Madrona Venture Labs raises $11M to build companies from the ground up

In regions where would-be entrepreneurs need a little more support and encouragement before they’ll quit their day job, the startup studio model is taking off.

In Seattle, Madrona Venture Labs (MVL), a studio founded within one the city’s oldest and most-celebrated venture capital firms, Madrona Venture Group, has raised $11.3 million. The investment brings the studio’s total funding to $20 million.

Traditional venture capital funds invite founders to pitch their business idea to a line-up of partners. Sometimes that’s a founder with an idea looking for seed capital, other times it’s a more mature company looking to scale. When it comes to startup studios, the partners themselves craft startup ideas internally, recruiting entrepreneurs to lead the projects, then building them from the ground up within their own safe, protective walls. After a project passes the studio’s litmus test, i.e. shows proof of traction, product-market fit and more, it’s spun out with funding from Madrona and other VCs within its large and growing investor network.

For aspiring entrepreneurs deterred by the risk factors inherent to building venture-backed startups, it’s a highly desirable route. In the Pacific Northwest, where MVL focuses its efforts, it’s a chance to lure Microsoft and Amazon employees into the world of entrepreneurship.

“We want to be an onboard for founders in our market,” MVL managing director Mike Fridgen, who previously led the eBay-acquired business Decide.com, tells TechCrunch. “In Seattle, everyone isn’t a co-founder or an angel investor. Not everyone has been at a startup. A lot of people coming here are coming to work at Amazon, Microsoft or one of the larger satellite offices like Facebook. We want to help them fast-track learning, fundraising and everything else that comes with launching a successful company.”

Fridgen, MVL managing director Ben Elowitz, who co-founded the online jewelry marketplace Blue Nile and chief technology officer Jay Bartot, the co-founder of Hulu-acquired Vhoto, lead Madrona’s studio effort.

The investment in MVL comes in part from its parent company, Madrona, and for the first time, outside investors have acquired stakes in the practice. Alpha Edison, West River Group, Founder’s Co-op partner Rudy Gadre, Zillow co-founder Spencer Rascoff, former GoDaddy CEO Blake Irving, Trinity Ventures venture partner Gus Tai, TCV venture partner Erik Blachford and others participated.

With $1.6 billion in assets under management, Madrona is known for investments in Seattle bigwigs like Smartsheet, Rover and Redfin. The firm, which recently closed on another $100 million for an acceleration fund that will expand its geographic reach beyond the Pacific Northwest, launched its startup studio in 2014. Since then, it’s spun-out seven companies with an aggregate valuation of $140 million.

“There are some 85 VCs that have $300 million-plus funds,” Fridgen said. “In Seattle, we have two of the most valuable companies in the world and we have just one [big fund], Madrona; it’s the center of gravity for Seattle technology innovation.”

Companies created within MVL include Spruce Up, an AI-powered personal shopping platform, and Domicile, a luxury apartment rental service geared toward business travelers. Domicile was co-founded by Ross Saario, who spent the three years ahead of launching the startup as a general manager at Amazon. The company recently raised a $5 million round, while Spruce Up, co-founded by serial founder Mia Lewin, closed a $3 million round in May.

Other spin-outs include MightyAI, which was valued at $71 million in 2017; Nordstrom-acquired MessageYes, Chatitive and Rep the Squad. The latter, a jersey rental business, was a failure, shutting down in 2018 after failing to land necessary investment, according to GeekWire.

MVL’s latest fundraise will be used to invest in operations. Though MVL does provide its spin-outs with some capital, between $100,000 to $200,000 Fridgen said, it takes a back seat when it comes time to raise outside capital and doesn’t serve as the lead investor in deals.

Partnering with Visa, emerging market lender Branch International raises $170 million

The San Francisco-based startup Branch International, which makes small personal loans in emerging markets, has raised $170 million and announced a partnership with Visa to offer virtual, pre-paid debit cards to Branch client networks in Africa, South-Asia and Latin America. 

Branch — which has 150 employees in San Francisco, Lagos, Nairobi, Mexico City and Mumbai — makes loans starting at $2 to individuals in emerging and frontier markets. The company also uses an algorithmic model to determine credit worthiness, build credit profiles and offer liquidity via mobile phones.

