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4 ways martech will shift in 2021
The tidal wave of growth is upon us — an unprecedented economic boom that will manifest later this year, bringing significant investments, acquisitions and customer growth. But most tech companies and startups are not adequately prepared to capitalize on the opportunity that lies ahead.
Here’s how marketing in tech will shift — and what you need to know to reach more customers and accelerate growth in 2021.
First and foremost, differentiation is going to be imperative. It’s already hard enough to stand out and get noticed, and it’s about to get much more difficult as new companies emerge and investments and budgets balloon in the latter half of the year. Virtually all major companies are increasing budgets to pre-pandemic levels, but will delay those investments until the second half of the year. This will result in an increased intensity of competition that will drown out any undifferentiated players.
The second half of 2021 will bring incredible growth, the likes of which we haven’t seen in a long time.
Additionally, tech companies need to be mindful not to ignore the most important part of the ecosystem: people. Technology will only take you so far, and it’s not going to be enough to survive the competition. Marketing is about people, including your customers, team, partners, investors and the broader community.
Understanding who your people are and how you can use their help to build a strong foundation and drive exponential growth is essential.
Tactically, the most successful tech companies will embrace video and experimentation in their marketing — two components that will catapult them ahead of the competition.
Ignoring these predictions, backed by empirical evidence, will be detrimental and devastating. Fasten your seatbelts: 2021 is going to be a turbocharged year of growth opportunities for marketing in tech.
Differentiation is crucial
The explosion of tech companies and startups seeking to be the next big thing isn’t over yet. However, many of them are indistinguishable from each other and lack a compelling value proposition. Just one look at the websites of new and existing tech companies will reveal a proliferation of buzzwords and conceptual illustrations, leaving them all looking and sounding alike.
The tech companies that succeed are those that embrace one of the fundamentals of effective marketing — positioning.
In the ’80s, Al Ries and Jack Trout published “Positioning: The Battle For Your Mind” and coined the term, which documented the best-known approach to standing out in a noisy marketplace. As the market heats up, companies will realize the need to sharpen their positioning and dial in their focus to break through the noise.
To get attention and build traction, companies need to establish a position they can own. The mashup method — “Netflix but for coding lessons” — is not real positioning; it’s simply a lazy gimmick.
It is imperative to identify who your ideal customer is and not just who could use your product. Focusing on a segment of the market rather than the whole is, perhaps counterintuitively, the most effective approach to capturing the larger market.
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Announcing our TC Sessions: SaaS virtual event happening October 27
Software-as-a-service (SaaS) is now the default business model for most B2B and B2C software startups. And while it’s been around for a while now, its momentum keeps accelerating and the ecosystem continues to expand as technologists and marketers are getting more sophisticated about how to build and sell SaaS products. For all of them, we’re pleased to announced TechCrunch Sessions: SaaS 2021, a one-day virtual event that will examine the state of SaaS to help startup founders, developers and investors understand the state of play and what’s next.
The single-day event will take place 100% virtually on October 27 and will feature actionable advice, Q&A with some of SaaS’s biggest names and plenty of networking opportunities. Importantly, $75 Early Bird passes are now on sale. Book your passes today to save $100 before prices go up.
We’re not quite ready to disclose our agenda yet, but you can expect a mix of superstars from across the industry, ranging from some of the largest tech companies to up-and-coming startups that are pushing the limits of SaaS.
The plan is to look at a broad spectrum of what’s happening with B2B startups and give you actionable insights into how to build and/or improve your own product. If you’re just getting started, we want you to come away with new ideas for how to start your company, and if you’re already on your way, then our sessions on scaling both your technology and marketing organization will help you to get to that $100 million annual run rate faster.
In addition to other founders, you’ll also hear from enterprise leaders who decide what to buy — and the mistakes they see startups make when they try to sell to them.
But SaaS isn’t only about managing growth — though ideally, that’s a problem founders will face sooner or later. Some of the other specific topics we will look at are how to keep your services safe in an ever-growing threat environment, how to use open source to your advantage and how to smartly raise funding for your company.
We will also highlight how B2B and B2C companies can handle the glut of data they now produce and use it to build machine learning models in the process. We’ll talk about how SaaS startups can both do so themselves and help others in the process. There’s nary a startup that doesn’t want to use some form of AI these days, after all.
And because this is 2021, chances are we’ll also talk about building remote companies and the lessons SaaS startups can learn from the last year of working through the pandemic.
Don’t miss out. Book your $75 Early Bird pass today and save $100.
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Hustle Fund backs Fintor, which wants to make it easier to invest in real estate
Farshad Yousefi and Masoud Jalali used to drive through Palo Alto neighborhoods and marvel at the outrageous home prices. But the drives sparked an idea. They were not in a financial position to purchase a home in those neighborhoods (to be clear, not many people are) either for investment or to live. But what if they could invest in homes in up and coming cities throughout the U.S.?
Then they realized that even that might be a challenge, considering that with all their student debt, affording a down payment would be impossible.
“There was nothing available out there besides a crowdfunding platform, which when we first signed up, took away $1,000 from our account that we didn’t have, and then our capital would be locked up for three to 10 years,” recalls Yousefi.
So the pair started doing research and spoke to 1,000 individuals under the age of 35. Eight out of 10 said they would like to invest in real estate but were deterred by all the barriers to entry.
