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Just a quick heads-up that we're going to take the next week off from the 2-Minute Drill to spend time with family during Thanksgiving. We'll be out in Miami the following week for Tech + Crypto + Art Basel. Give us a shout if you plan to be in town!
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Welcome to the 2-Minute Drill -- a curated selection of the week's hottest stories from the world of tech, all in 2 minutes.


As a reminder, join us on Tuesday mornings at 8am PT / 11am ET in the Crossover Club on Clubhouse where we talk through the week's stories in more detail and with a rotating panel of special guests from the worlds of pro sports, entertainment and technology. 

As always, shoot me a note to learn more or if you just want to say 👋.

-Noah  


✉️ noah@crossovervc.com
📱 650.468.9543
📸 @crossovervc 
👋 @ndl / the Crossover Club


On my whistle...
FIRST DOWN


 

PayZen Picks Up $15M Tab for "Care Now, Pay Later"
One of the hottest sectors in the startup ecosystem is fintech, and within fintech, the "buy now, pay later" vertical has been on a tear. Led by companies such as Affirm and Klarna--followed by a wave of hyper-localized competitors--the model of leveraging data and technology to assess risk and instantly offer payment plans at point of sale has exploded. (note: many refer to companies like these as "embedded finance").

But instead of using BNPL to buy a Peloton, what if that same model could be used to help people get medical care they need, but perhaps can't afford to pay for all at once?  Enter PayZen, which this week announced a $15 million Series A round of funding to scale its “care now, pay later” model to hospitals and patients across the country. This brings the two-year-old San Francisco-based company's total funding to $20 million.

We all know that medical procedures are expensive, and our healthcare system in America is a mess. And according to studies, as of last year Americans held $140 million in medical debt from nearly 18% of all Americans. PayZen's goal is to use the power of data and technology to help underwrite that risk, and offer hospitals and healthcare systems a way to easily determine if a patient is able to pay for care (whether regular treatments for chronic illness or elective care). If money is the barrier to receiving care, then using PayZen, the providers can offer patients an interest-free payment plan that enables them to receive the care they need, without having to be burdened by predatory loans or high interest rates.

This last part is key--that the payment plan features zero interest. What PayZen is solving for is providing a way for providers to earn more money by enabling patients to pay for the care they need and by reducing unpaid bills and collections fees--while for patients, it makes receiving the care they need more affordable. PayZen makes money from the providers, instead of passing that fee on to the patient.

The startup is still in the early days, and selling into healthcare systems can be notoriously challenging. But PayZen reports that it expects to have 10 major healthcare providers signed up for its platform by the end of the year.

The Money Quote: “Our thesis was if you give people a way to break down a big payment into payments without interest that they can afford—using data, underwriting and trying to maximize the payments access without overburdening the patient—more people will participate in paying their medical bills.”  -- PayZen Co-founder and CEO, Itzik Cohen

(more here)
SECOND DOWN


 

Resonate Launches Meditation Chair to Take You "From 60 to 0"
By now, the science is well-established around the many benefits of meditation. Yet mastering the practice can be incredibly difficult. If you're like me, it can be hard to slow down your brain and stay focused on the meditative practice when your mind is racing and jumping from thought to thought and distracted by the surrounding environment. 

Enter Resonate, a new Los Angeles-based startup that launched this week, which offers a physical chair-like device for the home that helps create fully-immersive meditative experiences--and that doubles as a sleek modern piece of home decor. The device retails for $3,000 and just opened up for pre-sales, for scheduled shipping in early 2022.

The Resonate chair combines traditional meditation techniques with the proven benefits of vibration, sound and light to relax and change the frequency and pattern of thoughts. The science behind the device is referred to as "neural entrainment," which at a high level refers to the synchronization of neural responses to an external (or perceptual) rhythm. By leveraging external stimuli like vibrations, sound, and light pulses, it can help create this synchronicity of brainwaves, helping make traditional meditation techniques easier, accessible, and more effective.

Meditation apps like Calm and Headspace thrived during the pandemic as more people looked for technology-driven ways to manage stress and anxiety. But these apps only provide auditory sensations and lack a feedback loop. With Resonate, the physical device can essentially give a nudge to the brain to tell it to go in the desired direction.

For now the $3,000 price tag limits the addressable market somewhat to those hardcore believers with disposable income, but the hope for the company is that with scale, the prices will come down over time. There may also be the opportunity for these devices to be purchased by those with shared spaces like offices, spas, or health clubs, so that many people can share the benefits of deep meditation.  

Resonate launches officially at Design Week in Miami if you plan to be in town and want to give it a test drive.

(more here)
THIRD DOWN


 

Racket Nets $3M in Pre-Seed Funding for Bite-Sized Audio
This week, Los Angeles-based bite-sized audio platform Racket served up a $3 million pre-seed round of funding as it looks to step-up its game in the social audio sector. This is the first reported round of funding for the year-old company.

Social audio is one of hottest verticals within the booming creator economy, sparked by Clubhouse's astronomical growth, followed shortly thereafter by every other social platform's spin on the audio medium. On Clubhouse you can hear countless hours of audio-based content ranging from lectures and meditations, to interviews, comedy, AMAs sports talk shows, and even the 2-Minute Drill weekly show :). Racket's take on the opportunity is to even further simplify the creation and sharing of audio content, making it as easy to say something online as it is to tweet or text

The app is currently in invite-only beta, and we had a chance to check it out earlier this summer--noting of course that with early-stage apps like this, innovation and new features change and are updated almost daily! With Racket, users can go on stage, invite friends to join (or go solo), and get started recording whatever it is they want to say. Clips are capped at 1:39 (99 seconds), and are instantly ready to be shared with the community where they are consumed in a TikTok like feed.

