XFactor, the early-stage VC that invests in women-led startups, raises a second fund

XFactor, the pre-seed and seed-stage VC out of Flybridge Capital, has today announced that it has raised a second fund of $8.6 million.

XFactor first came on the scene in 2017 with $3 million. Flybridge Capital partner Chip Hazard started the fund alongside several female founders who were interested in getting into investment.

The idea is not just to fund startups led by at least one female, but also to give female founders a path into investing.

With Fund 2, XFactor is able to not only increase its check size from $100K to $150K, but it also makes room for more partners at the firm. From Fund 1, XFactor has grown from 9 investment partners to 23, operating in cities like LA, Seattle and Denver alongside original markets of Boston, NY and SF. Collectively, this group of women has raised more than $550 million in venture capital for their own businesses.

Some notable investments from Fund 1 include Chief, The Riveter, Choosy, CourtBuddy and MixLab, which today raised an $8.5 million seed round.

The increase in fund size will allow XFactor to invest in 53 companies, and the fund is looking to finance companies in new verticals, such as healthcare, fintech, agtech and frontier tech.

All of the partners at XFactor, which include Anna Palmer, Kathryn Minshew, Kate Ryder, Danielle Morrill, Allison Kopf, and Aubrie Pagano, work on the fund part-time while running their respective businesses.

“The greatest challenge is managing deal flow, given we’re all operators at our day jobs,” said Anna Palmer, co-founder and CEO of Dough and investment partner at XFactor. “We saw 1,500 opportunities come through on the first fund, and we’re expecting to see the same if not more this time around. The biggest challenge is seeing everything and managing that alongside our day jobs.”

‘Weirdo’ Fintech VC Anthemis marches to its own drummer

Entering into the world of Anthemis is a bit like stepping into the frame of a Wes Anderson film. Eclectic, offbeat people situated in colorful interiors? Check. A muse in the form of a renowned British-Venezuelan economist? Check. A design-forward media platform to provoke deep thought? Check. An annual summer retreat ensconced in the French Alps? Bien sûr.

Sitting atop this most unusual fintech(ish) VC is its ponytailed founder and chairman Sean Park, whose difficult-to-place accent and Philosophy professor aura belie his extensive fixed income capital markets experience. He’s joined by founder and CEO Amy Nauiokas, who in addition to being one of Fintech’s most prominent female investors also owns a high-minded film and television production company.

When Arman Tabatabai and I recently sat down with Park and Nauiokas in their New York office, the firm’s leaders were in an upbeat mood, having blown past the temporary perception-setback associated with the abrupt resignation last year of Anthemis’ former CEO Nadeem Shaikh (for more on this, read TechCrunch writer Steve O’Hear’s coverage of the situation).

And as the conversation below demonstrates, Park and Nauiokas are well poised to bring the quirk into everything they touch, which these days runs the gamut from backing companies involved in sustainable finance, advancing their home-grown media platform and preparing a soon-to-be-announced initiative elevating female entrepreneurs.

Gregg Schoenberg: With the two of you now at the helm, how does Anthemis present itself today?

Sean Park: I’ll step back and say that when Amy and I were working at big financial institutions in the noughties, we saw that the industry was going to change and that existing business models were running into their natural diminishing returns.

We tried to bring some new ideas to the organizations we were working in, but we each had epiphany moments when we realized that big organizations weren’t built to do disruptive transformation — for bad reasons, but also good reasons, too.

GS: Let’s fast forward to today, where you have several strong Fintech VCs out there. But unlike others, Anthemis puts weirdness at the heart of its model.

Yes, you’ve backed some big names like Betterment and eToro, but you’ve done other things that are farther afield. What’s the underlying thesis that supports that?

Amy Nauiokas: Whatever we do at Anthemis has to be a non-zero-sum game. It has to be for good, not for evil. So that means that we aren’t looking in any place where you see predatory opportunities to make money.

Fintech and cleantech… an odd couple or a perfect marriage?

The Valley’s rocky history with cleantech investing has been well-documented.

Startups focused on non-emitting-generation resources were once lauded as the next big cash cow, but the sector’s hype quickly got away from reality.

