Sepsis: A Deadly and Costly Problem

Sepsis is the leading cause of death in hospitals in the U.S. – twice the number of deaths from heart attack and stroke combined, at a cost of around $62B annually.

Sepsis is defined as life-threatening organ dysfunction due to a dysregulated/inappropriate host immune response to an infection. Despite the seemingly simple definition, sepsis is very difficult to diagnose early on because it can mimic several other common medical conditions.

Around 80 percent of sepsis cases present in emergency departments (EDs), which struggle with overcrowded waiting rooms and where health practitioners simultaneously juggle multiple medical emergencies.

Worst of all, there is no fast, accurate way to determine if a patient has sepsis. Diagnosis is based on a physician’s judgment, leading to frequently missed diagnoses as well as overtreatment of patients who don’t have sepsis.

Currently, EDs run multiple tests if sepsis is suspected, but it can take hours or days to get results, adding to the number of incorrect diagnoses that lead to poorer patient outcomes and higher costs.

Rapid diagnosis and treatment of sepsis are essential. If not treated quickly, sepsis can lead to septic shock, multiple organ failure, and eventual death. Rapid administration of antibiotics is the primary approach to reduce mortality. For every hour sepsis goes untreated, the risk of death in the next 30 days increases by 8-10 percent.

The New York Times reports, “About one in three people who die in a hospital had sepsis during their time there, according to the CDC (Centers for Disease Control). About 1.7 million adults in the United States develop sepsis each year, and about 350,000 of them die or are moved to hospice.”

Recognizing the scale of the problem, the CDC recently issued a toolkit and recommendations designed to improve the diagnosis and treatment of sepsis.

In addition to the threat to patient health, hospitals also face financial risks from inconsistent diagnosis of sepsis. Capitated payments may cover only half the ED’s costs, meaning incorrect or unnecessary procedures will produce losses. In addition, incentives and penalties related to early or late diagnosis can mean a difference of millions of dollars to a hospital.

Cytovale Provides a Groundbreaking Solution

Cytovale offers IntelliSep, the first FDA-approved, rapid sepsis diagnostic test for use in EDs. Its cutting-edge, patented technology requires only 90 seconds of hands-on time by ED staff and generates results in under an hour. The IntelliSep test uses the same blood-collection tube used to perform a complete blood count or CDC (the “purple tube”), is compatible with standard ED procedures, and its single-use plastic disposable contributes to low cost.

IntelliSep’s breakthrough technology detects cellular biophysical markers of sepsis. When a patient’s inflammatory system is “overactivated” during sepsis, the white blood cells are “squishier” when compressed compared to normal white blood cells.

The IntelliSep test uses microfluidics, high-speed video, and computer algorithms to individually measure the rigidity of tens of thousands of white blood cells, looking for the “squishier” cells that may indicate sepsis.

Test results are reported in three bands corresponding to risk levels for developing sepsis within three days. ED physicians and nurses can rapidly rule out sepsis when they see results in green and prioritize high-risk patients when results appear in yellow or red.

IntelliSep Delivers Multiple Benefits

The positive impact of IntelliSep is achieved in several dimensions. It:

• Focuses attention on the highest priorities – Fewer delays in treating high-risk patients.
• Reduces clinical variations – Unbiased test results reduce uncertainties inherent in physician judgment.
• Improves SEP-1 compliance – Reduced chance of penalties by payors.
• Maximizes resources in the ED – Physicians/nurses can attend to those most at risk; fewer tests administered in favor of a single IntelliSep.
• Potential for significant cost savings – An estimated $3.5m to $7.7m a year for an ED with 90,000 visits.

Cost savings are achieved by reducing the number of unnecessary tests or procedures and by delivering faster care to sepsis patients, which has been shown to improve outcomes and reduce the length of hospital stays.

Why Norwest is Excited About Cytovale

Cytovale is a sterling example of a company making a tangible contribution toward the goal of better patient outcomes at lower costs. IntelliSep is a straightforward, easy-to-use, and cost-effective solution that addresses a critical need that is universally recognized as a high priority.

Cytovale’s value proposition is clear and compelling: more accurate diagnoses; simple, low-cost operational requirements; and the potential for major cost savings. It also has a predictable revenue stream and a high-efficiency sales model.

It is the first sepsis diagnostic test to directly measure the core, underlying pathophysiology of sepsis (how dysregulated the patient’s immune system is). That constitutes a significant competitive differentiation of the platform technology.

The company has experienced co-founders and an impressive senior management team.

We estimate an immediate TAM of around $2B in the U.S., growing to as much as $10B worldwide.

The post Cytovale: A Breakthrough Tool in The Fight Against Sepsis appeared first on Norwest Venture Partners.

Our latest portfolio company, Diana Health, creates this impact by applying an innovative model to women’s healthcare. We are grateful for the opportunity to support the company as it scales nationwide.

An Urgent Need to Improve Women’s Health and Maternal Care

Many areas of women’s health and maternal care need to improve. Female patients face issues such as limited access to care, minimal pre- and post-partum care, the overuse of medical interventions (e.g., C-section), and a challenged reimbursement profile across Medicaid payors. Ultimately, this results in a market that fails women, families, and the caregivers who serve them.

Maternal care outcomes are staggeringly poor in the United States. Among the 38 countries in the Organization for Economic Co-operation and Development (OECD), the U.S. is last in infant mortality, with 5.4 deaths per 1,000 live births compared to 1.6 in Norway, the best country. U.S. maternal mortality is also the worst in the OECD: 23.8 deaths per 1,000 compared to an average of 5.1 across all countries. Challenges are particularly acute for Black women, who face birth complications at a rate two to three times higher than white women — a symptom of broader underlying social and economic inequities rooted in racism and discrimination. Given the abysmal state of care, it may be no surprise that 45 percent of women in the U.S. experience some form of birth trauma.

These challenges are the symptoms of an unsustainable cost structure for hospitals that provide women’s health and maternal care services, which result in lower-quality care and limited access, particularly for Medicaid patients. (Close to 50 percent of U.S. births are covered by Medicaid.)

Many hospitals outside major metropolitan areas can no longer reconcile the high fixed costs of labor and delivery (L&D) departments with the limited reimbursements they receive. As a result, some 400 L&D facilities were closed between 2016 and 2020.

In addition, the U.S. faces a looming shortage of OB-GYNs. In 2020, the gap was around 2,600 providers. That number is estimated to exceed 22,000 by 2050 as providers reach retirement age and recruiting top talent becomes increasingly difficult. The trends toward fewer L&D departments and a shortage of OB-GYNs do not bode well for access to maternal care for many women.

