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Venture

Peloton co-founder John Foley is a rug guy now

What Ernesta’s round tells us about today’s VC market John Foley clearly didn’t take (ahem) a brake after leaving Peloton. The former co-founder and CEO of the connected fitness company — who stepped down as CEO in February and left the company altogether in September — is back with a new startup. Ernesta, which aims to launch in spring 2023, will sell custom rugs through a direct-to-consumer strategy. It has already raised a $25 million Series A round from a slate of investors that also backed Peloton, including True Ventures and Lee Fixel, through his current firm Addition. It’s not surprising to see Foley getting back into the startup game by any means — venture capital both embraces failure and loves a good comeback story. Plus, there are plenty of previous examples of this happening involving folks who left companies on much worse terms than Foley did. But this deal is particularly interesting — even when you look past the seeming randomness of it. For one thing, comeback stories in venture don’t generally start in the same calendar year that the previous tale ended in. And Foley’s ability to quickly raise such a sizable round before the company’s launch actually tells us quite a bit about where the market is at right now.

Quona Capital sinking $332M into startups focused on financial inclusion • ZebethMedia

Though finance technology startups are having a moment when it comes to decreased venture capital deals and layoffs, Quona Capital, a venture capital firm that invests in emerging markets that accelerate financial inclusion, has found the appetite is still there for fintechs. The firm had its final close on $332 million in capital commitments for its Fund III, which invests in companies in Latin America, India, Southeast Asia, Africa and the Middle East. Notable exits from its first fund were IndiaMart, which went public in 2019, and Coins.ph, which was acquired, also in 2019, by Gojek. The commitments for Fund III exceed the $250 million target Quona was initially shooting for and brings the firm’s aggregate committed capital to over $745 million, co-founding managing partner Monica Brand Engel told ZebethMedia. She started Quona Capital in 2015 with Jonathan Whittle and Ganesh Rengaswamy. “We got very lucky in that the digital thesis about bringing technology to help affordability, also helps connectivity in a world where we’re more remote, where things are constructed, and we have been very successful,” she added. “So even fundraising is evidence of the results and Fund III being a $332 million fund.” Brand Engel, who leads Quona’s investments in Africa and the Middle East regions, said the fund’s investors include a majority of existing investors from sectors like global asset managers, insurance companies, investment and commercial banks, university endowments, foundations, family offices and development finance institutions. It also includes 20 new investors, the firm said. While speaking with the LPs during the fundraising, she noted that one of their main concerns was investment into emerging markets: how risky it is and how it is being affected by current events, for example the Russia/Ukraine war and the governmental instability in the United Kingdom. “People realize you’re not immune to macro instabilities,” Brand Engel said. “There is an attractiveness of emerging markets, though, and the pent-up demand for basic goods and services that early adopters can adapt with technology.” She noted that the driver for starting the new fund is that financial inclusion “is a huge, powerful lever for impact” for a movement that started with Accion in microfinance and is now having a 2.0 moment with new innovative approaches from startups that are “radically improving access and quality of financial services,” for example, embedded finance or the connecting of financial services with other business models where those services become “the engine to drive growth.” One of the other areas she feels Quona Capital’s thesis “shines” is by being what the firm calls “global local” with offices in over 10 countries. “Part of our value proposition is that we have people who are very much embedded in the local market who speak a language, who were born there and have had children there,” Brand Engel said. Quona Capital funds have made more than 65 investments, and will make 25 to 30 new and follow-on investments from the third fund. While the firm has shied away a bit from consumer finance, it has gone all-in on business-to-business, she added. Some of the first six investments from the new funding have gone into companies including Egyptian financial super app Khazna, MoHash, a decentralized finance protocol, Pillow, which wants to make cryptocurrency saving and investing easier, and nocnoc, helping global sellers connect with marketplaces in Latin America. “We call ourselves an authentic impact investor that is focused on numbers, KPIs and building real business models so that they are profitable and impactful in a way that’s kind of bottoms-up,” Brand Engel added. “Also, the notion that we are operators and have started, scaled and exited financial services and technology companies gives us a really important perspective. Not only do we have empathy because we’ve been entrepreneurs ourselves, but I’m Latina and the daughter of immigrants, and we are building something that really reflects reality.”

