It could be the long-awaited turning point in the world of venture capital and beyond. Yale, whose $32 billion endowment has long been led since 1985 by the legendary investor David Swensen, just let its 70 money managers across a variety of asset classes know that for the school, diversity has now moved front and center.
According to the WSJ, Swensen has told the firms that from here on out, they be measured annually on their progress in increasing the diversity of their investment staff, meaning their hiring, training, mentoring and retention of women and minorities.
Those that show little improvement may see the university pull its money, Swensen tells the outlet.
It’s hard to overstate the move’s apparent significance. Though the endowment saw atypically poor performance last year, Swensen, at 66, is the most highly regarded endowment manager in the world, growing Yale’s endowment from $1 billion when he joined as a 31-year-old former grad student of the school, to the second-largest school endowment in the country today after Harvard, which currently manages $40 billion.
Credited for developing the so-called Yale Model, which is short on public equities and long on commitments to venture shops, private equity funds, hedge funds, and international investments, Swensen has inspired legions of other endowment managers, many of whom worked with him previously, including the current endowment heads at Princeton, Stanford, and the University of Pennsylvania.
It isn’t a stretch to imagine that they will again follow Swensen’s lead, which could go a long way in changing the stubbornly intractable world of money management, which remains mostly white and mostly male across asset classes.
While the dearth of woman and minorities within the ranks of venture firms may not be news to readers, a 2019 study commissioned by the Knight Foundation and cited by the WSJ found that women- and minority-owned firms held less than 1% of assets managed by mutual funds, hedge funds, private-equity funds and real-estate funds in 2017, even though their performance was on a par with such firms.
Swensen tells that WSJ that he has long talked about diversity with the fund managers to which the endowment commits capital, but that he had he held of anything systematic owing to a belief, in part, that there were not enough diverse candidate entering into asset management for a mandate to make sense.
After the Black Lives Movement gained momentum this spring, he decided it was time to take the leap.
What about that pipeline concern? Fund managers will have to figure it out. For his part, says the WSJ, Swensen suggested to the U.S. managers that they forget the standard resume and consider recruiting directly from college campuses.
This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth mode, and investors back into the check-writing arena.
Boston has been an exemplar of the trend, with early pandemic caution dissolving into rapid-fire dealmaking as summer rolled into fall.
We collated new data that underscores the trend, showing that Boston’s third quarter looks very solid compared to its peer groups, and leads greater New England’s share of American venture capital higher during the three-month period.
For our October look at Boston and its startup scene, let’s get into the data and then understand how a new cohort of founders is cropping up among the city’s educational network.
Boston’s third quarter was strong, effectively matching the capital raised in New York City during the three-month period. As we head into the fourth quarter, it appears that the silver medal in American startup ecosystems is up for grabs based on what happens in Q4.
Boston could start 2021 as the number-two place to raise venture capital in the country. Or New York City could pip it at the finish line. Let’s check the numbers.
According to PitchBook data shared with TechCrunch, the metro Boston area raised $4.34 billion in venture capital during the third quarter. New York City and its metro area managed $4.45 billion during the same time period, an effective tie. Los Angeles and its own metro area managed just $3.90 billion.
In 2020 the numbers tilt in Boston’s favor, with the city and surrounding area collecting $12.83 billion in venture capital. New York City came in second through Q3, with $12.30 billion in venture capital. Los Angeles was a distant third at $8.66 billion for the year through Q3.
The economic impact of the COVID-19 pandemic adversely affected the financial outlook for millions of people, and continues to cause significant fiscal distress to millions more, but such challenging times have also wrought a more resilient and resourceful financial system.
With the ingenuity of crowdfunding, considered to be one of the last decade’s greatest “success stories,” and such desperate times calling for bold new ways to finance a wide variety of COVID-19 relief efforts, we are now seeing an excellent opportunity for banks and other financial institutions to partner with crowdfunding platforms and campaigns, bolstering their efforts and impact.
Before considering how financial institutions can assist with crowdfunding campaigns, we must first look at the diverse array of impressive results from this financing option during the pandemic. As people choose between paying the rent or buying groceries, and countless other despairing circumstances, we must look to some of the more inventive ways businesses, entrepreneurs and people in general are using crowdfunding to provide the COVID-19 relief that cash-strapped consumers with maxed-out or poor credit do not have access to or the government has not provided.
Some great examples of COVID-19 crowdfunding at its best include the following:
The possibilities presented by crowdfunding in this age of the coronavirus are endless, and financial institutions can certainly lend their assistance. Here is how.
Crowdfunding is a substantial and ever-so relevant means of financing all sorts of businesses, people and products. Denying its substantive contribution to the economy, especially in digital finance during this pandemic, is akin to wearing a monocle when you actually need glasses for both of your eyes. Do not be shortsighted on this. Crowdfunding is here to stay. In fact, countless crowdfunding businesses and platforms continue to make major moves within the markets globally. For example, Parpera from Australia, in coordination with the equity-crowdfunding platforms, hopes to rival the likes of GoFundMe, Kickstarter and Indiegogo.
This might seem contrary to the original purpose of these campaigns, but the right amount of seed-cash infusions to campaigns that are aligned with your goals as a company is a win-win for both you and the entrepreneurs or causes, especially now in such desperate times of need.
This means that small businesses and medium-sized businesses within your institution’s community could use your help. Consider investing in crowdfunding campaigns similar to the ones mentioned earlier. Better yet, bridge the gaps between financial institutions and crowdfunding platforms and campaigns so that smaller businesses get the opportunities they need to survive through these difficult times.
Last month, the United Nations Development Program released a report proclaiming that digital finance is now allowing people from all over the world to customize and personalize their money-management experiences such that their financial needs have the potential to be more readily and sufficiently met. Financial institutions willing to work as a partner with crowdfunding platforms and campaigns will further these goals and set society up for a more robust rebound from any possible detrimental effects of the COVID-19 recession.
Other countries are already beginning to figure out better ways to regulate the crowdfunding financing industry, such as the recent updates to the European Union’s handling of crowdfunding regulations, set to take effect this fall. Well-established financial institutions can lend their support in defining the policies and standard operating procedures for crowdfunding even during such a chaotic time as the COVID-19 pandemic. Doing so will ensure fair and equitable financing for all, at least, in theory.
While originally born out of either philanthropy or early-adopting innovation, depending on the situation, person or product, crowdfunding has become an increasingly reliable means of providing COVID-19 economic relief when other organizations, including the government and some banks, cannot provide sufficient assistance. Financial institutions must lend their vast expertise, knowledge and resources to these worthy causes; after all, we are all in this together.
Yes, the media f’ing gorged on the Quibi story yesterday. We did, they did, everyone did. And really, truly, how could anyone not? Nearly $2 billion came in (with $350 million heading back), a star-studded lineup of executives and production teams, an absolutely massive advertising campaign, and a PR strategy that all but begged the sun to melt Icarus’ wings.
Our collective exhalation on the complete clusterfuck that was Quibi though leads to a legitimate and interesting question: are we obnoxiously attacking a good-faith failure? Wasn’t Quibi a bet just like every other startup, a bet that just happened to fail? A16Z’s general partner Andrew Chen put it vividly on Twitter, saying “It’s gross” and lauding the entrepreneurial challenge of building a startup:
all the people rushing to their keyboards to type in their "i told you so" hot takes on Quibi:
It's gross. Building a company is hard, why celebrate a fail?
