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Yesterday — May 29th 2020Your RSS feeds

Jeremy Conrad left his own VC firm to start a company, and investors like what he’s building

By Connie Loizos

When this editor first met Jeremy Conrad, it was in 2014, at the 8,000-square-foot former fish factory that was home to Lemnos, a hardware-focused venture firm that Conrad had cofounded three years earlier.

Conrad —  who as a mechanical engineering undergrad at MIT worked on self driving cars, drones and satellites — was still excited about investing in hardware startups, having just closed a small new fund even while hardware was very unfashionable. One investment his team had made around that time was in Airware, a company that made subscription-based software for drones and attracted meaningful buzz and $118 million in venture funding before abruptly shutting down in 2018.

For his part, Conrad had already moved on, deciding in late 2017 that one of the many nascent teams that was camping out at Lemnos was on to a big idea relating the future of construction. Conrad didn’t have a background in real estate per se or even an earlier interest in the industry. But the “more I learned about it — not dissimilar to when I started Lemnos — It felt like there was a gap in the market, an opportunity that people were missing,” says Conrad from his home in San Francisco, where he has hunkered down throughout the COVID-19 crisis.

Enter Quartz, Conrad’s now 1.5-year-old, 14-person company, which quietly announced $7.75 million in Series A funding earlier this month, led by Baseline Ventures, with Felicis Ventures, Lemnos and Bloomberg Beta also participating.

What it’s selling to real estate developers, project managers and construction supervisors is really two things, which is safety and information. Using off-the-shelf hardware components that are reassembled in San Francisco and hardened (meaning secured to reduce vulnerabilities), the company incorporates its machine-learning software into this camera-based platform, then mounts the system onto cranes a construction sites. From there, the system streams 4K live feeds of what’s happening on the ground, while also making sense of the action.

Say dozens of concrete pouring trucks are expected on a construction site. The cameras, with their persistent view, can convey through a dashboard system whether and when the trucks have arrived and how many, says Conrad. It can determine how many people on are on a job site, and whether other deliveries have been made, even if not with a high degree of specificity. “We can’t say [to project managers] that 1,000 screws were delivered, but we can let them know whether the boxes they were expecting were delivered and where they were left,” he explains.

It’s an especially appealing proposition in the age of coronavirus, as the technology can help convey information that’s happening at a site that’s been shut down, or even how closely employees are gathered. Conrad says the technology also saves on time by providing information to those who might not otherwise be able to access it. Think of the developer who is on the 50th floor of the skyscraper he or she is building, or even the crane operator who is perhaps moving a two-ton object and has to rely on someone on the ground to deliver directions but can enjoy far more visibility with the aid of a multi-camera set-up.

Quartz, which today operates in California but is embarking on a nationwide rollout, was largely inspired by what Conrad was seeing in the world of self-driving. From sensors to self-perception systems, he knew the technologies would be even easier to deploy at construction sites, and he believed it could make them safer, too. Indeed, like cars, construction sites are astonishingly dangerous. According to the Occupational Safety and Health Administration, of the worker fatalities in private industry in 2018, more than 20% were in construction.

Conrad also saw an opportunity to take on established companies like Trimble, a 42-year-old, publicly traded, Sunnyvale, Ca.-based company that sells a portfolio of tools to the construction industry and charges top dollar for them, too. (Quartz is currently charging $2,000 per month per construction site for its series of cameras, their installation, a livestream and “lookback” data, though this may well rise at its adds additional features.)

It’s a big enough opportunity in fact, that Quartz is not alone in chasing it. Last summer, for example, Versatile, an Israeli-based startup with offices in San Francisco and New York City, raised $5.5 million in seed funding from Germany’s Robert Bosch Venture Capital and several other investors for a very similar platform,  though it uses sensors mounted under the hook of a crane to provide information about what’s happening. Construction Dive, a media property that’s dedicated to the industry, highlights many other, similar and competitive startups in the space, too.

Still, Quartz has Conrad, who isn’t just any founding CEO. Not only does he have that background in engineering, but having founded a venture firm and spent years as an investor may serve him well, too. He thinks a lot about the payback period on its hardware, for example.

Unlike a lot of founders, he also says he loves the fundraising process. “I get the highest quality feedback from some of the smartest people I know, which really helps focus your vision,” says Conrad, who says that Quartz, which operates in California today, is now embarking on a nationwide rollout.

“When you talk with great VCs, they ask great questions. For me, it’s best free consulting you can get.”

Tech talent is flocking to smaller cities, but investors aren’t

By Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines. This week’s show took a break from regularly scheduled programming. Our co-host Alex Wilhelm, who usually leads us through the show, was on some much-deserved vacation, so Danny Crichton and Natasha Mascarenhas took the reigns and invited Floodgate Capital’s Iris Choi to join in on the fun. It’s Choi’s fourth time being on the podcast, which officially makes her our most tenured guest yet (in case the accomplished investor needs another bullet point on her bio page).

