A group of sex tech startup founders, employees and supporters gathered outside of Facebook’s NY office in Manhattan to protest its advertising policies with respect to what it classifies as sexual content. The protest, and a companion website detailing their position , are the work of ‘Approved, Not Approved,’ a coalition of sex health companies co-founded by Dame Products and Unbound Babes. These policies are applied have fallen out of step with “the average person’s views of what should or shouldn’t be approved of ads,” according to Janet Lieberman, co-founder and CTO of Dame Products. “If you look at the history of the sex toy industry, for example, vibrators were sexual health products, until advertising restrictions were put on them in the 1920s and 1930s – and then they became dirty, and that’s how the industry got shady, and that’s why we have negative thoughts towards them,” she told me in an interview at the protest. “They’re moving back towards wellness in people’s minds, but not in advertising policies. There’s a double standard for what is seen as obscene, talking about men’s sexual health versus women’s sexual health and talking about products that aren’t sexual, and using sex to sell them, versus taking sexual products and having completely non-sexual ads for them.” Credit: TechCrunch It’s a problem that extends beyond just Facebook and Lieberman says. In fact, her company is for its own ad standards after it refused to run ads for women’s sex toys in their out-of-home advertising inventory. But it also has ramifications beyond just advertising, since in many ways what we see in ads helps define what we see as acceptable in terms of our everyday lives and conversations. “Some of this stems from society’s inability to separate sexual products from feeling sexual, and that’s a real problem that we see that hurts women more than men, but hurts both genders, in not knowing how to help our sexual health,” Lieberman said. “We can’t talk about it without being sexual, and that we can’t bring things up, without it seeming like we’re bringing up something that is dirty.” Credit: Unbound / Dame Products “A lot of the people you see here today have Instagrams that have been shut down, or ads that have been not approved on Facebook,” said Bryony Cole, CEO at Future of Sex in an interview. “Myself, I run Future of Sex, which is a sex tech hackathon, and a podcast focused on sex tech, and my Instagram’s been shut down twice with no warning. It’s often for things that Facebook will say they consider phallic imagery, but they’re not […] and yet if you look at images for something like HIMS [an erectile dysfunction medication startup,], you’ll see those phallic practice images. So there’s this gross discrepancy, and it’s very frustrating, especially for these companies where a lot of the revenue in their business is around community that are online which is true for sex toys.” Online ads aren’t just a luxury for many of these startup brands and companies – they’re a necessary ingredient to continued success. and Facebook together account for the majority of digital advertising spend in the U.S., , and it’s hard to grow a business that caters to primarily online customers without fair access to their platforms, Cole argues. “You see a lot of sex tech or sexual wellness brands having to move off Instagram and find other ways to reach their communities,” she said. “But the majority of people, that’s where they are. And if they’re buying these products, they’re still overcoming a stigma about buying the product, so it’s great to be able to purchase these online. A lot of these companies started either crowdfunding, like Dame Products, or just through ecommerce sites. So the majority of their business is online. It’s not in a store.” Credit: Unbound / Dame Products Earlier this year, sex tech company netted a win in getting the Consumer Technology Association to restore its CES award after community outcry. Double standards in advertising is a far more systemic and distributed problem, but these protests will hopefully help open up the conversation and prompt more change.