Go build something instead of using your energy to let twitter know how smart you are the say the consensus thing.
I understand this view, deeply. In fact, all of us at TechCrunch understand this. One of the things that we pride ourselves on here is respecting the hustle. We know how hard it is to launch a startup. As a team, we collectively talk to thousands of founders every year, and we hear the heartbreaking stories and the downright trauma at times that comes with building a company. Occasionally (and yes, we focus most of our reporting here), we hear about the wins and successes too.
Let’s be honest: most startups fail. Most ideas turn out wrong. Most entrepreneurs are never going to make it. That doesn’t mean no one should build a startup, or pursue their passions and dreams. And when success happens, we like to talk about it, report on, and try to explain why it happens — because ultimately, more entrepreneurial success is good for all of us and helps to drive progress in our world.
But let’s also be clear that there are bad ideas, and then there are flagrantly bad ideas with billions in funding from smart people who otherwise should know better. Quibi wasn’t the spark of the proverbial college dropout with a passion for entertainment trying to invent a new format for mobile phones with ramen money from friends and family. Quibi was run by two of the most powerful and influential executives in the United States today, who raised more money for their project than other female founders have raised collectively this year.
Chen makes an important point that many obvious ideas in tech started as dumb ideas. That’s true! In fact, the history of technology is littered with examples of ideas that investors and the press thought were either dumb or impossible to build (which is a more polite way to say “dumb”).
for everyone who “obviously” knows when they see a bad idea in tech – everyone citing Quibi today – here’s a thread for you. https://t.co/QpXXKG16Vm
— Andrew Chen (@andrewchen) October 22, 2020
Why do supposedly dumb ideas turn out to be smart? Part of the reason is that what starts out as dumb slowly iterates into something that is very smart. Facebook was just a “facebook” for checking out your classmates on college campuses. If it had ended there and withered away like many other social networks before it, we might well have put it in the waste bin of history. But Zuckerberg and his crew iterated — adding features like photos, a feed, messaging and more with an extreme focus on growth that made the product so much more than when it started.
We’ve seen this pattern again and again throughout time. Founders get feedback from users, they iterate, they pivot, they try new things, and slowly but surely they start to migrate from what might have been a very raw concept to something much more ready to compete in the ferocious marketplace of business and consumer attention today.
This was never the story with Quibi. There was never an iteration of the product, or a long-range plan to assiduously cultivate users and talent as the company found traction while carefully husbanding its capital for the inevitable tough moments in the growth of any company.
Yes, we in the commentariat do make mistakes, but analysts weren’t dumb in pointing out all of Quibi’s glaring, red-alert flaws. Those analysts were smart. They were right. They might not be right next time, of course — no analyst should get too overconfident in their predictions. But at the same time, we shouldn’t just collectively throw up our hands and declare every idea that comes our way a brilliant gift from the heavens. Most ideas are dumb, and we and everyone else have every right to point that out.
So respect the hustle. Don’t kick a hardworking entrepreneur down who is just trying to get their project out there and show it the world. But that doesn’t mean you can’t call out stupid when you see it. The best entrepreneurs know that — even at its most vituperative — critical feedback is the necessary ingredient to startup success. Lauding everyone lauds no one.
Productivity software has had a huge couple of years, yet for all of the great note-taking apps that have launched, consumers haven’t gotten a lot of quality options for Google Calendar replacements.
This week, Woven, a calendar startup founded by former Facebook CIO Tim Campos is shaking up the premium tier of their scheduling software, hoping that productivity-focused users will pay to further optimize the calendar experience just as they have paid up for subscription email services like Superhuman and note-taking apps like Notion.
There’s been a pretty huge influx of investor dollars into the productivity space which has shown a lot of promise in bottoms-up scaling inside enterprises by first aiming to sell their products to individuals. Woven has raised about $5 million to date with investments from Battery Ventures, Felicis Ventures and Tiny Capital, among others.
“Time is the most valuable asset that we have,” Campos told TechCrunch. “We think there’s a real opportunity to do much more with the calendar.”
Their new product will help determine just how much demand there is for a pro-tier calendar that aims to make life easier for professionals than Google Calendar or Outlook Calendar cares to. The new product, which is $20 per month ($10 during an early access period if you pay for a year), builds on the company’s free tier product giving users a handful of new features. There’s still quite a bit of functionality in the free tier still, which is sticking around, but the lack of multi-account support is one of the big limitations there.
Image credit: via Woven.
The core of Woven’s value is likely its Calendly-like scheduling links which allow single users to quickly show when they’re free, or give teams the ability to eliminate back-in-forth entirely when scheduling meetings by scanning everyone’s availability and suggesting times that are uniformly available. In this latest update, the startup has also launched a new feature called Open Invite which allows users to blast out links to join webinars that recipients can quickly register for.
One of Woven’s top features is probably Smart Templates which aims to learn from your habits and strip down the amount of time it takes to organize a meeting. Selecting the template can automatically set you up with a one-time Zoom link, ping participants for their availability with Woven’s scheduling links and take care of mundane details. Now, the titles automatically update depending on participants, location or company information as well. While plenty of productivity happens on the desktop, the startup is trying to push the envelope on mobile as well. They’ve added an iMessage integration to quickly allow people to share their availability and schedule meetings inside chat.
The product updates arrive soon after the announcement of the company’s Zoom “Zapp,” which shoves the app’s functionality inside Zoom and will likely be a bit sell to new users.
European entrepreneurs who want to launch startups could do worse than Switzerland.
In a report analyzing Europe’s general economic health, cost of doing business, business environment and labor force quality, analysts looked for highly educated populations, strong economies, healthy business environments and relatively low costs for conducting business. Switzerland ended up ranking third out of 31 European nations, according to Nimblefins. (Germany and the UK came out first and second, respectively).
According to official estimates, the number of new Swiss startups has skyrocketed by 700% since 1996. Zurich tends to take the lion’s share, as the city’s embrace of startups has jump-started development, although Geneva and Lausanne are also hotspots.
As well as traditional software engineering startups, Switzerland’s largest city boasts a startup culture that emphasizes life sciences, mechanical engineering and robotics. Compared to other European countries, Switzerland has a low regulatory burden and a well-educated, highly qualified workforce. Google’s largest R&D center outside of the United States is in Zurich.
But it’s also one of the more expensive places to start a business, due to its high cost of living, salary expectations and relatively small labor market. Native startups will need 25,000 Swiss Francs to open an LLC and 50,000 more to incorporate. While they can withdraw those funds from the business the next day, local founders must still secure decent backing to even begin the work.
This means Switzerland has gained a reputation as a place to startup — and a place to relocate, which is something quite different. It’s one reason why the region is home to many fintech businesses born elsewhere that need proximity to a large banking ecosystem, as well as the blockchain/crypto crowd, which have found a highly amenable regulatory environment in Zug, right next door to Zurich. Zurich/Zug’s “Crypto Valley” is a global blockchain hotspot and is home to, among others, the Ethereum Foundation.
Lawyers and accountants tend to err on the conservative side, leading to a low failure rate of businesses but less “moonshot innovation,” shall we say.
