TechCrunch is returning to U.C. Berkeley on March 3 to bring together some of the most influential minds in robotics and artificial intelligence. Each year we strive to bring together a cross-section of big companies and exciting new startups, along with top researchers, VCs and thinkers.
In addition to a main stage that includes the likes of Amazon’s Tye Brady, U .C. Berkeley’s Stuart Russell, Anca Dragan of Waymo, Claire Delaunay of NVIDIA, James Kuffner of Toyota’s TRI-AD, and a surprise interview with Disney Imagineers, we’ll also be offering a more intimate Q&A stage featuring speakers from SoftBank Robotics, Samsung, Sony’s Innovation Fund, Qualcomm, NVIDIA and more.
Alongside a selection of handpicked demos, we’ll also be showcasing the winners from our first-ever pitch-off competition for early-stage robotics companies. You won’t get a better look at exciting new robotics technologies than that. Tickets for the event are still available. We’ll see you in a couple of weeks at Zellerbach Hall.
8:30 AM – 4:00 PM
Registration Open Hours
General Attendees can pick up their badges starting at 8:30 am at Lower Sproul Plaza located in front of Zellerbach Hall. We close registration at 4:00 pm.
10:00 AM – 10:05 AM
10:05 AM – 10:25 AM
The UC Berkeley professor and AI authority argues in his acclaimed new book, “Human Compatible,” that AI will doom humanity unless technologists fundamentally reform how they build AI algorithms.
10:25 AM – 10:45 AM
Maxar Technologies has been involved with U.S. space efforts for decades, and is about to send its sixth (!) robotic arm to Mars aboard NASA’s Mars 2020 rover. Lucy Condakchian is general manager of robotics at Maxar and will speak to the difficulty and exhilaration of designing robotics for use in the harsh environments of space and other planets.
10:45 AM – 11:05 AM
Amazon Robotics’ chief technology officer will discuss how the company is using the latest in robotics and AI to optimize its massive logistics. He’ll also discuss the future of warehouse automation and how humans and robots share a work space.
11:05 AM – 11:15 AM
Live Demo from the Stanford Robotics Club
11:30 AM – 12:00 PM
Join one of the foremost experts in artificial intelligence as he signs copies of his acclaimed new book, Human Compatible.
11:35 AM – 12:05 PM
Can robots help us build structures faster, smarter and cheaper? Built Robotics makes a self-driving excavator. Toggle is developing a new fabrication of rebar for reinforced concrete, Dusty builds robot-powered tools and longtime robotics pioneers Boston Dynamics have recently joined the construction space. We’ll talk with the founders and experts from these companies to learn how and when robots will become a part of the construction crew.
12:15 PM – 1:00 PM
Join this interactive Q&A session on the breakout stage with three of the top minds in corporate VC.
1:00 PM – 1:25 PM
Select, early-stage companies, hand-picked by TechCrunch editors, will take the stage and have five minutes to present their wares.
1:15 PM – 2:00 PM
Your chance to ask questions of some of the most successful robotics founders on our stage
1:25 PM – 1:50 PM
Leading investors will discuss the rising tide of venture capital funding in robotics and AI. The investors bring a combination of early-stage investing and corporate venture capital expertise, sharing a fondness for the wild world of robotics and AI investing.
1:50 PM – 2:15 PM
As robots become an ever more meaningful part of our lives, interactions with humans are increasingly inevitable. These experts will discuss the broad implications of HRI in the workplace and home.
2:15 PM – 2:40 PM
Autonomous driving is set to be one of the biggest categories for robotics and AI. But there are plenty of roadblocks standing in its way. Experts will discuss how we get there from here.
2:15 PM – 3:00 PM
Join this interactive Q&A session on the breakout stage with some of the greatest investors in robotics and AI
Imagineers from Disney will present start of the art robotics built to populate its theme parks.
3:10 PM – 3:35 PM
This summer’s Tokyo Olympics will be a huge proving ground for Toyota’s TRI-AD. Executive James Kuffner and Max Bajracharya will join us to discuss the department’s plans for assistive robots and self-driving cars.
3:15 PM – 4:00 PM
Join this interactive Q&A session on the breakout stage with some of the greatest engineers in robotics and AI.
3:35 PM – 4:00 PM
In 1920, Karl Capek coined the term “robot” in a play about mechanical workers organizing a rebellion to defeat their human overlords. One hundred years later, in the context of increasing inequality and xenophobia, the panelists will discuss cultural views of robots in the context of “Robo-Exoticism,” which exaggerates both negative and positive attributes and reinforces old fears, fantasies and stereotypes.
4:00 PM – 4:10 PM
Live Demo from Somatic
4:10 PM – 4:35 PM
Machine learning and AI models can be found in nearly every aspect of society today, but their inner workings are often as much a mystery to their creators as to those who use them. UC Berkeley’s Trevor Darrell, Krishna Gade of Fiddler Labs and Karen Myers from SRI will discuss what we’re doing about it and what still needs to be done.
4:35 PM – 5:00 PM
The benefits of robotics in agriculture are undeniable, yet at the same time only getting started. Lewis Anderson (Traptic) and Sebastien Boyer (FarmWise) will compare notes on the rigors of developing industrial-grade robots that both pick crops and weed fields respectively, and Pyka’s Michael Norcia will discuss taking flight over those fields with an autonomous crop-spraying drone.
5:00 PM – 5:25 PM
Robotics and AI are the future of many or most industries, but the barrier of entry is still difficult to surmount for many startups. Speakers will discuss the challenges of serving robotics startups and companies that require robotics labor, from bootstrapped startups to large scale enterprises.
5:30 PM – 7:30 PM
Unofficial After Party, (Cash Bar Only)
Come hang out at the unofficial After Party at Tap Haus, 2518 Durant Ave, Ste C, Berkeley
We only have so much space in Zellerbach Hall and tickets are selling out fast. Grab your General Admission Ticket right now for $350 and save 50 bucks as prices go up at the door.
Student tickets are just $50 and can be purchased here. Student tickets are limited.
Startup Exhibitor Packages are sold out!
A new startup called Arize AI is building what it calls a real-time analytics platform for “observability” in artificial intelligence and machine learning.
The company is led by CEO Jason Lopatecki, who has also served as chief strategy officer and chief innovation officer at TubeMogul, the video ad company acquired by Adobe. TubeMogul’s co-founder and former CEO Brett Wilson is an investor and board member.
And it has already made an acquisition: a Y Combinator -backed startup called Monitor ML. The entire Monitor ML team is joining Arize, and its CEO Aparna Dhinakaran (who previously built machine learning infrastructure at Uber) is becoming Arize’s co-founder and chief product officer.
Lopatecki and Dhinakaran said that even when they were leading two separate startups, they were trying to solve similar problems — problems that they both saw at big companies.
“Businesses are deploying these complex models that are hard to understand, they’re not easy to troubleshoot or debug,” Lopatecki said. So if an AI or ML model isn’t delivering the desired results, “The state of the art today is: You file a ticket, the data scientist comes back with a complicated answer, everyone’s scratching their head, everyone hopes the problem’s gone away. As you push more and more models into the organization, that’s just not good enough.”
