Tag: Series A

Our Investment In Esper To Enable The Dev-Ops Of Smart Devices

Today, Madrona Venture Group announced that we’ve led the $7.6M Series A investment in Esper, an investment that Tim Porter and I spearheaded for the firm. Esper is a devops platform for Android IOT devices.

As everything around us becomes smart and connected, developers of devices have many new challenges. We are no longer just designing a single piece of hardware – but developing a full solution spanning many cooperating devices and supporting cloud software. During development, we have a variety of deployment, testing, and versioning requirements. Once deployed, we need to support device maintenance and updates on both hardware and software through a variety of complex deployment variations, while also supporting that rare remote debugging session. We have regular security updates to the firmware, OS, and apps to manage. We need to integrate device signals with CRM systems, billing systems, and more. Like we’ve come to think about a “dev-ops” process for cloud services, we now need to think about a dev-ops process for our smart devices.

For non-phone devices which require a user experience, Android has become the most popular platform due to the free price, broad silicon support, and broad software framework support. Amazon Echos, Peloton Bikes, and many home televisions all run a version of Android. When it comes to managing these devices, there are many options available for corporate IT to manage personal Android phones — but there’s no great solution for devices where a developer needs to manage these endpoints into the dev-ops process of their overall solution.

This is the challenge which the co-founders of Esper lived through as they worked in their prior roles. Yadhu Gopalan, CEO of Esper, most recently led the development and deployment of all the smart devices in the Amazon Go retail stores. Shiv Sundar, COO of Esper, most recently helped lead the Cyanogen Android device ecosystem. Prior to those roles, I worked with Yadhu and Shiv on the development of the Windows embedded operating system. It’s fun to be working with these great engineers once again!

After introducing their solution late last year, Esper quickly started serving many impressive customers across over 50,000 devices. Each customer we talked with discussed how they had tried to use a mobile device management solution designed for personal devices, but it had failed to meet their dev-ops needs. We’re excited to work with the Esper team to scale their solution, delighting developers all over the world as they enable billions of smart devices to do amazing things.

It’s been great to partner with Tim Porter on this investment. His experience with other developer focused investments like Heptio will be invaluable in Esper reaching its full potential.

This blog post was also posted on Terry’s LinkedIn page.

Our Investment in Uplevel, Helping Engineering Teams Become More Effective

(founding team – David, Joe, Ravs, Dave)

Today, we are excited to announce our investment in Uplevel, whose mission is to empower software engineering teams to do their best work. The company announced $7.5M in seed funding from Madrona, Norwest Venture Partners and Voyager Capital.

Engineering productivity has become a tough nut to crack for many growing companies. Developers are pulled in many directions at once, constantly bouncing between immediate and cross-team meetings, code reviews, planning, strategy, and, of course, actually writing code. With more interruptions comes lower productivity. While there are many tools available to other types of teams within an organization, few are designed with the engineer and engineering team manager in mind. Enter Uplevel.

Uplevel is designed to help engineering teams and managers take back their productivity. At Madrona, we believe in the power of intelligent applications to provide important insights. Uplevel’s unique combination of machine learning from ambient data created by and in systems that developers use every day (think messaging apps, calendar, code repositories, project management tools, etc.) plus deep organizational science knowledge fits this thesis to a “t”. Uplevel’s system generates data-driven insights that are rich, actionable, and help teams make small changes that provide outsized results. The product fundamentally is designed to help the sometimes overlooked firstlevel manager who most developers in an engineering organization report to, yet lacks the management tools available to senior management or individual contributors. Equally important, the product helps the team work together to become more effective by providing insights to both the manager and the individual developers so everyone has the same information and can openly collaborate using data instead of gut feel.

We are also pleased that the original idea for Uplevel was hatched by Dave Matthews, co-founder and Director of Product Management, at a hackathon run by Madrona Venture Labs. David Youssefnia, co-founder and Chief Strategy Officer, was also working in the labs as an Entrepreneur in Residence (EIR). He had previously been leveraging his PhD in Industrial-Organizational Psychology by helping companies answer these tough productivity questions using old-school surveys, but he knew that there must be a better way. They were joined by co-founder and CEO, Joe Levy. Joe is a startup veteran in Seattle, having had successful go-to-market leadership roles at a number of SaaS analytics companies. Joe is someone we have been fortunate to know for a number of years and are thrilled to be working together at Uplevel. To perfectly round out the founding team, CTO Ravs Kaur came onboard from Tableau Software, bringing ideal experiences building and scaling software products and teams, data visualization, and a keen understanding of the “voice of the customer” pain point that Uplevel is solving. They have since recruited an amazing initial team and built a vibrant and fun culture.

