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Extra Crunch roundup: Pre-pitch tactics, Warby Parker S-1, Israel’s fintech ecosystem
Forget what you’ve heard: There are many shortcuts to success.
Tapping into someone else’s experience is a tried-and-true method, which is why two-time Y Combinator participant Chris Morton wrote a guest post for Extra Crunch with advice for founders hoping to be accepted by the famed accelerator.
Morton, who has also reviewed thousands of YC applications, shares his thoughts on when to submit an application, what to do if you miss the deadline and whether you’ll need to relocate if accepted.
“Remember that your application should be good enough to get an interview, not win a prize,” says Morton. “Go back to work instead of spending more time perfecting an application.”
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Use discount code ECFriday to save 20% off a one- or two-year subscription
Image Credits: Robert Katai under a license.
In an interview with reporter Anna Heim, Romania-based marketer Robert Katai discussed some of the methods he uses to help clients refine their content and branding strategies.
“Today, content creation is free — everybody can do it. The hard part is how you distribute and amplify that.”
Katai also shared his impressions of Romania’s startup ecosystem, suggestions for maintaining top-of-mind status with customers, and reinforced the often-overlooked need to continually repurpose content to grab mindshare.
Like our other growth marketing interviews, there’s no paywall.
Thanks very much for reading Extra Crunch this week! I hope you have a fantastic weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Why global investors are flocking to back Latin American startups
Image Credits: Bryce Durbin / TechCrunch
Latin America’s increasingly dynamic venture capital scene has been making headlines of late. To learn more about why investors are so enthusiastic, senior reporter Mary Ann Azevedo spoke to several who are actively engaged with the region:
- Shu Nyatta, managing partner, SoftBank
- Ethan Choi, partner, Accel
- Julie Ruvolo, director of venture capital, LAVCA
- Bill Cilluffo, partner, QED Investors
- Ana Cristina Gadala-Maria, principal, QED Investors
- Ross Darwin, principal, Owl Ventures
“I am not surprised by all the activity,” Mary Ann writes. “However, I am a bit taken aback by the sheer number of rounds, the caliber of firms leading them and the sky-high valuations.
“It seems that the region is finally, and deservedly, being taken seriously. This is likely just the beginning.”
Corporate venture capital follows the same trend as other VC markets: Up
Image Credits: Nigel Sussman (opens in a new window)
Corporations are not remaining on the sidelines of the fiery 2021 venture capital game, Alex Wilhelm and Anna Heim note in The Exchange.
After parsing data from CB Insights and Stryber and chatting with a handful of investors, Alex and Anna concluded that the corporate venture capital market looks a lot like other VC markets.
“Perhaps this should not be a surprise,” they write. “We’ve seen non-venture funds flow into the later stages of startup land, pushing VCs toward earlier-stage and more venture-y deals. Why would CVCs be immune to the same trend?”
Ramp and Brex draw diverging market plans with M&A strategies
Image Credits: Bryan Mullennix (opens in a new window) / Getty Images
Corporate spending management startup Brex raised a $300 million Series C and acquired Buyer just a week after rival Brex announced it had acquired Israeli fintech Weav.
Ryan Lawler and Alex Wilhelm dug into the Ramp-Brex rivalry, and what those acquisitions say about their diverging strategies.
“From a high level, all of the recent deal-making in corporate cards and spend management shows that it’s not enough to just help companies track what employees are expensing these days,” they write.
“As the market matures and feature sets begin to converge, the players are seeking to differentiate themselves from the competition.”
Boston’s startup market is more than setting records in scorching start to year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim interviewed VCs and corralled data to present a detailed picture of Boston’s startup funding scene.
“Boston is benefiting from larger structural changes to at least the U.S. venture capital market, helping close historical gaps in its startup funding market and access funds that previously might have skipped the region,” they write.
“And local university density isn’t hurting the city’s cause, either, boosting its ability to form new companies during a period of rich investment access.”
Europe’s quick-commerce startups are overhyped: Lessons from China
Image Credits: Andrew Holt (opens in a new window) / Getty Images
Half of the companies offering instant grocery delivery in Europe were founded last year as the pandemic reshaped most aspects of our existence.
To date, they’ve raised about $2 billion, but Picus Capital’s Alexander Kremer says startup lessons from China suggest that “instant delivery is not the magic bullet to crack the dominance” of old-school grocery players.
“If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.”
D2C specs purveyor Warby Parker files to go public
Image Credits: Nigel Sussman (opens in a new window)
For The Exchange, Alex Wilhelm examines the S-1 filing from Warby Parker, “a consumer hardware company with two main sales channels, largely attractive economics, falling losses and rising adjusted profitability. You could even argue that it handled the pandemic well, despite COVID-19’s negative impact on its operations.”
