Tag: Seed Investments

Announcing OthersideAI – Making Email Magical Through AI

Natural Language Processing is having a major moment. NLP enables machines to analyze, understand and manipulate language. It is undergoing a rapid and transformational shift, powered by forms of deep learning.

Led largely by a new generation of pre-trained transformer models, innovators are unlocking NLP use-cases and entirely new applications seemingly at the speed of light. For some context – in February 2020, Microsoft announced what was then the largest and most powerful language model: Turing-NLG. Turing is 17 billion parameter language model that outperformed the state of the art in on a variety of language modeling benchmarks. A matter of months later, OpenAI released GPT-3 – a 175 billion parameter generative transformer model: a 10x increase in size.

These models join a growing number in the “billion parameter club”- to sit among the likes of 9.4B from Facebook and Google’s Meena chatbot. But make no mistake – this is not only a big tech game. New companies like HuggingFace and open-source options like DistillBERT are driving drastic performance improvement in transformer models and redefining the standards by which we evaluate them. The progress is nothing short of astonishing.

OpenAI’s GPT-3 lit the entrepreneurial Twitterverse on fire this summer – and with good reason. The third iteration of OpenAI’s autoregressive language model is a step change in deep learning generative language models. In a matter of days, beta users were demonstrating GPT-3 enabled re-imaginations of tasks like text summarization, code generation, and auto-translation and completion, just to name a few.

At Madrona, we see next-gen NLP generally and these transformer models specifically as enablers to building new companies and applications. Over the past months, we have closely followed the infrastructure developments and potential applications, searching for the right combination of team and use case to support. It came in the form of three young and ambitious founders who, just this summer, formed their company, OthersideAI.

OthersideAI is a next-gen productivity tool that increases the speed of communication. In the few short months since incorporating, the team has leveraged GPT-3 to build a product that takes short-form user input and generates full length emails in the user’s style of writing. It is delightfully simple, contextually aware, and ever-learning.

Since meeting the founders Matt Shumer, Jason Kuperberg and Miles Feldstein in August, we have been continually impressed with the speed of progress and future vision from this team. Just as their tool re-imagines communication, the company re-imagines processes. With OthersideAI, development cycles are measured in days, new features are shipped in hours, inboxes are cleared in minutes, and emails are written in seconds.

OthersideAI has been in alpha mode, working closely with the OpenAI team to refine and customize filters on top of the existing base GPT-3 models. Currently, the product is a Chrome extension that integrates with Gmail. With this announcement, Otherside is officially launching their beta and will start to onboard the first cohort of users from the growing waitlist.

Productivity tools like OthersideAI are a key element of our Future of Work investment theme, augmenting a digital-first workflow with automation. Using OthersideAI promises to drastically reduce the hours spent writing email every day. With the push of a button, it opens access to powerful automation driven by the latest in artificial intelligence and natural language processing. And – alpha testers say it is working – enabling them to get through their inboxes 4x faster already.

We are thrilled to start this journey from Day One with the OthersideAI team and lead their seed round. Join the waitlist here!

Our Investment In Strike Graph

Cyber security is no longer a “nice to have,” it is table stakes. Today, we are excited to announce our investment in Strike Graph. Strike Graph is building an intelligent platform to help B2B companies manage the difficult challenge of setting up their cyber security controls and then passing and maintaining the strict annual cyber security certifications necessary to build their business.

In today’s world of data-driven companies, a business’s greatest asset is less and less often related to any particular physical object and more often related to the data it collects from its users and customers. This data, which comprises myriad inputs, is a foundation that leads to insights, competitive advantages, and strong business models. However, it rarely sits in a silo. Bits and pieces must flow through and work with other businesses in order to be most effective. Consider how some companies upload their contracts to DocuSign, entrusting DocuSign with a specific task (e.g., getting multiple parties to sign on the dotted line) but also entrusting that DocuSign does its part to keep that contract private and secure, and only accessible to those who are supposed to see it.

Many data flows like this are common and necessary nowadays, and it is each company’s responsibility to maintain strong cyber security practices to securely manage that data. To do this, companies are being required to undergo strict cyber security audits for a variety of certifications including SOC2, ISO 27001, FedRAMP, and others. These annual audits are incredibly intensive and time consuming but achieving and maintaining certification has become a crucial requirement by these companies’ customers and partners.

Strike Graph was founded with a vision of helping B2B companies improve their internal processes that sit at the heart of this cyber security – and ultimately, sales – issue. Strike Graph has built an intelligent application that helps SMBs and Enterprises walk through the process of identifying their risks, choosing the appropriate controls, and automating evidence and testing – all with an end-to-end platform that helps them prepare for and achieve these annual cyber security certifications.

We met CEO and co-founder Justin Beals when he was incubating the idea for Strike Graph at Madrona Venture Labs. Justin is a top-notch product creator and technology leader. Most recently he was CTO at Koru leading up to its acquisition by Cappfinity. With the support of the MVL team, he was able to prove out the concept for Strike Graph, build a working alpha version of the product, and recruit co-founder Brian Bero. We were delighted when Justin and Brian joined forces, as Brian has deep domain knowledge both from his time as co-founder at Apptio and his own venture, Greytwist. Together they have rapidly built and launched the product and have onboarded a staggering number of pilot customers since their formation at the beginning of 2020.

This team is going after a large and significantly growing opportunity to serve a sharp pain point for B2B businesses. Strike Graph defines what we call an intelligent application, one that is using smart technologies to define the workflows and risks, and then automating the tracking and collection of evidence to support the ever changing environments. We are excited for Justin, Brian, and the team for their success ahead. And we are just getting started.

Welcome WhyLabs – the AI Observability Platform for massive scale data monitoring and collaborative AI operations

At Madrona, we love partnering with founders from their very early days of idea formation and for the long run. Now that WhyLabs emerged from stealth, we are thrilled to announce that we led the $4 million Series Seed investment in WhyLabs, the AI observability platform for massive scale data monitoring and collaborative AI operations. We joined forces with AI2, Bezos Expeditions, Defy Partners and Ascend.vc.

Thanks to an intro from Jacob Colker at the Allen Institute for Artificial Intelligence (AI2), Maria first met the WhyLabs CEO, Alessya Visnjic, a long-time Amazon software engineer and technical leader, when she was in the early phase of exploring the idea. She kept coming back to a pain point that she experienced at Amazon as a pager-carrying engineer on what later became the core ML team. She was on-call to respond to model failures and data quality issues in internal ML deployments. It quickly became apparent to her that AI needed its own specialized tooling ecosystem. Knowing that the kinds of tools that software engineers rely on to monitor traditional software at scale are not suitable for AI applications, she set out to build WhyLabs.

