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Today — January 18th 2021TechCrunch

Bustle CEO Bryan Goldberg explains his plans for taking the company public

By Anthony Ha

Bustle Digital Group — owner of Bustle, Inverse, Input, Mic and other titles — could eventually join the ranks of startups going public via a special purpose acquisition company (SPAC).

During an interview about the state of BDG and the digital media industry at the end of 2020, founder and CEO Bryan Goldberg laid out ambitious goals for the next few years.

“Where do I want to see the company in three years? I want to see three things: I want to be public, I want to see us driving a lot of profits and I want it to be a lot bigger, because we’ve consolidated a lot of other publications,” he said.

He added that those goals connect, because by going public, BDG can raise “hundreds of millions dollars,” which Goldberg wants to use to “buy a lot of media companies.”

That might seem like bluster after a year in which many digital media companies (including BDG) had to make serious cuts. But Goldberg said that the company would be profitable in 2020, with revenue that’s “a little bit under $100 million.” And it won’t be the first digital media company to take a similar route — Group Nine created a SPAC that went public last week.

“I want to prove that we can be highly profitable,” he said. “A lot of startups don’t have that goal. A lot of VCs tell their startups: Don’t worry about profits, don’t worry about losing money. I don’t believe in that.”

In addition to his plans to go public, Goldberg also discussed how acquisitions have helped Bustle’s business, his joint venture to purchase W Magazine and digital media’s “overcapitalization” problem. You can read our full conversation, edited for length and clarity, below.

TechCrunch: The last time I caught up with someone at BDG, it was with [the company’s president Jason Wagenheim] and that was when you guys were dealing with the initial fallout [from the pandemic]. Now we’re a lot further into whatever this new world is, so what is your sense of where BDG is now, versus where it was in the early days of the pandemic?

Bryan Goldberg: It might be the craziest, most eventful six months for many of us in our lives. And certainly, for those of us in this industry, the difference between April and October, it’s really hard to fathom, it’s complete night and day. April was a very frightening time for everyone, personally and professionally across the country, across the world.

From an advertising standpoint, it was a really scary time, because we have clients across every industry, and every industry was impacted differently. We have clients who were greatly impacted — theme parks, car makers, hotel companies, airlines — and then we had clients who were not as badly affected, such as a lot of CPG clients, who everybody depended upon so much during the pandemic.

There was a huge pause in our business in in March, April and May. For a lot of clients, tossing advertising was a sort of knee-jerk reaction to the sudden shock of COVID, and so we saw a huge negative impact in our second quarter. What we started to see in the third quarter, and especially now in the fourth quarter, is now that the shock of COVID is behind us, the macro trends that were catalyzed by COVID are now moving into the forefront.

The story of media is no longer about the shock of COVID. The story of media is now about all of the changes to our world, and changes to our industry that were brought about as a consequence of COVID.

The good news for our company, and the good news for other digital media companies, is it looks like the future is being accelerated. It looks like people are watching less television, and so advertisers are moving their budgets into digital faster than they would have had it not been for COVID. Even things like live sports, [their] TV ratings are way down. And a lot of advertisers are saying, “Is there efficacy anymore in cable television or broadcast television?” And the magazine industry was heavily impaired, simply because magazines are a physical medium, and people didn’t want to pass around magazines or read magazines at the dentist’s office, so we probably saw some print budget move into digital as well.

Industry analysts now are going to take up their estimates of what digital revenue is going to look like in 2021, 2022 and beyond. I also think we’ve seen a world in which a lot of brand advertisers are starting to think about what happens when they start to spend beyond Facebook and Google. For most of the last three years, there’s been so much talk about the duopoly, the idea that Facebook and Google are going to eat almost every last dollar of advertising. What we’ve seen in the last three months is advertisers saying that this needs to be the moment in which they learn how to deploy advertising spend digitally beyond Facebook or Google.

No, it doesn’t mean they’re all pulling out of Facebook — Facebook and Google are doing just fine. But there are still tens of billions of dollars that need to be deployed outside of Facebook and Google. And you’re seeing winners such as Snapchat, Pinterest. Both had incredibly strong earnings. They’re benefiting from the same thing that benefits Bustle Digital Group and a lot of other digital media players who aren’t Facebook and Google, which is you’re seeing big ad spenders finally deciding that now’s the time to find other ways to deploy advertising spend.

I think those are the two big trends: Dollars moving to digital out of TV faster than we thought, and major advertisers using now as a time to find other channels beyond Facebook and Google.

So when you look at how that is impacting Bustle’s business, has it returned to pre-COVID levels?

For us, when we reflect upon the year 2020, we see that we had a great first quarter, we see that we’re having an incredible fourth quarter, and we have a big, epic crater in the second and third quarters. So when we look at the year, we basically have to say to ourselves, if it were not for that crater in the second and third quarters, what would this year have looked like? We would have had revenue well in excess of $100 million. Now, we’re gonna have revenue a little bit under $100 million.

But when we think about how we prepare for 2021 and set goals for 2021, we have to set goals for 2021 as though COVID had never happened, we have to set goals for 2021 without using Q2 and Q3 as a sort of excuse for lowering expectations. Because the fourth quarter, the quarter we’re currently in, has exceeded our wildest expectations.

People sort of sat up and took notice of the company because you had a pretty aggressive acquisition strategy. I imagine that strategy had to change a little bit in 2020. To what extent do you feel that ambition is something that you can pick up again?

So to be clear, not only do we feel great about our strategy, our strategy was critical in helping our company survive and ultimately thrive in the wake of the virus. You know, we made two acquisitions [in 2019] — in the science and technology category, we bought Inverse, which is a science and technology publication, and then Josh Topolsky launched a tech-and-gadget publication for us called Input Magazine that’s growing very quickly.

It’s critical that we had that strategy, because no single advertiser category has performed better for us in 2020 than tech — we more than tripled our revenue from technology clients this year, because technology has thrived through COVID. Had we not had an acquisition strategy, had we not diversified into tech media publishing, we certainly would not have had the outcome we had in 2020. That’s just the reality.

Categories like beauty, fashion, retail were very hard hit. Those have traditionally been our bread and butter, and they’re going to be great again, in 2021. But this spring, beauty companies weren’t doing so well, because people weren’t leaving the house. So the strategy worked, in part, because we diversified the categories in which we created content, which allowed us to diversify the advertiser base. And we’re gonna continue full speed ahead in 2021.

Now, you know, we did six acquisitions in 2019. I don’t know if we’ll do six acquisitions in 2021. But I want to do a lot more than one acquisition in 2021.

Watch Virgin Orbit launch a rocket to space from a modified 747 for the first time

By Darrell Etherington

Virgin Orbit scored a major success on Sunday, with a test flight that not only achieved its goals of reaching space and orbit, but also of delivering payloads on board for NASA, marking its first commercial mission, too. The launch was a success in every possible regard, which puts Virgin Orbit on track to becoming an active launch provider for small payloads for both commercial and defense customers.

Today's sequence of events for #LaunchDemo2 went exactly to plan, from safe execution of our ground ops all the way through successful full duration burns on both engines. To say we're thrilled would be a massive understatement, but 240 characters couldn't do it justice anyway. pic.twitter.com/ZKpoi7hkGN

— Virgin Orbit (@Virgin_Orbit) January 18, 2021

Above, you can watch the actual launch itself – the moment the LauncherOne rocket detaches from ‘Cosmic Girl,’ a modified Boeing 747 airliner that takes off normally from a standard aircraft runway, and then climbs to a cruising altitude to release the rocket, which then ignites its own engines and flies the rest of the way to space. Virgin Orbit’s launch model was designed to reduce the barriers to carrying small payloads to orbit vs. traditional vertical take-off vehicles, and this successful test flight proves the model works.

Virgin Orbit now joins a small but growing group of private launch companies who have actually reached space, and made it to orbit. That should be great news for the small satellite launch market, which still has much more demand than there is supply. Virgin Orbit also offers something very different from current launch providers like SpaceX, which typically serves larger payloads or which must offer rideshare model missions for those with smaller spacecraft. The LauncherOne design potentially means more on-demand, response and quick-turnaround launch services for satellite operators.

WhatsApp-Facebook data-sharing transparency under review by EU DPAs after Ireland sends draft decision

By Natasha Lomas

A long-running investigation in the European Union focused on the transparency of data-sharing between Facebook and WhatsApp has taken the first major step towards a resolution. Ireland’s Data Protection Commission (DPC) confirmed Saturday it sent a draft decision to fellow EU DPAs towards the back end of last year.

This will trigger a review process of the draft by other DPAs. Majority backing for Facebook’s lead EU data supervisor’s proposed settlement is required under the bloc’s General Data Protection Regulation (GDPR) before a decision can be finalized.

The DPC’s draft WhatsApp decision, which it told us was sent to the other supervisors for review on December 24, is only the second such draft the Irish watchdog has issued to-date in cross-border GDPR cases.

The first case to go through the process was an investigation into a Twitter security breach — which led to the company being issued with a $550,000 fine last month.

The WhatsApp case may look very timely, given the recent backlash over an update to its T&Cs, but it actually dates back to 2018, the year GDPR begun being applied — and relates to WhatsApp Ireland’s compliance with Articles 12-14 of the GDPR (which set out how information must be provided to data subjects whose information is being processed in order that they are able to exercise their rights).

In a statement, the DPC said:

“As you are aware, the DPC has been conducting an investigation into WhatsApp Ireland’s compliance with Articles 12-14 of the GDPR in terms of transparency, including in relation to transparency around what information is shared with Facebook, since 2018. The DPC has provisionally concluded this investigation and we sent a draft decision to our fellow EU Data Protection Authorities on December 24, 2020 (in accordance with Article 60 of the GDPR in order to commence the co-decision-making process) and we are waiting to receive their comments on this draft decision.

“When the process is completed and a final decision issues, it will make clear the standard of transparency to which WhatsApp is expected to adhere as articulated by EU Data Protection Authorities,” it added.

Ireland has additional ongoing GDPR investigations into other aspects of the tech giant’s business, including related to complaints filed back in May 2018 by the EU privacy rights not-for-profit, noyb (over so called ‘forced consent’). In May 2020 the DPC said that separate investigation was at the decision-making phase — but so far it has not confirmed sending a draft decision for review.

It’s also notably that the time between the DPC’s Twitter draft and the final decision being issued — after gaining majority backing from other EU DPAs — was almost seven months.

The Twitter case was relatively straightforward (a data breach) vs the more complex business of assessing ‘transparency’. So a final decision on WhatsApp seems unlikely to come to a swifter resolution. There are clearly substantial differences of opinion between DPAs on how the GDPR should be enforced across the bloc. (In the Twitter case, for example, German DPAs suggested a fine of up to $22M vs Ireland’s initial proposal of a maximum of $300k). Although there is some hope that GDPR enforcement of cross border cases will speed up as DPAs gain experience of the various processes involved in making these co-decisions.

Returning to WhatsApp, the messaging platform has had plenty of problems with transparency in recent weeks — garnering lots of unwelcome attention and concern over the privacy implications of a confusing mandatory update to its T&Cs which has contributed to a major migration of users to alternative chat platforms, such as Signal and Telegram.

The backlash led WhatsApp to announced last week that it was delaying enforcement of the new terms by three months. Last week Italy’s data protection agency also issued a warning over a lack of clarity in the T&Cs — saying it could intervene using an emergency process allowed for by EU law (which would be in addition to the ongoing DPC procedure).

 

On the WhatsApp T&Cs controversy, the DPC’s deputy commissioner Graham Doyle told us the regulator had received “numerous queries” from confused and concerned stakeholders which he said led it to re-engage with the company. The regulator previously obtained a commitment from WhatsApp that there is “no change to data-sharing practices either in the European Region or the rest of the world”. But it subsequently confirmed it would delay enforcement of the new terms.

“The updates made by WhatsApp last week are about providing clearer, more detailed information to users on how and why they use data. WhatsApp have confirmed to us that there is no change to data-sharing practices either in the European Region or the rest of the world arising from these updates. However, the DPC has received numerous queries from stakeholders who are confused and concerned about these updates,” Doyle said.

“We engaged with WhatsApp on the matter and they confirmed to us that they will delay the date by which people will be asked to review and accept the terms from February 8th to May 15th. In the meantime, WhatsApp will launch information campaigns to provide further clarity about how privacy and security works on the platform. We will continue to engage with WhatsApp on these updates.”

While there’s no doubt Europe’s record of enforcement of its much vaunted data protection laws against tech giants remains a major weak point of the regulation, there are signs that increased user awareness of rights and, more broadly, concern for privacy, is causing a shift in the balance of power in favor of users.

Proper privacy enforcement is still sorely lacking but Facebook being forced to put a T&Cs update on ice for three months — as its business is subject to ongoing regulatory scrutiny — suggests the days of platform giants being able to move fast and break things are firmly on the wain.

