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Calendly CEO Tope Awotona is joining us at Disrupt 2021

By Jordan Crook

It all seems so simple. Instead of the dreaded back-and-forth on email, what if there was a solution that helped two parties (or multiple parties) schedule a call or a hangout?

Calendly was born out of that question. Today, the company is worth more than $3 billion, according to reports, and has more than 10 million users. The growth of the product is insane, with more than 1,000% growth from last year.

But that kind of success doesn’t come without hard work and dedication.

To hear more about the journey from bootstrapped to billions, Calendly founder and CEO Tope Awotona will join us at Disrupt this September.

P.S. Early Bird Tickets to Disrupt end today, Friday, July 30. Book your tickets now! 

Awotona put his entire life savings into Calendly and managed to bootstrap it for years before taking a $350 million funding round led by OpenView and Iconiq.

We’ll chat with Awotona about the early days of Calendly, how he navigated the hyper-growth phase, what made him choose to finally take institutional funding, his thoughts on pricing and packaging, and much more.

Awotona joins an incredible roster of speakers, including Secretary of Transportation Pete Buttigieg, Mirror’s Brynn Putnam, Chamath Palihapitiya, Slack CEO Stewart Butterfield and more. Plus, Disrupt features the legendary Startup Battlefield competition, where startups from across the globe compete for $100,000 and eternal glory.

Disrupt’s virtual format provides plenty of opportunity for questions, so come prepared to ask the experts about the issues that keep you up at night.

One post can’t possibly contain all of Disrupt’s events. Don’t miss the epic Startup Battlefield competition, hundreds of early-stage startups exhibiting in the Startup Alley expo area, special breakout sessions — like the Pitch Deck Teardown — and so much more.

TechCrunch Disrupt 2021 offers tons of opportunities. Don’t miss out on the first one — buy your Disrupt pass today, July 30, by 11:59 pm (PT) for less than $100. It’s a sweet deal!

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

Airtel Africa gets an extra $200M for its mobile money business from QIA

By Tage Kene-Okafor

Three months ago, Mastercard invested $100 million in Airtel Mobile Commerce BV (AMC BV) — the mobile money business of telecom Airtel Africa. This was two weeks after it also received $200 million from TPG’s Rise Fund.

Today, the African telecoms operator has announced that it has secured another investment for its mobile money arm. The investor? Qatar Holding LLC, an affiliate of the Qatar Investment Authority (QIA), the sovereign wealth fund of the State of Qatar with over $300 billion in assets. The Middle Eastern corporation is set to invest $200 million into AMC BV through a secondary purchase of shares from Airtel Africa.

AMC BV is an Airtel Africa subsidiary and the holding company for several of Airtel Africa’s mobile money operations across 14 African countries, including Kenya, Uganda and Nigeria. The mobile money arm operates one of the largest financial services on the continent. It provides users access to mobile wallets, support for international money transfers, loans and virtual credit cards.

According to a statement released by the telecoms operator, the proceeds of the investment will be used to reduce debt and invest in network and sales infrastructure in the respective operating countries. The deal will close in two tranches — $150 million invested at the first close, most likely in August. The remaining $50 million will be invested at second close.

Airtel Africa claims QIA will hold a minority stake while it continues to hold the majority stake. This transaction still values Airtel Africa at $2.65 billion on a cash and debt-free basis like other deals. However, what’s different this time is that QIA is entitled to appoint a director to AMC BV’s board and “to certain customary information and minority protection rights.”

Airtel Africa’s most recent report for Q1 2021 shows signs of growth. The telecoms operator saw a year on year revenue growth of 53.7%, pushed by a 24.6% growth in customer base to 23.1 million. Transaction value went up 64.4% to $14.7 billion ($59 billion annualised); and EBITDA stood at $60 million ($240 million annualised) at a margin of 48.8%. The company also generated $124 million in revenue ($496 million annualised), while its profits before tax year-on-year for Q1 2021 stood at $185 million.

Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, said the sovereign’s wealth fund investment in Airtel Africa would help promote financial inclusion in Sub-Saharan Africa. “Airtel Money plays a critical role in facilitating economic activity, including for customers without access to traditional financial services. We firmly believe in its mission to expand these efforts over the coming years,” he added.

In February, Airtel Africa first made it known that it wanted to sell a minority stake in AMC BV to raise cash and sell off some assets. The subsequent month, it sold off telecommunication towers in Madagascar and Malawi to Helios Towers for $119 million and raised $500 million from outside investors.

Introducing the Open Cap Table Coalition

By Ram Iyer
Aron Solomon Contributor
Aron Solomon, J.D., is the head of Strategy for Esquire Digital and the editor of Today’s Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was the founder of LegalX, a legal technology accelerator.

On Tuesday, the Open Cap Table Coalition announced its launch through an inaugural Medium post. The goal of this project is to standardize startup capitalization table data as well as make it far more accessible, transparent and portable.

For those unfamiliar with a cap table, it’s a list of who owns your company’s securities, which includes your company shares, options and more. A clear and simple cap table should quickly indicate who owns what and how much of it they own. For a variety of reasons (sometimes inexperience or bad advice) too many equity holders often find companies’ capitalization information to be opaque and not easily accessible.

This is particularly important for the small percentage of startups that survive in the long term, as growth makes for far more complicated cap tables.

A critical part of good startup hygiene is to always have a clean and updated cap table. Since there is no set format and cap tables are generally not out in the open, they are often siloed rather than collaborative.

Cap tables are near and dear to me as someone who has advised hundreds of startups over the past two decades as the founder of an accelerator, a venture partner and a senior adviser at a government-funded startup launchpad. I have been on the shareholder side of the equation as well and can assure you that pretty much nothing destroys trust between shareholders and startups quicker than poor communication, especially around issues such as the current status of the cap table.

A critical part of good startup hygiene is to always have a clean and updated cap table.

I really like the idea of a cap table being an open corporate record, because the value proposition to the companies is clear. From the time a startup creates a cap table, it’s prone to inaccuracy, friction and mistakes. What this means in practice is that startups may spend money on cap-table-related issues that they should be spending on other things. From a legal process perspective, the law firm that is brought in to help with these issues has to deal with tedious back-end work, so the legal time isn’t high value for either the startup or the law firm.

The value proposition for equity holders is equally clear. All equity holders have a general and legal interest in a company’s capitalization information. They have the right to this information, which they may need for a variety of reasons (including, if things ever get really bad, an aggrieved shareholder action). So making this information clear and easily accessible is a service to equity holders and can also encourage more investment, especially from less experienced investors.

When I imagine what this project could become in the next couple of years, I think back to late 2013, when Y Combinator announced the SAFE (simple agreement for future equity). I think the SAFE is a good analogy here, as no one knew what it was and people wondered if this was a nice-to-have rather than a must-have for startups. But the end result was a dramatic improvement in the early-stage capital-raising process.

While the coalition’s founders include Morgan Stanley’s Shareworks, LTSE Software and Carta, it’s also heavy on Big Law, with Cooley, Goodwin Procter, Wilson Sonsini Goodrich & Rosati, Orrick, Gunderson Dettmer, Latham & Watkins, and Fenwick & West rounding out the group of 10 founding members.

So what’s the real motivation of seven law firms, which together saw revenue of over $10 billion in 2020 to collaborate on an open cap table product for startups? Deal flow.

Big Law has been trying for a couple of decades to build relationships with startups at the stage where it makes no sense for a startup to be dealing with a massive and expensive law firm. Their efforts to build startup programs have often fallen short and received mixed reviews. They have also been far too heavy on the self-serve and too light on the “we’re going to give you our regular Big Law level of services at a small fraction of the costs just in case you make it big and can one day pay our regular fees.” So these firms are trying to separate themselves from the rest of the Big Law pack by building this entrepreneur-friendly tech.

