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8 VCs agree: Behavioral support and remote visits make digital health a strong bet for 2021

By Sarah Buhr

In TechCrunch investor surveys of years past, we’ve seen a big focus on fixing what’s broken or bringing the infrastructure into the modern era. But the world has dramatically changed since the beginning of the COVID-19 pandemic.

More of us saw our doctor on video than ever before in 2020 — reaching a 300-fold increase in telehealth visits. It was the year healthcare finally moved fully into the digital space with data management solutions as well. And, though those digital visits have fallen slightly from the beginning of the pandemic, it doesn’t look like people want to go back to the way things were in the foreseeable future.

Now we’re onto the next phase where more people will be getting vaccinated, more of us will likely start to return to the office towards the end of the year, and there’s now a slew of new tech solutions to the issues 2020 presented. If you are investment-minded, as so many of our TechCrunch readers are, you will likely see a lot of potential in this space in 2021.

So we asked some of our favorite health tech VCs from The TechCrunch List where we are headed in the next year, what they’re most excited about and where they might be investing their dollars next. We asked each of them the same six questions, and each provided similar thoughts, but different approaches. Their responses have been edited for space and clarity:


Bryan Roberts and Bob Kocker, partners, Venrock

Do you see more consumer demand for digital services? How does this trend affect what you are looking to invest in for 2021?
The pandemic certainly intensified pressure on the legacy, fee-for-service, activity-based healthcare system since volumes dried up for several months. People were scared to go to the doctor and doctors who are only paid when they see patients saw their revenue evaporate overnight. Telemedicine offered some revenue salvation fee-for-service healthcare but it was impossible to do as many tests and procedures so they have by and large, since summer 2020, reverted back to in-person as much as possible for increased revenue capture.

On the other hand, value-based providers were, in the short term, more insulated as they are paid based on typical levels of utilization. Not surprisingly, COVID-19 has motivated more providers to embrace value-based care because it offers much more stable cash flows and does not depend on the tyranny of cramming more patients into the daily schedule.

With value-based care, the incentives are strongly aligned for more, and continued, tech-enabled virtual care since it is more profitable for those clinicians when they detect diseases earlier and take action to avoid hospitalizations. The beauty of virtual and tech-enabled care is that it can be delivered more frequently and group visits can be facilitated easily, with multiple specialists or people supporting a patient, to improve coordination and speed of action. Also, much more data can be brought to bear to make these interactions higher quality. Imagine how much better blood pressure is controlled when a doctor has not just the in-office reading but also all of the daily readings, or diabetic control when it is informed by all the data from a patient’s continuous glucose monitor, or post-surgical care when a surgeon can review daily pictures of the surgical site.

The enormity of the opportunity to make healthcare more productive and recession-proof growth from our aging population will attract more entrepreneurs and more capital to healthcare IT.

Digital health funding broke records in 2020, with investors pouring in over $10 billion in the first three quarters and a jump in deals overall, compared to the previous year. Do you see that trend continuing as we move back to offices and out of this pandemic or do you think this was a blip due to special circumstances?

We think growth in healthcare IT has been and will continue to be, driven by (1) better businesses and business models via aligned economic incentives and information and (2) some big wins in the space via Teladoc-Livongo merger and JD Health IPO — so both sides of the supply (great businesses) — demand (investor interest) equation. For payers, many healthcare providers and patients, it is in their interest to adopt more cost-effective approaches for care delivery and to access new data to derive insights and remove arbitrages. These prerequisites are strongly aligned in favor of more healthcare IT company formation, rapid growth and successful exits.

While people may spend more time receiving in-person HC in the future than today, we think the rapid adoption of virtual care in 2020 coupled with ever-stronger incentives for the healthcare system to emulate consumer technology usability and the never-ending imperative of improving affordability, will continue to drive demand for startups. We also think that downward cost pressures will drive demand for technology to replace fax-machine-era, labor-first administrative processes too.

What do you think are the biggest trends to look out for in the digital healthcare industry this next year, given we are likely toward the end of the year to see more workers return to the office and everyone resuming activities as they did before this pandemic hit?

We think that telehealth will become the “Intel Inside” for many of the full stack healthcare IT businesses — Medicare Advantage payers, navigation companies, virtual pharmacies, virtual primary care practices — and that patients will continue to embrace telehealth. As a result, payers will increasingly redesign how insurance benefits work to encourage every patient to start with a telehealth visit every time. In many cases, telehealth will be able to fully resolve the problem and if not, guide the patient, along with the relevant data, to the best next step in care. This will improve responsiveness and reduce costs. We do think that brick-and-mortar players will lag behind since they continue to have strong incentives for in-person care and procedures to cover their large fixed costs.

COVID-19 has also made inescapable the inadequacy of behavioral healthcare in America. We have observed this firsthand through our investment in Lyra Health, which experienced dramatic growth in 2020. We think greater access to behavioral health, better coordination of behavioral health and primary care, better use of medications and tech-enabled care for more complex behavioral health conditions are all large opportunities.

We also foresee virtual care growing in more specialty care areas as patients demand more convenient ways to access specialist expertise and value-based primary care doctors desire more rapid and cost-effective ways to co-manage patients.

How will the Biden administration possibly affect your funding strategy in the digital health field now that there’s a change of the guard?

Economic incentives to lower healthcare cost growth and the desire to use information and data to find arbitrages and insights are as aligned as ever. Remember, the law driving the adoption of new payment models is MACRA, which passed the Senate in a bipartisan 92-8 vote in 2015. This implies an uninterrupted effort to drive the adoption of value-based care in Medicare, Medicare Advantage and Medicaid. A Biden administration will also continue efforts to create more interoperable data systems and support telehealth adoption.

A Biden administration also reduces uncertainty around the permanence of the Affordable Care Act (ACA). They instead will focus their efforts on expanding coverage through enhanced subsidies to buy insurance, more marketing of ACA plans, greater support for e-broker enrollment and strong incentives for states to expand Medicaid. And we do not think Medicare for All will be seriously considered by a ~50/50 Senate, although it will likely be spoken about periodically and loudly by the far left.

What’s the biggest category in your mind for digital health this next year? Why is that?

“Technology-enabled, virtual-everything” as the initial journey in healthcare, until you need to visit a facility because in-person is necessary. In 2020, we witnessed about a decade of user adoption compressed into six months as COVID-19 made it scary, or even impossible, to access in-person healthcare. Nearly every clinician in America, and at about half of the population, conducted a virtual healthcare visit in 2020. What happened? Patients liked it. Clinicians found virtual visits useful. And going forward we think that most care will incorporate aspects of virtual care, asynchronous communication and in-person encounters only when a procedure is needed. As importantly, payers found these approaches to be more cost-effective since care was delivered more rapidly and with only the most necessary diagnostics tests ordered.

Finally, are there any rising startups in your portfolio we should keep our eyes on at TechCrunch? 

We have two portfolio companies that may be very compelling candidates:  Suki and NewCo Health.

Suki has created a virtual medical assistant that acts as a voice user interface for electronic health records, enabling a doctor to write their clinical notes, enter orders, view information and exchange data with other providers dramatically and more efficiently. They have launched primary care and specialist doctors across dozens of health systems in 2020.

NewCo Health is a startup trying to democratize access to world-class cancer outcomes. Starting initially in Asia, they are tech-enabling the diagnosis, treatment planning and care management processes for cancer patients, connecting expert clinicians to every cancer case.

Eight Roads Ventures Europe appoints Lucile Cornet to Partner

By Mike Butcher

Lucile Cornet has been appointed Partner with Eight Roads Ventures Europe, a firm focusing on startups in Europe and Israel. Cornet is its first female Partner. Eight Roads is backed by Fidelity and has over $6 billion assets under management globally.

Cornet will be focusing on the software and fintech sectors and previously led a number of investments for the firm, having risen from Associate to Partner within five years. It’s an out of the ordinary career trajectory when VC is notorious for having a ‘no succession’ culture, unless partners effectively buy into funds.

Cornet commented: “I am hugely optimistic about what is to come for European technology entrepreneurs. We are seeing more and more amazing founders and innovative businesses across the whole European region with ambitions and abilities to become global champions, and I look forward to helping them scale up.”

Speaking with TechCrunch, Cornet added: “I feel so, so fortunate because I think we’ve been living during a once in a lifetime transformation in general in tech and also in Europe. To build some of those companies, and just be part of the ecosystem has been fantastic. I know how much more exciting things are going to be in the next couple of years.”

Cornet previously led investments into Spendesk, the Paris-based spend management platform; Thinksurance, the Frankfurt-based B2B insurtech; and Compte-Nickel, one of the first European neobanks which was successfully acquired by BNP Paribas in 2017. She also sits on the boards of VIU Eyewear, OTA Insight and Fuse Universal.

France-born Cornet’s previous career includes investment banking, Summit Partners, and she joined Eight Roads Ventures in 2015. She was a ‘rising star’ at the GP Bullhound Investor of the Year Awards 2020.

Commenting, Davor Hebel, managing partner at Eight Roads Ventures Europe, said: “We are delighted with Lucile’s success so far at Eight Roads. She has made a huge impact in Europe and globally since joining the firm. She has a tremendous work ethic and drive… identifying the best European companies and helping them scale into global winners. Her promotion also speaks to our desire to continue to develop our best investment talent and promote from within.”

Speaking to me in an interview Hebel added: “We always believed in a slightly different approach and we say when we hire people, even from the start, we want them to have judgment, and we want them to have that presence when they meet entrepreneurs. So it was always part of the model for us to say, we might not hire many people, but we really want them to have the potential to grow and stay with us and have the path and the potential to do so.”

In 2020, Eight Roads Ventures Europe invested in Cazoo, Otrium, Spendesk, Odaseva and most recently Tibber, completed eight follow-on investments and exited Rimilia. The firm also saw its portfolio company AppsFlyer reach a $2 billion valuation.

Digital securities platform iSTOX closes $50 million Series A to make private equity accessible to more investors

By Catherine Shu

Oi Yee Choo, chief commercial officer of digital securities platform iSTOX

Oi Yee Choo, chief commercial officer of digital securities platform iSTOX

iSTOX, a digital securities platform that wants to make private equity investment more accessible, has added new investors from Japan to its Series A round, bringing its total to $50 million. Two of its new backers are the government-owned Development Bank of Japan and JIC Venture Growth Investments, the venture capital arm of Japan Investment Corporation, a state-backed investment fund.

Other participants included Juroku Bank and Mobile Internet Capital, along with returning investors Singapore Exchange, Tokai Tokyo Financial Holdings and Hanwha Asset Management.

Founded in 2017 and owned by blockchain infrastructure firm ICHX, iSTOX’s goal is to open private capital opportunities, including startups, hedge funds and private debt, that are usually limited to a small group of high-net-worth individuals to more institutional and accredited investors. (It also serves accredited investors outside of Singapore, as long as they meet the country’s standards by holding the equivalent amount in assets and income.) iSTOX’s allows users to make investments as small as SGD $100 (about USD $75.50) and says it is able to keep fees low by using blockchain technology for smart contracts and to hold digital securities, which makes the issuance process more effective and less costly.

iSTOX’s Series A round was first announced in September 2019, when the company said it had raised an undisclosed amount from Thai investment bank Kiatnakin Phatra Financial Group while participating in the Monetary Authority of Singapore (MAS) FinTech Regulatory Sandbox. The Singaporean government has been especially supportive of blockchain technology, launching initiatives to commercialize its use in fintech, data security, logistics and other sectors.

iSTOX completed the sandbox program in February 2020, and was approved by the MAS for the issuance, custody and trading of digitized securities. The new funding will be used for geographical expansion, including in China, where it already has an agreement in the city of Chongqing, and Europe and and Australia, where it is currently working on issuance deals. iSTOX also plans to add new investment products, including private issuances that investors can subscribe to in “bite-size portions.”

