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Friday, December 4, 2020

Tink Labs, which gives free-to-use smartphones to hotel guests, is raising $300M

Tink Labs, a Hong Kong startup that develops smartphones that hotels provide to their guests for free, is raising a new round of up to $300 million to further its international footprint, TechCrunch has come to understand. The startup is in the final stages of completing the deal that could give its six-year-old business a post-money valuation of at least $1.5 billion, two sources with knowledge of discussions told TechCrunch . It isn’t clear at this point which investors are part of the round, but once source said Tink Labs has made an effort to court hotels and travel firms as investors since it believes they could provide strategic value beyond simply capital. But any hoteliers would likely provide smaller checks, with more established investors picking up the bulk of the round. Tink Labs declined to respond when contacted for comment by TechCrunch. The company’s existing investors include manufacturing giant Foxconn (via its FIH Mobile unit), Sinovation Ventures — the investment firm from ex-Google China head Kaifu Lee — and Cai Wensheng, an angel investor who is the founder and chairman of Hong Kong-listed photo app firm Meitu. It also snagged money from SoftBank this summer after the Japanese firm invested in a joint-venture for the Japanese market. That deal appears to have been hugely successful since Japan is Tink Labs’ largest market with over 810 hotel deployments. To date, the firm has announced over $170 million in funding. Its most recent deal was a $125 million investment in 2016, but a source close to the company said it landed an undisclosed deal in the past year that took its valuation over the $1 billion mark and made it one of Hong Kong’s first unicorns. Bloomberg reported last year that it had closed $40 million, but that was never confirmed nor announced by Tink Labs, so this round could mark its official coming out as a billion-dollar business. The company has 17 offices worldwide while its website claims it has deployed phones in over 1,700 hotel locations worldwide, predominantly in APAC and Europe, with over 12 million customers using them. It said in March that it plans to reach one million hotel rooms by the end of this year — half of which will be in Europe — and this new money is likely earmarked for further global growth. To give an indication, there are currently over 90 open positions listed on Tink Labs’ careers page. The company was founded by CEO Terrence Kwok, now 26, and it moved into the hotel concierge phone space after first developing a device rental service that targeted travelers at airports. Tink Labs remained focused on offering connectivity to travelers, but it shifted the focus to hotels because it believes it can help foster a closer relationship between hotel brands and their guests. Tink Labs says that active users typically engage with the device for just over one hour per day, while it claims to have lifted hotel revenue by four percent when adopted. Tink Labs’ Handy phone can also be programmed to work with key-less doors and to activate air conditioning and other gadgets in guest rooms. Its Handy product is a smartphone for hotel guests that takes the pain out of mobile roaming. You can make calls and send messages like a normal phone, but it also includes details of services available at your hotel and nearby activities. It even hooks into the hotel’s telephone system so you can order room service before you get back to your room, call a colleague via their room number, or phone the helpdesk if you’re out and about but need help talking to a taxi driver in the local language. The concept has proven popular with hotels — global brands using Handy include the likes of IHG, Sheraton, Novotel, Mercure and Holiday Inn — and, in perhaps the ultimate validation, a series of knock-offs have surfaced with their own Handy clones. Sign of success for Hong Kong's Tink Labs — someone cloned its Handy phone with a Freedy phone pic.twitter.com/5GVJcKlg9f — Jon Russell (@jonrussell) June 21, 2017 Tink Labs has pushed itself (and Handy) as a platform for enabling sales, both for hotels and ‘preferred’ venues in cities, with pricing starting at $1 for each device in a room per day. While this new funding round is in its final stages before being closed, there is one intriguing wrinkle. Tink Labs seems to have flirted with the idea of an ICO, even though most token sales have shifted to essential private, rather than public, sales. The company is seeking to hire a “strategy associate (with ICO experience)”, according to a listing on its jobs site that has been online for most of this year. Despite multiple requests for information from TechCrunch, Tink Labs has not provided further details on its plan for crypto. However, with this new round soon to be in the bank and the general crypto market declining significantly this year, an ICO would seem unlikely.