Alessya’s conviction matched perfectly with our investment thesis around both AI/ML Infrastructure and Intelligent Applications. Through our investments in companies like Algorithmia, OctoML, Snowflake, Turi, XNOR.ai, and Lattice Data, we had come to the same conclusion: while Intelligent Applications are on the rise, the tools that AI builders rely on are at best immature, causing data scientists and engineering teams to spend precious time and effort on non-value added work such as data sampling, error detection, and debugging.

With enterprises of all sizes adopting AI rapidly, global spending on AI is expected to double to $110 billion in four years, according to IDC. The demands on AI practitioners to deliver transparent and non-biased AI systems are ever higher. WhyLabs is a company built on first principles and their solution starts with the data as the single source of truth. The WhyLabs Platform sends AI builders actionable alerts, enabling them to respond to data quality issues and model meltdowns in real-time. We’ve been impressed with how scalable, intuitive, and elegant the platform is – it integrates with existing tools and workflows to support any data type at any scale. While we expect that cloud platforms and many ML platforms for model building and deployment will offer their own model monitoring, we think customers will also need a truly platform-agnostic AI monitoring solution that provides consistent, best-of-breed insights and observability into model performance regardless of where it is running. This follows the pattern demonstrated by traditional APM and monitoring leaders like DataDog and New Relic.

Consistent with Madrona’s strategy of investing in and supporting founders from “Day One for the Long Run,” Maria in particular has worked with Alessya and the team since before they even incorporated. She helped them hone their idea, validate it with customer prospects, develop go-to-market plans and overall strategy, and recruit co-investors. Maria led the investment round for Madrona and served as the Madrona board director. Along the way, Maria, Alessya and the WhyLabs team continued to work together so closely and cohesively that they decided to join forces with her coming on board as co-founder and COO.

Madrona was thrilled with this serendipitous, massive win-win for all parties. Maria brings incredible start-up and GTM experience to this deeply technical team. She joined Cloudflare pre-revenue as an early executive and head of business development helping it grow into the cloud security juggernaut it is today. Her experience scaling GTM dovetails and compliments Alessya, Andy, and Sam’s deep product and technical expertise, making us at Madrona even more excited about the trajectory for this company.

And this is the fourth collaboration Madrona has had with AI2 to fund and spin-out new companies (along with KITT.ai, XNOR.ai, and Lexion), and we are excited to continue to work with them to create new intelligent applications leveraging cutting edge AI to solve important customer problems.

You can experience the WhyLabs Platform or schedule a live demo on their website at www.whylabs.ai or join their community of AI builders on Slack.

Welcoming Zeitworks To The Madrona Family!

Today, we are thrilled to announce a $4.5 million seed financing in Zeitworks, a company incubated at Madrona Venture Labs, that is automating process discovery, mapping and measurement. We are also excited to partner again with Ryan Windham – who previously was the CEO of Cedexis in our portfolio – and welcome our new co-investors JAZZ Venture Partners, and entrepreneur Spencer Rascoff, founder of Zillow.

Most investments we make at Madrona follow the time-tested model in which an entrepreneur pitches us his/her vision of how to change the world and we end up partnering because we believe that is the right team taking on an important market opportunity for which the time has come. And we also need to believe that we can directly contribute to their success. Occasionally, we have bent that model and incubated a company at Madrona via Madrona Venture Labs, that has a full fledged incubation program. Zeitworks is the outcome of one such collaboration in a space that we have a deep conviction in.

Intelligent applications have been at the core of our investing strategy for years. The proliferation of data, and the ability to process it and derive insights has changed both consumer facing and enterprise facing experiences. In the last couple of years we have seen this extend to automating tasks and we have become more involved with companies looking to change how work gets done, as evidenced by our investment in UiPath, the leader in RPA. But understanding the work and the process is a required element to actually automating.

Businesses in every industry execute hundreds of repetitive business processes for wide-ranging use cases such as claims processing, employee onboarding, order processing, returns management, etc. to name just a few. The success of such processes, and in turn of the businesses executing those, critically depend on the efficiency of those processes and the ability to improve their efficiencies. However, in an overwhelming majority of cases, the processes are not documented – or, at least poorly documented – and not measured accurately enough. As a result, businesses struggle to understand the true costs of their processes, identify the bottlenecks and make improvements that would have the highest ROI.

Traditionally, process discovery and modeling has been largely manual – serviced by consulting firms such as Accenture, Deloitte, PWC, etc. – and as a result, costly and time-consuming. However, with every business undergoing digital transformation, automated discovery and measurement of processes is increasingly becoming key to success.

Zeitworks is building a process discovery/mining product to automatically map, measure, and improve business processes across all applications, without IT integrations, consultants, interviews, or workshops. The operative word here is “automatically:” Zeitworks collects data on user activity and events via desktop sensors, applies Machine Learning to automatically discover and map processes, and analyzes and measures those processes to understand, optimize and automate those.

While process discovery and mining is not new, what makes Zeitworks possible today is the convergence of three macro trends – (a) the availability of “infinite” compute thanks to cloud computing, (b) the ability to collect large volumes of high-fidelity data, and (c) the maturity of ML/AI techniques to identify patterns and extract unique insights. Capitalizing on advanced ML algorithms and the computing ability to process vast amounts of data, Zeitworks can help identify repetitive processes and provide insights into how they are being accomplished now and how they can be completed more efficiently. Equally importantly, Zeitworks requires no deep technology integrations, enabling teams to deploy the software and realize value in a matter of hours.

From a market need standpoint, the focus on digital transformation and increasing efficiencies is driving business users’ awareness of the benefits of analyzing and understanding their own processes. We believe that Zeitworks will be a key enabler in that inevitable digital transformation of enterprises.

At Madrona Venture Labs (MVL), the founders Ryan Windham, Ben Elowitz and Matthew Holloway tested the idea behind Zeitworks extensively, with input from hundreds of prospective customers and us, while assembling a world-class team of product and technology leaders to go execute that vision. MVL continues to be core to our work with early stage founders – the MVL process includes both ideating and testing as well as partnering with a wide variety of technical and business founders – and Zeitworks is a great example of a world-class founding team taking on a market opportunity we have a deep conviction in.

