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Accel closes on $3B across three funds as it ramps up global investing
Accel announced Tuesday the close of three new funds totaling $3.05 billion, money that it will be using to back early-stage startups, as well as growth rounds for more mature companies. Notably, the 38-year-old Silicon Valley-based venture firm is doubling down on global investing.
The announcement underscores both the robust confidence investors continue to have for backing startups in the tech sector and the amount of money available to startups these days.
Specifically, today Accel is announcing its 15th early-stage U.S. fund at $650 million; its seventh early-stage European and Israeli fund also at $650 million and its sixth global growth stage fund at $1.75 billion. The latter fund is in addition, and designed to complement, a previously unannounced $2.3 billion global “Leaders” fund that is focused on later-stage investing that Accel closed in December.
Accel expects to invest in about 20 to 30 companies per fund on average, according to Partner Rich Wong. Its average investment in its growth fund will be in the $50 million to $75 million range, and $75 million and $100 million out of its global Leaders fund.
But the firm is also still eager and “excited” to incubate companies, Wong said.
“We’ll still write $500,000 to $1 million seed checks,” he told TechCrunch. “It’s important to us to work with companies from the very beginning and support them through their entire journey.”
Indeed, as TechCrunch recently reported, Accel has a history of backing companies that were previously bootstrapped (and often profitable) -– the latest example being Lower, a Columbus, Ohio-based fintech, which just raised a $100 million Series A.
Interestingly, Accel is often referred to some of these companies by existing portfolio companies (also in the case of Lower, whose CEO was referred to Accel by Galileo Clay Wilkes). More often than not, companies that Accel backs out of its early-stage and growth funds are bootstrapped and located outside of Silicon Valley.
The venture firm has long looked outside of Silicon Valley for opportunities, and has had offices not only in the Bay Area, but in London and Bangalore for years. Part of its investment thesis is to “invest early and locally,” according to Wong. Examples of this philosophy include investments in companies based all over the world — from Mexico to Stockholm to Tel Aviv to Munich.
Since the time of its last fund closure in 2019, the firm has seen 10 portfolio companies go public, including Slack, Austin-based Bumble, Bucharest-based UiPath, CrowdStrike, PagerDuty, Deliveroo and Squarespace, among others.
It also had 40 companies experience an M&A, including Utah-based Qualtrics’s $8 billion acquisition by SAP and Segment’s $3.2 billion acquisition by Twilio. Also, just last week, Rockwell Automation announced it was buying Michigan-based Plex Systems for $2.22 billion in cash. Accel first invested in Plex, which has developed a subscription-based smart manufacturing platform, in 2012.
Recent investments include a number of fintech companies such as LatAm’s Flink, Berlin-based Trade Republic, Unit and Robinhood rival Public. Accel has also backed as existing portfolio companies such as Webflow, a software company that helps businesses build no-code websites and events startup Hopin.
Wong says Accel is “open-minded but thematic” in its investment approach.
Accel Partner Sonali de Rycker, who is based out of London, agrees.
“For example, we’ll look at automation companies, consumer businesses and security companies, but at a global scale. Our goal is to find the best entrepreneurs regardless of where they are,” she said.
That has only been intensified by the recent rise of the smartphone and cloud, Wong said.
“Before, companies were mostly selling to the consumer in their own country,” he added. “But now the size of the market is so dramatically bigger, allowing them to become even larger, which is one of the reasons why I believe we’re seeing investment pace at this speed.”
To support this, it’s notable that Accel’s global Leaders fund is “dramatically” larger than the $500 million Leaders fund the firm closed in 2019.
Also, de Rycker points out, companies are staying private longer so the opportunity to invest in them until they sell or go public is greater.
Accel is also patient. In some cases, the firm’s investors will develop “years-long” relationships with companies they are courting.
“1Password is an example of this approach,” Wong said. “Arun [Mathew] had that relationship for at least six years before that investment was made. Finally, 1Password called and said ‘We’re ready, and we want you to do it.’ ”
And so Accel led the Canadian company’s first external round of funding in its 14-year history — a $200 million Series A — in 2019.