Subterranean drone mapping startup Emesent raises $2.5M to autonomously delve the deep

Seemingly every industry is finding ways to use drones in some way or another, but deep underground it’s a different story. In the confines of a mine or pipeline, with no GPS and little or no light, off-the-shelf drones are helpless — but an Australian startup called Emesent is giving them the spatial awareness and intelligence to navigate and map those spaces autonomously. Drones that work underground or in areas otherwise inaccessible by GPS and other common navigation techniques are being made possible by a confluence of technology and computing power, explained Emesent CEO and co-founder Stefan Hrabar. The work they would take over from people is the epitome of “dull, dirty, and dangerous” — the trifecta for automation. The mining industry is undoubtedly the most interested in this sort of thing; mining is necessarily a very systematic process and one that involves repeated measurements of areas being blasted, cleared, and so on. Frequently these measurements must be made manually and painstakingly in dangerous circumstances. One mining technique has ore being blasted from the vertical space between two tunnels; the resulting cavities, called “stopes,” have to be inspected regularly to watch for problems and note progress. “The way they scan these stopes is pretty archaic,” said Hrabar. “These voids can be huge, like 40-50 meters horizontally. They have to go to the edge of this dangerous underground cliff and sort of poke this stick out into it and try to get a scan. It’s very sparse information and from only one point of view, there’s a lot of missing data.” [gallery ids="1742224,1742228,1742227,1742226,1742225,1742223,1742222,1742220"] Emesent’s solution, Hovermap, involves equipping a standard DJI drone with a powerful lidar sensor and a powerful onboard computing rig that performs simultaneous location and mapping (SLAM) work fast enough that the craft can fly using it. You put it down near the stope and it takes off and does its thing. “The surveyors aren’t at risk and the data is orders of magnitude better. Everything is running onboard the drone in real time for path planning — that’s our core IP,” Hrabar said. “The dev team’s background is in drone autonomy, collision avoidance, terrain following — basically the drone sensing its environment and doing the right thing.” As you can see in the video below, the drone can pilot itself through horizontal tunnels (imagine cave systems or transportation infrastructure) or vertical ones (stopes and sinkholes), slowly working its way along and returning minutes later with the data necessary to build a highly detailed map. I don’t know about you, but if I could send a drone ahead into the inky darkness to check for pits and other scary features, I wouldn’t think twice. The idea is to sell the whole stack to mining companies as a plug-and-play solution, but work on commercializing the SLAM software separately for those who want to license and customize it. A data play is also in the works, naturally: “At the end of the day, mining companies don’t want a point cloud, they want a report. So it’s not just collecting the data but doing the analytics as well,” said Hrabar. Emesent emerged from the Commonwealth Scientific and Industrial Research Organisation, or CSIRO, an Australian agency not unlike our national lab system. Hrabar worked there for over a decade on various autonomy projects, and three years ago started on what would become this company, eventually passing through the agency’s “ON” internal business accelerator. Data collected from a pass through a cave system. “Just last week, actually, is when we left the building,” Hrabar noted. “We’ve raised the funding we need for 18 months of runway with no revenue. We really are already generating revenue, though.” The $3.5 million (Australian) round comes largely from a new $200M CSIRO Innovation fund managed by Main Sequence Ventures. Hrabar suggested that another round might be warranted in a year or two when the company decides to scale and expand into other verticals. DARPA will be making its own contribution after a fashion through its Subterranean Challenge, should (as seemly likely) Emesent achieve success in it. Hrabar was confident. “It’s pretty fortuitous,” he said. “We’ve been doing underground autonomy for years, and then DARPA announces this challenge on exactly what we’re doing.” We’ll be covering the challenge and its participants separately. You can read more about Emesent at its website.