“We’ll use [the money] to deepen existing business in Africa. Later this year we’ll announce high-yield savings accounts…in Africa,” says Branch co-founder and chief executive Matt Flannery.

The $170 million round from Foundation Capital and its new debit card partner, Visa, will support Branch’s international expansion, which could include Brazil and Indonesia, according to Flannery. Branch launched in Mexico and India within the last year. In Africa, it offers its services in Kenya, Nigeria and Tanzania.

A potential Branch customer

The Branch-Visa partnership will allow individuals to obtain virtual Visa accounts with which to create accounts on Branch’s app. This gives Branch larger reach in countries such as Nigeria — Africa’s most populous country with 190 million people — where cards have factored more prominently than mobile money in connecting unbanked and underbanked populations to finance.

Founded in 2015, Branch started operating in Kenya, where mobile money payment products such as Safaricom’s M-Pesa (which does not require a card or bank account to use) have scaled significantly. M-Pesa now has 25 million users, according to sector stats released by the Communications Authority of Kenya. Branch has more than 3 million customers and has processed 13 million loans and disbursed more than $350 million, according to company stats.

Branch has one of the most downloaded fintech apps in Africa, per Google Play app numbers combined for Nigeria and Kenya, according to Flannery.

Already profitable, Branch International expects to reach $100 million in revenues this year, with roughly 70 percent of that generated in Africa, according to Flannery.

In addition to Visa and Foundation Capital, the $170 Series C round included participation from Branch’s existing investors Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, CreditEase and Victory Park, while adding new investors Greenspring, Foxhaven and B Capital.

Branch last raised $70 million in 2018. The company’s overall VC haul and $100 million revenue peg register as pretty big numbers for a startup focused primarily on Africa. Pan-African e-commerce startup Jumia, which also announced its NYSE IPO last month, generated $140 million in revenue (without profitability) in 2018.

Startups building financial technologies for Africa’s 1.2 billion population have gained the attention of investors. As a sector, fintech (or financial inclusion) attracted 50 percent of the estimated $1.1 billion funding to African startups in 2018, according to Partech.

Branch’s recent round and plans to add countries internationally also tracks a trend of fintech-related products growing in Africa, then expanding outward. This includes M-Pesa, which generated big numbers in Kenya before operating in 10 countries around the world. Nigerian payments startup Paga announced its pending expansion in Asia and Mexico late last year. And payment services such as Kenya’s SimbaPay have also connected to global networks like China’s WeChat.

The next frontier in real estate technology

From entertainment to transportation, technology has upended nearly every major industry — with one notable exception: real estate. Instead of disrupting the sector, the last generation of real estate technology companies primarily improved efficiencies of existing processes. Industry leaders Zillow/Trulia and LoopNet* helped us search for homes and commercial real estate better and faster, but they didn’t significantly change what we buy or lease or from whom or how.

The next generation of real estate technology companies is taking a more expansive approach, dismantling existing systems and reimagining entirely new ones that address our growing demand for affordability, community and flexibility.

The increasing need for affordability

Home ownership has long been integral to the American dream, but for many young Americans today it’s an unattainable dream. A third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations did — about 45 percent during their first decade of work. This leaves little money left over for savings, much less for home ownership, the largest financial expenditure of most people’s lifetimes.

The increasing need for affordable housing is driving some creative tech-enabled solutions. One segment of startups is focused on making existing homes more affordable, especially in high-cost markets like New York and the Bay Area. Divvy helps consumers, many of them with low credit scores, rent-to-own homes, which are assessed for viability by a combination of contractors and machine learningLandedfunded by the Chan Zuckerberg Initiative, helps educators afford homes in the communities in which they teach. Homeshare divides luxury apartments into multiple more-affordable units, and Bungalow takes a similar approach with houses. Both companies have built technology platforms to manage their tenant listings and to allocate tenant expenses and streamline payments.

Consumers aren’t just craving affordability, they’re also seeking company.

Another segment of startups is aiming to reduce the costs of building new homes, such as with modular, prefab housing to reduce construction costs. Katerra, which just raised $865 million, is aiming to create a seamless, one-stop shop for commercial and residential development, managing the entire building process from design and sourcing through the completion of construction. Taking a “full stack” approach to every step of the building process should enable them to find efficiencies and reduce costs.

If the economy weakens, the need for more affordable housing will only grow, making these startups not only recession-proof but even recession-strong. Collectively, they’re helping Americans right-size their dreams to something more broadly attainable.

