Startup News

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This week was something of a first for the crew, twice. First, we had two guests on the show, and, also, we only made it through two and a half topics. The former is good, the latter is, well, we’ll see.

So, this week Matthew Lynley and I were joined by David Chao, co-founder and general partner at DCM, and Steve Vassallo, a general partner at Foundation Capital. Points to both for being guinea pigs.

Heading into our first topic I’m sorry to inform you that, at least in terms of Equity, scooters are the new Uber. So, we wound up talking about both this week. We started with the fact that Bird is raising new capital at an even more staggering valuation than before ($2 billion!), and that Lime is working to raise a truckload of capital itself. (Reports vary, but it’s probably a $250 million equity round at around a $750 million valuation. There may also be some debt in the mix for Lime. More when we lock that down.)

And, as Chao’s firm is an investor in the space, we had even more to chew on.

Next up we dug into the massive new Opendoor round. The firm’s new $325 million puts it into a solid position to help people sell their houses. Which markets are the best fit was something for us to unspool, along with public market comps, such as they are. But most critical, at least in my view, was the idea of risk. On that point Vassallo made a reasonable argument regarding stress testing. We’ll see.

And finally, we touched on Meituan’s impending IPO, and how it came to be.

Thanks for sticking with Equity after all this time. We’ll be back next week with another round of chatter about the latest, greatest and dumbest that tech has to offer.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Pocket Casts, Downcast and all the casts.

While brand safety and fraud prevention have been big topics in the online ad industry over the past couple years, Cheq CEO Guy Tytunovich argued that “first generation solutions for ad verification” aren’t good enough.

The problem, Tytunovich said, is that existing products use sampling to alert advertisers to issues “after the fact.” Compare this to credit card fraud — if the credit card company only alerted you long after the fraud had occurred, “You’re not going to be happy with that kind of answer.”

At Cheq, Tytunovich and his team have developed an approach that uses artificial intelligence to deliver what he calls “autonomous brand safety” — the idea is that when an ad is being served, Cheq can detect whether it might be a fraudulent impression that will only be seen by bots, or if it might show up next to content that a brand doesn’t want to be associated with. If there’s an issue, Tytunovich said, “We block [the ad] from being served in real time.”

Beforehand, advertisers set up their own ad placement guidelines, and afterwards, they can see the reason why individual ads didn’t get served.

Cheq is announcing that it has raised $5 million in Series A funding led by Battery Ventures . Tytunovich said that 80 percent of the Cheq team consists of developers, and that most of the funding will go towards further product development.

If the Cheq approach really is so much better, why aren’t bigger, better-funded companies doing the same thing? Tytunovich pointed to his experience, and his team’s experience, in the Israel Defense Forces, where he said “they teach you to compensate for a lack of scale, of manpower, by focusing on automation and speed.”

Similarly, Tytunovich said that at Cheq, “the name of the game is speed.”

“A lot about our underlying technology lies around the speed of the data crunching,” he added. “We look at around 700 data parameters per impression … We need to be able to take all that data, analyze it and do it in real time.”

Cheq has offices in Tokyo, New York and Tel Aviv. Tytunovich said it’s currently focused on the American and Japanese markets — customers listed on the Cheq website include Coca Cola, Turner and Mercedes-Benz. Update: A spokesperson clarified that those companies are listed on the Cheq website because Cheq participated with them in The Bridge program.

Security companies Fortinet and Kromtech found seventeen tainted Docker containers that were essentially downloadable images containing programs that had been designed to mine cryptocurrencies. Further investigation found that they had been downloaded 5 million times, suggesting that hackers were able to inject commands into insecure containers to download this code into otherwise healthy web applications. The researchers found the containers on Docker Hub, a repository for user images.

“Of course, we can safely assume that these had not been deployed manually. In fact, the attack seems to be fully automated. Attackers have most probably developed a script to find misconfigured Docker and Kubernetes installations. Docker works as a client/server architecture, meaning the service can be fully managed remotely via the REST API,” wrote researcher David Maciejak.