SoftBank to wait on Khashoggi murder investigation before deciding on second Vision Fund

SoftBank CEO Masayoshi Son says the company won’t walk away from its existing commitment with the Saudi Arabian royal family — the largest LP in its $100 billion Vision Fund — but the firm will wait on the outcome of an investigation into the death of journalist Jamal Khashoggi before deciding on whether to continue the relationship. In his first public remarks following the gruesome death of Khashoggi, whose murder last month is linked with Saudi Arabia’s Crown Prince Mohammad bin Salman, Son told the audience at a SoftBank investor day that there’s no immediate strategy for a follow-up to the $100 billion Vision Fund. “We still have money in the Vision Fund 1, in addition, the [SoftBank Mobile] IPO is underway so therefore we can collect money so we will use that effectively for now,” he said. “I think it is still too early to go ahead with Vision Fund 2 so we will be cautious in our next step… however, we have no change in the SoftBank 2.0 strategy, we want to continue expanding better.” That is in line with previous comments from SoftBank playing down an imminent second fund — its COO Marcelo Claure recently said there is “no certainty” of a follow-up — but the firm has adopted a much softer response than other top businessmen who are aligned with Saudi money. Virgin CEO Richard Branson very publicly suspended his role with two Saudi projects and walked away from investment talks with the country’s Public Investment Fund (PIF), which was in discussion to put money into his Virgin Galactic and Virgin Orbit ventures. While Son did cancel a speaking engagement at a high-profile Saudi investment event last month, he said today that he believes SoftBank has a responsibility to use the funds it has already collected from PIF. “Before this tragic case happened, we had already accepted a responsibility to the people of Saudi Arabia to help them manage their financial resources and we can’t all of a sudden drop such responsibility. Things that we have already accepted, we would like to fulfill our fiduciary duties, “For new projects, we would like to carefully watch the outcome of the case and once the explanation is fully made then we will think about it once again,” Son said. The SoftBank supremo has traveled to the Middle East to meet Saudi Arabia’s Crown Prince Mohammad bin Salman and government officials, and he said that he “directly raised our concerns with them and asked for further clarity on this tragic case.” The prince, he said, is “taking this very seriously.” PIF’s role in Vision Fund — it is the largest single investor — has threatened to taint its efforts, with chatter in Silicon Valley suggesting that many companies would prefer to take money from less-tainted sources. However, SoftBank has struck two deals in the past week — putting $375 million into robotic food-prep startup Zume and $1.1 billion into glass maker View — which suggest that the sheer size of the checks on offer outweighing any concerns on the origins of its money. When asked about negative blowback, Son said he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did concede that there “may be some impact” in the future. Silicon Valley hoped the Khashoggi story would go away; instead, it may end an era

