Last Week in Boston Tech Deals

Seven Tech Companies Raised Over $172M

Happy Monday!

Thanks for tuning in.

If you’re a new face, welcome! My name is Nick Stuart and I’ve been writing a weekly newsletter about Boston-area technology companies that have raised capital for about a year now. The goal is to provide more consistent coverage of a geography that many think is criminally under-reported. I don’t think I’m single-handedly solving the problem, but this newsletter helps me learn more about these quiet companies and hopefully teaches you something as well.

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Stuff I’m Reading:


Boston VC Financing Deals:

Foundation Devices 🔒

I wrote about Boston-based Bitcoin wallet company Foundation Devices briefly when I covered that Nebulous had recently raised some new funding. I forgot to include last week that the startup, founded by ex-COO of Nebulous, also just closed a seed round. They raised an undisclosed amount from Animal Ventures, Fulgur Ventures, Great American Mining, Inflection, Visary Capital, and several individual investors. They make a Bitcoin hardware wallet that differentiates itself by focusing on security, transparency, interoperability, and a good UX.

I think Foundation’s product is interesting because it highlights a recurring theme in crypto these days: compromises. The Bitcoin network is censorship-resistant. You can send anyone money, whenever you want, but most choose to send and store their crypto on a centralized exchange that could freeze the accounts and block the transaction at any time. A less discussed compromise is how Bitcoin’s entire ledger is verifiable by anyone, but many store their crypto on a hardware product that hasn’t disclosed its own source code.

What makes Bitcoin so cool is that you don’t have to rely on one company’s ability to make it a secure digital asset. It’s security can be tested and verified by anyone. Wouldn’t it be cool if the same was true about the wallet storing that Bitcoin? That seems to be the premise behind Foundation Devices. A sovereign storage solution for a sovereign currency, just how Satoshi wanted it.

Foundation’s CEO, Zach Herbert, made a thread in July outlining his issues with the current cold wallet landscape:

“Don’t Trust. Verify.”

In short, his problem is that many wallets on the market don’t have open source hardware and software, so you’re taking a private company’s word that there’s no possible way your data could be compromised. (Yes, I know you already do this with all of your personal data — but Bitcoin makes it way easier not to, so you might as well.)

Of course if a leading wallet company like Ledger revealed that they had a security vulnerability, or if a whistle-blower from the company came out and said they were secretly accessing user information, people would flee from the product. That’s just how free markets work. But it would be pretty strange for them to purposely build an inferior product.

My biggest question is why it isn’t commonplace to build completely open-source wallets already? Why would other cold wallet companies purposely build a product doesn’t have verified security? There’s no way that these companies see an ideological problem with being transparent and secure, otherwise they probably wouldn’t proponents of Bitcoin in the first place.

That’s why I think it’s more of a technical challenge surrounding a mixture of quality security chips and a simple UX. Addressing a technical challenge that solves a real pain point in the market seems like a pretty good reason to start a company.

More:

Crypto Exchange Kraken Receives a Bank Charter


Devo 💽

Nine-year-old data analytics firm Devo just raised $60M in Series D funding from Georgian Partners, with participation from Bessemer Venture Partners and Insight Partners. Devo’s analytics platform helps companies drive down the cost and labor associated with collecting and analyzing historical data to improve IT operations and security. It was originally founded in Madrid, Spain in 2011 as LogTrust and later moved its headquarters to Cambridge in 2018, shortly after rebranding. Along with the new funding comes the appointment of a new CEO, Marc van Zadelhoff. Marc is the ex-COO of LogMeIn, which was acquired in 2019 for $4.3B.


Demand Sage 🔍

Demand Sage, the creator of a no-code tool that pulls HubSpot data into Google Sheets, just raised $3M in seed funding from Eniac Ventures and Underscore VC. It’s run by Raj Aggarwal, who previously grew mobile marketing analytics startup Localytics from 2009 until its acquisition back in February. The freemium tool allows sales and marketing teams to automatically upload HubSpot data into Google Sheets files with pre-built reporting templates and dashboards.


Form Energy 🔋

Somerville-based battery technology company Form Energy has raised $52M, per a Form D. The three-year-old company is building hardware and software products to enable long-duration energy storage and energy optimization on the grid. They’ve previously raised $49M from Eni Next, The Engine, Prelude Ventures, Breakthrough Energy Ventures, and others. The company is led by Mateo Jaramillo, ex-VP of Product on Tesla’s energy team.