Apana CEO Matt Rose. Many building operators assume that losses from water mismanagement are just a cost of doing business. thinks otherwise. Rose is the CEO and co-founder of , a Bellingham, Wash.-based startup located north of Seattle that helps Fortune 500 brands and other customers manage their water use. The startup today announced a $11 million funding round led by existing investor , a Tokyo-based company, as well as others that previously invested including Cowles Company, E8 Fund, and Urban Innovation Fund. Rose, a former Navy pilot who has a software development background in healthcare and defense industries, founded Apana in 2014 with , who has more than two decades of experience building and maintaining wastewater treatment plants. Apana helps companies manage their water usage. (Apana Photo) They’ve helped build a product that combines IoT devices with cloud-based analytics software to measure and analyze building-wide water use. It alerts users to potential problems and helps address areas of optimization. Rose said that customers typically see between a 15 and 30 percent reduction in water use, which is more valuable given in big cities. He said the system pays for itself in 18 to 24 months. Apana has customers such as Costco and MGM Resorts International in more than 600 cities globally, but Rose said the opportunity remains large. He noted that less than 1 percent of commercial, industrial, and institutional buildings in the U.S. have any kind of water management system. “This type of solution has not readily been available, because without some sort of IoT solution connected to analytics and reporting, it’s nearly impossible to do,” he noted. Total funding to date for Apana is $15.5 million. The company, which its seed round more than two years ago, employs 16 employees.
Igneous Systems CEO Kiran Bhageshpur (Igneous Photo) Seattle startup has reeled in a $25 million investment round to fuel growth of its software that helps companies manage their unstructured data. WestRiver Group led the Series C round, which pushes total funding to date to $70 million. Existing investors including Madrona Venture Group, NEA, Vulcan Capital, and Redpoint Ventures also participated. by veterans of Isilon Systems and NetApp, Igneous’ platform provides visibility and storage for unstructured data, or information that isn’t easily categorized, both in the cloud or on-premise. The company’s clients span across various industries and include The Allen Institute of Brain Science, OpSec, PAIGE, Tippet Studios, Altius Institute, and Bardell. Igneous has customers in the “mid-double digits,” said CEO and co-founder . “They use Igneous to see, organize, mobilize and protect their unstructured data — and for our customers this is petabytes of mission critical, often machine generated data typically living across disparate systems onsite, offsite and in public cloud,” Bhageshpur said in an email. “Igneous helps data-centric enterprises tap into their valuable unstructured data, optimize their storage and IT resources and reduce their data risk posture.” (Igneous Photo) Bhageshpur said Igneous differentiates from competitors with its focus on enabling efficiency at scale and the ability to support any file or object protocol. “Our customers are able to quickly (in days) get up and running, see all of their data, improve their backup SLAs and modernize their data protection services, surgically archive and migrate data to control tier 1 storage costs, organize their datasets for use in HPC/ML/EDA/RPA workflows … all without the need for a full-time system administrator,” he explained. The startup employs 70 people and expects to grow headcount by more than 50 percent in 2019. Bhageshpur said new sales growth has increased by 10X over the past year. Igneous originally sold a hardware data appliance for companies to help manage on-premises storage systems but has since expanded to develop services geared toward cloud computing. The global big data market size is expected to reach $70 billion by 2022, according to . Bhageshpur is the former vice president of engineering in the Isilon Storage Division at EMC, having spent five years in senior engineering roles at the company. Another Isilon engineering vet, co-founder , is CTO at Igneous. The company’s third co-founder, , was the first employee at NetApp. Madrona was also an early investor in Isilon, which sold to . Anthony Bontrager, WestRiver Group managing director, will join the company’s board as a result of the funding. “Igneous is uniquely positioned to enable enterprises to unlock the value of their datasets and simultaneously reduce their risk profile,” he said in a statement. “This is a complex problem that Igneous has tackled with impressive technology services.” Other recent Seattle-area investments by Kirkland, Wash-based WestRiver Group include , , , and .
