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This startup says its AI can better spot a healthy embryo — and improve IVF success

With every year, AI is beginning to bring more standardized levels of diagnostic accuracy in medicine. This is true of skin cancer detection, for example, and lung cancers.

Now, a startup in Israel called Embryonics says its AI can improve the odds of successfully implanting a healthy embryo during in vitro fertilization. What the company has been developing, in essence, is an algorithm to predict embryo implantation probability, one they have trained through IVF time-lapsed imaging of developing embryos.

It’s just getting started, to be clear. So far, in a pilot involving 11 women ranging in age from 20 to 40, six of those individuals are enjoying successful pregnancies, and the other five are awaiting results, says Embryonics.

Still, Embryonics is interesting for its potential to shake up a big market that’s been stuck for decades and continues to grow only because of external trends, like millennial women who are putting off having children owing to economic concerns.

Consider that the global in-vitro fertilization market is expected to grow from roughly $18.3 billion to nearly double that number in the next five years by some estimates. Yet the tens of thousands of women who undergo IVF each year have long faced costs of anywhere from $10,000 to $15,000 per cycle (at least in the U.S.), along with long-shot odds that grow worse with age.

Indeed, it’s the prospect of reducing the number of IVF rounds and their attendant expenses that drives Embryonics, which was founded three years ago by CEO Yael Gold-Zamir, an M.D. who studied general surgery at Hebrew University, yet became a researcher in an IVF laboratory owing to an abiding interest in the science behind fertility.

As it happens, she would be introduced to two individuals with complementary interests and expertise. One of them was David Silver, who had studied bioinformatics at the prestigious Technion-Israel Institute of Technology and who, before joining Embryonics last year, spent three years as a machine learning engineer at Apple and three years before that as an algorithm engineer at Intel.

The second individual to whom Gold-Zamir was introduced was Alex Bronstein, a serial founder who spent years as a principal engineer with Intel and who is today the head of the Center for Intelligent Systems at Technion as well as involved with several efforts involving deep learning AI, including at Embryonics and at Sibylla AI, a nascent outfit focused on algorithmic trading in capital markets.

It’s a small outfit, but the three, along with 13 other full-time employees to join them, appear to be making progress.

Fueled in part by $4 million in seed funding led by the Shuctermann Family Investment Office (led by the former president of Soros Capital, Sender Cohen) and the Israeli Innovation Authority, Embryonics says it’s about to receive regulatory approval in Europe that will enable it to sell its software — which the team says can recognize patterns and interpret image in small cell clusters with greater accuracy than a human —  to fertility clinics across the continent.

Using a database with millions of (anonymized) patient records from different centers around the world that representing all races and geographies and ages, says Gold-Zamir, the company is already eyeing next steps, too.

Most notably, beyond analyzing which of several embryos is most likely to thrive, Embryonics wants to work with fertility clinics on improving what’s called hormonal stimulation, so that their patients produce as many mature eggs as possible.

As Bronstein explains it, every woman who goes through IVF or fertility preservation goes through an hormonal stimulation process — which involves getting injected with hormones from 8 to 14 days — to induce their ovaries to produce numerous eggs. But right now, there are just three general protocols and  a “lot of trial and error in trying to establish the right one,” he says.

Though deep learning, Embryonics thinks it can begin to understand not just which hormones each individual should be taking but the different times they should be taken.

In addition to embryo selection, Embryonics has developed a non-invasive genetic test based on analysis of visual information, together with clinical data, that in some cases can detect major chromosomal aberrations like down syndrome, says Gold-Zamir.

And there’s more in the works if all goes as planned. “Embryonics’s goal is to provide a holistic solution, covering all aspects of the process,” says Gold-Zamir, who volunteers that she is raising four children of her own, along with running the company.

It’s too soon to say whether the nascent outfit will succeed, naturally. But it certainly seems to be at the forefront of a technology that is fast changing after more than 40 years wherein many IVF clinics worldwide have simply assessed embryo health by looking at days-old embryos on a petri dish under a microscope to assess their cell multiplication and shape.

In the spring of 2019, for instance, investigators from Weill Cornell Medicine in New York City published own their conclusion  that AI can evaluate embryo morphology more accurately than the human eye after using 12,000 photos of human embryos taken precisely 110 hours after fertilization to train an algorithm to discriminate between poor and good embryo quality.

The investigators said that each embryo was first assigned a grade by embryologists that considered various aspects of the embryo’s appearance. The investigators then performed a statistical analysis to correlate the embryo grade with the probability of a successful pregnancy outcome. Embryos were considered good quality if the chances were greater than 58 percent and poor quality if the chances were below 35%.

After training and validation, the algorithm was able to classify the quality of a new set of images with 97% accuracy.

Photo Credit: Tammy Bar-Shay

Startups at CES showed how tech can help elderly people and their caregivers

The COVID-19 pandemic shined a harsh spotlight on the challenges many elderly people face. Older adults are among the highest-risk groups for developing cases that need hospitalization and nursing homes were especially vulnerable to outbreaks. While dealing with COVID-19, the elderly have also faced many other problems, including the difficulty of accessing medical care for chronic conditions during lockdowns and isolation.

Many of these issues won’t go away after the pandemic. According to the United Nations, the global population of people 65 and over is growing faster than any other age group. At the same time, there is a critical shortage of caregivers, especially for elderly people who want to continue living at home instead of moving into nursing homes.

Tech can help in many ways: by helping caregivers (and reducing burnout), allowing seniors to perform health monitoring at home and creating tools to combat isolation. During CES, there were several “age-tech” presentations. One of the most notable was AARP Innovation Lab, the non-profit’s startup accelerator program. It presented nine companies at the virtual show.

Zibrio's smart scale for assessing postural stability, or balance

Zibrio’s smart scale for assessing postural stability, or balance

One common theme among AARP’s group was tech that helps elderly people “age in place,” or stay in their homes or communities instead of moving into a nursing home. For example, Wheel Pad designs accessible home and work spaces that can be installed into existing structures and sites. Mighty Health is an app that pairs users with health coaches, certified trainers and personalized nutrition plans, while Zibrio, a scale that assesses users’ balance to predict if they are at risk for a fall, can also be incorporated into at-home routines.

Other startups from AARP Innovation Lab focus on helping caregivers, too. For example, FallCall Solutions’ creates Apple Watch apps that send alerts if a fall is detected and help family members check on users. Another app, called Ianacare, helps family members coordinate caregiving tasks and ask for support. End-of-life planning is one of the most emotionally difficult processes for families, and Cake, an “end-of-life platform” helps by providing tools for estate and health care planning, as well as resources to help relatives cope with caregiving issues and grief.

Other startups center on medical care. For people with chronic conditions, Folia Health helps monitor the progress of treatments. On the clinical side, Embleema’s software allows clinical investigators to share data and design studies, making pharmaceutical research more efficient.

Other noteworthy age-tech startups at CES included Nobi, a smart lamp that automatically turns on when users stand up and sends alerts to family members if they fall. Nobi can also be used in residences and nursing homes.

Caregiver Smart Solution's app for caregivers to coordinate tasks

Caregiver Smart Solution’s app for caregivers to coordinate tasks

Caregiver Smart Solutions is a multi-faceted platform that makes it easier for seniors to stay at home with a machine learning-based app for early detection of potential health issues, fall sensors, monitors and emergency buttons. For people with incontinence, DFree, a wearable device, can reduce stress by monitoring how full their bladder is with an ultrasound sensor and keeping track of their average time between bathroom visits. It’s available for both consumers and health care facilities.

A diagram of companion robot Cutii's features

A diagram of companion robot Cutii’s features

For elderly people living in nursing homes, Rendever is a virtual reality platform that wants to help reduce isolation. It can be used with reminiscence therapy, which guides individuals with dementia through experiences that remind them of their pasts, and to allow virtual travel to landmarks. Cutii, a companion robot, also seeks to reduce loneliness. While companion robots have been a mainstay of CES for years, Cutii sets itself apart with entertainment like music, games and live events. It also has video call and night patrol features.

After a record year for Israeli startups, 16 investors tell us what’s next

Israel’s startup ecosystem raised record amounts of funding and produced 19 IPOs in 2020, despite the pandemic. Now tech companies across industries are poised for an even better year, according to more than a dozen investors we talked to in the country.

Mainstay sectors like cybersecurity continue to matter, they said, but are maturing (more about that here). Some people are more excited by emerging areas like artificial intelligence, which has been a focus of the country’s military for years, and like cybersecurity is now producing many fresh teams of founders. Other investors felt that a broader range of industries, like fintech and biotech, would eventually produce the biggest companies in the country.

Overall, local investors cited the country’s focus on global markets from day one, general support from the Israeli government and deep relationships with Silicon Valley and other global tech centers as additional factors that are powering it forward today.

Here are the investors in their own words, for any TechCrunch reader who is interested in hiring, investing or founding a company in the country. Oh, and one more thing. We just launched Extra Crunch in Israel. Subscribe to access all of our investor surveys, company profiles and other inside tech coverage for startups everywhere. Save 25% off a one- or two-year Extra Crunch membership by entering this discount code: THANKYOUISRAEL

The investors:


Boaz Dinte, Qumra Capital

What trends are you most excited about investing in, generally?
At Qumra, we get excited about companies that disrupt traditional industries while doing good and improving quality of life. Our portfolio includes some great examples such as Fiverr that has disrupted the labor market by unlocking the global talent pool, or Talkspace, which is providing access to therapy to all.

What’s your latest, most exciting investment?
Our latest investment is At-bay, the insurance company for the digital age. At-bay offers an end-to-end solution with comprehensive risk assessment, a tailored cyber insurance policy, and active, risk-management service.

Traditional insurers don’t have the know-how to properly and continually assess risk and approach digital risk the same way they approach physical products, through a statistical model that tries to predict the future based on past events. This a great example of company that is disrupting a traditional market.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
As a growth fund, we are sector agnostic and diversify our investments across multiple industries. Would be happy to add proptech and agritech startups to our portfolio.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We stay clear of nonregulated industries and do not invest in cryptocurrency-related companies, gambling, etc.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are focused on Israeli and Israeli-related companies. As growth companies they may have moved to NY or CA with their headquarters and maintained their R&D in Israel.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
A great amount of talent is cultivated in the military, which has spawned innovative cyber, AI and machine-learning companies. Also, significant experience and know-how have been accumulated here in big data analytics. SaaS models and cloud technologies have eliminated some of the barriers for Israeli companies and enable companies to quickly set up and set up a proof of concept.

A few highlights in our portfolio include AppsFlyer, JoyTunes, Riskified, Talkspace and Guardicore.

Data-driven AppsFlyer, spearheaded by Oren Kaniel, is an exciting mobile-attribution company that is rapidly growing ($200 million+ ARR in 2020) yet maintains a unique DNA. JoyTunes, led by Yuval Kaminka has developed a music-learning platform that has skyrocketed in 2020. The platform has been widely adopted doing so much good for so many people in a short amount of time. Guardicore is disrupting the traditional firewall market by providing fine-grained segmentation for greater attack resistance. Led by CEO Pavel Gurevich the company is seeing excellent traction. Riskified makes e-ommerce easier and safer and enables a thriving e-commerce environment. Founder duo Eido Gal and Assaf Feldman are a powerhouse of vision and execution capabilities. Talkspace has not only created the leading online therapy business, but is actually improving the quality of life of hundreds of thousands of Americans, which are gaining access to therapy for the first time. Founding husband and wife Oren and Roni Frank are the ultimate power couple — creating an incredible business while creating some real impact.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Tech investors must make sure that Israel is part of their portfolio. Same as VC funds are deeply acquainted with Silicon Valley, tech investors cannot ignore this hub of innovation that has produced global market leading companies and serial entrepreneurs

What are the opportunities startups may be able to tap into during these unprecedented times?
Products and services that require anything requiring on-site visits and integration as well as a long sales cycle involving face-to-face meetings and customer education are negatively impacted during this time. The upside is that companies that will develop a remote and simplified approach can reap gains from this time. Such an example is Augury from our portfolio that has developed an end-to-end solution to provide manufacturers with early, actionable and comprehensive insights into machine health and performance. This has proved to be of crucial value in the supply chain during the pandemic.

How has COVID-19 impacted your investment strategy?
Earlier in the month we have closed our third fund, Qumra III, at $260 million. This was done in a short time in a period when traveling and face-to-face meetings were impossible. Commitments to this fund, which is larger than its predecessor, included increased investments form existing LPs as well as new LPs from new geographies. This is a vote of confidence in the Israeli growth market in general and in Qumra in particular and has been a great achievement and source of hope going forward.

Rafi Carmeli, Viola Growth

What trends are you most excited about investing in, generally?
Platforms that are transforming how people and businesses operate, go about their business or leverage their core assets, using superior products, data and AI.

What’s your latest, most exciting investment?
Zoomin Software.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Transformation of the CFO and treasury suite of tools.

What are you looking for in your next investment, in general?
A+ team, superior product demonstrated with business/market traction and a sizable market opportunity.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Any area that needs to compete both with incumbents and also a set of already successful “new age” companies that made the first step of meaningful disruption.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Plenty of interesting opportunities but like many places, competitive around the best of the best.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Definitely see changes in evolution of young startups given the behavioral changes caused by COVID.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Any area that is exposed to mass physical engagement (pockets in travel, food, sports, etc.) are at risk. Remote engagement and productivity have potential to disrupt more industries, such as corporate events/virtual events.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Founders are generally resilient and based on their view on the company’s position post-COVID (winner/at risk) and the capital resources available, should decide on appropriate level of caution/aggressiveness.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes in many areas. In general software has proven to be a winner and specifically SaaS as a business model has proven its resilience.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The speed and decisiveness at which humanity acted to adjust to the effects and aftermath of the pandemic, and importantly to proactively get us all out of the health and economic crisis as quickly as possible (e.g., the speed of creating vaccines).

Any other thoughts you want to share with TechCrunch readers?
If something won’t matter in five years, don’t waste more than five minutes worrying about it now — easier said than done!

Yonatan Mandelbaum, TLV Partners

What trends are you most excited about investing in, generally?
Fintech (specifically embedded finance or financial SaaS), synthetic bio. This is in addition to traditional focus areas that we remain bullish on — cloud infrastructure, ML infra and cyber.

What’s your latest, most exciting investment?
Unit.co, meshpayments.com.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
There simply isn’t enough innovation in fintech from the Israeli ecosystem. Our locale has managed to produce three of the most prolific insurtech companies (Next, Lemonade and Hippo), has a strong history of successful fintech companies (Payoneer, Forter, Riskified) and even has a few very promising earlier-stage ventures (Unit, Melio). That said, only about 10% of our overall deal flow are fintech companies. Areas such as vertical banking, embedded finance, compliance as a service and consumer finance consistently get overlooked by young Israeli founders.

What are you looking for in your next investment, in general?
The cliche VC answer: strong team, big market. This remains constant during all times.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
(1) Cybersecurity — with one caveat. Israel will always be at the forefront of cyber innovation, and thus there will always be an opportunity for fledgling cyber companies in Israel. That said, it is 100% oversaturated, and there are too many examples of strong technical founders creating “yet another” SaaS security startup. (2) Remote work collaboration — clearly an issue that needs solving, but we have unsurprisingly seen an absurd amount of companies in the space. They are largely reactionary companies, and the companies that will prove to be the winners in this market have already been in the market for quite some time (Zoom, Alack, Miro, etc.).

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Fintech and bio are very well-positioned to thrive in Israel. In 10 years I wouldn’t be surprised if Israel is more well-known for those two sectors than it is for its cyber companies. Some companies to keep an eye on: Next Insurance, Unit, Mesh Payments, Aidoc, Deepcure, Immunai.

How should investors in other cities think about the overall investment climate and opportunities in your city?
I’m not saying anything new, but Israel is known as the startup nation for a reason. There is an incredible, thriving entrepreneurship culture that breeds fascinating companies weekly. Interestingly, valuation trends seem to trail the U.S. by about 12-18 months. So for later-stage VCs around the globe, Israel can represent an interesting opportunity to do deals of the same quality that they are doing in their locale, but for a more reasonable price.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not particularly. Israel a small country, and even if there may be a residential exodus from Tel Aviv, there won’t be a commercial one.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and proptech are more exposed due to COVID-19.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID hasn’t impacted our investment strategy much. We have remained steady in our search for interesting early-stage software opportunities and our commitment to invest substantial amounts even at the seed round. The biggest worries of the portfolio founders surround slower enterprise sales cycles due to WFH and smaller budgets from potential customers. Our early advice to founders was to ensure runway for 18 months in order to weather the storm. Recently however, after witnessing the incredibly founder-friendly fundraising landscape, our advice has been to put the pedal to the metal, reach certain benchmarks and raise capital.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
No, there still hasn’t been enough time. That said, I will say that the initial enthusiasm of WFH has faded. The vast majority of our companies are clamoring to be back in the office.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
My grandparents both recently passed away from COVID-19. Despite the tragic loss that it was for my family, there was one moment that truly gave me hope. I had the opportunity to visit my grandmother in the COVID ward at a local hospital before she passed (in full protective gear of course). Before entering the ward, while the nurses were going over the protocols with me and four other individuals who were there to visit their sick family members, I was surprised to realize that the five of us in the room were an eclectic bunch. Jewish, Muslim, religious and not, young and old. In that moment, we all gave each other strength, wished each other well and it gave me hope that we can truly become a unified country in the near future. The next exponential growth that occurs in the Israeli ecosystem will be when there is an influx of minorities (Arabs, ultra-Orthodox) into the workforce.

Natalie Refuah, Viola Growth

What trends are you most excited about investing in, generally?
DevOps, martech, digital health.

What’s your latest, most exciting investment?
RapidAPI.

What are you looking for in your next investment, in general?
Exciting team, hypergrowth, disruptiveness.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cyber, automotive.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Close to 100%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
DevOps, cyber, enterprise software.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very positively.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
There will be changes, that’s for sure.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?

E-commerce tech-related companies will thrive.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We lowered our check size per company. My advice — if you are “with COVID trend” push hard, if you are “against COVID trend” — preserve cash.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
More time with my kids, but in general I miss hugging people when i meet them, and I prefer meeting people face to face.

Any other thoughts you want to share with TechCrunch readers?
Let the vaccine go!

Daniel Cohen, Viola Ventures

What trends are you most excited about investing in, generally?
Games, vertical AI and AI agencies, digital health.

What’s your latest, most exciting investment?
Hyperguest, creating direct connectivity between hotels and OTAs. It’s the perfect next-gen travel infrastructure for the world post-pandemic.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
The biggest trend in the post-COVID world will be the new work environment. We would love to see more startups that will create corporate solutions that are focused on the future of work. That can be at the workplace or at the home.

What are you looking for in your next investment, in general?
Unique, innovative go-to-market. Leveraging technology to reach consumers in a more innovative way. It’s basically innovation in growth hacking, not only in great products.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cybersecurity — the market is real and important, but there are too many startups with small niche solutions.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The most exciting trends locally are everything AI with focus on B2B apps. Same goes with digital health and consumer-focused health applications.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Israel is the #1 region globally in unicorn production, probably the hottest startup region right now.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

The biggest change has been on company culture, which is hard to maintain in a distributed work-from-home environment. Companies need to be innovative and creative in maintaining/building culture, which was so much easier pre-COVID.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic? What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

The announcements around the vaccines make it clear that the end of the pandemic is near. I think 2021 will be amazing.

Ben Wiener, Jumpspeed Ventures

What trends are you most excited about investing in, generally?
Jumpspeed invests exclusively in pre-seed and seed-stage startups from the Jerusalem startup ecosystem.

What’s your latest, most exciting investment?
MDGo.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Not really, we are sector agnostic/bottom-up rather than thesis driven.

What are you looking for in your next investment, in general?
10x better, paradigm-shift solution to a large, near-term, acute business problem, produced and led by a complementary founding team (hacker+hustler+designer).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cybersecurity, crypto, telehealth.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
EXCLUSIVELY, see above.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Jerusalem is well-positioned in certain clusters such as computer vision, general enterprise SaaS, AI/ML and healthtech.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Our city’s startup ecosystem is underexploited and generates a few fantastic under-the-radar opportunities per year.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Little direct impact on strategy because by definition I am investing in things that will go to market and ripen over years.

Founders’ biggest worries are employee well-being, after that access to overseas customers and markets.

Advice to founders: Stay calm and healthy, play the long game, take care of yourself, your family and your employees, don’t panic or cut staff reactively.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes but not that I can attribute directly to the pandemic.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
No specific moment, just the general resilience and ability to adapt to the radically changing new realities that our portfolio founders have exhibited.

Any other thoughts you want to share with TechCrunch readers?
“Entrepreneurship in advanced technology, is not merely a matter of decision-making; it is a matter of imposing cognitive order on situations that are repeatedly ill-defined.” — W. Brian Arthur, “The Nature of Technology”

No situation has been this ill-defined in the past century. Keep calm and carry on 🙂

Inbal Perlman, TAU Ventures

What trends are you most excited about investing in, generally?
At TAU, we are interested in a variety of sectors and evaluate each potential investment independently. In regards to trends, we look at trends with a grain of salt understanding that trends might come and go. When we see a particular trend, we try to understand if there is a need behind the trend and see beyond the initial hype. We want to assure that a startup is meeting a real need in the market. We are particularly interested in technologies that do not require too much time and capital to get to market.

What’s your latest, most exciting investment?
We invested in a company called Xtend, which is creating human-machine telepresence allowing us to “step into” a machine, anywhere in the world, breaking the limits of physical reality. In particular, it develops solutions that allow people to interact with drones and other unmanned machine technologies. The company’s technology enables humans to extend themselves into the action by allowing them to virtually sit inside the drone for various tactical missions. What is exciting about Xtend is how the technology can be implemented in a variety of ways from defense and homeland security to reimagining entertainment, gaming and cinematography.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We like to see startups that are disrupting traditional industries by solving basic challenges and needs with innovative means. There are some industries that haven’t changed in many years. And if you create a technology that can be simply integrated into existing markets, it has the potential to gain significant traction and drastically change an industry. So we would love to see more startups going “back to the basics” asking questions about commonly felt pain points and innovating to solve those pains.

What are you looking for in your next investment, in general?
We want to get the feeling from the entrepreneur that they are professional, ready for the entrepreneurial journey, have the right mindset and skill set and will conquer the world. We understand that with early-stage startups, the product or service will likely change and therefore pay significant attention to the entrepreneurs themselves as an early indicator of future success.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Technology trends that often come and go can create an oversaturated market for startups. For example, previously there was hype around drones. Now, only the strongest companies in the drone industry have stuck around. Today, there are many startups responding to needs exacerbated by the COVID-19 pandemic such as remote learning and remote work. It is important to filter out whether these are solutions that will be around for a while and survive a post-COVID world or are temporary.

We are more cautious about particular industries. In edtech, those who have successfully done exits, have done so at low amounts ($200 million-$300 million). For us, we are seeking larger exits. Blockchain is a difficult sector because it lacks a clear regulatory environment, subsequently raising many questions. Similarly, the cannabis industry also does not have a fixed regulatory environment across countries. Any small regulation change can highly impact the company. These are the sectors and areas that we are more cautious around.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We invest in startups that are exclusively Israeli startups but are targeted for a global market. At TAU Ventures, we have 1,000 sq. meter coworking office space where majority of our portfolio companies and accelerator program companies sit on a daily basis. On a daily basis we are engaging with our startups through kitchen chats and hallway encounters. Through our coworking space, we are directly investing in our local ecosystem both supporting entrepreneurs and identifying rising entrepreneurs.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
In Israel, many Israeli entrepreneurs bring a high level of technical capabilities that they learn in the army such as in cyber and AI. After acquiring this knowledge and ability, they are well-prepared and able to transfer it to the commercial area. This is why we see many successful startups coming out of Israel particularly in these fields.
For example, founders of our portfolio company, SWIMM all come from leading elite tech training units in the army (Aram, Talpiot) and before founding SWIMM, established ITC (Israel Tech Challenge, a nonprofit high-tech academy that offers in-demand tech training programs in English in Tel Aviv, inspired by the IDF’s 8200 unit).
Furthermore, Tel Aviv University (TAU), our affiliated university, is a leading research institute and academic leader in AI, engineering and other sciences and is producing entrepreneurs with high levels of knowledge. 50% of entrepreneurs in Israel have studied at TAU. And TAU ranked eighth worldwide as a top university producing VC-backed entrepreneurs, and the first outside of the US. So we are very excited by the added advantage we have in being affiliated closely with the university and the talent which it is producing.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The significant advantage of Israel is its small size. Because there is little to no local market, startups automatically think globally in their marketing and growth strategies. To best understand Israel and Israelis, it’s important to understand the influence of the military and the reality of thriving in a complex political environment in the Middle East. Military service is compulsory for all Israelis at the age of 18. The army plays an important role in the socialization, education, skills development, social network and fabric of Israeli society. Many personal and professional networks are the result of army service. As Israelis, we live in an environment where we need to constantly be innovative and one step ahead to survive. This innovative mindset has been instilled in our state of mind and cultural DNA.
We are proud that In Israel we have academics at the highest level in the world across a variety of fields. Multinationals from all over the world have local R&D centers or innovation hubs in Israel to source from the local talent pool. This presence of multinationals creates mutual exposure for both startups and corporates alike.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At TAU Ventures, the majority of our portfolio and accelerator companies sit next to us at our 1,000 sq. meter coworking space. At our offices, we love seeing our founders and their employees on a regular basis. This is how we have successfully created a strong familial culture at our VC. Throughout COVID, companies have continued to come in person to the office. This has reinforced to us that there is no exchange for face-to-face engagement. As early-stage investors, we understand that at this stage it is all about the people. At the end of the day, people want to be around people and you can not replace the experience of sharing a cup of coffee and shaking someone’s hand.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
COVID affected companies in different ways. For some, it boosted business and for others it led them to shift their strategy and approach. Our companies who had clients in the travel industry or airports were obviously affected. In this situation, the company looked at their technology and reconsidered where and how their technology could be relevant to other consumers and industries. This particular company saw an opportunity to shift to logistics and supply chain clients. COVID is presenting opportunities for companies to reevaluate their target market and discover new applications of their technology for different purposes.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
As a result of COVID, we have come to understand that things simply are taking more time, such as processes of raising funds or achieving the next milestone. We are patient and empathetic to the experiences of our startups.

The startups’ most significant worry is that they will not succeed to raise enough funds before reaching their next milestone. And more so, if they are unable to prove their achievement milestones in time, then they might be forced to close business. As a result, our startups are raising more funds during this time to assure a longer runway. Our startups are also keenly aware of how periods of crisis might call on them to pivot and adapt to the current circumstances. Startups are making decisions around adjusting budgets, determining whether customers are still relevant, anticipating whether the circumstances are temporary or will renormalize and ultimately whether there is a completely new path to pivot to.
In light of the circumstances, we are advising our portfolio startups to raise more funds in next rounds to have runway for at least 1.5 years and not to be afraid of making drastic changes (i.e., pivots, changing budget, raising more funds).

As a fund, we are assuring our entrepreneurs that if they choose to change paths, it is okay. Working from a coworking space alongside many of our founders enables us to stay updated on the startups, foster a strong internal ecosystem and network, and provide ongoing psychological safety for our entrepreneurs, which is ever so needed during these unprecedented times for startups.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Two of our portfolio companies have experienced impressive growth and are thriving in 2020.
1. Gaviti is a SaaS company that specializes in receivable collections acceleration. Its system maps out the collection process to spot inefficiencies and optimize clients’ procedures. Specifically during COVID, many companies had increased economic pain points related to generating cash flow on a timely, efficient basis. Gaviti’s solution helps companies manage their collection payments. As a result of of the economic crisis this year, Gaviti saw fast growth in clients and have thrived during 2020.
2. Medorion understands that health companies and hospitals want us to get regular health checkouts. Using AI and behavioral science, Medorion is driving people to take action for their own health by increasing engagement and communication between insurance companies and patients. During COVID, they are combating the coronavirus pandemic by applying their technology to create highly personalized engagement and communication plans targeted at those individuals who are at highest risk of COVID-19.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
In recent months, it is inspiring to see our entrepreneurs continue fighting despite the uncertain economic and global circumstances. Many of our companies are continuing to recruit and hire. Our founders are resilient and are finding creative means to succeed. It is also a blessing to have a large coworking space hosting the offices of 10 startups and to see employees continue to come in to the office day in and day out working with their teams.

Any other thoughts you want to share with TechCrunch readers?
TAU Ventures is a venture capital fund, affiliated with Tel Aviv University, for investing in early-stage, cutting-edge technologies based in Israel. TAU Ventures is the first and only university-affiliated VC in Israel.

The fund has a unique, triangle model creating ecosystem connections between industry, academy and entrepreneurs. We connect to available resources at Tel Aviv University, foster strong partnerships in the high-tech industry and support entrepreneurs as they work side by side in the coworking office space of the VC located on the university campus.

TAU Ventures also runs incubation programs in a variety of tech fields and offers a vibrant hub for entrepreneurs with concrete opportunities for design partnerships with international leading companies: AlphaC program (in partnership with NEC, Checkpoint, Innogy, Team8 and Cybereason) and The Xcelerator (an acceleration program with the Israeli Security Agency).
In 2018, IVC awarded TAU Ventures an award for one of the most active VCs in Israel. And in 2019, Geektime ranked TAU Ventures among the top five best VCs in Israel.