A Huge Market Opportunity in Addressing These Problems

We believe that innovative companies that pursue collaborative care approaches, incorporating midwives and offering a differentiated business model – can provide better care for mothers and newborns. They also can produce improved financial results for hospitals and more cost-effective outcomes for payors.

The leading company pursuing this path is Diana Health. Founder and CEO Kate Condliffe is an experienced leader in healthcare innovation. Previously, she was COO of Baby & Co. and for many years was a senior leader of the Clinton Health Access Initiative. She co-founded Diana Health in 2020 alongside Jim Corum, an experienced hospital executive and the incubation arm of AlleyCorp, a New York venture capital firm with a strong position in healthcare. The company received Series A funding of $11 million in 2022. Diana Health currently has three locations in Tennessee, with plans to expand to Florida and additional states in the near future.

Today, we are excited to announce that Norwest is leading a Series B round of $34 million. All existing insider investors participated in the round, including .406 Ventures, LRV Health, and AlleyCorp.

A Holistic Approach to OB-GYN Practices and Women’s Health

Diana Health’s model is based on the principles of the midwifery model of care, which it deploys through a collaborative staffing structure, providing higher-quality care at a lower cost than most OB-GYN practices.

Traditional OB-GYN practices require high patient volumes for a practice to be financially sustainable. As a result, women who come in for a prenatal visit are often seen by an OB-GYN for only five to 10 minutes per visit with just enough time to do a quick physical exam. Diana emphasizes Certified Nurse Midwife (CNM)-led care for healthy, low-risk pregnancies and well-woman visits. This frees up OB-GYNs to focus on higher-risk pregnancies and gynecological visits and procedures.

Diana also uses an integrated care team – including health coaches, licensed clinical social workers, and health educators – to support whole-person health needs. In contrast to the quick prenatal visit in traditional OB-GYN practices, the CNM-led collaborative model provides 30- to 60-minute sessions with more frequent touchpoints throughout the pregnancy journey. In the Diana model, midwives are the primary providers during pregnancy, childbirth, and the postpartum period, working in collaboration with obstetricians and other healthcare professionals when necessary. The midwifery-led model emphasizes partnership, informed choice, and continuity of care. It is a holistic approach to maternal health, recognizing that pregnancy and childbirth are natural processes that require individualized care and support. This care model has been shown to improve outcomes for women and infants. Among them are lower rates of interventions such as cesarean sections, and fewer preterm births, as this review by the Mayo Clinic shows:

Midwifery-led care is still uncommon in the U.S., with only about 12 percent of births attended by midwives. In many developed countries, midwives attend up to 70 percent of births. We believe this represents a significant opportunity to expand Diana’s approach throughout the country.

Why We’re Excited About Diana Health

Diana Health aligns incentives for all stakeholders and has seen early signs of improvement in clinical and financial outcomes.

Diana’s highly differentiated business model has three core elements:

1. Dedicated 24/7 clinics, often co-located with a hospital, offering comprehensive care for mothers before, during, and after birth. This care is provided in a comfortable, affirming environment that includes many valuable ancillary services, such as family planning, mental health therapy, health and wellness coaching, and classes.
2. Partnership with mid-sized hospitals (500-1,500 annual births), who turn over their OB-GYN practice and L&D operations to Diana Health for a flat annual fee, generating an immediate ROI.
3. CNMs provide the bulk of routine services, freeing up OB-GYNs to handle more complex cases, plus an integrated care delivery team to create an improved patient experience.

Diana Health creates a quadruple win for all parties involved:

• Women receive higher-quality, more personalized care.
• Underserved populations and communities keep or increase access to maternal care.
• Hospitals replace a money-losing department with the potential for a higher-margin line of services.
• Payors see their reimbursements spent more effectively with improved outcomes.

Results from the last 18 months of operation at Diana’s launch sites in Tennessee have been promising – including increased overall delivery and visit volume for their partner hospitals, improved patient outcomes through a reduction in C-sections and NICU stays, and higher patient and physician satisfaction. We are encouraged by this tremendous progress and are looking forward to this impact expanding to other communities as Diana Health expands nationwide.

Diana Health is bringing long-needed innovation to the women’s health and maternal care market. We are proud to be partnering with such a promising, forward-thinking company.

The post Diana Health: A Holistic Approach to Women’s Health appeared first on Norwest Venture Partners.

Using AI to Disrupt the Massive Enterprise Data Market

By now, it’s safe to say that GPT and BERT foundation models’ abilities are well-known to all. Organizations are increasingly moving away from expensive models trained on massive amounts of data to a world of pre-trained models that can be used to augment humans as “co-pilots” in a variety of tasks. Examples include sales coaching (e.g. Gong), sales emails (e.g. Lavender), copywriting (e.g. Jasper, Copy.ai), creative/design (e.g. Stability.ai, Runway), and document extraction (e.g. AirPaper).

Leveraging its proprietary foundation model, Numbers Station is building an AI co-pilot with which data analysts can collaborate. Using natural language, users can offload repetitive data tasks such as data cleaning, data preparation, deduplication, classification, and normalization.

Addressing the Growing Market of Enterprise Data

Repetitive tasks can take up 80 percent of a data worker’s time, according to Harvard Business Review. Organizations are forced to spend heavily on data analysts and scientists in the loop to ensure high data quality. Today, the data preparation tooling market is a sizable multi-billion-dollar market that’s growing quickly. After speaking with countless data quality and analytics leaders, there is unanimous feedback on how ineffective and manual today’s data workflows still are, even with the many tools in the market.

Repetitive tasks can take up 80 percent of a data worker’s time. Numbers Station’s AI co-pilot offloads those repetitive tasks, including data cleaning, classification preparation and more.

By empowering its users to automate data-intensive workflows, information workers are freed from the most basic of data tasks to the most complex.

Built by a Strong Team That Wrote the Seminal AI Research in This Space

Chris Aberger, Ines Chami, Sen Wu, and Chris Re spent years in Stanford’s AI Lab building data task automation technology and even pioneered the use of foundation models on these data automation tasks (research paper here). Before Numbers Station, Chris Aberger served as the Senior Director of ML at SambaNova Systems, where he built the AI team from the ground up. This experience revealed a lot of the challenges that customers faced firsthand.

With the launch of the platform today, we can’t wait to see what’s yet to come for Numbers Station and its customers. We’re excited to partner with Madrona and Factory and extend the Numbers Station team a warm welcome to Norwest’s portfolio!

The post Disrupting Data Automation With Numbers Station’s AI Co-Pilot appeared first on Norwest Venture Partners.

