Private Equity
Auto Added by WPeMatico
Announcing the agenda for Extreme Tech Challenge Global Finals presented by TechCrunch
Here at TechCrunch, we’re big fans of startup competitions. From our Extra Crunch Live Pitch-offs all the way up to the world-famous Disrupt Startup Battlefield, we can’t get enough of ’em. So we’re hooking up with Extreme Tech Challenge (‘XTC’) to present the Extreme Tech Challenge Global Finals, a startup competition focused on powering a more sustainable, equitable, inclusive, and healthy world.
Extreme Tech Challenge is the world’s largest transformative tech startup competition and forum for the leaders of tomorrow to be able to unleash their full potential. Last year, the competition attracted startups from 87 countries, and one third of the XTC 2020 finalists raised more than $167M combined in venture investment since being selected.
This year, over 3700 startups applied from 92 countries across XTC’s competition tracks: Agtech, Food & Water, Cleantech & Energy, Edtech, Enabling Tech, Fintech, Healthtech, and Mobility & Smart Cities. Check out the 80 Global Finalists that emerged from this competitive pool. The Category winners and the Special Awards winners will make it to the Global Finals stage.
Join the Extreme Tech Challenge on 7/22 to meet the world’s best purpose-driven startups making the world better through transformative tech. Network with corporations, VCs, & founders. Get your free tickets here!
Today, we’re excited to share the agenda of the event with you.
Powering the Future Through Transformative Tech
with Young Sohn (Young Sohn (XTC Co-Founder, Chairman of the Board, HARMAN International, and former Samsung Corporate President and Chief Strategy Officer), Bill Tai (XTC Co-Founder, Partner Emeritus, Charles River Ventures), and Beth Bechdol (Deputy Director-General, United Nations Food and Agriculture Organization)
What are the breakthrough tech innovations transforming industries to build a radically better world? How can business, government, philanthropy, and the startup community come together to create a better tomorrow? Hear from these industry veterans and thought leaders about how technology can not only shape the future, but also where the biggest opportunities lie, including some exciting news about XTC and the United Nations Food and Agriculture Organization.
Going Green
with Shilpi Kumar (Urban Us), Jenny Rooke (Genoa Ventures), and Albert Wenger (Union Square Ventures)
Sustainability is the key to our planet’s future and our survival, but it’s also going to be incredibly lucrative and a major piece of our world economy. Hear from these seasoned investors and founders how VCs and startups alike are thinking about greentech and how that will evolve in the coming years.
The Extreme Tech Challenge 2021 Global Finals: Startup Pitches Part 1
The reason we’re all here – the XTC Category and Special Awards Winners get their chance to pitch their transformative tech ideas to a panel of expert judges and hear their feedback. XTC is a global platform that connects exceptional purpose-driven startups with a network of investors, corporations, and mentors to help them raise capital, launch corporate collaborations, and scale their world-changing startups.
Waste Matters
with Leon Farrant (Green Li-ion), Matanya Horowitz (AMP Robotics), and Elizabeth Gilligan (Material Evolution)
According to the EPA, the U.S. alone produces 292.4 million tons of waste a year. Can technology help this massive – and growing – issue? Leon Farrant (Green Li-Ion), Matanya Horowitz (AMP Robotics), and Elizabeth Gilligan (Material Evolution) will discuss their companies’ unique approaches to dealing with the problem.
The Extreme Tech Challenge 2021 Global Finals: Startup Pitches Part 2
The reason we’re all here – the XTC Category and Special Awards Winners get their chance to pitch their transformative tech ideas to a panel of expert judges and hear their feedback, in this second and final round.
Cutting Out Carbon Emitters with Bioengineering
with Aaron Nesser (AlgiKnit), Jennifer Holmgren (LanzaTech) and Patricia Bubner (Orbillion Bio)
Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. By utilizing natural and engineered biological processes, we may soon have low-carbon textiles from Algiknit, lab-grown premium meats from Orbillion, and fuels captured from waste emissions via LanzaTech. Leaders from these companies will join our panel to talk about how bioengineering can do its part in the fight against climate change.
Announcement of the Extreme Tech Challenge 2021 Winners
The judging panel will crown the global winner of Extreme Tech Challenge 2021 and also announce the winner of the Female Founder Award.
Join thousands of investors, corporate executives, startups, and policymakers to network via video chat.
Join the Extreme Tech Challenge on July 22 to meet the world’s best purpose-driven startups making the world better through transformative tech. Network with corporations, VCs, & founders. Get your free tickets here!
Powered by WPeMatico
Extra Crunch roundup: influencer marketing 101, spotting future unicorns, Apple AirTags teardown
With the right message, even a small startup can connect with established and emerging stars on TikTok, Instagram and YouTube who will promote your products and services — as long as your marketing team understands the influencer marketplace.
Creators have a wide variety of brands and revenue channels to choose from, but marketers who understand how to court these influencers can make inroads no matter the size of their budget. Although brand partnerships are still the top source of revenue for creators, many are starting to diversify.