David (Dede) Goldschmidt, Samsung Catalyst Fund

What trends are you most excited about investing in, generally?
Digital transformation and AI.

What’s your latest, most exciting investment?
Solarisbank (Germany).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
AI-acceleration technologies seems to be overcrowded.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
AI, cyber security. Excited about our portfolio company Innoviz (LiDAR). Excited about Avigdor Willenz, serial entrepreneur, including our portfolio company Habana Labs that was acquired for $2 billion.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Highly dynamic and competitive, very global approach of entrepreneurs, risk takers, “can-do” approach.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I don’t expect that to happen because a strong ecosystem of entrepreneurs, investors and service providers would be needed, and it takes years for that to grow.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
Industries serving brick-and-mortars are likely to get weakened by accelerated transition to online.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our advice has been to be careful with cash. There is a disconnect between the strong momentum in the tech financing vis-a-vis overall economic crisis (unemployment, governments deficits, etc.). We have yet to see the full impact of COVID-19 on tech startups and better be prepared for that.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, for pure digital plays.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Frankly, I remain concerned because of the disconnect alluded to above. Vaccine momentum brings some hope, but too early to tell.

Any other thoughts you want to share with TechCrunch readers?
I am very concerned from potential crunch in early stage. While overall financing numbers are growing almost across all geographies, investments are heavily weighted toward later stage and unicorns, and much fewer new companies are being formed. This will have dramatic impact on the tech ecosystem a few years out, if it does not change in 2021.

Dror Nahumi, Norwest Venture Partners

What trends are you most excited about investing in, generally?
We are a large fund that invests in early-to-late-stage companies across a wide range of sectors with a focus on consumer, enterprise and healthcare. My focus is primarily in Israeli companies and I’m seeing many exciting startups in security, SaaS, enterprise and cloud infrastructure, robotics and semiconductors.

What’s your latest, most exciting investment?
We are naturally excited about all our latest investments. I recently invested in three seed-stage companies that are in stealth mode: an open-source cloud infrastructure company, a people analytics (HR) SaaS company and a next-generation business-intelligence platform.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I believe there is a massive opportunity for startups to develop new solutions to fuel the digitization of next-generation enterprises. We’re seeing innovation and activity in this sector, but there’s so much more to be done, especially in light of challenges and vulnerabilities that COVID-19 has exposed. The hottest areas will be in human resources, production, security, infrastructure, sales and remote work.

What are you looking for in your next investment, in general?
We look for a great team, strong intellectual property and compelling execution. The new product idea can be a replacement (i.e., replace existing products that are aging, low performance) or a new category. Gong.io is a great example of a new category we invested in early on. We created the new “revenue intelligence” category that offers businesses automated, unfiltered and real-time insights on customer interactions and deals. This helps businesses understand what’s actually being said to transform the way they go to market.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Security is currently oversaturated. There are too many companies doing similar things, which can make it difficult for newcomers to break through. Additionally, most emerging security startups are all claiming to use machine learning and AI to combat the next level of breaches. These are important areas to focus on, but it’s getting harder for these companies to differentiate themselves. That aside, we have made several great investments in security over the years and will continue to invest in great teams.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our team in Israel is 100% focused on our local market.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Numerous industries in the Israeli market are poised to thrive and are doing so currently. Examples include startups in the security, SaaS, enterprise and the cloud infrastructure space, and even consumer services. We are especially excited to continue to witness the growth and success of Gong, VAST Data, WekaIO, Cynet, Wiliot, ActiveFence, Ermetic and SundaySky while building new companies who are still in the stealth stage.

How should investors in other cities think about the overall investment climate and opportunities in your city?
At Norwest and especially among our Israel portfolio companies, we’ve been able to let our companies mature. We’ve given them the time and support they need to reach maturity. This is a very different approach than what we are seeing in other environments.

Today, growth comes before M&A and companies get valuations much quicker. In past years, it was hard to raise money but it’s not so difficult now. In Israel, inside sales and marketing analytics allow companies to sell more effectively now than in the last decade. This gives entrepreneurs flexibility, room to expand into other markets and the ability to hire top talent globally versus just within their own region.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Israel is so small that you are never really too far outside a major city. We expect our startup hub to stay intact even if individuals and businesses choose to move slightly outside of the main CBD.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The travel industry has been massively impacted in every market globally since the COVID-19 outbreak. That said, that means there is a huge opportunity to fill gaps based on business and consumer needs as we approach a post-pandemic normal.

I would say that solutions with huge potential are those centered on hybrid workforces as enterprises rethink the future of work. These have the potential to significantly benefit from the pandemic in the short and long term.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has not impacted our investment strategy. However, in recent conversations with our portfolio companies, it’s clear that brands can emerge stronger than ever with an adaptable strategy, adjusted expectations, strong marketing and B2C communications, and compassionate leadership.

Over the past several months, we’ve advised companies in our portfolio to focus on building their business while prioritizing the safety of their workforce, which could mean further extending work-from-home policies or making remote work a standard option in their hiring practices. Companies’ ability to innovate and adapt while building their business around the new normal will be better positioned to succeed in a post-COVID landscape.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
While it’s not one particular moment, there were many times this past year where our portfolio companies faced major challenges due to the pandemic and were still able to continue to expand their businesses. Every sales quarter that shows growth and success gives me hope.

Sharin Fisher, Fort Ross Ventures

What trends are you most excited about investing in, generally?
I’m mostly excited about AI/ML technologies, cybersecurity companies and the global opportunity in B2B SaaS companies in general; companies that help to optimize business processes and boost efficiency (e.g., one of our portfolio companies, Kryon, is operating in the robotic process automation space, evaluating business processes, and recommending which ones to automate in order to free up underutilized human talent). We are seeing many successful Israeli SaaS companies across the board, from marketing and collaboration tools, business intelligence products, to payment systems.

What’s your latest, most exciting investment?
My latest investment was in a B2B SaaS company that disrupts a huge market. I’m mostly excited about the team, which contains senior executives and second-time entrepreneurs with domain expertise.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

We are looking for companies that have a big market, a compelling story and a clear path to building a large business. When we invest, companies already have traction, a diverse customer base, established and repeatable sales process and metrics. So, when we dive deeper into the company’s metrics we would like to see they support the company’s assumptions and ability to scale up properly.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
WFH enablement tools (from security to communication tools).

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are a global VC with a distributed team, focused on investing in midstage companies based in the U.S. and Israel, that can become global leaders. I’m leading our investments in the Israeli companies, globally.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel is well-positioned to build and grow large companies that can become segment leaders. We are seeing many leading companies across multiple sectors such as mobility (Moovit, Mobileye), cybersecurity (Armis, Cybereason, SentinelOne), fintech (Lemonade, Payoneer, eToro), information technology (Jfrog, Snyk), etc.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The Israeli ecosystem has matured significantly over the last decade, mainly due to repeat entrepreneurs who bring knowledge and relevant experience to the table. They aspire to build meaningful companies. On top of that, there’s more available late-stage capital, allowing companies to stay private longer and become mega-acquisitions/IPO.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The COVID-19 crisis has impacted Israeli founders in terms of how and from where they work. As many Israeli startups aim to tap into the U.S. market, they usually relocate pretty early on, mainly to build relationships with potential customers. Since the pandemic has created a situation where you have to sell your product/service remotely, physical location has become less relevant. In the short term, I believe we’ll see more Israeli founders working out of Israel, especially when taking into account the advantages (e.g., lower cost of living compared to other places like NYC/San Francisco). In the long run, there’s a high probability that founders who can keep the same sales efficiency remotely will continue to work out of their home country.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
All of the segments we look at are thriving or haven’t changed significantly. I’m mostly interested in startups that are able to sell remotely and have an established inside sales team with a simple integration/deployment, because I believe they are in a better position to scale faster even in this climate.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy remains the same; we are still looking to back companies that can become global leaders and aspire to disrupt huge markets. In terms of the work with our portfolio companies, our founders have already made the needed adjustments and are now more focused on capital efficiency and expanding the runway.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Most of our portfolio adapted to the crisis quite fast and have enough runway to reach their next milestone. For some of our portfolio companies, especially those that support the digital transformation, the pandemic has created business opportunities and accelerated the adoption of their technology. As a result, we deployed additional capital to help them leverage this momentum.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Although the pandemic has created uncertainty for all of us, we have still been seeing more (+14) Israeli companies reaching unicorn status/going public during the past months.

Adi Levanon Chazan, Flint Capital

What’s your latest, most exciting investment?
Sensi.ai.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
A bit over 50% of the portfolio are Israeli startups, the remaining 50% divide between Europe and the U.S.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Fintech has been continuing to grow and will thrive over time. I’m excited about companies like Melio, Unit, Acrocharge and Rapyd.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very important to have local partners and try to expand the local network as much as possible, best would be to have a person on the ground dedicated to Israeli investments.

Chaim Meir Tessler, partner, OurCrowd

What trends are you most excited about investing in, generally?
Fintech, cloud services, quantum software, cyber.

What’s your latest, most exciting investment?
Closed at time of writing this: D-ID.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Built from the ground up remote educational platforms.

What are you looking for in your next investment, in general?
Founders I like to work with and believe in.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Micromobility, autonomous car sensors.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
60%-70% local.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Cyber, computer vision, semiconductor, quantum computing all thrive.

The banking infrastructure companies starting to emerge look fantastic.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Great market, easy to network, mostly friendly to coinvestment.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
With the world becoming flat, innovation will definitely sprout up in new areas.

How has COVID-19 impacted your investment strategy?
COVID hasn’t strongly affected our overall strategy other than a slowdown in March/April. The biggest worry is inadequate funding/runway.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Realizing that we landed in this pandemic on a moment in history that we had the tools needed to enable a large amount of the world’s population to continue working without having to be in a specific physical location.

Noam Kaiser, Intel Capital

What trends are you most excited about investing in, generally?
Cloud adoption through digital transformation to hybrid cloud, 5G, vertical AI-based SaaS.

What’s your latest, most exciting investment?
Cellwize — basically opening up RAN (4G and 5G) to any API, cloud environment compatibility.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Solution allowing application to run across data sources in multiple buckets across hybrid/multicloud environments.

What are you looking for in your next investment, in general?
Deep understanding of the area and the customer needs, a complementing trend, high revenue potential within five years.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
MLOps, too many, too quickly, Storage at large.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Safebreach — Red Team automation for cybersecurity teams, Verbit — vertical AI, transcription.

How should investors in other cities think about the overall investment climate and opportunities in your city?
It hasn’t slowed down, plenty of opportunity, you have to move fast.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I don’t see the pandemic having that effect. Hubs will remain as are.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
Anything relying on on-prem slowed down; this can be semiconductors and retail. but it’s recovering.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not really, we invest the same amount into the same amount of companies at same stages as before.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, deals are closing, financing is taking place as well as M&As.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Simply lively investment atmosphere, new up rounds and several M&A processes emerging.

Any other thoughts you want to share with TechCrunch readers?
Careful optimism, raise aggressively and cash up when possible, refresh the pipeline and get to it, corporates are back into closing deals.

Tal Slobodkin, StageOne Ventures

What trends are you most excited about investing in, generally?
Cloud computing and​ software infrastructure​/cybersecurity/DevOps/connected everything/deep compute, big data and AI/next-generation storage and data center.

What’s your latest, most exciting investment?
R-Go Robotics are pioneering an artificial perception technology that enables mobile robots to understand complex surroundings and operate autonomously just like humans.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More sophisticated cyber solutions, additional MLOps technologies, AI solutions.

What are you looking for in your next investment, in general?
Deep-tech technology solving complex enterprise challenges.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We see a lot of could monitoring services/SaaS cloud startups all competing with very similar technologies.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Israel 85%; USA 15% — always looking to expand in the U.S. market as well.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
StageOne portfolio companies: Coralogix, Silverfort, Epsagon, Avanan, Neuroblade. Other companies: OwnBackup/RunAI/Verbit/Indegy — all based in Israel.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Less relevant for Israel and more for the U.S., but yes we will probably see new founders from different geographies, which is a good thing, giving new opportunities to people that before may have not considered starting a company.

What are the opportunities startups may be able to tap into during these unprecedented times?
We do see that COVID-19 has less of an effect on the cybersecurity industry as many organizations are looking for new solutions, as the risk of cyberattacks increases due to remote working and refocusing a lot of their activity to the digital world.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our companies continue to adapt and make the necessary changes and plans for the near future. Most of the companies have continued the work-from-home policy.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Seeing our companies continue to grow and expand both in people and product. They all adapted to the situation for both the short term and long run. They have continued to raise funds and some companies have even developed additional products to assist with COVID-19-related issues.

Ayal Itzkoviz, partner, Pitango First

What trends are you most excited about investing in, generally?
Disruption in traditional markets yearning innovation, such as retail, insurtech, logistics, etc.

B2B2B: Companies no longer wish to build things they can buy. Buying key components of the product/software enables companies to focus on the innovation side. One example is Frontegg — the company provides a set of pre-built, essential SaaS product capabilities that can easily and seamlessly integrate within any new or existing SaaS application. This enables dev teams to focus on perfecting the truly differentiating and valuable features at the heart of their SaaS offering. Another viable example is Stripe and its offering in the payments market.

Cyber: 2020 taught us many lessons, one of them is that tech is just getting more exciting as digital transformation is enhanced, and the other is that the digital revolution presents cyber challenges that didn’t exist before. This results in continued opportunities for disruption in this domain.

What’s your latest, most exciting investment?
Frontegg — a startup that transforms the way SaaS is being built, so that developers don’t need to develop nondifferentiating code and features. Frontegg provides a state of the art SaaS-as-a-service platform, perfectly integrated within the company’s stack and allowing it to do what it’s best at: building their own product. Frontegg is the first pre-built suite of universal SaaS capabilities, enabling teams to focus on core features, shorten time-to-market and drive user adoption. Frontegg’s mission is to accelerate the delivery of enterprise-grade SaaS applications while providing the safest, most secure and optimal user experience.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
First: more open-source projects. They do exist, but usually operate under the radar and come out of stealth mode when they’re already mature and beyond the phase of seed and stage on which Pitango First is focused.

Quantum computing, in our view, has reached a point of no return. We’ll be happy to see entrepreneurs, scientists and business people in Israel jumping on the opportunity wagon already now, and build companies now, before the quantum market begins what will surely be an exponential growth.

Lastly are startups with a double bottom line, i.e., startups that while solving a pain point in the market they’re in and have a potential to become category leader, also address an impact category. Pitango is the first VC to integrate ESG practices into its mainstream activities. As part of this strategy, and as a first step, we are focusing on our vast portfolio of companies and work closely with them to embed

ESG into their core practices through a “migration” process.

Pitango aims to move the needle in the venture capital space through the “AND” philosophy: profit AND purpose, capital AND impact. Pitango is introducing a new paradigm of how venture capital does impact and integrates the “AND” philosophy by turning to a new opportunity set: the impact migrants. i.e., those startups that, although might not have been created under the SDG narrative, have the potential and a desire to embrace and track their impact. They will define their impact mission, integrate SDG targets within their business performance and track impact in alignment with financial targets, all without losing sight of their primary mission to deliver superior financial returns.

Furthermore, Pitango applies this AND philosophy beyond its existing portfolio and onto future deal flow review. We call it the “mainstreaming” of impact investing.

What are you looking for in your next investment, in general?
The Israeli market has evolved tremendously in recent years. While the IPO market used to be out of reach for Israeli-born companies, this is no longer the case. We are looking for the visionaries, the dent blowers, the unconventional types who are eager to solve the biggest of challenges and are aiming at building an IPO-able business rather than an M&A one.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Pitango First is focused on Israeli/Israeli-related startups. From time to time we identify an investment opportunity in areas we have defined as strategic, in which the Israeli market isn’t mature enough and for which we believe we can add significant value and then invest in non-Israeli companies.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel is a super strong innovation hub. One of the major evolution trends of recent years is that the traditional glass ceiling that Israeli startups used to tackle has been shattered. Global players realize that now they can get the same upside like SV-based companies, in much more reasonable terms, and sometimes, less competition.
Somewhat counterintuitively, we see the investment climate in these times of COVID-19 being extremely vibrant and competitive. Strong teams are raising significant rounds at record high valuations, which add up to the current belief that COVID-19 didn’t slow, but accelerated the digital transformation.

What are the opportunities startups may be able to tap into during these unprecedented times?
For many seed early-stage startups that have secured funding, COVID-19 didn’t set setbacks in their plans, as they are further from the market from more mature companies. However, such companies, when backed by strong investors, while they may experience decrease in their revenues, are using this period to gain strength by acquiring companies within their ecosystem and position themselves better toward the out-of-pandemic curve that will eventually be here in a few short quarters.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The pattern of investing for the long run during the pandemic. Looking far into the horizon, as veterans of previous crises we were able to share our experience and insights and help them better deal with the crisis. Also, this question can’t be answered without mentioning the COVID-19 vaccines, which set a magnificent example to the extent humanity can benefit when tech, medical companies and governments join hands and engage in a group effort.

Ittai Harel, Pitango HealthTech

What trends are you most excited about investing in, generally?
The consumerization of healthcare.

What’s your latest, most exciting investment?
HomeThrive — a tech-enabled healthcare services company tackling the aging-in-home challenge and helping families help their loved ones age happily.

What are you looking for in your next investment, in general?
An all-star team building a category-defining or category-leading company with demonstrable clinical AND financial outcomes.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Narrow wearables that do not integrate into a clinical or life workflow.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Pitango HealthTech is focused on Israeli/Israeli-related startups. From time to time we identify an investment opportunity in areas we have defined as strategic, in which the Israeli market isn’t mature enough and for which we believe we can add significant value, and then invest in non-Israeli companies.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel has many thriving healthcare sectors — from RPM and computer vision in digital health to cardiovascular in med devices to drug research in biotech and pharma. We are excited about our portfolio company Variantyx (a provider of whole genome sequencing and analytics unique platform solution) and Alike (a patient-facing platform to allow individuals to access and analyze their medical data and to connect to others similar to them). We are also excited to be part of this ecosystem and to lead thought leadership in it.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The healthcare innovation ecosystem in Israel is thriving. There are incredible entrepreneurs and opportunities with global potential and reach that global investors should be aware of.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
To some extent we are witness more disbursement in Israel, but there is nonetheless a strong draw to co-locating in hubs and we expect to see Tel-Aviv and the central area in Israel to continue dominating in terms of attractiveness to strong teams.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?

Hospitals have seen a drastic decline in elective procedures and an overall disruption to their operations and budgets. Startups that are able to introduce new technologies to make this shift efficient and painless stand to win from the current trend.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
For the healthcare industry, COVID-19 has brought challenges — but also opportunities. We believe overall that our companies (and the industry overall) stand to gain from the shift as stakeholders are quicker to adopt changes that before took much longer. We advise our — and all — portfolio companies to prepare for the days after COVID and think through what changes in their specific segment will be long-lasting and are “here to stay.”

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
When the first individual in the U.K. — a 90-year-old woman — received the vaccine. A turning point hopefully for the entire world.

Extra Crunch roundup: Antitrust jitters, SPAC odyssey, white-hot IPOs, more

Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled “A theory about the current IPO market”, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: Thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

I’m taking the credit/blame for this headline https://t.co/2KYLsTxeHq

— Walter Thompson (@YourProtagonist) January 12, 2021

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: This week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: Many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Image Credits: Getty Images/Andriy Onufriyenko

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

Image Credits: monsitj/Getty Images

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

Image Credits: Ana Maria Serrano/Getty Images

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Image Credits: George Frey/Bloomberg/Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Image Credits: MirageC/Getty Images

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these nontraditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window)/Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

Yo-Kai Express introduces Takumi, a smart home cooking appliance

Yo-Kai Express is known for autonomous restaurant technology for venues like office campuses, malls and hotels. As people continue staying home because of the COVID-19 pandemic, the company is introducing a smart home cooking appliance with multiple functions. Called Takumi, it includes a coffee maker, high induction cooktop and a steamer for sanitizing utensils and baby bottles. Takumi is connected by RFID to an app with preprogrammed recipes, which also sends alert when its water container is running low.

The company is currently presenting Takumi at CES’ Taiwan Tech Arena.

Yo-Kai Express' smart home cooking appliance Takumi

Yo-Kai Express’ smart home cooking appliance Takumi

If you live in the Bay Area, you might have seen Yo-Kai Express’s Octo-Chef, a vending machine that serves hot noodle dishes (ramen, udon and pho), in venues like the San Francisco International Airport, the Metreon mall in San Francisco and corporate campuses. But the company is adapting as people stay home. In April, it launched a home meal kit delivery service that is now available in all states.

Created for people who want a home-cooked meal but are short on time (and space), the Takumi’s pre-programmed recipes have cooking times of just two to eight minutes. Yo-Kai Express is known for noodle dishes, but the Takumi’s menu will also include rice bowls, dim sum, dumplings and pasta.

Oxbotica raises $47M to deploy its autonomous vehicle software in industrial applications

While the world continues to await the arrival of safe, reliable and cost-effective self-driving cars, one of the pioneers in the world of autonomous vehicle software has raised some substantial funding to double down on what it sees as a more immediate opportunity: providing technology to industrial companies to build off-road applications.

Oxbotica, the Oxford, England startup that builds what it calls “universal autonomy” — flexible technology that it says can power the navigation, perception, user interfaces, fleet management and other features needed to run self-driving vehicles in multiple environments, regardless of the hardware being used — has picked up $47 million in a Series B round of funding from an interesting mix of strategic and financial investors.

Led by bp ventures, the investing arm of oil and gas giant bp, the round also includes BGF, safety equipment maker Halma, pension fund HostPlus, IP Group, Tencent, Venture Science and funds advised by Doxa Partners.

Oxbotica said it plans to use the capital to fuel a raft of upcoming deployments — several that will be coming online this year, according to its CEO — for clients in areas like mining, port logistics and more, with its lead investor bp an indication of the size of its customers and the kinds of projects that are in its sights.

The question, CEO Ozgur Tohumcu said in an interview, is “Where is the autonomy needed today? If you go to mines or ports, you can see vehicles in use already,” he said. “We see a huge transformation happening in the industrial domain.”

The funding and focus on industry are interesting turns for Oxbotica. The startup has been around since about 2014, originally as a spinout from Oxford University co-founded by academics Paul Newman and Ingmar Posner — Newman remains at the startup as its CTO, while Posner remains an AI professor at Oxford.

Oxbotica has been associated with a number of high-profile projects — early on, it provided sensor technology for Nasa’s Mars Rover, for example.

Over time, it has streamlined what it does to two main platforms that it calls Selenium and Caesium, covering respectively navigation, mapping, perception, machine learning, data export and related technology; and fleet management.

Newman says that what makes Oxbotica stand out from other autonomous software providers is that its systems are lighter and easier to use.

“Where we are good is in edge compute,” he said. “Our radar-based maps are 10 megabytes to cover a kilometer rather than hundreds of megabytes… Our business plan is to build a horizontal software platform like Microsoft’s.” That may underplay the efficiency of what it’s building, however: Oxbotica also has worked out how to efficiently transfer the enormous data loads associated with autonomous systems, and is working with companies like Cisco to bring these online.

In recent years Oxbotica has been synonymous with some of the more notable on-road self-driving schemes in the U.K. But, as you would expect with autonomous car projects, not everything has panned out as expected.

A self-driving pilot Oxbotica kicked off with London-based car service Addison Lee in 2018 projected that it would have its first cars on the road by 2021. That project was quietly shut down, however, when Addison Lee was sold on by Carlyle last year and the company abandoned costly moonshots. Another effort, the publicly backed Project Endeavour to build autonomous car systems across towns in England, appears to still be in progress.

The turn to industrial customers, Newman said, is coming alongside those more ambitious, larger-scale applications. “Industrial autonomy for off-road refineries, ports and airports happens on the way to on-road autonomy,” he said, with the focus firmly remaining on providing software that can be used with different hardware. “We’ve always had this vision of ‘no atoms, just software,’ ” he said. “There is nothing special about the road. Our point is to be agnostic, to make sure it works on any hardware platform.”

It may claim to have always been interested in hardware- and application-agnostic autonomy, but these days it’s being joined by others that have tried the other route and have decided to follow the Oxbotica strategy instead. They include FiveAI, another hyped autonomous startup out of the U.K. that originally wanted to build its own fleet of self-driving vehicles but instead last year pivoted to providing its software technology on a B2B basis for other hardware makers.

Oxbotica has now raised about $80 million to date, and it’s not disclosing its valuation but is optimistic that the coming year — with deployments and other new partnerships — will bear out that it’s doing just fine in the current market.

“bp ventures are delighted to invest in Oxbotica – we believe its software could accelerate the market for autonomous vehicles,” said Erin Hallock, bp ventures managing partner, in a statement. “Helping to accelerate the global revolution in mobility is at the heart of bp’s strategy to become an integrated energy company focused on delivering solutions for customers.”

On-demand logistics company Lalamove gets $515 million Series E

Lalamove will extend its network to cover more small Chinese cities after raising $515 million in Series E funding, the on-demand logistics company announced on its site. The round was led by Sequoia Capital China, with participation from Hillhouse Capital and Shunwei Capital. All three are returning investors.

According to Crunchbase data, this brings Lalamove’s total raised so far to about $976.5 million. The company’s last funding announcement was in February 2019, when it hit unicorn status with a Series D of $300 million.

Bloomberg reported last week that Lalamove was seeking at least $500 million in new funding at $8 billion valuation, or four times what it raised at least year.

Founded in 2013 for on-demand deliveries within the same city, Lalamove has since grown its business to include freight services, enterprise logistics, moving and vehicle rental. In addition to 352 cities in mainland China, Lalamove also operates in Hong Kong (where it launched), Taiwan, Vietnam, Indonesia, Malaysia, Singapore, the Philippines and Thailand. The company entered the United States for the first time in October, and currently claims about 480,000 monthly active drivers and 7.2 million monthly active users.

Part of its Series D had been earmarked to expand into India, but Lalamove was among 43 apps that were banned by the government, citing cybersecurity concerns.

In its announcement, Lalamove CEO Shing Chow said its Series E will be used to enter more fourth- and fifth-tier Chinese cities, adding “we believe the mobile internet’s transformation of China’s logistics industry is far from over.”

Other companies that have recently raised significant funding rounds for their logistics operations in China include Manbang and YTO.

Lalamove’s (known in Chinese as Huolala) Series E announcement said the company experienced a 93% drop in shipment volume at the beginning of the year, due to the COVID-19 pandemic, but has experienced a strong rebound, with order volume up 82% year-over-year even before Double 11.

This VC introduced Palantir’s first business hire to its earliest engineer, then his business took off

You might not know yet of XYZ Venture Capital, a four-year-old, San Francisco-based seed-stage venture firm, but many veterans of Palantir are surely aware of it. XYZ says it has already backed 22 startups whose founders came out of the data analysis company, including most notably, Anduril, Lucky Palmer’s defense tech startup. In fact, the founder of XYZ, Ross Fubini, says his firm wrote Anduril its first check.

It all dates back to a key introduction. Fubini is a Carnegie Mellon grad who cofounded an enterprise company, CubeTree, that a dozen years later, sold to SuccessFactors, which was itself acquired by SAP the next year, in 2011.

Then, like a lot of founders, he started writing checks.

First, Fubini linked up with Mitch Kapor, another software mogul turned investor and a friend of Fubini who bought him into his venture firm and taught him the ropes. During his one year spent with the outfit, Fubini says, he wrote seed checks into the digital care company Omada Health, the optimization platform Optimizely (acquired this fall), and LendUp, the payday loan company that was split into two businesses back in 2018.

From Kapor Capital, it was onto Canaan Partners as a venture partner and, just three years later, to Village Global, the early-stage venture firm that was founded in 2017 with the backing of prominent founders like Bill Gates and Reid Hoffman. (Fubini helped cofound the outfit with a handful of others.) At the same time, Fubini began raising his own pool of capital under the brand XYZ Ventures, eventually launching a $70 million fund.

Now he’s turning the enterprise into a bigger organization.

For starters, this year, XYZ closed its second fund with $80 million in capital commitments from what Fubini says is predominately institutional investors, and it has been investing actively. Fubini says the firm has already written checks to 30 different startups that range in size from $500,000 to $4 million in exchange for 12% to 20% ownership.

He also brought aboard a partner: Chauncey Kerr Hamilton, who spent more than five years as a partner operations manager with First Round and was looking for a new challenge when a mutual friend introduced her to Fubini. “I kept hearing about Ross from founders and other investors and we met for coffee, then we kept meeting week after week,” she says of their earlier conversations.

Hamilton says she realized over time that “we’re kindred spirits.” But she has also pushed Fubini to be more public for the sake of XYZ’s portfolio companies.

As a former projects editor at Wired before leaping into venture capital, she half-kiddingly refers to the “mystique” of XYZ Ventures, but she also wondered if it might be easier for founders to discuss their lead investor if they could point to more than Fubini’s LinkedIn page.

Certainly, it makes sense as XYZ widens its aperture beyond Palantir, which was itself long known for keeping a low profile and where Fubini’s relationship began when he introduced Palantir’s first business hire to its first engineer. The first, a personal friend, is today Palantir’s chief operating officer, Shyam Sankar; the second, Akash (“Aki”) Jain, a former colleague of Fubini, is now the company’s president.

