Extra Crunch
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Demand for fertility services persists despite COVID-19 shutdowns
In 2019, the global fertility services industry was estimated to be worth $14.8 billion with demand driven by the significant growth in the median age of first-time mothers, according to a Research & Markets report.
Gina Bartasi, founder and CEO of NYC-based fertility center Kindbody, has pointed to macroeconomic trends responsible for the industry’s consistent growth, such as the increase in single mothers by choice and the fact that “heterosexual couples are waiting to have children and waiting to get married, and more and more same-sex couples are having children, which is relatively new.”
Regardless of the increasing demand, disasters can disrupt fertility services: On March 17, the American Society for Reproductive Medicine directed U.S.-based fertility clinics to avoid initiating new treatments, push back nonemergency surgeries and shift care to telemedicine.
Now reopened, it’s undeniable that COVID-19’s national impact could alter the space as different types of crises have in the past. In looking back, we can find a better understanding of what the future holds.
After the terror attacks on September 11, 2001, a University of Louisville study found that there was “a prompt and significant increase in births and birthrates in the post-9/11 period” in New York City. Relatedly, when Hurricane Katrina hit New Orleans in August 2005 and created the nation’s costliest natural disaster, it was also one of five times since 1987 that frozen embryos were evacuated and protected during a natural disaster.
According to a study done by University of Wisconsin, “following Katrina, displacement contributed to a 30% decline in birth cohort size. Black fertility fell, and remained 4% below expected values through 2010. By contrast, white fertility increased by 5%.” The communities were so ravaged that the area’s Black population has remained substantially smaller.
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How first-time fund managers are de-risking
After what felt like winter, investors say startup deals are back on — although the numbers suggest they never stopped. As Semil Shah of Haystack VC phrased it in a blog post, “It’s game on, pandemic or bust.”
This is good news for founders and big funds, but the investment landscape becomes more complicated when it comes to up-and-coming venture capitalists. “My impression of the current mood amongst traditional limited partners is that most have slowed down considerably in terms of net new investments, new relationships,” Shah told TechCrunch.
So rebound or not, we’re in a volatile time, and first-time fund managers are looking for unique ways to de-risk themselves.
One route: Put liquidity up high in your pitch deck. Moore Ventures, a new fund focused on investing in diverse teams working on sustainability, is experimenting with an unconventional fund structure. Instead of traditional ventures where returns come from multiple rounds of financing and an exit either through acquisition or IPO, Moore is concentrating on successful liquidity strategies throughout a portfolio company’s life.
Constant commercialization, if it works, could be music to a limited partner’s ears.
“Some will fall into the licensing model, some will be developing the product and then selling the design and manufacturing process to an existing company before expanding marketing and sales. Only if a company has the ability to expand its product base and scale will we plan to commercialize through the traditional company development process,” said Darius Sankey, a general partner at Moore Ventures.
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Trump’s worker visa ban will hit Silicon Valley hard
Yesterday, President Donald Trump released an executive order that extended an existing ban on immigrant work visas through the end of the year. The move prohibits immigrants who are outside the United States from applying, but because new visas are generally issued in October, the impacts of the new rules will be felt well into 2021.
The proclamation specifically targets H-1B and H-2B visas, as well as J and L visas. As a result, the San Francisco Bay area, with its high concentration of STEM-based industries, could be disproportionately impacted.
To better understand the executive order’s potential impacts on the startup community — and the tech landscape in general — I interviewed TechCrunch contributor Sophie Alcorn, a Silicon Valley-based immigration lawyer.
TechCrunch: How long does the executive order prohibit issuing new work visas?
Sophie Alcorn: The new ban will last until at least December 31, 2020 and may be continued longer “as necessary.” The government plans to revisit this order within the next month. Every 60 days after that, the Departments of State, Labor and Homeland Security will be recommending modifications if necessary.
What will be some of the initial impacts of suspending new H-1B visas?
Beneficiaries of this spring’s H-1B visa lottery (for government fiscal year 2021) will not be able to apply for visas at consulates this year. Normally after the I-129 petition gets approved in the summer, applicants will go for visa interviews at consulates abroad to request H-1Bs and to enter the U.S. before the October 1 typical start date. That will probably not be possible this year.
For individuals with technical, professional and research backgrounds and companies that engage in research, a big effect is that there won’t be new J-1s issued this year either for interns, trainees, researchers and specialists who are currently abroad.
