All posts in “Startups”

Furniture startups skip the showroom and go straight to your door

Startups making delivery and transport easier than ever are a hit with venture capitalists, so it’s not a surprise that young tech companies delivering home staples — living room sets, dining room tables, couches and more — are raising big dollars.

From 2010 through 2017, venture investors have outfitted U.S.-based furniture startups with a little over $1.1 billion in funding across 96 known rounds. But that funding has not been spread equally over time, as the following chart shows:

Total dollars funneled into U.S.-based furniture startups, according to Crunchbase, hit an all-time high of $432.7 million across 12 rounds in 2011. Wayfair, an e-commerce site dedicated to selling furniture, raised a significant $165 million Series A that year, accounting for more than a third of the total deal volume.

But while funding hasn’t surpassed 2011 levels, from that year through 2015, round counts steadily climbed. During this period, investments into seed and early-stage startups made up more than 70 percent of known deals.

Whether or not this cohort of seed and early-stage startups will act as fodder for late-stage investors is not yet clear. Before that happens, Stephen Kuhl thinks that there’s more work to be done.

Kuhl, the CEO of Burrow, a company that sells furniture over the internet, told Crunchbase News that “selling traditional furniture made in China or Mexico isn’t innovative, and as such we wouldn’t expect to see a lot of venture funding.” But that doesn’t mean that venture interest in the sector is doomed. Kuhl added that “a new company has to offer a unique product, experience and brand that is altogether [10 times] better than traditional offerings. Expect the money to follow the new brands that truly shake up the status quo.”

That may bear out. The funding data we examined tells one particular story: venture money has shown a preference for delivery and a consumer that doesn’t easily call the place they live in “home.”

Deliver, don’t move, furniture

For city dwellers, modular, utilitarian couches are taking hold. And it’s increasingly clear you don’t have to leave your couch to purchase one.

Let’s return to Burrow, which has raised a total of $19.2 million, according to Crunchbase. The startup has created a modular couch built for those who live in dense urban environments and may move often.

“Our customers are reflective of larger trends in the market. They’re more likely to be renters rather than homeowners,” Kuhl explained. “They’re likely to move multiple times over the course of a few years, and they crave thoughtful, high-quality goods.”

To account for this new type of customer, Burrow delivers each section of the couch in distinct packages. Burrow claims on its website that its direct to consumer business model and its ability to ship parts of couches, rather than one whole couch, removes “over 70 [percent] of standard shipping costs.” The couch also includes modern amenities such as a USB charger, and Burrow has also “launched an AR app that helps customers visualize a Burrow in their home,” according to Kuhl.

However, Burrow isn’t completely eschewing the showroom as part of its selling strategy. In a podcast interview with TotalRetail, Kuhl noted that the startup has “partner showrooms” in co-working spaces and other retail locations in more than 20 cities.

Of course, while modular design is helpful for city dwellers, there are those who enjoy a bit more of a personal twist. Interior Define, a Chicago-based startup, has raised $27.2 million to offer direct to consumer couches and dining room sets. And, according to Interior Define’s founder Rob Royer, its appeal is being driven by a new breed of consumers who are interested in brands that have “an authentic mission, deliver on a promised experience, and offer a real value proposition (not just a lower price).”

That said, both of these options still require that the furniture be owned — an unnecessary burden if you move often or just like fresh looks without the commitment. Through Feather, customers can subscribe to a whole living room, bedroom or dining room for as low as $35 a month. According to Crunchbase, the New York-based startup has raised $3.5 million from established venture firms such as Y Combinator and Kleiner Perkins.

There are also startups looking to simply help brands sell more furniture by using artificial intelligence and augmented reality. One such startup, Grokstyle, has raised $2.5 million for an app that identifies furniture by image as well as style and pricing preferences.

In general, streets, kitchens and even front doors are being claimed by venture-backed startups. What you sit on might as well be paid for, in part, by venture capitalists, too.

Chowly is raising $5.8 million to help restaurants manage on-demand delivery orders

Chowly, a point-of-sale system for restaurants, has raised nearly $4.7 million, according to an SEC filing. The company is targeting a total raise of $5.8 million.

Chowly aims to help restaurants better manage the influx of delivery orders they receive from a variety of services, such as Grubhub, Delivery.com and Chownow.

In May, Square launched a point-of-sale system for restaurants that integrates on-demand delivery platform Caviar. Down the road, Square said it envisions third-party applications from companies like Postmates, UberEats and DoorDash.

Chowly had previously raised just $700,000 from MATH Venture Partners, Domenick Montanile and others. I’ve reached out to Chowly and will update this story if I hear back.

Chad Rigetti to talk quantum computing at Disrupt SF

Even for the long-standing giants of the tech industry, quantum computing is one of the most complicated subjects to tackle. So how does a five-year old startup compete?

Chad Rigetti, the namesake founder of Rigetti Computing, will join us at Disrupt SF 2018 to help us break it all down.

Rigetti’s approach to quantum computing is two-fold: on one front, the company is working on the design and fabrication of its own quantum chips; on the other, the company is opening up access to its early quantum computers for researchers and developers by way of its cloud computing platform, Forest.

Rigetti Computing has raised nearly $70 million to date according to Crunchbase, with investment from some of the biggest names around. Meanwhile, labs around the country are already using Forest to explore the possibilities ahead.