A true low-cost, long-duration energy storage solution that can sustain output for days, would fill gaps in wind and solar energy production that would otherwise require firing up a fossil-fueled power plant. A technology like that could make a reliable, affordable 100% renewable electricity system a real possibility. TechCrunch


Airworks 🗺️

Airworks, a Boston-based spatial analytics company, just raised $2.7M led by MetaProp, with participation from Innospark Ventures, Creative Ventures, and Met Fund — according to Strictly VC. The four-year-old startup specializes in building CAD drawings of job sites using 3D aerial scans from drones. The product uses AI to convert existing aerial datasets into tagged and segmented CAD drawings that can be used in a built environment by surveyors and land developers. They also offer image stitching and photogrammetry services to clients. Previous investors include FM Global, Roughdraft Ventures, and MIT Delta v.

More:

Boston-based drone analytics company Raptor Maps raised $5M earlier this month.


Humatics 🛰️

Micro-location sensor developer Humatics just raised a $30M Series B from Blackhorn Ventures, with participation from Tenfore Holdings, Fontinalis Partners, Airbus Ventures, Lockheed Martin, and Presidio Ventures. The company develops extremely accurate sensors and location systems that can help bridge the divide between the physical and digital world, giving computers true spatial awareness.

Their two main products are a Rail Navigation System for improving the efficiency of railway operations and a microlocation system that helps computers precisely understand where objects are in relation to each other. They’re ideal for industrial applications like manufacturing and transportation, but also for things like precision-dependent filmmaking techniques and high-accuracy VR applications.


Perfect Health 🏥

Tech-enabled home-based primary care company Perfect Health raised $25M out of a $45M round, according to a Form D. The Woburn-based startup focuses on providing affordable home healthcare solutions for seniors.


Hey there! If you’re still reading this, I’d love to understand why! Would you fill out one question survey so I can write better content?

Thanks for reading!

That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.

Missing something? Spot an inaccuracy?
Email me and tell me about it! I’ll be sure to share it in my next update.

The Long Term Stock Exchange is Here

Plus Eight Boston Tech Companies that Raised Over $300M

The LTSE is Here, But Do We Need It?

It’s good to question everything. Given that this newsletter focuses on venture finance and startups, it makes sense that I’ve spent the last few weeks questioning how we raise capital with topics like rolling funds vs traditional funds and venture debt vs “Securitizing SaaS.” This week, I wanted to question a core piece of the venture-backed startup equation: liquidity. Aside from M&A deals, IPOs are the prized outcome for any venture-backed company.

On Wednesday, Lean Startup author Eric Ries announced that the Long Term Stock Exchange can now begin trading U.S. exchange-listed stocks and will be able to list new companies as well (none have listed directly with the LTSE so far). The exchange, backed by the likes of Andreessen Horowitz, Founders Fund, and Initialized Capital, represents Silicon Valley’s disdain for the short-term thinking and execution that traditional stock exchanges often incentivize.

Many VC’s have been arguing for years now that the traditional IPO is a ripoff and large private businesses should seek direct listings (the SEC is finally coming around to expanding direct listing options). Meanwhile, everyone and their mother is spinning up a SPAC to avoid the IPO debacle altogether. Ries had a bigger vision than just altering the rules of stock exchanges and wanted to instead build an entirely new one from scratch. In May of 2019, that vision got approved by the SEC and is now live for trading as of last week.

The LTSE is comprised of institutional investors who share the exchange’s vision of empowering long-term focused companies, calling themselves the Long-Term Investor Coalition (LTIC). Their website states, “It's a chance to build a new relationship between companies that are built to last and the stakeholders who believe in them.”

Some tech investors and CEO’s argue that the most meaningful private companies that exist today live on a time horizon that the public markets simply can’t stomach. How do you discount the cash flows of colonizing Mars? What about eliminating aging, or creating near-infinite energy sources?

What the LTSE Wants

The LTSE’s plan is to augment standard listing rules and encourage companies to adopt a set of governing practices that focus on a long-term outcomes, rather than short-term spikes in price. As Ries puts it, “Companies that operate with a long-term mindset tend to outperform their peers over time. But going public can pressure even the most visionary founder into a short-term mindset.”

They have a set of guiding principals that outline how companies on the exchange must behave. None of them are strict rules exactly, but in order to be listed, the company needs written policies in place that cover a range of topics. They include things like:

  • Considering a broader range of stakeholders, and the role they play in the company’s success. They want exchange listed companies to focus on understanding environmental stakeholders, developing a concrete approach to D&I, creating a strong employee compensation/incentive plan, and more. Last year this view was echoed when the Business Roundtable Redefined the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans.’

  • A policy regarding how the company will measure success in the long term. All companies are still required to make quarterly filings with the SEC by law, but the LTSE wants their listed companies to have additional strategic plans and filings that favor long-term thinking.

  • Companies listed on the LTSE would be discouraged from tying executive compensation packages to stock price or other similar measures. Instead, their compensation would be tied to longer-term vesting schedules and outcomes.

