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Reframe your Metaphors, and other lessons from Y Combinator S21 Day 1

Published August 31, 2021

After a 17-hour marathon through nearly 200 startup pitches, the Equity team was fired up to get back on Twitter and chat through some early trends and favorites from the first day of Y Combinator’s demo party. We’ll be back on the air tomorrow, so make sure you’re following the show on Twitter so you don’t miss out.

What did Natasha and Alex chat about? The following:

First Impressions: We started by going through top-line numbers, geographic breakdown, and how the accelerator is doing when it comes to the representation of diverse founders. The last bit had a tiny bit of progress, but diversity continues to be an issue in YC’s batches – even as cohort size grows. We also chatted about what startups pitching can work on: like better mics, which are cheap and good.
Our early favorites: Metaphor, Lumify, Alex’s favorite duo Indian real estate plays, Akudo, Reframe, and Playhouse.
And some hmmm moments, including our thoughts on Writesonic, which Natasha has a potentially paranoid theory on.

TechCrunch has extensive coverage of the day on the site, so there’s lots to dig into if you are in the mood. More tomorrow!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!

Our favorite startups from YC’s Summer 21 Demo Day, Part 1

Published August 31, 2021

Y Combinator kicked off its fourth-ever virtual Demo Day today, revealing the first half of its nearly 400-company batch. The presentation, YC’s biggest yet, offers a snapshot into where innovation is heading, from not-so-simple seaweed to a Clearco for creators.

The TechCrunch team stuck to its tradition of covering every single company live (but, you know, from home) so you’ll find all of the Day One companies here. For those who want a sampling of standouts, however, we’re also bringing you a host of our favorites from today’s one-minute pitch-off extravaganza.

As reporters, we’re constantly inundated with hundreds of pitches on a daily basis. The startups below caught our picky attention for a whole host of reasons, but that doesn’t mean other startups weren’t compelling or potential unicorns as well. Instead, consider the below to be a data point on which startups made us do a double take, be it due to the size of the market opportunity, the ambition exhibited by the founding team or an idea that was just too clever to pass up.

Genei

Genei is, dare I say, a refreshing mashup between robots and writers. The startup has a simple goal: Automatically summarize background reading so content creators can grab the top facts, attribute and move onto the next graf. Writing is innately an art, so I find Genei’s positioning as a tool for writers instead of a replacement out to take their jobs as smart. Better yet, it’s launching by targeting some of the hardest workers in our industry: freelance writers. These folks often have to balance consistent pitches, diverse assignments and tight deadlines for their livelihood, so I’d presume a sidekick can’t hurt. Down the road, I could totally see this startup playing the same role as a Grammarly: a helpful extension of workflows that optimizes the way people who write for a living, write. — Natasha

Dismantling the myths around raising your first check

Published May 27, 2021

As startups and venture capital grow in tandem, fundraising has gone from a formal affair on Sand Hill Road to a process that can happen anywhere from Twitter to Zoom.

While fundraising may no longer require a trip to California, it might depend on whether you got an invite to a private audio app. And while you may not need to be an insider, second-time founders — largely male and white — still have a competitive advantage.

If your intention is to build a company that you want to own and run indefinitely, and/or to grow more slowly and take fewer risks, traditional venture capital is not right for what you want to build.

The growing complexity of fundraising has the opportunity to make tech either inclusive or exclusive. For new founders looking to raise money, let’s dismantle the myths about raising your first check and instead focus on how investors and other successful founders describe the nuance needed to secure money.

What makes my business venture-worthy?

This question is existential, but it should be at the forefront throughout your journey as a founder. Elizabeth Yin, founding partner of Hustle Fund, says startups should be able to hit one of two goals: Reach $100 million ARR by its fifth year or get to $1 billion in valuation in the same time period.

“This is hard to do. And most businesses will never get there — not for a lack of trying — but there’s a lot of luck whether your idea has that much demand that quickly,” she added.