While the firm is open-minded, there are still some industries it has not yet embraced as much as others. For example, Wong said, “We’re not announcing a $2.2 billion crypto fund, but we have done crypto investments, and see some very interesting trends there. We’ll look at where crypto takes us.”
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In its first funding in 7 years, profitable fintech Lower raises $100M Series A led by Accel
Lower, an Ohio-based home finance platform, announced today it has raised $100 million in a Series A funding round led by Accel.
This round is notable for a number of reasons. First off, it’s a large Series A even by today’s standards. The financing also marks the previously bootstrapped Lower’s first external round of funding in its seven-year history. Lower is also something that is kind of rare these days in the startup world: profitable. Silicon Valley-based Accel has a history of backing profitable, bootstrapped companies, having also led large Series A rounds for the likes of 1Password, Atlassian, Qualtrics, Webflow, Tenable and Galileo (which went on to be acquired by SoFi).
In fact, Galileo founder Clay Wilkes introduced the VC firm to Dan Snyder, Lower’s founder and CEO. The two companies have a few things in common besides being profitable: they were both bootstrapped for years before taking institutional capital and both have headquarters outside of Silicon Valley.
“We were immediately intrigued because Ohio-based Lower echoes both of these themes,” said Accel partner John Locke, who led the firm’s investment in Lower and is taking a seat on the company’s board as part of the investment. “Like Galileo, Lower will be one of the most successful bootstrapped fintech companies globally. The combination of a company built in a nontraditional region across the globe and a bootstrapped company reminds us of [other] companies we have partnered with for a large Series A.”
There were other unnamed participants in the round, but Accel provided the “majority” of the investment, according to Lower.
Snyder co-founded Lower in 2014 with the goal of making the home-buying process simpler for consumers. The company launched with Homeside, its retail brand that Snyder describes as “a tech-leveraged retail mortgage bank” that works with realtors and builders, among others.
In 2018, the company launched the website for Lower, its direct-to-consumer digital lending brand with the mission of making its platform a one-stop shop where consumers can go online to save for a home, obtain or refinance a mortgage and get insurance through its marketplace. This year, it launched the Lower mobile app with a savings account.
Sitting (L to R): Co-founders Dan Snyder, Grayson Hanes
Standing (L to R): Co-founders Mike Baynes, Chris Miller
Not pictured: Robert Tyson; Image credit: Lower
Over the years, Lower has funded billions of dollars in loans and notched an impressive $300 million in revenue in 2020 after doubling revenue every year, according to Snyder.
“Our history is maybe a little atypical of fintech companies today,” he told TechCrunch. “We’ve had a view going back to the start of the company that we wanted to run it profitably. That’s been one of our pillars, so that’s what we’ve done. Also, we all grew up in the mortgage industry, so we saw firsthand the size of the market, but also how broken it was, so we wanted to change it.”
In launching the direct-to-consumer digital lending brand, the company was working to make the homebuying process more “digital, transparent and easier for consumers to access,” Snyder said.
At the same time, the company didn’t want to lose the human touch.
“We tried to design the app flow in a way where you can get as far along as you can in the application but if you want, at any point in time, to talk or chat with someone, we’re available,” Snyder added.
Image Credits: Lower
Lower’s typical customer is the millennial and now Gen Z who’s aspiring to own their first home, according to Snyder.
“They might be thinking, ‘OK, I might be living in an apartment now, but in the next few years I’m going to meet someone and/or have a child and I want to unlock the investment that is a home,’” he told TechCrunch. “And we’ll help them on that journey.”
Lower’s recently launched new app offers a deposit account it’s dubbed “HomeFund.” The interest-bearing, FDIC-insured deposit account offers a 0.75% Annual Percentage Yield and is designed to help consumers save for a home with a “dollar-for-dollar match in rewards” up to the first $1,000 saved, Snyder said.
Lower works with more than 35 major insurance carriers nationally, including Nationwide, Liberty Mutual and Allstate. It has more than 1,600 employees, about half of which are based in Lower’s home state. That’s up from about 650 employees in June of 2020.
Looking ahead, the company plans to add more services and has an “aggressive roadmap” for adding new features to its platform. Today, for example, Lower sells primarily to Fannie Mae and Freddie Mac. And while it services the majority of its loans, like many large lenders, it uses a subservicer. That will change, however, in early 2022, when Lower intends to launch its own native servicing platform.