In a press statement, iSTOX chief commercial officer Oi Yee Choo said, “Capital markets are transforming rapidly because of advancements in technology. The regulator MAS and our institutional investors have been far-sighted and progressive, and they support the change wholeheartedly.”

The company is among several Asia-based fintech platforms that want to democratize the process of investing. For retail investors, there are apps like Bibit, Syfe, Stashaway, Kristal.ai and Grab Financial’s investment products.

Since iSTOX works with accredited and institutional investors, however, its most direct competitors include the recently-launched DBS Digital Exchange, which is also based in Singapore. iSTOX’s advantage is that it offers more kinds of assets. Right now, it facilitates the issuance of funds and bonds, but this year, it will start issuing private equity and structured products as well. The company’s securities are also fully digitized, which means they are created on the blockchain, instead of being recorded on the blockchain after they are issued, which means iSTOX is able to offer faster settlement times.

6 investors on 2021’s mobile gaming trends and opportunities

By Lucas Matney

Many VCs historically avoided placing bets on hit-driven mobile gaming content in favor of clearer platform opportunities, but as more success stories pop up, the economics overturned conventional wisdom with new business models. As more accessible infrastructure allowed young studios to become more ambitious, venture money began pouring into the gaming ecosystem.

After tackling topics including how investors are looking at opportunities in social gaming, infrastructure bets and the moonshots of AR/VR, I asked a group of VCs about their approach to mobile content investing and whether new platforms were changing perspectives about opportunities in mobile-first and desktop-first experiences.

While desktop gaming has evolved dramatically in the past few years as new business models and platforms take hold, to some degree, mobile has been hampered. Investors I chatted with openly worried that some of mobile’s opportunities were being hamstrung by Apple’s App Store.

“We are definitely fearful of Apple’s ability to completely disrupt/affect the growth of a game,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch. “We do not foresee that changing any time in the near future despite the outcry from companies such as Epic and others.”

All the while, another central focus seems to be the ever-evolving push toward cross-platform gaming, which is getting further bolstered by new technologies. One area of interest for investors: migrating the ambition of desktop titles to mobile and finding ways to build cross-platform experiences that feel fulfilling on devices that are so differently abled performance-wise.

Madrona’s Hope Cochran, who previously served as CFO of Candy Crush maker King, said mobile still has plenty of untapped opportunities. “When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale.”

Responses have been edited for length and clarity. We spoke with:

Hope Cochran and Daniel Li, Madrona Venture Group

Does it ever get any easier to bet on a gaming content play? What do you look for?

Hope Cochran: I feel like there are a couple different sectors in gaming. There’s the actual studios that are developing games and they have several approaches. Are they developing a brand new game, are they reimagining a game from 25 years ago and reskinning it, which is a big trend right now, or are they taking IP that is really trendy right now and trying to create a game around it? There are different ways to predict which ones of those might make it, but then there’s also the infrastructure behind gaming and then there’s also identifying trends and which games or studios are embracing those. Those are some of the ways I try to parse it out and figure out which ones I think are going to rise to the top of the list.

Daniel Li: There’s this single-player narrative versus multiplayer metaverse and I think people are more comfortable on the metaverse stuff because if you’re building a social network and seeing good early traction, those things don’t typically just disappear. Then if you are betting more on individual studios producing games, I think the other thing is we’re seeing more and more VCs pop up that are just totally games-focused or devoting a portion of the portfolio to games. And for them it’s okay to have a hits-driven portfolio.

There seems to be more innovation happening on PC/console in terms of business models and distribution, do you think mobile feels less experimental these days? Why or why not?

Hope Cochran: Mobile is still trying to push the technology forward, the important element of being cross-platform is difficult. When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale. The metrics are also very different for mobile though.

Daniel Li: It seems like the big monetization innovation that has happened over the last couple of years has been the “battle pass” type of subscription where you can unlock more content by playing. Obviously that’s gone over to mobile, but it doesn’t feel like mobile has had some sort of new monetization unlock. The other thing that’s happened on desktop is the success of the “pay $10 or $20 or $20 for this indie game” type of thing, and it feels like that’s not going to happen on mobile because of the price points that people are used to paying.

Alice Lloyd George, Rogue VC

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

By Mike Butcher

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

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

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

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

The investors:


Boaz Dinte, Qumra Capital

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

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

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

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

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

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

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

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

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

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

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

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

Rafi Carmeli, Viola Growth

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yonatan Mandelbaum, TLV Partners

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

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

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

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

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

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

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

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

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

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

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

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

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

Natalie Refuah, Viola Growth

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

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

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

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

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

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

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

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

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

E-commerce tech-related companies will thrive.

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

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

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

Daniel Cohen, Viola Ventures

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

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

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

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

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

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

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

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

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

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

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

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

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

Ben Wiener, Jumpspeed Ventures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Inbal Perlman, TAU Ventures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

David (Dede) Goldschmidt, Samsung Catalyst Fund

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

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

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

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

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

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

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

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

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

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

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

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

Dror Nahumi, Norwest Venture Partners

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sharin Fisher, Fort Ross Ventures

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

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

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

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

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

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

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

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

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

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

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

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

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

Adi Levanon Chazan, Flint Capital

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

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

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

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

Chaim Meir Tessler, partner, OurCrowd

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

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

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

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

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

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

The banking infrastructure companies starting to emerge look fantastic.

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

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

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

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

Noam Kaiser, Intel Capital

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tal Slobodkin, StageOne Ventures

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

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

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

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

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

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

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

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

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

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

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

Ayal Itzkoviz, partner, Pitango First

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ittai Harel, Pitango HealthTech

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

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

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

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

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

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

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

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

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

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

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

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

Madrona promotes Anu Sharma and Daniel Li as Partners

By Lucas Matney

Fresh off the announcement of more than $500 million in new capital across two new funds, Seattle-based Madrona Venture Group has announced that they’re adding Anu Sharma and Daniel Li to the team’s list of Partners.

The firm, which in recent years has paid particularly close attention to enterprise software bets, invests heavily in the early-stage Pacific Northwest startup scene.

Both Li and Sharma are stepping into the Partner role after some time at the firm. Li has been with Madrona for five years while Sharma joined the team in 2020. Prior to joining Madrona, Sharma led product management teams at Amazon Web Services, worked as a software developer at Oracle and had a stint in VC as an associate at SoftBank China & India. Li previously worked at the Boston Consulting Group.

I got the chance to catch up with Li who notes that the promotion won’t necessarily mean a big shift in his day-to-day responsibilities — “At Madrona, you’re not promoted until you’re working in the next role anyway,” he says — but that he appreciates “how much trust the firm places in junior investors.”

Asked about leveling up his venture career during a time when public and private markets seem particularly flush with cash, Li acknowledges some looming challenges.

“On one hand, it’s just been an amazing five years to join venture capital because things have just been up and to the right with lots of things that work; it’s just a super exciting time,” Li says. “On the other hand, from a macro perspective, you know that there’s more capital flowing into VC as an asset class than ever before. And just from that pure macro perspective, you know that that means returns are going to be lower in the next 10 years as valuations are higher.”

Nevertheless, Li is plenty bullish on internet companies claiming larger swaths of the global GDP and hopes to invest specifically in “low code platforms, next-gen productivity, and online communities,” Madrona notes in their announcement, while Sharma plans to continue looking at to “distributed systems, data infrastructure, machine learning, and security.”

TechCrunch recently talked to Li and his Madrona colleague Hope Cochran about some of the top trends in social gaming and how investors were approaching new opportunities across the gaming industry.

These 5 VCs have high hopes for cannabis in 2021

By Matt Burns

Cannabis has always been essential to some. Thanks to COVID-19, cannabis is now an essential business and many companies are entering 2021 after seeing huge gains in 2020.

TechCrunch surveyed five key investors who touch different aspects of the cannabis business. We asked these investors the same six questions, and each provided similar thoughts, but different approaches. Despite remaining headwinds, the future is looking up for most cannabis businesses, according to these investors.

Morgan Paxhia, managing director of Poseidon Investment Management, put it this way: “2021 could be nothing short of amazing for our industry. We expect capital flows to pick up massively from pent-up demand, good public markets bringing more IPOs, lots of M&A and new innovative startups coming on scene. We see opportunity with social equity for the first time, driven by private markets rather than poorly constructed regulations. It’s going to be fun!”

  • Morgan Paxhia, managing director, Poseidon Investment Management
  • Anthony Coniglio, CEO, NewLake Capital
  • Emily Paxhia, managing partner, Poseidon Investment Management
  • Matt Shalhoub, managing partner, Green Acre Capital
  • Jerel Registre, managing director, Curio WMBE Fund

Morgan Paxhia, managing director, Poseidon Investment Management

2020 was a blockbuster year for cannabis. What advice are you giving your portfolio companies entering 2021?

Typical mantra for us, stay focused. Markets, deals and valuations are volatile in our industry but we all have to do our best to tune out the noise and focus. I’d say a great example of a team with focus is GTI. They have executed against a strategy while many of their supposed peers have done very irrational deals, impaired shareholder value, etc. GTI continues to march down its path and their results are showing.

How is COVID-19 changing the cannabis landscape?

2020 was an inward-facing year as most companies could not travel, capital was tight and macro was uncertain. This inward work has led to a lot of fundamental improvements for operators. There are others that got one last puff of wind but their businesses are too impaired and will continue to fall to the wayside.

2021 could be nothing short of amazing for our industry. We expect capital flows to pick up massively from pent-up demand, good public markets bringing more IPOs, lots of M&A and new innovative startups coming on scene. We see opportunity with social equity for the first time, driven by private markets rather than poorly constructed regulations. It’s going to be fun!

From retail to SaaS to research, there’s a lot of inroads to investing in cannabis. What sector of the business do you see has the best opportunity for growth in 2021?

We are bullish on select state markets. For example, new adult-use markets in NJ and AZ and existing markets with new growth prospects opening in CA and NY.

SaaS could get very interesting as there are several players reaching scale that are garnering mainstream attention.
International opportunity is mostly Mexico. It is the largest federally legal market that will just be opening in 2021. Many have not taken this one seriously but we have and are very proud of the efforts that went to moving such a monumental step forward.

The history of drug enforcement in the United States has been deeply unjust and racist; as we enter a period of growing legalization, are there things that startups and investors can do to address that inequity?

The industry, meaning established companies, entrepreneurs and investors need to drive solutions here. Regulations have been terrible and only exacerbate the issue. We have been putting a lot of thought into this area for years, watching various aspects such as the missteps taken by government and the unfortunate poor intentions from supposed investors.

We see a path emerging here that is collaborative, simple and should be attractive to capital providers. Stay tuned.

Who are some leaders in the cannabis space — companies, founders, growers?

  • My sister Emily is a co-founder and rock star! She is a true leader in this space on so many levels.
  • Ahmer Iqbal, CEO of Sublime — Ahmer took the role at a very challenging time and with very little capital was able to rebuild the company into a leader in the CA market.
  • Jason Wild — Not only is he a savvy investor, he puts his money where his mouth is. Outside of Poseidon, I do not know any other person in this industry that puts up so much of their own money into what they believe in.
  • Coleman Beale, CEO of Bastcore — If you are not familiar with the industrial hemp renaissance in the U.S., look no further. This technology-driven hemp-processing company is rejuvenating textiles in the U.S., using domestically grown hemp and processing for uses in such textiles as denim.