We could not be more excited to partner with Ryan and team and we look forward to helping them build the next billion-dollar business in enterprise software!

 

 

 

Angel Investors – Standing Behind Startups

When Madrona Venture Group was founded in 1995, it did not start by raising a venture capital fund right away. In the early days, Madrona invested with funds solely from the four founders: Tom Alberg, Paul Goodrich, Gerald Grinstein and William Ruckelshaus. It was a “super” angel group, so to speak. One of those early angel investments that Tom Alberg made was in a first- time founder with a plan to sell books on the internet – Jeff Bezos and the company that became Amazon. 25 years later, Amazon has fundamentally changed retail as we know it.

It took four years of investing as angels before the founders decided to raise an outside fund. Building on this history, we, at Madrona, have consistently had a focus on investing in the early stage of companies over the intervening years and have a deep understanding that, for founders, these investors, and other assistance such as accelerators and incubators, at the earliest stages are the most crucial.

We have a long history of collaboration with the angel community here and continue to invest alongside them. Over the past decade, Madrona has participated in 78 deals alongside angel investors, mostly in companies here in our region. In fact, some of our most recent investments have been alongside angel investors, including The Riveter, OctoML and MontyCloud.

The total capital invested by angels in the PNW has steadily increased over the last decade. Alliance of Angels, Keiretsu and Element 8 have been among the most active angel investing groups in the PNW – investing in a combined total of over 1,300 deals over the last decade.

While the individual checks an angel investor or group write may feel small in comparison to the ever-increasing later-stage rounds, that amount adds up. According to Pitchbook, there were 25 PNW angel groups that made investments in 2019, totaling $145M in capital contribution. In contrast, 2009 had 12 PNW angel groups that invested a collective $11M. As part of angels’ commitment through the long run, they participate in later-stage rounds as well. In fact, angel investors participated in over 200 deals that raised $2.8B in the PNW in 2019 alone.

It is important to note that angel investing’s importance extends far beyond capital. While these investments may come in different forms and sizes, a common denominator is the support they provide at a critical time in a new company’s journey. Angels invest early, sometimes alongside seed stage investments from larger funds like Madrona. These investments are personal, ones that the investors are particularly passionate about – and subsequently, angels are known for rolling up their sleeves and getting deeply involved in formative stages. Not only can they be a key factor in reaching the next stage of funding by bringing other investors and VCs to the table, but angel investors provide advice, coaching and network access that remains influential throughout the entirety of a company’s journey. As an example, the Angel Capital Association estimated in 2017 that roughly 40% of angel investors take board seats, and almost 50% have active board advisory roles. In short, when angel investors commit to fostering this growth, they are giving back to the community over the long run – and truly living up to their name.

For those who have yet to take a step into this community, angel investing can be an incredible way to get involved in the rich and vibrant startup community in the PNW. To some, it may seem risky a risky endeavor, rife with unknowns. In many ways, this is the beauty of angel investing; taking a bet on a founding team in an early stage company and helping them navigate growth challenges is an invigorating way to allocate both your capital and time.

A study of over 1,500 angel investors in the US showed that nearly 66% initially got involved in the discipline through angel groups. Participating in these larger groups and communities can create a structured approach, share risk across a variety of investments, learn from each other and alleviate some of the initial apprehension to starting angel investments.

Downturns do affect investing but if history is to be believed, not that much when it comes to angels. Take 2008 for example where angel investing was relatively consistent through the downturn. The total early-stage venture funding raised in the PNW dropped by 13% from the prior year, and again by 9% from 2008-09. However, seed stage and angel investing only decreased by 10% from 2007-08, and actually increased by 18% the following year, bouncing back to pre-recession levels within 2 years.

If we use sentiment as a historical guidepost, we would have expected to see the venture community invest in fewer deals, at lower valuations and increase their focus on existing portfolios. We have demonstrated, however, resiliency in the face of difficulty. And now, more than ever, fostering innovation is critical.

Madrona has always been excited about the technology innovation and start-up ecosystem in the PNW, but today, we are reaffirming our commitment to invest through the downturn. We continue to remain focused on investing from Day One to the long run. As Seed stage investors, we will roll up our sleeves and partner to go the distance together. By extension, that means working closely with angel investors, other seed funds and entrepreneurs in the community.

We will continue to support Create33, TechStars, Madrona Venture Labs, AI2, FFA among other groups that help get startups ready for any kind of early stage funding. Further, we have a roundtable of start-up founders and senior technology executives working with us on our Pioneer Fund. These experienced technology execs are also angel investors. The Pioneer Fund enables them to bring more funding to startups through partnering with Madrona in their own angel investments.

To other members of the ecosystem – angel investors and other funds alike – let’s lean in through this tough period. We have a shared responsibility to help both existing and new start-ups continue to innovate through this downturn. Washington State has led the country in COVID-19 responses in a number of ways already. Together, we have the potential to continue leading by demonstrating our commitment to the start-up ecosystem in the Pacific Northwest.

Can Your Seed Stage Investors Go the Distance?

Madrona is approaching our 25th Anniversary as a firm committed to seed stage investing in Seattle and the Pacific Northwest. Over the past 25 years we have made 155 seed stage investments (on average 6 per year), from Amazon in 1995 to OctoML in late 2019. In the early days, Madrona was a “super angel” group, and today we continue our passion for seed stage entrepreneurs and their companies. We are active in the ecosystem as long term supporters of seed groups including Techstars, Madrona Venture Labs, other labs, Create33, UW’s Startup Hall and many more.

By definition, seed stage investments are “Day One” opportunities. We believe that rolling up our sleeves with great entrepreneurs from the earliest days creates a material advantage for company success. We also believe having an investor partner with the capital, commitment, and expertise for the long run (often 10 years or more) provides the greatest opportunity for entrepreneurs to realize their highest aspirations. Madrona was recognized last year for exceptional outcomes for our seed investments by The Information. Eighteen Madrona-backed companies have gone public and over 60 have been acquired for positive outcomes over the past couple decades and we were the seed or Series A lead investor for most of those companies. We also keep learning from the over 75 current Madrona portfolio companies across all stages of growth. Based on our experiences, here are some thoughts entrepreneurs may find helpful about partnering with investors from Day One for the long run.

Finding Long-Term Partners Upfront

We often get asked by entrepreneurs what partnering from seed stage onward with Madrona looks like. We encourage entrepreneurs to talk with the founders and CEOs who have experienced this partnership, including companies that were big successes and those that did not achieve their goals. In addition, founders should ask any potential seed stage investors their perspectives on how they will add value near term and help build the company over the full journey.

