Extra Crunch Roundup
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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?
Image Credits: hopsalka (opens in a new window) / Getty Images
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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Extra Crunch roundup: Clubhouse UX teardown, YC Demo Day favorites, proptech VC survey, more
Since the pandemic began, I have been pushing the limits of my imagination to try to picture what cities will look and feel like in the coming years.
If your town looks like San Francisco, where I live, it’s a pressing question: Our once-bustling financial district is a ghost town, but even in outer neighborhoods, the number of vacant storefronts is unsettling. People are starting to emerge after sheltering in place for a year, but we are a long way from fully restoring our shared spaces.
What’s going to happen to those semi-vacant office towers, some of which are still under construction? There’s been renewed talk of converting some skyscrapers into residential housing, but there are real economic/logistic hurdles to clear before that can be broadly applied. Scores of restaurants have closed in recent months; who will take over those spaces? I spend a lot of time walking around, and it’s been a long time since I’ve noticed a “Grand Opening” sign.
Seeking answers, Managing Editor Eric Eldon interviewed 10 VCs who are active in proptech and found that most were generally “optimistic.”
Several expressed genuine uncertainty about the future of offices, but most were bullish about prospects for remote work, the rebirth of physical retail and the emergence of “third spaces” that will fill the gap between work and home.
In a companion article on TechCrunch, Eric explores these broader shifts, concluding, “you can start to see a world emerging that sounds a lot more like the fantasies of a New Urbanist than the world before the pandemic.”
Here’s who he interviewed:
- Clelia Warburg Peters, venture partner, Bain Capital Ventures
- Christopher Yip, partner and managing director, RET Ventures
- Zach Aarons, co-founder and general partner, MetaProp
- Casey Berman, general partner, Camber Creek
- Vik Chawla, partner, Fifth Wall
- Adam Demuyakor, co-founder and managing partner, Wilshire Lane Partners
- Robin Godenrath and Julian Roeoes, partners, Picus Capital
- Stonly Baptiste, founding partner, and Shaun Abrahamson, managing partner, Urban Us
- Andrew Ackerman, managing director, Dreamit
Thanks very much for reading Extra Crunch this week. 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.
It’s time to abandon business intelligence tools
Image Credits: Jon Feingersh Photography Inc / Getty Images
Ideally, BI transforms raw data into actionable information, but according to Charles Caldwell, VP of product management at Logi Analytics, “a gap exists between the functionalities provided by current BI and data discovery tools and what users want and need.”
Few BI tools actually integrate with existing workflows and most offer clunky user experiences, “leaving many individuals feeling like they need an advanced computer science degree to actually be able to pull insights out.”
Instead of requiring workers to abandon workflow applications to access data, embedded analytics are more efficient and easier to use, says Caldwell.
In short, “it’s time to abandon BI — at least as we currently know it.”
Pre-seed round funding is under scrutiny: Is VC pandemic posturing here to stay?
Image Credits: nadia_bormotova / Getty Images
Amid the pandemic, investors became laser-focused on sections of the pitch deck that address monetization and business viability — signs that founders need to come to the table with better-defined businesses in order to succeed.
Investors’ heightened expectations for monetization potential and a company’s positioning within its competitive landscape are unlikely to lessen in the years to come, even in a post-COVID economy.
Clubhouse UX teardown: A closer look at homepage curation, follow hooks and other features
Image Credits: Rafael Henrique/SOPA Images/LightRocket via Getty Images
Clubhouse’s hockey-stick growth is something most startups would kill for.
However, it also means that UX problems can only be addressed while in “full flight” — and that changes to the user experience will be felt at scale rather under the cover of a small, loyal and (usually) forgiving user base.
Our favorite companies from Y Combinator’s W21 Demo Day
We’re not investors, so we’re not pretending to sort the unicorns from the goats.
But TechCrunch reporters spend a lot of time talking with startups, hearing pitches and telling their stories; if you’re curious about which companies stood out from Y Combinator’s W21 Demo Day, read on.
A look at 4 IPO updates and 2 late-stage funding rounds
Image Credits: Nigel Sussman (opens in a new window)
There’s a lot going on: The venture capital market is redlining its engines while public markets remain sympathetic to growing, unprofitable companies.
Let’s round up IPO news from DigitalOcean, Kaltura, Robinhood and Zymergen, and big rounds for Lattice and goPuff.
Dear Sophie: When can I finally come to Silicon Valley?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I’m a startup founder looking to expand in the U.S. I was originally looking at opening an office in Silicon Valley to be close to software engineers and investors, but then … COVID-19 🙂
A lot has changed over the last year — can I still come?
— Hopeful in Hungary
Staying ahead of the curve on Google’s Core Web Vitals
Image Credits: Aleksei Naumov / Getty Images
Aside from improved SEO, small business websites optimizing for Google’s new Core Web Vitals will reap the rewards of an improved user experience for their site visitors.
While many are looking at the Core Web Vitals as a big hoop to jump through to please the search powers that be, others are seeing — and seizing — the opportunities that come along with this change.
Steady’s Adam Roseman and investor Emmalyn Shaw outline what worked (and what was missing) in the Series A deck
Image Credits: Steady
When it comes to Steady — the platform that helps hourly workers manage and maximize their income and access deals on things like benefits and financial services — the strengths of the business are clear.
But it took time for founder and CEO Adam Roseman to clearly define and communicate each of them in his quest for fundraising.
Discord’s reported $10B exit; Compass and Intermedia Cloud Communications set IPO price ranges
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm dug into Discord’s possible $10 billion exit to Microsoft and explored IPO price ranges for real estate tech company Compass and Intermedia Cloud Communications, a unified-communications-as-a-service company.
“It’s a lot,” he noted, “but if we don’t get through it all now, we’ll fall behind and feel silly later.”
Will fading YOLO sentiment impact Robinhood, Coinbase and other trading platforms?
Image Credits: Nigel Sussman (opens in a new window)
The consumer trading frenzy could be slowing.
What would happen to Robinhood and its cohorts if the apparent cooling in consumer trading demand continues?
How VC and private equity funds can launch portfolio-acceleration platforms
Image Credits: Miguel Navarro (opens in a new window) / Getty Images (Image has been modified)
Almost every private equity and venture capital investor now advertises that they have a platform to support their portfolio companies, “however, most of us don’t have the budget of an Andreessen Horowitz to support almost every major need” for each startup they’ve bet on, says Versatile VC founder David Teten.
If you’re prioritizing a platform buildout for your firm, consider using the framework he’s outlined.
Automakers, suppliers and startups see growing market for in-vehicle AR/VR applications
Image Credits: Bryce Durbin
Despite all of the pomp and promises about the potential for AR and VR, there isn’t a clear understanding of market demand for bringing the technology to cars, trucks and passenger vans.
Estimates of the global market range from $14 billion by 2027 to as much as $673 billion by 2025, showing just how nascent the market currently is and how much opportunity is present.
Amid pandemic, Middle East adtech startups play essential role in business growth
Image Credits: phototechno / Getty Images
The Middle East is a promising region with growing digital advertising solutions despite locals’ attachment to traditional means of advertising.
In recent years, there has been a shift to the active use of social media and online shopping, meaning the Middle East embodies great potential for adtech startups.
Social+ payments: Why fintechs need social features
Image Credits: Getty Images
Social+ products are seeing mass adoption because they marry community with functionality.
This applies even to fintech companies as taboos around money fall away.
The lightning-fast Series A that was 3 years in the making
Image Credits: Mironov Konstantin / Getty Images
It took Christine Tao, founder of Sounding Board, just over three years to recognize the value of executive coaching and get her company to a Series A.
Here’s how she did it.
NFTs could bridge video games and the fashion industry
Image Credits: Amber J. Dickinson (opens in a new window)
Music companies, celebrities and fashion brands are some of the latest entities to dip a toe into the burgeoning NFT market.
In part two of a three-part series, we take a look at why NFTs are “the next chapter of digital art history.”
Where is the e-commerce app ecosystem headed in 2021?
Image Credits: Charday Penn (opens in a new window) / Getty Images
The pandemic-induced growth of e-commerce is, by now, well documented.
What is happening in the app ecosystem that supports e-commerce? Is it growing, or are we more likely to see consolidations and IPOs?
Let’s explore.
ironSource is going public via a SPAC and its numbers are pretty good
Image Credits: Nigel Sussman (opens in a new window)
You’ll want to pay attention to this one: Israel’s ironSource, an app-monetization startup, is going public via a SPAC.
It’s the second SPAC-led debut from an Israeli company in recent weeks worth more than $10 billion, and ironSource is actually a pretty darn interesting company from a financial perspective.
Coursera set to roughly double its private valuation in impending IPO
Image Credits: Bryce Durbin / TechCrunch
The market views Coursera’s edtech business warmly ahead of its impending public offering.
