Car rental startup Virtuo picks up €20M Series B

Virtuo, the Paris-headquartered car rentals startup, has raised €20 million in Series B funding. The round is backed by Iris Capital, Balderton Capital and Raise Ventures, and will be used to continue expanding across the U.K. and other European countries.

Originally founded in France and available in 19 French and 2 Belgium locations, Virtuo launched in London last Summer, and says it plans to bring the service to U.K. cities Manchester, Bristol and Edinburgh later this year.

The company will also expand to Spain and Germany in 2019, creating what Virtuo claims will be a “truly pan-European rental option,” for drivers who are seeking an alternative to the big five incumbent car rental companies.

Designed to bring car rentals into the mobile age and in turn improve the user experience, the Virtuo app lets you book and unlock a Mercedes A-Class or GLA “in minutes,” at stations across the various cities the company operates, eradicating long wait times and arduous paperwork often associated with renting a car.

Like a plethora of mobility startups, the idea is to provide more options to a generation of non-car owners and in turn help creative a longer-term alternative to car ownership more generally.

“From the outset, we have been new challengers in an industry that has long-been dominated by 5 key players, whose bricks and mortar approach is deeply ingrained, not just in terms of market coverage, but also consumer rental habits,” Virtuo co-founder Karim Kaddoura tells me.

“We were the first to come into this industry with the fundamental belief that a 100 percent mobile approach is the only way to rebuild and re-think how car rental can be delivered from the ground up… From an operational perspective, by not being tied to bricks and mortar, we are able to launch stations, markets and services at a pace that has not been seen in the industry before”.

Kaddoura says Virtuo is also taking a data-driven and customer centric approach to building out its product, helping the company to innovate and improve every facet of renting a car. This has seen Virtuo garner 500,000 downloads of its app, which is popular with drivers between the age of 25 and 35.

I’m also told the average number of days of each rental is 4, averaging 325 miles per rental. Meanwhile, 80 percent of customers go for the compact A Class, while 20 percent take SUV.

“By continually listening to customer pain-points around booking processes, damage reporting, refuelling, communication and transparency, we can tackle these long-standing issues in new ways with technology as the solution,” he says. “The series B will play a key role in being able to provide greater availability across Europe and our existing markets”.

Adds Bernard Liautaud, managing partner of Balderton Capital: “Technology in cars and other areas of mobility is evolving rapidly, due to concerns over the environment and congestion. Given these shifts, renting a car as and when you need it is becoming a viable alternative to buying, particularly for younger people who have come of age as the sharing economy took off”.

Amazon looked to the past to build the future

Over the last 20 years, smart home gadgets have evolved from fantasy to commodity. Walk into Best Buy and there are dozens of products that take just a few minutes to set up. It’s wonderful. Even better, it’s easy. There are lights and locks and screens from big and small companies alike. And therein lies the problem. There isn’t a unified solution for everything. Amazon’s vertically integrated offering could be the solution for the consumer and retail giant.

Sure, most smart home gadgets work, but nothing works well together. The smart home has to be as easy as flipping a switch to control a light bulb. Amazon’s purchase of the mesh Wi-Fi startup, Eero, speaks to the problem. Assembling a smart home containing more than a couple of smart gadgets is hard. There are countless spots where something can go wrong, exposing a smart home as nothing more than a house of cards.

What’s best for the average consumer is also the best for Amazon. In order for the smart home to be easy and functional as possible, one company should control the experience from every entry point. This is Apple’s approach to smartphones, and Apple has long offered the easiest, most secure smartphone experience.

In theory, Amazon will likely look to either bundle Eero routers with the purchase of Amazon Echos or build mesh networking into Echo products. Either way, Amazon is ensuring its Fire TV and Echo products can reliably access Amazon’s content services, which is where Amazon makes its money in the smart home.

As Devin explains, mesh networking is the solution to the problem created by Amazon’s push into every room. Wi-Fi is critical to a truly smart home, but there’s more to it. The smart home is complicated and it goes back over 20 years.