  • “A policy explaining the engagement of the company’s board of directors in the company's long-term focus, including discussion of whether the board and/or which board committee(s), if any, have explicit oversight of and responsibility for long-term strategy and success metrics.”

  • A thoughtful plan for how these long-term companies should engage with their long-term stakeholders. This could mean perhaps a special class of shares for long-term oriented investors gets a special set of voting rights.

Is it Necessary?

A lot of critics point out that you don’t really need a brand new exchange to make these ideas a reality, and plenty of massive companies have been greatly rewarded for thinking long term on regular exchanges. Bezos’s leadership has always favored long-term results and investors have historically rewarded him well for it. However, I think Amazon is a bit of an outlier here.

Companies listing on LTSE also don’t have to trade exclusively on it. They can be listed on other exchanges simultaneously. It seems like less of a new system of listing stocks and more of a “stamp of approval” that the company is dedicated to long-term value creation. In that sense, it’s a bit similar to something like a B Corp. There’s no financial benefit to becoming one, and it’s difficult to stay one, but doing so is undoubtedly better for the company and society in the long term.

Also, it seems like the biggest problem with short-term decision making by executives might not be as much about company leadership as it is about investor behavior, and this exchange doesn’t change anything about investor behavior yet. Your company can still get shorted or you could get bullied by an activist investor. Regardless, it’s an interesting model and I’m excited to see what the first batch of companies listed on the LTSE will look like.

More:

Eric did an AMA on Hacker News and the comments bring up a lot of other thoughts, ideas, and criticisms.


Stuff I’m Reading:


VC Financing Deals:

Snyk 🔍

London and Boston-based Snyk just raised $200M in Series D funding from Lee Fixel’s Addition at a $2.6B+ valuation. Utilizing open source software can rapidly accelerate a business’s software development timeline, but developers have to inherit the potentially vulnerable code that comes along with it. The five-year-old company helps open source developers within enterprises continuously identify security vulnerabilities in this code.


LightForce Orthodontics 🦷

Lightforce is a Cambridge-based dental technology company that makes 3D-printed brace brackets and bite-correction trays. They just raised a $14M Series B led by Tyche Partners, with participation from Matrix Partners and AM Ventures. The company claims that 3D printed brackets are cheaper and more accurate, which leads to less patient visits and higher profits.

More:

In June, Boston-based dental AI company Overjet raised $7.9M.


Zapata Computing 🖥️

Back in March, I highlighted where Zapata Computing sits within the budding Quantum Computing ecosystem when they raised an undisclosed strategic investment from Honeywell. According to a new Form D, the company has now raised close to $30M out of a $40M round.

Zapata is building a middle-layer software solution for companies building workflows on near-term quantum computers. With this latest investment, the company will have raised $60M+ from previous investors including Comcast Ventures, Prelude Ventures,  Pillar VCThe EngineFounders Fund, and several other deep-tech VCs.


Catalog 🧬

Catalog, a Boston-based company building a data storage solution with DNA as the backbone, just raised a $10M Series A from Horizon Ventures and Airbus Ventures.

“The world will generate 160 zettabytes of data in 2025. That’s more bytes than there are stars in the observable universe. Conventional storage media like flash-drives and hard-drives do not have the longevity, data density, or cost efficiency to meet the global demand. CATALOG is building the world’s first DNA-based platform for massive digital data storage and computation.” — Catalog

Apparently even current-day hard drives only have a storage-to-size ratio of 30 million gigabytes per cubic meter, which adds up quickly as we continue to ramp up data center development worldwide. Catalog can store 600 billion gigabytes into the same volume by encoding data onto DNA. Last year, they filmed a short documentary on their process of putting the entirety of Wikipedia into DNA.


Squadle 🍔

Cambridge-based Squadle, a hardware and software developer creating solutions for fast food operations, just raised a Series A of an undisclosed amount. The seven-year-old company has previously raised $3.8M from investors including Bolt, BOSS Syndicates, 500 Startups, Walnut Ventures, and Companyon Ventures. They help multi-unit restaurant owners simplify operational tasks that are usually done using paper manager playbooks. Bringing them online into a dashboard helps owners monitor things like compliance, food safety, and store performance across all facilities. They’ve experienced a 700% jump in ARR in the last 12 months, according to the funding announcement.


Orig3n 🧬

Orig3n, a Boston-based company that uses DNA tests to recommend lifestyle changes, is currently raising $29M. They offer a variety of DNA tests that can be used to create personalized vitamin kits, nutrition guides, fitness routines, skin complexion profiles. They’ve already raised $50M+ from a handful of biotech investors including Hatteras Venture Partners, Syno Capital, and Haitong International.


