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TechCrunch Early Stage is coming up soon, and all attendees can get 3 months of free access to Extra Crunch as a part of a ticket purchase. Extra Crunch is our members-only community focused on founders and startup teams.
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Extra Crunch unlocks access to our investor surveys, private market analysis, and in-depth interviews with experts on fundraising, growth, monetization and other core startup topics. Get feedback on your pitch deck through Extra Crunch Live, and stay informed with our members-only Extra Crunch newsletter. Other benefits include an improved TechCrunch.com experience and savings on software services from AWS, Crunchbase, and more.
Learn more about Extra Crunch benefits here, and buy your TC Early Stage tickets here.
What is TC Early Stage?
TC Early Stage is a two-day virtual event where early-stage founders can take part in highly interactive group sessions with top investors and ecosystem experts. This particular Early Stage event has a focus on marketing and fundraising.
The event will take place July 8-9, and we’d love to have you join.
View the event agenda here, and purchase tickets here.
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2 years in, Extra Crunch is helping readers build and grow companies around the world
Remote-first startups were still controversial in Silicon Valley when we launched Extra Crunch two years ago today. Back then, if you can recall, the rest of the world was not even sure how all those unicorns were going to do on the public markets.
Today, Silicon Valley resides on the cloud and is publicly traded. We’ve covered the stunning changes, and as we help founders navigate the path from idea to first check to IPO, we also tripled the number of Extra Crunch members.
Take 20% off the price of a 2-year Extra Crunch membership
Offer expires Monday, February 15, 2021
Now, as the world glimpses a brighter, post-pandemic future, we are doubling down on the news and analysis that’s helped many early-stage companies make better decisions.
As Extra Crunch enters its third year, we’re putting our foot on the gas so we can bring you more:
- Fresh analysis about today’s most dynamic tech industries.
- Surveys of top investors about trends in your sector.
- In-depth profiles of top companies from their earliest days.
- Expanded live programming.
We’ll also publish more articles with inside tips from industry experts to help you solve nonsoftware problems that face every company, like fundraising, growth and hiring, as well as deep dives into different industry sectors and pre-public companies.
We’re tying all of these efforts back in with the editorial coverage and event plans at TechCrunch. And to make this holistic approach truly successful, we’re ramping up efforts to engage and expand the Extra Crunch community.
In recent weeks, reporters and editors have appeared on Clubhouse and Discord to discuss their work with readers. We’re planning to expand this outreach, so stay tuned!
To show our appreciation for your support, we’re offering a 20% discount on two-year subscriptions through Monday, February 15 to celebrate our second anniversary. If you’re already a member, you can renew at a discount.
If you’re not a Extra Crunch member yet, we hope you’ll join us.
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Extra Crunch’s top 10 stories of 2020
I edited hundreds of stories in 2020, so choosing my favorites would be an exercise in futility.
Instead, I’ve tried to gather a sample of Extra Crunch stories that taught me something new. (Which means this top 10 list betrays my ignorance, a humbling admission for a know-it-all like myself.)
While narrowing down the field of candidates, I realized that we’re covering each of the topics on this list in greater depth next year. We already have stories in the works about no-code software, the emergence of edtech, proptech and B2B marketplaces, to name just a few.
Some readers are skeptical about paywalls, but without being boastful, Extra Crunch is a premium product, just like Netflix or Disney+. I know: We’re not as entertaining as a historical drama about the reign of Queen Elizabeth II or a space western about a bounty hunter.
But, speaking as someone who’s worked at several startups, Extra Crunch stories contain actionable information you can use to build a company and/or look smart in meetings — and that’s worth something.
Thanks for reading, and I hope you have a very happy new year.
Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription
1. The VCs who founders love the most
Image Credits: Bryce Durbin/TechCrunch
Managing Editor Danny Crichton spearheaded the development of The TechCrunch List earlier this year to help seed-stage founders connect with VCs who write first checks.
The TechCrunch List has no paywall and contains details and recommendations about more than 400 investors across 22 verticals. Once it launched, Danny crunched the data to pick out 11 investors for which “founders were particularly effusive in their praise.”
2. API startups are so hot right now
Image Credits: Juana Mari Moya(opens in a new window)/Getty Images (Image has been modified)
Alex Wilhelm uses his weekday column The Exchange to keep a close eye on “private companies, public markets and the gray space in between,” but one effort stood out: An overview of six API-based startups that were “raising capital in rapid-fire fashion” when many companies were trying to find their COVID-19 footing.
For me, this was particularly interesting because it helped me better understand that an optimal pricing structure can be key to a SaaS company’s initial success.
3. ‘No code’ will define the next generation of software
4. Tracking the growth of low-code/no-code startups
Image Credits: Richard Drury(opens in a new window)/Getty Images
Two stories about the advent of no-code/low-code software that we ran in July take the third and fourth position on this list.