If you’re in charge of marketing at an early-stage startup, this post explains how to connect with an influencer who authentically resonates with your brand and covers the basics of setting up a revenue-share structure that works for everyone.
Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription
Our upcoming TC Early Stage event is devoted to marketing and fundraising, so expect to see more articles than usual about growth marketing in the near future.
We also ran a post this week with tips for making the first marketing hire, and Managing Editor Eric Eldon spoke to growth leader Susan Su to get her thoughts about building remote marketing teams.
We’re off today to celebrate the Juneteenth holiday in the United States. I hope you have a safe and relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
As the economy reopens, startups are uniquely positioned to recruit talent
Image Credits: ballyscanlon (opens in a new window) / Getty Images
The pandemic forced a reckoning about the way we work — and whether we want to keep working in the same way, with the same people, for the same company — and many are looking for something different on the other side.
Art Zeile, the CEO of DHI Group, notes this means it’s a great time for startups to recruit talent.
“While all startups are certainly not focused on being disruptive, they often rely on cutting-edge technology and processes to give their customers something truly new,” Zeile writes. “Many are trying to change the pattern in their particular industry. So, by definition, they generally have a really interesting mission or purpose that may be more appealing to tech professionals.”
Here are four considerations for high-growth company founders building their post-pandemic team.
Refraction AI’s Matthew Johnson-Roberson on finding the middle path to robotic delivery
Image Credits: Bryce Durbin
“Refraction AI calls itself the Goldilocks of robotic delivery,” Rebecca Bellan writes. “The Ann Arbor-based company … was founded by two University of Michigan professors who think delivery via full-size autonomous vehicles (AV) is not nearly as close as many promise, and sidewalk delivery comes with too many hassles and not enough payoff.
“Their ‘just right’ solution? Find a middle path, or rather, a bike path.”
Rebecca sat down with the company’s CEO to discuss his motivation to make “something that is useful to the general public.”
How to identify unicorn founders when they’re still early-stage
Image Credits: RichVintage (opens in a new window)/ Getty Images
What are investors looking for?
Founders often tie themselves in knots as they try to project qualities they hope investors are seeking. In reality, few entrepreneurs have the acting skills required to convince someone that they’re patient, dedicated or hard working.
Johan Brenner, general partner at Creandum, was an early backer of Klarna, Spotify and several other European startups. Over the last two decades, he’s identified five key traits shared by people who create billion-dollar companies.
“A true unicorn founder doesn’t need to have all of those capabilities on day one,” Brenner, writes “but they should already be thinking big while executing small and demonstrating that they understand how to scale a company.”
Founders Ben Schippers and Evette Ellis are riding the EV sales wave
Image Credits: TechCrunch
EV sales are driving demand for services and startups that fulfill the new needs of drivers, charging station operators and others.
Evette Ellis and Ben Schippers took to the main stage at TC Sessions: Mobility 2021 to share how their companies capitalized on the new opportunities presented by the electric transportation revolution.
Scale AI CEO Alex Wang weighs in on software bugs and what will make AV tech good enough
Image Credits: Alexandr Wang
Scale co-founder and CEO Alex Wang joined us at TechCrunch Sessions: Mobility 2021 to discuss his company’s role in the autonomous driving industry and how it’s changed in the five years since its founding.
Scale helps large and small AV players establish reliable “ground truth” through data annotation and management, and along the way, the standards for what that means have shifted as the industry matures.
Even if two algorithms in autonomous driving might be created more or less equal, their real-world performance could vary dramatically based on what they’re consuming in terms of input data. That’s where Scale’s value prop to the industry starts, and Wang explains why.
Edtech investors are flocking to SaaS guidance counselors
Image Credits: Getty Images / Vertigo3d
The prevailing post-pandemic edtech narrative, which predicted higher ed would be DOA as soon as everyone got their vaccine and took off for a gap year, might not be quite true.
Natasha Mascarenhas explores a new crop of edtech SaaS startups that function like guidance counselors, helping students with everything from study-abroad opportunities to swiping right on a captivating college (really!).
“Startups that help students navigate institutional bureaucracy so they can get more value out of their educational experience may become a growing focus for investors as consumer demand for virtual personalized learning increases,” she writes.
Dear Sophie: Is it possible to expand our startup in the US?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My co-founders and I launched a software startup in Iran a few years ago, and I’m happy to say it’s now thriving. We’d like to expand our company in California.
Now that President Joe Biden has eliminated the Muslim ban, is it possible to do that? Is the pandemic still standing in the way? Do you have any suggestions?
— Talented in Tehran
Companies should utilize real-time compensation data to ensure equal pay
Image Credits: Rudzhan Nagiev (opens in a new window) / Getty Images
Chris Jackson, the vice president of client development at CompTrak, writes in a guest column that having a conversation about diversity, equity and inclusion initiatives and “agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.”
He lays out a data-driven proposal that brings in everyone from directors to HR to the talent acquisition team to get companies closer to actual equity — not just talking about it.