Coursera is being valued as a software company, likely a breathe-easy moment for still-private edtech companies, since the debut could be an industry bellwether.
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Extra Crunch roundup: AI eats fintech, fundraising visas, no-code transition tips, more
Most American retail banks are designed the same way: Customers must pass several desks set aside for loan and mortgage officers before they can talk to a customer representative.
I only step inside a bank a few times each year, but even pre-pandemic, I can’t remember the last time I saw someone sitting at one of those desks. Everyone I know who’s obtained a home or business loan in the recent past started with an online application process.
For this morning’s column, Alex Wilhelm interviewed Dave Girouard, CEO of Upstart, an AI-powered fintech lender that expects to see growth increase 114% this year.
A forecast like that suggests that retail banks have gotten comfortable with using automated tools to calculate risk, which may help explain all the empty desks at my local branch.
“If Upstart hits its 2021 numbers, we will be able to read into them broader adoption of AI among old-guard firms,” says Alex.
According to PitchBook, investors are also more bullish on AI: Q4 2020 saw record funding for AI and ML startups, and exit totals are increasing as well.
I wouldn’t mind adding a gently used desk to my home office; perhaps I should call my bank and see if they have one to spare.
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.
A crypto company’s journey to Data 3.0
Image Credits: dowell (opens in a new window) / Getty Images
Data is a gold mine for a company. If managed well, it provides the clarity and insights that lead to better decision-making at scale, in addition to an important tool to hold everyone accountable.
However, most companies are stuck in Data 1.0.
Dear Sophie: What type of visa should we get to fundraise in Silicon Valley?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
A friend and I founded a tech startup last year. Like a lot of other startups, we’re looking for funding.
Should we come to Silicon Valley to meet with venture capitalists?
How should we begin that process? What type of visa should we get and how easy is it to get?
—Logical in Lagos
To solve all the small things, look to everyday Little AI
Image Credits: Yuichiro Chino / Getty Images
Why are developers still solving everyday pain points with manual, archaic processes, as opposed to employing “Little AI”?
There are millions of everyday use cases for AI, where technology is empowered to learn and decide on a course of action that offers the best outcome for consumers and companies alike.
How to recruit data scientists without paying top dollar
Image Credits: Thomas Barwick (opens in a new window) / Getty Images
The increasing demand for AI and data science experts, driven in part by the pandemic’s economic impact, is showing no sign of abating.
Many employers are failing to identify viable job candidates, much less interviewing or hiring them. What’s holding them back?
Often, it’s a poorly drafted job posting.
3 steps to aid the transition to becoming a no-code company
Image Credits: Korrawin / Getty Images
No-code is changing how organizations build and maintain applications.
It democratizes application development by creating “citizen developers” who can quickly build out apps that meet their business-facing needs in real time, realigning IT and business objectives by bringing them closer together.
How can your company get ahead of the trend?
No taxation without innovation: The rise of tax startups
Image Credits: jokerpro / Getty Images
The idiosyncrasies of sales taxes are a burden on small- and medium-sized businesses, but a new legion of startups is emerging to help companies manage the intricacies of cross-jurisdictional taxes.
Snowflake gave up its dual-class shares: Should you?
Image Credits: VectorInspiration / Getty Images
Some founders and investors argue that these preferred shares protect them from the whims of the market, but the perspective isn’t universally accepted.
Dual-class shares are a controversial governance structure, and some wonder if they are setting up an unfair playing field by allowing a cabal to wield outsized power.
So why would Snowflake give up such a powerful tool?
MaaS transit: The business of mobility as a service
Image Credits: Bryce Durbin
As transit agencies seek to win back riders, a flurry of platforms — some backed by giants like Uber, Intel and BMW — are offering new technology partnerships.
Whether it’s bundling bookings, payments or just trip planning, startups are selling these mobility-as-a-service (MaaS) offerings as a lifeline to make transit agencies the backbone of urban mobility.
What eToro’s investor presentation and $10B valuation tells us about Robinhood
Image Credits: Nigel Sussman (opens in a new window)
Israeli consumer stock-trading service eToro is going public in the United States via a SPAC. One thing that points to?
Trading platforms are being valued like high-margin video games.
The global inequity in venture backing is staggering
Image Credits: Nigel Sussman (opens in a new window)
I knew African founders lacked the same access to capital as entrepreneurs based in Europe or the United States, but the numbers are far less favorable than I thought.
According to Dauda Barry, CEO of Adaplay Esports, African startups have raised $500 million so far in 2021. If that trend continues, he estimates that the region’s tech companies will exceed the $1.4 billion they raised in 2020.
For perspective: “Stripe raised more yesterday than Barry had reported for the entire African continent this year,” Alex Wilhelm noted in today’s column.
Digging deeper, he pulled numbers from Crunchbase and PitchBook to track VC activity in Africa over the last three months. Once he filtered private equity funding from nonequity investments, the numbers were “staggering.”
“I am surprised that more VCs aren’t investing in Africa,” says Alex. “It smells like investing arbitrage.”
Farmland could be the next big asset class modernized by marketplace startups
Image Credits: Pgiam (opens in a new window) / Getty Images
Companies that help farmers raise money for agricultural development projects are revolutionizing the way farm and forestland are acquired, developed and commercialized across the United States.
While private equity has gotten a lot of press for expanding the size of their farmland investments, those investments are still dwarfed by the size of the potential farm industry in the U.S., meaning there’s still plenty of opportunity for investors to provide additional capital.
The NFT market is just getting started, but where is it headed?
Image Credits: Beeple (opens in a new window) under a CC BY 4.0 (opens in a new window) license.
The crypto art craze might seem silly and expensive, but it could empower artists from emerging economies and underrepresented groups to access the global art market in ways that they couldn’t before.
Can it outlive the hype?
Olo raises IPO range as DigitalOcean sees possible $5B debut valuation
Image Credits: jayk7 (opens in a new window) / Getty Images
That Olo raised its IPO price is not a huge surprise, given the software company’s rapid growth and profits. In the case of DigitalOcean, we have more work to do as its approach to growth is a bit different.
Stripe’s epic new valuation and the value-capture gap between public and private markets
Image Credits: Nigel Sussman (opens in a new window)
Stripe’s $600 million round values the payments and banking software company at $95 billion, near the top end of the valuation range at which the company was said to be raising funds back in November 2020.
Sadly, Stripe is still being coy with growth metrics. The Exchange digs in, no matter how vague.
Julia Collins and Sarah Kunst outline how to build a fundraising process
Julia Collins, the first Black woman to co-found a venture-backed unicorn, and investor Sarah Kunst offer fundraising pointers on Extra Crunch Live.
Kunst says good design is critical, but:
If you’re not a graphic designer, then any incremental minute that you’re spending on trying to make your deck pretty is a waste of time. You need to be focusing on content. Hire somebody, pay them a tiny bit of money to be able to do a nice graphics pass on your deck, and it’s going to make it a lot easier for people to to get the information that you need them to know.
How nontechnical talent can break into deep tech
Image Credits: Getty Images
Startup hiring processes can be opaque, and breaking into the deep tech world as a nontechnical person seems daunting. This column offers tactical advice for finding, reaching out to, cultivating relationships with and working at deep tech companies as a nontechnical candidate.
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Extra Crunch roundup: Coupang and Roblox debut, driving GPT-3 adoption, startup how-tos, more
Extra Crunch publishes a variety of article types, but how-tos are my favorite category.
For many entrepreneurs, the startup they are trying to get off the ground might be only the second entry on their resume. As a result, they don’t have much experience to draw from when it comes to basics like hiring, fundraising and growth marketing.
Last week, Natasha Mascarenhas interviewed experts who had some strategic advice for finding the right time to bring a product manager on board. This afternoon, we published a guest post by growth marketer Jessica Li with tips for “how nontechnical talent can build relationships with deep tech companies.”
We’ve also received great feedback on a recent guest post about bootstrapping options for SaaS founders written by a founder who’s actually done it.
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
If you have some startup-related “how” and “why” questions, please browse our Extra Crunch How To stories. They’re aimed squarely at early-stage founders and workers trying to solve long-term problems.
Thanks very much for reading Extra Crunch this week! I hope you have a relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Welcome to Bloxburg, public investors
Image Credits: Steve Jennings / Getty Images
As Roblox began to trade Wednesday, the company’s shares shot above its reference price of $45 per share. Roblox, a gaming company aimed at children, has had a tumultuous if exciting path to the public markets.
Seeing Roblox trade so very far above its direct listing reference price and final private valuation appears to undercut the argument that this sort of debut can sort out pricing issues inherent in more traditional IPOs.
4 ways startups will drive GPT-3 adoption in 2021
Image Credits: Zastrozhnov (opens in a new window) / Getty Images
Trained on trillions of words, GPT-3 is a 175-billion parameter transformer model — the third of such models released by OpenAI.