But in recent years, corporate docs are being drawn up in English to facilitate communication both inside Switzerland’s various language regions and foreign capital, and investment documentation is modeled after the U.S.
Ten years ago startups were unusual. Today, pitch competitions, incubators, accelerators, VCs and angel groups proliferate.
The country’s Federal Commission for Technology and Innovation (KTI) supports CTI-Startup and CTI-Invest, providing startups with investment and support. Venture Kick was launched in 2007 with the vision to double the number of spin-offs from Swiss universities and draws from a jury of more than 150 leading startup experts in Switzerland. It grants up to CHF 130,000 per company. Fundraising platforms such as Investiere have boosted the angel community support of early funding rounds.
Swiss companies, like almost all European companies, tend to raise lower early-stage rounds than U.S. ones. A CHF 1-2 million Series A or a CHF 5 million Series B investment is common. This has meant smaller exits, and thus less development for the ecosystem.
These are the investors we interviewed:
Jasmin Heimann, partner, Ringier Digital Ventures
What trends are you most excited about investing in, generally?
Consumer-facing startups with first revenues.
What’s your latest, most exciting investment?
AirConsole — a cloud-gaming platform where you don’t need a console and can play with all your friends and family.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I really wish that the business case for social and ecological startups will finally be proven (kind of like Oatly showed with the Blackstone investment). I also think that femtech is a hyped category but funding as well as renown exits are still missing.
What are you looking for in your next investment, in general?
I am looking for easy, scalable solutions with a great team.
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?
I think the whole scooter/mobility space is super hyped but also super capital intensive so I think to compete in this market at this stage is hard. I also think that the whole edtech space is an important area of investment, but there are already quite a lot of players and it oftentimes requires cooperation with governments and schools, which makes it much more difficult to operate in. Lastly, I don’t get why people still start fitness startups as I feel like the market has reached its limits.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Switzerland makes — maximum — half of our investments. We are also interested in Germany and Austria as well as the Nordics.
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?
Zurich and Lausanne are for sure the most exciting cities, just because they host great engineering universities. Berne is still lagging behind but I am hoping to see some more startups emerging from there, especially in the medtech industry.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Overall, Switzerland is a great market for a startup to be in — although small, buying power is huge! So investors should always keep this in mind when thinking about coming to Switzerland. The startup scene is pretty small and well connected, so it helps to get access through somebody already familiar with the space. Unfortunately for us, typical B2C cases are rather scarce.
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 think it is hard to make any kind of predictions. But on the one hand, I could see this happening. On the other hand, I also think that the magic of cities is that there are serendipity moments where you can find your co-founder at a random networking dinner or come across an idea for a new venture while talking to a stranger. These moments will most likely be much harder to encounter now and in the next couple of months.
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?
I think travel is a big question mark still. The same goes for luxury goods, as people are more worried about the economic situation they are in. On the other hand, remote work has seen a surge in investments. Also sustainability will hopefully be put back on the agenda.
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 much. I think we allocated a bit more for the existing portfolio but otherwise we continue to look at and discuss the best cases. The biggest worries are the uncertainties about [what] the future might look like and the related planning. We tell them to first and foremost secure cash flow.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Totally! Some portfolio companies have really profited from the crisis, especially our subscription-based models that offer a variety of different options to spend time at home. The challenge now is to keep up the momentum after the lockdown.
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.
What gives me hope is to see that people find ways to still work together — the amount of online events, office hours, etc. is incredible. I see the pandemic also as a big opportunity to make changes in the way we worked and the way things were without ever questioning them.
“I have to choose my words carefully,” says Joe Castelino of Stevens Creek Volkswagen in San Jose, Ca., when asked about the software on which most car dealerships rely for inventory information, to manage marketing, to handle customer relationships and to otherwise help sell cars.
Castelino, the dealership’s service director, laughs as he says this. But the joke has apparently been on car dealers, most of whom have largely relied on a few frustratingly antiquated vendors for their dealer management systems over the years — along with many more sophisticated point solutions.
It’s the precise opportunity that former Tesla CIO, Jay Vijayan, concluded he was well-positioned to address while still in the employ of the electric vehicle giant.
As Vijayan tells it, he knew nothing about cars until joining Tesla in 2011, following a dozen years of working in product development at Oracle, then VMWare. Yet he learned plenty over the subsequent four years. Specifically, he says he helped to build with Elon Musk a central analysis system inside Tesla, a kind of brain that could see all of the company’s internal systems, from what was happening in the supply chain to its factory systems to its retail platform.
Tesla had to build it itself, says Vijayan; after evaluating the existing software of third company providers, the team “realized that none of them had anything close to what we needed to provide a frictionless modern consumer experience.”
It was around then that a lightbulb turned on. If Tesla could transform the experience for its own customers, maybe Vijayan could transform the buying and selling experience for the much bigger, broader automotive industry. Enter Tekion, a now four-year-old, San Carlos, Ca., company that now employs 470 people and has come far enough along that just attracted $150 million in fresh funding led by the private equity investor Advent International.
With the Series C round — which also included checks from Index Ventures, Airbus Ventures, FM Capital and Exor, the holding company of Fiat-Chrysler and Ferrari — the company has now raised $185 million altogether. It’s also valued at north of $1 billion. (The automakers General Motors, BMW, and the Nissan-Renault-Mitsubishi Alliance are also investors.)
Eric Wei, a managing director at Advent, says that over the last decade, his team had been eager to seize on what’s approaching a $10 billion market annually. Instead, they found themselves tracking incumbents Reynolds & Reynolds, CDKGlobal and Dealertrack, which is owned by Cox Automotive, and waiting for a better player to emerge.
Then Wei was connected to Tekion through Jon McNeill, a former Tesla president and an advisory partner to Advent.
Says Wei of seeing its tech compared with its more established rivals: “It was like comparing a flip phone to an iPhone.”
Perhaps unsurprisingly, McNeill, who worked at Tesla with Vijayan, also sings the company’s praises, noting that Tekion even bought a dealership in Gilroy — the “garlic capital” of California — to use as a kind of lab while it was building its technology from scratch.
Such praise is nice, but more importantly, Tekion is attracting the attention of dealers. Though citing competitive reasons, Vijayan declined to share how many have bought its cloud software — which connects dealers with both manufacturers and car buyers and is powered by machine learning algorithms — he says it’s already being used across 28 states.
One of these dealerships is the national chain Serra Automotive, whose founder, Joseph Serra, is now an investor in Tekion.
Another is that Volkswagen dealership in San Jose, where Castelino — who doesn’t have a financial interest in Tekion — speaks enthusiastically about the time and expenses his team is saving because of Tekion’s platform.
For example, he says a customers need only log-in now to flag a particular issue. After that, with the help of an RFID tag, Stevens Creek knows exactly when that customer pulls into the dealership and what kind of help they need, enabling people to greet him or her on arrival. Tekion can also make recommendations based on a car’s history. It might, for instance, suggest to a customer a brake fluid flush “without an advisor having to look through a customer’s history,” he says.
As important, he says, the dealership has been able to cut ties with a lot of other software vendors, while also making more productive use of its time. Says Castelino, “As soon as a [repair order] is live, it’s in a dispatcher’s hand and a technician can grab the car.”
It’s like that with every step, he insists. “You’re saving 15 minutes again and again, and suddenly, you have three hours where your intake can be higher.”