Utilities leverage software to manage their operations and customer interactions—software called Customer Information Systems (CIS). Despite its criticality as the “heart and lungs” of a utility, the CIS space has seen decades of relative stagnation as evidenced by virtually zero new entrants and the vast majority of the market belonging to legacy, on-premise vendors. Today, a number of challenges and opportunities facing utilities—including evolving consumer expectations, EV / dynamic energy pricing further driving complexity, an increasingly distributed workforce, security threats, and physical infrastructure advancements—have produced the perfect storm in driving the industry’s desire for CIS modernization. The utilities CIS market is a textbook example of an industry struggling under the weight of legacy software in need of a new-age SaaS solution.

While we saw a clear “why now” for the utilities CIS space, we also knew that it was a difficult market to build a business in due to the multi-year product development lifecycle, long and complex sales motion and implementation process, and most importantly, the deep utilities experience and expertise required. We hadn’t found a company bringing innovation to the market—until SpryPoint.

Founded by Veterans of the Utilities Software Industry

The SpryPoint executive team consists of Keir Pollard, Kyle Strang, Ryan Cawley, and Kevin Clancey, veterans of the utilities software industry all hailing from beautiful Prince Edward Island, Canada. While the team came from different functional areas of a software business (engineering, product, sales), they all collectively understood the shortcomings of CIS incumbents and shared a joint vision of a radically different solution. Serendipitously, an alphabetical seating chart at their former employer brought Keir and Kyle together first as coworkers, then as friends and eventually—after leaving to pursue other initiatives—business partners. Keir launched SpryPoint in 2011 with Kyle, Ryan,and Kevin joining the team shortly thereafter, completing the puzzle to help round out the team.

The early days of SpryPoint involved an estimated 75,000 hours of product development prior to the commercialization of the CIS, working closely with utilities to test and iterate on the platform. The team bootstrapped the operation entirely, funding development through ongoing consulting projects, point solutions, and Canadian R&D grants. In a display of conviction in their vision and years of patience, SpryCIS was launched in 2020—the industry’s first cloud CIS platform built from the ground up.

Rapid Market Adoption and a Passionate Customer Base

Less than three years post-launch, SpryPoint’s performance speaks for itself, with rapid market adoption fueled by unprecedented win rates and key customer wins that have sent shockwaves throughout the industry. Staying true to its capital efficient roots, SpryPoint continues to double revenue while maintaining meaningful profitability. SpryPoint, the “new kid on the block,” has catapulted itself to the forefront of the utilities CIS space with its true cloud architecture, robust feature set, best-in-class security, and customer-first approach.

At Norwest, a key part of our due diligence is to speak to customers. We’ve conducted thousands of references on hundreds of SaaS companies, but never have we encountered customers that speak with the level of passion and enthusiasm that we heard from SpryPoint’s customer base. Sound bites include: “choosing SpryPoint was the best decision I’ve made in my career” and “we were sold during the product demo and our experience has only gotten better with time… I would invest my 401(k) in SpryPoint if I could”. When we asked customers if they would ever consider switching to another CIS vendor it was often met with a laugh or a shudder.

Over a meal featuring famous PEI oysters, we shared our excitement about SpryPoint and our experience scaling disruptive SaaS companies from a similar stage as SpryPoint to billion-dollar outcomes in Avetta, Cority and Galvanize (the latter two which happen to also be Canadian). The SpryPoint team didn’t need to raise capital, but decided now is the time to partner with a value-added investor to capture the massive market opportunity ahead and accelerate toward their mission.

It’s easy to get excited about great businesses doing disruptive things but it’s thrilling to partner with founders and management teams who share our core values of trust, integrity, customer centricity and a sense of humor and humility along the way. We are proud to announce our substantial strategic investment in SpryPoint and couldn’t be more excited to partner with Keir, Kyle, Ryan and Kevin.

With our investment, we are excited to be their partners in the long-overdue revolution of the utility software market, and to work alongside the team to drive product innovation, expand S&M efforts, grow the team, and continue to put customers first. Now that’s an electric partnership.

The SpryPoint team is hiring now.

The post Partnering with SpryPoint: Bringing Long-Awaited Innovation to the Utilities Sector appeared first on Norwest Venture Partners.

Instead, as his top priority, O’Neill prioritized workers’ safety and invested in reducing work-related injuries.

Although it was initially an unpopular decision with shareholders that led to the stock tanking, O’Neill’s move to focus on worker health and safety led to astonishingly impressive downstream results: a maniacal focus on employee safety resulted in streamlined manufacturing processes, more well-maintained equipment, and increased employee productivity. All of these things ultimately reduced the cost base and made the company run more efficiently. Then the stock price soared. Prior to O’Neill taking over in 1986, Alcoa was worth $3 billion. By the end of O’Neill’s term in 2000, the aluminum producer was valued at $28 billion and branded as among the world’s safest companies despite the inherent risks in the aluminum industry.

“Our safety record is better than the general American workforce. But it’s not good enough. I intend to make Alcoa the safest company in America.”
– Paul O’Neill

Social impact investing follows a similar template within the software world. For software businesses, measuring social impact creates a more profound commitment to customer value. Customer value, in turn, leads to a stronger product. A stronger product leads to happier customers and ultimately more revenue growth! In addition, a compelling social impact story rallies a company’s culture. Recruiting also gets a boost by broadening the gateway to a talent pool motivated by social impact. This becomes important during tight labor markets like we’re experiencing today; knowing how to measure social impact of a business has become more crucial.

Within Norwest’s growth equity business, we often hear companies talk about their positive social impact, but their discussions can be vague. We take the position that to experience the entire customer, product, employee, and ultimately, financial benefits of social impact, companies must begin tracking and measuring social impact and make it one of their most crucial KPIs.

So what is the broader picture of social impact investing today? And how can companies move toward better social impact measurement?

Social Impact Investing: A Growing Trend

Social impact investing is often confused with ESG (environmental, social, and governance) investing. However, they are two different things. ESG investing supports the tracking and measurement of environmental, social, and governance factors relevant to a particular investment, many of which are not core elements of a company’s operations.

Since starting Norwest’s growth equity business over a decade ago, we’ve seen social impact investing grow in popularity. As a result, the number of investors looking for portfolio companies that create social impact in addition to investment returns has dramatically increased. Some investors are doing this as part of a distinct social impact fund, while others are making it a core thesis within their traditional funds.

Younger investors are often at the vanguard of social impact investing as they are the most keen to bring about positive societal change. According to a recent study, 62 percent of millennial investors believe that impact investing has greater potential versus traditional philanthropy. The same research also found that two-thirds of young investors think impact investing is a smart strategy in terms of financial viability.