Investors Clara Brenner, Quin Garcia and Rachel Holt on SPACs, micromobility and how COVID-19 shaped VC
Image Credits: TechCrunch
Few people are more closely tapped into the innovations in the transportation space than investors.
They’re paying close attention to what startups and tech companies are doing to develop and commercialize autonomous vehicle technology, electrification, micromobility, robotics and so much more.
For TC Sessions: Mobility 2021, we talked to three VCs about everything from the pandemic to the most overlooked opportunities within the transportation space.
Experts from Ford, Toyota and Hyundai outline why automakers are pouring money into robotics
Image Credits: TechCrunch
Automakers’ interest in robotics is not a new phenomenon, of course: Robots and automation have long played a role in manufacturing and are both clearly central to their push into AVs.
But recently, many companies are going even deeper into the field, with plans to be involved in the wide spectrum of categories that robotics touch.
At TC Sessions: Mobility 2021, we spoke to a trio of experts at three major automakers about their companies’ unique approaches to robotics.
Apple AirTags UX teardown: The trade-off between privacy and user experience
Image Credits: James D. Morgan/Getty Images
Apple’s location devices — called AirTags — have been out for more than a month now. The initial impressions were good, but as we concluded back in April: “It will be interesting to see these play out once AirTags are out getting lost in the wild.”
That’s exactly what our resident UX analyst, Peter Ramsey, has been doing for the last month — intentionally losing AirTags to test their user experience at the limits.
This Extra Crunch exclusive helps bridge the gap between Apple’s mistakes and how you can make meaningful changes to your product’s UX.
How to launch a successful RPA initiative
Image Credits: NanoStockk (opens in a new window) / Getty Images
Robotic process automation (RPA) is no longer in the early-adopter phase.
Though it requires buy-in from across the organization, contributor Kevin Buckley writes, it’s time to gather everyone around and get to work.
“Automating just basic workflow processes has resulted in such tremendous efficiency improvements and cost savings that businesses are adapting automation at scale and across the enterprise,” he writes.
Long story short: “Adapting business automation for the enterprise should be approached as a business solution that happens to require some technical support.”
Mobility startups can be equitable, accessible and profitable
Image Credits: TechCrunch
Mobility should be a right, but too often it’s a privilege. Can startups provide the technology and the systems necessary to help correct this injustice?
At our TC Sessions: Mobility 2021 event, we sat down with Revel CEO and co-founder Frank Reig, Remix CEO and co-founder Tiffany Chu, and community organizer, transportation consultant and lawyer Tamika L. Butler to discuss how mobility companies should think about equity, why incorporating it from the get-go will save money in the long run, and how they can partner with cities to expand accessible and sustainable mobility.
CEO Shishir Mehrotra and investor S. Somasegar reveal what sings in Coda’s pitch doc
Image Credits: Carlin Ma / Madrona Venture Group/Brian Smale
Coda CEO Shishir Mehrotra and Madrona partner S. Somasegar joined Extra Crunch Live to go through Coda’s pitch doc (not deck. Doc) and stuck around for the ECL Pitch-off, where founders in the audience come “onstage” to pitch their products to our guests.
Extra Crunch Live takes place every Wednesday at 3 p.m. EDT/noon PDT. Anyone can hang out during the episode (which includes networking with other attendees), but access to past episodes is reserved exclusively for Extra Crunch members. Join here.
Powered by WPeMatico
Swedish company Northvolt raises $2.75B to accelerate European battery production
Swedish battery developer and manufacturer Northvolt AB has raised $2.75 billion in capital as it prepares to ramp up to an annual production capacity of 150 GWh in Europe by 2030.
The funding round — Northvolt’s largest thus far — was co-led by existing investors Goldman Sachs and Volkswagen, and new investors including the Swedish pension funds AP1-4 and OMERS, one of Canada’s largest pension plans. AMF, ATP, Baillie Gifford, Baron Capital Group, Bridford Investments Limited, Compagnia di San Paolo through Fondaco Growth, Cristina Stenbeck, Daniel Ek, IMAS Foundation, EIT InnoEnergy, Norrsken VC, PCS Holding, Scania and Stena Metall Finans also participated in the raise.
Volkswagen’s investment came to €500 million ($620 million), the OEM said Wednesday, maintaining its 20% stake in the battery manufacturer.
CNBC reported that Northvolt’s valuation now stands at $11.75 billion. The company declined to comment on the specific valuation figure to TechCrunch.
Northvolt has already scored major deals with automakers like Volkswagen and BMW. In July 2020, the company inked a $2.3 billion contract with BMW for batteries; more recently, in March, Volkswagen put in a $14 billion order over a 10-year period. The two deals bring Northvolt’s total contracts to $27 billion. Other notable customers include Swedish heavy-duty truck manufacturer Scania and energy storage company Fluence.