Before wireless networking was ubiquitous, hobbyists and luxury home builders turned to other solutions to add electronic features to homes. Some gadgets still use modern versions of these protocols. Services like Z-Wave and ZigBee allowed home security systems to wireless monitor entry points and control power to otherwise disconnected gadgets like coffee makers and lamps.

Later, competing wireless protocols competed with Z-Wave and ZigBee. Insteon came out in the early 2000s and offered redundant networking through RF signals and power line networking. In 2014, Nest, with the help of Samsung, Qualcomm, ARM and others, introduced Thread networking, which offers modern network redundancy and improved security. And there’s more! There are gadgets powered by Bluetooth 5, Wi-Fi HaLow and line of sight IR signals.

This cluster of competing protocols makes it difficult to piece together a smart home that’s controlled by a unified device. So far, at this nascent stage of smart home gadgets, Amazon and Google have built a compelling case to use their products to control this bevy of devices.

Apple tried, and in some ways, succeeded. Its HomeKit framework put iOS devices as the central control point for the home. Want to turn on the lights? Click a button in iOS or, more recently, tell a HomePod. It works as advertised, but Apple requires compatible devices to be certified, and therefore the market of compatible devices is smaller than what works with an Amazon Echo.

Meanwhile, Goole and Amazon stepped into the smart home with their arms wide, seemingly willing to work with any gadget.

It worked. Over the last two years, gadget makers took huge steps to ensure its products are compatible with Google Assistant and Amazon Alexa. Last month, at CES, this became a punchline when a toilet was announced that was compatible with Alexa.

Smart commodes be damned. All of these connected gadgets require their own setup process. Every connected light, thermostat and toilet demand the initial user be comfortable navigating several smartphone apps, knowing their network configuration and what to Google when something goes wrong — because things go wrong.

Amazon’s own Alexa app doesn’t help. The single app is loaded with several tentpole functions including voice calling, skill setup, remote operation and access to Alexa — it’s overwhelming and unwieldy once several Echos are configured under the same account.

Something has to change.

If the smart home is to reach new demographics, barriers have to be dropped and centralized control has to become paramount. A layman should be able to purchase a couple of voice control hubs, connected lights, and a thermostat and set them up through a single app even though the devices might use different networking methods.

Amazon has already taken a big step towards working with different smart home wireless protocols. In 2017 the company introduced the Echo Plus. This version of the Echo speaker included support for Zigbee (Philips Hue lights use Zigbee). Later, in 2018 the company upgraded the Echo Plus and included a temperature sensor and offline smart home networking so when the Internet goes down, the user can still control their connected products.

Amazon has a growing portfolio of smart home companies. Along with its own Echo products, Amazon owns Ring, a video doorbell company, Blink, a wireless video camera system, and recently purchased, Mr. Beams, an outdoor lighting company. Now, with Eero, it can offer buyers a WiFi solution by Amazon. The only thing missing is a unified experience between these devices.

In order for any company to win at the smart home, consumers need to fully trust this company and Amazon has so far only had several, relatively, minor incidents concerning the privacy of its users. A couple reports have surfaced reporting Amazon handing over voice data to the authorities. Other reports have taken issue with Amazon’s video doorbell company’s neighborhood watch system that could lead to profiling and discrimination.

Amazon can weather disparaging reports. Amazon cannot weather dysfunctional products unable to reach Amazon’s revenue-generating services.

Amazon is not alone in its quest for smart home domination. Google, Samsung, and Apple take this growing market seriously and will not let Amazon eat the whole pie. Consumer electronic giants will likely continue to scoop up smart home gadget companies that have traction with consumers. Look for companies like Arlo, ecobee, Belkin, Wyze Labs, sevenhugs and Brilliant to be acquired. These companies offer some of the best products in their respective fields and would compliment the companies currently owned by the big players as they look to offer consumers a the most complete experience.

Another fine mesh

Amazon’s acquisition of mesh router company Eero is a smart play that adds a number of cards to its hand in the rapidly evolving smart home market. Why shouldn’t every router be an Echo, and every Echo be a router? Consolidating the two makes for powerful synergies and significant leverage against stubborn competition.