Doola nurses new capital for its ‘business in a box’ tool targeting global founders • ZebethMedia

Doola, a company helping global founders start a limited liability company in the United States, even without a Social Security number, raised an $8 million round of funding. The new investment comes less than one year after the company secured $3 million in seed funding. This gives the company just under $12 million in total funding since the company was founded by Arjun Mahadevan and JP Pincheira in 2020. Mahadevan did not disclose the company’s new valuation but did say this round increased it. When we previously wrote about doola in 2021, the New York-based company had just built its MVP and was working with its first paying customer and hundreds of companies had formed LLCs using its software that provides things like an EIN (employee identification number), a U.S. address and bank account, access to U.S. payments, a free tax consultation, U.S. tax support and a phone number. Today, now thousands of companies from over 130 countries have launched with doola, which has helped the company increase its revenue growth by seven times since 2020, Mahadevan told ZebethMedia. Doola is building what he said customers call “business in a box,” which has turned into a one-stop solution for compliantly forming a company, including more education on how to start a company, a new banking offering and a soon-to-come credit product. Much of that is to help the U.S. Census’ project of over 5 million new business applications made in 2021, Mahadevan said. “If we can help people go from zero to point one and get their business off the ground, we think we can increase entrepreneurship globally and make it more likely that people with businesses can succeed and reach product-market fit and scale,” he added. Nexus Venture Partners again led the investment into doola and was joined by investors, including Y Combinator, Hustle Fund, Chris Adelsbach, Sahil Bloom, Alex Cohen, Bart Macdonald and Vibe Capital. They join a group of existing investors that includes Jacqueline Reses, former head of Square Capital; Dharmesh Shah, founder and CTO at HubSpot; Ankur Nagpal, founder at Teachable and of Vibe Capital; Rohini Pandhi, product manager at Square and partner at Transparent Collective; Arjun Sethi, co-founder and investor at Tribe Capital; Prasanna Sankar, co-founder of Rippling; Translink and Psion Capital. Mahadevan intends to use the new funding to grow doola’s team, particularly in the areas of product, engineering and R&D. It has an office in New York and Germany and will be scaling those and opening up new offices. It will also focus on marketing. Meanwhile, in the past year, the company launched its own banking service, which enables customers to have a U.S.-based account and remotely bank from anywhere in the world using physical and virtual credit and debit cards and international wires. “The ultimate end goal is to accept payments,” Mahadevan said. “We’re also sitting on this treasure trove of data with visibility into companies and how they perform. We’re going to be able to think for customers and provide financial services that never had before.”