LAUNCHub Ventures heading towards a $85M fund for South Eastern European startups

By Mike Butcher

LAUNCHub Ventures, an early-stage European VC which concentrates mainly on Central Eastern (CEE) and South-Eastern Europe (SEE), has completed the first closing of its new fund at €44 million ($53.5M), with an aspiration to reach a target size of €70 million. A final close is expected by Q2 2021.

Its principal backer is the European Investment Fund, corporates and a number of Bulgarian tech founders and investors.

With this new fund, LAUNCHub aims to invest in 25 startups in the next 4 years. The initial investment range will be between €500K and €2M in verticals such as B2B SaaS, Fintech, Proptech, Big Data, AI, Marketplaces, Digital Health. The fund will also actively invest in the Web 3.0 / Blockchain space, as it has done so since 2014.

LAUNCHub has also achieved a 50:50 gender split in its team, with Irina Dimitrova being promoted to operating partner while Raya Yunakova who joins as an Investor, previously working for PiLabs in London and Mirela Yordanova joins as an Associate, previously leading the startup community at Google for Startups Campus in London.

The investor is mining a rich view of highly skilled developers in the CEE countries where there are approximately 1.3 developers for every 100 people in the workforce. “Central and Eastern Europe’s rapid economic growth has caught the attention of Western investors searching for the next unicorn. The region has huge and still untapped potential with more and more local success stories, paving the way for the next generation of CEE tech founders.” said Todor Breshkov, Founding Partner at LAUNCHub Ventures .

LAUNCHub Ventures competes with other investors like Earlybird in the region, but they tend to invest at a later stage and is more typically a co-investor with LAUNCHub. Nearby Greece also features Greek funds such as Venture Friends and Marathon, but these tend to focus on their core country and diaspora entrepreneurs. Others include Speedinvest (usually focused on DACH) and Credo Ventures, more focused on the Czech Republic and CEE.

LAUNCHub partner and cofounder Stefan Grantchev told me: “Our strategy is to be regional, not to focus specifically on Bulgaria – but to look at all the opportunities in the region of South-Eastern Europe.”

LAUNCHub Ventures has backed companies including:

  • Giraffe360 (Robotic camera for real estate listing automation, co-investment with Hoxton Ventures and HCVC)

  • Fite (Premium direct to consumer digital live streaming for sports, followed-on by Earlybird)

  • GTMHub (The world’s leading and most intuitive OKR software, followed-on by CRV)

  • FintechOS (Banking and Insurance middleware for automation and digital innovation acceleration, followed-on by Earlybird and OTB)

  • Cleanshelf (Enterprise SaaS management and optimization platform, followed-on by Dawn Capital)

  • Office RnD (Co-working and flexible office space management, followed-on by Flashpoint Ventures)

  • Ferryhopper (Ferry ticketing platform for Southern Europe, co-investment with Metavallon)

Content discovery platform Dable closes $12 million Series C at $90 million valuation to accelerate its global expansion

By Catherine Shu

Launched in South Korea five years ago, content discovery platform Dable now serves a total of six markets in Asia. Now it plans to speed up the pace of its expansion, with six new markets in the region planned for this year, before entering European countries and the United States. Dable announced today that it has raised a $12 million Series C at a valuation of $90 million, led by South Korean venture capital firm SV Investment. Other participants included KB Investment and K2 Investment, as well as returning investor Kakao Ventures, a subsidiary of Kakao Corporation, one of South Korea’s largest internet firms.

Dable (the name is a combination of “data” and “able”) currently serves more than 2,500 media outlets in South Korea, Japan, Taiwan, Indonesia, Vietnam and Malaysia. It has subsidiaries in Taiwan, which accounts for 70% of its overseas sales, and Indonesia.

The Series C brings Dable’s total funding so far to $20.5 million. So far, the company has taken a gradual approach to international expansion, co-founder and chief executive officer Chaehyun Lee told TechCrunch, first entering one or two markets and then waiting for business there to stabilize. In 2021, however, it plans to use its Series C to speed up the pace of its expansion, launching in Hong Kong, Singapore, Thailand, mainland China, Australia and Turkey before entering markets in Europe and the United States, too.

The company’s goal is to become the “most utilized personalized recommendation platform in at last 30 countries by 2024.” Lee said it also has plans to transform into a media tech company by launching a content management system (CMS) next year.

Dable currently claims an average annual sales growth rate since founding of more than 50% and says it reached $27.5 million in sales in 2020, up from 63% the previous year. Each month, it has a total of 540 million unique users and recommends five billion pieces of content, resulting in more than 100 million clicks. Dable also says its average annual sales growth rate since founding is more than 50%, and in that 2020, it reached $27.5 million in sales, up 63% from the previous year.

Before launching Dable, Lee and three other members of its founding team worked at RecoPick, a recommendation engine developer operated by SK Telecom subsidiary SK Planet. For media outlets, Dable offers two big data and machine learning-based products: Dable News to make personalized recommendations of content, including articles, to visitors, and Dable Native Ad, which draws on ad networks including Google, MSN and Kakao.

A third product, called karamel.ai, is an ad targeting solution for e-commerce platforms that also makes personalized product recommendations.

Dable’s main rivals include Taboola and Outbrain, both of which are headquartered in New York (and recently called off a merger), but also do business in Asian markets, and Tokyo-based Popin, which also serves clients in Japan and Taiwan.

Lee said Dable proves the competitiveness of its products by running A/B tests to compare the performance of competitors against Dable’s recommendations and see which one results in the most clickthroughs. It also does A/B testing to compare the performance of articles picked by editors against ones that were recommended by Dable’s algorithms.

Dable also provides algorithms that allow clients more flexibility in what kind of personalized content they display, which is a selling point as media companies try to recover from the massive drop in ad spending precipitated by COVID-19 pandemic. For example, Dable’s Related Articles algorithm is based on content that visitors have already viewed, while its Perused Article algorithm gauges how interested visitors are in certain articles based on metrics like how much time they spent reading them. It also has another algorithm that displays the most viewed articles based on gender and age groups.

Indonesian investment platform Ajaib gets $25 million Series A led by Horizons Venture and Alpha JWC

By Catherine Shu

Ajaib Group, an online investment platform that says it now runs the fifth-largest stock brokerage in Indonesia by number of trades, announced it has raised a $25 million Series A led by Horizons Ventures, the venture capital firm founded by Li Ka-Shing, and Alpha JWC. Returning investors SoftBank Ventures Asia, Insignia Ventures and Y Combinator also participated in the round, which was made in two closes.

Founded in 2019 by chief executive officer Anderson Sumarli and chief operating officer Yada Piyajomkwan, Ajaib Group focuses on millennials and first-time investors, and currently claims one million monthly users. It has now raised a total of $27 million, including a $2 million seed round in 2019.

Stock investment has a very low penetration rate in Indonesia, with only about 1.6 million capital market investors in the country, or less than 1% of its population (in comparison, about 55% of Americans own stocks, according to Gallup data).

The very low penetration rate, coupled with growing interest in the capital market among retail investors during the pandemic, has spurred VC interest in online investment platforms, especially ones that focus on millennials. Last week, Indonesian investment app Bibit announced a $30 million growth round led by Sequoia Capital India, while another online investment platform, Bareksa, confirmed an undisclosed Series B from payment app OVO last year.

Ajaib Group’s founders said it differentiates as a low-fee stock trading platform that also offers mutual funds for diversification. Bibit is a robo-advisor for mutual funds, while Bareksa is a mutual fund marketplace.

In an email, Sumarli and Piyajomkwan told TechCrunch that the stock investment rate is low in Indonesia because it is typically done by high net-worth individuals who use offline brokers and can afford high commissions. Ajaib Group was launched in 2019 after Sumarli became frustrated by the lack of investment platforms in Indonesia where he could also learn about stock trading.

Inspired by companies like Robinhood in the United States and XP Investimentos in Brazil, Ajaib Group was created to be a mobile-first stock trading platform, with no offline brokers or branches. It appeals to first-time investors and millennials with a simple user interface, in-app education features and a community where people can share investment ideas and low fees.

Since people prefer to invest small amounts when trying out the app for the first time, Ajaib requires no minimums to open a brokerage account. Piyajomkwan said “we typically see investors triple their investment amount within the second month of investing with Ajaib.”

Ajaib Group’s platform now includes Ajaib Sekuritas for stock trading and Ajaib Reksadana for mutual funds. The company says that Ajaib Sekuritas became the fifth-largest stock brokerage in Indonesia by number of trades just seven months after it launched in June 2020.

The Indonesian government and Indonesia Stock Exchange have launched initiatives to encourage more stock investing. Some of Ajaib Group’s Series A will be used for its #MentorInvestai campaign, which works with the government to educate millennials about investing and financial planning. The round will also be spent on expanding Ajaib’s tech infrastructure and products, and to hire more engineers.

Ajaib may eventually expand into other Southeast Asian markets, but for the near future, it sees plenty of opportunity in Indonesia. “Ajaib was built with regional aspiration, having two founders from the two biggest capital markets in Southeast Asia, Indonesia and Thailand,” Piyajomkwan said. “But for the immediate term, we are focused on Indonesia as investment penetration is still low and there are many more millennial investors we can serve.”

 

VCs discuss gaming’s biggest infrastructure investment opportunities in 2021

By Lucas Matney

We last polled our network of investors on the topic of gaming infrastructure startups back in May just as it was becoming clear what pandemic opportunities were in store for gaming startups.

Accel’s Amit Kumar told us at the time that “social and interactivity layers spanning across these games” were poised to be the big winners, highlighting his firm’s investments in startups like Discord and Mayhem. In December, Discord announced it was raising at a valuation of $7 billion and this month Pokémon Go creator Niantic announced it was buying Mayhem.

Following my story this week digging into investor sentiment around evolved opportunities in social gaming, I dug into gaming tools and rising platforms and pinged a handful of VCs to hear their thoughts on that market.

The broader market moves of the past several months have defied expectations with startups in the gaming world picking up substantial steam as well. This week, Roblox announced it had raised at a $29.5 billion valuation — up from $4 billion in February of last year. Game makers across the board, including Roblox, have been acquiring gaming infrastructure startups as of late.

I talked to investors about what they wanted to see more of in the space.

“We’d love to see more innovation around gaming infrastructure, which has the potential to democratize game development and allow clever indies to compete with Riot and Epic,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch.

They highlighted numerous areas for new opportunity including specialized engines, next-gen content creation platforms, and tools to port desktop experiences to mobile. The VCs we chatted with were also intrigued by latent opportunities presented by major platforms’ adopting of cloud gaming tech. The overall trend was one promoting accessibility, a desire to provide more casual experiences for platforms that may have typically catered to “hardcore” audiences.

It was also apparent from conversations that Roblox is significantly shaping investor attitudes toward the potential growth opportunities and pitfalls in the entire gaming industry, with VCs who didn’t get in on Roblox eager to dissect its success and bet on an adjacent player or one that could follow a similar recipe for success.

Responses have been edited for length and clarity. We spoke with:

  • Hope Cochran, Madrona Venture Group
  • Daniel Li, Madrona Venture Group
  • Ethan Kurzweil, Bessemer Venture Partners
  • Sakib Dadi, Bessemer Venture Partners
  • Alice Lloyd George, Rogue VC
  • Gigi Levy-Weiss, NFX

Hope Cochran and Daniel Li, Madrona Venture Group

Cloud game-streaming networks are exciting but don’t seem like a sure bet quite yet, how do you feel about them?

