Startup News

“The percentage of Top 40 music made with our platform blows my mind,” says Splice co-founder Steve Martocci. He tells me about some bedroom music producers who were “working at Olive Garden until they put sounds on Splice.” Soon they quit their jobs because they were earning enough from artists downloading those sounds to use in their songs. That led them to collaborate with famous DJ Zedd, resulting in the Billboard No. 12 hit “Starving.”

Splice has attracted $47 million in funding to power this all-new music economy. That might be a shock, considering Martocci estimates that 95 percent of digital instruments and sample packs are pirated because they’re often expensive with no try-before-you-buy option. Even Kanye West got caught stealing the trendy Serum digital synthesizer.

But Splice lets artists pay $7.99 per month to download up to 100 samples they can use royalty-free to create music. That’s cheaper than it costs to listen to music on Spotify. Splice then compensates artists based on how frequently their sounds are downloaded, and has already paid out over $7 million.

Splice Sounds is like an iTunes Store for samples

“We try to make more seats at the table in the music business,” says Martocci, who previously founded messaging app GroupMe, which sold to Skype for between $50 million and $80 million in 2011. “GroupMe was made to go to concerts with our friends. Music has always been my motivator, but code is my canvas. Artists come up to me and hug me because I’m changing the creative process.”

Splice co-founder Steve Martocci

But now he’s getting some big-name assistance, attracted by Splice’s success in the stubborn musician community and its $35 million Series B from December. Splice has just hired former Facebook product manager Matt Pakes as VP of product to lead core teams in New York, and former Secret co-founder Chrys Bader to build out a new squad in Los Angeles. [Disclosure: I knew both from before they moved out of the SF social scene.]

Splice now has 100 staffers, mostly hobbyist musicians themselves, but “I don’t think I have one San Francisco employee,” says Martocci. He wants his offices where the artists live. “Everyone has a genuine passion for music. It doesn’t feel like a tech company as much,” says Bader. Martocci apparently takes feedback well, which is different because “I’ve had some pretty fucking hard people to work with in the past…” Bader notes, likely referring to disagreements with his co-founder at Secret. “I have zero tolerance for bullshit at this point in my life and there’s zero bullshit on this team.”

While the Sounds marketplace has blown up recently, pushing Splice to 1.5 million users, the startup has a grander vision for software to eat instruments. That means creating the same kind of tools that help programmers code apps, but for musicians to compose songs. Splice Studio integrates with composition software like GarageBand, Logic and Ableton to offer cloud-synced version control.

This might sound nerdy, but it’s a lifesaver. Splice Studio automatically backs up the artist’s work-in-progress song after every single edit so they can always reverse changes and safely work with collaborators without having to nervously save manually and fret about keeping all the copies organized.

Splice saves every edit to a song-in-progress so you can experiment but always reverse changes

Since Splice’s staffers actually make music themselves rather than parachuting into a foreign space, they intimately understand the frustrations they’re trying to solve. Knowing income can be unpredictable, Splice lets musicians access plugins, software and instruments on a rent-to-own basis, where they can pause payment and resume later. That’s the kind of convenience that Bader says makes Splice “easier than piracy,” echoing Spotify director Sean Parker’s plan to beat bootleg MP3s with a simple streaming service. “I wanted to build something even Reddit couldn’t complain about,” Martocci laughs.

But where Splice goes next could address the biggest, most insidious barrier to creative output: writer’s block. Ask most modern musicians and they’ll tell you about their giant folders of unfinished songs. Getting from a melody rattling around in your head to a few tracks laid out in your preferred composition software is the easy part. Polishing those parts, ditching the unnecessary ones, finding the rights sounds and tying it all together into something listenable can be agonizingly difficult.

Creative Companion is Splice’s solution. Currently being built by Bader’s LA team, it’s a songwriting assistant that can suggest a next step and surface samples that fit well with those you’re already using. Martocci explains how Splice uses “cool machine learning stuff” to recommend “Hey, you should add a bass line. You should add some mastering.”

Splice just hired Chrys Bader, previously the co-founder of Secret

The question for Splice will be how many music producers out there are willing to pay. “There’s an upper bound. This is not a consumer product,” Bader admits. Citing internal research, he says there are 30 million music producers in the world. Many might not even know about Splice, “but at $8 a month, that’s not really breaking the bank. You might pay $200 for a plugin or $700 for Ableton. That’s insane. Musicians can’t afford that. Yet a musician friend tells me all the time ‘I’m broke, I’m broke…but I live or die by Splice.'”