the market is changing; YC’s terms are not • ZebethMedia

Last week at Web Summit, we were asked to interview outgoing Y Combinator President Geoff Ralston about the past, present, and future of the popular accelerator program. We covered a lot of ground during our 20-minute-long chat, including why Ralston — long a partner at YC —  decided to leave after assuming the role of president just three years ago (Garry Tan assumes the role in January). We also discussed where YC’s investing capital comes from and whether, given the market slowdown, YC will be changing its terms to reflect that slowdown. Here is much of that conversation, edited lightly for length and clarity. You can watch the longer conversation here, or just listen in. TC: Let’s start with the news [that] you are leaving Y Combinator. You were there for three years. It was a little bit of a surprise [that you are stepping away]. Why now? GR: I actually count my tenure at YC from just after 2006, when I left Yahoo [and]  started hanging out with Paul [Graham] and company, so really, almost 16 years. And I’ve been an employee at YC since 2011. So it’s been over a decade. And, you know, I felt inside me an urgency that it was time for a change. And I think you have to do that justice, when you feel that, even though I love YC. I love what I do. I think it’s important work. I think it matters. We’re very mission driven. We think entrepreneurship is important and makes a real positive difference in the world. And I love working with founders. It’s weird. I love it. But it was just time to do something different. So I’m moving on. TC: YC went from cohorts of 12 or 18 to roughly 400 founders last winter, before downsizing a bit. Tell me about this idea that launching startups is infinitely scalable. GR: I’ve made what some people consider outlandish claims for how many companies we could possibly fund. It’s never been infinite. It scales a lot. There is extraordinary opportunity for entrepreneurship and for founders to find success across the United States and across the world, in every demographic. In the beginning, we were just scratching the surface. One of the things that I think YC did that was really special was to democratize the idea of entrepreneurship, to open it up to different folks. Originally, the idea was to open it up to technologists, to hackers. That was really an opening of entrepreneurship to folks who really didn’t quite have the access. And we’ve continued that to this day. For that reason our batches have continued to grow. It’s supply and demand. There’s a demand for entrepreneurship. TC: Sam Altman, your predecessor as president, once said there are five ways that YC really innovated, including letting anybody in the world apply to the program, whereas with VCs, you had to get a warm introduction. GR: Yeah, totally, and to be fair, PG, Paul Graham, the founder of YC, started opening up the ideas behind entrepreneurship with his essays, which I’m sure a number of people in the audience have read. They were really a turning point for how people thought about entrepreneurship I honestly don’t know at this point how YC is really structured. You have the Continuity Fund [for later-stage investments]. Where is the money [for these new cohorts] coming from? Is YC a holding company where investors have stakes in a holding company? Or does it raise funds very, very quietly? We raise funds, and we do it rather quietly. It’s sort of our internal sausage making, and it’s not so relevant to talk. We’ve evolved over time. Originally, YC was funded exclusively by Paul and company. And later on, we took on, from a funding perspective, the nature of most VCs, where we have limited partners from whom we raise money on a relatively regular basis. And we have a number of funds in which those LPs place their money. We look like a standard VC from that perspective. Are these evergreen funds?  They’re not. I’m guessing that a lot of alums are also welcome to invest? Virtuous cycle and all? Yeah. I would like to point out that one of the innovations that Sam probably talked about when you talked about these five innovations was that we think of the folks who go through Y Combinator as our alumni and we’ve created this community of founders. If that tight community can actually reinvest the success they found back into YC, it ties us all more tightly together. With regard to that community, I’ve always wondered if there is a breaking point. I know a founder will roll out a product and a lot of YC alums will happily test it out or buy it, for example. But when you’re dealing with thousands of teams as you are at this point, I wonder how you keep your alums from getting overwhelmed. The best answer to that is we have really good software. We actually consider ourselves, more than anything else, a software platform. We’ve all been software engineers. Paul has a PhD in computer science. Sam was a software engineer. I’m a software engineer. My successor, Garry Tan, is a software engineer. So we take a software attitude toward scaling and toward creating tools that bring our companies and our founders together. In fact, Garry built the community software originally that we still use at YC. You did pare back your class size more recently. It’s a new world, right? It changed in two fundamental ways, which caused us to retrench a little bit on our batch size. One is that the pandemic sort of is coming to an end, and we’re much more in person, and it’s harder to scale in person than purely virtual, which we were from March 2020 until the winter of 2022. The second thing is the economy is doing somewhat different things than in 2021, so it’s