This week’s docket features scrappiness, a seed round and a Startup Battlefield alumnus.

Here’s what we chewed through:

  • LeverEdge raised seed funding to get you and your friends a volume discount on student loans. Fintech has been booming for years now, and startups often crop up around the painful world of student loans. Yet this startup still caught our eye, and it has a little something to do with its choice to use collective bargaining power as its modus operandi.
  • Stackin’ raises $12.6 million Series B for a text-messaging service that connects millennials to money tips, and eventually other fintech apps. According to CEO Scott Grimes, Stackin’ wants to be the “pipes that port people around fintech.” We get into if the world needs a fintech app marketplace and how it targets younger users.
  • D-ID, a Startup Battlefield alumnus, digitally de-identifies faces in videos and still images and just raised $13.5 million. We’re all worried about our privacy concerns, so the funding news was a refreshing change of pace from the usual headlines we see around surveillance. Now the company just needs to find a successful use case beyond the goodness in people’s hearts.
  • ByteDance, the Chinese parent company that owns TikTok, hit $3 Billion in net profit last year, reports Bloomberg. TikTok also recently snagged former Disney executive Kevin Mayer for its CEO. This one, as you can expect, made for an interesting conversation around privacy and bandwidth. We even asked Choi to weigh in on Donald J. Trump’s recent tweet threatening to regulate social media companies, since Floodgate was an early angel investor in Twitter.
  • We ended with a round table of sorts on how the future of work will look and feel in our new world, from college campuses to offices. We get into the vulnerability that comes with being on Zoom, the ever-increasing stupidity of “manels”, and how tech talent might be flocking to smaller cities but investors aren’t just yet.

And that was the show! Thanks to our producer Chris Gates for helping us put to this together, thanks to you all for listening in on this quirky episode, and thanks to Iris Choi for always bringing a fresh, candid perspective. Talk next week.

Belvo scores $10M from Founders Fund and Kaszek to scale its API for financial services

By Anna Escher

Belvo, a Latin American fintech startup which launched just 12 months ago, has already snagged funding from two of the biggest names in North and South American venture capital.

The company is aiming to expand the reach of its service that connects mobile applications in Mexico and Colombia to a customer’s banking information and now has some deep-pocketed investors to support its efforts. 

If the business model sounds familiar, that’s because it is. Belvo is borrowing a page from the Plaid playbook. It’s a strategy that ultimately netted the U.S. startup and its investors $5.3 billion when it was acquired by Visa in January of this year.

Belvo and its backers, who funneled $10 million into the year-old company, want to replicate Plaid’s success and open up an entire new range of financial services companies in Latin America.  

The round was co-led by Silicon Valley’s Founders Fund and Argentina’s Kaszek. With the new arsenal of capital complimented by the Founders Fund’s network and Kaszek’s deep knowledge of the Latin American market, Belvo hopes to triple its current team of 25 that is spread across operations in Mexico City and Barcelona. 

Since its initial establishment in May 2019, the company has raised a total of $13 million from Y Combinator (W20) along with some of the biggest players in Latin America’s startup scene. Those investors include David Velez, the co-founder of Brazil’s multi-billion dollar lending startup, Nubank; MAYA Capital and Venture Friends. 

The company’s co-founders, Pablo Viguera and Oriol Tintoré are no stranger to startups themselves. Viguera served as COO at European payments app Verse, and is a former general manager of one of the big European neo-banks, Revolut. Tintoré is a former NASA aerospace engineer, and while working for his Stanford MBA, founded Capella Space, an information collection startup that went on to raise over $50 million. 

The company said it aims to work with leading fintechs in Latin America, spanning across verticals like the neobanks, credit providers and personal finance products Latin Americans use every day.

Belvo has built a developer-first API platform that can be used to access and interpret end-user financial data to build better, more efficient and more inclusive financial products in Latin America. Developers of popular neobank apps, credit providers and personal finance tools use Belvo’s API to connect bank accounts to their apps to unlock the power of open banking.

Viguera says the capital will be used to open a new office in Sao Paulo, and invest in new product and business development hires. Notably, Belvo is only one year old, having launched in January 2020 and operative in Mexico and Colombia. 

Co-founders Pablo Viguera and Oriol Tintoré are a former Revolut GM and former NASA aerospace engineer.

 

Belvo’s latest funding also marks another instance of a U.S.-Latin America investment teamup for a Latin American company.