And while the company intends to continue to run profitably, Snyder said he and his co-founders “think the time is now to gain share.”
“We want to become a global brand, raise money and gain market share,” he added. “We’re going to continue to double down on product and build out our capabilities. We are the best-kept secret in fintech and plan to change that with smart branding, advertising and sponsorships.”
And last but not least, Lower is eyeing the public markets as part of its longer-term roadmap.
“Ultimately, we know we can build a great public company,” Snyder told TechCrunch. “We’re of the scale to be a public company right now, but we’re going to keep our heads down and we’re going to keep building for the next few years and then I think we can be in a spot to be a strong public business.”
Accel’s Locke points out that in the U.S., mortgage and home finance are among the largest financial service markets, and they have primarily been handled by large banks.
“For most consumers, getting a mortgage through these banks continues to be an overly complex, slow-moving process,” Locke told TechCrunch. “We believe by providing consumers a great mobile experience, Lower will gain share from incumbent banks, in the same way that companies like Monzo have in banking or Venmo in payments or Trade Republic and Robinhood in stock trading.”
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Holloway launches in-depth startup guides, aims to rewrite publishing with $4.6M from NYT, tech VCs
Founders need to get smart quickly about the many nuanced aspects of building a company, from understanding weird language in a big term sheet to hiring a key software developer.
But the best practical advice is scattered across blog posts, podcasts and books, and it gets outdated quickly as industry norms evolve. Even experienced founders spend a lot of time searching and still end up with the wrong information.
Holloway has an ambitious solution: Today, it’s launching a library of book-length online guides about work, written and regularly updated by teams of industry experts.
The flagship title is called Raising Venture Capital, which features 340 thoughtfully organized pages in 15 sections and three appendices on all aspects of the funding process. Designed for easy reading and easy searching in spite of the information density and length (it has a 14-hour total read-time), the guide could become a go-to resource for the startup world.
Some sections will be most appealing to newer founders, like the part on whether to raise VC in the first place. Other portions are relevant to even the most experienced serial entrepreneurs — like how to think through potential drag-along and pay-to-play provisions, full-ratchet anti-dilution clauses and other tricky terms one might find. Did you know that investors can include more than 20 types of conditions in a term sheet? Do you know how to handle each one?
With $4.6 million in seed funding from a combination of top tech investors and The New York Times that it is also announcing now, Holloway intends to expand to cover the wide variety of work-related topics about startups and technology, and beyond. The next guide, currently in progress, will be on technical hiring and recruiting. A relatively shorter sample guide on equity compensation is already available for free.
The goal is to democratize access to how the best are doing business today (and take on traditional publishing).
“We didn’t just do this for Silicon Valley and New York,” and other startup-heavy cities, co-founder and chief executive Andy Sparks tells me, “we did this for people in cities like Columbus and Atlanta where startup communities are growing, but knowledge is harder to come by.”
The lawyers and other experts who author and edit the guides could otherwise cost more than $800 an hour, he explains, and won’t have time for many clients in the first place. (The company estimates there are $40,000 worth of legal fees in the VC guide.)
Sparks, previously the co-founder of analytics platform Mattermark, is also the lead author on “Raising Venture Capital” — along with another 20 or so contributors, like Brad Feld of the Foundry Group, and Darby Wong, co-founder of the popular legal document startup Clerky . The lead author of the technical recruiting guide is Ozzie Osman, former head of product engineering at Quora, and a main contributor to it is Aditya Agarwal, the former CTO of Dropbox.
The current pricing is $100 per guide forever (including future updates), with a discount available if you pre-order. Sparks says this may change to ensure the guides stay affordable, as well as cover the very real costs of producing this quality of content.
The big-picture bet is that the startup market is large enough to create strong demand for the initial guides, in the same way that many successful tech startups of this decade have started out serving companies like themselves. Some of the topics that Holloway is working on, like tech recruiting, naturally blend in with the rest of the business world and those wider audiences. Eventually, through expansion into broader work-related topics, Holloway’s online-first approach could compete against the existing book publishing industry at a bigger scale.