This brings Northvolt’s total raised to more than $6.5 billion since the company was founded in 2016. The manufacturer’s first gigafactory in Skellefteå, Sweden, will be expanded from 40 GWh to 60 GWh, in part due to increased demand from the Volkswagen order, the company said in a statement. That facility will commence production later in 2021.
Northvolt’s overarching plan is to ramp up to at least 150 GWh of annual battery production across Europe by 2030. To meet this massive target, the company is considering at least two additional gigafactories, including one in Germany.
Northvolt is one of Europe’s largest battery manufacturers. Company shareholder EIT InnoEnergy said in a statement Wednesday that the funding is key to Europe achieving its Green Deal objectives, which includes creating a European battery value chain.
The Swedish company aims to distinguish itself from other battery manufacturers by producing batteries using renewable energy for the manufacturing process. Northvolt says its batteries have an 80% lower carbon footprint than those made with coal power. It also recycles batteries in-house and reuses the raw materials in its production process.
Powered by WPeMatico
Carlyle acquires 1E.com, an endpoint and hybrid working specialist, in $270M deal
Remote work was the order of the day for the past 16 months, but as we (fingers crossed) move out of the pandemic, it’s looking like a lot of people may move into a new era of hybrid work: less focus being present in offices to feel like you are getting things done, less time commuting and more time to be productive. To help better address that opportunity, a company called 1E, which builds solutions for companies to enable hybrid working along with managing the wider space of endpoint management, has been acquired by Carlyle on the heels of a strong year of business.
The private equity firm has picked up the London-based company in a deal that values the company at $270 million.
The acquisition is coming in the form of a majority stake with CEO and co-founder Sumir Karayi maintaining a significant minority stake, along with employees of the company. The firm is completely bootstrapped — no outside investors, no VCs on the cap table prior to this deal — and profitable, with growth of 28% in the last year.
The birth and now exit of 1E is an interesting counterpoint to that of most of the enterprise startups that you will read about on the pages of TechCrunch, or maybe in tech press overall.
The company was started in 1997 when Karayi and co-founders Phil Wilcock and Mark Blackburn were at Microsoft working as in-house consultants helping enterprises adopt and adapt to Microsoft software. Karayi decided he wanted to start something of his own, rather than, in his words, “working for Microsoft forever.”
Given his background, his business started first as a consultancy, but he said that it didn’t take long to pivot, since “We realized that the problems we were looking to solve we needed to build technology to do that, so we started to write our own software.”
The company got its start as a Microsoft shop, building endpoint technology management, along with tools to help companies manage their computer terminals and networks better. That included products like NightWatchman, a power management tool for PCs and servers that helped save energy consumption for businesses; Nomad, a bandwidth management tool that helps reduce server usage; and Shopping, a platform for companies to build app store-like experiences for internal employees or customer-facing tools.
Over time — years before the COVID-19 pandemic — that also evolved into software to enable hybrid working environments, which were already emerging as a thing and already posing challenges to businesses and users.
“The challenge was that remote working was a second-class experience,” he said, with technical support, software usage, network connectivity, device issues and just about everything harder to sort out when problems arose for workers not working in the office. So 1E — a play on the last two characters of the error message you get on a failing PC, “STOP 0x0000001E” — built software to address that, too.
Overall the company amassed some 40 patents on its technology, which now is used across more than 11 million devices among 500 large enterprise customers, including AT&T, Nestlé and a number of big banks that can’t be named.
It’s been the remote working software that has seen the company through an especially strong year — no surprise there, given the environment many of us have been working in — where businesses have been buying its tools as part of their “digital transformation” efforts, and it was this that got Karayi thinking that the company — which had largely built the business it had today on an employee base of people who just like building new things, and word-of-mouth between end users — could finally do with an outside investment and cash injection to take the business to the next level.
“We’re going through a seismic change right now and we think it’s a big opportunity for 1E,” he noted, adding that while many of us might feel like remote work is everywhere, he believes this is just the beginning of how to enable better remote working. “I think the office boat has sailed,” he said.
1E went with Carlyle among a number of other bidders as it seemed like the right fit: strong support and understanding of the business, combined with a well-recognized name. The plan more generally is to follow the PE playbook if all goes well: four years of growth, with “all later options open.”
“We were attracted to 1E’s fully integrated digital experience technology, which is differentiated by its advanced remediation and automation capabilities, and are delighted to partner with Sumir as we support the company as it enters its next phase of growth,” said Fernando Chueca, a managing director in the Carlyle Europe Technology Partners (CETP) advisory team. “With strong industry tailwinds, we believe 1E has significant growth opportunities and we look forward to supporting another founder-backed business to scale through investments in product innovation, commercial operations, and international expansion.”
Powered by WPeMatico
Network security startup ExtraHop skips and jumps to $900M exit
Last year, Seattle-based network security startup ExtraHop was riding high, quickly approaching $100 million in ARR and even making noises about a possible IPO in 2021. But there will be no IPO, at least for now, as the company announced this morning it has been acquired by a pair of private equity firms for $900 million.