Complex underlying science, severe capital intensity, slow-moving customers and high-cost business models outside the comfort zones of typical venture capital ultimately caused a swath of venture-backed companies and investors in the cleantech boom to fall flat.

Yet, decarbonization and sustainability are issues that only seem to grow more dire and more galvanizing for founders and investors by the day, and more company builders are searching for new ways to promote environmental resilience.

While funding for cleantech startups can be hard to find nowadays, over time we’ve seen cleantech startups shift down the stack away from hardware-focused generation plays toward vertical-focused downstream software.

A far cry from past waves of venture-backed energy startups, the downstream cleantech companies offered more familiar technology with more familiar business models, geared toward more recognizable verticals and end users. Now, investors from less traditional cleantech backgrounds are coming out of the woodwork to take a swing at the energy space.

An emerging group of non-traditional investors getting involved in the clean energy space are those traditionally focused on fintech, such as New York and Europe-based venture firm Anthemis — a financial services-focused team that recently sat down with our fintech contributor Gregg Schoenberg and I (check out the full meat of the conversation on Extra Crunch).

The tie between cleantech startups and fintech investors may seem tenuous at first thought. However, financial services have long played a significant role in the energy sector and is now becoming a more common end customer for energy startups focused on operations, management and analytics platforms, thus creating real opportunity for fintech investors to offer differentiated value.

Finance powering the world?

Though the conversation around energy resources and decarbonization often focuses on politics, a significant portion of decisions made in the energy generation business is driven by pure economics — is it cheaper to run X resource relative to resources Y and Z at a given point in time? Based on bid prices for request for proposals (RFPs) in a specific market and the cost-competitiveness of certain resources, will a developer be able to hit their targeted rate of return if they build, buy or operate a certain type of generation asset?

Alternative generation sources like wind, solid oxide fuel cells or large-scale or even rooftop solar have reached more competitive cost levels — in many parts of the U.S., wind and solar are in fact often the cheapest form of generation for power providers to run.

Thus as renewable resources have grown more cost competitive, more infrastructure developers and other new entrants have been emptying their wallets to buy up or build renewable assets like large-scale solar or wind farms, with the American Council on Renewable Energy even forecasting cumulative private investment in renewable energy possibly reaching up to $1 trillion in the U.S. by 2030.

A major and swelling set of renewable energy sources are now led by financial types looking for tools and platforms to better understand the operating and financial performance of their assets, in order to better maximize their return profile in an increasingly competitive marketplace.

Therefore, fintech-focused venture firms with financial service pedigrees, like Anthemis, now find themselves in pole position when it comes to understanding cleantech startup customers, how they make purchase decisions, and what they’re looking for in a product.

In certain cases, fintech firms can even offer significant insight into shaping the efficacy of a product offering. For example, Anthemis portfolio company kWh Analytics provides a risk management and analytics platform for solar investors and operators that helps break down production, financial analysis and portfolio performance.

For platforms like kWh analytics, fintech-focused firms can better understand the value proposition offered and help platforms understand how their technology can mechanically influence rates of return or otherwise.

The financial service customers for clean energy-related platforms extends past just private equity firms. Platforms have been and are being built around energy trading, renewable energy financing (think financing for rooftop solar) or the surrounding insurance market for assets.

When speaking with several of Anthemis’ cleantech portfolio companies, founders emphasized the value of having a fintech investor on board that not only knows the customer in these cases, but that also has a deep understanding of the broader financial ecosystem that surrounds energy assets.

Founders and firms seem to be realizing that various arms of financial services are playing growing roles when it comes to the development and access to clean energy resources.

By offering platforms and surrounding infrastructure that can improve the ease of operations for the growing number of finance-driven operators or can improve the actual financial performance of energy resources, companies can influence the fight for environmental sustainability by accelerating the development and adoption of cleaner resources.

Ultimately, a massive number of energy decisions are made by financial services firms and fintech firms may often know the customers and products of downstream cleantech startups more than most.  And while the financial services sector has often been labeled as dirty by some, the vital role it can play in the future of sustainable energy offers the industry a real chance to clean up its image.