Dauntless co-founder and CEO Clark Musser and Soro CEO Jerry Tindall at this year’s CannaCon. (Dauntless photo.) , a Seattle-area software developer providing point-of-sale and tracking software to the cannabis industry, has acquired pot sales software company . The combined companies aim to create an all-encompassing platform serving growers, packagers, and retailers across the U.S., said Soro CEO Jerry Tindall. “The vision is to build an entire ecosystem around what it means to be a cannabis business,” Tindall said. “By putting our softwares together we now have a full stack, a fully integrated offering, and that doesn’t really exist yet — not from the grower all the way to the retail plant sale … there isn’t anyone who is doing the end-to-end product suite at this point.” Soro brings to Dauntless its analytics and customer relationship management sales software, which connects growers and packagers. Soro will keep its brand name for now, Tindall said. Dauntless, which launched in 2013, provides traceability and compliance for growers, as well as point-of-sale, compliance and inventory management software to retailers. Dauntless co-founder and CEO Clark Musser, who left Microsoft to launch the startup, said between 30 and 40 percent of all the state’s retail pot transactions go through his company’s retail software. Executives at both Soro and Dauntless, both private companies, declined to disclose the terms of the all-stock deal. All four of Soro’s employees will join Dauntless, making for a total of 33 employees. Soro will bring about a dozen customers to Dauntless, which has roughly 120 customers. The Dauntless executive team includes vets from Microsoft, Amazon, and Starbucks. The combined company plans to pursue between $5 million and $10 million in a Series A funding round, Musser said. The acquisition comes especially fast for Soro, which only a year ago. Tindall said the company bootstrapped itself, foregoing a formal investment round and taking a $25,000 investment from Tindall’s dad to cover the bills. “Yeah, we worked hard,” Tindall said of the breakneck timeline from launch to acquisition. With today’s acquisition, Soro and Dauntless are trying to capitalize on what is seen as sky’s-the-limit opportunity in a young and burgeoning legal cannabis industry that is hungry for customized software solutions. There are 87,000 cannabis business in the U.S., Musser said. , which tracks the legal pot market, said U.S. consumers spent more than $10.5 billion on cannabis for both recreational and medical uses in 2018. Recreational pot spending more than doubled from $2.7 billion in 2017 to $6 billion last year as more states legalized cannabis, BDS said. The company said recreational pot is likely to be a $14.3 billion market by 2022, with the medical pot market growing from its current $4.5. billion to $7.9 billion. Patrick Rea, CEO and co-founder of , a venture fund that invests in the pot industry, said that leaves plenty of opportunities for companies like Dauntless to grow, especially if it can improve on the existing models. “The growth opportunity for these seed-to-sale software tracking companies is probably larger than the growth of the industry overall because so many new businesses are coming online,” he said. In a , New Cannabis Ventures said that, of the 44 point-of-sale software vendors it counted in the cannabis industry, only five make up 80 percent of the sector’s market share. The biggest is BioTrack, with Green Bits a close second followed by Flowhhub, MJ Freeway, and Adilas. “If you can do better, there’s reason for you to play in the space,” Rea said. “The need for better solutions is greater than any market share that any of the top (cannabis software) companies has. The industry is hungry for better.” And there’s plenty of room for improvement. Last year, Washington state enlisted a new cannabis traceability system called Leaf Data Systems, which has been , including businesses being unable to log in, scrambled orders and missing shipping manifests. The system has also, compromising data and creating even more havoc across the state’s pot businesses. Executives from both Soro and Dauntless, who did not know each other well at the time, said they found themselves exchanging pained glances during a 2017 Washington State Liquor and Cannabis Control Board meeting about implementing Leaf’s system, which wasn’t yet ready and still lacks key features promised by Leaf, Tindall said. Tindall said he and the Dauntless executives began talking about merging as they discussed their “shared misery” caused by the state tracking system at industry events. The merger made sense, they said, because the cannabis business is still fragmented, and software platforms for large-scale agriculture operations are often ill-suited to fit the unique needs of pot operations. “The different people in the supply chain, they all get stuck in their little silos,” Tindall said. To solve that problem, Dauntless has developed a platform called GIANT, which stands for “Global Interoperable Application Network Technology.” Musser said GIANT has a universal API that can connect every cannabis business — grower, packagers and retailers — as well as regulators, regardless of different state tracking systems. Instead of modifying software for each state regulatory environment, only one adjustment is needed in GIANT, Musser said. This month, Dauntless was showing off GIANT at Seattle’s , the country’s largest cannabis industry event. Late last month, Dauntless that , the Seattle company that publishes a directory of where to buy pot and gets more than 16 million visitors to its site each month, will begin using GIANT to update retailers’ menus of cannabis products. Tindall said the combined companies, quite ambitiously, want to “create the most transparent and connected industry on earth.” “The goal is to create a better industry,” he said, adding later, “this is us responding to a need that exists globally.”