The firms, Bain Capital Private Equity and Crosspoint Capital Partners, are buying a security solution that provides controls across a hybrid environment, something that could be useful as more companies find themselves in a position where they have some assets on-site and some in the cloud.
The company is part of the narrower Network Detection and Response (NDR) market. According to Jesse Rothstein, ExtraHop’s chief technology officer and co-founder, it’s a technology that is suited to today’s threat landscape, “I will say that ExtraHop’s north star has always really remained the same, and that has been around extracting intelligence from all of the network traffic in the wire data. This is where I think the network detection and response space is particularly well suited to protecting against advanced threats,” he told TechCrunch.
The company uses analytics and machine learning to figure out if there are threats and where they are coming from, regardless of how customers are deploying infrastructure. Rothstein said he envisions a world where environments have become more distributed with less defined perimeters and more porous networks.
“So the ability to have this high-quality detection and response capability utilizing next generation machine learning technology and behavioral analytics is so very important,” he said.
Max de Groen, managing director at Bain, says his company was attracted to the NDR space, and saw ExtraHop as a key player. “As we looked at the NDR market, ExtraHop, which [ … ] has spent 14 years building the product, really stood out as the best individual technology in the space,” de Groen told us.
Security remains a frothy market with lots of growth potential. We continue to see a mix of startups and established platform players jockeying for position, and private equity firms often try to establish a package of services. Last week, Symphony Technology Group bought FireEye’s product group for $1.2 billion, just a couple of months after snagging McAfee’s enterprise business for $4 billion as it tries to cobble together a comprehensive enterprise security solution.
Powered by WPeMatico
Architect Capital brings alternative capital to the early stage with new $100M fund
Early-stage startups are increasingly looking for alternative ways to access capital, meaning not every company wants to raise money from VCs or take on debt.
In recent years, a flurry of startups have emerged to give companies other options. (Think Pipe, for example.)
And today, San Francisco-based Architect Capital is a new firm that is launching with over $100 million in funds to serve as an “asset-based lender” to “high-growth,” early-stage tech companies. Specifically, the new firm aims to provide non-dilutive or less-dilutive financing options to asset-rich fintech, e-commerce and SaaS companies in the U.S. and Latin America, but with an emphasis on the latter. The region, Architect maintains, does not have a plethora of institutional financing available against assets.
The firm is not out to replace traditional venture capital or venture debt, emphasizes founder and CEO James Sagan, but rather to offer asset-based products that will complement them.
For some context, Sagan is no stranger to the startup world, having co-founded and served as managing partner of Arc Labs, an early-stage credit fund focused on lending to technology-enabled businesses. He’s been investing in Latin America for years, and recognized the need for new forms of financing to fund “novel and underappreciated assets.”
Also, he believes the region is home to “the most prominent fintech ecosystem in the world.”
To Sagan, traditional forms of equity and debt financing in the venture world are vital for things like growing headcount, but he believes they are “not engineered to support the growth of a company’s underlying financial products.”
“VC is highly dilutive and should be used for ROI activities such as hiring engineers and building great teams,” Sagan told TechCrunch. “It’s expensive to use equity to fund assets. Equity should not be put in a loan book. We’ll fund the loan book.”
Image Credits: Architect Capital founder James Sagan / Architect Capital
Architect’s goal is to provide “tailored and less dilutive funding,” especially to companies that produce repeatable revenues, such as SaaS and subscription businesses.
Sagan said he first discovered the strategy in 2015 when he was working for a multifamily office that was lending against a bunch of traditional assets.
“A colleague and good friend of mine started a business and raised some equity and venture debt, but he couldn’t find the asset-specific financing for the receivables he was generating,” Sagan recalls. “He was lending to small businesses and needed asset-specific financing against those receivables.”
Venture debt doesn’t really work for receivables-based lending because venture debt shops typically are underwriting assets, or rather, underwriting the quality of the investors in the company, Sagan believes.
“So we really tailor our underwriting towards those assets themselves right and those assets range from unsecured consumer receivables to secure small business receivables to real estate,” he told TechCrunch. “Essentially, we’re providing an additional instrument for asset-heavy businesses that will allow them to scale in a way that venture debt will not.”
Architect’s LPs are mostly large institutions, as opposed to traditional high net worth individuals. The firm’s average check size will land at around $10 million to $15 million.
“Our portfolio allocation is more concentrated in general,” Sagan said. “We expect to grow our AUM (assets under management) pretty precipitously.”
Architect Capital has invested in six companies since inception, including PayJoy, a company that delivers consumer financing and smartphone technology to customers in emerging markets; Forum Brands, a U.S.-based e-commerce marketplace aggregator; and ADDI, a fintech that aims to give Colombian consumers access to fair and affordable credit through point-of-sale-financing that recently raised $65 million.
Powered by WPeMatico
How to win consulting, board and deal roles with PE and VC funds
Would you like to work with private equity and venture capital funds?