This is why the company is investing heavily in its software, in addition to its content. The interface was inspired by the experiences of co-founder Joshua Levy, a veteran technologist who found himself writing popular third-party guides on GitHub about how to use common services like AWS. Features in the software include search results that break out sections and sources, a detailed left-hand index view, a hyperlinked in-house glossary of hundreds of key terms, notes of warning and importance from experts and numerous links to third-party sources.
“We decided to invest in a digital reading experience that makes reading book-length content in a browser a great experience,” Sparks said, “which also means you will land on the right guide when you go hunting for answers on search engines like Google .”
Holloway co-founders Joshua Levy (left) and Andy Sparks (right)
You’ll even see a number of links to TechCrunch and Extra Crunch articles in the guides. Sparks tells me that the company plans to continue to link to a wide variety of sources in the future — so when guest columnists write something great and practical on Extra Crunch, we will help them to get this work featured in Holloway as well. The company is also accepting a variety of contributor types for its guides going forward, which you can find more details about here.
(On that note, we’ve published an excerpt from Holloway’s “Raising Venture Capital” guide, about pro rata terms and issues, on Extra Crunch. Subscribers can go check it out here, and find a special discount to Holloway inside.)
Sparks is careful to say that the current guides are not literally finished, despite all the effort put into them so far. And indeed, they will never be. Holloway is named after the “hollow ways” seen in the European countryside, where well-used roads have gradually sunk through hundreds of years of regular use. The company intends for its guides to be the paths that people who build companies tread year after year, where the knowledge that accumulates from the usage of many forms the clear direction that those in the future take.
The company’s investors include NEA, South Park Commons, The New York Times Co., Precursor Ventures and Comcast Ventures as well as Day One Ventures, Social Capital, Abstract Ventures, 415, Royal Bank of Canada, Lightspeed Ventures, & Full Tilt Capital. Angels include Leo Polovets, Lee Linden, Raj De Datta, Neil Parikh, Mikhail Larionov, Danielle & Kevin Morrill, Srinath Sridhar, Dennis Phelps and Kevin Lee.
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How to go to market in middle America
Deborah Eisenberg is the founder of TechStarts PR, where she helps technology companies both big and small hone their message and reach their audience.
There comes a time for many startup companies where they either realize they need to do a nationwide rollout, or they need to actively target buyers in the middle of the country. If you are a startup on either the East or the West Coasts, it’s worth thinking about how this market might present its own set of unique challenges, and how you plan to overcome them.
There are a lot of misconceptions about what some people call “flyover country,” and as a San Francisco native who spent two decades in New York, Washington DC, and Boston before moving to Pittsburgh, I can assure you they are almost all wrong. Without getting into specifics, the reality of “middle America” is that it’s the same as anywhere else.
Income, education, world view, and waistlines are all varied. It’s pretty accurate that San Francisco possesses a culture obsessed with fitness and entrepreneurship, but California isn’t necessarily all like that, and if you think it is, I encourage you to go to Bakersfield, the Central Valley, or Eureka sometime.
In addition, just because the stereotypes are wrong doesn’t mean there’s nothing different about doing business here. As you think about how to conduct your rollout, here are some things you should consider:
Table of Contents
Research
As with any market, research is key since it informs every other aspect of the rollout. Start by looking into who your competition is.
Since there are fewer VC-backed startups in middle America, and smaller companies tend to get less press, the research may be harder. However, there are some major universities that are actively putting money into their own Entrepreneurship programs and those spinoffs often do very well.
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Economic development organizations: good or bad for entrepreneurial activity?
Bill Baumel
Contributor
Contributor
Bill Baumel is Managing Director at the Ohio Innovation Fund. After twenty years in Silicon Valley – 4 public companies and 10 major acquisitions – Bill came home to the Midwest creating OIF, whose 14 companies have attracted partners such as Microsoft, Facebook, SAP, and Sanofi, providing SaaS, cyber, AI/ML and med tech solutions to a majority of the Fortune 500.
In developing VC markets such as the Midwest, some may think that funding from the government or economic development organizations are a godsend for local entrepreneurs. Startups are often looking for all the help they can get, and a boost in funds or an attractive set of economic incentives can be perceived as the fuel they need to take the next step in their growth journey.