Despite social impact investing gaining substantial traction, there are roadblocks hampering its maturity, especially in businesses that operate on traditional ESG models. About 78 percent of investors want organizations to home in on environmental, social and governance (ESG) initiatives, even if it impacts short-term profits. However, only half of enterprises agree. In addition, 76 percent of investors believe businesses “cherry pick” information they share on sustainability activity.

The Secret Sauce: Measuring Social Impact

One of the biggest challenges of measuring social impact is selecting and implementing a standardized framework. Measuring social impact is indeed a difficult endeavor. A global survey by BNP Paribas has found that 51 percent of investors across 356 institutions say that “social impact” is the most demanding aspect of ESG to analyze. Without a standard, industry-wide accepted framework for analyzing social impact investment performance, investors and organizations struggle to integrate it into their investment strategies.

While various organizations have great frameworks, we’ve found a more bespoke approach to work better than something force-fitted.

As part of our process, we endeavor to align with management around the fundamental social impact measurement framework they’re looking to create. For example, is management decreasing carbon emissions, lowering job site injuries, or improving access to online learning for underprivileged students? We can then create a longitudinal model pre and post-investment to measure social impact improvement. For example, in the instance of software that mitigates the risk of job site injuries, we can track injuries or near-misses by customers over time. The company can then work back up the funnel to see which variables and tools actually influence the ultimate social impact. Is it more investment in product, subject matter expertise, an acquisition that enhances the overall solution, or better customer training through professional services? The company then sets up processes and priorities that drive the social impact.

The flywheel shows how the process, product, and service improvements that drive social impact leads to happy customers and great case studies to support even more new business. The strategies, investments, and priorities that drive social impact eventually become central to the company’s mission, culture and evolve into a rallying cry for all stakeholders in the business. Measuring it all is the secret sauce to social impact because, as the adage goes, “if you can’t measure it, you can’t improve it.”

The BNP Paribas report concludes that the lack of initiatives on measuring social impact has led to an “acute lack of standardization around social metrics.” This then impedes investors from understanding the social performance of the companies they invest in.

There is no doubt that measuring social impact has become vital today. Fortunately, we have some great social impact-oriented companies in the Norwest growth equity portfolio. We asked the founders and CEOs of a few of these companies how they think about social impact and measurement within their respective businesses.

Cority

Cority is the global enterprise EHS (environmental, health, safety, and sustainability) software provider that empowers those who transform the way the world works. For over 35 years, Cority has been powered by a spirit of innovation, deep domain expertise, and a commitment to integrity that enables our customers to achieve higher operational and sustainable performance levels.

“We have a customer that had multiple deaths on the job from one incident,” said Cority CEO Mark Wallace. “The employees and community were devastated. As a result, the company redoubled its use of the Cority system and is singularly focused on avoiding such tragedies in the future. We also recently got the world’s largest retailer to use Cority’s Waste Management Solution, which has enabled them to divert ~82% of its waste from landfills through recycling, donating to charities, creating animal feed, composting, reselling or reusing, and converting waste to energy. Cority employees and customers can all feel proud that we are making a positive impact on the planet.”

Envisage Technologies

Envisage Technologies is the world’s leader in unified public safety training, compliance, and performance software solutions. Our Acadis Readiness Suite is the only comprehensive solution built exclusively for public safety leaders that ensures first responders are trained, equipped, and ready. The software enables streamlined personnel training, compliance, internal affairs case management, professional development, legal defensibility, and public accountability. Customers include federal agencies, law enforcement organizations, military commands, and state and local public safety organizations.

“Readiness saves lives, and saving lives is what our first responders do every day,” said Ari Vidali, Envisage Technologies Founder and CEO. “For us, the mission is simple; ensuring that our firefighters, police officers, and emergency medical personnel are fully trained and equipped to provide the critical services our communities need to be safe and citizens need when their lives hang in the balance. It is our primary goal that every first responder come home alive and uninjured from their shift.”

Avetta

Avetta offers a configurable SaaS-based solution that assists organizations – both large and small – in managing supply chain risk across a variety of disciplines. Avetta is building the world’s most intelligent supply chain risk management network to advance clients’ safety, resilience and sustainability programs. Less than two weeks ago, Avetta announced that a growing number of executives in all industries recognize the importance of social and environmental efforts. The findings are in a technical whitepaper here.

We’re inspired by the remarkable social impact software tools that many of our portfolio companies deliver. These companies have proven that a heightened measurement on the underpinnings that create positive social impact results in a positive flywheel of great products, happy customers, motivated employee culture, and strong financial returns. So whether it’s Cority helping its customers to thrive as a result of sustainable operations, Envisage transforming law enforcement training, Avetta creating safe and sustainable supply chains, or our other portfolio companies creating substantial social impact in their own endeavors, we thank all these companies for their commitment to social impact.

The post Measuring Social Impact in Your Software Business appeared first on Norwest Venture Partners.

Hope all is well at <your company>!

Are you interested in connecting with customers through email? Did you know that most mailboxes are inundated with hundreds of emails a day?

I’d love to talk to you about a terrific new startup to help you cut through the noise! Do you have time for a quick call next week?

Looking forward to hearing from you!

– Scott and Elaine

What do you think? Are we crazy to expect a response? Perhaps we’re just really terrible at outbound marketing?

All possible. But you’d be surprised how many sales and marketing pros send precisely these kinds of messages out by the thousands every hour, hoping that someone will bite. There’s always that person already looking for the thing you’re offering, right? Still, you’d probably have a better chance of selling a ketchup popsicle to a person in white gloves than getting conversions from that impersonal, out-of-touch, and just plain crappy email.

Yet we still play this game because we’ve conditioned ourselves to believe that as long as we play the odds (massive volume) it will result in a percentage of sales. Truth be told, this has worked in the past. And to date, most of the innovation we have seen in the sales software space has been around increasing the volume of sales outreach. Companies such as Outreach and Salesloft have done a great job of automating outbound workflows and dramatically increasing the volume of email outreach.

Ok, so we have the superhighway in place, but the vehicles are underpowered beige minivans with AM radios. Yes the vans run, but they’re completely unmemorable. Kinda like our generic email earlier. Our names are on it, there’s a product/service that’s mentioned, and it made it to someone’s inbox. But then it’ll probably get deleted. Immediately.

What kind of email doesn’t get deleted immediately? The kind that feels personalized, like talking to someone who has taken the time to understand you and your needs.

So how do you connect with that stranger on the other side of the inbox?

Well, we think we’ve found a solution. Today Norwest is thrilled to announce our Series A investment in Lavender, the leading AI-powered sales email coaching platform.

