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As low-code startups continue to attract VC interest, what’s driving customer demand?

Published September 14, 2020

Investor interest in no-code, low-code apps and services advanced another step this morning with Airtable raising an outsized round. The $185 million investment into the popular database-and-spreadsheet service comes as it adds “new low-code and automation features,” per our own reporting.

The round comes after we’ve seen several VCs describe no- and low-code startups as part of their core investing theses, and observed how the same investors appear to be accelerating their investing pace into upstart companies that follow the ethos.

The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Undergirding much of the hype around apps that allow users to connect services, mix data sources and commit visual programming is the expectation that businesses will require more customized software than today’s developers will be able to supply. Low-code solutions could limit required developer inputs, while no-code services could obviate some need for developer time altogether. Both no- and low-code solutions could help alleviate the global developer shortage.

But underneath the view that there is a market mismatch between developer supply and demand is the anticipation that businesses will need more apps today than before, and even more in the future. This rising need for more business applications is key to today’s growing divergence between the availability and demand for software engineers.

The issue is something we explored talking with Appian, a public company that provides a low-code service that helps companies build apps.

Today we’re digging a little deeper into the topic, chatting with Mendix CEO Derek Roos. Mendix has reached nine-figure revenues with its low-code platform that helps other companies build apps, meaning that it has good perspective into what the market is actually demanding of itself and its low-code competition.

We want to learn a bit more about why business need so many apps, how COVID-19 has changed the low-code market and if Mendix is accelerating in 2020. If we can get all of that in hand, we’ll be better equipped to understand the growing no- and low-code startup realm.

A growing market

Mendix, based in Boston, raised around $38 million in known venture capital across a few rounds, including a $25 million Series B back in 2014. In 2018, Mendix partnered up with IBM to bring its service to their cloud, and later sold to Siemens for around $700 million the same year.

Unicorn layoffs prompt more startups to consider acqui-hiring

Published September 12, 2020

Alex Zajaczkowski was just months into her role at Toast, a restaurant point-of-sale software company, when she was let go during COVID-19 layoffs. Toast, last valued at $5 billion, cut 50% of its staff through layoffs and furloughs.

Zajaczkowski said she started applying for jobs within a week.

“I think I got on the boat a little bit quicker than others because I wanted that security a little bit faster,” she said. She and former Toast colleagues formed a Slack to communicate about layoffs, their job searches and what lay ahead. Toast created an opt-in spreadsheet for recruiters that listed laid-off employees.

The sheet brought Zajaczkowski to Stavvy, an online mortgage startup also based in Boston, for an interview. Today, a majority of Stavvy’s team are ex-Toasters, including Zajaczkowski.

“I think one of the benefits of recruiting from an organization that is sort of an iconic Boston company, is that you know what the hiring practices are,” Ligris said. “There’s been a level of vetting that has occurred.”

Stavvy’s onboarding of former Toast employees suggests that the layoffs which rocked startups in March could be an opportunity for smaller startups to scoop up star talent that already has chemistry. While acqui-hiring is not a new concept, it has new weight in an environment reeling from mass layoffs and a shift to remote-first work.

Stavvy co-founders Kosta Ligris and Josh Feinblum, though, say hiring a pod of employees can backfire without proper diligence.

As COVID-19 era drags on, VCs look beyond Zoom calls for due diligence and sourcing

Published September 11, 2020

While the coronavirus has accelerated the dealmaking pace for many early-stage startups, activity has not come without adaptation.

Remote investment struggles for investors were clear from the get go: it’s challenging to invest millions in someone you have never met, and there’s not a lot to learn from “off-the-cuff” conversations that are calendared days in advance. Some investors said the pandemic was forcing them to stick with people they know in categories where they have experience, limiting the network that one can push money into.

Over six months into a global pandemic, though, new techniques are emerging to address some of these woes. The very art of a deal, from due diligence to sourcing, is changing from a cultural and technological standpoint.

One of the new places that recreates informal bonding and camaraderie is Matchbox.VC, formerly Fortnite.VC.

