E11: Inside VC Deals - Rubrik $752m, Augment $252m, ThreatLocker $115m, QI Tech $50m, Beehiiv $33m, Inhabitr $27m, Backflip $15m

Welcome to the Superconnector podcast. I am Matt Joseph, your host. Today, we're gonna be diving into eight of the most interesting startups that raised venture capital in the last week. I'm excited to jump into it. Let's do this.

First up, Augment, a rival to GitHub copilot has raised 252 million at a 977 million post money valuation. That is a whole lot of money. And what makes Augment interesting is that it's backed by Eric Schmidt.

Now, Eric Schmidt, if you don't know, was the longtime CEO of Google. He's actually the CEO who the founders hired

to be the adult in the room. And he was there for about 10 years. He became a billionaire in that process.

And now I guess he's funding startups.

Now, Augment is one of many startups that are trying to be coding assistants to engineers. And this is a space that is full of large companies. Obviously, GitHub Copilot is at the top of that list, but there's a lot of other ones that are in the space as well. Let's check out what the article says about this.

Practically every tech giant offers its own version of an AI coding assistant. Microsoft has GitHub copilot, which is by far the firmest entrenched with over 1. 3 million paying individual and 50, 000 enterprise customers as of February. Amazon has AWS is code whisperer and Google has Gemini code assist recently rebranded from duet AI for developers. Elsewhere, there's a torrent of coding assistant startups, Magic, TabbyML, Sweep, Laredo, and Cognition, which reportedly just raised 175 million, to name a few.

Now, despite the fact that there are so many other competitors in the space, it doesn't actually seem like these businesses are profitable. And the article calls that out. Here's what it says.

Even Copilot loses money to the tune of 20 to 80 a month per user, according to the wall street journal. Now, Augment was founded by Igor Ostrovsky,

who spent six years as a software engineer at Microsoft and another eight years as an engineer at pure storage. He also interned, I guess, at a VC firm called Sutter Hill, a well known firm. So he has some experience at the intersection of engineering and venture capital. That probably explains why he was able to get a who's who of investors to join into the company.

Now, Igor actually posted on LinkedIn about this fundraise and his statements are somewhat telling. Here's what he had to say. In late 2021, I became fascinated by the potential of a rapidly emerging technology, generative AI.

As a software builder, I could see just how much generative AI will transform my field. We saw early promise in technologies like GitHub copilot and projects like alpha code, but it was clear that this is barely even the beginning.

I was picturing humans and AI collaborating together at building software, humans augmented by AI. The idea of software developers augmenting AI is coming closer to reality day by day, even though there's still a long way to go.

Now there's a couple of things that I think are pretty interesting about the round.

Firstly is that they publicized the post money valuation. So it's rare for startups to put their valuations out there. They want to play that kind of close to the vest, and I also find it really interesting that they cut it off at 977 million. What that tells you is they don't want to be known as a unicorn.

They would rather be known as just a regular company. They don't want to put the pressure and expectations of being a billion dollar company on their plate, which makes sense because they literally just launched.

In 2022, Ostrovsky and Guy Gur-Ari, previously an AI research assistant at Google, teamed up to create augments MVP. To fill out the startups executive ranks, Ostrowski and Gur-Ari brought on Scott Dietzen, ex CEO of Pure Storage and Dion Almayer, formerly a Google engineering director and VP of engineering at Spotify.

The reality is that big companies like Microsoft who really want to win the AI race are going to continue to lose money on this for a long time. And they're going to try to outspend their competitors, like augment who come in with a lot of VC funding. But that said, they've recruited a great team and I think they have a shot to do something interesting.

Up next, Beehiiv, the newsletter publishing platform, has raised 33 million to make its platform more sticky.

I like that headline.