Nuvocargo, a logistics startup that wants to bolster the Mexico – U.S. trade lane with its freight transportation technology, also recently raised a round co-led by Mexico’s ALLVP and Silicon Valley-based NFX. American investors may be starting to take note of the co-investment opportunity of putting capital into startups serving the Latin American market in partnership with successful new wave domestic funds like Mexico’s ALLVP and Argentina’s Kaszek.  

Before yesterdayYour RSS feeds

3 bearish takes on the current edtech boom

By Natasha Mascarenhas

Edtech is booming, but a short while ago, many companies in the category were struggling to break through as mainstream offerings. Now, it seems like everyone is clamoring to get into the next seed-stage startup that has the phrase “remote learning” on its About page.

And so begins the normal cycle that occurs when a sector gets overheated — boom, bust and a reckoning. While we’re still in the early days of edtech’s revitalization, it isn’t a gold mine all around the world. Today, in the spirit of balance and history, I’ll present three bearish takes I’ve heard on edtech’s future.

Quizlet’s CEO Matthew Glotzbach says that when students go back to school, the technology that “sticks” during this time of massive experimentation might not be bountiful.

“I think the dividing line there will be there are companies that have been around, that are a little more entrenched, and have good financial runway and can probably survive this cycle,” he said. “They have credibility and will probably get picked [by schools].” The newer companies, he said, might get stuck with adoption because they are at a high degree of risk, and might be giving out free licenses beyond their financial runway right now.

Former Lime exec launches Cabana, a company that merges #vanlife and hotels

By Jonathan Shieber

Is it glamping on wheels? Hotel #vanlife?

It’s Cabana, a new startup from a former Lime executive that’s bringing tricked-out vans with all the amenities of a Holiday Inn hotel room to cities on the West Coast, starting in Seattle.

Because of Lime I spent 54 consecutive weeks on the road staying at hotels,” recalls Scott Kubly, the co-founder and chief executive of Cabana. “I got this bug that there needed to be a better way.”

So with the benefit of a few years of startup salary in the bank, Kubly launched Cabana. “The way I would describe it is vanlife meets car sharing meets a boutique hotel. It’s a hotel room packed into the back of a van.”

The vans come with showers, toilets, a slide out two-range stovetop that can serve as a kitchen and the freedom to hit the road after a customer crushes that last sales meeting, conference appearance, convention, or just needs to travel and experience the outdoors.

The vans cost $200 per-night plus tax to rent and there’s a fleet of several vans already available in Seattle. Booking a van is simple through the company’s app and everything is contactless — an important feature in the COVID-19 era.

[gallery ids="1995050,1995048,1995047"]

Kubly estimates there’s around $15 billion spent on travel that he thinks he can unlock with Cabana, and the company is definitely tapping into a small, but not insignificant trend of glamping, vanlife and luxury experiences that investors are already backing.

Companies like Tentrr, HipCamp and even Airbnb have gotten in on the vanlife movement, and Cabana’s founder definitely thinks he can ride the wave.

Cabana has already raised $3.5 million from investors, led by Craft Ventures — the investment firm founded by David Sacks. Other investors include Goldcrest Capital, Travis VanderZanden (the chief executive and founder of Bird), and Sunny Madra, vice president of Ford X at Ford Motor Company.

“Cabana gives people an ideal combination of freedom, comfort, and convenience,” said David Sacks, co-founder and general partner of Craft, in a statement. “Despite the societal upheaval of the last few months, the human desire to travel and explore remains unchanged. Why shelter in place when you can shelter in paradise?”

Sacks may be on to something. According to Kubly, the RV rental business has exploded and is up 650% year-on-year. “People are going a little stir crazy,” he said.

Back in 2019 when Kubly and his co-founder Jonathan Savage, a former nuclear engineer for the Navy and the bassist in the Red Not Chili Peppers (a Red Hot Chili Peppers cover band), launched the company, they weren’t expecting to have to deal with running a hospitality business during a pandemic, but they’ve adapted.

Image credit: Cabana

Cabana’s fleet of vans are cleaned and then irradiated with UVC light (the same treatment the president suggested, wrongly, for people) and then left to stand for six-to-eight hours between rentals.

The hardest part of the business hasn’t been handling the vans or disinfecting them for customers concerned about the novel coronavirus, but the more mundane task of cleaning out the toilets.

“There is a toilet and a toilet tank,” said Kubly. “At the end of every trip we swap that out. Just like scooters have swappable batteries we have swappable toilet tanks. It is the big downside of the business.”

He should know. He spent the first six months that the company was in business cleaning out the tanks himself on the retrofitted van that he and Savage bought to test the business idea.

“Ideas that utilize existing infrastructure and satisfy a previously unseen or emerging consumer need are often the genesis of companies that can establish and lead a new industry,” said VanderZanden in a statement. “Cabana fits squarely within this theory and provides travelers a new way to experience and explore destinations that might not otherwise have been available to them while also avoiding carbon-emitting flights.” 