I have been a no-code user for some time: Using Zapier to send automated invitations via Slack for group lunches was a real time-saver in the pre-pandemic days.
“Enterprise expenditure on custom software is on track to double from $250 billion in 2015 to $500 billion in 2020,” so we’ll definitely be diving deeper into this topic in the coming months.
5. ‘Edtech is no longer optional’: Investors’ deep dive into the future of the market
Image Credits: PM Images(opens in a new window)/Getty Images
Natasha Mascarenhas picked up TechCrunch’s edtech beat when she joined us just before the pandemic. Twelve months later, she’s an expert on the topic.
In July, she surveyed six edtech investors to “get into the macro-impact of rapid change on edtech as a whole.”
- Ian Chiu, Owl Ventures
- Shauntel Garvey and Jennifer Carolan, Reach Capital
- Jan Lynn-Matern, Emerge Education
- David Eichler, TCV
- Jomayra Hererra, Cowboy Ventures
6. B2B marketplaces will be the next billion-dollar e-commerce startups
Image Credits: Kmatta(opens in a new window)/Getty Images
In 2018, B2B marketplaces saw an estimated $680 billion in sales, but that figure is expected to reach $3.6 trillion by 2024.
As companies shifted their purchasing online, these platforms are adding a range of complementary services like payment management, targeted advertising and logistics while also hardening their infrastructure.
7. Facebook’s former PR chief explains why no one is paying attention to your startup
Caryn Marooney, right, vice president of technology communications at Facebook, poses for a picture on the red carpet for the 6th annual 2018 Breakthrough Prizes at Moffett Federal Airfield, Hangar One in Mountain View, Calif., on Sunday, Dec. 3, 2017. Image Credits: Nhat V. Meyer/Bay Area News Group
Reporter Lucas Matney spoke to Caryn Marooney in August at TechCrunch Early Stage about how startup founders who hope to expand their reach need to do a better job of connecting with journalists.
“People just fundamentally aren’t walking around caring about this new startup,” she said. “Actually, nobody does.”
Speaking as someone who’s been on both sides of this equation, I most appreciated her advice about focusing on “simplicity and staying consistent” when it comes to messaging.
“Don’t let the complexity of your intellect cloud what needs to be simple,” she said.
8. You need a minimum viable company, not a minimum viable product
Image Credits: alvarez(opens in a new window)/Getty Images
In a guest post for Extra Crunch, seed-stage VC Ann Miura-Ko shared some of what she’s learned about “the magic of product-market fit,” which she termed “the defining quality of an early-stage startup.”
According to Miura-Ko, a co-founding partner at Floodgate, startups can only reach this stage when their business model, value propositions and ecosystem are in balance.
Using lessons learned from her portfolio companies like Lyft, Refinery29 and Twitch, this article should be required reading for every founder. As one commenter posted, “I read this thinking, ‘I need to add some slides to my deck!’”
9. 6 investment trends that could emerge from the COVID-19 pandemic
10 January 2020, Berlin: Doctor Olaf Göing, chief physician of the clinic for internal medicine at the Sana Klinikum Lichtenberg, tests mixed-reality 3D glasses for use in cardiology. They can thus access their patients’ medical data and visualize the finest structures for diagnostics and operation planning by hand and speech. The Sana Clinic is, according to its own statements, the first hospital in the world to use this novel technology in cardiology. Image Credits: Jens Kalaene/picture alliance via Getty Images
During “the early innings of this period of uncertainty,” an article we published offered several predictions about investor behavior in the U.S.
Although we posted this in April, each of these forecasts seem spot-on:
- Future of work: promoting intimacy and trust.
- Healthcare IT: telemedicine and remote patient monitoring.
- Robotics and supply chain.
- Cybersecurity.
- Education = knowledge transfer + social + signaling.
- Fintech.
10. Construction tech startups are poised to shake up a $1.3-trillion-dollar industry
Image Credits: Steve Proehl(opens in a new window)/Getty Images
I’ve always found the concept of total addressable market (TAM) hard to embrace fully — the arrival of a single disruptive company could change an industry’s TAM in a week.
However, several factors are combining to transform the construction industry: high fragmentation, poor communication, a skilled labor shortage and a lack of data transparency.
Startups that help builders manage aspects like pre-construction, workflow and site visualization are making huge strides, but because “construction firms spend less than 2% of annual sales volume on IT,” the size of this TAM is not at all speculative.
11. Don’t let VCs be the gatekeepers of your success
Image Credits: PM Images(opens in a new window)/Getty Images
As a bonus, I’m including a TechCrunch op-ed written by insurtech founder Kevin Henderson that describes the myriad challenges he has faced as a Black entrepreneur in Silicon Valley.