The containers are now gone, but the hackers may have gotten away with up to $90,000 in cryptocurrency, a small but significant amount for such a hack.

“Today’s growing number of publicly accessible misconfigured orchestration platforms like Kubernetes allows hackers to create a fully automated tool that forces these platforms to mine Monero,” said a writer of a report by Kromtech. “By pushing malicious images to a Docker Hub registry and pulling it from the victim’s system, hackers were able to mine 544.74 Monero, which is equal to $90,000.”

“As with public repositories like GitHub, Docker Hub is there for the service of the community. When dealing with open public repositories and open source code, we recommend that you follow a few best practices including: know the content author, scan images before running and use curated official images in Docker Hub and certified content in Docker Store whenever possible,” wrote Docker’s head of security David Lawrence in a Threatpost report.

Interestingly, of late hackers have moved from attacking AWS Elastic Compute servers on Amazon’s platform to Docker and other container-based systems. While there are security systems available to manage Docker and Kubernetes containers, users should remain vigilant and assess their vulnerabilities before hackers get more of an upper hand.

Juul Labs, the company behind the ever-popular Juul e-cig, has today announced a new policy around social media.

This comes in the midst of Juul’s effort to get FDA approval, which has been made more arduous by the fact that the FDA has cracked down on Juul after learning how popular the device is with underage users.

As part of the new policy, Juul will no longer feature models in pictures posted on Instagram, Twitter, or Facebook. FWIW, Juul doesn’t even have a Snapchat. Instead of using models to market the e-cig, Juul Labs will now use real former smokers who switched from combustible cigarette to Juul.

Juul has always said that its product was meant to serve as an alternative to combustible cigarettes, which are considered far more harmful to your health.

Juul has also initiated an internal team focused on flagging and reporting social media content that is inappropriate or targeted to underage users.

The company mentioned that it has worked to report and remove more than 10,000 illegal online sales since February from various online marketplaces.

We reached out to Juul to see if any changes have been made to the way that Juul targets ads on social media and elsewhere. We’ll update the post if/when we hear back.

Here’s what Juul Labs CEO Kevin Burns had to say in a prepared statement:

While JUUL already has a strict marketing code, we want to take it one step further by implementing an industry-leading policy eliminating all social media posts featuring models and instead focus our social media on sharing stories about adult smokers who have successfully switched to JUUL. We also are having success in proactively working with social media platforms to remove posts, pages and unauthorized offers to sell product targeted at underage accounts. We believe we can both serve the 38 million smokers in the U.S. and work together to combat underage use – these are not mutually exclusive missions.

In April, the FDA sent a request for information to Juul Labs as part of a new Youth Tobacco Prevention Plan, which is aimed at keeping tobacco products of any kind out of the hands of minors. The information request was meant to help the FDA understand why teens are so interested in e-cigs (particularly Juul) and whether or not Juul Labs was marketing the product intentionally to minors.

In response, Juul announced a new strategy to combat underage use, with an investment of $30 million over the next three years going towards independent research, youth and parent education and community engagement efforts.

Since August 2017, Juul has required that people be 21+ to purchase products on its own website, but online and offline third-party retailers have not been so diligent.

Step aside, Allbirds. Atoms come in quarter-sizes you can mix-and-match. Emerging from stealth today in a TechCrunch exclusive, this shoe startup’s obsession with satisfaction allowed it to replace my Nikes. I’ve spent the last two months wearing Atoms every day. They’re the first sneaker classy-looking enough for semi-formal occasions, but that I can comfortably walk or even hike in for hours.