GPT-3 is remarkable in its ability to generate human-like text and responses, able to return coherent and topical emails, tweets, trivia and much more. In 2021, this technology will power the launch of a thousand new startups and applications.
There have never been more $100M+ fintech rounds than right now
Image Credits: Nigel Sussman (opens in a new window)
We are in a period of all-time record investment for so-called mega-rounds, or investments of $100 million or more inside the fintech realm.
To date, Q1 2021 is ahead and is thus guaranteed to set a new record, having already bested the preceding all-time high. What’s going on?
Global-e files to go public as e-commerce startups enjoy a renaissance
Image Credits: Nigel Sussman (opens in a new window)
Global-e, an e-commerce platform that helps online sellers reach global consumers, filed to go public on Tuesday. Global-e’s business exploded amid the pandemic in 2020, and the company expects that the COVID-fueled shift to e-commerce will only lead to future growth.
Passive collaboration is essential to remote work’s long-term success
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Have you ever popped into a meeting because you overheard a snippet of a conversation and wanted to share your perspective?
That’s passive collaboration — low-friction ways to invite new ideas. But it’s only when we’re able to fully realize passive collaboration virtually that we’ll have unlocked the full potential of remote and hybrid work situations.
Dear Sophie: What are the pros and cons of the H-1B, O-1A and EB-1A?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I’m an entrepreneur who wants to expand my startup to the U.S. What are the benefits and drawbacks of various types of visas and green cards?
The ones I’ve heard the most about are the H-1B, O-1 and EB-1A.
— Intelligent in India
Proactive CEOs should prioritize European expansion
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Many investors will encourage CEOs to remain U.S.-centric this year and perhaps expand their product offering or move into new market segments. But 95% of the world’s population lives outside the U.S., making an expansion into Europe your best growth lever.
Coupang follows Roblox to a strong first day of trading
Image Credits: Bloomberg (opens in a new window)/ Getty Images
After Roblox debuted on Wednesday, Coupang followed, with shares shooting above the South Korean e-commerce giant’s IPO price range. Quick math shows Coupang is worth around $92 billion at the moment, a huge number that nearly zero companies will ever reach.
How and when to hire your first product manager
Image Credits: Francesco Carta Fotografo (opens in a new window) / Getty Images
Because product managers and founders often have overlapping skill sets, it can be tricky to find the right candidate.
While it’s different for every company, hiring a PM ensures companies aren’t “chasing the shiny object” but rather building the things that create enduring value for customers.
Deep Science: AI adventures in arts and letters
Image Credits: Alashi / Getty Images (Image has been modified)
AI isn’t confined to the tech sphere; machine learning is applicable across disciplines, from music and the “computational unfolding” of ancient letters to figuring out where EV charging stations need to be built.
A first look at Coursera’s S-1 filing
Image Credits: Bryce Durbin / TechCrunch
The SEC filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year.
It paints a picture of growth, albeit one that came at steep expense.
Olo’s IPO could value the company north of $3B as Toast waits in the wings
Image Credits: Nigel Sussman (opens in a new window)
Olo has a history of growth and profitability, making its impending pricing all the more interesting.
But are investors willing to pay more for profits? And, if so, how much?
From electric charging to supply chain management, InMotion Ventures preps Jaguar for a sustainable future
Image Credits: Andrew Ferraro — Handout/Jaguar Racing / Getty Images
InMotion’s investment in Circulor, a company that monitors supply chains from raw material inputs to finished outputs with an eye toward sustainable sourcing, shows the firm’s dedication to backing companies across the mobility space broadly.
White-label voice assistants will win the battle for podcast discovery
Image Credits: maxkabakov (opens in a new window) / Getty Images
Americans are bored, housebound and screened out, driving roughly 128 million Americans to use a voice assistant at least once a month.
This has created a golden opportunity for audio as consumers turn to podcasts, voice assistants and smart speakers.
Why I’m hitting pause on ARR-focused coverage
Image Credits: Nigel Sussman (opens in a new window)
One of the first recurring features Alex Wilhelm established at Extra Crunch was the “$100M ARR Club,” ongoing coverage of startups that have reached scale.
“Forget a $1 billion valuation — $100 million in annual recurring revenue is the cool kids’ club,” he wrote in December 2019. Since then, he expanded it to cover companies that attained $50M ARR.
The concept is a useful lens for studying the market. I can say this with confidence because it’s been widely copied by other tech news outlets. But this morning, Alex surprised me — he’s shelving the ARR Club, at least for now.
“In the end it became a pre-IPO list that was fun but not entirely educational, by my reckoning,” he told me. “The $50M ARR club evolution was supposed to help shake loose more interesting operational details, but just didn’t.”
Before putting the format on hiatus, Alex’s last ARR Club roundup looks at in-office display and kiosk startup AppSpace, data backup unicorn Druva, and Synack, which makes security software.
TC Early Stage: The premier how-to event for startup entrepreneurs and investors
From April 1-2, some of the most successful founders and VCs will explain how they build their businesses, raise money and manage their portfolios.
At TC Early Stage, we’ll cover topics like recruiting, sales, legal, PR, marketing and brand building. Each session includes ample time for audience questions and discussion.
Use discount code ECNEWSLETTER to take 20% off the cost of your TC Early Stage ticket!
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EC roundup: BNPL startups, growth marketing tips, solid state battery market map, more
When I needed a new sofa several months ago, I was pleased to find a buy now, pay later (BNPL) option during the checkout process. I had prepared myself to make a major financial outlay, but the service fees were well worth the convenience of deferring the entire payment.
Coincidentally, I was siting on said sofa this morning and considering that transaction when Alex Wilhelm submitted a column that compared recent earnings for three BNPL providers: Afterpay, Affirm and Klarna.
I asked him why he decided to dig into the sector with such gusto.
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“What struck me about the concept was that we had just seen earnings from Affirm,” he said. “So we had three BNPL players with known earnings, and I had just covered a startup funding round in the space.”
“Toss in some obvious audience interest, and it was an easy choice to write the piece. Now the question is whether I did a good job and people find value in it.”
Thanks very much for reading Extra Crunch this week! Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings
Pilot CEO Waseem Daher tears down his company’s $60M Series C pitch deck
Image Credits: Colin Hawkins (opens in a new window) / Getty Images
I avoid running Extra Crunch stories that focus on best practices; you can find those anywhere. Instead, we look for “here’s what worked for me” articles that give readers actionable insights.
That’s a much better use of your time and ours.
With that ethos in mind, Lucas Matney interviewed Pilot CEO Waseem Daher to deconstruct the pitch deck that helped his company land a $60M Series C round.
“If the Series A was about, ‘Do you have the right ingredients to make this work?’ then the Series B is about, ‘Is this actually working?’” Daher tells TechCrunch.
“And then the Series C is more, ‘Well, show me that the core business is really working and that you have unlocked real drivers to allow the business to continue growing.’”
Can solid state batteries power up for the next generation of EVs?
Image Credits: Bryce Durbin
A global survey of automobile owners found three hurdles to overcome before consumers will widely embrace electric vehicles:
- 30-minute charging time
- 300-mile range
- $36,000 maximum cost
“Theoretically, solid state batteries (SSB) could deliver all three,” but for now, lithium-ion batteries are the go-to for most EVs (along with laptops and phones).
In our latest market map, we’ve plotted the new and established players in the SSB sector and listed many of the investors who are backing them.
Although SSBs are years away from mass production, “we are on the cusp of some pretty incredible discoveries using major improvements in computational science and machine learning algorithms to accelerate that process,” says SSB startup founder Amy Prieto.
Dear Sophie: Which immigration options are the fastest?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
Help! Our startup needs to hire 50 engineers in artificial intelligence and related fields ASAP. Which visa and green card options are the quickest to get for top immigrant engineers?
And will Biden’s new immigration bill help us?
— Mesmerized in Menlo Park
Why F5 spent $2.2B on 3 companies to focus on cloud native applications
Image Credits: Jasmin Merdan / Getty Images
Founded in 1996, F5 has repositioned itself in the networking market several times in its history. In the last two years, however, it spent $2.2 billion to acquire Shape Security, Volterra and NGINX.
“As large organizations age, they often need to pivot to stay relevant, and I wanted to explore one of these transformational shifts,” said enterprise reporter Ron Miller.
“I spoke to the CEO of F5 to find out the strategy behind his company’s pivot and how he leveraged three acquisitions to push his organization in a new direction.”
DigitalOcean’s IPO filing shows a two-class cloud market
Image Credits: Who_I_am (opens in a new window) / Getty Images
Cloud hosting company DigitalOcean filed to go public this week, so Ron Miller and Alex Wilhelm unpacked its financials.
“AWS and Microsoft Azure will not be losing too much sleep worrying about DigitalOcean, but it is not trying to compete head-on with them across the full spectrum of cloud infrastructure services,” said John Dinsdale, chief analyst and research director at Synergy Research.