The service connects founders and investors over video games to network and source deals in a low-stress environment. Matchbox.VC was inspired from a tweet by Founders Fund principal Delian Asparouhov and has garnered interest from investors like Arjun Sethi from Tribe Capital, Ryan Shea, the ex-founder of Blockstack, Jake Chapman from AlphafundVC and Peter Rojas from Betaworks. Its last game night was backed by Yac, Tribe Capital and Shrug Capital.

We’ve invested $14m total in the company and it’s off to the races, and is counter cyclical in a covid world so yeah

pretty pleased with my Fortnite sourcing thus far

— delian (@zebulgar) April 24, 2020

The pitch is simple: founders and investors sign up on the website, answer basic questions about their focus, company and stage before picking three game choices from eight options that include Fortnite, COD: Warzone and Valorant.

What’s driving API-powered startups forward in 2020?

Published September 10, 2020

Startups that deliver products via an API are seeing momentum in 2020, as their method of serving customers becomes increasingly mainstream. And investors are taking note.

It’s not hard to find a startup with an API-based delivery model that is doing well this year. This column noted a grip of recently funded API-focused startups in May, for example, underscoring how attractive they are to venture capitalists today.

Yesterday, I caught up with Alpaca, a startup whose API allows other companies to add equities-trading capabilities to their own services. The company’s business is skyrocketing this year. According to data it provided to TechCrunch, Alpaca’s trading volume, processed for its developer users and customers, has grown from $388.1 million in January to nearly $1.6 billion in both June and July. Volume fell some in August, but according to CEO Yoshi Yokokawa, September’s trading volume could see Alpaca surpass its summer records.

Alpaca announced a $6 million round from Spark Capital last November that TechCrunch covered, with Social Leverage, Portag3, Fathom Capital and Zillionize helping boost its total capital raised to nearly $12 million. We confirmed with Yokokawa that his startup’s revenue scales with volume, meaning that the company’s top line has exploded this year, with trading volumes up 10x from July 2019 to July 2020.

Alpaca is a good example of what to think of when we consider an API-powered company versus something more traditional, like Robinhood, which provides services to end users. Alpaca considers developers as its users, and those developers bring Alpaca to market in their own fashion.

The developer-first model can lead to efficiencies. As Twilio CEO Jeff Lawson told TechCrunch regarding new software products: “I don’t want to go through a sales process,” he said, adding that he also doesn’t want to wait “a week to get a call back” but would rather “start exploring now.” With many API companies offering a free tier or low-cost options for tinkering, lowering sales and marketing costs in certain instances when developers sell themselves on an API-delivered service.

So what?

What’s driving the API-delivered model forward in 2020? Or, more simply, why do I keep hearing from API-powered startups that are either raising money, or are seeing rapid growth?

Alpaca’s Yokokawa has a theory. According to the startup exec, two macro trends are coming together to push API startups forward. The first is a simple evolution of the tech industry toward a new software delivery model. Yokokawa drew a timeline for TechCrunch, from legacy IT systems to on-prem software, through SaaS to API-delivered services today, the last in the bunch offering what he views as having the most flexibility. That trend has combined with more folks becoming developers, in his view, through traditional education, coding schools and even no-code’s growth.

An industry shift toward software and services in an increasingly on-demand model (SaaS is more on-demand than on-prem software, and API-delivered tools are even more on-demand than SaaS) and more developers to help plug APIs into other apps could make for a nice tailwind for companies employing the business model.

To get a bit more on the where we stand today, The Exchange chatted with Shasta’s Isaac Roth and collected notes from two Mayfield investors, Patrick Salyer and Rajeev Batra. There’s a general air of bullishness around startups selling APIs. Let’s learn how it is impacting venture interest.

The investor perspective

Carbon Health to launch 100 pop-up COVID-19 testing clinics across the US

Published September 10, 2020

Primary care health tech startup Carbon Health has added a new element to its “omnichannel” healthcare approach with the launch of a new pop-up clinic model that is already live in San Francisco, LA, Seattle, Brooklyn and Manhattan, with Detroit to follow soon – and that will be rolling out over the next weeks and months across a variety of major markets in the U.S., ultimately resulting in 100 new COVID-19 testing sites that will add testing capacity on the order of around an additional 100,000 patients per month across the country.