6 leading mobility VCs discuss the road ahead

By Megan Rose Dickey

Millions of consumers sheltering in place to stem the spread of the novel coronavirus sent shockwaves through the global economy. Transportation-related companies were not spared in the upheaval. Mobility startups consolidated, pulled back from some markets and reduced headcount. And yet, the industry — and the VCs who invest in it — is still rolling forward.

Founders are huddled with their teams, picking over spreadsheets and go-to-market strategies in search of ways to accelerate as their runways grow ever shorter. And while the pace of investments might have slowed, venture capitalists are still seeking out innovative tech and overlooked ideas.

TechCrunch spoke with six investors about the state of mobility, which trends they’re most excited about and what they’re looking for in their next investments:

Ernestine Fu, Alsop Louie Partners

What trends are you most excited about in mobility hardware from an investing perspective?

In-car cybersecurity. Today’s vehicles are highly sophisticated smart devices, and cybersecurity is becoming an integral part of automakers’ development efforts. We’re already seeing infotainment connectivity systems and over-the-air software updates in cars being vulnerable to cyberattacks. Vehicles will serve as the nodes of vast information networks, especially as personal mobility, autonomous driving and car connectivity drive our future. In-car cybersecurity threats will remain an ongoing concern — and a rich investment opportunity.

Stonly Baptiste & Shaun Abrahamson, Urban Us

What trends are you most excited about in mobility hardware from an investing perspective?

The most interesting thing is the continued reduction in costs of electric drivetrains and autonomous stacks. These are going to have a profound impact on total costs of fleets – lower labor, fuel and maintenance costs.

Tia Health gets over $24 million to build a network of holistic health clinics and virtual services for women

By Jonathan Shieber

Tia Health, the developer of a network of digital wellness apps, clinics and telehealth services designed to treat women’s health holistically, has raised $24.275 million in a new round of funding.

The company said the financing would support the expansion of its telehealth and clinical services to new markets, although co-founder and chief executive Carolyn Witte would not disclose, where, exactly those locations would be.

Co-founded initially as a text-based tool for women to communicate and receive advice on sexual health and wellness, Witte and her co-founder Felicity Yost always had bigger ambitions for their business.

Last year, Tia launched its first physical clinic in New York and now boasts a team of 15 physicians, physician assistants, registered nurses, therapists and other treatment providers. The support staff is what helps keeps cost down, according to Witte.

“We reduce the cost of care by 40% [and] we do that through collaborative care staffing. [That] leverages mid-level providers like nurse practitioners to deliver higher-touch care at lower cost,” she said. 

Tia closed its most recent round before shelter-in-place went into effect in New York on March 17, and since then worked hard to port its practices over to telehealth and virtual medicine, Witte said.

Two days later, Tia went live with telehealth services and the company’s membership of 3,000 women responded. Witte said roughly half of the company’s patients have used the company’s telehealth platform. Since Tia began as an app first before moving into physical care services, the progression was natural, said Witte. The COVID-19 epidemic just accelerated the timeline. “In the last 90 days close to 50% of Tia’s 3,000 members have engaged in chat or video,” Witte said. 

The move to telehealth also allowed Tia to take in more money for its services. With changes to regulation around what kinds of care delivery are covered, telehealth is one new way to make a lot of money that’s covered by insurance and not an elective decision for patients.

“That has allowed us to give our patients the ability to use their insurance for that virtual care and bill for those services,” Witte said of the regulatory changes. 

The staff at Tia consists not just of doctors and nurse practitioners (there are two of each), but also licensed clinical therapists that provide mental health services for Tia’s patient population too.

“Before COVID we surveyed our 3,000 patients in NY about what they want and mental health was the most requested service,” said Witte. “We saw a 400% increase in mental health-related messages on my platform. We rolled out this behavioral health and clinical program paired with our primary care.”

As Tia continues to expand the services it offers to its patients, the next piece of the puzzle to provide a complete offering for women’s health is pregnancy planning and fertility, according to Witte.

The company sees itself as part of a movement to repackage a healthcare industry that has concentrated on treating specific illnesses rather than patient populations that have unique profiles and care needs.

Rather than focusing on a condition or medical specialization like cardiology, gastroenterology, gynecology or endocrinology, the new healthcare system treats cohorts or groups of people — those over 65, adult men and women, as groups with their own specific needs that cross these specializations and require different types of care.

We are really focused on collecting longitudinal data to better understand and treat women’s health,” said Witte. “A stepping stone in that regard is expanding our service line to support the pregnancy journey.” 

Tia’s latest round was led by new investor Threshold Ventures, with participation from Acme Ventures (also a new backer) and previous investors, including Define Homebrew, Compound and John Doerr, the longtime managing partner at KPCB.

