Portfolio Spotlight

Portfolio Spotlight: Wethos

We are thrilled to announce that we’ve led a $3 million seed round in Wethos!

Wethos curates innovative teams of marketing specialists to work with meaningful brands. Wethos doesn’t neatly fit into any single investment category - Instead, it’s what you’d get if a network, managed marketplace, and future of work platform had a futuristic baby. This atypical model is one of the keys to Wethos’ momentum and traction in the market. 

By delivering on the promise of curating the right people for every project in a compelling time frame and price bracket, Wethos’ offering exceeds that of traditional solutions by an order of magnitude. At the same time, Wethos provides freelancers with an alternative to the lonely, uncertain, and “race to the bottom” reality of most independent work. By enabling users to find work they actually care about, removing the burden of administrative work management, and always putting freelancers’ rights at the forefront, Wethos repairs the broken trust of the gig economy and, as one of their specialists aptly said, creates “what freelance work was actually meant to be”.

No one is better equipped to tackle this opportunity than the Wethos team. They have remained uncompromising on both building a better world for freelancers while simultaneously tackling the highest pain points in the market, and we can’t wait to see them embark on this next stage.

We were initially introduced to Rachel by Mike MacCombie two years ago (thanks again, Mike!). At the time, Wethos was still in the earlier stages of building its bench of freelance specialists, with a focus on matching individuals to projects. Because of the b2c-esque nature of freelance community-building, the company was not a fit for Laconia’s b2b SaaS-focused investment strategy at the time. Still, we had no doubts about Rachel’s focus, passion, and inevitable success. Over the next two years, we stayed in touch, regularly meeting for working sessions, catching up more casually, and collaborating on tech/VC community events. 

Fast forward to our latest catch-up this past February. Wethos had built a community of 4,000+ freelance specialists, in large part cracking the chicken-or-egg problem that b2b/b2c companies often have. They had launched dozens of teams for leading organizations after having successfully navigated a major business model pivot, all while building out a formidable distributed team and figuring out how to scalably create, launch, and manage curated teams in a new and unique way. As we dove into the mechanics of the business, I was blown away by the level of detailed thought in every component. So it was no surprise that when Rachel asked, “Which funds do you recommend we talk to about this round?”, my answer was 🙋‍.

After Rachel got the rest of our team up to speed (they were stoked as well!), we dove right into our due diligence process, which got us even more excited about the company for multiple reasons. One of the core components of our due diligence process is introducing companies to 6-12 prospective customers in order to gauge market demand, value proposition strength, differentiation, and our ability to add value by opening doors, all while simultaneously generating sales leads for the company. With Wethos, we received resoundingly positive feedback, with about half of the organizations immediately moving forward with the process to hire Wethos teams. This conviction was echoed by Wethos’ existing customers and freelancers, who highlighted the exceptional quality of the specialists and Wethos’ seamless workflows as the main selling points.

We’ve found that how companies handle due diligence is often strongly correlated with how they run their business. We often see CEOs paralyzed during fundraising due to the bandwidth drain, but Rachel had everything ready to go and seamlessly collaborated with her team throughout the whole process. This delegation, responsiveness, and thoroughness were strong signals of the Wethos team’s high level of trust and efficiency. Our impression of this team dynamic was cemented by the group meeting we had with co-founders Rachel, Kristen, and Claire. The three of them demonstrated a deep mutual respect, complementary skills, individual adaptability within their evolving roles, and an unwavering shared vision for the company.

As with all of our investments, we worked in partnership with the founders to identify a strong co-investor group for this round. We couldn’t be more excited to be working with ValueStream Ventures, Loup Ventures, and Overton, among others, as well as existing investors including Flybridge and BBV.

We could go on for days about the massive market opportunity, innovative structure, and many other things that excite us about this company -- but instead we’ll leave you to check out some of their incredible work, follow them to stay posted in real time, and explore opportunities to join them as a specialist, customer, or teammate. 

For more on their latest fundraise, visit their blog.

