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Finch raises $3.5M to build out its HR and payroll-focused API business

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The old saw about finding a place where companies still use spreadsheets, and then building a startup to solve the problem, was a good way to dream up new software as a service (SaaS) companies. But the next generation of that idea may be to instead find a place where data is locked, fragmented or both, and build an API to unleash the information.

That’s the thesis behind companies that TechCrunch has covered like Noyo, which wants to free health insurance data and raised $12.5 million in September. And it’s the apparent concept behind Finch, a recent Y Combinator graduate that is looking to liberate HR and payroll data.

General Catalyst led the round, which saw participation from a number of industry executives, including the founders from Ramp and Brex, two competing startups, and Digits. The company’s round comes after the startup had targeted a smaller, $1.5 million sum but wound up taking more capital aboard.

Finch was founded by Jeremy Zhang and Ansel Parikh. Zhang moved from robot R&D for a big tech company to SmartCar, which is building an API for what it self-describes as “mobility applications.” Parikh, Zhang told TechCrunch, worked in venture on API-related deals. So, the pair had experience with startup products that were delivered through a developer endpoint, not by an application coupled to a contract.

Zhang and Parik initially worked on a product that would have allowed other companies to embed consumer lending into their own service. But, in Zhang’s telling, the pair ran into the pandemic, the early period of which was anathema to interest in extending more credit to regular folks. (Notably Upstart, a fintech focused on facilitating consumer lending, is in the process of going public; how rapidly 2020 has spun industries around.)

However, a design partner wanted to offer PPP loans to SMBs on its platform, so the pair wound up looking into what was required for the project on the data side of the ask; Finch was born out of those learnings.

Finch connects customers to payroll and HR data via an API, offering both a free version of its product to entice developers, and a paid version of the product that is priced either as a pay-as-you-go service, or with a SaaS-like pricing provision.

Something notable about Finch is its age. Even for a startup, it’s young. The founding group put up a landing page for the company in April, and wrote the first code for the project in July. That’s rapid scaling from zero to in-market traction. Today Finch is growing 50% month-over-month in terms of both revenue and “employers connected,” giving it the sort of growth that investors flock to.

What might one be able to build with Finch’s API? Past a few basic ideas, my brain was bereft, so I asked Zhang to dole out the future to me. In the co-founder’s estimation, there are three core buckets where Finch can have a role: financial software, inside the lending and insurances spaces, and supporting the burgeoning HR and benefits software market.

In each area, having access to what Zhang called a “source of truth,” namely HR and payroll data about employees and their employment, would allow other companies to better make decisions; tenure at a job could help one determine creditworthiness, HR services need to know who works where, and in the realm of finance apps that are working to help or supplant CFOs need to understand current headcount.

Still, Finch’s path won’t be an easy one. Part of the problem that its founders discovered is that there are myriad payroll and HR systems. Building out an API to support as many as its market requires will take time and investment. Raising more capital than it initially intended will help, we’re sure, but even with deeper coffers, the scale of the challenge in front of the young company will require yeoman’s work.

The company told TechCrunch that it can support the systems of 1.4 million employers today, though it intends to “10x” that number in the next year. Finch’s capital event is similar to the round raised recently by fellow YC graduate BuildBuddy, a SaaS play, in which both startups took aboard more than $3 million in funding after initially targeting a raise in the $1 million range.

The startup has six staff today, with Zhang expecting the the company to scale to 15 or 20 by the end of next year.

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Elon Musk is donating $100M to find the best carbon capture technology

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Elon Musk said Thursday via a tweet that he will donate $100 million toward a prize for the best carbon capture technology.

Musk, who recently surpassed Amazon’s Jeff Bezos to become the world’s richest person, didn’t provide any more details except to add in an accompanying tweet the “details will come next week.” It’s unclear if this is a contribution to another organization that is putting together a prize such as the Xprize or if this is another Musk-led production.

The broad definition of carbon capture and storage is as the name implies. Waste carbon dioxide emitted at a refinery or factory is captured at the source and then stored in an aim to remove the potential harmful byproduct from the environment and mitigate climate change. It’s not a new pursuit and numerous companies have popped up over the past two decades with varying means of achieving the same end goal.

The high upfront cost to carbon capture and storage or sequestration (CCS) has been a primary hurdle for the technology. However, there are companies that have found promise in carbon capture and utilization — a cousin to CCS in which the collected emissions are then converted to other more valuable uses.