In search of community

Consumers aren’t just craving affordability, they’re also seeking company. More than half of Americans feel lonely, and the youngest cohort in their late teens and early-to-mid-twenties are the loneliest of the bunch (followed closely by millennials). Millennials are the first generation to enter the workforce in the era of smartphones and laptops. While 24/7 connectivity enables us to work anywhere, anytime, it also creates expectations of working anywhere, anytime — and so many people do, bleeding the lines between work life and personal life. Longer work hours make community harder to build organically, so many millennials place value on employers and landlords who facilitate it for them.

Airbnb and WeWork were early to capitalize on the demand for community, with one changing how we travel and the other redefining the modern office space. Co-working companies like WeWork, as well more targeted providers like The Assembly*, The Wing and The Riveter, offer speaker series, classes and other free member events aimed at building connections. Airbnb, once focused only on lodging, has broadened its platform to include community-building shared experiences.

Shared living and hospitality startups are also investing in community to attract and retain customers. StarCity provides dorms for adults, Common and HubHaus rent homes intended to be shared by roommates and Ollie offers luxury micro apartments in a co-living environment. These companies are leveraging technology to foster in-person connections. For example, Common uses Slack channels to communicate with and connect members, and HubHaus uses roommate matching algorithms.

Within the hospitality sector, Selina offers a blended travel lodge, wellness and co-working platform geared toward creating community for travelers and remote workers, complete with high-tech beachside and jungle-side office spaces. Meanwhile, experience-driven lifestyle hotel company Life House* connects guests through onsite locally rooted food and beverage destinations and direct app-based social introductions to other travelers.

Modern life requires flexibility

Life can be unpredictable, especially for young people who tend to change jobs frequently. Short job tenures are especially common within the growing gig economy workforce. People who don’t know how long their jobs will last don’t want to be burdened with long-term lease commitments or furniture that’s nearly as expensive to move as it is to buy.

The next frontier in real estate technology is as boundless as it is exciting.

Companies like FeatherFernish and CasaOne rent furniture to people seeking flexibility in their living environments. Among consumers ready to buy their homes but looking for some extra help, Knock, created by Trulia founding team members and which recently raised a $400 million Series B, provides an end-to-end platform to enable home buyers to buy a new home before selling their old one. Also emphasizing flexibility, OpenDoorvalued at more than $2 billion, pioneered “instant offers” for homeowners looking to sell their homes quickly, leveraging algorithms to determine how much specific houses are worth.

It’s not just residents who seek flexible leases; many companies do as well, particularly those accommodating distributed employees or experiencing periods of uncertainty or rapid growth. To enable flexibility, several commercial real estate technology companies have developed platforms that balance pricing, capacity and demand.

Knotel, a “headquarters as a service” for companies with 100-300 employees, builds out and manages office spaces at lower risk and with more flexibility than is typically possible through commercial real estate leases, enabling tenants to quickly add or shrink office space as needed. WeWork allows members to pay only for the time periods when they come in to work. Taking flexibility to an even greater level, Breather lets workers rent rooms by the hour, day or month.

The next frontier in real estate technology is as boundless as it is exciting. A whole new generation of startups is designing innovative solutions from the ground up to address our growing demands for affordability, community and flexibility. In the process, they’re fundamentally reimagining how we live, work and play by transforming the modern workplace, leisure space and even our definition of home. We look forward to seeing — and experiencing — what lies ahead.

*Trinity Ventures portfolio company.

Appen acquires Figure Eight for up to $300M, bringing two data annotation companies together

Appen just announced that it’s acquiring Figure Eight in an all-cash deal that sees Appen paying $175 million upfront, with an additional payment of up to $125 million based on Figure Eight’s performance this year.

Both companies focus on using crowdsourced labor pools to annotate data, which in turn is used to train artificial intelligence and machine learning — for example, Figure Eight (formerly known as CrowdFlower and Dolores Labs) says its technology has been for everything from mapping to stock photography to scanning receipts for expense reports.

Appen, meanwhile, is a publicly-traded company headquartered in Sydney. CEO Mark Brayan described its technology — and its “crowd” of more than 1 million remote workers — as “highly complementary” to Figure Eight, which he praised for its data annotation and self-serve capabilities.