It’s no secret that Amazon wants to be in every room of the house — and on the front door to boot. It bought connected camera and doorbell companies Blink and Ring, and of course at its events it has introduced countless new devices from connected plugs to microwaves.

All these devices connect to each other, and the internet, wirelessly. Using what? Some router behind the couch, probably from Netgear or Linksys, with a 7-character model number and utilitarian look. This adjacent territory is the clear next target for expansion.

But Amazon could easily have moved into this with a Basics gadget years ago. Why didn’t it? Because it knew that it would have to surpass what’s on the market, not just in signal strength or build, but by changing the product into a whole new category.

The router is one of a dwindling number of devices left in the home that is still just a piece of “equipment.” Few people use their routers for anything but a basic wireless connection. Bits come and go through the cable and are relayed to the appropriate devices, mechanically and invisibly. It’s a device few think to customize or improve, if they think of it at all.

Apple made some early inroads with its overpriced and ultimately doomed Airport products, which served some additional purposes, like simple backups, and were also designed well enough to live on a table instead of under it. But it’s only recently that the humble wireless router has advanced beyond the state of equipment. It’s companies like Eero that did it, but it’s Amazon that’s made it realistic.

Build the demand, then sell the supply

It’s become clear that in many homes a single Wi-Fi router isn’t sufficient. Two or even three might be necessary to get the proper signal to the bedrooms upstairs and the workshop in the garage.

A few years ago this wasn’t even necessary, because there were far fewer devices that needed a wireless connection to work. But now if your signal doesn’t reach the front door, the lock won’t send a video of the mail carrier; if it doesn’t reach the garage, you can’t activate the opener for the neighbor; if it doesn’t reach upstairs, the kids come downstairs to watch TV — and we can’t have that.

A mesh system of multiple devices relaying signals is a natural solution, and one that’s been used for many years in other contexts. Eero was among the first not to create a system but to make a consumer play, albeit at the luxury level, rather like Sonos.

Google got in on the game relatively soon after that with the OnHub and its satellites, but neither company really seemed to crack the code. How many people do you know who have a mesh router system? Very few, I’d wager, likely vanishingly few when compared with ordinary router sales.

It seems clear now that the market wasn’t quite ready for the kind of investment and complexity that mesh networking necessitated. Amazon, however, solves that, because its mesh router will be an Echo, or an Echo Dot, or an Echo Show — all devices that are already found in multiple rooms of the house, and seem very likely to include some kind of mesh protocol in their next update.

It’s hard to say exactly how it will work, since a high-quality router necessarily has features and hardware that let it do its job. Adding these to an Echo product would be non-trivial. But it seems extremely likely that we can expect an Echo Hub or the like, which connects directly to your cable modem (it’s unlikely to perform that duty as well) and performs the usual router duties, while also functioning as an attractive multipurpose Alexa gadget.

That’s already a big step up from the ordinary spiky router. But the fun’s just getting started for Amazon.

Platform play

Apple has powerful synergies in its ecosystems, among which iMessage has to be the strongest. It’s the only reason I use an iPhone now; if Android got access to iMessage, I’d switch tomorrow. But I doubt it ever will, so here I am. Google has that kind of hold on search and advertising — just try to get away. And so on.

Amazon has a death grip on online retail, of course, but its naked thirst for an Amazon-populated smart home has been obvious since it took the smart step to open its Alexa platform up for practically anyone to ship with. The following Alexavalanche brought garbage from all corners of the world, and some good stuff too. But it shipped devices.

Now, any device will work with the forthcoming Echo-Eero hybrids. After all it will function as a perfectly ordinary router in some ways. But Amazon will be putting another layer on that interface specifically with Alexa and other Amazon devices. Imagine how simple the interface will be, how easily you’ll be able to connect and configure new smart home devices — that you bought on Amazon, naturally.

Sure, that non-Alexa baby cam will work, but like Apple’s genius blue and green bubbles, some indicator will make it clear that this device, while perfectly functional, is, well, lacking. A gray, generic device image instead of a bright custom icon or live view from your Amazon camera, perhaps. It’s little things like that that change minds, especially when Amazon is undercutting the competition via subsidized prices.

