Keeps parent company Thirty Madison raises $15 million to fight male pattern baldness

Men’s hair loss brand Keeps has raised $15 million in a round co-led by Maveron and Northzone.

Thirty Madison, the healthcare startup behind the hair loss brand Keeps, has brought in a $15.25 million Series A co-led by Maveron and Northzone.

The company provides a subscription-based online marketplace for men’s hair loss prevention medications Finasteride and Minoxidil. Keeps sells these drugs direct-to-consumer, working with manufacturers to keep the costs low.

On Keeps, a subscription of Minoxidil, an over-the-counter topical treatment often referred to as Rogaine, is $10 monthly. A subscription to Finasteride, a prescription drug taken daily, is $25 per month.

It’s an end-to-end platform that is the single best place for guys who are looking to keep their hair,” Thirty Madison co-founder Steven Gutentag told TechCrunch.

Keeps is tapping into a big market. According to the American Hair Loss Association, two-thirds of American men experience some hair loss by the age of 35.

You may have heard of Hims, a venture-backed men’s healthcare company that similarly sells subscriptions to hair loss treatments, as well as oral care, skin care and treatments for erectile dysfunction. Keeps is its smaller competitor. For now, the company is focused solely on haircare, though with the new funds, Thirty Madison plans to launch Cove, a sister brand to Keeps that will provide treatments to migraine sufferers.

The company was founded last year by Gutentag and Demetri Karagas with a plan to develop several digital healthcare brands under the Thirty Madison umbrella.

“Going through this process myself of starting to experience hair loss, I was not sure where to turn,” Gutentag said. “I went online and looked up ‘why am I losing my hair,’ and if you search on Google, really for any medical condition, you usually walk away thinking you’re going to die … I was so fortunate that I got access to this high-quality specialist who could help me with my problem and I was in the position to afford those treatments but most people don’t get that access.”

Keeps also provide digital access to a network of doctors at a cost of roughly $30 per visit.

TechCrunch’s Connie Loizos wrote last year that “it’s never been a better time to be a man who privately suffers from erectile dysfunction, premature ejaculation or hair loss” because of advances and investments in telemedicine. Since then, even more money has been funneled into the space.

Hims has raised nearly $100 million to date and is rumored to be working on a line of women’s products. Roman, a cloud pharmacy for erectile dysfunction, raised an $88 million Series A last month and is launching a “quit smoking kit.” And Lemonaid Health, which also provides prescriptions to erectile dysfunction medications and more, secured $11 million last year.

Greycroft, Steadfast Venture Capital, First Round, Entrepreneurs Roundtable, HillCour and Two River also participated in Thirty Madison’s fundraise, which brings its total raised to date to $22.75 million.

Keeps parent company Thirty Madison raises $15 million to fight male pattern baldness

Men’s hair loss brand Keeps has raised $15 million in a round co-led by Maveron and Northzone.

Thirty Madison, the healthcare startup behind the hair loss brand Keeps, has brought in a $15.25 million Series A co-led by Maveron and Northzone.

The company provides a subscription-based online marketplace for men’s hair loss prevention medications Finasteride and Minoxidil. Keeps sells these drugs direct-to-consumer, working with manufacturers to keep the costs low.

On Keeps, a subscription of Minoxidil, an over-the-counter topical treatment often referred to as Rogaine, is $10 monthly. A subscription to Finasteride, a prescription drug taken daily, is $25 per month.

It’s an end-to-end platform that is the single best place for guys who are looking to keep their hair,” Thirty Madison co-founder Steven Gutentag told TechCrunch.

Keeps is tapping into a big market. According to the American Hair Loss Association, two-thirds of American men experience some hair loss by the age of 35.

You may have heard of Hims, a venture-backed men’s healthcare company that similarly sells subscriptions to hair loss treatments, as well as oral care, skin care and treatments for erectile dysfunction. Keeps is its smaller competitor. For now, the company is focused solely on haircare, though with the new funds, Thirty Madison plans to launch Cove, a sister brand to Keeps that will provide treatments to migraine sufferers.