“There is clearly a large demand for access to real estate,” Yousefi said. “And we wanted to give people a way to invest in it like they can in stocks, via a mobile app.”
And so the idea for Fintor was born.
Yousefi and Jalali founded the company in 2020 with the goal of purchasing homes via an LLC, and turning each into shares through an SEC-approved broker dealer. Individuals can then buy shares of the homes via Fintor’s platform. Its next step is to sign agreements with individual real estate investors or bigger real estate development firms to list their properties on the platform and give people the opportunity to buy shares.
And now Fintor has raised $2.5 million in seed money to continue building out its fractional real estate investing platform. The startup aims to “fractionalize” houses and other residential property, giving people in the U.S. access to investment opportunities “starting with as little as $5.” The company attracted the interest of investors such as 500 Startups, Hustle Fund, Graphene Ventures, Houston-based real estate investor Manny Khoshbin, Mana Ventures and other angel investors such as Cindy Bi, Skyler Fernandes, VU Venture Partners, Minal Hasan, Andrew Zalasin, Alluxo CEO and founder Safa Mahzari, SquareFoot CEO and founder Jonathan Wasserstrum and Teachable CEO and founder Ankur Nagpal.
Image Credits: Fintor
Fintor is eying markets such as Kansas City, South Carolina and Houston, where it already has some properties. It’s looking for homes in the $80,000 to $350,000 price range, and millennials and Gen Zers are its target demographic.
“Fintor can give the same return as the stock market, but at half the risk,” Yousefi said. “As two [Iranian] immigrants, we’ve seen how much this country has to offer and how real estate sits at the top of everything, yet is so inaccessible.”
The pair had originally set out to raise just $1 million but the round was quickly “way oversubscribed,” according to Yousefi, and they ended up raising $2.5 million at triple the original valuation.
Jalali said the company will use machine learning technology to filter and rate properties as it scales its business model.
“We’ll use ML to categorize neighborhoods and to come up with the price of properties to offer to potential sellers,” he added. “Our ultimate goal is to create indexes so that people can invest in multiple properties in a given city. That creates diversification right away.”
Elizabeth Yin, co-founder and general partner of Hustle Fund, believes that Fintor is solving a generational problem with real estate.
“Retail investors have almost no access to great real estate investments today and the best opportunities are reserved for the select few,” she told TechCrunch. “Not to mention that in addition to access, retail investors often need a lot of capital in order to have a diversified portfolio or be accredited to join funds.”
Fintor’s approach to securitize real estate assets will give millions of investors who are not accredited investors access they would otherwise not have had, Yin added.
“Simultaneously, it provides increased liquidity to property owners, while improving the user experience for both parties,” she said. “Effectively this becomes a new asset class, because it’s entirely turnkey and is fractionalized, which opens up many new pockets of investors.”
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Extra Crunch roundup: UiPath’s IPO filing, predicting revenue, how to pivot properly, much more
This is not a boast, but a warning: I could write a how-to article on almost any topic.
Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.
Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:
- Pouyan Salehi, CEO and co-founder, Scratchpad
- Rami Essaid, CEO and founder, Finmark
- Melonee Wise, CEO and co-founder, Fetch Robotics
The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.
Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.
Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!
I hope you got something out of reading Extra Crunch this week. Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Building the right team for a billion-dollar startup
Image Credits: Bryce Durbin/TechCrunch
From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.
At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.
She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.
So you want to raise a Series A
Image Credits: Bryce Durbin/TechCrunch
During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).
In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.
Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.
With the right tools, predicting startup revenue is possible
For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.
Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?
How we dodged risks and raised millions for our open-source machine learning startup
Image Credits: erhui1979 / Getty Images
If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.
Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.
But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.
Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.
Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting
Image Credits: Ureeka
Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.
She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.
Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.
Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best
Image Credits: Eric Millette / Scale AI
Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.
Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.
Ride-hailing’s profitability promise is in its final countdown
Image Credits: Nigel Sussman (opens in a new window)
Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.
UiPath’s first IPO pricing could be a warning to late-stage investors
Image Credits: Noam Galai/Getty Images
For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.
But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.
Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?
How to choose and deploy industry-specific AI models
Image Credits: alexsl / Getty Images
As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.
While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.
Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.
Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.
Atomico’s talent partners share 6 tips for early-stage people ops success
Image Credits: Atomico
In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.
However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.
Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.
5 questions about Grab’s epic SPAC investor deck
Image Credits: Roslan Rahman/Getty Images
Southeast Asian superapp Grab is going public via a SPAC.
Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.
Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.
Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal
Image Credits: Nigel Sussman (opens in a new window)
Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.
For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.
In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?
What’s fueling hydrogen tech?
Image Credits: Bryce Durbin
When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.
But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.
Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.
5 product lessons to learn before you write a line of code
Image Credits: LaylaBird / Getty Images
Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.
The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.
Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.
Inside the US’ epic first-quarter venture capital results
Image Credits: Nigel Sussman (opens in a new window)
In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.
That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.
Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.
Dear Sophie: How can I get an H-1B without the lottery?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.
We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?
— Soldiering on in Sunnyvale
Alexa von Tobel outlines how founders should manage personal finances
Image Credits: Alexa von Tobel
Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.
She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.