Do you have a sense of how many J-1 visa holders there are in the Bay Area?
I estimate that there are at least 15,000 J-1 visa holders in the Bay Area. In 2018, California had over 35,000 participants across over 600 sponsors according to the State Department. The purpose of the program is to promote cross-cultural exchange.
J-1s are not just au pairs, who are vital to so many families, including those with special-needs children, but many other types of workers as well. Other examples are post-doctoral researchers at universities such as Stanford and Berkeley in myriad fields. J-1 holders are also conducting advanced research at private tech companies in fields such as AI and semiconductors and genomics.
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Plaid’s Zach Perret: ‘Every company is a fintech company’
The fintech revolution is just getting started.
At least that’s the impression we got after a conversation with Plaid co-founder Zach Perret. He appeared on Extra Crunch Live last week to talk about his company’s announced exit to Visa and the larger fintech landscape.
Perret and Plaid announced a deal to sell the company to Visa earlier this year for $5.3 billion, a transaction that highlighted the company’s central position in the fintech world. Plaid provides APIs that link consumer bank accounts to apps and other financial services, making it the connective tissue of the fintech boom.
It’s probably no surprise, then, that Perret is bullish: “You’ve heard it a million times, but the quote of software eating the world [is true], and my corollary to that is [that] every company is a fintech company. And certainly every financial services company should be a fintech company.”
He said there’s lots of room left for fintech and finservices companies to create new products, which is not a bad view of the future if you want to be cheered up. Perret also noted that there are widespread opportunities for fintech companies to help underbanked people in the U.S. and abroad, which indicates a massive, untapped total addressable market.
To make sure you can take your own notes, we’ve included the full session below and excerpted a few passages from the transcript. (You can sign up for Extra Crunch here if you need access.)
Zach Perret
First up, here’s the full call:
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How will EC plans to reboot rules for digital services impact startups?
A framework for ensuring fairness in digital marketplaces and tackling abusive behavior online is brewing in Europe, fed by a smorgasbord of issues and ideas, from online safety and the spread of disinformation, to platform accountability, data portability and the fair functioning of digital markets.
European Commission lawmakers are even turning their eye to labor rights, spurred by regional concern over unfair conditions for platform workers.
On the content side, the core question is how to balance individual freedom of expression online against threats to public discourse, safety and democracy from illegal or junk content that can be deployed cheaply, anonymously and at massive scale to pollute genuine public debate.
The age-old conviction that the cure for bad speech is more speech can stumble in the face of such scale. While illegal or harmful content can be a money spinner, outrage-driven engagement is an economic incentive that often gets overlooked or edited out of this policy debate.
Certainly the platform giants — whose business models depend on background data-mining of internet users in order to program their content-sorting and behavioral ad-targeting (activity that, notably, remains under regulatory scrutiny in relation to EU data protection law) — prefer to frame what’s at stake as a matter of free speech, rather than bad business models.
But with EU lawmakers opening a wide-ranging consultation about the future of digital regulation, there’s a chance for broader perspectives on platform power to shape the next decades online, and much more besides.
In search of cutting-edge standards
For the past two decades, the EU’s legal framework for regulating digital services has been the e-commerce Directive — a cornerstone law that harmonizes basic principles and bakes in liabilities exemptions, greasing the groove of cross-border e-commerce.
In recent years, the Commission has supplemented this by applying pressure on big platforms to self-regulate certain types of content, via a voluntary Code of Conduct on illegal hate speech takedowns — and another on disinformation. However, the codes lack legal bite and lawmakers continue to chastise platforms for not doing enough — nor being transparent enough about what they are doing.
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3 questions for Lemonade’s IPO
While we await a fresh IPO filing from heavily backed insurtech startup Lemonade, let’s talk a little more about its public offering.
Since our first dig into its S-1 filing, TechCrunch has spoken to a number of investors and operators in Lemonade’s space to find out if our initial read was off — were we being too generous or too kind to Lemonade after reading its somewhat complex financial results?
The Exchange is a daily look at startups and the private markets for Extra Crunch subscribers; use code EXCHANGE to get full access and take 25% off your subscription.
The short answer is not really, though there are some positive notes and themes worth highlighting. This morning, let’s ask three questions about Lemonade’s IPO filing that will help us understand what’s ahead for the SoftBank-backed unicorn.