Some of the discussions about the lack of diversity in tech can feel abstract, but his post describes its concrete consequences. For starters: he’s never had an opportunity to pitch at a VC firm where there was another Black person in the room.
“Black founders have a better chance playing pro sports than they do landing venture investments,” says Henderson.
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Extra Crunch roundup: ‘Nightmare’ security breach, Poshmark’s IPO, crypto boom, more
The rest of the world may be slowing down as we prepare for Christmas and the new year, but we are not taking our foot off the gas.
Alex Wilhelm keeps a close watch on the public markets in his column The Exchange, but this week, he branched out to look at some of the metrics underpinning soaring cryptocurrency prices and turned his gaze on StockX, the consumer reseller marketplace that just raised $275 million in a Series E that values the company at approximately $2.8 billion.
“Selling a tenth of your company for north of a quarter-billion may be somewhat common among late-stage software startups with tremendous growth,” he says, but “don’t laugh — the round actually makes pretty OK sense.”
Our staff continues to file their end-of-year stories: We ran a post this morning by Manish Singh that studies India’s massive total addressable market for retail. The nation has more than 60 million mom-and-pop neighborhood stores, and companies like Walmart and Amazon are eager to offer help with payments, logistics and inventory management — as are hundreds of native and foreign startups.
In an interview with author and MIT professor Sinan Aral, Managing Editor Danny Crichton discussed some of the debates currently swirling around the desire in some quarters to regulate social media platforms. In “The Hype Machine,” Aral explores topics like neuroscience, economics and misinformation before offering potential solutions for resolving what he calls “a full-blown social media crisis.”
The stories that follow are an overview of Extra Crunch from the last five days. Complete articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.
Thank you very much for reading Extra Crunch this week; I hope you have a safe, relaxing weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Unpacking Poshmark’s IPO filing
Image Credits: Nigel Sussman (opens in a new window)
How did fashion marketplace Poshmark go from posting regular losses in 2019 to generating net income in 2020?
After the company filed a public S-1 last night, Alex Wilhelm pondered the question this morning in The Exchange.
Like many e-commerce platforms, Poshmark saw a surge in activity during the COVID-19 pandemic, but it also slashed its marketing spend, which helped boost profits. As the cash-rich company prepares its road show, “Poshmark is valuable,” Alex concluded.
“How valuable the market will decide. But who will it enrich with its final pricing decision?”
Just how bad is that hack that hit US government agencies?
WASHINGTON, D.C. – APRIL 22, 2018: A statue of Albert Gallatin, a former U.S. Secretary of the Treasury, stands in front of The Treasury Building in Washington, D.C. The National Historic Landmark building is the headquarters of the United States Department of the Treasury. (Photo by Robert Alexander/Getty Images)
The breach of FireEye and SolarWinds by hackers working on behalf of Russian intelligence is “the nightmare scenario that has worried cybersecurity experts for years,” reports Zack Whittaker.
The intrusion began several months ago, but news of the breach wasn’t made public until this week.
“Given that potential victims include defense contractors, telecoms, banks, and tech companies, the implications for critical infrastructure and national security, although untold at this point, could be significant,” said Erin Kenneally, director of cyber risk analytics at Guidewire, an industry platform for insurance carriers.
In his analysis for Extra Crunch, Zack breaks down the rippling effects of supply-chain attacks that can compromise platforms like SolarWinds, which is used by more than 420 of the Fortune 500.
From startups to Starbucks: The embedded API opportunity
Image Credits: dowell (opens in a new window) / Getty Images
Embedded finance connects services like payment processing with everyday activities like grabbing a coffee before unlocking an e-scooter.
“The ability to be at the right place at the right time, supporting consumers and merchants alike, where they want it, how they want it and when they want it — cannot be understated,” says Simon Wu, an investment director with Cathay Innovation.
In a post that identifies embedded finance’s top providers and enablers, he offers advice for startups and established brands that are hoping to “earn and build customer loyalty while generating new revenue streams.”
Is rising usage driving crypto’s recent price boom?
Image Credits: Nigel Sussman (opens in a new window)
Bitcoin is at an all-time high.
CoinMarketCap reports that crypto market values have reached almost $659 billion; that figure was just $140 billion in March 2020.
“These gains have created a huge amount of wealth for crypto holders,” Alex Wilhelm wrote yesterday.
To get a better handle on why crypto values are sky-bound, he parsed some basic industry metrics, including the number of unique bitcoin addresses, fees paid and transactions per day.
“Do the price gains make sense in the short term? Who knows,” he wrote, “but they are not based on nothing.”
2020 was a disaster, but the pandemic put security in the spotlight
Stage Light on Black. Image Credits: Fotograzia / Getty Images
For his year-end Extra Crunch story, security reporter Zack Whittaker looked back at the myriad security challenges and vulnerabilities COVID-19 brought to the fore.