The coalition has already produced its initial version of the open cap table. The real question is whether this is going to be a big deal, as the SAFE was, or whether it’s going to be a vanity solution in search of a real problem. My best guess is that if this coalition gets all the relationships right, doesn’t get greedy and understands that there is a social good component at play here, this could be, reasonably quickly, as impactful as the SAFE was.

Why Latin American venture capital is breaking records this year

By Anna Heim

Today we’re wrapping our multi-week exploration of the global venture capital market’s second-quarter performance. We’ve gone around the world, working to better understand the geyser of cash flowing into today’s startups. But we’ve saved the best for last: Latin America.

At a glance, the Latin American venture capital and startup market appears similar to what we’ve seen from other growing ecosystems. Like the U.S., Canadian, European, Indian and African startup hubs, Latin America is seeing venture capital activity set records.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


But inside the big numbers is a surprising picture of a startup market in the process of maturing while outside money hunts for breakout opportunities.

To help us in our exploration of Latin America’s epic second quarter, we collected notes and observations from NXTP’s Gonzalo Costa, Magma Partners’ Nathan Lustig and ALLVP’s Federico Antoni. We also have data from Dealroom, CB Insights, the Global Private Capital Association (GPCA) and ALLVP.

Today we’re digging into the data, yes, but also the human potential behind the startup rush. According to Antoni, the Latin American startup market of today “is a story about talent, not about capital.” Echoing the point in a recent piece about “the Latin American startup opportunity,” U.S. venture capital firm Sequoia wrote that it has “been blown away by the quality of founders in the current wave.” So we’ll have to do more than just read charts.

The union of talent and money is what startup markets need to thrive. But there are other reasons why Latin American startups are so frequently in the news today, including structural factors, such as strong digital penetration and quick e-commerce growth.

Those trends could have long lives. NXTP’s Costa made a bullish argument: The portion of “market capitalization from technology companies in Latin America is only 2.5% today compared to 40%+ in the U.S,” and his firm expects the two numbers to “converge in the long-term.” Our read of that set of data points is that there are a host of future Latin American public tech companies being founded — and funded — today.

Let’s talk about Latin American venture capital data, dig into which countries are rising stars in the region, learn how quickly Latin American startups have to go cross-border, and explore how quickly capital is recycling in the ecosystem – always a key test for startup-market longevity.

A venture capital wave

Latin America is on pace for all-time records in venture capital dollars raised and venture capital rounds in 2021. According to CB Insights data, startups in the region have already raised $9.3 billion in 2021’s first six months from 414 deals. The same data set indicates that in all of 2020, startups in the region raised $5.3 billion across 526 deals. And in case you’re worried that we’re comparing to an unfairly COVID-impacted year, in 2019 the numbers were $5.3 billion (again) from 614 individual deals.

This year is different, and the second quarter of 2021 was simply an outlier event. With some $7.2 billion invested in Latin American startups, Q2 2021’s closest rival in terms of quarterly venture totals was the second quarter of 2017, when $2.6 billion was invested.

Early-stage founders: Beat the clock & buy a $79 Founder pass to TC Disrupt 2021

By Alexandra Ames

If you’re an early-stage founder, you’d be wise to make TechCrunch Disrupt 2021 (September 21-23) your must-attend virtual destination. It’s the OG of tech startup conferences, draws more than 10,000 attendees from around the world and features some of the most gifted, visionary minds and makers across the entire tech spectrum.

Cash-strapped founders in the early innings of their startup love to save money, and we get it in a big way. That’s why our Founder pass is the perfect choice for you. Right now, you can buy a Founder Pass for $79 but the clock is ticking on this early bird deal. It flies away — and prices go up — on July 30 at 11:59 pm (PT).

The price might be small, but a Founder pass provides full access to Disrupt programming — more than 100 hours of live content and three months of video-on-demand access. You’ll connect and network with thousands of Disrupt attendees, strike up ad hoc conversations in the virtual platform’s chat feature and use CrunchMatch to set up private 1:1 meetings with potential customers, investors or employees.

Watch the Startup Battlefield, explore hundreds of early-stage startups exhibiting in the Startup Alley expo area and take full strategic advantage of the free, three-month Extra Crunch membership that comes with your Founder pass.

Of course, we think attending Disrupt is a no-brainer, but check out what these early-stage founders told us about their Disrupt experiences.

“Disrupt is laser-focused on startups. I’m just starting my own company and attending Disrupt was an incredible opportunity to connect with companies and learn from the best people in the industry.” — Anirudh Murali, co-founder and CEO, Economize.

“My top three benefits of going to Disrupt were introducing my product to people who would not have seen it otherwise; networking with investors, mentors, advisors and potential customers and, finally, talking to other entrepreneurs and founders and learning what it took to get their companies off the ground.” — Felicia Jackson, inventor and founder of CPRWrap.

“Disrupt gave our company and technology invaluable exposure to potential customers and partners that we would not have met otherwise. A company that does 15 billion in annual sales thinks our tech is a fit for their ecosystem, and we’re excited to continue building that relationship.” — Joel Neidig, founder of SIMBA Chain.

Take a few minutes and peruse the Disrupt 2021 agenda. Don’t miss out on Startup Battlefield or any of the pitch feedback sessions — they’re great opportunities to learn what investors look for in a pitch. The pitch(deck) you improve could be your own.

TechCrunch Disrupt 2021 takes place on September 21-23, but time is running out for you to buy a Founder Pass for only $79. Prices go up when the early-bird deal expires on July 30 at 11:59 pm (PT).

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

Egyptian ride-sharing company Swvl plans to go public in a $1.5B SPAC merger

By Tage Kene-Okafor

Cairo and Dubai-based ride-sharing company Swvl plans to go public in a merger with special purpose acquisition company Queen’s Gambit Growth Capital, Swvl said Tuesday. The deal will see Swvl valued at roughly $1.5 billion.

Swvl was founded by Mostafa Kandil, Mahmoud Nouh and Ahmed Sabbah in 2017. The trio started the company as a bus-hailing service in Egypt and other ride-sharing services in emerging markets with fragmented public transportation.

Its services, mainly bus-hailing, enables users to make intra-state journeys by booking seats on buses running a fixed route. This is pocket-friendly for residents in these markets compared to single-rider options and helps reduce emissions (Swvl claims it has prevented over 240 million pounds of carbon emission since inception).

After its Egypt launch, Swvl expanded to Kenya, Pakistan, Jordan and Saudi Arabia. The company also moved its headquarters to Dubai as part of its strategy to become a global company.

Swvl offerings have expanded beyond bus-hailing services. Now, the company offers inter-city rides, car ride-sharing, and corporate services across the 10 cities it operates in across Africa and the Middle East.

Queen’s Gambit, the women-led SPAC in charge of the deal, raised $300 million in January and added $45 million via an underwriters’ overallotment option focusing on startups in clean energy, healthcare and mobility sectors.

The statement also mentions a group of investors — Agility, Luxor Capital and Zain Group — which will contribute $100 million through a private investment in public equity, or PIPE.

Per Crunchbase, Swvl has raised over $170 million. From an African perspective, Swvl features as one of the most venture-backed startups on the continent. The company has been touted to reach unicorn status in the past and will when this SPAC merger is completed.