But how are its growth prospects?
Dear Sophie: Can I still get a green card through marriage if I’m divorcing?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I received a conditional green card after my wife and I got married in 2019. Recently, we have made the difficult decision to end our marriage. I want to continue living and working in the United States.
Is it still possible for me to complete my green card based on my marriage through the I-751 process or do I need to do something else, like ask my employer to sponsor me for a work visa?
— Better to Have Loved and Lost
Using AI to reboot brand-client relationships
Image Credits: Getty Images under an alashi (opens in a new window)license.
Marketing automation can help boost key metrics, but it can also be a disservice to brands by perpetually devaluing goods and services, ShareThis’ Michael Gorman writes in a guest column.
Companies with a narrow focus on driving conversions are missing the bigger picture: AI can help create richer experiences that identify consumer actions and intent while also improving customer experiences.
“We live in a world rich with data, and insights are growing more vibrant every day,” he writes.
Israel’s maturing fintech ecosystem may soon create global disruptors
Image Credits: Thitima Thongkham (opens in a new window) / Getty Images
Fintech startups based in Israel raised more than $1.8 billion in 2019, but in Q1 2021, companies in the category raised $1.1 billion.
Facilitating a wide range of services, more than a dozen fintech unicorns have already emerged in a country that has a population slightly smaller than Los Angeles County, many of them started by entrepreneurs who lacked financial backgrounds.
“So what is it about Israeli-founded fintech startups that stand out from their scaling neighbors across the pond?” asks Flint Capital’s Tel Aviv-based investor, Adi Levanon.
Forbes jumps into hot media liquidity summer with a SPAC combo
Image Credits: Nigel Sussman (opens in a new window)
For The Exchange, Alex Wilhelm takes stock of Forbes’ SPAC combination during a week when POLITICO was snatched up for more than $1 billion by Axel Springer and just a few months after BuzzFeed went public via a blank-check company.
“Is it the most exciting debut? No,” he writes.
“But it does highlight that with enough sheer gumption, one can take a magazine business into the digital age and keep aggregate revenue growing. That’s worth something.”
Are B2B SaaS marketers getting it wrong?
Image Credits: mevans (opens in a new window) / Getty Images
Technical jargon is one of the most annoying aspects of technology marketing.
Sadly, it tends to perpetuate itself: Marketers are terrified of making a wrong move, so they tend to copy what everyone else is doing.
If you want to attract customers and drive higher conversions, cut the jargon.
“Do everything you can to be immediately understood and you’ll have a much better chance of cutting through the noise and pushing clear and persuasive benefits in a way no prospect can resist,” advises Konrad Sanders, CEO of The Creative Copywriter.
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Old media giants turn to VC for their next act
The Web 1.0 and Web 2.0 eras weren’t kind to the world’s largest media conglomerates, throwing their business models into question, creating whole new categories of content consumption, and bringing online competition to subscription and ad pricing. Many of the media giants from the 1990s and early 2000s remain market leaders with multi-billion dollar valuations, however, and have become active investors in startups as a tactic to help themselves evolve.
Of the traditional media companies that have committed to corporate venturing, there are two distinct strategies: those whose investing seems to be about replacing the historic classifieds section of newspapers and diversifying into a range of consumer-facing marketplaces, and those whose investing is concentrated on capturing an early glimpse (and early equity stake) in startups reshaping media.
Replacing Classifieds, Investing in Marketplaces
Mathias Doepfner, CEO of Axel Springer. The company’s startup accelerator is one of the most active in Europe. (Photo by Michele Tantussi/Getty Images)
Given the first crisis newspaper groups faced from tech startups in the 1990s and early 2000s was the rise of online classifieds sites (like Craigslist) and transactional marketplaces (like eBay and Amazon), the disruption of their lucrative classified ads revenue stream drove their attention to e-commerce.
Aside from Hearst, the major US newspaper and magazine chains – like Gannett, News Corp, Meredith Corp / Time Inc, and Digital First Media – haven’t made many investments in startups. Perhaps the financial straits of most US newspaper companies have left little cash for VC investments that won’t pay off for years in the future.
But in Northern and Central Europe, where news readership and even print publishing remain healthy by comparison, the leading media groups have been aggressively investing in marketplace and e-commerce startups across the continent over the last decade.
Europe’s leading publisher, Axel Springer has made itself an established player in the European startup scene. Axel Springer’s Digital Ventures team has backed marketplaces from Caroobi (for cars) to Airbnb, and their Berlin-based accelerator (run in partnership with Plug & Play) has invested in over 100 young startups, like digital bank N26, boat rental marketplace Zizoo, and influencer-brand marketplace blogfoster. In a move more strategic to its business, the 15,000-employee group made a large investment in augmented reality unicorn Magic Leap this past February as well, forming a partnership to leverage its content IP in the process.