When the company launched, its stated mission was to use women’s data to improve women’s health.

“We believe reproductive-aged women deserve a similar focus, and a new model of care designed end-to-end, just for us,” the company said in a statement

As Tia continues to stress, women have been “under-researched and underserved by a healthcare system that continues to treat us as ‘small men with different parts’ — all-too-often neglecting the complex interplay of hormones, gene regulation, metabolism and other sex-specific differences that make female health fundamentally distinct from male health. It’s time for that to change.”

But Tia won’t be changing anything on the research front anytime soon. The company is not pursuing any clinical trials or publishing any research around how the ways in which women’s menstrual cycles may affect outcomes or influence other systems, according to Witte. Rather the company is using that information in its treatment of individual patients, she said.

The company did just hire a head of research — an expert in reproductive genomics, which Witte said was to start to understand how the company can build out proof points around how Tia’s care model can improve outcomes. 

Tia will reopen its brick-and-mortar clinic in New York on June 1 and will be expanding to new locations over the course of the year. That expansion may involve partnerships with corporations or existing healthcare providers, the company said.

“By partnering with leading health systems, employers, and provider networks to scale our Connected Care Platform, and open new physical and digital Tia doors, we can make ‘the Tia Way’ the new standard of care for women and providers everywhere,” Tia said in a statement.

As it does so, the company said it will continue to emphasize its holistic approach to women’s health.

As the company’s founders write:

Being a healthy woman is all-too-often reduced to not having an STD or an abnormal Pap, but we know that the leading cause of death for women in America is cardiovascular disease. We also know that women are diagnosed with anxiety and depression at twice the rate of men, and that endocrine and autoimmune disorders are on the rise. In pregnancy, c-section and preterm birth rates continue to go up instead of down, as does maternal mortality, with the U.S. reporting more maternal deaths than any developed country in the world.

We believe that the solution is a preventive “whole women’s health” model…

A 12 year journey ends as Skimlinks is acquired by retail marketing platform Connexity

By Mike Butcher

Connexity, a lead-gen platform for online retailers, has acquired Skimlinks, a UK platform for publishers to make money through affiliate links. Terms of the deal were undisclosed. According to Crunchbase, Skimlinks had raised a total of $25.5M and reached a late a Series C stage of funding, the final round coming from Frog Capital which invested $16M.

An early Seed investor was Sussex Place Ventures way back in 2009. For context, San Francisco-based competitor VigLink, which has raised a total of $27.3 million, remains an independent company.

Sources in the VC industry indicate that the acquisition was a “decent one” that may even have hit three figures, with a possible a large-ish earnout and equity component. Certainly, this was not a ‘firesale,’ by any means.

Although coy on the price of the acquisition, co-founder and President Alicia Navarro said: “Every party, including many staff, has made money out of this deal and is very happy.”

Cofounded in 2007 by Navarro and Joe Stepniewski, Skimlinks rode the wave of online activity as publishers struggled to monetize their ballooning online operations in the mid-teens of the last decade. Affiliate programs allow publishers to get a cut of the revenue when their link drives a purchase on an e-commerce site. Skimlinks makes the process easier through automation.

Originally spinning out of an idea Navarro had about consumer online commerce habits — a startup called Skimbit which resembled Pinterest in some respects — it had scaled to the US by the time I interviewed Navarro in 2012.

In 2013 it took on a growth financing round led by Greycroft Partners.

A couple of years later the platform was driving more than $500 million in e-commerce sales for publishers.

By 2016 editorial content from its publisher network of 1.5M domains had driven nearly $1 billion of ecommerce transactions and the company said it was on a path to profitability.

In 2018 Navarro stepped away from the CEO position, taking on the role of President, and handed the reigns to Sebastien Blanc, previously Chief Revenue Officer.

Speaking to TechCrunch, Navarro said the COVID-19 pandemic had accelerated the growth of the business as more publishers in its network monetized the massively increased online traffic, brought about by global lockdown policies.

Bill Glass, CEO of Connexity said in a statement: “Our solutions help retailers acquire new customers and sales while enabling ecommerce-oriented publishers to monetize engaged shopping audiences. Combining the companies creates more scale on both sides of the marketplace.”

Sebastien Blanc, CEO of Skimlinks said: “By marrying Connexity’s CPC search budgets with the broad CPA affiliate monetization coverage of Skimlinks, we provide best-in-class monetization for publishers. Our combined scale will fortify Connexity as a critically important customer acquisition channel for retailers and will strengthen publisher monetization solutions.”

And what of the founders? Stepniewski has taken on a senior role with Facebook UK. Navarro is now working on a fresh startup she bills as “AirBnB-meets-Calm as a service” allowing founders or executives to unplug and get into what is known as ‘Deep Work’.