There are relatively few jobs directly inside private equity and venture capital funds, and those jobs are highly competitive. However, there are many other ways you can work and earn money within the industry — as a consultant, an interim executive, a board member, a deal executive partnering to buy a company, an executive in residence or as an entrepreneur in residence.
Venture capitalists often have an operations background. However, historically most private equity professionals were former investment bankers and other finance professionals. Then private equity players gradually realized that value cannot be created through financial engineering alone. A BCG study of 121 investments found that operational improvement drives 48% of value creation in PE-backed companies. PE funds now almost always require an upgrade in management and change management teams if necessary.
Not surprisingly, the tighter your relationship with the firm, the more money you will earn:
Image Credits: David Teten
At Versatile VC, we’ve used all these models. We are soon launching Founders’ Next Move, a selective, free community for founders researching their next move, which will be a key tool for working with outside talent.
The simplest path forward is to identify funds in your industry of expertise and reach out. You can explore all of the models below with them. First, start by identifying the firms that invest in companies that you’ve worked with. Then, more broadly, look for investors in the industries in which you have expertise. You can identify institutional investors through one of multiple online databases:
| All investors | Private equity | Venture capital |
| Preqin (free demo)
Grey House (free demo) |
PitchBook (free trial)
PrivateEquityFirms.com |
AngelList (free)
CrunchBase (free) PWC MoneyTree (free) VentureDeal (free trial) Asian Venture Capital Journal (free trial) |
Let’s take a look at the different ways you can work with the investment community.
Expert networks
Expert network firms source subject matter experts from various domains and pair them with clients seeking topical or industry insights. They typically charge clients up to $1,200 per hour, and pay the expert $100 to $500 an hour. I founded Circle of Experts, an expert network that I sold to Evalueserve.
The expert network industry has grown an average 4.5% annually between 2015 and 2020, its market size topping $1.3 billion in 2020. While the major clients were initially hedge funds and private equity firms, consulting firms now comprise 32% of total demand for expert network services.
Inex One, an expert network marketplace, has compiled a list of 80 expert networks, summarized in the graphic below:
Image Credits: Inex One and Integrity Research
The largest expert networks include: GLG, which accounts for approximately 50% of the industry’s revenue; AlphaSights is the second biggest generalist expert network; Guidepoint services six major categories of clients globally across several industries; and Third Bridge hires and retains talent to “democratize the world’s human insights and upend the traditional research model.”
Other notable expert networks include Atheneum Partners, Coleman Research Group, Dialectica, ENG, Lynk Global, Mosaic, PreScouter, ProSapient and Tegus. There are also expert networks with sector or geography specialization. For example, SERMO is a global social media network for physicians to exchange knowledge and share challenging patient cases, and Clarity.fm connects startups to experts in building new businesses.
Powered by WPeMatico
Cloudera to go private as KKR & CD&R grab it for $5.3B
Cloudera was once one of the hottest Hadoop startups, but over time the shine has come off that market, and today it went private as KKR and Clayton, Dubilier & Rice, a pair of private equity firms, announced they intended to purchase Cloudera for $5.3 billion. The company has a market cap of around $3.7 billion.
Cloudera and Hortonworks, two key startups in the Hadoop space, merged in 2018 for $5.2 billion. Cloudera was likely under pressure from activist investor Carl Icahn, who took an 18% stake in the company in 2019 and now stands to gain from the sale, which the company stated represented a 24% premium for shareholders at $16 a share. Prior to the market opening this morning, the stock was sitting at $12.86.
Back in the day, about a decade ago, when Hadoop was the way to process big data, venture money was pouring into the space. Over time it lost some of its glow. That’s because it was highly labor intensive, and companies began moving to the cloud and looking at software services that did more of the work for them. More modern technologies like data lakes began replacing it and the company recognized that it must change its approach to survive in the modern data processing marketplace.
Cloudera CEO Rob Bearden sees the transaction as a way to do just that. “We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity,” Bearden said in a statement.
While there is a lot of executive jargon in that statement, it basically means that the company hopes that these private equity firms can give it some additional financial resources to move toward a more modern approach for processing large amounts of data.
While it was at it, Cloudera also announced a couple of acquisitions of its own to help it move toward that modernization goal. For starters, it grabbed Datacoral, a startup that abstracts away the infrastructure needed to build a data pipeline without using code. It also acquired Cazena, a startup that helps customers build cloud data lakes, giving the company a more modern approach to processing big data. Bearden sees both of these services helping Cloudera reposition itself in the big data self-service market
“Both businesses will enable our combined customers to enjoy a reduction in complexity and faster time to value for their data initiatives, leading to improved insights, faster innovation, and stronger engagements with their customers and partners,” Bearden said in a statement.
Cloudera went public in 2018, closing at $18.09 a share after raising $1 billion. The vast majority of that was a $740 million investment from Intel Capital in 2014. It’s worth noting that Cloudera bought Intel’s stake in the company at the end of last year for $314 million.
