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Only one thing on this week’s reading list.
The American Economy Is Rigged — Scientific American
In the U.S., the market power of large corporations, which was greater than in most other advanced countries to begin with, has increased even more than elsewhere. On the other hand, the market power of workers, which started out less than in most other advanced countries, has fallen further than elsewhere. This is not only because of the shift to a service-sector economy—it is because of the rigged rules of the game, rules set in a political system that is itself rigged through gerrymandering, voter suppression and the influence of money.
If you’re in the US, don’t forget to get out and vote tomorrow, in what’s sure to be the most consequential midterm election in a generation.
Recent Startup Funding Announcements 💰
US— California, New York
SafeTraces (Anthony Zografos, founder and CEO)
SafeTraces, Inc., a Pleasanton, California-based food safety solution provider, closed a USD 10m equity financing round in October.
Recommended rule to live by: My only rule is “innovate or perish”. For a start-up to be successful, it needs to innovate across all functions not just product development. So expect all employees, engineers, scientists, sales and marketing people, buyers. Planners to constantly strive to innovate, even if it is something as simple as placing an order for supplies. We constantly try to find ways to do things better, faster and, of course, cheaper.
Recommended book: My personal experience is that many times I get so consumed that I don’t have the time to read anything. So all I recommend is to find the time to read SOMETHING, and it does not really matter if it is fiction, biography or business, as long as you enjoy reading it and stick with it.
How long did the round take to close: It took us over six months mainly because there was a lot of interest from investors to participate and we wanted to make sure that those who ended up participating were the best possible match to our long term vision and objectives.
How many firms did you speak with: Probably several dozen and in the end we only added one new investors. Having said that, the process of meeting new people and understanding the investment approaches and theses was useful to both us and them, I believe, as it will likely facilitate any possible future rounds or other deals.
What capital will be used for: We will mainly look to build our sales force and develop channels. We are also working on several very large scope projects and we will deploy capital to support those on the ground.
Comment on valuation after the round: Post money is in the $50m ballpark.
Seems as though the process of raising money isn’t efficient. Your thoughts: It's a hard question to answer. I wish there was an easier way. But easier usually means that one party has the upper hand, either the founder or the investor and that almost always leads to abominations.
Total amount raised to date: The total amount raised to date is around $20 million and we have raised an additional $3 million from Small Business Innovation Grants.
Competitive landscape: Our biggest competitor is really the status quo, i.e. for our customers to opt to do nothing in the face of mounting food safety challenges. We are introducing ground breaking solutions that can be invaluable in improving food safety and supply chain transparency. However, at times people see adoption of new technologies as an admission that the status quo is failing and in an as highly regulated industry as food, this can be dangerous. So our strategy has been to introduce our soutions as enhancements to what our customers already have in place rather than replacements. That does reduce the value proposition a bit but it is the wiser long term growth strategy.
Macro trends: Population growth, growth of the middle class in the developing world and the associated need for higher quality food, increasing supply chain complexity and increasing consumer demand for supply chain transparency and sustainability are all relevant trends that support adoption of our solutions.
Oh My Green (Michael Heinrich, CEO & Founder)
Oh My Green, a San Francisco-based concierge-style provider of healthy food and wellness services for corporations of all sizes, secured $20m in seed funding.
Recommended rule to live by: Yes, transcendental meditation by far has been the greatest productivity hack for me and my team. Releasing stress through meditation makes the mind sharper, more efficient and provides the ability to make better decisions. It thus follows the Pareto principle of doing less and accomplishing more.
Recommended book: Yes, probably the best business book I’ve read is Getting to Yes: Negotiating to Agreement Without Giving In by Roger Fisher and William Ury and more recently I’ve picked up Elad Gil’s book High Growth Handbook.
How long did the round take to close: It was raised over 2 years/2016 starting with the initial Ycombinator investment.
How many firms did you speak with: 120+.
What capital will be used for: The funding will be used to further advance Oh My Green’s innovative wellness platform, which incorporates artificial intelligence and IoT technology to enhance supply chain management and improve personalization of the company’s food services. Additionally, the funds will support continued growth of Oh My Green’s supplier and customer network in North America, and eventually its international expansion. Oh My Green will also use these funds to increase our sales efforts. We will be hiring throughout all levels of the company to support this growth.
Seems as though the process of raising money isn’t efficient. Your thoughts: Ycombinator in 2016 really accelerated the entire process for us. I like the safe structure because it provides the ability to add additional funding at increasing caps as it comes in. It’s also a good way to “date” potential long term investors and board members.
Total amount raised to date: $20 Million.