Say ‘fromage’! French startup PhotoRoom captures $19M Series A • ZebethMedia

To get a roundup of ZebethMedia’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here. Hello, dear crunchers! We hope you’ve had a peaceful weekend and that you were able to stay clear of social media for a few days. LOL Who are we kidding? We’ve all been glued to the slow-moving, painful, Elon-catalyzed bird crash over at Twitter. Now, if only Mastodon would call its posts something other than “toots,” we might be able to get behind those. In the meantime, come say hello to us on Mastodon! Much love from Christine (@ChristineHall@mastodon.social) and Haje (@Haje@mastodon.social). And, given that those social handles don’t exactly roll off the tongue, we’ll probably go back to linking to our Twitter accounts tomorrow. We are nothing if not creatures of habit, after all. The ZebethMedia Top 3 Get ready for your close-up: PhotoRoom, a photo-editing app for e-commerce sellers that enables users to remove the background behind objects, has attracted 40 million app downloads and now raised $19 million, Romain reports. Twitter wants you back: If you were recently laid off from Twitter, would you return? Ivan writes that after laying off half of its staff, the social media giant is reportedly compiling a list of people who could be asked to come back. Better read the fine print on that rehiring contract. Putting the “super” in super app: Organizing all the facets of your life in one app seems to be quite popular, and Yassir is proof of that. The Africa-based super app, offering ride-hailing, food and grocery delivery and payments, grabbed $150 million. Tage has more. Startups and VC Evidently, the downturn hasn’t soured investors on the travel industry. Travel booking startup Hopper today announced that it closed a $96 million follow-on investment from Capital One, bringing the company’s total raised to close to $730 million, Kyle reports. The fresh cash will be put toward several efforts, CEO and co-founder Frederic Lalonde said in a press release, including supporting Hopper’s new social commerce initiatives. Want to start a DAO? It’s not that hard. Want to join a DAO? It’s even easier, but there are several steps to get connected. Some of those steps are daunting. Matt is here to help, and he’s invited Alex Taub and one of his investors to learn more about how starting and onboarding for a DAO is about to become a lot easier, at least if they have something to do with it. Tune in to our next episode of ZebethMedia Live on Wednesday to hear from Alex and investor Karin Klein from Bloomberg Beta. A smattering more: Dear Sophie: How can I stay in the US if I’ve been laid off? Image Credits: Bryce Durbin/ZebethMedia Dear Sophie, I was laid off and I’m on an H-1B. I have enough savings to survive for a while. What should I do if I have been let go from my job? I am on an H-1B, have an approved I-140, and an I-797 that expires in March 2024. If I have to leave the U.S., can my current I-797 be transferred to my next employer? Are there any issues I should be aware of? — Upended & Unemployed Three more from the TC+ team: ZebethMedia+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription! Big Tech Inc. Romain has your look at the Devialet Mania, a $790 high-end portable speaker. And he actually uses the term “portable” lightly because it weighs five pounds, so more like a speaker you can pick up and change rooms with, not one you carry around in a backpack. Business marriage is in the air, with Ouster and Velodyne agreeing to merge. Rebecca writes that this move “signals consolidation in the lidar industry” and also describes the background and what led up to this. Ready for five more? That’s a lot of cryptocurrency: The U.S. Department of Justice said it seized $3.36 billion in cryptocurrency from James Zhong, who Jacquelyn reports is accused of unlawfully obtaining that large chunk from the dark web. Game on: Paul updates us on the completion of the $4.4 billion merger of Unity and ironSource. Together, the companies are building a platform for the development and monetization of games. Flocking to something new: Boosted by all the Twitter drama over the past week, people have been on the lookout for another place to enjoy social media. Mastodon has been one of the benefactors, reaching 1 million active monthly users, Kyle reports. All the prices that are fit to post: Airbnb is tweaking its search so that it will soon show prices inclusive of all fees in search results, Ivan writes. Say farewell: Over the weekend, Lauren had a story about HBO canceling “Westworld.”

Harmonic helps investors query the startup searches of their wildest dreams • ZebethMedia