Overall, our take is that audio is a durable medium, and that like video and photos, there will be multiple platforms and formats for audio creation and consumption. YouTube provides a very different video-based experience than TikTok, and the team behind Racket is hoping that the same holds true for audio. It should be noted though that Clubhouse recently launched a Clips feature for extracting and sharing bite-sized highlights of longer audio conversations, and Facebook has been testing its own Soundbites feature.

Racket is still in the early stages, and it's far too early to tell if the company will be successful or not. We look forward to seeing how the entire social audio ecosystem evolves, but we fundamentally believe that audio is a durable medium and that as has been proven with other mediums (Instagram for photos, TikTok for short-form video, etc), a pure play player is more likely to win than an incumbent that layers on audio as a feature.

(more here)

Disclaimer: Crossover is an investor in Clubhouse.
FOURTH DOWN


 

Party Round Raises a Party Round For Startup Funding
This week Los Angeles-based crowdfunding platform Party Round drank its own Kool-Aid and raised a $7 million "party round" of funding from a mix of venture investors, angels, and others as it looks to build better fundraising tools for founders. This is the first reported round of funding for the young startup.

With more startups being launched than ever before, and with record-setting volumes of capital pouring into the venture ecosystem, Party Round is looking to make the process of raising capital less onerous for founders who want to spend less time fundraising and more time building. As any founder or investor can tell you, the process of raising capital remains expensive and pain-staking. Even with the advent of SAFEs to simplify early-stage rounds, the legal fees, wiring of funds, paperwork, and more can be a major headache. Through technology, Party Round wants to remove the friction for founders raising capital.

Here's how it works. Using Party Round's software, founders can create a funding round, set the terms, and then the platform helps handle creating, distributing, and collecting all the required funding documents and signatures, as well as capturing the incoming funds. By leveraging technology to automate these processeses, Party Round hopes to not only reduce fundraising costs (and time), but also open up the investor pool to a larger number of prospective investors who may only be able to write smaller checks--but due to overhead with traditional funding models, would be too costly to accept funding from.

Party Round is certainly not the only startup that has looked to innovate on the traditional startup funding model. A few notable others include Kickstarter, Angel List, and Flow. But one thing I like about Party Round in these early days is that they have invested heavily in brand and design. Using a clean and intuitive interface, it makes investing in a startup feel more like using a modern digital broker like Robinhood, than an old school investor portal. And on the branding side, doing NFT drops, and using cheeky social medial posts (ie daring people to quit their jobs and launch companies) is an innovative way to build community and attract liquidity for both sides of a marketplace in a crowded ecosystem.

It's far too early to tell what the future holds for Party Round, but if it can gain traction and the white hot startup funding market continues on its tear, then it could be well-positioned to capture more slices of the startup funding value chain.

(more here)
EXTRA POINT



Talent in Tech: SageSpot
One of the hallmarks of the pandemic era is that seemingly everyone is now a creator. Thanks to the democratizing power of technology and the foundational interactive loops ingrained in social platforms like TikTok, Instagram, Clubhouse, Substack, and others, more and more people are finding ways to monetize their talents directly from their most passionate fans. This is leading to a new generation of creators and solo-preneurs who are either moonlighting or fully making a living off of their creative talents, and the rise of a new wave of startups built to help cater to the specific needs of this booming creator economy.

The latest in a long and growing list of platforms aiming to connect creators with their communities is New York based SageSpot, which this week announced raising a $3 million seed round of funding led by Khosla Ventures--which appears to be and expansion of the $2.1 million announced back in July. The startup is still in private beta.

The startup refers to itself as a social platform that transforms world-class creators' most passionate followers into paid subscribers to form a dedicated community. Using the app, creators set up their own "spot" that followers can subscribe to where they can access content and interact directly with their favorite creators. SageSpot takes a commission on monthly subscriptions, as well as on 1-off fees charged for asking questions or setting up direct video chat with Creators.

In many ways, it feels like a mash-up of creator platforms like Cameo, Bright, OnlyFans, and others where the platforms exist to enable creators to directly interact with and monetize their audiences behind a paywall versus through ads. Much like other platforms, SageSpot enables creators to set their own rates. In addition to following specific creators, with SageSpot users can also follow topic-based communities, where users can interact with like-minded people who share their passions. In these communities, users have the ability to create their own posts, engage with other followers interested in the same field they are, and form new connections.

The company is still in the earliest stages, so it's far too early to tell whether the plan will pan out for the founders or their investors. But at a macro level, there remains plenty of demand for building platforms that more effectively connect creators with their most passionate followers, and enable them to monetize these interactions.

Athletes + Entertainers involved include: NFL legend Tom Brady, championship golfer Rory McIlroy, and Torrie Wilson from the WWE.

(more here)

Bonus Creator Economy coverage: this week, Substack announced that had eclipsed 1 million paid subscriptions across all the newsletters on its platform, with the top 10 writers on the platform collectively earning $20m+ per year.
 

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Disclaimer: The content in this newsletter is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It also does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security.



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