“I think you will know in the first year or two how ‘easy’ or ‘hard’ it is to get customers and whether you think on that trajectory you can get to $100 million a year in a few years,” Yin said. “And if it’s really hard, it doesn’t mean you throw in the towel. … There are many great companies that are not VC-backable where the founders will make a lot of money, but it just means you need to think through where to get your financing. Perhaps it’s from angels. Perhaps it’s from revenue-based financing funds. Perhaps it’s from customer crowdfunding.”

While VC is the flashy gold medal, the rapid growth of emerging fund managers means that a first check can be piecemealed together from a variety of different sources. The options for financing are seemingly endless: syndicates, public crowdfunding, VC firms, accelerators, debt financing, rolling funds, and, for the profitable few, bootstrapping.

“When people go around saying, ‘Do you want to run a VC-backable company?’ that feels weird — you don’t necessarily get to pick how fast you can grow — the market just may or may not be there,” Yin said. “There’s a lot of luck with that.”

Leslie Feinzaig, founder of Female Founders Collective, said that beyond economics, the hardest part of knowing whether your startup makes sense as a VC-backed business is understanding your own goals as an entrepreneur.

Every early-stage startup must identify and evaluate a strategic advantage

Published May 14, 2021

Mike Ghaffary
Contributor

Mike Ghaffary is a general partner at Canvas Ventures, where he invests in innovation for consumers and software. Previously, he was a partner at Social Capital, co-founder and VP of Business Development of Stitcher, VP of Business and Corporate Development at Yelp, and Director of Business Development at TrialPay.

Deadline extended: Apply to Startup Battlefield at TC Disrupt 2021

Published May 14, 2021

When you’re head-down and nose to the grindstone — I’m looking at all you hard-working early-stage startup founders — it’s easy to miss a deadline for an outstanding opportunity. Case in point: competing in Startup Battlefield at TechCrunch Disrupt 2021 in September.

We want every game-changing, innovative startup — from anywhere around the world — to have a shot at massive exposure to investors, media and other influential unicorn-makers. The $100,000 in equity-free prizemoney would be nice, too, right? That’s why we’re extending our application deadline for another full week.

It won’t cost you a thing to apply or to participate, so don’t let this trajectory-changing opportunity slip past you. Apply to Startup Battlefield here before May 27 at 11:59 p.m. (PT).

The TechCrunch editorial team will vet every application and ultimately choose roughly 20 startups to go head-to-head. Each team receives weeks of free, rigorous coaching from our seasoned Battlefield team. Your pitch, presentation skills and business model will reach new heights of excellence. You’ll also be ready to deftly handle all the questions you’ll receive from our expert VC judges.

Startup Battlefield plays out over several rounds, with the field progressively narrowing. Each time you make the cut, you’ll repeat your pitch-and-answer session to a new set of judges. All that training, prep and focus leads to a final showdown and one last grab for the brass ring. And then it’s up to the judges to decide which stand-out startup wins the championship and that huge check.

11 words and phrases to cut from your VC pitch deck

While only one startup wins the money and the title, every team that competes benefits from standing in a global spotlight. Sean Huang, co-founder of Matidor, competed in Startup Battlefield at Disrupt 2020. His team was one of the five finalists. Here’s what he said about his experience:

“Going through Startup Battlefield helped us simplify and improve our pitch. It helped us not only with brand messaging, but also to win other pitch competitions after Battlefield. By pitching in the finals, we booked a demo with one of the final panelists. We received inbound investment interest from 12 Tier-1 investors, and eight potential key clients came to our website for a demo session. We also received an endorsement letter for our Y Combinator application from a fellow Battlefield participant, with whom we formed a great connection.”

You’re head down and focused — that’s why we’re giving you a one-week extension. So… stop, look up and grab this opportunity to take your startup to whole new levels. Get your nose off that grindstone and apply to Startup Battlefield here before May 27 at 11:59 p.m. (PT).