So far, Carbon Health has focused its COVID-19 efforts around its existing facilities in the Bay Area, and also around pop-up testing sites set up in and around San Francisco through collaboration with genomics startup Color, and municipal authorities. Now, Carbon Health CEO and co-founder Even Bali tells me in an interview that the company believes the time is right for it to take what it has learned and apply that on a more national scale, with a model that allows for flexible and rapid deployment. In fact, Bali says the they realized and began working towards this goal as early as March.

“We started working on COVID response as early as February, because we were seeing patients who are literally coming from Wuhan, China to our clinics,” Bali said. “We expected the pandemic to hit any time. And partially because of the failure of federal government control, we decided to do everything we can to be able to help out with certain things.”

That began with things that Carbon could do locally, more close to home in its existing footprint. But it was obvious early on to Bali and his team that there would be a need to scale efforts more broadly. To do that, Carbon was able to draw on its early experience.

“We have been doing on-site, we have been going to nursing homes, we have been working with companies to help them reopen,” he told me. “At this point, I think we’ve done more than 200,000 COVID tests by ourselves. And I think I do more than half of all the Bay Area, if you include that the San Francisco City initiative is also partly powered by Carbon Health, so we’re already trying to scale as much as possible, but at some point we were hitting some physical space limits, and had the idea back in March to scale with more pop-up, more mobile clinics that you can actually put up like faster than a physical location.”

Interior of one of Carbon Health’s COVID-19 testing pop-up clinics in Brooklyn.

To this end, Carbon Health also began using a mobile trailer that would travel from town to town in order to provide testing to communities that weren’t typically well-served. That ended up being a kind of prototype of this model, which employs construction trailers like you’d see at a new condo under development acting as a foreman’s office, but refurbished and equipped with everything needed for on-site COVID testing run by medical professionals. These, too, are a more temporary solution, as Carbon Health is working with a manufacturing company to create a more fit-for-purpose custom design that can be manufactured at scale to help them ramp deployment of these even faster.

Carbon Health is partnering with Reef Technologies, a SoftBank -backed startup that turns parking garage spots into locations for businesses, including foodservice, fulfilment, and now Carbon’s medical clinics. This has helped immensely with the complications of local permitting and real estate regulations, Bali says. That means that Carbon Health’s pop-up clinics can bypass a lot of the red tape that slows the process of opening more traditional, permanent locations.

While cost is one advantage of using this model, Bali says that actually it’s not nearly as inexpensive as you might think relative to opening a more traditional clinic – at least until their custom manufacturing and economies of scale kick in. But speed is the big advantage, and that’s what is helping Carbon Health look ahead from this particular moment, to how these might be used either post-pandemic, or during the eventual vaccine distribution phase of the COVID crisis. Bali points out that any approved vaccine will need administration to patients, which will require as much, if not more infrastructure than testing.

Exterior of one of Carbon Health’s COVID-19 testing pop-up clinics in Brooklyn.

Meanwhile, Carbon Health’s pop-up model could bridge the gap between traditional primary care and telehealth, for ongoing care needs unrelated to COVID.

“A lot of the problems that telemedicine is not a good solution for, are the things where a video check-in with a doctor is nearly enough, but you do need some diagnostic tests – maybe you might you may need some administration, or you may need like a really simple physical examination that nursing staff can do with the instructions of the doctor. So if you think about those cases, pretty much 90% of all visits can actually be done with a doctor on video, and nursing staff in person.”

COVID testing is an imminent, important need nationwide – and COVID vaccine administration will hopefully soon replace it, with just as much urgency. But even after the pandemic has passed, healthcare in general will change dramatically, and Carbon Health’s model could be a more permanent and scalable way to address the needs of distributed care everywhere.

This Labor Day, spare a thought for the workers who made your doorstep delivery possible

Published September 7, 2020

Arjuna Costa
Contributor

Arjuna Costa is a partner at Omidyar Network and early stage investor in Ruma.