Firefly raises $30M to bring more ads to Ubers, Lyfts and taxis

Firefly, a startup that allows ride-hail drivers to make money from advertising, has raised $30 million in Series A funding.

The company is about to launch in New York City, where it’s also acquiring the digital operations of advertising company Strong Outdoor. Co-founder and CEO Kaan Gunay said this will allow Firefly to start working with traditional taxis in a big way.

“It’s essentially locking in the largest taxi advertising contract, partnering with the largest taxi trade organization in the United States,” Gunay said.

Firefly already operates in San Francisco and Los Angeles, where it works with drivers for Uber, Lyft and other services to install a “digital smart screen” that can run targeted, geofenced advertising from companies like Brex, Segment, Caviar and Zumper. And although the startup is starting to work with taxis too, Gunay said it won’t be ignoring ride-hail drivers: “Firefly is for everyone.”

The new funding comes just six months after Firefly announced a big seed round of $21.5 million. Gunay said that by raising even more money, the company can “make sure we are able to scale very quickly and very efficiently.”

Firefly

The round was led by GV (formerly Google Ventures), with participation from NFX.

“Firefly is creating a significant new ad format at scale,” said GV’s Adam Ghobarah in a statement. “In addition to taxis, the scale of rideshare networks has created a large opportunity to provide digital out of home advertising with granular city-block and time targeting.”

The recent IPOs of Uber and Lyft have also brought more attention to the issue of driver compensation, with some drivers staging a brief strike. (Last year, Firefly said it was bringing its drivers an additional $300 per month on average.)

“In this current environment, where unfortunately it is becoming more difficult for our driver partners to make a livelihood in these expensive cities, I think having a platform like Firefly whose mission really is to help these drivers make a better living is incredible,” Gunay said. “We have been extremely lucky to see such an incredible reception from our driver partners, and we’re doing everything possible to make sure we continue to increase the income we are providing to them.”

He also described the Firefly approach as a “win-win-win scenario” — not just for drivers and advertisers, but also for local businesses, nonprofits and local governments, to whom the company has committed 10% of its inventory.

Soona raises $1.2M for quick, affordable content creation

Businesses have to keep the content flowing on social media, so a startup called soona says it’s developed a new way to provide all the photos and videos they need.

The company was founded by CEO Elizabeth Giorgi and Chief Creative Officer Hayley Anderson. Giorgi told me they both worked in production (Anderson as an animator, Giorgi as the founder of her own video production company), and “kept finding ourselves saying no to projects that needed to be done quickly — we could never find a way to make production move fast enough.”

At the same time, they saw a growing need, as small and medium businesses increasingly rely on email and social marketing to promote themselves, which means they either “go to a stock content site and buy something that isn’t even relevant to their brand, or they can do a DIY solution.”

With soona, customers can get the photos and videos they need within 24 hours, and at a relatively affordable price. Giorgi compared the company’s approach to Kinko’s, which “turned printing into a same-day business 20 years ago.”

soona storefront

Giorgi said soona combines “the best of retail innovation with a strong background in technology.” It operates actual studios where customers come in for photos and video shoots, but it’s also developed software to encode and upload the footage quickly, and to allow customers to “shop [their] content in real time.”

Soona started out with a studio in Denver and just launched in Minneapolis, and Giorgi said her hope is to open three to five studios in 2020. The service costs $393 per hour for a one-time shoot (with a guarantee of nine edited photos or one edited video), or $453 for a monthly membership.

The company has also launched a service called soona anytime for customers in other geographies — you send soona your product and you get your content in about a week.

Soona is announcing that it has raised $1.2 million in seed funding led by 2048 Ventures, with participation from Matchstick Ventures and Techstars Ventures.

Giorgi noted that the fundraising documents include something she’s calling the Candor Clause, which requires investors to disclose if they’ve ever faced issues with sexual assault, sexual harassment or sexual discrimination.

Giorgi said the team at 2048 fully supported this move. In addition, soona is publishing the clause in the hopes that other startups will take advantage of it, allowing founders and investors to “move past tweets, move towards action, move towards something that makes it clear that there will be consequences” for bad behavior.