At Early Stage 2021, she gave a presentation on how founders should think about managing their own wealth. Startup founders can often put all their money into their venture and end up paying more attention to the finances of their company than their own bank account.
Von Tobel outlined the various steps you can take to stay out of debt, build credit and accumulate wealth through investments to ensure you have financial peace of mind as you take on the most stressful venture of your life: Starting a company.
How to pivot your startup, save cash and maintain trust with investors and customers
Image Credits: Olive
A few years ago, founder Sean Lane thought he’d achieved product-market fit.
Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.
Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.
Building customer-first relationships in a privacy-first world is critical
Image Credits: jayk7 (opens in a new window) / Getty Images
In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.
But the truth is that the companies that champion privacy will be better-positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.
For startups choosing a platform, a decision looms: Build or buy?
Image Credits: Chris Jongkind (opens in a new window)/ Getty Images
Founders shouldn’t be worried about starting companies that rely on other platforms.
Platforms exist to help startups get to users and customers faster and should be used as a means to an end, but everyone must get their piece.
Coinbase’s direct listing alters the landscape for fintech and crypto startups
Image Credits: Nigel Sussman (opens in a new window)
Coinbase’s direct listing was a massive finance, startup and cryptocurrency event, and the transaction’s effects will be felt for some time in the public market, but also among the startups and capital that comprise the private market.
In the buildup to Coinbase’s flotation — and we’d argue especially after it released its blockbuster Q1 2021 results — there was a general expectation that the unicorn’s direct listing would provide a halo effect for other startups in the space.
The widely held perspective raised two questions: Will the success of Coinbase’s direct listing bolster private investment in crypto-focused startups, and will that success help other areas of financially focused startup work garner more investor attention?
Billion-dollar B2B: Cloud-first enterprise tech behemoths have massive potential
Image Credits: twomeows (opens in a new window)/ Getty Images
The “billion-dollar B2B” paradigm refers to the forces shaping a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR — and achieve market capitalizations in excess of $50 billion or even $100 billion.
One of the biggest factors driving billion-dollar B2Bs is a simple but important shift in how organizations buy enterprise technology today.
How startups can ensure CCPA and GDPR compliance in 2021
Image Credits: tumsasedgars (opens in a new window) / Getty Images
Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.
Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.
Should Dell have pursued a more aggressive debt-reduction move with VMware?
Image Credits: Bloomberg / Getty Images
When Dell announced it was spinning out VMware, the move itself wasn’t surprising; there had been public speculation for some time.
But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.
It seems Dell hopes to have its cake and eat it too with this deal: It generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned.
What we all missed in UiPath’s latest IPO filing
Image Credits: Nigel Sussman (opens in a new window)
Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising.
Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors.
But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.
But let’s dig into the company’s quarterly results to get a clearer picture of UiPath.
The IPO market is sending us mixed messages
Image Credits: Mohd Hafiez Mohd Razali/EyeEm (opens in a new window) / Getty Images
If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.
But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.
To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.
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Do you fit the mold for the next generation of values-driven VCs?
More individuals than ever are donning the investor cap. Almost a fifth of U.S. equity trading in 2020 was driven by mom-and-pop investors — up from around 15% in the previous year. With such impressive returns to be made, many are deciding to set up a full-fledged investment business.
With the fundraising world becoming more democratic and accessible, we should help people find the right path to setting up a venture capital firm and also make sure the right people are entering the VC sphere. Startups are changing, and any new investment manager will have to adapt to the shifting landscape. VCs today have to provide more than money to get the best portfolio, and they must have a strong focus on impact to get the best institutional investors into their funds.
Startup investors can be the financial backbone for mass disruption. That’s why, at Founder Institute, we believe in the need for more VCs with strong values: Because they will prop up the companies that will build a brighter future for humanity. We’re not the only ones — our first “accelerator for ethical VCs” was oversubscribed.
VCs today have to provide more than money to get the best portfolio, and they must have a strong focus on impact to get the best institutional investors into their funds.
So if you want to lead your own VC fund in 2021, here are the main questions aspiring investors need to ask themselves.
Are you doing this for the right reasons?
Investing in startups is not just about making money. In selecting the startups that will become future industry leaders, VCs have a lot more power than most to do good (or harm). If you’re only interested in money, you likely won’t go too far. Identifying the greatest businesses means seeing beyond their capital into the longevity of their vision, their real-life impact on society, and how much consumers will love or hate them.
After all: Most startup founders pour their blood, sweat and tears into building a business not just to make money, but also to make an impact on the world and build products that align with their mission. Any new venture capitalist looking to attract the best founders needs to think about the vision and mission of their fund in the same terms.
Although VC firms have been slow on the uptake when it comes to environmental, social and governance (ESG) goals, there are signs that times are changing. Some firms are forming a community around implementing ESG, not only because of the external impact but because it furthers their business goals. To help accelerate this trend, we asked our VC Lab participants to take The Mensarius Oath (Latin for “banker” or “financier”), a professional code of conduct for finance professionals to create an ethical, prosperous and healthy world.
What value do you bring to the table?
The number of VCs are growing and the industry is increasingly becoming concentrated. This means that simply offering large sums of money won’t get you traction with the best startups. Founders are looking for value over volume — they usually want mission alignment, connections, value-added services and industry expertise more than a blank check.