Similarly, for example, Facebook recently had to delay the launch of a dating feature in Europe while it consulted with the DPC. It also remains limited in the data it can share between WhatsApp and Facebook because of the existence of the GDPR — so still can’t share data for ad targeting and product enhancement purposes, even under the new terms.

Europe, meanwhile, is coming with ex ante rules for platform giants that will place further obligations on how they can operate with the aim of counteracting abusive behaviors and bolstering competition in digital markets.

 

Tencent-backed Hike, once India’s answer to WhatsApp, has given up on messaging

By Manish Singh

India’s answer to WhatsApp has completely moved on from messaging.

Hike Messenger, backed by Tencent, Tiger Global and SoftBank and valued at $1.4 billion in 2016, earlier this month announced that it was shutting down Sticker Chat, its messaging app.

The startup, founded by Kavin Bharti Mittal, this month pivoted to two virtual social apps called Vibe and Rush, said Mittal, who is the son of telecom giant Airtel’s chairman Sunil Bharti Mittal.

In a series of tweets earlier this month, Kavin said that India will never have a homegrown messenger that makes inroads in the world’s second largest market unless it chooses to ban Western companies from operating in the nation. “Global network effects are too strong,” he said. WhatsApp has amassed over 450 million users in India, its biggest market by users.

Mittal described opportunities in building virtual worlds as a “much better approach for today’s world that is unconstrained by cheap, fast data and powerful smartphones.”

In recent years, Hike made bets on stickers and emojis to cater to the younger population in India. In a meeting with TechCrunch in late 2019, Mittal said that the startup was overwhelmed with the engagement stickers on its platform and was working to automate development of personalized stickers.

In a different meeting last year, Mittal showcased emojis that replicated human expressions and a virtual hangout place called HikeLand. Vibe is the rebranded version of HikeLand and the emojis Hike developed will continue to be available to users on both the newer apps, Mittal said earlier this month.

Hike, which has raised more than $260 million to date, had enough runway last year, Mittal said, who hinted that the startup may raise more capital a year later.

Hike also attempted to build its own operating system through acquisition of a startup called Creo. In 2018, Hike launched Total OS that aimed to cater to users with low-cost Android smartphones and slow internet data.

The startup later shut down the project. Mittal told TechCrunch that the arrival of Reliance Jio, which prompted Airtel and Vodafone to lower mobile data tariff on their networks, solved the data issues in the country and Total OS was no longer needed in the market.

proSapient raises $10M Series A led by Smedvig Capital to expand expert network platform

By Mike Butcher

For several years there has been talk about how to leverage ‘experts’ online. How do you ‘suck their brains’ for information in an efficient manner, whether it be for research into companies or sectors, often for investment purposes. Major players in this arena include GLG, Third Bridge, Guidepoint and Alphasights. With the pandemic destroying many means of hearing experts – conferences and events for instance – and turning the entire world into a remote working experiment, platforms like these are now far more relevant than they ever were before.

So it’s perhaps unsurprising that the expert network and primary research platform, proSapient, has now closed a $10m Series A investment led by Smedvig Capital. Noted high-profile investor Guy Hands and existing investors 24 Haymarket also participated in the round. This brings the total raised by proSapient to date to $18m. The company will use the cash to expand internationally.

proSapient is essentially a SaaS platform for interrogating expert networks. It’s aimed mainly at investors and consultants to gather data. The platform matches experts to projects and provides transcripts. You can gather insight over the phone or in-person; launch bespoke surveys; conduct small strategy projects with a small group of experts. You can search, filter messaging, and also collaborate internally on the platform. It now claims to be servicing over 100 clients across Europe and the USA, with revenue up over 100% year on year. 

Margo Polishchuk, Co-Founder of proSapient, said in a statement: “This funding round will facilitate our strategic objective of being a leading  primary research platform for the private equity and consulting sectors.”

Rob Toms, managing director at Smedvig Capital, commented: “We’re excited to be working with Margo and Jordan to continue their impressive growth and international expansion. They have a great team, strong market position and a clear vision of where the business is going.”

Additionally, proSapient recently appointed Mike Wroe, former group CFO of Just Eat plc, as Chairman.

Samsung vice chairman Jay Y. Lee sent back to prison in bribery case

By Catherine Shu

Samsung Electronics vice chairman Jay Y. Lee is back in prison following a retrial of his 2017 conviction in a bribery case that helped lead to the downfall of former South Korean president Park Guen-hye. The Seoul High Court sentenced Lee to 30 months on Monday.

Lee was originally convicted of bribery in 2017 and sentenced to five years, but was released in 2018 after the sentence was reduced and suspended on appeal. In August 2019, however, South Korea’s Supreme Court overturned the appeals court, ruling that it was too lenient, and ordered the case to be retried.

Lee was expected to become chairman of Samsung after the death of his father, Lee Kun-hee, in October 2020. He has served as the chaebol’s de facto leader since his father suffered a stroke in 2014. With Lee’s sentencing today, it is unclear who will take over his responsibilities at Samsung.

Charges against Lee included bribing Park to gain support for deals that would have helped Lee inherit control of Samsung from his father. The illegal payments played a major role in the corruption scandal that led to Park’s impeachment, arrest and 25-year prison sentence.

 

The bribery case is separate from another one Lee is involved in, over alleged accounting fraud and stock manipulation. Hearings in that case begun in October.

TechCrunch has contacted Samsung for comment.

Goama lets developers integrate a social gaming platform into their apps

By Catherine Shu

Goama (also known as Go Games) lets developers quickly integrate social games into their apps. Some of Goama’s clients have used it for promotional campaigns, while others rely on the platform, which introduces new games every week, to add a full-fledged gaming function to their app.

The startup, which recently took part in SOSV’s accelerator program, presented last week during CES at the Taiwan Tech Arena pavilion. The event is over, but Goama’s virtual booth is still up.

Some of Goama’s clients are “super apps,” or apps that offer several services and want to include games, too. To better serve super apps, Goama recently introduced a tournament model in addition to its subscription model for users.

[gallery columns="2" ids="2097598,2097599"]

 

The startup says that integrating Goama’s platform can help apps grow brand awareness when people share their results or invite other players tournaments. It also increases user engagement, with players typically spending more than 16 minutes per session playing games. So far, the platform has a combined total of 2.5 million unique users.

The company currently focuses on Asia and Latin America, where mobile penetration is growing quickly, and works with more than 15 partners, including GCash and Rappi, to enable digital payments and communications. Its gaming platform’s user interface can be customized to match host apps and rewards can include points and other prizes that can be spent inside the app. Some companies that have used Goama include food delivery app FoodPanda, Snickers and money transfer app WavePay.

Twitter is bringing Moments to Indian social app Dailyhunt

By Manish Singh

Five years after its launch, Twitter Moments is growing beyond the American social networking platform.

On Monday, Twitter said it had partnered with Dailyhunt to bring Moments to the Indian social app. Dailyhunt app now has a dedicated tab called ‘Twitter Moments India’ to showcase curated tweets pertaining to news and other events in the world’s second largest internet market.

The partnership will allow Twitter to extend its reach in India, where according to mobile insight firm App Annie (data of which an industry executive shared with TechCrunch), it had fewer than 75 million monthly active users last month. Dailyhunt, which last month raised $100 million in a round from Google, Microsoft and AlphaWave, in comparison, claims to reach over 285 million users each day.

Unlike Twitter, Dailyhunt is also popular in smaller Indian cities and towns. The Indian social app, which serves users in 14 local languages, termed its partnership with Twitter as its “biggest collaboration” to date.

“At Twitter, we are committed to doing what we can to ensure people can keep up with what the world is talking about at any given time. Moments — a curated set of Tweets about a particular topic — are a powerful way to do so. With this partnership with Dailyhunt, a platform that caters to diverse languages and readers from all parts of India, we are thrilled to extend Twitter Moments to the Dailyhunt app,” said Manish Maheshwari, Managing Director of Twitter India, in a statement.

Umang Bedi, co-founder of Dailyhunt and former head of Facebook India, said, “the past year has shown us the power of public opinion and awareness and it is incumbent upon us to mobilize this discourse by making information more accessible, more reliable, and more engaging. When a trusted partner with our shared vision of enabling consumers to create and share information without barriers validates our platform with their presence, we know we are on the right path.”

Flipkart doubles down on rewards program, partners with 5,000 retail outlets in India

By Manish Singh

Flipkart on Monday launched SuperCoin Pay that its customers will be able to use across thousands of retail stores across the country as Walmart-owned e-commerce giant bets on its loyalty program to win and sustain its user base in the world’s second largest internet market.

The Bangalore-headquartered e-commerce giant said it had partnered with over 5,000 retail outlets including TimesPoints, Peter England, Cafe Coffee Day and Flying Machine across India to give its customers a “greater value and choice” to cash in on their Flipkart loyalty program, called SuperCoin Rewards. Flipkart customers earn these SuperCoins when they make purchases on the e-commerce platform.

Customers will be able to pay up to 100% of the bill value through SuperCoins, Flipkart said, pointing out that traditional loyalty programs have struggled to gain traction because they locked customers to their platform and made it difficult to convert reward points to cash.

Its retail partners operate in a wide-range of categories including fashion, grocery, food and beverages, travel, health and wellness. These retail partners will offer a QR code to make it easier for Flipkart customers to redeem their rewards points.

The move comes as giant e-commerce firms in India aggressively partner with physical and digital stores across the country. Amazon, too, has broadened its offering in recent years to offer coupons and discounts that Amazon Pay customers can redeem when making purchases at Urban Company, Domino’s, BigBazaar, More, Oyo Rooms, Licious, BookMyShow, Swiggy, and RedBus, for instance.

“The lines between online and offline shopping are becoming increasingly blurred, and our intention is to make the consumers’ shopping experience more rewarding, no matter where they shop,” said Prakash Sikaria, Vice President of Growth and Monetization at Flipkart, in a statement.

“Being a part of the SuperCoin programme enables our partners to reap the benefits of Flipkart’s 300 million customer base through a truly integrated rewards initiative,” he added.

Flipkart said customers on its platform have earned over a billion SuperCoin to date.

Personio raises $125M on a $1.7B valuation for an HR platform targeting SMEs

By Ingrid Lunden

With the last year changing how (and where) many of us work, organizations have started to rethink how well they manage their employees, and what tools they use to do that. Today, one of the startups that is building technology to address this challenge is announcing a major round of funding that underscores its traction to date.

Personio — the German startup that targets small and medium-sized businesses (10-2,000 employees) with an all-in-one HR platform covering recruiting and onboarding, payroll, absence tracking and other major HR functions — has picked up $125 million in funding at a $1.7 billion post-money valuation.

The Series D is being co-led by Index Ventures and Meritech, with previous backers Accel, Lightspeed Venture Partners, Northzone, Global Founders Capital and Picus all participating.

The $1.7 billion valuation is a big jump on the company’s $500 million valuation a year ago, and it comes after a year where the startup has doubled its revenues, and was not on the hunt to raise, with much of its previous fundraising still in the bank.

Personio currently counts some 3,000 SMEs in Europe as customers.

In an interview, Hanno Renner, the co-founder and CEO of Personio, said that the startup would be using the funding to continue building out the product — which operates a little like Workday, but built for much smaller organizations — as well as expanding its presence in Europe.

Although SMEs can be a notoriously challenging customer segment, Renner said that a new opportunity has emerged: a new wave of people in the SME sector have started to realise the value of having a modern and integrated HR platform.

“We started Personio in 2016 wanting to become the leading HR platform for mid-market companies, and we knew it could be a great company, but we realize it can be hard to grasp what HR really means,” he said. “But I think what has driven our business in the past year has been the realization that HR is not just an important part, but maybe the most important part, of any business.”

It may take one magic turn to convert users, he said, by providing (as one example) tools to recruit, sign contracts and onboard new employees remotely. Still, he acknowledges that the mid-market — especially those companies not built around technology — has been “lagging for years,” with many still working off Excel spreadsheets, or even more surprisingly, pen and paper. “Supporting them by helping them to digitize in a more efficient way has been driving our business.”

Personio is not the only startup hopeful that the shift in how we work will bring a new appreciation (and appetite) for purchasing HR tools. Others like Hibob have also seen a big boost in their business, and have also been raising money to tap into the opportunity more aggressively.

Hibob is looking to build in more training tools, underscoring the feature race that Personio will also have to run to keep up.

But given the sheer numbers of SMBs in the European market — more than 25 million, and accounting for more than 99% of all enterprises, according to research from the European Union — the fact that many of them have yet to adopt any kind of HR platform at all, there remains a lot of growth for a number of players.