NEA is leading this Series B With Sapphire Sport and previous backer Lightspeed Venture Partners also participating. The startup is not disclosing its valuation with this round, but it has now raised 46 and a half million dollars.

when we covered Beehiiv's 12. 5 million dollar Series A in June 2023, a round which was led by Lightspeed, the company had 7, 500 active newsletters with 35 million unique readers and 350 million monthly impressions.

Now the company is sending out 1 billion emails per month from around 20,000 active newsletters.

And I love this nugget. Apparently Arnold Schwarzenegger is using this for his newsletter.

It doesn't stop with newsletters for Beehiiv though. They really want to be an advertising platform. So essentially they want to build the system that all of these writers and creators of newsletters use to run ads on their platform as well.

Here's what they say

in the last year, the startup also built and launched an advertising network that sits alongside a range of pricing tiers based on different features and functionalities.

Now, I think one of the interesting parts of this startup is that these co founders were all alumni of Morning Brew.

Morning Brew is a newsletter founded by Austin Reif. It targets millennials with business news. It's almost like Bloomberg, but for millennials.

And it's sold to the maker of Business Insider for 75 million in 2020. But Morning Brew created its own newsletter.

The difference here is that Beehiiv is actually a platform for other people to create their newsletters. Now, Beehiiv is going up against a lot of competitors.

There are big players like HubSpot and MailChimp, ConvertKit, but then there's a startup that everyone seems to know about which is called Substack.

The way that Beehiiv wants to differentiate itself is through technology. Their idea is pretty simple. Make it really, really easy to migrate to them and find ways to integrate with CRMs.

The larger trend that's driving newsletters right now is that all of these social platforms are making it very difficult for creators to control the flow of information to their audiences.

It's a fascinating opportunity because the newsletter space is really one of the best ways for creators to maintain a close connection to their audiences.

I hope that they're successful with it. Beehiiv, congratulations on the funding.

Up next, Inhabitr has raised 27 million for its AI powered commercial real estate furnishing platform.

Now those are a whole lot of words which might not mean anything to you, so I'm going to read a little statement here from the article.

Inhabitr's platform utilizes generative AI to provide real time insights into furniture inventory, cost and availability aiming to streamline the furnishing process for commercial properties. Additionally, the company offers a financing solution to help property owners upgrade their spaces with minimal upfront investment.

So the AI component here is a little bit of a head fake because really what these guys are doing is furnishing commercial real estate.

The areas of focus for them are hospitality, multifamily, and student housing. That gives you a sense of the kinds of customers that they're going after. They also said that they plan to expand internationally into the middle East and the UK.

So far they've furnished 20, 000 units in the U S and their plan is to furnish a hundred thousand by 2025, which is a pretty ambitious goal.

Now, what makes a startup interesting to me is actually where it started versus where it is now.

The company was actually founded in 2016. And then in 2019, they announced a 4 million seed round. And essentially the idea was that whenever you move that you should just rent the furniture in your place instead of having to buy it. So that would essentially just become part of the expenses that you have in living in a place that you rent.

And that would be easier in theory for customers than having to buy new furniture periodically. Now the company was founded by this guy,

Ankur Agrawal, and he was a partner at McKinsey before he did this, which I can tell you that moving from consulting into entrepreneurship is very, very difficult. And it sounds like he had a pretty difficult journey along the way by pivoting from what they were doing initially to focusing entirely on commercial real estate platforms.

But now it seems like what they're doing is furnishing things like hotels and student dorms so it seems like the pivot has actually worked out pretty well for them.

Now, the AI component of this seems like it's a little bit of a reach. All the things that they mentioned, they're doing things like inventory management. It just seems like that's not necessarily something that you need AI for specifically, and that's just part of how they're trying to market the company.

But that said, furnishing 20, 000 units, isn't something to sniff at. And it seems like they actually have some pretty good traction.

So as long as they keep going in that direction, I think they've got a good shot to succeed.

Up next, another real estate deal. Backflip raised $15 million to help real estate investors flip houses.