DL: I think the real story behind cloud gaming is “play anywhere” and the cross-platform nature of it. Gaming is just different than Netflix, it’s not like you want to have an endless library of content. When I’m playing a game, I want to play Overwatch all the time and I don’t need to have access to 1,000 other games. I think the approach that the cloud companies have taken has been more around the thinking of, what do we have and what can we build for gamers with it? More so than what do gamers want and what can we give them? It’s definitely trended toward that direction with things like giving away two free games per month, but really I think the thing that will be exciting in the longer term for cloud gaming is to play your game anywhere and play with your friends anywhere.

If users embrace desktop-class cloud gaming on mobile and there’s a broader cross-platform unification, does that spell trouble for today’s mobile gaming industry?

DL: The audiences between a Candy Crush and a Warzone are probably a little different, though I like to play both. So maybe it gets into eating some people’s lunch but I don’t think it’s anything where the number one problem for a Candy Crush is people hopping over to play desktop Call of Duty.

Are there any clear infrastructure gaps where you’d like to see new startups rise up and fill the void?

DL: Honestly just tools for building games, like next-gen Roblox Studio, next-gen Unity and Unreal type stuff — I’ve seen a couple interesting companies there. I think we’ve seen a few smaller companies focused on making sure that a network is safe for children, but I feel like a lot of the infrastructure stuff is really driven by what type of new content is coming out. So as the social games became really popular, securing that and making sure that the chats were safe became really important.

HC: I would love to see something built for helping games that were created for the triple-A environment to port over better to mobile environments. Every time I work with a gaming company on that, they seem to have to rebuild the game so it’d be really interesting to see something like that really helps them adopt to the mobile form.

Roblox raises at $29.5 billion valuation, readies for direct listing

By Lucas Matney

Roblox is now one of the world’s most valuable private companies in the world after a monster Series H raise brings the social gaming platform a stratospheric $29.5 billion valuation. The company won’t be private for long, though.

The $520 million raise led by Altimeter Capital and Dragoneer Investment Group is a significant cash influx for Roblox, which had previously raised just over $335 million from investors according to Crunchbase. The Investment Group of Santa Barbara, Warner Music Group, and a number of current investors, also participated in this round.

In February of 2020, the company closed a $150 million Series G led by Andreessen Horowitz which valued the company at $4 billion.

The gaming startup has initially planned an IPO in 2020, but after the major first day pops of DoorDash and Airbnb, the company leadership reconsidered their timeline, according to a report in Axios. Those major say-one share price pops left significant money on the table for the companies selling those shares, an outcome Roblox is likely looking to avoid. Today, the company also announced that it plans to enter the public markets via a direct listing.

Roblox’s 7x valuation multiple signals just how feverish public and private markets are for tech stocks. The valuation also highlights how investors foresee the company benefiting from pandemic trends which pushed more users online and towards social gaming platforms. In a 2019 prospectus, the company shared that it had 17.6 million users, now Roblox claims to have 31 million daily active users on its platform.

Lisbon’s startup scene rises as Portugal gears up to be a European tech tiger

By Mike Butcher

Almost four years ago I wrote a long deep dive into Lisbon’s tech scene. So it’s great to check back in with both Lisbon and Portugal for a slightly briefer update on where it’s at.

As well-outlined by Stephan Morais, founder and managing general partner at Indico Capital Partners, Portugal has a very high quality of engineering talent at a competitive cost; an extremely high level of English language proficiency (compared to Spain, France, Italy); and a preference for launching product globally from day one. Portuguese founders are highly qualified, with the majority of them holding at least a master’s degree.

However, the ecosystem is still in an “early phase” and there are few founders turned angel investors; there have been limited exits until recently; and there is limited available talent in sales and marketing fields. That said, there is still plenty of growth to come, as you will see below, and in the COVID-19 era, Lisbon — and Portugal generally — is becoming a magnet for digital nomads with talent.

Given the lack of a large home consumer market, startups in Portugal tend to err toward enterprise and SaaS over consumer applications, according to the Startup Portugal Ecosystem report. While the gap between domestic and foreign sources of funding is closing, there is still a gap in early-stage financing. According to government figures, in 2019 there was €285 million available for investment, and the top 25 later-stage companies raised a total of €117.8 million.

VCs in the country include Portugal Ventures, Indico Capital, Faber Ventures, Armilar Venture Partners, Bynd Capital, Semapa Next, Bright Pixel, EDP Ventures and Shilling Capital Partners. While Mustard Seed is a VC, it’s fashioned as an impact fund, only investing in startups that use technology to address social and environmental challenges inside the country.

Portugal is undergoing some changes. In particular, many British refugees from Brexit are relocating there (and everywhere else in Europe, but Lisbon has beaches and startup-friendly taxes). Non-EU residents are able to get a golden visa and tech entrepreneurs can get a startup visa. Meanwhile, Portuguese startups are starting to raise money internationally, so, therefore, punching out of their Portugal-shaped box.

Domestic VC capacity went through a period of great scarcity 2016-18, but this has greatly improved in the 2019-20 period. And international VCs, including nearby Spanish ones (K Fund, Kibo, Conexo Ventures, etc.), are taking an interest in the ecosystem, as explained by one here.

Due to the recent successes of Farfetch, Talkdesk, Outsystems, Feedzai and DefinedCrowd, among others, international investors are becoming interested in Portugal. According to investor Pedro Almeida in 2020, less than 40% of overall venture rounds had the participation of an international investor, but international investors account for over 30% of seed and pre-seed rounds.

This indicates that international investors will increasingly participate higher up the funding stack as the startups grow. Corporate VC has also become more active and professional during the period.

Key Government initiatives to stimulate the ecosystem include Startup Portugal and 200M, a 50:50 matched-funding initiative with a call option within 3-4 years at a low price point (3%-4% IRR); and the FIS social innovation fund with a 70:30 match funding initiative and a call option within 3-4 years also at a low price point.

Plus, “Portugal Tech” is the first-ever proper fund-of-funds initiative, market rules, owned by IFD (the development bank) but professionally managed by the European Investment Fund.

Unicorns emerging from the Portugal ecosystem include OutSystems; Talkdesk (which relocated its HQ to SF); and while Farfetch can claim Portuguese heritage via its founders, it’s better known as a London startup. On their way to bigger things are startups to watch like Feedzai, Codacy, BIZAY, Aptoide, Unbabel and Uniplaces.

Among the up-and-coming “new kids on the block” there are Rows, Didimo, Tonic App, SWORD Health, Barkyn, Utrust, Sensei, Vawlt, Lovys, StudentFinance, Nutrium, Reatia, LegalVision, Kitch, Rnters, kencko and YData.

Key accelerators/incubators include Beta-i, Bright Pixel, BGI (Building Global Innovators), Tec Labs, Startup Lisboa, Fábrica de Startups, Techstars Lisbon (run for two years, but now on a pause), Demium, EDP Starter, Maze X, Blue Bio Value and the Indico Pre-Seed Program.

Co-working spaces (Lisbon only) include LACS, Fintech House, Cowork Central, Second Home, Startup Lisboa, SITIO, Impact Hub and NOW_Beato. Then there is the giant “campus” style Factor Lisbon, which has happily rejiggered its plans ahead of launch to make the spaces COVID-safe.

Lisbon — and Portugal more generally — is emerging on the European and global stage as an increasingly fast-moving ecosystem that will benefit from its continued EU membership, international outlook, welcoming culture and can-do work ethic.

We talked with the following Portugal-based VCs:

Cristina Fonseca, partner, Indico Capital Partners

What trends are you most excited about investing in, generally?
Digitalization of supply chains and AI-powered decision-making processes.

What’s your latest, most exciting investment?
Digitizing beehives — honey production and pollination industry.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
IoT and AI will finally come to be with 5G; time to invest is now.

What are you looking for in your next investment, in general?
We are going deeper in founder personality analysis pre-investment.

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?
Digital health, fintech in general, e-commerce.

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

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?
B2B SaaS and marketplaces (sometimes a combination that creates the moat). Watch out for Barkyn, Nutrium, Unbabel, Zenklub, kencko, Consentio.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Business as usual, great engineering, global ambition.

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?
For sure, already a reality in Portugal and Spain for some years and more to come.

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?
On the plus side more consumers moving to online for all needs. On the negative side startups that have SMEs as customers will continue to be impacted as will travel, proptech and fintech (because of bank reactions).

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?
Cash is king, make sure you don´t run out of money and prioritize that — cost reduction, fundraising and focus on positive margins, road to zero burn.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Absolutely — consumer move to online shopping and interactions has benefited almost half of our portfolio directly.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The end of home schooling.

Any other thoughts you want to share with TechCrunch readers?
We might be back to a 2008 situation or worse, but we are better prepared this time.

 

Pedro Ribeiro Santos, partner,  Armilar Venture Partners

What trends are you most excited about investing in, generally?
Having always invested in deep tech, we’ve been advocates of the low-code/no-code movement for more than a decade (e.g., through our early investment in OutSystems), and it’s really exciting to see all that not just becoming a reality but also expanding even further toward the “citizen developer,” with products such as dashdash, Airtable, etc.

What’s your latest, most exciting investment?
Our latest investment was in Didimo, a young company with very exciting tech to automate the creation of high-fidelity and fully animatable human avatars in just seconds and from just a photo taken with any handheld device. Traditional processes use a sequence of piecemeal technology, several hours of computer graphics artists and computational processing. Enormous range of applications, the most immediate in gaming/entertainment and retail.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Teleportation :)
More seriously, while many T&H startups are enduring the impacts of COVID, the dramatic and long-enduring effect that it will have in change of habits (e.g., in business traveling) will likely open a world of new opportunities.

What are you looking for in your next investment, in general?
I’ll go with the general: Tech with strong defensibility (IP) with wide market applicability.

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?

While there are obviously several marketplaces that I wish we had invested in, I’m generally wary of that type of investment at the early stage, due to the low barriers to entry/no tech defensibility. (Of course, at the later stage, scale itself and the network effects become evident and extraordinary barriers to entry.)

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

While we’ve been investing globally since the beginning (20 years ago), we’ve been investing closer to home as the regional-to-local (European, Southern European, Portuguese) ecosystems really started to develop. Our current flagship fund V has a defined allocation to Portugal (not just Lisbon) of more than 50%, and we currently have a smaller fund 100% dedicated to Portugal.

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?
I’m biased, but I am a strong believer that Portugal is particularly well-poised to thrive in companies that are capital-light and engineering-heavy, that rely more on their proprietary tech (rather than deep pockets) to scale fast: deep tech B2B software companies. Software engineering/developer tools/DevOps/low-code tools/SW-based infrastructure spring to mind, as well as strongly grounded AI products. As Portugal still needs to fully close the loop of startup -> success -> exit -> liquidity -> reinvestment, I’m most excited about the companies that appear to be closer to that feat: OutSystems (our portfolio), Feedzai (our portfolio), Talkdesk (not our portfolio). I’m also really excited about companies less mature than those but with a very high potential, such as DefinedCrowd (not our portfolio), SWORD Health (not our portfolio), Codacy (our portfolio), dashdash (our portfolio), Didimo (our portfolio), among others that I’m surely and unfairly leaving out.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Portugal is characterized by:
• Enormous talent (particularly technical) at a relatively low cost (versus most of Europe).
• A place where people want to live (security, climate, friendliness, infrastructure, languages … the list could go on).
• Where capital has historically been scarce (it has recently developed significantly, but it remains relatively scarce by any European measure), but with very meaningful local experience.
• Companies born with a global mindset (Portugal is, at best, a good pilot market) and a capital efficiency mindset (do a lot with a little).
• Resulting in a ratio of good companies (measured, e.g., in the number or value of unicorns, or any other measure) per (capita, GDP, local capital or other metric of choice) far above most European countries (OK, maybe not Romania).
The scarcity of capital has been opening up a lot of opportunities for international investors, attracted by all of the above.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not necessarily. Many founders come from outside Lisbon or Porto already, with the cities serving as a central focus point.
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?