Better safety in the warehouse

Imagine there’s a package handler at a major manufacturer named Jack who spends his shifts heaving heavy boxes onto a conveyor belt. It’s an arduous movement that Jack will repeat a few thousand times before he punches out. As a 10-year veteran on the job, Jack has performed this singular task on this same warehouse floor more times than he can count. On this particular night, he’s tired after staying up late playing with his kids, and he slips a disk in his back. Unfortunately, Jack’s plight is all too often a reality for millions of workers today.

According to the Bureau of Labor Statistics, 5% of warehouse workers in the U.S. experience an injury on the job each year—higher than the national average. After service workers, like firefighters and police, transportation/shipping and manufacturing/production rank second and third as the occupations with the largest number of workplace injuries resulting in days away from work. Jobs that involve heavy lifting, arduous repetition and operating complex machinery come with serious risk.

Injuries can be devastating for workers, both physically and financially. Taking time off work can not only result in lost wages, but also drive people into debt due to health-related expenses, creating health-poverty traps that are difficult to climb out of. Worker injuries are also costly for employers. A study from Liberty Mutual, using data from the U.S. Bureau of Labor Statistics and the National Academy of Social Insurance, found that serious, nonfatal injuries cost $84.04 million a week in the transportation and warehousing industry. It is in corporations’ best interest to prioritize workplace safety.

One challenge is that traditional approaches to workplace safety are slow, inaccurate and costly. Without practical interventions, organizations spend an estimated $2,000+ per worker annually on injury prevention. Within manufacturing and logistics industries, it costs an additional $2,000+ annually for workers’ compensation per full-time employee. Currently, there is no standard solution to preventing workplace injuries while lowering costs, leaving workers like Jack without adequate protections. Fortunately, digital platforms and tools that leverage technological innovation, including sensors and wearables, are advancing new ways to prevent workplace accidents and injuries.

Take for example StrongArm, one of Flourish’s portfolio companies. StrongArm has built a technology platform that integrates a new generation of industrial wearables, big data analytics and smart algorithms. It is designed to modernize industry dynamics for workers, employers and workers’ compensation insurers. The company’s GDPR-compliant wearable hardware devices and data platform called FUSE deliver real-time injury prevention feedback and collect data to support precise interventions for overall injury reduction and has reduced injury rates by more than 40% year-over-year for its clients.

StrongArm has also helped keep workers safe during the pandemic by launching a new suite of capabilities on its FUSE platform, including CDC communication, proximity alerts (i.e., notifications to workers within six feet of one another), and exposure analysis (understanding who has interacted with whom, at what time, and for what duration, exposing any potential contact transfer with accuracy). These enhanced capabilities can get workers back to work faster, earning vitally needed income while reducing COVID-19 risk by 95%.

Fetch Robotics is another company using technological innovation and digital platforms to promote worker safety. Fetch makes an Autonomous Mobile Robot (AMR) that can transport materials within warehouses, factories and distribution centers while also gathering environmental data. This can relieve the burden of heavy lifting from human workers and ensure that conditions, like heat, remain safe in work environments. In June 2020, the company announced that it was launching a disinfecting AMR that can decontaminate spaces larger than 100,000 square feet in 1.5 hours, helping workers stay safe and get back to work quicker amid the spread of the virus.

Employers should do more

In its report titled, “The Impact of COVID-19 on Tech Innovation,” Lux Research found that the outbreak of COVID-19 will likely push corporations with major manufacturing and logistics operations to assess the potential of robotics. More companies will explore how they can automate processes, particularly those that are repeatable and predictable. Findings like these inevitably lead to questions about how increased automation will impact workers — the eternal “will robots take all the jobs?” question. However, we are still a long way away from a world where human workers are obsolete (just ask Elon Musk).

Robots are still not good at picking up small or oddly shaped objects, for instance. For the foreseeable future, corporations will depend on logistics workers and have a responsibility to protect the safety of those workers. It’s not enough to plaster the required OSHA sign on the factory or warehouse floor. Corporations need to do more. Fortunately in this case, the right thing to do is the good thing to do. By embracing technological innovation, promoting worker safety is a win-win.