For instance, LanzaTech has developed technology that captures waste gas emissions and uses bacteria to turn it into useable ethanol fuel. A bioreactor is used to convert into liquids captured and compressed waste emissions from a steel mill or factory or any other emissions-producing enterprises. The core technology of LanzaTech is a bacteria that likes to eat these dirty gas streams. As the bacteria eats the emissions it essentially ferments them and emits ethanol. The ethanol can then be turned into various products. LanzaTech is spinning off businesses that specialize in a different product. The company has created a spin-off called LanzaJet and is working on other possible products such as converting ethanol to ethylene, which is used to make polyethylene for bottles and PEP for fibers used to make clothes.

Other examples include Climeworks and Carbon Engineering.

Climeworks, a Swiss startup, specializes in direct air capture. Direct air capture uses filters to grab carbon dioxide from the air. The emissions are then either stored or sold for other uses, including fertilizer or even to add bubbles found in soda-type drinks. Carbon Engineering is a Canadian company that removes carbon dioxide from the atmosphere and processes it for use in enhanced oil recovery or even to create new synthetic fuels.

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Chinese esports player VSPN closes $60M Series B+ round to boost its international strategy

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eSports “total solutions provider” VSPN (Versus Programming Network) has closed a $60 million Series B+ funding round, joined by Prospect Avenue Capital (PAC), Guotai Junan International, and Nan Fung Group.

VSPN facilitates esports competitions in China, which is a massive industry and has expanded into related areas such as esports venues. It is the principal tournament organizer and broadcaster for a number of top competitions, partnering with more than 70% of China’s eSports tournaments.

The “B+” funding round comes only three months after the company raised around $100 million in a Series B funding round, led by Tencent Holdings.

This funding round will, among other things, be used to branch out VSPN’s overseas esports services.

Dino Ying, Founder, and CEO of VSPN said in a statement: “The esports industry is through its nascent phase and is entering a new era. In this coming year, we at VSPN look forward to showcasing diversified esports products and content… and we are counting the days until the pandemic is over.”

Ming Liao, the co-founder of PAC, commented: “As a one-of-its-kind company in the capital market, VSPN is renowned for its financial management; these credentials will be strong foundations for VSPN’s future development.”

Xuan Zhao, Head of Private Equity at Guotai Junan International said: “We at Guotai Junan International are very optimistic of VSPN’s sharp market insight as well as their team’s exceptional business model.”

Meng Gao, Managing Director at Nan Fung Group’s CEO’s Office said: “Nan Fung is honored to be a part of this round of investment for VSPN in strengthening their current business model and promoting the rapid development of emerging services and the esports streaming ecosystem.”

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Google’s parent firm is shutting down Loon connectivity project

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Google’s parent firm Alphabet is done exploring with the idea of using giant balloons to beam high-speed internet in remote parts of the world.

The firm said on Thursday evening that it was winding down Loon after failing to find a sustainable business model and willing partners. The demise of Loon comes a year after Android-maker ended Google Station, its other major connectivity effort. Through Station, Google provided internet connectivity at over 400 railway stations in India and sought to replicate the model in other public places in more nations.

That said, Alphabet’s move is still surprising. Just last year, Loon had secured approval from the government of Kenya to launch first balloons to provide commercial connectivity services in Kenya — something it did successfully achieve months later, giving an impression that things were moving in the right direction.

Perhaps the growing interest of SpaceX and Amazon in this space influenced Alphabet’s decision — otherwise, the two firms are going to have to answer some difficult feasibility questions of their own in the future.

“We talk a lot about connecting the next billion users, but the reality is Loon has been chasing the hardest problem of all in connectivity — the last billion users,” said Alastair Westgarth, chief executive of Loon, in a blog post.

“The communities in areas too difficult or remote to reach, or the areas where delivering service with existing technologies is just too expensive for everyday people. While we’ve found a number of willing partners along the way, we haven’t found a way to get the costs low enough to build a long-term, sustainable business. Developing radical new technology is inherently risky, but that doesn’t make breaking this news any easier.”

The blog post, which makes no mention of what will happen to Loon’s existing operations in Kenya, characterised Loon’s connectivity effort as successful. “The Loon team is proud to have catalyzed an ecosystem of organizations working on providing connectivity from the stratosphere. The world needs a layered approach to connectivity — terrestrial, stratospheric, and space-based — because each layer is suited to different parts of the problem. In this area, Loon has made a number of important technical contributions,” wrote Westgarth.

More to follow…

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