Yin Wu has cofounded several companies since graduating from Stanford in 2011, including a computer vision company called Double Labs that sold to Microsoft, where she stayed on for a couple of years as a software engineer. In fact, it was only after that sale she she says she “actually understood all of the nuances with a company’s cap table.”
Her newest company, Pulley, a 14-month-old, Mountain View, Ca.-based maker of cap table management software aims to solve that same problem and has so far raised $10 million toward that end led by the payments company Stripe, with participation from Caffeinated Capital, General Catalyst, 8VC, and numerous angel investors.
Wu is going up against some pretty powerful competition. Carta was reportedly raising $200 million in fresh funding at a $3 billion valuation as of the spring (a round the company never official confirmed or announced). Last year, it raised $300 million. Morgan Stanley has meanwhile been beefing up its stock plan administration business, acquiring Solium Capital early last year and more newly purchasing Barclay’s stock plan business.
Of course, startups often manage to find a way to take down incumbents and a distraction for Carta, at least, in the form of a very public gender discrimination lawsuit by a former VP of marketing, could be the kind of opening that Pulley needs. We emailed with Yu yesterday to ask if that might be the case. She didn’t answer directly, but she did mention “values,” as long as shared some more details about what she sees as different about the two products.
TC: Why start this company? Has Carta’s press of late created an opening for a new upstart in the space?
YW: I left Microsoft in 2018 and started Pulley a year later. We skipped the seed and raised the A because of overwhelming demand from investors. Many wanted a better product for their portfolio companies. Many founders are increasingly thinking about choosing with companies, like Pulley, that better align with their values.
TC: How many people are working for Pulley and are any folks you pulled out of Carta?
YW: We’re a team of seven and have four people on the team who are former Y Combinator founders. We attract founders to the team because they’ve experienced firsthand the difficulties of managing a cap table and want to build a better tool for other founders. We have not pulled anyone out of Carta yet.
TC: Carta has raised a lot of funding and it has long tentacles. What can Pulley offer startups that Carta cannot?
YW: We offer startups a better product compared to our competitors. We make every interaction on Pulley easier and faster. 409A valuations take five days instead of weeks, and onboarding is the same day rather than months. By analogy, this is similar to the difference between Stripe and Braintree when Stripe initially launched. There were many different payment processes when Stripe launched. They were able to capture a large portion of the market by building a better product that resonated with developers.
One of the features that stands out on Pulley is our modeling feature [which helps founders model dilution in future rounds and helps employees understand the value of their equity as the company grows]. Founders switch from our competitors to Pulley to use our modeling tool [and it works] with pre-money SAFEs, post-money SAFEs, and factors in pro-ratas and discounts. To my knowledge, Pulley’s modeling tool is the most comprehensive product on the market.
TC: How does your pricing compare with Carta’s?
YW: Pulley is free for early-stage companies regardless of how much they raise. We’re price competitive with Carta on our paid plans. Part of the reason we started Pulley is because we had frustrations with other cap table management tools. When using other services, we had to regularly ping our accountants or lawyers to make edits, run reports, or get data. Each time we involved the lawyers, it was an expensive legal fee. So there is easily a $2,000 hidden fee when using tools that aren’t self-serve for setting up and updating your cap table.
TC: Is there a business-to-business opportunity here, where maybe attorneys or accountants or wealth managers private label this service? Or are these industry professionals viewed as competitors?
YW: We think there are opportunities to white label the service for accountants and law firms. However, this is currently not our focus.
TC: How adaptable is the software? Can it deal with a complicated scenario, a corner case?
YW: We started Pulley one year ago and we’re launching today because we have invested in building an architecture that can support complex cap table scenarios as companies scale. There are two things that you have to get right with cap table systems, First, never lose the data and second, always make sure the numbers are correct. We haven’t lost data for any customer and we have a comprehensive system of tests that verifies the cap table numbers on Pulley remain accurate.
TC: At what stage does it make sense for a startup to work with Pulley, and do you have the tools to hang onto them and keep them from switching over to a competitor later?
YW: We work with companies past the Series A, like Fast and Clubhouse. Companies are not looking to change their cap table provider if Pulley has the tool to grow with them. We already have the features of our competitors, including electronic share issuance, ACH transfers for options, modeling tools for multiple rounds, and more. We think we can win more startups because Pulley is also easier to use and faster to onboard.
TC: Regarding your paid plans, how much is Pulley charging and for what? How many tiers of service are there?
YW; Pulley is free for early-stage startups with less than 25 stakeholders. We charge $10 per stakeholder per month when companies scale beyond that. A stakeholder is any employee or investor on the cap table. Most companies upgrade to our premium plan after a seed round when they need a 409A valuation.
Cap table management is an area where companies don’t want a free product. Pulley takes our customers data privacy and security very seriously. We charge a flat fee for companies so they rest assured that their data will never be sold or used without their permission.
TC: What’s Pulley’s relationship to venture firms?
YW: We’re currently focused on founders rather than investors. We work with accelerators like Y Combinator to help their portfolio companies manage their cap table, but don’t have a formal relationship with any VC firms.
While certifications for security management practices like SOC 2 and ISO 27001 have been around for a while, the number of companies that now request that their software vendors go through (and pass) the audits to be in compliance with these continues to increase. For a lot of companies, that’s a harrowing process, so it’s maybe no surprise that we are also seeing an increase in startups that aim to make this process easier. Earlier this month, Strike Graph, which helps automate security audits, announced its $3.9 million round, and today, Secureframe, which also helps businesses get and maintain their SOC 2 and ISO 27001 certifications, is announcing a $4.5 million round.
Secureframe’s round was co-led by Base10 Partners and Google’s AI-focused Gradient Ventures fund. BoxGroup, Village Global, Soma Capital, Liquid2, Chapter One, Worklife Ventures and Backend Capital participated. Current customers include Stream, Hasura and Benepass.
Shrav Mehta, the company’s co-founder and CEO, spent time at a number of different companies, but he tells me the idea for Secureframe was mostly born during his time at direct-mail service Lob.
“When I was at Lob, we dealt with a lot of issues around security and compliance because we were sometimes dealing with very sensitive data, and we’d hop on calls with customers, had to complete thousand-line security questionnaires, do exhaustive security reviews, and this was a lot for a startup of our size at the time. But it’s just what our customers needed. So I started to see that pain,” Mehta said.
After stints at Pilot and Scale AI after he left Lob in 2017 — and informally helping other companies manage the certification process — he co-founded Secureframe together with the company’s CTO, Natasja Nielsen.
“Because Secureframe is basically adding a lot of automation with our software — and making the process so much simpler and easier — we’re able to bring the cost down to a point where this is something that a lot more companies can afford,” Mehta explained. “This is something that everyone can get in place from day one, and not really have to worry that, ‘hey, this is going to take all of our time, it’s going to take a year, it’s going to cost a lot of money.’ […] We’re trying to solve that problem to make it super easy for every organization to be secure from day one.”
The main idea here is to make the arcane certification process more transparent and streamline the process by automating many of the more labor-intensive tasks of getting ready for an audit (and it’s virtually always the pre-audit process that takes up most of the time). Secureframe does so by integrating with the most-often used cloud and SaaS tools (it currently connects to about 25 services) and pulling in data from them to check up on your security posture.
