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Wasabi scores $112M Series C on $700M valuation to take on cloud storage hyperscalers

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Taking on Amazon S3 in the cloud storage game would seem to be a fool-hearty proposition, but Wasabi has found a way to build storage cheaply and pass the savings onto customers. Today the Boston-based startup announced a $112 million Series C investment on a $700 million valuation.

Fidelity Management & Research Company led the round with participation from previous investors. It reports that it has now raised $219 million in equity so far, along with additional debe financing, but it takes a lot of money to build a storage business.

CEO David Friend says that business is booming and he needed the money to keep it going. “The business has just been exploding. We achieved a roughly $700 million valuation on this round, so  you can imagine that business is doing well. We’ve tripled in each of the last three years and we’re ahead of plan for this year,” Friend told me.

He says that demand continues to grow and he’s been getting requests internationally. That was one of the primary reasons he went looking for more capital. What’s more, data sovereignty laws require that certain types of sensitive data like financial and healthcare be stored in-country, so the company needs to build more capacity where it’s needed.

He says they have nailed down the process of building storage, typically inside co-location facilities, and during the pandemic they actually became more efficient as they hired a firm to put together the hardware for them onsite. They also put channel partners like managed service providers (MSPs) and value added resellers (VARs) to work by incentivizing them to sell Wasabi to their customers.

Wasabi storage starts at $5.99 per terabyte per month. That’s a heck of a lot cheaper than Amazon S3, which starts at 0.23 per gigabyte for the first 50 terabytes or $23.00 a terabyte, considerably more than Wasabi’s offering.

But Friend admits that Wasabi still faces headwinds as a startup. No matter how cheap it is, companies want to be sure it’s going to be there for the long haul and a round this size from an investor with the pedigree of Fidelity will give the company more credibility with large enterprise buyers without the same demands of venture capital firms.

“Fidelity to me was the ideal investor. […] They don’t want a board seat. They don’t want to come in and tell us how to run the company. They are obviously looking toward an IPO or something like that, and they are just interested in being an investor in this business because cloud storage is a virtually unlimited market opportunity,” he said.

He sees his company as the typical kind of market irritant. He says that his company has run away from competitors in his part of the market and the hyperscalers are out there not paying attention because his business remains a fraction of theirs for the time being. While an IPO is far off, he took on an institutional investor this early because he believes it’s possible eventually.

“I think this is a big enough market we’re in, and we were lucky to get in at just the right time with the right kind of technology. There’s no doubt in my mind that Wasabi could grow to be a fairly substantial public company doing cloud infrastructure. I think we have a nice niche cut out for ourselves, and I don’t see any reason why we can’t continue to grow,” he said.

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Source: https://techcrunch.com/2021/04/29/wasabi-scores-112m-series-c-on-700m-valuation-to-take-on-cloud-storage-hyperscalers/

Artificial Intelligence

DataRobot expands platform and announces Zepl acquisition

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DataRobot, the Boston-based automated machine learning startup, had a bushel of announcements this morning as it expanded its platform to give technical and non-technical users alike something new. It also announced it has acquired Zepl, giving it an advanced development environment where data scientists can bring their own code to DataRobot. The two companies did not share the acquisition price.

Nenshad Bardoliwalla, SVP of Product at DataRobot says that his company aspires to be the leader in this market and it believes the path to doing that is appealing to a broad spectrum of user requirements from those who have little data science understanding to those who can do their own machine learning coding in Python and R.

“While people love automation, they also want it to be [flexible]. They don’t want just automation, but then you can’t do anything with it. They also want the ability to turn the knobs and pull the levers,” Bardoliwalla explained.

To resolve that problem, rather than building a coding environment from scratch, it chose to buy Zepl and incorporate its coding notebook into the platform in a new tool called Composable ML. “With Composable ML and with the Zepl acquisition, we are now providing a really first class environment for people who want to code,” he said.

Zepl was founded in 2016 and raised $13 million along the way, according to Crunchbase data. The company didn’t want to reveal the number of employees or the purchase price, but the acquisition gives it advanced capabilities, especially a notebook environment to call its own to attract those more advanced users to the platform.The company plans to incorporate the Zepl functionality into the platform, while also leaving the stand-alone product in place.

Bardoliwalla said that they see the Zepl acquisition as an extension of the automated side of the house, where these tools can work in conjunction with one another with machines and humans working together to generate the best models. “This [generates an] organic mixture of the best of what a system can generate using DataRobot AutoML and the best of what human beings can do and kind of trying to compose those together into something really interesting […],” Bardoliwalla said.