Note that this applies to expanding the network as well — other Amazon devices (the Dot and its ilk) will likely not only play nice with the hub but will act as range extenders and perform other tasks like file transfers, intercom duty, throwing video, etc. Amazon is establishing a private intranet in your house.

The rich data interplay of smart devices will soon become an important firehose. How much power is being used? How many people are at home and when? What podcasts are being listened to, at what times, and by whom? When did that UPS delivery actually get to the door? Amazon already gets much of this but building a mesh network gives it greater access and allows it to set the rules, in effect. It’s a huge surface area through which to offer services and advertisements, or to preemptively meet users’ needs.

Snooping ain’t easy (or wise)

One thing that deserves a quick mention is the possibility, as it will seem to some, that Amazon will snoop on your internet traffic if you use its router. I’ve got good news and bad news.

The good news is that it’s not only technically very difficult but very unwise to snoop at that level. Any important traffic going through the router will be encrypted, for one thing. And it wouldn’t be much of an advantage to Amazon anyway. The important data on you is generated by your interactions with Amazon: items you browse, shows you watch, and so on. Snatching random browsing data would be invasive and weird, with very little benefit.

Eero addressed the question directly shortly after the acquisition was announced:

Maybe they would have eventually as a last-ditch effort to monetize, but that’s neither here nor there.

Now the bad news. You don’t want Amazon to see your traffic? Too bad! Most of the internet runs on AWS! If Amazon really cared, it could probably do all kinds of bad stuff that way. But again it would be foolish self-sabotage.

Free-for-all

What happens next is an arms race, though it seems to me that Amazon might have already won. Google took its shot and may be once bitten, twice shy; its smart home presence isn’t nearly so large, either. Apple got out of the router game because there’s not much money in it; it won’t care if someone uses an Apple Homepod (what a name) with an Amazon router.

Huawei and Netgear already have Alexa-enabled routers, but they can’t offer the level of deep integration Amazon can; there’s no doubt the latter will reserve many interesting features for its own branded devices.

Linksys, TP-Link, Asus, and other OEMs serving the router space may blow this off to start as a toy, though it seems more likely that they will lean on the specs and utilitarian nature to push it with budget and performance markets, leaving Amazon to dominate a sliver… and hope that sliver doesn’t grow into a wedge.

One place you may see interesting competition is from someone leaning on the privacy angle. Although we’ve established that Amazon isn’t likely to use the device that way, the fear doesn’t have to be justified for it to be taken advantage of in advertising. And anyway there are other features like robust ad blocking and so on that, say, a Mozilla-powered open source router could make a case for.

But it seems likely that by acquiring an advanced but beleaguered startup that was ahead of the market, Amazon will be able to make a quick entry and multiply while the others are still engineering their responses.

Expect specials on Eeros while stock lasts, then a new wave of mesh-enabled Echo-branded devices that are backwards compatible, mega-simple to set up, and more than competitive on price. Now is the time and the living room is the place; Amazon will strike hard and perhaps it will set in motion the end of the router as mere equipment.

InReach Ventures, the ‘AI-powered’ European VC, closes new €53M fund

InReach Ventures, the so-called “AI-powered” venture capital firm based in London, is announcing the first closing of a new €53 million fund targeting early-stage European technology companies — surpassing the original fund target of €50 million, apparently.

Founded by former Balderton Capital General Partner Roberto Bonanzinga, along with Ben Smith (former U.K. Engineering Director at Yammer) and John Mesrie (former General Counsel at Balderton Capital), InReach set out in 2015 to use technology to help scale VC, especially across Europe’s idiosyncratic and highly fragmented market.

The firm’s proprietary software-based approach, which is underpinned by machine learning, claims to be able to generate and evaluate deal-flow more efficiently than traditional venture firms that mostly employ human VCs alone — although, admittedly, practically every VC firm is underpinned by some eliminate of data science and/or technology these days. Berlin’s Fly VC is another machine learning-enabled early-stage VC that comes to mind.

However, InReach certainly appears to be putting its money where its mouth is, disclosing that it has invested over €3 million in the development of its software, codenamed “DIG”. To back this up, Bonanzinga tells me the firm employs “more software engineers than investors”. (I saw an early demo of the software a couple of years ago and even then it seemed legit.)