Solo.io 💻

Three-year-old digital transformation company Solo.io just raised $23M in Series B funding, according to a new Form D. They’ve previously raised $13.5M from investors including True Ventures, Redpoint, Haystack, and WestWave Capital. Solo is for enterprises with large, complex legacy applications that would be difficult to completely replace overnight. Instead, they use Solo’s API to easily deploy microservices on top of their application network as an “edge application.”


Tally Street 💸

Customer insights platform Tally Street just raised a $750K seed round from Launchpad Venture Group. The company’s low-priced product integrates with accounting software like Quickbooks and automatically uncovers customer trends. They focus on analyzing SMB accounting data to show businesses which of their customers are the most valuable for future revenue generation.


Hey there! If you’re still reading this, I’d love to understand why! Would you fill out one question survey so I can write better content?

Thanks for reading!

That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.

Missing something? Spot an inaccuracy?
Email me and tell me about it! I’ll be sure to share it in my next update.

Revisiting SaaS Securitization

Plus Ten Other Boston Companies that Raised $115M+

Hope you all had a wonderful labor day weekend. If you’re looking for some motivation to get outside and enjoy the last weeks of warm weather, just remember that September is already 25% over.

If you’re new here, welcome! My name is Nick Stuart and I’ve been writing a weekly newsletter about Boston-area technology companies that have raised capital for about a year now. The goal is to provide more consistent coverage of a geography that many think is criminally under-reported given its historical outcomes. I don’t think I’m single-handedly solving the problem, but this newsletter helps me learn more about these quiet companies and hopefully teaches you something as well.

Share Tech Deals by Nick Stuart

Fintech Spotlight: Capchase 💸

A month ago, I wrote about why the securitization of SaaS revenue might be the next big thing in non-dilutive financing for startups. Startups like Pipe are helping software companies with strong revenue securitize and sell their accounts receivable on an investor marketplace in exchange for working capital. The central idea is that recurring revenue companies shouldn’t be selling equity for cash to cover highly predictable expenses, such as customer acquisition.

In that post, I had also mentioned a similar Cambridge-based company called Capchase, which went on to raise a $4.6M seed round last week led by Caffeinated Capital, Bling Capital, SciFi VC, BoxGroup, and ONEVC. It’s a pretty interesting bunch of non-New England investors that have collectively backed well-known fintechs including Stripe, Ramp, Brex, Plaid, Coinbase, and Square.

From TechCrunch:

Startups upload key details of their customer contracts and financial history to Capchase, and the company uses its underwriting algorithms to quickly assess the quality of those contracts and extend a debt line. The startup calls itself part of the “non-dilutive revolution,” and it’s headquartered in Boston.

Unlike Pipe, Capchase doesn’t appear to be selling Accounts Receivable contracts on a marketplace to investors. They seem to be more of a vertically-specific lending solution offering something similar to AR lines of credit only. They’re betting that a speedy and algorithmic approach to lending debt will make them more attractive to startups than traditional debt.

How They Make Money:

When startups get their annual AR amount up front from Capchase, they're really getting slightly less than the total amount, and Capchase is skimming small percentage off of it to collect from the startup’s customers. It apparently ends up being a bit more expensive than regular venture debt, with the benefit being a much faster time to close and no warrants.

Aside from working at a company that issues a product that Capchase hopes to disrupt, I’m pretty interested in this space for a few reasons:

  • Building a competitive moat probably won’t come from the pricing of these contracts, because capital is mostly is a commodity. The best VCs and debt lenders already know this. So, where will the moat come from? More efficient pricing of debt? The speed of execution from intro to cash in account? (Capchase claims they can underwrite this debt in hours, and will soon be able to in minutes). But how long can speed remain a moat?

  • I’ve heard bankers talk about the idea that these companies might end up being more of an API play that banks use as underwriting software for lending to SaaS companies. I doubt that a Pipe or Capchase could be competitive in lending deals against technology banks (for now) — but maybe they’d have better luck selling to them? Although, you’d think if SaaS lending could be done 100% by an algorithm that banks would be doing this by now. They’d have much more data to create the algorithm too.

  • With that said, it’s easy to doubt companies that are “unbundling” banks at first. Why would a vertical banking product perform better than a company with dozens of identical and well-performing products? I’m sure that back in 2017, industry insiders doubted that a little company called Brex would gain any traction. As a16z puts it, Fintech Scales Vertical SaaS.

  • I’m all about exploring new and interesting ways to finance companies outside of the traditional debt/equity combo, and this method is certainly interesting. Definitely hit me up if you’d like to chat more about it.

More:

Pipe’s CEO Harry Hurst and angel investor Jason Calacanis had an interesting and informative beef on Twitter recently about how Pipe works.