“We know that to compete and to be able to deliver even higher volumes, we need a richer set of technologies,” Brayan said. “That’s where Figure Eight comes in. They are, in our view, the leader in the market of the platform providers.”

As for what this means for the Figure Eight team, he said, “Everybody stays in place,” and that Appen plans to continue investing in the product.

Brayan also noted that Appen previously acquired another data annotation company called Leapforce in 2017, a move that he said provided the company with greater scale.

“The Figure Eight acquisition is the next step of our evolution,” he said. “Step one was to get bigger, step two is to become much more tech forward, which is what we get with Figure Eight.”

San Francisco-based Figure Eight has raised a total of $58 million in funding, according to Crunchbase, from investors including Trinity Ventures, Industry Ventures, Canvas Ventures and Salesforce Ventures. As CrowdFlower, it launched on-stage at the TechCrunch50 conference nearly a decade ago.

“I’m extremely proud of the team,” said Figure Eight co-founder Lukas Biewald in a statement. “This is a genuine validation of everything we’ve achieved and a great platform for our teams to combine and continue to do amazing things in AI.”

Biewald (a college friend of mine), along with his co-founder Chris Van Pelt, has moved on to a new startup called Weights and Biases, but he remains involved in Figure Eight as chairman. You can watch their TC50 presentation here.

Healthcare wearables level up with new moves from Apple and Alphabet

Announcements that Apple has partnered with Aetna health insurance on a new app leveraging data from its Apple Watch and reports that Verily — one of the health-focused subsidiaries of Google‘s parent company — Alphabet, is developing a shoe that can detect weight and movement, indicate increasing momentum around using data from wearables for clinical health applications and treatments.

For venture capital investors, the movea from Apple and Alphabet to show new applications for wearable devices is a step in the right direction — and something that’s been long overdue.

“As a healthcare provider, we talk a lot about the important of preventative medicine, but the US healthcare system doesn’t have the right incentives in place to pay for it,” writes Cameron Sepah, an entrepreneur in residence at Trinity Ventures. “Since large employers largely pay for health care (outside of Medicaid and Medicare), they usually aren’t incentivized to pay for prevention, since employees don’t stay long enough for them to incur the long-term costs of health behaviors. So most startups in this space end up becoming an expendable wellness perk for companies. However, if an insurer like Aetna keeps its members long enough, there’s better alignment for disseminating this app.”

Sepah sees broader implications for the tie ups between health insurers and the tech companies making all sorts of devices to detect and diagnose conditions.

“Most patients relationship with their insurer is just getting paper bills/notifications in the mail, with terrible customer satisfaction (NPS) across the board,” Sepah wrote in an email. “But when there’s a way to build a closer relationship through a device that sits on your wrist, it opens possibilities to partner with other health tech startups that can notify patients when they are having mental health issues before they even recognize it (e.g. Mindstrong); or when they should get treatment for hypertension or sleep apnea (e.g. Cardiogram); or leverage their data into a digital chronic disease treatment program (e.g. Omada Health).”

Aetna isn’t the first insurer to tie Apple Watch data to their policies. In September 2018, John Hancock launched the Vitality program, which also gave users discounts on the latest Apple Watch if they linked it with John Hancock’s app. The company also gave out rewards if users changed their behavior around diet and exercise.

In a study conducted by Rand Europe of 400,000 people in the U.S., the U.K., and South Africa, research showed that users who wore an Apple Watch and participated in the Vitality benefits program averaged a 34 percent increase in physical activity compared to patients without the Apple Watch. It equated to roughly 5 extra days of working out per month.

“[It will] be interesting to see how CVS/Apple deal unfolds. Personalized health guidance based on a combination of individual medical records and real time wearable data is a huge and worthy goal,” wrote Greg Yap, a partner at the venture capital firm, Menlo Ventures . But, Yap wrote,I’m skeptical their first generation app will have enough data or training to deliver value to a broad population, but we’re likely to see some anecdotal benefits, and I find that worthwhile.”

Meanwhile the types of devices that record consumer health information are proliferating — thanks in no small part to Verily.

With the company reportedly working to co-develop shoes with sensors that monitor users’ movement and weight, according to CNBC, Verily is expanding its portfolio of connected devices for health monitoring and management. The company already has a watch that monitors certain patient data — including an FDA approved electrocardiogram — and is developing technologies to track diabetes-related eye disease in patients alongside smart lenses for cataract recovery.