The company will aptly trade under the ticker SWVL. The listing will make it the first Egyptian startup to go public outside Egypt and the second to go public after Fawry. It will also make the mobility company the largest African unicorn debut on any U.S.-listed exchange, beating Jumia’s debut of $1.1 billion on the NYSE. In the Middle East, Swvl joins music-streaming platform Anghami as the second startup to go public via a SPAC merger.

Swvl had annual gross revenue of $26 million in 2020, according to the statement, and the company expects its annual gross revenue to increase to $79 million this year and $1 billion by 2025 after expanding to 20 countries across five continents.

On why Queen’s Gambit picked Swvl for this deal, Victoria Grace, founder and CEO, said in a statement that the company fit the profile of what she was looking for: “a disruptive platform that solves complex challenges and empowers underserved populations.”

“Having established a leadership position in key emerging markets, we believe Swvl is ready to capitalize on a truly global market opportunity,” she added.

In May, TechCrunch wrote that SPACs didn’t target African startups for several reasons, including a lack of global appeal and private capital and market satisfaction. Judging by Grace’s comments, Swvl has that global appeal and is ready to venture into the public market despite being in operation for just four years.

48-hour countdown to early bird savings on passes to TC Disrupt 2021

By Alexandra Ames

What’s big enough, bold enough and influential enough to inspire more than 10,000 people around the world to carve out three days from their intensely busy schedules? If you said TechCrunch Disrupt 2021, the grand matriarch of startup tech conferences, well friend, you’d be right on the money.

And speaking of money, you have just 48 hours left to score the early-bird price on TC Disrupt Innovator, Founder and Investor passes. Buy any of these passes and attend all three days of Disrupt for less than $100. Here’s the catch: The early bird price expires on July 30 at 11:59 pm (PT).

Don’t miss the dynamic 1:1 interviews and panel discussions on the Disrupt Stage. We’ve tapped high-profile speakers — all leading voices in their fields — to download their insight, trends and sage advice. You’ll hear U.S. Secretary of Transportation Pete Buttigieg discuss some of the major challenges of moving people and packages around the block and across the globe.

Houseplant COO, Haneen Davies will join company co-founders Michael Mohr and Seth Rogen — who, it seems, has a somewhat successful side hustle as a Hollywood writer, director and actor — for a lively CBD: Cannabis Business Discussion.

Head on over to the Extra Crunch Stage where you’ll find strategic insight across a range of essential startup skills. Think fundraising, product iteration, tech stack development and growth marketing.

Here’s a quick peek at just some of what’s going down Extra Crunchy.

How to Cultivate a Community for your Company that Actually Lasts: The word of the year in startup-land is “community.” In this panel, Community Fund’s Lolita Taub, Commsor’s Alex Angel and Seven Seven Six’s Katelin Holloway will extract buzz from reality and help founders understand the growing importance of chief community officers in startup culture and, ultimately, financial success today.

The Path for Underrepresented Entrepreneurs: Founding a startup comes with a wide array of challenges but, unfortunately, underrepresented founders face an extra layer of bias, both conscious and unconscious. We’ll talk with Hana Mohan (MagicBell), Leslie Feinzaig (Female Founders Alliance) and Stephen Bailey (ExecOnline) about their journeys, as founders, through fundraising and scaling — and as advocates who can offer tactical insights and advice.

We’re just warming up, folks. You’ll hear from execs, founders and CEOs from companies like Twitter, Calendly, Mirror, Evil Geniuses, Andreessen Horowitz and plenty more. Check out the Disrupt 2021 agenda. We’ll add even more speakers, events and ticket discounts in the coming weeks. Register for updates so you don’t miss out.

TechCrunch Disrupt 2021 takes place on September 21-23. Buy your Disrupt pass before July 30 at 11:59 pm (PT), and get ready to join the big, bold and influential — for less than $100.

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

Canada’s startup market booms alongside hot global VC investment

By Anna Heim

Continuing our global look into the torrid pace of venture capital investment in the second quarter, today we turn to Canada. While many markets have posted impressive results, like the United States setting the pace for new all-time records in dollars invested into startups, Canada’s numbers stand out.

The country, now famous in the startup world for giving birth to Shopify, has already crushed prior yearly records for venture investment thus far in 2021. Indeed, CB Insights data indicates that Canadian startups this year have already raised more than double their 2020 totals.

The same data set indicates that Canada’s venture capital results now rival those of the entire Latin American region, with exits and mega-deals coming in roughly on par in the second quarter, and a similar number of total venture capital rounds in the period.

That caught our attention.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


The Exchange reached out to a number of venture capitalists to expand our perspective on the Canadian market beyond the data points. Matt Cohen, a Toronto-based investor at Ripple Ventures, told The Exchange that “Canada is in a venture explosion” today, leading to results that are “unprecedented” for the country.

Taking the data and investor notes in aggregate, Canada’s startup industry seems to be benefiting from both domestic and international trends, a wide genre focus and more than one hub. Let’s talk aboot it.

A venture capital blowout

In the first half of 2021, Canadian startups raised $6.3 billion across 414 deals, per CB Insights data. Both numbers compare favorably to Canada’s 2020 results, when 617 deals led to $2.9 billion in total capital raised by Canadian startups. Canada has already bested its previous record in venture dollars invested ($4.3 billion, 2019), and is on pace to beat its all-time deal count as well (720, 2018).

By itself, the second quarter’s outsize results are even more extreme than its H1 2021 results might have led you to expect, amazingly. Observe the following chart from the same data set:

Image Credits: CB Insights

Canadian startups just had their single best quarter ever in both deal volume and dollar volume terms. Furthermore, the country boosted capital raised by nearly 10x from its local minimum in Q4 2020.

Notably, no Canadian startup deal in the quarter was worth more than $500 million; indeed, Trulioo’s $394 million Series D was the largest. From there the list includes $300 million for ApplyBoard’s Series D and Vena’s $242 million Series C. We read that list of results as indicative of an investing landscape in Canada that is not dominated by a handful of companies raising billion-dollar rounds. That’s good news, mind you: The data implies that the Canadian startup market is not being bolstered by one or two standout companies, but rather performing well more generally.

Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

By Mike Butcher

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

Bielefeld survey highlights an emerging B2B, crypto, deep tech ecosystem

By Mike Butcher

Welcome to the city survey of Bielefeld, Germany, part of our ongoing survey into European cities. If you’d like your city featured, just fill in this form and add your city name. Once we have enough entries from a city, we will put your city on TechCrunch!

According to local media reports, Bielefeld’s has experienced a tech boom in recent years, with accelerators like the local Founders Foundation (backed by the Bertelsmann Foundation) and Garage 33 (at the University of Paderborn) attracting a new wave of young company founders to the East Westphalia-Lippe region.

Notable startups to emerge include Semalytix, Valuedesk, Zahnarzt-Helden, StudyHelp, PartWorks and AMendate.

Unfortunately, Bielefeld suffers from the same ailment the rest of Germany is subject to: Most startups gravitate to Berlin, followed by Munich, then Hamburg (according to an initiative from UnternehmerTUM in Munich).

However, as Business Punk magazine found earlier this year, the Ostwestfalen-Lippe region in northern North Rhine-Westphalia is home to some of Germany’s biggest companies. That means startups aiding large organizations to digitize post-pandemic have ready access to some of Germany’s largest companies and institutions.

Our survey respondents pointed out that the region is strong in sectors such as B2B because of the many old-school B2B companies in the manufacturing area. There is fairly ready access to many large family offices such as Dr. Oetker, Miele, CLAAS, Schüco and Bertelsmann, so there is a lot of capital available.