Credit Karma acquires Noddle from TransUnion and expands to the UK

Credit Karma, the US startup with 85 million users that offers credit reports and a platform to browse and buy other financial services, has made an acquisition to help it kick-start its first overseas expansion beyond the US and Canada: it has acquired Noddle, a UK-based credit reporting service with 4 million users, from TransUnion. Financial terms of the deal are not being disclosed, but Valerie Wagoner, Credit Karma’s VP of International (who had previously been at Twitter), said that it will be a full acquisition of tech and employees — 35 in all — and TransUnion is not taking any stake in Credit Karma as part of this deal, although the two will continue to work together with TransUnion providing data to Credit Karma, as it had done before. As a point of reference — and a sign of the consolidation and competition in the market — earlier this year Experian acquired another credit scoring service in the UK, ClearScore, for the equivalent of $385 million. That service has 6 million users compared to Noddle’s 4 million. Competition authorities are still investigating that deal, and Credit Karma’s will also have to get the pass from regulators before closing. Credit Karma raised $500 million in a secondary round earlier this year that valued it at $4 billion, specifically to help fuel its growth, and that’s what it has been doing. (It also acquired mortgage platform Approved in August.) For TransUnion, this is a cleaning of house, of sorts. The larger company, a credit reporting agency that competes against Equifax and Experian — and thus, in part, with Credit Karma, too — acquired CallCredit in the UK earlier this year for $1.4 billion; Noddle had been a part of CallCredit that overlapped with existing operations at the bigger company: hence the divestment. “We are proud to have partnered with Credit Karma from its inception to empower tens of millions of consumers with the information they need to make smarter financial decisions,” said John Danaher, TransUnion’s president of Consumer Interactive, in a statement. “This deal represents an expansion of our mission to the United Kingdom, and we look forward to supporting Credit Karma as they continue to expand globally.” In an interview, Wagoner said that the first thing that Credit Karma is doing is making Noddle’s previously paid services free to use from now on, to align it closer with Credit Karma’s business model of offering all credit scoring and monitoring services for free, and making money when a user purchases (not just clicks through to) other financial services on its site from partners. Previously, Noddle offered free credit scoring but charged for other services like ID monitoring (more on that below). “We will make sure 100 percent of the business is free and accessible to everyone,” she said. This will be the first step in integrating the two businesses and their customer bases, she said: the next will be to offer Credit Karma’s wider range of offerings — which cover services like automotive loans and mortgages, credit cards and refinancing offers — to Noddle’s users. Although most of the integration will involve using Noddle’s existing base and established market presence in the UK to bring in Credit Karma products, there will be features of Noddle’s coming to Credit Karma as well. The US startup launched a monitoring tool six months ago — in part a response to the many large data breaches that we have seen hit the Equifaxes of the world in recent times — and it will be expanding that to do more with identity monitoring. This is an area where Noddle has been developing products, Wagoner said, and the plan longer term will be to use some of that development in Credit Karma’s wider business. “We never want data breaches to happen but we know they are inevitable in this day and age,” she said, “not just at credit bureaus but all businesses, so it’s important for us to be able to deliver services to members that affect them and their credit around ID monitoring and services that help monitor breeches.” She noted that Noddle’s ID monitoring product — which had been one of its paid products — today has relatively little usage. For example, it partnered with TalkTalk in 2015 to provide ID monitoring to users after the carrier reported a data breach where TalkTalk would have paid for the monitoring deal to offer the service free to its customers. But “it is a sign that Noddle cares about that mission and is a great fit for the Credit Karma family family.” No word on when that product will make its way to the Credit Karma service elsewhere, but that is on the roadmap she said. It will be worth watching to see whether Credit Karma uses this acquisition as a template for how it will enter new markets, or whether it will look to organic expansion elsewhere. The company, we’d reported back in 2015, had been eyeing an IPO within two years. The company is profitable, and we’ve been seeing a strong market for public offerings from tech companies, although for now it looks like the company is focused on creating more diverse revenue streams before taking further steps.

Korean AI startup Skelter Labs lands strategic investment to expand to Southeast Asia

Korean AI startup Skelter Labs is expanding to Southeast Asia after it pulled in undisclosed funding from Singapore-based VC firm Golden Gate Ventures. Skelter Labs was founded in 2015 by founded by Ted Cho, the former engineering site director at Google Korea. It started out developing apps and services that made use of AI but then it pivoted to focus fully on AI tech, which it licenses out to companies and corporations that it works with. Now it is eying opportunities in Japan and parts of Southeast Asia — which has a cumulative population of over 600 million — with Vietnam, Thailand and Malaysia specifically mentioned. The startup raised a $9 million seed round earlier this year, and Golden Gate has added an additional check to that round which came from KakaoBrain — the AI unit of Korean messaging giant Kakao — Kakao’s K-Cute venture arm, Stonebridge Ventures and Lotte Homeshopping, the TV and internet shopping business owned by multi-billion dollar retail giant Lotte. More specifically, Seoul-based Skelter Labs works on AI in the context of vision and speech, conversation, and context recognition, while it goes after customers in areas that include manufacturing, customer operations, device interaction, and consumer marketing. The startup doesn’t disclose customers, but it previously told TechCrunch that its vision is to bring its machine learning technology to daily life and schedules. Possible examples of that might be could include “intelligent virtual assistant technology that can be widely applied to various areas including smart speakers, smartphones, home appliances, automobiles and wearable devices.” Golden Gate is one of Southeast Asia’s longest running tech VC firms. This deal is part of its recently announced third fund, which is $100 million in size. In a statement, Skelter Labs CEO Cho paid tribute to the VC’s strong footprint in Southeast Asia that he said could open doors for the company. Startups in Golden Gate’s portfolio that might be of particular interest could include mobile listings startup Carousell, auto portal Carro, fashion commerce site Grana and online furnishings seller Hipvan. Note: The original version of this article has been corrected. Skelter Labs has announced an extension to its previous round not a new round. Apologies for any confusion caused.