The company was founded last year by Gutentag and Demetri Karagas with a plan to develop several digital healthcare brands under the Thirty Madison umbrella.

“Going through this process myself of starting to experience hair loss, I was not sure where to turn,” Gutentag said. “I went online and looked up ‘why am I losing my hair,’ and if you search on Google, really for any medical condition, you usually walk away thinking you’re going to die … I was so fortunate that I got access to this high-quality specialist who could help me with my problem and I was in the position to afford those treatments but most people don’t get that access.”

Keeps also provide digital access to a network of doctors at a cost of roughly $30 per visit.

TechCrunch’s Connie Loizos wrote last year that “it’s never been a better time to be a man who privately suffers from erectile dysfunction, premature ejaculation or hair loss” because of advances and investments in telemedicine. Since then, even more money has been funneled into the space.

Hims has raised nearly $100 million to date and is rumored to be working on a line of women’s products. Roman, a cloud pharmacy for erectile dysfunction, raised an $88 million Series A last month and is launching a “quit smoking kit.” And Lemonaid Health, which also provides prescriptions to erectile dysfunction medications and more, secured $11 million last year.

Greycroft, Steadfast Venture Capital, First Round, Entrepreneurs Roundtable, HillCour and Two River also participated in Thirty Madison’s fundraise, which brings its total raised to date to $22.75 million.

With $300M in new funding, Devoted Health launches its Medicare Advantage plan in Florida

Andreessen Horowitz has led the $300 million Series B, with participation from Premji Invest and Uprising.

Devoted Health, a Waltham, Mass.-based insurance startup, has raised a $300 million Series B and began enrolling members in eight Florida counties to its Medicare Advantage plan.

The company, which helps Medicare beneficiaries access care through its network of physicians and tech-enabled healthcare platform, has raised the funds from lead investor Andreessen Horowitz, Premji Invest and Uprising.

The company declined to disclose its valuation.

Devoted’s founders are brothers Todd and Ed Park — the company’s executive chairman and chief executive officer, respectively. Todd co-founded a pair of now publicly-traded companies, Athenahealth, a provider of electronic health record systems, and health benefits platform Castlight Health. He also served as the U.S. chief technology officer during the Obama Administration. Ed, for his part, was the chief operating officer of Athenahealth until 2016 and a member of Castlight’s board of directors for several years.

Venrock partners Bryan Roberts — Devoted’s founding investor — and Bob Kucker — its chief medical officer — are also part of the company’s founding team.

The Park brothers have tapped Jeremy Delinsky, the former CTO at Wayfair and Athenahealth, as COO; DJ Patil, a former data scientist at the White House, as its head of technology; and Adam Thackery, the former CFO of Universal American, as its chief financial officer.

Its board includes former Health and Human Services Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist. As part of the latest round, A16z’s Vijay Pande will join its board, too.

The company says it’s committed to treating its customers as if they were members of its employees’ own families. For Patil, the startup’s head of tech, that’s made the entire process of building Devoted a very emotional one.

“I’ve cried a lot at this company,” Patil told TechCrunch. “You meet these seniors and they’ve done everything right. They’ve worked so incredibly hard their entire lives. They’ve given it their all for the American dream. They’ve paid into this model of healthcare and they deserve better.”

Devoted, which previously raised $69 million across two financing rounds in 2017 from Oak HC/FT, Venrock, F-Prime Capital Partners, Maverick Ventures and Obvious Ventures, has begun enrolling seniors located in Broward, Hillsborough, Miami-Dade, Osceola, Palm Beach, Pinellas, Polk and Seminole counties to its Medicare Advantage plan. It will begin providing care Jan. 1, 2019.

Its long-term goal is to offer insurance plans to seniors nationwide.

“We are responsible for these people’s healthcare so we need to get it right,” Patil said.

With $300M in new funding, Devoted Health launches its Medicare Advantage plan in Florida

Andreessen Horowitz has led the $300 million Series B, with participation from Premji Invest and Uprising.