Siri, show me fintech companies, founded in the last two years, that haven’t raised over the past year but have grown headcount by 100% in the same time frame; and can it be founded by Stanford alumni whose Twitter traction has grown by at least 50% in the last six months? This is Harmonic’s vision; well, only if you swap out Siri for Harmonic’s text-based startup search query tool. The data platform, built by co-founders Bryan Casey and Max Ruderman, thinks it can help executives discover the next big startups without hundreds of hours of manual sourcing and research. Harmonic is a more specific version of its largest competitors, Crunchbase and Pitchbook, which aggregate and organize private startup data. “We go out and look at every nook and cranny of the web where there might be information about companies and we take that structured and unstructured data and figure out how to merge it all together into some canonical representation of a company,” Ruderman told ZebethMedia. Harmonic’s aggregation differentiation, per Ruderman, is the intelligence it uses to help recognize which public data is more accurate for certain feels, and then merge those sources to develop the “most accurate, fresh representation at any point in time.” Harmonic joins a flock of other startups trying to make venture more data-driven, transparent and equitable. In theory, algorithmic investing hedges against investors’ preconceived notions and pushes emotions to the side. Fintech unicorn Clearco and venture firm SignalFire have spent years implementing data-focused investment processes, joined by AngelList and Hum Capital. In a landscape where investors are re-learning discipline, data feels safe. But, as other solutions have matured, the cleanliness and reliability of said data has come into question. (One founder even played a prank once, listing that Andreessen Horowitz was an investor in his startup on Crunchbase; when other investors piled on looking to put money into his upstart, he explained it was a joke to show the poor quality of data on the platform, reports Bloomberg). Ruderman admitted that data reliability and consistency is one of the hardest problems to get right – and that their strategy is a big differentiator for them. “We’re able to keep data up-to-date at scale, and merge together fragmented bits of structured and unstructured data from all over the web with confidence,” Ruderman said, adding that its main measure of success is an internal score they use that captures freshness, inventory and taxonomy. When asked for more specifics on how they gain an upper edge on freshness, Ruderman didn’t share many specifics (and given that it’s a competitive moat, I’m not too surprised by this). He also said that pricing will evolve as the product evolves, but currently the startup charges licensing and API usage fees. Ruderman’s background adds some color to why he is confident in a better way to search. The co-founder was at Google for around 6 and a half years – with his last role being a senior software engineer on a team in Search that was all about building tools to help Google do UX research and design at scale. Before that, he spent time learning about behavioral economics in the people operations department, technical infrastructure on the business intelligence team, machine learning on the finance team, and ultimately Search. So far, his direction and the company behind him has landed Harmonic at least 150 customers, including SaaS startups such as Brex, Vouch, Notion and Carta, and venture firms such as Floodgate, A16z and Accel. Some of those early adopters have even turned into the startup’s largest investors. Harmonic announced today that it closed a $20 million Series A round led by Sozo Ventures, with participation from Craft Ventures, which led its $10 million seed round last year. Floodgate, another customer, was Harmonic’s first investor ever. “By creating a really powerful discovery tool in venture, it lets capital flow out to more innovation in a more efficient way…if we bring this to sales teams, it lets teams bring their service and push forward at the right time,” Ruderman said. “And then eventually, we want to make it the case that talent can find startups to match their talents, driving startups forward.”

Truveta’s big data healthcare project is pretty cool • ZebethMedia

A few weeks back, ZebethMedia caught up with Terry Myerson and others from the Truveta team to chat through an important product update from the company. This publication has covered Truveta for some time now, curious about its objectives as a business that has a strong public-health component, and because Myerson was a longtime Microsoft denizen that we were familiar with from covering Windows for years and years. Our interest was also piqued late last year when Truveta raised $100 million, slightly more than doubling its capital base. With around $200 million in backing, Truveta had a roster of folks with whom we were familiar, and enough cash to bring to bear whatever it was dreaming up. The Truveta concept is simple: Work with different healthcare groups to collect anonymized patient data, pool the information, and make it available to third parties so that they can see what’s actually going on in terms of patient outcomes in a more holistic sense. The potential public health and commercial applications are reasonably apparent, but what struck your scribe when chatting with Myerson and the team was that this sort of aggregated database of depersonalized information was not already in existence. While having a private-public healthcare system has some advantages, centralized data is seemingly not one of them. Back to the recent: Truveta has expanded the roster of health systems contributing to its dataset from a handful toward the end of 2021 to 25 today. More data is good when it comes to this sort of “healthcare analytics” work, so the additional 11 providers matter. But more notably, Truveta’s software product launched earlier this month. Back in 2021, the company made a bit of a splash when it rolled out a COVID-focused product. Now, Truveta Studio is out, and I got a tour. Something that Truveta has to handle is harmonizing information from disparate systems. This is something it’s tackling, allowing users to set up definitions in a computable format, and then collect results and graph them. The resulting wall of charts and graphs is exciting to look at if you, like myself, are a huge dork for data visualization. The service is not something, from my run-through of it, that anyone with a passing interest in healthcare outcomes could use. But for an expert, it could pay off — our tour guide explained that, in his prior research environment, he would spend weeks executing what he can do in minutes with Truveta. That’s more than an order of magnitude of time savings. Provided that the service is sufficiently user-friendly for professionals, the company could be onto something. The question now is how much people — customers — want to use it. Truveta’s early goals — getting its data ingestion set up, raising money, building a team, and then a product for regular use — have been met. Now we are down to the business brass-tacks of the effort. And there are nine figures of capital wagered that it will succeed. Given that healthcare in the United States is exorbitantly expensive, opaque, and full of inequitable outcomes, folks working to make it a bit less impossible to parse are fine by me.