The hacks of Fire Eyes and SolarWinds were just one link in the chain: How well is your company prepared to deal with file-encrypting malware, hackers backed by nation-states or employees accessing secure systems from home?
“With 2020 wrapping up, much of the security headaches exposed by the pandemic will linger into the new year,” says Zack.
Inside Zoox’s six-year ride from prototype to product
Zoox Fully Autonomous, All-electric Robotaxi. Image Credits: Zoox
After six years of research and development, autonomous vehicle company Zoox this week unveiled an electric robotaxi that can carry four people at a maximum speed of 75 miles per hour.
Automotive writer Kirsten Korosec interviewed Zoox co-founder and CTO Jesse Levinson to learn more about the vehicle’s development and how the company overcame a series of technical and legal challenges.
“I would say that if you have a big idea and you’re confident that it makes sense, you should at least explore the idea, rather than giving up because the current regulations aren’t designed for it,” said Levinson.
Kirsten only had 15 minutes to interview Levinson, but this comprehensive interview covers topics like regulatory compliance, Zoox’s relationship with parent company Amazon and the highest (and lowest) moments he experienced along the way.
Pluralsight $3.5B deal signals a matured edtech market
Fairy dust flying in gold light rays. Computer-generated abstract raster illustration. Image Credits: gonin / Wikimedia Commons
In one of the largest enterprise acquisitions of 2020, Visa Equity Partners this week purchased Utah-based edtech startup Pluralsight for $3.5 billion.
According to the entrepreneurs and investors reporter Natasha Mascarenhas spoke to, this deal “shows the strength of edtech’s capital options as the pandemic continues.”
“What’s happening in edtech is that capital markets are liquidating,” a major change from “the old days where the options to exit were very narrow,” says Deborah Quazzo, a managing partner at GSV Advisors and seed investor in Pluralsight.
Dear Sophie: How did immigration change for startup founders in 2020?
Image Credits: Sophie Alcorn
Dear Sophie:
I’m on an F1 OPT and am about to incorporate a startup with my two American co-founders.
What were the biggest immigration changes in 2020 affecting us?
—Ambitious in Albany
How to pick an investor in good or bad times
High angle view of young man walking towards white doorways on blue background Image Credits: Klaus Vedfelt / Getty Images
Founders and the VCs who back them may not be friends, but they’re usually friendly.
Investors are on a first-name basis with entrepreneurs from their portfolio companies and frequently have candid conversations with them about life, work and the world in general. In the before times, they might even have shared a meal or attended a baseball game together.
But make no mistake, it is a top-down relationship — the investor will always have the upper hand. When an entrepreneur accepts a check, they are hiring their next boss.
In an Extra Crunch guest post, Quiq CEO and founder Mike Myer poses two questions for founders who are considering a new relationship with a VC:
- How can the investor help the business?
- What’s the risk that the investor will hurt the business?
From India’s richest man to Amazon and 100s of startups: The great rush to win neighborhood stores
NEW DELHI, INDIA – 2011/12/18: Rice is sold at a night market in Paharganj, the urban suburb opposite New Delhi Railway Station. (Photo by Frank Bienewald/LightRocket via Getty Images)
In India, about 90% of consumers buy their everyday goods from neighborhood-based kirana stores instead of supermarkets.
As a result, U.S. retail giants like Walmart and Amazon have adopted an “if you can’t beat them, join them” approach, offering the nation’s 60 million mom-and-pop shops software for inventory control, payments and e-commerce.
India’s retail market will be worth an estimated $1.3 trillion by 2025, but e-commerce represents just 3% of that activity today, reports Manish Singh.
For his final Extra Crunch story of 2020, he looked at the startups and major players who are hoping to carve out their niche in one of the world’s largest retail ecosystems.
ClickUp CEO talks hiring, raising and scaling in the white-hot productivity space
Image Credits: PM Images / Getty Images
Earlier this year, business productivity software startup ClickUp raised a $35 million Series A.
Now, just six months later, the company has closed a second round of $100 million that values the San Diego-based startup at $1 billion.
Lucas Matney interviewed CEO Zeb Evans this week to learn more about how the company was buoyed by pandemic-based behavior shifts that doubled its customer base and multiplied revenue by a factor of nine.
“I think that the biggest thing that we’ve always focused on is shipping a new version of ClickUp every week. That is our differentiation,” he said. “We’ve kind of created these iterative cycles called natural product-market fit and it’s been hard to keep up with that.”
2020’s top 10 enterprise M&A deals totaled a staggering $165B
Multi Colored Bling Bling Dollar Sign Shape Bokeh Backdrop on Dark Background, Finance Concept. Image Credits: MirageC / Getty Images.
In 2018, the total value of the year’s 10 top enterprise mergers and acquisitions reached $87 billion; last year, that figure fell to just $40 billion.
But in 2020, 10 M&A deals accounted for $165.2 billion.