Devoted Health, a Waltham, Mass.-based insurance startup, has raised a $300 million Series B and began enrolling members in eight Florida counties to its Medicare Advantage plan.

The company, which helps Medicare beneficiaries access care through its network of physicians and tech-enabled healthcare platform, has raised the funds from lead investor Andreessen Horowitz, Premji Invest and Uprising.

The company declined to disclose its valuation.

Devoted’s founders are brothers Todd and Ed Park — the company’s executive chairman and chief executive officer, respectively. Todd co-founded a pair of now publicly-traded companies, Athenahealth, a provider of electronic health record systems, and health benefits platform Castlight Health. He also served as the U.S. chief technology officer during the Obama Administration. Ed, for his part, was the chief operating officer of Athenahealth until 2016 and a member of Castlight’s board of directors for several years.

Venrock partners Bryan Roberts — Devoted’s founding investor — and Bob Kucker — its chief medical officer — are also part of the company’s founding team.

The Park brothers have tapped Jeremy Delinsky, the former CTO at Wayfair and Athenahealth, as COO; DJ Patil, a former data scientist at the White House, as its head of technology; and Adam Thackery, the former CFO of Universal American, as its chief financial officer.

Its board includes former Health and Human Services Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist. As part of the latest round, A16z’s Vijay Pande will join its board, too.

The company says it’s committed to treating its customers as if they were members of its employees’ own families. For Patil, the startup’s head of tech, that’s made the entire process of building Devoted a very emotional one.

“I’ve cried a lot at this company,” Patil told TechCrunch. “You meet these seniors and they’ve done everything right. They’ve worked so incredibly hard their entire lives. They’ve given it their all for the American dream. They’ve paid into this model of healthcare and they deserve better.”

Devoted, which previously raised $69 million across two financing rounds in 2017 from Oak HC/FT, Venrock, F-Prime Capital Partners, Maverick Ventures and Obvious Ventures, has begun enrolling seniors located in Broward, Hillsborough, Miami-Dade, Osceola, Palm Beach, Pinellas, Polk and Seminole counties to its Medicare Advantage plan. It will begin providing care Jan. 1, 2019.

Its long-term goal is to offer insurance plans to seniors nationwide.

“We are responsible for these people’s healthcare so we need to get it right,” Patil said.

Paperspace scores $13M investment for AI-fueled application development platform

Paperspace wants to help developers build artificial intelligence and machine learning applications with a software/hardware development platform powered by GPUs and other powerful chips. Today, the Winter 2015 Y Combinator grads announced a $13 million Series A. Battery Ventures led the round with participation from SineWave Ventures, Intel Capital and Sorenson Ventures. Existing investor Initialized […]

Paperspace wants to help developers build artificial intelligence and machine learning applications with a software/hardware development platform powered by GPUs and other powerful chips. Today, the Winter 2015 Y Combinator grads announced a $13 million Series A.

Battery Ventures led the round with participation from SineWave Ventures, Intel Capital and Sorenson Ventures. Existing investor Initialized Capital also participated. Today’s investment brings the total amount to $19 million raised.

Dharmesh Thakker, a general partner with Battery Ventures sees Paperspace as being in the right place at the time. As AI and machine learning take off, developers need a set of tools and GPU-fueled hardware to process it all. “Major silicon, systems and Web-scale computing providers need a cloud-based solution and software ‘glue’ to make deep learning truly consumable by data-driven organizations, and Paperspace is helping to provide that,” Thakker said in a statement.

Paperspace provides its own GPU-powered servers to help in this regard, but co-founder and CEO Dillon Erb says they aren’t trying to compete with the big cloud vendors. They offer more than a hardware solution to customers. Last spring, the company released Gradient, a serverless tool to make it easier to deploy and manage AI and machine learning workloads.

By making Gradient a serverless management tool, customers don’t have to think about the underlying infrastructure. Instead, Paperspace handles all of that for them providing the resources as needed. “We do a lot of GPU compute, but the big focus right now and really where the investors are buying into with this fundraise, is the idea that we are in a really unique position to build out a software layer and abstract a lot of that infrastructure away [for our customers],” Erb told TechCrunch.