Similarly Dhinakaran said that at Uber, she saw her team spend a lot of time “answering the question, ‘Hey, is the model performing well?’ And diving into that model performance was really a tough problem.”
To solve it, she said, “The first phase is: How can we make it easier to get these real-time analytics and insights about your model straight to the people who are monitoring it in production, the data scientist or the product manager or engineering team?”
Lopatecki added that Arize AI is providing more than just “a metric that says it’s good or bad,” but rather a wide range of information that can help teams see how a model is performing — and if there are issues, whether those issues are with the data or with the model itself.
Besides giving companies a better handle on how their AI and ML models are doing, Lopatecki said this will also allow customers to make better use of their data scientists: “[You don’t want] the smallest, most expensive team troubleshooting and trying to explain whether it was a correct prediction or not … You want insights surfaced up [to other teams], so your head researcher is doing research, not explaining that research to the rest of the team.”
He compared Arize AI’s tools to Google Analytics, but added, “I don’t want to say it’s an executive dashboard, that’s not the right positioning of the platform. It’s an engineering product, similar to Splunk — it’s really for engineers, not the execs.”
Lopatecki also acknowledged that it can be tough to make sense of the AI and ML landscape right now (“I’m technical, I did EECS at Berkeley, I understand ML extremely well, but even I can be confused by some of the companies in this space”). He argued that while most other companies are trying to tackle the entire AI pipeline, “We’re really focusing on production.”
In the wake of the $5.3 billion sale of banking API provider Plaid to Visa — a deal generally lauded as intelligent for the larger company — fintech became an even hotter part of the venture capital and startup landscape.
While companies in the broad fintech and finservices spaces were already attractive bets for private investors, Visa made them all the more attractive — a facet of the market that we presume has a great impact on startups that are working along similar lines to Plaid . Startups like Belvo, a Y Combinator-backed company that is part of the accelerator’s current, Winter 2020 batch.
TechCrunch got in touch with Belvo because its model is interesting, as are the bones of the company’s organization itself. Let’s explore.
To understand what Belvo is building, TechCrunch caught up with the Pablo Viguera, one of the company’s co-founders, to chat about his startup and its goals.
Noting that his company’s aims are “similar to the overarching goal[s] of Plaid,” Viguera told TechCrunch that Belvo is not merely building a banking API business hoping to connect apps to financial accounts. Instead, Belvo wants to build a finance API, which takes in more information than is normally collected by such systems. Why take in more data from more sources? Because, Viguera said, only 50% of individuals at most have a bank account in Latin America, his company’s target market.
But that doesn’t mean the underbanked population isn’t financially active. Indeed, Belvo wants to link all sorts of accounts together. For example, Viguera told TechCrunch that some gig-economy companies in Latin America are issuing their own cards that allow workers to cash out at small local shops. In time, all those transactions are data that could be linked up using Belvo, casting a far wider net than what we’re used to domestically.
The company’s work to connect banks and non-banks together is key to the company’s goal of allowing “any fintech or any developer to access and interpret user financial data,” according to Viguera.
So we might consider Belvo to be similar to Plaid, but tuned for the Latin American market so it can take in a more diverse set of data to better meet the local market’s needs. As far as goals go, providing better financial services to the underbanked is something I can get behind.
Belvo is a fun company in that it has two hubs, or headquarters, today. One of its nexuses is in Mexico City, Mexico, focused on “sales, operations, [and] biz dev,” according to Viguera. Its other home is in Barcelona, Spain, where it has its product and tech teams. Such multi-hub companies are becoming more common, as are, I suspect, smaller companies starting life as effective multinationals.
The startup intends to expand its engineering staff in Mexico in time.
Today Belvo is 15 people, the company told TechCrunch, a figure that it expects to rise to between 20 and 25 people by the end of Q1 2020. (Demo day is in late March, for reference.)
Belvo has a business model that investors can understand. Similar to other players in the API-space, Belvo charges for each API call that its customers use. We can compare the model to Twilio’s, I reckon.
The company is focused on the Mexican market first, something that I was curious about. According to Belvo, Mexico is home to a host of fintech companies it can partner with — 450 to 500 by Viguera’s estimation — with more being founded each quarter. That makes the country fertile ground for Belvo, given the nascency of its product and business.
Regarding growth, Belvo is coy, saying only that traction is “very strong” today, having added “dozens of developers” since it launched its platform about a month ago. Viguera did disclose that his company has “signed contracts with some of the most relevant fintechs in Mexico” and has seen “interest from other countries in Latin America.”
Belvo will move into the Colombian and Brazilian markets this year.
Belvo will present to a crowded room of investors in a little over a month’s time. How much revenue growth it can demonstrate will help price the company, and attract or disinterest capital. But given the mechanics of fundraising at Y Combinator today, who wants to bet that Belvo will close more capital ahead of the big day?
Seed fundraising is rarely easy, but it certainly used to be a lot less complicated than it is today. In a simpler world, a seed investor (or maybe two) would lead a round, which meant that they would write the terms of the deal in a term sheet and then pass that document to their friends to flesh out the funds and eventually close the round. That universe of investors was small and (unfortunately) often cliquish, but everyone sort of knew each other and founders always knew at least who to start with in these early fundraises.
That world is long since gone, particularly at the seed stage. Now there are thousands of people who write checks into the earliest startup venture rounds, making it increasingly challenging for founders to find the right investors. “Pre-seed,” “seed,” “post-seed,” “seed extension,” “pre-Series A” and more terms get batted about, none of which are all that specific about what kinds of startups these investors actually invest in.
Worse, obvious metrics in the past that helped stack-rank investors — like size of potential check — have come to matter far less. In their place are more nuanced metrics like the ability to accelerate a deal to its closing. Today, your greatest lead investor may be the one who ends up writing the smallest check.
Given how much the landscape has changed, I wanted to do two things for founders thinking through a seed fundraise. First, I want to talk about how to strategize around a seed fundraise today, given the radical changes in the market over the past few years. Second, I want to talk about a couple of the archetypes of startup stages you see in the market today and discuss how to handle each of them.
This article focuses on “conventional” seed fundraising and doesn’t get into a bunch of alternative models of VC that I intend to explore in the coming weeks. If you thought traditional seed investing is complicated, wait until you see what the alternatives look like. The upshot, though, is that founders with the right strategy have more choices than ever, and, ultimately, that means there are more efficient ways to use capital to get the desired outcome for your startup.
Let’s get some preliminaries out of the way. This discussion assumes that you are a startup, looking to fundraise a seed round of some kind (i.e. you’re not looking to bootstrap your company) and that you are looking to close some sort of conventional venture capital round (i.e. not debt, but equity).
The problem with most seed fundraising advice is that it isn’t tailored to the specific stage of the startup under discussion. As I see it, there are now roughly six stages for startups before they reach scale. Those stages are:
YC-backed Astranis has raised $90 million of new combined debt and equity funding in a Series B round led Venrock, with a sizeable contribution by existing investor (and lead of their 2018 round) Andreessen Horowitz. The funding will be used to help the company launch its first commercial satellites, which will be the bedrock of its future internet service offering, aimed at connecting the massive market of underserved populations around the world.