Seed stage investors are generally looking for alignment with an exceptional team that is passionate about a customer problem and has a vision for novel solutions. Investors want to work with founders who have an insatiable curiosity and humility around what they know and the questions they are trying to answer. And, these founders have the market understanding and technological capabilities to build a compelling solution while attracting other team members to help build the company. Finally, the founding team and the seed investors need to share general core beliefs about the timing and nature of big market forces that can enable the company to succeed.

As a founder, you hope to find investors with big picture views similar to your own and relevant experiences that will directly help you succeed. It is especially useful to get beyond “pitch mode” and have a conversation about themes and real-world learnings. A good example here is how we have partnered with entrepreneurs around one of our major technology investment themes –the rise of “Intelligent Applications”. For the past decade we have been investing in seed and first venture rounds of companies that fit this broad theme. Horizontally focused companies we seeded in this area include Turi, Algorithmia, Xnor.ai and OctoML. Vertically focused companies have included Amperity, Highspot, Tesorio, Suplari and most recently Clari. The intelligent applications investment theme is just one of our key areas of focus and experience. The main point here, though, is for founders to seek strong alignment even at the seed stage with investors who understand their market and how a company in an emerging sector can be built over time.

Going the Distance with Capital and Value-add

Companies built to last take a long time to build! Entrepreneurs take the greatest risk because they are highly concentrated on one big bet with their company. They deserve investing partners who think and act like owners, show respect and appreciation, and have the resources to support the company over a long period of time. Founders can get the best of both worlds from a venture capital firm that has proven seed stage investing and multi-stage company building capabilities. They should expect investors that will combine their capital, time, experience, and value-add to help a company materially increase the probability of long-term success. Every company has its own journey. But experience has taught us some common lessons and patterns around navigating the entrepreneur’s journey.

  • EVERY company has one or more “near death” experiences. There are just too many things you can’t directly control (macro forces, market timing, regulations) and too many times you make sub-optimal choices (hiring, product priorities, go-to-market strategies) to always get it right. Having both macro awareness and self-awareness helps the most successful entrepreneurs navigate and grow from their “near death” situations. Isilon Systems had hardware reliability issues that forced a product “stop ship” in the Spring of 2003. Smartsheet had to rewrite its front-end in 2009. Amazon may have run out of cash in 2000 if they had not raised a substantial amount of debt before the market crashed. Having investors who have been through these experiences can be grounding and also provide valuable guidance in challenging times .
  • Establishing your own style of a “Learning Loop” culture and process can significantly improve the potential for success. A learning loop culture combines curiosity, triangulation and rapid decision making to help a company learn better and faster than others. It is important to establish this culture early, at seed stage, so that you can absorb and grow from “experiential learning”, quickly dial-in initial product-market fit and create a virtuous cycle of customer and market understanding. This “formula” can help a company achieve early market leadership and establish a foundation for greater success. Your investors will be on this road with you as well so finding curious and thoughtful partners is key to navigating this continuous cycle of learning together.
  • Look around corners and make hard choices at every stage. Circumstances are always changing and scale breaks people, processes and sometimes strategies. For example, finding and starting to scale product-market fit is an exhilarating phase of the company building journey. Having found that initial fit usually means your company will at least have a positive outcome someday. But there are many challenges to scaling and sustaining early market leadership. Initial products often meet a minimum threshold for bleeding edge customers, but the next set of customers expects more. Early employees who are great at running small teams or being individual contributors aren’t necessarily interested in or capable of running larger teams. In addition, established competitors start to mimic your messaging (even if they don’t have a product) and other startups observe your success and “pivot” to your market. At each stage of scaling, you want investors, board members and management teams who you have built a trust-based relationship over years of working together. And, you want them to keep looking around the corner to anticipate emerging risks and respectfully raise valid concerns. This type of trust-based relationship takes time and shared experience to establish.
  • Financial transactions, especially M&A and IPOs, are usually the most intense and potentially misaligned periods in a company’s journey. During these times, trust and transparency are put to the test and are crucial to navigating these waters successfully. Most companies go through several rounds of financings. And, whether it is a Series A, Series F or an IPO financing round, they are always intense. In fact, the process of selling a company in one form or another (acquisition, recapitalization, merger) is the only time that is more anxiety-inducing than a financing round. This is especially understandable for founders and key executives who may be experiencing that process for the first time and are “all in” on the company.

Further complicating the intensity is the potential for misalignment between management and investors, and sometimes between the major investors. Investors can have different time horizons for when they hope to sell. Other times investors have different levels of capital to invest in follow-in rounds leading to different views on financing strategy. Investors also made their investments at different valuations, terms and ownership levels. Often investors can have varying views on strategy, capital requirements and operating plans. And, that is just differences you may encounter amongst your investors! Founders and senior executives might have differing views on all the above topics as well. And, they can feel misaligned with one or more of their major investors/board members as a result.

For example, a broadly held view amongst Silicon Valley investors the past few years was to delay going public for as long as possible. Comparatively “cheap” capital for later-stage private companies was available and the temptation to raise private capital was strong. In some situations where a business didn’t yet have sufficient scale or predictability, staying private was advisable. But, in many cases the combination of cheaper capital and less business scrutiny led private companies to insufficiently focus on unit economics and value creation. Regardless of the specifics for any one company, the IPO timing debate highlights how financing decisions can lead to misalignment between and across management team members and investors. Having investors who have been long term trusted partners accustomed to transparent communication with the entrepreneur gives the company a clear advantage in getting through transactional times.

Some Questions to Consider

While it is hard at the seed stage to be thinking around the corner to future financing rounds, potential IPOs or eventual M&A scenarios, it is critical to understand the experience and perspective of your seed investors. Are they committed to building a trust-based relationship with you over the long-term? Do they roll up their sleeves and continually add value at each stage of the company? Have they shown good judgement and sought alignment during financings and sales of prior companies? And, do they appear energized and culturally aligned with you and your team to build a great company over the long run? If you are answering yes to these questions, you and your investors are likely on an aligned and positive path to success. If you are just starting to evaluate outside capital and investors, I hope these thoughts and questions help you and your company achieve your goals!

Timing is Everything: A Guide for When to Raise Early-Stage Investment

For all the articles on how to raise funding, timing comes up a lot less often. Yet, the question of when to raise is arguably just as — if not more important — than the question of how. It is also more of an art than a science. At Madrona we mostly invest very early in a company’s lifecycle – at the seed and A stage. And we usually start talking to companies well before the stage they are approaching.