Ally founder and CEO Vetri Vellore (left) and Cooper Crosby, head of UX. (Ally Photo) It was a problem that came up at his first startup that led to create his second one. In 2007 Vellore co-founded , a company providing digital tools that allow large businesses to run employee development programs for mentoring and coaching. It was going well, but Vellore found that it was difficult to effectively and efficiently manage his team. The resources that he wanted didn’t seem to be available. So in 2017, two years after Chronus was acquired by a private equity firm, Vellore decided to pursue a new project. “I found myself itching to do something much bigger,” Vellore said. He launched , a Bellevue, Wash.- based company that provides management solutions. OKRs are a framework for running teams and businesses that helps companies track and stay aligned with specific goals. The operations approach became widely popular thanks in large part to its use at Google. Vellore said that his long-term goal is to develop a tool that helps businesses connect their strategies and execution, using AI to successfully pursue their goals. The company, which has six employees, was in private beta mode for many months, working with a few Seattle startups. Ally had a public launch in the spring of 2018. The company has raised $3 million seed round from investors such as Founders’ Co-op, Vulcan Capital, and others. Ally, an OKR tool, helps companies track their performance in meeting specific goals. (Ally Image) Ally’s competition includes 15Five, BetterWorks, Khorus and Workboard. The startup distinguishes itself from the other tools available by integrating with business management systems, Vellore said, including Slack, Salesforce, Jira and Smartsheet. That allows users to avoid switching between apps or program and automatically update progress on projects. Customers include Slack, Remitly, Plaid, National Institutes of Health and UrbanClap, and the product is available to businesses of all sizes. Companies managing up to 10 users pay a $29 monthly fee, while those with 11-to-250 users pay $7 per person per month. Ally offers discounts for businesses with more than 250 users. The product is available as a free, 14-day trial. Before launching startups, Vellore was at Microsoft for 14 years, ultimately running the Visual Studio core and platform team. We caught up with Vellore for this . Continue reading for his answers to our questionnaire. Ally CEO Vetri Velllore. (Ally Photo) Explain what you do so our parents can understand it: We help businesses move fast and align their strategy and execution to match the evolving needs of their customers and market conditions. Imagine trying to win a basketball game without knowing the score or where the other players are on the court. So why would you run your business that way? Inspiration hit us when: I was struggling to manage operations at Chronus even though we were only about 20 people. I had managed much larger teams at Microsoft and was surprised that I was struggling with such a small team. Then it dawned on me that to be successful in today’s environment, the way that teams and businesses are managed has to change in a fundamental way. Microsoft went on to realize this themselves years later. Businesses need to operate at higher speeds than even before, but strategy and execution still need to be combined in a very tight, iterative loop. At Chronus we tried to use project management tools, spreadsheets and other software solutions to do this and they just do not work as well as we needed. I knew that there had to be a better way. VC, Angel or Bootstrap: Chronus was bootstrapped and I am familiar with the pros and cons of that model. With Ally we knew that what we were building was really big, so my plan was to bootstrap for a few years and then raise outside funding. But the strong tailwinds and aggressive interest we’ve experienced for our product since launch led us to decide to raise money sooner to build on that momentum. We are fortunate that round was heavily oversubscribed and are thrilled to have an amazing syndicate of investors, led by Founders’ Co-op with participation from Vulcan and others. Our ‘secret sauce’ is: Creating amazingly simple experiences to accomplish very complex workflows that involve multiple systems. The smartest move we’ve made so far: Focusing on a product experience that allows for easy user engagement at all levels of an organization, which has led us to bring features to where users are already doing their work, like in Slack. The biggest mistake we’ve made so far: Not scaling sooner. We are