Sequoia leads $10M round for home improvement negotiator Setter

You probably don’t know how much it should cost to get your home’s windows washed, yard landscaped, or countertops replaced. But Setter does. The startup pairs you with a home improvement concierge familiar with all the vendors, prices, and common screwups that plague these jobs. Setter finds the best contractors across handiwork, plumbing, electrical, carpentry, and more. It researches options, negotiates a bulk rate, and with its added markup you pay a competitive price with none of the hassle. One of the most reliable startup investing strategies is looking at where people spend a ton of money but hate the experience. That makes home improvement a prime target for disruption, and attracted a $10 million Series A round for Setter co-led by Sequoia Capital and NFX. “The main issue is that contractors and homeowners speak different languages” Setter co-founder and CEO Guillaume Laliberté tells me, “which results in unclear scopes of work, frustrated homeowners who don’t know enough to set up the contractors for success, and frustrated contractors who have to come back multiple times.” Setter is now available in Toronto and San Francisco, with seven-plus jobs booked per customer per year costing an average of over $500 each, with 70% repeat customers. With the fresh cash, it can grow into a household name in those cities, expand to new markets, and hire up to build new products for clients and contractors. I asked Laliberté why he cared to start Setter, and he told me “because human lives are made better when you can make essential human activities invisible.” Growing up, his mom wouldn’t let him buy video games or watch TV so he taught himself to code his own games and build his own toys. “I’d saved money to fix consoles and resell them, make beautiful foam swords for real live action games, buy and resell headphones — anything that people around me wanted really!” he recalls, teaching him the value of taking the work out of other people’s lives. Meanwhile his co-founder David Steckel was building high-end homes for the wealthy when he discovered they often had ‘home managers’ that everyone would want but couldn’t afford. What if a startup let multiple homeowners share a manager? Laliberté says Steckely describes it as “I kid you not, the clouds parted, rays of sunlight began to shine through and angels started to sing.” Four days after getting the pitch from Steckel, Laliberté was moving to Toronto to co-found Setter. Users fire up the app, browse a list of common services, get connected to a concierge over chat, and tell them about their home maintenance needs while sending photos if necessary. The concierge then scours the best vendors and communicates the job in detail so things get done right the first time, on time. They come back in a few minutes with either a full price quote, or a diagnostic quote that gets refined after an in-home visit. Customers can schedule visits through the app, and stay in touch with their concierge to make sure everything is completed to their specifications. The follow-through is what sets Setter apart from directory-style services like Yelp or Thumbtack . “Other companies either take your request and assign it to the next available contractor or simply share a list of available contractors and you need to complete everything yourself” a Setter spokesperson tells me. They might start the job quicker, but you don’t always get exactly what you want. Everyone in the space will have to compete to source the best pros. Though potentially less scalable than Thumbtack’s leaner approach, Setter is hoping for better retention as customers shift off of the Yellow Pages and random web searches. Thumbtack rocketed to a $1.2 billion valuation and had raised $273 million by 2015, some from Sequoia (presenting a curious potential conflict of interest). That same ascent may have lined up the investors behind Setter’s $2 million seed round from Sequoia, Hustle Fund and Avichal Garg last year. Today’s $10 million Series A also included Hustle Fund and Maple VC. The toughest challenge for Setter will be changing the status quo for how people shop for home improvement away from ruthless bargain hunting. It will have to educate users about the pitfalls and potential long-term costs of getting slapdash service. If Laliberté wants to fulfill his childhood mission, he’ll have to figure out how to make homeowners value satisfaction over the lowest sticker price.