While this type of funding can be helpful, a startup should ensure that funding from these sources is not a double-edged sword. The biggest positive, of course, is the money, which can help startups with product development, hiring, marketing, sales and more. But there can also be certain restrictions or limitations that are not fully understood initially—these restrictions could hinder growth at an inopportune time later on.
The inevitable question, then, is should startups consider partnering with the government or various economic development groups as they look to get off the ground? Let’s take a closer look.
What Local Economic Development Organizations Have to Offer
Today, particularly in the Midwest, it’s common for state and local governments to offer startups incentives such as tax exemptions or grants in an effort to keep local businesses around and also attract companies from other regions.
So how do these incentives work? When it comes to tax credits or exemptions, local governments are sometimes willing to provide these incentives if a startup can demonstrate how paying lower taxes will benefit the wider community.
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May Mobility puts autonomous shuttles on the streets of Columbus, Ohio
This December a set of autonomous vehicles will start roaming the streets of Columbus, Ohio, in an effort to turn this bustling Midwestern community into the first smart city. The project, which is part of the Smart Columbus and DriveOhio initiatives, is the first step in launching a fully autonomous shuttle route in the city.
“We’re proud to have the first self-driving shuttle in Ohio being tested on the streets of Columbus,” said Mayor Andrew J. Ginther. “This pilot will shape future uses of this emerging technology in Columbus and the nation. Residents win when we add more mobility options to our transportation ecosystem – making it easier to get to work, school or local attractions.”
Michigan-based May Mobility provided the shuttles and the team is training the autonomous vehicles to navigate Columbus streets. May Mobility already launched their vehicles in Detroit and this is the second full implementation of the tech.
The six-seater electric shuttles will follow a 3 mile route through downtown Columbus and the vehicles will start picking up passengers on December 1. Rides are free. May Mobility has already performed over 10,000 successful trips in Detroit. In Columbus the shuttles will drive the Scioto Mile loop, a scenic route through the city and by the Ohio River. A large digital display will show system information and there will be a single operator to oversee the trip and take control in case of emergency.
Founder Edwin Olson is a robotics professor at the University of Michigan and his team won the original DARPA challenge in 2007.
“Cities are seeking cost-effective transportation services that will improve congestion in urban cores, and self-driving shuttles can offer a huge relief,” he said. “As we work toward a future where people can drive less and live more, we’re thrilled to be working with partners from Columbus to provide a new transportation experience that will make traveling through Columbus safe, reliable and personal.”
Columbus won the $40 million Smart City Challenge in June 2016 to test and implement smart city tech.
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VCs say Silicon Valley isn’t the gold mine it used to be
In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’
The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising rents are making it impossible for new blood to make a living, let alone build businesses. And according to a recent survey, 46 percent of Bay Area residents want to get the hell out, an increase from 34 percent two years ago.
Needless to say, the future of Silicon Valley was top of mind on stage at Disrupt.
“It’s hard to make a difference in San Francisco as a single entrepreneur,” said J.D. Vance, the author of ‘Hillbilly Elegy’ and a managing partner at Revolution’s Rise of the Rest Fund, which backs seed-stage companies based outside Silicon Valley. “It’s not as a hard to make a difference as a successful entrepreneur in Columbus, Ohio.”
In conversation with Vance, Revolution CEO Steve Case said he’s noticed a “mega-trend” emerging. Founders from cities like Pittsburgh, Detroit or Portland are opting to stay in their hometowns instead of moving to U.S. innovation hubs like San Francisco.
“The sense that you have to be here or you can’t play is going to start diminishing.”
“We are seeing the beginnings of a slowing of what has been a brain drain the last 20 years,” Case said. “It’s not just watching where the capital flows, it’s watching where the talent flows. And the sense that you have to be here or you can’t play is going to start diminishing.”
J.D. Vance says that most entrepreneurs don’t need to move to Silicon Valley.
Here’s why. #TCDisrupt pic.twitter.com/0mFPeTuHLe
— TechCrunch (@TechCrunch) September 6, 2018
Farewell, San Francisco
“It’s too expensive to live here,” said Aileen Lee, the founder of seed-stage VC firm Cowboy Ventures, amid a conversation with leading venture capitalists Spark Capital general partner Megan Quinn and Benchmark general partner Sarah Tavel .