These folks are working to bring more diversity to the venture LP investing pool • ZebethMedia

When you think about diversity in the startup ecosystem, one area that could be overlooked is the limited partner pool. These are the folks who contribute to the larger funds or individual investments. They don’t necessarily have the same influence over deals that VCs do, but they are a key piece that provides the cash to grease the startup funding framework. Having more heterogeneity in this part of the system ultimately helps bring more diversity to cap tables. One of the reasons that LPs aren’t more diverse is likely due to the fact that the VC firms themselves typically aren’t. If the partners at investment firms are seeking limited partners, they are probably going to reach out to their own networks, and that tends to be people who look like them and run in the same circles. Since the vast majority of VC partners are white and male, it’s a hard pattern to break. In fact, it takes a concerted effort to get people involved who have been left out of deals in the past. This isn’t just about diversity for diversity’s sake, either. It’s also about wealth creation, who’s being included and who’s being left out. While venture investing often involves many misses, when a deal hits, it can bring generational-changing wealth for the investors who got in early. If the cap table is confined to mostly white men, that leaves out a lot of people who have been historically underrepresented across society. A number of folks with access to deal flows are attempting to change this on their own, some as a side hustle, working to bring in a more diverse set of people to the investor pool. As an example, last year we wrote about Amanda Robson, a partner at Cowboy Ventures, who has started in an informal angel network of women and non-binary folks, who have means but have never been asked to be included in deals before. “I had a number of friends who had recently within the past couple of years become VP-level at different companies, and they had an interest in angel investing, and they had the means to at that point, but they didn’t have access,” she told us at the time. Robson created her network to give the same access that their male counterparts are getting. She has built this network on her own in her free time, because she recognizes the importance of bringing historically underrepresented groups to the cap table. And she’s not alone. We spoke to several folks who are making a concerted effort to get more people involved, some doing it in addition to a demanding full-time job. People with money, but no access There are plenty of people from historically underrepresented groups who have the money to invest, but typically haven’t been asked or don’t know how to go about it. These aren’t just people in the tech industry, either — it’s a variety of wealthy professionals who have been left out of the startup investment process. Shruti Challa and her husband, Patrick Ekeruo, launched Community Growth Capital this year to give people like this access to later-stage deals with the goal of democratizing growth-stage cap tables. This is in addition to their day jobs. Challa is CRO at hospitality startup Sonder, while Ekeruo is assistant general counsel at fintech startup Brex. The couple has been involved in investing on their own, including investments in SpaceX and Robinhood, but they want to create a network to bring in people they know, who have not been asked to be involved in startup investments. “Our goal is to give access to these underrepresented minorities and help them close the generational and racial- and minority-driven wealth gap that exists, even for people at higher [income] levels,” Challa told ZebethMedia. Ekeruo said that there are founders out there who want to diversify their cap tables, but don’t know where to start, and firms like his and Challa’s can help. “There’s a growing chorus that understands that diversifying every piece of the tech ecosystem is important, including the cap table, and we bring our diverse LPs to the cap table and to our growth equity partners, who in turn can offer that to founders who want to diversify their cap tables because they recognize it as a problem,” he said. He says that going for the later stage companies also lets them bring more tangible financials to a new investor than angel investing where you are basically investing in a person or a team with an idea. “When I’m talking to somebody who’s used to doing public company investing, it’s much easier for me to  say, ‘Look, this company has a product, has product market fit, they are raising $75 million in order to grow revenue because they expect to go public in four to five years.’” The Cap Table Coalition (CTC) is another group trying to pull in investors that have been historically left out of the investing process. Richie Serna, whose day job is CEO at payments startup Finix, helped build CTC. The network of 775 investors, many of whom are from historically underrepresented groups, grew from his own contacts and exploded from there. The firm helps people get involved by making it possible to write much smaller checks, especially in later-stage rounds. “I think one of the issues is that after the seed round, every investment is probably like a minimum $50,000 to $100,000 to get onto a cap table just because of the sort of administrative work that’s involved. And so by forming one SPV… people can invest $5,000 to $10,000 and start to build a portfolio that way [and we can include a lot more people],” he said. Expanding the pie When you include a wider variety of people in investing, it can impact the entire system from the cap table to the boardroom to founders, executive teams, and workforces, and it can lead to more diverse wealth creation over time because some percentage of