Three questions
1. How quickly can Lemonade accelerate its rental insurance graduation rate?
On the theme of things that bode well for Lemonade is its ability to “graduate” customers from low-cost rental insurance to more lucrative products.
In its S-1 filing, Lemonade noted this fact early on. After stating that a “an entry-level $60 a year [rental] policy [corresponds] to $10,000 of possessions,” the company said that as its customers age, they tend to buy more insurance and sometimes swap rental plans for homeowner policies. Moving from the former to the latter is graduating in the company’s parlance.
If many customers moved from rental insurance to homeowner insurance while keeping Lemonade as their provider, the company could do very well, as illustrated by this section of its SEC filing:
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4 enterprise developer trends that will shape 2021
Technology has dramatically changed over the last decade, and so has how we build and deliver enterprise software.
Ten years ago, “modern computing” was to rely on teams of network admins managing data centers, running one application per server, deploying monolithic services, through waterfall, manual releases managed by QA and release managers.
Today, we have multi and hybrid clouds, serverless services, in continuous integration, running infrastructure-as-code.
SaaS has grown from a nascent 2% of the $450B enterprise software market in 2009, to 23% in 2020 and crossed $100B in revenue. PaaS and IaaS revenue represent another $50B in revenue, expecting to double to $100B by 2022.
With 77% of the enterprise software market — over $350B in annual revenue — still on legacy and on-premise systems, modern SaaS, PaaS and IaaS eating at the legacy market alone can grow the market 3x-4x over the next decade.
As the shift to cloud accelerates across the platform and infrastructure layers, here are four trends starting to emerge that will change how we develop and deliver enterprise software for the next decade.
1. The move to “everything as code”
Companies are building more dynamic, multiplatform, complex infrastructures than ever. We see the “-aaS” of the application, data, runtime and virtualization layers. Modern architectures are forcing extensibility to work with any number of mixed and matched services.
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4 months into lockdown, Eventbrite CEO Julia Hartz sees ‘exciting signs of recovery’
“Eventbrite is in the unique club that nobody wants to be in,” says CEO and co-founder Julia Hartz. “Which is the first affected and one of the most directly affected businesses of the COVID-19 era.”
Hartz, who co-founded the company with her husband Kevin Hartz and Renaud Visage, joined ExtraCrunch Live recently to discuss moving forward when your core business isn’t just threatened, but wiped out completely.
“You never as a founder — at least I never — ever wondered what would happen if the whole basis of our mission was tested,” she said.
The events world was one of the first industries to feel the pandemic’s impacts and will likely be among the last to be restored. For Eventbrite, which was built on a core business of in-person events and event ticketing, it meant making swift decisions to stay afloat.
External data show some bright spots. According to an operational update from Eventbrite, paid ticket volume on its platform increased 33% in May compared to April 2020. Eventbrite is down 82% in paid tickets in May 2020 compared to the same month year ago.
“A massive market and industry dislocation and disruption. I mean, we’re a living example of that,” she said. “It’s not a victory lap. Certainly, we’re seeing some really exciting signs of recovery, but it’s still very sobering.”
Hartz offered founders at all levels advice on how to work on culture during a crisis and offered tips on communication and transparency.
We also chatted about how open consumers are to paying for virtual events, how the company curates and moderates political events and how Eventbrite plans to address racial injustice beyond, in Hartz’s words, “episodic outrage.”
We pulled out a couple of highlights for you to peruse.
How she sees events changing in the next 18 months
Structurally, events are pivoting to in-person. So it’s not just pivoting online. A good example is the Beanstalk Music Festival in Colorado, a two-day music festival that pivoted to an in-person drive-in night concert. They were wildly successful in selling tickets to this new format.
It was a testament to the strength of their community and the pent-up demand to get together and listen to great music. But what we’re seeing beyond sort of those really creative uses of new types of space and venues that are outdoors are smaller events. Classes, workshops, seminars, small meetups are starting to come back. I think that as creators start to think about how to bring their community back in person, there’s a huge element of trust that exists in this new world.
We’re helping our creators establish that trust and be very upfront about what their event goers and attendees can expect in that moment as you bring yourself together in-person again.