After the first 4-6 weeks of uncertainty, no change in the investment strategy. Biggest concerns of founders revolve around delays in buying decisions from their customers/frozen budgets. Hang tight!

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. In many cases (except for the most critically hit arenas such as travel and hospitality), there are signs of business going back to normal.

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.
Many businesses that had dramatically cut their plans for 2020 are now realizing that it won’t be as bad as they had initially thought.

Tocha, partner, Olisipo Way

What trends are you most excited about investing in, generally?
Looking for companies aiming at profitability that can become startups or businesses.

What’s your latest, most exciting investment?
Reatia.com and HunterBoards.com.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Small niches that traditionally are not big enough markets for VCs.

What are you looking for in your next investment, in general?
Passionate founders that want to create businesses where they want to work for the rest of their life.

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?
Marketplaces, crypto.

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

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?
Tourism, relocation.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Great founders, great and affordable teams. Companies focused since day one in international markets.

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

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?
Tourism, restaurants and retail.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. All related to home delivery or remote work.

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.
General understanding that the pandemic is here to stay for the next 2-5 years. And it’s not a short-term issue.

Any other thoughts you want to share with TechCrunch readers?
Come to Portugal, create and invest in companies.

Adão Oliveira, investment manager, Portugal Ventures

What trends are you most excited about investing in, generally?
At this point in time, looking forward to e-commerce, cloud and remote work solutions.

What’s your latest, most exciting investment?
Barkyn, which delivers all products and services a pet needs, online and offline, with a subscription plan. Barkyn delivers a package with personalized food (Barkyn’s private label) among other articles and access to a dedicated vet, solving two regular needs of dog owners in one single service.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
It would be great to have a startup that would allow us all to keep eye contact during a video call by using software, but perhaps that’s more like a DIY project :)

What are you looking for in your next investment, in general?
In general? A good return on investment :) Just being funny, but serious though. As a seed/early-stage investor we naturally thrive for having a successful exit, but we do have a big focus on assisting the startups in all their initial challenges and also in securing new rounds of funding for further growing and expansion.

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?
At this point all areas that have a tiny and small opportunity window — even if the market is big — will be having difficulties in getting funding, more than in the past. Startups that are only “marginally” improving current processes, meaning that if they are not brand new nor bringing breakthrough disruptive innovation their probability of succeeding will be too small.

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

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?
Companies excited about in the portfolio:
Barkyn (founder: André Jordão), which closed a €5 million round during the pandemic and that is already present in two international markets (Italy and Spain) besides Portugal.
DefinedCrowd (founder: Daniela Braga), another company that has secured a round of fundraising in the amount of $50,5M during the pandemic.
Curiously, both founders have won the first two editions João Vasconcelos’ award for entrepreneur of the year, Daniela in 2019 and André in 2020. That’s two in a row for Portugal Ventures :)

How should investors in other cities think about the overall investment climate and opportunities in your city?
IMO, and on general terms, the main drivers for other investors to look into Lisbon but also to Portugal are the following ones:

DEVELOPED LOCAL MARKET

  • Allows for business model validation at a reduced cost.
  • Important entrepreneurial hubs (Lisbon, Porto, Braga and Coimbra).

AVAILABILITY OF LOW-COST TALENT AND ALSO CHEAP LIVING COSTS

  • High-capital efficiency but with needs of international talent, for instance in the sales and marketing fields.

RELATIVELY LOW VALUATIONS

  • Maturing ecosystem.
  • Buyers’ market, meaning supply exceeds demand, giving purchasers an advantage over sellers in negotiation.

PUBLIC INCENTIVES ON INNOVATION

  • Leverage the equity investment with long-term nondilutive state and regional grants, R&D tax breaks or even a matching fund like 200M.

MORE STARTUPS GROWING FASTER AND ACHIEVING HIGHER MULTIPLES

  • It contributes to the creation of a real ecosystem, where network effects start to be more tangible.

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?
In the case of Portugal and the Lisbon hub I think it works quite on reverse. What I mean is that I envision Lisbon (and Portugal) receiving digital nomads essentially for some of the reasons I mentioned above, and the weather, never forget the weather :) Besides the quality life the country has to offer, other things will be contributing, IMO, for this inflow.

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?
On the downside, tourism-related ventures look definitely weaker under the current pandemic situation, which is easily understandable considering all the current restrictions. On the upper side, e-commerce as well as on-demand services have been experiencing a particularly good moment. In short, all businesses that can ride the trend of allowing a transition from the offline to the online world, preferably in untapped markets can benefit from a big window of opportunity.

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?
The investment strategy hasn’t changed as we are still looking for the best opportunities and the most promising ventures. What indeed happened during Q1 and Q2 2020 was that we needed to go through all our portfolio companies and assess their exposure to the pandemic situation — it’s like protecting the family first — then make decisions on further financing to sustain operations under the uncertain times of the pandemic. This put on hold the new opportunities we were looking into. But from Q3 2020 onward we got back on track with our deal sourcing as well as investing in new startups. The biggest worries of the founders of the portfolio was the impact of COVID on business activities in general and also to try to guarantee the biggest runway possible considering the uncertainty of the times ahead.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
As mentioned some of them take benefit from the pandemic situation, others don’t.

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.
During the pandemic I closed my first fully remote deal (Barkyn) — I still haven’t met the CEO (André Jordão) in person nor even anyone from the team actually (looking forward to that!). Also participated in the TNW 2020 Conference (fully remote) as a speaker on the topic of scaling up and expanding in the Iberian Peninsula. Both “moments” made me think how the things are indeed transforming and perhaps how this way of living, making business and sharing knowledge can speed up things rather than slowing them down and also how efficient they can be, at least IMO.

Any other thoughts you want to share with TechCrunch readers?

Portugal, the next 10 years, a VC perspective: I saw the evolution from the last 10 years, and I do think that if we are able to keep the current trajectory in Portugal we will continue to stand out and impress. I think it is a mix of being ambitious but also credible and the most recent wave of entrepreneurs and founders I have been talking with seem to be better prepared than their predecessors. The other thing I do expect is that we are able to create a real ecosystem in Portugal, true ecosystems are good if network effects could be activated and also deliver positive outcomes for everyone involved, and I think we have a journey ahead of us. Last but not least, I hope that successful entrepreneurs in 5-10 years time can be able to give back to the community and share their knowledge with new startups in that time. They can do this through becoming investors themselves, that is something we see in other more mature countries happening, or simply by acting as facilitators in any type of challenges that startups will face.

Alexandre Barbosa, partner, Faber

What trends are you most excited about investing in, generally?
Faber invests in teams transforming the world with emerging technologies and we believe data-centric startups are accelerating digital transformation and driving innovation in several industries.

We are excited about the technologies enabling resilience, intelligence, agility or automation in the enterprise world, including next-gen solutions around AI Engineering (e.g., DataOps, MLOps), NLP, explainable AI, data management, data privacy and cybersecurity. Additionally, we also see value in using proprietary data and innovative human-machine interfaces (e.g., neurotechnologies) to enable precision and/or personalization in several industries (e.g., digital health).

What’s your latest, most exciting investment?
Over the last few months we have completed four new investments out of our new AI/data-focused fund: SWORD Health, who are building the future of digital physical therapy, and three other investments (to be announced soon) around DataOps/synthetic data, neurotechnologies and explainable AI.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
A growing percentage of enterprise IT budgets is being allocated to accelerating digital transition by working with data-centric startups, so there’s still significant opportunity for next-generation startups to challenge and transform the tech stack in multiple industries. Our belief is that entrepreneurship is also a core engine for a sustainable future through a combination of new business models, technology innovation and positive impact. As we are seeing in digital health, we expect to see a growing number of startups on a mission to tackle pressing societal challenges, such as climate change, through innovative applications of AI/ML/robotics to Earth science or natural resource management.

What are you looking for in your next investment, in general?
We are typically the first local investor in early-stage (pre-seed/seed) B2B data-driven startups primarily starting from Southern Europe to scale globally.
We look for highly specialized tech teams on a mission to transform an industry, who aim to build a diverse, balanced and inclusive culture with an open mindset, endless curiosity and relentless ambition to capture a large opportunity and conquer the world.

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?
Within our B2B focus, startups launching undifferentiated SaaS products or with too much exposure to stressed industries should rethink their priorities.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our stage/tech specialty focus and value-add approach fill a gap in Iberia and we believe that we are now well-positioned to be investors in the next vintage of data-driven successes from Southern Europe (that typically scale up to the U.S.). In this context, we are planning to invest most of our capital in companies starting from Iberia to become a world-class benchmark, and selectively co-invest in promising teams across Europe.

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?
We believe that some of the most valuable and innovative startups emerging from Southern Europe are working in the “intelligent enterprise” space and/or driving digital innovation in financial services, cybersecurity, healthcare, manufacturing, agro-food and retail industries.
We have been first local investors in companies like Unbabel, Codacy, Seedrs and EnjoyHQ, who have started their companies from Portugal and rapidly scaled up to become distributed and acknowledged innovators in their industries/market spaces (just like Feedzai, who started before Faber existed). We are obviously excited about their success and how strongly they reflect our thesis.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Iberia has a solid track record of being a launch pad for a significant number of successful startups over the last 10 years. The region continues to be a magnet for talent from across Europe to blend with local talent and start a new venture, leveraging the growing maturity and specialization of the local ecosystem and its resources with a clear mindset from founders to start locally and scale up to the U.S.
Both Portugal and Spain have experienced pre-Series A investors who have historically co-invested with international VCs, a growing layer of later stage/growth capital (both local and international) and now more institutional LPs are following to get exposure to the asset class.
We strongly believe that Southern Europe will continue to produce a substantial number of innovative companies that will challenge and lead their industries at global scale, proving that the region is becoming the next emerging opportunity for venture in Europe.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The ecosystem has been rapidly adapting and we expect to see a growing number of new companies starting with distributed teams, ready to work around market restrictions and more resilient in general.
This will hopefully lower the barriers for founders from outside major cities, but we also believe that the major hubs in the region will continue to offer a powerful combination of resources to power new companies. So we don’t see remote work and new work dynamics as detrimental to major cities, but as a facilitation of access to capital or talent and an amplification of the deal flow in the region.

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?
Although some industries are more exposed to the consequences of this pandemic (e.g., travel and hospitality), our investment strategy focuses on data-centric startups applying AI/ML/data science to enterprise digital transformation.
The immediate implications of C19 for business continuity, agility and performance open a realm of enterprise-grade opportunities for B2B data-driven startups that can help corporations adapt or drive innovation in their industries by leading “the new normal.”

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy hasn’t changed, if anything these times have validated our thesis and our focus on teams and companies challenging their industries with innovative solutions across the data stack that can help accelerate enterprise digital transformation.
The immediate priority of our portfolio was to work with us and our co-investors in ensuring solid runways, quickly adjusting go-to-market strategies to focus on less-exposed industries or longer sales cycles and, in general, review priorities and plan/prepare for uncertain times ahead. Fortunately the overall balance is currently positive, with the vast majority of our portfolio growing this year.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, so far the overall portfolio has been adapting and overcoming this challenge with a better performance than initially expected (in several cases with significant YoY growth), demonstrating that B2B/cloud/data-centric startups are more resilient and necessary.