What’s the current state of quantum computing? How do we separate hype from reality? Which fields might quantum computing impact first — and how can those interested in quantum technology make an impact? We’ll talk all this and more at Disrupt SF 2018.

Tickets are available here.

Emptor looks to help companies more easily find contractors in the area

For any company looking to spin up some kind of operation in a new region, one of the first steps may be finding contractors in the area that can actually get the work started — but, especially as companies drift further from cities, that can increasingly become a nightmare that’s quite familiar to Matt Velker.

That led to he and his co-founder starting Emptor, a network to connect companies with local contractors in order to get those local projects off the ground effectively. That can range from actual construction to janitorial work or landscaping. A platform like Emptor seeks to take a lot of the ambiguity or guesswork out of finding a set of local companies to work with in order to get construction projects off the ground. It also adds a robust audit trail — ratings or otherwise — to ensure that the best contractors surface up and that everyone knows which ones they should skip.

“Every time you’re building [projects in new regions] you have to find an entirely new set of suppliers,” Velker said. “Often in rural areas when there isn’t an saturation of contractors like there is in a large metro, that discovery process within a reasonable time frame was the biggest challenge. Especially within the construction industry, there’s a huge deviation in terms of the quality fo the companies you work with. We definitely had a lot of pains with unreliable contractors who weren’t getting the job done to spec or on time, or things that came close to fraud. It comes with the territory when you work with that volume of companies in a short period of time.”

Companies first go to Emptor and describe the projects they want and what kinds of pricing structure they are offering. Then, kind of like Thumbtack or other marketplaces, Emptor matches those projects up with qualified contractors and then compares those bids in order to select the best offer. It aims to be a replacement for the time spent searching around Yelp or Google, where there may be listings and pages but not a high volume of ratings — or ones that are even accurate to begin. Even after the search, getting the whole process started can take weeks, another period Emptor hopes to shrink by streamlining that process.

Right now Emptor mainly focuses on facilities and maintenance, though should something like this take off it could add other elements of contract work that companies need. The approach also aims to be more granular, giving companies more ways to identify the needs of the project that might not necessarily just be quantitative. After all, better data about a company’s actual needs that flows into some algorithm can produce better matching, and that can also go down to the actual way compensation would work on that project.

“Having just one number for what a project will cost is convenient from the supplier and buyer perspective, but it’s missing out on the ability to build structured data that you can analyze,” Velker said. “The companies are deciding, ‘what do I need to know, how many years have you done in business.’ You want to be explicit about how are we going to make this decision. If price is a factor, how much of a factor is it, so they can spec things out and there’s transparency to the buyers.”

But while it’s an attempt to try to bridge that gap between the company and a service provider, it’s one that many companies have tried to fill before. There are tools like Angie’s List and others for finding contractors, though Velker says those are primarily geared toward consumers — and some end up bending the apps in order to fill the needs they have for contractors without some kind of formal platform to use. Velker acknowledges the theory behind all these tools is pretty similar, though he hopes Emptor will be able to tackle the specific needs companies might have that he’s experienced himself.

Instacart taps Postmates to help with deliveries in SF during peak demand

Instacart has tapped Postmates to offer better delivery services during peak hours in a San Francisco pilot.

While Instacart will still handle all the shopping for its customers, it will hand off some deliveries to Postmates at times when there is high demand on the Instacart platform.

Postmates, obviously, has offered delivery-as-a-service for merchants and brands since its inception, and some of those brands, such as Walmart, offer their own delivery services. But this marks the first time that Postmates has offered delivery-as-a-service to a business that itself is already a delivery service.

This comes at a time when the grocery space is at an inflection point. Amazon’s nearly $14 billion acquisition of Whole Foods has spurred a race to offer quick and convenient grocery delivery from a number of the bigger players, such as Target and Walmart. On top of that, the grocery industry is highly fragmented, offering a huge opportunity for the catch-all of Instacart’s service.

But quantity means almost nothing without quality, and Instacart’s pilot with Postmates is meant to ensure that delivery times don’t lag in the late morning and early afternoon, when most Instacart orders are set to be delivered.

Instacart’s Northwest General Manager Michelle McRae explained that there is a load balance involved in the partnership with Postmates.

“Like many on-demand services, Instacart sees demand peaks on certain days and at certain times,” said McRae. “The pilot is a way to offer delivery during peak hours and utilize Postmates delivery staff at times where Postmates would be most underutilized. Instacart users overwhelmingly prefer mid-morning and mid-afternoon, where is different from when people want hot, prepared food.”

McRae also stressed that the pilot would not affect current Instacart shoppers or delivery contractors, as Postmates is simply offering delivery capacity during peak demand times.

Perhaps more interesting, Postmates sees a big opportunity to work with on-demand services in offering extra delivery either at or below the cost of hiring more delivery people.

“We definitely see this as a bigger part of Postmates’ future,” said Postmates SVP Dan Mosher. “Most brands are moving toward a world where they want to provide quick convenient delivery but they don’t have the capabilities. As we scale, we have the delivery density to drive economics in a really cost-effective way, not only to restaurants and retailers but to other on-demand services as well.”

He added that enterprise delivery services will never eclipse Postmates’ direct-to-consumer business.

The pilot is currently only going down in San Francisco, but Instacart said that it is considering expanding it to other geographies and other delivery services as the pilot continues. The deal is not exclusive, as Postmates is currently working with Walmart to help deliver their groceries to customers.