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“The region has a good momentum for startups in general, [largely] because of Founders Foundation. At the same time, them being the only institutional driver leads to a certain monoculture,” said one.

Deep tech technologies are a feature of the ecosystem, but there are “almost no B2C or direct-to-consumer” startups, said another respondent.

Commenting on the investment scene in the city, survey respondents said investors have “strong bonds to the industry and Mittelstand.” However, another commented that there are “only very few local investors with NRW or OWL focus like EnjoyVenture (Technologiefonds OWL), but not much more.”

That said, companies get decent attention from “national” investors, and Founders Foundation has really boosted the scene in the region. Angels are also becoming more active, and “there is a strong business angel community in Bielefeld who have been really supportive of the new startup scene.”

We surveyed:

Jonathan Maycock, co-founder and CEO, margin

Louis Schulze, ecosystem development manager, Founders Foundation

Stefan Trockel, founder and CEO, Mercury.ai

Jasper Steinlechner, CTO, Pektogram

Victoria Erdbrügger, co-founder and managing director, circuly

Manuel Rüsing, CTO, Synctive

Conner Kuhlmeyer, founder, reportio

Miriam Kleiner, talent acquisition manager, Founders Foundation

 


Jonathan Maycock, co-founder and CEO, margin

Which sectors is Bielefeld’s tech ecosystem strong in? What are you most excited by? What does it lack?
We are strong in the cryptotrading ecosystem. We are most excited by the adoption of Bitcoin as a financial asset by corporates and institutions as well as the ongoing network effect and adoption by the masses. We need to add support for DeFi trading venues alongside the centralized exchanges we already support.

Which are the most interesting startups in your city?
Semalytix, Zahnarzt-Helden, Coindex and Valuedesk.

What is the tech investment scene like in Bielefeld? What’s their focus?
Since Founders Foundation started in Bielefeld in 2016 the startup scene has exploded. We joined the first accelerator and since then 24 startups have been founded and come through its programs. There is a strong business angel community in Bielefeld that has been really supportive of the new startup scene.

With the shift to remote working, do you think will people stay in Bielefeld, move out, or will people move in?
We switched completely to home office once the pandemic got underway. For us, it has worked really well and we now have three employees who work outside of Bielefeld. Everything is more flexible now.

Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Sebastian Borek (CEO of the Founders Foundation), Eduard R. Doerrenberg (managing director, Dr. Wolff Group).

Where do you think Bielefeld’s tech scene will be in five years?
As Bielefeld is in the heart of the German “Mittelstand”, there are huge opportunities for tech startups to help these large industries take a leap forward with technical solutions using AI, blockchain and other technologies. The city is well served by Bielefeld University, which turns out highly qualified CS graduates every year. Especially with the superb backing of the Founders Foundation, the startup ecosystem in Bielefeld has a bright future.

Louis Schulze, ecosystem development manager, Founders Foundation

Which sectors is Bielefeld’s tech ecosystem strong in? What are you most excited by? What does it lack?
B2B, deep tech technologies.

Carlyle to acquire live broadcasting and streaming tech outfit LiveU for over $400M, say sources

By Ingrid Lunden

Streaming is the name of the content game these days, and now one of the companies that builds tech to do this from anywhere in the world is getting acquired. LiveU — whose satellite/cellular hardware and software for capturing and delivering live streaming and broadcasting video is used by over 3,000 large media organizations — is going to be acquired by private equity firm Carlyle, multiple sources tell TechCrunch, for a value of over $400 million.

LiveU is based in Israel, and the deal was reported to be in the works by local press. Our sources say that the acquisition is in the final stages of closing and could be announced as soon as today or tomorrow. A LiveU spokesperson declined to comment on the story, and a Carlyle spokesperson did not respond to a request for comment.

What is notable is that this is the second time that LiveU has changed hands in the space of two years: the company was previously acquired by Francisco Partners, another PE firm, for at $200 million.

The quick jump in valuation, more than doubling in 25 months, is due in part to the huge surge of interest we’ve seen for video content.

It was not that long ago that you only watched live video on television, using a limited set of broadcast channels. Now, we have live, or near-live, or on-demand moving pictures coming at us from everywhere. On-demand and live streamed video can be found on apps (both those dedicated to broadcasting, and those that offer it alongside other content like YouTube, Facebook, and more) and websites; and not just TVs but phones, tablets and computers. It has become the primary medium for informing and entertaining people today and accounts for more than 80% of all IP traffic.

So it makes sense that a company building technology to make the process of capturing and delivering that video easier, cheaper and at a better level of quality would catch attention. (LiveU has been used for a lot of high-profile coverage, from tennis championships through to the Derek Chauvin trial.)

The other reason for the hike, it seems, is that LiveU itself has grown in size through an acquisition of its own. Earlier this year it snapped up its channel partner in the UK market, Garland Partners, for an undisclosed sum, to get closer to its customers in the region. One of our sources noted that this consolidation helped set the course both for LiveU to get acquired itself, and for its valuation.

It’s not clear whether there were other bidders interested in the company at the same time as Carlyle but the PE firm has been a pretty active buyer and growth-stage investor in the last year, which has been a heady one for funding in the wake of the Covid-19 pandemic and the resulting shifts in consumer and business behavior.

Other acquisitions in Europe (specifically the UK) have included 1e, a hybrid working startup based out of the UK, in deal that valued 1e at $270 million; and gaming company Jagex for around $530 million. Investments meanwhile have included a $200 million stake in South Korean mobility-as-a-service startup Kakao Mobility. LiveU would appear to be its first deal in Israel.

Israel has been a big benefactor of that activity. Avihai Michaeli, a Tel Aviv-based senior investment banker and startup advisor. estimates that startups in the country collectively raised $11 billion in the first six months of 2021, and that has already grown to $12 billion as of today. PE firms are a regular shopper when it comes to Israeli exits, he said, “to improve them from within, and then sell them for an even higher value.” Other examples have included Francisco Partners acquiring MyHeritage in February for around $600 million.

We’ll update this story as we learn more.

In an increasingly hot biotech market, protecting IP is key

By Ram Iyer
John Flavin Contributor
John Flavin is founder and CEO of Portal Innovations, LLC.
Kevin O’Connor Contributor
Kevin A. O'Connor, Ph.D., is a partner in the Intellectual Property practice group at Neal Gerber Eisenberg.

After a record year for biotech investment in 2020 — during which the industry saw $28.5 billion invested across 1,073 deals — the market for new innovations remains strong. What’s more, these innovations are increasingly coming to market by way of early-stage startups and/or their scientific founders from academia.

In 2018, for instance, U.S. campuses conducted $79 billion worth of sponsored research, much of it thanks to the federal government. That number spiked amid the pandemic and could increase even more if President Biden’s infrastructure plan, which includes $180 billion to enhance R&D efforts, passes.

Since 1996, 14,000 startups have licensed technology out of those universities, and 67% of licenses were taken by startups or small companies. Meanwhile, the median step-up from seed to Series A is now 2x — higher than all other stages, suggesting that biotech startups are continuing to attract investment at earlier stages.

When it comes to protecting IP, early and consistent communication with investors, tech transfer offices and advisers can make all the difference.

For biotech startups and their founders, these headwinds signal immense promise. But initial funding is only one part of a long journey that (ideally) ends with bringing a product to market. Along the way, founders will need to procure additional investments, develop strategic partnerships and stave off competition. All of which starts by protecting the fundamental asset of any biotech company: its intellectual property.

Here are three key considerations for startups and founders as they get started.