Edo raises $12M from Breyer Capital to measure TV ad effectiveness

Edo, an ad analytics startup founded by Daniel Nadler and actor Edward Norton, announced today that it has raised $12 million in Series A funding. Nadler and Norton have both had startup success before — Nadler co-founded and led Kensho, which S&P Global acquired for $550 million. Norton invested in Kensho and co-founded CrowdRise, which was acquired by GoFundMe. Even so, ad analytics might seem like an arcane industry for an actor/filmmaker to want to tackle. However, Norton said he was actually the one to convince Nadler that it was worth starting the company, and he argued that this is an important topic to both of them as creators. (Nadler’s a poet.) “Movie studios and publishers, they take risks on talent, on creative people like us,” Norton said. “We want them to do well … The better they do with the dollars they spend, the less risk adverse they become.” Nadler and Norton recruited Kevin Krim, the former head of digital at CNBC, to serve as Edo’s CEO. Krim explained that while linear TV advertising still accounts for the majority of ad budgets, the effectiveness of those ads is still measured using old-fashioned “survey-based methodologies.” There are other measurement companies looking online, Norton said they’re focused on social media sentiment and other “weak proxies” for consumer behavior. In contrast, Edo pulls data from sources like search engines and content sites where people are doing research before making a purchase. By applying data science, Krim said, “We basically can measure the change in consumer engagement, the behaviors that are indicative of intent. We can measure the change in consumer behavior for every ad.” In fact, Edo says that since its founding in 2015, it has created a database of 47 million ad airings, so advertisers can see not just their own ad performance, but also that of their competitors. This allows advertisers to adjust their campaigns based on consumer engagement — Krim said that in some cases, advertisers will receive the overnight data and then adjust their ad rotation for that very night. As for the Series A, it was led by Breyer Capital. (Jim Breyer has backed everything from Facebook to Etsy to Marvel.) Vista Equity co-founders Robert Smith and Brian Sheth participated in the round, as did WGI Group. “For more than a decade I’ve watched the data science talent arbitrage transform industries from finance to defense, from transportation to commerce,” Breyer said in the funding announcement. “We needed someone to bring these capabilities to bear on the systemic inefficiencies and methodological shortcomings of measurement and analytics in media and advertising.” On the customer side, Edo is already working with ESPN, Turner, NBCUniversal, Warner Bros. I wondered whether some of the TV networks might have been worried about what Edo would reveal about their ads, but Norton said the opposite was true. “I don’t sense that they in any way have trepidation that we’re going to pull their pants down — quite the opposite,” he said. “They are absolutely thrilled with our ability to help burnish and validate their assertions about the strength of what they’re offering.”