Splice’s heavy-duty funding from Union Square Ventures, True Ventures and DFJ could also attract competition. It might awake the interest of big creative services corporations like Adobe, or more established music production tool companies like Native Instruments, which just launched a direct competitor called Sounds.com. But Splice is digging in for a long fight, giving away Splice Studio to lure in users and commissioning exclusive sample packs from top creators. In that sense, Splice is almost like a record label.

“I want to see a world with more transcendent musical highs,” where “you have more music that’s ready for any moment,” Martocci opines. “If we build something that makes musicians lives better, that makes our lives better because a lot of us are musicians… what else is there in life?” Bader explains.

Computers democratized music-making, leading to a flood of amateurs sharing their content with the world. But all good democratizations necessitate layers of curation to sort through all the output, which social networks have become, and tools to let the most talented artists create what’s worth everyone’s attention.

Martocci concludes, “Software is a great instrument. One-third of the world tries to make music at some point. They’re not going to pick up guitars and recorders any more.” Whatever app they choose, Splice wants to keep them in the creative flow.

The global early-stage investment pie is getting bigger… a lot bigger. Just four years ago, investors were putting less than $10 billion per quarter into early-stage deals (Series A and B). The past two quarters, however, have all come in over twice that level. Q1 2018, meanwhile, looks to be a record-setting one, with Crunchbase projecting $25 billion in global early-stage investment.

But while overall investment is on the rise, the U.S.’ share is dwindling. A few years ago, North American startups reliably received at least two-thirds of global early-stage investment. No more. For the past three quarters, North America’s share has dwindled to less than half, as the chart below illustrates:

The rise of China’s startup scene, combined with local investors’ penchant for jumbo-sized Series A rounds, goes a long way to explaining the shift. Venture ecosystems in Southeast Asia, Brazil and elsewhere have also been in growth mode, and thus accounting for a more significant share of global early-stage investment.

Before we venture further, it should be noted that although we associate Series A with early-stage companies, this is not always the case. Some of the largest Series A rounds globally have gone to companies that were relatively mature but previously bootstrapped or spun out of large corporations.

Recent data shows both the U.S. and China have their share of spin-outs and older companies gobbling up so-called early-stage rounds. OneConnect and Ping An Healthcare, subsidiaries of Chinese insurance giant Ping An, which raised $650 million and $1.2 billion, respectively, are examples of such activity.

Venture investors in China also put far more into Series A and B deals than U.S. counterparts. A Crunchbase News analysis found that the average Series A round for a China-based startup in 2017 was $32.8 million, just over triple the size of the average Series A for a U.S. company.

The momentum is holding up in 2018. So far this year, at least 12 Chinese companies have raised early-stage rounds of $100 million or more, altogether bringing in more than $4 billion (see list). Recipients of some of the largest rounds include:

• Ziroom, an apartment rental service provider based in Beijing, raised $621 million in its Series A round.
• Black Fish, a consumer finance platform, raised a $145 million Series A round.
• Pony.ai, an autonomous vehicle startup with significant operations in both Silicon Valley and China, raised a $112 million Series A.

The U.S. has also had a dozen startups (plus Pony.ai) bring in $100 million or more in early-stage rounds this year. However, the aggregate total these startups have raised — about $1.8 billion — is less than half that of Chinese counterparts.

As mentioned previously, many of the largest early-stage round recipients are mature companies or spin-outs of mature companies. The list includes two companies founded in 2009 that closed Series B rounds of around $100 million this year: Joby Aviation, a developer of electric planes, and Vacasa, a vacation property management company.

Healthcare spin-outs are also attracting big dollars, including Celularity, a developer of placental stem cell-based therapies, and Viela Bio, a developer of therapies for autoimmune diseases.

But while big rounds are still getting done, the number of U.S. early-stage rounds of all sizes has declined a bit over the past four years. Over the last two quarters, Crunchbase projects fewer than 900 early-stage rounds are closing quarterly. Globally, however, the number of early-stage rounds has been trending up:

Part of the pattern is that the dynamics of early-stage funding have changed over the years. In the past, Series A and B rounds were for startups to develop working prototypes, hone market segments to target and attract the earliest customers. Scaling on a national or international level was generally for later stages, after a company had proven demand and a working product.