HR platform WorkTorch raises $2.2M seed round • ZebethMedia

WorkTorch, previously known as QuickHire, announced today the closing of a $2.2 million seed round led by Tenzing Capital. Along with the raise comes the name change, with the goal of encapsulating the business’ focus on employee recruiting and retention. Speaking to ZebethMedia, its founders, sisters Deborah Gladney and Angela Muhwezi-Hall said the rebrand was a year and a half in the making as they realized the changing relationship between employees and employers. “Finding the right talent is just half the battle,” Gladney said. “Where companies are really being hit the hardest is losing people faster than they’re coming in the door.” They realized that their hard work to help companies find the right talent was fruitless if those businesses weren’t doing anything to keep those workers. “We started leaning into what was happening to people post-hire and have started to focus on career development and talent retention tools,” Gladney continued. “So our new name is WorkTorch. We want to be a guiding light to a better career, a better workforce.” Launched last April, the company says it has a roster of more than 40,000 service industry applicants actively looking for a job, with at least 1,000 interviews scheduled via the platform a month. As part of its rebrand, users will now have access to a career development portal where they can track professional growth, as well as connect with others who have similar interests. At the same time, employers will now be able to access new retention tools to look at national and regional data trends, as well as receive feedback from their employees on their current working experiences. Investors were drawn to WorkTorch due to shifting U.S. working conditions. ZebethMedia previously reported that VCs remain bullish on HR platforms despite “The Great Resignation.” In the first two months of 2022, investors poured over $1.4 billion into the sector. This follows the more than $12.3 billion HR tech startups raised last year. Gladney said it took about six months for WorkTorch’s seed round to close because the founders felt pressure from investors amid the economic downturn. “Every check felt like a fight to get,” Gladney said. The high of this fundraise was that most of their existing investors returned. Based in Kansas, the returning capital helped make the duo two of the few, if any, Black women to raise more than $1 million in the Midwest. “As two Black women in Kansas, we’re super proud of that.” Then there were lows, naturally, where they felt as if investors were stringing them along — even more than the last time they raised, when they picked up more than $1 million in funding. “I felt like people were talking to us to check a box or make it feel like they’re doing their part,” Gladney said. Muhwezi-Hall said people would give soft commitments, perform extensive due diligence, and then back out, saying they actually never wanted to get into HR. “It was very odd,” Muhwezi-Hall said. “A lot of these individuals have social media presences that are focused on diversity and inclusion. We were excited to meet with them. But when push came to shove, it was like any other — probably even worse than the VCs that just wouldn’t respond to our emails because they strung us along and wasted so much of our time.” They overcame the bias, though, and nabbed top investors such as Bloomberg Beta, MATH Venture Partners, Ruthless for Good Fund, and Graham & Walker. The fresh capital will help WorkTorch expand into several new cities, including Chicago, Denver, Dallas, and Atlanta. The Hackett Group found earlier this year that spending on HR Tech would probably increase by the year’s end. This is Gladney and Muhwezi-Hall finding space in the current trend. “Employers need better tools and capabilities to meet the needs of their workforce, and service-industry professionals thrive when offered opportunities to develop and grow their careers,” Josh Oeding, the founder of Tenzing Capital, told ZebethMedia. “WorkTorch has figured out how to deliver value to employers, and professionals and the market is responding.” Leslie Feinzaig, the founder of Graham & Walker, added to that: “I was deeply impressed by Deborah and Angela and had one of those magical first meetings where I immediately know I want to invest,” she told ZebethMedia. “It was striking to me that this team deeply understands and respects the service workers, in a way that is rare in startup pitches. And this translates to metrics that are undeniable and unheard of for a startup at this stage.” Next, Gladney and Muhwezi-Hall are hoping that WorkTorch becomes the go-to platform for anyone looking to see what’s next for their careers. “This is what makes us different,” Gladney said. “WorkTorch is empowering people to pursue whatever they are passionate about. And then we come alongside them to help them get there.“

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