BIMA nabs $30M more for micro- health and life insurance aimed at emerging markets

Published September 7, 2020

The coronavirus global health pandemic — and the new emphasis on social distancing to slow down the spread of COVID-19 — has put healthcare and tech services used to enable healthcare remotely under the spotlight. Today a startup that’s building microinsurance and healthcare services specifically targeting emerging markets is announcing a round of funding to meet a surge in demand for its services.

BIMA, a startup that provides life and health insurance policies, along with telemedicine to support the latter, all via a mobile-first platform targeting consumers in emerging markets whose primary entry point to online services is via phones, not computers, is today announcing that it has raised $30 million in funding, a growth round that the Stockholm/London-based startup plans to use to double down on its health services in the wake increased demand around COVID-19.

The company currently provides telemedicine as a service connected to its health insurance, and it has expanded to include health programs for managing illnesses and offering discounts for pharmacies, and the plan seems to be to bring more services into the mix.

This is the same approach we’re seeing from other insurance startups targeting emerging economies, including China’s Waterdrop, which recently raised $230 million. Looking at the network of services Waterdrop is building, including crowdfunding, gives you an idea of what else BIMA might potentially look to add in, too.

The round is being led by a new investor — China’s CreditEase Fintech Investment Fund (CEFIF) — with previous backers LeapFrog Investments and insurance giant Allianz (who were in BIMA’s previous, $97 million round) also participating.

The startup is not disclosing its valuation this time around, but in its previous round the company was valued at $300 million, and it has grown considerably since then.

BIMA has now clocked up 2 million tele-doctor consultations and has some 35 million insurance and health policies on its books, growing its customer base by some 11 million people in the last two years. It’s now active in 10 countries — Ghana, Tanzania and Senegal in Africa; and Bangladesh, Cambodia, Indonesia, Malaysia, Pakistan, Philippines and Sri Lanka across Asia.

At a time when we have seen a number of insure tech startups emerge in the US and Europe — with some, like Lemonade, growing into publicly-listed companies — BIMA is very notable in part because of who it targets.

It’s not higher economic brackets, or necessarily segments with disposable income, or those in developed markets with stable economies. Rather, its focus is, in its words, underserved families that typically live on less than $10 per day and are at high risk of illness or injury, with 75% of its customers accessing insurance services for the very first time, BIMA notes.

“Telemedicine and insurance are needed more than ever and COVID accelerated awareness and acceptance for these types of products amongst emerging consumers and government. They’ve gone from ‘nice to have’ to a necessity,” said Mathilda Strom, who co-founded the company with CEO Gustaf Agartson, in an interview. “Utilisation nearly doubled in our telemedicine services.” BIMA covers COVID and pandemics in general in its policies, she added. “We have paid out COVID-related claims to families of people who suffered or passed away from the illness.”

It’s also working with health authorities that have been overwhelmed in the pandemic. Pakistani government and Indonesian government now use BIMA to off-load their health services by providing teledoctor consultations or doctors chats to customers.

Aiming at developing economies where middle classes are still only materialising, currencies are potentially unstable, and there is still a lack of infrastructure means that BIMA is contending with a combination of factors that makes the bar high for entry, but it’s also potentially more rewarding because of the lack of competition and tapping a demand that is still rapidly growing.

“The onset of COVID-19 has brought home the value of telemedicine, to help prevent the spread of disease, and the importance of insurance, for peace of mind,” said Agartson in a statement.

“Through digital solutions, and a human touch, we’ve been able to serve hard to reach communities with tools and services that bring them a sense of security at such a challenging time. The funds we have raised will allow us to expand our operations and further invest in our product offering that will help us scale quickly to meet the unprecedented demand for our services.”

It’s interesting to see CreditEase, a Chinese investor, as part of this round: the idea of all-in, full service health services companies banked around the insurance proposition has been one cultivated in the Chinese market. But even with the development of HMOs in the US, it’s interesting that there have been relatively few startups around the world trying to develop similar models. BIMA stands out in part because of that.