Edo raises $12M to measure TV ad effectiveness

Edo, an ad analytics startup founded by Daniel Nadler and actor Edward Norton, announced today that it has raised $12 million in Series A funding. Nadler and Norton have both had startup success before — Nadler co-founded and led Kensho, which S&P Global acquired for $550 million. Norton invested in Kensho and co-founded CrowdRise, which was acquired by GoFundMe. Even so, ad analytics might seem like an arcane industry for an actor/filmmaker to want to tackle. However, Norton said he was actually the one to convince Nadler that it was worth starting the company, and he argued that this is an important topic to both of them as creators. (Nadler’s a poet.) “Movie studios and publishers, they take risks on talent, on creative people like us,” Norton said. “We want them to do well … The better they do with the dollars they spend, the less risk adverse they become.” Nadler and Norton recruited Kevin Krim, the former head of digital at CNBC, to serve as Edo’s CEO. Krim explained that while linear TV advertising still accounts for the majority of ad budgets, the effectiveness of those ads is still measured using old-fashioned “survey-based methodologies.” There are other measurement companies looking online, Norton said they’re focused on social media sentiment and other “weak proxies” for consumer behavior. In contrast, Edo pulls data from sources like search engines and content sites where people are doing research before making a purchase. By applying data science, Krim said, “We basically can measure the change in consumer engagement, the behaviors that are indicative of intent. We can measure the change in consumer behavior for every ad.” In fact, Edo says that since its founding in 2015, it has created a database of 47 million ad airings, so advertisers can see not just their own ad performance, but also that of their competitors. This allows advertisers to adjust their campaigns based on consumer engagement — Krim said that in some cases, advertisers will receive the overnight data and then adjust their ad rotation for that very night. As for the Series A, it was led by Breyer Capital. (Jim Breyer has backed everything from Facebook to Etsy to Marvel.) Vista Equity co-founders Robert Smith and Brian Sheth participated in the round, as did WGI Group. “For more than a decade I’ve watched the data science talent arbitrage transform industries from finance to defense, from transportation to commerce,” Breyer said in the funding announcement. “We needed someone to bring these capabilities to bear on the systemic inefficiencies and methodological shortcomings of measurement and analytics in media and advertising.” On the customer side, Edo is already working with ESPN, Turner, NBCUniversal, Warner Bros. I wondered whether some of the TV networks might have been worried about what Edo would reveal about their ads, but Norton said the opposite was true. “I don’t sense that they in any way have trepidation that we’re going to pull their pants down — quite the opposite,” he said. “They are absolutely thrilled with our ability to help burnish and validate their assertions about the strength of what they’re offering.”