Remember that the best founders get to choose their VCs from a menu of options, not the other way around. To convince them that you’re the right match, you’ll need a proven track record in the same industry (or transferable experience from another industry) and referrals from credible people. You’ll also need a strong value proposition or niche that sets you apart from other funds. For example, Untapped Capital invests in “unexpected” and “undernetworked” founders, while R42 Group invests in AI and longevity-focused businesses.
If you don’t think you’ve got the profile to offer value to founders just yet, it’s worth taking some time to lay out exactly who you are. That is: what you hope to achieve as a fund manager, the vision you have for your portfolio companies and how you alone can help them get there.
What’s your secret sauce?
As a new VC fund without historical data points, limited partners (LPs) will naturally be cautious to invest in your fund. So, you have to build a brand that tells your story and proves your reputation.
Go back to the basics and pinpoint exactly what your strengths are. If you’re having trouble finding inspiration, use statements like, “I can get the best deal because I have X,” or, “I help grow my portfolio companies by X” to get the ball rolling. Be wary of saying that the amount of money you have is your strength — at this stage, your bank balance isn’t your competitive edge. Focus instead on what makes you unique, credible and relevant. Having a high number of strategic contacts, extensive industry experience or a backsheet of successful exits could be your secret ingredients. For extra guidance, check out this resource my team put together to help fund managers consolidate their niche in an “investment thesis.”
Once you have a list, choose your top three strengths and write a followup sentence detailing how each of them can be enriched by your network and expertise. Ideally, share these with a test group (friends, family or fellow entrepreneurs) and ask them which is the most compelling. If there’s a general consensus toward one point, you know to make that a large chunk of your VC fund’s thesis.
Do you have a solid network?
Who you know is just as important as what you know, and the most prominent VCs tend to be in the middle of a flow of information and people. Your network tells founders that you’re respected and reassures them that they will probably be brought into the fold to connect with future mentors, customers, investors or hires.
If you’re a thought leader, the alumni of a well-known company like Uber or PayPal, or if you’ve started a community around an emerging vertical, you’re more likely to form a positive deal flow. But this status and these relationships have to be established before you launch your fund — if you try to network from zero, you’ll be spinning too many plates and won’t have the social proof to back yourself up.
Don’t just rely on your gut to tell you whether your network is satisfactory. Map out your personal ecosystem, sorting people based on familiarity (close contacts or acquaintances) and defining characteristics (consumers, finance, ex-CEOs, etc.). That “map” can be as basic as an Excel sheet with a column for each category, or you could use more attractive visual tools like Canva — great for sharing with your future team and encouraging them to fill any network gaps.
What size fund do you want to launch?
A VC fund runs like any other business — you have to develop a vision, recruit a team, form an entity, raise money, deliver value and report to stakeholders. To kick things off, you need to consider what size fund you want, and then secure significant commitments from LPs — at least 10% of your total fund. LPs can be corporations, entrepreneurs, government agencies and other funds.
Also keep in mind that most LPs will want you to personally invest at least 1% of the total fund size so that you have “skin in the game.”
For that reason especially, it’s best to start small, somewhere between $5 million and $20 million, and use this “training fund” to demonstrate returns and create a launchpad for bigger raises to follow.
Can you help founders from launch to exit?
Your partnership with companies will be for the long haul, so you can’t rely just on offering value when you wire the money. Founders need consistent support across the full startup lifecycle, meaning you need to be conscious not to overpromise and fail to deliver. Think of the startups you’d most like to work with: How could you help them now? How could you help them in the future? And how could you help them exit?
You can take a skills-centric approach, where you reserve different resources and connections based on marketing, hiring, fundraising and culture-creation that can be applied as the startup grows. Alternatively, you might want to make sprint-like plans, where you check in with founders on a repeating basis and iterate the support you offer based on their progress. Whatever way you chose to structure your support, ensure that you’re realistic about what you can bring to the table, your availability, preferred involvement and how you’ll document it.
The future of VC will be driven by venture capitalists with strong values who have built funds with the new needs of founders in mind. VC may once have been exclusive and mysterious, but 2021 could be the year VC becomes a more open and fair space for businesses and investors alike.
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Atomico’s talent partners share 6 tips for early-stage people ops success
In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users. However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.
You need to recruit for what you need, but you also need to think about what is coming down the line.
As members of the VC’s operational support team, both work closely with companies in the Atomico portfolio to “find, develop and retain” the best employees in their respective fields, at various stages of the business. They’re operators at heart, and they bring a wealth of experience from time spent prior to entering VC.
Before joining Atomico, Chayot led the EMEA HR team at Twitter, where she helped scale the business from two to six markets and grew the team from 80 based in London to 500 across the region. Prior to that, she worked at Google in people ops for nine years.
Hynes was responsible for talent and staffing at well-known technology companies including Google, Cisco and Skype. At Google, he grew the EMEA team from 60 based in London to 8,500 across Europe by 2010, and at Skype, he led a talent team that scaled from 600 to 2,300 in three years.