Astranis emerged from stealth in 2018 when it announced $13.5 million in funding led by Andreessen, and revealed its plan to offer low-cost, reliable internet using geostationary satellites – a different strategy from the increasingly numerous entrants in the satellite internet race who plan to deploy large constellations of satellites into low Earth orbit that don’t stay at a fixed point relative to a specific location on Earth, but that instead hand off their connection via a kind of relay system through ground stations to offer continued service.
The geostationary model that Astranis is embracing is somewhat more similar to the existing way of offering internet connectivity from space, which employs very large communications satellite parked in geostationary orbit fairly far away from Earth. Astranis’ novel approach uses small satellites, however – spacecraft roughly 20 times smaller than the traditional variety, weigh in at around 770 lbs vs. over 14,000 lbs for the legacy kind.
Astranis has made it possible to use smaller satellites thanks in large part to its proprietary ultra-sideband software-defined radio tech, which can provide more bandwidth on much smaller and less complicated hardware, using digital vs. analog technologies. These not only save a tone of space, but can be built and launched with a turnaround time of just months, compared to many years for the large, geostationary telecommunications spacecraft of yore.
As mentioned, this is a combined debt and equity round, including $40 million of equity funding with participating by Y Combinator and others in addition to Venrock and Andreessen. The remaining $50 million of debt facility comes from TriplePoint Capital. Astranis will be looking to this year and next as the time to grow its internet service provider partnerships, as well as built out its relationships with governments and the rest of the industry.
Astranis signed an agreement with launch provider SpaceX last year for a ride for their first commercial satellite, with the aim of having that mission take place sometime as early as the fourth quarter of 2020. The company has raised $108 million to date, but has deep-pocketed competitors eyeing the same opportunity with different technologies, including SpaceX’s Starlink and Amazon’s Kuiper.
Are you a student enthralled by robots and the AI that powers them? Do you live within striking distance of UC Berkeley? Ready to learn from the greatest minds and makers in the field? Then we want you at TC Sessions: Robotics + AI 2020 on March 3 at UC Berkeley’s Zellerbach Hall.
We’re investing in the next generation of makers by making our day-long conference super-affordable. Buy your $50 student pass right here.
If you’re not familiar with our Robotics/AI session, listen up. It’s a full day of interviews, panel discussions, Q&As, workshops and demos. And it’s all dedicated to these two world-changing technologies. Last year, we hosted 1,500 attendees. We’re talking the industries’ top leaders, founders, investors, technologists, executives and engineering students.
As a student, you’ll rub elbows with the greats. You’ll have ample time to learn and network. Who knows? You might impress the pants off the right person and land an internship, a prime job — or find the co-founder of your dreams.
If networking feels like a chore, never fear. CrunchMatch, our free business matching platform, removes the pain and adds efficiency. Win-win!
You’ll hear from our great slate of speakers, including VCs Eric Migicovsky (Y Combinator), Kelly Chen (DCVC) and Dror Berman (Innovation Endeavors). You’ll also hear from plenty of founders, including experts focused on agricultural, construction and human assistive robotics. And that’s just for starters.
Here are a few more examples of presentations you’ll find in our program agenda:
TC Sessions: Robotics + AI 2020 takes place on March 3. We’re making the event affordable for students, because there’s no future tech without them. Invest $50 in your tomorrow — buy your student ticket today, and join us in Berkeley!
Is your company interested in sponsoring or exhibiting at TC Sessions: Robotics + AI 2020? Contact our sponsorship sales team by filling out this form.
As the insuretech space fills up, a new entrant is joining the fight.
The company offers renters insurance in California. The twist? Goodcover returns unclaimed premiums to policy holders at the end of the year.
Here’s how it works. Goodcover operates as a managing general agent, which means they write the policy, set the pricing and build their own risk assessment model, but partner with insurance carriers to hold the back-end capital and write on their book. This differs from Lemonade, which is its own insurance carrier, but is similar to Hippo and many other new insurtech startups.
The first priority of the company, according to co-founder and CEO Chris Lotz, is to use technology to bring down the cost of insurance in the first place. That means eliminating paperwork, sales agents and expensive acquisition tactics used by big insurance. Statista reports that GEICO, Progressive and State Farm alone spent upwards of $3 billion on advertising in 2018.
But tech is also used to rethink the insurance model. Here’s what the company said in its launch blog post:
Old models say the number one indicator you’ll make a claim is having a prior claim, and charge you accordingly, even when you were not at fault. Models designed with the Member in mind determine whether a claim is likely to reoccur, or whether mitigation has actually reduced risk and warrants a lower price. Good technology empowers us to build this new data into our models, keeping prices as low as possible for as many people as possible.
Lotz says that USAA was actually a part of the inspiration for Goodcover. Lotz worked at AIG for eight years before starting the company, inspired by the USAA’s member-first mentality. Lotz looked to model Goodcover after USAA, the insurance co-operative for military service members and their families, which has no outside agents, pays a dividend and uses technology to both keep costs down and offer quality policy coverage.
Goodcover takes a 20% cut up front. The other 80% goes to Goodcover’s partners: KnightBrook Insurance (primary carrier), Transatlantic Reinsurance (reinsurance), North American Risk Services (claims services) and Milliman (actuarial services).
The majority of that 80% goes toward indemnity, or paying out claims, with some going toward loss adjustment expenses (paying the human that goes and checks out or works on the claim), carrier fees and reinsurance premiums. These portions of the revenue are where partners like KnightBrook and Transatlantic Reinsurance make their money.
Whatever is left over is passed on to the policy holders. Lotz says that that number is expected to range from 5% to 10%. However, in a case where reinsurance premiums are applied (if, for example, a major earthquake were to destroy multiple Goodcover-insured apartment buildings), there may not be extra cash left over. In that case, Goodcover will take on the extra cost, eliminating the dividend to policy holders but also not costing them any extra.
“This isn’t about charging everyone and then giving 50% back,” said Lotz. “It’s a guarantee that we’re not overcharging you in the first place.” The company claims that it saves renters 45% on their renters insurance.
Goodcover has raised a total of $2 million in funding from Fuel Capital, YC, Liquid 2, Box Group, several angels and Transatlantic Reinsurance, one of their insurance partners.
The company has plans to continue expanding, though insurance is regulated at the state level, which could make that a more tedious process. Lotz explained that starting in California was very purposeful, as regulatory approval is relatively difficult to secure in such a consumer protection-heavy state. The company is also interested in introducing home owners insurance.
Insurance is a crowded market, with startups racing to rethink the model, employ tech to advance the product and update the value proposition for a millennial audience that may be new to insurance. But in an industry that hasn’t changed much in over a century, and which has lost the trust of the consumer, it makes sense that startups are scrambling to stake their claim.
Datree, the early stage startup building a DevOps policy engine on GitHub, announced an $8 million Series A today. It also announced it has joined the Y Combinator Winter 20 cohort.
Since that seed round, company co-founder and CEO Shimon Tolts says that the company learned that while scanning code for issues was something DevOps teams found useful, they wanted help defining the rules. So Datree has created a series of rules packages you can run against the code to find any gaps or issues.