“SMEs are the backbone of the European economy, employing 100 million people across the continent, but it is also a sector that has been neglected by software companies focused predominantly on large enterprises,” Martin Mingot, a partner at Index who sits on Personio’s board, said in a statement. “Personio changes that, having created a set of powerful tools tailored to address the needs of small businesses.”

“We have had the pleasure of working with some of the most successful SaaS companies in the world, and given Personio’s success over the past five years and the immense market potential, we strongly believe in Personio’s ability to build an equally successful and impactful business,” added Alex Clayton, general partner at Meritech Capital, in his own statement. “After many great discussions with Hanno over recent years, we are now excited to be joining the journey.” Clayton is also joining the board with this round.

Startups at CES showed how tech can help elderly people and their caregivers

By Catherine Shu

The COVID-19 pandemic shined a harsh spotlight on the challenges many elderly people face. Older adults are among the highest-risk groups for developing cases that need hospitalization and nursing homes were especially vulnerable to outbreaks. While dealing with COVID-19, the elderly have also faced many other problems, including the difficulty of accessing medical care for chronic conditions during lockdowns and isolation.

Many of these issues won’t go away after the pandemic. According to the United Nations, the global population of people 65 and over is growing faster than any other age group. At the same time, there is a critical shortage of caregivers, especially for elderly people who want to continue living at home instead of moving into nursing homes.

Tech can help in many ways: by helping caregivers (and reducing burnout), allowing seniors to perform health monitoring at home and creating tools to combat isolation. During CES, there were several “age-tech” presentations. One of the most notable was AARP Innovation Lab, the non-profit’s startup accelerator program. It presented nine companies at the virtual show.

Zibrio's smart scale for assessing postural stability, or balance

Zibrio’s smart scale for assessing postural stability, or balance

One common theme among AARP’s group was tech that helps elderly people “age in place,” or stay in their homes or communities instead of moving into a nursing home. For example, Wheel Pad designs accessible home and work spaces that can be installed into existing structures and sites. Mighty Health is an app that pairs users with health coaches, certified trainers and personalized nutrition plans, while Zibrio, a scale that assesses users’ balance to predict if they are at risk for a fall, can also be incorporated into at-home routines.

Other startups from AARP Innovation Lab focus on helping caregivers, too. For example, FallCall Solutions’ creates Apple Watch apps that send alerts if a fall is detected and help family members check on users. Another app, called Ianacare, helps family members coordinate caregiving tasks and ask for support. End-of-life planning is one of the most emotionally difficult processes for families, and Cake, an “end-of-life platform” helps by providing tools for estate and health care planning, as well as resources to help relatives cope with caregiving issues and grief.

Other startups center on medical care. For people with chronic conditions, Folia Health helps monitor the progress of treatments. On the clinical side, Embleema’s software allows clinical investigators to share data and design studies, making pharmaceutical research more efficient.

Other noteworthy age-tech startups at CES included Nobi, a smart lamp that automatically turns on when users stand up and sends alerts to family members if they fall. Nobi can also be used in residences and nursing homes.

Caregiver Smart Solution's app for caregivers to coordinate tasks

Caregiver Smart Solution’s app for caregivers to coordinate tasks

Caregiver Smart Solutions is a multi-faceted platform that makes it easier for seniors to stay at home with a machine learning-based app for early detection of potential health issues, fall sensors, monitors and emergency buttons. For people with incontinence, DFree, a wearable device, can reduce stress by monitoring how full their bladder is with an ultrasound sensor and keeping track of their average time between bathroom visits. It’s available for both consumers and health care facilities.

A diagram of companion robot Cutii's features

A diagram of companion robot Cutii’s features

For elderly people living in nursing homes, Rendever is a virtual reality platform that wants to help reduce isolation. It can be used with reminiscence therapy, which guides individuals with dementia through experiences that remind them of their pasts, and to allow virtual travel to landmarks. Cutii, a companion robot, also seeks to reduce loneliness. While companion robots have been a mainstay of CES for years, Cutii sets itself apart with entertainment like music, games and live events. It also has video call and night patrol features.

Signal and Telegram are also growing in China – for now

By Rita Liao

As fears over WhatsApp’s privacy policies send millions of users in the West to Signal and Telegram, the two encrypted apps are also seeing a slight user uptick in China, where WeChat has long dominated and the government has a tight grip on online communication.

Following WhatsApp’s pop-up notification reminding users that it shares their data with its parent Facebook, people began fleeing to alternate encrypted platforms. Telegram added 25 million just between January 10-13, the company said on its official Telegram channel, while Signal surged to the top of the App Store and Google Play Store in dozens of countries, TechCrunch learned earlier.

The migration was accelerated when, on January 7, Elon Musk urged his 40 million Twitter followers to install Signal in a tweet that likely stoked more interest in the end-to-end encryption messenger.

The growth of Telegram and Signal in China isn’t nearly as remarkable as their soaring popularity in regions where WhatsApp has been the mainstream chat app, but the uplift is a reminder that WeChat alternatives still exist in China in various capacities.

Signal amassed 9,000 new downloads from the China App Store between January 8 and 12, up 500% from the period between January 3 and 7, according to data from research firm Sensor Tower. Telegram added 17,000 downloads during January 8-12, up 6% from the January 3-7 duration. WhatsApp’s growth stalled, recording 10,000 downloads in both periods.

Sensor Tower estimates that Telegram has seen about 2.7 million total installs on China’s App Store, compared to 458,000 downloads from Signal and 9.5 million times from WhatsApp.

The fact that Telegram, Signal, and WhatsApp are accessible in China might come as a surprise to some people. But China’s censorship decisions can be arbitrary and inconsistent. As censorship monitoring site Apple Censorship shows, all major Western messengers are still available on the China App Store.

The situation for Android is trickier. Google services are largely blocked in China and Android users revert to Android app stores operated by local companies like Tencent and Baidu. Neither Telegram nor Signal is available on these third-party Android stores, but users with a tool that can bypass China’s Great Firewall, such as a virtual private network (VPN), can access Google Play and install the encrypted messengers.

The next challenge is actually using these apps. The major chat apps all get slightly different treatment from Beijing’s censorship apparatus. Some, like Signal, work perfectly without the need for a VPN. Users have reported that WhatsApp occasionally works in China without a VPN, though it loads very slowly. And Facebook doesn’t work at all without a VPN.

“Some websites and apps can remain untouched until they reach a certain threshold of users at which point the authorities will try to block or disrupt the website or app,” said Charlie Smith, the pseudonymous head of Great Fire, an organization monitoring the Chinese internet that also runs Apple Censorship.

“Perhaps before this mass migration from WhatsApp, Signal did not have that many users in China. That might have changed over the last week in which case the authorities could be pondering restrictions for Signal,” Smith added.

To legally operate in China, companies must store their data within China and submit information to the authorities for security spot-checks, according to a cybersecurity law enacted in 2017. Apple, for instance, partners with a local cloud provider to store the data of its Chinese users.

The requirement raises questions about the type of interaction that Signal, Telegram, and other foreign apps have with the Chinese authorities. Signal said it never turned over data to the Hong Kong police and had no data to turn over when concerns grew over Beijing’s heightened controls over the former British colony.

The biggest challenges for apps like Signal in China, according to Smith, will come from Apple, which is constantly under fire by investors and activists for submitting to the Chinese authorities.

In recent years, the American giant has stepped up app crackdown in China, zeroing in on services that grant Chinese users access to unfiltered information, such as VPN providers, RSS feed readers and podcast apps. Apple has also purged tens of thousands of unlicensed games in recent quarters after a years-long delay.

“Apple has a history of pre-emptively censoring apps that they believe the authorities would want censored,” Smith observed. “If Apple decides to remove Signal in China, either on its own initiative or in direct response to a request from the authorities, then Apple customers in China will be left with no secure messaging options.”

UK’s Bloom & Wild raises $102M to seed its flower delivery service across Europe

By Ingrid Lunden

Bloom & Wild, a London-based startup that takes an updated and online approach to the very traditional business of ordering and delivering flowers, has seen business blossom in the last year. And today, it is announcing a big round of funding to help it double down on the opportunity ahead.

The company has raised £75 million ($102 million), a Series D that it plans to use to continue expanding across Europe (in addition to the UK, it operates today in Ireland, France, Germany and Austria) as it also continues to build out the business through technology, hiring new talent, thinking up more ideas and new partnerships, such as a new deal with supermarket giant Sainsbury’s to spearhead a new brick-and-mortar push.

“We’ve been extremely fortunate to have been able to continue trading when we know how tough the past nine months or so has been for many,” said Aron Gelbard, Bloom & Wild’s co-founder & CEO, in an emailed interview. “It’s been a real joy & privilege to help keep our customers connected with their loved ones when we’ve all been missing being able to see our friends & family. We’ve certainly seen strong sales during periods of national restrictions across our markets, but sales have held strong during periods of relatively limited restrictions as we’ve retained new customers and converted many of our new recipients too.”

The funding is being led by General Catalyst, with Index Ventures, Novator, Latitude Ventures, D4 Ventures (established by Hanzade Dogan), and existing investors such as Burda Principal Investments also participating.

Bloom & Wild is not disclosing its valuation, but it comes on the heels of some very strong growth. Revenues for the company were up 160% in 2020, with some 4 million deliveries of flowers in that period — more than had ever been made in the lifetime of the company previously, it said. That helped push the company into the black, its first profitable year.

Founded in 2014, Bloom & Wild had only raised around $35 million before this, according to PitchBook, which estimates its pre-money valuation at $88 million.

Now, you might be asking yourself, “How can people think about flowers at a time like this? We’re in the midst of a global pandemic, for crying out loud.”

And indeed, that is so. But it seems that there is a special place for flower-based gifts, whether for other people or just for ourselves, that are appreciated especially when times are hard.

And while we’ve also seen people move quickly past that extra toilet paper, face masks and other practical purchases to click buy on many not-totally-essential indulgences — from fancy food and drinks through to nicer furniture since they’re spending so much time at home — I’d argue flowers have a unique position in the indulgence/gifting pantheon.

In the midst of a health pandemic that has severely curtailed how people can interact with each other in person, getting flowers from a person can take on a new and sometimes deeper meaning. The physical presence — the colors, the smells, the rustle of life — they convey can be a proxy for the human interaction that we’re missing.

“We’re privileged to have played our part in keeping people connected in this difficult period, and I’m proud of our growing team for scaling our operations whilst maintaining the signature thought and care we put into every order,” said Gelbard in a statement. “With this new backing from General Catalyst and Index we start 2021 with renewed energy to pursue our vision of becoming the world’s leading and most loved flower company.”

If you’ve ever ordered flowers for someone or for yourself, you know there is no shortage of options for doing so. In the UK alone there are some 7,500 florists according to the British Florist Association, and that’s not counting thousands more online-only retailers (like Bloom & Wild) or the many services that knit these together into wider delivery networks such as Interflora or FTD. FTD has been something of a consolidator here: in 2018 it acquired a US flower delivery startup called BloomThat (which likened itself to an Uber for flowers).

While some people still prefer to shop for tangible things like flowers in person, a lot of that has moved into the virtual world over the years — especially for those ordering flowers to be delivered to someone — making it in some ways much easier to launch and grow online-only flower businesses.

Bloom & Wild’s product approach is to sell flowers as bouquets, and to give people the option of making the smaller of those bouquets extremely easy to deliver, by designing a box that fits through the typical UK mail slot (either in your front door or elsewhere).

The bouquets it sells, meanwhile, are Instagrammably eye-catching, created for the kind of person who might discover them on that social network (where it has around 250,000 followers), and targeted at our modern predicament. (For example, the bouquet pictured above is called “The Ezra”. Its description: “This cocktail of vibrant oranges and soft lilacs reminds us of holidays in the sun. And the people we’d spend them with. Missing your travel buddy? Send them this instant day-brightener.”)

There are options for ordering flowers for offices — although these are almost certainly not getting ordered as much days — and to build subscriptions, as you might with any other D2C product you order online. And once Bloom & Wild gets to know you and what you like, that will inform how and which flowers on the service are presented to you. Over time it’s moved into more than flowers — it sold Christmas trees this season, and offers a few gifts alongside its bouquets — and it is gradually building out a brick-and-mortar presence, too.

But most of all, it seems the company has seen a surge of interest not just because of the efficiency and targeting of its service, but because it has gotten the product right — specifically delivering flowers that people like.

Gelbard points out that the company has “the most direct supply chain in the flower industry, sourcing directly from growers. This means our customers get excellent value and their flowers last longer, arriving in bud and regularly blooming for up to ten days or more.”

He also notes that the company has built a “bespoke technology and data science platform” focused on a quick and easy ordering experience on app or web. Lastly, “in a traditionally commoditised industry reliant on paid search, we’ve taken an innovative approach to product and brand development,” he notes, pointing to the “letterbox flower” invention.