When she knew the business would be materially impacted — and what she did next
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Clockwise CEO Matt Martin: How we closed an $18M Series B during a pandemic
Matt Martin is CEO and co-founder of Clockwise, a San Francisco-based software company.
More posts by this contributor
It all started with an email from a customer: “Do you know why Bain Capital Ventures is reaching out to me about Clockwise?”
That email would mark the beginning of a journey toward closing $18 million in new funding that will dramatically accelerate my company, Clockwise . It would require getting to know a partner in lockdown, long nights assembling a pitch deck and many bleary-eyed Zoom calls with some of the best VCs in the world.
Here’s how Ajay Agarwal from Bain Capital Ventures and I established trust online, how I made high-stakes decisions in extreme economic uncertainty and how we were able to turn the pandemic’s constraints into opportunities.
Let’s start at the beginning.
Building momentum: 2016 to 2020
Clockwise was founded in late fall of 2016. We realized that, as personal as time is, our schedules inside modern work environments are intertwined by a network of calendar events and attendees. People schedule meetings without considering the preferences of colleagues by simply hunting for any available “white space” (read: time to do real work). The net effect is that our most valuable resource, time, is easy to take and almost impossible to protect.
More than two years later, in June of 2019, we launched Clockwise to the public. After years of experimentation and refinement, we delivered to the world an intelligent calendar assistant that frees up your time so you can focus on what matters. Workers soon confirmed our hunch that they’re hungry for a tool that gives them more productive hours in their day. Our rapid user growth carried throughout 2019.
By January of 2020, we were on fire. Since January 1, our user base has grown by more than 90%, expanding at a clip of well over 5% week-over-week. As people sought remote tools during shelter-in-place, our rate of growth accelerated even further.
Our growth, incredible team, top-tier existing investors (Accel and Greylock) and strong cash position meant we didn’t need to raise additional capital until the fall of 2020. While COVID-19 certainly sent shock waves through the community, I was in regular communication with a few highly engaged investors who still seemed eager to invest in the future of productivity. I felt cautiously confident more capital could wait.
But, you know, best-laid plans.
Establishing trust while sheltering in place
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How Reliance Jio Platforms became India’s biggest telecom network
It’s raised $5.7 billion from Facebook. It’s taken $1.5 billion from KKR, another $1.5 billion from Vista Equity Partners, $1.5 billion from Saudi Arabia’s Public Investment Fund, $1.35 billion from Silver Lake, $1.2 billion from Mubadala, $870 million from General Atlantic, $750 million from Abu Dhabi Investment Authority, $600 million from TPG, and $250 million from L Catterton.
And it’s done all that in just nine weeks.
India’s Reliance Jio Platforms is the world’s most ambitious tech company. Founder Mukesh Ambani has made it his dream to provide every Indian with access to affordable and comprehensive telecommunications services, and Jio has so far proven successful, attracting nearly 400 million subscribers in just a few years.
The unparalleled growth of Reliance Jio Platforms, a subsidiary of India’s most-valued firm (Reliance Industries), has shocked rivals and spooked foreign tech companies such as Google and Amazon, both of which are now reportedly eyeing a slice of one of the world’s largest telecom markets.
What can we learn from Reliance Jio Platforms’s growth? What does the future hold for Jio and for India’s tech startup ecosystem in general?
Through a series of reports, Extra Crunch is going to investigate those questions. We previously profiled Mukesh Ambani himself, and in today’s installment, we are going to look at how Reliance Jio went from a telco upstart to the dominant tech company in four years.
The birth of a new empire
Months after India’s richest man, Mukesh Ambani, launched his telecom network Reliance Jio, Sunil Mittal of Airtel — his chief rival — was struggling in public to contain his frustration.
That Ambani would try to win over subscribers by offering them free voice calling wasn’t a surprise, Mittal said at the World Economic Forum in January 2017. But making voice calls and the bulk of 4G mobile data completely free for seven months clearly “meant that they have not gotten the attention they wanted,” he said, hopeful the local regulator would soon intervene.
This wasn’t the first time Ambani and Mittal were competing directly against each other: in 2002, Ambani had launched a telecommunications company and sought to win the market by distributing free handsets.
In India, carrier lock-in is not popular as people prefer pay-as-you-go voice and data plans. But luckily for Mittal in their first go around, Ambani’s journey was cut short due to a family feud with his brother — read more about that here.
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