Stuff I’m Reading:


Other VC Financing Deals:

Nebulous 🌎

Last month, Axios reported that one of the most highly-anticipated decentralized storage platforms was caught in an investor revolt from a $200M+ fundraise held three years ago. The kicker? They haven’t even fully launched yet. Meanwhile…

Per a Form D, Boston-based Nebulous just raised $6.2M in equity. Nebulous is the parent company of decentralized storage platform Sia and ASIC mining hardware company Obelisk. Back in July of 2019, they raised $3.5M led by Bain Capital Ventures. Other previous investors include SV Angel, Collaborative Fund, and Bessemer Venture Partners. Early seed investors included Boston-based Raptor Group and First Star Ventures.

They’re building a completely decentralized file sharing platform for the open internet. Much like bitcoin transactions being confirmed on the ledger by thousands of others on the network, files stored on Sia’s network are securely distributed across nodes around the globe. Unlike traditional cloud computing, there’s no central point of failure that could lead to network downtime.

More:

Nebulous’ COO recently branched off to start a Boston-based crypto cold storage wallet company called Foundation Devices. They focus on providing a truly open-source Bitcoin storage experience — something that other big names in the space like Ledger have failed to provide.


ecoText 📚

Over a year ago, my close friends and classmates at UNH began building an EdTech company called ecoText to decrease the pricing and environmental impact of the traditional college textbook. This past week, they successfully crowdfunded $166K+ on the NetCapital platform at a $2.5M valuation! The NH-based company is a web and mobile application that helps students view and interact with their course materials. For now, they’re focusing on being the one-stop-shop for Open Education Resource (OER) licensed textbooks, but will continue to build out relationships with other big-name book publishers. Bram Berkowitz from The Buzz put together a great summary about them back in May.


Biofourmis 😮‍💨

Softbank’s Vision Fund and Sequoia made their latest foray into the Boston tech scene with a $100M Series C investment into Biofourmis. Founded in 2015, the company has created a wearable hardware product and accompanying software platform for detecting various vital signs for better-personalized drug delivery. More recently, they’ve focused on COVID detection.

I recently purchased an Oura Ring wearable and I couldn’t be more bullish on the future of biofeedback and personalized insights on physical health. I think we still have a few years to go before these things are perfect, but we are getting really close. Also worth checking out consumer wearable Levels.

More:

Amazon launches Whoop clone, and the data might be sold to insurers


Unytalk 🎥

According to Crunchbase, Sharon-MA based Unytalk just raised an undisclosed seed round. Founded by Mahendra Penumathsa, they’re building a back-end solution for hosting remote events. Why? My guess:

This is true in my opinion. Zoom’s meteoric growth was part of a short-term solution to a bigger problem. The real goldmine is building a platform for customized back-end solutions for anyone to build a video conference system. I would place my bets on companies like Daily, Mux, and Agora who are building APIs for on-demand video.


Immuto 💻

Two-year-old Immuto is building a platform to help others build digital health applications that deal with sensitive data. It kind of sounds like a HIPAA-compliant Retool. They went through Techstars and MassChallenge and recently raised $120K from Techstars, according to Crunchbase.


Slang 🎤

Slang is a seven-year-old EdTech company helping non-English speakers become fluent in English while studying career-specific courses. They just raised a $2.5M convertible note from LatAm-focused ALLVP and several other South American VCs. The company was spun out of MIT and is led by Diego Villegas.


Humanity 👵

I wrote about Humanity back in March when they raised $2.38M to help users find out how they can live longer. According to Crunchbase, they’ve now raised $2.5M from Boston-based One Way Ventures, Esther Dyson, and Serge Chiaramonte. The company is on a mission to create a subscription-based app to help users monitor key biomarkers associated with aging and ideally take action to improve those markers. Founded in 2017, Humanity is led by Peter Ward and Michael Geer (both of whom are actually UK-based).


Preddio Technologies 📡

Pre-launch industrial IoT startup Preddio Technologies just raised $1M. According to Linkedin, They’re a “provider of industrial instruments for measurement, control processes, and cloud services” being led by Aaron Gannick.


Some Boston Companies That Raised from YC:

These three companies New England-based came out of YC’s summer batch the other week (I covered my favorites here). They each raised $125K from the accelerator, so they’re definitely worth profiling:

Biocogniv 🏥

Biocogniv is a Burlington, VT-based company that launched specifically in response to COVID-19. It’s led by ex-Twitter and Magic Leap engineer Artur Adib.

From their website:

We are developing artificial intelligence models (patent-pending) that can screen and predict outcomes for COVID-19 within the first hour of presentation to emergency departments using only routine blood tests.


Acho 💽

Acho is a Boston-based company building a no-code data warehouse tool for building projects with disparate data sources. It eliminates the complexity of running SQL queries for big data projects and integrates as many apps as you need. There’s also a separate Exchange component where you can use other compiled datasets.