“We are very impressed by BIMA’s innovative integration of micro insurance and tele-doctor services, which provide critical coverage to meet large unmet demand in emerging markets, and whose value is accentuated further by the current pandemic,” said Dennis Cong, managing partner at CEFIF, in a statement. “We are very happy to have the opportunity to join this meaningful journey, along with the established leading shareholders, and support the company to grow its business and expand its leadership position in its served markets.”

“The market that BIMA is serving is vast and demand for health services is tremendous,” added Stewart Langdon, a partner at LeapFrog Investments. “BIMA’s unique digital capabilities empower emerging market consumers to access many health and insurance services on a single, easy to use platform. That includes protection for millions of first-time buyers of insurance who would otherwise remain unprotected and at risk.”

“We are happy to continue our partnership with BIMA and jointly deliver telemedicine and remote healthcare services in developing markets,” said Nazim Cetin, CEO at Allianz X, in a statement. “We believe the demand for these services will continue to increase and want to manifest BIMA’s leading position in the market by providing support with our experience and network.”

3 views on the future of geographic-focused funds

Published September 4, 2020

For many investors, the coronavirus has effectively taken geography out of the equation when it comes to vetting new opportunities.

While this dynamic opens up startups to more investment opportunities, venture capital firms that focus on a specific region are in a thornier spot. The competitive advantage they once had when raising — the notion that they’re focused on an area no one else is — is potentially threatened.

Natasha Mascarenhas, Danny Crichton and Alex Wilhelm of the TechCrunch Equity crew discussed the future of geographic-focused funds given the uptick of remote investing:

Natasha: Early-stage regional funds can win if they remain focused
Alex: Geo-focused venture funds will be weakened, but won’t die
Danny: Geo-focused venture funds are dead (and should never have existed)

Natasha: Early-stage regional funds can win if they remain focused

Since 2014, Steve Case and his team have made an annual bus trip across the country to meet startups in emerging startup hubs. Five days, five cities and at least $500,000 of investment dollars given to startups. Case would even offer to fly out promising and hard-to-reach startups to have them join the trip.

The Rise of the Rest fund, with more than $300 million in assets under management, has invested in over 130 startups across 70 cities, including Austin, Chicago, Detroit, Los Angeles, New Orleans and Washington, D.C.

12 Paris-based VCs look at the state of their city

Published September 1, 2020

Four years after the Great Recession, France’s newly elected socialist president François Hollande raised taxes and increased regulations on founder-led startups. The subsequent flight of entrepreneurs to places like London and Silicon Valley portrayed France as a tough place to launch a company. By 2016, France’s national statistics bureau estimated that about three million native-born citizens had moved abroad.

Those who remained fought back: The Family was an early accelerator that encouraged French entrepreneurs to adopt Silicon Valley’s startup methodology, and the 2012 creation of Bpifrance, a public investment bank, put money into the startup ecosystem system via investors. Organizers founded La French Tech to beat the drum about native startups.

When President Emmanuel Macron took office in May 2017, he scrapped the wealth tax on everything except property assets and introduced a flat 30% tax rate on capital gains. Station F, a giant startup campus funded by billionaire entrepreneur Xavier Niel on the site of a former railway station, began attracting international talent. Tony Fadell, one of the fathers of the iPod and founder of Nest Labs, moved to Paris to set up investment firm Future Shape; VivaTech was created with government backing to become one of Europe’s largest startup conference and expos.

Now, in the COVID-19 era, the government has made €4 billion available to entrepreneurs to keep the lights on. According to a recent report from VC firm Atomico, there are 11 unicorns in France, including BlaBlaCar, OVHcloud, Deezer and Veepee. More appear to be coming; last year Macron said he wanted to see “25 French unicorns by 2025.”

According to Station F, by the end of August, there had been 24 funding rounds led by international VCs and a few big transactions. Enterprise artificial intelligence and machine-learning platform Dataiku raised a $100 million Series D round, and Paris-based gaming startup Voodoo raised an undisclosed amount from Tencent Holdings.