He says that building some of the infrastructure was an important early step, but they aren’t trying to compete with the cloud vendors. They are trying to provide a set of tools to help developers build complex AI and machine learning/deep learning applications, whether it’s on their own infrastructure or on the mainstream cloud providers like Amazon, Google and Microsoft.

What’s more, they have moved beyond GPUs to support a range of powerful chips being developed to support AI and machine learning workloads. It’s probably one of the reasons that Intel joined as an investor in this round.

He says the funding is definitely a validation of something they set out to work on when they first started this in 2014 and launched out of Y Combinator in 2015. Back then he had to explain what a GPU was in his pitch decks. He doesn’t have to do that anymore, but there is still plenty of room to grow in this space.

“It’s really a greenfield opportunity, and we want to be the go-to platform that you can start building out into the intelligent applications without thinking about infrastructure.” With $13 million in hand, it’s safe to say that they are on their way.

Instacart raises another $600M at a $7.6B valuation

D1 Capital Partners has led the $600 million round for Instacart.

Instacart chief executive officer Apoorva Mehta wants every household in the U.S. to use Instacart, a grocery delivery service that allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app.

Today, the company is taking a big leap toward that goal.

San Francisco-based Instacart has raised $600 million at a $7.6 billion valuation, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.

D1 Capital Partners, a relatively new fund led by Daniel Sundheim, the former chief investment officer of Viking Global Investors, has led the round.

Instacart is raking in cash aggressively but spending it cautiously. The company still has all of its Series E, which ultimately totaled $350 million, and the majority of its $413 million Series D in the bank, a source close to the company told TechCrunch. That means, in total, Instacart has $1.2 billion at its fingertips. Currently, according to the same source, the company is only profitable on a contribution margin basis, meaning it’s earning a profit on each individual Instacart order.

In a conversation with TechCrunch, Mehta said the company didn’t need the capital and that it was an “opportunistic” round, i.e. the capital was readily available and Instacart has ambitious plans to scale, so why not fundraise. Instacart plans to use the enormous pool of capital to double its engineering team by 2019, which will include filling 300 open engineering roles in its recently announced Toronto office, he said.

As far as an initial public offering, it will happen — eventually.

“It will be on the horizon,” Mehta told TechCrunch.

“2018 has been a really big year for us,” he added. “The reason why we are so excited is because the opportunity ahead of us is enormous. The U.S. is a $1 trillion grocery market and less than 5 percent of that is bought online. It’s an enormous category that’s highly under-penetrated.”

In the last six months, Instacart has announced a few notable accomplishments.

As of August, the service has been available to 70 percent of U.S. households. That’s due to the expansion of existing partnerships and new deals entirely, like a recently announced pilot program between Instacart and Walmart Canada that gives Canadian Instacart users access to 17 different Walmart locations across Winnipeg and Toronto, Ontario.

The company has also completed several executive hires. Most recently, it tapped former Thumbtack chief technology officer Mark Schaaf as CTO. Before that, Instacart brought on David Hahn as chief product officer and Dani Dudeck as its first chief communications officer.

In early September, the company confirmed its chief growth officer Elliot Shmukler would be leaving the company.

The 6-year-old Y Combinator graduate has raised more than $1.6 billion in venture capital funding from Coatue Management, Thrive Capital, Canaan Partners, Andreessen Horowitz and several others.

 

Truphone, an eSIM mobile carrier that works with Apple, raises another $71M, now valued at $507M

Truphone — a UK startup that provides global mobile voice and data services by way of an eSIM model for phones, tablets and IoT devices — said that it has raised another £18 million ($23.7 million) in funding; additionally securing £36 million ($47 million) more “on a conditional basis” to expand its business after signing […]

Truphone — a UK startup that provides global mobile voice and data services by way of an eSIM model for phones, tablets and IoT devices — said that it has raised another £18 million ($23.7 million) in funding; additionally securing £36 million ($47 million) more “on a conditional basis” to expand its business after signing “a number of high-value deals.”