Retail-as-a-service provider Leap raises $3M and launches first store

The past decade in retail has been the golden age of direct-to-consumer (D2C) and digitally native vertical brands (DNVBs) that use the internet to communicate with customers, execute transactions, handle distribution and offer better economics. But as small independent startups have scaled into unicorn territory and as countless brands have saturated digital channels, customer acquisition has gotten harder and costlier. Companies are now trying to meet customers with different purchase habits by developing physical stores. However, building an effective brick-and-mortar presence can be expensive and risky for DNVBs, requiring resources outside their core competencies. Chicago-based startup, Leap, is hoping to make it easier for digital brands to grow physical retail footprints without the typical risks of store development by taking care of the entire process for them. Leap offers a full-service platform covering the complete life cycle of a brand’s brick-and-mortar launch. In addition to owning the lease and the financial commitments that come with it, Leap covers everything from staffing, experiential design, tech integration, and even day-to-day operations. (Photo by Alexander Scheuber/Getty Images) Less than a year since its founding, Leap announced today the launch of its first store and the close of a $3 million seed round, led by Costanoa Ventures, with participation from Equal Ventures and Brand Foundry Ventures. The debut store will act as the first Chicago location for Koio, the high-end D2C sneaker brand backed by headline-grabbing names like the Winklevoss twins, director Simon Kinberg and actor Miles Teller. Instead of paying a monthly lease fee, along with all the other variable costs associated with operating a physical store, companies like Koio pay Leap on a percent of sales basis, effectively minimizing risk and incentivizing performance. On top of minimizing development expense for brands, Leap believes its customer insights and intelligent logistics platform can help improve shopper engagement, increase customer traffic and drive brand lift. If the startup’s thesis proves true, brands can improve both sides of their brick-and-mortar unit economics by reducing customer acquisition costs and amplifying customer value. At its core, Leap simplifies a DNVB’s physical retail operations into a single line item on its P&L, allowing the company to focus on brand building and supply chain rather than retail strategy, while also allowing them to scale faster. With the latest fundraise, the company hopes to build out its team and continue new location expansion. Longer-term, Leap’s co-founders hope to build a vast network of sites, that can help provide intelligence around new store development and shopper preference. “We want to be the platform to help brands go to market in the offline space”, said co-founder Amish Tolia. “We want to help brands build direct-to-consumer relationships in local neighborhoods across the country and enable them to focus on what they’re best at. Enable them to focus on product innovation, supply chain management, great marketing and brand building.” A glimpse into the future retail While Leap’s value proposition is straightforward, its business model points to a bigger trend in the world of retail. By opting to sell its software and brick-and-mortar services rather than creating its own brands, Leap effectively acts as a “retail-as-a-service” platform. The as-a-service strategy is already quietly growing in popularity in the retail space, with companies like b8ta, the Internet of Things gadget retailer, launching its hardware-oriented “Built by b8ta” platform earlier this year. Though likely heavy in upfront capital costs, retail-as-a-service businesses don’t have the same constant concern around supply chain, manufacturing, consumer acquisition and marketing spend. And in certain pricing models based on a monthly fee or percent of square footage basis, platforms can see more stable revenues relative to pure retail startups. From a brand perspective, DNVBs have been looking for ways to extend growth runways while minimizing the cost and uncertainty that deterred them from physical stores in the first place. The as-a-service model can make brick-and-mortar retail a much more scalable engine, possibly even cooling rising concern around bubbling consumer valuations. As more of the young digitally-born D2C giants resort to as-a-service companies to find marginal customers, we may see the rise of a new set of startups fighting to establish themselves as the platform on which brands operate. If the last decade was defined by retail online, it’s possible that the next decade will be defined by retail-as-a-service. And if you find yourself in Chicago, feel free to check out the Leap-enabled Koio Store at 924 W Armitage in Lincoln Park.

HashiCorp scores $100M investment on $1.9 billion valuation

HashiCorp, the company that has made hay developing open source tools for managing cloud infrastructure, obviously has a pretty hefty commercial business going too. Today the company announced an enormous $100 million round on a Unicorn valuation of $1.9 billion. The round was led by IVP, whose investments include AppDynamics, Slack and Snap. New comer Bessemer Venture Partners joined existing investors GGV Capital, Mayfield, Redpoint Ventures, and True Ventures in the round. Today’s investment brings the total raised to $179 million. The company’s open source tools have been downloaded 45 million times, according to data provided by the company. It has used that open source base to fuel the business (as many have done before). “Because practitioners choose technologies in the cloud era, we’ve taken an open source-first approach and partnered with the cloud providers to enable a common workflow for cloud adoption. Commercially, we view our responsibility as a strategic partner to the Global 2000 as they adopt hybrid and multi-cloud. This round of funding will help us accelerate our efforts,” company CEO Dave McJannet said in a statement. To keep growing, it needs to build out its worldwide operations and that requires big bucks. In addition, as the company scales that means adding staff to beef up customer success, support and training teams. The company plans on making investments in these areas with the new funding. HashiCorp launched in 2012. It was the brainchild of two college students, Mitchell Hashimoto and Armon Dadgar, who came up with the idea of what would become HashiCorp while they were still at the University of Washington. As I wrote in 2014 on the occasion of their $10 million Series A round: “After graduating and getting jobs, Hashimoto and Dadgar reunited in 2012 and launched HashiCorp . They decided to break their big problem down into smaller, more manageable pieces and eventually built the five open source tools currently on offer. In fact, they found as they developed each one, the community let them know about adjacent problems and they layered on each new tool to address a different need.” HashiCorp has continued to build on that early vision, layering on new tools over the years. It is not alone in building a business on top of open source and getting rewarded for their efforts. Just this morning, Neo4j, a company that built a business on top of its open source graph database project announced an $80 million Series E investment.
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