Caro Chayot’s top 3 tips
1. Think about your long-term org design (18 months down the line) and hire back from there
When most founders think about hiring, they think about what they need now and the gaps that exist in their team at that moment. Dan and I help founders see things a little differently. You need to recruit for what you need, but you also need to think about what is coming down the line. What will your company look like in a year or 18 months? Functions and team sizes will depend on the sector — whether you are building a marketplace, a SaaS business or a consumer company. Founders also need to think about how the employees they hire now can develop over the next 18 months. If you hire people who are at the top of their game now, they won’t be able to grow into the employees you need in the future.
2. Spend time defining what your culture is. Use that for hiring and everything else people-related
If org design is the “what,” then culture is the “how.” It’s about laying down values and principles. It may sound fluffy, but capturing what it means to work at your company is key to hiring and retaining the best talent. You can use clearly articulated values at every stage of talent-building to shape your employer brand. What do you want potential employees to feel when they see your website? What do you want to look for in the interview process to make sure you are hiring people who are additive to the culture? How do you develop people and compensate them? These are all expressions of culture.
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Extra Crunch roundup: StockX EC-1, Early Stage recaps, unpacking Alkami’s IPO, more
Over the last few days, we’ve published several articles recapping panels from last week’s TechCrunch Early Stage virtual conference.
Each story is based on an interview with a founder or investor who addressed some of the most common startup dilemmas. Predictably, they’re mostly focused on the how and why:
How do I get into an accelerator? When should I hire a sales team? What’s the best way to earn attention from investors?
TechCrunch reporter Natasha Mascarenhas interviewed Kleiner Perkins partner Bucky Moore to get sector-agnostic advice for founders who are ready to raise a Series A.
Their conversation isn’t a rehash of basic best practices — Moore says the pandemic has fundamentally changed the way he does business: “I actually believe that first meetings over Zoom are here to stay; I think it’s far more efficient.”
I’m looking forward to the eventual return of live TechCrunch events, but each Early Stage recap includes video and a complete transcript. As ever, full articles are available for Extra Crunch members.
Thanks very much for reading — I hope you have a fantastic weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription
The StockX EC-1
Image Credits: Nigel Sussman
Have you ever bought a pig in a poke?
It’s a saying from medieval times: A farmer traveling on an unfamiliar road agrees to buy a baby pig in a bag from a passing stranger. Unfortunately, when the farmer gets back to their hut and opens the sack, there’s a kitten inside.
The risk of getting stuck with a counterfeit item when buying online is real, especially when it comes to sneakers, jewelry and other designer products. That’s why online marketplace StockX created a rigorous product verification and authentication process.
To date, its users have conducted more than 10 million transactions for sneakers, handbags, streetwear, watches and other high-end items that are often produced in limited quantities.
StockX’s prices are regulated and all transactional data is transparent, factors that have combined to help the platform reach a $2.8 billion valuation.
In a four-part series that dropped this week, Extra Crunch analyzes this “foundational new category of market” that began as a hobbyist’s sneaker price chart.
- Part 1: How StockX became the stock market of hype
- Part 2: Authentication and StockX’s global arms race against fraudsters
- Part 3: Where StockX fits in the business of sneakers
- Part 4: The consequences of scaling up sneaker culture
Will Topps’ SPAC-led debut expand the bustling NFT market?
Image Credits: Nigel Sussman (opens in a new window)
Yes, the baseball card company is going public in a debut that could easily be read as a way to put money into the NFT craze without actually having to buy cryptocurrencies.
Digging into the Alkami Technology IPO
Image Credits: Nigel Sussman (opens in a new window)
It appears that the slowdown in tech debuts is not a complete freeze; despite concerning news regarding the IPO pipeline, some deals are chugging ahead.
Alkami Technology joins a list that includes Coinbase’s impending direct listing and Robinhood’s expected IPO.
Texas-based Alkami Technology is a software company that delivers its product to banks via the cloud, so it’s not a legacy player scraping together an IPO during boom times.
Let’s dig into the latest SEC filing from the software unicorn.
Chinese startups rush to bring alternative protein to people’s plates
Image Credits: TechCrunch
Last year could well have been the dawn of alternative protein in China. More than 10 startups raised capital to make plant-based protein for a country with increasing meat demand. Of these, Starfield, Hey Maet, Vesta and Haofood have been around for about a year; ZhenMeat was founded three years ago; and Green Monday is a nine-year-old Hong Kong firm pushing into mainland China.
The competition intensified further last year when American incumbents Beyond Meat and Eat Just entered China.
Although some investors worry the sudden boom of meat-substitute startups could turn into a bubble, others believe the market is far from saturated.
LG’s exit from the smartphone market comes as no surprise
Image Credits: Joan Cros/NurPhoto/Getty Images
For those who follow the space, LG will be remembered fondly as a smartphone trailblazer. For well over a decade, the company was a major player in the Android category and a driving force behind a number of innovations that have since become standard.
LG continued pushing envelopes — albeit to mixed effect. But in the end, the company just couldn’t keep up.
This week, the South Korean electronics giant announced it will be getting out of the “incredibly competitive” category, choosing instead to focus on its myriad other departments.
Giving EV batteries a second life for sustainability and profit
Image Credits: Getty Images
Electric cars and trucks seem to have everything going for them: They don’t produce tailpipe emissions, they’re quieter than their fossil-fuel-powered counterparts and the underlying architecture allows for roomier and often sleeker designs.