These days, markets move faster, and it’s not uncommon to see startups move in just a few quarters from concept to scaling en masse. Just look at Bird, the scooter sharing company that raised $115 million after mere months of operation with a business model intended to terrorize pedestrians and motorists provide a last-mile transit solution.

The entire bike, scooter and moped sharing sector has blossomed over a couple of short years, with big early-stage rounds all around. And it’s an area where China was the early leader for scaling. But fintech, biotech, agtech and other fields are also providing fertile ground for substantial early-stage funding rounds.

So is the declining share of North American early-stage funding a source of worry for founders and investors in the region? Or is it a predictable evolution following economic growth in China and elsewhere?

We won’t attempt to answer that here, but others have tried. Sequoia Capital’s Michael Moritz drew wide criticism earlier this year for an essay sounding the warning bell on what he perceived as superior work ethic among Chinese entrepreneurs compared to their U.S. counterparts.

Purely following the money, the takeaway is this: Investors globally have decided the early-stage opportunity is a lot bigger than they thought a couple of years ago. And while investors are putting a bit more into mature ecosystems like the U.S. and Silicon Valley, they are putting a lot more into China and other regions with underdeveloped venture markets relative to their size and technology prowess.

Some folks I met in Chicago are holding an amazing event at a great place on South Canalport Avenue. This former macaroni factory now builds startups and I’ll be helping judge their pitch-off alongside some Chicago luminaries.

You can RSVP here and sign up for a spot to pitch here. They’ll choose eight startups to pitch; there are some great prizes available.

Blue Lacuna is at 2150 South Canalport Avenue in Chicago and the event is on April 19 at 6pm. Grab your tickets early for this cool meet and greet and I’ll see you there!

There’s a new world of lab-grown replacements coming for everything, from the meat department in your grocery store to a department store near you.

Lab-made leather replacements will soon join vegetable-based meat replacements on store shelves thanks to startups like Bolt Threads, which today announced that it would join companies like Modern Meadow in the quest to bring to market vegetable-based replacements for animal hides.

Earlier this year, the Silicon Valley-based Bolt Threads raised a $123 million financing to expand its business beyond the manufacture of spider silk, which had brought the company acclaim — and an initial slate of products.

The announcement today of its new product, Mylo, is the first step on that path.

Working with established partner Stella McCartney and using technology licensed from the biomaterials company Ecovative Design, Bolt is bringing Mylo’s mushroom-based leather replacement to the world in a debut of one of McCartney’s Falabella bag designs made from the mushroom material.

The first bag will be available at the Victoria and Albert Museum’s Fashioned from Nature exhibit, open to the public on April 21st in London.

In an interview with Fast Company last year, McCartney discussed her commitment to sustainability. “I don’t think you should compromise anything for sustainability,” McCartney told the magazine. “The ultimate achievement for me is when someone comes into one of my stores and buys a Falabella bag thinking it’s real leather.”

While Bolt Threads is licensing its technology from Ecovative Design, Modern Meadow is choosing to develop its own intellectual property for growing a replacement leather.

Taking a different path to its California-based competitor, Brooklyn’s Modern Meadow model is going for a mass market while Bolt Threads is more bespoke.

The East Coast company partnered with the European chemical giant Evonik — and has raised more than $40 million dollars from billionaire backers like Peter Thiel’s Breakout Ventures and Horizons Ventures (financed by Li Ka Shing — one of China’s wealthiest men) — along with the Singaporean investment giant, Temasek.

Both companies are examples of how animal husbandry is being replaced by technology in the search for a more sustainable way to feed and clothe the world’s growing population. It’s a population that’s demanding quality goods without sacrificing sustainable industrial practices — all things that are made possible by new material — and data — science, along with novel manufacturing capabilities that show promise in taking things from the laboratory to the heart of the animal industries they’re looking to replace.

This is a pattern that’s not just happening in fashion, but being replicated in food science, as well.

How quickly the change will come — and how viable these alternatives will be — depend on them scaling to meet a broad consumer demand. One purse in a museum show isn’t enough. Once there are hundreds of handbags on Target shelves — that’s when the revolution won’t need to be televised, because it will already have been commercialized.