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

Sequoia’s Mike Vernal will share how to iterate with tempo at TC Early Stage in July

Published April 30, 2021

TC Early Stage is back in July and we have a fantastic lineup in store that’s laser-focused on marketing and fundraising. That includes, but is not limited to, Sequoia’s Mike Vernal, whose portfolio companies include Citizen, PicsArt, Whisper, Threads, Houseparty and more.

Vernal will be leading a discussion on tempo and product-market fit. The chat stems from Vernal’s experience as an investor, sharing the lesser-known keys to success to not only secure early investment, but to use it to secure a later-stage investment.

In essence, tempo is everything. At the earliest stage, investors are looking more at the team than the product, knowing that the likelihood of the product changing and evolving is high. That means that the ability to adapt — including the systems in place to collect feedback and willingness to continue iterating — are incredibly important factors.

Vernal will not only stress the importance of tempo and product iteration (and how it relates to fundraising success), he’ll also share how both enterprise and consumer companies should go about creating these feedback loops with customers and how to iterate quickly.

Vernal joined Sequoia as a partner in 2016. He currently sits on the boards of Citizen, Jumpstart, rideOS, PicsArt, Rockset, Threads and Whisper. Before Sequoia, Mike was VP at Facebook, where he led a variety of product and engineering teams. He co-created Facebook Login and the Graph API.

In other words, he’s seen and participated in success, and has done the work of product iteration himself.

Vernal joins a stellar lineup of speakers at TC Early Stage in July, including Norwest Venture Partners’ Lisa Wu, Greylock’s Mike Duboe and Cleo Capital’s Sarah Kunst, among many others that are soon to be announced.

One of the great things about TC Early Stage is that the show is designed around breakout sessions, with each speaker leading a chat around a specific startup core competency (like fundraising, designing a brand, mastering the art of PR and more). Moreover, there is plenty of time for audience Q&A in each session.

Pick up your ticket for the event, which goes down July 8 and 9, right here. And if you do it before the end of the day today, you’ll save a cool $100 off of your registration.

Garry Kasparov launches a community-first chess platform

Published April 15, 2021

Four years ago, MasterClass, a platform that sells celebrity-taught classes, invited chess legend Garry Kasparov to teach a class. He said yes, but soon realized that creating a message that could satisfy a majority of players was a “struggle throughout the process.”

While the class did pretty well, Kasparov found it “a little bit annoying” that he had to downplay concepts and stick to a specific structure. So, now, Kasparov is launching a platform he says has been several years in the making: Kasparovchess.

Kasparovchess will be a platform in which legendary chess players will have free reign to share tips and tricks with players from various levels. Financed by private investors, and media conglomerate Vivendi, the company declined to disclose its total capital raised to date.

The platform, produced by Vivendi, includes documentaries, podcasts, articles and interviews between experts and known players in the chess community. Moe than 1,000 videos have been recorded to date, Kasparov said. Beyond content, Kasparovchess will have an exclusive Discord server attached to it and playing zones.

In many ways, it’s a vertical-specific version of the chess MasterClass he did years ago, with a big focus on community and variety. MasterClass, which is reportedly raising funding that would value it at $2.5 billion, has been a leader in the “edutainment” space, which monetizes off of documentary-style entertainment. One of the unicorn’s biggest characteristics, as Kasparov alluded to earlier, is that it has to appeal to a wide audience so subscribers can hop from one class to another. Within the same month, a user could go from a Kasparovchess class to general pontifications from RuPaul on self expression. The more classes that MasterClass can get you to take, the longer you’ll keep your subscription.

Image Credits: Kasparovchess

MasterClass might consider its broad view as a differentiator, but it’s clear that Kasparov views it as an opportunity.

Kasparovchess has a monthly or yearly subscription of $13.99 or $119.99, respectively. The majority of lessons from experts and retrospective analysis on games you’ve played sit behind the paywall. The premium product also grants users access to a database of 50,000 manually created puzzles that allows players to train certain skills. The product will be available to the public by the end of month.