But the humble lithium-ion battery powering these cars and trucks leads a difficult life. Irregular charging and discharge rates, intense temperatures and many partial charge cycles cause these batteries to degrade in the first five to eight years of use, and, eventually, they end up in a recycling facility.
Instead of sending batteries straight to recycling for raw material recovery — and leaving unrealized value on the table — startups and automakers are finding ways to reuse batteries as part of a small and growing market.
How to kick the 10 worst startup habits with Fuel Capital’s Leah Solivan
Image Credits: Meg Messina
Fuel Capital General Partner Leah Solivan joined us at TechCrunch Early Stage 2021 to explain how to avoid early mistakes in building your startup.
Solivan has ample experience on both sides of the fence, as she founded TaskRabbit and led it to exit through an acquisition by Ikea in 2017. She shared a list of 10 things to avoid in total, but here are some highlights of what to watch out for.
How founders can avoid blind spots and make better decisions with EchoVC’s Eghosa Omoigui
Image Credits: miodrag ignjatovic / Getty Images
Eghosa Omoigui, the founder and managing general partner of EchoVC Partners, has helped entrepreneurs navigate the first steps of starting a company and laying the right foundation early on.
Omoigui advocates for founders to develop their own All-22 tape — a tool used by professional football coaches that allows the viewer to see all 22 players on the field at the same time. It improves a coach’s line of sight, and, most importantly, helps avoid missing a critical motion or player.
The concept of this tool can — and should — be applied in the startup world as well, Omoigui said during the virtual TC Early Stage event. He explained what it means to have an All-22 tape and the steps founders should take to develop a skill set that will allow them to see and understand the playbook from all sides.
Building and leading an early-stage sales team with Zoom CRO Ryan Azus
Image Credits: Zoom Video Communications, Inc.
This year at Early Stage, TechCrunch spoke with Zoom Chief Revenue Officer Ryan Azus about building an early-stage sales team.
Azus is perhaps best known for leading the video-calling giant’s income arm during COVID-19, but his experience building RingCentral’s North American sales organization from the ground up made him the perfect guest to chat with about building an early-stage sales team.
We asked him about when founders should step aside from leading their startup’s sales org, how to build a working sales culture, hiring diversely, how to pick customer segments and how to build a playbook.
The dos and don’ts of bug bounty programs with Katie Moussouris
Image Credits: Bryce Durbin / TechCrunch
Katie Moussouris has been in cybersecurity circles since some of the world’s biggest tech companies were startups, and helped to set up the first vulnerability disclosure and bug bounty programs.
Moussouris, who runs consultancy firm Luta Security, now advises companies and governments on how to talk to hackers and what they need to do to build and improve their vulnerability disclosure programs.
At TC Early Stage, Moussouris explained what startups should (and shouldn’t) do, and what priorities should come first.
Start your engines, TechCrunch is (virtually) headed to Detroit
Join us on our next (virtual) field trip to Southeast Michigan. All lights will be shining on the Motor City.
Why Detroit? This is where StockX and Rivian call home, along with a growing stable of medical technology companies, fintech startups and security companies. The area is quickly transforming thanks to active investors, low cost of living and access to amazing universities that have a long history of supporting entrepreneurs.
If you’re interested in what’s happening in Detroit in general, are seeking out a new up-and-coming city to live in, or looking for cool companies and talented founders to invest in, then you’ll want to register and drop Thursday, April 15, on your calendar.
How to get into a startup accelerator
Image Credits: Techstars
Should you try to get your company into an accelerator? How far along should your idea and your team be before applying? When it is time to apply, how do you make your application stand out from hundreds or thousands of others? How fancy do you need to get with the application video?
For answers, we spoke with Neal Sáles-Griffin, managing director of Techstars Chicago and an adjunct professor at Northwestern University. He’s got an incredible wealth of knowledge about all things startups.
Understanding how fundraising terms can affect early-stage startups
Image Credits: Fenwick
Fenwick & West partner (and business lawyer) Dawn Belt joined us at TechCrunch Early Stage to break down some of the terms that trip up first-time entrepreneurs.
Belt has been involved in a number of key Silicon Valley moves, including EV company Proterra’s recent decision to go public via SPAC, as well as IPOs for Bill.com and Facebook. Here, she discusses key concepts like equity and the right of first refusal, and the role they play in the early stages of startup funding.
Bootstrapping, managing product-led growth and knowing when to fundraise
Image Credits: Calendly / OpenView
Product-led growth is all the rage in the Valley these days, and we had two leading thinkers discuss how to incorporate it into a startup at TechCrunch Early Stage 2021.
Tope Awotona is the CEO and founder of Calendly, which bootstrapped for much of its existence before raising $350 million at a $3 billion valuation from OpenView and Iconiq. And on the other side of that table (and this interview) sat Blake Bartlett, a partner at OpenView who has been leading enterprise deals based around the principles of efficient growth.
The two talked about bootstrapping and product-led growth, expanding internationally, when to bootstrap and when to fundraise, and how VCs approach a profitable company (carefully, and with a big stick). Oh, and how to spend $350 million.