stretched too thin and running really hard to meet the strong customer interest while scaling as fast as we can. PS: We’re hiring sales development reps! Ally’s approach helps businesses track overarching goals and individual achievements. (Ally Image) Which entrepreneur or executive would you want working in your corner?: Sunny Gupta of Apptio would be one. I am huge fan of how he managed to essentially create a new category and scale the company successfully. In many ways, we are also trying to create a new category and can learn a lot from how Sunny did that so well. Our favorite team-building activity is: Playing ping-pong. This was big at Chronus as well. The biggest thing we look for when hiring is: Unstoppable drive with a genuine passion to help teams and individuals achieve their goals. What’s the one piece of advice you’d give to other entrepreneurs just starting out: Pick a problem you are genuinely passionate about. The journey is going to have ups and down and your passion for solving the problem will be one of the key determinants of success and help you enjoy the journey.
Lytics CEO James McDermott. (LinkedIn Photo) has raised more funding to help brands such as Nestlé, The Economist, Atlassian and others bolster their 1-to-1 customer marketing outreach. The Portland, Ore.-based startup announced a $35 million Series C round led by late-stage software growth equity firm JMI Equity. Existing investors such as Comcast Ventures, Two Sigma Ventures, Rembrandt Venture Partners, and Voyager Capital also participated. What Lytics does: The 7-year-old company captures customer data across various databases and marketing tools, aggregating information in one place and using machine learning to help consumer-facing companies with their personalized marketing efforts. Traction: Lytics has more than 175 enterprise brands paying for its software. It saw revenue increase by nearly 3X last year. The company its Series B round this past April and total funding to date is north of $50 million. Competition: There are various competitors tackling the same problem. Many companies use their own software to analyze internal marketing data; external consultancies offer something similar; and several early-stage startups — , , and are three from the Pacific Northwest — have a similar pitch. Investor insight: Backers describe Lytics as the leader among customer data platforms. “As marketers seek to coordinate more of their campaigns across channels, Lytics is perfectly positioned to make this possible,” Suken Vakil, general partner at JMI Equity, said in a statement. “Starting with our initial investment, we recognized the disruptive role Lytics’ vision for customer data platforms could play within the world’s largest brands,” added Erik Benson, partner a Voyager Capital.
Sales automation startup Outreach was the only Seattle company to make CB Insights’ list of future unicorns. (Outreach Photo) Can algorithms predict the next billion-dollar companies better than human venture capitalists? It seems possible, at least based on a formula created by CB Insights and The New York Times. Back in 2015, the companies published a list of 50 startups that would eventually becomes “unicorns,” or those valued at $1 billion or more. It identified candidates using CB Insights’ which analyzes the health of a startup based on various data including strength of market, financial performance, and overall traction — a “FICO score for startups,” as described by the investment data firm. Fast forward to today, and 48 percent of the companies on the 2015 list are now considered unicorns. “At the risk of sounding immodest, that is pretty good,” CB Insights this month. “And if we were a venture firm, this kind of hit rate would make us legendary.” That’s why it’s worth giving a look. (CBInsights Photo) The 50 future unicorns hail from various industries and the median company has about $111 million in total funding. A majority are based in the U.S., with 22 from California, five in New York, and two in Massachusetts. Outreach CEO Manny Medina. (Outreach Photo) There is just one from Seattle: sales automation startup , which this past spring, announced it was space this summer, made its , and was the only Seattle company to crack the top 25 in list for 2018. Outreach CEO Manny Medina said the company more than doubled its revenue in 2018 and met all goals and metrics. Outreach now has more than 3,100 customer accounts and 50,000-plus users. It employs 315 people and plans to reach 450 by the end of 2019. “This upcoming year we will make more investments in scaling the business efficiently and