Meanwhile, Norway’s Schibsted, Sweden’s Bonnier, and Germany’s Hubert Burda Media (best know to many in tech for their annual DLD conference in Munich) and Holtzbrinck Publishing are each globally active, multi-billion dollar publishers who operate active early- or growth-stage VC portfolios composed mainly of e-commerce brands and marketplaces.
The most iconic corporate venture investment by a newspaper conglomerate (or any company for that matter) is without question the $32M check written into 3-year-old Chinese social web startup Tencent in 2001 by the South African publishing group Naspers (founded in 1915). Tencent, now valued around $400B, is Asia’s largest and most powerful digital media company and Naspers’ 31% stake was worth roughly $175B in March 2018 when it sold $10B in shares.
As a result, Naspers has transformed into a holding company that incubates, acquires, and invests in online marketplace businesses around the globe (though it still maintains a relatively small publishing unit).
The challenge for traditional media companies investing in startups beyond the realm of media is that even if wildly successful, those investments neither give them a distinct advantage in media itself nor make their business model like that of a tech company by way of osmosis. These investments can be flashy distractions to make management and shareholders call the company innovative while it fails to actually re-envision its core operations. Investing in Airbnb or BaubleBar doesn’t address the key challenges or opportunities a traditional publishing group faces.
Therefore the best case scenario in this strategy seems to be that these companies find enough financial success that they just transition out of the content game and become holding companies for other types of consumer-facing brands the way Naspers has. But even then the path seems uncertain: despite all its other activities, Naspers’ market cap is less than the value of its Tencent shares…it’s not clear that the best case scenario necessarily transforms the core organization.
Investing in the Next Generation of Media
Thomas Rabe, CEO of German media group Bertelsmann. Bertelsmann is unique in treating startup investments as a dedicated division of the conglomerate. (TOBIAS SCHWARZ/AFP/Getty Images)
The other track for “old media” giants has been to focus on venture capital as a means to uncover the future of the media business so the old guard can learn from the new generation of media entrepreneurs and react to market changes sooner than competitors. Intriguingly, it is consistent that the conglomerates who have taken this strategy are ones whose operations in television, radio, data, and telecom outweigh any involvement in newspapers.
Bertelsmann, Hearst, and 21st Century Fox have been the most aggressive corporate venture investors in startups working to shape the future of media, whether it be through streaming video services, crowdsourced storytelling platforms, or augmented reality.
With annual revenue over €17B, Bertelsmann is one of the largest media companies in the world, spanning television production and broadcasting (RTL Group), book publishing (Penguin Random House), newspapers, magazine publishing (Grüner + Jahr), and education. Unlike of media companies though, it treats venture investments in media startups as a key division of its company rather than as a side project.
The company’s core Bertelsmann Digital Media Investments (BDMI) invests across the US and Europe in companies like Audible, Mic, The Athletic, and Wondery (and in funds like Greycroft and SV Angel) but there are also the 3 regionally-focused funds investing in China, India, and Brazil plus the education-focused University Ventures fund it anchors in NYC. Collectively, Bertelsmann teams made 40 new startup investments in 2017 and generated €141M in venture returns, according to their 2017 Annual Report.
The investment arm of Hearst, one of America’s largest publishers with $10.8B in 2017 revenue, has likewise been a major backer of BuzzFeed, Pandora, Hootesuite, and Roku not to mention Chinese language app LingoChamp, live entertainment brand Drone Racing League, VR capture startup 8i, and dozens of other media-related startups. Hearst’s ownership in these ventures makes strategic sense: they provide market insights relevant to the core businesses, offer immediate partnership opportunities, and would be strategic acquisition targets that evolve the company’s position in a changing market.
21st Century Fox and Sky Plc (in which 21st Century Fox owns a 39% stake and is trying to acquire outright) have both made a whole slate of startup investments across the media sector in the last few years. In addition to its $100M investment in live-streaming platform Caffeine (announced on September 5) and similarly massive investment in WndrCo’s NewTV venture led by Meg Whitman, Fox has invested repeatedly in sports-centric OTT service fuboTV, hit newsletter brand TheSkimm, VR studio WITHIN, and fantasy sports app Draftkings with Sky often co-investing or building meaningful stakes in international startups like iflix (a leading streaming video service in Southeast Asia and the Middle East).