Here’s how Atoms is modernizing the footwear experience:

• Pick your quarter-size, say 10.25, and Atoms sends you 10s, 10.25s, and 10.5s, plus socks
• Try them on and pick any two, even different sizes for different feet, and send the rest back free
• No logos. Atoms come in jet black, pure white or black top/white bottom, but don’t stick an ad on your feet
• Copper threads inside eat bacteria, preventing funky smells
• Elastic laces with subtle oval eyelets let Atoms slip on but stay tight so you rarely have to tie them
• Get a discount on your next pair if you send in your old Atoms for analysis and donation

Image via Jeff Macke

At $179, Atoms are pricier than $100 lifestyle Nikes or $79 Allbirds. But the basketball shoe giant just sells in half sizes, while Allbirds offers only whole sizes that fit few perfectly. The right quarter-size Atoms for each foot makes them feel molded to your body.

“To make shoes better, you need to know why people wear shoes,” Atoms co-founder Waqas Ali tells me. People buy fancy dress shoes they never wear, yet feel embarrassed by the childish designs and branding on most sneakers. “We perfected Atoms for your everyday routine — walking, standing and commuting,” he explains. “You are a person not a billboard, so there’s no logo.”

That hasn’t stopped the shoes from going viral during their beta-testing phase. Everyone who tries them on seems to rave about them. That’s driven 4,000 people to sign up on the Atoms waitlist, which you can join to be first in line. Atoms launch this summer in the U.S., with the first wave of customers getting their shoes in late June/early July.

Husband and wife duo Waqas and Sidra Ali started their first shoe company Markhor in Okara, Pakistan back in 2012. They attacked the market with one of the best qualities you can find in an entrepreneur: curiosity. Instead of coming in with preconceived notions, they traveled the world to research how people actually wear shoes. “You might assume that ‘Oh in Italy, everyone wears leather shoes,’ but the young people there were all wearing sneakers,” Waqas recalls.

After launching a Kickstarter, the Alis came to Silicon Valley to go through the prestigious Y Combinator startup accelerator in Summer 2015. There, they drilled into more customer research and product design.

Comfort and style were the big deciding factors in most sneaker purchases, so that’s where the couple wanted to differentiate. They discovered that more than 70 percent of people have at least a quarter-size difference in their two feet, and more than 7 percent have a half-size discrepancy. So why don’t other shoe companies offer quarter-sizes? “They make tons of different shoes,” Waqas says.

Suddenly, the two guiding principles of Atoms aligned. By designing just a single unisex model in a limited set of colors, it could make quarter-sizing scalable while stripping away all the goofy extra fabrics and patterns. Indeed, 35 percent of customers already take two different sizes. That breakthrough attracted $560,000 in seed funding from LinkedIn’s ex-head of growth Aatif Awan and Shrug Capital.

But Atoms is determined to avoid being labeled a Silicon Valley shoe. Rather than coders, the company wants creative types like painters and graphic designers to be its early adopters. The vision is to create a sneaker a head chef could wear all night in the kitchen without hurting, but that look elegant enough that they could stride into the chic dining room with confidence.

“Most shoes in the market that claim they’re comfortable are only comfortable when you try them on,” Waqas laments. Take that other shoe startup Allbirds. They’re super-soft and made of wool, and the first steps feel like you’re wearing cloud slippers. But walk 10 blocks and you’ll find the bendy bottoms don’t protect you much.

That’s why Atoms hired 18-year-veteran of the shoe business Sangmin Lee, who’s worked with Adidas and Puma out of Portland and South Korea. He prototyped tons of different versions for Atoms. The result is a strong but light outsole on the bottom with indents cut out for anti-slip traction and to reduce weight. Meanwhile, the upper’s tough mesh material breathes but holds its shape, and refuses stains.

Image via Adam Bain

“Shoe companies say they use sustainable materials but you go to the factories and everything is falling apart,” Sidra tells me. Organic materials sound nice but can break down too quickly. “The way we make our shoes environmentally friendly is that they last long,” Waqas says with a laugh.