What kind of email doesn’t get deleted immediately? The kind that feels personalized, like talking to someone who has taken the time to understand you and your needs.

Product Vision: Write Better Emails Faster

It takes about 15 minutes to write a personalized email, and the average time a recipient takes to read it is 15 seconds. Lavender’s mission is to help bridge this gap so sales reps can focus on what they do best: building relationships and selling products.

The feature we heard the most raves about is the Lavender Score. As the name implies, Lavender scores every email on a scale of 1 to 100 against metrics such as sentence length, the ratio of I’s to You’s, and mobile friendliness. Lavender’s AI will then suggest edits in real-time to optimize the email. Most sales teams guide their reps to score 80 or above before sending an email.

Another amazing feature is the “personality” function. Basically, you type in an email and Lavender generates an entire personality profile based on a proprietary AI algorithm. We were amazed by how quickly Lavender identified the best sales approach for each prospect. Scott found it so effective that he even used it on his wife to figure out how best to get on her good side (hey, it worked!). We absolutely think it should be adapted for dating sites (but that’s a blog for another time).

Anyway, Lavender’s product has so many great features that you just have to take it for a test run yourself. Lucky for you, it’s free!

It takes about 15 minutes to write a personalized email, and the average time a recipient takes to read it is 15 seconds. Lavender’s mission is to help bridge this gap so sales reps can focus on what they do best: building relationships and selling products.

Passionate, Focused Team

When we met Co-founders Will Ballance (CEO), Will Allred (COO), and Casey Corvino (CTO), we were struck by their grit and resourcefulness. They had spent years obsessing over how to write the best cold outreach emails that would yield the highest reply rates and had applied their learnings to building Lavender.

From the UI to the product workflow, it was clear that they deeply understood their end user (SDRs and AEs). It takes 15 seconds to install Lavender as a Chrome Extension, and you see value in the first few seconds of use. Will B. is constantly thinking of how to improve the product. Casey was an early adopter of GPT-3 and continues to push the envelope on applying generative AI. Will A has been a thought leader in the sales community for years. It was no surprise to us when Will A. was named a LinkedIn Top Sales Voice in 2021, and he and his co-founders have created the leading AI-powered sales email coaching platform.

Strong Customer Love and Community

We love backing founders who think long-term. Lavender has always led with value from Day 1 and adopted an ethos of sharing sales best practices with everyone. And they’ve done so in a fun, approachable way (hey, Lavender Joe). As a result they’ve built a tight-knit community of sales leaders and SDRs.

In our diligence process, we were blown away by the customer love for Lavender’s product. We heard countless stories from SDRs, AEs, and sales leaders on how Lavender had empowered them and made them successful. Not only did customers see a 2-4x increase in cold email conversion, which led to booking more meetings and a lift in pipeline, but Lavender also helped them write better emails faster, reducing the email creation time by up to 50 percent.

People #LoveLavender so much that they’ve even gotten a Lavender tattoo! And even jammed to the Lavender single (yes, they recorded a single).

Want to write better sales emails faster? Check out Lavender.

The post What’s the Best Outbound Sales Platform? It’s Lavender, Duh appeared first on Norwest Venture Partners.

Based in Vancouver, British Columbia, GeoComply marks our third growth equity investment in a Canadian software company (following Cority and Galvanize) as we continue to find exceptional companies among our neighbors to the north (read: we love Canada).

We also have a long history of supporting female-led, market-leading organizations like GeoComply, having backed more than 50 female founders to date. Additionally, our partnership reflects Norwest’s continued focus on investing behind businesses that help companies ensure mission-critical compliance with regulations to manage risk and avoid costly penalties. As a team, we have backed over 10 “compliance DNA” software/data businesses, which are companies that have been built around (or have elements of) enabling compliant practices and/or mitigating risk for customers.

GeoComply offers reliable, accurate, and precise location-based detection technology and today is the trusted leader in the online gaming/sports betting industry.

After tracking GeoComply for over two years, we connected with founders Anna Sainsbury (CEO) and David Briggs (Director) and quickly found common ground. GeoComply fit squarely in the aperture of the types of investments we pursue—the company was founder-led, profitable plus exceptionally capital efficient, and growing rapidly. The team certainly did not need additional primary capital to sustain operations but was looking to bring on like-minded partners during the next phase of growth—one we anticipate will be similar to the last.

Persistence and Capitalizing on Opportunity at the Right Time

Anna and David founded GeoComply in 2011, growing conservatively and profitably in the early years while building customer-driven, market-leading solutions for the online gaming/sports betting industry. GeoComply was the first to identify a lack of reliable location-based geofencing solutions and started first by serving the New Jersey market. In 2013, New Jersey was the first U.S. state to legalize online gaming, and state regulators needed a location-based solution to quickly and precisely locate users for legal and regulatory compliance purposes.

In May of 2018, after years of GeoComply preparation, lobbying and education of regulators, PASPA (Professional and Amateur Sports Protection Act of 1992) was overturned, which afforded individual states the ability to determine the legality of sports betting. The PASPA ruling not only sparked the enormous growth of the sports betting industry by opening the pathway to legal online gaming in more states, but it also made a solution like GeoComply critical to the success of the industry.

Given the complexity of state-by-state location compliance requirements and stringent tax policies, GeoComply is instrumental in helping states, operators, and regulators:

• ensure bets come only from legal states and locations
• prevent slippage of tax revenues
• detect bettors who try to spoof their locations by using a VPN or other techniques

Today, about half of the states have legalized online sports betting, sparking a modern day gold rush. The growth of the industry has attracted players from large casino operators to numerous new startups, Caesars to Fanatics. Against a rapidly evolving backdrop, GeoComply has remained steady and constant—profitable, growing, and operating reliably behind the scenes.

GeoComply is instrumental in helping states, operators, and regulators ensure bets come only from legal states and locations, prevent slippage of tax revenues, and detect bettors who try to spoof their locations by using a VPN or other techniques.

Why We Are Bullish on GeoComply

Sticking to the “gold rush” theme, our thesis behind partnering with GeoComply is much like selling pickaxes to miners. It’s in use daily, consistently works, and enables customers to operate successfully. While there is fierce competition amongst operators in the gaming market to capture market share, GeoComply is able to “play Switzerland,” offering valuable services to all operators and regulators.

Even as operators pull back marketing spend and growth initiatives in order to focus more on profitability, GeoComply stands to benefit from the continued move of sports betting and gaming to legitimate, legal, and online methods. From 2018 to 2021, bets placed on sports in the U.S. grew more than 20-fold, increasing from about $300 million to over $7 billion a month.