We’ve all probably heard of containers and virtual machines by now. Virtualization enabled IT to break down a single server into multiple machines. Containers allowed you take that concept and make it even smaller. DeferPanic wants to take another step with a technology called Unikernels. Today, the company announced its $1.5 million seed round.

The round was led by Initialized Capital. Other Investors included Hack.VC, Ron Gula, Ray Rothrock, Justin Label, Liquid2 and BloomBerg Beta. The round was funded on a post valuation of $6 million, founder and CEO Ian Eyberg told TechCrunch.

Unikernels are a kind of container, but Eyberg is careful to distinguish them from the kinds of containers we are talking about when we are looking at Docker and Kubernetes. They are a specialized, very light-weight form of virtualization with some key features that should make them extremely attractive to companies trying to build at speed while avoiding being hacked (just about everyone).

First of all, you can put just about any application in a unikernal, even your older legacy ones and enjoy some big advantages. The biggest perhaps is a unikernal is by design a single isolated entity. It only runs the application inside it and nothing more. That means, you can’t execute any other code against it, which effectively eliminates any form of attack.

The unikernel itself is so efficient, you can pack 100-200 per host, as opposed to 5-6 VMs. “We spin up 1000s of unikernels on crappy servers in seconds. There is a lot of room for growth,” Eyberg explained.

While Eyberg says this technology has been around for some time with bigger companies like Ericsson and NEC working on them, up until now, they have been confined to geeks who were willing to put in the sweat to make them work. Just as it took some time for containers to really take hold before the commercialization of Kubernetes as an orchestration layer, Eyberg sees his company bringing a similar dynamic to unikernels.

“Up until now been a real pain in the ass to manage [unikernels]. The orchestration side is its own ball of craziness. If you don’t have a low level background you probably aren’t playing with them. We are one of the only ones to build a platform, allowing you to click a button and you are off to the races,” he said.

You may be wondering how the company abstracts the unikernel down to such a small size, but Eyberg says it’s because the operating system, typically Linux when it comes to virtualization, has always been bigger than it has to be.

He sees finding a way of eliminating this OS bloat as a key to the unikernal platform success. Instead of placing the entire OS in the unikernel container, he puts the absolute bare minimum, which usually only includes a network and disk drivers. That greatly reduces the size and feeds into the other benefits.

The company, which is launching out of the Alchemist Accelerator, is announcing its unikernel orchestration tool and the funding this week at the RSA security conference.

Mixcloud, the London startup that offers an audio streaming platform designed for long-form content, has closed its first-ever funding round, TechCrunch has learned. According to a regulatory filing and since confirmed by co-founder Nico Perez, the ten-year old company has raised approximately $11.5 million led by WndrCo, the media and technology holding company based in Los Angeles and San Francisco.

As part of the investment, WndrCo partners Ann Daly (former president of DreamWorks Animation) and Anthony Saleh (an investor and artist manager of hiphop stars Nas and Future) have joined the Mixcloud board. The injection of capital will be used to scale the service globally and for product development, says the company.

This will include doubling down on the U.S., hence Mixcloud’s new backers, and growing the company’s 22-person team, both in London and New York (where Perez is now based). On the product side, I understand the plan is to “diversify the platform,” which would appear to point to a recent licensing deal with Warner and new paid Mixcloud consumer offerings, making the company less reliant on display advertising and other types of brand sponsorship alone.

That Mixcloud has raised a decent sized funding round isn’t surprising in itself. The music streaming site, which originally wanted to be something akin to ‘YouTube for long-form audio’, has carved out a decent following as a place to house archived radio shows and DJ mixes, and counts more than 1 million “curators” uploading content to the platform. However, aside from a couple of U.K. government grants in its formative years, the fact that the company hasn’t taken any outside funding since being founded in 2008 is no-less than remarkable. As is, perhaps, its survival. The history of consumer-facing music startups is littered with companies that raise significant venture capital, before ultimately crashing and burning or being litigated out of existence.

“We are fairly rare, if not unique,” Perez tells me, in his understated way. “We quit our jobs and incorporated the company in 2008 and then the next two years was the challenge of starting any new company, around building the team, trying to raise funding, and in our case doing these innovate types of [music] licenses. And, being straight up honest with you, we couldn’t fundraise. We couldn’t find anybody to put in money. It was a very different time back then”.