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.
As in previous downturns, it is always invigorating and encouraging to see the audacity and the resolve of a new generation of entrepreneurs turning difficulty into opportunity and launching their ventures to challenge the status quo and build a better future.
Over the last months and despite these current times, we have been fortunate to witness this kind of long-term sight across a growing number of mission-driven founders and investors, alongside a vibrant momentum at technical universities and research institutions.
Together with the collective behavior and determination to adapt to and overcome this pandemic, we believe the entrepreneurial signs are strong enough to offer hope for the future.

Any other thoughts you want to share with TechCrunch readers?
Stay tuned for the next generation of startups arising from Southern Europe, the ecosystem is maturing fast and there’s a large number of new teams working around innovative applications of AI/engineering/deep tech in the region.

António Miguel, partner, Mustard Seed MAZE

What trends are you most excited about investing in, generally?
Sharing economy (more linked to circularity, like rental solutions); elderly care; skills development (requalification at scale post-COVID); female tech.

What’s your latest, most exciting investment?
Investment in a femtech business that is offering people who bleed with superior menstruation products and using a tech-enabled platform to be a full-spectrum companion across all period cycles.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Elderly care is ripe for disruption despite being talked about for some years; I wish I would see more on specific female health topics (e.g., menopause); overlooked opportunities include areas like environmental footprint of e-commerce and online to offline solutions given that people are now craving more than ever for meaningful connections.

What are you looking for in your next investment, in general?
A strong impact thesis through a lockstep model where the creation of social/environmental impact is the driver of top line.

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?
Sustainable consumption apps and carbon footprint personal tracking; urban mobility.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50% in local ecosystem; 50% all Europe (EU and non-EU).

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?
Well-positioned to thrive: Blue economy ventures; elderly care ventures; food tech.
Not well-positioned to thrive: Consumer businesses.
Companies I’m excited about: Hopin; StudentFinance.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Portugal is a great place to find price-competitive talent and an excellent location to be a first second-market for European businesses given its size, small distance between product and market (and therefore faster feedback loops) and sophistication of users.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Definitely. Take Lisbon as an example: Every week I learn about a founder or investor moving to Lisbon as a way to move out of U.K./Germany/France/U.S. as a result of the pandemic. The local ecosystem has never been so cosmopolitan and diverse.

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?
Impact in our strategy: de minimis. Our strategy is focused on the belief that the most successful businesses are those that profit whilst solving social and environmental issues. COVID has only corroborated the need for such businesses. If anything, we have just invested more earlier tickets given the nature of fundraising in Q2 and Q3 of 2020.
Worries of founders: fundraising amidst uncertain times; how much of current traction is an indication of future traction versus a time-constrained trend (e.g., D2C revival as a distribution channel).
Advice: execution first and foremost; double down on stakeholder management, especially with super clients, partners and investors.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially because our portfolio is exclusively based on companies that generate revenues by solving social and/or environmental challenges. As a result, during and post-pandemic, demand for their solutions has increased.

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.
Hearing Michael Seibel saying that social impact is the biggest trend he has seen in the last YC batch.

Any other thoughts you want to share with TechCrunch readers?
Thanks for what you do for the venture ecosystem in general!

Jaime Parodi Bardón, partner, impACT NOW Capital

What trends are you most excited about investing in, generally?
Our focus is impact investing and social innovation. Startups tackling the challenges that are at the heart of the UN 2030 Sustainable Development Goals (SDGs).

What’s your latest, most exciting investment?
We are currently structuring our first VC fund, which hopefully will be up and running in the beginning of 2021.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We expect to see an imminent development at the intersection between business, impact and technology … potentially through an emerging vertical: impact tech. It is still an immature field but it is rapidly gaining awareness and traction from entrepreneurs and investors.

What are you looking for in your next investment, in general?
We are looking for startups developing technology as a way to solve problems at the core of the UN SDGs agenda and/or using it as a channel to scale their solutions faster. These startups must create societal or environmental impact while producing financial performance. Personally, I want to see AI and blockchain as a force for good.

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?
In the impact landscape there is still plenty of room to grow. There are many local initiatives that are not sustainable nor scalable. It is needed to professionalize the commercialization of these initiatives (through products and services) to make them sustainable (and profitable), and incorporate technology in order to make them scalable.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our plan is to invest 50% in Iberia (it includes Portugal, our local ecosystem, and Spain) and 50% between Europe and CPLP (Community of Portuguese Language Countries).

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The Portuguese government, through the Social Innovation Fund (SIF), is supporting social innovation and stimulating the impact economy. We are observing a significant development in areas such as healthcare and well-being (SDG #3), education (SDG #4), clean energy (SDG #7), and sustainable cities and communities (SDG #11). We have also seen great initiatives working in other fields such as responsible consumption and production, climate action and inequalities reduction. However, it is still not enough to meet the societal and environmental demands. We need to feel the sense of urgency and understand the dramatic consequences of not tackling these challenges on time.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Lisbon is a vibrating startup ecosystem. Investors from other countries are conscious of that and keep a good relation with the city and its ecosystem. Lisbon holds relevant entrepreneurial and investment events with Web Summit at the forefront. In addition, the Social Innovation Fund is creating opportunities for foreign investors to invest in Portuguese impact startups.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The increasing adoption of remote work tools during the pandemic has only accelerated the trend that was already in place. Lisbon was already a hub for entrepreneurs and digital nomads (not only working for Portuguese startups but global ones). It is possible that current big cities as startup hubs are losing people now while virtual communities are gaining ground. That would contribute to a more delocalized VC industry. However, in my opinion, the human touch is very important and physical events are a big part of building a community, so as soon as they are back, people will be attracted to them.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The pandemic has aggravated some of the challenges already present in the UN SDGs agenda. Apart from the obvious devastating health outcomes, the COVID-19 pandemic has brought to the surface the weaknesses of the, until now, reducing inequalities efforts. On the other side, it is offering a great momentum and opportunity to review the concept of humanity through core values, population solidarity or global collaboration … all of them empowered by the digital transformation and adoption. The UN SDG agenda is not a choice but a must. Any startup that is able to implement a profitable and scalable business model addressing one of the challenges at the core of any of the SDGs will have a great opportunity to thrive in the medium and long term. In the short term, we can see a faster lane for these startups that keep a broader vision for the future while executing a narrower mission focused on solving problems related to COVID-19 itself.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has brought even more sense of urgency in solving the problems already identified by the UN. Our investment strategy has not changed but has been reinforced by the current situation.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Since we don’t have an official portfolio yet we can not answer completely this question. What we have seen so far, in our prospects, is the creation of new markets and extension of the existing ones thanks to the aforementioned digital transformation/adoption. In addition, the increasing awareness of the consumer about the societal and environmental challenges together with the sense of responsibility in its purchasing behavior has lead to new and revolutionary revenue streams.

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.
It might sound cliché but the recent birth of my baby girl gives me even more energy to help build a better future.

Any other thoughts you want to share with TechCrunch readers?
We would like to keep on encouraging entrepreneurs, investors, corporates, governments and the rest of the ecosystem stakeholders to work together in finding formulas that create significant impact and financial benefits.

Stephan Morais, partner, Indico Capital Partners

What trends are you most excited about investing in, generally?
SaaS solutions, AI applications, digital health, data monetization, IoT SaaS platforms, engineered biology, marketplaces.

What’s your latest, most exciting investment?
Nutrium, a digital health platform that serves 800,000 nutrition patients and aims to put together dietitians, patients and their appointments, including wellness data and products and supplements.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Still many traditional areas and industries to digitize. AI is in its first stages in most industries so we need to address these traditional large opportunities.

What are you looking for in your next investment, in general?
We look for great founders that can actually be good leaders and CEOs. That’s a combination of vision, being able to take advantage of the market opportunity and having the necessary resilience to break the necessary barriers to create a success case. Additionally, teams need to be very good technically.

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?
Food delivery, most e-commerce and SaaS for SMEs and startups. Given the saturation and competition in the advertising space, everything that depends on that to get off the ground is challenging.

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

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?
B2B SaaS companies: Unbabel, InnovationCast, Infraspeak, Onalytics.
AI and deep tech: Feedzai, Smartex, Cleverly.ai, Sound Particles.
Digital health: Nutrium, Zenklub, SWORD Health, Tonic App.
Fintech: StudentFinance, Switch Payments.
Consumer: Barkyn, EatTasty, Pleasy Play.
Digitalization of traditional industries: BitCliq, Apis Tech.

How should investors in other cities think about the overall investment climate and opportunities in your city?
In regards to Portugal, the ecosystem still has room to evolve. Most of the opportunities are in the early stage and the majority of the rounds are below €1 million. International investors should partner with local players in the early stages.

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?
Portugal has been very attractive to international companies that have setup local offices in the past years to take advantage of the great technical talent available. The safety and lifestyle also makes the country attractive for nomads and remote workers, as well as senior executives that are willing to relocate here with their families. As more people work remotely, Portugal is expected to become even more of a destination for tech workers and startups.

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?
Some industries like travel, hospitality and aviation are clearly suffering and some of our companies addressing these sectors have been impacted. We expect that to persist for the next couple of months.
Other sectors are booming like online deliveries, automation of processes and team sync and communication.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We focused the last months in making sure our portfolio had enough runway for the next year. We know cash is king, companies need to balance that with executing on their vision, taking advantage of the current opportunities.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Definitely. In some sectors, tech has been fundamental in keeping the society working and companies productive.

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.
Lots of successful companies in the U.S. were created by European founders, and some of them are returning to their home countries, which will generate a very positive impact! There will be a lot of interesting companies coming out of Europe in the coming years.

Any other thoughts you want to share with TechCrunch readers?
Europe has so much to do to catch up — severe lack of depth in the availability of capital still makes companies move to the U.S. after Series B.

Gavin Goldblatt, managing partner, Portugal Gateway

What trends are you most excited about investing in, generally?
Energy and fintech, particularly around mobile money.

What are you looking for in your next investment, in general?
A proven management team and proven product with international expansion potential.

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

How should investors in other cities think about the overall investment climate and opportunities in your city?
Lisbon provides fantastic work-life balance and low startup and living costs as well as a good supply of skills. As a result it is likely to benefit from the recent COVID-inspired move away from more established startup hubs in less desirable locations.

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

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?
Too early to tell. Obviously tourism and many services have been negatively impacted, but even in these areas innovators are taking advantage of the disruption to position themselves well if there is a recovery (and a release of pent-up demand) post-vaccine.

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?
Surprisingly, the net result has been positive across our portfolio with significant opportunities arising. Turmoil and change bring opportunity,
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes.

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.
All of our investments are outperforming budget and expectations this year.

VCs dispense with niceties during Capitol riots: “Never talk to me again”

By Connie Loizos

It was hard not to feel emotional today, as the world watched for more than four hours as rioters stormed into and throughout the Capitol building in Washington to disrupt the certification of the election win of incoming U.S. President-Elect Joe Biden. They’d been encouraged earlier in the afternoon by outgoing President Donald Trump himself to head to the building and protest what he falsely claimed yet again was an stolen election, a lie he began to spread the evening of the U.S. election in November.

While members of Congress called on him to make a statement rebuking the rioters’ actions from their undisclosed locations, he instead encouraged his supporters over Twitter, writing of the “sacred landslide election victory” that was “so unceremoniously & viciously stripped away from great patriots” and later posting a video in which repeated his lies about a “landslide election that was stolen from us.”

It was the first time in American history that supporters of the losing presidential candidate forcibly disrupted the official counting of electoral votes, as noted earlier in the evening by PBS. And while Trump’s tweets were later deleted by Twitter for “repeated and severe violations of our Civic Integrity policy,” the move was viewed by many as too little and too late, including by Silicon Valley investors, a wide number of whom let loose their fury toward the outgoing administration and its enablers.