Two months of tough wear later, my Atoms are holding up great. The foamy mid-sole has frayed a tiny bit in the front like many shoes. And the knit materials ingrained some dust when I went camping in them that needed some brushing to get out. But they’ve succeeded in becoming my go-to shoe I can chill, work and play in.

Now Atoms is trying to build more commerce innovation to turn buyers into lifetime wearers. It’s working on a special pattern for the insole that will rub off based on where you put your weight. The idea is that when people send their old pairs in for a discount on the next, it can analyze that insole pattern to improve the shape of future models.

One day, Atoms hopes to create a completely personalized shoe shopping experience. It hopes to actually give you slightly different insoles with more or less arch support depending on how you wore the last ones. And it’s planning early access to new color combinations and laces for repeat buyers.

Atoms will need loyalty in case the shoe giants come out with their own minimalist, quarter-sized sneakers. Such a limited set of colors and single style mean plenty of people will simply find them ugly or outside their taste. And no, they’re not a great fit for the gym or with a suit. But if you want understated, durable shoes you don’t have to think about, Atoms excel.

The startup must rely on its nimbleness and a flawless customer experience if it’s going to gain a foothold in a business dominated by brands with huge ad campaigns and brick-and-mortar distribution. One thing it’s thankful to its shoe startup competitor for is that “Allbirds has shown the world is not just ruled by Nike and Adidas.”

Luckily Atoms has strong differentiation in a world of interchangeable sneakers. One customer “thought quarter-sizing was a joke or gimmick until I tried the 10.25s,” Airbnb designer Bryce Daniel tweeted. “How will I go back to a 10.5 when 10.25 fits so well?” Personally, there hasn’t been another tech or startup product in the past 10 years beyond Apple’s AirPods that has cemented itself so deeply into my daily life.

“There’s no way to hack shoes” Waqas concludes. “You just have to make a good shoe.”

Everyone from Elon Musk to AdBlock Plus wants to tell you which news sources are worth trusting. Now news aggregator Nuzzel is joining in.

Specifically, it’s launching NuzzelRank, which founder and CEO Jonathan Abrams described as “our new authority ranking of thousands of top news sources, using signals from top business influencers.” He said it replaces a more “simplistic” ranking system that it was using for its news monitoring and research product Nuzzel Media Intelligence.

You may also see NuzzelRank outside the company’s Media Intelligence reports. For one thing, there’s a new page with rankings of Nuzzel’s top sources. For another, Abrams said publishers will be able to add badges with their NuzzelRank scores to their websites, and he also plans to make this data available through an API.

At this point, you’re probably wondering how Nuzzel does this ranking. You’re definitely wondering that if you looked at the top sources ranking and saw that TechCrunch is comes in at number four overall. That’s right: We score below The New York Times and The Washington Post, but above The New Yorker and Wired — which is both flattering and a little nuts.

Abrams said there are three main ways that Nuzzel calculates the score. First, there’s data within Nuzzel itself, including the reading behavior of its users. Second, it’s looking at “external signals about the engagement and authority of news sources.”

Third, it’s working with a whole bunch of outside organizations that have developed different approaches to scoring news sources and sorting out which ones are and aren’t trustworthy — so Nuzzel is joining the Trust Project and the Credibility Coalition, and it’s also partnering with NewsGuard and Deepnews.ai.

In the announcement, Abrams emphasized that the company isn’t relying on human editors or making these judgments on its own: “Nuzzel has always focused on building scalable solutions that use software to aggregate existing valuable signals to provide useful results, rather than human approaches that are not scalable and subject to bias.”

Influential announced today that it has raised $12 million in Series B funding.

The funding came from existing investors Capital Zed, ECA Ventures, Paradigm Talent Agency, ROAR and Tech Coast Angels, as well as from Hollywood agency WME .

Just a couple weeks ago, Influential said it was working with (and had raised money from) WME. The agency is the first to try out a new Influential product called Talent Pro, which gives agents access to social data around a broader pool of talent.