“I know that there are a lot of people in the Bay Area that are trying to work on that problem and I hope that they are successful,” Lee added. “It’s an amazing place to live and we’ve made it really challenging for people to live here and not worry about making ends meet.”
One of Cowboy’s portfolio companies opted to relocate from Silicon Valley to Colorado when it came time to scale their business. That kind of move would’ve historically been seen as a failure. Today, it may be a sign of strong business acumen.
Quinn said that of all 28 of Spark’s growth-stage portfolio companies, Raleigh, North Carolina-based Pendo has the easiest time recruiting folks locally and from the Bay Area.
She advises her Bay Area-based late-stage companies to open a second office outside of the Valley where lower-cost talent is available.
“We often say go to [flySFO.com], draw a three-hour circle around San Francisco where they have direct flights, find a city that has a university and open up a second office as quickly as possible,” Quinn said.
Still, all three firms invest in a lot of companies based in San Francisco. Of Benchmark’s 10 most recent investments, for example, eight were based in SF, according to Crunchbase.
“I used to believe really strongly if you wanted to build a multi-billion dollar company you had to be based here,” Tavel said. “I’ve stopped giving that soap speech.”
Aileen Lee (Cowboy Ventures), Megan Quinn (Spark Capital), and Sarah Tavel (Benchmark Capital) on whether or not Silicon Valley is on the wane for investors #TCDisrupt pic.twitter.com/SOpn7p0eNQ
— TechCrunch (@TechCrunch) September 5, 2018
Underestimated talent
A lot of Bay Area VCs have been blind to the droves of tech talent located outside the region. Believe it or not, there are great engineers in America’s small- and medium-sized markets too.
At Disrupt, Backstage Capital founder Arlan Hamilton announced the firm would launch an accelerator to further amplify companies led by underestimated founders. The program will have cohorts based in four cities; San Francisco was noticeably absent from that list.
Instead, the firm, which invests in underrepresented founders and recently raised a $36 million fund, will work with companies in Philadelphia, Los Angeles, London and one more city, which will be determined by a public vote. Aniyia Williams, the founder of Tinsel and Black & Brown Founders, will spearhead the Philadelphia effort.
“For us, it’s about closing that wealth gap to address inequity in tech,” Williams said. “There needs to be more active participation from everyone.”
Hamilton added that for her, the tech talent in LA and London is undeniable.
“There is a lot of money and a lot of investors … it reminds me of three years ago in Silicon Valley,” Hamilton said.
Silicon Valley vs. China
Silicon Valley’s demise may not be just as a result of increased costs of living or investors overlooking talent in other geographies. It may be because of heightened competition abroad.
Doug Leone, an early- and growth-stage investor at Sequoia Capital, said at Disrupt that he’s noticed a very different work ethic in China.
Chinese entrepreneurs, he explained, are more ruthless than their American counterparts and they’re putting in a whole lot more hours.
Doug Leone of Sequoia Capital says founders in the US and China both want to change the world, but Chinese founders are a little more desperate (and you see it in the crazy work ethic they have).#TCDisrupt pic.twitter.com/dPxsRTbJoq
— TechCrunch (@TechCrunch) September 6, 2018
“I’ve had dinner in China until after 10 p.m. and people go to work after 10 p.m.,” Leone recalled.
“We don’t see that in the U.S. I’m not saying the U.S. founders oughta do that but those are the differences. They are similar in character. They are similar in dreams. They are similar in how they want to change the world. They are ultra-driven … The Chinese founders have a half other gear because I think they are a little more desperate.”
Much of this, however, has been said before and still, somehow, Silicon Valley remained the place to be for investors and startup entrepreneurs.
The reality is, those engaged in tech culture are always anxiously awaiting for the bubble to pop, the market to crash and for “peak Valley” to finally arrive.
Maybe, just maybe, Silicon Valley is forever.
Here’s more of our coverage of Disrupt 2018.
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Cleveland offered $120 million in freebies lure Amazon to the city
A Cleveland.com article detailed the lengths the small midwestern city would go to lure Amazon’s in 50,000-person HQ2. In a document obtained by reporter Mark Naymik, we learn that Cleveland was ready to give over $120 million in free services to Amazon including considerably reduced fares on Cleveland-area trains and buses.