It doesn’t specify which deals these are, but Truphone was an early partner of Apple’s to provide eSIM-based connectivity to the iPad; and it will also be offering a service for new iPhone XS and XR models, taking advantage of the dual SIM capability. Truphone says that strategic partners of the company include Apple (“which chose Truphone as the only carrier to offer global data, voice and text plans on the iPad and iPhone digital eSIM”); Synopsys, which has integrated Truphone’s eSIM technology into its chipset designs; and Workz Group, a SIM manufacturer, which has a license from Truphone for its GSMA-accredited remote SIM provisioning platform and SIM operating system.

The company said that this funding, which was made by way of a rights issue, values Truphone at £386 million ($507 million at today’s rates) post-money. Truphone told TechCrunch that the funding came from Vollin Holdings and Minden Worldwide — two investment firms with ties to Roman Abramovich, the Russian oligarch who also owns the Chelsea football club, among other things — along with unspecified minority shareholders. Collectively, Abramovich-connected entities control more than 80 percent of the company.

We have asked the company for more detail on what the conditions are for the additional £36 million in funding to be released and all it is willing to say is that “it’s KPI-driven and related to the speed of growth in the business.”

For some context, Truphone most recently raised money almost exactly a year ago, when it picked up £255 million also by way of a rights issue, and also from the same two big investors. The large amount that time was partly being raised to retire debt. That deal was done at a valuation of £370 million ($491 million at the time of the deal). Going just on sterling values, this is a slight down-round.

Truphone, however, says that business is strong right now:

“The appetite for our technology has been enormous and we are thrilled that our investors have given us the opportunity to accelerate and scale these groundbreaking products to market,” said Ralph Steffens, CEO, Truphone, in a statement. “We recognised early on that the more integrated the supply chain, the smoother the customer experience. That recognition paid off—not just for our customers, but for our business. Because we have this capability, we can move at a speed and proficiency that has never before seen in our industry. This investment is particularly important because it is testament not just to our investors’ confidence in our ambitions, but pride in our accomplishments and enthusiasm to see more of what we can do.”

Truphone is one of a handful of providers that is working with Apple to provide plans for the digital eSIM by way of the MyTruphone app. Essentially this will give users an option for international data plans while travelling — Truphone’s network covers 80 countries — without having to swap out the SIMs for their home networks.

The eSIM technology is bigger than the iPhone itself, of course: some believe it could be the future of how we connect on mobile networks. On phones and tablets, it does away with users ordering, and inserting or swapping small, fiddly chips into their devices (that ironically is also one reason that carriers have been resistant to eSIMs traditionally: it makes it much easier for their customers to churn away). And in IoT networks where you might have thousands of connected, unmanned devices, this becomes one way of scaling those networks.

“eSIM technology is the next big thing in telecommunications and the impact will be felt by everyone involved, from consumers to chipset manufacturers and all those in-between,” said Steve Alder, chief business development officer at Truphone. “We’re one of only a handful of network operators that work with the iPhone digital eSIM. Choosing Truphone means that your new iPhone works across the world—just as it was intended.” Of note, Alder was the person who brokered the first iPhone carrier deal in the UK, when he was with O2.

Truphone has not released numbers detailing how many devices are using its eSIM services at the moment — either among enterprises or consumers — but it has said that customers include more than 3,500 multinational enterprises in 196 countries. We’ll update this post as we learn more.

With $50M in fresh funding, Allbirds will open new stores in the US, UK and Asia

Allbirds’ wool runners have been a VC favorite since the beginning. Now, the company is worth $1.4 billion.

The quintessential venture capitalist’s uniform consists of a pair of designer jeans, a Patagonia fleece vest and $95 wool sneakers.