“We offer development best practices, coding standards and security and compliance policies. What happens today is that, as you connect to Datree, we connect to your source code and scan the entire code base, and we recommend development best practices based on your technology stack,” Tolts explained.
He says that they build these rules packages based on the company’s own expertise, as well as getting help from the community, and in some cases partnering with experts. For instance, for its Docker security package, it teamed up with Aqua Security.
The focus remains on applying these rules in GitHub where developers are working. Before committing the code, they can run the appropriate rules packages against it to ensure they are in compliance with best practices.
Datree rules packages. Screenshot: Datree
Tolts says they began looking at Y Combinator after the seed round because they wanted more guidance on building out the business. “We knew that Y Combinator could really help us because our product is relevant to 95% of all YC companies, and the program has helped us go and work on six figure deals with more mature YC companies,” he said.
Datree is working directly with Y Combinator CEO Michael Seibel, and he says being part of the Winter 20 cohort has helped him refine his go-to-market motion. He admits he is not a typical YC company having been around since 2017 with an existing product and 12 employees, but he thinks it will help propel the company in the long run.
Funko Pops. You’ve probably noticed them at your local GameStop, Hot Topic or spread out all over your co-worker’s desk. These lil’ vinyl figurines and their big ol’ heads have taken over retail shelves in the last few years. You can now find a Funko Pop! (or thirty) for just about every fandom; there are more than 8,000 different Pops, and that number never seems to stop growing.
Like most collectible things, some Pops are worth more than others — whether they’re obscure characters that didn’t get a big run, limited-edition color variations or were only sold for a day or two at a convention, the rarest Pops can sell for hundreds or thousands of dollars. And, like anything where people are dropping piles of cash, there are folks trying to sell fakes.
Whatnot, a company out of Y Combinator’s Winter 2020 class, wants to tackle the issue of fakes in collectibles by adapting a model proven by services like GOAT and StockX: authenticated resale.
As with the aforementioned, Whatnot works as the obsessively-informed middle man between buyer and seller. Buyer makes an offer, seller sends their figurine to Whatnot, Whatnot uses its growing knowledge of what’s real (and how to flag what’s not) to make sure it’s legit. If everything looks good, Whatnot forwards the Funko Pop to the buyer and takes their cut (about 9%, plus a few bucks for shipping).
“We started out buying and reselling sneakers, actually,” Whatnot co-founder Grant LaFontaine tells me. “Then we started getting into buying/reselling Funko Pops. As we started to do this, we noticed it was much more difficult, and much more unsafe, to buy and sell Funko Pops than it was to buy and sell sneakers.”
Services like GOAT and StockX had “drastically simplified” the process for sneaker fans, LaFontaine says, helping to weed out counterfeits for buyers while limiting potential scams that could hurt sellers.
Today all sales on Whatnot are verified by a human expert. That makes sense for the rarer, more expensive figurines. The “Grails,” as Funko Pop collectors call them — like this Comic Con Sith Trooper that has been selling for around $600-700, or this 2012 “Holographic” Darth Maul that can go for thousands. For the less rare stuff, though, it’s a bit overkill.
With that in mind, Whatnot is building out its database of the red flags to look for with each transaction — things like boxes that are just slightly mis-sized, or a logo that doesn’t look quite right. In time, this could allow for more of their verification to be automated, with the human expert (and the associated higher fees) reserved for bigger transactions.
Whatnot isn’t alone in noticing this market’s potential. StockX, the authenticated resale marketplace that first focused on sneakers, expanded into collectibles late last year. Whatnot is looking to find its fan base by focusing solely on collectibles, giving collectors the exact user experience, filters and info they’d be looking for within a given category.
That’s not to say they’re focusing solely on Funko Pops, though — not in the long run, at least. The team intends to expand into other types of collectibles down the road, with Pokémon cards being the likely next candidate.
Whatnot tells me it has raised a $550,000 pre-seed round from Wonder Ventures, YC, and a handful of angel investors.
I am a chaplain trying to understand the tech world, and to me, that means I need to understand people like Justin Kan.
Who, after all, most “represents tech?” There are the obvious answers: secular deities like Bill Gates, Elon Musk or the late Steve Jobs. Or there are the often-marginalized figures on whom I’ve often preferred to focus in writing this column: the immigrant women of color who built the industry’s physical infrastructure; social workers and feminist philosophers who study how tech really works on a subconscious level, and how to fix it; or the next generation of leaders who represent the future of tech even as they worry about the inequalities they themselves embody.
But you can’t understand what has come to be the power and mystique of tech without also understanding the minds of its enigmatic founders. Justin Kan is a serial entrepreneur and founder who, whether you appreciate his public voice or not, certainly stands out as one of the most interesting examples of that classic Silicon Valley archetype: a tech entrepreneur ostensibly doing much more than just selling technology.
Kan famously started his business career not long after he graduated from Yale in 2005 by creating Justin.tv, a tech platform from which he broadcast his own life 24/7. Fifteen years later, Kan’s original idea seems quaint, given the level of self-promotion and oversharing that’s become commonplace. And yet, as he was arguably the first person to turn surveillance capitalism into not only overt performance art but also a noteworthy career in startups and venture capital, one can’t help but take the idea of Justin Kan seriously, at the very least as a harbinger of what is to come.
Brazil’s famously tricky real estate market has long drawn international investors to the region in search of tech solutions. This time, Brazilian startup Loft brought in a $175 million Series C from first-time investor in the region, Vulcan Capital (Paul Allen’s investment arm), alongside Andreessen Horowitz. Loft is also a16z’s first and only Brazilian investment.
Co-founded by serial entrepreneurs and investors Mate Pencz and Florian Hagenbuch in 2018, Loft uses a proprietary algorithm to process transaction data and provide more transparent pricing for both buyers and sellers. The startup uses two models to help clients sell properties; either Loft will value the apartment for listing on the site, or they will offer to purchase the property from the buyer immediately. Many real estate platforms in the U.S. are shifting toward a similar iBuyer model; however, this system may be even more apt for the Latin American market, where property sales are notoriously untransparent, bureaucratic and tedious.
Loft will use the capital to expand to Rio de Janeiro in Q1 2020 and to Mexico City in Q2, bringing on at least 100 new employees in the process. It also plans to scale its financial products to include mortgages and insurance by the end of the year.
Mexican consumer lending startup AlphaCredit became SoftBank’s new Mexico bet this month, with a $125 million Series B round. AlphaCredit uses a programmed deduction system to provide rapid, online loans to individuals and small businesses in Mexico. To date, the startup has granted more than $1 billion in loans to small business clients in Mexico and Colombia, many of whom have never previously had access to financing.
AlphaCredit’s programmed deductions system enables the startup to lower default rates, which in turn lowers interest rates. For more than eight years, AlphaCredit has encouraged financial inclusion in Mexico and Colombia through technology; this round of investment will enable the platform to consolidate its holding as one of the top lending platforms in the region. The investment is still subject to approval by Mexico’s competition authority, COFECE, which has previously blocked startup deals such as the Cornershop acquisition in 2019.