To put that period in context, the term ‘Silicon Roundabout,’ used to describe the emerging tech cluster in East London where Mixcloud would eventually relocate, only entered the public domain in July 2008. And although Spotify was founded the same year, it remained very much under the radar. Meanwhile, the spectacular rise and fall of Napster over the previous decade was still fresh in the memories of investors.

“There had been several major collapses — Napster being the largest but also other services like imeem — that had grown and ultimately failed. Investors were very, very wary of the space, or maybe we were just not very good at pitching. Either way we didn’t manage to raise in the early days… For better or worse, we had to figure out how to survive by ourselves”.

This saw Mixcloud initially set up home in a warehouse in an industrial estate near Wembley, a much less fashionable part of London, in a bid to keep costs low. The team also took on “small jobs on the side,” ploughing any surplus money they earned into keeping the service alive. Aside from bootstrapping and those early government grants, the key to survival was growing Mixcloud’s users at roughly the same speed as advertising revenue, alongside pioneering new content licenses and fingerprinting technology to ensure rights-holders were paid.

“Slowly, over the next few years, it started to get traction amongst users and listeners. Then we started to make a little bit of money from Google Adsense and a few different brand partnerships. And then it took a good five or six years until we could support a small team, and we never raised investment along the way”.

That journey instilled a culture at Mixcloud of “being lean and not splashing out huge amounts of money on launch parties”. This not only ensured the lights could be kept on, but in recent years and somewhat ironically, the same financial discipline and non-reliance on venture capital started to attract the attention of investors. As did the latent potential for Mixcloud to go international.

“The next step for us — and actually part of the fund-raise — is how do we move from bringing this very U.K.-centric streaming platform to being a global player,” adds Perez. “We looked at the wider marketplace and the time we’re in right now… and we kinda felt like if we really wanna go for it then we’re gonna need some firepower behind us. So that’s why we did the deal”.

More devices are coming onto the Internet every single day, and that’s especially true within organizations that have a fleet of devices with access to sensitive data — which means there are even more holes for potential security breaches.

That’s the goal of Kolide. The aim is to ensure that companies have access to tools that give them the ability to get a thorough analysis of every bit of data they have — and where they have it. The Kolide Cloud, its initial major rollout for Mac and Linux devices, turns an entire fleet of apps and devices into what’s basically a table that anyone can query to get an up-to-date look at what’s happening within their business. Kolide looks to provide a robust set of tools that help analyze that data. By doing that, companies may have a better shot at detecting security breaches that might come from even mundane miscalculations or employees being careless about the security of that data. The company said today it has raised $8 million in new venture financing in a round led by Matrix Partners.

“It’s not just an independent event,” Kolide CEO Jason Meller said. “The way I think about it, if you look at any organization, there’s a pathway to a massive security incident, and the pathway is rather innocuous. Let’s say I’m a developer that works at one of these organizations and I need to fix a bug, and pull the production database. Now I have a laptop with this data on this, and I did this and didn’t realize my disk wasn’t encrypted. I went from these innocuous activities to something existentially concerning which could have been prevented if you knew which devices weren’t encrypted and had customer data. A lot of organizations are focused on these very rare events, but the reality is the risk that they face is mishandling of customer data or sensitive information and not thinking about the basics.”

Kolide is built on top of Osquery, a toolkit that allows organizations to essentially view all their devices or operations as if it were a single database. That means that companies can query all of these incidents or any changes in the way employees use data or the way that data is structured. You could run a simple select query for, say, apps and see what is installed where. It allows for a level of granularity that could help drill down into those little innocuous incidents Meller talks about, but all that still needs some simpler approach or interface for larger companies that are frantically trying to handle edge cases but may be overlooking the basics.

Like other companies looking to build a business on top of open source technology, the company looks to offer ways to calibrate those tools for a company’s niche needs that they necessarily don’t actively cover. The argument here is that by basing the company and tools on open source software, they’ll be able to lean on that community to rapidly adapt to a changing environment when it comes to security, and that will allow them to be more agile and have a better sales pitch to larger companies.

There’s going to be a lot of competition in terms of application monitoring and management, especially as companies adopt more and more devices in order to handle their operations. That opens up more and more holes for potential breaches, and in the end, Kolide hopes to create a more granular bird’s-eye view of what’s happening rather than just creating a flagging system without actually explaining what’s happening. There are some startups attacking device management tools, like Fleetsmith does for Apple devices (which raised $7.7 million), and to be sure provisioning and management is one part of the equation. But Kolide hopes to provide a strong toolkit that eventually creates a powerful monitoring system for organizations as they get bigger and bigger.