“Bloom & Wild has infused the traditional flower giving experience with predictive analytics and technology to deliver a fresher, less-travelled bouquet to the people you care most about,” said Adam Valkin, MD, General Catalyst, in a statement. “What’s most impressive about Aron and his team has been their duality of focus since launch. They’re bringing industry-leading efficiency to the intricate supply chain challenges of flower delivery while simultaneously building a beloved experience that connects with consumers in a remarkably authentic way.”

Martin Mignot, Partner at Index Ventures added: “Bloom & Wild team have reinvented every aspect of flower delivery and gifting, challenging the status quo at every stage. Through relentless execution, Aron and his team have created a delightful experience for customers, becoming the fastest growing flower business in Europe. We’re thrilled to partner with them as they scale internationally.”

Yesterday — January 17th 2021TechCrunch

Virgin Orbit reaches orbit for the first time

By Darrell Etherington

Virgin Orbit launched its LauncherOne rocket to orbit for the first time today, with a successful demonstration mission that carried a handful of satellites and will attempt to deliver them to low Earth orbit on behalf of NASA. It’s a crucial milestone for the small satellite launch company, and the first time the company has shown that its hybrid carrier aircraft/small payload orbital delivery rocket works as intended, which should set the company up to begin commercial operations of its launch system very soon.

This is the second attempt at reaching orbit for Virgin Orbit, after a first try in late May ended with the LauncherOne rocket initiating an automatic safety shutdown of its engines shortly after detaching from the ‘Cosmic Girl’ carrier aircraft, a modified Boeing 747 that transports the rocket to its launch altitude. The company said that it learned a lot from that attempt, including identifying the error that caused the failsafe engine shut down, which it corrected in advance of today’s mission.

Virgin’s Cosmic Girl took off at just before 2 PM EDT, and then released LauncherOne from its wing at roughly 2:40 PM EDT. LauncherOne had a “clean separation” as intended, and then ignited its own rocket engines and quickly accelerated to the point where it was undergoing the maximum amount of aerodynamic pressure (called max q in the aerospace industry). LauncherOne’s main engine then cut off after its burn, and its payload stage separated, crossing the Karman line and entering space for the first time.

It achieved orbit at around 2:49 PM EDT, and will release its payload of small satellites in roughly 30 minutes. We’ll update this post to provide the results of this part of its mission later, but this is already a major milestone and huge achievement for the Virgin Orbit team.

Virgin Orbit’s unique value proposition in the small launch market is that it can take off and land from traditional runways thanks to its carrier aircraft and mid-air rocket launch approach. That should provide flexibility in terms of launch locations, allowing it to be more responsive to customer needs in terms of geographies and target orbital deliveries.

In 2017, Virgin Orbit was spun out of Virgin Galactic, to focus exclusively on small payload orbital launch. Virgin Galactic then devoted itself entirely to its own mission of offering commercial human spaceflight. Virgin Orbit itself create its own subsidiary earlier this year, called VOX Space, which intends to use LauncherOne to deliver small satellites to orbit specifically for the U.S. national security market.

 

GitHub’s head of HR resigns in light of termination of Jewish employee

By Megan Rose Dickey

A GitHub internal investigation has revealed the company made “significant errors of judgment and procedure” in the firing of the Jewish employee who cautioned his coworkers about the presence of Nazis in the DC area on the day of insurrection at the U.S. Capitol.

In a blog post today, GitHub COO Erica Brescia said the company’s head of HR took full responsibility for what happened and resigned from the company yesterday.

“In light of these findings, we immediately reversed the decision to separate with the employee and are in communication with his representative,” Brescia said in the blog post. “To the employee we wish to say publicly: we sincerely apologize.”

On the day a violent mob of Trump supporters stormed the U.S. Capitol, a worried GitHub employee warned his co-workers in the D.C. area to be safe.

After making a comment in Slack saying, “stay safe homies, Nazis are about,” a fellow employee took offense, saying that type of rhetoric wasn’t good for work, the former employee previously told me. Two days later, he was fired, with a human relations representative citing a “pattern of behavior that is not conducive to company policy” as the rationale for his termination, he told me.

In an interview with TechCrunch earlier this week, the now-former employee said he was genuinely concerned about his co-workers in the area, in addition to his Jewish family members. During that interview, he said he would not be interested in getting his job back, but would be interested in other forms of reconciliation.

Threat of inauguration violence casts a long shadow over social media

By Taylor Hatmaker

As the U.S. heads into one of the most perilous phases of American democracy since the Civil War, social media companies are scrambling to shore up their patchwork defenses for a moment they appear to have believed would never come.

Most major platforms pulled the emergency break last week, deplatforming the president of the United States and enforcing suddenly robust rules against conspiracies, violent threats and undercurrents of armed insurrection, all of which proliferated on those services for years. But within a week’s time, Amazon, Facebook, Twitter, Apple and Google had all made historic decisions in the name of national stability — and appearances. Snapchat, TikTok, Reddit and even Pinterest took their own actions to prevent a terror plot from being hatched on their platforms.

Now, we’re in the waiting phase. More than a week after a deadly pro-Trump riot invaded the iconic seat of the U.S. legislature, the internet still feels like it’s holding its breath, a now heavily-fortified inauguration ceremony looming ahead.

(Photo by SAUL LOEB/AFP via Getty Images)

What’s still out there

On the largest social network of all, images hyping follow-up events continued to circulate mid this week. One digital Facebook flyer promoted an “armed march on Capitol Hill and all state Capitols,” pushing the dangerous and false conspiracy that the 2020 presidential election was stolen.

Facebook says that it’s working to identify flyers calling for “Stop the Steal” adjacent events using digital fingerprinting, the same process it uses to remove terrorist content from ISIS and Al Qaeda. The company noted that it has seen flyers calling for events on January 17 across the country, January 18 in Virginia and inauguration day in D.C.

At least some of Facebook’s new efforts are working: one popular flyer TechCrunch observed on the platform was removed from some users’ feeds this week. A number of “Stop the Steal” groups we’d observed over the last month also unceremoniously blinked offline early this week following more forceful action from the company. Still, given the writing on the wall, many groups had plenty of time to tweak their names by a few words or point followers elsewhere to organize.

With only days until the presidential transition, acronym-heavy screeds promoting QAnon, an increasingly mainstream collection of outrageous pro-Trump government conspiracy theories, also remain easy to find. On one page with 2,500 followers, a QAnon believer pushed the debunked claim that anti-fascists executed the attack on the Capitol, claiming “January 6 was a trap.”

QAnon sign

(Photo by Win McNamee/Getty Images)

On a different QAnon group, an ominous post from an admin issued Congress a warning: “We have found a way to end this travesty! YOUR DAYS ARE NUMBERED!” The elaborate conspiracy’s followers were well represented at the deadly riot at the Capitol, as the many giant “Q” signs and esoteric t-shirt slogans made clear.

In a statement to TechCrunch about the state of extremism on the platform, Facebook says it is coordinating with terrorism experts as well as law enforcement “to prevent direct threats to public safety.” The company also noted that it works with partners to stay aware of violent content taking root on other platforms.

Facebook’s efforts are and late and uneven, but they’re also more than the company has done to date. Measures from big social networks coupled with the absence of far-right social networks like Parler and Gab have left Trump’s most ardent supporters once again swearing off Silicon Valley and fanning out for an alternative.

Social media migration

Private messaging apps Telegram and Signal are both seeing an influx of users this week, but they offer something quite different from a Facebook or Twitter-like experience. Some expert social network observers see the recent migration as seasonal rather than permanent.

“The spike in usage of messaging platforms like Telegram and Signal will be temporary,” Yonder CEO Jonathon Morgan told TechCrunch. “Most users will either settle on platforms with a social experience, like Gab, MeWe, or Parler, if it returns, or will migrate back to Twitter and Facebook.”

That company uses AI to track how social groups connect online and what they talk about — violent conspiracies included. Morgan believes that propaganda-spreading “performative internet warriors” make a lot of noise online, but a performance doesn’t work without an audience. Others may quietly pose a more serious threat.

“The different types of engagement we saw during the assault on the Capitol mirror how these groups have fragmented online,” Morgan said. “We saw a large mob who was there to cheer on the extremists but didn’t enter the Capitol, performative internet warriors taking selfies, and paramilitaries carrying flex cuffs (mislabeled as “zip ties” in a lot of social conversation), presumably ready to take hostages.

“Most users (the mob) will be back on Parler if it returns, and in the meantime, they are moving to other apps that mimic the social experience of Twitter and Facebook, like MeWe.”

Still, Morgan says that research shows “deplatforming” extremists and conspiracy-spreaders is an effective strategy and efforts by “tech companies from Airbnb to AWS” will reduce the chances of violence in the coming days.

Cleaning up platforms can help turn the masses away from dangerous views, he explained, but the same efforts might further galvanize people with an existing intense commitment to those beliefs. With the winds shifting, already heterogeneous groups will be scattered too, making their efforts desperate and less predictable.

Deplatforming works, with risks

Jonathan Greenblatt, CEO of the Anti-Defamation League, told TechCrunch that social media companies still need to do much more to prepare for inauguration week. “We saw platforms fall short in their response to the Capitol insurrection,” Greenblatt said.

He cautioned that while many changes are necessary, we should be ready for online extremism to evolve into a more fractured ecosystem. Echo chambers may become smaller and louder, even as the threat of “large scale” coordinated action diminishes.

“The fracturing has also likely pushed people to start communicating with each other via encrypted apps and other private means, strengthening the connections between those in the chat and providing a space where people feel safe openly expressing violent thoughts, organizing future events, and potentially plotting future violence,” Greenblatt said.

By their own standards, social media companies have taken extraordinary measures in the U.S. in the last two weeks. But social networks have a long history of facilitating violence abroad, even as attention turns to political violence in America.

Greenblatt repeated calls for companies to hire more human moderators, a suggestion often made by experts focused on extremism. He believes social media could still take other precautions for inauguration week, like introducing a delay into livestreams or disabling them altogether, bolstering rapid response teams and suspending more accounts temporarily rather than focusing on content takedowns and handing out “strikes.”

“Platforms have provided little-to-nothing in the way of transparency about learnings from last week’s violent attack in the Capitol,” Greenblatt said.

“We know the bare minimum of what they ought to be doing and what they are capable of doing. If these platforms actually provided transparency and insights, we could offer additional—and potentially significantly stronger—suggestions.”

Original Content podcast: Martin Scorsese and Fran Lebowitz have a good time in ‘Pretend It’s A City’

By Anthony Ha

The concept behind the new Netflix documentary series “Pretend It’s A City” is pretty straightforward: Author Fran Lebowitz talks, while Martin Scorsese (who’s both director and an on-camera presence) listens and laughs.

Lebowitz’s musings across seven episodes are organized by loose themes, such as “Metropolitan Transit” and “Library Services,” with the more recent footage interspersed with clips from older interviews. That’s pretty much it as far as structure goes; while Lebowitz shares a number of amusing anecdotes, there’s no attempt to explore the broader arc of her career or explain why we’re watching a show about her.

And yet, as we discuss on the latest episode of the Original Content podcast, we both enjoyed watching the entire show.

Darrell describes Lebowitz as the consummate party guest, full of aphorisms and provocative opinions on everything from technology to sports to the New York York City subway. And there’s something delightful about watching an accomplished director like Scorsese just relaxing and having a good time.

On the other hand, it would be a little exasperating when we didn’t find Lebowitz’s as remarks quite as hilarious as Scorsese did, and watching one episode after another meant that she eventually wore out her welcome. So it’s probably best to enjoy the series an at a time, rather than binging the whole thing at once.

In addition to reviewing “Pretend It’s A City,” we also discussed Nielsen’s rankings of the most popular streaming services of 2020.

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also follow us on Twitter or send us feedback directly. (Or suggest shows and movies for us to review!)

If you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:34 Listener email
5:46 Nielsen streaming data discussion
14:03 “Pretend It’s a City” review

After a record year for Israeli startups, 16 investors tell us what’s next

By Mike Butcher

Israel’s startup ecosystem raised record amounts of funding and produced 19 IPOs in 2020, despite the pandemic. Now tech companies across industries are poised for an even better year, according to more than a dozen investors we talked to in the country.

Mainstay sectors like cybersecurity continue to matter, they said, but are maturing (more about that here). Some people are more excited by emerging areas like artificial intelligence, which has been a focus of the country’s military for years, and like cybersecurity is now producing many fresh teams of founders. Other investors felt that a broader range of industries, like fintech and biotech, would eventually produce the biggest companies in the country.

Overall, local investors cited the country’s focus on global markets from day one, general support from the Israeli government and deep relationships with Silicon Valley and other global tech centers as additional factors that are powering it forward today.