While SoftBank is still rapidly deploying its Latin America-focused Innovation Fund, some of its largest companies are stepping on the brakes. In particular, SoftBank’s largest LatAm investment, Rappi, recently announced that it would lay off up to 6% of its workforce in an effort to cut costs and focus on their technology. The Colombian unicorn has been expanding at a breakneck pace throughout the region using a blitzscaling technique that has helped it reach nine countries, with 5,000 employees in just two years, including Ecuador in November 2019.
Rappi has stated that it will focus on technology and UX in 2020, explaining that the job cuts do not reflect its long-term growth strategy. However, Rappi is also facing legal action for alleged intellectual property theft. Mauricio Paba, José Mendoza and Jorge Uribe are suing Rappi CEO Simon Borrero and the company for stealing the idea for the Rappi platform while providing consulting for the three founders through his firm, Imaginamos. The case is currently being processed in Colombia and the U.S.
One of SoftBank’s biggest bets in Asia, Oyo Rooms, is facing similar challenges. Just months after announcing their expansion into Mexico, Oyo fired thousands of employees in China and India. Oyo plans to be the largest hotel chain in Mexico by the end of 2020, according to a local spokesperson.
With a $23 million Series B from SP Ventures, Fall Line Capital and Acre Venture Partners, Argentine agricultural supply marketplace Agrofy has raised the region’s largest round for an agtech startup to date. The platform provides transparency and ease for the agricultural industry, where users can buy everything from tractors to seeds. In four years, Agrofy has established itself as the market leader in agricultural e-commerce; it was also Fall Line Capital’s first investment outside of the U.S.
Agrofy is active in nine countries and receives more than five million visits per month, 60% of which come from Brazil. However, the startup faces the challenge of low connectivity in rural areas, where most of its customers live. The investment will go to improving the platform, as well as integrating new payment types directly into the site to help clients process their transactions more smoothly.
The Miami-based sports-streaming platform Fanatiz raised $10 million in a Series A round from 777 Partners in January 2020 after registering 125% user growth since July 2019. Founded by Chilean Matias Rivera, Fanatiz provides legal international streaming of soccer and other sports through a personalized platform so that fans can follow their teams from anywhere in the world. The startup provided the Pope with an account so that he could follow his beloved team, San Lorenzo, from the Vatican. Fanatiz has previously received investment from Magma Partners and participated in 500 Startups’ Miami Scale program.
Conservation-tech startup Pachama raised $4.1 million from Silicon Valley investors to continue developing a carbon offset marketplace using drone and lidar data. Pachama was founded by Argentine entrepreneur Diego Saez-Gil in 2019 after he noticed the effects of deforestation in the Peruvian Amazon. After participating in Y Combinator in 2019, Pachama now has 23 sites in the U.S. and Latin America where scientists are working alongside the startup’s technology to certify forests for carbon sequestration projects.
Mexico’s Moons, an orthodontics startup that provides low-cost invisible aligners, has raised $5 million from investors such as Jaguar Ventures, Tuesday Capital and Foundation Capital and was recently accepted into Y Combinator, bringing the startup to the U.S. Moons provides a free consultation and 3D scan to patients in Mexico to determine if they are a good fit for the program, then supplies them with a year-long invisible braces regime for around $1,200. With 18 locations in Mexico and two in Colombia, Moons is expanding rapidly across the region, with ambitions for providing low-cost healthcare across several verticals in Latin America.
Chinese ride-hailing startup Didi Chuxing recently launched a sustainable fleet of over 700 electric and hybrid cars for its Mexico City operations. After two years operating in Mexico, Didi announced that it would establish its headquarters in the capital city to manage its new low-emissions fleet. The company will provide financing to help its drivers acquire and use the vehicles, in an effort to reduce Didi’s environmental impact.
The IDB Lab released a report on female entrepreneurs in Latin America, finding that 54% of female founders have raised capital and 80% plan to scale internationally in the next five years. The study, entitled “wX Insights 2020: The Rise of Women STEMpreneurs,” finds that female entrepreneurship is on the rise in Latin America, particularly in the areas of fintech, edtech, healthtech and biotech. Nonetheless, 59% of the 1,148 women surveyed still see access to capital as the most significant limitation for their companies. However, as women take center stage in Latin American VC, such as Antonia Rojas Eing joining ALLVP as Partner, we may see funding tilt toward female-founded firms.
This month has set 2020 on a course to continue the strong growth we saw in the Latin American ecosystem in 2019. It is always exciting to see international investors make their first bets in the region, and we expect to continue seeing new VCs entering the region over the coming year.
Legacy, a male fertility startup, has just raised a fresh, $3.5 million in funding from Bill Maris’s San Diego-based venture firm, Section 32, along with Y Combinator and Bain Capital Ventures, which led a $1.5 million seed round for the Boston startup last year.
We talked earlier today with Legacy’s founder and CEO Khaled Kteily about his now two-year-old, five-person startup and its big ambitions to become the world’s preeminent male fertility center. Our biggest question was how Legacy and similar startups convince men — who are generally less concerned with their fertility than women — that they need the company’s at-home testing kits and services in the first place.
“They should be worried about [their fertility],” said Kteily, a former healthcare and life sciences consultant with a master’s degree in public policy from the Harvard Kennedy School. “Sperm counts have gone down 50 to 60% over the last 40 years.” More from our chat with Legacy, a former TechCrunch Battlefield winner, follows; it has been edited lightly for length.
TC: Why start this company?
KK: I didn’t grow up wanting to be the king of sperm [laughs]. But I had a pretty bad accident — a second-degree burn on my legs after having four hot Starbucks teas spill on my lap in a car — and between that and a colleague at the Kennedy School who’d been diagnosed with cancer and whose doctor suggested he freeze his sperm ahead of his radiation treatments, it just clicked for me that maybe I should also save my sperm. When I went into Cambridge to do this, the place was right next to the restaurant Dumpling House and it was just very awkward and expensive and I thought, there must be a better way of doing this.
TC: How do you get started on something like this?
KK: This was before Ro and Hims began taking off, but people were increasingly comfortable doing things from their own homes, so I started doing research around the idea. I joined the American Society of Reproductive Medicine. I started taking continuing education classes about sperm…
TC: Women are under so much pressure from the time they turn 30 to monitor their fertility. Aside from extreme circumstances, as with your friend, do men really think about testing their sperm?
KK: Men should be worried about it, and they should be taking responsibility for it. What a lot of folks don’t know is for every one in seven couples that are actively trying to get pregnant, the man is equally responsible [for their fertility struggles]. Women are taught about their fertility but men aren’t, yet the quality of their sperm is degrading over the years. Sperm counts have gone down by 50 to 60% over the last 40 years, too.
TC: Wait, what? Why?
KK: [Likely culprits are] chemicals in plastics, chemicals in what we eat eat and drink, changes in lifestyle; we move less and eat more, and sperm health relates to overall health. I also think mobile phones are causing it. I will caveat this by saying there’s been mixed research, but I’m convinced that cell phones are the new smoking in that it wasn’t clear that smoking was as dangerous as it is when the research was being conducted by companies that benefited by [perpetuating cigarette use]. There’s also a generational decline in sperm quality [to consider]; it poses increased risk to the mother but also the child, as the risk of gestational diabetes goes up, as well as the rate of autism and other congenital conditions.