Start with an option agreement

Most early-stage biotechnology starts in a university lab. Then, a disclosure is made with the university’s tech transfer office and a patent is filed with the hopes that the product can be taken out into the market (by, for instance, a new startup). More often than not, the vehicle to do this is a licensing agreement.

A licensing agreement is important because it shows investors the company has exclusive access to the technology in question. This in turn allows them to attract the investments required to truly grow the company: hire a team, build strategic partnerships and conduct additional studies.

But that doesn’t mean jumping right to a full-blown licensing agreement is the best way to start. An option agreement is often the better move.

India poised for record VC year as unicorns head for decisive IPOs

By Anna Heim

In case you’ve not been paying attention, we’ll say it again: The global venture capital industry is on fire. The second quarter of 2021 was the largest single three-month period on record for dollars invested.

The data coming in points to a worldwide boom. The United States’ startup market had a huge Q2, and investors don’t expect the pace to slow in the country. Europe is also having one hell of a year. Around the world, 2021 is shaping up to be a breakout year for venture investment into startups. And that’s after several years of growing, record-breaking results.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


India is another good example of this trend. The country’s venture capital haul thus far in 2021 has nearly matched its 2020 total and is on pace for a record year. But as the third quarter gets underway, something perhaps even more important is going on: public-market liquidity.

The new trend is being spearheaded by Zomato, an Indian food delivery giant that could be valued at $8.6 billion in its public debut. Other major Indian unicorns are following it to the public markets, including fintech players like MobiKwik and Paytm, which is backed by Alibaba and its affiliate Ant Financial. The trio of companies could herald a rush of public offerings from Indian companies if their debuts prove lucrative and stable.

Today, The Exchange is taking a look at India’s recent venture capital results and digging more deeply into the country’s IPO pipeline, with help from VCs Kunal Bajaj of Blume Ventures and Manish Singhal of pi Ventures. We’ll also read the tea leaves when it comes to how Zomato’s IPO is performing thus far, and what we can learn from its early data. This will be fun!

Q3 IPO cycle starts strong with Couchbase pricing and Kaltura relisting

By Alex Wilhelm

Today we have new filings from Couchbase and Kaltura: Couchbase set an initial price range for its IPO, something we’ve been waiting for, and Kaltura’s offering is back from hiatus with a new price range and some fresh financial information to boot.

Both bits of news should help us get a handle on how the Q3 2021 IPO cycle is shaping up at the start.

TechCrunch has long expected the third quarter’s IPO haul to prove strong; investors said as 2020 closed that quarters one, three and four would prove very active in terms of public market exits this year. Then the second quarter surpassed expectations, with more companies going public than at least some market observers anticipated.

With that in mind, you can imagine why the newly launched Q3 could prove an active period.

So! Let’s start with a dig into the filing from NoSQL provider Couchbase, working to understand its first price range and what the numbers may say about market demand for technology debuts. Here’s our first look at the company’s value. Then we are taking the Kaltura saga back up, checking into the pricing and second-quarter results from the technology company that provides video streaming software and services.

Frankly, I’ve been waiting for these filings to drop. So, let’s cut the chat and get into the numbers:

Couchbase’s IPO price range

In its new S-1/A filing, Couchbase reports that it anticipates a $20 to $23 per share IPO price. With a maximum sale of just over 8 million shares, Couchbase could raise as much as $185.15 million in its public offering.

The company will have 40,072,801 shares outstanding after its IPO, not including 1,050,000 shares that are reserved for possible release. The math from here is simple. To calculate Couchbase’s possible simple IPO valuation we can just do a little multiplication:

  • Couchbase simple valuation at $20 per share: ~$802 million
  • Couchbase simple valuation at $23 per share: ~$922 million

If you want to include the company’s reserved shares, add $21 million to the first figure, and $24.2 million to the second. Notably, TechCrunch wrote before it priced that using a historical analog from the Red Hat-IBM sale — both Couchbase and Red Hat work in the OSS space — the company would be worth around $900 million. So, we were pretty close.

Extra Crunch roundup: NS1 EC-1, Pakistan’s tech ecosystem, SPACs bonanza

By Walter Thompson

Did you see the viral videos of yesterday’s flooding in New York City subways?

In one, riders waded through brown, waist-deep water; another video showed a cascade rushing down a flight of stairs to a subway platform where passengers waited for a train.

Infrastructure doesn’t attract much attention until it fails. Domain name services (DNS), the system that directs readers to techcrunch.com when they say or speak it into their web browser, are much the same way.

For the latest entry in a series of longform articles that explore the inner workings of notable startups, we looked at NS1, an internet infrastructure company best known for its software-defined DNS.

Since its founding in 2013, NS1 has raised more than $100 million to build an engineering team and robust product portfolio that’s expanded to include DDI, which helps companies manage internal networks.

If you’re curious about how NS1 transformed “a slumbering and dreary yet reliable aspect of the internet” into “a strategic moat and an enterprise win” in just eight years, read on.


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Use discount code ECFriday to save 20% off a one- or two-year subscription.


Part 1: Origin story: how three engineers decided to rebuild the internet’s core addressing system.

Part 2: Product development and roadmap: experimentation, open-source efforts and expanding beyond DNS.

Part 3: Competitive landscape: a look at the broader internet infrastructure market.

Part 4: Customer development: how their top competitor’s stumble became “the gift that kept on giving.”

Thanks very much for reading Extra Crunch — have a great weekend!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Startups have never had it so good

Alex Wilhelm and Anna Heim didn’t mince words in today’s Exchange.

“The venture capital market is racing ahead, foot on the gas, middle finger out the window, hair on fire.”

That’s their hot take after analyzing the Q2 data released so far about how much money VCs deployed across the globe between April and the end of June.

Leaning on data from CB Insights, Crunchbase News and FactSet, Alex and Anna walk through the data from the U.S. and a few other regions — and promise deeper regional dives next week.

What I learned the hard way from naming 30+ startups

Image of a pink toy dinosaur holding a name tag on a yellow background.

Image Credits: Juj Winn (opens in a new window) / Getty Images

If you’re starting a company, choosing a name can feel like a fraught choice. But actually, as long as you follow some basic guidelines, it shouldn’t lead to paralysis.

“The truth is that business names fall on a bell curve — you have a small number of outliers that actively contribute to your success and a small number of outliers that actively impair your ability to succeed,” Drew Beechler, who’s named more than 30 software startups, writes in a guest column. “The vast majority, though, fall somewhere in the middle in their impact on your business.”

Nextdoor’s SPAC investor deck paints a picture of sizable scale and sticky users

American Suburban Neighborhood Tilt-shift Aerial Photo

Image Credits: jhorrocks / Getty Images

The SPAC parade continued apace this week as Nextdoor announced it would go public via a blank-check company, with the community social network making its pitch based on scale, claiming users in one in three U.S. households.

Alex Wilhelm unpacks Nextdoor’s “clear-eyed look into [its] financial performance in both historical terms and in terms of what it might accomplish in the future,” noting that “our usual mockery of SPAC charts mostly doesn’t apply.”

Pakistan’s growing tech ecosystem is finally taking off

Image of the Karachi, Pakistan, skyline.

Image Credits: shan.shihan (opens in a new window)/ Getty Images

So far this year, startups in Pakistan are on track to raise more than in the previous five years combined, according to Mikal Khoso, an early-stage investor at Wavemaker Partners.

“Even more excitingly, a large portion of this capital is coming from international investors from across Asia, the Middle East and even famed investors from Silicon Valley,” he notes in a guest post for Extra Crunch.

He’s identified three factors that are fueling investor interest: rapidly expanding mobile connectivity, an improved security situation, and critical legal and regulatory changes that are making the country more startup- and VC-friendly.