Today, GeoComply serves several gaming industry leaders (DraftKings, BetMGM, FanDuel), leading media and entertainment companies (Amazon Prime and BBC), and companies in the financial services and crypto spaces. The company now processes over a billion transactions a month and is active on over 400 million devices.

GeoComply has also expanded its product set to offer KYC and AML verification, chargeback management, and marketing analytics to become a one-stop shop for compliance, fraud, data analytics, and digital identity.

From 2018 to 2021, bets placed on sports in the U.S. grew more than 20-fold, increasing from about $300 million to over $7 billion a month.

Doing Well by Doing Good

An equally important mission for GeoComply is its focus on giving back to impactful causes. The company had nearly 200 employees based in Ukraine when Russia invaded in February of 2022. The team worked tirelessly to support and relocate those employees, even urging the Canadian government to expedite visas to help those affected by the crisis.

Along with the work in Ukraine, GeoComply is committed to ensuring and advocating for responsible gaming practices. They partner with organizations like the National Council for Problem Gambling and the Responsible Gaming Council. Besides causes directly related to core operations and gaming, the GeoComply team also is passionate about supporting the Child Rescue Coalition, <Code> Like a Girl, and many other causes.

A Partnership You Can Both Bet and Bank On

We’re excited to be joined in this round by Arctos Sports Partners, a private equity firm dedicated to the professional sports industry and sports franchise owners. Arctos will bring invaluable expertise and key relationships with teams and leagues to support GeoComply’s product and vertical expansion.

We look forward to working with them, along with existing investors Blackstone and Atairos, and are thrilled to partner with the GeoComply team in the next chapter of its growth and evolution. We truly believe this will be a partnership you can both bet and bank on!

The post GeoComply: A Partnership You Can Both Bet and Bank On appeared first on Norwest Venture Partners.

While there have been significant advancements in the treatment of autoimmune disease over the past two decades, the current state-of-the-art therapies—namely, a group of immunosuppressive drugs, often called “biologics,” which work by “turning off” or “blocking” the immune system—have numerous drawbacks and very high costs. As such, there are significant opportunities for alternative solutions.

SetPoint Medical has developed such an alternative that could potentially downregulate inflammation without causing immunosuppression. The company has developed an innovative approach that uses a small implantable device rather than pharmaceuticals to treat autoimmune diseases.

The company has developed an innovative approach that uses a small implantable device rather than pharmaceuticals to treat autoimmune diseases.

Today, Norwest Venture Partners announced that it recently led an $80 million preferred stock financing for SetPoint. In addition, the company announced a senior secured term loan facility of up to $65 million from Runway Growth Capital. These financings will enable SetPoint to complete its ongoing pivotal trial for the company’s initial indication, Rheumatoid Arthritis, file for regulatory approval with the Food and Drug Administration (FDA), and begin commercialization in the U.S.

To appreciate why we are excited about SetPoint’s approach, it is important to understand some of the problems with the biologic therapies for autoimmune diseases and how SetPoint’s therapy addresses them. There are three main areas of concern with the biologics: 1) the potentially severe side effects, 2) an inconvenient dosing regimen which results in poor patient compliance, and 3) the high cost of the therapies.

The Significant Side Effects of Biologics and How SetPoint’s Therapy Addresses Them

Biologics come in several forms, but all of them have side effects that can be quite severe, most notably a greater susceptibility to serious infections and a higher risk of certain cancers. The increased danger of infection is a direct result of the biologics’ mechanism of action: they suppress the body’s natural immune response. While effective in treating autoimmune diseases, biologics leave patients vulnerable to infections that can be serious, and even life-threatening. In fact, all of the FDA approved biologics for autoimmune diseases carry a “black box” warning about the risks of immunosuppression. SetPoint’s therapy eliminates this shortcoming because, unlike biologics, it does not shut down the body’s immune response. Instead, it uses a highly targeted, neuro-modulatory approach to downregulate the immune system without causing immunosuppression  using the body’s innate pathways.

Normally, when the brain detects elevated levels of inflammation in the blood, it sends a signal to the immune system which instructs the white blood cells to “turn off” their inflammatory response. The signal from the brain to the immune system is sent through the vagus nerve, a cranial nerve that starts at the brain stem, travels down both sides of the neck, and then branches out into a network of nerves to innervate all the organ systems in the body. Scientists call this interaction between the brain and the immune system the “inflammatory reflex.” In patients with autoimmune disease, this reflex is not working properly.

SetPoint’s device is a small neurostimulator which is placed around the left vagus nerve through a narrow incision in the neck in a short outpatient procedure. It works by sending a short electrical signal to the spleen—a major organ involved with the immune system—for one minute, once a day, which may be sufficient to reset the inflammatory reflex to “normal” and thereby reduce the level of inflammation without causing immunosuppression.

“SetPoint’s device works by sending a short electrical signal to the spleen—a major organ involved with the immune system—for one minute, once a day, which may be sufficient to reset the inflammatory reflex to “normal” and thereby reduce the level of inflammation without causing immunosuppression.”

Inconvenient Dosing and Poor Patient Compliance

Biologics are a powerful but non-specific approach to treatment. They, unfortunately, don’t work for all patients, and when they do, they often lose efficacy over time, causing physicians to change therapies for patients frequently throughout the course of their disease. In addition, many of the biologics can only be taken by injection—either by IV infusion (which requires a visit to a doctor’s office every two to four weeks) or by intramuscular (IM) injections (which requires the patients to inject the drug into their stomach and/or thighs every two weeks). Because of these issues, patient compliance with biologic therapies is very poor, with over 50 percent of patients discontinuing therapy within two years. As a result of these challenges only a minority of RA patients achieve sustained remission.

SetPoint’s implantable device eliminates the inconvenience of IV infusion or IM injections and ensures that treatment is administered consistently over the long term.

Most patients with autoimmune diseases are unhappy with their current therapies. Studies have shown that as few as 25 percent of patients treated with biologics are satisfied with their therapies and that many patients are looking for other alternatives. SetPoint’s implantable device eliminates the inconvenience of IV infusion or IM injections and ensures that treatment is administered consistently over the long term. In one patient survey a sizable group of autoimmune patients said they would prefer the SetPoint option even before trying a biologic.

High Cost of Biologics

Biologics are very expensive therapies, typically ranging from $1,300 to $3,000 a month, to as high as $5,000 a week. As a result, spending on autoimmune diseases reached $77 billion in the U.S. in 2020—more than what was spent on cancer or diabetes. By offering a long-term treatment that can be provided in a single outpatient procedure with the possibility of reducing the need for biologic therapies, SetPoint’s therapy has the potential to meaningfully reduce the cost of care for autoimmune diseases.