Arist 📱

Arist is another startup fresh out of YC that’s based out of Wellesley, MA. Co-founded by Michael Loffe, Ryan Laverty, and Joe Passante, the company is building an education platform that helps enterprises text employees entire educational courses, question-by-question. They’re betting on the increasingly popular idea that text messages have the highest rate of engagement and accessibility among messaging mediums, so we should deliver educational content through them.

Also: I recently wrote about Boston-based Tone, which has a similar hunch about SMS engagement, but for decreasing eCommerce churn.


Hey there! If you’re still reading this, I’d love to understand why! Would you fill out one question survey so I can write better content?

Thanks for reading!

That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.

Missing something? Spot an inaccuracy?
Email me and tell me about it! I’ll be sure to share it in my next update.

The Most Interesting Startups From YC Demo Day

Plus Seven Boston Companies that Raised VC

YC Digital Demo Day

I combed through the 194 presenting companies from YC’s Summer batch that presented last week and tried to condense the coolest-sounding ones into a single sentence. Here are some that caught my attention:

Enterprise:

  • Bandit — Algorithmically boost user retention with targeted coupons.

  • Tella + Queue + Backlot — Interesting plays in the video editing space.

  • Synth — Fake datasets for developers that act real.

  • Digital Brain — Streamlined customer support tickets.

  • SafeBase — Startups can be seen as safe/secure when selling to large clients.

Consumer-ish:

  • Bits — Build your credit score faster.

  • Quell — A more fun-sounding Peloton.

  • Artifact — Interview and preserve memories of people you love.

  • Hotplate — Cloud kitchens, but you’re the chef.

  • Gilgamesh Pharma — Psychedelic drugs for depression & anxiety.

  • Hanna Life Technologies— Making making babies easier.

  • Jemi — Help influencers monetize themselves.

(Craziest website award goes to Letter.) 🤯


Stuff I’m Reading


VC Financing Deals:

Radical Plastics 🤙

Radical Plastics, a company making biodegradable plastics for packaging solutions, is raising $2.4M. They won the Cleantech Open Northeast in 2018. The company combines conventional plastics with a catalyst made of tiny naturally occurring minerals. The result is a durable plastic material that can biodegrade in ambient conditions.

This two-stage degradation process begins with a chemical phase, in which the long polymer molecules are broken down to smaller components by a free radical mechanism.This triggers a second, biological phase in which microorganisms in the environment see these components as food and metabolize the material turning it into biomass, CO2 and water. — Radical Plastics


Ovia Health 👶

Ovia Health, which provides a suite of maternity benefits, is raising $12.6M, with $7.6M already closed. Their last round of financing was in 2016 when they raised $10M led by Blue Cross Blue Shield of MA. The 11-year-old company offers a variety of consumer benefits products for fertility, pregnancy, and parenting.


Folx Health 🏳️‍⚧️

Back in May, I wrote about a stealth digital health startup called Folx Health raising $4.35M from Define Ventures, an $87M early-stage digital health fund. Now WSJ Venture Capital reports that they have raised a formal round of funding.

The company is developing a telehealth service and prescription marketplace that is run by, and tailored to, the queer community. They’re starting out by focusing on products for PrEP, STI tests, hormones, and fertility testing.

It’s run by CEO A.G. Breitenstein, who previously co-founded Optum Ventures, and served on the board of Buoy HealthLetsGetCheckedVim, and WellSky. Since they last raised, they’ve brought on several new employees. They now have CTO Ryan Scharer on board, who previously served as VP Engineering for Boston-based Patient Ping, which raised $60M from a16z, F-Prime, and GV last month.

“We know that the best care comes from people who understand us, who understand our lives and who can empathize with our deepest needs. And “gay-friendly” is great, but it’s not enough. Gay-friendly still assumes that we are the exception, not the rule. We can do better. We can personalize care. We can tailor the experience and scale the access, by focusing and listening to our community.” — Folx Health


XYZ Robotics 🤖

Shanghai and Allston-based XYZ Robotics just raised $17M in Series A funding from Source Code Capital, Gaorong Capital, and Morningside Capital. The two-year-old company has built computer vision-enabled picking stations that can lift and sort a variety of objects, ideal for a shipping warehouse setting. The company has now raised $28M.

First launch | "XYZ Robotics" completes round A financing, improving  logistics and industrial automation efficiency with hand-eye coordination  technology | domeet webmaster

Raptor Maps 🦖

Raptor Maps, a five-year-old analytics company for solar energy developers, just raised a $5M Series A led by Blue Bear Capital, Data Point Capital, and Buoyant Ventures with participation from Congruent Ventures, YC, Powerhouse Ventures, and Mass CEC. The Somerville-based company uses drones and computer vision to capture aerial data for solar farm development and rooftop solar panel installations. More from BostInno.


