within 10 days of taking on a property.

The new funding will help Zeus expand to more neighborhoods and cities while retaining a focus on breadth within each market so clients have plenty of homes to pick from. The startup will be revamping its booking and invoicing tools for enterprise partners, and improving how it sources real estate. Meanwhile it will be investing in customer care to maintain its high 70s NPS scores so relocated workers brag to their colleagues about how nice their new place is.

“Finding housing is stressful and time-consuming for both individuals and employers. As someone who has moved countries four times, I’ve lived through that tension” says Taggar. Zeus Living has built technology to remove complexity from housing, turning it into a service that enables a more mobile world.”

Taggar had gotten into the real estate business early, remortgaging his mom’s house to buy a condo in Mumbai to rent out. After moving to the US, he built and sold Y Combinator-backed auction tool Auctomatic with co-founder and future Stripe starter Patrick Collison. It was while working on NFC-triggered task launcher Tagstand that Taggar recognized the hassle of both finding new corporate housing and reliably renting out one’s home. With Uber, Stripe, and more startups growing huge by simplifying processes that move a lot of money around, he was inspired to do the same with Zeus Living.

“Modern professionals travel more frequently, stay longer, and seek accommodations that feel like home. As more companies look to Airbnb for Work for extended-stay and relocation solutions, this segment remains a key focus for Airbnb,” says David Holyoke, Global Head of Airbnb For Work. “We have great alignment with the Airbnb team in terms of serving the changing needs of business travelers that want the comforts of home when traveling for extended 30-day stays for work or a project” Taggar follows.

Zeus Living’s co-founders

Zeus’ biggest threat is that it could get overextended, misjudge demand, and end up on the hook to pay rent for two-year leases it can’t fill. And now with more funding, there will be added scrutiny regarding its margins, especially in the wake of the WeWork implosion.

Taggar recognizes these threats. “This is a business where we have to be focused on maximizing the gross profit we generate for the investments we make, with the least amount of risk. At Zeus Living, we’re continuously improving the ways we predict and secure demand.” He’s also building out teams on the ground in different markets to ensure regulatory compliance and push for more conducive laws around 30+ day rental stays.

Property tech has become a heated space, though, so Zeus will have heavy competition. There are traditional corporate housing providers, pure marketplaces that don’t deal with logistics, and direct competitors like $66 million-funded Domio, and juggernaut Sonder which has raised a whopping $360 million. Zeus might also see its model copied abroad before it can get there.

At least with Airbnb as an investor, Zeus won’t have to fear a bitter battle with the tech giant over corporate housing. Instead, Airbnb could keep investing to coin off this adjacent market while listing Zeus properties, or potentially acquired the startup one day. For now though, Taggar just wants to prove startups can be accountable in the real world, acknowledging that taking over people’s homes is “a lot of responsibility! Our homes represent hundreds of millions of dollars of assets we manage and we take that very seriously.”