(If you are later stage and reading this – check out our Acceleration Fund here )

Sometimes this is a quick decision: product, team, and market are in alignment, but sometimes those pieces aren’t enough in alignment to give us confidence that the funds entrusted to us by our investors should be invested at that moment in the company’s lifecycle. If there are elements we really like such as the team, we continue to work with the entrepreneur and be helpful where we can with intros and advice. Sometimes not raising at that moment in time was a good decision for everyone involved.

A great example from the last couple of years of a company that benefited from NOT raising early is Unearth. The company’s founders initially came to us very early in their life cycle — about a year prior to when we actually funded them. Venture is not about just financing but involves a strong partnership around company building and scaling and at its core is a relationship business. The investors you choose will be with you throughout your journey – at least if you work with Madrona, they will be – so you want to choose wisely.

And that’s how we started with founder, Brian Saab. We have had a working relationship with Brian for over a decade. Brian and Soma worked together at Microsoft. Brian had been a co-founder at another startup where we worked with him called buuteeq, which was acquired by Priceline back in 2014.

According to Brian: “Our early idea was very focused on how to use drones in a new way to map. We went to Madrona while we were doing a friends and family raise around this idea. At that point there were a lot of open questions. We had good conversations with Tim and Soma, but they didn’t think the business was ready for VC funding yet. Not raising from Madrona led to more discipline around the business as I dove into pulling the angel round together, which I liken to herding angel cats. This smaller round kept us capital efficient and we didn’t overbuild during the early time period.

“Not raising from Madrona led to more discipline around the business as I dove into pulling the angel round together, which I liken to herding angel cats.”

As we progressed, we kept Madrona apprised of where we were throughout the whole process of market and customer exploration. We had started with a focus on drones and IOT and had chosen the construction sector, but we were still mostly focused on using drones versus creating the platform of work management we have today. We went back to Madrona as we went to market with a deeper product for construction and at first Madrona didn’t want to lead but then they got closer to the business and saw what was happening at a deeper level. Soma pulled in senior associate, Chris Picardo, and then they led the seed round of $4.5 million. And today our business is strong – we have expanded our focus and it’s great to have Soma and the team supporting our journey.

Unearth raised a Series A of $7 million following a successful seed stage.

Why Timing is Important
As Unearth shows, there can be real costs for miscalculating timing of your first institutional round. Raise too early and you could put yourself ahead of what your company can feasibly accomplish. This can put a huge amount of unnecessary pressure on you and your team to live up to the raise. The pressure can lead to unwise spending, high burn and a cash out date that arrives before achieving the milestones you set in place when you raised the round.

Conversely, if you bootstrap for too long, beyond the obvious (running out of money) you could allow competitors to outpace you and miss the ideal window for scaling your business. Keep in mind the fundraising process takes time. Be sure to mentally prepare yourself to devote at least a 3-6 months to the process, potentially more.

Determining the Right Time for Your Company
A good rule of thumb is to start fundraising when you have six months of cash left. While every company is different, here’s a general guide for where your business should be by then so you’re well-positioned for early-stage financing:

We (and Pitchbook) took a look at data of technology companies that raised a series A in the past 5 years in the US and found that on average companies close seed rounds 1 year and 9.6 months after their founding date and A rounds after 1 year and 10.5 months after their seed financing. However, these are just averages and every business is unique. What’s most important is you are keeping an eye on your cash balance and have a clear vision of what milestones you want to reach before hitting the market.

On a final note since we’re talking timing, contrary to what some people say about VCs and the summer and winter holidays there is never a wrong time of the year to raise! We can’t remember a year in recent memory where we weren’t closing a deal in August or over the winter holidays, for instance.

If you have a great idea, come see us! It’s never too early to talk!

Chris Picardo greatly contributed to this post.

Our Investment In Lexion: Finding The “Data Needle” In A Haystack Of Documents

Today, Lexion announced a $4.2 million Series Seed funding round led by Madrona, and we couldn’t be more thrilled.

The business world is filled with and ruled by an ever-increasing mix of complex documents that need to be constantly managed – from customer and vendor contracts to insurance agreements to commercial real estate agreements. Exactly how and when “business gets done” is determined by the key details in these documents, and yet the process for tracking and acting upon these details is often highly manual, time consuming, and inconsistent. This is where the power of Artificial Intelligence (AI) and Natural Language Processing (NLP) come in.

Enter Lexion, a new offering for underserved mid-market businesses that provides a powerful application, based on AI and NLP technology developed at Seattle’s Allen Institute for Artificial Intelligence (AI2), built from the ground-up to ingest and understand your corporate contracts. Whether it be a pricing term, a partnership revenue share agreement, a renewal date, or an extension clause, the details are tedious to find and track and yet necessary to understand and be able to act on in order to run a business well. Lexion is your powerful magnet for locating that “needle hidden in the haystack” of your paperwork, and it helps make you smarter, faster, and more action-oriented when running your business.

Lexion Founders, Emad Elwany, Gaurav Oberoi, and James Baird.

Gaurav Oberoi, Lexion founder and CEO, is a Seattle-based entrepreneur whom we have known and have wanted to work with for a long time. He is a tremendous founder and well-known in the tech community both for his successes in and his enthusiasm for the Seattle startup scene. He founded and bootstrapped successful startups Billmonk (acquired by Obopay) and Precision Polling (acquired by SurveyMonkey) and originated the still popular startup email list, STS (SeattleTechStartups), over a decade ago. Gaurav, together with co-founders Emad Elwany and James Baird, came together at AI2 and formed the idea for Lexion over discussions on the common customer problem of intelligent document management and then built Lexion as a solution to solve it.

At Madrona, we love this customer- and problem-first approach to company creation and are excited to support the Lexion team from Day One. This investment also supports one of our core investment themes of ML-driven intelligent applications, in this case using advanced text mining and NLP techniques to extract structured data and insights from large corpuses of unstructured information to solve a vertical business problem, here specifically contract management. We think there will continue to be more opportunities in this form of entity extraction from large text sets, and this investment builds on the theme behind our other startup in this space, Lattice Data (acquired).