Here are the investors in their own words, for any TechCrunch reader who is interested in hiring, investing or founding a company in the country. Oh, and one more thing. We just launched Extra Crunch in Israel. Subscribe to access all of our investor surveys, company profiles and other inside tech coverage for startups everywhere. Save 25% off a one- or two-year Extra Crunch membership by entering this discount code: THANKYOUISRAEL

The investors:


Boaz Dinte, Qumra Capital

What trends are you most excited about investing in, generally?
At Qumra, we get excited about companies that disrupt traditional industries while doing good and improving quality of life. Our portfolio includes some great examples such as Fiverr that has disrupted the labor market by unlocking the global talent pool, or Talkspace, which is providing access to therapy to all.

What’s your latest, most exciting investment?
Our latest investment is At-bay, the insurance company for the digital age. At-bay offers an end-to-end solution with comprehensive risk assessment, a tailored cyber insurance policy, and active, risk-management service.

Traditional insurers don’t have the know-how to properly and continually assess risk and approach digital risk the same way they approach physical products, through a statistical model that tries to predict the future based on past events. This a great example of company that is disrupting a traditional market.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
As a growth fund, we are sector agnostic and diversify our investments across multiple industries. Would be happy to add proptech and agritech startups to our portfolio.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We stay clear of nonregulated industries and do not invest in cryptocurrency-related companies, gambling, etc.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are focused on Israeli and Israeli-related companies. As growth companies they may have moved to NY or CA with their headquarters and maintained their R&D in Israel.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
A great amount of talent is cultivated in the military, which has spawned innovative cyber, AI and machine-learning companies. Also, significant experience and know-how have been accumulated here in big data analytics. SaaS models and cloud technologies have eliminated some of the barriers for Israeli companies and enable companies to quickly set up and set up a proof of concept.

A few highlights in our portfolio include AppsFlyer, JoyTunes, Riskified, Talkspace and Guardicore.

Data-driven AppsFlyer, spearheaded by Oren Kaniel, is an exciting mobile-attribution company that is rapidly growing ($200 million+ ARR in 2020) yet maintains a unique DNA. JoyTunes, led by Yuval Kaminka has developed a music-learning platform that has skyrocketed in 2020. The platform has been widely adopted doing so much good for so many people in a short amount of time. Guardicore is disrupting the traditional firewall market by providing fine-grained segmentation for greater attack resistance. Led by CEO Pavel Gurevich the company is seeing excellent traction. Riskified makes e-ommerce easier and safer and enables a thriving e-commerce environment. Founder duo Eido Gal and Assaf Feldman are a powerhouse of vision and execution capabilities. Talkspace has not only created the leading online therapy business, but is actually improving the quality of life of hundreds of thousands of Americans, which are gaining access to therapy for the first time. Founding husband and wife Oren and Roni Frank are the ultimate power couple — creating an incredible business while creating some real impact.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Tech investors must make sure that Israel is part of their portfolio. Same as VC funds are deeply acquainted with Silicon Valley, tech investors cannot ignore this hub of innovation that has produced global market leading companies and serial entrepreneurs

What are the opportunities startups may be able to tap into during these unprecedented times?
Products and services that require anything requiring on-site visits and integration as well as a long sales cycle involving face-to-face meetings and customer education are negatively impacted during this time. The upside is that companies that will develop a remote and simplified approach can reap gains from this time. Such an example is Augury from our portfolio that has developed an end-to-end solution to provide manufacturers with early, actionable and comprehensive insights into machine health and performance. This has proved to be of crucial value in the supply chain during the pandemic.

How has COVID-19 impacted your investment strategy?
Earlier in the month we have closed our third fund, Qumra III, at $260 million. This was done in a short time in a period when traveling and face-to-face meetings were impossible. Commitments to this fund, which is larger than its predecessor, included increased investments form existing LPs as well as new LPs from new geographies. This is a vote of confidence in the Israeli growth market in general and in Qumra in particular and has been a great achievement and source of hope going forward.

Rafi Carmeli, Viola Growth

What trends are you most excited about investing in, generally?
Platforms that are transforming how people and businesses operate, go about their business or leverage their core assets, using superior products, data and AI.

What’s your latest, most exciting investment?
Zoomin Software.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Transformation of the CFO and treasury suite of tools.

What are you looking for in your next investment, in general?
A+ team, superior product demonstrated with business/market traction and a sizable market opportunity.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Any area that needs to compete both with incumbents and also a set of already successful “new age” companies that made the first step of meaningful disruption.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Plenty of interesting opportunities but like many places, competitive around the best of the best.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Definitely see changes in evolution of young startups given the behavioral changes caused by COVID.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Any area that is exposed to mass physical engagement (pockets in travel, food, sports, etc.) are at risk. Remote engagement and productivity have potential to disrupt more industries, such as corporate events/virtual events.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Founders are generally resilient and based on their view on the company’s position post-COVID (winner/at risk) and the capital resources available, should decide on appropriate level of caution/aggressiveness.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes in many areas. In general software has proven to be a winner and specifically SaaS as a business model has proven its resilience.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The speed and decisiveness at which humanity acted to adjust to the effects and aftermath of the pandemic, and importantly to proactively get us all out of the health and economic crisis as quickly as possible (e.g., the speed of creating vaccines).

Any other thoughts you want to share with TechCrunch readers?
If something won’t matter in five years, don’t waste more than five minutes worrying about it now — easier said than done!

Yonatan Mandelbaum, TLV Partners

What trends are you most excited about investing in, generally?
Fintech (specifically embedded finance or financial SaaS), synthetic bio. This is in addition to traditional focus areas that we remain bullish on — cloud infrastructure, ML infra and cyber.

What’s your latest, most exciting investment?
Unit.co, meshpayments.com.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
There simply isn’t enough innovation in fintech from the Israeli ecosystem. Our locale has managed to produce three of the most prolific insurtech companies (Next, Lemonade and Hippo), has a strong history of successful fintech companies (Payoneer, Forter, Riskified) and even has a few very promising earlier-stage ventures (Unit, Melio). That said, only about 10% of our overall deal flow are fintech companies. Areas such as vertical banking, embedded finance, compliance as a service and consumer finance consistently get overlooked by young Israeli founders.

What are you looking for in your next investment, in general?
The cliche VC answer: strong team, big market. This remains constant during all times.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
(1) Cybersecurity — with one caveat. Israel will always be at the forefront of cyber innovation, and thus there will always be an opportunity for fledgling cyber companies in Israel. That said, it is 100% oversaturated, and there are too many examples of strong technical founders creating “yet another” SaaS security startup. (2) Remote work collaboration — clearly an issue that needs solving, but we have unsurprisingly seen an absurd amount of companies in the space. They are largely reactionary companies, and the companies that will prove to be the winners in this market have already been in the market for quite some time (Zoom, Alack, Miro, etc.).

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Fintech and bio are very well-positioned to thrive in Israel. In 10 years I wouldn’t be surprised if Israel is more well-known for those two sectors than it is for its cyber companies. Some companies to keep an eye on: Next Insurance, Unit, Mesh Payments, Aidoc, Deepcure, Immunai.

How should investors in other cities think about the overall investment climate and opportunities in your city?
I’m not saying anything new, but Israel is known as the startup nation for a reason. There is an incredible, thriving entrepreneurship culture that breeds fascinating companies weekly. Interestingly, valuation trends seem to trail the U.S. by about 12-18 months. So for later-stage VCs around the globe, Israel can represent an interesting opportunity to do deals of the same quality that they are doing in their locale, but for a more reasonable price.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not particularly. Israel a small country, and even if there may be a residential exodus from Tel Aviv, there won’t be a commercial one.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and proptech are more exposed due to COVID-19.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID hasn’t impacted our investment strategy much. We have remained steady in our search for interesting early-stage software opportunities and our commitment to invest substantial amounts even at the seed round. The biggest worries of the portfolio founders surround slower enterprise sales cycles due to WFH and smaller budgets from potential customers. Our early advice to founders was to ensure runway for 18 months in order to weather the storm. Recently however, after witnessing the incredibly founder-friendly fundraising landscape, our advice has been to put the pedal to the metal, reach certain benchmarks and raise capital.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
No, there still hasn’t been enough time. That said, I will say that the initial enthusiasm of WFH has faded. The vast majority of our companies are clamoring to be back in the office.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
My grandparents both recently passed away from COVID-19. Despite the tragic loss that it was for my family, there was one moment that truly gave me hope. I had the opportunity to visit my grandmother in the COVID ward at a local hospital before she passed (in full protective gear of course). Before entering the ward, while the nurses were going over the protocols with me and four other individuals who were there to visit their sick family members, I was surprised to realize that the five of us in the room were an eclectic bunch. Jewish, Muslim, religious and not, young and old. In that moment, we all gave each other strength, wished each other well and it gave me hope that we can truly become a unified country in the near future. The next exponential growth that occurs in the Israeli ecosystem will be when there is an influx of minorities (Arabs, ultra-Orthodox) into the workforce.

Natalie Refuah, Viola Growth

What trends are you most excited about investing in, generally?
DevOps, martech, digital health.

What’s your latest, most exciting investment?
RapidAPI.

What are you looking for in your next investment, in general?
Exciting team, hypergrowth, disruptiveness.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cyber, automotive.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Close to 100%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
DevOps, cyber, enterprise software.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very positively.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
There will be changes, that’s for sure.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?

E-commerce tech-related companies will thrive.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We lowered our check size per company. My advice — if you are “with COVID trend” push hard, if you are “against COVID trend” — preserve cash.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
More time with my kids, but in general I miss hugging people when i meet them, and I prefer meeting people face to face.

Any other thoughts you want to share with TechCrunch readers?
Let the vaccine go!

Daniel Cohen, Viola Ventures

What trends are you most excited about investing in, generally?
Games, vertical AI and AI agencies, digital health.

What’s your latest, most exciting investment?
Hyperguest, creating direct connectivity between hotels and OTAs. It’s the perfect next-gen travel infrastructure for the world post-pandemic.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
The biggest trend in the post-COVID world will be the new work environment. We would love to see more startups that will create corporate solutions that are focused on the future of work. That can be at the workplace or at the home.

What are you looking for in your next investment, in general?
Unique, innovative go-to-market. Leveraging technology to reach consumers in a more innovative way. It’s basically innovation in growth hacking, not only in great products.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cybersecurity — the market is real and important, but there are too many startups with small niche solutions.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The most exciting trends locally are everything AI with focus on B2B apps. Same goes with digital health and consumer-focused health applications.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Israel is the #1 region globally in unicorn production, probably the hottest startup region right now.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

The biggest change has been on company culture, which is hard to maintain in a distributed work-from-home environment. Companies need to be innovative and creative in maintaining/building culture, which was so much easier pre-COVID.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic? What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

The announcements around the vaccines make it clear that the end of the pandemic is near. I think 2021 will be amazing.

Ben Wiener, Jumpspeed Ventures

What trends are you most excited about investing in, generally?
Jumpspeed invests exclusively in pre-seed and seed-stage startups from the Jerusalem startup ecosystem.

What’s your latest, most exciting investment?
MDGo.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Not really, we are sector agnostic/bottom-up rather than thesis driven.

What are you looking for in your next investment, in general?
10x better, paradigm-shift solution to a large, near-term, acute business problem, produced and led by a complementary founding team (hacker+hustler+designer).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cybersecurity, crypto, telehealth.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
EXCLUSIVELY, see above.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Jerusalem is well-positioned in certain clusters such as computer vision, general enterprise SaaS, AI/ML and healthtech.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Our city’s startup ecosystem is underexploited and generates a few fantastic under-the-radar opportunities per year.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Little direct impact on strategy because by definition I am investing in things that will go to market and ripen over years.

Founders’ biggest worries are employee well-being, after that access to overseas customers and markets.

Advice to founders: Stay calm and healthy, play the long game, take care of yourself, your family and your employees, don’t panic or cut staff reactively.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes but not that I can attribute directly to the pandemic.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
No specific moment, just the general resilience and ability to adapt to the radically changing new realities that our portfolio founders have exhibited.

Any other thoughts you want to share with TechCrunch readers?
“Entrepreneurship in advanced technology, is not merely a matter of decision-making; it is a matter of imposing cognitive order on situations that are repeatedly ill-defined.” — W. Brian Arthur, “The Nature of Technology”

No situation has been this ill-defined in the past century. Keep calm and carry on :-)

Inbal Perlman, TAU Ventures

What trends are you most excited about investing in, generally?
At TAU, we are interested in a variety of sectors and evaluate each potential investment independently. In regards to trends, we look at trends with a grain of salt understanding that trends might come and go. When we see a particular trend, we try to understand if there is a need behind the trend and see beyond the initial hype. We want to assure that a startup is meeting a real need in the market. We are particularly interested in technologies that do not require too much time and capital to get to market.