It’s part of a broader push from technology companies to tie themselves closer to consumer health as they look to seize a part of the nearly $3 trillion healthcare industry.

If more data can be collected from wearable devices (or consumer behavior) and then monitored in a consistent fashion, tech companies ideally could suggest interventions faster and provide lower cost treatments to help avoid the need for urgent or emergency care.

These “top of the funnel” communications and monitoring services from tech companies could conceivably divert users and future healthcare patients into an alternative system that is potentially lower-cost with more of a focus on outcomes than on the volume of care and number of treatments prescribed.

Not all physicians are convinced that the use of persistent monitoring will result in better care. Dr. John Ioannidis, a celebrated professor from Stanford University, is skeptical about the utility of monitoring without a better understanding of what the data actually reveals.

“Information is good for you provided you know what it means. For much of that information we have no clue what it means. We have absolutely no idea what to do with it other than creating more anxiety,” Dr. Ioannidis said

The goal is to provide personalized guidance where machine learning can be used to identify problems and come up in concert with established therapeutic practices, according to investors who back life sciences starups.

“I think startups like Omada, Livongo, Lark, Vida, Virta, and others, can work and are already working on this overall vision of combining real time and personal historical data to deliver personalized guidance. But to be successful, startups need to be more narrowly focused and deliver improved outcomes and financial benefits right away,” according to Yap.

 

With a new deal for customers and a fresh $23 million, Mayvenn extends its hair care business

Pitching customers a new, all-inclusive service for buying and installing hair, Mayvenn is looking to significantly expand its haircare business and just raised $23 million in a new round of funding to do it.

The new financing was led by Essence Ventures — and it represents the first outside investment by the  holding company owned by serial entrepreneur Richelieu Dennis .

A millionaire many times over, Dennis was the founder and chief executive of SunDial brands — a line of skin and haircare products which sold to Unilever for $240 million. He used that exit to create Essence Ventures with the acquisition of Essence magazine from Time Inc. and has now, with Mayvenn, is working to create a media and investment powerhouse.

Dennis joins a clutch of celebrity investors and venture capital firms in backing Mayvenn. Previous investors include Andreessen Horowitz, Cross Culture Ventures, Trinity Ventures along with a clutch of super famous athletes and music moguls like Serena Williams, Andre Iguodala, and Jimmy Iovine.

Dennis says the new capital infusion for Mayvenn is a testament to the vision of its founder and chief executive Diishan Imira.

Diishan’s vision is very big,” Dennis said. “He’s building a platform to service a space and a consumer that has not been served and certainly not in this way.”

With the new cash in hand Mayvenn is going to market with a new value proposition for its network of stylists and their customers. Before, Mayvenn would sell hair direct to consumers and then provide those consumers with a marketplace of stylists that would install the hair.

That’s a costly proposition for customers who can spend as much as $250 for the hair and another $250 for the service.

Now, Mayvenn is going to make it so customers can buy the hair directly from the company, and Mayvenn will match that customer with a hair stylist who will install the hair. All for the cost of the hair itself

“Customers will be able to buy hair and the installation service for probably 40% less than what they normally would have paid,” says Imira.

Imira first got started selling hair while he was living overseas in Shenzhen in Shanghai from 2003 to 2005. A world traveler who has spent time in Brazil, Ethiopia, France, Japan and China, Imira always had an entrepreneurial spirit, but it was after his stint in business school that he returned to Oakland with the idea for Mayvenn.

The company was accelerated through 500 Startups in 2013 and before that Imira was buying and selling hair for relatives who worked at salons and barbershops.

“I’m just a kid from Oakland selling hair out of the trunk of my car,” Imira says, laughing. “I always saw these barbershops and hair salons as points of commercial distribution. When I started selling hair i said, ‘This is crazy. How come you guys are not making any money off of selling this product?’”

There are $6 billion worth of haircare products sold in the African American community annually and Mayvenn is grabbing an increasingly larger share of that pie since its launch. Imira says the company has done $80 million in revenue in the five years since it graduated from 500 Startups. And the company has paid out over $20 million in commissions to its hairstylists.

Mayvenn chief executive officer Diishan Imira

“Now we really want to increase that number. Our number one metric is that number. How much are we paying hair stylists?” Imira says.