“SetPoint’s therapy has the potential to meaningfully reduce the cost of care for autoimmune diseases.”

SetPoint Medical has an impressive leadership team, headed by CEO Murthy Simhambhatla, PhD, and Chief Medical Officer David Chernoff, MD. The SetPoint system has been granted Breakthrough Device Designation by the FDA for patients with RA who have an incomplete response to, or are intolerant to, biologic drugs.

The company is currently enrolling the second stage of its pivotal trial which began last fall, after the FDA completed an interim review of the results from the first 60 patients that were enrolled in the study and gave the company permission to proceed with the trial. The company expects to announce the results from the pivotal trial in mid-2024 and to submit its application for FDA approval by the end of that year.

As part of the recent financing, Zack Scott, MD, a general partner on Norwest’s healthcare venture capital team, has joined the board of directors at SetPoint. Norwest is excited by the prospects for SetPoint Medical as a company, as well as the potential to transform the lives of millions of people who suffer from autoimmune diseases, and we look forward to working with the company and its other investors to bring SetPoint’s exciting new therapy for autoimmune diseases to market.

The post SetPoint Medical: Targeting Breakthroughs in the Treatment of Autoimmune Diseases appeared first on Norwest Venture Partners.

The same phenomhttps://www.statisticbrain.com/gym-membership-statistics/enon applies to enterprise software. Back in the day, we used to call it “shelfware,” or software that gets purchased but never gets used. Even though we’ve moved on from binders full of DVDs, the dirty little secret in SaaS is that many customers buy more seat licenses than they actually use. This has given rise to the sea change now underway in SaaS pricing models, shifting away from seat-based models and toward consumption-based business models, which are far more appealing to end customers.

The dirty little secret in SaaS is that many customers buy more seat licenses than they actually use. This has given rise to the sea change now underway in SaaS pricing models, shifting away from seat-based to consumption-based business models.

Today, we’re excited to announce our Series A investment in Amberflo, a company that’s working toward a future where companies price in a more transparent, usage-based way. Amberflo handles metering and billing for you, enabling anyone shipping a software product to charge their customers based on usage.

So, What Exactly is Usage-Based Pricing (UBP)?

It’s a SaaS pricing model that allows customers to pay for what they consume. Unlike traditional seat-based subscription billing, usage-based pricing models require measuring activity with extremely high levels of accuracy. Gathering the right data and determining the right metrics are crucial to successfully implementing usage-based pricing.

In the current age of rising product-led growth (PLG), software is often discovered and championed from users within an organization (bottoms-up). In the PLG paradigm, as customers derive more value from the software, their usage goes up and they are willing to pay the provider for increased access. This usage-based pricing model ties cost to value for the customer. Over the past few years, we’ve seen prominent companies transition their pricing to be based on value, and even more startups launch their products in this model.

The usage-based pricing trend is already underway. Snowflake, Confluent, and MongoDB are all examples of successful companies that—out of necessity—built their own UBP infrastructure. Now, Amberflo offers an out-of-the-box solution so companies can avoid building this in-house and instead focus on their core competencies. After speaking with many product leaders over the past year, Amberflo’s manageability, flexibility, and reliability made it an easy decision to buy versus build.

Amberflo offers an out-of-the-box solution so companies can avoid building this in-house and instead focus on their core competencies.

An Impressive Founding Team With a Strong Vision

As we dug into this market, we were impressed by Amberflo’s product and vision and we credit this to the founders and their relevant backgrounds. CEO Puneet Gupta was previously a general manager at AWS, where he oversaw the growth of usage-based services like CloudSearch and ElasticSearch. Likewise, CTO Lior Mechlovich hails from an AWS engineering background. In 2020, the duo joined forces to found Amberflo.

Beyond the strong team and exciting market opportunity, the cherry on top for us was getting to hear directly from a few of Amberflo’s early customers. Amberflo powers the metering and billing foundation at companies like LaunchDarkly, Firebolt, SupportLogic, and over a dozen others who are delighted by Amberflo’s well-thought-out product and reliable customer service.

We’re excited about what’s yet to come for the future of consumption-based billing. And who knows, it might not be long before your gym implements pay-per-use models too.

We’re thrilled to join the Amberflo team on this journey and welcome them to the Norwest family!

The post Amberflo: The Out-Of-The-Box Solution for Usage-Based Pricing appeared first on Norwest Venture Partners.

That is: Is the ~$100 a month worth it for my Netflix, Spotify, Amazon Prime, Chewy, Peloton, NYTimes.com, Strava, and Calm app subscriptions?

Everything seems to be a subscription these days. Forbes estimates that the global subscription e-commerce market will grow from $73B in 2021 to $904B by 2026. And despite the impending recession, consumer subscriptions are booming. In fact, National Research Group finds Americans are cutting back on restaurants and groceries first and their Netflix and Spotify subscriptions last. So consumers have flipped Maslow’s hierarchy of needs, basically saying – “sure, you can take all my food but I’m not missing the new season of Stranger Things.”

Content creators, e-commerce merchants, and even social media platforms use recurring subscriptions to provide a top user experience for customers – fresh regular content, a personalized experience with immediate instant-gratification perks (e.g., free shipping, unlimited premium access and consumption, no ads). A real win for customers – and upon closer inspection – for the merchants as well.

Butter Eases Churn for New Generation of Subscription-Based Companies

Startups are specifically designed to grow fast, but at some point they need to find a way to actually make money and be profitable. Thus, the name of the game is finding operating leverage. In e-commerce companies – where marketing/acquisition cost is often the largest operating expense – they specifically need to realize marketing leverage.

It’s no secret that customer acquisition costs (CAC) have been skyrocketing in recent years. Although savvy marketers continue to fight and optimize CAC, companies are increasingly focusing on increasing customer lifetime value (LTV) because it’s more in their control. Subscription business models provide a recurring, predictable stream of revenue and – coupled with high margins and retention rates – a healthy LTV. For a new generation of consumer subscription companies, customer retention rate has now become the most important metric in driving strong unit economics and realizing marketing leverage over time.

Customer retention rate has now become the most important metric in driving strong unit economics and realizing marketing leverage over time.

Butter solves a true pain point for these subscription-based businesses (both consumer and self-serve B2B SaaS companies) by recovering up to ~50 percent of unintended subscriber churn. Subscribers can “accidentally churn” for reasons such as:

• card entry typos
• insufficient funds, incorrect card expiration date or zip codes
• overloaded PSPs
• potential fraud

Butter integrates with Payment Service Providers (PSPs) and subscription management platforms to dynamically validate logic, retry, intelligently route, and authorize payments at the optimal moment.