Oscar Health’s initial IPO price is so high, it makes me want to swear
Image Credits: Nigel Sussman (opens in a new window)
I asked Alex Wilhelm to dial back the profanity he used to describe Oscar Health’s proposed valuation, but perhaps I was too conservative.
In March 2018, the insurtech unicorn was valued at around $3.2 billion. Today, with the company aiming to debut at $32 to $34 per share, its fully diluted valuation is closer to $7.7 billion.
“The clear takeaway from the first Oscar Health IPO pricing interval is that public investors have lost their minds,” says Alex.
His advice for companies considering an IPO? “Go public now.”
If Coinbase is worth $100 billion, what’s a fair valuation for Stripe?
Image Credits: Nigel Sussman (opens in a new window)
Last week, Alex wrote about how cryptocurrency trading platform Coinbase was being valued at $77 billion in the private markets.
As of Monday, “it’s now $100 billion, per Axios’ reporting.”
He reviewed Coinbase’s performance from 2019 through the end of Q3 2020 “to decide whether Coinbase at $100 billion makes no sense, a little sense or perfect sense.”
Winning enterprise sales teams know how to persuade the Chief Objection Officer
Image Credits: Alla Aramyan (opens in a new window) / Getty Images
A skilled software sales team devotes a lot of resources to pinpointing potential customers.
Poring through LinkedIn and reviewing past speaker lists at industry conferences are good places to find decision-makers, for example.
Despite this detective work, GGV Capital investor Oren Yunger says sales teams still need to identify the deal-blockers who can spike a deal with a single email.
“I call this person the Chief Objection Officer.”
3 strategies for elevating brand authority in 2021
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Every startup wants to raise its profile, but for many early-stage companies, marketing budgets are too small to make a meaningful difference.
“Providing real value through content is an excellent way to build authority in the short and long term,” says Amanda Milligan, marketing director at growth agency Fractl.
RIBS: The messaging framework for every company and product
Image Credits: luchezar (opens in a new window) / Getty Images
The most effective marketing uses good storytelling, not persuasion.
According to Caryn Marooney, general partner at Coatue Management, every compelling story is relevant, inevitable, believable and simple.
“Behind most successful companies is a story that checks every one of those boxes,” says Marooney, but “this is a central challenge for every startup.”
Ironclad’s Jason Boehmig: The objective of pricing is to become less wrong over time
On a recent episode of Extra Crunch Live, Ironclad founder and CEO Jason Boehmig and Accel partner Steve Loughlin discussed the pitch that brought them together almost four years ago.
Since that $8 million Series A, Loughlin joined Ironclad’s board. “Both agree that the work they put in up front had paid off” when it comes to how well they work together, says Jordan Crook.
“We’ve always been up front about the fact that we consider the board a part of the company,” said Boehmig.
TC Early Stage: The premiere how-to event for startup entrepreneurs and investors
From April 1-2, some of the most successful founders and VCs will explain how they build their businesses, raise money and manage their portfolios.
At TC Early Stage, we’ll cover topics like recruiting, sales, legal, PR, marketing and brand building. Each session includes ample time for audience questions and discussion.
Use discount code ECNEWSLETTER to take 20% off the cost of your TC Early Stage ticket!
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Extra Crunch roundup: Optimized SaaS pricing, recruiting growth experts, VC surveys, more
Since the pandemic began, have you been walking more, or do you know someone who bought a new car? Perhaps you ran your first errand on a rented e-bike or scooter?
Over the last year, I’ve experimented with different mobility options to see which ones best suit my needs, as have most people I know. It can be challenging to maintain a recommended physical distance on a bus or subway. (After a decade-plus hiatus, I even briefly considered rejoining the ranks of automobile owners!)
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It took some getting used to, but I now enjoy traveling around San Francisco on a scooter or e-bike. Pre-pandemic, I was leery of riding two-wheeled vehicles in a city with a high rate of injury collisions, but there are fewer cars on the road than there used to be.
COVID-19 has spotlighted many of the weakest points in our transportation system, but some of the rapid shifts in consumer behavior are creating opportunities for tech once considered fanciful, like sidewalk delivery robots and eVTOLs (electric vertical and takeoff vehicles).
Transportation editor Kirsten Korosec reached out to 10 investors to learn more “about the state of mobility, which trends they’re most excited about and what they’re looking for in their next investments.”
Here’s who she interviewed:
- Clara Brenner, co-founder and managing partner, Urban Innovation Fund
- Shawn Carolan, partner, Menlo Ventures
- Dave Clark, partner, Expa
- Abhijit Ganguly, senior manager, Goodyear Ventures
- Rachel Holt, co-founder and general partner, Construct Capital
- David Lawee, founder and general partner, CapitalG
- Sasha Ostojic, operating partner, Playground Global
- Sebastian Peck, managing director, InMotion Ventures
- Natalia Quintero and Rachel Haot, Transit Innovation Partnership/Transit Tech Lab
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
A fraction of Robinhood’s users are driving its runaway growth
Image Credits: Nigel Sussman (opens in a new window)
Yesterday’s House Financial Services Committee hearing on the GameStop short squeeze saga was fairly typical: Most lawmakers used their time to grandstand and little new information was revealed.
But Alex Wilhelm found one tidbit: Much of Robinhood’s revenue is generated from payment for order flow (PFOF). Under the practice, market makers pay the trading platform for executing trades.
To get a sense of how much Robinhood’s high rollers contribute to the company’s general health, he calculated its PFOF revenues for the last three months of 2020.
“Borrowing a term from the casino trade, these whales generate the bulk of the company’s revenue stream.”
Why do SaaS companies with usage-based pricing grow faster?
Image Credits: John Lund (opens in a new window) / Getty Images
HubStop introduced usage-based pricing in 2011 to boost its retention rate, then near 70%.
When it went public three years later, its net revenue retention rate was edging close to 100%, “all without hurting the company’s ability to acquire new customers.”
Offering new users frictionless onboarding, customer support and free credits is a proven method for making them more active — and loyal.
So, why do public SaaS firms with usage-based pricing see faster growth?
“Because they’re better at landing new customers, growing with them and keeping them as customers,” says Kyle Powar, VP of growth at OpenView.
Paying $115B for Stripe or $77B for Coinbase might be quite rational
Image Credits: Nigel Sussman (opens in a new window)
In October 2018, private-market money valued Coinbase at around $8 billion. As of this week, it’s valued at $77 billion.
Similarly, Stripe is valued at $115 billion on secondary markets. In the middle of last year, that figure was closer to $36 billion.
“Would I line up to pay $77 billion for Coinbase?” asked Alex. “Probably not, but that doesn’t mean that the public markets won’t.”
Pandemic-era growth and SPACs are helping edtech startups graduate early
Image Credits: Witthaya Prasongsin (opens in a new window) / Getty Images
Natasha Mascarenhas reports that some edtech startups are hitching rides with special purpose acquisition vehicles so they can speed up their journey to the public markets.
To learn more, she interviewed Susan Wolford, chairperson of $200 million SPAC Edify Acquisition, and Nerdy CEO Chuck Cohn. Nerdy, parent company of Varsity Tutors, is going through a reverse merger with TPG Pace Tech Opportunities.
“It’s less about going into the public markets and more about that this transaction allows us to take an offensive position and lean into the big opportunities,” Cohn said.
Dear Sophie: Tips for filing for a green card for my soon-to-be spouse
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
My fiancé is in the U.S. on an H-1B visa, which is set to expire in about a year and a half.
We were originally planning to marry last year, but both he and I want to have a ceremony and party with our families and friends, so we decided to hold off until the pandemic ends. I’m a U.S. citizen and plan to sponsor my fiancé for a green card.
How long does it typically take to get a green card for a spouse? Any tips you can share?
— Sweetheart in San Francisco
Inside Rover and MoneyLion’s SPAC-led public debuts
Image Credits: Nigel Sussman (opens in a new window)
When I saw that Alex Wilhelm wrote on Tuesday about two more startups that were taking the SPAC route to public markets, I briefly wondered if we’ve been covering special purpose acquisition companies too frequently.
After I read his first sentence, I realized Alex made exactly the right call because the trend that emerged in 2020 may be turning into a actual wave: This week, pet e-commerce company Rover and fintech startup MoneyLion both announced that they’re planning SPAC-led debuts.
On Monday, Alex covered the news that Lerer Hippeau Acquisition Corp. and Khosla Ventures Acquisition Co. I, II and III. filed S-1 filings last week.
“You have to wonder if every VC worth a damn in the future will have their own raft of SPAC offerings,” says Alex.
Wrote Lerer Hippeau Acquisition Corp.:
With our portfolio now maturing to the stage at which many are considering the public markets, we view SPACs as a natural next step in the evolution of our platform.
“If we are not careful, every entry of this column could consist of SPAC news,” writes Alex.