The Predictive Index 🔍

The Predictive Index, a 65 year old workplace analytics company that raised $50M from General Catalyst in 2019, raised $6M according to a Form D. The company switched hands in 2014 with an acquisition by CEO Mike Zani and is now focusing on scaling its talent optimization platform. They offer a variety of cognitive and behavioral assessments for companies to better understand current and potential employees.


Amwell🏥

Google just announced that they’ll be making a $100M strategic investment into telehealth company Amwell. I last wrote about Amwell in March when they raised $60M from Cowen Healthcare Investments. Google had to pay someone $100M to actually use Google Meets to make video calls. Genius.


Hey there! If you’re still reading this, I’d love to understand why! Would you fill out one question survey so I can write better content?

Thanks for reading!

That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.

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OK I'll Bite, What's a Rolling Venture Fund?

Plus Four Boston Companies that Raised $63M+

What Are Rolling Venture Funds?

Outside the conversations about NYC and SF being doomed, Rolling Venture Funds are the new hot topic in the Twittersphere. They’re buzzy enough that someone already made a substack newsletter to curate rolling fund news and developments. So, what are they, and why should you care as a founder, investor, or LP? I’ve been trying to get a better understanding of them over the past week myself, and here’s the simplest explanation I could write up:

February: AngelList Introduces Rolling Funds

In February, AngelList introduced a new Rolling Venture Fund product, targeting emerging VC fund managers that want to quickly raise and deploy capital. What opportunity did they see in the market?

The Problem: Fundraising is Old Fashioned

Raising venture capital for a new fund is one of the more time-intensive processes as a fund manager. Plus, while GPs are out raising money for a new fund, they might be paying less attention to potential new deals on their desk or emerging issues with their current portfolio investments. The traditional VC fund structure might also limit the ability of partners to invest new LP money until the fund has officially closed. Lastly, there’s a short period when VCs aren’t fundraising and are heads down making investments, but a great LP might be out there looking to write a check. Why should they have to turn away good commitments? What if they could deploy that LPs money instantly?

“The cost of starting a company has declined dramatically in the last 20 years, and now it is time for the cost of deploying capital to decline as well.” — Stephan Hays

The Solution: A “Rolling Fund” Structure

The rolling fund structure enables a General Partner to take on new LP money on a rolling basis, as often as they’d like. With some nifty legal structuring, AngelList made it easy for LPs to subscribe to a venture fund at any time in its life cycle, making payments on a quarterly basis. LPs can invest in the fund and get returns on all investments made after the point they invested, but not before. Fund managers can immediately deploy capital that’s been raised without waiting for a fund to close. Paired with AngelList’s existing fund management solutions, it’s enabled them to offer a sort of “full-stack” VC-as-a-Service solution.

Under the rolling fund structure, fund managers raise a specific amount of capital, then set up quarterly LP commitments that roll in automatically. New LPs can join the fund at any time, and funds that haven’t been invested roll into the next quarter. Say my first and only LP invests $10K quarterly into my rolling fund. If I only make one $5K in a quarter, their remaining $5K commitment rolls into the next quarter.

AngelList takes a 1.5% fee on all committed funds (charged quarterly), and if you source an LP from the AngelList platform, they get 5% of that LP’s carry when any distributions are made. If you source the LP yourself, they take nothing. An additional benefit of the rolling fund is its legal classification. Using Rule 506(c) of Reg D, rolling fund managers can use general solicitation and advertising to find new LPs. Every LP still needs to be accredited, but this could make it much easier for an emerging manager to get their first few checks.

“AngelList’s bet is that smaller emerging investors will find more value in the ability to sign up more limited partners immediately after a high-profile exit or markup has them appearing to have a hot hand.”Alex Konrad

August: “Solo Capitalists” Become Mainstream

Building off the tailwinds from Alex Danco’s idea of the Social Subsidy of Angel Investing, Nikhil Basu Trivedi wrote a fascinating piece on the Rise of the Solo Capitalist. These are individual investors who are using their personal brand and a compelling thesis on a market to raise funds that can compete head on with traditional venture investors. The GP is the brand of the fund. They might be superstar investors, serial entrepreneurs, or people with a truly unique view of a market opportunity that they’re ready to capitalize on in a way that few others can.

August was a big month for new rolling fund announcements from these sort of high-profile investors. Sahil Lavingia stole the spotlight when he announced SHL.vc. At around the same time, Cindy Bi started soliciting investors for her new fund, CapitalX. Other investors utilizing the rolling fund structure include Stephan Hays and Tyler Tringas.