Competitive landscape: Today, we often find our customers using regular supermarkets and big-box retailers to keep their corporate kitchens supplied. Those organizations offer very limited food options – often highly processed, high in sugar and sodium and generally unhealthy – a 2018 CDC study of employees across the U.S. found that the foods people get at work tend to contain high amounts of salt, sugar and empty calories.
Those not using big box stores must piece together a solution using vending machine providers, industrial catering operations and/or mobile-app middlemen that aren’t involved in the food-creation process.
Oh My Green creates an entirely new food experience for companies. Taking care to curate healthy snack menus and wellness programming to ensure the highest quality foods and eliminate snack fatigue. The only vendor to utilize machine learning or AI to personalize product recommendations and efficiently manage the supply chain at scale, assuring optimal quality, quantity, and variety while minimizing food waste.
Oh My Green frees up the office manager’s time to allow her/him to be more productive
Macro trends: According to industry watcher Grand View Research, the global healthy snack market alone is expected to reach $32.8 billion by 2025. In 2017, Morgan Stanley estimated the corporate food service industry at $330B and $900B for facilities services worldwide.
Our mission is to empower people to live healthy and blissful lives. Oh My Green, a concierge-style provider of healthy food and wellness services for corporations of all sizes, is positioned to take advantage of the corporate interest in health and wellness.
Oh My Green creates an entirely new food experience for companies, offering a variety of services ranging from the delivery of healthy office snacks and kitchen design and stocking services, to catering, cafe management and wellness programming. The company works with a number of unique suppliers to offer a carefully curated selection of nutritious and delicious products, with the goal of helping companies easily stock their kitchens and cafeterias while amplifying the health, productivity and engagement of their employees.
Oh My Green’s offering is built on a technology platform that utilizes machine learning to personalize product recommendations and efficiently manage the supply chain at scale, assuring optimal quality, quantity, and variety while minimizing food waste. When choosing food and beverage suppliers, Oh My Green prioritizes organic, non-GMO and locally sourced products. The company’s customers include organizations like Mixpanel, Greenhouse, Flatiron Health, and many others.
Hiring: Head of Product, Lead Software Engineer, CFO, Sr Visual Designer, andVP of HR, amongst other roles. View them all here.
FundGuard (Lior Yogev, CEO and co-founder)
FundGuard, a NYC-based provider of a cloud investment funds operating system powered by AI, raised USD 4m in a seed round last month.
Recommended rule to live by: Try to address most issues/topics/emails same day.
Recommended book: The Book Thief, and The Giving Tree.
How long did the round take to close: A few weeks of preparation and part-time during two months of meetings with investors.
How many firms did you speak with: Approximately 10-15 investment firms
What capital will be used for: We’ll use the financing to continue product development and hire in both the U.S. and Israel across R&D, product and sales.
Comment on valuation after the round: between USD 10-20 million.
Seems as though the process of raising money isn’t efficient. Your thoughts: There's a lot of inefficiency and randomness in the process for both founders and investors but I don't have the formula for a better system that yields stronger partnerships, investment returns, or more efficient usage of everyone's time. My advice to founders is to take time to prepare for the round, and then attempt to schedule all initial investor meetings within two or three weeks.
Total amount raised to date: We started Fundguard in 2018 and raised $4 million in a single seed round.
Competitive landscape: With continued pressure on asset management fees driven by the proliferation of ETFs, robo-advisors, 'zero fee' offerings, and frequently changing regulations, the industry is clearly now in need of an operating system that's highly accurate across all asset classes and efficient to operate.
Macro trends: Our SaaS platform is built to meet the needs of today's investment industry, designed to support sophisticated and high-volume trading environments. With FundGuard, users will find a modern UX, APIs, plus workflow and collaboration tools that will add tremendous efficiency to their companies and keep them ahead of the competition.
Hiring: The company is hiring in NYC and Tel Aviv. Check out open positions here.
Perq (Andy Medley, CEO)
Perq, an Indianapolis-based online consumer engagement and shopping behavior company, closed a USD 4m funding.
Recommended rule to live by: Every week, I define the top 3 things I want to get done – either on a Saturday or Sunday. These are my MUST DOs – and they are broken out between business and personal tasks. I put them at the top of my to-do list and they just sit there as a constant reminder until I’ve done them and can check them off.
Recommended book: It’s probably one that your audience is already familiar with, but the business book I’ve found most useful is “The Hard Thing About Hard Things” by Ben Horowitz.
How long did the round take to close: About 9 months.
How many firms did you speak with: We started with a list of 20 potential investment partners, then narrowed that down to eight likely investors and whittled that down to a short list of three.