We asked 12 Paris-based investors to comment on the state of play in their city:

Alison Imbert, partner, Partech
Alexandre Mordacq, partner, 360 Capital Partners
Emmanuel Delaveau, partner, Partech
Boris Golden, partner, Partech
Jean de La Rochebrochard, managing partner, Kima Ventures
Paul Bolardi, associate, AXA Venture Partners
Shiraz Mahfoudhi, Speedinvest
Guillaume Dupont, founding partner, CapHorn
Martin Mignot, partner, Index Ventures
Bartosz Jakubowski, principal, Alven
Pierre Entremont, founding partner, Frst Capital
Pierre-Eric Leibovici, founding partner, Daphni

10 Berlin-based VCs discuss how COVID-19 has changed the landscape

Alison Imbert, Partech

What trends are you most excited about investing in, generally?

All the fintechs addressing SMBs to help them to focus more on their core business (including banks disintermediation by fintech, new infrastructures tech that are lowering the barrier to entry to nonfintech companies).

What’s your latest, most exciting investment?

77foods (plant-based bacon) — love that alternative proteins trend as well. Obviously, we need to transform our diet toward more sustainable food. It’s the next challenge for humanity.

What are you looking for in your next investment, in general?
Impact investment: Logistic companies tackling the life cycle of products to reduce their carbon footprint and green fintech that reinvent our spending and investment strategy around more sustainable 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?
D2C products.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% investing in France as I’m managing Paris Saclay Seed Fund, a €53 million fund, investing in pre-seed and seed startups launched by graduates and researchers from the best engineering and business schools from this ecosystem.

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?
Deep tech, biotech and medical devices. Paris, and France in general, has thousands of outstanding engineers that graduate each year. Researchers are more and more willing to found companies to have a true impact on our society. I do believe that the ecosystem is more and more structured to help them to build such companies.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris is booming for sure. It’s still behind London and Berlin probably. But we are seeing more and more European VC offices opening in the city to get direct access to our ecosystem. Even in seed rounds, we start to have European VCs competing against us. It’s good — that means that our startups are moving to the next level.

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?
For sure startups will more and more push for remote organizations. It’s an amazing way to combine quality of life for employees and attracting talent. Yet I don’t think it will be the majority. Not all founders are willing/able to build a fully remote company. It’s an important cultural choice and it’s adapted to a certain type of business. I believe in more flexible organization (e.g., tech team working remotely or 1-2 days a week for any employee).

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 hospitality sectors are of course hugely impacted. Yet there are opportunities for helping those incumbents to face current challenges (e.g., better customer care and services, stronger flexibility, cost reduction and process automation).

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?
Cash is king more than ever before. My only piece of advice will be to keep a good level of cash as we have a limited view on events coming ahead. It’s easy to say but much more difficult to put in practice (e.g., to what extend should I reduce my cash burn? Should I keep on investing in the product? What is the impact on the sales team?). Startups should focus only on what is mission-critical for their clients. Yet it doesn’t impact our seed investments as we invest pre-revenue and often pre-product.

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.
There is no reason to be hopeless. Crises have happened in the past. Humanity has faced other pandemics. Humans are resilient and resourceful enough to adapt to a new environment and new constraints.

10 Berlin-based VCs discuss how COVID-19 has changed the landscape

Published August 30, 2020

A breeding ground for European entrepreneurs, Berlin has a knack for producing a lot of new startups: the city attracts top international, diverse talent, and it is packed with investors, events and accelerators. Also important: it’s a more affordable place to live and work when compared to many other cities in the region.

Berlin ranked 10th place in the 2019 Global Ecosystem Report, trailing behind only two other European cities: London and Paris. It’s home to unicorns such as N26, Zalando, HelloFresh and pioneers of the scene such as SoundCloud.

Top VCs include Earlybird, Point Nine, Project A, Rocket Internet, Holtzbrinck Ventures and accelerators such as Axel Springer Plug and Play Accelerator, hub:raum and The Family.