“We believe data collection is an absolute commodity,” Meller said. “That’s a fundamentally different approach, they believe the actual collection tools are proprietary. We feel this is a solved problem. Our goal isn’t to take info and regurgitate it in a fancy user interface. We believe we should be paid based on the insights and help manage their fleet better. We can tell the whole industry is swinging this way due to the traction OSQuery had. It’s not a new trend, it’s really the end point as a result of companies that have suffered from this black box situation.”

This week on Technotopia I talked to Osama Hashmi, founder of Mocha 7 and a deep thinker on the topics of AI, blockchain, and the future. Hashmi was a bit of a downer in my optimistic view of the future but he had plenty to say, especially on the topic of human growth and improvement.

“There are many Exponential Social Impact challenges ahead and a positive future that can come from that,” he said. “We can put together an innovation ecosystem to solve this in a very positive way – but we have to start thinking about this.”

Take a listen and see what this positive – if wary – founder has to say about our collective futures. You can also read his book, Innovation Thinking.

Technotopia is a podcast by John Biggs about a better future. You can subscribe in Stitcher, RSS, or iTunes and listen the MP3 here.

Online coursework is exploding across all kinds of verticals and fields of expertise — but those courses inevitably end up on platforms like Udemy, and for Ankur Nagpal, that’s really not a way to build a true business.

That’s why Nagpal started Teachable, a platform for experts that want to create a business around their coursework that helps them build an entire online education suite beyond just platforms like Coursera or Udemy. Niche expertise can be way too valuable for just a simple marketplace like Coursera, Nagpal says, and experts in those areas — even seminars on mindfulness or Feng Shui — should be able to make more than just a few thousand dollars a year off that coursework. Nagpal said the company has raised an additional $4 million in equity from existing investors Accomplice Ventures and AngelList co-founder Naval Ravikant.

“In the past, if you wanted to teach courses, you could either put it in the marketplace or have it on your own website — with your brand and domain name and full control of everything — but there’s no easy way to do it,” Nagpal said. “It’s the difference between listing a physical good on Amazon and having your own storefront. While you could make a few thousand dollars on Udemy, you couldn’t build a sustainable business selling courses for $10 to $15.”

That fundraise, however, comes with a whopping $134 million valuation in the end as the company expects to be profitable by the end of Q4 this year. Teachable has around 10 million students across 125,000 courses, with 12,000 paying customers on the platform. Nagpal says it is aiming for a business that will generate more than $200 million in sales this year, which might not be so far off given the speed at which it has ramped up from just $5 million in 2015 to around $90 million in 2017.

In Teachable’s earliest days, instructors focused on marketing or programming, which is where a lot of online coursework got its start when the value of knowledge skills like Ruby or Python skyrocketed. But since then, Teachable has grown into a platform where users with niche skill sets can create robust coursework, and if they already have content ready to go like videos, can get their domain up and running in just a few hours. Teachable has a multi-tier pricing structure ranging from taking small transaction fees to a paid subscription of nearly $299 a month in order to manage its online domains, which is designed to appeal to a wide variety of potential instructors looking to get their start.

“If you look at our top 10 or 20 instructors, there’s virtually no pattern of verticals that are successful,” Nagpal said. “[The popular courses are based on] professional skills, or learning to play a musical instrument, or fly a drone, or even financial empowerment. There’s almost an anti-pattern.”

And again, these aren’t supposed to be courses that get wrapped up into a $49 per-month subscription. Courses in highly specific verticals — like something like Feng shui — can cost up to a hundred dollars or more. But the idea is that these seminars have so much value that students who are looking to dive deep into them are willing to go beyond the cost of just a Udemy in order to get the most valuable content. Teachable aims to make it easy to port the kind of content instructors might post on one of those marketplaces to quickly get them up and running with their own independent online course.

That free plan with a transaction fee is ultimately what at least piques the interest of potential instructors, and Teachable also hosts workshops to try to get them more excited about the opportunity — and then get them to start paying as they look to attract more and more students and need a more robust toolkit, like advanced reporting. or priority product support. The company doesn’t really focus on paid marketing because Nagpal says it’s “not very good at it,” as it primarily leans on word of mouth and affiliates.