From dorm rooms to board rooms: How universities are promoting entrepreneurship
Image Credits: CasarsaGuru (opens in a new window) / Getty Images
Fifteen U.S.-based institutions of higher learning have joined forces to create the University Technology Licensing Program LLC (UTLP).
The program makes it easier for entrepreneurs and investors to find IP that can drive their companies forward, but it’s also an attempt to repair what one participant calls “the somewhat broken interface between universities and very large companies in the tech space.”
4 strategies for deep tech companies recruiting top growth marketers
Image Credits: Mallika Wiriyathitipirm/EyeEm (opens in a new window) / Getty Images
Here’s some real talk for technical founders: if you find it frustrating to work with growth experts and marketing professionals, the feeling’s probably mutual.
“Incredible growth people are independent and creative and are drawn to environments that explicitly value these traits,” says Jessica Li, a content/growth professional who was previously a VC.
To land top talent, “demonstrate that you have a team structure in place where a growth marketer could fit in and thrive.”
9 investors discuss hurdles, opportunities and the impact of cloud vendors in enterprise data lakes
Image Credits: Donald Iain Smith (opens in a new window) / Getty Images
Before my first cup of coffee this morning, I’d already interacted with four different devices that transmitted details about my behavior to a data lake.
Hopefully, the response I sent to an automated text while waiting for the kettle to boil will generate a discount offer in my inbox later today. (And hopefully, the raw data I’m transmitting has been properly secured and cataloged.)
Enterprise reporter Ron Miller interviewed nine investors to learn more about their approach to the lucrative data lake market:
- Caryn Marooney, general partner, Coatue Management
- Dharmesh Thakker, general partner, Battery Ventures
- Casey Aylward, principal, Costanoa Ventures
- Derek Zanutto, general partner, CapitalG
- Navin Chaddha, managing director, Mayfield
- Jon Lehr, co-founder and general partner, Work-Bench
- Peter Wagner, founding partner, Wing Ventures
- Nicole Priel, managing director, Ibex Ventures
- Ilya Sukah, partner, Matrix Partners
Felicis’ Aydin Senkut and Guideline’s Kevin Busque on the value of simple pitch decks
Image Credits: Felicis Ventures / Guideline
When it comes to building a durable relationship between a founder and an investor, “the trust starts in the pitch deck,” says Guideline CEO Kevin Busque.
Busque joined Extra Crunch Live last week with Felicis Ventures’ Aydin Senku to discuss the seed round Senku declined to join — and the Series B he led a short while later.
In keeping with our new format, the pair also offered feedback on pitch decks submitted by members of the audience. Read highlights, or watch a video with the full conversation.
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Extra Crunch roundup: 500 Startups’ demo day, smart SaaS pricing and much more
Demo days at startup accelerators are a pretty big deal around here.
These events aren’t just a chance to review the latest cohort of hopeful entrepreneurs — they also showcase the technology, products and services that will compete for VC and consumer attention over the next few years.
You never know where a hit will come from, which is why these events capture our attention. Here’s just one example from Y Combinator’s Summer 2013 Demo Day:
Positioning itself as the “FedEx of today,” it hopes to provide a logistics framework that goes beyond food and can be used for any type of on-demand order.
That startup was DoorDash, by the way.
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Full disclosure: In 2016, I was 500 Startups’ Journalist-in-residence. I covered one demo day in person, spending most of my time backstage where founder teams practiced their pitches.
It was quite a scene: Several people literally jumped up and down to shake off their nervous energy, but I also recall one who calmly recited their lines while gazing through a window.
Yesterday, Jon Shieber and Alex Wilhelm covered 500 Startups’ 27th virtual demo day and selected eight companies as their favorites:
- Stack
- Adapty
- MightyFly
- Omnitron Sensors
- AWSM
- Memechat
- Ryu Games
- Apothecary
Thank you very much for reading Extra Crunch this week! I hope you have a safe, relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
TechCrunch’s favorite companies from 500 Startups’ latest demo day
Image Credits: David Malan (opens in a new window) / Getty Images
How the GameStop stonkathon helped Robinhood raise $3.4B last week
Image Credits: Nigel Sussman (opens in a new window)
I’ve never used “stonkathon” in a headline before, but it’s been that kind of week.
The war between hedge funds and day traders over GameStop vaulted discount trader Robinhood into the headlines for days.
But how did it affect the company’s financial health?
This morning, Alex Wilhelm examined why Robinhood’s investors were willing to inject $3.4 billion more into the company in just one week.
“More trades means more PFOF (payment for order flow) revenue,” says Alex. “And Robinhood effectively doubled in size.”
Udemy’s new president discusses the reskilling company’s future
Image Credits: Andrew_Rybalko / Getty Images
Reporter Natasha Mascarenhas interviewed Greg Brown, new president of digital learning platform Udemy, after his company announced that it surpassed $100 million ARR.
A new arm of the company, Udemy for Business, just secured a 100,000-employee contract with Cisco Systems to offer software, business and technology courses.
“The opportunity that the company sees has really forced us to reallocate resources and strategy,” said Brown.
Why one Databricks investor thinks the company may be undervalued
Image Credits: Nigel Sussman (opens in a new window)
After scaling its ARR to $425 million and reaching a valuation of $28 billion, data analytics company Databricks is clearly IPO-ready.
Battery Ventures has backed Databricks since 2017, so Alex Wilhelm interviewed General Partner Dharmesh Thakker to understand why he thinks the company may be undervalued.
“Whether it’s digital transformation, whether it’s analytics, data is everywhere,” said Thakker. “So the TAM is massive.”
4 strategies for deep tech founders who are fundraising
Image Credits: MirageC (opens in a new window) / Getty Images
Deep tech founders face special challenges when pitching investors: they usually don’t have a product, customers or revenue.
It’s difficult enough to ask a stranger for a check when there’s a beta product, but how do you drum up interest in an unproven idea that may exist largely in your imagination?
“Early-stage investors are in the business of funding dreams,” says angel investor Jessica Li.
“Investors are less interested in the intricacies of your technology and more interested in what impact it can create.”
Step one: use storytelling to highlight your big vision.
Edtech valuations aren’t skyrocketing, but investors see more exit opportunities
Image Credits: Images by Tang Ming Tung (opens in a new window) / Getty Images
Investors funded edtech startups with $10 billion last year as the pandemic forced widespread adoption of remote learning.
The valuations of these companies aren’t rising at the same rate as SaaS or fintech startups, but “where edtech lacks in impressive valuations, investors see it gaining in exit opportunities,” writes Natasha Mascarenhas.
For this edtech investor survey, she interviewed:
- Deborah Quazzo, managing partner, GSV Ventures (an education fund backing ClassDojo, Degreed and Clever)
- Ashley Bittner, founding partner, Firework Ventures (a future-of-work fund with portfolio companies LearnIn and TransfrVR)
- Jomayra Herrera, principal, Cowboy Ventures (a generalist fund with portfolio companies Hone and Guild Education)
- John Danner, managing partner, Dunce Capital (an edtech and future-of-work fund with portfolio companies Lambda School and Outschool)
- Mercedes Bent and Bradley Twohig, partners, Lightspeed Venture Partners (a multistage generalist fund with investments including Forage, Clever and Outschool)
- Ian Chiu, managing director, Owl Ventures (a large edtech-focused fund backing highly valued companies including BYJU’s, Newsela and MasterClass)
- Jan Lynn-Matern, founder and partner, Emerge Education (a leading edtech seed fund in Europe with portfolio companies like Aula, Unibuddy and BibliU)
- Benoit Wirz, partner, Brighteye Ventures (an active edtech-focused venture capital fund in Europe that backs YouSchool, Lightneer and Aula)
- Charles Birnbaum, partner, Bessemer Venture Partners (a generalist fund with portfolio companies including Guild Education and Brightwheel)
- Daniel Pianko, co-founder and managing director, University Ventures (a higher-ed and future-of-work fund that is backing Imbellus and AdmitHub)
- Rebecca Kaden, managing partner, Union Square Ventures (a generalist fund with portfolio companies including TopHat, Quizlet and Duolingo)
- Andreata Muforo, partner, TLcom Capital (a generalist fund backing uLesson)
Deep Science: AIs with high class and higher altitudes
Image Credits: MF3d (opens in a new window) / Getty Images
In his latest recap of recent breakthroughs in applied science, Devin Coldewey looked at how researchers are using AI to:
- Categorize thousands of pieces of classical music
- Read MRIs to spot patients with schizophrenia
- Track elephant herds via satellite
- Improve accessibility on mobile phones
Spotify Group Session UX teardown: the fails and their fixes
Image Credits: Getty Images
In the latest of a series of articles that examines user experiences for consumer apps, UX expert Peter Ramsey and TechCrunch reporter Steve O’Hear studied Spotify Group Session, the shared-queue feature that permits users to create playlists collaboratively.