Portfolio Spotlight: PromoteIQ

We are thrilled to announce today that our portfolio company, PromoteIQ, has been acquired by Microsoft!

PromoteIQ automates vendor marketing for e-commerce. Their platform enables brands to promote their products on e-commerce sites, increasing brand awareness, driving incremental product sales and generating unprecedented product performance insight. For retailers, vendor marketing is quickly becoming a strategic business line and critical source of incremental margin. Today, PromoteIQ's technology powers the core vendor marketing programs for the largest online retailers and brands, and we couldn’t imagine a better partner for the next stage of PromoteIQ’s growth than Microsoft.

In August of 2016, Alex Sherman and Peter Schwartz, the co-founders of PromoteIQ, walked into our office after being introduced to us by another founder in our Laconia family, Liz Zalman (Co-founder & CEO, @strongDM).

Investing in PromoteIQ wasn’t an immediately obvious decision. Though we had a number of exciting adtech investments in our legacy portfolio (TripleLift, C3 Metrics, FreeWheel, Localytics, to name a few), our fund focus had shifted away from the sector as it became increasingly tough to navigate for both entrepreneurs and investors alike. The space had become oversaturated with investment, and obtaining fresh capital and/or liquidity was proving to be difficult. 

Any reservations we had about the sector quickly disappeared as Alex and Peter presented a clear articulation of PromoteIQ as building an entirely new category at the forefront of the "Digital Shelf". At the time, vendor marketing had not yet gained serious momentum; even Amazon's now multi-billion-dollar advertising business was mostly under the radar. Alex and Peter cleanly outlined the tremendous growth opportunity in this new category at the intersection of marketing and commerce. PromoteIQ's platform enabled e-commerce sites to create another revenue stream and allowed brands to promote themselves to shoppers at the critical moment of conversion in their purchasing pathway.

Confident and grounded entrepreneurs, Alex and Peter possessed a clear vision of the market opportunity and the potential challenges ahead. They were also fully versed in the metrics and milestones needed to drive the business and reach the next stage of company growth. We felt a strong sense of 'fit' - these were entrepreneurs that we wanted to work with.

We introduced Alex and Peter to Nauta Capital and co-led their seed round. Over the last thirty months, we have had the honor of working closely with them on opening doors at key enterprise clients, fine-tuning strategy, helping them find some star hires (including our very own former intern Reena!), and everything in between. Their business has grown at breathtaking speed and in a short period of time, the company has become the dominant player within their category, easily outmaneuvering some of their larger competitors to build the defining solution for retailers.

We are so proud of Alex, Peter, and the entire team for building and establishing the company as a leading global vendor marketing platform -- no small feat by any means. From board meetings to late night phone calls and summer retreats, we have learned a great deal from them as investors, partners, and friends -- and who knew they would help us find love and tranquility in fishing? We can’t wait to see them expand their global presence through their continued growth with Microsoft’s powerhouse behind them.

You can read more on the acquisition here and here.

Portfolio Spotlight: Ocrolus

We are very excited to announce the closing of Ocrolus’s $24 million Series B financing led by Oak HC/FT with follow-on support by Laconia, Bullpen Capital,  QED Investors, ValueStream Ventures, and Differential Ventures. We were introduced to Ocrolus in the summer of 2017 by Nick Adams of Differential Ventures. Ocrolus is a New York City-based fintech infrastructure platform that automates the analysis of digital documents and financial data. By eliminating manual review, Ocrolus empowers companies to reinvest their human capital and automate processes with industry-leading speed and accuracy. Ocrolus services hundreds of customers in the financial sector and analyzes millions of transactions every day with 99+% accuracy. 

The company was in our sweet spot from the moment we met their CEO, Sam Bobley. It had been seed funded primarily by friends and family, allowing Sam to build a strong founding team with a product solving a large TAM manual workflow problem. When Sam first sat down with us, he was looking to raise $750K. His pitch was very compelling about digitizing what heretofore was a high pain point manual workflow: the processing of financial services applications.  Ocrolus was a big idea and it quickly became apparent to us that a much larger capital raise was needed.  