It makes a lot of sense for big-name GPs to put money into these funds. Like Kate Clark wrote in February, partners at top tier firms like a16z are putting their personal money into microfunds to guarantee access to hyper-competitive deals.

Some Unknowns

I think it’s important to be weary of any new financial product. New things are always popping up that promise to “democratize X” or “disrupt Y.” Although the idea of being able to raise and deploy funds easier sounds objectively better than traditional VC, there are still some unknowns.

There are certainly still benefits to the traditional venture fund structure:

  • A big question on a founder’s mind when taking VC money might be, “Will they be able to invest in me again further down the line?” Raising millions of dollars as a VC signals to potential portfolio companies that you’ll have enough ammunition to fund them all the way to exit. A rolling fund can’t really tout big AUM numbers.

  • In a way, I think the cumbersome process of sourcing LPs could be a test for how the relationship will look long term. Lowering the amount of friction it takes to obtain LPs is of course useful — but my guess is some GPs and LPs might hold the opinion that the “dance” required to raise capital is good. It’s how you get to know the person you’re engaging in a long term relationship with.

There might also be some issues that arise directly from using this structure:

  • One potential issue might be accurately tracking returns. The money coming into the fund is entering in a staggered and sporadic way. How will this impact metrics like IRR?

  • Chris Harvey from Law of VC notes that although this structure isn’t illegal, there’s no legal opinion that clearly authorizes it — which may lead to difficulties down the line. I think this might cut off a good percent of potential LPs that simply aren’t willing to meddle in something that’s “technically legal.”

  • How will these rolling fund investors think about reserves? If they can’t anticipate how much capital they’ll have for the life of the fund, will they know if they can maintain their allocation? Naval Ravikant (founder of AngelList) thinks they shouldn’t care about them at all.

  • If you have a bunch of smaller and less vetted LPs, should you be concerned about their behavior in a downturn? According to AngelList, you can still impose similar commitments in an LPA as you would in a regular fund. Ex: “Must commit to at least ten quarters. But it’s certainly a different dynamic to not know what your investing partnership will look like in the long term.

So…who’s wants to start the first Rolling Fund of Funds?

Some Additional DD on the Topic:

Share Tech Deals by Nick Stuart


Stuff I’m Reading:


Boston VC Financing Rounds:

Drizly 🍺

Alcohol delivery delivery marketplace Drizly just announced a $50M Series C led by Avenir, with participation from Tiger Global. The eight-year-old company has now raised ~$120M from a handful of individual angels and VCs. Along with the Series C announcement, Drizly also disclosed that their sales have increased 400% YoY and they’ve reached sustained profitability. The investment will also support their foray into cannabis delivery through Lantern.


HelloTeam 👋

Four-year-old employee engagement and talent management platform HelloTeam raised $3.5M in a seed round led by Underscore VC, with participation from Osage Venture Partners, Bain Capital Ventures, VT Technology Ventures, and VentureForGood. See why Underscore invested here.

Founded by Tanya Bakalov, the company helps employees learn more about each other through an internal directory and activity feed. It’s a formal online medium for things like wishing happy birthday or congratulating others on promotions. It’s also an HR tool for managers to engage, survey, and set goals with employees.

I think integrating engagement and recognition into remote work will be a real challenge for many businesses, and companies like HelloTeam are well-positioned to alleviate this. Now that we all just talk on Zoom, Slack, and email, things can feel a bit transactional (or even hostile). It’s tough to see who your coworkers really are and how they’re progressing professionally.

See also: Back in June I wrote about Workhuman, a MA and Ireland-based unicorn that’s also working on performance management and employee recognition.


Tone 📱

Cambridge-based Tone, an SMS marketing platform out of Techstars, raised $1.3M out of a $2M round last week per a Form D. It’s a conversational AI product similar to Drift, but with a focus on engaging lost eCommerce customers via text message. When people close out of a web page with a loaded cart, a follow-up email is usually sent to their inbox. However, according to Tone, a follow-up text message can retrieve far more lost customers than follow-up emails.


Podimetrics 🦶🏽

Podimetricsdeveloper of a floor mat aimed at preventing diabetic foot ulcers through temperature monitoring, raised $8.6M in Series B2 funding from Polaris Partners, Rock Health, Norwich Ventures, and Scientific Health Development. I wrote about them back in December when they raised a $16.5M B1 round. The Podimetrics RTM system includes an IoT foot mat for scanning foot temperature paired with a web-based application for clinicians to analyze results. Diabetes is the leading cause of lower extremity amputations in the US and approximately 14-24% of those with diabetes who develop a foot ulcer will require amputation. With 30M+ diabetes patients in the US alone, that equates to 4-7M amputations.


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That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.

Missing something? Spot an inaccuracy?
Email me and tell me about it! I’ll be sure to share it in my next update.

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