What capital will be used for: PERQ’s AI-driven online guided shopping solution has been successfully deployed in three key verticals – automotive retailing, home furnishing and multifamily/leasing – and has resulted in triple digit revenue growth YOY. With this capital infusion, we will continue to make improvements to our offering and look to expand into other big ticket, high-touch sectors. We’ve already announced the expansion of our executive team with the appointment of Bradley Long, EVP of Sales, and we’re looking to fill numerous openings as we ramp up our sales and marketing efforts.
Seems as though the process of raising money isn’t efficient. Your thoughts: It certainly wasn’t full time effort for us…but it did take 9 months – and I felt that it was time well spent. I view fundraising as broken down into 3 phases:
Establishing relationship and figuring out who are likely potential investors
Once identified, then it’s time to get to know each other
Then it’s the work to get the deal done
I don’t think I’d want to the process to go crazy fast…it’s like a marriage, you want to make sure it’s the right fit.
Total amount raised to date: $7.5 million.
Competitive landscape: To be honest, the status quo is our biggest competitor. The tools available to help retailers/businesses engage with today’s consumer online are seriously lacking. There is a huge opportunity for what we do – which is to easily re-engineer websites to be more intuitive and provide a guided shopping experience personalized to each consumer, which in turn delivers greater engagement and increased sales.
Macro trends: Consumers will continue to evolve and will end up owning even more of the sales process – meaning they want transparency, control and ease when they shop for anything – large or small - not road blocks. This desire to ‘self-serve’ and be in control will drive even more technological advancements, including virtual reality. At PERQ we are monitoring consumer online trends and partnering with other companies that can deliver best-in-class products. For example, we announced an integration with DOVR Media just last month (Oct 2018) to provide an interactive virtual reality experience for the home furnishing sector.
Artifical Solutions (Andy Peart, Chief Marketing & Strategy Officer)
Artificial Solutions, a Stockholm, Sweden-based unified natural language development and analytics platform, raised USD 15.8m in funding last month.
Recommended rule to live by: Focus. Focus. Focus. Artificial Solutions is totally focused on building conversational AI for enterprises. It delivers clarity of message, strengthens targeting and enables strong differentiation.
Recommended book: Books take too long to read! TED Talks are a great go-to for inspiration and identifying future trends.
How long did the round take to close: The whole process of raising the round took around three months over the summer.
Comment on valuation after the round: Approximately around € 100M.
What capital will be used for: The funding will help support global growth and to accelerate the expansion of our conversational AI platform, Teneo®. Artificial Solutions is already making discernible progress in the enterprise market with successful projects implemented by some of the world’s largest companies. The additional investment will enable the company to further capitalize on new opportunities in a rapidly growing market.
Seems as though the process of raising money isn’t efficient. Your thoughts: In our experience, the process will always depends on which investor groups you target. For this finance round, we focused on targeting future capital market investors rather than private equity funds which helped shorten the process. Still, finance rounds are always very time consuming and clear corporate messaging, clarity on company differentiation and timing are key to success.
Total amount raised to date: Around €70M.
Competitive landscape: The last eighteen months have seen no abatement in the demand for conversational AI platforms and predictions from major analyst firms shows the trend is set to continue strongly in 2018. But throughout this, there is an underlying message; enterprises need to deploy conversational platforms that are capable of truly understanding the customer—however they phrase the question.
The market is fragmented between those vendors that offer specific solutions in niche markets, to technology providers such as Artificial Solutions that offer a complete platform to enable enterprises to take full advantage of the benefits of conversational AI.
Platforms such as Teneo frequently deliver more advanced capabilities than their counterparts. Particularly in terms of integration into legacy and third party systems, enabling the conversational interface to do more for the user; and data mining tools in which to derive significant value for the conversational data generated.
Macro trends: Demand for enterprise-strength conversational AI technology that delivers independence from the tech giants and guarantees data ownership is rising fast. At a capability level, conversational AI technology will rapidly start to deliver even more humanlike, conversational systems that are truly able to hold long, complex conversations around a broad range of topics and provide in-depth knowledge on specific subjects. This will ensure that conversational AI based systems are able to solve complex issues and at the same time engage, entertain, socialize and exhibit emotional intelligence.
Our Teneo platform offers exciting opportunities for enterprises because of its ability to create AI-based digital assistants capable of delivering premium levels of service over automated channels. In addition, Conversational AI solutions created with Teneo allow companies to increase engagement with all of their customers and rebuild the one-to-one relationship through the use of conversational data.
Other details: The funding round was significantly oversubscribed indicating a real and continuing interest from the investors in innovative, AI-focused businesses.
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