“Many of these lessons can be applied to other existing digital products or ones you are currently building,” such as the need to add context for important decisions and how to best use “react and explain” prompts.
Lightspeed’s Gaurav Gupta and Grafana’s Raj Dutt discuss pitch decks, pricing and how to nail the narrative
Extra Crunch Live returned this week with two guests: Lightspeed Venture Partners’ Gaurav Gupta and Raj Dutt, co-founder and CEO of Grafana Labs.
In addition to walking us through the presentation that encouraged Lightspeed to invest in Grafana’s Series A, the duo also gave direct feedback to audience members about their pitch decks.
Watch a video with our complete episode, or read highlights from the chat to get Gupta and Dutt’s insights on what goes into a successful pitch deck.
New episodes of Extra Crunch Live drop each Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT.
Here’s a breakdown of the complete episode with Gaurav Gupta and Raj Dutt:
- How they met — 2:00
- Grafana’s early pitch deck — 12:00
- The enterprise ecosystem — 25:00
- The pitch deck teardown — 32:00
Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models
Paper plane made from a ten-dollar bill. Image Credits: LockieCurrie (opens in a new window)/ Getty Images
Some IT managers may still be debating the merits of usage-based pricing versus subscription-based models, but SaaS investors have made up their minds.
Compared to their rivals, companies that employ usage-based pricing trade at a 50% revenue multiple premium. You can argue with success, but seven out of the nine IPOs since 2018 with the best net dollar retention offer usage-based models.
If you’re a founder who hopes to break into the $100M ARR club, this guest post can help you identify the right usage metrics for creating a sustainable customer journey.
For more actionable advice regarding SaaS pricing and sales, see these previously published Extra Crunch stories:
- Should your SaaS startup embrace a bottom-up GTM strategy?
- How should SaaS companies deliver and price professional services?
Bumble IPO could raise more than $1B for dating service
Image Credits: Nigel Sussman (opens in a new window)
How many dating networks can the public market support?
In Tuesday’s column, Alex Wilhelm examined the latest IPO filing from relationship-finding service Bumble.
The company set a range of $28 – $30 per share, so Alex set out to find its simple and diluted valuations, how much it expects investors to pay and “how those stack up compared to Match Group’s own numbers.”
Robinhood’s Q4 2020 revenue shows a return to growth
Image Credits: Nigel Sussman (opens in a new window)
Discount brokerage Robinhood stayed in the news last week as it became a proxy battlefield for institutional and retail investors, but its backers “put in another billion just last week,” says Alex Wilhelm.
Why were investors so bullish after days of screaming headlines?
In yesterday’s column, Alex unpacked Robinhood’s Q4 2020 numbers, “which shows a return to sequential-quarterly growth at the trading upstart.”
Trading app Public drops payment for order flow in favor of tips
Image Credits: Towfiqu Photography / Getty Images
Before Redditors came after GameStop, zero-cost trading service Public says it was seeing “steady ~30%” month-over-month growth.
Last week, however, “new user signups went up 20x,” founders Leif Abraham and Jannick Malling told TechCrunch.
After closing a $65 million Series C, Public announced yesterday that it would “stop participating in the practice of Payment for Order Flow,” replacing PFOF with an “optional tipping feature.”
Customer advisory boards are a gold mine for startup brand champions
Image Credits: Andrii Yalanskyi (opens in a new window) / Getty Images
Startups that don’t directly engage their earliest customers with purpose and intention are leaving money on the table.
Creating a Customer Advisory Board (CAB) is a proven method for soliciting product ideas, testing marketing plans and turning early users into loyal brand advocates.
Before you call a CAB, read this post to find out how to identify customers who’ll contribute real insights, establish goals and “pick members who play well together.”
Best practices as a service is a key investment theme to watch in 2021
Red and white stop sign on the wall. Image Credits: Karl Tapales (opens in a new window)/ Getty Images
Identity and access management company Okta announced in a study last week that its largest customers use an average of 175 different applications to manage their operations.
Managing Editor Danny Crichton says this “explosion of creativity and expressiveness and operational latitude” offers widespread benefits, but it’s “also a recipe for disaster,” since many end users aren’t well-trained when it comes to using these tools.
This enterprise version of the Tower of Babel creates an opening for companies that offer “best practices as a service,” says Danny. “The next generation of SaaS software has to take those abecedarian building blocks and forcibly guide users to using those tools in the best possible way.”
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Extra Crunch roundup: Edtech VC survey, 5 founder mistakes, fintech liquidity, more
Edtech is so widespread, we already need more consumer-friendly nomenclature to describe the products, services and tools it encompasses.
I know someone who reads stories to their grandchildren on two continents via Zoom each weekend. Is that “edtech?”
Similarly, many Netflix subscribers sought out online chess instructors after watching “The Queen’s Gambit,” but I doubt if they all ran searches for “remote learning” first.
Edtech needs to reach beyond underfunded public school systems to become more sustainable, which is why more investors and founders are focusing on lifelong learning.
Besides serving traditional students with field trips and art classes, a maturing sector is now branching out to offer software tutors, cooking classes and singing lessons.
For our latest investor survey, Natasha Mascarenhas polled 13 edtech VCs to learn more about how “employer-led up-skilling and a renewed interest in self-improvement” is expanding the sector’s TAM.
Here’s who she spoke to:
- Deborah Quazzo, managing partner, GSV Ventures
- Ashley Bittner, founding partner, Firework Ventures (a future of work fund with portfolio companies LearnIn and TransfrVR)
- Jomayra Herrera, principal, Cowboy Ventures (a generalist fund with portfolio companies Hone and Guild Education)
- John Danner, managing partner, Dunce Capital (an edtech and future of work fund with portfolio companies Lambda School and Outschool)
- Mercedes Bent and Bradley Twohig, partners, Lightspeed Venture Partners (a multistage generalist fund with investments including Forage, Clever and Outschool)
- Ian Chiu, managing director, Owl Ventures (a large edtech-focused fund backing highly valued companies including Byju’s, Newsela and Masterclass)
- Jan Lynn-Matern, founder and partner, Emerge Education (a leading edtech seed fund in Europe with portfolio companies like Aula, Unibuddy and BibliU)
- Benoit Wirz, partner, Brighteye Ventures (an active edtech-focused venture capital fund in Europe that backs YouSchool, Lightneer and Aula)
- Charles Birnbaum, partner, Bessemer Venture Partners (a generalist fund with portfolio companies including Guild Education and Brightwheel)
- Daniel Pianko, co-founder and managing director, University Ventures (a higher ed and future of work fund that is backing Imbellus and Admithub)
- Rebecca Kaden, managing partner, Union Square Ventures (a generalist fund with portfolio companies including TopHat, Quizlet, Duolingo)
- Andreata Muforo, partner, TLCom Capital (a generalist fund backing uLesson)
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In other news: Extra Crunch Live, a series of interviews with leading investors and entrepreneurs, returns next month with a full slate of guests. This year, we’re adding a new feature: Our guests will analyze pitch decks submitted by members of the audience to identify their strengths and weaknesses.
If you’d like an expert eye on your deck, please sign up for Extra Crunch and join the conversation.
Thanks very much for reading! I hope you have a fantastic weekend — we’ve all earned it.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
13 investors say lifelong learning is taking edtech mainstream
Image Credits: Bryce Durbin
Rising African venture investment powers fintech, clean tech bets in 2020
Image Credits: Nigel Sussman (opens in a new window)
After falling into yesterday’s wild news cycle, Alex Wilhelm returned to The Exchange this morning with a close look at venture capital activity across Africa in 2020.
“Comparing aggregate 2020 figures to 2019 results, it appears that last year was a somewhat robust year for African startups, albeit one with fewer large rounds,” he found.
For more context, he interviewed Dario Giuliani, the director of research firm Briter Bridges, which focuses on emerging markets in Africa, Asia and Latin America.
Talent and capital are shifting cybersecurity investors’ focus away from Silicon Valley
Image Credits: MCCAIG (opens in a new window) / Getty Images
New cybersecurity ecosystems are popping up in different parts of the world.
Some of of that growth has been fueled by an exodus from the Bay Area, but many early-stage security startups already have deep roots in East Coast cities like Boston and New York.
In the United Kingdom and Europe, government innovation programs have helped entrepreneurs close higher numbers of Series A and B rounds.
Investor interest and expertise is migrating out of Silicon Valley: This post will help you understand where it’s going.
Will Apple’s spectacular iPhone 12 sales figures boost the smartphone industry in 2021?
Image Credits: NurPhoto (opens in a new window) / Getty Images
Today’s smartphones are unfathomably feature-rich and durable, so it’s logical that sales have slowed.
A phone purchased 18 months ago is probably “good enough” for many consumers, especially in times of economic uncertainty.
Then again, of the record $111.4 billion in revenue Apple earned last quarter, $65.68 billion came from phone sales, largely driven by the release of the iPhone 12.