The document, available here, focuses on the Northeast Ohio Areawide Coordinating Agency (NOACA)’s ideas regarding the key component in many of Amazon’s decisions – transportation.
Ohio has a budding but often tendentious connection to public transport. Cities like Columbus have no light rail while Cincinnati just installed a rudimentary system. Cleveland, for its part, has a solid if underused system already in place.
That the city would offer discounts is not surprising. Cities were falling over themselves to gain what many would consider – including Amazon itself – a costly incursion on the city chosen. However, given the perceived importance of having Amazon land in a small city – including growth of the startup and tech ecosystems – you can see why Cleveland would want to give away plenty of goodies.
Ultimately the American Midwest is at a crossroads. It could go either way, with small cities growing into vibrant artistic and creative hubs or those same cities falling into further decline. And the odds are stacked against them.
The biggest city, Chicago, is a transport, finance, and logistics hub and draws talent from smaller cities that orbit it. Further, “smart” cities like Pittsburgh and Ann Arbor steal the brightest students who go on to the coasts after graduation. As Richard Florida noted, the cities with a vibrant Creative Class are often the ones that succeed in this often rigged race and many cities just can’t generate any sort of creative ecosystem – cultural or otherwise – that could support a behemoth like Amazon landing in its midst.
What Cleveland did wasn’t wrong. However, it did work hard to keep the information secret, a consideration that could be dangerous. After all, as Maryland Transportation Secretary Pete K. Rahn told reporters: “Our statement for HQ2 is we’ll provide whatever is necessary to Amazon when they need it. For all practical purposes, it’s a blank check.”
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Rapchat raises $1.6 million to help you make and share your def jams
The first thing to understand about media-sharing app Rapchat is that co-founder Seth Miller is not a rapper and his other co-founder, Pat Gibson, is. Together they created Rapchat, a service for making and sharing raps, and the conjunction of rapper and nerd seems to be really taking off.
Since we last looked at the app in 2016 (you can see Tito’s review below), a lot has changed. The team has raised $1.6 million in funding from investors out of Oakland and the Midwest. Their app, which is sort of a musical.ly for rap, is a top 50 music app on iOS and Android and hit 100 million listens since launch. In short, their little social network/sharing platform is a “millionaire in the making, boss of [its] team, bringin home the bacon.”
The pair’s rap bona fides are genuine. Gibson has opened or performed with Big Sean, Wiz Khalifa and Machine Gun Kelly, and he’s sold beats to MTV. “My music has garnered over 20M+ plays across YouTube, SoundCloud and more,” he wrote me, boasting in the semi-churlish manner of a rapper with a “beef.” Miller, on the other hand, likes to freestyle.
“I grew up loving to freestyle with friends at OU and I noticed lots of other millennials did this too (even if most suck lol) … at any party at 3am – there would always be a group of people in the corner freestyling,” he said. “At the same time Snapchat was blowing up on campus and just thought you should be able to do the same exact thing for rap.”
Gibson, on the other hand, saw it as a serious tool to help him with his music.
“I spent a lot of time, energy and resources making music,” he said. “I was producing the beats, writing the songs, recording/mixing the vocals, mastering the project, then distributing & promoting the music all by myself. With Rapchat, there’s a library of 1,000+ beats from top producers, an instant recording studio in your pocket, and the network to distribute your music worldwide and be discovered…. all from a free app. Rapchat is disrupting the creation, collaboration, distribution, & discovery of music via mobile.”
“We have a much bigger but also more active community than any other music creation app,” said Miller.
While it’s clear the world needs another sharing platform like it needs a hole in the head, thanks to a rabid fan base and a great idea, the team has ensured that Rapchat is not, as they say, wicka-wicka-whack. That, in the end, is all that matters.
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Columbus could be the next startup city
Ever since I wrote about the Midwest last year I’ve been keeping my eyes on Columbus. I decided to hold a small pitch-off to meet some of the startups I saw last time I had driven through. The pitch-off was a success and a company called Wyzzer took first place and the quirky Hopper Carts came in second. But what I really came away with was a new respect for Columbus as a startup hub.… Read More
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