So many of us have held off on this post in the name of balance and decency. If you still support Trump after this, FUCK YOU and never talk to me again.

— Ryan Sarver (@rsarver) January 6, 2021

What’s happening in DC is a terrorist attack on the US gov & should be dealt w/ as such

One warning to stand down, then head shot

The deference to white domestic terrorist orgs is appalling & must end

If black folks were assaulting the Capitol, there’d be helicopter gunships

— Matt Ocko (@mattocko) January 6, 2021

I’m sorry Hawley, I can’t hear you over the first pump to the MAGA crowd earlier. Sit the fuck down. (Nice double mask by Romney though!)

— M.G. Siegler (@mgsiegler) January 7, 2021


A lingering question is whether the ignominious day — one on which a dozen Senate Republicans and dozens more Republican House members had planned to object to the certification of the election results — will begin to polarize people further or whether, following Trump’s departure, some of that fury begins to subside instead.

Some investors, at least, say their anger has always had more to do with basic human decency, which seemed frequently to take a backseat during the Trump administration.

Deena Shakir of Lux Capital used to work for the Obama administration and is transparent about her political perspective on Twitter. But she says of today’s events that they “are not about politics. What we have witnessed is an affront to democracy, an assault on American history, and a gruesome reflection of the divided nation we live in.”

Hunter Walk — a cofounder of the venture firm Homebrew and who today tweeted, “don’t be putting [Trump son-in-law and White House advisor] Jared Kushner on cap tables when this is all said and done” — echoes the sentiment, saying: “I’m not afraid to have a strong public voice on issues I consider to be urgent and essential human rights questions.”

As for whether today might make it harder to fund or partner with a team who supported Trump’s ascendency, Walk says no. “We fund wonderful entrepreneurs and employ no purity tests on whether they agree with us 100%. I’m certain we’ve backed people who sit to our political left and to our political right – that’s not an issue for us and not an issue for them.”

To the extent that Walk’s clearly Democratic public stance may turn off some talented founders who disagree with him or prefer that he shut up and write a check, that’s ok, too, says Walk.

“We don’t believe we need to compromise our values in order to be successful.”

Shakir meanwhile suggests that she doesn’t always have the luxury of tuning out politics entirely.

For one thing, she considers those who terrorized the nation’s capital today “angered perpetrators of a jingoistic, supremacist ideology that is not only normalized but actually incited by the highest branch of our government and amplified via social media.”

More, she notes, “Given my focus on healthcare, so much of my own thesis development and so many of my conversations have inevitably been informed by the pandemic, which—for better or worse—has become politicized.”

Try as she might to bifurcate politics from work, it’s futile right now, she says. “These events and policies inform our present and our future, affect the markets that value our companies, and contribute to trends and white spaces. And today, they reflect our values as a nation and as human beings.”

Revenue-based financing: The next step for private equity and early-stage investment

By Walter Thompson
Thomas Rush Contributor
Thomas Rush is founder of Bootstrapp and Head of Investment Platform at ConsenSys Mesh.

Revenue-based investing (RBI), also known as revenue-based financing, or revenue-share investing,1 is a natural next step for the private equity and early-stage venture investment industry. However, due to RBI being a relatively new model, publicly available data is limited.

To address this foundational gap in market information, we have developed a proprietary data set of 32 RBI investment firms, 57 distinct funds and 134 companies that have secured revenue-based investing.

Bootstrapp developed this extensive analysis on revenue-based investing for the purpose of accelerating the shift toward greater transparency and standardization within the industry.

Upon thoroughly analyzing the data, we’ve been able to identify the total number of investment firms and amount of capital that comprise the RBI industry, the specific verticals and business models that are most actively leveraging RBI, and the typical profile of companies that access this form of capital.

These findings are summarized below; a full industry-spanning report that defines the overall revenue-based investing market as it stands today is available to download here.

As context, the financial structures used by VCs haven’t evolved much since they first emerged in 1957. Today, the model is almost precisely the same, with only incremental changes such as more efficient capital markets and industry standards for structuring deals, pricing companies and more.

More recently, we have seen numerous new investment models and financing instruments, including shared earnings agreements and point-of-sale capital. One of the most prominent and popular new models for investors is revenue-based investing (RBI).

However, because the model is new, there is a lack of publicly available data, industry standards have not yet been fully established, and similarly to the equity investment market, there is little transparency into the cost of capital that investees truly pay in exchange for taking on a revenue-based investment.

Thankfully, there have been some notable efforts to drive transparency in the RBI market. For example, Bigfoot Capital open-sourced its RBI model, outlining it in a blog post and sharing their RBI financial model and anonymized term sheet, but a thorough, quantitative, industry-wide analysis has not been conducted until now.

In order to raise RBI, the company must normally be generating revenue, but is not necessarily required to be profitable, although profitability, or at least a near-term path to profitability, is often an important criteria for many investors. “For startups with revenue, RBI may be a good option because, even though the startup may not be profitable, it can reduce dilution — especially for founders,” said Emily Campbell of The Campbell Firm PLLC, a law firm that represents serial entrepreneurs and venture-backed businesses.

“Taking in some smart equity or convertible debt and balancing that money with other financing can be a good strategy for a startup,” she said. Profitability decreases the risk of default and assures that the investee has the ability to service the debt.

In regards to the applications that are best suited to RBI, B2B software-as-a-service (SaaS) companies rise to the top of the list primarily because one is able to — in essence — securitize the revenue being generated by a company and then lend capital against that theoretical security. In addition to SaaS companies, RBI is being used quite frequently in the impact investing community as it solves the problem of a lack of normal M&A or IPO exit paths for impact-driven companies and are sometimes marketed as a nonextractive form of investment structure.

Beyond B2B SaaS and impact investing, many other verticals are adopting the model as well, including e-commerce/D2C, consumer software, food and beverage, and more. It ought to be noted, however, that regardless of the specific business model a company employs, the investee is typically required to have repeatable sales and a track record that demonstrates a strong revenue stream, and therefore a clear ability to return the capital to the investors.

The U.S. RBI landscape

We have identified 32 U.S.-based firms actively investing via a revenue-based investing instrument, with those firms managing 57 distinct funds representing an estimated $4.31 billion in capital. Through our analysis of those firms, funds and investees, we found that:

  1. The number of firms and the amount of capital committed to RBI is increasing, and we forecast that this trend will continue.
  2. B2B software was not surprisingly the largest consumer of RBI,
  3. There was a surprising amount of activity across industries that are not yet typically associated with revenue-based investing such as food and beverage, consumer products, fashion, and healthcare.

Firms were included in the data set (and by extension, determined to be actively making revenue-based investments) if they:

  1. Invest in companies using an instrument where the return is generated from the principal plus a flat fee that is paid back via a fixed percentage of revenue.
  2. Payments to investors are made on a monthly (or longer) basis.
  3. The payback period is expected to be longer than 12 months.

The specific number of firms we believe to be quite accurate, representing only active, U.S.-based revenue-based investing firms. The number of funds, however, may be underestimated. This is due to the fact that, although each firm is associated with at least one fund, we did not include additional funds beyond that unless they were confirmed through other sources, such as the firms’ public communications, their SEC Form D or other sources as outlined in the methodology section at the conclusion of the full report.

The total amount of RBI capital that has already been allocated to companies across all firms and all years is $2.1 billion. However, it should be noted that this includes the outliers in our dataset, namely Kapitus, Clearbanc, Braavo and United Capital Source. Once we remove those firms, the remaining 28 firms, representing 51 funds, have allocated $592.8 million.

This figure of $592.8 million is almost certainly an underestimate due to the fact that only 19 of 32 firms had a known “amount of allocated capital,” whereas the remaining 13 firms have unknown values (i.e., zeros) for the amount of capital they have allocated thus far. Therefore, if all 32 firms had a valid and confirmed amount of allocated capital, we can logically conclude that the number would rise dramatically from the current figure of $592.8 million.

Increasing popularity of RBI

New RBI firms have been founded every year since 2013. In 2010, five firms were founded and in 2015 four additional firms were founded, then from 2014-2019, two or more firms were founded each year.

Clearly, there has been a major uptick in RBI firms being founded since 2005, with a relatively consistent number of new firms being founded over the 15 years since then. In the last 10 years alone, 25 RBI firms have been founded.

5 questions about 2021’s startup market

By Alex Wilhelm

Welcome to 2021, a year that could extend 2020’s startup market disruptions and excesses — or change patterns that previously performed well for early-stage tech companies and their investors.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


As we turn the page, I have a number of questions worth raising as we muck into 2021.

Each relates to a 2020 change that is expected to persist, by either the general market or those bullish on startups. I want to know what would need to change to shake up what became the new normal last year. After all, it’s precisely when it feels like nothing could shake up a downturn (or a boom) that things often do.

Today, let’s discuss seed deals, venture investing cadence, the resulting valuation pressures from rapid-fire bets, current IPO expectations and what happens to software sales when remote work begins to fade.

1. How long can seed deal-making stay hot?

As 2020 came to a close, Natasha Mascarenhas and I reported on seed investing’s strong year and its especially strong second half. How long can that pace keep up?

Nearly all our questions today deal with the endurance of certain conditions, namely: how long the market can keep parts of startup land red-hot.

When it comes to seed deal-making, Q1 and Q2 2020 saw similar levels of investment in the United States. But Q3 proved explosive, with money invested into domestic seed deals rising from around $1.5 to $1.6 billion during the first two quarters to $2.2 billion in the July-September period.

Q4 numbers are yet to fully come in, but it’s clear that private investors were incredibly bullish on early-stage startups in the second half of 2020. How long can that keep up? I think the answer is for a while yet, as investors have shown scant enthusiasm for slowing down their dealmaking cadence.

While cadence remains hot generally, seed deals should stay heated as the number of investors who are willing to invest early has increased.

Which brings us to our second question:

2. How long can investors keep writing such quick checks?

A theme that cropped up in the second half of 2020 was the pace at which investors were conducting venture capital deals. This was for a few reasons. To start, venture capitalists have raised larger funds in recent years, meaning that they need larger returns to make the math work out. This led to many investors putting money to work in younger and younger companies, hoping to get in early on a big win. That setup led to more deal competition and faster deal-making.

How? Two things. Investors who were already on a startup’s cap table — already part-owners, in other words — led preemptive rounds, in part to get ahead of other investors who might want to poach the succeeding deal. Other investors, knowing this, seemed to do the same math and move even faster, and earlier, to get around the defense.

So how long can the trend keep up? Given that many big VC firms raised in 2020, many startups picked up some tailwinds from the COVID-19 economy and exits have been strong, forever? Until something stops things? Think of it as Newton’s First Law of startup investing.

What could be the sudden impact to shake up the current set of conditions boosting the pace at which seed and later deals occur? An asteroid strike is probably too extreme, but inertia is one hell of a drug and markets love to stay happy.

Moving along, all the competition to get money to work in hot startups now has had another effect than the mere speed of deal-making; it has also pushed prices higher.

Color raises $167 million funding at $1.5 billion valuation to expand ‘last mile’ of US health infrastructure

By Darrell Etherington

Healthcare startup Color has raised a sizable $167 million in Series D funding round, at a valuation of $1.5 billion post-money, the company announced today. This brings the total raised by Color to $278 million, with its latest large round intended to help it build on a record year of growth in 2020 with even more expansion to help put in place key health infrastructure systems across the U.S. — including those related to the “last mile” delivery of COVID-19 vaccines.