Regards the new fund, Bonanzinga says InReach is targeting the most promising and innovative startups across Europe, primarily in the areas of consumer internet, software as a service and marketplaces. “We are geographically agnostic and will invest in companies anywhere in Europe, from Helsinki to Barcelona, from Warsaw to Rome,” he says. “In most cases we will be the first institutional investors and our first cheques will be between €500,000 and €2 million”.

To date, InReach Ventures has invested in eight startups from across Europe. They include Oberlo (Lithuania), which was subsequently acquired by Shopify, Soldo (Italy/UK), Tutorful (U.K.), Shapr3D (Hungary), Traitly (Sweden) and Loot (Germany).

Below follows a lightly edited Q&A with Bonanzinga on the new fund, how AI can be used to scale venture capital, and why machines won’t put VCs out of a job entirely any time soon.

TC: You have often said that venture capital doesn’t scale, especially across a fragmented market like Europe, but what do you mean by this?

RB: People get very excited about ecosystems but the data shows that startups can come from anywhere; the big technology hubs or more remote locations. This is carried through to Europe’s largest exists: from Betfair in London to Zalando in Berlin, from Supercell and Spotify in the Nordics, to Critio in France and Yoox in Italy, and so on. So not only is deal sourcing fragmented across Europe, but so are the returns.

Traditional ventures firms have looked to manage this fragmentation by throwing people at the problem, but if you want true coverage you need to have a presence in every city in Europe. This is how you need to think of our technology platform, as like having a highly trained associate in every city and town across the whole of Europe, providing structured diligent deal-flow. With this data/technology driven approach we can be truly pan-European at the early-stage, even as the first institutional investor on the cap-table.

TC: A lot of VCs say they use technology to help find or manage deal-flow, how is InReach any different?

RB: Many venture firms talk about data and software. Lately, it has become a hot topic in pitches to limited partners. I predict a new hype: the rush of needing to check the box of “we have a data strategy”. We will have many firms with 30+ investment professionals and a data engineer in a corner. The real question is how many firms are willing to transform their professional service DNA into a product DNA? As always, this is more of a people/organisational question, rather than a question simply of the use of technology.

Take a look at InReach, we are a very atypical founding team for a venture firm. In particular, Ben Smith comes from a software engineering background and has built many data platforms and product development teams (most recently at Yammer/Microsoft). The majority of the people at InReach are software engineers. This is the only Venture Firm we know in which there are more software engineers than investors! So far we have invested over €3m in developing our proprietary technology platform.

TC: Without giving away your secret sauce, how does the InReach platform work, both in terms of the machine learning/feedback loop or the signals/data you plug into it?

RB: From a technology perspective, our logical architecture is primarily based on 3 distinct layers: data, intelligence, and workflow. The data layer is a mix of massive data aggregation, with deep data enhancement, including the generation of a large set of original data. The intelligence layer makes sense of these millions of data points through an ensemble of machine learning algorithms, ranging in complexity from simple rules to advanced networks. Given this data-driven approach and the significant deal-flow this generates, we invest heavily in building a workflow product which allows us to efficiently process thousands of companies each month.

TC: You say the final investment decision is still made by humans: why is that and do you think this will always be the case?

RB: As with any AI company, it’s all about data. We have spent the past 3 years aggregating data from across the internet and building algorithms to provide us with significant dealflow. Much more crucially, we have been collecting and generating our own proprietary data-set of investment decisions and how these startups grow and adapt over time. Clearly this will only get more powerful.

However, especially at this early-stage, so much of the investment decision is based on the founders and what we call the DNA fit of the founders and the problem they are trying to solve. Some of this can be encoded in algorithms and learnt by AI, but there are still intangibles that ultimately require that we ask the question: do we enjoy spending time together?

RB: What has been the reaction by under the radar founders when they are discovered really early via InReach’s software?