“Last year’s biggest deal — Salesforce buying Tableau for $15.7 billion — would have only been good for fifth place on this year’s list,” notes enterprise reporter Ron Miller. “And last year’s fourth largest deal, where VMware bought Pivotal for $2.7 billion, wouldn’t have even made this year’s list at all.”
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Extra Crunch roundup: Inside DoorDash’s IPO, first-person founder stories, the latest in fintech VC and more
One of my favorite series of Monty Python sketches is built around the concept of surprise:
Chapman: I didn’t expect a kind of Spanish Inquisition.
[JARRING CHORD]
[Three cardinals burst in]
Cardinal Ximénez: NOBODY expects the Spanish Inquisition!
I was reminded of this today when I needed to reschedule a few stories so we could cover DoorDash’s S-1 filing from multiple angles. First, Managing Editor Danny Crichton looked at how well the company’s co-founders and many investors stand to make out. Alex Wilhelm covered the IPO announcement in depth on TechCrunch before writing an Extra Crunch column that studied the role the COVID-19 pandemic played in the home-delivery platform’s recent growth.
Our all-hands-on-deck coverage of DoorDash’s S-1 is a good illustration of Extra Crunch’s mission: timely analysis of current and future technology trends that serves founders and investors. We have a talented team, and as today’s coverage shows, they’re just as good as they are fast.
The stories that follow are an overview of Extra Crunch from the last five days. The full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.
Thanks very much for reading Extra Crunch this week. I hope you have a great weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
What I wish I’d known about venture capital when I was a founder
Why I left edtech and got into gaming
Image Credits: Klaus Vedfelt / Getty Images
We frequently run posts by guest contributors, but two stories we published this week were written in the first person, which is a bit of a departure.
In Why I left edtech and got into gaming, Darshan Somashekar brought us inside his decision to pivot away from a sector that’s been growing hotter in 2020.
His post is a unique take on two oft-discussed categories, but it also examines one founder/investor’s thought process when it comes to evaluating new opportunities.
Andy Areitio, a partner at early-stage fund TheVentureCity, wrote What I wish I’d known about venture capital when I was a founder, a reflection on the “classic mistakes” founders tend to make when it’s time to fundraise.
“Error number one (and two) is to raise the wrong amount of money and to do it at the wrong time,” he says. “They can also put all their eggs in one basket too early. I made that mistake.”
You can find business writing that explores best practices anywhere, which is why we hunt down stories that are firmly rooted in data or personal experience (which includes success and failure).
How COVID-19 accelerated DoorDash’s business
Image Credits: DoorDash
The coronavirus pandemic looms large in DoorDash’s S-1 filing.
According to the food-delivery platform, “58% of all adults and 70% of millennials say that they are more likely to have restaurant food delivered than they were two years ago,” and “the COVID-19 pandemic has further accelerated these trends.”
As in other sectors, the pandemic didn’t wave a magic wand — instead, it hastened trends that were already in play: consumers love convenience, which means DoorDash’s gross order volume and revenue were tracking well before the virus started to shape our lives.
“It’s your call on how to balance the factors and decide whether or not to buy into the IPO, but this one is going to be big,” writes Alex Wilhelm in a supplemental edition of today’s The Exchange.
The VC and founder winners of DoorDash’s IPO
SAN FRANCISCO, CA – SEPTEMBER 05: DoorDash CEO Tony Xu speaks onstage during Day 1 of TechCrunch Disrupt SF 2018 at Moscone Center on September 5, 2018 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch)
None of us knew DoorDash would release its S-1 filing today, but Danny Crichton jumped on the story “so we can see who is raking in the returns on the country’s delivery startup champion.”
After estimating the value of the respective ownership stakes held by DoorDash’s four co-founders, he turned to the investors who participated in rounds seed through Series H.
Some growth funds are about to look very good after this IPO, and each founder is looking at hundreds of millions, he found.
But even so, their diminished haul of about $1.3 billion is “a sign of just how much dilution the co-founders took given the sheer amount of capital the company fundraised over its life.”
Fintech VC keeps getting later, larger and more expensive
Image Credits: Nigel Sussman (opens in a new window)
Investors sent stacks of cash to late-stage fintech companies in Q3 2020, but these sizable rounds may also point to shrinking opportunities for early-stage firms, reports Alex Wilhelm in this morning’s edition of The Exchange.
2020 could be a record year for fintech VC in Europe and North America, but are these “huge late-stage dollars” actually “a dampener for new fintech startups trying to get off the ground?”
Accelerators embrace change forced by pandemic
Devin Coldewey interviewed the leaders of three startup accelerators to learn more about the adaptations they’ve made in recent months:
- David Brown, founder and CEO, Techstars
- Cyril Ebersweiler, founder HAX, venture partner at SOSV
- Daniela Fernandez, founder, Ocean Solutions Accelerator
Due to travel bans, shelter-in-place orders and other unknowns, they’ve all shifted to virtual. But accelerators are intensive programs designed to indoctrinate founders and elicit brutally honest feedback in real time.