This latest investment into Color was led by General Catalyst, and by funds invested by T. Rowe Price, along with participation from Viking Global investors as well as others. Alongside the funding, the company is also bringing on a number of key senior executives, including Claire Vo (formerly of Optimizely) as chief product officer, Emily Reuter (formerly of Uber, where she played a key role in its IPO process) as VP of Strategy and Operations, and Ashley Chandler (formerly of Stripe) as VP of Marketing.

“I think with the [COVID-19] crisis, it’s really shone the light on that lack of infrastructure. We saw it multiple times, with lab testing, with antigen testing and now with vaccines,” Color CEO and co-founder Othman Laraki told me in an interview. “The model that we’ve been developing, that’s been working really well and we feel like this is the opportunity to really scale it in a very major way. I think literally what’s happening is the building of the public health infrastructure for the country that’s starting off from a technology-first model, as opposed to, what ends up happening in a lot of industries, which is you start off taking your existing logistics and assets, and add technology to them.”

Color’s 2020 was a record year for the company, thanks in part to partnerships like the one it formed with San Francisco to establish testing for healthcare workers and residents. Laraki told me they did about five-fold their prior year’s business, and while the company is already set up to grow on its own sustainably based on the revenue it pulls in from customers, its ambitions and plans for 2021 and beyond made this the right time to help it accelerate further with the addition of more capital.

Laraki described Color’s approach as one that is both cost-efficient for the company, and also significant cost-saving for the healthcare providers it works with. He likens their approach to the shift that happened in retail with the move to online sales — and the contribution of one industry heavyweight in particular.

“At some point, you build Amazon — a technology-first stack that’s optimized around access and scale,” Laraki said. “I think that’s literally what we’re seeing now with healthcare. What’s kind of getting catalyzed right now is we’ve been realizing it applies to the COVID crisis, but also, we started actually working on that for prevention and I think actually it’s going to be applying to a huge surface area in healthcare; basically all the aspects of health that are not acute care where you don’t need to show up in hospital.”

Ultimately, Color’s approach is to rethink healthcare delivery in order to “make it accessible at the edge directly in people’s lives,” with “low transaction costs,” in a way that’s “scalable, [and] doesn’t use a lot of clinical resourcing,” Laraki says. He notes that this is actually very possible once you reasses the problem without relying on a lot of accepted knowledge about the way things are done today, which result in a “heavy stack” versus what you actually need to deliver the desired outcomes.

Laraki doesn’t think the problem is easy to solve — on the contrary, he acknowledges that 2021 is likely to be even more difficult and challenging than 2020 in many ways for the healthcare industry, and we’ve already begun to see evidence of that in the many challenges already faced by vaccine distribution and delivery in its initial rollout. But he’s optimistic about Color’s ability to help address those challenges, and to build out a “last mile” delivery system for crucial care that expands accessibility, while also making sure things are done right.

“When you take a step back, doing COVID testing or COVID vaccinations … those are not complex procedures at all — they’re extremely simple procedures,” he said. “What’s hard is doing them massive scale and with a very low transaction cost to the individual and to the system. And that’s a very different tooling.”

Austin-based ReturnSafe raises $3.25 million for its employee health management tools

By Jonathan Shieber

ReturnSafe, a symptom checking and contact tracing employee health management toolkit for businesses, has raised $3.25 million in financing from investors including Fifty Years and Active Capital. 

With companies looking to reopen operations and have their employees return to work safely, management toolkits that track employee health are piling into the market offering all sorts of strategies to maintain a safe work environment.

These include offerings from companies like WorkSafe; or the ProtectWell tool from Microsoft and UnitedHealth; or NSpace, which has similar features and a scheduling tool for booking office space safely.

For its part, ReturnSafe is boasting six figure monthly recurring revenue and is working with 50 organizations since its launch six months ago.

The pitch to investors and customers is that the need to manage employees and ensure that workspaces are free from health risks is only going to grow in a post-COVID-19 world.

Of course, the best way for employers to ensure the safety and security of their employees is to provide adequate leave and time off if employees are sick and to ensure that everyone has access to adequate testing at regular intervals should they not be able to work remotely.

Like other companies in the market, ReturnSafe offers a symptoms screener, a testing dashboard, a case management dashboard and a new vaccine management service. In addition to those software tools, ReturnSafe pitches a set of wearable devices with built-in social distancing alarms to ensure that employees maintain safe distances. 

 

 

Ada Ventures closes first fund at $50M, investing in diverse founders tacking society’s problems

By Mike Butcher

A year ago this week Ada Ventures — a UK/Europe focused VC with an ‘impact twist’ aiming to invest in diverse founders tacking societal problems — launched on stage at Techcrunch Disrupt. (You can watch the video of that launch below).

Today Ada announces that it has closed its first fund at $50 million. Cornerstone LPs in the fund include Big Society Capital, an entity owned by the UK government, as well as the the British Business Bank.

Check Warner, a co-founding partner, said the raise was oversubscribed: “We weren’t even sure we’d be able to raise $30 million. And then to actually get to 38 million pounds then $50 million, which was over our initial hard cap of 35 is, is really, really big.” All of the fund was raised on video calls during the 2020 pandemic.

Geared as a ‘first-cheque’ seed fund, Ada is trying to tackle that thorny problem that to a large extent the VC industry itself created: the ‘mirroring’ that goes on when white male investors invest in other white men, thus ignoring huge swathes of society. Instead, it’s aiming to invest in the best talent in the UK and Europe, regardless of race, gender or background, with the specific aim of “creating the most diverse pipeline, and portfolio, on the continent”, while tackling issues including mental health, obesity, workers rights and affordable childcare.

It appears to be well on its way. In 2020, Ada invested in eight seed-stage companies tackling the above issues. Four of the eight companies have female CEOs. This brings the total portfolio size to 17, including the ‘pre-fund’ portfolio.

In terms of portfolio progress: Huboo Technologies raised a £14m Series A, which was led by Stride VC and Hearst Ventures; Bubble delivered tens of thousands of hours of free childcare to NHS staff; and Organise grew their members from 70,000 to more than 900,000, and campaigned for the government to provide support for the self-employed during COVID-19.

On Ada Lovelace Day this October, Ada launched its own Angel program, enabling five new Angel investors to write their first cheques. This is not dissimilar to similar Angel programs run by other VCs. It also has a network of 58 ‘Ada Scouts’ resulting in around 20% of deal flow, with two investments now made across the portfolio that were scout-sourced.

This is no ordinary scout network, however. Ada’s Scout community includes the leaders of Hustle Crew, a for-profit working to make the tech industry more inclusive, and Muslamic Makers, a community of Muslims in tech.

In 2021, Ada says it will continue to grow its network of Ada Scouts across the UK, with a focus on the LGBTQ+ community, disabled entrepreneurs, and regions outside of London.

And Scout network is not just ‘for show’, as Warner told me: “We have spoken to the Iranian Women’s Association and Islamic makers and all these groups that are underrepresented within tech and VC. And they bring us companies. And if we end up investing in these companies, we pay them both an upfront cash fee and also a carried interest share. So there are quite a few things that make it distinct from other scout programs. Many other scout programs just take existing investors like existing angels, and give them more capital and double up their investments. We’re actually enabling a whole new group of people who wouldn’t otherwise be able to get access to VC. We involve them in our due diligence process, we get their insight into markets that we wouldn’t necessarily understand, like the Shariya finance market, for example. So there are quite a few things that we’re doing differently. And we now have 58 of these scouts, who drive between 10 and 20% of our deal flow on any given month.”

Warner continued: “When we launched we couldn’t have predicted the seismic changes and tragedy brought on by Covid-19, or the social dislocation precipitated by the killing of George Floyd. These events have provided the backdrop of the first year of deployment from Ada Ventures Fund I. In light of these events, the Ada Ventures strategy feels more poignant — and urgent — than it has perhaps ever been.”

In an exclusive interview with TechCrunch, Warner and co-founder Matt Penneycard admitted the fund is not ‘labeled; as an ‘Impact fund’ but that it shares a similar orientation.

Penneycard said: “The difference, the difference is often in the eye of the beholder. In that, it’s the way the investor wants to bucket it. Some investors might see us as an impact fund if they want to, and that’s fine. Other investors see the massive financial arbitrage that you get with a fund like ours, just because you’re looking in very different places to other funds. So, you’ve got more coming in the top of the funnel, if you’ve got a decent process, you should get a better outcome. And so with some of our investors, that’s kind of one of the primary reasons they’re investing, they think we’re going to generate superior returns to other funds, because of where were are looking. It isn’t pure impact. It’s a real fund, it just happens to have the byproduct of quite deep, meaningful social impact.”

AWS expands on SageMaker capabilities with end-to-end features for machine learning

By Jonathan Shieber

Nearly three years after it was first launched, Amazon Web Services’ SageMaker platform has gotten a significant upgrade in the form of new features making it easier for developers to automate and scale each step of the process to build new automation and machine learning capabilities, the company said.

As machine learning moves into the mainstream, business units across organizations will find applications for automation,  and AWS is trying to make the development of those bespoke applications easier for its customers.

“One of the best parts of having such a widely-adopted service like SageMaker is that we get lots of customer suggestions which fuel our next set of deliverables,” said AWS vice president of machine learning, Swami Sivasubramanian. “Today, we are announcing a set of tools for Amazon SageMaker that makes it much easier for developers to build end-to-end machine learning pipelines to prepare, build, train, explain, inspect, monitor, debug and run custom machine learning models with greater visibility, explainability, and automation at scale.”

Already companies like 3M, ADP, AstraZeneca, Avis, Bayer, Capital One, Cerner, Domino’s Pizza, Fidelity Investments, Lenovo, Lyft, T-Mobile, and Thomson Reuters are using SageMaker tools in their own operations, according to AWS.

The company’s new products include Amazon SageMaker Data Wrangler, which the company said was providing a way to normalize data from disparate sources so the data is consistently easy to use. Data Wrangler can also ease the process of grouping disparate data sources into features to highlight certain types of data. The Data Wrangler tool contains over 300 built-in data transformers that can help customers normalize, transform and combine features without having to write any code.

Amazon also unveiled the Feature Store, which allows customers to create repositories that make it easier to store, update, retrieve and share machine learning features for training and inference.

Another new tool that Amazon Web Services touted was its workflow management and automation toolkit, Pipelines. The Pipelines tech is designed to provide orchestration and automation features not dissimilar from traditional programming. Using pipelines, developers can define each step of an end-to-end machine learning workflow, the company said in a statement. Developers can use the tools to re-run an end-to-end workflow from SageMaker Studio using the same settings to get the same model every time, or they can re-run the workflow with new data to update their models.

To address the longstanding issues with data bias in artificial intelligence and machine learning models, Amazon launched SageMaker Clarify. First announced today, this tool allegedly provides bias detection across the machine learning workflow, so developers can build with an eye towards better transparency on how models were set up. There are open source tools that can do these tests, Amazon acknowledged, but the tools are manual and require a lot of lifting from developers, according to the company.

Other products designed to simplify the machine learning application development process include SageMaker Debugger, which enables to developers to train models faster by monitoring system resource utilization and alerting developers to potential bottlenecks; Distributed Training, which makes it possible to train large, complex, deep learning models faster than current approaches by automatically splitting data cross multiple GPUs to accelerate training times; and SageMaker Edge Manager, a machine learning model management tool for edge devices, which allows developers to optimize, secure, monitor and manage models deployed on fleets of edge devices.

Last but not least, Amazon unveiled SageMaker JumpStart, which provides developers with a searchable interface to find algorithms and sample notebooks so they can get started on their machine learning journey. The company said it would give developers new to machine learning the option to select several pre-built machine learning solutions and deploy them into SageMaker environments.

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