“It’s the highest value thing I’ve done,” Fubini says of bringing the two together, which led to an early and lasting advisor role at the company, where he helped develop senior talent and work through challenges (and received advisor shares in return).

Indeed, he has since become a first call for some who spin out of the company. In addition to Anduril —  cofounded by former Palantir execs Matt Grimm, Trae Stephens, and Brian Schimpf — XYZ has more recently backed the the San Diego-based financial planning platform Mosaic (cofounder Bijan Moallemi, a former finance exec at Palantir).

It also wrote the first check for Saltbox, an Atlanta-based startup that’s building co-working units for founders needing warehouse space. Saltbox’s founder, Tyler Scriven, previously spent more than seven years as a chief of staff at Palantir.

Fubini and Hamilton stress that while a meaningful portion of XYZ’s capital has flowed into the “Palantir diaspora,” the company has other areas of interest, too, mostly enterprise related.

XYZ is very focused, for example, on fintech, betting on Bond Technologies, a company that helps brands and banks integrate their offerings. It has insure-tech investments, like the brokerage Newfront Insurance. And it is focused on security and counts among its portfolio companies, a now highly valued outfit that poorly handled a sexual harassment situation but seems to have survived it.

XYZ even made a direct-to-consumer bet recently, though Fubini and Hamilton aren’t talking about it just yet.

Mostly, they say, they’re focused on “trends we believe are exploding,” says Hamilton. Think video, she says. Think fintech infrastructure, she adds. “For fintech that’s building a new bank, we think three companies will replace the crappy software” that supports them, says Fubini.

As for how they wins deals against VCs when it comes to founders to whom they aren’t already connected in some way, Fubini says it’s not so complicated. Being “bizarrely honest” has proved helpful, he says. But also, he says, “If you’re good, and you work goddamn hard, you start seeing more stuff.”

Reddit acquires Dubsmash

Reddit announced that it has acquired short video platform Dubsmash. The deal’s terms were undisclosed. Dubsmash will retain its own platform and brand, and Reddit will integrate its video creation tools. Its co-founders, Suchit Dash, Jonas Drüppel and Tim Specht, will join Reddit.

According to Crunchbase data, the app has raised $20.2 million from investors including Lowercase Capital, Index Ventures, Eniac Ventures, Heartcore Capital and Sunstone Life.

Dubsmash is now one of TikTok’s biggest rivals, but struggled for several years after a brief stint of popularity in 2015 during its first incarnation as a lip-sync video app. In 2017 it began transforming itself into a social platform and moved its headquarters from Berlin to Brooklyn. By the beginning of this year, Dubsmash’s share of the United States’ short-form video market was second only to TikTok when counted by app installs, and it reportedly held acquisition talks with Facebook and Snap.

Credit for much of Dubsmash’s success goes to Black and Latinx users. While many of TikTok’s highest-profile stars are white, Dubsmash is known for its large communities of Black and Latinx content creators. The polarization between the two apps began to gain more attention earlier this year, when the New York Times published a piece about how dance moves by Black Dubsmash stars are frequently appropriated without credit by TikTok influencers, which means their creators miss out on opportunities like larger followings, brand deals and industry connections.

Reddit has its own issues with racism, and has been criticized for not doing enough to stop hate speech or giving moderators of subreddits targeted by racist trolls enough support.

Last year, founder and former chief executive officer Alexis Ohanian called for his position on Reddit’s board to be filled with a Black candidate when he stepped down, which current CEO Steve Huffman said the company would honor as part of a larger effort to address hate speech on the platform announced during anti-racism demonstrations after the killing of George Floyd by a police officer. Ohanian’s position was filled by Y Combinator CEO Michael Seibel.

In its announcement today, Reddit linked its acquisition of Dubsmash to its inclusion efforts, acknowledging that the app’s “communities are driven by young, diverse creators—about 25 percent of all Black teens in the U.S. are on Dubsmash, and females represent 70 percent of users.”

It also said the integration of Dubsmash’s video creation tools will enable Reddit’s users to “express themselves in original and authentic ways that are endemic to our communities.”

Since launching native videos in 2017, Reddit said usage has increased sharply, growing 2X in 2020 alone. Much of Reddit’s content is still text-based, however, with video, gifs and images often shared from other sources, so Dubsmash’s integration can help Reddit build out its own video platform.

Seoul-based payment tech startup CHAI gets $60 million from Hanhwa, SoftBank Ventures Asia

Demand for contactless payments and e-commerce has grown in South Korea during the COVID-19 pandemic. This is good news for payment service operators, but the market is very fragmented, so adding payment options is a time-consuming process for many merchants. CHAI wants to fix this with an API that enables companies to accept over 20 payment systems. The Seoul-based startup announced today it has raised a $60 million Series B.

The round was led by Hanhwa Investment & Securities, with participation from SoftBank Ventures Asia (the early-stage venture capital arm of SoftBank Group), SK Networks, Aarden Partners and other strategic partners. It brings CHAI’s total funding to $75 million, including a $15 million Series A in February.

Last month, the Bank of Korea, South Korea’s central bank, released a report showing that contactless payments increased 17% year-over-year since the start of COVID-19.

CHAI serves e-commerce companies with an API called I’mport, that allows them to accept payments from over 20 options, including debit and credit cards through local payment gateways, digital wallets, wire transfers, carrier billings and PayPal. It is now used by 2,200 merchants, including Nike Korea and Philip Morris Korea.

CHAI chief executive officer Daniel Shin told TechCrunch that businesses would usually have to integrate each kind of online payment type separately, so I’mport saves its clients a lot of time.

The company also offers its own digital wallet and debit card called the CHAI Card, which launched in June 2019 and now has 2.5 million users, a small number compared with South Korea’s leading digital wallets, which include Samsung Pay, Naver Pay, Kakao Pay and Toss.

“CHAI is a late comer to Korea’s digital payments market, but we saw a unique opportunity to offer value,” said Shin. The CHAI Card offers merchants a lower transaction fee than other cards and users typically check its app about 20 times to see new cashback offers and other rewards based on how often they pay with their cards or digital wallet.

“We’ve digitized the plastic card experience, and this is the first step towards creating a robust online rewards platform,” Shin added.

In press statement, Hanhwa Investment & Securities director SeungYoung Oh director said, “I’mport has reduced what once took e-commerce businesses weeks to complete into a simple copy-and-paste task, radically reducing costs. It is a first-of-its-kind business model in Korea, and I have no doubt that CHAI will continue to grow this service into an essential infrastructure of the global fintech landscape.”

Lemonade launches its renters insurance in France

Lemonade is launching its renters insurance in France. This is the company’s third European launch after the Netherlands and Germany. Originally from the U.S., Lemonade is now a public company with a current market capitalization close to $4 billion.

Lemonade will compete directly with a local competitor called Luko. Both companies share a lot of similarities. But Luko has already attracted 100,000 customers and just raised $60 million.

https://techcrunch.com/2020/12/06/luko-raises-60-million-for-its-home-insurance-products/

Lemonade has optimized its insurance product in different ways. First, it’s supposed to be easier to sign up with Lemonade compared with a legacy insurance company. Second, the company wants to bring back trust by taking a flat fee for its operations.

Premiums are then pooled together and used to pay back claims. If there’s money left at the end of the year, customers can choose to donate to nonprofits. Lemonade is also a certified B-Corp.

But it’s worth noting that other insurance companies try to position themselves as socially responsible, such as MAIF. Insurtech companies aren’t reinventing the wheel on this front.

Third, Lemonade tries to pay you back as quickly as possible after you file a claim.

Chances are you don’t think that much about renters insurance. But it’s a lucrative industry. For instance, home insurance is a legal requirement in France. Due to tenant turnover, there are many opportunities to jump in and convince customers to switch to Lemonade when people move to a new place.

Let’s see how the fight between Lemonade and Luko plays out in France.

Mike Cagney is testing the boundaries of the banking system for himself — and others

Founder Mike Cagney is always pushing the envelope, and investors love him for it. Not long sexual harassment allegations prompted him to leave SoFi, the personal finance company that he cofounded in 2011, he raised $50 million for new lending startup called Figure that has since raised at least $225 million from investors and was valued a year ago at $1.2 billion.

Now, Cagney is trying to do something unprecedented with Figure, which says it uses a blockchain to more quickly facilitate home equity, mortgage refinance, and student and personal loan approvals. The company has applied for a national bank charter in the U.S., wherein it would not take FDIC-insured deposits but it could take uninsured deposits of over $250,000 from accredited investors.

Why does it matter? The approach, as American Banker explains it, would bring regulatory benefits. As it reported earlier this week, “Because Figure Bank would not hold insured deposits, it would not be subject to the FDIC’s oversight. Similarly, the absence of insured deposits would prevent oversight by the Fed under the Bank Holding Company Act. That law imposes restrictions on non-banking activities and is widely thought to be a deal-breaker for tech companies where banking would be a sidelight.”

Indeed, if approved, Figure could pave the way for a lot of fintech startups — and other retail companies that want to wheel and deal lucrative financial products without the oversight of the Federal Reserve Board or the FDIC — to nab non-traditional bank charters.

As Michelle Alt, whose year-old financial advisory firm helped Figure with its application, tells AB: “This model, if it’s approved, wouldn’t be for everyone. A lot of would-be banks want to be banks specifically to have more resilient funding sources.” But if it’s successful, she adds, “a lot of people will be interested.”

One can only guess at what the ripple effects would be, though the Bank of Amazon wouldn’t surprise anyone who follows the company.

In the meantime, the strategy would seemingly be a high-stakes, high-reward development for a smaller outfit like Figure, which could operate far more freely than banks traditionally but also without a safety net for itself or its customers. The most glaring danger would be a bank run, wherein those accredited individuals who are today willing to lend money to the platform at high interest rates began demanding their money back at the same time. (It happens.)

Either way, Cagney might find a receptive audience right now with Brian Brooks, a longtime Fannie Mae executive who served as Coinbase’s chief legal officer for two years before jumping this spring to the Office of the Comptroller of the Currency (OCC), an agency that ensures that national banks and federal savings associations operate in a safe and sound manner.

Brooks was made acting head of the agency in May and green-lit one of the first national charters to go to a fintech, Varo Money, this past summer. In late October, the OCC also granted SoFi preliminary, conditional approval over its own application for a national bank charter.

While Brooks isn’t commenting on speculation around Figure’s application, in July, during a Brookings Institution event, he reportedly commented about trade groups’ concerns over his efforts to grant fintechs and payments companies charters, saying: “I think the misunderstanding that some of these trade groups are operating under is that somehow this is going to trigger a lighter-touch charter with fewer obligations, and it’s going to make the playing field un-level . . . I think it’s just the opposite.”

Christopher Cole, executive vice president at the trade group Independent Community Bankers of America, doesn’t seem persuaded. Earlier this week, he expressed concern about Figure’s bank charter application to AB, saying he suspects that Brooks “wants to approve this quickly before he leaves office.”

Brooks’s days are surely numbered. Last month, he was nominated by President Donald to a full five-year term leading the federal bank regulator and is currently awaiting Senate confirmation. The move — designed to slow down the incoming Biden administration — could be undone by President-elect Joe Biden, who can fire the comptroller of the currency at will and appoint an acting replacement to serve until his nominee is confirmed by the Senate.

Still, Cole’s suggestion is that Brooks still has enough time to figure out a path forward for Figure — and if its novel charter application is approved, and it stands up to legal challenges — a lot of other companies, too.

Eat Just to sell lab-grown meat in Singapore after gaining “world first” regulatory approval

Eat Just will start offering lab-grown chicken meat in Singapore after gaining regulatory approval from the Singapore Food Agency (SFA). The cell-cultured chicken will eventually be produced under Eat Just’s new GOOD Meat brand through partnerships with local manufacturers and go on sale to restaurants before it is available to consumers.

While there are plenty of other companies working on lab-grown meats using various techniques, Eat Just describes the Singapore government’s review and regulatory approval as a “world first.”

No chickens were killed to obtain the cell line used to produce Eat Just’s cultured meat, global head of communications Andrew Noyes told TechCrunch. Instead, the process starts with cell isolation, where cells are sourced through methods that can include a biopsy from a live animal. After the cells are cultured, they are transferred into a bioreactor, fed with a proprietary mix of proteins, amino acids, minerals, sugars, salts and other nutrients and then harvested after they achieve enough density.

The company said it went through 20 productions runs of cell-cultured chicken in 1,200-liter bioreactors to prove the consistency of its manufacturing process. Eat Just also said no antibiotics were used and that its cultured chicken has an “extremely low and significantly cleaner microbiological content than conventional chicken.”

Noyes said the company is already working with a restaurant to add its GOOD Meat chicken to their menu, and hopes to announce a launch date soon.

In Eat Just’s announcement today, chief executive officer Josh Tetrick said, “Singapore has long been a leader in innovation of all kinds, from information technology to biologics to now leading the world in building a healthier, safer food system.”

The government is currently engaged in an initiative, called “30 by 30,” to produce 30% of the country’s food supply locally by 2030. Spearheaded by the Singapore Food Agency (SFA), the initiative was prompted because Singapore currently imports over 90% of its food, which makes it vulnerable to export bans or the logistics issues highlighted by the COVID-19 pandemic’s impact. As part of “30 by 30,” the SFA and Agency for Science, Technology and Research has made $144 million SGD in research funding available.

Eat Just, whose other products include a plant-based egg substitute, announced last month it is partnering with Proterra Investment Partners Asia to launch a new Asian subsidiary. The partnership includes a factory in Singapore that received support from the government’s Economic Development board.

There are several factors driving demand for cultured meat and plant-based protein in Asian markets. The first is concerns about the safety of meat from slaughterhouses that gained momentum during the COVID-19 pandemic. The pandemic also highlighted vulnerabilities in the production and supply chain that can be potentially be avoided with lab-produced meat and meat alternatives.

Singapore-based mental health app Intellect reaches one million users, closes seed funding

Theodoric Chew, co-founder and chief executive officer of mental health app Intellect

Theodoric Chew, co-founder and chief executive officer of mental health app Intellect

Intellect, a Singapore-based startup that wants to lower barriers to mental health care in Asia, says it has reached more than one million users just six months after launching. Google also announced today that the startup’s consumer app, also called Intellect, is one of its picks for best personal growth apps of 2020.

The company recently closed an undisclosed seed round led by Insignia Ventures Partners. Angel investors including e-commerce platform Carousell co-founder and chief executive officer Quek Siu Rui; former Sequoia partner Tim Lee; and startup consultancy xto10x’s Southeast Asia CEO J.J. Chai also participated.

In a statement, Insignia Ventures Partners principal Samir Chaibi said, “In Intellect, we see a fast-scaling platform addressing a pain that has become very obvious amidst the COVID-19 pandemic. We believe that pairing clinically-backed protocols with an efficient mobile-first delivery is the key to break down the barriers to access for millions of patients globally.”

Co-founder and chief executive officer Theodoric Chew launched Intellect earlier this year because while there is a growing pool of mental wellness apps in the United States and Europe that have attracted more funding during the COVID-19 pandemic, the space is still very young in Asia. Intellect’s goal is encourage more people to incorporate mental health care into their daily routines by lowering barriers like high costs and social stigma.

Intellect offers two products. One is a consumer app with self-guided programs based on cognitive behavioral therapy techniques that center on issues like anxiety, self-esteem or relationship issues.

The other is a mental health platform for employers to offer as a benefit and includes a recently launched telehealth service called Behavioural Health Coaching that connects users with mental health professionals. The service, which includes one-on-one video sessions and unlimited text messaging, is now a core part of Intellect’s services, Chew told TechCrunch.

Intellect’s enterprise product now reaches 10,000 employees, and its clients include tech companies, regional operations for multinational corporations and hospitals. Most are located in Singapore, Hong Kong, Indonesia and India, and range in size from 100 to more than 3,000 employees.

For many small- to mid-sized employers, Intellect is often the first mental health benefit they have offered. Larger clients may already have EAP (employee assistance programs), but Chew said those are often underutilized, with an average adoption rate of 1% to 2%. On the other hand, he said Intellect’s employee benefit program sees an average adoption rate of 30% in the first month after it is rolled out at a company.

Chew added that the COVID-19 pandemic has prompted more companies to address burnout and other mental health issues.

“In terms of larger trends, we’ve seen a huge spike in companies across the region having mental health and wellbeing of their employees being prioritized on their agenda,” said Chew. “In terms of user trends, we see a significantly higher utilization in work stress and burnout, anxiety and relationship-related programs.”

Intellect’s seed round will be used to expand in Asian markets and to help fund clinical research studies it is currently conducting with universities and organizations in Singapore, Australia and the United Kingdom.

What to make of Stripe’s possible $100B valuation

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

Welcome to a special Thanksgiving edition of The Exchange. Today we will be brief. But not silent, as there is much to talk about.

Up top, The Exchange noodled on the Slack-Salesforce deal here, so please catch up if you missed that while eating pie for breakfast yesterday. And, sadly, I have no idea why Palantir is seeing its value skyrocket. Normally we’d discuss it, asking ourselves what its gains could mean for the lower tiers of private SaaS companies. But as its public market movement appears to be an artificial bump in value, we’ll just wait.

Here’s what I want to talk about this fine Saturday: Bloomberg reporting that Stripe is in the market for more money, at a price that could value the company at “more than $70 billion or significantly higher, at as much as $100 billion.”

Hot damn. Stripe would become the first or second most valuable startup in the world at those prices, depending on how you count. Startup is a weird word to use for a company worth that much, but as Stripe is still clinging to the private markets like some sort of liferaft, keeps raising external funds, and is presumably more focused on growth than profitability, it retains the hallmark qualities of a tech startup, so, sure, we can call it one.

Which is odd, because Stripe is a huge concern that could be worth twelve-figures, provided that gets that $100 billion price tag. It’s hard to come up with a good reason for why it’s still private, other than the fact that it can get away with it.

Anyhoo, are those reported, possible prices bonkers? Maybe. But there is some logic to them. Recall that Square and PayPal earnings pointed to strong payments volume in recent quarters, which bodes well for Stripe’s own recent growth. Also note that 14 months ago or so, Stripe was already processing “hundreds of billions of dollars of transactions a year.”

You can do fun math at this juncture. Let’s say Stripe’s processing volume was $200 billion last September, and $400 billion today, thinking of the number as an annualized metric. Stripe charges 2.9% plus $0.30 for a transaction, so let’s call it 3% for the sake of simplicity and being conservative. That math shakes out to a run rate of $12 billion.

Now, the company’s actual numbers could be closer to $100 billion, $150 billion and $4.5 billion, right? And Stripe won’t have the same gross margins as Slack .

But you can start to see why Stripe’s new rumored prices aren’t 100% wild. You can make the multiples work if you are a believer in the company’s growth story. And helping the argument are its public comps. Square’s stock has more than tripled this year. PayPal’s value has more than doubled. Adyen’s shares have almost doubled. That’s the sort of public market pull that can really help a super-late-stage startup looking to raise new capital and secure an aggressive price.

To wrap, Stripe’s possible new valuation could make some sense. The fact that it is still a private company does not.

Market Notes

Various and Sundry

And speaking of edtech, Equity’s Natasha Mascarenhas and our intrepid producer Chris Gates put together a special ep on the education technology market. You can listen to it here. It’s good.

Hugs and let’s both go do some cardio,

Alex

N26 launches mid-tier subscription plan for €4.90 per month

Challenger bank N26 is adding a third subscription product called N26 Smart. N26 Smart is designed to be a mid-tier subscription plan with advanced banking features but without a travel insurance package.

In Europe, in addition to the free plan, N26 already provides two subscription tiers called N26 You and N26 Metal. N26 You costs €9.90 per month and comes with higher limits, such as five free ATM withdrawals instead of three and free withdrawals in foreign currencies.

With an N26 You account, you can create sub-accounts (N26 Spaces), share them with other N26 users or use them to save money. As an N26 You subscriber, you also get a travel insurance package with medical travel insurance, trip and flight insurance and more. You can also access some partner offers.

N26 Metal is the most expensive plan and costs €16.90 per month. In addition to everything in N26 You, you get car rental insurance when you’re abroad and phone insurance. As the name suggests, you also get a metal card.

The new N26 Smart subscription costs €4.90 and works well for people who don’t need travel insurance. With an N26 Smart subscription, you can create up to ten sub-accounts. You get five free ATM withdrawals per month. You can also call N26 support directly in addition to in-app support chat.

N26 is launching a new round-up feature for N26 Smart users. It lets you round each purchase up to the nearest Europe and save it in a separate sub-account. N26 Smart account also access colorful debit cards — the same colors as N26 You.

This is just a first step as N26 plans to revamp its subscription products altogether. In the near future, N26 You will become N26 International. There will be more features focused on borderless banking. N26 Metal will become N26 Unlimited.

As for the free N26 Standard account, the company wants to focus on digital cards. Some users are going to switch to the N26 Smart plan to keep some of the features that they’ve been using with a free account. That move should help the company’s bottom line.

Image Credits: N26

PingCAP, the open-source developer behind TiDB, closes $270 million Series D

PingCAP, the open-source software developer best known for NewSQL database TiDB, has raised a $270 million Series D. TiDB handles hybrid transactional and analytical processing (HTAP), and is aimed at high-growth companies, including payment and e-commerce services, that need to handle increasingly large amounts of data.

The round’s lead investors were GGV Capital, Access Technology Ventures, Anatole Investment, Jeneration Capital and 5Y Capital (formerly known as Morningside Venture Capital). It also included participation from Coatue, Bertelsmann Asia Investment Fund, FutureX Capital, Kunlun Capital, Trustbridge Partners, and returning investors Matrix Partners China and Yunqi Partners.

The funding brings PingCAP’s total raised so far to $341.6 million. Its last round, a Series C of $50 million, was announced back in September 2018.

PingCAP says TiDB has been adopted by about 1,500 companies across the world. Some examples include Square; Japanese mobile payments company PayPay; e-commerce app Shopee; video-sharing platform Dailymotion; and ticketing platfrom BookMyShow. TiDB handles online transactional processing (OLTP) and online analytical processing (OLAP) in the same database, which PingCAP says results in faster real-time analytics than other distributed databases.

In June, PingCAP launched TiDB Cloud, which it describes as fully-managed “TiDB as a Service,” on Amazon Web Services and Google Cloud. The company plans to add more platforms, and part of the funding will be used to increase TiDB Cloud’s global user base.

Bonus: An extra week to save on tickets to TC Sessions: Space 2020

When you’re laser-focused on reaching beyond the stars, it’s hard to remember more earthly, mundane tasks. That’s why we’re giving you an extra week to score early-bird savings to TC Sessions: Space 2020 (December 16-17). So, to all you harried, procrastinating visionaries: take a breath, relax a bit and buy your pass before November 20 at 11:59 p.m. (PT).

Join the two-day online conference to hear from and connect with the leading forces within the space industry. Learn how to secure grants for your space company, how and where the Air Force plans to spend $60 billion on R&D, what savvy space investors think and where they might place their bets. And that’s just the tip of the rocket.

Presentations range from asteroid mining, extra-planetary robotic research and the future of space exploration to human spaceflight, manufacturing in space and supply-chain issues. Here are just two stellar examples, and you’ll find many more in the event agenda. Start planning your time now.

Bridging Two Eras of Human Spaceflight: When Kathryn Lueders started working at NASA in 1992, it was the peak of the Space Shuttle era. As she begins her leadership of the Human Spaceflight Office this year, a new and exciting era is just beginning. Lueders will discuss the possibilities and challenges of the new systems and technologies that will put the first woman and the next man on the surface of the moon…and perhaps Mars.

Crafting the Kuiper Constellation: Amazon is set to create its own global constellation of LEO satellites — a very different type of gadget from what Amazon SVP of Device & Services Dave Limp is used to overseeing. He’ll tell us how Project Kuiper fits in with Amazon’s grand plans.

Looking for more ways to save? Bring the whole team with a group discount. Tickets cost $100 each — bring four team members and get the fifth one free. Discount passes for students cost $50, while current government, military and nonprofit employees pay $95. Plus, Extra Crunch subscribers get a 20% discount.

Step into a virtual spotlight and showcase your startup in our expo: An Early-Stage Startup Exhibitor Package ($360 gets you three tickets, digital exhibition space and the ability to generate leads). Bonus: Exhibiting startups each get five minutes to pitch live to attendees around the world.

As you reach for the stars, connect with the experts and opportunities at TC Sessions: Space 2020 to help make your galactic dreams a reality. You have an extra week. Now, breathe, relax and buy your early-bird pass before November 20 at 11:59 p.m. (PT).

Is your company interested in sponsoring TC Sessions: Space 2020? Click here to talk with us about available opportunities.

This fintech-focused VC firm just closed a $75 million debut fund; backers “came out of the woodwork”

It’s no secret that a massive digital transformation is happening within financial services companies and amid the growing number of non-financial outfits that are also adding financial products to their offerings.

Still, Sheel Mohnot, who was formerly a general partner at the fintech fund of 500 Startups, and Jake Gibson, co-founder of personal finance startup NerdWallet, were a little taken aback by investor interest in their fintech-focused early-stage venture firm, Better Tomorrow Ventures, or BTV.

The outfit just closed its debut fund with $75 million in capital commitments, exceeding their original $60 million target, and even one of their earliest investors, Michael Kim of Cendana Capital, expresses surprise. “Remarkably, they raised a lot of it during Covid,” says Kim.

We talked yesterday with the pair, who have already invested in 13 startups with the fund’s capital and, they say, led nine of those deals.

TC: The good news is you’re focused on fintech. The bad news is that fintech valuations are going through the roof. How do you compete?

SM: It’s true. Everybody decided that what we’ve been talking about all along is in line with their beliefs too, after exits like Plaid and Credit Karma. Everybody became a fintech investor. And you’re right that that has led to an increase in valuations. To some extent that’s good, though. It’s meant that one of our companies has already had a pretty massive markup in part because of this phenomenon.

I also think we’re finding we’re able to win deals at better prices because we’re both founders. [Mohnot sold a company, FeeFinders, to Groupon 2012]. And all we do is fintech. So we tend to understand better what founders are building than generalist investors.

JG: I do think [these things] resonate in that we’ve been able to pay prices that we think make sense and to get the ownership we want. This isn’t the 4 on 16 game that others are playing (where VCs invest $4 million at a pre-money valuation and so own 20% of the company). I think all but one or two of our investments involve repeat founders who see the value of working with partners like us.

TC: How much ownership are you targeting for that first check — 10%?

JG: Right, 10%, though we’re really shooting for 12%.

TC: And will you turn to [special purpose vehicles] to maintain your stake if certain companies begin to gain traction?

JG: Yes, I’ve done quite a bit of SPVs in the past. I’ve invested in 90 companies as an angel investor and I think we’ve probably deployed more than $40 million between the two of us over the last five years leading up to BTV, including SPVs on top of angel investments. [Editor’s note: some of those earlier deals include Chipper Cash, Albert, Clear Cover, and Hippo.]

TC: What companies are in BTV’s portfolio? 

SM: None have been announced.

TC: Not one?!

SM: Nobody announces their seed rounds anymore. When I started my company, I wanted as much coverage as possible. I thought that was great for the company. Now founders don’t feel that way, with very few wanting to announce.

TC: But there are benefits to recruiting and getting on the radar or later-stage investors. Why eschew it altogether?

JG: Competition to some extent. They don’t want people to know what they’re working on because once you see a competitive seed round, you see a lot of other startups pop up to do the same thing. I also just think there’s not as much upside anymore to announcing, so most founders, when you’re seeing their seed round, it’s because they’re about to raise their Series A. The data you’re seeing in Pitchbook is typically six months [behind].

TC: Who are your investors?

SM: We have founders of fintech unicorns. We have a couple of fintech venture funds, fintech-focused GPs from later-stage funds, a few insurance companies, and Wall Street people who help us keep track on that side of the market, as well.

JG: We’re also backed by kind of a who’s who of fund of funds that back emerging managers: Cendana, Industry Ventures, Vintage [Investment Partners], Invesco.

TC: Did you know a lot of these investors before the pandemic shut down everything?

JG: Some, but we had to sell a lot of them cold over Zoom. We held a first close last December — that capital was from Cendana and individuals. We’d started conversations with other institutions at that point but everyone said it would take a while and that institutions won’t come until you raise your second fund, so we didn’t have high hopes that we’d get a lot of them on board.

In fact, when March and April hit, we figured we’d have to raise a smaller fund. But then things re-opened, people got back to work, and we were able to close institutions we’d started conversations with. Then people came out of the woodwork, because tech got hot fast but especially fintech, with all the IPO and M&A activity.  People said, ‘We want fintech exposure now, and we want to invest in a fintech-focused fund, and you’re the only game in town.’

TC: What do you need to see to write a check?

JG: Our thesis is that everything is fintech, so we invest across the board: payments, lending, banking, real estate, insurance, b2b, consumer — anything that’s ostensibly fintech. We think a lot of companies that aren’t typically fintech today will look like fintech later, with more and more tech platforms that get into financial services. We’re investing at the pre-seed and seed stage but also meeting with founders at the idea stage, sometimes to talk them out of starting another neobank. [Laughs.]

TC: Do you? Every time I wonder how many neobanks make sense in this world, an investor tells me that if only their startup can get .00001% of the market, they’ll have a multibillion company on their hands.