Despite the sudden shift, that boot-camp mindset is still in effect, Devin reports.
“Cutting out the commute time in a busy city leaves founders with more time for workshops, mentor matchmaking, pitch practice and other important sessions,” said Fernandez. “Everybody just has more flexibility and tranquility.”
Said Ebersweiler: “People are for some reason more participative and have more feedback than physically — it’s pretty strange.”
Greylock’s Asheem Chandna on ‘shifting left’ in cybersecurity and the future of enterprise startups
Image Credits: Greylock
In a recent interview with Greylock partner Asheem Chandna, Managing Editor Danny Crichton asked him about the buzz around no-code platforms and what’s happening in early-stage enterprise startups before segueing into a discussion about “shift left” security:
“Every organization today wants to bring software to market faster, but they also want to make software more secure,” said Chandna.
“There is a genuine interest today in making the software more secure, so there’s this concept of shift left — bake security into the software.”
Square and PayPal earnings bring good (and bad) news for fintech startups
Image Credits: Nigel Sussman (opens in a new window)
If you missed Wednesday’s The Exchange, Alex scoured earnings reports from PayPal and Square to see what the near future might hold for several fintech startups currently waiting in the wings.
Using Square and PayPal’s recent numbers for stock purchases, card usage and consumer payment activity as a proxy, he attempts to “see what we can learn, and to which unicorns it might apply.”
Conflicts in California’s trade secret laws on customer lists create uncertainty
Image Credits: jayk7 (opens in a new window)/ Getty Images
In California, non-competition agreements can’t be enforced and a court has ruled that customer contact lists aren’t trade secrets.
That doesn’t mean salespeople who switch jobs can start soliciting their former customers on their first day at the new gig, however.
Before you jump ship — or hire a salesperson who already has — read this overview of California’s trade secret laws.
“Even without litigation, a former employer can significantly hamper a departing salesperson’s career,” says Nick Saenz, a partner at Lewis & Llewellyn LLP, who focuses on employment and trade secret issues.
As public investors reprice edtech bets, what’s ahead for the hot startup sector?
Image: Bryce Durbin / TechCrunch
News of a highly effective COVID-19 vaccine appeared to drive down prices of the three best-known publicly traded edtech companies: 2U, Chegg and Kahoot saw declines of about 20%, 10% and 9%, respectively after the report.
Are COVID-19 tailwinds dissipating, or did the market make a correction because “edtech has been categorically overhyped in recent months?”
Dear Sophie: What does a Biden win for tech immigration?
Image Credits: Sophie Alcorn
What does President-elect Biden’s victory mean for U.S. immigration and immigration reform?
I’m in tech in SF and have a lot of friends who are immigrant founders, along with many international teammates at my tech company. What can we look forward to?
— Anticipation in Albany
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Extra Crunch Partner Perk: Get 6 months free of Zendesk Support and Sales CRM
We’re excited to announce an update to the Extra Crunch Partner Perk from Zendesk. Starting today, annual and two-year Extra Crunch members that are new to Zendesk, and meet their startup qualifications, can now receive six months of free access to Zendesk’s Sales CRM, in addition to Zendesk Support Suite, Zendesk Explore and Zendesk Sunshine.
Here is an overview of the program.
Zendesk is a service-first CRM company with support, sales and customer engagement products designed to improve customer relationships. This offer is only available for startups that are new to Zendesk, have fewer than 100 employees and are funded but have not raised beyond a Series B.
The Zendesk Partner Perk from Extra Crunch is inclusive of subscription fees, free for six months, after which you will be responsible for payment. Any downgrades to your Zendesk subscription will result in the forfeiture of the promotion, so please check with Zendesk first regarding any changes (startups@zendesk.com). Some add-ons such as Zendesk Talk and Zendesk Sell minutes are not included. Complete details of what’s included can be found here.
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Fall sale: Get 10% off an annual Extra Crunch membership
From now until October 25, TechCrunch readers in the U.S. can save 10% on an annual plan for Extra Crunch. If you aren’t familiar, Extra Crunch is our membership program focused on startups, founders and investors with more than 100 exclusive articles published per month.
You can claim the deal here.
Extra Crunch helps you spot technology trends and opportunities, build better startups and stay connected. It features thousands of articles, including weekly investor surveys, daily market analysis and expert interviews on fundraising, growth, monetization and other work topics.
You can also find answers to your burning questions about startups and investing through Extra Crunch Live, and stay informed with our members-only Extra Crunch newsletter. Other benefits include an improved TechCrunch.com experience, 20% off discounts to future TechCrunch events and savings on software services from DocSend, Canva, Crunchbase and more.