What’s your latest, most exciting investment?
We invested in a company called Xtend, which is creating human-machine telepresence allowing us to “step into” a machine, anywhere in the world, breaking the limits of physical reality. In particular, it develops solutions that allow people to interact with drones and other unmanned machine technologies. The company’s technology enables humans to extend themselves into the action by allowing them to virtually sit inside the drone for various tactical missions. What is exciting about Xtend is how the technology can be implemented in a variety of ways from defense and homeland security to reimagining entertainment, gaming and cinematography.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We like to see startups that are disrupting traditional industries by solving basic challenges and needs with innovative means. There are some industries that haven’t changed in many years. And if you create a technology that can be simply integrated into existing markets, it has the potential to gain significant traction and drastically change an industry. So we would love to see more startups going “back to the basics” asking questions about commonly felt pain points and innovating to solve those pains.

What are you looking for in your next investment, in general?
We want to get the feeling from the entrepreneur that they are professional, ready for the entrepreneurial journey, have the right mindset and skill set and will conquer the world. We understand that with early-stage startups, the product or service will likely change and therefore pay significant attention to the entrepreneurs themselves as an early indicator of future success.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Technology trends that often come and go can create an oversaturated market for startups. For example, previously there was hype around drones. Now, only the strongest companies in the drone industry have stuck around. Today, there are many startups responding to needs exacerbated by the COVID-19 pandemic such as remote learning and remote work. It is important to filter out whether these are solutions that will be around for a while and survive a post-COVID world or are temporary.

We are more cautious about particular industries. In edtech, those who have successfully done exits, have done so at low amounts ($200 million-$300 million). For us, we are seeking larger exits. Blockchain is a difficult sector because it lacks a clear regulatory environment, subsequently raising many questions. Similarly, the cannabis industry also does not have a fixed regulatory environment across countries. Any small regulation change can highly impact the company. These are the sectors and areas that we are more cautious around.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We invest in startups that are exclusively Israeli startups but are targeted for a global market. At TAU Ventures, we have 1,000 sq. meter coworking office space where majority of our portfolio companies and accelerator program companies sit on a daily basis. On a daily basis we are engaging with our startups through kitchen chats and hallway encounters. Through our coworking space, we are directly investing in our local ecosystem both supporting entrepreneurs and identifying rising entrepreneurs.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
In Israel, many Israeli entrepreneurs bring a high level of technical capabilities that they learn in the army such as in cyber and AI. After acquiring this knowledge and ability, they are well-prepared and able to transfer it to the commercial area. This is why we see many successful startups coming out of Israel particularly in these fields.
For example, founders of our portfolio company, SWIMM all come from leading elite tech training units in the army (Aram, Talpiot) and before founding SWIMM, established ITC (Israel Tech Challenge, a nonprofit high-tech academy that offers in-demand tech training programs in English in Tel Aviv, inspired by the IDF’s 8200 unit).
Furthermore, Tel Aviv University (TAU), our affiliated university, is a leading research institute and academic leader in AI, engineering and other sciences and is producing entrepreneurs with high levels of knowledge. 50% of entrepreneurs in Israel have studied at TAU. And TAU ranked eighth worldwide as a top university producing VC-backed entrepreneurs, and the first outside of the US. So we are very excited by the added advantage we have in being affiliated closely with the university and the talent which it is producing.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The significant advantage of Israel is its small size. Because there is little to no local market, startups automatically think globally in their marketing and growth strategies. To best understand Israel and Israelis, it’s important to understand the influence of the military and the reality of thriving in a complex political environment in the Middle East. Military service is compulsory for all Israelis at the age of 18. The army plays an important role in the socialization, education, skills development, social network and fabric of Israeli society. Many personal and professional networks are the result of army service. As Israelis, we live in an environment where we need to constantly be innovative and one step ahead to survive. This innovative mindset has been instilled in our state of mind and cultural DNA.
We are proud that In Israel we have academics at the highest level in the world across a variety of fields. Multinationals from all over the world have local R&D centers or innovation hubs in Israel to source from the local talent pool. This presence of multinationals creates mutual exposure for both startups and corporates alike.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At TAU Ventures, the majority of our portfolio and accelerator companies sit next to us at our 1,000 sq. meter coworking space. At our offices, we love seeing our founders and their employees on a regular basis. This is how we have successfully created a strong familial culture at our VC. Throughout COVID, companies have continued to come in person to the office. This has reinforced to us that there is no exchange for face-to-face engagement. As early-stage investors, we understand that at this stage it is all about the people. At the end of the day, people want to be around people and you can not replace the experience of sharing a cup of coffee and shaking someone’s hand.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
COVID affected companies in different ways. For some, it boosted business and for others it led them to shift their strategy and approach. Our companies who had clients in the travel industry or airports were obviously affected. In this situation, the company looked at their technology and reconsidered where and how their technology could be relevant to other consumers and industries. This particular company saw an opportunity to shift to logistics and supply chain clients. COVID is presenting opportunities for companies to reevaluate their target market and discover new applications of their technology for different purposes.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
As a result of COVID, we have come to understand that things simply are taking more time, such as processes of raising funds or achieving the next milestone. We are patient and empathetic to the experiences of our startups.

The startups’ most significant worry is that they will not succeed to raise enough funds before reaching their next milestone. And more so, if they are unable to prove their achievement milestones in time, then they might be forced to close business. As a result, our startups are raising more funds during this time to assure a longer runway. Our startups are also keenly aware of how periods of crisis might call on them to pivot and adapt to the current circumstances. Startups are making decisions around adjusting budgets, determining whether customers are still relevant, anticipating whether the circumstances are temporary or will renormalize and ultimately whether there is a completely new path to pivot to.
In light of the circumstances, we are advising our portfolio startups to raise more funds in next rounds to have runway for at least 1.5 years and not to be afraid of making drastic changes (i.e., pivots, changing budget, raising more funds).

As a fund, we are assuring our entrepreneurs that if they choose to change paths, it is okay. Working from a coworking space alongside many of our founders enables us to stay updated on the startups, foster a strong internal ecosystem and network, and provide ongoing psychological safety for our entrepreneurs, which is ever so needed during these unprecedented times for startups.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Two of our portfolio companies have experienced impressive growth and are thriving in 2020.
1. Gaviti is a SaaS company that specializes in receivable collections acceleration. Its system maps out the collection process to spot inefficiencies and optimize clients’ procedures. Specifically during COVID, many companies had increased economic pain points related to generating cash flow on a timely, efficient basis. Gaviti’s solution helps companies manage their collection payments. As a result of of the economic crisis this year, Gaviti saw fast growth in clients and have thrived during 2020.
2. Medorion understands that health companies and hospitals want us to get regular health checkouts. Using AI and behavioral science, Medorion is driving people to take action for their own health by increasing engagement and communication between insurance companies and patients. During COVID, they are combating the coronavirus pandemic by applying their technology to create highly personalized engagement and communication plans targeted at those individuals who are at highest risk of COVID-19.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
In recent months, it is inspiring to see our entrepreneurs continue fighting despite the uncertain economic and global circumstances. Many of our companies are continuing to recruit and hire. Our founders are resilient and are finding creative means to succeed. It is also a blessing to have a large coworking space hosting the offices of 10 startups and to see employees continue to come in to the office day in and day out working with their teams.

Any other thoughts you want to share with TechCrunch readers?
TAU Ventures is a venture capital fund, affiliated with Tel Aviv University, for investing in early-stage, cutting-edge technologies based in Israel. TAU Ventures is the first and only university-affiliated VC in Israel.

The fund has a unique, triangle model creating ecosystem connections between industry, academy and entrepreneurs. We connect to available resources at Tel Aviv University, foster strong partnerships in the high-tech industry and support entrepreneurs as they work side by side in the coworking office space of the VC located on the university campus.

TAU Ventures also runs incubation programs in a variety of tech fields and offers a vibrant hub for entrepreneurs with concrete opportunities for design partnerships with international leading companies: AlphaC program (in partnership with NEC, Checkpoint, Innogy, Team8 and Cybereason) and The Xcelerator (an acceleration program with the Israeli Security Agency).
In 2018, IVC awarded TAU Ventures an award for one of the most active VCs in Israel. And in 2019, Geektime ranked TAU Ventures among the top five best VCs in Israel.

David (Dede) Goldschmidt, Samsung Catalyst Fund

What trends are you most excited about investing in, generally?
Digital transformation and AI.

What’s your latest, most exciting investment?
Solarisbank (Germany).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
AI-acceleration technologies seems to be overcrowded.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less than 50%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
AI, cyber security. Excited about our portfolio company Innoviz (LiDAR). Excited about Avigdor Willenz, serial entrepreneur, including our portfolio company Habana Labs that was acquired for $2 billion.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Highly dynamic and competitive, very global approach of entrepreneurs, risk takers, “can-do” approach.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I don’t expect that to happen because a strong ecosystem of entrepreneurs, investors and service providers would be needed, and it takes years for that to grow.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
Industries serving brick-and-mortars are likely to get weakened by accelerated transition to online.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our advice has been to be careful with cash. There is a disconnect between the strong momentum in the tech financing vis-a-vis overall economic crisis (unemployment, governments deficits, etc.). We have yet to see the full impact of COVID-19 on tech startups and better be prepared for that.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, for pure digital plays.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Frankly, I remain concerned because of the disconnect alluded to above. Vaccine momentum brings some hope, but too early to tell.

Any other thoughts you want to share with TechCrunch readers?
I am very concerned from potential crunch in early stage. While overall financing numbers are growing almost across all geographies, investments are heavily weighted toward later stage and unicorns, and much fewer new companies are being formed. This will have dramatic impact on the tech ecosystem a few years out, if it does not change in 2021.

Dror Nahumi, Norwest Venture Partners

What trends are you most excited about investing in, generally?
We are a large fund that invests in early-to-late-stage companies across a wide range of sectors with a focus on consumer, enterprise and healthcare. My focus is primarily in Israeli companies and I’m seeing many exciting startups in security, SaaS, enterprise and cloud infrastructure, robotics and semiconductors.

What’s your latest, most exciting investment?
We are naturally excited about all our latest investments. I recently invested in three seed-stage companies that are in stealth mode: an open-source cloud infrastructure company, a people analytics (HR) SaaS company and a next-generation business-intelligence platform.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I believe there is a massive opportunity for startups to develop new solutions to fuel the digitization of next-generation enterprises. We’re seeing innovation and activity in this sector, but there’s so much more to be done, especially in light of challenges and vulnerabilities that COVID-19 has exposed. The hottest areas will be in human resources, production, security, infrastructure, sales and remote work.

What are you looking for in your next investment, in general?
We look for a great team, strong intellectual property and compelling execution. The new product idea can be a replacement (i.e., replace existing products that are aging, low performance) or a new category. Gong.io is a great example of a new category we invested in early on. We created the new “revenue intelligence” category that offers businesses automated, unfiltered and real-time insights on customer interactions and deals. This helps businesses understand what’s actually being said to transform the way they go to market.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Security is currently oversaturated. There are too many companies doing similar things, which can make it difficult for newcomers to break through. Additionally, most emerging security startups are all claiming to use machine learning and AI to combat the next level of breaches. These are important areas to focus on, but it’s getting harder for these companies to differentiate themselves. That aside, we have made several great investments in security over the years and will continue to invest in great teams.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our team in Israel is 100% focused on our local market.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Numerous industries in the Israeli market are poised to thrive and are doing so currently. Examples include startups in the security, SaaS, enterprise and the cloud infrastructure space, and even consumer services. We are especially excited to continue to witness the growth and success of Gong, VAST Data, WekaIO, Cynet, Wiliot, ActiveFence, Ermetic and SundaySky while building new companies who are still in the stealth stage.

How should investors in other cities think about the overall investment climate and opportunities in your city?
At Norwest and especially among our Israel portfolio companies, we’ve been able to let our companies mature. We’ve given them the time and support they need to reach maturity. This is a very different approach than what we are seeing in other environments.

Today, growth comes before M&A and companies get valuations much quicker. In past years, it was hard to raise money but it’s not so difficult now. In Israel, inside sales and marketing analytics allow companies to sell more effectively now than in the last decade. This gives entrepreneurs flexibility, room to expand into other markets and the ability to hire top talent globally versus just within their own region.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Israel is so small that you are never really too far outside a major city. We expect our startup hub to stay intact even if individuals and businesses choose to move slightly outside of the main CBD.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The travel industry has been massively impacted in every market globally since the COVID-19 outbreak. That said, that means there is a huge opportunity to fill gaps based on business and consumer needs as we approach a post-pandemic normal.