In talking to dozens of portfolio and other midmarket and growth companies, we heard this pain point and market opportunity reiterated over and over again. We were enthused as this company and technology came together to solve the problem, and are very excited to also have forward-thinking law firm, Wilson Sonsini, Goodrich and Rosati, the premier legal advisor to technology, life sciences, and growth enterprises worldwide, invest a sizable amount and join the board. WSGR clearly sees their clients dealing with this same issue of contract management and understands deeply the differentiated approach Lexion is bringing to market. We are looking forward to working with David Wang at WSGR and the team there to help build Lexion’s success.

Lexion is also the latest company to spin out from AI2 and the third we have funded (previous early stage investments were Kitt.ai and Xnor.ai). AI2 has proven to be an incredible incubation ground for companies – and it’s great to see Seattle and our region nurturing AI for the broader good.

To learn more about intelligently and cost-effectively managing your contracts – visit https://lexion.ai/

Our Investment in Kush Parikh and Player Tokens

I am pleased to announce Madrona’s seed investment in Player Tokens Inc. (PTI) and our partnership with Kush Parikh, the founder and CEO. Kush joined Madrona as an Entrepreneur in Residence (EIR) in late 2017 and explored several ideas with the Madrona team, including a nascent category called crypto-collectibles. Player Tokens is launching today.

There have been a number of interesting crypto-collectible projects … this Medium post by CryptoKitties, one of the pioneers of the space, does a nice job covering both the definition of crypto-collectibles and some of the earliest experiments. This post is another good 101.

As Kush and we explored the world of crypto-collectibles together, a few things really stood out. First, there is an opportunity to bring together the digital and physical worlds (something my partner Matt lovingly describes as DiPhy) to create an entirely new and compelling collectible experience, powered by blockchain. Second, this intersection of worlds is particularly powerful in professional sports, where fans have the opportunity to encounter and interact with their favorite athletes, at games, on television, and through social media. Third, the crypto-collectible experience as it exists is entirely too complicated for the typical pro sports fan and collector.

These observations and a compelling vision for ways that crypto-collectibles could be the entry point to a whole slew of digital and physical fan experiences is what prompted Kush to found Player Tokens at Madrona, and for us to begin this journey together. Step one on the journey … talking to fans and collectors. Having lived in epic sports towns like Seattle and Chicago, we’ve had no shortage of conversations with sports fans and collectors who are interested in modern ways to buy, sell, and trade, authentic, rare collectibles for their favorite players. Through Madrona’s partnership with the OneTeam Collective, we’ve also had the opportunity to connect with the players, associations, teams and leagues, all of whom are excited about the future of crypto-collectibles and the opportunities they will enable in the professional sports world.

A mix of product vision from Kush and team, and feedback from fans, collectors and athletes alike, have shaped the initial version of Player Tokens launching today, as well as the long-term roadmap for PTI. We are excited to be working with Evan Kaplan and team at the Major League Baseball Players Association, who represent the Major League players, as our first business partner in this journey; we look forward to building great things together for fans and professional athletes across the globe.

Special thanks to our friends Ahmad Nassar, Ricky Medina, Casey Schwab and team at NFL Players Inc. / OneTeam Collective, who have been great thought partners and connectors for PTI at this early stage in the life of the company and the category.

Welcome Unearth to Madrona!

Pictured in photo: From left to right, Nate Miller, S. Somasegar, Brian Saab & Amy Hutchins.

Welcome Unearth to Madrona!

It is always a happy occasion to welcome a family member back into the household.

With Madrona’s investment in Unearth Technologies, we are excited to be working again with Brian Saab (CEO/Co-Founder) who we had previously worked with as the co-founder of buuteeq (a former Madrona portfolio company that was acquired by Booking Holdings, formerly Priceline). Brian co-founded Unearth with two other buuteeq & Booking Holdings employees, Amy Hutchins, Chief Product Officer and Nate Miller, Chief Design Officer. buuteeq spurred a lot of entrepreneurial spirit as we have also backed Pixvana – started by another co-founder of buuteeq, Forest Key.

Brian went back to his family roots as he began thinking of his next company. Brian grew up in a multigenerational construction company – a business he, as a technology executive, noticed hadn’t really changed that much despite cloud technologies, aerial imagery, and the plethora of tablets and laptops. He and his co-founders did some field testing and realized they could change that with their skills.

The construction industry has long been plagued by both low digitization and low productivity from its workforce. A $1.5T annual industry in the US alone and a $10T opportunity globally, the construction industry is projected to keep growing as new infrastructure is required to keep up with the global economy.

Because of the low productivity, the construction industry suffers from large amounts of waste and lost opportunity. For example, 98% of construction projects face cost overruns or delays with the average project delayed by 20 months and 80% more expensive than planned. In the US, this waste equates to approximately $500B lost per year. This is especially evident in large commercial and civic projects that require large teams and extensive communication between the field and office. This is the problem that Unearth is tackling.

Unearth has built a cloud-native collaboration and communication platform, called OnePlace, for construction and architecture teams to track the progress of their projects in real time. By giving all parties (including project owners and project managers) access to the Unearth platform, everyone is informed every step of the way of the progress of the construction. OnePlace is specifically built to seamlessly handle different data types aerial imagery, 360 images, traditional pictures, plans, and surveys.These are all integrated into the software platform which creates one view available to both office and field teams. After a year in beta and in use on major civic construction projects, OnePlace is open today for sign up at www.unearthlabs.com.

The construction industry is at an inflection point of digitization and software adoption and Unearth is well-positioned to provide a compelling solution for its customers.

Please join me in welcoming Brian, Amy, Nate and the Unearth team to the Madrona family.

Spruce Up, A Madrona Venture Labs Spinout For AI+Home Designer Service

Pictured in photo: Spruce Up + Madrona Venture Labs Team

At Madrona Venture Labs we know it’s all about the founders and we could not be more confident in Spruce Up co-founders Mia Lewin CEO and Mike Dierken CTO. Today, they announced $1.5M in funding from backers known for picking winners in marketplaces, AI, ecommerce and consumer — Two Sigma Ventures, Madrona Venture Group, Maveron, Female Founders Fund, and Petersen Ventures.

Mia is everything we dream of in a founder CEO and it is more than the fact she is a three-time founder, has design domain expertise and holds a Stanford GSB degree. Mia is deeply passionate about design at the core and it stems from her Scandinavian roots. Mike Dierken is an incredible complement to Mia with his background at Amazon and McKinsey & Co. and the full-spectrum startup experience. His hands-on experience building ecommerce platforms and machine-learning recommendation systems could not be more relevant. We love this team.