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Extra Crunch Friday roundup: Edtech funding surges, Poland VC survey, inside Shift’s SPAC plan, more
I live in San Francisco, but I work an East Coast schedule to get a jump on the news day. So I’d already been at my desk for a couple of hours on Wednesday morning when I looked up and saw this:
What color is the sky this morning pic.twitter.com/nt5dZp5wWc
— Walter Thompson (@YourProtagonist) September 9, 2020
As unsettling as it was to see the natural environment so transformed, I still got my work done. This is not to boast: I have a desk job and a working air filter. (People who make deliveries in the toxic air or are homeschooling their children while working from home during a global pandemic, however, impress the hell out of me.)
Not coincidentally, two of the Extra Crunch stories that ran since our Tuesday newsletter tie directly into what’s going on outside my window:
As this guest post predicted, a suboptimal attempt I made to track a delayed package using interactive voice response (IVR) indeed poisoned my customer experience, and;
Sheltering in place to avoid the novel coronavirus — and wildfire smoke — is fueling growth in the video-game industry, perhaps one factor in Unity Software Inc.’s plan to go public ahead of competitor Epic Games. In a two-part series, we looked at how the company has expanded beyond games and shared a detailed financial breakdown.
We covered a lot of ground this week, so scroll down or visit the recently redesigned Extra Crunch home page. If you’d like to receive this roundup via email each Tuesday and Friday, please click here.
Thanks very much for reading Extra Crunch; I hope you have a relaxing and safe weekend.
Walter Thompson
Senior Editor
@yourprotagonist
Bear and bull cases for Unity’s IPO
Image Credits: Nigel Sussman (opens in a new window)
In a two-part series that ran on TechCrunch and Extra Crunch, former media columnist Eric Peckham returned to share his analysis of Unity Software Inc.’s S-1 filing.
Part one is a deep dive that explains how the company has grown beyond gaming to develop multiple revenue streams and where it’s headed.
For part two on Extra Crunch, he studied the company’s numbers to offer some context for its approximately $11 billion valuation.
10 Poland-based investors discuss trends, opportunities and the road ahead
Image Credits: Edwin Remsberg (opens in a new window) / Getty Images
As we’ve covered previously, the COVID-19 pandemic is making the world a lot smaller.
Investors who focus on their own backyards still have an advantage, but the ability to set up a quick coffee meeting with a promising investor is no longer one of them.
Even though some VCs are cutting first checks after Zoom calls, regional investors’ personal networks are still a trump card. Tourists will always rely on guide books, however, which is why we continue to survey investors around the world.
A Dealroom report issued this summer determined that 97 VC funds backed more than 1,600 funding rounds in Poland last year. With over 2,400 early- and late-stage startups and 400,000 engineers in the country, it’s easy to see why foreign investors are taking notice.
Editor-at-large Mike Butcher reached out to several investors who focus on Warsaw and Poland in general to learn more about the startups fueling their interest across fintech, gaming, security and other sectors:
- Bryony Cooper, managing partner, Arkley Brinc VC
- Anna Wnuk-Błażejczyk, investor relations manager, Experior.vc
- Rafał Roszak, investment director, YouNick Mint
- Michal Mroczkowski, partner, Market One Capital
- Marcus Erken, partner, Sunfish Partners
- Borys Musielak, partner, SMOK Ventures
- Mathias Åsberg, partner, Nextgrid
- Kuba Dudek, SpeedUp Venture Capital Group
- Marcin Laczynski, partner, Next Road Ventures
- Michał Rokosz, partner, Inovo Venture Partners
We’ll run the conclusion of his survey next Tuesday.
Brands that hyper-personalize will win the next decade
Image Credits: cnythzl (opens in a new window) / Getty Images
Even for fledgling startups, creating a robust customer service channel — or at least one that doesn’t annoy people — is a reliable way to keep users in the sales funnel.
Using AI and automation is fine, but now that consumers have grown used to asking phones and smart speakers to predict the weather and read recipe instructions, their expectations are higher than ever.
If you’re trying to figure out what people want from hyper-personalized customer experiences and how you can operationalize AI to give them what they’re after, start here.
VCs pour funding into edtech startups as COVID-19 shakes up the market
Image Credits: Nigel Sussman (opens in a new window)
For today’s edition of The Exchange, Natasha Mascarenhas joined Alex Wilhelm to examine how the pandemic-fueled surge of interest in edtech is manifesting on the funding front.
The numbers suggest that funding will far surpass the sector’s high-water mark set in 2018, so the duo studied the numbers through August 31, which included a number of mega-rounds that exceeded $100 million.
“Now the challenge for the sector will be keeping its growth alive in 2021, showing investors that their 2020 bets were not merely wagers made during a single, overheated year,” they conclude.