JG: No. Most will never figure out how to get profitable. A lot of investors like to argue that with neobanks, you lose money on every trade but you make it up in volume. Yet very few have a path to getting to positive economics. You need huge scale to get to profitability, and that means you have to spend a ton of venture capital on marketing. More, a lot are going after audiences that are already over-served by traditional financial products.

SM: The same is true for “Plaid for X” type companies. After the announcement of Plaid’s exit — or what we all thought was Plaid’s exit — we looked at five companies, many of them hitting on the same ideas and duking it out for the same customers.

TC: Will the fact that the DOJ is suing to block Plaid’s sale to Visa, citing Visa’s monopoly power, have a chilling effect?

JG: We haven’t seen that. A lot of people are discounting that complaint and thinking it will get out of this in the end via SPAC. The company was doing north of $100 million in revenue, and given where these businesses trade, Plaid could go public and see an amazingly successful outcome.

It’s not just Plaid, by the way. There are now 40 SPACs that are focused on fintech alone. Just think about the outcomes that have to happen in the next two years.

Warren gets $1.4 million to help local cloud infrastructure providers compete against Amazon and other giants

Started as a side project by its founders, Warren is now helping regional cloud infrastructure service providers compete against Amazon, Microsoft, IBM, Google and other tech giants. Based in Tallinn, Estonia, Warren’s self-service distributed cloud platform is gaining traction in Southeast Asia, one of the world’s fastest-growing cloud service markets, and Europe. It recently closed a $1.4 million seed round led by Passion Capital, with plans to expand in South America, where it recently launched in Brazil.

Warren’s seed funding also included participation from Lemonade Stand and angel investors like former Nokia vice president Paul Melin and Marek Kiisa, co-founder of funds Superangel and NordicNinja.

The leading global cloud providers are aggressively expanding their international businesses by growing their marketing teams and data centers around the world (for example, over the past few months, Microsoft has launched a new data center region in Austria, expanded in Brazil and announced it will build a new region in Taiwan as it competes against Amazon Web Services).

But demand for customized service and control over data still prompt many companies, especially smaller ones, to pick local cloud infrastructure providers instead, Warren co-founder and chief executive officer Tarmo Tael told TechCrunch.

“Local providers pay more attention to personal sales and support, in local language, to all clients in general, and more importantly, take the time to focus on SME clients to provide flexibility and address their custom needs,” he said. “Whereas global providers give a personal touch maybe only to a few big clients in the enterprise sectors.” Many local providers also offer lower prices and give a large amount of bandwidth for free, attracting SMEs.

He added that “the data sovereignty aspect that plays an important role in choosing their cloud platform for many of the clients.”

In 2015, Tael and co-founder Henry Vaaderpass began working on the project that eventually became Warren while running a development agency for e-commerce sites. From the beginning, the two wanted to develop a product of their own and tested several ideas out, but weren’t really excited by any of them, he said. At the same time, the agency’s e-commerce clients were running into challenges as their businesses grew.

Tael and Vaaderpass’s clients tended to pick local cloud infrastructure providers because of lower costs and more personalized support. But setting up new e-commerce projects with scalable infrastructure was costly because many local cloud infrastructure providers use different platforms.

“So we started looking for tools to use for managing our e-commerce projects better and more efficiently,” Tael said. “As we didn’t find what we were looking for, we saw this as an opportunity to build our own.”

After creating their first prototype, Tael and Vaaderpass realized that it could be used by other development teams, and decided to seek angel funding from investors, like Kiisa, who have experience working with cloud data centers or infrastructure providers.

Southeast Asia, one of the world’s fastest-growing cloud markets, is an important part of Warren’s business. Warren will continue to expand in Southeast Asia, while focusing on other developing regions with large domestic markets, like South America (starting with Brazil). Tael said the startup is also in discussion with potential partners in other markets, including Russia, Turkey and China.

Warren’s current clients include Estonian cloud provider Pilw.io and Indonesian cloud provider IdCloudHost. Tael said working with Warren means its customers spend less time dealing with technical issues related to infrastructure software, so their teams, including developers, can instead focus on supporting clients and managing other services they sell.

The company’s goal is to give local cloud infrastructure providers the ability to meet increasing demand, and eventually expand internationally, with tools to handle more installations and end users. These include features like automated maintenance and DevOps processes that streamline feature testing and handling different platforms.

Ultimately, Warren wants to connect providers in a network that end users can access through a single API and user interface. It also envisions the network as a community where Warren’s clients can share resources and, eventually, have a marketplace for their apps and services.

In terms of competition, Tael said local cloud infrastructure providers often turn to OpenStack, Virtuozzo, Stratoscale or Mirantis. The advantage these companies currently have over Warren is a wider network, but Warren is busy building out its own. The company will be able to connect several locations to one provider by the first quarter of 2021. After that, Tael said, it will “gradually connect providers to each other, upgrading our user management and billing services to handle all that complexity.”

10 Zurich-area investors on Switzerland’s 2020 startup outlook

European entrepreneurs who want to launch startups could do worse than Switzerland.

In a report analyzing Europe’s general economic health, cost of doing business, business environment and labor force quality, analysts looked for highly educated populations, strong economies, healthy business environments and relatively low costs for conducting business. Switzerland ended up ranking third out of 31 European nations, according to Nimblefins. (Germany and the UK came out first and second, respectively).

According to official estimates, the number of new Swiss startups has skyrocketed by 700% since 1996. Zurich tends to take the lion’s share, as the city’s embrace of startups has jump-started development, although Geneva and Lausanne are also hotspots.

As well as traditional software engineering startups, Switzerland’s largest city boasts a startup culture that emphasizes life sciences, mechanical engineering and robotics. Compared to other European countries, Switzerland has a low regulatory burden and a well-educated, highly qualified workforce. Google’s largest R&D center outside of the United States is in Zurich.

But it’s also one of the more expensive places to start a business, due to its high cost of living, salary expectations and relatively small labor market. Native startups will need 25,000 Swiss Francs to open an LLC and 50,000 more to incorporate. While they can withdraw those funds from the business the next day, local founders must still secure decent backing to even begin the work.

This means Switzerland has gained a reputation as a place to startup — and a place to relocate, which is something quite different. It’s one reason why the region is home to many fintech businesses born elsewhere that need proximity to a large banking ecosystem, as well as the blockchain/crypto crowd, which have found a highly amenable regulatory environment in Zug, right next door to Zurich. Zurich/Zug’s “Crypto Valley” is a global blockchain hotspot and is home to, among others, the Ethereum Foundation.

Lawyers and accountants tend to err on the conservative side, leading to a low failure rate of businesses but less “moonshot innovation,” shall we say.

But in recent years, corporate docs are being drawn up in English to facilitate communication both inside Switzerland’s various language regions and foreign capital, and investment documentation is modeled after the U.S.

Ten years ago startups were unusual. Today, pitch competitions, incubators, accelerators, VCs and angel groups proliferate.

The country’s Federal Commission for Technology and Innovation (KTI) supports CTI-Startup and CTI-Invest, providing startups with investment and support. Venture Kick was launched in 2007 with the vision to double the number of spin-offs from Swiss universities and draws from a jury of more than 150 leading startup experts in Switzerland. It grants up to CHF 130,000 per company. Fundraising platforms such as Investiere have boosted the angel community support of early funding rounds.

Swiss companies, like almost all European companies, tend to raise lower early-stage rounds than U.S. ones. A CHF 1-2 million Series A or a CHF 5 million Series B investment is common. This has meant smaller exits, and thus less development for the ecosystem.

These are the investors we interviewed:

 

Jasmin Heimann, partner, Ringier Digital Ventures

What trends are you most excited about investing in, generally?
Consumer-facing startups with first revenues.

What’s your latest, most exciting investment?
AirConsole — a cloud-gaming platform where you don’t need a console and can play with all your friends and family.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I really wish that the business case for social and ecological startups will finally be proven (kind of like Oatly showed with the Blackstone investment). I also think that femtech is a hyped category but funding as well as renown exits are still missing.

What are you looking for in your next investment, in general?
I am looking for easy, scalable solutions with a great team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I think the whole scooter/mobility space is super hyped but also super capital intensive so I think to compete in this market at this stage is hard. I also think that the whole edtech space is an important area of investment, but there are already quite a lot of players and it oftentimes requires cooperation with governments and schools, which makes it much more difficult to operate in. Lastly, I don’t get why people still start fitness startups as I feel like the market has reached its limits.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Switzerland makes — maximum — half of our investments. We are also interested in Germany and Austria as well as the Nordics.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Zurich and Lausanne are for sure the most exciting cities, just because they host great engineering universities. Berne is still lagging behind but I am hoping to see some more startups emerging from there, especially in the medtech industry.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Overall, Switzerland is a great market for a startup to be in — although small, buying power is huge! So investors should always keep this in mind when thinking about coming to Switzerland. The startup scene is pretty small and well connected, so it helps to get access through somebody already familiar with the space. Unfortunately for us, typical B2C cases are rather scarce.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think it is hard to make any kind of predictions. But on the one hand, I could see this happening. On the other hand, I also think that the magic of cities is that there are serendipity moments where you can find your co-founder at a random networking dinner or come across an idea for a new venture while talking to a stranger. These moments will most likely be much harder to encounter now and in the next couple of months.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
I think travel is a big question mark still. The same goes for luxury goods, as people are more worried about the economic situation they are in. On the other hand, remote work has seen a surge in investments. Also sustainability will hopefully be put back on the agenda.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not much. I think we allocated a bit more for the existing portfolio but otherwise we continue to look at and discuss the best cases. The biggest worries are the uncertainties about [what] the future might look like and the related planning. We tell them to first and foremost secure cash flow.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Totally! Some portfolio companies have really profited from the crisis, especially our subscription-based models that offer a variety of different options to spend time at home. The challenge now is to keep up the momentum after the lockdown.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
What gives me hope is to see that people find ways to still work together — the amount of online events, office hours, etc. is incredible. I see the pandemic also as a big opportunity to make changes in the way we worked and the way things were without ever questioning them.

 

Katrin Siebenbuerger Hacki, founder, Medows

VCs reload ahead of the election as unicorns power ahead

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

It was an active week in the technology world broadly, with big news from Facebook and Twitter and Apple. But past the headline-grabbing noise, there was a steady drumbeat of bullish news for unicorns, or private companies worth $1 billion or more.

A bullish week for unicorns

The Exchange spent a good chunk of the week looking into different stories from unicorns, or companies that will soon fit the bill, and it’s surprising to see how much positive financial news there was on tap even past what we got to write about.

Databricks, for example, disclosed a grip of financial data to TechCrunch ahead of regular publication, including the fact that it grew its annual run rate (not ARR) to $350 million by the end of Q3 2020, up from $200 million in Q2 2019. It’s essentially IPO ready, but is not hurrying to the public markets.

Sticking to our theme, Calm wants more money for a huge new valuation, perhaps as high as $2.2 billion which is not a surprise. That’s more good unicorn news. As was the report that “India’s Razorpay [became a] unicorn after its new $100 million funding round” that came out this week.

Razorpay is only one of a number of Indian startups that have become unicorns during COVID-19. (And here’s another digest out this week concerning a half-dozen startups that became unicorns “amidst the pandemic.”)

There was enough good unicorn news lately that we’ve lost track of it all. Things like Seismic raising $92 million, pushing its valuation up to $1.6 billion from a few weeks ago. How did that get lost in the mix?

All this matters because while the IPO market has captured much attention in the last quarter or so, the unicorn world has not sat still. Indeed, it feels that unicorn VC activity is the highest we’ve seen since 2019.

And, as we’ll see in just a moment, the grist for the unicorn mill is getting refilled as we speak. So, expect more of the same until something material breaks our current investing and exit pattern.

Market Notes

What do unicorns eat? Cash. And many, many VCs raised cash in the last seven days.

A partial list follows. It could be that investors are looking to lock in new funds before the election and whatever chaos may ensue. So, in no particular order, here’s who is newly flush:

All that capital needs to go to work, which means lots more rounds for many, many startups. The Exchange also caught up with a somewhat new firm this week: Race Capital. Helmed by Alfred Chuang, formerly or BEA who is an angel investor now in charge of his own fund, the firm has $50 million to invest.

Sticking to private investments into startups for the moment, quite a lot happened this week that we need to know more about. Like API-powered Argyle raising $20 million from Bain Capital Ventures for what FinLedger calls “unlocking and democratizing access to employment records.” TechCrunch is currently tracking the progress of API-led startups.

On the fintech side of things, M1 Finance raised $45 million for its consumer fintech platform in a Series C, while another roboadvisor, Wealthsimple, raised $87 million, becoming a unicorn at the same time. And while we’re in the fintech bucket, Stripe dropped $200 million this week for Nigerian startup Paystack. We need to pay more attention to the African startup scene. On the smaller end of fintech, Alpaca raised $10 million more to help other companies become Robinhood.

A few other notes before we change tack. Kahoot raised $215 million due to a boom in remote education, another trend that is inescapable in 2020 as part of the larger edtech boom (our own Natasha Mascarenhas has more).

Turning from the private market to the public, we have to touch on SPACs for just a moment. The Exchange got on the phone this week with Toby Russell from Shift, which is now a public company, trading after it merged with a SPAC, namely Insurance Acquisition Corp. Early trading is only going so well, but the CEO outlined for us precisely why he pursued a SPAC, which was actually interesting:

  • Shift could have gone public via an IPO, Russell said, but prioritized a SPAC-led debut because his firm wanted to optimize for a capital raise to keep the company growing.
  • How so? The private investment in public equity (PIPE) that the SPAC option came with ensured that Shift would have hundreds of millions in cash.
  • Shift also wanted to minimize what the CEO described as market risk. A SPAC deal could happen regardless of what the broader markets were up to. And as the company made the choice to debut via a SPAC in April, some caution, we reckon, may have made some sense.

So now Shift is public and newly capitalized. Let’s see what happens to its shares as it gets into the groove of reporting quarterly. (Obviously, if it flounders, it’s a bad mark for SPACs, but, conversely, successful trading could lead to a bit more momentum to SPAC-mageddon.)

A few more things and we’re done. Unicorn exits had a good week. First, Datto’s IPO continues to move forward. It set an initial price this week, which could value it above $4 billion. Also this week, Roblox announced that it has filed to go public, albeit privately. It’s worth billions as well. And finally, DoubleVerify is looking to go public for as much as $5 billion early next year.

Not all liquidity comes via the public markets, as we saw this week’s Twilio purchase of Segment, a deal that The Exchange dug into to find out if it was well-priced or not.

Various and Sundry

We’re running long naturally, so here are just a few quick things to add to your weekend mental tea-and-coffee reading!

Next week we are digging more deeply into Q3 venture capital data, a foretaste of which you can find here, regarding female founders, a topic that we returned to Friday in more depth.

Alex

Pear hosted its invite-only demo day online year; here’s what you might have missed

Pear, the eight-year-old, Palo Alto, Calif.-based seed-stage venture firm that has, from its outset, attracted the attention of VCs who think the firm has an eye for nascent talent, staged its seventh annual demo day earlier this week, and while it was virtual, one of the startups has already signed a term sheet from a top-tier venture firm.

To give the rest of you a sneak peak, here’s a bit about all of the startups that presented, in broad strokes:


  1. ) AccessBell

What it does: Video conferencing platform for enterprise workflows

Website: accessbell.com

Founders: Martin Aguinis (CEO), Josh Payne (COO), Kamil Ali (CTO)

The pitch: Video has emerged as one of the prominent ways for enterprises to communicate internally and externally with their customers and partners. Current video conferencing tools like Zoom and WebEx are great for standalone video but they have their own ecosystems and don’t integrate into thousands of enterprise workflows. That means that API tools that do integrate, like Agora and Twilio, still require manual work from developer teams to customize and maintain. AccessBell is aiming to provide the scalability and reliability of Zoom, as well as the customizability and integrations of Twilio, in a low code integration and no code extensible customization platform.

It’s a big market the team is chasing, one that’s expected to grow to $8.6 billion by 2027. The cost right now for users who want to test out AccessBell is $27 per host per month.


2.) FarmRaise

What it does: Unlock financial opportunities for farmers to create sustainable farms and improve their livelihoods.

Website: farmraise.com

Founders: Jayce Hafner (CEO), Sami Tellatin (COO), Albert Abedi (Product)

The pitch: Over half of American farms don’t have the tools or bandwidth they need to identify ways to improve their farms and become profitable. The startup’s API links to farmers’ bank accounts, where its algorithm assesses financials to provide a “farm read,” scoring the farms’ financial health. It then regularly monitors farm data to continuously provide clean financials and recommendations on how to improve its customers’ farms, as well as to connect farmers with capital in order to improve their score. (It might suggest that a farm invest in certain sustainability practices, for example.)

Eventually, the idea is to also use the granular insights it’s garnering and sell these to hedge funds, state governments, and other outfits that want a better handle on what’s coming — be it around food security or climate changes.


3.) Sequel

What it does: Re-engineering life’s essential products – starting with tampons.

Website: thesequelisbetter.com

Founders: Greta Meyer (CEO),  Amanda Calabrese (COO)

The pitch: Founded by student athletes from Stanford, Sequel argues that seven out of 10 women don’t trust tampons, which were first designed in 1931 (by a man). New brands like Lola have catchy brands and new material, but they perform even worse than legacy products. Sequel has focused instead on fluid mechanics and specifically on slowing flow rates so a tampon wont leak before it’s full whether they’re in the “boardroom” or the “stadium.” The company says it has already filed patents and secured manufacturing partners and that it expects that the product will be available for consumers to buy directly from its website, as well as in other stores, next year.


4.) Interface Bio

What it does: Unlocking the therapeutic potential of the microbiome with a high-throughput pipeline for characterizing microbes, metabolites, and therapeutic response, based on years of research at Stanford.

Founders: Will Van Treuren, Hannah Wastyk

The pitch: The microbiome plays a major role in a wide range of human diseases, including heart disease, kidney disease, liver disease, and cancer. In fact, Interface’s founders — both of whom are PhDs —  say that microbiome-influenced diseases are responsible for four of the top 10 causes of death in the United States. So how do they better size on the opportunity to identify therapeutics by harnessing the microbiome? Well, they say they’ll do it via a “high-speed pipeline for characterizing metabolites and their immune phenotypes,” which they’ll create by developing the world’s largest database of microbiome-mediated chemistry, which the startup will then screen for potential metabolites that can lead to new therapies.


5.) Gryps

What it does: Gryps is tackling construction information silos to create a common information layer that gives building and facility owners quick, enriched and permanent access to document-centric information.

Website: gryps.io

Founders: Dareen Salama, Amir Tasbihi

The pitch: The vast size and complexity of the construction industry has resulted in all kinds of software and services that address various aspects of the construction processes, resulting in data and documents being spread across many siloed tools. Gryps says it picks up where all the construction-centered tools leave off: Taking delivery of the projects at the end of a construction job and providing all the information that facility owners need to operate, renovate, or build future projects through a platform that ingests data from various construction tools, mines the embedded information, then provides operational access through owner-centered workflows. 


6.) Expedock

What it does: Automation infrastructure for supply chain businesses, starting with AI-Powered Freight Forwarder solutions.

Website: expedock.com

Founders: King Alandy Dy (CEO), Jeff Tan (COO), Rui Aguiar (CTO)

The pitch: Freight Forwarders take care of all the logistics of shipping containers including financials, approvals and paper work for all the local entities on both sides of the sender and receiver geographies, but communications with these local entities are often done through unstructured data, including forms, documents, and emails and can subsequently eat up to 60% of operational expenses. Expedock is looking to transform the freight forwarding industry by digitizing and automating the processing and inputting of unstructured data into various local partner and governmental systems, including via a “huan in the loop” AI software service.


7.) Illume

What it does: A new way to share praise

Website: illumenotes.com

Founders: Sohale Sizar (CEO), Phil Armour (Engineering), Maxine Stern (Design)

The pitch: The process of thanking people is full of friction. Paper cards have to be purchased, signed, passed around; greetings on Facebook only mean so much. Using Illume, teams and individuals can download its app or come together on Slack and create a customized, private, and also shareable note. The nascent startup says one card typically has 10 contributors; it charging enterprises $3 per user per month, ostensibly so sales teams, among others, can use them.


8.) Quansa

What it does: Quansa improves Latin American workers’ financial lives via employer-based financial care

Website: quansa.io

Founders: Gonzalo Blanco, Mafalda Barros

The pitch: Fully 40% of employees across Latin America have missed work in the past 12 months due to financial problems. Quansa wants to help them get on the right track financially with the help of employers that use its software to link their employees’ payroll data with banks, fintechs and other financial institutions.

There is strength in numbers, says the firm. By funneling more customers to lenders through their employers, for example, these employees should ultimately be able to access to cheaper car loans, among other things.


9.) SpotlightAI

What it does: Spotlight turns sensitive customer information from a burden to an asset by using NLP techniques to identify, anonymize, and manage access to PII and other sensitive business data.

Website: hellospotlight.com

Founder: Austin Osborne (CEO)

The pitch: Data privacy legislation like GDPR and CCPA is creating an era where companies can no longer use their customer data to run their business due to the risks of fines, lawsuits, and negative media coverage. These lawsuits relating to misuse of personal data can reach billions of dollars and take years to settle. Spotlight’s software plugs into existing data storage engines via APIs and operates as a middleware within a company’s network. With advanced NLP and OCR techniques, it says it’s able to detect sensitive information in unstructured data, perform multiple types of anonymization, and provide a deep access control layer.


10.) Bennu

What it does: Bennu closes the loop on management communication

Website: bennu.io

Founder: Brenda Jin (CEO)

The pitch: Today’s work communication is done through forms, email, Slack, and docs; the timelines are unnatural.  Bennu is trying to solve the problem with communication loops that use integrations and smart topic suggestions to help employees prepare for substantive management conversations in seconds, not hours. 


11.) Playbook

What it does: Playbook automates the people coordination in your repeatable workflows with a simple system to create, execute and track any process with your team, customers, and more.

Website: startplaybook.com

Founders: Alkarim Lalani (CEO), Blaise Bradley (CTO)

The pitch: Whether you’re collecting time cards from 20 hourly workers every week, or managing 30 customer onboardings – you’re coordinating repetitive workflows across people over email and tracking it over spreadsheets. Playbook says it coordinates workflows between people at scale by taking programming concepts such as variables and conditional logic that let its customers model any workflow, and all packaged in an interface that enables anyone to build out their workflows in minutes.


12.) June Motherhood

What it does: Community-based care for life’s most important transitions.

Website: junemotherhood.com

Founders: Tina Beilinson (CEO), Julia Cole (COO), Sophia Richter (CPO)

The pitch: June is a digital health company focused on maternal health, with community at the core. Like a Livongo for diabetes management, June combines the latest research around shared appointments, peer-to-peer support and cognitive behavioral therapy to improve outcomes and lower costs, including through weekly programs and social networks that encourage peer-to-peer support. 


13.) Wagr

What it does: Challenge anyone to a friendly bet.

Website: wagr.us

Founders: Mario Malavé (CEO), Eliana Eskinazi (CPO)

The pitch: Wagr will allow sports fans to bet with peers in a social, fair, and simple way. Sending a bet requires just three steps, too: pick a team, set an amount, and send away. Wagr sets the right odds and handles the money.

Users can challenge friends, start groups, track leaderboards, and see what others are betting on, so they feel connected even if they aren’t together in the stadium. Customers pay a commission when they use the platform to find them a match, but bets against friends are free. The plan is to go live in Tennessee first and expand outward from there.


14.) Federato

What it does: Intelligence for a new era of risk

Website: federato.ai

Founders: Will Ross (CEO), William Steenbergen (CTO)

The pitch: Insurance companies are struggling to manage their accumulation of risk as natural catastrophes continue to grow in volume and severity. Reinsurance is no longer a reliable backstop, with some of the largest insurers taking $600 million-plus single-quarter losses net of reinsurance. 

Federato is building an underwriter workflow that uses dynamic optimization across the portfolio to steer underwriters to a better portfolio balance. The software lets actuaries and portfolio analysts drive high-level risk analysis into the hands of underwriters on the front lines to help them understand the “next best action” at a given point in time.


15.) rePurpose Global

What it does: A plastic credit platform to help consumer brands of any size go plastic neutral

Website: business.repurpose.global

Founders: Svanika Balasubramanian (CEO), Aditya Siroya (CIO), Peter Wang Hjemdahl (CMO

The pitch: Consumers worldwide are demanding businesses to take action on eliminating plastic waste, 3.8 million pounds of which are leaked into the environment every few minutes. Yet even as brands try, alternatives are often too expensive or worse for the environment. Through this startup, a brand can commit to the removal of a certain amount of plastic, which will then be removed by the startup’s loal watse management partners and recycled on the brand’s behalf (with rePurpose verifying that the process adheres to certain standards). The startup says it can keep a healthy margin while also running this plastic credit market, and that its ultimate vision is to our vision is to become a “one-stop shop for companies to create social, economic, and environmental impact.”


16.) Ladder

What it does: A professional community platform for the next generation

Website: ladder.io

Founders: Akshaya Dinesh (CEO), Andrew Tan

The pitch: LinkedIn sucks, everyone hates it. Ladder (which may have a trademark infringement battle ahead of it) is building a platform around community instead of networks. The idea is that users will opt in to join communities with like-minded individuals in their respective industries and roles of interest. Once engaged, they can participate in AMAs with industry experts, share opportunities, and have 1:1 conversations.

The longer term ‘moat’ is the data it collects from users, from which it thinks it can generate more revenue per user than LinkedIn. (By the way, this is the startup that has already signed a term sheet with a firm whose team was watching the demo day live on Tuesday.)


Exporta

How it works: Exporta is building a B2B wholesale marketplace connecting suppliers in Latin America with buyers in North America.

Website: exporta.io

Founders: Pierre Thys (CEO), Robert Monaco (President)

The pitch: The U.S. now imports more each year from Latin America than from China, but LatAm sourcing remains fragmented and manual. Exporta builds on-the-ground relationships to bring LatAm suppliers onto a tech-enabled platform that matches them to U.S. buyers looking for faster turnaround times and more transparent manufacturing relationships.


Via

What it does: Via helps companies build their own teams in new countries as simply as if they were in their HQ.

Website: via.work

Founders:  Maite Diez-Canedo, Itziar Diez-Canedo

The pitch: Setting up a team in a new country is very complex. Companies need local entities, contracts, payroll, benefits, accounting, tax, compliance…and the list goes on. Via enables companies to build their own teams in new countries quickly and compliantly by leveraging  local entities to legally employ teams on their behalf, and integrate local contracts, payroll, and benefits in one platform. By plugging into the local hiring ecosystem, Via does all the heavy lifting for its customers, even promising to stand up a team in 48 hours and at less expense than traditional alternatives. (It’s charging $600 per employee per month in Canada and Mexico, where it says it has already launched.)

Gogoro’s Eeyo 1s e-bike goes on sale in France, its first European market

Gogoro announced today that its Eeyo 1s is now available for sale in France, the smart electric bike’s first European market. Another model, the Eeyo 1, will launch over the next few months in France, Belgium, Monaco, Germany, Switzerland, Austria and the Czech Republic.

In France, the Eeyo 1s can be purchased through Fnac, Darty or, in Paris, Les Cyclistes Branchés. The Eeyo 1s is priced at €4699 including VAT, while the the Eeyo 1 will be priced at €4599, also including VAT.

The weight of Eeyo bikes is one of their key selling points and Gogoro says they are about half the weight of most other e-bikes. The Eeyo 1s weighs 11.9 kg and the Eeyo 1 clocks in at 12.4 kg.  Both have carbon fiber frames and forks, but the Eeyo 1s’ seat post, handlebars and rims are also carbon fiber, while on the Eeyo 1 they are made with an alloy.

Based in Taiwan, Gogoro first introduced its Eeyo lineup in May, making them available for sale in the U.S. first. The e-bikes are the company’s second type of vehicle after its SmartScooters, electric scooters that are powered by swappable batteries. The Eeyo bike’s key technology is the SmartWheel, a self-contained hub that integrates its motor, battery, sensor and smart connectivity technology so it can be paired with a smartphone app.

In an interview for the Eeyo’s launch, Gogoro co-founder and chief executive Horace Luke said the company began planning for Eeyo’s launch in 2019, before the COVID-19 pandemic. While sale of e-bikes were already growing steadily before COVID-19, the pandemic has accelerated sales of e-bikes as people avoid public transportation and stay closer to home. Several cities have also closed some streets to car traffic, making riders more willing to use bikes for short commutes and exercise.

Founded in 2011 and backed by investors including Temasek, Sumitomo Corporation, Panasonic, the National Development Fund of Taiwan and Generation (the sustainable tech fund led by former vice president Al Gore), Gogoro is best known for its electric scooters, but it is also working on a turnkey solution for energy-efficient vehicles to license to other companies, with the goal of reducing carbon emissions in cities around the world.

Why are VCs launching SPACs? Amish Jani of FirstMark shares his firm’s rationale

It’s happening slowly but surely. With every passing week, more venture firms are beginning to announce SPACs. The veritable blitz of SPACs formed by investor Chamath Palihapitiya notwithstanding, we’ve now seen a SPAC (or plans for a SPAC) revealed by Ribbit Capital, Lux Capital, the travel-focused venture firm Thayer Ventures, Tusk Ventures’s founder Bradley Tusk, the SoftBank Vision Fund, and FirstMark Capital, among others. Indeed, while many firms say they’re still in the information-gathering phase of what could become a sweeping new trend, others are diving in headfirst.