While operating in stealth mode for the past year, the company has built a fantastic initial product and great group of blue-chip customers. They are now scaling rapidly and further building out their team (yes – they are hiring!).

Uplevel represents exactly what we love to do at Madrona: back amazing founders tackling important problems in massive markets using cutting technology, from day one for the long run. We have been fortunate to work with these founders since before Uplevel was even officially a company. We are enthused at their progress since, creating an innovative solution for this important challenge for product and engineering teams.

Our Investment in TwinStrand Biosciences, Leveraging Big Data And The Cloud To Improve Genome Sequencing Accuracy By 10,000x

Today, we’re excited to announce that Madrona has led the $16M Series A investment in TwinStrand Biosciences, a Seattle genomics company with the potential to profoundly impact all of us. TwinStrand’s technology will help detect cancer earlier when it can be most effectively treated, will help identify the most effective personalized therapies, and will help to recognize carcinogens quickly thereby lowering the development cost and time-to-market of powerful new drugs. We’ve previously discussed the incredible intersection of life sciences and computer science in our region – and TwinStrand is at the forefront of this amazing innovation opportunity.

When I first met Jesse, the founder and CEO of TwinStrand, he was discussing the technology in exclusively life science terms. However, as I listened, it was incredible how so many of the concepts had direct analogs to my experience with high scale software. TwinStrand’s “Duplex Sequencing” technology uniquely tags each strand of billions of individual DNA molecules with a chemical GUID. The DNA is then replicated to enable sequencing on a standard genome sequencer – resulting in up to 6 TB of data per run – then imported to the TwinStrand cloud where error correction algorithms are employed. The result is a high-resolution reading of the DNA sequence, 10,000x more accurate than standard sequencing. Duplex Sequencing reduces today’s DNA sequencing error rate of ~1% to below 0.0001%. This biochemical error correction approach reminded me of error correction techniques employed in high scale storage arrays in cloud datacenters.

Researchers are actively exploring how to use this level of precision to detect DNA mutations caused by chemicals (a market known as “genetic toxicology”). Today it can take more than 2 years to determine if a chemical is a carcinogen, as large tumors need to be given time to develop in lab animals. With Duplex Sequencing’s breakthrough accuracy, the resulting mutations can be detected as very small tumors within weeks – saving time, money, and the number of animals required. This testing is a critical step in the drug development process, but also is used to test the safety of agricultural chemicals, food contaminants, and even to examine the effect of space radiation.

When I talked with leaders in the clinical cancer community, a common response I heard was that this level of precision was amazing and insightful – but that today’s diagnostics don’t need that level of accuracy. This response reminded me of so many of the skeptics of 64-bit computing 15 years ago – who would ever need that much memory on any computer? With our investment, we are making the bet that new diagnostics, therapies and even information storage technologies will be developed to leverage this new precision, just like software has always found great new ways to leverage new system performance. It’s very exciting to see the future through the eyes of the TwinStrand team and invest in making it possible.

Jesse created Duplex Sequencing through his MD/PhD research with colleagues at the University of Washington. The TwinStrand team consists of half biochemists, and half software developers and bioinformaticians. Together, they have built an incredible foundation—contributing to more than 15 peer-reviewed scientific articles leveraging Duplex Sequencing and developing a portfolio of over 50 patents. To learn more, I’d suggest these three great recent articles:

TwinStrand’s product will be launching soon, and I look forward to seeing what scientists all over the world will create with it.

-Terry

P.S. Out of humility, Jesse doesn’t often share that he is the grandson of Jonas Salk, the scientist who discovered the vaccine for polio, definitively changing our world for the better. It’s pretty incredible to think that TwinStrand may have the same potential.

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.

Welcoming Polly to the Madrona Family

Today, we are thrilled to announce our Series A investment in Polly, a company we believe is going to significantly impact how enterprises get work done and measure success. We led this $7 million round and were joined with the existing seed investors Amplify Partners, Fathom Capital, and the Slack Fund.