How to respond to a data breach
Image Credits: WhataWin (opens in a new window) / Getty Images
The odds are low that someone’s going to enter my home and steal my belongings. I still lock my door when I leave the house, however, and my valuables are insured. I’m an optimist, not a fool.
Similarly: Is your startup’s cybersecurity strategy based on optimism, or do you have an actual response plan in case of a data breach?
Security reporter Zack Whittaker has seen some shambolic reactions to security lapses, which is why he turned in a post-mortem about a corporation that got it right.
“Once in a while, a company’s response almost makes up for the daily deluge of hypocrisy, obfuscation and downright lies,” says Zack.
Shift’s George Arison shares 6 tips for taking your company public via a SPAC
Image Credits: Eric Burger/EyeEm (opens in a new window) / Getty Images
There’s a lot of buzz about special purpose acquisition companies these days.
Used-car marketplace Shift announced its SPAC in June 2020, and is on track to complete the process in the next few months, so co-founder/co-CEO George Arison wrote an Extra Crunch guest post to share what he has learned.
Step one: “If you go the SPAC route, you’ll need to become an expert at financial engineering.”
Dear Sophie: What is a J-1 visa and how can we use it?
Image Credits: Sophie Alcorn
Dear Sophie:
I am a software engineer and have been looking at job postings in the U.S. I’ve heard from my friends about J-1 Visa Training or J-1 Research.
What is a J-1 status? What are the requirements to qualify? Do I need to find a U.S. employer willing to sponsor me before I apply for one? Can I get a visa? How long could I stay?
— Determined in Delhi
As direct listing looms, Palantir insiders are accelerating stock sales
Image Credits: Patrick T. Fallon/Bloomberg (opens in a new window) / Getty Images
While we count down to the September 23 premiere of NYSE: PLTR, Danny Crichton looked at the “robust secondary market” that has allowed some investors to acquire shares early.
“Given the number of people involved and the number of shares bought and sold over the past 18 months, we can get some insight regarding how insiders perceive Palantir’s value,” he writes.
Use ‘productive paranoia’ to build cybersecurity culture at your startup
Image Credits: JakeOlimb / Getty Images
Zack Whittaker interviewed Bugcrowd CTO, founder and chairman Casey Ellis about the best practices he recommends for creating a startup culture that takes security seriously.
“It’s an everyone problem,” said Ellis, who encouraged founders to promote the notion of “productive paranoia.”
Now that the threat envelope includes everyone from marketing to engineering, employees need to “internalize the fact that bad stuff can and does happen if you do it wrong,” Ellis said.
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Robinhood raises $200M more at $11.2B valuation as its revenue scales
Robinhood announced this morning that it has raised $200 million more at a new, higher $11.2 billion valuation. The new capital came as a surprise.
Astute observers of all things fintech will recall that Robinhood, a popular stock trading service, has raised capital multiple times this year, including an initial $280 million round at an $8.3 billion valuation, and a later $320 million addition that brought its valuation to $8.6 billion.
The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Those rounds, coming in May and July, now feel very passé in the sense that they are frightfully cheap compared to the price at which Robinhood just added new funds. D1 Partners — a private capital pool founded in 2018 — led the funding.
The unicorn’s new nine-figure tranche, a Series G, values the firm at $11.2 billion. A $2.6 billion bump in about a month is an impressive result, one that points to an inescapable conclusion: Robinhood is still growing, and fast.
How fast is the question. There are three things to bring up in this regard: Trading growth at Robinhood, the company’s soaring incomes from selling order flow to other financial institutions, and, oddly enough, crypto. Let’s peek at each and come up with a good why as to the new Robinhood valuation.
After all, we’re going to see an IPO from this company before the markets get less interesting, if it’s smart.
Growth
Robinhood is currently walking a line between enthusiasm that its trading volume is growing and conservatism, arguing that its userbase is not majority-comprised of day traders. The company is stuck between the need for huge revenue growth and keeping pedestrian users from tanking their net worth with unwise options bets.
It’s worth noting that Robinhood spent a lot of its funding round announcement email to TechCrunch talking about its users safety and education work. It makes sense given that we know that the company is seeing record trades, and record incomes from options themselves. After a Robinhood user killed themself after misunderstanding an options trade on the platform, Robinhood pledged to do better. We’re keeping tabs on how well it manages to meet the mark of its promise.
But back to the revenue game, let’s talk volume. On the trading front Robinhood has lots of darts. And by darts we mean daily average revenue trades. Robinhood had 4.31 million DARTs in June, with the company adding that “DARTs in Q2 more than doubled compared to Q1” in an email.
The huge gain in trading volume does not mean that most Robinhood users are day trading, but it does imply that some are given the huge implied trading volume results that the DARTs figure points to. Robinhood saw around 129,300,000 trades in June, which is 30 days. That’s a lot!
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