To better understand what’s happening out there, we talked on Friday with Amish Jani, the cofounder of FirstMark Capital in New York and the president of a new $360 million tech-focused blank-check company organized by Jani and his partner, Rick Heitzmann. We wanted to know why a venture firm that has historically focused on early-stage, privately held companies would be interested in public market investing, how Jani and Heitzmann will manage the regulatory requirements, and whether the firm may encounter conflicts of interest, among other things.

If you’re curious about starting a SPAC or investing in one or just want to understand how they relate to venture firms, we hope it’s useful reading. Our chat has been edited for length and clarity.

TC: Why SPACs right now? Is it fair to say it’s a shortcut to a hot public market, in a time when no one quite knows when the markets could shift?

AJ: There are a couple of different threads that are coming together. I think the first one is the the possibility that [SPACs] works and really well. [Our portfolio company] DraftKings [reverse-merged into a SPAC] and did a [private investment in public equity deal]; it was a fairly complicated transaction and they used this to go public and the stock has done incredibly well.

In parallel, [privately held companies] over the last five or six years could raise large sums of capital, and that was pushing out the the timeline [to going public] fairly substantially. [Now there are] tens of billions of dollars in value sitting in the private markets and [at the same time] an opportunity to go public and build trust with public shareholders and leverage the early tailwinds of growth.

TC: DraftKings was valued at $3 billion when it came out and it’s now valued at $17 billion, so it has performed really, really well. What makes an ideal target for a SPAC versus a traditional IPO? Does having a consumer-facing business help get public market investors excited? That seems the case.

AJ: It comes down to the nature and the growth characteristics and the sustainability of the business. The early businesses that are going out, as you point out, tend to be consumer based, but I think there’s as good an opportunity for enterprise software companies to use the SPAC to go public.

SPAC [targets] are very similar to what you would want in a traditional IPO: companies with large markets, extremely strong management teams, operating profiles that are attractive, and long term margin profiles that are sustainable, and to be able to articulate [all of that] and have the governance and infrastructure to operate in a public context. You need to be able to do that across any of these products that you use to get public.

TC: DraftKings CEO Jason Robins is an advisor on your SPAC. Why jump into sponsoring one of these yourselves?

AJ: When he was initially approached, we were, like most folks, pretty skeptical. But as the conversations evolved, and we began to understand the amount of customization and flexibility [a SPAC can offer], it felt very familiar. [Also] the whole point of backing entrepreneurs is they do things differently. They’re disruptive, they like to try different formats, and really innovate, and when we saw through the SPAC and the [actual merger] this complex transaction where you’re going through an M&A and raising capital alongside that and it’s all happening between an entrepreneur and a trusted partner, and they’ve coming to terms before even having to talk about all of these things very publicly, that felt like a really interesting avenue to create innovation.

For us, we’re lead partners and directors in the companies that we’re involved with; we start at the early stages at the seed [round] and Series A and work with these entrepreneurs for over a decade, and if we can step in with this product and innovate on behalf of our entrepreneurs and entrepreneurs in tech more broadly, we think there’s a really great opportunity to push forward the process for how companies get public.

TC: You raised $360 million for your SPAC. Who are its investors? Are the same institutional investors who invest in your venture fund? Are these hedge funds that are looking to deploy money and also potentially get their money out faster?

AJ: I think a bit of a misconception is this idea that most investors in the public markets want to be hot money or fast money. You know, there are a lot of investors that are interested in being part of a company’s journey and who’ve been frustrated because they’ve been frozen out of being able to access these companies as they’ve stayed private longe. So our investors are some are our [limited partners], but the vast majority are long-only funds, alternative investment managers, and people who are really excited about technology asa long term disrupter and want to be aligned with this next generation of iconic companies.

TC: How big a transaction are you looking to make with what you’ve raised?

AJ: The targets that we’re looking for are going to look very similar to the kind of dilution that a great company would take going public —  think of that 15%, plus or minus, around that envelope. As you do the math on that, you’re looking at a company that’s somewhere around $3 billion in value.  We’re going to have conversations with a lot of different folks who we know well, but that’s that’s generally what we’re looking for.

TC: Can you talk about your “promote,” meaning how the economics are going to work for your team?

AJ: Ours [terms] are very standard to the typical SPAC. We have 20% of the original founders shares. And that’s a very traditional structure as you think about venture funds and private equity firms and hedge funds: 20% is is very typical.

TC: It sounds like your SPAC might be one in a series.

AJ: Well, one step at a time. The job is to do this really well and focus on this task. And then we’ll see based on the reaction that we’re getting as we talk to targets and how the world evolves whether we do a second or third one.

TC: How involved would you be with the management of the merged company and if the answer is very, does that limit the number of companies that might want to reverse-merge into your SPAC?

AJ: The management teams of the companies that we will target will continue to run their businesses. When we talk about active involvement, it’s very much consistent with how we operate as a venture firm, [meaning] we’re a strong partner to the entrepreneur, we are a sounding board, we help them accelerate their businesses, we give them access to resources, and we leverage the FirstMark platform. When you go through the [merger], you look at what the existing board looks like, you look at our board and what we bring to bear there, and then you decide what makes the most sense going forward. And I think that’s going to be the approach that we take.

TC: Chamath Palihapitiya tweeted yesterday about a day when there could be so many VCs with SPACs that two board members from the same portfolio company might approach it to take it public. Does that sound like a plausible scenario and if so, what would you do?

AJ: That’s a really provocative and interesting idea and you could take that further and say, maybe they’ll form a syndicate of SPACs. The way I think about it is that competition is a good thing. It’s a great thing for entrepreneurship, it’s a good thing overall.

The market is actually really broad. I think there’s something like 700-plus private unicorns that are out there. And while there are a lot of headlines around the SPAC, if you think about technology-focused people with deep tech backgrounds, that pool gets very, very limited, very quickly. So we’re pretty excited about the ability to go have these conversations.

You can listen in on more of this conversation, including around liquidation issues and whether FirstMark will target its own portfolio companies or a broader group or targets, here.

Venture capital gets less diverse in 2020

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. You can subscribe here.


First, a big congrats on making it through the week. If you live in the United States, you just endured one of the wildest news weeks ever. Rapid-fire headlines and nigh-panic have been our lot since last Friday when the president announced he was COVID-19 positive. We’re all very tired. You get points for just surviving.

Second, I wanted to bring you something uplifting this weekend, as you deserve it. Sadly, that’s not what we’re going to talk about.

On Friday, The Exchange covered new data concerning the venture capital results of female founders during the third quarter. The data set was U.S.-focused, but we can presume that it is illustrative of global trends. Regardless of that nuance, the data was depressing.

In the third quarter, U.S.-based female founders and co-founders raised 136 rounds worth $434 million, per PitchBook data. That was a handful more rounds than Q2 2020, but far fewer dollars. And it was down across the board compared to Q3 2019. Even more, as we noted in the piece, the aggregate venture capital world did very well.

Here’s some PwC data making that point, and a bit more from my old employer Crunchbase. What matters is that female founders are doing worse when VCs are super active. This will only perpetuate inequalities and inequities in the startup market.

Speaking of which, here’s some more bad news. Vern Howard Jr., the co-founder and CEO of Hallo, a startup that has raised nearly $2 million, according to Crunchbase, compiled some data on Black founders’ VC performance in Q3. Here’s what he set out to do:

[W]e wanted to put hard numbers behind the promises of so many venture capitalists and create a benchmark for how we can track the investment into black founders over time. So our team pulled a list from Crunchbase of all the startups globally with a total funding amount of $500,000 — $20,000,000 and who raised a round between July 1 and October 1. There were over 1383 companies here and our team went through one by one, to see how many Black founders there were.

There were 31.

Now, you could open up the funding bands to include both smaller and larger funding events, but regardless of the data boundaries, the resulting number — just 2.2% of the total — is a disgrace.

Market Notes

Various and Sundry

  • Continuing our coverage of the savings and investing boom that fintech startups around the world have been riding this year, Freetrade, a British Robinhood if you will, told The Exchange that it crossed £1 billion in September order volume. That’s not bad!
  • Freetrade also recently launched a paid version of its service, as the payment-for-order-flow method of generating revenue that Robinhood is growing on the back of is not allowed across the pond.
  • Sticking to the fintech world, Yotta Savings is a startup that provides a savings option to its users, with the added chance of winning a big monetary prize for having stored their money with the startup. Folks have been whispering in my ear about the company for a bit, but I’ve held off writing about it until now as it was not clear to me if the model was merely a gimmick, or something that would actually attract customers.
  • Well, Yotta grew from 8,000 accounts to more than 30,000 in the past few weeks and has reached the $100 million deposit mark. So, I guess we now care.
  • Coinbase lost one in 20 employees to its new strategy of standing neutral during political times on anything that its CEO deems as unrelated to its core mission, which, as a for-profit company with tectonic financial backing, is making money.
  • On the same topic, Can from The Margins made a salient point that “no politics is a political stance.” Correct, and it is a very conservative one at that.
  • Even more, Coinbase’s CEO made noise about how his company will “work to create an environment where everyone is welcome and can do their best work, regardless of background, sexual orientation, race, gender, age, etc.” Whether he likes it or not, this is a political stance, and one that has nothing to do with the company’s stated core mission. And a political fight earned it — namely, equal access to the workplace.
  • I’ll toss in a plug for this piece on the matter from a VC that TechCrunch published, and these thoughts from a tech denizen on how to guarantee that your company lands on the wrong side of history on essentially everything.
  • Wrapping our grab-bag this week, Ping Identity bought ShoCard. Ping is now a public company, so normally its deals would land outside our wheelhouse. But we care in this case because TechCrunch has covered ShoCard (2015: “ShoCard Is A Digital Identity Card On The Blockchain”), and because the startup does crypto-related work.
  • Seeing a public company snap up a blockchain startup for real money, on purpose and out loud, doesn’t happen every day. More here if you want to read about the deal.

Wrapping, this newsletter is a lot of fun and I appreciate your reading it. It is, also, a work in progress. So feel free to hit respond to it and let me know what you want to see more of. Or hit respond and send me a cute pic of your pet. Either is fine by me.

Chat soon,

Alex

Faraday Future plans to go public through a SPAC deal

Faraday Future, the electric vehicle startup with a messy and complicated past, is planning to go public through a special-purchase acquisition company (SPAC) deal.

The company’s chief executive Carsten Breitfeld told Reuters that the company is working on a reverse merger with a SPAC and “will be able to announce something hopefully quite soon.”

Breitfeld, formerly the co-founder of Chinese EV startup Byton, declined to give more information about who Faraday is talking to or when the deal will closed. A Faraday Future spokesperson contacted by TechCrunch also said the company had no further details to share at this time.

SPACs are blank-check companies that are formed to raise money through an initial public offering in order to merge or acquire other companies. As TechCrunch’s Connie Loizos wrote in an explainer, they’ve become more popular among tech companies recently because many had their initial public offering plans delayed by the pandemic. SPACs also present an alternative to the regulatory issues surrounding traditional IPOs.

Shortly after being appointed CEO in September 2019, Breitfeld told Automotive News that Faraday Future wanted to raise about $850 million by the first quarter of 2020. By that time, company had already received $225 million in bridge financing led by Birch Lake Associates. The funding’s purpose is to finally bring Faraday’s flagship vehicle, the FF91 luxury electric SUV, to market.

Though the SPAC deal’s timeline is still undisclosed, Breitfeld told Reuters that Faraday Future plans to start volume production of the FF91, its first electric luxury SUV, 12 months after securing funding. This would represent a major milestone for the company, which was founded in 2015 but hasn’t produced a production vehicle yet. Faraday Future has made several prototypes, including one that went up for auction in August.

If the deal is successful, Breitfeld told Reuters that Faraday Future will first build the FF91 at its Hanford, California plant, but then work with a contract manufacturer in Asia that it has already entered into an agreement with.

Faraday Future’s financial issues date back to 2017, when LeEco, the Chinese tech company it was closely linked to, began dealing with multiple financial headaches of its own. They worsened when Faraday Future fell out with its main backer, Evergrande Health, in 2018.

Many of those issues were tied to Jia Yueting, founder and former CEO of LeEco and Faraday Future, who filed for personal bankruptcy earlier this year. Filings in the case revealed that Jia’s bankruptcy was funded by one of Faraday Future’s main holding companies, Pacific Technology. The documents also revealed that Faraday Future had just $6.8 million in cash at the end of July 2019.

Breitfeld told Reuters that Jia no longer owns stock in Faraday Future. The approval of Jia’s bankruptcy enabled Faraday Future to once again pursue investments to produce its electric vehicles, though now that may hinge on the success of its SPAC deal. Breitfeld acknowledged that Faraday Future’s past raises questions. “Because of the history and sometimes the bad news of the company, not everyone is really trusting us,” he told Reuters. “They want to see that we’ve become a stable company.”

Airbnb nears IPO as Asana and Palantir land their direct listings

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The going has not always been easy but the tech IPOs keep coming. Airbnb itself is almost here, in what is likely to be the ultimate stock market listing of this dramatic year. After the pandemic triggered mass layoffs for the short-term rental marketplace, it has managed to make up all of the lost ground to pre-pandemic projections, TechCrunch and others have reported. Now, news is leaking out that it could seek to raise up to $3 billion at a $30 billion valuation.

The US presidential election in a month, Trump’s positive COVID-19 diagnosis, and various other world events have yet to stop the tech IPO momentum.

This past Wednesday, Palantir and Asana both opted to put a limited number of shares up for sale directly instead of working with a bank to pre-sell portions to favored clients, following in the direct-listings footsteps of Spotify and Slack.

Palantir, which is continuing to get political scrutiny around its government data businesses, and Asana both finished the first few days of trading without any pop to speak of for initial public investors (although other things have been impacting markets in the same time frame). However, both companies have already turned billions of paper funding rounds into liquid money that can start going back to the employees and investors, as intended. And now, each can sail the high seas of public markets with a smaller, friendlier group of stockholders than many, many other public companies have.

We’ve been covering Palantir in great detail recently, but Asana’s entrance provides a broader lesson for the many aspiring SaaS startups out there.

Dustin Moskovitz, who has retained a huge amount of control as a cofounder/investor, told Danny Crichton for Extra Crunch that more than 40% of the task-focused work management provider’s revenue is now coming from outside of North America, with ongoing growth, high customer loyalty and big integrations with other SaaS providers. The results bode well for other SaaS companies considering direct listings, as Alex Wilhelm analyzes for EC:

Asana grew 63% in the six months ending July 31, 2020, compared to the same period of 2019, though that growth rate decelerated to around 57% when only looking at the most recent quarter and its historical analog. Good growth then, if slowing. And Asana’s gross margins were good and improving, coming in at 86% in the six months ending July 31, 2019, and 87% in the same period of 2020. But the company’s net losses were rising in gross and relative terms at the same time. In the six months ending July 31, 2020, Asana lost $76.9 million, up from $30.5 million in the same period of 2019. And, the company’s 77% net loss as a percent of revenue in the two quarters ending in July of 2020 was up from a 50% loss during the same period of the preceding year. Asana also consumed more cash this year than last year, with its operating cash burn rising from $13.1 million during the six months ending July 31, 2019 to $40.3 million in the same period of 2020.

And yet, from a reference price of $21, valuing the company at around $4 billion on a fully diluted basis, shares of Asana have risen to $25.14 at the open of trading this morning (though Asana lost several points today thanks to general market carnage). Current market trackers value the company at $3.86 billion.

Now, on to Airbnb! (And also, Datto!)

Source: Getty Images

Pandemic upsides arrive for cannabis, mental health and language learning

As the world tries to make sense of fresh Q3 data, we took a closer look at a few fresh startup trends. First, the cannabis market seems to be as strong as you’d expect. Matt Burns caught up with a range of weed-tech founders, investors and analysts, who shared almost entirely good news for the emerging sector. Here’s a highlight from Andy Lytwynec, VP, Global Vape Business at Canopy Growth, the cannabis holding company for a range of brands, including the vaporizer preferred by your self-medicated correspondent:

Lytwynec points to Storz & Bickle as a barometer of sorts in judging the impact of COVID-19. The German-based vaporizer company saw an uptick in sales, as reported in Canopy Growth’s latest quarterly report. The company reported a 71% increase during the first quarter ending on June 30. The financial report pointed to Storz & Bickel’s increased sales and distribution expansion as a primary reason for the increase. 

Just try getting a replacement for that mouthpiece you tragically broke at the start of quarantine. And don’t fall for that fake stuff on Amazon or you’ll be huffing plastic. Anyway…

Alex also checked in on mental health funding, which were already coming into their own before the pandemic. The first half of the year was the sector’s biggest yet, with a focus on remote therapy, virtual coaching and anxiety alleviation, although Q2 was down slightly from Q1. More, from Extra Crunch:

Investors are putting dollars to work in 2020 to further the growth mental health startups managed in 2018 and 2019. Per the CB Insights dataset, in Q1 and Q2 2020, these startups saw 106 rounds worth $1.08 billion. In the year-ago period, the figures were 87 rounds worth $750 million. (Unlike some subcategories of wellness startups that CB Insights detailed, mental health upstarts have enough regular VC volume to make year-over-year comparisons reasonable.)

In a different sector of tech-powered mind improvement, Duolingo is now on track to hit $180 million bookings, chief executive Luis von Ahn tells Natasha Mascarenhas for EC. While the language-learning company has seen usage surge from 30 million to 42 million monthly active users this year, it only makes money from 3% of them (those who want to pay to avoid seeing ads, get download access, and other features).

The future of transportation

From Kirsten Korosec, our resident mobility expert and host of our next event:

If you’re interested in tech, transportation and startups — of course you are — you should make our next event a priority. And it’s coming up in just a few days. TechCrunch is hosting TC Sessions: Mobility 2020 on October 6 & 7, a virtual event that will bring together the best and brightest minds working on automated vehicle technology, shared micromobility and electrification. We’ll be talking to former Tesla co-founder and CTO JB Straubel about his new venture Redwood Materials, the CEOs of EV newcomers Polestar and Lucid Motors, Formula E driver Lucas di Grassi about a new kind of racing event (hint, scooters!), early stage-investors from Trucks VC, Hemi Ventures and Maniv as well as Uber’s director of policy for cities Shin-Pei Tsay, to name a few. Plus there will be a dedicated networking time, a pitch night on October 5 and a virtual expo. There are a variety of ticket prices to meet your budget, including one for students. But I’m also here bearing gifts: Startups Weekly readers can get 50% off the full price at this link. If you’d just like to check out the startups expo portion, Startups Weekly readers can get in free with this link.

Photographer: Anindito Mukherjee/Bloomberg via Getty Images

Top Indian app developers join global platform rebellion

Manish Singh, our lead reporter covering Indian startups, has been breaking news on the growing dissent against app platform policies. It’s getting epic:

More than 150 startups and firms in India are working to form an alliance and toying with the idea of launching an app store to cut their reliance on Google, five people familiar with the matter told TechCrunch.

The list of entrepreneurs includes high-profile names, such as Vijay Shekhar Sharma, co-founder and chief executive of Paytm (India’s most valuable startup); Deep Kalra of travel ticketing firm MakeMyTrip; and executives from PolicyBazaar, RazorPay and ShareChat. The growing list of founders expressed deep concerns about Google’s “monopolistic” hold on India, home to one of the world’s largest startup ecosystems, and discussed what they alleged was unfair and inconsistent enforcement of Play Store’s guidelines in the country.

Their effort comes days after a small group of firms — including Epic Games, Spotify, Basecamp, Match Group and ProtonMail — forged their own coalition to pressure Apple and Google to make changes to their marketplace rules.

“Where else do these dollars go?”

Danny interviewed SF-based Index Ventures partners Nina Achadjian and Sarah Cannon about the latest trends in startup fundraising. Here’s a key part about the macro trends, that also explains why all those tech IPOs continue to happen (and do well):

TechCrunch: Given the amount of capital flowing into venture these days, have you noticed any LPs starting to pull back from the market?

Cannon: They’re not pulling back. In fact, it’s like, “Could you potentially take more allocation? And what do you think of these other seed managers?”

I think the way that I’ve got my mind around this is, where else would these dollars go? What are the alternatives for the dollars that are rushing into tech? I don’t know the latest numbers, but it was something like 40% of stock market returns are actually concentrated in Apple [and FAANG]. And then we’re seeing IPOs perform the same.

We’re in a global pandemic that could easily cause [another] recession. A lot of industries like airlines and travel have more exposure. Tech is just relatively more attractive. So if the interest rates are low, which they are, and [economists] have said that they’re going to be low for the coming decades, then you’re going to have lots of capital chasing returns.

Across the week

TechCrunch

Allbirds CEO Joey Zwillinger on the startup’s $100 million round, profitability and SPAC mania

How Twilio built its own conference platform

Working for social justice isn’t a ‘distraction’ for mission-focused companies

Apple removes two RSS feed readers from China App Store

Calling VCs in Rome and Milan: Be featured in The Great TechCrunch Survey of European VC

Extra Crunch

News apps in the US and China use algorithms to drive engagement, discovery

Which neobanks will rise or fall?

9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future

Spain’s startup ecosystem: 9 investors on remote work, green shoots and 2020 trends

Healthcare entrepreneurs should prepare for an upcoming VC/PE bubble

#EquityPod

From Natasha:

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week, Alex is on a much-deserved vacation (but not from Twitter, it seems) so Danny Crichton and I chatted through the news and happenings of the week. Somehow we winded our way through the latest tech controversies, gave Chris Wallace a shout out and ended with some funding rounds. I’ll be out next week so don’t miss me too much, but expect the entire Equity team to be back full-speed in mid-October. Thanks, as always, to our producer Chris Gates for his patience and diligence.

Now, onto a sneak peek of what we got into:

  • Moderation continues to be the root of all problems. We got into the anti-semitic comments that were spewed on Clubhouse, and what that means for the future of the audio-only platform. As Danny so eloquently put it: if Clubhouse is having moderation problems even with an exclusive invite-only user base, the problem will grow.
  • We also talked about Coinbase CEO Brian Armstrong’s blog post, which triggered a debate between us on whether tech companies can even choose to not be political. For the record, Black Lives Matter is not a political statement. It’s a human statement. Read this op-ed for more.
  • I wrote a piece about how a new program wants to be the Y Combinator for emerging fund managers. The whole “YC for X” model usually makes me roll my eyes, but listen to hear why I’m actually optimistic and bullish on programs like these taking off within tech.
  • Silver Lake added a $2 billion “long-term” hedge fund backed by Abu Dhabi to its tech finance toolkit. The strategy is a signal to privately backed startups, and potentially a slap in the face to SoftBank.
  • For a quick edtech note, I caught up with Duolingo’s CEO this week in one of his rare press interviews. Luis von Ahn explained the app’s surge in bookings, and there’s one key metric we pull out to noodle over.
  • Danny explained Gusto’s latest product launch with, wait for it, Gusto. In all seriousness, he brings up interesting points about the future of fintech feeling more full-suite, and free.
  • Funding round chatter continued when we unpacked Lee Fixel’s latest investment in India’s Inshorts.
  • Finally, we ended with LiquidDeath, which is not the name of a drinking game, but instead the name of a startup that has successfully attracted millions in venture capital for mountain water.

And with that, we will be back next week. Vote like your life depends on it, because it does.

Equity  drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Allbirds CEO Joey Zwillinger on the startup’s $100 million round, profitability, and SPAC mania

As people spend less time out in the world and more time daydreaming about when a vaccine will arrive, lifestyle shoes are only gaining traction.

One obvious beneficiary is Allbirds, the San Francisco-based maker of comfortable, sustainable kicks that launched in 2016 and quickly became a favorite in Silicon Valley circles before taking off elsewhere.

Though the company saw its business slow this year because of the pandemic, its products are now available to purchase in 35 countries and its 20 brick-and-mortar stores are sprinkled throughout the U.S. and Europe, with another outpost in Tokyo and several shops in China.

Investors clearly see room for more growth. Allbirds just closed on $100 million in Series E funding at roughly the same $1.6 billion valuation it was assigned after closing on $27 million in Series D funding earlier this year, and blank-check companies have been calling, says cofounder and CEO Joey Zwillinger. He talked with us earlier this week in a chat that has been edited for length and clarity.

TC: Your shoes are sold worldwide. What are your biggest markets?

JZ: The biggest market by far is the U.S., and the same day that we started here in 2016, we also launched in New Zealand, so that’s been very good to us over the last four years, too. But we’ve seen growth in Japan and Korea and China and Canada and Australia. We have a network of warehouses globally that lets us reach 2.5 billion people [who], if they were so inclined, could get their product in three days. We’re proud of the infrastructure we’ve set up.

TC: We’ve all worn shoes a lot less than we might have expected in 2020. How has that impacted your business?

JZ: We’re growing but definitely not at the same pace we would be had the pandemic not occurred. We’re predominantly digital in terms of how we reach people, but stores are important for us. And we had to switch [those] off completely and lost a portion of our sales for a long time.

TC: Did you have to lay off your retail employees?

JZ: A large portion of our retail force was unable to work, but we were luckily able to keep them fully paid for four months, plus [some received] government benefits if they got that. And now all of our 20 stores are up and running again in a way that’s totally safe and everyone feels really comfortable.

We also donated shoes to frontline workers — 10,000 pairs or around a million dollars’ worth.

TC: What does Allbirds have up its sleeve, in terms of new offerings?

JZ: We just launched our native mobile app, and through it we’re able to give our more loyal fans exclusives. It’s a really cool experience that blends technology with fashion. You can try on shoes in a virtual mirror; you’re given information [about different looks] that you wouldn’t have otherwise.

We also launched wool-based weather-proofed running shoes in April that have blown away our expectations but [were fast discovered by] people who haven’t really been running for 10 to 15 years and are running again [because of gym closures]. It’s a super high-stakes category and one that’s hard to break into because people buy on repeat. But we spent two years making it. It’s not like we launched it because of the pandemic. It’s a shoe for 5K to 10K distances — it’s not a marathon shoe or a trail shoe — and that we’ve been able to clearly articulate that speaks to its success, I think.

TC: What about clothing?

We launched underwear and socks last year in a small launch. We developed a textile that hasn’t been used before — it’s a blend of tree fiber and merino wool because our view is that nature can unlock magic. Underwear is typically synthetic — it’s made from plastics — or cotton, which isn’t a great material for a whole bunch of reasons. [Meanwhile] ours is phenomenal for temperature control; it also feels like cashmere.

TC: Patagonia really advertises its social and environmental values. Do you see Allbirds evolving in a similar way, with a growing spate of offerings?

JZ: I’m incredibly humbled by [the comparison]. Given their environmental stewardship of the retail sector, we hope we’re compared to them. But they are much more of an outdoor brand — not a competitor so to speak. And we’d love to share more of the retail world with them so we can do our environmental thing together.

TC: You just raised funding. Are you profitable and, if not, is profitability in sight?

JZ: We’ve been profitable for most of our existence. Having some discipline as we grow is good. We’re not close to the profitability that we’ll eventually have, but we’re still a small company in investment mode. After we emerge from the pandemic, we’ll enter a ramping-up phase.

TC: Everyone and their brother is raising money for a blank-check company, or SPAC, which can make it a lot faster for a private company to go public. Have you been approached, and might this option interest you?

JZ: Yes and no. Yes we’ve been approached, and no, we’re [not interested]. We want to build a great company and being public might be something that helps enable that for a whole bunch of reasons. But we want to do it at the right time, in a way that helps the business grow in the most durable and sustainable fashion. Just jumping at the opportunity of a SPAC without doing the rigorous prep the way we want to, we’re not super focused on that

E-scooter startup Neuron Mobility adds $12M to its Series A for expansion in Australia and New Zealand

Neuron Mobility, a Singapore-based e-scooter rental startup, announced today that it has added $12 million to its Series A. Led by Square Peg, an Australian venture capital firm and GSR Ventures, this increases the round’s new total to $30.5 million. The company, which operates in Australia and New Zealand in addition to Southeast Asian markets, first announced its Series A in December 2019.

Part of Neuron Mobility’s growth plans hinges on the increased adoption of electric scooters and bikes during the COVID-19 pandemic. Many people are using their cars less frequently because they are working remotely or there are movement restrictions where they live. When they do go out, electric bikes and scooters offer an alternative to public transportation and ride-hailing services for short trips.

Neuron Mobility’s chief executive Zachary Wang said the company raised a Series A+ instead of moving onto a Series B because more cities are “opening up to the possibility of micromobility, particularly rental e-scooters as they present an individual transport option that takes pressure off public transport and allows people to continue social distancing.”

“We’ve been experiencing tremendous growth in ANZ and the pandemic has made us fast track our plans,” he added.

Though Neuron Mobility currently does not operate in other Southeast Asian countries besides Singapore, Wang said it is “constantly evaluating opportunities across APAC.”

The new funding will be used to speed up Neuron Mobility’s expansion plans in Australia and New Zealand, where it claims to be the leading electric scooter rental operator. The company is currently present in nine locations, including Auckland, New Zealand, and Australian cities Adelaide, Brisbane, Darwin, Canberra and Townsville. Neuron Mobility plans to expand into five new cities over the next two months and part of that involves hiring 400 more people in Australia, New Zealand and Singapore. In addition to the Asia-Pacific, Neuron Mobility will also launch in Slough, it’s first location in the United Kingdom, by the end of this year.