The company is also introducing a no-code AI app builder that enables non-technical users to create apps from the data set with drag and drop components. In addition, it’s adding a tool to monitor the accuracy of the model over time. Sometimes, after a model is in production for a time, the accuracy can begin to break down as the data the model is based is no longer valid. This tool monitors the model data for accuracy and warns the team when it’s starting to fall out of compliance.

Finally the company is announcing a model bias monitoring tool to help root out model bias that could introduce racist, sexist or other assumptions into the model. To avoid this, the company has built a tool to identify when it sees this happening both in the model building phase and in production. It warns the team of potential bias, while providing them with suggestions to tweak the model to remove it.

DataRobot is based in Boston and was founded in 2012. It has raised over $750 million and has a valuation of over $2.8 billion, according to Pitchbook.

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Source: https://techcrunch.com/2021/05/11/datarobot-expands-platform-and-announces-zepl-acquisition/

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Cycode raises $20M to secure DevOps pipelines

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Israeli security startup Cycode, which specializes in helping enterprises secure their DevOps pipelines and prevent code tampering, today announced that it has raised a $20 million Series A funding round led by Insight Partners. Seed investor YL Ventures also participated in this round, which brings the total funding in the company to $24.6 million.

Cycode’s focus was squarely on securing source code in its early days, but thanks to the advent of infrastructure as code (IaC), policies as code and similar processes, it has expanded its scope. In this context, it’s worth noting that Cycode’s tools are language and use case agnostic. To its tools, code is code.

“This ‘everything as code’ notion creates an opportunity because the code repositories, they become a single source of truth of what the operation should look like and how everything should function, Cycode CTO and co-founder Ronin Slavin told me. “So if we look at that and we understand it — the next phase is to verify this is indeed what’s happening, and then whenever something deviates from it, it’s probably something that you should look at and investigate.”

Cycode Dashboard

Cycode Dashboard. Image Credits: Cycode

The company’s service already provides the tools for managing code governance, leak detection, secret detection and access management. Recently it added its features for securing code that defines a business’ infrastructure; looking ahead, the team plans to add features like drift detection, integrity monitoring and alert prioritization.

“Cycode is here to protect the entire CI/CD pipeline — the development infrastructure — from end to end, from code to cloud,” Cycode CEO and co-founder Lior Levy told me.

“If we look at the landscape today, we can say that existing solutions in the market are kind of siloed, just like the DevOps stages used to be,” Levy explained. “They don’t really see the bigger picture, they don’t look at the pipeline from a holistic perspective. Essentially, this is causing them to generate thousands of alerts, which amplifies the problem even further, because not only don’t you get a holistic view, but also the noise level that comes from those thousands of alerts causes a lot of valuable time to get wasted on chasing down some irrelevant issues.”

What Cycode wants to do then is to break down these silos and integrate the relevant data from across a company’s CI/CD infrastructure, starting with the source code itself, which ideally allows the company to anticipate issues early on in the software life cycle. To do so, Cycode can pull in data from services like GitHub, GitLab, Bitbucket and Jenkins (among others) and scan it for security issues. Later this year, the company plans to integrate data from third-party security tools like Snyk and Checkmarx as well.

“The problem of protecting CI/CD tools like GitHub, Jenkins and AWS is a gap for virtually every enterprise,” said Jon Rosenbaum, principal at Insight Partners, who will join Cycode’s board of directors. “Cycode secures CI/CD pipelines in an elegant, developer-centric manner. This positions the company to be a leader within the new breed of application security companies — those that are rapidly expanding the market with solutions which secure every release without sacrificing velocity.”

The company plans to use the new funding to accelerate its R&D efforts, and expand its sales and marketing teams. Levy and Slavin expect that the company will grow to about 65 employees this year, spread between the development team in Israel and its sales and marketing operations in the U.S.

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Source: https://techcrunch.com/2021/05/11/cycode-raises-20m-to-secure-devops-pipelines/

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Ecommerce

Led by ex-Amazonians, Acquco raises $160M to buy and scale e-commerce businesses

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There has been a flurry of investments in startups focused on acquiring third-party sellers on Amazon and helping them build their businesses.

The latest is Acquco, which aims to stand out from the others in that it was formed by a pair of founders — Raunak Nirmal and Wiley Zhang — who actually worked at Amazon, and then built multimillion-dollar businesses on its platform.