For Imira, Mayvenn is about developing entrepreneurial talent from within the black community. “Black women are buying $9 billion of hair products in general and they’re buying it from these corner stores and 90% of those are owned by people not in the community,” he says. “All of those dollars flow out of the community and nobody is getting a piece.”

With its new offering, Mayvenn is giving more money back to consumers, getting more money out to stylists and cutting the middleman out of the equation,” he says.

Along with co-founder Taylor Wang, who serves as the company’s chief operating officer, Imira says Mayvenn has built a business whose only real online competitor is the Chinese wholesale service AliExpress.

Indeed, what separates Mayvenn fom the other startups that are trying to sell hair and beauty products directly to consumers is the network of stylists that the company has built.

“The biggest competitor for selling direct to consumers is AliExpress,” and now, with its network and the ability to combine products and services at a wider scale, Mayvenn can provide better service for less, Imira says. “They can’t bundle the hair with the service. We can take the margin out of the hair we can bundle the package. We can be more price competitive than AliExpress and give you better hair and better service.”

 

Ne-Yo wants to make Silicon Valley more diverse one investment at a time

Dressed in a Naruto t-shirt and a hat emblazoned with the phrase “lone wolf,” Ne-Yo slouches over in a chair inside a Holberton School classroom. The Grammy-winning recording artist is struggling to remember the name of “that actor,” the one who’s had a successful career in both the entertainment industry and tech investing.

“I learned about all the things he was doing and I thought it was great for him,” Ne-Yo told TechCrunch. “But I didn’t really know what my place in tech would be.”

It turns out “that actor” is Ashton Kutcher, widely known in Hollywood and beyond for his role in several blockbusters and the TV sitcom That ’70s Show, and respected in Silicon Valley for his investments via Sound Ventures and A-Grade in Uber, Airbnb, Spotify, Bird and several others.

Ne-Yo, for his part, is known for a string of R&B hits including So Sick, One in a Million and Because of You. His latest album, Good Man, came out in June.

Ne-Yo, like Kutcher, is interested in pursuing a side gig in investing but he doesn’t want to waste time chasing down the next big thing. His goal, he explained, is to use his wealth to encourage people like him to view software engineering and other technical careers as viable options.

“Little black kids growing up don’t say things like ‘I want to be a coder when I grow up,’ because it’s not real to them, they don’t see people that look like me doing it,” Ne-Yo said. “But tech is changing the world, like literally by the day, by the second, so I feel like it just makes the most sense to have it accessible to everyone.”

Last year, Ne-Yo finally made the leap into venture capital investing: his first deal, an investment in Holberton School, a two-year coding academy founded by Julien Barbier and Sylvain Kalache that trains full-stack engineers. The singer returned to San Francisco earlier this month for the grand opening of Holberton’s remodeled headquarters on Mission Street in the city’s SoMa neighborhood.

Holberton, a proposed alternative to a computer science degree, is free to students until they graduate and land a job, at which point they are asked to pay 17 percent of their salaries during their first three years in the workforce.

It has a different teaching philosophy than your average coding academy or four-year university. It relies on project-based and peer learning, i.e. students helping and teaching each other; there are no formal teachers or lecturers. The concept appears to be working. Holberton says their former students are now employed at Apple, NASA, LinkedIn, Facebook, Dropbox and Tesla.

Ne-Yo participated in Holberton’s $2.3 million round in February 2017 alongside Reach Capital and Insight Venture Partners, as well as Trinity Ventures, the VC firm that introduced Ne-Yo to the edtech startup. Holberton has since raised an additional $8 million from existing and new investors like daphni, Omidyar Network, Yahoo! co-founder Jerry Yang and Slideshare co-founder Jonathan Boutelle.

Holberton has used that capital to expand beyond the Bay Area. A school in New Haven, Conn., where the company hopes to reach students who can’t afford to live in tech’s hubs, is in development.

The startup’s emphasis on diversity is what attracted Ne-Yo to the project and why he signed on as a member of the board of trustees. More than half of Holberton’s students are people of color and 35 percent are women. Since Ne-Yo got involved, the number of African American applicants has doubled from roughly 5 percent to 11.5 percent.

“I didn’t really know what my place in tech would be.”