Neuron Mobility’s research found that before the COVID-19 lockdowns in Australia, one in five of its users had never used an e-scooter before. But now Australian and New Zealand users have increased their average e-scooter trip distances by 23% to 2.6 kilometers, with the average duration of rides rising by 10% to more than 14 minutes. Neuron Mobility’s pricing is meant to be affordable depending on different markets. For example, in Brisbane, users pay one Australian dollar (about 68 U.S. cents) to begin a trip and then 38 Australian cents for each minute of the ride. Its e-scooters can go up to speeds of about 25 kilometers (15.5 miles) per hour.

Other “micromobility” companies, including Ofo, Reddy Go, Obike and Lime, have also offered rental services in Australia and New Zealand, but ran into trouble. Bike-sharing startups Ofo, Reddy Go and Obike withdrew from Australia in part because city councils were frustrated by bikes were being abandoned on sidewalks and in parks. Lime still operates in Australian cities, but in June, the Australian Competition and Consumer Commission found that the company failed to disclose safety issues with its Generation 2 scooters (in response, Lime said it would implement new compliance procedures and upgrade to its new Generation 3 scooter).

Wang said Neuron Mobility avoids those issues by strategically planning which cities it will launch in, instead of focusing on rapid expansion, partnering with city councils and “continually shifting and adapting to meet their needs.” Several of Neuron Mobility’s features, including geofencing to control where and how fast e-scooters can be ridden, and a “Helmet Lock” to make helmets available for all scooters, were developed after discussions with city councils. Neuron Mobility’s scooters, designed by the company specifically for renting, also use swappable batteries to decrease pollution.

After launching in Singapore, Neuron Mobility decided to focus on Australia and New Zealand because “both countries have cities that are highly suitable for micromobility in terms of infrastructure and regulations,” Wang said. City councils have also “been keen to push the boundaries of what can be done with technology to make programs better and safer and that really suits our way of thinking.”

 

Philippines payment processing startup PayMongo lands $12 million Series A led by Stripe

Stripe has led a $12 million Series A round in Manila-based online payment platform PayMongo, the startup announced today.

PayMongo, which offers an online payments API for businesses in the Philippines, was the first Filipino-owned financial tech startup to take part in Y Combinator’s accelerator program. Y Combinator and Global Founders Capital, another previous investor, both returned for the Series A, which also included participation from new backer BedRock Capital.

PayMongo partners with financial institutions, and its products include a payments API that can be integrated into websites and apps, allowing them to accept payments from bank cards and digital wallets like GrabPay and GCash. For social commerce sellers and other people who sell mostly through messaging apps, the startup offers PayMongo Links, which buyers can click on to send money. PayMongo’s platform also includes features like a fraud and risk detection system.

In a statement, Stripe’s APAC business lead Noah Pepper said it invested in PayMongo because “we’ve been impressed with the PayMongo team and the speed at which they’ve made digital payments more accessible to so many businesses across the Philippines.”

The startup launched in June 2019 with $2.7 million in seed funding, which the founders said was one of the largest seed rounds ever raised by a Philippines-based fintech startup. PayMongo has now raised a total of almost $15 million in funding.

Co-founder and chief executive Francis Plaza said PayMongo has processed a total of almost $20 million in payments since launching, and grown at an average of 60% since the start of the year, with a surge after lockdowns began in March.

He added that the company originally planned to start raising its Series A in in the first half of next year, but the growth in demand for its services during COVID-19 prompted it to start the round earlier so it could hire for its product, design and engineering teams and speed up the release of new features. These will include more online payment options; features for invoicing and marketplaces; support for business models like subscriptions; and faster payout cycles.

PayMongo also plans to add more partnerships with financial service providers, improve its fraud and risk detection systems and secure more licenses from the central bank so it can start working on other types of financial products.

The startup is among fintech companies in Southeast Asia that have seen accelerated growth as the COVID-19 pandemic prompted many businesses to digitize more of their operations. Plaza said that overall digital transactions in the Philippines grew 42% between January and April because of the country’s lockdowns.

PayMongo is currently the only payments company in the Philippines with an onboarding process that was developed to be completely online, he added, which makes it attractive to merchants who are accepting online payments for the first time. “We have a more efficient review of compliance requirements for the expeditious approval of applications so that our merchants can use our platform right away and we make sure we have a fast payout to our merchants,” said Plaza.

If the momentum continues even as lockdowns are lifted in different cities, that means the Philippine’s central bank is on track to reach its goal of increasing the volume of e-payment transactions to 20% of total transactions in the country this year. The government began setting policies in 2015 to encourage more online payments, in a bid to bolster economic growth and financial inclusion, since smartphone penetration in the Philippines is high, but many people don’t have a traditional bank account, which often charge high fees.

Though lockdown restrictions in the Philippines have eased, Plaza said PayMongo is still seeing strong traction. “We believe the digital shift by Filipino businesses will continue, largely because both merchants and customers continue to practice safety measures such as staying at home and choosing online shopping despite the more lenient quarantine levels. Online will be the new normal for commerce.”

Is your startup the next TikTok?

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

And I don’t mean building an app that gets the world addicted to short-form videos. I mean, where you build a huge company that spans the world and then get turned into a political football.

The Bytedance-owned app developer still appears headed for a shutdown in the US, after the already convoluted talks stalled out this past week. Each national government appears to require local ownership of a new entity, as Catherine Shu details, and the business partners are each claiming ownership. It’s a zero sum global game now for control of data and algorithms.

On the other side of the world, Facebook was quick to state that it would not be pulling out of the European Union this week even if it is forced to keep EU user data local, as Natasha Lomas covered. The company was clarifying a recent filing it had made that seemed to threaten otherwise — it doesn’t want to get TikTok’d.

For startups with physical supply chains, existing tensions are squeezing business activity from Chimerica out into other parts of the world, as Brian Heater wrote about the topic for Extra Crunch this week. Here’s what one founder told him:

Many [companies] are considering manufacturing in areas like Southeast Asia and India. Vietnam, in particular, has offered an appealing proposition for a labor pool, notes Ho Chi Minh City-based Sonny Vu, CEO of carbon-fiber products manufacturer Arevo and founder of deep tech VC fund Alabaster. “We’re friendly [with] the Americans and the West in general. Vietnam, they’ve got 100 million people, they can make stuff,” Vu explains. “The supply chains are getting more and more sophisticated. One of the issues has been the subpar supply chain … it’s not as deep and broad as as other places like China. That’s changing really fast and people are willing to do manufacturing. I’ve heard from my friends trying to make stuff in China, labor’s always this chronic issue.”

Danny Crichton blamed nationalistic US policies for undermining the country’s long-term commitment to leading global free trade and threatening its competitive future, in a provocative rant last weekend. There’s truth to that, but the underlying truth is that globalization worked, it just hasn’t work as well as hoped for a lot of people in the US and some other parts of the world. In addition to phenomenon like China’s industrial engine, for example, those cross-border flows of money and technology have helped nurture the startup ecosystem in Europe.

Mike Butcher, who has been covering startups for TechCrunch from London since last decade, writes about a new report from Index Ventures about this trend.

It used to be the case that in order to scale globally, European companies needed to spend big on launching in the U.S. to achieve the kind of growth they wanted. That usually meant relocating large swathes of the team to the San Francisco Bay Area, or New York. New research suggests that is no longer the case, as the U.S. has become more expensive, and as the opportunity in Europe has improved. This means European startups are committing much less of their team and resources to a U.S. launch, but still getting decent results…. Between 2008-2014, almost two-thirds (59%) of European startups expanded, or moved entirely, to the U.S. ahead of Series A funding rounds. However, between 2015-2019, this number decreased to a third (33%).

The report also highlights the economic problem of dividing up markets into political blocks. “European corporates invest three-quarters (76%) less than their U.S. counterparts on software,” Butcher adds about the report. “And this is normally on compliance rather than innovation. This means European startups are likely to continue to look to the U.S. for exits to corporates.”

The pain from failing to trade will come home sooner or later to each government, as Danny observes. But that could be longer than your current company exists. Instead, now is the time to pick the markets you can win, and plan for a world where success has a lower ceiling. And hey, if you’re lucky, your national government could pick you as its winner!

Want $100m ARR? Fix your churn

We’ve been recapping key moments from the Extra Crunch Stage at Disrupt this week, here’s a key segment from a panel Alex Wilhelm hosted about how to achieve the $100m ARR dream, featuring Egnyte CEO Vineet Jain:

After explaining that in the early stages of building a SaaS company it’s common to focus more on adding new revenue than “plugging the holes at the bottom,” [Jain] added that as a company matures and grows, more focus has to be paid to managing churn and retention. He said that dollar-based retention is a key metric in the SaaS world that startups are valued by, meaning that after securing a customer, your ability to upsell that same account over a “defined window of time” really matters.

Noting the impacts of the COVID-19 pandemic and the fact that bonuses at Egnyte are tied to retention, “I say, managing churn is the new revenue,” he added. “Focus on that disproportionately more than you would focus on just top-line growth” … . Egnyte, Jain added, drives to just one or two metrics (net new MRR, or gross MRR adds and churn). “Everything that we’re doing, all of us [at Egnyte] have to be measured with that number to say, ‘How are we doing as a company?’” So if your startup is post-Series A, listen to what Jain says on managing churn. After all his company reached $100 million ARR, has a few dozen million in the bank, grew 22% in Q2 and is EBITDA positive.

Summer of tech IPOs continues with Root, Corsair Gaming and of course, Palantir

While public markets have waffled on tech stocks lately, the overall momentum of unicorn IPOs has continued.

Except, Danny may have slowed things down a bit for Palantir? Here are the key headlines from the week:

As tech stocks dip, is insurtech startup Root targeting an IPO? (EC)

Chamath launches SPAC, SPAC and SPAC as he SPACs the world with SPACs

Palantir publishes 2020 revenue guidance of $1.05B, will trade starting Sept 30th

Following TechCrunch reporting, Palantir rapidly removes language allowing founders to ‘unilaterally adjust their total voting power’

In its 5th filing with the SEC, Palantir finally admits it is not a democracy

How has Corsair Gaming posted such impressive pre-IPO numbers? (EC)

Even more info about the best investors for you

We’re making another big update to The TechCrunch List of startup investors who write the first checks and lead the scary rounds, based on thousands of recommendations that we’ve been receiving from founders. Here’s more, from Danny:

Since the launch of the List, we’ve seen great engagement: tens of thousands of founders have each come back multiple times to use the List to scout out their next fundraising moves and understand the ever-changing landscape of venture investing.

We last revised The TechCrunch List at the end of July 30 with 116 new VCs based on founder recommendations, but as with all things venture capital, the investing world moves quickly. That means it’s already time to begin another update.

To make sure we have the best information, we need founders — from new founders who might have just raised their VC rounds to experienced founders adding another round to their cap tables — to submit recommendations. Thankfully, our survey is pretty short (about two minutes), and the help you can give other founders fundraising is invaluable. Please submit your recommendation soon.

Since our last update in July, we have already had 840 founders submit new recommendations, and we are now sitting at about 3,500 recommendations in total now. Every recommendation helps us identify promising and thoughtful VCs, helping founders globally cut through the noise of the industry and find the leads for their next checks.

Around TechCrunch

Extra Crunch Live: Join Index Ventures VCs Nina Achadjian and Sarah Cannon Sept 29 at 2 pm EDT/11 am PDT on the future of startup investing

TC Sessions Mobility 2020 kicks off in two weeks

Announcing the final agenda for TC Sessions: Mobility 2020

Explore the global markets of micromobility at TC Sessions: Mobility

Don’t miss the Q&A sessions at TC Sessions: Mobility 2020

Across the week

TechCrunch

Calling Helsinki VCs: Be featured in The Great TechCrunch Survey of European VC

The highest valued company in Bessemer’s annual cloud report has defied convention by staying private

Human Capital: The Black founder’s burden

Thanks to Google, app store monopoly concerns have now reached India

Free VPNs are bad for your privacy

Extra Crunch

The Peloton effect

Edtech investors are panning for gold

3 founders on why they pursued alternative startup ownership structures

How Robinhood and Chime raised $2B+ in the last year

Dear Sophie: Possible to still get through I-751 and citizenship after divorce?

Equity: Why isn’t Robinhood a verb yet?

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week Natasha MascarenhasDanny Crichton and your humble servant gathered to chat through a host of rounds and venture capital news for your enjoyment. As a programming note, I am off next week effectively, so look for Natasha to lead on Equity Monday and then both her and Danny to rock the Thursday show. I will miss everyone.

But onto the show itself, here’s what we got into:

Bon voyage for a week, please stay safe and don’t forget to register to vote.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Indonesian cloud kitchen startup Yummy gets $12 million Series B led by SoftBank Ventures Asia

Yummy Corporation, which claims to be the largest cloud kitchen management company in Indonesia, has raised $12 million in Series B funding, led by SoftBank Ventures Asia. Co-founder and chief executive officer Mario Suntanu told TechCrunch that the capital will be used to expand into more major cities and on developing its tech platform, including data analytics.

Other participants in the round included returning investors Intudo Ventures and Sovereign’s Capital, and new backers Vectr Ventures, AppWorks, Quest Ventures, Coca Cola Amatil X and Palm Drive Capital. The Series B brings Yummy Corporation’s total raised so far to $19.5 million.

Launched in June 2019, Yummy Corporation’s network of cloud kitchens, called Yummykitchen, now includes more than 70 HACCP-certified facilities in Jakarta, Bandung and Medan. It partners with more than 50 food and beverage (F&B) companies, including major brands like Ismaya Group and Sour Sally Group.

During COVID-19 movement restrictions, Suntanu said Yummykitchen’s business showed “healthy growth” as people, confined mostly to their homes, ordered food for delivery. Funding will be used to get more partners, especially brands that want to digitize their operations and expand deliveries to cope with the continuing impact of COVID-19.

The number of cloud kitchens in Southeast Asia has grown quickly over the past year, driven by demand for food deliveries that began increasing even before the pandemic. But for F&B brands that rely on deliveries for a good part of their revenue, running their own kitchens and staff can be cost-prohibitive. Sharing cloud kitchens with other businesses can help increase their margins.

Other cloud kitchen startups serving Indonesia include Hangry and Everplate, but these companies and Yummy Corporation are all up against two major players: “super apps” Grab and Gojek, which both operate large networks of cloud kitchens that have the advantage of being integrated with their on-demand delivery services.

Suntanu said Yummy’s main edge compared to other cloud kitchens is that it also offers fully-managed location and kitchen operation services, in addition to kitchen facilities. This means Yummy’s partners, including restaurants and and F&B brands, don’t need to hire their own teams. Instead, food preparation and delivery is handled by Yummy’s workers. The company also provides its clients with a data analytics platform to help them with targeted ad campaigns and making their listings more visible on food delivery apps.

In a statement, Harris Yang, Souteast Asia associate at SoftBank Ventures Asia, said the firm invested in Yummy because “given the company’s strong expertise in the F&B industry and unique value proposition to brands, we believe that Yummy will continue to be the leader in this space. We are excited to support the team and help them scale their business in this emerging sector.”

Unity Software has strong opening, gaining 31% after pricing above its raised range

Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.

On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.

Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.

Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .

TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.

According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.

Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.

Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value  and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.

That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.

Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.

One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:

Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.

We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”

Looking at our own gaming levels in 2020 compared to 2019, that checks out.

This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .

Homage announces strategic partnership with Infocom, one of Japan’s largest healthcare IT providers

Homage, a Singapore-based caregiving and telehealth company, has taken a major step in its global expansion plan. The startup announced today that it has received strategic investment from Infocom, the Japanese information and communications technology company that runs one of the largest healthcare IT businesses in the country. Infocom’s solutions are used by more than 13,000 healthcare facilities in Japan.

During an interview with TechCrunch that will air as part of Disrupt tomorrow, Homage co-founder and chief executive Gillian Tee said “Japan has one of the most ageing populations in the world, and the problem is that we need to start building infrastructure to enable people to be able to access the kind of care services that they need.” She added that Homage and Infocom’s missions align because the latter is also building a platform for caregivers in Japan, in a bid to help solve the shortage of carers in the country.

Homage raised a Series B earlier this year with the goal of entering new Asian markets. The company, which currently operates in Singapore and Malaysia, focuses on patients who need long-term rehabilitation or care services, especially elderly people. This makes it a good match for Japan, where more than one in five of its population is currently aged 65 or over. In the next decade, that number is expected to increase to about one in three, making the need for caregiving services especially acute.

The deal includes a regional partnership that will enable Homage to launch its services into Japan, and Infocom to expand its reach in Southeast Asia. Homage’s services include a caregiver-client matching platform and a home medical service that includes online consultations and house calls, while Infocom’s technology covers a wide range of verticals, including digital healthcare, radiology, pharmaceuticals, medical imaging and hospital information management.

In a statement about the strategic investment, Mototaka Kuboi, Infocom’s managing executive officer and head of its healthcare business division, said, “We see Homage as an ideal partner given the company’s unique cutting-edge technology and market leadership in the long-term care segment, and we aim to drive business growth not only in Homage’s core and rapidly growing market in Southeast Asia, but also regionally.”

Check out these Breakout Sessions at Disrupt 2020

We’re on the brink of the biggest Disrupt in TechCrunch history. It’s five days of education, exhibition, competition and connection that spans the globe. As you plan your schedule, keep this in mind: You’ll find some of the most insightful and downright interesting programming at Disrupt 2020 in our Breakout Sessions. And that, given our powerhouse agenda, is saying something.

Every Disrupt attendee can take part in the breakout sessions — they’re open to every pass level. Breakouts cover a range of topics and formats. You might watch startups pitch, attend a workshop or take in a panel discussion. No matter what, you’re bound to receive valuable insight that can inspire you and help your business.

Take advantage of our partners’ expertise and check out any (or all) of these breakout sessions. You’ll be glad you did.

 

Monday, September 14

11:00 am – 11:50 am

Sponsored by Adobe

How to Invest in Infrastructure to Deliver Experience 

Gabie Boko, Global VP Digital, Hewlett Packard Enterprise & Adobe VP of Platform Engineering, Anjul Bhambhri discuss digital transformation and experience delivery. 

 

12:00 pm – 12:30 pm

Sponsored by Taiwan Tech Arena

Taiwan Pavilion Pitch-off session 1

Featuring twenty startups in healthcare, IoT, blockchain, AR-VR, cyber security, E-learning, and green technology

 

Tuesday, September 15

9:00 am – 9:50 am

Sponsored by Silicon Valley Bank

Diversity as Disruption: Take action now to create a more diverse ecosystem

Recent events continue to demonstrate that change is not happening fast enough. How can we ensure the current social justice momentum is more than just talk? Guided by SVB’s recent research into the “4th wave of venture capital,” learn how three industry leaders are tackling the problem with real actions. By the close of the session, leave with tangible steps you can take today – whether as an individual or as a firm — to make a meaningful, move-the-needle impact in your organization.

 

9:00 am – 10:30 am

Sponsored by Taiwan Tech Arena

Taiwan Reception: Innovations and investment opportunities amid COVID19 Pandemics with Christine Tsai (500 Startups), Allan May (Life Science Angels)

Join Christine, Allan, Tico Blumenthal (Life Sciences Angels), and Laura Dietch (BioTrace Medical) to explore the investment and innovation framework in post-COVID19, and to discuss the driver of innovation healthcare amid the pandemic and economic collapse. TTA will also present the key anti-COVID19 innovative measurements in Taiwan to achieve the lowest infection rate around the world.

 

10:00 am – 10:30am

Sponsored by hub.brussels

Belgian Startup Pitch Competition

Hub.brussels invites you to join us for the 6th edition of our Belgian startup pitch competition.

 

12:00 pm – 12:30 pm

Taiwan Pavilion Pitch-off Session 2

Sponsored by Taiwan Tech Arena

Featuring twenty startups in AI solutions, softwares, big data, edge computing, and space technology

 

2:30 pm – 4:00 pm 

TC Include Reception sponsored by Sootchy

Sponsored by Sootchy

INVITE ONLY – TC Include kicks off this year’s founder cohort with organizational partners Black Female Founders, Female Founders Alliance, Latinx Startup Alliance and StartOut with remarks by Sootchy.

 

Wednesday, September 16

9:00 am – 9:50 am

Sponsored by Consulate General of Canada in San Francisco

“Grow North”: How Canada Empowers Investors and Founders

Come listen to a group of Canadian founders who will talk about their start-ups and how Canada has helped them grow and succeed globally.

 

10:00 am – 11:00 am

Sponsored by StartUp Bahrain

Bahrain: Your gateway to the Middle East and beyond

INVITE ONLY – With its supportive ecosystem, advanced digital infrastructure, flexible and pioneering regulations; rapid growth in funding opportunities and a liberal market, Bahrain is the ideal testbed for startups and scaleups to test their products and solutions before growing and expanding across the Middle East

 

10:00 am – 10:30 am 

Sponsored by JETRO

Japanese Startup Pitches

Come see the latest exciting technology and services coming from Japan.

 

11:00 am – 11:30 am 

Sponsored by KOCCA

Join Us to Watch Seven Amazing Startups from Korea

K-pop? K-Drama? K-Games? K-Entertainment? All startups with K-contents will show off during this Pitch Off

 

12:00 pm – 12:50 pm 

Sponsored by Envestnet | Yodlee

Making Data Meaningful for the FinTech Ecosystem

Open finance/banking represents a new era of financial data transparency. It brings an unprecedented opportunity for FinTechs to provide personalized guidance consumers need to improve financial wellness. Envestnet | Yodlee experts will discuss empowering the entire FinTech ecosystem with enriched financial data and insights, plus the future of open banking in the U.S.

 

Thursday, September 17

10:00 am – 11:30 am

Sponsored by Dassault Systèmes

Dassault Systemes’s 3DEXPERIENCE Lab Global Accelerator Program

INVITE ONLY – 3DEXPERIENCE Lab is Dassault Systèmes’s global innovation program that offers innovative startups free access to Dassault Systèmes collaborative Design, Engineering, Simulation & Data Intelligence solutions, along with mentoring, and marketing support for two years. Come; learn how the Lab selects, mentors and supports its startups!

 

10:00 am – 10:50 am

Sponsored by AppsFlyer

Advertising Disrupted: What User Privacy Means For Marketers

This session offers the unique opportunity to join a live recording of AppsFlyer’s industry podcast, Next in Marketing. Mike Shields, podcast host and former Wall Street Journal, Business Insider, AdWeek and Digiday editor along with guests (Brian Quinn, US President & GM, AppsFlyer and Ana Milicevic, Co-founder and Principal, Sparrow Advisers) will delve into the ecosystem’s pivotal privacy updates, including Apple’s IDFA opt-out and the impact of iOS 14 to measurement and attribution, as well as targeting in a cookieless world. You’ll also hear about the future of personalization post-regulations in this session that is sure to address the most pressing issues and headlines on the mind of marketers globally.

 

12:00 pm – 12:50 pm

Sponsored by KITE

It Takes An Ecosystem To Innovate: Startups, Corporations and the Connectors that Bring Them Together

Startups plus large enterprises can fuel each other’s growth and bottom line, whether it’s a partnership, investment or acquisition. But bringing the right ones together needs more than serendipity: it requires a dynamic ecosystem that includes consultants, accelerators and VCs (aka the connectors). We sit down with top leaders from around the ecosystem to learn how they discover innovative solutions — and get to outcomes — faster.

 

And for those who want to upgrade to a Disrupt Digital PRO Pass you can get access to these sessions:

Tuesday, September 15

10:30 am – 10:50 am

Sponsored by All Raise

Showing Your Work: VCs Investing in Diversity Share Their Secrets

More than 80% of venture capital firms don’t have a single Black investor and 68% of firms don’t have any female partners. As VCs across the country urgently seek to diversify both their investing teams and their portfolios, they could learn a lot from these amazing investors, who have made diversity a central part of their investing thesis from the start. Join us for a candid conversation about the power of investing in underrepresented founders and tapping into over $4.4 trillion in value. This panel will be moderated by Pam Kostka, CEO of All Raise featuring Sarah Kunst, Founder & Managing Director at Cleo Capital and Christie Pitts, General Partner at Backstage Capital who are both leading VCs who focus their investments on founders from underrepresented backgrounds.

 

11:30 am – 11:50 am

Sponsored by Toyota

Innovating with Fuel Cells

James Kast demonstrates how Toyota continues to navigate the innovation of fuel cells and the implementation across numerous industries.

 

That’s a mighty fine breakout lineup if we do say so ourselves. Yep, we’re tooting our own horn. Don’t let all that valuable expertise go to waste. Make sure you carve out time in your Disrupt schedule for insight and inspiration!

Extra Crunch Friday roundup: Edtech funding surges, Poland VC survey, inside Shift’s SPAC plan, more

I live in San Francisco, but I work an East Coast schedule to get a jump on the news day. So I’d already been at my desk for a couple of hours on Wednesday morning when I looked up and saw this:

What color is the sky this morning pic.twitter.com/nt5dZp5wWc

— Walter Thompson (@YourProtagonist) September 9, 2020

As unsettling as it was to see the natural environment so transformed, I still got my work done. This is not to boast: I have a desk job and a working air filter. (People who make deliveries in the toxic air or are homeschooling their children while working from home during a global pandemic, however, impress the hell out of me.)

Not coincidentally, two of the Extra Crunch stories that ran since our Tuesday newsletter tie directly into what’s going on outside my window:

As this guest post predicted, a suboptimal attempt I made to track a delayed package using interactive voice response (IVR) indeed poisoned my customer experience, and;

Sheltering in place to avoid the novel coronavirus — and wildfire smoke — is fueling growth in the video-game industry, perhaps one factor in Unity Software Inc.’s plan to go public ahead of competitor Epic Games. In a two-part series, we looked at how the company has expanded beyond games and shared a detailed financial breakdown.

We covered a lot of ground this week, so scroll down or visit the recently redesigned Extra Crunch home page. If you’d like to receive this roundup via email each Tuesday and Friday, please click here.

Thanks very much for reading Extra Crunch; I hope you have a relaxing and safe weekend.

Walter Thompson
Senior Editor
@yourprotagonist


Bear and bull cases for Unity’s IPO

In a two-part series that ran on TechCrunch and Extra Crunch, former media columnist Eric Peckham returned to share his analysis of Unity Software Inc.’s S-1 filing.

Part one is a deep dive that explains how the company has grown beyond gaming to develop multiple revenue streams and where it’s headed.

For part two on Extra Crunch, he studied the company’s numbers to offer some context for its approximately $11 billion valuation.


10 Poland-based investors discuss trends, opportunities and the road ahead

The Palace of Culture and Science is standing reminder of communism in Warsaw, Masovian Voivodeship, Poland.

Image Credits: Edwin Remsberg (opens in a new window) / Getty Images

As we’ve covered previously, the COVID-19 pandemic is making the world a lot smaller.

Investors who focus on their own backyards still have an advantage, but the ability to set up a quick coffee meeting with a promising investor is no longer one of them.

Even though some VCs are cutting first checks after Zoom calls, regional investors’ personal networks are still a trump card. Tourists will always rely on guide books, however, which is why we continue to survey investors around the world.

A Dealroom report issued this summer determined that 97 VC funds backed more than 1,600 funding rounds in Poland last year. With over 2,400 early- and late-stage startups and 400,000 engineers in the country, it’s easy to see why foreign investors are taking notice.

Editor-at-large Mike Butcher reached out to several investors who focus on Warsaw and Poland in general to learn more about the startups fueling their interest across fintech, gaming, security and other sectors:

  • Bryony Cooper, managing partner, Arkley Brinc VC
  • Anna Wnuk-Błażejczyk, investor relations manager, Experior.vc
  • Rafał Roszak, investment director, YouNick Mint
  • Michal Mroczkowski, partner, Market One Capital
  • Marcus Erken, partner, Sunfish Partners
  • Borys Musielak, partner, SMOK Ventures
  • Mathias Åsberg, partner, Nextgrid
  • Kuba Dudek, SpeedUp Venture Capital Group
  • Marcin Laczynski, partner, Next Road Ventures
  • Michał Rokosz, partner, Inovo Venture Partners

We’ll run the conclusion of his survey next Tuesday.


Brands that hyper-personalize will win the next decade

Customer Relationship Management and Leader Concepts on Whiteboard

Image Credits: cnythzl (opens in a new window) / Getty Images

Even for fledgling startups, creating a robust customer service channel — or at least one that doesn’t annoy people — is a reliable way to keep users in the sales funnel.

Using AI and automation is fine, but now that consumers have grown used to asking phones and smart speakers to predict the weather and read recipe instructions, their expectations are higher than ever.

If you’re trying to figure out what people want from hyper-personalized customer experiences and how you can operationalize AI to give them what they’re after, start here.


VCs pour funding into edtech startups as COVID-19 shakes up the market

For today’s edition of The Exchange, Natasha Mascarenhas joined Alex Wilhelm to examine how the pandemic-fueled surge of interest in edtech is manifesting on the funding front.

The numbers suggest that funding will far surpass the sector’s high-water mark set in 2018, so the duo studied the numbers through August 31, which included a number of mega-rounds that exceeded $100 million.