To get a sense of how the novel coronavirus has changed the landscape, we asked ten investors to give us an insight into their thinking during these pivotal times:

Jeannette zu Fürstenberg , founding partner, La Famiglia
Jorge Fonturbel, associate, Target Global
Luis Shemtov, founding partner, Lunar Ventures
Mike Lobanov, founding partner, Target Global
Ludwig Ensthaler, founding partner, 468 Capital
Mathias Ockenfels, partner, Speedinvest
Axel Bard Bringéus, partner, EQT Ventures
Eckhardt Weber, managing partner, Heal Capital
Joerg Rheinboldt, managing partner, APX Axel Springer Porsche GmbH & Co. KG
Christian O. Edler, partner, Christianedler.com

Jeannette zu Fürstenberg, La Famiglia

What trends are you most excited about investing in, generally?
Generally, we believe in a future in which we can leverage technology to free up humans from repetitive and tedious work and to empower them to shift their focus to what they consider more meaningful and impactful: that is creative and interpersonal activities. Thus, we are excited about founders working towards that future and finding answers across multiple industries, such as manufacturing or logistics, across all working-classes, and across different eras – before, during and after COVID.

What’s your latest, most exciting investment?
One of the recent additions of our new fund is Luminovo, a Munich-based company that develops a solution in the electronics industry to reduce the time and resources needed to go from an idea to a market-ready circuit board.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
So far, we have only scratched the surface of the kind of efficiency gains that can potentially be achieved – particularly in industries that were considered to be boring and sluggish in the past, such as insurance or logistics. Even small improvements driven by technology can have a massive direct impact on P&L.

What are you looking for in your next investment, in general?
In general, we love to back visionary founders in the seed-stage that tap into giant industries with a high potential for digitization across Europe and the US.

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?
COVID has sprung a myriad of companies in the communication and collaboration space into existence. While we believe in a future in which products and processes will be inherently remote-first, we will see a consolidation of that space that only allows for an oligopolistic market structure similar to how there is only one Zoom and Google Meet in the video communication space today.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We have always considered ourselves as one of the few funds in Germany with a significant investment footprint both in Europe and the US. COVID has emphasized that we are able to invest entirely remotely and hence we will continue and even increase our activities across multiple hubs, such as Munich, Paris, or London.

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?
Germany’s economy relies on wealthy traditional companies sitting on top of capital to be unlocked which new entrants can make use of. This has been true before 2020, and COVID will only demand more and accelerated innovation across these traditional industries ranging from automotive, manufacturing, to the chemical industry.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Berlin and other German cities have consistently proven to develop and grow new leaders across multiple categories such as banking (N26), mobility (Flixbus and Lilium), or data analytics (Celonis). This is certainly driven by a mix of talents coming out of world-class educational institutions, the relative low cost of living in tech hubs, and large local incumbents with massive capital to invest and spend.

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?
While COVID has accelerated remote-first products and processes, we still believe that people will flock back to startup hubs such as Berlin or Munich, especially given the relatively low cost of living compared to other tech hubs like San Francisco. Nevertheless, we will continue to see an increasing number of companies scattered across multiple time zones building products that are inherently remote first, regardless where the general work environment will shift into.

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?
We are lucky in that our investment focus has been on sector verticals such as Logistics, Supply chain, manufacturing or the future of work, which have all captured significant tailwind from Covid.

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?
While our investment strategy on a high level will not change, we are putting longer sales cycles into consideration as potential customers of our portfolio companies now are focusing on capital efficiency which also holds true for our founders. Thus, we advise them to focus on extending the runway both by increasing capital efficiency as well as taking on additional funding.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
As our economy is still in the midst of dealing with the effects of COVID, it is too early to tell, but we definitely see positive indications driven by efforts of portfolio companies that could adapt quickly and shipped features catered to the current needs. One example is Personio, which extended their HR offerings with features that solve the need of customers who shifted to short-time work.

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 gave me hope was the cohesion of the German economy that fought together for solutions and support during these difficult times. One positive example was the German Startup Association that helped achieve additional governmental financial aid for German SMEs.

Any other thoughts you want to share with TechCrunch readers?
Similar to how the past financial crisis allowed companies such as Stripe or Shopify to become ubiquitous parts of our daily life, these unprecedented times now will also give birth to new forms and shapes in which new ideas will grow into large businesses and we are excited to partner up with founders willing to take a bet on that future.

14 VCs discuss COVID-19 and London’s future as a tech hub