She is now in the process of early-stage fundraising, so her entrepreneurial journey is clearly going to continue.

Carry1st has $4M to invest in African mobile gaming

By Jake Bright

Gaming development startup Carry1st has raised a $2.5 million seed round led by CRE Venture Capital .

That brings the company’s total VC to $4 million, which Carry1st will deploy to support and invest in game publishing across Africa.

The startup — with offices in New York, Lagos, and South Africa — was co-founded in 2018 by Sierra Leonean Cordel Robbin-Coker, American Lucy Parry, and Zimbabwean software engineer Tinotenda Mundangepfupfu.

Robbin-Coker and Parry met while working in investment banking in New York, before forming Carry1st.

“I convinced her to avoid going to business school and instead come to South Africa to Cape Town,” Robbin-Coker told TechCrunch on a call.

“We launched with the idea that we wanted to bring the gaming industry…to the African continent.”

Carry1st looks to match gaming demand in Africa to the continent’s fast growing youth population, improving internet penetration and rapid smartphone adoption.

The startup has already launched two games as direct downloads from its site, Carry1st Trivia and Hyper!.

“In April, [Carry1st Trivia] did pretty well. It was the number one game in Nigeria, and Kenya for most of the year and did about one and a half million downloads.” Robbin-Coker said.

Carry1st Africa

Image Credit: Carry1st

The startup will use a portion of its latest round and overall capital to bring more unique content onto its platform. “In order to do that, you need cash…to help a developer finish a game or entice a strong game to work with you,” said Robbin-Coker.

The company will also expand its distribution channels, such as partnerships with mobile operators and the Carry1st Brand Ambassador program — a network of sales agents who promote and sell games across the continent.

The company will also invest in the gaming market and itself.

“We want to dedicate at least a million dollars to actually going out and acquiring users and scaling our user base. And then, the final piece is really around the tech platform that we’re looking to build,” said Robbin-Coker.

That entails creating multiple channels and revenue points to develop, distribute, and invest in games on the continent, he explained.

Image Credits: Carry1st

Robbin-Coker compared the Carry1st’s strategy in Africa as something similar to Sea: an Asia regional mobile entertainment distribution platform — publicly traded and partially owned by Tencent — that incubated the popular Fornite game.

“We’re looking to be the number one regional publisher of [gaming] content in the region…the publisher of record and the app store,” said Robbin-Coker.

That entails developing and distributing not only games originating from the continent, but also serving as channel for gaming content from other continents coming into Africa.

That generates a consistent revenue stream for the startup, Robbin-Coker explained, but also creates opportunities for big creative wins.

“It’s a hits driven business. A single studio will work and toil in obscurity for a decade and then they’ll make Candy Crush. And then that would be worth $6 billion, very quickly,” Carry1st’s CEO said.

He and his team will use a portion of their $4 million in VC to invest in that potential gaming success story in Africa.

The company’s co-founder Lucy Parry directs aspirants to the company’s homepage. “There’s a big blue button that says ‘Pitch Your Game’ at the bottom of our website.”

Investors say emerging multiverses are the future of entertainment

By Jonathan Shieber

The COVID-19 pandemic is accelerating the adoption of new technologies and cultural shifts that were already well underway. According to a clutch of heavy-hitting investors, this dynamic is particularly strong in gaming and extended reality.

Unlike other segments of the startup and tech world, where valuations have been slashed, early-stage companies focused on building new games, gaming infrastructure and virtual or extended reality entertainment are having no trouble raising money. They’ve even seen valuations rise, investors said.

“Valuations have increased pretty significantly in the gaming sector. Valuations have gone up 20 to 25% higher than I would have seen prior to this pandemic,” Phil Sanderson, a co-founder and managing director at Griffin Gaming Partners, told fellow participants on a virtual panel during the Los Angeles Games Conference earlier this month.

Driving the appetite for new investments is the entertainment industry’s bearhug of virtual events, animated features, games and social media platforms after widespread shelter-in-place orders made physical events an impossibility.

What should startup founders know before negotiating with corporate VCs?

By Walter Thompson
Scott Orn Contributor
Scott runs operations at Kruze Consulting, a fast-growing startup CFO consulting firm. Kruze is based in San Francisco with clients in the Bay Area, Los Angeles and New York.
Bill Growney Contributor
Bill Growney, a partner in Goodwin’s Technology & Life Sciences group, focuses his practice on advising technology and other startup companies through their full corporate life-cycle.

Corporate venture capitalists (CVCs) are booming in the startup space as large companies look to take advantage of the fast-paced innovation and original thinking that entrepreneurs offer.

For startups, taking funding from CVCs can come with many benefits, including new opportunities for marketing, partnerships and sales channels. Still, no founder should consider a corporate investor “just another VC.” CVCs come with their own set of priorities, strategic objectives and rules.