TC: You’re selling directly to consumers. Are you also working with companies to incorporate your tests in their overall wellness offerings?
KK: We’re investing heavily in business-to-business and expect that to be a huge acquisition channel for us. We can’t share any names yet, but we just signed a big company last week and have a few more in the works. These are mostly Bay Area companies right now; it’s an area where our experience as a YC alum was valuable because of the founders who’ve gone through and now run large companies of their own.
TC: When you’re talking with investors, how do you describe the market size?
KK: There are four million couples that are facing fertility challenges and in all cases, we believe the man should be tested. So do [their significant others]. Almost half of purchases [of our kits] are by a female partner. We also see men in the military freezing their sperm before being deployed, same-sex couples who plan to use a surrogate at some point and transgender patients who are looking at a life-changing [moment] and want to preserve their fertility before they start the process. But we see this as something that every man might do as they go off to college, and investors see that bigger picture.
TC: How much do the kits and storage cost?
KK: The kit costs $195 up front, and if they choose to store their sperm, $145 a year. We offer different packages. You can also spend $1,995 for two deposits and 10 years of storage.
TC: Is one or two samples effective? According to the Mayo Clinic, sperm counts fluctuate meaningfully from one sample to the next, so they suggest semen analysis tests over a period of time to ensure accurate results.
KK: We encourage our clients to make multiple deposits. The scores will be variable, but they’ll gather around an average.
TC: But they are charged for these deposits separately?
TC: And what are you looking for?
KK: Volume, count, concentration, motility and morphology [meaning the shape of the sperm].
TC: Who, exactly, is doing the analysis and handling the storage?
KK: We partner with Andrology Labs in Chicago on analysis; it’s one of the top fertility labs in the country. For storage, we partner with a couple of cryo-storage providers in different geographies. We divide the samples into four, then store them in two different tanks within each of two locations. We want to make sure we’re never in a position where [the samples are accidentally destroyed, as has happened at clinics elsewhere].
TC: I can imagine fears about these samples being mishandled. How can you assure customers this won’t happen?
KK: Trust and legitimacy are core factors and a huge area of focus for us. We’re CPPA and HIPAA compliant. All [related data] is encrypted and anonymized and every customer receives a unique ID [which is a series of digits so that even the storage facilities don’t know whose sperm they are handling]. We have extreme redundancies and processes in place to ensure that we’re handling [samples] in the most scientifically rigorous way possible, as well as ensuring the safety and privacy of each [specimen].
TC: How long can sperm be frozen?
TC: How will you use all the data you’ll be collecting?
KK: I could see us entering into partnerships with research institutions. What we won’t do is sell it like 23andMe.
If a thousand companies make their own smart light bulb, do a thousand companies also have to design a light switch app to control them?
Kraftful, a company out of Y Combinator’s Summer 2019 class, doesn’t think so. Kraftful builds the myriad components that an IoT/Smart Home company might need, puzzle piecing them together into apps for each company without requiring them to reinvent the light switch (or the pad lock button, or the smart thermostat dial) for the nth time.
Because no company wants an app that looks identical to a competitor’s, much of what Kraftful does is built to be tailored to each company’s branding — all the surface level stuff, like iconography, fonts, colors, etc. are all customizable. Under the hood, though, everything is built to be reusable.
This focus on finding the parts that can be built once makes sense, especially given the team’s background. CEO Yana Welinder and CTO Nicky Leach were previously Head of Product and a Senior Engineer, respectively, at IFTTT — the web service made up of a zillion reusable, interlinking “recipe” applets that let you hook just about anything (Gmail, Instagram, your cat’s litterbox, whatever) into anything else to let one trigger actions on the other.
Kraftful founders Nicky Leach and Yana Welinder
So why now? More smart devices are coming onto the market every day, many of them from legacy appliance companies who don’t have much (or any) history in building smartphone apps. Good apps are the exception — the Philips Hue app is one of the better ones out there, and even it’s a little wonky sometimes. Many of them are… real bad.
Bad apps get bad App Store reviews, and bad reviews dent sales. And even for those who dive in and buy it without checking the reviews first, bad apps means returned devices. According to this iQor survey from 2018, 22% of smart home customers give up and return the products before getting them to work.
“We kind of looked around and realized that 80% of all smart home apps have zero, one, or two stars on the app store,” Welinder tells me.
Knowing what’s working and what’s not with buyers is a strength of Kraftful’s approach; behind the scenes, they can run all sorts of analytics on how users are actually interacting with components in the apps they’re powering and adjust all of them accordingly. If they make a tweak to the setup process in one app, do more users actually get all the way through it? Great. Now roll that out everywhere.
“If you look at some of the leading smart lock apps, they all have very… very similar interfaces. They’ve basically gotten to a standardized user experience, but they’ve all be developed individually.” says Welinder. “So all of these companies are spending the resources designing and developing these apps, but they’re not getting the benefit of being standardized across the board and being able to leverage data from all of these apps to be able to improve them all at once”
Kraftful builds the app for both iOS and Android, tailors it to the brand’s needs, offers cloud functionality like push notifications and activity history, provides analytics for insights on how users are actually using an app, and keeps everything working as OS updates roll out and as device display sizes grow ever larger.
Of course, the entire concept of a dedicated app for a smart home device has some pretty fierce competition — between Apple’s Homekit and Google Home, the platform makers themselves seem pretty set on gobbling up much of the functionality. But most buyers still expect their shiny devices to have their own apps — something branded and purpose-built, something for the manual to point them to. Power users, meanwhile, will always want to do things beyond what the all-encompassing solutions like Homekit/Home are built for.
Folks at Google seem to agree with Kraftful’s approach, here — the team counts the Google Assistant Investments Program as one of the investors in the $1 million they’ve raised. Other investors include YC, F7 Ventures, Cleo Capital, Julia Collins (co-founder of Zume Pizza and Planet Forward), Lukas Biewald (co-founder of CrowdFlower), Nicolas Pinto (co-founder of Perceptio) and a number of other angel investors.
Welinder tells me they’re already working with multiple companies to start powering their apps; NDAs prevent her from saying who, at this point, but she notes that they’re “some of the largest brands that provide smart lights, plugs/switches, thermostats, and other smart home products.”
Since its launch in May of last year, the cannabis-infused drink company Cann has sold 150,000 cans of its THC and CBD-infused, alcohol-free, intoxicants, in a sign of success that’s bucking current industry trends,.
On its way to that milestone, the company has sold out multiple times as it wrestled with manufacturing facilities that simply couldn’t keep up with demand, according to the company’s co-founders, Luke Anderson and Jake Bullock.
Now, thanks to a $5 million investment from new backers led by Imaginary, an early stage investment firm launched by the founder of the Net-a-Porter group, and JM10, a leading cannabis company, Cann is hoping to break through the legal obstacles surrounding distribution of cannabis-derived intoxicants and overcome investors growing skepticism around the viability of cannabis as a business.