The New York City-based startup has raised $160 million in debt and equity in a Series A round that it says will fund its “aggressive growth plans.” CoVenture, Singh Capital Partners, Crossbeam and other notable investors such as GoDaddy CEO Aman Bhutani put money in the equity portion of the round. Acquco would not disclose the valuation at which the money was raised, nor the exact breakdown of debt and equity, other than to say “a significant portion was equity.” But CEO Raunak Nirmal did share a few other notable things. 

For one, the company has already scaled to over $100 million in revenue since its founding (in a year’s time) while deploying less than $2 million of equity capital. Plus, it’s been profitable “since day one,” he said.

Nirmal also claims that Acquco’s proprietary technology and “proven playbooks” give it an edge against competitors such as Thrasio and Perch. Specifically, the company says it helps Amazon sellers exit their business within 30 days and continue to scale their business “to the next level” post-acquisition. It also claims to offer flexible terms and that it does not prevent entrepreneurs from selling again on Amazon.

Acquco says it identifies the best businesses to acquire, and leverages what it describes as “flexible founder-friendly deal structures,” which essentially gives sellers a way to make money from the exit and then still get a cut of revenues down the line. The company claims that it on average achieves over 100% revenue growth after migrating brands onto its platform.

Forming Acquco was not an overnight story, but rather was years in the making.

“My first job out of college was actually at Amazon. I worked as a business analyst on the merchant technologies team there, which was really focused on third-party selling and helping empower third-party sellers to grow on the platform and then just growing that segment of the business,” Nirmal recalls. “At the time, third-party selling was smaller than the retail side for Amazon.”

A lot has changed since then, of course, as that segment of the e-commerce giant’s business has grown dramatically. 

In recent years, most sales on Amazon have come through Amazon Marketplace, where millions of outside sellers compete to find customers. Many pay Amazon to store and ship their goods, making them eligible for Prime shipping through an arrangement known as Fulfillment by Amazon, or FBA. This is where Acquco is focusing. 

While at Amazon years ago, Nirmal was tasked with starting a brand on the site so he could better understand sellers’ pain points, as well as the tools that could be built “to really help them grow.”

Eventually, Nirmal left Amazon to pursue selling on Amazon full time because the brand he’d started ended up selling over $7 million in its first year. After that, he and COO Zhang built and sold multiple brands in the Amazon ecosystem before going on to consult for “some of the largest sellers in the marketplace,” primarily based in China but selling in the U.S. market.

“A lot of these guys are actually public companies now,” Nirmal said. 

The duo went on to co-found a seller outsourcing firm in the Philippines, which helps to minimize the cost of operating the brands for sellers and make it more accessible for sellers that don’t have a huge team to build something on Amazon. 

Then they founded a company called Refund Labs, a seller tool that helps sellers essentially automatically identify issues in the payments that they receive from Amazon as well as recover money on their behalf for things like inventory that gets damaged or lost or the fees that are being charged that might be incorrect. 

Nirmal stepped down as CEO of Refund Labs to form Acquco.

“What we wanted to do is take this knowledge and experience that we really have built up over the last seven years, and apply it in the best way possible,” Nirmal told TechCrunch. “And rather than building brands from the ground up, or consulting for some of these large sellers, we thought, ‘Why not go and buy the best brands, and then help grow them using our expertise?’ ”

The company says its proprietary algorithms analyze thousands of criteria sets and millions of data inputs “to automate and maximize the performance of the core functions within supply chain and brand management” across their portfolio. 

Acquco plans to use its new capital to enter “hypergrowth mode,” according to Chief Strategy Officer Jerel Ho, who most recently led corporate development and strategy at WeWork, where he closed over $40 billion in M&A deals.

The startup has the ambitious goal of scaling its portfolio to over $500 million in revenue by 2022. It plans to put the new money toward continuing to build out its technology platform — including tools that can automate the management of an entire brand on Amazon and across other retail channels — as well as continuing to acquire brands. It’s also, naturally, going to do some hiring.

“We’ve done a lot with very little,” Ho told TechCrunch. “But hyper growth plans require a much larger team across all functions.”

CoVenture founder Ali Hamed says that the Amazon third-party seller ecosystem does $200 billion of revenue and is growing at a compounded annual growth rate (CAGR) of over 50%. 

“It’s the most attractive market we’ve seen since founding our firm,” he told TechCrunch. “And of all the people we’ve talked to, Raunak is as plugged into the Amazon ecosystem as anyone we could find. In many ways, he taught us how to look, think and deploy capital into the market.”