Spruce Up is the smarter way to design your home. By applying data science to the designer workflow, the shopping service bridges the gap between design inspiration to low-cost, highly personalized design implementation. Thematically, the Spruce Up concept fell right into our focus on vertical ML/AI and early on we collectively identified a unique opportunity to do for home design what StitchFix has done for apparel. The DIWM (do it with me) segment of the home design space is a massive $75B+ market and although there are competitors, most are positioned upmarket in the DIFM (do it for me) category.

Our journey with Mia started back in June of last year after a chance meeting at Madrona resulted in her accepting a CEO-in-residence role with MVL. We agreed to explore a nascent concept we were researching in the garden design space which was inspired by Ben Zulauf, engineering partner at MVL. Given Mia’s deep domain and founder experience in design and ecommerce, we quickly realized that if we are going to do anything in this category it should be with her. So we formed a strong team with design and engineering expertise, including Ben Zulauf, Ejiro Akporobaro, and Jason Flateboe (founding designer of two consumer ML, ecommerce startups). Over the course of eight months we interviewed dozens of designers and hundreds of target customers, built several light-weight prototypes to test concepts and on-boarding flows, and pivoted along the way. Jay Bartot, MVL CTO and serial ML startup CTO, rode shotgun on the investor roadshow and outlined the technical vision for the company. Early exposure to the MVL investor network resulted in a lead investor term sheet from our partner Two Sigma Ventures and an investment from Maveron and access to our talent network resulted in co-founder CTO Mike Dierken joining the team. It has been an honor to be part of the earliest of formation days with Mia and Mike and we look forward to supporting them in the future.

This is just the beginning and we invite you to be a part of the Spruce Up movement — sign up now and get a free Spruce Up (personalized interior design advice) when the company launches later this year.

Introducing Pulse Labs, a Platform for Voice Designers

L-R Abhishek Suthan, Maria Karaivanova, Dylan Zwick, – not pictured – Akansha Mehta

Today we are very excited to announce our investment in Pulse Labs, a startup that is helping designers and developers understand how real people interact with their voice applications – and how to leverage this understanding to build better apps. We are joined in the $2.5 million seed round by the Amazon Alexa Fund, Bezos Expeditions and Techstars Ventures. We are joined in the $2.5 million seed round by Amazon Alexa Fund, Bezos Expeditions and Techstars Ventures.

Each year the team at Madrona develops and presents investment themes that we revisit frequently and use to guide our investment strategy. One of the areas we are very excited about, is the emergence of new user interfaces that enable multi sense interactions between humans and technology. Over the past few years, voice has become a natural extension of how humans interact with technology and thus, the next frontier for application developers. According to Google and Bing, one in four searches is conducted by talking, not typing, a figure comScore predicts will reach 50 percent by 2020.

We believe the shift in human-computer interaction towards voice will be as fundamental as the shift from the command line to the mouse click, or the shift from type to touch in mobile computing. This shift will be as pertinent for the enterprise as it is for consumers, and in fact will serve to further blur the lines between productivity and social communication. Having Amazon in our backyard is a great way to interact at the start with technologies like these – and we were happy to become closely involved with the Alexa Accelerator Powered by Techstars that ran last year in Seattle.

When we first met Abhishek, Akansha and Dylan, the co-founders of Pulse Labs at the Alexa Accelerator last year, we knew right away that they were building something special. It was their second week at the Accelerator, and they only had a prototype but it was addressing a huge need for anyone building voice applications. Fast forward six months, and the Pulse team launched a platform to help brands understand how real people interact with their voice applications through a rigorous process of live testing and data analysis. They enable voice app developers, or voice designers as they are typically called, to quickly see how consumers want to interact with their app and get data on which prompts work and which don’t. In that short time, they’ve assisted in the successful launch of more than 20 Alexa skills for top brands, and they are just getting started.

You may be wondering what’s so different about voice apps. Turns out that developing apps for voice requires a significantly different process than app development on other platforms. As workflows and interactions shift away from the more traditional platforms like mobile and mediums shift from touch and type to speech, voice designers face a whole new set of decisions and there is a lot of room for error and interpretation. Moreover, users have different expectations regarding how a voice app responds, and apps live and die based on how well their designers understood and accommodated these expectations when building the skill or action. (Alexa dubs voice applications for their platform ‘skills’ while Google calls theirs ‘actions’).

Let’s take this example: “Would you like fries or a shake with that?” It’s a question asked over an intercom thousands of times each day, and the teenagers who are asking don’t think twice about it. But, if you’re designing a program to handle orders on avoice platform, you’ll need to think long and hard about it. You may expect the customer to answer with “fries” or “shake, please”, choosing one option or the other, but what if the answer is “yes”? Does that mean fries, a shake, or both?

Understanding these types of interactions and equipping voice designers with the right solutions is the guiding mission of Pulse Labs. With 56 million smart speakers expected to sell in 2018, according to Canalys, this need is only going to rapidly increase as will voice commerce. The experts from investment firm Mizuho Bank predict that Amazon Alexa powered Echo smart speaker alone will account for $7 billion in voice transactions—or vcommerce in 2020. It is for all these reasons, that we are excited to back the Pulse Labs team.

Pulse is extending their product to Google Actions in the coming months and if you are a voice designer looking for a new challenge, send them a note, they are hiring!

Introducing Wicket, a Video Analytics Platform

L-R Ian Blaine, CSO, Len Jordan, Madrona, Marty Roberts, CEO

A lot has changed in the media world since Bruce Springsteen delivered his eponymous lament “57 Channels and Nothing On” in 1984. First, there are more than 57 ‘channels’ on cable and satellite TV. Neilsen data from a few years ago suggested that that the average home had access to 189 channels and watched only 17. Perhaps more importantly, the US subscription cable/satellite business peaked at 100M users in late 2015 and although still a big business at just under $100B for 2016 the rise of ‘cord cutters’ or ‘cord nevers’ is creating a pre-Cambrian explosion of new over-the-top (OTT) IP video experiences. There are now hundreds of conventional cable channels, thousands of live and on-demand OTT programs, (they aren’t really channels) and there is plenty of award-winning programming ‘on’, but other than that Mr. Springsteen was right. J

Today, we are excited to lead the $2M series seed round of Wicket Labs, a company directly attacking the value equation for media companies in this new blended world of OTT and traditional channels. Wicket is building a SAAS platform for measuring and analyzing video consumption, giving media companies insight into how the many channels available to them are performing and which content is driving viewers. The market opportunity is substantial- combined video revenues from subscription television, OTT services and advertising is projected to exceed $193B in the US this year. The challenge for content creators, marketers and distributors is understanding the rapid and dramatic shifts in consumption patterns as users watch a growing selection of different programs on new networks, different devices and a complex array of pay and ad-supported services.