When it comes to choosing a CVC with which to enter negotiations, the most important step is doing your own diligence beforehand. An entrepreneur’s goal is to find the perfect match to partner with and guide you as you grow your business. So before you start discussing terms, you’ll want to understand what’s driving the CVC’s interest in venture investing.

While traditional VCs are purely financially driven, CVCs can be in the venture game for a variety of reasons, including finding new technology that might generate marketplace demand for their products. An example is Amazon’s Alexa fund, which invested into emerging companies that drive use and adoption of Alexa. Alternatively, a CVC’s parent company may be looking to invest in tech that will help them operate their own products more efficiently, such as Comcast Ventures investing in DocuSign.

As a rule of thumb, the bigger CVC funds like GV and Comcast tend to be financially driven, meaning they’ll be approaching negotiations through a financial lens. As such, the negotiating process more closely resembles an institutional fund. You as a founder have to do the work to figure out what’s driving your CVC — is this a customer acquisition or distribution opportunity? Or are they seeking to find a source of knowledge transfer and/or bring new tech into their parent company?

“Before negotiating, always look at a CVC’s existing portfolio,” says Rick Prostko, managing director at Comcast Ventures. “Have they made a lot of investments, at what stage, and with whom? From this information you’ll see the strategic thinking of the CVC, and you can determine how best to position yourself when you begin negotiations.”

How to approach (and work with) the 3 types of corporate VCs

By Walter Thompson
Scott Orn Contributor
Scott runs operations at Kruze Consulting, a fast-growing startup CFO consulting firm. Kruze is based in San Francisco with clients in the Bay Area, Los Angeles and New York.
Bill Growney Contributor
Bill Growney, a partner in Goodwin’s Technology & Life Sciences group, focuses his practice on advising technology and other startup companies through their full corporate life-cycle.

Corporate venture capital (CVC) is booming, with more than $50 billion of CVC capital deployed in 2018. The rise in capital expenditures by CVCs between 2013 and 2018 was an impressive 400%, according to Corporate Venturing Research Data. There are currently more than a hundred active CVC investors, and some sources suggest that almost half of all venture rounds include a strategic investor.

This rise has been driven by two factors: 1) the tech landscape is moving at a faster pace and bigger companies know they need to innovate quicker to meet market demand; and 2) the number of startups seeking CVC capital is growing as founders look beyond traditional venture funds to help grow their businesses.

Kruze Consulting and Goodwin have worked with hundreds of startups through the funding process, including those working with CVCs. Together, the two firms and their principals have decades of experience advising founders during and after their capital raises.

To help startups navigate CVC transactions, we’ve created a guide to working with CVCs. In this segment, we’ll discuss the types of CVCs, the best way to approach each type and the key things to keep in mind during initial discussions.

The three types of corporate VCs

Roughly put, CVCs fall into three categories:

  1. The corporate version of an institutional venture platform, meaning that they look to leverage their parent company’s strategic assets with the goal of scaling their portfolio and driving real revenue. As Grant Allen, general partner at SE Ventures, the CVC arm of Schneider Electric, says, “this type of CVC looks just like a pure financial VC, except with a big company behind them, and the ability to open up real channel revenue.”
  2. Strategically-minded CVCs are not driven exclusively by returns, but also value innovation. These CVCs are looking for outsourced ways to stay on the leading edge and to learn about new technology that might benefit their parent corporation. This category likely still cares about returns, but their view on ROI is more nuanced than a traditional investor.
  3. So-called “tourists” often are made up of brand new and relatively inexperienced venture arms of companies that have done very few deals and haven’t had time to develop a strong process or dealflow strategy.

As the realm of CVCs becomes increasingly professionalized, more and more CVCs fall into the first category. For entrepreneurs seeking CVC investors, those in the institutional or strategic category can provide tremendous value — though it’s important that a startup know which type of CVC they’re speaking to, and have clear objectives going in that align with the CVC’s goals and strengths.

Determining which type of CVC you’re dealing with

Before engaging with a CVC, or any potential investor for that matter, the most important step is to do your research. Who is the individual you’re meeting with? What’s his/her background and what deals has he/she done with this venture group? These are Must Knows before walking into the initial meeting.

Once you’re in early discussions, ask the CVC whether he or she has carry in the fund and whether the venture arm is autonomous. The answers to these questions will help you clarify whether you’re dealing with institutional versus strategic CVCs.

“With corporate-backed venture funds, it’s really key up front to know who you’re talking to,” says Allen. “It’s dangerous to call all groups that are nontraditional investors ‘CVCs’ since some are far more serious than others. Most have some degree of strategic mandate but many are increasingly investing for financial gain.”