Four strategies for getting attention from investors
Image Credits: MaC Venture Capital
Being a successful early-stage investor is about a lot more than simply identifying trends; a successful VC needs to think several steps ahead. For MaC Venture Capital founder Marlon Nichols, it’s an ability that’s helped him spot big names like Gimlet Media, MongoDB, Thrive Market, PlayVS, Fair, LISNR, Mayvenn, Blavity and Wonderschool early on.
Nichols joined us on TechCrunch Early Stage to discuss his strategies for early-stage investing and how those lessons can translate into a successful launch for budding entrepreneurs.
Setting up a management board for success with Dave Easton
Image Credits: Generation Investment Management
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 experience serving on boards as both a full member and as an observer helped peel back the curtain on the murky topic of good governance.
Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting
Image Credits: Ureeka
Zoom-based pitch meetings became standard during the pandemic, but many investors say they intend to maintain the practice as more people are vaccinated.
In conversation with Jordan Crook, founder, investor, and business school professor Melissa Bradley offered pointers for how founders can prepare for Zoom calls, common pitfalls to avoid, and how to allocate time during the meeting.
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Bootstrapping, managing product-led growth and knowing when to fundraise
Product-led growth is all the rage in the Valley these days, and we had two leading thinkers discuss how to incorporate it into a startup at TechCrunch Early Stage 2021. Tope Awotona is the CEO and founder of Calendly, which bootstrapped for much of its existence before raising $350 million at a $3 billion valuation from OpenView and Iconiq. And on the other side of that table and this interview sat Blake Bartlett, a partner at OpenView who has been leading enterprise deals based around the principles of efficient growth.
In this interview, the two talk about bootstrapping and product-led growth, expanding internationally, when to bootstrap and when to fundraise, and how VCs approach a profitable company (carefully, and with a big stick). Oh, and how to spend $350 million.
Quotes have been edited and condensed for quality.
Bootstrapping is directly tied to product-led growth
Product-led growth is all about efficiency — spending all of a startup’s capital and time on perfecting its product to capture new users and help the most fervent customers advocate for the product with others or perhaps the managers approving their expenses. That’s directly related to bootstrapping, since by evading VC investment, a startup has to be much more tied to customers in the first place.
Tope Awotona:
With no marketing at all, Calendly began to take off. So the initial users were in higher education, and very quickly we moved to the commercial sector. And all of that was because of the virality of the product. Seeing that, we just began to invest more into virality. So the combination of self-serve, which is incredibly capital efficient, because you don’t need all of these sales people, and also the virality, instead of spending a bunch of dollars on advertising, you can really rely on the virality of the product and rely on the network of the users to really propagate and to enable distribution, just those are the two things that really allowed us to be successful. (Timestamp: 7:49)
We later discussed how the extreme focus on users can drive efficiency through product-led growth.
Blake Bartlett:
It’s the product and the distribution model, and they need to be tightly aligned. Tope spoke to some of this, but I think first and foremost, even outside of metrics, it’s just how is the business built? And on the product front, the product is built, the jobs to be done, so to speak, are oriented towards the actual user of the product, not their boss. SaaS historically was built for the boss because the boss owns the the budget for that department. So if you’re building a sales tool, build for the VP of Sales, and then hopefully the AEs will, you know, go along with it. But now with product-led growth, you’re actually building for that user. … Eventually, you can build the things on top that the boss cares about like the admin panel, and the KPIs and all that kind of stuff. (Timestamp: 29:35)
- Bootstrapping to $80M ARR
- 6 tips for SaaS founders who don’t want VC money
- Mailchimp’s Ben Chestnut on bootstrapping a startup to $700M in revenue
Product-led growth and international expansion
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Black Innovation Alliance, Village Capital team up to support founders of color
Black Innovation Alliance and Village Capital today announced Resource, a national initiative aimed at boosting the efforts of entrepreneur support organizations (ESOs) led by, and focused on, founders of color.
The motivation behind the project is straightforward. ESOs “face record demand, declining resources and are chronically underestimated, underappreciated and underfunded,” the organizations say.
Resource aims to give local accelerators and incubators support in the form of training and community.
Resource’s “ESO Accelerator” will train startup ecosystem leaders on how to build a more financially sustainable organization, as well as help connect them to potential funders. It also will provide milestone-based financial support tied to organizational development.
Resource also plans to build a national community of practice among ESO leaders of color and their funders to share best practices and “develop stronger capital and mentorship pathways” for Black, Latinx and Indigenous founders across the U.S.
Village Capital, says CEO Allie Burns, supports and invest in entrepreneurs “who have been historically sitting in historical blind spots of investors, whether that’s by the problems they’re trying to solve, the geography they’re located in or demographic factors that we have seen lead to capital being concentrated in very few people, places and problems.” Village Capital has worked with more than 100 other ESOs to help grow companies with founders from all backgrounds over the past five years.
The goal with Resource is to help ensure that incubators and accelerators focused on supporting people of color have the resources they need to flourish, she added.
“We want to make sure that those accelerators and other ESOs have the financial, social and human capital to keep their doors open and grow,” Burns said.
Black Innovation Alliance Executive Director Kelly Burton points out that these Black-led organizations are often the first line of support for Black entrepreneurs yet reap few benefits from their success over time.
“They receive very little support and very little funding,” she said. “It’s almost like they do all the heavy lifting, they plant seeds and do all the cultivation but they don’t really get to benefit once that founder and that startup has really taken off. This is an opportunity for us to stabilize these organizations to help them build their own capacities and capabilities so that that organization can be sustainable.”