Sam and Vik were very responsive and transparent throughout the due diligence process. Diving into everything from the company's financing history to their plans for improving unit economics to even introducing us to Sam's father, an entrepreneur himself & a trusted advisor to Ocrolus, we felt we were building a true partnership with the team. Our collaborative inclinations have few boundaries!

Sam had raised a fair amount of seed capital, so his cap table had unusual complexity to it. We rolled up our sleeves, sifted through the company's finances, and came up with a structure that would permit increasing the initial $750K Sam sought to a proposed $3M-$4M round. Indeed, over the next few months, a first class group of syndication partners concluded Ocrolus’s $4M financing in January of last year. 

It was then off to the races. Ocrolus’s rapid year-to-year revenue growth has been sensational.  Sam, Vik, and the team have built a product that checks all of the boxes: strong market fit, sound tech, tremendous scalability. They are also amongst the most intense and driven leaders we have encountered. They actively solicit and listen to all of their investors and then are quickly decisive once the facts and opinions have been satisfactorily gathered. They are also very loyal, always making sure their investors and employees are respected in any decision being made. 

Sam and Vik embody the Laconia DNA. Congratulations to them and their entire team!

For more details, see their feature in Venturebeat.

Portfolio Spotlight: xtraCHEF

We are very excited to announce the closing of xtraCHEF’s $7.5 million Series A financing led by MVP Capital with follow-on support by Laconia and ValueStream Ventures. We were introduced to xtraCHEF about 2 years ago through Michael Moretti, Managing Director at Silicon Valley Bank, and were immediately impressed with Andy Schwartz, the company's CEO.  Andy possesses a confident sense of direction, all the attributes of an excellent listener, and unparalleled grit. He, along with his co-founder and CTO, Bhavik Patel, has created a strong team foundation for building a great company. We led their $3 million seed round and are excited to support the company in this next stage of growth.

As a refresher, xtraCHEF, based in Philadelphia, is an automated Accounts Payable and Cost Intelligence platform built specifically for the hospitality industry. They help restaurant operators save time and money by eliminating manual back-of-house tasks. xtraCHEF digitizes and archives invoices and vendor statements, extracts and analyzes line-item details, and provides this data to view, analyze, and share. With this full suite of cost management tools, xtraCHEF empowers hospitality operators to drive profitability, an increasingly critical mission in the highly competitive, low margin food service industry.

From our first meeting, Andy and Bhavik were open and candid about their company, including the fact that they were new to raising venture capital. We never felt that they were selling us in order to close the funding round. They impressively understood that good-fit investors are those who are willing to roll up their sleeves and support business planning. Yes, they were looking for capital, but they also wanted value-added investors with whom they could form a true partnership of success. They have executed this approach with all of their investors, including those in the new Series A round. That’s our kind of entrepreneur!

In addition to working with Andy on positioning xtraCHEF within the VC community, we also helped him communicate the expectations of taking on institutional capital to his initial angel investors. Angels often look upon VCs with skeptical eyes and need to be assured that they are still a welcome support group to the company and also flexible enough as to not impede a new round of financing. Part of this communication is to explain in detail the capital strategy and how it aligns with an operating plan to paint the vision and create excitement. Taking venture capital should put a company on a different, more accelerated growth trajectory than most business people are familiar with. This shift may bring unfamiliar operating risks and even capital structures to those investors. Managing past investors with respect and transparency is an important part of fundraising.

In tandem with solving a high pain point problem for their customers, the xtraCHEF team has executed with impressive capital efficiency. Bhavik has built an excellent India-based offshore development team, providing one of the best examples of in-house off-shoring we have encountered. Andy has also segmented his go-to-market strategy with precision, allowing him to rapidly build revenue without a large sales infrastructure. Of course, the new capital will leverage this foundation allowing for even greater market scale. Laconia has a strong bias for sales-oriented leaders, which Andy is to a very high degree.

Congratulations to Andy, Bhavik, and the entire xtraCHEF team on this newest achievement!