Wicket’s team is led by cofounders Marty Roberts and Ian Blaine from thePlatform (acquired by Comcast in 2006). Marty and I worked together years ago at RealNetworks and it’s a privilege to be working together again- the quantity and color of our hair has changed but I’ve always felt hair is generally overrated. Marty and Ian have deep relationships with TV studios, OTT services and distribution networks- they spent years understanding the challenges in the market and have developed a breakthrough product plan that will provide a compelling level of insights for the industry.

Wickets’ first product will help marketers understand consumption and retention patterns. What are the attributes and characteristics of my customers? What programs are my customers watching and how often? Live or time-shifted? What other networks and programs are they watching? How did I acquire the customer and what trial programs are most successful? What patterns can be discerned from lost customers that would help me drive improved retention?

Over time Wicket will be able to help marketers, content creators and distributors understand the best approaches to producing and delivering the best customer experiences. This will become even more important as the market continues to evolve. There are now 11 different OTT services in the US generating more than $8B in 2015 and projected to grow to $23B by 2021 (Digital TV Research) More than 1/3 of US homes now have an OTT TV device (eg Roku) and as consumption on laptops and tablets accelerates there is a lot of opportunity for innovation in digital content creation, packaging, promotion and distribution.

sThe changing dynamic in video content may best be illustrated by this year’s Emmy awards where three of the top ten nominated networks (Netflix, Amazon and Hulu) were not even creating original content just five years ago. Several of the other top ten networks (CBS, HBO, Disney/ABC) have announced or launched their own DTC (direct to consumer) OTT services and dozens more have announced plans or already launched. Wicket hopes to be at the center of this market as a valued partner and we are excited to be part of their team.

 

 

 

Rep the Squad, the Latest Madrona Labs Spinout

Bringing innovation to the $18B sports apparel market

After a year in development at Madrona Labs, our fifth company, Rep the Squad, launched yesterday. The response was enthusiastic (ESPN, USA Today, Geekwire) – as the company aims to power sports passion throughout the country and build community in every city. The latest Madrona Labs spinout follows in the footsteps of companies where Madrona partnered from Day One with the founders (Rover, Redfin).

Rep the Squad is a new subscription service that provides fans unprecedented access to a wide variety of licensed sports jerseys for a monthly membership fee. We believe the company speaks directly to the modern passionate fan who is interested in “access over ownership.” These engaged fans number in the tens of millions and they spend thousands of dollars every year supporting the teams and players they love. Rep the Squad empowers them to rep multiple players, jersey styles, and avoid the pitfalls of player trades or even a child’s growth spurt.

We could not be more proud to partner with co-founders Brian Watkins and Alex Berg. They exemplify the best of what we look for in Madrona Labs spinout founders — passion for the market (sports), deep domain experience (ecommerce), and the proven grit and resilience needed to take an early stage startup to the next level. Brian and Alex worked together at both Ritani and Blue Nile and have brought together an exceptional team of ecommerce veterans.

Together, we have been able to assemble a uniquely Seattle startup team across the board. Local venture capital firms Madrona and Maveron were the first to commit to the $1.5M funding round. Seahawks Pro Bowler Doug Baldwin and Mariners legend Edgar Martinez, who’s number 11 jersey was retired earlier this month at Safeco Field, personally invested. Seahawks All-Pro Richard Sherman, who is a big-time jersey collector and swapper himself, signed on as the Rep the Squad brand ambassador.

One of the advantages of operating a startup studio out of a venture capital firm is benefiting from the broader team and ecosystem. Ryan Metzger, a die-hard Seattle sports fan and Madrona’s director of growth marketing, not only came up with the jersey rental concept, but he also worked with Aaron Wilson and others from our team in the early days to validate the idea and introduced us to CEO Brian Watkins, who he had worked with over a decade ago at Blue Nile. Our process consisted of market sizing, competitive analysis, hundreds of in-person interviews, ad-driven customer acquisition testing, and an in-season Seattle Seahawks minimally viable product (MVP) to test unit economics and operational assumptions. The project benefited from Madrona’s existing relationship with Seahawks players and connections to the NFL Players Association, in which Scott Jacobson serves on their OneTeam Collective board of directors.

One of the advantages of operating a startup studio out of a venture capital firm is benefiting from the broader team and ecosystem.

We are thrilled to be a part of the early days of Rep the Squad and invite you to join us. To get started simply choose your favorite jersey and sign up. NFL season kick-off is just one week away, so what are you waiting for?!

Our Investment in Shyft – Transforming the Lives of Hourly Shift Workers

It is exciting and super fun for me to announce our seed investment in Shyft and to welcome the team to our Madrona family.

Shyft serves the huge market of shift workers worldwide – from retail to food service and beyond. They make it very easy for these hourly workers to find someone to cover a shift. It is a real time communication system that has been broadly embraced by users. Workers at 1/3 of Starbucks’ U.S. locations are already on the platform – all driven bottoms up rather than top down.

I first had the opportunity to meet Brett Patrontasch (CEO) and Daniel Chen (CTO) as a part of the most recent TechStars Seattle class. Right from my first interaction, Brett and Daniel were very impressive. Their first company approached this market from a different angle and they learned a lot. They were brave enough to shut it down and take what they learned to build something better. Brett has a strong conviction about this market and is eager to leverage the expertise of his advisors.

Madrona is investing in this seed round because we like the team, see the massive market opportunity and are impressed by their early growth. Shyft’s viral adoption and growth is impressive. For example, Starbucks has hourly workers in their stores on Shyft actively trading shifts each day. One person from McDonald’s tried the app and a day later 70 of her co-workers were on the platform. And though Shyft is primarily focused on workers, store managers are already starting to use the product as having a full staff is crucial for them.

I fundamentally believe that Shyft can build a massive platform and community for hourly shift workers. The app is a game-changing way for hourly workers and managers to coordinate with one another and manage their busy schedules. The mobile first approach speaks directly to the majority of this hourly smartphone-wielding audience.

This is the 5th company we have backed from the Seattle TechStars program. TechStars and all the people who run and support it are an incredibly important part of the Seattle ecosystem that brings together great founders, angel and VC investors and experienced operators. We are glad it is here and love participating.

I am looking forward to working with Brett, Daniel and the Shyft team as they build their team and business.