To say Hamed is bullish on Acquco would be an understatement. Since first investing in the company in 2020, Nirmal “has exceeded” all of CoVenture’s expectations.

“We’ve been begging him to take more money every three months since writing our first check,” Hamed added. “Raunak is able to help buy businesses and make them better than they ever were before. He has a vision of how to operate these assets post-purchase that other operators who are not Amazon-native just don’t have.”

Besides Thrasio, other players in the space that have recently raised funding include Branded, which recently launched its own roll-up business on $150 million in funding, as well as Berlin Brands Group, SellerXHeydayHeroes and Perch. And, Valoreo, a Mexico City-based acquirer of e-commerce businesses, raised $50 million of equity and debt financing in a seed funding round announced in February.

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Source: https://techcrunch.com/2021/05/11/acquco-raises-160m/

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Start Ups

Strategy Session: Harbinger Ventures’ Megan Bent Expects More Innovation From Women After Pandemic

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Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.

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Megan Bent founded Boulder, Colorado-based Harbinger Ventures in 2016, inspired by her experience and observations from running a family office for 10 years and leading direct investments through the lens of entrepreneurs.

Harbinger closed its second fund in 2019 with $21.7 million and now has approximately $40 million in assets under management. The firm is actively deploying funds from this fund and has made four investments so far and will make eight total, Bent said. Companies in Harbinger’s portfolio include Cora, Once Upon a Farm and Nona Lim.

Bent spoke to me about her investment strategy and how she is redefining the traditional business model — particularly how the firm likes to meet female founders before they start raising money so it has the opportunity to prove its value-add for early-stage investments.

The following was lightly edited for length and clarity.

What is Harbinger’s investment philosophy?

Bent: From a fundamentals perspective, we are an early-stage growth firm investing in Series A companies in the consumer products space. We have a strong bias for brands that identify a real and practical need, but were in sectors that were under-innovated in over a decade. We look for brands that have a go-to-market advantage and have a disproportionate share of voice, authenticity and engagement. We also look for the DNA required for future success for general partners. Forty percent of our limited partners are women and 100 percent of the teams have a female as a co-founder. Most boards have women that make up 60 percent, and we like that accountability built in from Day One, ensuring the consumer is reflected in the key stakeholders.

Megan Bent, founder and managing partner, Harbinger Ventures.

Did this strategy bode well for the firm during pandemic?

Bent: It did. I hate to say we did well, but our portfolio companies serviced consumers well during the pandemic. We were in areas such as  baby food, tampons, wine and home fragrance, and those sustained or increased demand. Because of the channel mix, they had fluidity to be both retailers and e-commerce.

How do you like to work with founders?

Bent: I have very strong reverence for founders because I spent so many years working with one. We like to add value and work with them at a regular clip. We are often setting up weekly meetings and creating roundtable sessions, so when they go through quarterly board meetings, we can set up working sessions staffed with experts. Our goal is to derive the greatest source of value as quickly as possible. We also incentivize portfolio companies by giving them their own piece of carried interest of the fund. They are literally co-owners of their success, and that is an upside.

How is Harbinger redefining the traditional business model of financing startups?

Bent: We realize that it is seductive to be a big fund, but when you have to deploy more capital you aren’t able to provide the same service to everyone. Series A is a critical stage for a company — it is often when it is making its  first hires or closing on a national contract. I have been here my whole career and it requires discipline to not scale out the specific whitespace. We only take the lead position and that allows us to act differently. If we had to make 50 investments versus five, it would transform how we spend our resources. We prefer to spend more time with them in the weeds, and we know how to staff for that.

Why do you expect more innovation from women entrepreneurs after the pandemic?

Bent: Following the pandemic or accelerating during, women took on additional responsibilities, as educator and caretaker, along with a part-time or full-time job. When a crisis hits, it unlocks innovation. There are new ideas or better ways to address existing ideas. Many are revamping go-to-market, as well as rethinking marketing plans and messaging based on “aha” moments. Secondly, dislocation and disruption create opportunities. During this time, women also had trouble getting heard and there was a dramatic shift in behaviors, and we are actively looking for those pops.

Photo of Megan Bent courtesy of Harbinger Ventures.
Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

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Source: https://news.crunchbase.com/news/strategy-session-harbinger-ventures-megan-bent-expects-more-innovation-from-women-after-pandemic/

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