We have known Samir and Bilal, the co-founders of Polly, since the 2016 Seattle TechStars class, when we had them into our offices to give a practice demo run. We were excited about them then and have followed the progress as the company has graduated from delivering chatbots into the rich world of enterprise collaboration. Samir and Bilal have built a great team here in Seattle and they are passionate about delivering a quality experience to their customers – these customers, from individual developers to large enterprises are focused on being more successful and understanding their workflows better. Polly’s success over the last year has been impressive and we are excited that they have decided to partner with us for the journey ahead.

Our investment in Polly follows from our core thesis that, enterprise workflows, for the most part, will move away from legacy systems and email to modern online collaborations platforms like Slack, Teams and Mattermost. While these platforms started their lives as messaging tools, they now have the opportunity to become the “operating system” for modern enterprise workflows. That is already happening. Forward-looking organizations are creating Slack teams whose mandate is to adopt and/or build applications to enable enterprise workflows on Slack.

This is driven by the following.

First, due to technology and societal changes, the nature of engagement between an enterprise and its key constituents (customers, employees and other stakeholders) is becoming more open, bi-directional and frequent.

Second, decision-making in a modern enterprise is becoming far more decentralized. Employees at every level are empowered to directly collect and analyze data in order to make decisions and be far more responsive than it was ever possible before.

Third, as a result, the collaboration tools are where enterprise work happens. We are already seeing early evidence of that with workflows such as IT support, employee on-boarding, site reliability engineering, cyber security operations, etc. moving to Slack/Teams and multiple startups building specific products for each.

As enterprise workflows move to collaboration tools, measuring the effectiveness of those workflows — so that those could be analyzed and further improved — becomes critically important. That is exactly what Polly enables. Polly enables organizations to collect and understand feedback from key constituents so that enterprises can measure and optimize their workflows and thereby, deliver a much better experience.

The early signs have been extremely encouraging! The adoption of the free Polly product, which enables simple surveys within Slack and Teams, has grown consistently over the last couple of years and Polly tripled their user base in 2018. More interestingly, the team has seen incredible ramps in use at large enterprises and the adoption of Polly’s Enterprise product just since launch in in the fall of 2018 has been very strong. The company already has hundreds of paying enterprise customers with many others in the pipeline. The combination of the rapid organic adoption of the free product, strong inbound demand of its enterprise product and a team passionate about helping their customers, fuels our belief that Polly is poised to become the go to product for modern enterprises.

We are excited and buckled up for the fun ride ahead!

Why We Are Doubling Down On Shyft

We are excited to announce today our Series A investment in Shyft.

Since investing in Shyft’s seed round nearly two years ago, we have watched Brett Patrontasch (CEO) and team continue to make impressive progress against their goal of reinventing the way hourly workers manage their shifts and the way national employers both manage and support their workforce.

We originally met Brett through our involvement and support of the TechStars program. Shyft taps into our love of supporting scrappy entrepreneurs using technology to change people’s lives for the better. Through a mobile cloud connected application, Shyft enables a workforce that has little control over their schedule to take control by easily swapping shifts. Shyft started as a ground up platform that appealed to workers at Starbucks and many other retail chains, and, over the past two years, managers have taken note.

Shyft has responded by creating an enterprise software solution that enables retail outlets to manage their workforce while providing the flexibility that employees value.

This all comes at a crucial time in how the expectations of the modern workforce are changing and along with that, the move to create rules that protect this growing workforce. Cities and legislatures around the country are taking a close look via Secure Scheduling (also known as Predictive Scheduling) at how these hourly workers are scheduled – and creating protections that require some stability of schedule. This is a great thing, and as companies are required to support these regulations they need solutions like Shyft.

The proof is in the customers – and Gap has adopted the Shyft platform as their workforce management platform for all of their brands – Old Navy, Banana Republic, Althleta. Companies such as the Gap are adopting Shyft because the app creates real collaboration amongst employees which helps with productivity and general satisfaction.

We are investing alongside Ignition Partners for this round and it is great to work with them again.

The team’s relentless focus on product and end user experience is inspiring and is winning them new customers every day. Brett and his team are extremely passionate about the market and their product and we believe that they’ve created a game changing company poised for continued success.