Hortonworks raised another $248 million. A third Hadoop startup, MapR, raised $280 million. The company’s assets were sold rather unceremoniously to HPE in 2019 for a price pegged at under $50 million, showing just how far the market has fallen since its earlier glory days.
The Cloudera deal includes a brief “go shop” provision that allows it to continue to look for a better deal. It’s doubtful it will find one, and if it doesn’t the transaction with KKR and CD&R is expected to close in the second half of this year subject to typical regulatory review. The company will announce earnings later today.
Powered by WPeMatico
The exit effect: 4 ways IPOs and acquisitions drive positive change across the global ecosystem
For many VCs, the exit is the endgame; you cash in and move on. But as we know, the startup world is evolving, and that means the impact of investment is no longer limited to how much money is made.
As investors, we’re looking further into what each investment means to human beings, at interlinking our mission with our money. And yet, one of the events that generates the most momentum for long-term impact — the successful exit of a portfolio company — is not being harnessed.
When leveraged properly, an exit can be the beginning of a firm’s true impact, especially when we’re talking about giving all founders equal opportunities and empowering the best ideas. The investment sphere is slowly shaking off its “America first” approach as foreign products take the world by storm and international businesses become the norm.
When leveraged properly, an exit can be the beginning of a firm’s true impact, especially when we’re talking about giving all founders equal opportunities and empowering the best ideas.
Investors will be driving forces in enabling the highest-potential companies to build products that countries everywhere will benefit from — no matter where they were conceived. The way they play the game can transform the industry into one in which a founder from across the ocean has as much of a chance to change the world as one from next door.
We know the basics of how to do this with cash: Investing in underrepresented founders is a necessary first step. But who’s talking about the power of exits to change the playing field for diverse founders? We must consider the psychological motivation of seeing a huge buyout on other entrepreneurs, what that startup’s ex-team members go on to build, and what the achievements of one citizen does for that nation’s reputation.
Last year, 41 venture-backed companies saw a billion-dollar exit, totaling over $100 billion, the highest numbers in a decade. We have an unprecedented amount of clout to do something with those power moves and four ways to turn them into a domino effect.
1. Competitor effect
When a foreign entrepreneur raises money from U.S. firms and sells to a U.S. company, other immigrants see that. Regardless of how groundbreaking their product idea might be, immigrant Americans will always be more wary of putting their eggs into the entrepreneurship basket, at least as long as 93% of all VC money continues to be controlled by white men.
This, despite research suggesting that immigrants contribute 40% more to innovation than local inventors.
What these foreign entrepreneurs most need is confidence, role models and success stories proving other people who look like them have made it, especially when those founders are making waves in the same industry as them.
So a big, well-publicized exit will create momentum in the industry for other foreign founders to give fuel to their venture and seek to take it to the next stage. Not only that, it will instill more self-assurance when it comes to fundraising, and investors will value that.
I was inspired to write this column after Returnly, a fintech founded by a fellow immigrant from Spain based in San Francisco — which, for full transparency, I invested in as an angel investor, and then for Series B and C via my fund — was acquired for $300 million by Affirm.
While there was undoubtedly a personal financial gain worth celebrating, the success of a foreign founder who persevered against the odds in such a competitive ecosystem as Silicon Valley, raised large rounds from U.S.-based investors, and was finally acquired by a U.S. company served as a moment of inspiration for other diverse founders around the world. We saw this in the amount of media attention it received in both business and mainstream press in Spain and the floods of connect requests and congratulations that followed on LinkedIn.
The impact of an exit is greater when it shows foreign entrepreneurs that there are globally minded organizations helping startups like theirs get equal access to funding. That means having VC firms that spotlight international entrepreneurship and foster global expert networks.
As investors, we can maximize the impact of our exits in the industry by highlighting the foreign origins of our founders in a big way when it comes to promoting the exit, including narrating the challenges and opportunities they encountered on their journey. We can use the victory to drive the point home to our fellow investors that diverse and international entrepreneurship is an undervalued gem. We can personally take the win to boost our brand as one that empowers foreign entrepreneurs in that niche, attracting more to seek funding with us in a positive reinforcement cycle.
2. Wealth effect
The windfall from a big exit puts all previous investors in a privileged position, and it’s unlikely that money will sit around for long. They’ll look to reinvest in other high-potential companies — probably ones that look a lot like the one that was just sold.
But in addition to those investors multiplying the positive impact in their own portfolio, they will rally other investors to behave in a similar way.
Each exit — good or bad — sets a precedent for that niche and that type of company. Other investors will follow suit if they sense that one of their peers is onto a cash cow. Because foreign and ethnic minority founders are still underrepresented in startup funding, it makes this field less competitive while harboring huge potential. VCs who have an eye out for unique opportunities will spot when an investor has made a hefty profit from an unconventional startup, especially if they continue to invest in others in that same field.
To help this along, angels and VCs who’ve been behind a recent exit and are reinvesting in similar founders should publicize those knock-on investments, explaining how their previous success motivated them to support similar ventures. They can also be vocal within their network about their decision to raise up certain entrepreneurs because they’ve seen it works.