“It feels a lot like a QuickBooks or TurboTax-like experience, where we’ll essentially ask you to enter basic details about your business. We try to autofill as much of it as possible from third-party sources — then we ask you to connect up all the integrations your business uses,” Mehta explained.
The company plans to use much of the new funding to staff up and build out these integrations. Over time, it will also add support for other certifications like PCI, HITRUST and HIPAA.
Over 90% of the fastest-growing open-source companies in 2020 were founded outside the San Francisco Bay Area, and 12 out of the top 20 originate in Europe, according to a new study. The “ROSS Index”, created by Runa Capital lists the fastest-growing open-source startups with public repositories on Github every quarter.
Interestingly, the company judged to be the fastest-growing on the latest list, Plausible, is an ‘open startup’ (all its metrics are published, including revenues) and states on its website that it is “not interested in raising funds or taking investment. Not from individuals, not from institutions and not from venture capitalists. Our business model has nothing to do with collecting and analyzing huge amounts of personal information from web users and using these behavioral insights to sell advertisements.” It says it builds a self-sustainable “privacy-friendly alternative to very popular and widely used surveillance capitalism web analytics tools”.
Admittedly, ‘Github stars’ are not a totally perfect metric to measure the product-market fit of open-source companies. However, the research shows a possible interesting trend away from the VC-backed startups of the last ten years.
There have been previous attempts to create similar lists. In 2017 Battery Ventures published its own BOSS Index, but the index was abandoned. In September 2020 Accel revealed its Open100 market map, which included many open-source startups.
The high churn rates at Github mean the list of companies will change significantly every quarter. For instance, this recent finding by ROOS has only four companies that were mentioned in the previous list (Q2 2020): Hugging Face, Meili, Prisma and Framer.
Of course, open-source doesn’t mean these companies will never monetize or not go on to raise venture capital.
And Runa Capital clearly has an interest in publishing the list. It has invested in several open-source startups, including Nginx (acquired by F5 Networks for $670M), MariaDB and N8N, and recently raised a $157M fund aimed at open-source startups.
Bradley Tusk has become known in recent years for being involved in what’s about to get hot, from his early days advising Uber, to writing one of the first checks to the insurance startup Lemonade, to pushing forward the idea that we should be using the smart devices in our pockets to vote.
Indeed, because he’s often at the vanguard, it wasn’t hugely surprising when Tusk, like a growing number of other investors, formed a $300 million SPAC or special acquisition company, one that he and a partner plan to use to target a business in the leisure, gaming, or hospitality industry, according to a regulatory filing.
Because Tusk — a former political operative who ran the successful third mayoral campaign for Mike Bloomberg — seems adept at seeing around corners, we called him up late last week to ask whether SPACs are here to stay, how a Biden administration might impact the startup investing landscape, and how worried (or not) big tech should be about this election. You can hear the full conversation here. Owing to length, we are featuring solely the part of our conversation that centered on SPACs.
BT: They are down today last I checked. When you only check once in a blue moon, you’re like, ‘Hey, look at how great this is,’ whereas if, like me, you check me every day, you’re like, ‘It lost 4%, where’s my money?’
We got really lucky; Lemonade was our second deal that we did out of our first fund, and the fact that it IPO’d within four years of the company’s founding is pretty amazing.
TC: Is it amazing? I wonder what it says about the common complaint that the traditional IPO process is bad — is it just an excuse?
BT: [CEO] Daniel Schrieber was very clear that he and [cofounder] Shai Wininger had a strategy from day one to go public as quickly as they possibly could, because in his view, an IPO is supposed to represent kind of the the beginning. It’s the ‘Okay, we’ve proven that there’s product market fit, we’ve proven that there’s customer demand; now let’s see what we can really do with this thing.’ And it’s supposed to be about hope and promise and future and excitement. And if you’ve been a private company for 10 years, and you’re worth tens of billions of dollars and your growth is already starting to flatten out a little bit, it’s just much less exciting for public investors.
The question now for everyone in our business is what happens with Airbnb in a few weeks or whenever they are [staging an IPO]. Will that pixie dust be there, or will they have been around so long that the market is kind of indifferent?
TC: Is that why we’re seeing so many SPACs? Some of that pixie dust is gone. No one knows when the IPO window might shut. Let’s get some of these companies out into the public market while we still can?
BT: No, I don’t I don’t think so. I think SPACs have become a way to raise a lot of money very quickly. It took me two years to raise $37 million for my first venture fund, and three months was the entire process for me to raise $300 million for my SPAC. So it’s a mechanism that is highly efficient and right now is so popular with public market investors that there is just a lot of opportunity, and people are grabbing it. In fact, now you’re hearing about people who are planning SPACs having to pull [them] back because there’s a ton of competition right now.
At the end of the day, the fundamentals still rule. If you take a really bad company public through a SPAC, maybe the excitement of the SPAC gets you an early pop. But if the company has neither good unit economics nor high growth, there’s no real reason to believe it will be successful. And especially for the people in the SPAC, where they have to hold on to it for a little while, by the time the lockup ends, the world has probably figured out that this is not the greatest IPO of all time. You can’t put lipstick on a pig.
TC: You say you raised the SPAC very quickly. How is the investor profile different than that of a typical venture fund investor?
BT: The investors for this SPAC — at least when I did the roadshow, and I think I did 28 meetings over a couple of days — is mainly hedge funds and people who don’t really invest in venture at all, so there was no overlap between my [venture fund] LP base and the people who invested in our SPAC that I’m aware of. These are public market investors who are used to moving very quickly. There’s a lot more liquidity in a SPAC. We have two years to acquire something, but ultimately, it’s a public property, so investors can come in and out as they see fit.
TC: So it’s mostly hedge funds that are getting paid management fees to deploy their capital in this comparatively safe way and that are getting interest on the money invested, too, while it’s sitting around in a trust while [the SPAC managers] look for a target company.
BT: Why it kind of does make sense for [them to back] VCs is they are basically making the bet to say: does this person running the SPAC have enough deal flow, enough of a public profile, enough going on that they are going to come across the right target? And venture investors in many ways fit that profile because we just look at so many companies before deploying capital.
TC: Do you have to demonstrate some kind of public markets expertise in order to convince some of these investors that you know what it takes to take a company public and grow it in the public markets?
BT: I guess. We raised the money, so I guess I passed the test. But I did spend a little under two years on Wall Street; I created the lottery privatization group of Lehman Brothers. And my partner [in the SPAC], Christian Goode, has a lot of experience with big gaming companies. But overall, I think that if you are a venture investor with a ton of deal flow and a good track record but very little or no public market experience, I don’t know that that would disqualify you from being able to rate a SPAC.
In the world of software development, one term you’re sure to hear a lot of is full-stack development. Job recruiters are constantly posting open positions for full-stack developers and the industry is abuzz with this in-demand title.
But what does full-stack actually mean?
Simply put, it’s the development on the client-side (front end) and the server-side (back end) of software. Full-stack developers are jacks of all trades as they work with the design aspect of software the client interacts with as well as the coding and structuring of the server end.
In a time when technological requirements are rapidly evolving and companies may not be able to afford a full team of developers, software developers that know both the front end and back end are essential.