“Courses on marketplaces are effectively commoditized,” he said. “I would buy the top-rated courses, but the first course is as valuable as the second or third. On our platform, if people are buying the Ruby on Rails course, it’s probably because they’ve followed an expert on that for a year. What I’m buying is not commoditized, I have a relationship with that person. Their content is much more valuable. All the sales are generated through an instructor.”

Nagpal said he got his start building a bunch of, well, bad Facebook apps like personality quizzes and really simple flash games in the early days of the Facebook Platform. Getting such an early glimpse at that behavior on the Facebook Platform is pretty controversial today with the massive privacy scandal Facebook faces after Cambridge Analytica, a political research firm, ended up with personal data of up to 87 million people through a simple app on the Facebook Platform. Nagpal, however, said what now seems like a treasure trove of data was at the time not really all that useful for that business.

“We got some of that data, but to us it was junk and we never stored it,” he said. “It just seemed like noise.”

The biggest challenge for Teachable, Nagpal says, is making sure instructors actually want to remain instructors. The free tier might attract them to getting started, but instructors might just get burnt out from being instructors in general — whether that’s on Teachable or a marketplace like Udemy. The real competition, he says, are platforms like YouTube and other time sinks for content creators. To keep them on board, Teachable hopes to expand to other verticals of content like coaching and services. That, too, might keep it ahead of marketplaces like Coursera and eventually woo instructors with the opportunity to build an entire online business on Teachable.

“Every month we have 50 people getting more [than the top paid instructor on a platform like Skillshare],” he said. “The sustainability of the business is very different. It’s really hard to make a living selling $10 courses. On our platform, the average price point is closer to $100, which in turn gets reinvested to create actually good content. We’re finding most of the instructors don’t just sell courses, and they have multiple income streams. We’re trying to see if we can get our checkout product powering all that. That creates network lock-in.”

Sword Health, a startup operating out of Portugal that has developed a digital physiotherapy solution to enable patients to be treated remotely in their own homes, has raised $4.6 million in seed funding. Backing the round is Green Innovations, Vesalius Biocapital III, and other unnamed investors in the U.S. and Europe.

The company says it will use the new capital, which adds to an earlier ~$1.2 million grant from the European Commission, to accelerate the development of new digital therapies and drive global growth.

Using what it describes as a combination of “high-precision motion tracking sensors” and the latest advances in AI, the Sword Health solution aims to make the delivery of physiotherapy infinitely more scalable, in recognition that there is a worldwide shortage of physiotherapists. Its flagship product “Sword Phoenix” provides patients with interactive physical rehabilitation exercises from the comfort of their own home, supervised by remote physiotherapists.

“Twenty years ago my brother had a car accident. What I realised then (and this is still true now) is that there is a huge gap between the demand for physical therapy and our ability, as a developed society, to deliver that therapy,” Sword Health co-founder and CEO Virgílio Bento tells me.

“The problem is that the physical rehabilitation industry has not changed in the last 50 years. We’re still very much dependent on the one-to-one patient-therapist interaction, which is the gold standard, but it is not a scalable model and is actually very costly for both patients and healthcare providers”.

To remedy this, Bento and the Sword team began work on what he calls a “digital physical therapist” concept. The idea is that by using motion sensors attached to the appropriate places of a patient’s body, combined with an AI-driven user interface that can take that motion data and give instant feedback, some of what a physiotherapist does can be augmented by machines.

“With Sword Phoenix, clinical teams extend their therapeutic footprint to each patient’s home, scale their reach and are able to devote more time to delivering the human touch,” he says.

To date, Bento says Sword is working with insurance companies, national health services, health maintenance organisations and providers in the U.S., Canada, Australia, Norway, and the startup’s home country, Portugal.

“These customers are able to provide higher quality physical therapy services directly in the patient’s home and decrease operational costs at the same time – an accomplishment that is only possible in healthcare through enlightened use of data analysis and technology,” he adds.

In terms of competitors, Bento argues that the majority of health tech companies are focused on developing technologies that improve the one-to-one patient therapist interaction (e.g., Tyromotion, Hocoma). “This incremental improvement is not the solution because it does not result in a paradigm shift,” he says.

With that said, Bento does conceded that there are other startups trying to create a digital therapist. One I’ve covered in detail is Atomico-backed Hinge Health, which has developed a digital solution for musculoskeletal (MSK) disorders.