The company behind the shoes, Allbirds, entered the unicorn club this morning with the announcement of a $50 million Series C from late-stage players T. Rowe Price, which led the round, Tiger Global and Fidelity Investments. The 3-year-old startup founded by Joey Zwillinger and Tim Brown has raised $75 million to date, including a $17.5 million Series B last year. Its backed by Leonardo DiCaprio, Scooter Braun, Maveron, Lerer Hippeau and Elephant, the venture capital firm led by Warby Parker founder Andrew Hunt.

The Wall Street Journal is reporting the round values Allbirds at $1.4 billion. The company would not confirm that figure to TechCrunch.

Like Warby Parker, San Francisco-based Allbirds began as a direct-to-consumer online retailer but has since expanded to brick-and-mortar, opening stores in San Francisco and New York. It currently ships to locations across the U.S., New Zealand, Australia and Canada. Next week, the company plans to open its first storefront in the U.K. in London’s Covent Garden neighborhood. It will begin shipping throughout the U.K. In 2019.

Using its latest investment, Allbirds will double down on its brick-and-mortar business. In addition to the U.K., the company says it will open even more locations in the U.S., as well as open doors in Asia in the coming months. Tiger Global, which has backed Allbirds since its Series B, may be of help. The firm has offices in Hong Kong and Singapore, as well as partners across Asia.

Allbirds makes eco-friendly wool shoes for men, women and kids via its kid’s line, aptly named Smallbirds. The shoes are made out of sustainable materials, including merino wool, a fabric made from eucalyptus fiber that the company has dubbed “Tree” and “SweetFoam,” a shoe sole made from sugarcane-based, carbon-negative foam rubber.

“Climate change is the problem of our generation and the private sector has a responsibility to combat it,” Zwillinger, Allbirds’ chief executive officer, said in a statement. “This injection of capital will help us bring our sustainable products to more people around the globe, demonstrating that comfort, design and sustainability don’t have to live exclusive of each other.”

It’s been quite the year for venture investment in … shoes. Rothy’s, which makes sustainable ballet flats for women, has raised $7 million and launched a sneaker. Atoms, a maker of minimalist shoes, brought in $560,000 in seed funding from LinkedIn’s ex-head of growth Aatif Awan and Shrug Capital. And GOAT, the operator of an online sneaker marketplace, nabbed a $60 million Series C in February.

Snowflake scoops up another blizzard of cash with $450 million round

When Snowflake, the cloud data warehouse, landed a $263 million investment earlier this year, CEO Bob Muglia speculated that it would be the last money his company would need before an eventual IPO. But just 9 months after that statement, the company announced a second even larger round. This time it’s getting $450 million, as […]

When Snowflake, the cloud data warehouse, landed a $263 million investment earlier this year, CEO Bob Muglia speculated that it would be the last money his company would need before an eventual IPO. But just 9 months after that statement, the company announced a second even larger round. This time it’s getting $450 million, as an unexpected level of growth led them to seek additional cash.

Sequoia Capital led the round, joined by new investor Meritech Capital and existing investors Altimeter Capital, Capital One Growth Ventures, Madrona Venture Group, Redpoint Ventures, Sutter Hill Ventures and Wing Ventures. Today’s round brings the total raised to over $928 million with $713 million coming just this year. That’s a lot of dough.

Oh and the valuation has skyrocketed too from $1.5 billion in January to $3.5 billion with today’s investment. “We are increasing the valuation from the prior round substantially, and it’s driven by the growth numbers of almost quadrupling the revenue, and tripling the customer base,” company CFO Thomas Tuchscherer told TechCrunch.

At the time of the $263 million round, Muglia was convinced the company had enough funds and that the next fundraise would be an IPO. “We have put ourselves on the path to IPO. That’s our mid- to long-term plan. This funding allows us to go directly to IPO and gives us sufficient capital, that if we choose, IPO would be our next funding step,” he said in January.

Tuchscherer said in fact that was the plan at the time of the first batch of funding. He joined the company, partly because of his experience bringing Talend public in 2016, but he said the growth has been so phenomenal, that they felt it was necessary to change course.

“When we raised $263 million earlier in the year, we raised based on a plan that was ambitious in terms of growth and investment. We are exceeding and beating that, and it prompted us to explore how do we accelerate investment to continue driving the company’s growth,” he said.