Now, this is a really interesting company because so many young people are upset that they can't afford to buy homes. So here we have a startup that's basically saying real estate investors, we're going to make it even easier for you to flip homes.

Here's what the article had to say.

Founded in late 2020, BackFlip offers a service to real estate investors for securing short term loans. Beyond helping users secure financing, BackFlip's tech also helps investors source, track, comp, and evaluate potential investments.

Think of it as a cross between Zillow and Shopify. Now that's the collab I don't think we knew that we needed, but here we have it. Zillow meets Shopify.

Now, backflip was founded by this guy,

Josh Ernst. He's actually a former investment banker and a former VC. He founded the company in 2020 when interest rates were low. So a lot of people were buying houses essentially on the cheap.

I mean, many people now say that the most important asset in a house is a mortgage with a low interest rate.

So the environment that they started Backflip in is very different than the environment is today. But according to the article, things have actually gone really well. And now they're in a position where they can do more. So here's what it says.

The company managed to grow its revenue, nearly 5x in 2023 and reached an annualized run rate of 10 million. It also claims to be near profitability. The round was led by FirstMark Capital

and included existing backers, vertical venture partners, live Oak venture partners, rebel partners, which is where Josh actually worked, ECMC and the real estate company crow holdings In total backflip has raised 28 million dollars in equity and 67 million dollars in debt financing.

Presumably that's to facilitate these loans that they have on their platform. It's a really interesting concept.

I don't think it's going to make houses more affordable, but Hey, if the real estate investors feel good about things, I guess everyone who owns homes are going to be a little bit better off.

Up next Chemix has raised $20 million to build the next generation of electric vehicle batteries using AI.

Part of what makes this round interesting is who's funding it. Porsche Ventures actually is part of this round so it's clear that they have some traction from the stalwarts in the car industry.

Here's what the announcement said To practically and effectively integrate Gen AI into the battery development process, Chemix embarked on a journey from day one to build its own battery lab and collect its own data, creating its battery specific mix R and D platform.

In less than three years, the company has tested 10, 000 commercial format pouch, cylindrical, and prismatic cells.

Chemix is sitting on the back of a huge trend, which is the rise of electric vehicles. In theory, if they are able to help some of these traditional manufacturers,

like Porsche, to adopt new age electric vehicle batteries, Then they'll have a massive market. The startup has actually already developed some very interesting new technology. So here's what the article says.

Mix, their AI platform, has autonomously screened and developed without any human intervention, and in as little as two months, highly performant electrolyte materials.

The claim that the company is making is that it can make batteries that not only last longer, but are also equally as safe as existing batteries.

And they say that they actually have some traction outside of Porsche investing in them.

Earlier this year, the company signed a commercial agreement to supply batteries to a cutting edge EV manufacturer for its premium off road SUV and pack product lines.

Now, it's not actually clear which company that they did this agreement with, but the fact that they have a real auto manufacturer who has come to the table to use their technology does say a lot. Presumably, that's what was driving the funding. And with the funding, it sounds like they want to expand into other areas.

So here's what they say.

Chemix willl leverage its new financing round to scale global operations to meet the growing demand and expand its market penetration to specialized EV segments such as e motorcycles, utility, e motorbikes and commercial EVs.

Now the EV market is actually going through a phase of hyper growth right now. here's what we have.

The market is projected to grow from 132 billion in 2023 to 508 billion by 2033, registering a CAGR of 14. 4%. But they're going up against really stiff competition. The likes of Panasonic, Samsung, and LG, very large companies.

They're gonna have a hard time competing in that space, given some of the regulation and requirements on the companies that are suppliers, but if their AI platform actually allows them to build batteries that last much longer, I think they have a shot to get in and get somewhere interesting.

Now, a big part of why this company has a shot to succeed is because of its CEO, this guy,

Kaixiang Lin. Now, Kaixiang was a Harvard PhD who focused on organic chemistry and electrochemistry. So this is kind of in his wheelhouse. He's essentially taking some of the insights from his PhD and applying that to the world of electric vehicles.