“This is not just a woman’s issue, this is an everyone issue,” she added. “We all want to be treated fairly.”

Pitching accuracy rates of over 99% for multiple cancer screens, Thrive launches with $110 million

For more than 25 years the founders of Thrive Earlier Detection have been researching ways to improve the accuracy of liquid biopsy tests.

The fruits of that labor from Dr. Bert Vogelstein, Dr. Kenneth Kinzler and Dr. Nickolas Papadopoulos — all professors and researchers at Johns Hopkins University — is CancerSEEK, a liquid biopsy test that has demonstrated specificity of over 99% in a retrospective study published by Science.

By minimizing false positives in cancer screening tools and providing a test with proven accuracy, doctors can take treatment actions earlier, which can lead to better survival rates for cancer patients.

Now, with FDA approval for its tests for pancreatic and ovarian cancer and a new study underway with a large healthcare provider, CancerSEEK is being rolled out to market through Thrive Earlier Detection with the help of a new $110 million round of funding.

Thrive works by analyzing highly targeted sets of DNA and proteins in the blood to detect cancer.

“Over the past 30 years we have made great strides in understanding cancer. Combining this knowledge with the latest in molecular testing technologies, our founders have developed a simple and affordable blood test for the detection of many cancers at relatively early stages,” said Christoph Lengauer, PhD, partner at Third Rock Ventures, and co-founder and chief innovation officer of Thrive, in a statement. “We envision a future where routine preventative care includes a blood test for cancer, just as patients are now routinely tested for early stages of heart disease. We know that if cancer is caught early enough, it can often be cured.”

As part of its rollout, the company’s screening tool is being evaluated in DETECT, a study of 10,000 currently healthy individuals that’s being conducted in conjunction with the healthcare organization Geisinger. So far, 10,000 women between the ages of 65 and 75 without a history of cancer have been enrolled in the trial.

“To be truly useful to patients, new medical technology must be developed with rigorous evidence and designed to be affordable and readily integrated into routine medical care,” Steven J. Kafka, PhD, partner at Third Rock Ventures and chief executive officer of Thrive, said in a statement. “With the help of experts and strategic partners, Thrive is launching today to advance a novel test for the earlier detection of multiple cancers, which we aim to augment with an integrated service that helps patients maneuver the often confusing path that follows a cancer diagnosis.”

Third Rock Ventures actually led the Series A financing for Thrive, and comprise the bulk of the company’s executive team, while Kinzler and Papadopoulos — the researchers from Johns Hopkins who developed the technology — will have seats on the company’s board.

Other investors in the round include Bill Maris’ Section 32 investment firm, Casdin Capital, Biomatics Capital, BlueCross BlueShield Venture Partners, Invus, Exact Sciences, Cowin Venture, Camden Partners, Gamma 3 LLC and others.

According to Thrive, ovarian, pancreatic and liver cancers are difficult to detect because they can develop in pathways that aren’t always well understood.

Using CancerSEEK, Thrive hopes to develop a blood-based test that can be used in routine medical care, with the goal of identifying multiple cancer types at earlier stages.

The technology works by following genomic mutations in circulating tumor DNA (ctDNA) and cancer-associated protein markers in plasma to identify abnormalities that are common across multiple cancers. In a retrospective study published by Science in 2018, CancerSEEK was shown to perform with greater than 99% specificity and with sensitivities ranging from 69% to 98% for the detection of five cancer types — ovarian, liver, stomach, pancreas and esophageal, which the company says are cancers for which there are no screening tests available for average-risk individuals.

Thrive’s research has attracted an all-star executive team in addition to Lengauer and Kafka from Third Rock. Former Goldman Sachs lead medical technology analyst Isaac Ro is joining the company as chief financial officer, and the company’s head of research is Isaac Kinde, a co-inventor of the CancerSEEK technology.

It’s hard to overstate how transformative the Thrive test could prove to be. Having a blood-based diagnostic test for cancer prevalence and the ability to initiate treatment earlier radically improves the chances for surviving a cancer diagnosis.