Even though “Apple’s success this quarter was kind of a perfect storm,” writes Hardware Editor Brian Heater, “it’s safe to project a rebound for the industry at large in 2021.”
The 5 biggest mistakes I made as a first-time startup founder
Image Credits: Randy Faris (opens in a new window) / Getty Images
Finmark co-founder and CEO Rami Essaid wrote a post for Extra Crunch that candidly describes the traps he laid for himself that made him a less-effective entrepreneur.
As someone who’s worked closely with founders at several startups, each of the points he raised resonated deeply with me.
In my experience, many founders have a hard time delegating, which can quickly create cultural and operational problems. Rami’s experience bears this out:
“I became a human GPS: People could follow my directions, but they struggled to find the way themselves. Independent thinking suffered.”
Dear Sophie: How can I sponsor my mom and stepdad for green cards?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I just got my U.S. citizenship! My husband and I want to bring my mom and her husband to the U.S. to help us take care of our preschooler and toddler.
My biological dad passed away several years ago when I was an adult and my mom has since remarried.
— Appreciative in Aptos
Check out the amazing speakers joining us on Extra Crunch Live in February
Next month, Extra Crunch Live returns with a lineup of guests who are extremely well-qualified to discuss early-stage startups.
Each Wednesday at noon PPST/3 p.m. EST, join a conversation with founders and the investors who backed their companies:
February 3:
Gaurav Gupta (Lightspeed Venture Partners) + Raj Dutt (Grafana Labs)
February 10:
Aydin Senkut (Felicis Ventures) + Kevin Busque (Guideline)
February 17:
Steve Loughlin (Accel) + Jason Boehmig (Ironclad)
February 24:
Matt Harris (Bain Capital) + Isaac Oates (Justworks)
Also, we’re adding a new feature to Extra Crunch Live — our guests will offer advice and feedback on pitch decks submitted by Extra Crunch members in the audience!
10 VCs say interactivity, regulation and independent creators will reshape digital media in 2021
Image Credits: Aleksandar Nakic (opens in a new window) / Getty Images
Since the pandemic disrupted the social rhythms of work and school, many of us have compensated by changing our relationship to digital media.
For instance, I purchased a new sofa and thicker living room curtains several months ago when I realized we have no idea when movie theaters will reopen.
Last year, podcast sponsors spent almost $800 million to reach listeners, but ad revenue is estimated to surpass $1 billion this year. Clearly, I’m not the only person who used a discount code to buy a new product in 2020.
At this point, I can scarcely keep track of the multiple streaming platforms I’m subscribed to, but a new voice-activated remote control that comes with my basic cable plan makes it easier to browse my options.
Media reporter Anthony Ha spoke to10 VCs who invest in media startups to learn more about where they see digital media heading in the months ahead. For starters, how much longer can we expect traditional advertising models to persist?
And in a world with hundreds of channels, how are creators supposed to compete for our attention? What sort of discovery tools can we expect to help us navigate between a police procedural set in a Scandinavian village and a 90s sitcom reboot?
Here’s who Anthony interviewed:
- Daniel Gulati, founding partner, Forecast Fund
- Alex Gurevich, managing director, Javelin Venture Partners
- Matthew Hartman, partner, Betaworks Ventures
- Jerry Lu, senior associate, Maveron
- Jana Messerschmidt, partner, Lightspeed Venture Partners
- Michael Palank, general partner, MaC Venture Capital (with additional commentary from MaC’s Marlon Nichols)
- Pär-Jörgen Pärson, general partner, Northzone
- M.G. Siegler, general partner, GV
- Laurel Touby, managing director, Supernode Ventures
- Hans Tung, managing partner, GGV Capital
Normally, we list each investor’s responses separately, but for this survey, we grouped their responses by question. Some readers say they use our surveys to study up on an individual VC before pitching them, so let us know which format you prefer.
Does a $27 billion or $29 billion valuation make sense for Databricks?
Image Credits: Nigel Sussman (opens in a new window)
Data analytics platform Databricks is reportedly raising new capital that could value the company between $27 billion and $29 billion.
By the end of Q3 2020, Databricks had surpassed a $350 million run rate — a $150 million YoY increase, reports Alex Wilhelm.
At the time, he described the company as “an obvious IPO candidate” with “broad private-market options.”
Which begs the question: “Can we come up with a set of numbers that help make sense of Databricks at $27 billion?”
End-to-end operators are the next generation of consumer business
Image Credits: Natalia Timchenko (opens in a new window) / Getty Images
Rapid shifts in the way we buy goods and services disrupted old-school marketplaces like local newspapers and the Yellow Pages.
Today, I can use my phone to summon a plumber, a week’s worth of groceries or a ride to a doctor’s office.
End-to-end operators like Netflix, Peloton and Lemonade take a lot of time and energy to reach scale, but “the additional capital required is often outweighed by the value captured from owning the entire experience.”
Unpacking Chamath Palihapitiya’s SPAC deals for Latch and Sunlight Financial
Image Credits: Nigel Sussman (opens in a new window)
On January 25, Social Capital CEO Chamath Palihapitiya tweeted that he was making two blank-check deals.
Enterprise SaaS company Latch makes keyless entry systems; Sunlight Financial helps consumers finance residential solar power installations.
“There are nearly 300 SPACs in the market today looking for deals,” noted Alex Wilhelm, who unpacked both transactions.
“There’s no escaping SPACs for a bit, so if you are tired of watching blind pools rip private companies into the public markets, you are not going to have a very good next few months.”
Fintechs could see $100 billion of liquidity in 2021
Image Credits: dan tarradellas (opens in a new window) / Getty Images
On Monday, we published the Matrix Fintech Index, a three-part study that weighs liquidity, public markets and e-commerce trends to create a snapshot of an industry in perpetual flux.
For four years running, the S&P 500 and incumbent financial services companies have been outperformed by companies like Afterpay, Square and Bill.com.
In light of steady VC investment, increasing consumer adoption and a crowded IPO pipeline, “fintech represents one of the most exciting major innovation cycles of this decade.”
Drupal’s journey from dorm-room project to billion-dollar exit
Image Credits: Acquia
On January 15, 2001, then-college student Dries Buytaert released Drupal 1.0.0, an open-source content-management platform. At the time, about 7% of the world’s population was online.
After raising more than $180 million, Buytaert exited to Vista Equity Partners for $1 billion in 2019.
Enterprise reporter Ron Miller interviewed Buytaert to learn more about his 18-year journey.
“His story is compelling, but it also offers lessons for startup founders who also want to build something big,” says Ron.
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Extra Crunch roundup: Digital health VC survey, edtech M&A, deep tech marketing, more
I had my first telehealth consultation last year, and there’s a high probability that you did, too. Since the pandemic began, consumer adoption of remote healthcare has increased 300%.
Speaking as an unvaccinated urban dweller: I’d rather speak to a nurse or doctor via my laptop than try to remain physically distanced on a bus or hailed ride traveling to/from their office.
Even after things return to (rolls eyes) normal, if I thought there was a reliable way to receive high-quality healthcare in my living room, I’d choose it.
Clearly, I’m not alone: a May 2020 McKinsey study pegged yearly domestic telehealth revenue at $3 billion before the coronavirus, but estimated that “up to $250 billion of current U.S. healthcare spend could potentially be virtualized” after the pandemic abates.
That’s a staggering number, but in a category that includes startups focused on sexual health, women’s health, pediatrics, mental health, data management and testing, it’s clear to see why digital-health funding topped more than $10 billion in the first three quarters of 2020.
Drawing from The TechCrunch List, reporter Sarah Buhr interviewed eight active health tech VCs to learn more about the companies and industry verticals that have captured their interest in 2021:
- Bryan Roberts and Bob Kocher, partners, Venrock
- Nan Li, managing director, Obvious Ventures
- Elizabeth Yin, general partner, Hustle Fund
- Christina Farr, principal investor and health tech lead, OMERS Ventures
- Ursheet Parikh, partner, Mayfield Ventures
- Nnamdi Okike, co-founder and managing partner, 645 Ventures
- Emily Melton, founder and managing partner, Threshold Ventures
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Since COVID-19 has renewed Washington’s focus on healthcare, many investors said they expect a friendly regulatory environment for telehealth in 2021. Additionally, healthcare providers are looking for ways to reduce costs and lower barriers for patients seeking behavioral support.
“Remote really does work,” said Elizabeth Yin, general partner at Hustle Fund.
We’ll cover digital health in more depth this year through additional surveys, vertical reporting, founder interviews and much more.
Thanks very much for reading Extra Crunch this week; I hope you have a relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
8 VCs agree: Behavioral support and remote visits make digital health a strong bet for 2021
Image Credits: Luis Alvarez (opens in a new window) / Getty Images
Lessons from Top Hat’s acquisition spree
Image Credits: Bryce Durbin
In the last year, edtech startup Top Hat acquired three publishing companies: Fountainhead Press, Bludoor and Nelson HigherEd.