Resource is supported by a national coalition of funders committed to supporting entrepreneurs of color. The initial coalition includes Moody’s, The Sorenson Impact Foundation, Travelers and UBS.
In related news, on Tuesday we covered New Jersey Governor Phil Murphy’s proposal for a $10 million allocation in the state budget to create a seed fund for Black and Latinx startups.
In that piece, we noted that there are a number of organizations out there that are committed to funding diverse founders.
In February, several national and Chicago-based organizations banded together to support early-stage Black and Latinx tech entrepreneurs through a new program dubbed TechRise. The nonprofit P33 launched the program in partnership with Verizon and 1871, a private business incubator and technology hub, among others, with the goals “of narrowing the wealth gap in Chicago, generating thousands of tech-related jobs and giving $5 million in grant funding to Black and Latino entrepreneurs,” according to the Chicago Sun Times. (Disclosure: Verizon is TechCrunch’s parent company).
Also in Austin, DivInc is a nonprofit pre-accelerator that holds 12-week programs for underrepresented tech founders. Founded in 2016 by former Dell executive Preston James, the organization aims to “empower people of color and women entrepreneurs and help them build successful high-growth businesses by providing them with access to education, mentorship and vital networks.”
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Extra Crunch roundup: Tonal EC-1, Deliveroo’s rocky IPO, is Substack really worth $650M?
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
- DigitalOcean CEO Yancey Spruill, whose company went public via IPO.
- Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA.
- Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
The Tonal EC-1
Image Credits: Nigel Sussman
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Here’s how the Tonal EC-1 breaks down:
- Part 1: How a homegrown experiment became one of the fastest-growing companies in fitness tech
- Part 2: Millions of dollars and 3.5 years, and it all came down to this
- Part 3: Building online communities for fun, profit and product
- Part 4: Can Tonal become the luxury fitness market champion?
We have more EC-1s in the works about other late-stage startups that are doing big things well and making news in the process.
What to make of Deliveroo’s rough IPO debut
Image Credits: Nigel Sussman (opens in a new window)
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
Let’s peek at the numbers and find out.
Kaltura puts debut on hold. Is the tech IPO window closing?
Image Credits: Nigel Sussman (opens in a new window)
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
Is Substack really worth $650M?
Image Credits: Nigel Sussman (opens in a new window)
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
Image Credits: Visual Generation / Getty Images
Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
E-commerce roll-ups are the next wave of disruption in consumer packaged goods
Image Credits: Javier Zayas Photography (opens in a new window) / Getty Images
This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
Hack takes: A CISO and a hacker detail how they’d respond to the Exchange breach
Image Credits: TarikVision (opens in a new window) / Getty Images
The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
5 machine learning essentials nontechnical leaders need to understand
Image Credits: David Malan (opens in a new window) / Getty Images
Machine learning has become the foundation of business and growth acceleration because of the incredible pace of change and development in this space.
But for engineering and team leaders without an ML background, this can also feel overwhelming and intimidating.
Here are best practices and must-know components broken down into five practical and easily applicable lessons.
Embedded procurement will make every company its own marketplace
Image Credits: Busakorn Pongparnit / Getty Images
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
Knowing when your startup should go all-in on business development
Image Credits: twomeows / Getty Images
There’s a persistent fallacy swirling around that any startup growing pain or scaling problem can be solved with business development.
That’s frankly not true.
Dear Sophie: What should I know about prenups and getting a green card through marriage?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I’m a founder of a startup on an E-2 investor visa and just got engaged! My soon-to-be spouse will sponsor me for a green card.
Are there any minimum salary requirements for her to sponsor me? Is there anything I should keep in mind before starting the green card process?
— Betrothed in Belmont
Startups must curb bureaucracy to ensure agile data governance
Image Credits: RichVintage / Getty Images
Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Bring CISOs into the C-suite to bake cybersecurity into company culture
Image Credits: Jetta Productions Inc (opens in a new window) / Getty Images
Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-suite will be just as common and influential as CFOs in maximizing shareholder value.
How is edtech spending its extra capital?
Image Credits: Tetra Images (opens in a new window) / Getty Images
Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
Tech in Mexico: A confluence of Latin America, the US and Asia
Image Credits: Orbon Alija (opens in a new window)/ Getty Images
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries.
How we improved net retention by 30+ points in 2 quarters
Image Credits: Steven Puetzer (opens in a new window) / Getty Images
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
5 mistakes creators make building new games on Roblox
Image Credits: SOPA Images (opens in a new window) / Getty Images
Even the most experienced and talented game designers from the mobile F2P business usually fail to understand what features matter to Robloxians.
For those just starting their journey in Roblox game development, these are the most common mistakes gaming professionals make on Roblox.
CEO Manish Chandra, investor Navin Chaddha explain why Poshmark’s Series A deck sings
Image Credits: Poshmark
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Will the pandemic spur a smart rebirth for cities?
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Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
The NFT craze will be a boon for lawyers
Image Credits: Gearstd (opens in a new window) / Getty Images
There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
Viewing Cazoo’s proposed SPAC debut through Carvana’s windshield
Image Credits: Nigel Sussman (opens in a new window)
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.
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