I would say that solutions with huge potential are those centered on hybrid workforces as enterprises rethink the future of work. These have the potential to significantly benefit from the pandemic in the short and long term.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has not impacted our investment strategy. However, in recent conversations with our portfolio companies, it’s clear that brands can emerge stronger than ever with an adaptable strategy, adjusted expectations, strong marketing and B2C communications, and compassionate leadership.

Over the past several months, we’ve advised companies in our portfolio to focus on building their business while prioritizing the safety of their workforce, which could mean further extending work-from-home policies or making remote work a standard option in their hiring practices. Companies’ ability to innovate and adapt while building their business around the new normal will be better positioned to succeed in a post-COVID landscape.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
While it’s not one particular moment, there were many times this past year where our portfolio companies faced major challenges due to the pandemic and were still able to continue to expand their businesses. Every sales quarter that shows growth and success gives me hope.

Sharin Fisher, Fort Ross Ventures

What trends are you most excited about investing in, generally?
I’m mostly excited about AI/ML technologies, cybersecurity companies and the global opportunity in B2B SaaS companies in general; companies that help to optimize business processes and boost efficiency (e.g., one of our portfolio companies, Kryon, is operating in the robotic process automation space, evaluating business processes, and recommending which ones to automate in order to free up underutilized human talent). We are seeing many successful Israeli SaaS companies across the board, from marketing and collaboration tools, business intelligence products, to payment systems.

What’s your latest, most exciting investment?
My latest investment was in a B2B SaaS company that disrupts a huge market. I’m mostly excited about the team, which contains senior executives and second-time entrepreneurs with domain expertise.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

We are looking for companies that have a big market, a compelling story and a clear path to building a large business. When we invest, companies already have traction, a diverse customer base, established and repeatable sales process and metrics. So, when we dive deeper into the company’s metrics we would like to see they support the company’s assumptions and ability to scale up properly.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
WFH enablement tools (from security to communication tools).

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are a global VC with a distributed team, focused on investing in midstage companies based in the U.S. and Israel, that can become global leaders. I’m leading our investments in the Israeli companies, globally.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel is well-positioned to build and grow large companies that can become segment leaders. We are seeing many leading companies across multiple sectors such as mobility (Moovit, Mobileye), cybersecurity (Armis, Cybereason, SentinelOne), fintech (Lemonade, Payoneer, eToro), information technology (Jfrog, Snyk), etc.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The Israeli ecosystem has matured significantly over the last decade, mainly due to repeat entrepreneurs who bring knowledge and relevant experience to the table. They aspire to build meaningful companies. On top of that, there’s more available late-stage capital, allowing companies to stay private longer and become mega-acquisitions/IPO.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The COVID-19 crisis has impacted Israeli founders in terms of how and from where they work. As many Israeli startups aim to tap into the U.S. market, they usually relocate pretty early on, mainly to build relationships with potential customers. Since the pandemic has created a situation where you have to sell your product/service remotely, physical location has become less relevant. In the short term, I believe we’ll see more Israeli founders working out of Israel, especially when taking into account the advantages (e.g., lower cost of living compared to other places like NYC/San Francisco). In the long run, there’s a high probability that founders who can keep the same sales efficiency remotely will continue to work out of their home country.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
All of the segments we look at are thriving or haven’t changed significantly. I’m mostly interested in startups that are able to sell remotely and have an established inside sales team with a simple integration/deployment, because I believe they are in a better position to scale faster even in this climate.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy remains the same; we are still looking to back companies that can become global leaders and aspire to disrupt huge markets. In terms of the work with our portfolio companies, our founders have already made the needed adjustments and are now more focused on capital efficiency and expanding the runway.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Most of our portfolio adapted to the crisis quite fast and have enough runway to reach their next milestone. For some of our portfolio companies, especially those that support the digital transformation, the pandemic has created business opportunities and accelerated the adoption of their technology. As a result, we deployed additional capital to help them leverage this momentum.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Although the pandemic has created uncertainty for all of us, we have still been seeing more (+14) Israeli companies reaching unicorn status/going public during the past months.

Adi Levanon Chazan, Flint Capital

What’s your latest, most exciting investment?
Sensi.ai.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
A bit over 50% of the portfolio are Israeli startups, the remaining 50% divide between Europe and the U.S.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Fintech has been continuing to grow and will thrive over time. I’m excited about companies like Melio, Unit, Acrocharge and Rapyd.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very important to have local partners and try to expand the local network as much as possible, best would be to have a person on the ground dedicated to Israeli investments.

Chaim Meir Tessler, partner, OurCrowd

What trends are you most excited about investing in, generally?
Fintech, cloud services, quantum software, cyber.

What’s your latest, most exciting investment?
Closed at time of writing this: D-ID.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Built from the ground up remote educational platforms.

What are you looking for in your next investment, in general?
Founders I like to work with and believe in.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Micromobility, autonomous car sensors.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
60%-70% local.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Cyber, computer vision, semiconductor, quantum computing all thrive.

The banking infrastructure companies starting to emerge look fantastic.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Great market, easy to network, mostly friendly to coinvestment.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
With the world becoming flat, innovation will definitely sprout up in new areas.

How has COVID-19 impacted your investment strategy?
COVID hasn’t strongly affected our overall strategy other than a slowdown in March/April. The biggest worry is inadequate funding/runway.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Realizing that we landed in this pandemic on a moment in history that we had the tools needed to enable a large amount of the world’s population to continue working without having to be in a specific physical location.

Noam Kaiser, Intel Capital

What trends are you most excited about investing in, generally?
Cloud adoption through digital transformation to hybrid cloud, 5G, vertical AI-based SaaS.

What’s your latest, most exciting investment?
Cellwize — basically opening up RAN (4G and 5G) to any API, cloud environment compatibility.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Solution allowing application to run across data sources in multiple buckets across hybrid/multicloud environments.

What are you looking for in your next investment, in general?
Deep understanding of the area and the customer needs, a complementing trend, high revenue potential within five years.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
MLOps, too many, too quickly, Storage at large.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
More.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Safebreach — Red Team automation for cybersecurity teams, Verbit — vertical AI, transcription.

How should investors in other cities think about the overall investment climate and opportunities in your city?
It hasn’t slowed down, plenty of opportunity, you have to move fast.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I don’t see the pandemic having that effect. Hubs will remain as are.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
Anything relying on on-prem slowed down; this can be semiconductors and retail. but it’s recovering.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not really, we invest the same amount into the same amount of companies at same stages as before.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, deals are closing, financing is taking place as well as M&As.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Simply lively investment atmosphere, new up rounds and several M&A processes emerging.

Any other thoughts you want to share with TechCrunch readers?
Careful optimism, raise aggressively and cash up when possible, refresh the pipeline and get to it, corporates are back into closing deals.

Tal Slobodkin, StageOne Ventures

What trends are you most excited about investing in, generally?
Cloud computing and​ software infrastructure​/cybersecurity/DevOps/connected everything/deep compute, big data and AI/next-generation storage and data center.

What’s your latest, most exciting investment?
R-Go Robotics are pioneering an artificial perception technology that enables mobile robots to understand complex surroundings and operate autonomously just like humans.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More sophisticated cyber solutions, additional MLOps technologies, AI solutions.

What are you looking for in your next investment, in general?
Deep-tech technology solving complex enterprise challenges.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We see a lot of could monitoring services/SaaS cloud startups all competing with very similar technologies.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Israel 85%; USA 15% — always looking to expand in the U.S. market as well.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
StageOne portfolio companies: Coralogix, Silverfort, Epsagon, Avanan, Neuroblade. Other companies: OwnBackup/RunAI/Verbit/Indegy — all based in Israel.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Less relevant for Israel and more for the U.S., but yes we will probably see new founders from different geographies, which is a good thing, giving new opportunities to people that before may have not considered starting a company.

What are the opportunities startups may be able to tap into during these unprecedented times?
We do see that COVID-19 has less of an effect on the cybersecurity industry as many organizations are looking for new solutions, as the risk of cyberattacks increases due to remote working and refocusing a lot of their activity to the digital world.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our companies continue to adapt and make the necessary changes and plans for the near future. Most of the companies have continued the work-from-home policy.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Seeing our companies continue to grow and expand both in people and product. They all adapted to the situation for both the short term and long run. They have continued to raise funds and some companies have even developed additional products to assist with COVID-19-related issues.

Ayal Itzkoviz, partner, Pitango First

What trends are you most excited about investing in, generally?
Disruption in traditional markets yearning innovation, such as retail, insurtech, logistics, etc.

B2B2B: Companies no longer wish to build things they can buy. Buying key components of the product/software enables companies to focus on the innovation side. One example is Frontegg — the company provides a set of pre-built, essential SaaS product capabilities that can easily and seamlessly integrate within any new or existing SaaS application. This enables dev teams to focus on perfecting the truly differentiating and valuable features at the heart of their SaaS offering. Another viable example is Stripe and its offering in the payments market.

Cyber: 2020 taught us many lessons, one of them is that tech is just getting more exciting as digital transformation is enhanced, and the other is that the digital revolution presents cyber challenges that didn’t exist before. This results in continued opportunities for disruption in this domain.

What’s your latest, most exciting investment?
Frontegg — a startup that transforms the way SaaS is being built, so that developers don’t need to develop nondifferentiating code and features. Frontegg provides a state of the art SaaS-as-a-service platform, perfectly integrated within the company’s stack and allowing it to do what it’s best at: building their own product. Frontegg is the first pre-built suite of universal SaaS capabilities, enabling teams to focus on core features, shorten time-to-market and drive user adoption. Frontegg’s mission is to accelerate the delivery of enterprise-grade SaaS applications while providing the safest, most secure and optimal user experience.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
First: more open-source projects. They do exist, but usually operate under the radar and come out of stealth mode when they’re already mature and beyond the phase of seed and stage on which Pitango First is focused.

Quantum computing, in our view, has reached a point of no return. We’ll be happy to see entrepreneurs, scientists and business people in Israel jumping on the opportunity wagon already now, and build companies now, before the quantum market begins what will surely be an exponential growth.

Lastly are startups with a double bottom line, i.e., startups that while solving a pain point in the market they’re in and have a potential to become category leader, also address an impact category. Pitango is the first VC to integrate ESG practices into its mainstream activities. As part of this strategy, and as a first step, we are focusing on our vast portfolio of companies and work closely with them to embed

ESG into their core practices through a “migration” process.

Pitango aims to move the needle in the venture capital space through the “AND” philosophy: profit AND purpose, capital AND impact. Pitango is introducing a new paradigm of how venture capital does impact and integrates the “AND” philosophy by turning to a new opportunity set: the impact migrants. i.e., those startups that, although might not have been created under the SDG narrative, have the potential and a desire to embrace and track their impact. They will define their impact mission, integrate SDG targets within their business performance and track impact in alignment with financial targets, all without losing sight of their primary mission to deliver superior financial returns.

Furthermore, Pitango applies this AND philosophy beyond its existing portfolio and onto future deal flow review. We call it the “mainstreaming” of impact investing.

What are you looking for in your next investment, in general?
The Israeli market has evolved tremendously in recent years. While the IPO market used to be out of reach for Israeli-born companies, this is no longer the case. We are looking for the visionaries, the dent blowers, the unconventional types who are eager to solve the biggest of challenges and are aiming at building an IPO-able business rather than an M&A one.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Pitango First is focused on Israeli/Israeli-related startups. From time to time we identify an investment opportunity in areas we have defined as strategic, in which the Israeli market isn’t mature enough and for which we believe we can add significant value and then invest in non-Israeli companies.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel is a super strong innovation hub. One of the major evolution trends of recent years is that the traditional glass ceiling that Israeli startups used to tackle has been shattered. Global players realize that now they can get the same upside like SV-based companies, in much more reasonable terms, and sometimes, less competition.
Somewhat counterintuitively, we see the investment climate in these times of COVID-19 being extremely vibrant and competitive. Strong teams are raising significant rounds at record high valuations, which add up to the current belief that COVID-19 didn’t slow, but accelerated the digital transformation.

What are the opportunities startups may be able to tap into during these unprecedented times?
For many seed early-stage startups that have secured funding, COVID-19 didn’t set setbacks in their plans, as they are further from the market from more mature companies. However, such companies, when backed by strong investors, while they may experience decrease in their revenues, are using this period to gain strength by acquiring companies within their ecosystem and position themselves better toward the out-of-pandemic curve that will eventually be here in a few short quarters.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The pattern of investing for the long run during the pandemic. Looking far into the horizon, as veterans of previous crises we were able to share our experience and insights and help them better deal with the crisis. Also, this question can’t be answered without mentioning the COVID-19 vaccines, which set a magnificent example to the extent humanity can benefit when tech, medical companies and governments join hands and engage in a group effort.