RB: The first question is always ‘How did you find out about us?’. Once we explain what we do and how the platform works we create an immediate connection with the entrepreneur. This is exactly what happened when we reached out to 5 entrepreneurs in Vilnius who had started a company called Oberlo. Over the following year, we helped them grow and expand to 30 people across both Vilnius and Berlin, prior to their acquisition by Shopify.

We are taking a very entrepreneurial approach to investing; we run InReach more as a product development organisation, rather than a professional services firm, so we look and feel native to the entrepreneurs we talk to. We try to share our experiences and current-best-practices through the company building process, whether it be OKRs, different agile development methodologies, product roadmaps, etc.

Reaching out to promising entrepreneurs early is not the only advantage that DIG gives us. We are also very efficient and responsive when analysing inbound opportunities. In fact, if you look at our website, we optimize our website to convert visitors to share their startup with us. We are not concerned with being bombarded by opportunities because we have developed a scalable workflow that allows us to efficiently manage significant dealflow.

Jobvite raises $200M+ and acquires three recruitment startups to expand its platform play

Jobvite, the company that was once an early mover in leveraging social networks to help source job opportunities and find interesting candidates for openings, is today announcing two big moves to double down on its ambition to build a bigger platform for recruitment and applicant tracking.

The company has picked up an investment of more than $200 million, and it will be using the money to acquire three smaller companies focusing on different aspects of the recruitment process: Talemetry (which specializes in recruitment marketing); RolePoint (for employee referrals and in-company moves); and Canvas (a text-based conversational bot to get the screening process started).

Jobvite is not disclosing its valuation with the funding, which is coming from private equity firm K1, but for a little guidance, in an interview, Dan Finnigan, Jobvite’s CEO, said it was a majority stake but nowhere near a full acquisition. (PitchBook’s last valuation of the company, of around $150 million, is very old, dating from September 2014; and it has never been confirmed by the company.)

The combined company will have 2,000+ customers that include Schneider Electric, Lenovo, Santander, PayPal, Genuine Parts and Panasonic.

Finnigan says that Jobvite’s growth, and investor interest in backing that, is happening in tandem with two changes, one technological and another the evolution in how organizations handle human resources.

Several years ago, many companies — hoping to cut costs — merged their personnel and recruitment operations, “and recruiting became an afterthought,” he said. That led to companies tacking on, as a kind of minimum viable solution, applicant tracking software, but little or nothing else.

But more recently, the war for talent has escalated — not just because unemployment is low but because there are now multiple different opportunities and shortages of suitable people for specific, often emerging skills. In turn, businesses have started to realise “that recruiting is the backbone of every company, and that applicant tracking is just not enough,” he said.

At the same time, there have been evolutions in the technology. While a lot of recruitment software (and the recruitment process) has traditionally been quite fragmented, a move to cloud solutions has provided an avenue for consolidating the process and using one platform to manage it. (Google’s launch of Hire, which lets users manage job applicants using G Suite apps; LinkedIn’s recruitment platform; Zoho and SmartRecruiter are all prime examples of how cloud platforms are being used to build more complete sourcing and tracking services.)

Coupled with this is a rising use of technology like machine learning to remove some of the more mechanical aspects of a recruiter’s job to speed up processes.

Jobvite’s three acquisitions all play into both of these trends. Canvas, for example, uses a bot to source initial information about a candidate to start the screening process before human recruiters step in to take over.

Talemetry, meanwhile, taps into marketing tech to help identify where the most ideal candidates might be in order to better target job opportunities at them, in the form of ads or other kinds of content.

Lastly, RolePoint will add a new feature to tap into referrals from existing employees, and to help manage in-company moves.

Finnigan likens the cloud-based platform approach that we’re seeing in the market to the impact Salesforce has had on the expanding concept of CRM. “We know that marketing and sales software have continued to evolve with new features like content marketing, and the same has happened in recruitment,” he said.

“We are excited to be investing in such an innovative set of technologies,” says Ron Cano, managing partner at K1 Investment Management, in a statement. “The talent acquisition industry is critical to our economy and ripe for disruption with outdated software still prevalent. K1’s investment will create the only true end-to-end talent acquisition platform and will provide our customers with accelerated growth in innovation of product features and services.”