In response to the coronavirus pandemic, the ability to do full-stack development can make engineers extremely marketable as companies across all industries migrate their businesses to a virtual world. Those who can quickly develop and deliver software projects thanks to full-stack methods have the best shot to be at the top of a company’s or client’s wish list.
So how can you become a full-stack engineer and what are the expectations? In most working environments, you won’t be expected to have absolute expertise on every single platform or language. However, it will be presumed that you know enough to understand and can solve problems on both ends of software development.
Full-stack is becoming the default way to develop, so much so that some in the software engineering community argue whether or not the term is redundant. As the lines between the front end and back end blur with evolving tech, developers are now being expected to work more frequently on all aspects of the software. However, developers will likely have one specialty where they excel while being good in other areas and a novice at some things….and that’s OK.
Since full-stack developers can communicate with each side of a development team, they’re invaluable to saving time and avoiding confusion on a project.
One common argument against full stack is that, in theory, developers who can do everything may not do one thing at an expert level. But there’s no hard or fast rule saying you can’t be a master at coding and also learn front-end techniques or vice versa.
One hold up you may have before diving into full-stack is you’re also mulling over the option to become a DevOps engineer. There are certainly similarities among both professions, including good salaries and the ultimate goal of producing software as quickly as possible without errors. As with full-stack developers, DevOps engineers are also becoming more in demand because of the flexibility they offer a company.
For all of the investors preaching that augmented reality technology will likely be the successor to the modern smartphone, today, most venture capitalists are still quite wary to back AR plays.
The reasons are plentiful, but all tend to circle around the idea that it’s too early for software and too expensive to try to take on Apple or Facebook on the hardware front.
Meanwhile, few spaces were frothier in 2016 than virtual reality, but most VCs who gambled on VR following Facebook’s Oculus acquisition failed to strike it rich. In 2020, VR did not get the shelter-in-place usage bump many had hoped for largely due to supply chain issues at Facebook, but VCs hope their new cheaper device will spell good things for the startup ecosystem.
To get a better sense of how VCs are looking at augmented reality and virtual reality in 2020, I reached out to a handful of investors who are keeping a close watch on the industry:
Some investors who are bullish on AR have opted to focus on virtual reality for now, believing that there’s a good amount of crossover between AR and VR software, and that they can make safer bets on VR startups today that will be able to take advantage of AR hardware when it’s introduced.
“Besides Pokémon Go I don’t think we have seen the engagement numbers needed for AR,” Boost VC investor Brayton Williams tells TechCrunch. “We believe VR is still the largest long-term opportunity of the two. AR complements the real world, VR creates endless new worlds.”
Most of the investors I got in contact with were still fairly active in the AR/VR world, but many still disagreed whether the time was right for VR startups. For Jacob Mullins of Shasta Ventures, “It’s still early, but it’s no longer too early.” While Gigi Levy-Weiss of NFX says that the market is “sadly not happening yet,” Facebook’s Quest headsets have shown promise.
On the hardware side, the ghost of Magic Leap’s formerly hyped glory still looms large. Few investors are interested in making a hardware play in the AR/VR world, noting that startups don’t have the resources to compete with Facebook or Microsoft on a large-scale rollout. “Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation,” General Catalyst’s Niko Bonatsos tells us.
Even those that are still bullish on startups making hardware plays for more niche audiences acknowledge that life had gotten harder for ambitious founders in these spaces, “the spectacular flare-outs do make it harder for companies to raise large amounts with long product release horizons,” investor Tipatat Chennavasin notes.
Responses have been edited for length and clarity.
What are your general impressions on the health of the AR/VR market today?
We’re seeing some progress in VR and some of that is happening because of the Oculus ecosystem. They continue to improve the hardware and have a growing catalog of content. I think their onboarding and consumption experience is very consumer-friendly and that’s going to continue to help with adoption. On the consumer side, we’re seeing some companies across gaming, fitness and productivity that are earning and retaining their audiences at a respectable rate. That wasn’t happening even a year ago so it may be partially a COVID lift but habits are forming.
The VR bets of several years ago have largely struggled to pan out, if you were to make a startup investment in this space today what would you need to see?
Companies to watch are the ones that are creating cool experiences with mobile as the first entry point. Wave VR, Rec Room, VRChat are making it really easy for consumers to get a taste of VR with devices they already own. They’re not treating VR as just another gaming peripheral but as a way to create very cool, often celebrity-driven, content. These are the kinds of innovations that makes me optimistic about the VR category in general.
Most investors I chat with seem to be long-term bullish on AR, but are reticent to invest in an explicitly AR-focused startup today. What do you want to see before you make a play here?
In both AR/VR, a founder needs to be both super ambitious but patient. They’ll need to be flexible in thinking and open to pivoting a few times along the way. Product-market fit is always important but I want to see that they have a plan for customer retention. Fun to try is great, habit-forming is much better. Gaming continues to do pretty well as a category for VC dollars but it’d be interesting to see more founders look at making IRL sports experiences more immersive or figuring out how to enhance remote meeting experiences with VR to fix Zoom fatigue.
There have been a few spectacular flare-outs when it comes to AR/VR hardware investments, is there still a startup opportunity in AR/VR hardware?
Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation. Facebook and Microsoft seem to be the main companies willing to spend here while others have backed away. If we expand our thinking for a minute, maybe the first real mainstream breakthrough AR/VR consumer experience isn’t visual. For VR, it might be the mobile experiences. For AR maybe AirPods or AirPod-like devices are the right entry point for consumers. They’re in millions of people’s ears already and who doesn’t want their own special-agent-like earpiece? That’s where founders might find some opportunity.
Venture capital activity in Europe and Asia saw a strong return to form in Q3, data indicates.
The two continents enjoyed more venture capital investment into their local startups than in some time, underscoring that strong VC results the United States saw in the third quarter were not a fluke, but part of a broader trend.
Data compiled by CB Insights shows a global acceleration in the number of dollars venture capitalists are putting to work around the globe as 2020 chews through its second half. The record figures that Q3 supplied stand in stark contrast to the fear that overtook startup-land in late Q1 and early Q2, when COVID-19 threw some young technology companies surprise turbulence.
But the dip in venture capital activity was short-lived. As many startups sold software, they found their wares suddenly in greater demand; across a host of verticals, startups benefited from an accelerated digital transformation as the world adapted to a new work environment. Aside from clear winners like video conferencing tools, other categories from remote learning to security tooling also got a bump.
The COVID-tailwind, as it is sometimes called, does not appear to be specific to the United States or North America. Instead, given what the venture capital data states, we can infer that startups the world around are enjoying a similar boost.1
Let’s get into the numbers to better understand what’s up in Europe and Asia. (As an aside, if you have data on African startups’ venture capital results, please email me as I am starting to poke around for a more global picture. Recent deal activity makes it plain that American media needs to do more and better reporting on the continent.)
The venture capital world’s center of gravity still lands somewhere in the United States, but here’s how the three continents managed in Q3 2020, looking at their raised venture capital dollars:
Asia’s result was its best since at least Q4 2018, as far back as our dataset goes. Europe’s total tied its high-water mark set in Q2 2019. But as a combined pair, venture capital outside North America might have just had its best quarter in years, if not ever.
Here’s the data in graphical format:
Via CB Insights, shared with permission.