Natasha Mascarenhas interviewed CEO and founder Mike Silagadze to learn more about his content acquisition strategy, but her story also discussed “some rumblings of consolidation and exits in edtech land.”
How VCs invested in Asia and Europe in 2020
Image Credits: Nigel Sussman (opens in a new window)
Last year, U.S.-based VCs invested an average of $428 million each day in domestic startups, with much of the benefits flowing to fintech companies.
This morning, Alex Wilhelm examined Q4 VC totals for Europe, which had its lowest deal count since Q1 2019, despite a record $14.3 billion in investments.
Asia’s VC industry, which saw $25.2 billion invested across 1,398 deals is seeing “a muted recovery,” says Alex.
“Falling seed volume, lots of big rounds. That’s 2020 VC around the world in a nutshell.”
Decrypted: With more SolarWinds fallout, Biden picks his cybersecurity team
Image Credits: Treedeo (opens in a new window) / Getty Images
In this week’s Decrypted, security reporter Zack Whittaker covered the latest news in the unfolding SolarWinds espionage campaign, now revealed to have impacted the U.S. Bureau of Labor Statistics and Malwarebytes.
In other news, the controversy regarding WhatsApp’s privacy policy change appears to be driving users to encrypted messaging app Signal, Zack reported. Facebook has put changes at WhatsApp on hold “until it could figure out how to explain the change without losing millions of users,” apparently.
Hot IPOs hang onto gains as investors keep betting on tech
Image Credits: Nigel Sussman (opens in a new window)
A big IPO debut is a juicy topic for a few news cycles, but because there’s always another unicorn ready to break free from its corral and leap into the public markets, it doesn’t leave a lot of time to reflect.
Alex studied companies like Lemonade, Airbnb and Affirm to see how well these IPO pop stars have retained their value. Not only have most held steady, “many have actually run up the score in the ensuing weeks,” he found.
Dear Sophie: What are Biden’s immigration changes?
Image Credits: Bryce Durbin / TechCrunch
Dear Sophie:
I work in HR for a tech firm. I understand that Biden is rolling out a new immigration plan today.
What is your sense as to how the new administration will change business, corporate and startup founder immigration to the U.S.?
—Free in Fremont
Hello, Extra Crunch community!
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I began my career as an avid TechCrunch reader and remained one even when I joined as a writer, when I left to work on other things and now that I’ve returned to focus on better serving our community.
I’ve been chatting with some of the folks in our community and I’d love to talk to you, too. Nothing fancy, just 5-10 minutes of your time to hear more about what you want to see from us and get some feedback on what we’ve been doing so far.
If you would be so kind as to take a minute or two to fill out this form, I’ll drop you a note and hopefully we can have a chat about the future of the Extra Crunch community before we formally roll out some of the ideas we’re cooking up.
Drew Olanoff
@yoda
In 2020, VCs invested $428m into US-based startups every day
Image Credits: Nigel Sussman (opens in a new window)
Last year was a disaster across the board thanks to a global pandemic, economic uncertainty and widespread social and political upheaval.
But if you were involved in the private markets, however, 2020 had some very clear upside — VCs flowed $156.2 billion into U.S.-based startups, “or around $428 million for each day,” reports Alex Wilhelm.
“The huge sum of money, however, was itself dwarfed by the amount of liquidity that American startups generated, some $290.1 billion.”
Using data sourced from the National Venture Capital Association and PitchBook, Alex used Monday’s column to recap last year’s seed, early-stage and late-stage rounds.
How and when to build marketing teams at deep tech companies
Image Credits: Andy Roberts (opens in a new window) / Getty Images
Building a marketing team is one of the most opaque parts of spinning up a startup, but for a deep tech company, the stakes couldn’t be higher.
How can technical founders working on bleeding-edge technology find the right people to tell their story?
If you work at a post-revenue, early-stage deep tech startup (or know someone who does), this post explains when to hire a team, whether they’ll need prior industry experience, and how to source and evaluate talent.
Bustle CEO Bryan Goldberg explains his plans for taking the company public
Bustle Digital Group CEO Bryan Goldberg. Image Credits: Bustle Digital Group
Senior Writer Anthony Ha interviewed Bustle Digital Group CEO Bryan Goldberg to get his thoughts on the state of digital media.
Their conversation covered a lot of ground, but the biggest news it contained focuses on Goldberg’s short-term plans.
“Where do I want to see the company in three years? I want to see three things: I want to be public, I want to see us driving a lot of profits and I want it to be a lot bigger, because we’ve consolidated a lot of other publications,” he said.
It may not be as glamorous as D2C, but beauty tech is big money
Image Credits: Laia Divols Escude/EyeEm (opens in a new window) / Getty Images
The U.S. Federal Trade Commission is not a huge fan of personal-care D2C brands merging with traditional consumer product companies.
This month, razor startup Billie and Proctor & Gamble announced they were calling off their planned merger after the FTC filed suit.
For similar reasons, Edgewell Personal Care dropped its plans last year to buy Harry’s for $1.37 billion.
In a harsher regulatory environment, “the path to profitability has become a more important part of the startup story versus growth at all costs,” it seems.
Twilio CEO says wisdom lies with your developers
SAN FRANCISCO, CA – SEPTEMBER 12: Founder and CEO of Twilio Jeff Lawson speaks onstage during TechCrunch Disrupt SF 2016 at Pier 48 on September 12, 2016 in San Francisco, California. Image Credits: Steve Jennings/Getty Images for TechCrunch
Companies that build their own tools “tend to win the hearts, minds and wallets of their customers,” according to Twilio CEO Jeff Lawson.
In an interview with enterprise reporter Ron Miller for his new book, “Ask Your Developer,” Lawson says founders should use developer teams as a sounding board when making build-versus-buy decisions.
“Lawson’s basic philosophy in the book is that if you can build it, you should,” says Ron.
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Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more
Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.
The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.
Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.
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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.
Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.
In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.
In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!
Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.
If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Rapid growth in 2020 reveals OKR software market’s untapped potential
Image Credits: Nigel Sussman (opens in a new window)
After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.
Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.
A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.
To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:
- Gthmhub
- Perdoo
- WorkBoard
- Ally.io
- Koan
- WeekDone
“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.
5 consumer hardware VCs share their 2021 investment strategies
Image Credits: Ezra Shaw (opens in a new window)
For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:
- Hans Tung, managing partner, GGV Capital
- Dayna Grayson, co-founder and general partner, Construct Capital
- Cyril Ebersweiler, general partner, SOSV
- Bilal Zuberi, partner, Lux Capital
- Rob Coneybeer, managing director, Shasta Ventures
“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.
Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.
A theory about the current IPO market
Digital generated image of abstract multi colored curve chart on white background.
If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.
As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.
TL;DR? “Lots of demand, little supply, boom goes the price.”
Poshmark prices IPO above range as public markets continue to YOLO startups
Image Credits: Nigel Sussman (opens in a new window)
Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.
In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.
Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.
Will startup valuations change given rising antitrust concerns?
financial stock market graph on technology abstract background represent risk of investment
This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.
Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.
Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.
Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”
Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?
Image Credits: Sophie Alcorn
Dear Sophie:
I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.
I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.
How will this new process work?
— Positive in Palo Alto
Venture capitalists react to Visa-Plaid deal meltdown
OLYMPUS DIGITAL CAMERA
After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:
- Anshu Sharma, co-founder and CEO, SkyflowAPI
- Amy Cheetham, principal, Costanoa Ventures
- Sheel Mohnot, co-founder, Better Tomorrow Ventures
- Lucas Timberlake, partner, Fintech Ventures
- Nico Berardi, founder and general partner, ANIMO Ventures
- Allen Miller, VC, Oak HC/FT
- Sri Muppidi, VC, Sierra Ventures
- Christian Lassonde, VC, Impression Ventures
Plaid CEO touts new ‘clarity’ after failed Visa acquisition
Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images
Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.
Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.
2021: A SPAC odyssey
Image Credits: Nigel Sussman (opens in a new window)
In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.
To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:
- Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
- Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”
Flexible VC: A new model for startups targeting profitability
12 ‘flexible VCs’ who operate where equity meets revenue share
Spotlit Multi Colored Coil Toy in the Dark.
Growth-stage startups in search of funding have a new option: “flexible VC” investors.
An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”
In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.
These 5 VCs have high hopes for cannabis in 2021
Image Credits: Anton Petrus (opens in a new window) / Getty Images
For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.
Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:
- Morgan Paxhia, managing director, Poseidon Investment Management
- Emily Paxhia, managing partner, Poseidon Investment Management
- Anthony Coniglio, CEO, NewLake Capital
- Matt Shalhoub, managing partner, Green Acre Capital
- Jerel Registre, managing director, Curio WMBE Fund
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