Running on both Amazon Web Services and Microsoft Azure, which they added as a supported platform earlier this year, certainly contributed to the increased sales, and forced them to rethink the amount of money it would take to fuel their growth spurt.

“I think it’s very important as a distinction that we view the funding as being customer driven in the sense that in order to meet the demand that we’re seeing in the market for Snowflake, we have to invest in our infrastructure, as well as in our R&D capacity. So  the funding that we’re raising now is meant to finance those two core investments,” he stressed

The number of employees is skyrocketing as the company adds customers. Just eight months ago the company had around 350 employees. Today it has close to 650. Tuchscherer expects that to grow to between 900 and 1000 by the end of January, not that far off.

As for that IPO, surely that is still a goal, but the growth simply got in the way. “We are building the company to be autonomous and to be a large independent company. It’s definitely on the horizon,” he said.

While Tuchscherer wouldn’t definitively say that the company is looking to support at least one more cloud platform in addition to Amazon and Microsoft, he strongly hinted that such a prospect could happen.

The company also plans to plunge a lot of money into the sales team, building out new sales offices in the US and doubling their presence around the world, while also enhancing the engineering and R&D teams to expand their product offerings.

Just this year alone the company has added Netflix, Office Depot, DoorDash, Netgear, Ebates and Yamaha as customers. Other customers include Capital One, Lions Gate and Hubspot.

Shujinko brings in $2.8M for its cloud security compliance platform

Shujinko is emerging from stealth today with $2.8 million in seed funding from Unusual Ventures, Defy, Vulcan Capital, PSL Ventures and Vas Ventures.

Shujinko — yes, like the Mortal Kombat character — is emerging from stealth today after raising $2.8 million in seed funding from Unusual Ventures, Defy, Vulcan Capital, PSL Ventures and Vas Ventures.

The Seattle-based cloud security compliance platform is rolling out of startup studio Pioneer Square Labs, which itself recently raised $15 million to expand its incubation program.

Founded by a former director and a manager of Starbucks’ cloud engineering team, Scott Schwan and Matt Wells, Shujinko automates the auditing process for cloud-based IT businesses with at least 50 million users.

Here’s how Schwan explained it to me: “When you pay taxes through an accountant, basically you end up collecting all these receipts, you have all this evidence that you collected over time and you end up having to talk through it with an auditor to prove you don’t have any issues. That is a painful process … In IT, they are doing those on a regular basis, sometimes multiple times a  year they are going through the equivalent of an IT audit.”

“When companies go through an IT audit they generally spend months manually gathering evidence, like screenshots of a firewall configuration or an [operating system] configuration,” Wells added. “That takes months of manual effort and what we are trying to do is alleviate that pain by automating that process.”

Schwan and Wells have a long professional history. They met in 2008 at Tommy Bahama, where Schwan was a security and PCI program manager and Wells was an application system administrator. A few years later, Schwan joined Cardfree, a software platform for merchants. Not long after, he encouraged Wells to follow him.

“What I saw in [Wells] was someone who had this real drive to continue to learn,” Schwan said. “It’s something I felt I had as well.”

Wells ultimately agreed to join Cardfree, and when Schwan left the startup in 2015 to join Starbucks’ cloud engineering team, Wells, once again, followed suit.

For both of them, the experience of working at such a massive enterprise was transformative.

“What we saw there were the trends in the industry and how other competitors in the space were struggling with their cloud migration and specifically with the compliance needs in the cloud,” Wells said.

Wells and Schwan left Starbucks in January, joining Pioneer Square Labs as entrepreneurs-in-residence to work on what would become Shujinko.

As for the name, Shujinko — aside from its Mortal Kombat affiliation — is Japanese for hero or protagonist.

Matt and I have worked in infrastructure and security for a long time and we are never that main character,” Schwan said. “You can’t really see what we do, but it’s really important … With Shujinko, we’re really looking to step out and become that main character in our story.”