“Now the challenge for the sector will be keeping its growth alive in 2021, showing investors that their 2020 bets were not merely wagers made during a single, overheated year,” they conclude.


How to respond to a data breach

Digital Binary Code on Red Background. Cybercrime Concept

Image Credits: WhataWin (opens in a new window) / Getty Images

The odds are low that someone’s going to enter my home and steal my belongings. I still lock my door when I leave the house, however, and my valuables are insured. I’m an optimist, not a fool.

Similarly: Is your startup’s cybersecurity strategy based on optimism, or do you have an actual response plan in case of a data breach?

Security reporter Zack Whittaker has seen some shambolic reactions to security lapses, which is why he turned in a post-mortem about a corporation that got it right.

“Once in a while, a company’s response almost makes up for the daily deluge of hypocrisy, obfuscation and downright lies,” says Zack.


Shift’s George Arison shares 6 tips for taking your company public via a SPAC

Number 6 By Railroad Tracks During Sunset

Image Credits: Eric Burger/EyeEm (opens in a new window) / Getty Images

There’s a lot of buzz about special purpose acquisition companies these days.

Used-car marketplace Shift announced its SPAC in June 2020, and is on track to complete the process in the next few months, so co-founder/co-CEO George Arison wrote an Extra Crunch guest post to share what he has learned.

Step one: “If you go the SPAC route, you’ll need to become an expert at financial engineering.”


Dear Sophie: What is a J-1 visa and how can we use it?

Image Credits: Sophie Alcorn

Dear Sophie:

I am a software engineer and have been looking at job postings in the U.S. I’ve heard from my friends about J-1 Visa Training or J-1 Research.

What is a J-1 status? What are the requirements to qualify? Do I need to find a U.S. employer willing to sponsor me before I apply for one? Can I get a visa? How long could I stay?

— Determined in Delhi


As direct listing looms, Palantir insiders are accelerating stock sales

While we count down to the September 23 premiere of NYSE: PLTR, Danny Crichton looked at the “robust secondary market” that has allowed some investors to acquire shares early.

“Given the number of people involved and the number of shares bought and sold over the past 18 months, we can get some insight regarding how insiders perceive Palantir’s value,” he writes.


Use ‘productive paranoia’ to build cybersecurity culture at your startup

Vector illustration of padlocks and keys in a repeating pattern against a blue background.

Image Credits: JakeOlimb / Getty Images

Zack Whittaker interviewed Bugcrowd CTO, founder and chairman Casey Ellis about the best practices he recommends for creating a startup culture that takes security seriously.

“It’s an everyone problem,” said Ellis, who encouraged founders to promote the notion of “productive paranoia.”

Now that the threat envelope includes everyone from marketing to engineering, employees need to “internalize the fact that bad stuff can and does happen if you do it wrong,” Ellis said.

Do Ventures launches $50 million fund for Vietnamese startups, backed by Naver, Vertex and other notable LPs

Vy Le and Dzung Nguyen, the founders and general partners of Do Ventures, an investment firm focused on early-stage Vietnamese startups

Vy Le and Dzung Nguyen, the founders and general partners of Do Ventures, an investment firm focused on early-stage Vietnamese startups

New investment firm Do Ventures announced today the first closing of its fund for Vietnamese startups, which is backed by several of Asia’s most notable institutional investors. Called Do Ventures Fund I, the investment vehicle has hit more than half of its $50 million target, with limited partners including Korean internet giant Naver; Sea, whose businesses include Garena and Shopee; Singapore-based venture capital firm Vertex Holdings; and Korean app developer Woowa Brothers.

Do Ventures was founded by general partners Nguyen Manh Dung, former CEO of CyberAgent Ventures Vietnam and Thailand, and Vy Hoang Uyen Le, previously a general partner at ESP Capital. Its first fund will focus on early-stage companies and invest in seed to Series B rounds.

Both of its founders have a long track record of working with Vietnamese startups. Nguyen was an early investor in companies including Tiki.vn, one of Vietnam’s largest online marketplaces; food delivery platform Foody.vn; and digital marketing company CleverAds. Before she became an investor, Le was a serial entrepreneur and served as chief executive officer at fashion e-commerce company Chon.vn and VinEcom, the e-commerce project launched by Vietnamese real estate conglomerate Vingroup.

In an email, Le told TechCrunch that Do Ventures Fund I is industry agnostic, but will structure its investments into two tiers. The first will consist of B2C platforms, including education, healthcare and social commerce, that serve younger users, and are addressing changes in consumer behavior caused by the COVID-19 pandemic. The second tier will include B2B platforms that can provide services for companies in the first tier, and allow them to expand regionally with SaaS solutions for data and e-commerce services.

Do Ventures’ founders say that between 2016 and 2019, the amount of startup funding in Vietnam grew eight-fold to $861 million last year. But there are still only a few funds that focus specifically on the country, which means early-stage Vietnamese startups often run into funding gaps.

One of the firm’s goals is to help founders weather the impact of COVID-19, so their companies can continue growing in spite of the pandemic.

“We hope tech startups can enable traditional businesses to digitize faster and better adapt to the new normal,” Le said. “For consumers, we hope tech startups can transform customer experience in all aspects of daily life, and bring more accessibility to consumers in remote areas.”

The firm will take a hands-on approach to its investments, helping companies develop new business models. Do Ventures plans to set up an automatic reporting system that collects data about how its portfolio companies are performing, which its general partners say will enable them support startups’ operations, including product development, business organization, supply chain development, and overseas expansion.

The Disrupt 2020 Labor Day flash sale ends tonight

As the Labor Day weekend winds down here in the states, so too does our flash sale and your chance to save $100 on a Digital Pro pass to Disrupt 2020. Fight off your holiday food coma long enough to buy your pass before 11:59 p.m. (PT) tonight.

Disrupt 2020 takes place September 14-18, and you can’t afford to miss this global opportunity to learn new startup skills, add to your investment portfolio, build brand awareness, expand your network and do whatever it takes to drive your business forward.

We’re also celebrating 10 years of Disrupt. How crazy is that? As part of the celebration, we formed the TC10 — a remarkable group of entrepreneurs and investors who’ve been a big part of Disrupt for the past 10 years. Meet the TC10 here.

They’ll show up throughout Disrupt 2020 and play an important role in our newest event, the Pitch Deck Teardown sessions. Throughout Disrupt, top VCs and entrepreneurs will look at submitted pitch decks, dissect them slide-by-slide and discuss what works and what doesn’t. Want the Teardown treatment? Submit your pitch deck here.

What else can you do with your Digital Pro pass? Take a deep dive into the Disrupt 2020 agenda where you’ll find an incredible line up of experts, founders, investors, tech icons and visionaries. You’ll lean in and learn from folks like Bumble CEO, Whitney Wolfe Herd, Cloudflare Co-founder, Michelle Zatlyn and Sequoia Capital’s Roelof Botha. You’ll even hear from celebrities like Kerry Washington, who’s making quite a name for herself as a tech investor.

Explore hundreds of early-stage startups — including the TC Top Picks —  in Digital Startup Alley. Our virtual venue makes it easy to find them and connect.

Take your networking global. The virtual nature of Disrupt 2020 allows anyone from any location to participate, and that spells exponential opportunity. Keep organized and on schedule with CrunchMatch, our AI-powered platform that doesn’t just connect you with people, it connects you with the right people. Simply answer a few quick questions during registration, and you’re ready to schedule 1:1 virtual meetings with founders, investors or other Disrupt attendees.

There’s a metric ton more — the Extra Crunch Stage, Startup Battlefield, interactive Q&As and breakout sessions. TL;DR — you can’t afford to miss the abundant opportunities waiting for you at Disrupt 2020. Buy your Digital Pro Pass before the flash sale ends tonight at 11:59 p.m. (PT) and save $100.

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

Meet the TC Top Picks for Disrupt 2020

We’ve been extremely privileged to witness thousands of early stage startups launch and take flight at Disrupt over the past 10 years, and they just keep getting bettter. You’ll be hard-pressed to find more creative, game-changing startups than the ones that earned our TC Top Picks designation for Disrupt 2020.

The all-virtual nature of this Disrupt meant we received applications from startups around the world. Talk about a tough vetting process! Highly determined and highly caffeinated TechCrunch editors took on the task of narrowing the field to find the best of the best.

The TC Top Picks program showcases outstanding early-stage startups across these categories: Artificial Intelligence/Machine Learning, Biotech/HealthTech, Education/Social Impact, Enterprise/SaaS, Fintech, Mobility, Retail/E-commerce, Robotics/Hardware/IOT and Security/Privacy.

Each TC Top Pick will exhibit in Digital Startup Alley Package and have an exclusive, virtual interview with a TechCrunch writer. We record the interviews and promote them across our social media platforms. It’s terrific exposure and they make a killer long-term marketing tool, so consider applying to the TC Top Pick program next year.

It’s time to announce the Disrupt 2020 TC Top Picks cohort. Peruse these 26 impressive startups, buy your pass to Disrupt, and make a plan to connect with them in Digital Startup Alley. Opportunity knocks!

AI/Machine Learning

iLoF – Intelligent Lab on Fiber

Kings Distributed Systems

Resonance AI

 

Biotech/HealthTech

Nutrix

Parrots Inc.

SmartTab

 

Education/Social Impact

CPRWrap Inc

Platform Good

Rocky.ai

 

Enterprise/SaaS

Aurelius

Evertracker

 

FinTech

Crediverso

Kaoshi

Lizuna

 

Retail/E-commerce

ecosavers club

Patturn

Thelittleloop

 

Mobility

Bonnet

ConnectMyEV Inc.

Eambu

 

Robotics/Hardware/IOT

Kibus Petcare

LimeLoop

WATTS Battery

 

Security + Privacy

Allthenticate

Hummingbirds AI

WebTotem

How one VC firm wound up with no-code startups as part of its investing thesis

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. 

Ready? Let’s talk money, startups and spicy IPO rumors.

How one VC firm wound up with no-code startups as part of its investing thesis

Throughout all the chaos of 2020’s economic upheaval in the startup world, I’ve worked to pay more attention to low-code and no-code services. The short gist of chats I’ve had with investors and founders and public company execs in the past few weeks is that market awareness of no-code/low-code terminology is starting to spread more broadly.

Why? Again, summarizing aggressively, it seems that the gap between what different business units need (marketing, say) and what in-house or external engineering teams are capable of providing is widening. This means there is more total pain in the market, hunting for a solution, often with a tooling budget in hand.

Enter no-code and low-code startups, and even big-company services alike that can help non-developers do more without having to beg for engineering inputs.

I spoke with Arun Mathew this week. He’s a partner at Accel, a venture firm that has invested in all sorts of companies that you’ve heard of — including Webflow, which raised a $72 million Series A last August that Mathew led for his firm. (More on the round here, and notes from TechCrunch on Webflow’s early days here, and here, if you are curious.)

More interesting than that single round is how Accel wound up building a thesis around no-code startups. According to Mathew, Accel had made large investments into companies like Qualtrics, for example, when they were already pretty big and had found product-market fit. That same general approach led to the Webflow deal last year.

At the time, Webflow “wasn’t really defining what they were doing as n- code, they just said ‘we have a very simple drag and drop UI, to build websites, and soon full web applications, very simply,’ ” he told TechCrunch. But, according to Mathew, what Webflow was doing “lined up really well” with the “rising movement of no-code.”

From there, Accel “made a couple [more no-code] investments in Europe where [it has] an early-stage team and a growth team,” along with a few more in India. In the investor’s view, some of the investing activity was “thesis driven because we think [no-code is] a really interesting theme,” but some of the deals “happened opportunistically” where Accel had found “really talented founders in the space that we thought was interesting, executing on a vision that we found appealing.”

In the “span of a year, year-and-a-half,” Accel totted up “seven or eight companies in this no-code space,” which over the last five or six quarters became “a real thesis” for the firm, Mathew said. Accel now has “a global team” of around a dozen people “spending a lot of our time in and around no-code” he added.

Apologies for the length there, but what Mathew said makes me feel a bit less behind. After dipping a toe into learning more about no-code services and tooling (and, yes, low-code as well) it felt somewhat like I was playing catch-up. But as I covered that Webflow round and have since started paying more attention to no-code as well, perhaps you and I are right on time.

(We also recently ran an investor survey on the no-code topic, so hit it up if you want more VC scribbles on the topic.)

Market Notes

For Market Notes this week, we have four things. First, riffs from chats with two public company execs about the software market, some public market stuff and then some neat Airbnb spend data by which I am confounded:

  • I spoke with Apple MDM company Jamf’s CFO Jill Putman this week, after her company reported its first set of earnings as a public company. I wanted to know a bit more about the education market — a hot topic here at TechCrunch, given outsized rounds and huge market demand — and the medical world.
  • Regarding the software market for education, Putman noted that schools are buying lots of hardware, and that software sales should follow. Our read from that is that the boom in education software is not going to slow for some time as schools work on reopening.
  • Ditto the medical market, where Jamf has found uptake as hospitals roll out hardware to patients and families thereof to facilitate all sorts of demand that COVID has engendered. (Hardware needs software, enter Jamf!)
  • Chatting with the CFO our key takeaway was that there are still sectors that could generate a continued COVID tailwind, even if not all Jamf customers fit that bill. For startups that did catch a wave, this is probably good news.
  • And then there was Yext, a company that helps other companies’ customers find accurate information about them around the Web, and has recently gotten into the search game. Yext launched at a TechCrunch conference back in 2009, which is a neat bit of history. Anyway, Yext is public company now and we wanted to chat about which industries are driving growth for the former startup, and how the general climate for software is for the company, so we got on Zoom with its CEO, Howard Lerman.
  • So, which sectors are accelerating from Yext’s perspective? Government, education (again), insurance and financial services. Let that guide your take on the health of various startups.
  • Turning to the business climate, Lerman had some notes: “I will tell you in Q2,” he said, “things came back a bit from Q1.” In what sense? Retention rates, for one, according to the CEO. A return to form is welcome, but Lerman did caution that some companies were slower to “pull the trigger on big deals.”
  • Lerman also said that his perspective on the macro-climate has bounced back as well from a local-minima set around 30 days ago.

Public company execs are pretty guarded in how they talk because they have to be. But what Putman and Lerman seemed to intimate is that economic damage — provided you are selling to business, and not individuals — seems more contained on a per-sector basis than I would have anticipated. And that there are some good things ahead, at least in a handful of hot sectors.

Opening our aperture a bit, some SaaS companies struggled this week to meet investor expectations, even as more companies added themselves to the IPO queue. It’s going to be very busy for a few quarters. (Speaking of which, you can find the good and bad from the new Sumo IPO filing here.)

The economy is still garbage for many, but at least for companies it’s improving. And on that note, some data regarding Airbnb. According to the folks over at Edison Trends, things are going better for the home-booking site than I would have guessed. Per the group:

  • Airbnb’s bookings recovery outstripped its traditional rivals, growing “32% week-over-week” from late April into early June.
  • And, most critically: “Airbnb spending in July was up 22% over the previous July, and spending the week of August 17 was 75% higher than the equivalent week in 2019.”

Wild, right? Perhaps that’s why Airbnb has filed to go public.

Various and Sundry

We’re a tiny bit short on space, so I’ll keep our V&S dose short this week to respect your time. Here’s what I couldn’t not share:

And with that, we are out of room. Hugs, fist bumps and good vibes, and thank you so much for reading this little newsletter on the weekends. It’s a treat to write, and I hope you like it.

Hit me up with notes at alex.wilhelm@techcrunch.com. (I don’t know if you reply to this email if I will get the response. But try it so that we can find out?)

Alex

The week’s biggest IPO news had nothing to do with Monday’s S-1 deluge

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. (You can sign up for the newsletter here!)

Ready? Let’s talk money, startups and spicy IPO rumors.

The week’s biggest IPO news had nothing to do with Monday’s S-1 deluge

During Monday’s IPO wave I was surprised to see Asana join the mix. 

After news had broken in June that the company had raised hundreds of millions in convertible debt, I hadn’t guessed that the productivity unicorn wouldn’t give us an S-1 in the very next quarter. I was contentedly wrong. But the reason why Asana’s IPO is notable isn’t really much to do with the company itself, though do take the time to dig into its results and history

What matters about Asana’s debut is that it appears set to test out a model that, until very recently, could have become the new, preferred way of going public amongst tech companies. 

Here’s what I mean: Instead of filing to go public, and raising money in a traditional IPO, or simply listing directly, Asana executed two, large, convertible debt offerings pre-debut, thus allowing it to direct list with lots of cash without having raised endless equity capital while private.

The method looked like a super-cool way to get around the IPO pricing issue that we’ve seen, and also provide a ramp to direct listing for companies that didn’t get showered with billions while private. (That Asana co-founder Dustin Moskovitz’s trust led the debt deal is simply icing on this particular Pop-Tart).

This brief column was going to be all about how we may see unicorns follow the Asana route in time, provided that its debt-powered direct listing goes well. But then the NYSE got permission from the SEC to allow companies to raise capital when they direct-list.

In short, some companies that direct-list in the future will be able to sell a bloc of shares at a market-set value that would have previously set their “open” price. So instead of flogging the stock and setting a price and selling shares to rich folks and then finding out what public investors would really pay, all that IPO faff is gone and bold companies can simply offer shares at whatever price the market will bear. 

All that is great and cool, but as companies will be able to direct-list and raise capital, the NYSE’s nice news means that Asana is blazing a neat trail, but perhaps not one that will be as popular as we had expected.

The NASDAQ is working to get in on the action. As Danny said yesterday on the show, this new NYSE method is going to crush traditional IPOs, provided that we’re understanding it during this, its nascent period.

Market Notes

Look, this week was bananas, and my brain is scrambled toast. You, like myself, are probably a bit confused about how it is only finally Saturday and not the middle of next week. But worry not, I have a quick roundup of the big stuff from our world. And, notes from calls with the COO of Okta and the CEO of Splunk, from after their respective earnings report: 

Over to our chats, starting with Okta COO and co-founder Frederic Kerrest:

  • Okta had a good quarter. But instead of noodling on just the numbers, we wanted to chat with its team about the accelerating digital transformation and what they are seeing in the market. 
  • On the SMB side, Kerrest reported little to no change. This is a bit more bullish than we anticipated, given that it seemed likely that SMB customers would have taken the largest hit from COVID.
  • Kerrest also told us some interesting stuff about how the wave of COVID-related spend has changed: “We actually have seen the COVID ‘go home and remote work very quickly’ [thing], we’ve actually seen that rush subside a little bit, because you know now we’re five months into [the pandemic], so they had to figure it out.”
  • This is a fascinating comment for the startup world
  • Okta is big and public and is going to grow fine for a while. Whatever. For smaller companies aka startups that were seeing COVID-related tailwinds, I wonder how common seeing “that rush subside a little bit” is. If it is very common, many startups that had taken off like a rocket could be seeing their growth come back to Earth.
  • And if they raised a bunch of money off the back of that growth at a killer valuation, they may have just ordered shoes that they’ll struggle to grow into.

And then there was new McLaren F-1 sponsor Splunk, data folks who are in the midst of a transition to SaaS that is seeing the firm double-down on building ARR and letting go of legacy incomes:

  • I spoke with CEO Doug Merritt, kicking off with a question about his use of the word “tectonic” regarding the shift to data-driven decisions from Splunk’s earnings report. (“As organizations continue to adapt to tectonic societal shifts brought on by COVID-19, one thing is constant: the power of data to radically transform business.”)
  • I wanted to know how far down the American corporate stack that idea went; are mid-size businesses getting more data-savvy? What about SMBs? Merritt was pretty bullish: “We’re getting to tectonic,” he said during our call, adding that before “it really was the Facebooks, the Googles, the Apples, the DoorDashes, [and] the LinkedIns that were using [Splunk].” But now, he said, even small restaurant chains are using data to better track their performance. 
  • Relating this back to the startup world, I’ve been curious if lots of stuff that you and I think is cool, like low-code business app development, will actually find as wide a footing in the market as some expect. Why? Because most small and medium-sized businesses are not tech companies at all. But if Merritt is right, then the CEO of Appian might be right as well about how many business apps the average company is going to have in a few years’ time.

And finally for Market Notes, my work BFF and IRL friend Ron Miller wrote about Box’s earnings this week, and how the changing world is bolstering the company. It’s worth a read. (Most public software companies are doing well, mind.)

Various and Sundry

We’re already over length, so I’ll have to keep our bits-and-bobs section brief. Thus, only the brightest of baubles for you, my friend:

And with that, we are out of room. Hugs, fist bumps and good vibes, 

Alex

Palantir and the great revenue mystery

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. You can subscribe to the newsletter here if you haven’t yet.

Ready? Let’s talk money, startups and spicy IPO rumors.

Palantir and the great revenue mystery

As I write to you on Friday afternoon, the Palantir S-1 has yet to drop, but TechCrunch did break some news regarding the impending filing and just how big the company actually is. Please forgive the block quote, but here’s our reporting:

In screenshots of a draft S-1 statement dated yesterday (August 20), Palantir is listed as generating revenues of roughly $742 million in 2019 (Palantir’s fiscal year is a calendar year). That revenue was up from $595 million in 2018, a gain of roughly 25%. […] Palantir lists a net loss of roughly $580 million for 2019, which is almost identical to its loss in 2018. The company listed a net loss percentage of 97% for 2018, improving to a loss of 78% for last year.

A few notes from this. First, those losses are flat icky. Palantir was founded in 2003 or 2004 depending on who you read, which means that it’s an old company. And it was running an effective -100% net margin in 2018? Yowza.

Second, what the flocking frack is that revenue number? Did you expect to see Palantir come in with revenues of less than $1 billion? If you did, well done. After a deluge of articles over the years discussing just how big Palantir had become, I was anticipating a bit more (more here for context). Here are two examples:

  • Reporting from TechCrunch that Palantir expected “more than $1 billion in contracts” in 2014
  • Reporting from Bloomberg that Palantir had “booked deals totaling $1.7 billion in 2015”

Notably, Palantir’s real revenue result, or one very close to it, made it into Business Insider this April. The reporting makes the company’s S-1 less of a climax and more of a denouement. But, hey, we’re still glad to have the filing.

The Exchange will have a full breakdown of Palantir’s numbers Monday morning, but I think what Palantir coverage over the years shows is that when companies decline to share specific revenue figures that are clear, just presume that what they do share is misleading. (ARR is fine, trailing revenue is fine, “contract” metrics are useless.)

Market Notes

The Exchange spent a lot of time digging into e-commerce venture capital results this week, including notes from some VCs about why e-commerce-focused startups aren’t raising as much as we might have guessed.

Overstock!

We got a chance to fire a question over to the CEO of Overstock.com on the matter, adding to what we learned from private investors on the same topic. So here’s the online retailer’s CEO Jonathan Johnson, answering our question on how many smaller vendors are signing up to sell on its platform during today’s e-comm boom:

We have had increased demand to sell on Overstock and we are adding new partners daily. To protect the customer experience, we have become more selective and have increased the requirements to become a selling partner on our site. Our customers’ experience is critical to our long-term success and if partners cannot perform to our operational standards, we do not allow them to sell on our site.

We care because Shopify and BigCommerce are stacking up new rev, and we were curious how widely the e-commerce step-change from major platforms extended. Seems like all of them are eating.

How today’s evolving economic landscape isn’t working out better for e-commerce-focused startups is still a surprise. Normally when the world changes rapidly, startups do well. This time it seems that Amazon and a few now-public unicorns are snagging most of the gains.

Airbnb!

Anyhoo, onto the Airbnb world; we have a few data points to share this week. According to Edison Trends data that was shared with us, here’s how Airbnb is doing lately:

  • Per Edison Trends, “Airbnb July spend was 22% higher than it had been in 2019” in the United States.
  • From the same source, Airbnb has seen U.S. spend rise around 10% week-over-week “increase in customer spending” since April 27th.

This explains why the company is prepping to go public sooner rather than later: The second-half of Q2 was a ramp back to normal for the company, and July was pretty good by the looks of it. If Airbnb is worth what it once was is not clear, but the company is certainly doing better than we might have expected it to. (More on the comeback here.)

For more on the big unicorn IPOs, I wrote a digest on Friday that should help ground you. I can say that with some confidence, as I wrote it to ground myself!

Various and Sundry

Finally some loose ends and other notes like an after-dinner amuse-bouche:

  • A PE deal caught our eye, namely that the Williams Formula 1 team has been sold to Dorilton Capital. We had two thoughts: First, who is that. And second, it’s all good so long as they make the car faster but still slower than Haas F1, the official team of this newsletter, I’ve just decided. (Note to F1 lawyers: I am kidding, please don’t sue.)
  • The folks at Sensor Tower sent over some fintech data this week that we tucked into our pocket for this newsletter. According to the data and analytics firm, “the five largest mobile payment apps saw their average monthly active users grow 41.5% year-over-year in 1H20 when compared to 1H19” for “Cash App, Venmo, PayPal, Zelle, and Google Pay.”
  • Now, we’ve covered fintech often on The Exchange because it matters. But we’ve mostly been covering the startup/unicorn side of things. The above growth rates for some of the incumbent-led apps was a surprise, with faster growth than we would have guessed.
  • If momentum from the majors is good or bad for startups, we leave to you to decide.
  • Robinhood raised more money on the back of its huge revenue gains.
  • Until the Palantir brouhaha, the lead story of our missive today was going to be about BlockFi, which we’re still working to understand. The crypto outfit just raised more money, so we got curious. I wound up chatting with the CEO on Twitter about, you know, what BlockFi is. Turns out it’s like a credit union, but in the crypto space. That seems fair enough. Credit unions work! Maybe this will, too! We have some questions into the company, the answers to which we might post if they are interesting. (The company has detractors, as well.)
  • made a bad bet.
  • The Exchange chatted with a number of VC firms this week, including Tribeca Venture Partners for the first time. We caught up with Brian Hirsch from the firm, who told us a bit about the SaaS market (doing better than anticipated pre-COVID thanks to “rocket fuel” from the accelerating digital transformation) and the future of New York and cities in general (going to be fine long-term). We’ll cut out the best bits from the chat for next week if we have time.

And we’ll wrap with a tiny note from Greg Warnock, managing director at Mercato via email about the late-stage venture capital market. We asked for “notes on current valuation trends, in particular re: ARR/run rate multiples.” Here’s what we heard back:

I think valuations are correlated with economic activity and certainly something like COVID would qualify, but it’s very much a lagging indicator. It takes a while for entrepreneurs’ expectations to shift. Once they feel like the economy has moved in a permanent way, they begin to rethink. The first thing that they experience a little bit more urgency. They start from a belief that they can raise money any time they want, from anyone they want. Soon they realize there are fewer investors in market, that those opportunities appear less frequently, and each one should be managed more carefully. From there they go to thinking about terms. They might have to be flexible around some terms or some construct. Finally, they go to just fundamentally thinking about valuation in terms of multiples.

Going back to my first comment about economic factors being a lagging indicator, COVID related shocks haven’t moved through the system yet. It will take something more like a year for all the expectations to shift. My experience is that a shift in the economy from an investor standpoint creates a flight to quality. Companies with lackluster performance are first to feel lack of options in fundraising and exits. High performing businesses are the last ones to experience a change in valuation multiples. It disproportionately affects average businesses more quickly and more dramatically than high quality businesses which may feel no significant effects.

Hugs, fist bumps and good vibes,

Alex

Almost everything you need to know about SPACs

Feeling as if you should better understand special purpose acquisition vehicles – or SPACS — than you do? You aren’t alone.

Like most casual observers, you’re probably already aware that Paul Ryan now has a SPAC, as does baseball executive Billy Beane and Silicon Valley stalwart Kevin Hartz. You probably know, too, that entrepreneur Chamath Palihapitiya seemed to kick off the craze around SPACS — blank-check companies that are formed for the purpose of merging or acquiring other companies — in 2017 when he raised $600 million for a SPAC. Called Social Capital Hedosophia Holdings, it was ultimately used to take a 49% stake in the British spaceflight company Virgin Galactic.

But how do SPACS come together in the first place, how they work exactly, and should you be thinking of launching one? We talked this week with a number of people who are right now focused on almost nothing but SPACs to get our questions — and maybe yours, too — answered.

First, why are these things suddenly spreading like weeds?

Kevin Hartz — who we spoke with after his $200 million blank-check company made its stock market debut on Tuesday — said their popularity ties in part to “Sarbanes Oxley and the difficulty in taking a company public the traditional route.”

Troy Steckenrider, an operator who has partnered with Hartz on his newly public company, said the growing popularity of SPACs also ties to a “shift in the quality of the sponsor teams,” meaning that more people like Hartz are shepherding these vehicles versus “people who might not be able to raise a traditional fund historically.”

Indeed, according to the investment bank Jefferies, 76% of last year’s SPACs were sponsored by industry executives who “typically have public company experience or have sold their prior business and are seeking new opportunities,” up from 65% in 2018 and 32% in 2017.

Don’t forget, too, that there are whole lot of companies that have raised tens and hundreds of millions of dollars in venture capital and whose IPO plans may have been derailed or slowed by the COVID-19 pandemic. Some need a relatively frictionless way to get out the door, and there are plenty of investors who would like to give them that push.

How does one start the process of creating a SPAC?

The process is really no different than a traditional IPO, explains Chris Weekes, a managing director in the capital markets group at the investment bank Cowen. “There’s a roadshow that will incorporate one-on-one meetings between institutional investors and the SPAC’s management team” to drum up interest in the offering.