Drawing a map of Pakistan’s tech ecosystem, Khoso identifies local companies trying to grab a slice of grocery delivery, e-commerce, ride-hailing and other sectors before examining the challenges still in place.

“The segments in Pakistan that are likely to attract the best entrepreneurs and most investor capital in the years to come will be fintech, e-commerce and edtech,” says Khoso.

Investors find European unicorns reluctant to join SPAC boom

The nonstop news of startups partnering up with SPACs in the United States had Alex Wilhelm and Anna Heim wondering if the blank-check boom expanded to other countries.

“Unicorns are hardly unique to the U.S. startup ecosystem,” they write. “Are we seeing similar SPAC interest in Europe?”

Anna and Alex talked to investors to see why — or why not — European startups would take the SPAC path to become a public company.

For successful AI projects, celebrate your graveyard and be prepared to fail fast

Image of an origami crane and several crumpled pieces of paper to represent success from failure.

Image Credits: Wachiwit (opens in a new window) / Getty Images

When you’ve invested a lot of time and energy in a project, it can be difficult to decide to shelve it — or worse, kill it.

But for AI projects, teams should be prepared to fail fast, Sandeep Uttamchandani, the chief data officer of Unravel Data, writes in a guest column.

“In order to fail fast, AI initiatives should be managed as a conversion funnel analogous to marketing and sales funnels,” he writes. “Projects start at the top of the five-stage funnel and can drop off at any stage, either to be temporarily put on ice or permanently suspended and added to the AI graveyard.”

Uttamchandani walks through the five stages of the funnel and offers suggestions for when to start digging a hole for your project in the graveyard.

Circle is a good example of why SPACs can be useful

Yes, we’re all a bit over-SPAC-ed at this point. It’s just been a nonstop torrent of startups linking up with blank-check companies.

But Circle, a Boston-based technology company that provides API-delivered financial services and a stablecoin, is just “the sort of business that is correct for a SPAC-led debut,” Alex Wilhelm writes in The Exchange.

“It could not go public in a traditional manner in its current state of maturity,” he writes.

“But a SPAC can get it a huge slug of cash at a price that it has locked in, allowing it to complete its growth into corporate adulthood while public. A gamble, sure, but one that will be very fun to watch.”

Can advertising scale in VR?

Image of a person wearing a VR headset and two 3D orbs in front of his hands.

Image Credits: da-kuk (opens in a new window) / Getty Images

It’s not hard to imagine how advertising could be valuable in VR: billboards on streetscapes, magazine covers on newsstands, cereal boxes in virtual kitchens.

But Facebook’s stab at experimental VR ads didn’t last very long; after an onslaught of negative feedback from players, the test was quickly scuttled.

That said, VR advertising has a ton of untapped potential — but it’s going to take a minute to reach profitable scale.

Achieving digital transformation through RPA and process mining

concept of machine learning or digital transformation, wireframe hand pointing with key finger

Image Credits: Jackie Niam (opens in a new window) / Getty Images

“Robots are not coming to replace us,” Alp Uguray is quick to note in a guest column about robotic process automation. “They are coming to take over the repetitive, mundane and monotonous tasks that we’ve never been fond of.”

That’s the good news. But RPA is still in the early stages, despite rapid growth through IPOs, acquisitions and funding rounds.

“Adoption of RPA and process mining in your organization will define the operational excellence of your firm,” he writes. “If you are behind in this race, just think of how your enterprise can continue to compete with fully digital peers. Your organization won’t want to be in the back of this race.”

Demand Curve: 10 lies you’ve been told about marketing

Image of an advertiser speaking in front of a podium with a shadow of a long nose to represent lies.

Image Credits: Abscent84 (opens in a new window) / Getty Images

In a guest column, Nick Costelloe, the head of content for Demand Curve, notes that the content you stumble across in a Google search might not be “intentionally misleading,” it might not lead you in the right direction.

Here, he debunks 10 common myths about marketing — and offers suggestions for what to do instead.

5 fundraising imperatives for robotics startups

Image of a robot hand holding a fistful of cash to represent funding for robotics startups.

Image Credits: Paper Boat Creative (opens in a new window) / Getty Images

This guest post from three contributors from Next47, MassRobotics and Lux Capital looks at best practices for robotics startups looking to raise cash.

“There has never been a better time to pursue funding for robotics startups, but you are more likely to succeed if you build a fundraising strategy that is marked by the same sophistication and informed understanding you already bring to many other aspects of your new business,” the writers say.

Here, they lay out five strategies to ensure robotics startups get the funding they need.

5 fundraising imperatives for robotics startups

By Annie Siebert
Lidiya Dervisheva Contributor
As a partner at Next47, Lidiya Dervisheva works in the areas of robotics, AI and machine vision, as well as broader industrial and enterprise verticals.
Fady Saad Contributor
Fady Saad is the co-founder and strategic partnerships vice president of MassRobotics, the first and largest robotics/AI startup escalator in the world.
Bilal Zuberi Contributor
Bilal Zuberi is a partner at Lux Capital, and is on the boards of Evolv Technology, CyPhy Technologies, and Nozomi Networks, among others.

Early-stage robotics fundraising is accelerating, with funding coming from boutiques to deep-pocketed venture capital firms. For founders, getting their idea from concept to company, or developing a minimum viable product, is daunting enough, but seeking an initial fundraising round brings a complexity that can be especially challenging to manage.

So how do robotics startups best approach fundraising and secure the financing to propel their company to the next level? There are five key areas to keep in mind about fundraising for robotics startups that founders must learn and practice.

Understand the proper fit between your company’s scale and the fund’s scale

Too often, founders court venture capitalists without understanding that the company they are founding might not be the right fit for VCs. Venture capital firms generally, and ones that invest in robotics specifically, look to invest in startups that have clearly identified potential to scale exponentially.

They are not geared toward backing entrepreneurs looking for an exit under $100 million that will only realize a handful of multiples for the investor. VCs are more likely looking to fund on a much larger scale — think a $1-billion-plus exit valuation — and back a company with the potential to deliver at least a 10x return.

Venture capital firms generally, and ones that invest in robotics specifically, look to invest in startups that have clearly identified potential to scale exponentially.

Usually, robotics companies are capital-intensive and require a robust revenue model compared to pure software startups, and this is not for every VC. In fact, venture capital is likened to “rocket fuel” that is dangerous if put into a car but perfect for a rocket ready to shoot for escape velocity. Smaller-scale ventures often do not interest VCs but might be perfect for angel investors.

Bottom line: Do your homework, manage expectations, and seek funding from investors working at a scale commensurate with your idea and comfortable with the unique needs of robotics companies.

Consider capital sources that fit different companies and startups at different stages of its growth

Now is a great time for starting a company, in part because there have never been more sources of financing available. Angel investors and venture capitalists are just a portion of what is available.

There is growing opportunity, especially for robotics and AI startups, in nondilutive capital, including from U.S. government sources such as Department of Energy and Department of Defense grants. There are loaded/nondilutive funding streams, such as convertible debt, available from financial institutions and angels.

Special purpose acquisition companies, or SPACs, especially for hardware and robotics companies, have become popular in recent years. Some of these might be a better fit for your company at the current (or future) stage of your organizational growth cycle.

But some sophistication is warranted. Ask yourself what constraints or potential downsides come with the specific funding model you are considering/pursuing. Government grants, for instance, might drive the pace of development or push you toward certain customer-facing directions in ways that could be ill-suited to your company.

Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake

By Annie Siebert
Uwe Horstmann Contributor
Uwe Horstmann is co-founder and partner of the Berlin-based venture capital firm Project A Ventures.