“Overall, the industry is hurting. They’re not meeting the growth expectations that they set out,” says Bullock. “What’s happening on delivery platforms is not connected with the mainstream. You have folks that are not going to smoke or are not going to inhale vapor… [and so] you’ve seen a much slower adoption of cannabis as a mainstream mild intoxicant.”
Those problems are threatening the existence of one of the cannabis industry’s most recognizable startups, Eaze. According to earlier TechCrunch reports, the company is running low on cash thanks to a perfect storm of working capital constraints, increased marketing spend and lower customer demand.
Cann’s co-founders think their drink offers something more appealing to a casual consumer than vaping or smoking — but the company chafes under the distribution constraints that tie it to the dispensary businesses.
Cann wants to transform the social alcohol drinker into a Cann consumer, but is hampered by its inability to appear next to beer and wine on grocery store shelves. In fact, the company’s products can’t appear in the grocery store at all.
So to woo these would-be Cann fans, the company is casting about for new distribution deals and cutting its pricing — selling its drinks at a retail price of roughly $4 per Cann.
The $16 four-pack or $24 dollar six-pack is more palatable to consumers than the $27 price point for a euphoric like Kin, the company’s founders think. Investors have backed other would be bud beverages. K-Zen Beverages raised a $5 million from the investment firm DCM and California Dreamin’, a Y Combinator-backed intoxicant containing a whopping 10 milligrams of THC, has also nabbed some investor cash. Even traditional breweries are getting into the act, with the Heineken-owned brewery Lagunitas offering a THC and CBD-infused, alcohol-free version of their famous beer under the moniker HiFi Hops.
Bullock and Anderson say that their company’s drinks, which pack 2MG of THC and 4MG of CBD, could be a challenger to traditional liquors — offering all of the buzz and none of the bad hangover — if they could only get over the regulatory and supply chain hurdles.
To address their manufacturing issues, the company found a co-packer called Space Station, the Sacramento, Calif.-based producer that will help boost volumes.
“We are trying to create a product that can appeal to mainstream consumers,” says Bullock. “There are only 600 licensed distributors so how do you meet customers where they are?”
Instead of vertically integrating (just as Eaze is rushing to make its own products, Cann could build out its own distribution channels and delivery services), Cann is doubling down on third parties and will spend at least some of its new money to reach beyond California into other states where weed is legally sold and regulated.
Right now, it’s pretty much a land grab for shelf space at dispensaries, with few THC and CBD beverages on store shelves, but one reason for the new capital is that both Bullock and Anderson know that any edible company would be foolish not to explore the beverage market too.
Investors like Massenet view the investment in companies like Cann as a bet on the increasing movement toward sobriety among younger generations.
“We have been tracking the new generation of consumers who are searching for and embracing new forms of responsible social drinking which do not involve alcohol,” said Natalie Massenet, Co-founder of Imaginary. “Cann, with its formulation that has the potency of a light beer without the alcohol or calories, addresses this growing trend in a brilliantly formulated series of beverages. Being obsessed with backing the best new disruptive consumer product companies, Imaginary also loves the fantastic branding and positioning of Cann.”
Robotics, AI and automation have long been one of the hottest categories for tech investments. After years and decades of talk, however, those big payouts are starting to pay off. Robotics are beginning to dominate nearly every aspect of work, from warehouse fulfillment to agriculture to retail and construction.
Our annual TC Sessions: Robotics+AI event on March 3 affords us the ability to bring together some of the top investors in the category to discuss the hottest startups, best bets and opine on where the industry is going. And this year’s VC panel is arguably our strongest yet:
TC Sessions: Robotics+AI returns to Berkeley on March 3. Make sure to grab your early-bird tickets today for $275 before prices go up by $100. Startups, book a demo table right here and get in front of 1,000+ of Robotics/AI’s best and brightest — each table comes with four attendee tickets.
Indian tech startups have never had it so good.
Local tech startups in the nation raised $14.5 billion in 2019, beating their previous best of $10.6 billion last year, according to research firm Tracxn .
Tech startups in India this year participated in 1,185 financing rounds — 459 of those were Series A or later rounds — from 817 investors.
Early-stage startups — those participating in angel or pre-Series A financing round — raised $6.9 billion this year, easily surpassing last year’s $3.3 billion figure, according to a report by venture debt firm InnoVen Capital.
According to InnoVen’s report, early-stage startups that have typically struggled to attract investors saw a 22% year-over-year increase in the number of financing deals they took part in this year. Cumulatively, at $2.6 million, their valuation also increased by 15% from last year.
Overall, there were 81 financing deals of size between $25 million and $100 million, up from 56 last year and 36 the year before, and 27 rounds above $100 million, up from 17 in 2018 and and nine in 2017, Tracxn told TechCrunch.
Also in 2019, 128 startups in India got acquired, four got publicly listed and nine became unicorns. This year, Indian tech startups also attracted a record number of international investors, according to Tracxn.
This year’s fundraise further moves the nation’s burgeoning startup space on a path of steady growth.
Since 2016, when tech startups accumulated just $4.3 billion — down from $7.9 billion the year before — flow of capital has increased significantly in the ecosystem. In 2017, Indian startups raised $10.4 billion, per Tracxn.
“The decade has seen an impressive 25x growth from a tiny $550 million in 2010 to $14.5 billion in 2019 in terms of the total funding raised by the startups,” said Tracxn.
What’s equally promising about Indian startups is the challenges they are beginning to tackle today, said Dev Khare, a partner at VC fund Lightspeed Venture Partners, in a recent interview with TechCrunch.
In 2014 and 2015, startups were largely focused on building e-commerce solutions and replicating ideas that worked in Western markets. But today, they are tackling a wide-range of categories and opportunities and building some solutions that have not been attempted in any other market, he said.
Tracxn’s analysis found that lodging startups raised about $1.7 billion this year — thanks to Oyo alone bagging $1.5 billion, followed by logistics startups such as Elastic Run, Delhivery and Ecom Express that secured $641 million.
Also, 176 horizontal marketplaces, more than 150 education learning apps, over 160 fintech startups, over 120 trucking marketplaces, 82 ride-hailing services, 42 insurance platforms, 33 used car listing providers and 13 startups that are helping businesses and individuals access working capital secured funding this year. Fintech startups alone raised $3.2 billion this year, more than startups operating in any other category, said Tracxn.
Sequoia Capital, with more than 50 investments — or co-investments — was the most active venture capital fund for Indian tech startups this year. (Rajan Anandan, former executive in charge of Google’s business in India and Southeast Asia, joined Sequoia Capital India as a managing director in April.) Accel, Tiger Global Management, Blume Ventures and Chiratae Ventures were the other top four VCs.
Steadview Capital, with nine investments in startups, including ride-hailing service Ola, education app Unacademy and fintech startup BharatPe, led the way among private equity funds. General Atlantic, which invested in NoBroker and recently turned profitable edtech startup Byju’s, invested in four startups. FMO, Sabre Partners India and CDC Group each invested in three startups.
Venture Catalysts, with more than 40 investments, including in HomeCapital and Blowhorn, was the top accelerator or incubator in India this year. Y Combinator, with over 25 investments, Sequoia Capital’s Surge, Axilor Ventures and Techstars were also very active this year.