At the end of it, institutional investors like mutual funds, private equity funds, and family offices buy into the offering, along with a smaller percentage of retail investors.

Who can form a SPAC?

Basically anyone who wants to create one and who can persuade shareholders to buy its shares.

These SPACs all seem to sell their shares at $10 apiece. Why?

Easier accounting? Tradition? It’s not entirely clear, though Weekes says $10 has “always been the unit price” for SPACs and continues to be, with the very occasional exception, such as with Bill Ackman’s Pershing Square Capital Management.

Last month it launched a $4 billion SPAC that sold units for $20 each.

Have SPACS changed structurally over the years?

Funny you should ask! This gets a little more technical, but when buying a unit of a SPAC, institutional investors typically get a share of common stock and a warrant or a fraction of a warrant. A warrant is security that entitles the holder to buy the underlying stock of the issuing company at a fixed price at a later date; warrants are used as deal sweeteners to keep investors involved with a company.)

Earlier in time, when a SPAC announced the company it planned to buy, institutional investors in the SPAC — who had to sign NDA-type agreements — would vote yes to the deal if they wanted to keep their money in, and no to the deal if they wanted to redeem their shares and get out. But sometimes investors would team up and threaten to torpedo the deal if they weren’t given founder shares or other preferential treatment. (“There was a bit of bullying in the marketplace,” says Weekes.)

Regulators have since separated the right to vote and the right to redeem one’s shares, meaning investors today can vote ‘yes’ or ‘no’ and still redeem their capital, making the voting process more perfunctory and enabling most deals to go through as planned.

Does that mean SPACs are more safe? They haven’t had the best reputation historically.

They’ve “already gone through their junk phase,” suspects Albert Vanderlaan, an attorney in the tech companies group of Orrick, the global law firm. “In the ’90s, these were considered a pretty junky situation,” he says. “They were abused by foreign investors. In the early 2000s, they were still pretty disfavored.” Things could turn on a dime again, he suggests, but over the last couple of years, the players have changed for the better, which is making a big difference.

How much of the money raised does a management team like Hartz and Steckenrider keep?

The rough rule of thumb is 2% of the SPAC value, plus $2 million, says Steckenrider. The 2% roughly covers the initial underwriting fee; the $2 million then covers the operating expenses of the SPAC, from the initial cost to launch it to legal preparation, accounting, and NYSE or NASDAQ filing fees. It’s also “provides the reserves for the ongoing due diligence process,” he says.

Is this money like the carry that VCs receive, and do a SPAC’s managers receive it no matter how the SPAC performs?

Yes and yes.

Here’s how Hartz explains it: “On a $200 million SPAC, there’s a $50 million ‘promote’ that is earned at $10 a share if the transaction consummates at $10 a share,” which, again, is always the traditional size of a SPAC. “But if that company doesn’t perform and, say, drops in half over a year or 18-month period, then the shares are still worth $25 million.”

Hartz calls “egregious,” though he and Steckenrider formed their SPAC in exactly the same way, rather than structure it differently.  

Says Steckrider, “We ultimately decided to go with a plain-vanilla structure [because] as a first-time spec sponsor, we wanted to make sure that the investment community had as as easy as a time as possible understanding our SPAC. We do expect to renegotiate these economics when we go and do the [merger] transaction with the partner company,” he adds.

From a mechanics standpoint, what happens right after SPAC has raised its capital?

The money is moved into a blind trust until the management team decides which company or companies it wants to acquire. Share prices don’t really move much during this period as no investors know (or should know, at least) what the target company will be yet.

Does a $200 million SPAC look to acquire a company that’s valued at around the same amount?

No. According to law firm Vinson & Elkins, there’s no maximum size of a target company — only a minimum size (roughly 80% of the funds in the SPAC trust).

In fact, it’s typical for a SPAC to combine with a company that’s two to four times its IPO proceeds in order to reduce the dilutive impact of the founder shares and warrants.

In the case of Hartz’s and Steckenrider’s SPAC (it’s called “one”), they are looking to find a company “that’s approximately four to six times the size of our vehicle of $200 million,” says Harzt, “so that puts us around in the billion dollar range.”

Where does the rest of the money come from if the partner company is many times larger than the SPAC itself?

It comes from PIPE deals, which, like SPACs, have been around forever and come into and out of fashion. These are literally “private investments in public equities” and they get tacked onto SPACs once management has decided on the company with which it wants to merge.

It’s here that institutional investors get different treatment than retail investors, which is why some industry observers are wary of SPACs.

Specifically, a SPAC’s institutional investors — along with maybe new institutional investors that aren’t part of the SPAC — are told before the rest of the world what the acquisition target is under confidentiality agreements so that they can decide if they want to provide further financing for the deal via a PIPE transaction.

The information asymmetry seems unfair. Then again, they’re restricted not only from sharing information but also from trading the shares for a minimum of four months from the time that the initial business combination is made public. Retail investors, who’ve been left in the dark, can trade their shares any time.

How long does a SPAC have to get all of this done?

It varies, but the standard seems to be around two years.

What do you call that phase of the deal after the partner company has been identified and agrees to merge, but before the actual combination?

That’s called De-SPACing and during this stage of things, the SPAC has to obtain shareholder approval through that vote we talked about, followed by a review and commenting by the SEC.

Toward the end of this stretch — which can take 12 to 18 weeks — bankers aretaking out the new operating team and, in the style of a traditional roadshow, getting the story out to analysts who cover the segment so when the combined new company is revealed, it receives the kind of support that keeps public shareholders interested in a company.

Will we see more people from the venture world like Palihapitiya and Hartz start SPACs?

So far, says Weekes, he’s seeing less interest from VCs in sponsoring SPACs and more interest from them in selling their portfolio companies to a SPAC. As he notes, “Most venture firms are typically a little earlier stage investors and are private market investors, but there’s an uptick of interest across the board, from PE firms, hedge funds, long-only mutual funds.”

That might change if Hartz has anything to do with it. “We’re actually out in the Valley, speaking with all the funds and just looking to educate the venture funds,” he says. “We’ve had a lot of requests in. We think we’re going to convert [famed VC] Bill Gurley from being a direct listings champion to the SPAC champion very soon.”

In the meantime, Hartz says his SPAC doesn’t have a specific target in mind yet. But he does takes issue with the word “target,” preferring instead “partner” company.

“A target sounds like we’re trying to assassinate somebody.”

InfraDigital helps Indonesian schools digitize tuition and enrollment

In Indonesia, about half of adults are “underbanked,” meaning they don’t have access to bank accounts, credit cards and other traditional financial services. A growing list of tech companies are working on solutions, from Payfazz, which operates a network of financial agents in small towns, to digital payment services from GoJek and Grab. As a result, financial inclusion is increasing for consumers and small businesses in Southeast Asia’s largest country, but one group remains underserved: schools.

InfraDigital was founded in 2018 by chief executive officer Ian McKenna and chief operating officer Indah Maryani. Both have backgrounds in financial tech, and their platform enables parents to pay school tuition with the same digital services they use for electricity bills or online shopping. The startup currently serves about 400 schools and recently raised a Series A led by AppWorks.

Many Indonesian schools still rely on cash payments, which are often delivered by kids to their teachers.

“My kid had just started school, and one day I spotted my wife giving him an envelope full of cash for tuition. He was only three years old,” McKenna said. “That triggered my curiosity about how these financial systems work.”

To give parents an easier alternative, InfraDigital, which is registered with Indonesia’s central bank, partners with banks, convenience store chains like Indomaret, online wallets and digital payment services like GoPay to allow them to send tuition money online.

“The way you pay your electricity bill, it’s likely that your school is already there, regardless of whether you have a bank account or live in a really remote place” where many people make cash payments for services at convenience stores, McKenna said. The startup is now working on a system for schools in areas that don’t have access to convenience store chains and banks.

Before building InfraDigital’s network, McKenna and Maryani had to understand why many schools still rely on cash payments and paper ledgers to manage tuition.

“Banks have been trying to tap into the education market for a long time, 12 to 15 years probably, but no one has become the biggest bank for schools,” said Maryani. “The reason behind that is because they come in with their own products and they don’t try to resolve the issues schools are facing. Since they are focused on the consumer side, they don’t really see schools or other offline businesses as their customers, and there is a lot of customization that they need to do.”

For example, a school might have 2,000 students and charge each of them about USD $10 a month in school fees. But they also collect separate payments for books, uniforms, and building fees. InfraDigital’s founders say schools typically send out an average of about 2.5 invoices a month.

Digitizing payments also makes it easier for schools to track their finances. InfraDigital provides its clients with a backend application for accounting and enrollment management. It automatically tracks tuition payments as they come in.

“People don’t get paid that much and they are ridiculously busy taking care of thousands of kids. It’s really, really tough,” McKenna said. “When you’re giving them a solution, it’s not about features, it’s not about tools, it’s about the practicalities of their day-to-day life and how we are going to assist them with it. So you remove that burden from them.”

During the COVID-19 pandemic, which resulted in movement restriction orders in different areas of Indonesia, InfraDigital’s founders say the platform was able to forecast trends even before schools officially closed. They started surveying schools in their client base, and sent back data to help them forecast how school closures would affect their income.

“From the school’s perspective, it’s a really damaging situation, with 30% to 60% income drops. Teachers don’t get paid. If the economy goes down, parents at lower-income schools, which are a big part of our client base, won’t be able to pay,” McKenna said. “It’s built into the model, and we’ll continue seeing that however long the economic impact of COVID-19 lasts.”

Tune in tomorrow and watch five startups compete at Pitchers & Pitches

Ever hear the expression, “every master was once a disaster?” Now apply that to developing a well-crafted pitch. It takes practice and honest feedback to make a masterful pitch, and that’s exactly what you’ll get when you participate in our next Pitchers & Pitches. It’s 50 percent competition, 50 percent masterclass and 100 percent free.

Join us tomorrow, August 13, at 4 p.m. ET / 1 p.m. PT as five randomly chosen Digital Startup Alley exhibitors present their rapid-fire pitches to a panel of TC editors and expert VCs. (take a peek at this session’s competitors and judges below).

Get ready to take notes, ask questions — this is an interactive educational event — and apply what you learn to pump up your own 60-second pitch. Here’s another reason to pay close attention to the live pitches; the viewing audience decides which founder throws the best pitch. It’s a competition after all, with a prize and everything.

And it’s a pretty awesome prize if we do say so ourselves. The winner walks away with a consulting session with cela, a company that connects early-stage startups to accelerators and incubators that can help scale their businesses.

Anyone can attend Pitchers & Pitches — and learn valuable tips in the process — but only companies exhibiting in Digital Startup Alley at Disrupt 2020 can compete. If you’d like a shot at competing in our next Pitchers & Pitches event on September 2, purchase a Disrupt Digital Startup Alley Package. You’ll be ready to exhibit and pitch your startup genius to thousands of disrupt attendees from around the world.

Attending Pitchers & Pitches also gives you time to check out the new virtual Disrupt platform before it goes live in September, meet and video network with other P&P attendees and connect with the five pitching founders in their virtual booth in the startup expo.

It’s time to name names — judges are standing by to give their best feedback for this session. The panel consists of two TechCrunch editors — Zack Whittaker and Natasha Mascarhenas and two leading VCs — Sydney Thomas and Curtis Rodgers. When it comes to pitches, this group’s heard ‘em all — the good, the bad and the ugly. Follow their advice and you might just make it into the first category.

And here are the five startups ready to wring every advantage out of tomorrow’s competition.

Myneral Labs

Centrly

Primeclass

CarpeMed

Cirtru

Register here for the next Pitchers & Pitches — tomorrow, August 13 at 4 p.m. ET / 1 p.m. PT. Learn to master your pitch and get ready to make the most of all the opportunities you’ll find at Disrupt 2020.

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

Startups Weekly: What countries want your startup?

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7am PT). Subscribe here.

They say business needs certainty to succeed, but new tech startups are still getting funded aggressively despite the pandemic, recession, trade wars and various large disasters created by nature or humans. But before we get to the positive data, let’s spend some time reviewing the hard news — there is a lot of it to process.

TikTok is on track to get banned if it doesn’t get sold first, and leading internet company Tencent’s WeChat is on the list as well, plus Trump administration has a bigger “Clean Network” plan in the works. The TikTok headlines are the least significant part, even if they are dominating the media cycle. The video-sharing social network is just now emerging as an intriguing marketing channel, for example. And if it goes, few see any real opening in the short-form video space that market leaders aren’t already deep into. Indeed, TikTok wasn’t a startup story since the Musical.ly acquisition. It was actually part of an emerging global market battle between giant internet companies, that is being prematurely ended by political forces. We’ll never know if TikTok could have continued leveraging ByteDance’s vast resources and protected market in China to take on Facebook directly on its home turf.

Instead of quasi-monopolies trying to finish taking over the world, those with a monopoly on violence have scrambled the map. WeChat is mainly used by the Chinese diaspora in the US, including many US startups with friends, family and colleagues in China. And the Clean Network plan would potentially split the Chinese mobile ecosystem from iOS and Android globally.

Let’s not forget that Europe has also been busy regulating foreign tech companies, including from both the US and China. Now every founder has to wonder how big their TAM is going to be in a world cleaved back the leading nation-states and their various allies.

“It’s not about the chilling effect [in Hong Kong],” an American executive in China told Rita Liao this week about the view in China’s startup world. “The problem is there won’t be opportunities in the U.S., Canada, Australia or India any more. The chance of succeeding in Europe is also becoming smaller, and the risks are increasing a lot. From now on, Chinese companies going global can only look to Southeast Asia, Africa and South America.”

The silver lining, I hope, is that tech companies from everywhere are still going to be competing in regions of the world that will appreciate the interest.

Startup fundraising activity is booming and set to boom more

A fresh analysis from our friends over at Docsend reveals that startup investment activity has actually sped up this year, at least by the measure of pitchdeck activity on its document management platform used by thousands of companies in Silicon Valley and globally (which makes it a key indicator of this hard-to-see action).

Founders are sending out more links than before and VCs are racing through more decks faster, despite the gyrations of the pandemic and other shocks. Meanwhile, many startups shared that they had cut back hard in March and now have more room to wait or raise on good terms. Docsend CEO Russ Heddleston concludes that the rest of the year could actually see activity increase further as companies finish adjusting to the latest challenges and are ready to go back out to market.

All this should shape how you approach your pitchdeck, he writes separately for Extra Crunch. Additional data shows that decks should be on the short side, must include a “why now” slide that addresses the COVID-19 era, and show big growth opportunities in the financials.

Image Credits: Cadalpe (opens in a new window) / Getty Images

SaaS founders could transcend VC fundraising via securitized debt

“In one decade, we went from buying licenses for software to paying monthly for services and in the process, revolutionized the hundreds of billions spent on enterprise IT,” Danny Crichton observes. “There is no reason why in another decade, SaaS founders with the metrics to prove it shouldn’t have access to less dilutive capital through significantly more sophisticated debt underwriting. That’s going to be a boon for their own returns, but a huge challenge for VC firms that have been doubling down on SaaS.”

Sure, the market is sort of providing this with various existing venture debt vehicles, and by other routes like private equity (which has acquired a taste for SaaS metrics this past decade). Danny sees a more sophisticated world evolving, as he details on Extra Crunch this week. First, he sees underwriters tying loans to recurring revenues, even to the point that your customers could be your assets that the bank takes if you go bust. The trend could then build from there:

Part two is to take all those individual loans and package them together into a security… Imagine being an investor who believes that the world is going to digitize payroll. Maybe you don’t know which of the 30 SaaS providers on the market are going to win. Rather than trying your luck at the VC lottery, you could instead buy “2018 SaaS payroll debt” securities, which would give you exposure to this market that’s safer, if without the sort of exponential upside typical of VC investments. You could imagine grouping debt by market sector, or by customer type, or by geography, or by some other characteristic.

Image Credits: Hussein Malla / AP

Help the startup scene in Beirut

Beirut is home to a vibrant startup scene but like the rest of Lebanon it is reeling from a massive explosion at its main port this week. Mike Butcher, who has helped connect TechCrunch with the city over the years, has put together a guide to local people and organizations that you can help out, along with stories from local founders about what they are overcoming. Here’s Cherif Massoud, a dental surgeon turned founder of invisible-braces startup Basma:

We are a team of 25 people and were all in our office in Beirut when it happened. Thankfully we all survived. No words can describe my anger. Five of us were badly injured with glass shattered on their bodies. The fear we lived was traumatizing. The next morning day, we went back to the office to clean all the mess, took measurements of all the broken windows and started rebuilding it. It’s a miracle we are alive. Our markets are mainly KSA and UAE, so customers were still buying our treatments online, but the team needed to recover so we decided to take a break, stop the operations for a few days and rest until next Monday.

How to build a great “revenue stack”

Every business has been scrambling to figure out online sales and marketing during the pandemic. Fortunately the Cambrian explosion of SaaS products began years ago and now there are many powerful options for revenue teams of all shapes and sizes. The problem is how to put everything together right for your company’s needs. Tim Porter and Erica La Cava of Madrona Venture Group have created a framework for how to build what they call the “revenue stack.” While most companies are already using some form of CRM, communications and agreement management software generally, each one needs to figure out four new “capabilities.” What they define as revenue enablement, sales engagement, conversational intelligence and revenue operations.

Here’s a sample from Extra Crunch, about sales engagement:

Some think of sales engagement as an intelligent e-mail cannon and analysis engine on steroids. While in reality, it is much more. Consider these examples: How can I communicate with prospects in a way that is both personalized and efficient? How do I make my outbound sales reps more productive and enable them to respond more quickly to leads? What tools can help me with account-based marketing? What happened to that email you sent out to one of your sales prospects?

Now, take these questions and multiply them by a hundred, or even a thousand: How do you personalize a multitouch nurture campaign at scale while managing and automating outreach to many different business personas across various industry segments? Uh-oh. Suddenly, it gets very complicated. What sales engagement comes down to is the critical understanding of sending the right information to the right customer, and then (and only then) being able to track which elements of that information worked (e.g., led to clicks, conversations and conversions) … and, finally, helping your reps do more of that. We see Outreach as the clear leader here, based in Seattle, with SalesLoft as the number two. Outreach in particular is investing considerably in adding additional intelligence and ML to their offering to increase automation and improve outcomes.

Around TechCrunch

Hear how working from home is changing startups and investing at Disrupt 2020

Extra Crunch Live: Join Wealthfront CEO Andy Rachleff August 11 at 1pm EDT/10am PDT about the future of investing and fintech

Register for Disrupt to take part in our content series for Digital Startup Alley exhibitors

Boston Dynamics CEO Rob Playter is coming to Disrupt 2020 to talk robotics and automation

Across the week

TechCrunch
The tale of 2 challenger bank models

Majority of tech workers expect company solidarity with Black Lives Matter

‘Made in America’ is on (government) life support, and the prognosis isn’t good

What Microsoft should demand in exchange for its ‘payment’ to the US government for TikTok

Equity Monday: Could Satya and TikTok make ByteDance investors happy enough to dance?

Extra Crunch
5 VCs on the future of Michigan’s startup ecosystem

Eight trends accelerating the age of commercial-ready quantum computing

A look inside Gmail’s product development process

The story behind Rent the Runway’s first check

After Shopify’s huge quarter, BigCommerce raises its IPO price range

#EquityPod

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

As ever, I was joined by TechCrunch managing editor Danny Crichton and our early-stage venture capital reporter Natasha Mascarenhas. We had Chris on the dials and a pile of news to get through, so we were pretty hyped heading into the show.

But before we could truly get started we had to discuss Cincinnati, and TikTok. Pleasantries and extortion out of the way, we got busy:

It was another fun week! As always we appreciate you sticking with and supporting the show!

Equity drops every Monday at 7:00 a.m. PT and Friday at 6:00 a.m. PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

YC-backed Statiq wants to bootstrap India’s EV charging network

Electric vehicles (EVs) are spreading throughout the world. While Tesla has drawn the most attention in the United States with its luxurious and cutting-edge cars, EVs are becoming a mainstay in markets far away from the environs of California.

Take India for instance. In the local mobility market, two- and three-wheel vehicles are starting to emerge as a popular option for a rapidly expanding middle class looking for more affordable options. EV versions are popular thanks to their reduced maintenance costs and higher reliability compared to gasoline alternatives.

Two-wheeled electric scooters are a fast-growing segment of India’s mobility market.

There’s just one problem, and it’s the same one faced by every country which has attempted to convert from gasoline to electric: how do you build out the charging station network to make these vehicles usable outside a small range from their garage?

It’s the classic chicken-and-egg problem. You need EVs in order to make money on charging stations, but you can’t afford to build charging stations until EVs are popular. Some startups have attempted to build out these networks themselves first. Perhaps the most famous example was Better Place, an Israeli startup that raised $800 million in venture capital before dying from negative cash flow back in 2013. Tesla has attempted to solve the problem by being both the chicken and egg by creating a network of Superchargers.

That’s what makes Statiq so interesting. The company, based in the New Delhi suburb of Gurugram, is bootstrapping an EV charging network using a multi-revenue model that it hopes will allow it to avoid the financial challenges that other charging networks have faced. It’s in the current Y Combinator batch and will be presenting at Demo Day later this month.

Akshit Bansal and Raghav Arora, the company’s co-founders, worked together previously as consultants and built a company for buying photos online, eventually reaching 50,000 monthly actives. They decided to make a pivot — a hard pivot really — into EVs and specifically charging equipment.

Statiq founders Raghav Arora and Akshit Bansal. Photos via Statiq

“We felt the need to do something about the climate because we were living in Delhi and Delhi is one of the most polluted cities in the world, and India is home to a lot of the polluted cities in the world. So we wanted to do something about it,” Bansal said. As they researched the causes of pollution, they learned that automobile exhaust represented a large part of the problem locally. They looked at alternatives, but EV charging stations remain basically non-existent across the country.

Thus, they founded Statiq in October 2019 and officially launched this past May. They have installed more than 150 charging stations in Delhi, Bangalore, and Mumbai and the surrounding environs.

Let’s get to the economics though, since that to me is the most fascinating part of their story. Statiq as I noted has a multi-revenue model. First, end users buy a subscription from Statiq to use the network, and then users pay a fee per charging session. That session fee is split between Statiq and the property owner, giving landlords who install the stations an incremental revenue boost.

A Statiq charging station. Photo via Statiq

When it comes to installation, Statiq has a couple of tricks up its sleeves. First, the company’s charging equipment — according to Bansal — costs roughly a third of the equivalent cost of U.S. equipment. That makes the base technology cheaper to acquire. From there, the company negotiates installations with landlords where the landlords will pay the fixed costs of installation in exchange for that continuing session charge fee.

On top of all that, the charging stations have advertising on them, offering another income stream particularly in high-visibility locations like shopping malls which are critical for a successful EV charging network.

In short, Statiq hasn’t had to outlay capital in order to put in place their charging equipment — and they were able to bootstrap before applying to YC earlier this year. Bansal said the company had dozens of charging stations and thousands of paid sessions on its platform before joining their YC batch, and “we are now growing 20% week-over-week.”

What’s next? It’s all about deliberate scaling. The EV market is turning on in India, and Statiq wants to be where those cars are. Bansal and his co-founder are hoping to ride the wave, continuing to build out critical infrastructure along the way. India’s government will likely continue to help: its approved billions of dollars in incentives for EVs and for charging stations, tipping the economics even further in the direction of a clean car future.

The Not Company, a maker of plant-based meat and dairy substitutes in Chile, will soon be worth $250M

The Not Company, Latin America’s leading contender in the plant-based meat and dairy substitute market, is about to close on an $85 million round of funding that would value it at $250 million, according to sources familiar with the company’s plans.

The latest round of funding comes on the heels of a series of successes for the Santiago-based business. In the two years since NotCo launched on the global stage, the company has expanded beyond its mayonnaise product into milk, ice cream and hamburgers. Other products, including a chicken meat substitute, are also on the product roadmap, according to people familiar with the company.

NotCo is already selling several products in Chile, Argentina and Latin America’s largest market — Brazil — and has signed a blockbuster deal with Burger King to be the chain’s supplier of plant-based burgers. It’s in this Burger King deal that NotCo’s approach to protein formulation is paying dividends, sources said. The company is responsible for selling 48 sandwiches per store per day in the locations where it’s supplying its products, according to one person familiar with the data. That figure outperforms Impossible Foods per-store sales, the person said.

NotCo is also now selling its burgers in grocery stores in Argentina and Chile. And while the company is not break-even yet, sources said that by December 2021 it could be — or potentially even cash flow positive.

NotCo co-founders Karim Pichara, Matias Muchnick and Pablo Zamora. Image Credit: The Not Company

With the growth both in sales and its diversification into new products, it’s little wonder that investors have taken note.

Sources said that the consumer brand-focused private equity firm L Catterton Partners and the Biz Stone-backed Future Positive were likely investors in the new financing round for the company. Previous investors in NotCo include Bezos Expeditions, the personal investment firm of Amazon founder Jeff Bezos; the London-based CPG investment firm, The Craftory; IndieBio; and SOS Ventures.

Alternatives to animal products are a huge (and still growing) category for venture investors. Earlier this month Perfect Day closed on a second tranche of $160 million for that company’s latest round of financing, bringing that company’s total capital raised to $361.5 million, according to Crunchbase. Perfect Day then turned around and launched a consumer food business called the Urgent Company.


These recent rounds confirm our reporting in Extra Crunch about where investors are focusing their time as they try to create a more sustainable future for the food industry. Read more about the path they’re charting.


Meanwhile, large food chains continue to experiment with plant-based menu items and push even further afield into cell-based meat using cultures from animals. KFC recently announced that it would be expanding its experiment with Beyond Meat’s chicken substitute in the U.S. — and would also be experimenting with cultured meat in Moscow.

Behind all of this activity is an acknowledgement that consumer tastes are changing, interest in plant-based diets are growing, and animal agriculture is having profound effects on the world’s climate.

As the website ClimateNexus notes, animal agriculture is the second-largest contributor to human-made greenhouse gas emissions after fossil fuels. It’s also a leading cause of deforestation, water and air pollution and biodiversity loss.

There are 70 billion animals raised annually for human consumption, which occupy one-third of the planet’s arable and habitable land surface, and consume 16% of the world’s freshwater supply. Reducing meat consumption in the world’s diet could have huge implications for reducing greenhouse gas emissions. If Americans were to replace beef with plant-based substitutes, some studies suggest it would reduce emissions by 1,911 pounds of carbon dioxide.

Singaporean startup Partipost gets $3.5 million to let anyone become an influencer

Partipost, a Singapore-based marketing startup that lets anyone with a social media profile sign up for influencer campaigns, has raised $3.5 million in new funding. The round was led by SPH Ventures, the investment arm of publisher Singapore Press Holdings, with participation from Quest Ventures and other investors.

The funding will be used to grow Partipost’s current operations in Singapore, Indonesia and Taiwan, and expand into Vietnam, the Philippines and Malaysia, other Southeast Asian markets with heavy social media usage. Since launching its mobile app in 2018, Partipost says it has added about 200,000 influencers to its platform, and that over the past 12 months, it has helped conduct 2,500 social media marketing campaigns for more than 850 brands, including Adidas, Arnott’s, Red Bull, Chope and Gojek.

According to benchmark report released in March by Influencer Marketing Hub, the influencer marketing industry is expected to be worth about $9.7 billion in 2020, with companies spending increasing amounts on social media campaigns and working with more “micro-influencers.” To serve them, the report said that more than 380 new influencer marketing agencies and platforms were launched last year, joining a roster of companies that already include AspireIQ, Upfluence, BuzzSumo, SparkToro and Inzpsire.me, to name just a few examples.

While most of these companies focus on helping brands identify the influencers with the widest social media reach, Partipost lets anyone sign up to take part in a campaign.

“Partipost’s main difference is that we believe that everyone can be an influencer,” founder and chief executive officer Jonathan Eg told TechCrunch. “Even if you have 200 followers, you can be one. We want to create a new market that we believe will be the future. Everyone can post on social media, write a review or give some feedback and be paid for it.”

“We want to empower everyone to monetize off their own data and influence and not just allow the big tech companies to do so,” he added.

Aspiring influencers browse brand campaigns on Partipost’s app and apply to take part by submitting a post draft. If the brand approves it, the user can then go ahead and post it on their social media profiles.

The amount of cash they earn is based on how much engagement each post receives. According to the company’s website, most campaigns require a minimum of 200 followers or more, and successful users can earn an average of $5 to $150 per campaign, depending on the brand’s payout structure.

One of Partipost’s selling points for brands is that it enables them to sign up thousands of influencers for a campaign in a single day, help them react quickly to online trends. Part of the funding will also be used to build data tools to help brands match campaigns with Partipost users more efficiently. The company says it expects to increase its base of aspiring influencers to one million within the next 18 months.

As part of the funding, SPH Ventures chief executive officer Chua Boon Ping will join Partipost’s board, while Quest Ventures partner Jeffrey Seah will become an observer.

In a media statement, Chua said, “Social influencer marketing is one of the fastest growing segments within Digital marketing. Hence, we are very excited to lead Partipost’s Series A round to further accelerate its growth. We are impressed by Partipost’s strong traction in Singapore, Indonesia and Taiwan as a young startup and look forward to partnering it to scale to new markets.”