prepare for an IPO a few years out,” Medina told GeekWire. “This includes continued investment from our product to support, measure, and automate customer facing workflows. Our job is to make all sales reps great and drive higher revenue efficiency for their companies.” The 5-year-old sales engagement platform uses machine learning to help customers such as Cloudera, Adobe, Microsoft, Docusign, and others automate and streamline communication with sales prospects. Medina, a former director at Microsoft, originally launched a recruiting software startup called GroupTalent in 2011 with his co-founders Andrew Kinzer, Gordon Hempton, and Wes Hather. But the entrepreneurs in 2014 to focus on building tools for salespeople. Chris DeVore, managing director at Techstars Seattle — Outreach was a 2011 graduate of the accelerator — said the company is a good example of why he focuses on investing in people over ideas. “Outreach is one of my favorite stories,” . “The business they set out to build wasn’t working, but because they stuck together as a founding team and kept adapting and learning, they figured out how to find a productive thing. But that wasn’t because of where they started or the early metrics. It was because as humans, they were so committed and resilient and so gritty that they figured it out. “And that’s really what you’re betting on,” DeVore continued. “It’s a 10-year journey and it’s never always up and to the right. There are always setbacks and near-death moments. It’s the human capacity for resilience and persistence every time that will turn a bad investment into a good one.” While it’s a safe bet to invest in tenacious and dogged founders, CB Insights’ track record with its Mosaic score shows how data-driven formulas can drive smart investment decisions. That strategy has worked well for firms such as Seattle-based , an online revenue-based funding vehicle that uses proprietary technology to figure out which companies to back. Lighter Capital has invested in more than 300 companies across 500 deals since 2012 and plans to invest in close to 200 startups this year, CEO B.J. Lackland . A recent found that 38 percent of venture capitalists use data to source and evaluate investment opportunities. “Our survey shows strong adoption of data to inform investment decision-making and a growing appetite to increase usage,” Steve Bendt, vice president of marketing at PitchBook, said in a statement. “While the majority of respondents believe VC investing will always involve the human element, there’s enthusiasm to explore how machine learning can automate traditional VC.”
KenSci co-founders Ankur Teredesai (left) and Samir Manjure. (KenSci Photo) has raised an additional $22 million to fuel growth of its machine learning and AI-powered technology that helps health systems predict when patients will get sick and lower healthcare costs. Polaris Partners led the Series B round, which included participation from existing investors such as Ignition Partners, Osage University Partners, and Mindset Ventures. UL Ventures also joined the round as a strategic investor. Total funding to date is $30 million. Founded in 2015 by two childhood friends — , a longtime former Microsoft exec, and UW professor — KenSci’s software aggregates patient data from a number of existing sources, including data collected from patient devices, electronic medical records, and public records. The platform then assembles the data so its machine learning systems can use it to predict clinical, operational and financial risks. KenSci’s customers include Fullerton Health, St. Luke’s Health Partners, Evergreen Health, and others. “In the last two years, we’ve singularly invested ourselves in building a platform that simplifies the way health systems look at their data and gain actionable, predictive insights to save lives and costs,” Manjure said in a statement. “With this round of funding, we’re excited to take these capabilities to a global stage with partners who complement our capabilities and are committed to helping us drive this transformation across the care continuum.” Healthcare spending in the U.S. increased 3.9 percent in 2017 to $3.5 trillion, according to . KenSci appeared on last year, pitching its business to a group of judges. The company, which employs more than 50 people and has additional offices in Singapore and Hyderabad, was also nominated for the Innovation of the Year category at the . “If you can predict, then you can potentially prevent — and not only that, but you can make better outcomes happen and reduce cost,” Manjure said in his pitch, which you can watch below.