Klar, a new online bank based in Mexico City, has become the first big bet that Prosus Ventures (the firm formerly known as Naspers Ventures) is taking in Latin America outside of Brazil.
Founded by Stefan Moller, a former consultant at Bain & Co. who advised large banks, Klar blends Moller’s work experience in Mexico with his connections to the German banking world and the tech team at Berlin -based n26, to create a challenger bank offering deposit and credit services for Mexican customers.
The Mexican market is woefully underserved when it comes to the finance industry, according to Moller. Only 10% of Mexican adults have a credit card, something Moller said is the cheapest consumer lending instrument around.
That’s why Klar launched last year with both credit and debit services. The company has 200,000 banking customers and roughly 27,000 of those customers have taken out loans through the bank. A typical loan is roughly $110, according to Moller, and each loan comes with a 68% annual percentage rate.
If that sounds usurious, that’s because it is — at least by U.S. standards. In the U.S. a typical credit card will run somewhere between 16% and 24%, according to data from WalletHub. In Mexico, Moller said the typical interest rate is 70% (no wonder only 10% of adults have credit cards).
Still, the opportunity to expand credit and debit services made sense to Prosus, which led the company’s Series A round alongside investors including the International Finance Corporation and former investors Quona capital, who led Klar´s SEED round, Mouro Capital (formerly Santander Innoventures) and aCrew.
Banafsheh Fathieh, the Prosus Ventures principal who led the investment for the firm, said that the commitment to Klar will likely be the first of many investments that her firm makes in the region — both in fintech and likely in Mexico’s tech ecosystem more broadly.
Prosus is famous for making early bets on emerging technology companies in developing markets. Perhaps most famously the firm’s parent company was an early investor in Tencent — a multi-million dollar bet that has generated billions in returns.
“Prosus Ventures partners with entrepreneurs that are solving big societal problems with technology, in a uniquely local way. We invest in sectors of the economy where technology can lead to meaningful change in the lives of consumers. Klar has identified a massive need in the Mexican financial market and brings a unique solution through their credit and debit offering,” said Banafsheh Fathieh from Prosus Ventures, in a statement. “In less than a year, the team has shown an ability to build a world-class digital bank for the masses, one focused on financial access and inclusion. We are very excited to partner with them on that mission.”
The Unusual Ventures team has investments spanning the consumer and enterprise space, including Robinhood, AppDynamics, Mulesoft, Winnie and more. That short list could be the basis for a fascinating chat, but I also want to hear their thoughts on the democratization of venture capital, their appetite ahead of the election and the future of remote work. A big goal of mine is to squash some of the buzzwords we hear on tech Twitter so we can get an honest take on where one VC firm is sitting right now in a chaotic year.
As we wrote last week, this year has been everything but business as usual for the venture and tech community. And we still have an election ahead of us! I’ll ask Leary and Vrionis to share their framework for working through a looming event such as a presidential election and get their ideas on how early-stage is working more broadly.
Thanks to all of you who have joined us for our ongoing live chat series, which has brought on big names in tech such as Sydney Sykes, Alexia von Tobel, Mark Cuban and more (all recordings are still accessible for Extra Crunch subscribers to watch and learn from).
If you’re new, welcome! You’ll be able to ask our experts questions live as long as you’re an EC member (sign up for Extra Crunch here).
Come hang, bring snacks and prep some good questions. We’d love to have you.
Below are links so you can make it:
Before Nick Macario launched Verifiable, the Austin-based company that just raised $3 million for its api toolkit that verifies healthcare credentials, he ran a series of other businesses designed to offer public credentials for professionals.
His first foray into the world of identity management services was the personal website builder, branded.me. After that company was sold, Macario launched Remote.com, an outsourced provider of human resources services that was constantly running background checks and verifying employee credentials.
That’s where Macario got the idea for Verifiable and struck on a market opportunity that’s exploding thanks to the proliferation of telemedicine and on-demand services, and the shortage of qualified medical candidates to fill positions and meet growing demand.
This boom in remote medical services is one reason why Macario, working with co-founder and chief technology officer, Vivekanand Rajkumar, was able to raise $3 million from investors including Tiger Global, Liquid2 Ventures, Struck Capital, Soma Capital, Jack Altman, Max Mullen, and Sahil Lavingia.
“We’re at an inflection point with healthcare,” said Macario. “There are large volumes of healthcare verifications and certifications that are being verified manually… and the lack of infrastructure and credentialing is a big part of the bottleneck holding healthcare back.”
Verifiable uses Dock, a blockchain based ledger company that issues digital credentials and anchors them to a public ledger.
Verifiable provides an API that connects to hundreds of primary sources to keep updated records on the 17 million licensed healthcare providers working in the U.S.
Companies like Talkspace, Sesame and Verge Health are already using the API to automate real-time verifications for more than 50,000 healthcare providers.
“From a broader scale, we’re automating credentialing processes, but specifically we’re automating licensing verification and monitoring,” Macario said.
The Verifiable chief executive estimates that several billions of dollars in revenue and fines are lost every year because healthcare providers don’t keep up with the credentialing and licensing practitioners need to work in the U.S.
“It’s not a one-and-done verification,” says Macario. “You need to check on a monthly basis to make sure that providers are compliant.”
Verifiable’s management service can range anywhere from two to ten dollars depending on how deeply a potential employer wants to dive to confirm the standing and licensing of their practitioners. The price is based on the number of verifications and the number of healthcare providers that need to be verified.
And while Verifiable is starting with a specific focus on verification, the company has much bigger vision. “Where we’re excited about going is identity and healthcare provider data. It connects to many different areas of healthcare,” Macario said.
We’re starting in a specific focus with verification.. Where we’re excited about going is identity and healthcare provider data… it connects to many different areas of healthcare.
In the computing world, there are probably more types of chips available than your local supermarket snack aisle. Diverse computing environments (data centers and the cloud, edge, mobile devices, IoT, and more), different price points, and varying capabilities and performance requirements are scrambling the chip industry, resetting who has the lead right now and who might take the lead in new and emerging niches.
While there has been a spate of new chip startups like Cerebras, SiFive, and Nuvia funded by venture capitalists in the past two years, Flex Logix got its footing a bit earlier. The company, founded in 2014 by former Rambus founder Geoff Tate and Cheng Wang, has collectively raised $27 million from investors Lux Capital and Eclipse Ventures, along with Tate himself.
Flex Logix wants to bring AI processing workflows to the compute edge, which means it wants to offer technology that adds artificial intelligence to products like medical imaging equipment and robotics. At the edge, processing power obviously matters, but so does size and price. More efficient chips are easier to include in products, where pricing may put constraints on the cost of individual components.
In the first few years of the company, it focused on developing and licensing IP around FPGAs, or reprogrammable chips that can be changed after manufacturing through software. These flexible chips are critical in applications like AI or 5G, where standards and models change rapidly. It’s a market that is dominated by Xilinx and Altera, which was acquired by Intel for $16.7 billion back in 2015.
Flex Logix saw an opportunity to be “the ARM of FPGAs” by helping other companies develop their own chips. It built customer traction for its designs with organizations like Sandia National Laboratory, the Department of Defense and Boeing. More recently, it has been developing its own line of chips called InferX X1, creating a hybrid business model not unlike the model that Nvidia will have after its acquisition of ARM clears through regulatory hurdles.