Indian tech startups also attracted a number of direct investments from top corporates and banks this year. Goldman Sachs, which earlier this month invested in fintech startup ZestMoney, overall made eight investments this year. Among others, Facebook made its first investment in an Indian startup — social-commerce firm Meesho — and Twitter led a $100 million financing round in local social networking app ShareChat.
Back in 2017, Y Combinator began offering a 10-week, once-a-year online course called Startup School. Part forum community and part video classroom, the program offers a variety of lectures on topics like raising money or evaluating startup ideas, as led by YC partners and other entrepreneurs from their network.
Three years and 40,000+ students later, they’re switching up the schedule; beginning in 2020, Startup School will now be running multiple times per year. It’s also shifting from being a 10-week program to being an eight-week program.
In its first few years, Y Combinator set a hard cap on the number of founders it accepted into each Startup School session. After acceptance letters were accidentally sent to the wrong teams in 2018, the company opted to let in everyone who applied, modifying the program to focus less on personal advising and more on small peer-to-peer advice groups. It sounds like they’re sticking with this strategy moving forward, as an FAQ on the Startup School site notes that they “do not have a limit on the number of participants” with this year’s sessions.
Did you take part in Startup School previously and are curious if it’s worth doing again? YC says that while “a few lectures will be updated or replaced,” the video content of 2020’s Startup School will be largely the same as 2019. The structure of the course itself will see some changes, though: they’ll be doing fewer group video chat sessions, but introducing weekly Q&A sessions with YC partners.
Just how many times “multiple times per year” will actually be still seems to be up in the air; YC tells me that they’re still working that out. In a post announcing the change, YC notes that its first 2020 course will start in January (whereas previous sessions have started closer to mid-year).
Also still a bit up in the air is YC’s Startup School grant program. In previous years, graduates of the course were able to apply for an equity-free grant (initially $10,000, later increased to $15,000). With Startup School now occurring multiple times per year, YC says it’s “in the process of evaluating the grant program.”
In the same post, YC outlined some stats from this most recent year — like, of the 41,777 founders who took part in the course, 10,193 graduated; 57% of the founders worked on their startups full-time; and 62% of founders were from outside the U.S.
That last bit seems key to YC’s strategy here. Startup School is at least partly meant to serve as a potential funnel into the core YC accelerator program. By putting everything online, they’re letting people from around the world get their foot in the door and get the ball rolling without making the massive commitment of moving to the U.S.
Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. Last week, we looked at how Alibaba and Tencent fared in the last quarter; the talk in Silicon Valley and Beijing this week is on Y Combinator’s sudden retreat from China. We will also discuss the enduring food delivery war in the country later.
The storied Silicon Valley accelerator Y Combinator announced the closure of its China unit just a little over a year after it entered the country. In a vague statement posted on its official blog, the organization said the decision came amid a change in leadership. Sam Altman, its former president who hired legendary artificial intelligence scientist Lu Qi to initiate the China operation, recently left his high-profile role to join research outfit OpenAI. With that, YC has since refocused its energy to support “local and international startups from our headquarters in Silicon Valley.”
What was untold is the insurmountable challenge that multinationals face in their attempt to win in a wildly different market. Lu Qi, who wore management hats at Baidu and Microsoft before joining YC, was clearly aware of the obstacles when he said in an interview (in Chinese) in May that “multinational corporations in China have almost been wiped out. They almost never successfully land in China.” The prescription, he believes, is to build a local team that’s given full autonomy to make decisions around products, operations, and the business.
A former executive at an American company’s China branch, who asked to remain anonymous, argued that Lu Qi’s one-man effort can’t be enough to beat the curse of multinationals’ path in China. “All I can say is: Lu has taken a detour. Going independent is the best decision. When it comes to whether Chinese startups are suited for mentorship, or whether incubators bring value to China, these are separate questions.”
What’s curious is that YC China seemed to have been given a meaningful level of freedom before the split. “Thanks to Sam Altman and the U.S. team, who agreed with my view and supported with much preparation, YC China is not only able to enjoy key resources from YC U.S. but can also operate at a completely independent capacity,” Lu said in the May interview.
Moving on, the old YC China team will join Lu Qi to fund new companies under a newly minted program, MiraclePlus, announced YC China via a Wechat post (in Chinese). The initiative has set up its own fund, team, entity and operational team. The deep ties that Lu has fostered with YC will continue to benefit his new portfolio, which will receive “support” from the YC headquarters, though neither party elaborated on what that means.
The food delivery war in China is still dragging on two years after the major consolidation that left the market with two major players. Meituan, the local services company backed by Tencent, has managed to attain an expanding share against Alibaba-owned Ele.me. According to third-party data (in Chinese) provided by Trustdata, Meituan accounted for 65.1% of China’s overall food delivery orders during the second quarter, steadily rising from just under 60% a year ago. Ele.me, on the other hand, has lost nearly 10% of the market, slumping to 27.4% from 36% a year ago.
In terms of monetization, Meituan generated 15.6 billion yuan ($2.2 billion) in revenue from its food delivery segment in the quarter ended September 30. That dwarfs Ele.me, which racked up 6.8 billion yuan ($970 million) during the same period. Both are growing north of 30% year-over-year.
This may not be all that surprising given Alibaba has arguably more imminent battles to fight. The e-commerce leader has been consumed by the rise of Pinduoduo, which has launched an assault on China’s low-tier cities with its ultra-cheap products and social-driven online shopping experience. Meituan, on the other hand, is fixated on beefing up its main turf of on-demand neighborhood services after divesting its costly bike-sharing endeavor.
When both contestants have the capital to burn through — as they have demonstrated through heavily subsidizing customers and restaurants — the race comes down to which has greater control of user traffic. Meituan holds a competitive edge thanks to its merger with Dianping, a leading restaurant review app akin to Yelp, back in 2015. Dianping today operates as a standalone brand but its food app is deeply integrated with Meituan’s delivery services. For example, hundreds of millions of users are able to place Meituan-powered food delivery orders straight from Dianping.
Alibaba and Meituan used to be on more friendly terms just a few years ago. In 2011, the e-commerce giant participated in Meituan’s $50 million Series B financing. Before long, the two clashed over control of the company. Alibaba is known to impose a heavy hand on its portfolio companies by taking up majority stakes and reshuffling the company with new executives. That’s because Alibaba believes that “only when you operate can you generate synergies and really create exponential value,” said vice chairman Joe Tsai in an interview. “Whereas if you just make a financial investment, you’re counting an internal rate of return. You’re not creating real value.”
Ele.me lived through that transformation. As of September, Alibaba has reportedly (in Chinese) completed replacing Ele.me’s management with its pool of appointed personnel. Ele.me’s founder Zhang Xuhao left the company with billions of yuan in cash and joined a venture capital firm (in Chinese).
Meituan’s founder Wang Xing had more unfettered pursuits. In a later financing round, he refused to accept Alibaba’s condition for portfolio companies to eschew Tencent investments, a strategy of the giant to hobble its archrival. That botched the partnership and Alibaba has since been gradually offloading its Meituan shares but still held onto small amounts, according to Wang in 2017, “to create trouble” for Meituan going forward.