Influential founder and CEO Ryan Detert said the product will allow WME — and, in the future, other agencies — to sweeten endorsement and promotional deals with more data and to “take an A-list celebrity… and now surround that person with 10 lookalike influencers who are not celebrities themselves.”

One of Influential’s big selling points is its use of artificial intelligence (it’s a developer partner with IBM Watson) to help brands and marketers find influencers who would be a good fit for their campaigns. However, Detert acknowledged that selling access to social media influencers is starting to feel overhyped — as he put it, “People think of influencer marketing sometimes as a four-letter word.”

But in Detert’s view, influencer marketing is just one “tactic” that Influential supports: “We consider ourselves more of social intelligence and activation company.”

And in fact, Influential already offers a social intelligence product that helps customers get a broader understanding of things like the broader competitive landscape.

Detert also said Influential is working to measure the impact of brands’ social media campaigns, so that when they pay an influencer to make a promotional post, they “can actually map back that not only [the consumer] saw it, but that they engaged with it to make a real-world decision — walking into a location, buying a product in a grocery store.”

The company has now raised a total of $26.5 million.

Ethos, the company that bills itself as making life insurance accessible, affordable and simple, has officially come out of stealth with an $11.5 million investment led by one of the world’s top venture firms, Sequoia Capital, and additional participation from the family offices of Hollywood’s biggest stars and an NBA all-star.

Jay Z’s Roc Nation, and the family funds of Kevin Durant, Robert Downey Jr. and Will Smith, all participated in the new round for Ethos, and Sequoia Partner Roelof Botha is taking a seat on the company’s board. Because nothing says star power like a life insurance startup.

The life insurance market is one that’s been attracting interest from venture investors for a little over a year now. Companies like England’s Anorak, HealthIQ, Ladder, Mira Financial, and France’s Alan, which is backed by Partech Investments (among others), Fabric and Quilt, are all pitching life insurance products as well.

Ethos is licensed in 49 states, which is pretty comparable to the offering from providers like Haven Life, the Mass Mutual-backed life insurance product.

What has made the life insurance market interesting for investors is the fact that consumers’ interest in it continues to decline. Whether it’s because no one trusts insurers to actually pay out, or because Americans are putting their faith in the anti-aging technologies from funds like the Longevity Fund, folks just aren’t buying insurance products the way they used to.

So when investors see the numbers of users of a formerly ubiquitous product decline from 77 percent in 1989 to below 60 percent in 2018, the assumption is that there’s room for new companies to come in and provide better service.

Scads of investors have taken the same bet, which makes Ethos a marketing play as much as anything else. In the company’s press release it touts the fast, easy and inexpensive process for getting a quote.

The initial process requires only four questions to get a quote and a 10 minute survey to get a policy (in most cases). The company says 99 percent of its applicants don’t need a medical exam or blood test to get a policy.

What may have been most interesting to investors is the pedigree of the company’s co-founders. Peter Colis and Lingke Wang have both worked in the insurance industry before. They previously co-founded a life insurance marketplace called, Ovid Life.

“Life insurance is critical for families, but the process is broken for those who want and need it,” said Peter Colis. “We are consumer advocates, intensely focused on expanding life insurance accessibility to the millions of U.S. families who have college debt, mortgages​, spouses and children​ to care for, and who want to be financially empowered to live their lives without worry.”

Ethos founders Lingke Wang and Peter Colis

Email and a smarter notebook might be enough for handling communication for projects or experiments inside a team in a lab in some university basement. But when you have around 200 scientists working on discovering something new — say, a new drug — that communication process is going to quickly break down, and Sajith Wickramasekara says that sits somewhere between science and software.

That’s the goal for Benchling, which Wickramasekara hopes will make life easier for researchers and help simplify and speed up the process of scientific discovery. Specializing in life sciences, Benchling aims to create a comprehensive suite of tools that help researchers thoroughly log their processes and collaborate among other scientists. Benchling looks to provide a rigorous platform that can take a lot of the work away from researchers, who instead might be documenting everything in email, Excel sheets, or just in a notebook somewhere. Benchling said it has raised a $14.5 million round of financing led by Benchmark Capital, with participation from F-Prime Capital and Thrive Capital. Benchmark’s Eric Vishria is joining the company’s board of directors.