With that background out of the way, Flex Logix unveiled the availability of its X1 chip, which is currently slated to be offered at four speeds ranging from 533Mhz to 933Mhz. CEO Tate stressed on our call that the company’s key differential is price: those chips will be priced between $99-$199 depending on chip speed for smaller orders, and $34-$69 per chip for large-scale orders.
It’s a chip, alright. Ain’t a lot of great stock art. But here is the X1. Photo via Flex Logix.
The reason those chips are cheaper is that they are significantly smaller than competing chips from Nvidia in its Jetson chip lineup according to Tate, up to 1/7 the size. Smaller chips generally have lower costs, since each wafer in a chip fab can hold more chips, amortizing the cost of manufacturing over more chips. According to the company, its chips outperform Nvidia’s Xavier module, although independent benchmarks aren’t available.
“Every customer we talk to wants more processing power per dollar, more processing power per unit of power … and with our die-size advantage we can give them more for their money,” Tate explained.
Customer samples for these new chips are expected to arrive in the first quarter next year, with scale manufacturing in the second quarter.
The company’s plan is to continue both sides of its business and continue to grow and mature its technology. “Our embedded FPGA businesses is now, as a standalone, profitable. The amount of money we’re bringing in exceeds the engineering and business. And now we’re developing this new business for inference which ultimately should be a bigger business because the market is growing very fast in the inference space,” Tate explained.
The company’s board consists of Peter Hébert and Shahin Farshchi of Lux, Pierre Lamond at Eclipse, and Kushagra Vaid, a distinguished engineer at Microsoft Azure. The company is based in Mountain View, California.
A startup that is aiming to digitize millions of neighborhood stores in Bangladesh just raised the country’s largest Series A financing round.
Dhaka-headquartered ShopUp said on Tuesday it has raised $22.5 million in a round co-led by Sequoia Capital India and Flourish Ventures. For both the venture firms, this is the first time they are backing a Bangladeshi startup. Veon Ventures, Speedinvest, and Lonsdale Capital also participated in the four-year-old ShopUp’s Series A financing round. ShopUp has raised about $28 million to date.
Like its neighboring nation, India, more than 95% of all retail in Bangladesh goes through neighborhood stores in the country. There are about 4.5 million such mom-and-pop stores in the country and the vast majority of them have no digital presence.
ShopUp is attempting to change that. It has built what it calls a full-stack business-to-business commerce platform. It provides three core services to neighborhood stores: a wholesale marketplace to secure inventory, logistics (including last mile delivery to customers), and working capital, explained Afeef Zaman, co-founder and chief executive of ShopUp, in an interview with TechCrunch.
Image Credits: ShopUp
These small shops are facing a number of challenges. They are not getting inventory on time or enough inventory and they are paying more than what they should, said Zaman. And for these businesses, more than 73% (PDF) of all their sales rely on credit instead of cash or digital payments, creating a massive liquidity crunch. So most of these businesses are in dire need of working capital.
Zaman declined to reveal how many mom-and-pop shops today use ShopUp, but claimed that the platform assumes a clear lead in its category in the country. That lead has widened amid the global pandemic as more physical shops explore digital offerings to stay afloat, he said.
The number of neighborhood shops transacting weekly on the ShopUp platform grew by 8.5 times between April and August this year, he said. The pandemic also helped ShopUp engage with e-commerce players to deliver items for them.
“Sequoia India has been a strong supporter of the company since it was part of the first Surge cohort in early 2019 and it’s been exciting to see the company become a trailblazer facilitating digital transformation in Bangladesh,” said Klaus Wang, VP, Sequoia Capital, in a statement.
The startup has no intention to become an e-commerce platform like Amazon that directly engages with consumers, Zaman said. E-commerce is still in its nascent stage in Bangladesh. Amazon has yet to enter the country and increasingly Facebook is filling that role.
ShopUp sees immense opportunity in serving neighborhood stores, he said. The startup plans to deploy the fresh capital to deepen its partnerships with manufacturers and expand its tech infrastructure.
It opened an office in Bengaluru earlier this year to hire local tech talent in the nation. Indian e-commerce platform Voonik merged with ShopUp this year and both of its co-founders have joined the Bangladeshi startup. Zaman said the startup will hire more engineering talent in India.
SAIF Partners has raised $400 million for a new fund and rebranded the 18-year-old influential venture capital firm as it looks to back more early-stage startups in the world’s second largest internet market.
The new fund is SAIF Partners’ seventh for early-stage startups in India. Its previous two funds were each $350 million in size, and the firm today manages more than $2 billion in assets.
SAIF Partners started investing in Indian startups 18 years ago. The firm began as a joint venture with SoftBank and its first high-profile investment was Sify. But the two firms’ joint venture ended more than a decade ago, so the firm is now getting around to rebranding itself, Ravi Adusumalli, the managing partner of SAIF Partners, told TechCrunch in an interview.
The firm — which has seven unicorns in its portfolio, including Paytm’s parent firm One97 Communications, food delivery startup Swiggy and online learning platform Unacademy — is rebranding itself as Elevation Capital.
“Elevation reflects our investment ethos and re-emphasises our commitment to the founders who help redefine our future. For our existing partners, it is a commitment of continued collaboration on our path-breaking journeys together. For our new partners, it is a promise to do all we can to achieve great heights together, from day one,” said Adusumalli.
SAIF Partners has backed more than 100 startups to date. The venture firm makes long-term bets on founders and backs young firms beginning their early years when they are raising their seed, pre-Series A and Series A financing rounds.
The venture firm invests in startups operating in a wide-range of sectors and plans to continue this strategy and add more areas of interest, said Deepak Gaur, a managing director at Elevation Capital, in an interview with TechCrunch.
“Enterprise SaaS is one area where we are spending a lot of resources,” he said. “We believe the time has come for this sector and we will see many global companies emerge from India.”
More than 15 startups in Elevation Capital’s portfolio are projected to become a unicorn in the next few years, according to Tracxn, a firm that tracks startups and investments in India. These include app-based platform to book home services Urban Company, insurance tech startup Acko, digital loan platform Capital Float, and real estate property marketplace NoBroker.
A number of SAIF Partners-backed startups, including IndiaMART, MakeMyTrip and Justdial, have become publicly listed companies, too.
Mukul Arora, a managing director at SAIF Partners, said that the state of the Indian startup ecosystem has changed for the better in the past decade. “A few years ago, we were seeing many startups replicate a foreign company’s play in India. Today, we are seeing our ideas being replicated outside of the country. Someone is building a Meesho for Brazil,” he said.
The founders have also grown more sophisticated, said Mayank Khanduja, a managing director at Elevation Capital. Elevation Capital has over three dozen employees, with about two-dozen focused on the investment size.
Elevation Capital’s new fund comes at a time when many established venture capital firms have also closed their new funds for India in recent months. In July, Sequoia Capital announced two funds — totaling $1.35 billion in size — for India. A month later, Lightspeed raised $275 million for its third Indian fund. Accel late last year closed its sixth fund in India at $550 million.
All of the LPs participating in Elevation Capital’s new fund, as was the case with previous funds, are U.S.-based, and the vast majority of them are nonprofits, said Adusumalli. Without disclosing any figures, he said the firm’s previous funds have performed very well.