Before Ne-Yo’s preliminary meetings with Holberton’s founders, he says he wasn’t aware of the racial and gender diversity problem in tech.

“When it was brought to my attention, I was like ‘ok, this is definitely a problem that needs to be addressed,’” he said. “It makes no sense that this thing that affects us all isn’t available to us all. If you don’t have the money or you don’t have the schooling, it’s not available to you, however, it’s affecting their lives the same way it’s affecting the rich guys’ lives.”

Holberton’s founders joked with TechCrunch that Ne-Yo has actually been more supportive and helpful in the last year than many of the venture capitalists who back Holberton. He’s very “hands-on,” they said. Despite the fact that he’s balancing a successful music career and doesn’t exactly have a lot of free time, he’s made sure to attend events at Holberton, like the recent grand opening, and will Skype with students occasionally.

“I wanted it to be grassroots and authentic.”

Ne-Yo was very careful to explain that he didn’t put money in Holberton for the good optics.

“This isn’t something I just wanted to put my name on,” he said. “I wanted to make sure [the founders] knew this was something I was going to be serious about and not just do the celebrity thing. I wanted it to be grassroots and authentic so we dropped whatever we were doing and came down, met these guys, hung out with the students and hung out at the school to see what it’s really about.”

What’s next for Ne-Yo? A career in venture capital, perhaps? He’s definitely interested and will definitely be making more investments soon, but a full pivot into VC is unlikely.

At the end of the day, Silicon Valley doesn’t need more people with fat wallets and a hankering for the billionaire lifestyle. What it needs are people who have the money and resources necessary to bolster the right businesses and who care enough to prioritize diversity and inclusivity over yet another payday.

“Not to toot the horn or brag, but I’m not missing any meals,” Ne-Yo said. “So, if I’m going to do it, let it mean something.”

SynapseFi raises $17M to develop its fintech and banking platform

SynapseFi, a startup that helps banks and fintech companies work together to develop technology, has announced that it raised a $17 million Series A funding round.

The funding actually closed at the back end of last year, but CEO Sankaet Pathak said the company has been so busy developing new products, hiring and more than that it is only getting around to disclosing the deal now. The investment was led by Trinity Ventures and Core Innovation Capital, with participation from other unnamed backers.

The San Francisco-based startup has sat under the radar for a while now despite starting up in 2014. Its core product is a platform that helps banks and developers work together. That involves developer-facing APIs that allow companies to connect with banks to offer services, and also bank-facing APIs that allow banks to automate and extend back-end operations.

Pathak describes the vision as making it possible for anyone around the world to get access to high-quality financial products. The first focus is to make financial products “like Lego bricks” to enable banks to add new products and services easily. As it stands today, development is a painful process that requires specific infrastructure development, but SynapseFi aims to standardize a lot of the processes and platform to make things much simpler.

The idea for the business came when Pathak, who moved to the U.S. from India in 2010, grew frustrated at being unable to get a bank account or loan because he had no social security history. He left the University of Memphis, where he had studied computer engineering and sciences, and founded the startup in April 2014 alongside his friend Bryan Keltner.

Initially, the business focused on payments, but it gradually tilted to become a technology enabler for the financial industry.

Today, SynapseFi has over 60 staff and it works with a roster of over 100 financial industry clients. Its products include the basics like payment, deposit, lending and investment services, but it has also ventured into crypto with services that include a white-label wallet.

To date, it claims to have processed over $10 billion in transactions and helped bank more than 1.5 million people through its technology.

The SynapseFi team

“There are three core things we want to fix in banking,” Pathak told TechCrunch in an interview. “The back office is still mostly manual today and we want to automate that. There’s a need for vertical integration… we want any large or small financial company to be able to come to us and operate at the same scale as the likes of Wells and Chase. We also want to automate financial advice using behavior science.”

Pathak added that the startup also harbors an ambition to expand overseas. That’s likely to mean Europe first — potentially a market like the UK or Germany — but it’ll require fairly intensive localization as the SynapseFi platform is customized to accommodate U.S. APIs and data pipes, none of which will work outside of the country.

An expansion would be likely to happen around the time that the company looks to raise its Series B, although Pathak stressed that he is also focused on building a sustainable business and not simply relying on venture capital money. Indeed, he said that the company is likely to reach breakeven by the end of the year.

“I still think it’s a healthy business practice,” Pathak said.