The narrative suggests that Germany is lagging behind its European neighbors when it comes to building a globally competitive venture capital market. But I think that the next five years will be huge for the German venture capital sector, and that the signs for the future are very positive.

German startups raised €6.4 billion in 2020. That’s more than France, which came in at €5.7 billion. Another upside is that there is a healthy blend of local and international investment in the early-stage market. German funds dominate investments in German startups at the seed and Series A stages. As companies grow, overseas investment plays a huge part — half of the deals exceeding $50 million funding rounds are led entirely by foreign investors, while only 5% are run by German investors and 45% see a mix of foreign and domestic investors at the cap table.

I think this is where the German VC market needs to be right now. Great innovation is being sourced and backed by local funds. As these companies grow and become winners, they attract the best investors from around the globe, enabling the companies to internationalize from a German base, and the early-stage VCs reap the rewards and continue investing in local German talent. As the market matures, I am confident we will see more German VC money invested at the growth stages.

And the outlook is favorable. The German market is thriving. Even the pandemic did little to impact this fundamentally positive trend for the technology sector.

The German market is thriving. Even the pandemic did little to impact this fundamentally positive trend for the technology sector.

In addition to the growing level of both local and international investment into German tech, policymakers have created better conditions for startups and VC funds to thrive in Germany.

The German Federal Government launched the €10 billion Future Fund and has committed additional funds to the Deep Tech Future Fund. Not only does this immediately inject more capital into the market at the growth stage, but it also indicates that Germany is “open for business.” It sends a clear signal to the rest of the world that Germany understands the link between innovation and tangible improvements in society. It is a powerful and welcome indicator to funds from around the world.

Germany is incredibly attractive to tech talent, in addition to investors. More and more tech workers wish to relocate to Germany, with the welfare state providing a model for the future.

The long term looks good, too. Germany is famous the world over for its manufacturing and engineering sector. Germany is one of the few countries that still generates foreign trade surpluses through local production. Manufacturing and engineering are still yet to experience a massive leap in innovation. Therefore, German startups are extremely well positioned to benefit from the increasing activity in “Industry 4.0” innovation, with talent from Germany’s manufacturing heartland poised to blend with the ever-increasing pool of tech talent in Berlin and Munich.

Share options and spinoffs are the Achilles’ heel of the German startup scene

I think German VC and the tech market are due to take off and achieve new heights. However, there are two areas that need to be substantially improved: employee stock options and the regulations around spinoffs.

Germany is choking on its bureaucracy, and that threatens innovation. Tesla’s new Gigafactory is the latest example of how bureaucratic processes can slow everything down.

For startups in Germany, reforms on employee stock option plans (ESOP) are urgently needed for startup workers to benefit from the success of their companies and for the startup ecosystem to grow on its own.

The current bill to offer better tax benefits does not reflect the needs of the industry. For example, tax relief is only available for employees in companies that are younger than 10 years. If an employee changes employers, they must pay tax on company shares beforehand, which poses a significant risk of bankruptcy. Because many startups are still not profitable after 10 years, taxes should only be due when an employee makes an actual profit from their holdings — when they sell the shares. In the end, startups simply won’t offer new ESOPs to their employees.

Another example: spinoffs. Germany has the highest number of patent applications in Europe. However, startups often are not able to turn innovative technology into product-market fit. Spinoffs from the leading German research institutes have had a hard time gaining a foothold because they have been imposed with high institutional fixed and license costs when spinning off. Here, Germany needs to be more flexible and give startups the space and funding they need.

Lower the fixed costs and the enormous bureaucracy founders face when spinning off. Investors have to render more operational and organizational support for researchers-turned-founders. Furthermore, VCs must have the courage to invest more in innovative ideas and technologies that may take a bit longer to thrive. BioNTech is the best example of how this pays off in the long run.

More German unicorns?

As it stands, 2021 has already seen numerous new unicorns from Germany — with Personio, Mambu, Sennder, Gorillas and Trade Republic achieving billion-dollar valuations — and there are almost certainly more to come.

If regulators finally cut through the red tape around stock options and spinoffs, the German tech and VC industry will achieve new heights. I look forward to positive changes and an entire roster of German unicorns being minted in the years to come.

Dear EU: It’s time to get a grip

By Mike Butcher

The EU for all its lethargy, faults and fetishization of bureaucracy, is, ultimately, a good idea. It might be 64 years from the formation of the European Common Market, but it is 29 years since the EU’s formation in the Maastricht Treaty, and this international entity is definitely still acting like an indecisive millennial, happy to flit around tech startup policy. It’s long due time for this digital nomad to commit to one ‘location’ on how it treats startups.

If there’s one thing we can all agree on, this is a unique moment in time. The COVID-19 pandemic has accelerated the acceptance of technology globally, especially in Europe. Thankfully, tech companies and startups have proven to be more resilient than much of the established economy. As a result, the EU’s political leaders have started to look towards the innovation economy for a more sustainable future in Europe.

But this moment has not come soon enough.

The European tech scene is still lagging behind its US and Asia counterparts in numbers of startups created, talent in the tech sector, financing rounds, and IPOs / exits. It doesn’t help, of course, that the European market is so fractionalized, and will be for a long time to come.

But there is absolutely no excuse when it comes to the EU’s obligations to reform startup legislation, taxation, and the development of talent, to “level the playing field” against the US and Asian tech giants.

But, to put it bluntly: The EU can’t seem to get its shit together around startups.

Consider this litany of proposals.

Starting as far back a 2016 we had the Start-Up and Scale-Up Initiative. We even had the Scale-Up Manifesto in the same year. Then there was the Cluj Recommendations (2019), and the Not Optional campaign for options reform in 2020.

Let’s face it, the community of VC´s, founders, and startup associations in Europe has been saying mostly the same things for years, to national and European leaders.

Finally, this year, we got something approaching a summation of all these efforts.

Portugal, which has the European presidency for the first half of this year, took the bull by its horns and created something approaching a final draft of what the EU needs.

After, again, intense consultations with European ecosystem stakeholders, it identified eight best practices in order to level the playing field covering the gamut of issues such as fast startup creation, talent, stock options, innovation in regulation and access to finance. You name it, it covered it.

These were then put into the Startup Nations Standard and presented to the European Council at Digital Day on March 19th, together with the European Commission’s DG CNECT and its Commissioner Tierry Breton. I wrote about this at the time.

Would the EU finally get a grip, and sign up for these evidently workable proposals?

It seemed, at least, that we might be getting somewhere. Some 25 member states signed the declaration that day, and perhaps for the first time, the political consensus seemed to be forming around this policy.

Indeed, a body set up to shepherd the initiative (the European Startup Nations Alliance) was even announced by Portuguese Prime Minister António Costa which, he said, would be tasked with monitoring, developing and optimizing the standards, collecting data from the member states on their success and failure, and reporting on its findings in a bi-annual conference aligned with the changing presidency of the European Council.

It would seem we could pop open a chilled bottle of DOC Bairrada Espumante and celebrate that Europe might finally start implementing at least the basics from these suggested policies.

But no. With the pandemic still raging, it seemed the EU’s leaders still had plenty of time on their hands to ponder these subjects.

Thus it was that the Scaleup Europe initiative emerged from the mind of Emmanuel Macron, assembling a select group of 150+ of Europe’s leading tech founders, investors, researchers, corporate CEOs, and government officials to do some more pondering about startups. And then there was the Global Powerhouse Initiative of DG Research & Innovations Commissioner Mariya Gabriel.