A popular competitor already exists: Chess.com. It’s a chess server, forum and networking site that launched in 2005, with premium subscription that ranges between $5 a month or $29 a year. Kasparovchess is significantly more expensive.

Kasparov says his biggest differentiator will be a focus on community. The long-term goal of Kasparovchess is to connect global chess communities with each other, unearth prodigies that might not have access otherwise and give others access to his experiences. He thinks that remote education during the pandemic has shown the need to have more interactive solutions, beyond buzzy promises.

“It’s time to actually switch from what we’re teaching to how students can apply it,” he said. “And that helps us indirectly because chess has been recognized for centuries as a nexus for intelligence and creativity.”

Kasparov became the youngest world chess champion in 1985. He retired from public chess in 2005, and has since launched a foundation to help children have access to chess worldwide. Most recently, he helped advise for “Queen’s Gambit,” a show about a chess prodigy that became Netflix’s most-watched scripted limited series to date on the platform. The show was so ubiquitously popular that sales for chess boards soon skyrocketed.

“I was so happy because it was the first time where we could see chess as a positive factor,” he said. “We had so many years with chess being seen as potential destruction and something that could push kids to the dark area of psychological instability.”

The freshness of this message mixed with an uptick in remote education has given Kasparov confidence that his years-long project is finally ready to launch.

“It’s not just about teaching the game, or playing the game, or debating the game,” he said. Instead, he hopes people who come to the platform focus on the culture of chess, its survival and its seemingly timeless power.

13 investors say lifelong learning is taking edtech mainstream

Let’s talk about gaslighting and fundraising

Published April 12, 2021

“Most of the startups I give advice to about how to raise venture capital shouldn’t be raising venture capital,” an investor recently told me. While the idea that every startup isn’t venture-backable might run counter to the narrative to the barrage of funding news each week, I think it’s important to double click on the topic. Plus, it keeps coming up, off the record, on phone calls with investors!

As venture grows as an asset class, the access to capital has broadened from a dollar perspective, but I do think the difficulties that remain is an important dynamic to call out (and something no one talks about during an upmarket). Beyond the fact that only a small subset of startups truly can pull off scaling to the point of venture-level returns, it is still hard for even qualified founders to raise venture capital. Venture capital is still a heavily white, male-led industry, and as a result contains bias that disproportionately limits access for underrepresented founders.

Eniac founding partner Hadley Harris applied this dynamic to the current market boom in a recent tweet: A lot of people are misunderstanding this VC funding market. More money is flowing into the market but the increase is not evenly distributed. The market believes winners can be much bigger but not necessary that there will be more winners. It’s still very hard for most to raise a VC.

To say otherwise is to gaslight the early-stage or first-time founders that have spent months and months trying to raise their first institutional dollars and failed. So ask yourself: Seed rounds have indeed grown bigger, but for who? What comes at the cost of the $30 million seed round? Are the founders that can raise overnight from diverse backgrounds? Are investors backing first-time founders as much as they are backing second- or third-time entrepreneurs?

The answers might leave you debating about the boundaries, and limitations, of the upcoming hot-deal summer.

A few weeks ago, I wrote about the disconnect between due diligence and fundraising right now. Now we’ve moved onto the disconnect, and bifurcation, within first-check fundraising itself. There is so much more we can get into about the fallacy of “democratization” in venture capital, from who gets to start a rolling fund to the lack of assurance within equity crowdfunding campaigns.

The disconnect between Y Combinator Demo Day and due diligence

We’ll get through it all together, and in the meantime make sure to follow me on Twitter @nmasc_ for more hot takes throughout the week.

In the rest of this newsletter, we will talk about fintech politics, the Affirm model with a twist, and sneakers-as-a-service.