Ittai Harel, Pitango HealthTech

What trends are you most excited about investing in, generally?
The consumerization of healthcare.

What’s your latest, most exciting investment?
HomeThrive — a tech-enabled healthcare services company tackling the aging-in-home challenge and helping families help their loved ones age happily.

What are you looking for in your next investment, in general?
An all-star team building a category-defining or category-leading company with demonstrable clinical AND financial outcomes.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Narrow wearables that do not integrate into a clinical or life workflow.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Pitango HealthTech is focused on Israeli/Israeli-related startups. From time to time we identify an investment opportunity in areas we have defined as strategic, in which the Israeli market isn’t mature enough and for which we believe we can add significant value, and then invest in non-Israeli companies.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel has many thriving healthcare sectors — from RPM and computer vision in digital health to cardiovascular in med devices to drug research in biotech and pharma. We are excited about our portfolio company Variantyx (a provider of whole genome sequencing and analytics unique platform solution) and Alike (a patient-facing platform to allow individuals to access and analyze their medical data and to connect to others similar to them). We are also excited to be part of this ecosystem and to lead thought leadership in it.

How should investors in other cities think about the overall investment climate and opportunities in your city?
The healthcare innovation ecosystem in Israel is thriving. There are incredible entrepreneurs and opportunities with global potential and reach that global investors should be aware of.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
To some extent we are witness more disbursement in Israel, but there is nonetheless a strong draw to co-locating in hubs and we expect to see Tel-Aviv and the central area in Israel to continue dominating in terms of attractiveness to strong teams.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?

Hospitals have seen a drastic decline in elective procedures and an overall disruption to their operations and budgets. Startups that are able to introduce new technologies to make this shift efficient and painless stand to win from the current trend.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
For the healthcare industry, COVID-19 has brought challenges — but also opportunities. We believe overall that our companies (and the industry overall) stand to gain from the shift as stakeholders are quicker to adopt changes that before took much longer. We advise our — and all — portfolio companies to prepare for the days after COVID and think through what changes in their specific segment will be long-lasting and are “here to stay.”

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
When the first individual in the U.K. — a 90-year-old woman — received the vaccine. A turning point hopefully for the entire world.

No one knows what anything is worth

By Alex Wilhelm

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Click here if you want it in your inbox every Saturday morning.

Ready? Let’s talk money, startups and spicy IPO rumors.


It was yet another week of startups that became unicorns going public, only to see their valuation soar. Already marked up by their IPO pricing, seeing so many unicorns achieve such rich public-market valuations made us wonder who was mispricing whom.

It’s a matter of taste, a semantic argument, a tempest in a teacup. What matters more is that precisely no one knows what anything is worth, and that’s making a lot of people rich and/or mad.

This is not a new theme. I’ve touched on it for years, but what matters for us today is that there appear to be three distinct valuation bands for companies, and the gaps between them do not appear ready to shrink. You could even argue that they have widened.

Band 1 is the private capital cohort. These are the folks who valued Affirm at $19.93 per share in its September 2020 round and Roblox at $4 billion in February of 2020. Now Affirm is worth $116.58 per share, and Roblox is worth $29.5 billion. Whoops?

Band 2 is the long-term public investing cohort. These are folks critical in the IPO pricing context. They are willing to pay more for startups than the private capital crew. Affirm was not worth under $20 per share to this group, instead it was worth $49 per share just a few months later. Whoops?

Band 3 is the retail cohort, the /r/WallStreetBets, meme-stock, fintech Twitter rabble that are both incredibly fun to watch and also the sort of person you wouldn’t loan $500 to while in Las Vegas. They are willing to pay nearly infinite money for certain stocks — like Tesla — and often far more than the more conservative public money. Demand from the retail squad can greatly amplify the value of a newly listed company by making the supply/demand curve utterly wonky. This is how you get Poshmark more than doubling a strong IPO valuation on its first day.

Most investors do well in today’s world. Though Band 1 likes to blame Band 2 for not being willing to pay Band 3 prices, it always sounds like the private capital folks are merely complaining about sharing some of the winnings with another party.

Regardless, who really knows what anything is worth? I was recently chatting with an early-stage founder who has a history of investing — narrowing it down to 17,823 people, I know — about the price of software companies both private and public and why they may or may not make sense. He said that old valuation models at banks presumed that software companies’ growth would go to zero over time, and that profits would be rare among SaaS concerns. Both concepts were wrong, so prices went up.

But I have yet to have anyone explain to me why companies that would have been valued at 10x next year’s revenues can now get, at median, 18.1x. I have a working theory of what’s going on, but none of it points to sanity, or pricing that is grokkable through a lens that isn’t hype.

(You can hit reply to this email and tell me why I am dumb if you’d like. I will buy the person with the best valuation explanation coffee when the world works again.)

Milestones and megarounds

On the milestone front, it was a huge week for leaving the private markets and joining the Big Kid Club. Namely for Affirm and Poshmark, which priced well and started to trade. And for Bumble, which filed to go public. They are targeting a good IPO window.

But there was lots more going on, including a milestone that caught my eye. M1 Finance, a fintech startup that brings together lots of pieces of the fintech playbook into a single service, reached $3 billion in assets under management (AUM) this week. The company had reached $2 billion in AUM last September, after reaching $1 billion in February of 2020.

Why do we care? The company previously told TechCrunch that it works to generate revenues worth around 1% of AUM. If that percentage has held past its October, 2020 Series C, the company just added around $10 million in ARR in under half a year. That’s a pace of revenue creation that made me sit up and take notice. (Shoutout Josh for never shutting up about the Midwest.)

But I really bring up the M1 Finance milestone for a different reason. Namely that I am consistently surprised at how deep certain markets are. Neobanks that are still growing; the OKR software market’s surprising depth; the ability of M1 to accrete deposits in a market with so many incumbents and well-funded startups.

Perhaps this is why prices make no sense; if you can’t see the edge limits of TAM, can anything be overpriced?

Moving on, some quick notes on things from the week that mattered:

  • GitLab is now worth $6 billion and hit $150 million in annual recurring revenue last year. It grew 75%, we presume year-over-year in its most recent quarter.
  • Fintech upstart LendingPoint raised $125 million at an undisclosed valuation.
  • NYC-based Paige raised $100 million. It uses computers to help make diagnoses.

One more VC Visa-Plaid take

Aziz Gilani, a managing director at Mercury Fund and an advocate of Texas (observe his Twitter handle), wrote in late regarding our query for investor notes on the Visa-Plaid breakup. You can read the rest here.

But who are we to deprive you of useful notes. And Gilani is a nice person. So, here are his $0.02:

My big take-away on the Plaid/Visa deal falling apart is about how fast everything in 2021 is moving. Arguably the biggest advantage of SPACs over direct listings and IPOs is how fast those liquidity events can get done. In a world in which valuation[s] change week to week, the delays created by the DOJ can kill a deal – even if the DOJ would eventually lose in court.

I’m philosophically super negative about the government imposing their will, but I’m also personally excited about the current wave of insurgent startups not getting gobbled up by the FAANGs of the world. For the last several years too many startups fell victim to the “quick exit” mentality personified by Mint selling so fast to Intuit. With fast/cheap capital freely available, today’s crop of startups are going big.

Worth chewing on.

Odds/Ends

What a week. I have only a few things left for you, including some early-stage rounds that I could not get thanks to waves arms around generally but wanted to flag all the same.

  • Goldman Sachs chose Marqeta for Marcus. If you know what those words mean, they matter. If you don’t, congrats on having a life.
  • Nayya raised $11 million for what VentureBeat calls “an insurance benefits management platform,” including money from Felicis.
  • Minna raised €15.5 million for what Tech.eu called a “subscription management app.”
  • Muniq closed a  $8.2M Series A to sell a shake-sort-of-thing that could help with blood sugar control.
  • And from TechCrunch two more highlights, this neat Crossbeam round and more money for Moss.

Hugs,

Alex

Human Capital: Labor issues at GitHub, Facebook’s new civil rights exec and a legal battle against Prop 22

By Megan Rose Dickey

This week kicked off with a report of a GitHub worker who was fired after cautioning his coworkers in the DC area to stay safe from Nazis during the assault on the U.S. Capitol. Meanwhile, Facebook created a new executive role pertaining to civil rights and California’s Proposition 22 faced its first legal challenge this year.

All that and more in this week’s edition of Human Capital.

Facebook hires VP of civil rights

Facebook hired Roy Austin to become its first-ever VP of Civil Rights and Deputy General Counsel to create a new civil rights organization within the company. Austin is set to start on January 19 and will be based in Washington, DC.

Austin most recently served as a civil rights lawyer at Harris, Wiltshire & Grannis LLP. Prior to that, Austin co-authored a report on big data and civil rights and worked with President Barack Obama’s Task Force on 21st Century Policing.

Prop 22 faces lawsuit challenging its constitutionality

A group of rideshare drivers in California and the Service Employees International Union filed a lawsuit alleging Proposition 22 violates California’s constitution. The goal of the suit is to overturn Prop 22, which classifies gig workers as independent contractors in California.

The suit, filed in California’s Supreme Court, argues Prop 22 makes it harder for the state’s legislature to create and enforce a workers’ compensation system for gig workers. It also argues Prop 22 violates the rule that limits ballot measures to a single issue, as well as unconstitutionally defines what would count as an amendment to the measure. As it stands today, Prop 22 requires a seven-eights legislative supermajority in order to amend the measure.

Best tech companies to work for, according to Glassdoor

Glassdoor released its annual ranking of the best companies to work for in 2021. We broke out the top 10 tech companies from the list of large businesses (1,000+ employees) as well as from the small to medium-sized business list.

Despite recent allegations of wrongful firings and demands of better workplace conditions, Google ranked number three on the list of best tech companies, while Facebook ranked fifth. 

Netflix releases first diversity report

This was not the first time Netflix had shared this type of data, but the company had not put a bow on it until now.

Worldwide, women make up 47.1% of Netflix’s workforce. Since 2017, representation of white and Asian employees has been on a slow decline, while representation of Hispanic or Latinx, Black, mixed race and folks from native populations has been on the rise. In the U.S., Netflix is 8.1% Hispanic or Latinx, 8% Black and 5.1% of its employees are mixed race, while 1.3% of employees are either Native American, Native Alaskan, Native Hawaiian, Pacific Islander and/or from the Middle East or North Africa.

Github faces backlash after firing of Jewish employee who made comment about Nazis

On the day a violent mob of Trump supporters stormed the U.S. Capitol, a worried GitHub employee warned his co-workers in the D.C. area to be safe. In an interview with TechCrunch, the now-former employee said he was genuinely concerned about his co-workers in the area, in addition to his Jewish family members. 

TechCrunch agreed to keep the identity of the terminated employee confidential due to fears of his and his family’s safety.

After making a comment in Slack saying, “stay safe homies, Nazis are about,” a fellow employee took offense, saying that type of rhetoric wasn’t good for work, the former employee told me. Two days later, he was fired, with a human relations representative citing a “pattern of behavior that is not conducive to company policy” as the rationale for his termination, he told me.

Now, the terminated employee says he is currently seeking counsel to ensure his family is protected, as well as figure out if he can receive damages or some other form of reconciliation. The fired employee said GitHub has reached out to him for help in the internal investigation, but is waiting to engage with the company until he has legal representation in place.

You can read the full story here.

Dropbox lays off 315 people

Dropbox laid off 11% of its global workforce, which comes to 315 people affected. In an email to employees, CEO Drew Houston said the company simply doesn’t need as much in-office support due to the shift to remote work, “so we’re scaling back that investment and redeploying those resources to drive our ambitious product roadmap

In the note, Houston said the changes will make Dropbox more efficient and nimble this year.

Apple launches racial justice and equity programs

Apple unveiled a few key projects as part of its $100 million commitment to racial equity and justice. 

The first is a $25 million investment in the Propel Center, an innovation and learning hub for HBCUS. As part of the investment into the Propel Center, Apple employees will help to develop the curriculum and offer mentorship to students. 

In Detroit, Apple will launch a developer academy for young Black entrepreneurs in collaboration with Michigan State University. In all, Apple hopes to reach 1,000 students per year in Detroit.

Additionally, Apple invested $10 million in VC firm Harlem Capital, $25 million in Siebert Williams Shank’s Clear Vision Impact Fund and donated an undisclosed amount to the King Center.

Amazon warehouse workers scheduled to vote on union starting next month

The National Labor Relations Board has scheduled a mail-in voting process for Amazon warehouse workers in Bessemer, Alabama to begin on February 8 and end March 29. Workers at the facility will decide whether or not to join the Retail, Wholesale and Department Store Union. The bargaining unit includes about 6,000 workers, including hourly full-time and regular part-time fulfillment workers, as well as the hundreds of Amazon’s seasonal workers, and others.

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