Yes, ladies and gentlemen. We were about to go through this process all over again, with the EU acting as if it had the memory span of a giant goldfish.

Now, I’m not arguing that all these collective actions are a bad thing. But, by golly, European startups need more decisive action than this.

As things stand, instead of implementing the very reasonable Portuguese proposals, we will now have to wait for the EU’s wheels to slowly turn until the French presidency comes around next year.

That said, with any luck, a body to oversee the implementation of tech startup policy that is mandated by the European community, composed of organisation like La French Tech, Startup Portugal and Startup Estonia, might finally seem within reach.

But to anyone from the outside, it feels again as if the gnashing of EU policy teeth will have to go on yet longer. With the French calling for a ‘La French Tech for Europe’ and the Portuguese having already launched ESNA, the efforts seem far from coordinated.

In the final analysis, tech startup founders and investors could not care less where this new body comes from or which country launches it.

After years of contributions, years of consultations, the time for action is now.

It’s time for EU member states to agree, and move forward, helping other member states catch up based on established best practices.

It’s time for the long-awaited European Tech Giants to blossom, take on the US-born Big Tech Giants, and for Europe to finally punch its weight.

 

To sustain diversity, investors must tune into their unconscious biases

By Annie Siebert
April Dominguez Contributor
April Dominguez is the co-founder and CEO of Handsome, an app that provides beauty professionals with equal career opportunities. Prior to founding Handsome, she spent six years as a vice president at an investment startup that raised and invested over $130 million during her time there.
Nikki Dominguez Contributor
Nikki Dominguez is the co-founder and president of Handsome, an app that provides beauty professionals with equal career opportunities. She also built two beauty academies and one school and turned a team of 70 into a team of more than 150 stylists.

When the pandemic struck last year, the fundraising world turned upside down. Due to shifting priorities, investors had to commit to taking care of their portfolio companies, the majority of which were led by white men.

Any funding opportunities we had in the pipeline evaporated. This was especially true for investors considering attempts to reach new and underrepresented founders.

But the fundraising market came back pretty quickly in 2020 — for some. And though we are thrilled to have closed a $1.5 million pre-seed round in the middle of a pandemic, the challenges we faced in the past continued. The spotlight only turned back on minority founders after the Black Lives Matter movement took off last summer, and we began to pursue fundraising again in late 2020. We could tell by how investors interacted with our pitch deck or asked us questions that they already had preconceived ideas about us and our business.

We were in our second year of running Handsome and had traction similar to, if not better than, other male-centric startups that were getting funded, yet we still ran into friction when fundraising. The hard part was that we didn’t have any concrete evidence as to why, or the extent to which, fundraising was harder for minority and female teams outside of our apparent challenges and personal experiences. Men are allowed to have a vision or an idea on the back of a cocktail napkin, while women need to have fully established businesses and revenue streams.

The evidence is in the analytics

DocSend, a tool that we and thousands of other startups use to send out pitch decks to investors, analyzed how investors interact with pitch decks. A recent DocSend study confirmed our hunch, finding that investors do indeed scrutinize the decks of businesses founded by women and minorities differently.

For instance, their data showed investors spent 20% longer on the business model section of decks from all-female teams at the pre-seed stage than all-male teams. While more time spent on a particular section of a deck may seem to indicate more interest, it can actually be a sign of greater scrutiny and skepticism.

We could tell by how investors interacted with our pitch deck or asked us questions that they already had preconceived ideas about us and our business.

When you look at the makeup of the average VC you are pitching to, it is likely a middle-aged white man. When pitching Handsome — something that’s reimagining the education and community of the beauty industry — you can imagine that most VCs don’t understand the value and opportunity at hand. Although beauty is a $190 billion global industry ($60 billion alone in the U.S.), investors who don’t follow this industry might have a hard time understanding how big it is, how the industry works, and how our business fits into this thriving market. Even further, investors might completely discredit our business because of the “beauty” label.

All these factors can lead to more time spent analyzing the business model — and its viability — articulated in our pitch deck. In reality, VCs are busy, and if they’re spending more time on the fundamentals of your business, they don’t understand it. It’s more likely they are looking for ways that your business won’t work. And, frankly, we are not business school graduates or Stanford alumni, so investors who want to de-risk their portfolios will spend more time looking at our deck to gauge if we know how to build a business.

More than goodwill is needed for lasting change

Despite all this, we believe that most of the time, investors don’t even know they are acting on these biases. They don’t realize they may have already written you off, which is part of the problem. Awareness of a subconscious bias is the first step toward making positive change. Investors may think they’re widening the funnel simply by taking a meeting or providing mentorship over coffee when, subconsciously, they’ve already counted you out.

Even though the barriers are being lowered, minority founders just starting out still have a hard time getting their foot in the door. Most underrepresented founders don’t have an established network, making it difficult to get even an initial introduction. That’s why these founders aren’t getting meetings. So even with more investor goodwill, founders are still unable to access the capital they need to grow their businesses.

It takes time and effort to enact meaningful changes. Truly committed people are going to work on these issues over the coming years and decades. It’s only on a longer time scale that we’re going to be able to tell whether investors promising change have delivered. Changing the demographics of the founders you fund requires year in, year out consistency, again and again and again.

Only then will we see a time when the future of great ideas is not hindered by the demographics of the people building businesses out of those ideas.

Autonomous trucking startup Embark to go public in $5.2B SPAC deal

By Aria Alamalhodaei

Five-year old self-driving truck startup Embark Trucks Inc. said Wednesday it would merge with special purpose acquisition company Northern Genesis Acquisition Corp. II in a deal valued at $5.2 billion.

Embark takes a different approach to autonomous trucking: As opposed to manufacturing and operating a fleet of trucks themselves, which is the route rival TuSimple is taking, Embark offers its AV software as a service. Carriers and fleets can pay a per-mile subscription fee to access it. The company includes carriers Mesilla Valley Transportation and Bison Transport, and companies Anheuser-Busch InBev and HP Inc., amongst its partners.

Carriers purchase trucks with compatible hardware directly from OEMs, so Embark says it has designed its system to be “platform agnostic” across multiple components and manufacturers. The company says its software can simulate up to 1,200 60-second scenarios per second, and make adaptive predictions using those scenarios for the behaviour of other vehicles on the road.

Embark said in an investor presentation for the SPAC deal that it was targeting “driver-out,” or operating on roads without a safety driver, by 2023 and launching at a commercial scale across the American sunbelt the following year. However, Embark still has technical milestones yet to achieve, noting in the presentation that the software still needs to accomplish actions such as interactions with emergency vehicles, and responding to blown tires and other mechanical failures.

Upon closing, the transaction will inject Embark with around $615 million in gross cash proceeds, including $200 million in private investment in public equity (PIPE) funding from investors including CPP Investments, Knight-Swift Transportation, Mubadala Capital, Sequoia Capital and Tiger Global Management.

Embark also said former Department of Transportation Secretary Elaine Chao was joining its board, likely a boon for a company operating in the autonomous trucking industry, which is still only authorized for commercial deployment in 24 states.

Embark was founded in 2016 by CEO Alex Rodrigues and CTO Brandon Moak, who worked together on autonomous driving while completing engineering degrees from Canada’s University of Waterloo. After launching out of Y Combinator, the company quickly went on to raise $117 million in total funding, including a $30 million Series B led by Sequoia Capital and a $70 million Series C led by Tiger Global Management.

The transaction is anticipated to close in the second half of 2021. The company joins competitor AV trucking developer Plus in going public via a SPAC merger. TuSimple opted for a traditional initial public offering in March.

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