Ex-Coinbase talks politics

The inimitable Mary Ann Azevedo has been dominating the fintech beat for us, covering everything from the latest Uruguayan unicorn to Acorn’s scoop of a debt management startup. But the story I want to focus on this week is her interview with ex-Coinbase counsel & former Treasury official, Brian Brooks.

Here’s what to know: Coinbase CEO Brian Armstrong notoriously released a memo last year denouncing political activism at work, calling it a distraction. In this exclusive interview, Brooks spoke about how blockchain is the answer to financial inclusion, and argued why politics needs to be taken out of tech.

We don’t want bank CEOs making those decisions for us as a society, in terms of who they choose to lend money to, or not. We need to take the politics out of tech. All of us do a lot of different things, and we have no idea on a given day, whether what we’re doing is popular with our neighbors or popular with our bank president or not. I don’t want the fact that I sometimes feel Republican to be a reason why my local bank president can deny me a mortgage.

Image Credits: Bryce Durbin/TechCrunch

The Affirm for X model

While Affirm may have popularized the “buy now, pay later” model, the consumer-friendly business strategy still has room to be niched down into specific subsectors. I ran into one such startup when covering Plaid’s inaugural cohort of startups in its accelerator program.

Here’s what to know: Walnut is a new seed-stage startup that is a point-of-sale loan company with a healthcare twist. Unlike Affirm, it doesn’t make money off of fees charged to consumers.

Image Credits: Bryce Durbin/TechCrunch

Everything you could ever want to know about StockX

In our latest EC-1, reporter Rae Witte has covered a startup that leads one of the most complex and culturally relevant marketplaces in the world: sneakers.

The StockX EC-1

Here’s what to know: StockX, in her words, has built a stock market of hype, and her series goes into its origin story, authentication processes and a market map.

Image Credits: Nigel Sussman

Around TechCrunch

Found, a new podcast joining the TechCrunch network, has officially launched! The Equity team got a behind-the-scenes look at what triggered the new podcast, the first guests and goals of the show. Make sure to tune into the first episode.

Saying hello to TechCrunch’s newest podcast: Found

Also, if you run into any paywalls while browsing today’s newsletter, make sure to use discount code STARTUPSWEEKLY to get 25% off an annual or two-year Extra Crunch subscription.

Across the week

Seen on TechCrunch

Okta launches a new free developer plan

New Jersey announces $10M seed fund aimed at Black and Latinx founders

Education nonprofit Edraak ignored a student data leak for two months

6 VCs talk the future of Austin’s exploding startup ecosystem

Dear Sophie: Help! My H-1B wasn’t chosen!

Seen on Extra Crunch

5 machine learning essentials nontechnical leaders need to understand

How we dodged risks and raised millions for our open-source machine language startup

Giving EV batteries a second life for sustainability and profit

And that’s a wrap! Thanks for making it this far, and now I dare you to go make the most out of the rest of your day. And by make the most, I mean listen to Taylor’s Version.

Warmly,

Setting up a management board for success with Dave Easton

Published April 8, 2021

Viewed from the outside, board selection and corporate governance can seem like a bit of a black box — particularly at a startup. Generation Investment Management partner Dave Easton spoke at TechCrunch Early Stage about how to build a board as a founder, and specifically how to build a board you can live with. Easton’s own ample experience serving on boards as both a full member and as an observer, as well as Generation’s focus on building sustainable, ethically managed, mission-driven businesses helped peel back the curtain on the murky topic of good governance.

On the composition of boards

Easton noted that many boards end up overcrowded — in terms of both the number of people and also the background of those present. Mixing up the type of board members you have managing your corporate governance is key, he said, especially as a company grows in size and maturity.