Returnly’s founder recently offered to put some of his earnings back into our fund, enabling more foreign entrepreneurs like himself to access capital. If as investors we foster meaningful relationships with our funders and truly care about empowering diverse entrepreneurs, we’ll see more of that wealth circle back into our mission.
3. Team effect
The PayPal Mafia is a set of former PayPal executives and employees — such as Elon Musk, a South African, and Peter Thiel, a German American — who have gone on to seriously disrupt not one but multiple industries across tech. Among the companies they’ve founded are YouTube, LinkedIn, Yelp and Tesla, and they’ve even been named U.S. ambassadors. That’s just one company. Imagine what other diverse and driven teams can do with the influx of cash and inspiration that comes with a big exit. There will be a ripple effect of team members eager to start out on their own who feel empowered by the success of someone who believed in them.
Their ventures will be more likely to “pass it on” when it comes to giving equal opportunities to people regardless of origin and will generate more jobs for people with their mission. Take Thiel, who has to date backed over 40 companies in Europe alone.
As VCs, we can capitalize on this team effect by keeping our eye on any spinoff ventures that arise and supporting them when possible (with experience and contacts, if not with capital). But beyond this, you can also consider encouraging these people to join the investment sphere, maybe even within your firm. Many successful startup founders and executives go on to become investors — the PayPal Mafia has contributed to some of the most notorious funds out there today. The origin story of these former team members will make them more prone to supporting underrepresented founders they can get behind. In turn, new entrepreneurs will draw more value from their personal experiences.
4. Reputation effect
Although Returnly is headquartered in San Francisco, its founder is Spanish and many of its employees were based in Spain.
That means that the impact of Returnly’s exit will be felt on the other side of the Atlantic as well as among co-nationals in the United States. The same is true of other notable sales, like AlienVault, which was founded in Spain and had multiple offices there. AlienVault was acquired by U.S. telecommunications giant AT&T for $900 million. Or IPOs — earlier this month, the Spanish-origin payments company Flywire filed for an IPO that could value the company at $3 billion. One startup’s success boosts the reputation of its entire team, and with it other founders and talent with their same country of origin, background, education and drive.
It follows that investors and other stakeholders will be more inclined to back opportunities among founders from the same home country if it says something about the mission, expertise and culture they bring to their startup.
At the same time, growing startups will be more interested in hiring the talent of evidently successful teams. That doesn’t just mean hiring more foreign experts in the United States, but seeking to outsource farther afield. We’re already becoming far more comfortable with remote teams, and it’s more capital-efficient for one half of the team to be working while the other half sleeps. But founders will always gravitate more to countries where local talent and innovation is already seen to be thriving. Open up that conversation with your portfolio companies.
VCs have the power to change an industry forever, to connect startup ecosystems across continents and to see startups expand worldwide. But this is about staying relevant as an investor as much as it’s about ensuring this next stage in the startup world is a positive one.
Investors who don’t recognize that the future of startups is global and diverse in nature won’t be in sync with the best opportunities — and won’t be selected by the best founders. Rather than trying to play catchup, help build that ecosystem.
Powered by WPeMatico
Orbiit raises seed funding to automate the interactions within an online community
Orbiit, a startup that automates the interactions within an online community, has raised a $2.7 million round led by Bread and Butter Ventures, with participation from new investors High Alpha Capital, LAUNCHub Ventures and Company Ventures. Existing investors Founders Fund, which led Orbiit’s $1 million pre-seed round, Acceleprise and other angels also participated. The capital will be used to build out the Orbiit product and engineering team.
Orbiit says its platform handles the communications, matching, scheduling, feedback collection and analytics for people connecting with each other in an online community. The idea is that the communities therefore learn and network better, engage more and share more knowledge.
CEO and co-founder Bilyana Freye said: “Tailored 1:1 connections allow members to discuss difficult topics, be vulnerable and share learnings with one another. Those 1:1 connections are the hardest to execute, but when you start investing in them, with the help of Orbiit, you see engagement feeding into all other initiatives and a vibrant, active community that truly delivers on the promise to its members.”
Bread and Butter Ventures Managing Partner Mary Grove added: “This age-old question of how to leverage technology at scale to drive meaningful connections across communities both internal to an organization and across the globe is a problem we’ve been actively seeking a solution to for a decade. Orbiit brings the perfect blend of tech-enabled software with human curation to create strong connections and provide insights back to community managers.”
The platform is being used by startup communities at True Ventures, GGV and Lerer Hippeau; private networking groups such as Dreamers & Doers; and customer communities, like the CFO community run by fintech leader Spendesk.
Founders Fund Principal Delian Asparouhov said: “We see Orbiit as a key platform for peer learning within companies and communities, unlocking untapped knowledge through curated matchmaking.”
LAUNCHub Ventures participated in the round, following the recent first close of its new $70 million fund.
Powered by WPeMatico