“I was always planning to go to grad school to become a scientist,” Wickramasekara said. “Obviously since I’m working here I took a kind of left turn. As someone who was doing both science and software, on the software side of things I felt like i had really great tools for working with other people, and on the science side I felt like there were really great scientific tools but not great tools for working with other people.”

At its core, Benchling is a suite of applications and tools that include ways to design experiments as well as document them during that process. Researchers can track materials they are producing, manage their physical inventory — like even tubes or containers — and helps scientists standardize and easily query information from existing or previous runs. The service seeks to capture all of this in some unified platform that a company can deploy across a whole fleet of researchers and teams. Wickramasekara says more than 100,000 scientists are using the platform.

Benchling was initially born as a sort of smart notebook for scientists and academics. While that’s where it got started — and where a lot of the learning happened — eventually the team ended up creating something a little more formalized that it could sell as an actual product. That step proved a little more challenging as academics tend to be either alone or in small teams, so they don’t necessarily need the robust tools that a product like Benchling might have when commercialized.

“The freeform nature of a lab notebook is actually sufficient [for academia],” Wickramasekara said. “In the industry, that’s where all the structure comes in. We have a team as part of our customer success and implementation, we help customers come up with the right model and complexity and adjust their business processes. At the end fo the day, all these customers do something slightly differently. But we work with probably more than 80 customers and 25 do antibody research, so we figure out all the best practices over time. We help customers think about the tradeoffs vs one data model for another.”

Benchling also offers those same employees a suite of auditing tools, which Wickramasekara would be critical as it looked to move into larger companies that are dealing with more sensitive IP. For a company looking to discover new drugs, keeping that process under tight control is important — especially when they are working with organizations like the FDA. Benchling admins get a comprehensive view of who is doing what within the system, as well as guidelines around documentation.

Part of the challenge will be catering to all the niches and needs these individual companies might have throughout their own unique experimentation processes. Each lab is different, with its own quirks, and Benchling aims to be a unified platform that covers as many scenarios as possible, even with help tuning and adjustable models. That means there is room for other tools that could tap other niches and become the one-size-fits-all. But over time and with enough data, a tool like Benchling could figure out not only the best practices for specific labs, but also ones they should use — and then cover all those bases.

Researchers at the University of Maryland have found that people remember information better if it is presented in VR vs. on a two-dimensional personal computer. This means VR education could be an improvement on tablet or device-based learning.

“This data is exciting in that it suggests that immersive environments could offer new pathways for improved outcomes in education and high-proficiency training,” said Amitabh Varshney, dean of the College of Computer, Mathematical, and Natural Sciences at UMD.

The study was quite complex and looked at recall in forty subjects who were comfortable with computers and VR.

To test the system they created a “memory palace” where they placed various images. This sort of “spatial mnemonic encoding” is a common memory trick that allows for better recall.

“Humans have always used visual-based methods to help them remember information, whether it’s cave drawings, clay tablets, printed text and images, or video,” said lead researcher Eric Krokos. “We wanted to see if virtual reality might be the next logical step in this progression.”

From the study:

Both groups received printouts of well-known faces–including Abraham Lincoln, the Dalai Lama, Arnold Schwarzenegger and Marilyn Monroe–and familiarized themselves with the images. Next, the researchers showed the participants the faces using the memory palace format with two imaginary locations: an interior room of an ornate palace and an external view of a medieval town. Both of the study groups navigated each memory palace for five minutes. Desktop participants used a mouse to change their viewpoint, while VR users turned their heads from side to side and looked up and down.