With the compounding nature of subscription businesses over time, Butter drives real and lasting revenue lift to customers immediately. Looking at the example below, Butter reduces accidental churn by 50 percent and improves customer LTV by 27 percent, keeping the LTV/CAC ratio acceptable even as CACs increase by 67 percent. The net effect is a 9 percent lift in annual revenue.

This simple example assumes consistent churn but in most consumer businesses where churn is front-loaded, Butter’s revenue lift can be even higher. And when factoring in the cost of replenishing the subscriber base at higher CACs, Butter’s lift on the bottom line is even more pronounced.

As we navigate a new enterprise environment with falling software budgets, it’s now essential that software companies provide a clear and demonstrable ROI. Butter’s platform immediately drives higher top-line revenue – helping companies grow faster with strong unit economics while becoming (more) profitable.

The Right Leader for a Visionary Company

There’s no one better to drive the Butter vision than founder and CEO Vijay Menon. Vijay has spent the past decade solving payment failure and maximizing subscriber retention for Scribd, Dropbox, and XBox. He understands the product and customer journey as well as anyone in the space. And I’d be remiss if I also didn’t mention that he’s a true renaissance man – a natural serial entrepreneur, an acclaimed TED speaker, and a published author. He not only has strong domain expertise but a unique world perspective – critical skills needed to build a large and successful company with a great culture.

We couldn’t be more excited to have the opportunity to join Vijay, the Butter team and our friends at Atomic on their mission to reinvent the digital payments market!

Editor’s Note: This blog was originally published on Medium.

The post Let the Butter Churn, Not Your Customers! appeared first on Norwest Venture Partners.

That is exactly what we encountered when we met Sudhir Bhojwani, Lalitha Rajagopalan, and Yuan Tung, the co-founders of Oro. Akin to the name of the company (Oro means gold in Italian), we felt like we had struck gold.

Our partnership with the Oro team has a long history (dating back to the PowerPoint pitch stage when we brainstormed the startup name), and we are ecstatic to announce our investment today as the company emerges from stealth!

Experienced Founding Team with Strong FMF

Sudhir, CEO and co-founder of Oro, is an experienced product visionary in the procurement space. He initially joined Ariba in 2010 and rose through the ranks after the company was acquired by SAP. He most recently served as the chief product officer at SAP Ariba, and his FMF edge is that he intimately understands the challenges that buyers feel when onboarding suppliers and managing those relationships.

When he decided to set off on his own, he recruited two long-time colleagues from SAP Ariba, Yuan and Lalitha, as co-founders to start Oro. Sudhir, Yuan, and Lalitha complement each other incredibly well. They are a “dream team” to build a business in the procurement space.

Critical Pain Point in a Large Supply Chain and Procurement Market

As enterprises become more globalized, the volume of critical purchases and vendors has increased significantly. Today, Fortune 500 companies have tens to hundreds of thousands of suppliers to manage with little to no visibility into the associated spend pipeline. Employees are forced to wrestle with a complex, manual purchasing process, while supplier onboarding and qualification has become a tedious, disorganized, and expensive process. Existing solutions do not scale or integrate well with ERP systems, resulting in purchase and vendor data being managed manually in offline spreadsheets and scattered across various systems. Potential Oro customers strongly endorsed the company’s value proposition.

Here at Norwest, we have invested heavily in the supply chain and procurement space over the past few years. We have backed strong teams at companies such as 3rdwave, 6 Rivers, Avetta, Enable, Propel, SourceDay, and Supplier.io.

A Single Source of Truth Platform for Supplier Management

Oro is building a next-generation platform to accelerate business-critical purchases and onboard and manage supplier relationships at scale—think of it as a “modern procurement fabric.” For business users in most companies, making needed purchases and engaging with suppliers can take weeks to months. Current solutions are designed around linear, repetitive purchases or simple transactions (e.g., spend approval), but they are not designed to automate complex, decentralized procurement. Oro’s composable workflows complement existing ERP and procurement platforms to facilitate self-service for employees and vendors, as well as unifies the purchasing process across multiple business systems. The result is not only high user adoption based on an amazing user experience but also full vendor compliance for large enterprises and medium-sized businesses alike. We are excited about the company’s vision to become the de facto enterprise supplier management solution.

Oro has exceeded our expectations to date and we can’t wait to see what’s next. We extend Sudhir, Lalitha, Yuan, and the rest of the team a hearty welcome to the Norwest family!

The post Oro: A Single Platform to Onboard and Work with Suppliers appeared first on Norwest Venture Partners.

Today, we are proud to announce that Junk King has been acquired by Neighborly, a world-class organization backed by KKR and Harvest Partners. We know the Junk King-Neighborly partnership will prove to be quite successful. Our confidence comes from observing the Junk King leadership drive growth first hand, even motivating us to invest in other home services franchisors such as Poolwerx.

Here are a few humble observations from our partnership with the Junk King team:

1. Durable business models matter, especially now.

COVID pressures, economic uncertainty –brands have faced many challenges in recent years. Through these headwinds, Junk King has grown its B2B and B2C services, demonstrating the persistent value that quality home services offer consumers. In the case of Junk King, the value proposition is a fairly priced, do-It-for-me alternative to an omnipresent issue (just look at your garage or backyard!).

2. In consumer services, brand and execution win.

We have been lucky to back three franchisors across fragmented industries:

• The Learning Experience (early childhood education)
• Junk King (junk removal)
• Poolwerx (pool services)

In all three cases, strength of brand and consistency of execution have been a winning formula. At Junk King, management drove tremendous success at both the franchisor and franchisee levels, ensuring a delightful customer experience. Fair pricing, reliable crew, consistent messaging, and responsive contact centers at a national scale drive a virtuous customer cycle that creates success for all franchisees.

3. Aligning interests in franchising is paramount.

It’s an obvious statement, but in franchising aligning incentives, investment, and outcomes is key. At Junk King, we and management worked hard to ensure the franchisor invested heavily in the franchisee. From highly effective technology investments and local online marketing programs to new product initiatives, the team knew that corporate investment dollars would drive sustained franchisee growth. The subsequent franchisee success makes for more investment-minded franchisees, which benefits all.

We applaud the scores of Kings’ Club winners (annual recognition for outstanding sales volume) across the years and recognize that Junk King’s 125 franchisees will generate more than $100 million in revenue this year. The franchisees’ success is the franchisor’s success, and vice versa. It’s a terrific partnership.

We have enjoyed our partnership with Mike, Lisa, and the entire Junk King team. We wish them all the best in their next chapter with Neighborly.

The post Junk King Gets Crowned for Its Strong Consumer Value Prop and Franchise Execution appeared first on Norwest Venture Partners.