Since traditional media giants own extensive intellectual property of hit shows, films, and often exclusive rights to popular live events – not to mention established distribution channels to tens or hundreds of millions of people – there are immediate partnerships that can be signed to benefit both a startup and the incumbent. The incumbents often re-invest repeatedly to build their ownership and deepen the alignment between the companies, which rarely happens when media companies invest in marketplace startups.
Tencent’s always-be-evolving model
The new crop of digital media giants that includes Netflix, Snap, VICE, and BuzzFeed aren’t doing much if any strategic investing. Instead they’re keeping focused on growth of their core product offering. The notable exception is China’s Tencent.
In addition to dominating China’s booming messaging app sector with WeChat and QQ, owning 75% market share of music streaming in China, and being the world’s leading games publisher through its own studios (Riot Games, Supercell, etc.) and its minority stakes in Activision Blizzard, Epic Games, and others, Tencent has taken a strategy of investing often and early in promising digital media startups…and it has its tentacles in everything.
Based on Crunchbase data, Tencent has done over 300 investments in startups. It is likely the most active venture investor in China, where most of its portfolio is concentrated, but also backs Western media startups like SoundHound, Wattpad, Spotify, Smule, and Wonder Workshop.
Tencent can give distribution to these upstarts through its vast portfolio of digital properties and it can keep tabs on what new content formats or business models are gaining traction. It operates from a mindset of perpetually evolving, and trying to snatch up startups whose products could be key assets in the future of content creation, distribution, or monetization. This approach is one both old media giants and the next gen of unicorn media startups should consider.
The pace of innovation is moving so fast, and so many new doors are opening up – from subscription streaming and esports to voice interfaces and augmented reality – that corporate venture as a core strategy can unlock opportunities for the organization to evolve early, before it ends up being categorized as “old media”.
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German Supreme Court dismisses Axel Springer lawsuit, says ad blocking is legal
Germany’s Supreme Court dismissed a lawsuit yesterday from Axel Springer against Eyeo, the company behind AdBlock Plus.
The European publishing giant (which acquired Business Insider in 2015) argued that ad blocking, as well as the business model where advertisers pay to be added to circumvent the white list, violated Germany’s competition law. Axel Springer won a partial victory in 2016, when a lower court ruled that it shouldn’t have to pay for white listing.
However, the Supreme Court has now overturned that decision. In the process, it declared that ad-blocking and Eyeo’s white list are both legal. (German speakers can read the court’s press release.)
After the ruling, Eyeo sent me the following statement from Ben Williams, its head of operations and communications:
Today, we are extremely pleased with the ruling from Germany’s Supreme Court in favor of Adblock Plus/eyeo and against the German media publishing company Axel Springer. This ruling confirms — just as the regional courts in Munich and Hamburg stated previously — that people have the right in Germany to block ads. This case had already been tried in the Cologne Regional Court, then in the Regional Court of Appeals, also in Cologne — with similar results. It also confirms that Adblock Plus can use a whitelist to allow certain acceptable ads through. Today’s Supreme Court decision puts an end to Axel Springer’s claim that they be treated differently for the whitelisting portion of Adblock Plus’ business model.
Axel Springer, meanwhile, described ad blocking as “an attack on the heart of the free media” and said it would appeal to the country’s Constitutional Court.
— Adblock Plus (@AdblockPlus) April 19, 2018
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Axel Springer is investing in Magic Leap for some reason
Magic Leap is the gift that keeps on giving. The company has been working for years on augmented reality technologies and raised a gigantic pile of cash on the way. German media company Axel Springer is announcing today that it is investing an undisclosed amount in Magic Leap. The German company is taking a stake in Magic Leap through its Axel Springer Digital Ventures division. In its… Read More
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Beware the pitfalls of Silicon Valley
A recent article in Frankfurter Allgemeine Zeitung titled “Will Facebook Enslave Us?” captures a sentiment prevalent among companies around the world: admiration for Silicon Valley — albeit, with a dash of fear. International media outlets eagerly cover disruption developing in labs up and down the San Francisco peninsula. Boards of directors are spending hours debating how… Read More
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Axel Springer Goes After iOS 9 Ad Blockers In New Legal Battle
German media giant Axel Springer, which operates top European newspapers like Bild and Die Welt, and who recently bought a controlling stake in Business Insider for $343 million, has a history of fighting back against ad-blocking software that threatens its publications’ business models. Now, it’s taking that fight to mobile ad blockers, too. According to the makers of the iOS… Read More
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Samsung Preps Apple News Rival In Europe, Inks Axel Springer Deal
Samsung has inked a strategic partnership with European media giant Axel Springer. The pair said they will work together on “digital media offerings exclusively for Samsung customers”, saying they will develop a range of “creative new services” to be brought to market “in 2016 and beyond”. Read More
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