Next, Krokos asked the users to memorize the location of each of the faces shown. Half the faces were positioned in different locations within the interior setting–Oprah Winfrey appeared at the top of a grand staircase; Stephen Hawking was a few steps down, followed by Shrek. On the ground floor, Napoleon Bonaparte’s face sat above majestic wooden table, while The Rev. Martin Luther King Jr. was positioned in the center of the room.

Similarly, for the medieval town setting, users viewed images that included Hillary Clinton’s face on the left side of a building, with Mickey Mouse and Batman placed at varying heights on nearby structures.

Then, the scene went blank, and after a two-minute break, each memory palace reappeared with numbered boxes where the faces had been. The research participants were then asked to recall which face had been in each location where a number was now displayed.

The key, say the researchers, was for participants to identify each face by its physical location and its relation to surrounding structures and faces–and also the location of the image relative to the user’s own body.

Desktop users could perform the feat but VR users performed it statistically better, a fascinating twist on the traditional role of VR in education. The researchers believe that VR adds a layer of reality to the experience that lets the brain build a true “memory palace” in 3D space.

“Many of the participants said the immersive ‘presence’ while using VR allowed them to focus better. This was reflected in the research results: 40 percent of the participants scored at least 10 percent higher in recall ability using VR over the desktop display,” wrote the researchers.

“This leads to the possibility that a spatial virtual memory palace–experienced in an immersive virtual environment–could enhance learning and recall by leveraging a person’s overall sense of body position, movement and acceleration,” said researcher Catherine Plaisant.

Farmdrop, the farmer-friendly online grocery platform based in the U.K., has picked up £10 million in new funding. New investors in this Series B round include LGT Impact Ventures (described as a growth equity investor that invests in businesses making a positive contribution to society), and Belltown Ventures, a renewable energy investment specialist with an interest in agricultural technology. Previous backer Atomico also followed on.

Founded by ex-city broker Ben Pugh in 2014, Farmdrop originally launched as a ‘click and collect’ service that let you order groceries online from farmer-producers to pick up at a local collection point. However, the company has since pivoted to door-to-door delivery but with the same basic idea of a marketplace that bypasses the mass supermarkets. It claims to give consumers much fresher produce, and farmer-producers a more generous share of the retail price. Large supermarkets are known for squeezing suppliers in a bid to lower prices whilst maintaining their own profits, after all.

“The fundamental problem is that the supermarket’s dominance over the last fifty years has put huge amounts of downward pressure on farmgate prices,” Pugh told me when Farmdrop raised its Series A. “In this environment, the only option for producers has been to focus on yields and durability which has led to a big depreciation in the taste and nutritional quality of homegrown foods”.

To that end, Farmdrop says it now sells over 2,000 products ranging from high-welfare meat, dairy, fish, organic fruit and veg, plus household supplies and larder items. It says that 80 percent of its fresh produce is sourced directly from 208 “sustainable farmers and independent food makers” and that since 2014 the startup has generated over £5 million in revenue for small-scale British farmers.

The new capital will be used to fund further U.K. expansion after the successful launch of a second hub in Bristol and Bath in September 2017, in addition to London. “Over the next six months Farmdrop will double the total number of households it can deliver to, initially growing in the South East but with plans for a northern hub in Manchester by end of 2019,” says the company.

More broadly, Farmdrop is tapping the rise of online grocery — even if the offline to online switch is still happening quite slowly — coupled with a growing demand for high-quality produce that comes from a more ethical/sustainable supply chain (Farmdrop also uses electric vans for the last few miles of delivery). It seems to be working, too: the startup says it is now on track to achieve £10 million in annualised revenues before the end of 2018.

Adds Niklass Zennström, Skype founder and CEO of Atomico: “What we find so compelling about Farmdrop is the way they’re using technology for good. By creating a direct route to market for farmers, Farmdrop is helping to create a healthier and more efficient supply chain. We’re proud to invest in such a fantastic team and are excited about helping them scale their innovative e-grocery platform.”