It's a very interesting business and a space to watch. I think there's a good shot that they actually end up getting acquired at some point if this autonomous technology actually works, but we'll see what happens.

Up next. Cybersecurity company ThreatLocker has raised 115 million to expand its R& D efforts.

ThreatLocker has a very unique focus in the marketplace. They're targeting managed service providers or MSPs. Now MSPs are companies like Accenture and Deloitte that manage security and infrastructure on behalf of other companies.

ThreatLocker was founded by this guy,

Danny Jenkins. He doesn't have a particularly notable work history, but there is an interesting story about him that informs exactly what he's doing now.

Here's the story.

While struggling to raise investment in 2018, Jenkins recalls that his last hope was writing malicious software to try to beat a local firm's anti virus tool. Quote, if this doesn't steal your data, I'm actually going to close the company down. Jenkins firmly believed that his company threat locker had a unique and disruptive approach to endpoint security based on the concept of zero trust. But investors who agree with him were proving elusive.

I have thousands of emails from investors that say they thought it was a stupid idea. Jenkins said during a keynote session, Monday Jenkins then approached a well

connected company in the area with the hope that it would introduce him to clients who might invest.

Your antivirus isn't enough, he recalled telling the company, which he didn't identify. They wouldn't even talk to me. That's when he decided to write some malware that would steal the firm's data.

Cybersecurity companies have this very interesting challenge which is that they essentially have to show their clients the threat that other companies and hackers pose to them.

Danny had a pretty interesting method of getting his foot in the door there. He basically said, I'm going to hack your systems, and if I can hack your systems, you need my solution. So essentially the way that he got funding for his company was by hacking other companies. That's scrappiness if I've ever seen it.

Up next, Cybersecurity company Rubrik has raised 752 million in its IPO at a 5. 6 billion valuation.

Now IPOs are later stage than I normally like to go but I think this one's actually kind of interesting. In the world of venture capital, IPOs are the currency on which an investor can make their reputation. But the IPO market's pretty much been closed. Companies have basically been relying on acquisition for years instead of trying to go public. And it's because the standards for an IPO have actually risen.

So let's talk about what this company actually does.

Rubrik essentially backs up all the data that companies create and allows you to go to any specific point in time in the case of a disaster.

So you can imagine a hospital which has been taken over by hackers and are under some sort of a ransom situation who then get their entire system wiped out.

That's really where Rubrik would come in and they would say, we can restore you to any point in time.

But what actually intrigued me about this IPO is the story of its founder.

So here's the CEO, Bipul Sinha on the floor of the New York stock exchange, telling his story.

What a great story that is. Came from nothing, went to coffee shops, Great, great story. Congratulations to Bipul and to the Rubrik team. Hopefully the IPO window reopens soon.

Up next, QI Tech has raised 50 million in a Series B extension on a 200 million Series B round, which makes the company a unicorn.

QI Tech is a banking as a service platform. They started with Buy Now, Pay Later for Brazil, and now they're expanding into all kinds of other financial technology offerings.

And here is what the announcement says.

QI tech stands out with his one stop shop solution, which encompasses digital onboarding tools, facial recognition, data validation, credit scoring, And more. Digital account opening, transfers, PICs, bank slips, and credit underwriting for various economic sectors.

So QI Tech is providing a whole lot of different services to its customers.

The

article also notes that they have over 400 customers and they expect to pass 135 million in revenue this year.

QI Tech was founded by this guy,

Pedro McDowell. Now, Pedro previously founded a company that provide Financial services solutions to mid sized companies in Brazil, so he is directly in his wheelhouse with QI Tech.

inclusion, but

have video of his co founder discussing what they do in A little seen YouTube video. Here we go.

And So any company, in tech or in combat, is leveraging the AWS for banking. Any company can rank its own financials. we've been fortunate to create at least, with the largest customers in Brazil each year.