In terms of fields, the sorts of things that we find that often go wrong is when your board is stacked full of investors. I think investors are great — I’m an investor. I think there are super useful things investors do. But five investors is not very useful, right — it’s just more people who will generally think the same. So a typical thing that we’re doing when we come in is, we’re saying we’re not taking a board seat, we’re gonna give our board seats to an operator — someone who actually knows what they’re doing. When you’re in the earliest stages it’s probably fine to avoid operators and just have one or two investors. Particularly operators who come from, like bigger company backgrounds, they’re not necessarily so helpful when you’re getting product-market fit. But as you get bigger and bigger, you know, operators start to trump investors, and we think boards need to move more heavily in that direction. (Time stamp: 09:34)

Don’t put settled topics up for debate

On the subject of what should actually take place at well-run board meetings, Easton said that one of the most common pitfalls he’s encountered is when management sort of performatively offers up subjects for debate. It’s something that’s easy to do, but it also ends up not only being wasteful of the time of those present, it also leaves a bad taste in basically everyone’s mouths.

TC Early Stage will dive deep on how to fundraise for your startup

Published March 29, 2021

Despite the fact that capital is abundant and dozens of startups get funding every day, the process of raising institutional capital is anything but simple.

From getting an investor’s attention to nailing your virtual pitch meeting to the legal aspects of your term sheet, there is plenty to navigate.

Luckily, TechCrunch Early Stage is bringing together some of the biggest VCs to share how to manage the process proactively and successfully secure capital from the right VCs.

Just take a look at the fundraising sessions going down at TC Early Stage, which takes place later this week on April 1 – 2.

How to Get an Investor’s Attention – Marlon Nichols, MaC Venture Capital

Marlon Nichols is an expert in early-stage investments, having invested in countless successful ventures such as Gimlet Media, MongoDB, Thrive Market, PlayVS, Fair, Wonderschool and Finesse. Right now, there is more seed-stage fundraising than ever before, and Marlon will speak on how to get noticed by investors, how to grow your business and how to survive in the crowded, competitive space of tech startups. He will provide insights on how to network, craft a great pitch and target the best investors for your success.

How to Nail Your Virtual Pitch Meeting – Melissa Bradley, Ureeka

The rules of the pitch meeting have changed. Instead of traveling across the country, wasting time in planes, trains and automobiles, founders can take upwards of 30 meetings in a day from the comfort of their home. Entrepreneur and VC Melissa Bradley will outline how to make the most of that half hour on Zoom and lock in the next one.

How to Kick the 10 Worst Startup Habits – Leah Solivan, Fuel Capital

With voices across the internet giving their two-cents on how to run a great business, Fuel Capital’s Leah Solivan will share a list of things that a founder should NOT do. Avoid the pitfalls that could break your momentum, or worst case, your company, and ask Solivan your own questions.

Bootstrapping and the Power of Product-Led Growth – Tope Awotona, Calendly and Blake Bartlett, OpenView

Building a bootstrapped company forces you to be creative. For Calendly, it pointed the company toward a product-led growth model built on virality. Hear from Calendly’s Tope Awotona and OpenView’s Blake Bartlett as they cover pro tips on bootstrapping, PLG and when a profitable company should consider raising capital.

Four Things to Think About Before Raising a Series A – Bucky Moore, Kleiner Perkins

Founders looking to raise Series A capital know that it’s an entirely different ball game than seed-stage funding. Hear Kleiner Perkins partner Bucky Moore outline the most important ways to mentally prepare for heading into Series A fundraising.

Fundraising Terms That Affect Your Business – Dawn Belt, Fenwick & West

With each funding round, there is an exciting opportunity for growth, but it’s important to fully understand the implications of those terms. Fenwick partner Dawn Belt will discuss the key legal terms to focus on in your seed and Series A rounds and how they affect the control and operational freedom of your company.

TC Early Stage takes place on April 1 – 2 and is jam-packed with breakout sessions led by tech leaders, from VCs to operators. Each session will include audience Q&A so founders can get answers to their specific questions. On Day 2, we’ll be holding a pitch-off with some fantastic companies.

Announcing the TC Early Stage Pitch-Off startups

All in all, it’ll be a fantastic event. You should def come hang out! Get a ticket here.