The next question is: Are you dealing with a financially driven CVC or a strategically driven one? From a founder’s standpoint, you’ll need to know whether you’re meeting with an investor who views deals through the lens of, “I’m looking for a great team, huge market and a chance to bring in funding and connections to make a business as strong as it can be” or, “I’m looking for a solution/product/platform that I can bring into my company or use to expose my company to a brand new marketplace or technology.”

Once again, the way to determine which type of CVC you’re dealing with is to ask the right questions. In the first meeting, ask about their investment process, how investments are made and whether strategic business unit sponsorship is required for a given deal. The answers will tell you whether the CVC falls into Group 1 or 2, and you’ll be in a strong position to then make choices about whether this potential investor is right for you.

“Look for someone who will understand your business, meet with you and decide that there’s something beyond just capital that will form the basis for that relationship,” says Rick Prostko, managing director at Comcast Ventures. “In today’s venture market, founders want money AND value. Seek out a CVC who has valuable experience to provide, and look for someone who’s been an operator in this segment previously or who has valuable insight and experience to offer.”

What you need to know before you engage with a CVC

Once you’ve done your initial diligence, developed a relationship and determined that a CVC could be a strong investor in your business, there are important factors to be aware of as you move into the next stage of discussions. These include:

Expect deeper product and technical diligence. CVCs can call on technical, product and market experts within their corporation during the due diligence process. As such, their level of product diligence is typically more rigorous than traditional VCs. Be prepared for some grilling by subject matter experts. On the flip side, this diligence process provides you with exposure to potential customers and partners inside the corporation, so use this time to your advantage.

Be aware that you’re going to share confidential information with a large company. “CVCs know that you’re only as good as your reputation,” says Eric Budin, director at Touchdown Ventures . “As such, there are very few examples of CVCs abusing confidential information, because news of it would get around so quickly.”

Still, for a founder, the goal is to be thoughtful and strategic with what you share, and to determine whether the CVC is truly interested in doing a deal before you hand over financial, technical and competitive information. It’s possible that commercial teams at the CVC sponsor could gain unfair advantage from seeing your information, or use their CVC to gain valuable intel on the competition.

On the other hand, sharing your intel could be a fantastic way to get in front of an internal team at the parent company. The key is to think carefully about what you are being asked to share and with whom, and set ground rules with the CVC before they begin diligence.

“It’s important to understand how the corporate fund is structured and how they handle any information that’s shared,” says Prostko. “It might be in your interest to loop in a business unit [within the parent company] that could benefit from learning about your business. On the flip side, if the CVC is a potential competitor, you’ll want to be more careful about what you reveal.”

There will be a risk of regime change. Large companies operate like, well, large companies. People leave, management changes happen and priorities shift. At the outset, ask questions such as: Who will support your company if the commercial manager leading your investment leaves? What will happen to the CVC if the person leading the venture arm is fired? Will they do their pro-rata if the person leading your deal is gone? What happens to any commercial relationships that you might be working on? It’s important to have a keen understanding of internal dynamics before you enter the relationship.

“In general, the more successful a firm is, the more likely the CVC will stick around,” says Allen. “Be sure to look at the individual’s history at the firm, how long he or she has been there, and whether he or she has jumped from fund to fund. If the investing partner has come out of the corporate ‘mother ship,’ and lacks any credible venture experience, buyer beware.”

The CVC may be subject to regulatory rules. Depending on the industry, government regulations may impact how your deal is structured. Banks, for example, are subject to rules that can restrict the percentage of voting stock they can own. Foreign investors may need to comply with CFIUS regulations if your company provides certain specified technologies. Generally, the CVCs will understand the regulations that apply to them. They may not, however, bring them up until late in the process, which could lead to delays.

Commercial transactions with the corporate arm can slow things down. Purely strategic CVCs (Group 2) often require a commercial transaction to happen in connection with a venture deal. The process involved in these transactions often takes longer than the financing process, which can cause issues if the CVC is a key (but not sole) investor in the round. If you’re dealing with a Group 2 CVC, discuss this issue ahead of time to see if you can decouple the two transactions and close the investment prior to inking the commercial deal.

The best way to think about CVC investment

CVCs offer a wealth of capital, human resources and corporate partnerships for startups. But whether you choose to take CVC capital or not, you can benefit from merely approaching CVCs if you have business units operating in either the same space or a tangential space. An initial meeting both gives you an opportunity to do a sales pitch and offers the CVC a chance to vet a product or team and gain some deal insight. For founders, you gain a powerful sales opportunity that might have otherwise taken months or years to obtain.

“Even if you’re told ‘no’ by a CVC, the meeting could result in a good business relationship that could turn into a sales opportunity for you in the near future,” says Prostko.

The WRONG way to think about approaching CVC investors is something along the lines of, “I can’t raise what I want from financial VCs so I’ll go to CVCs as my second choice, since they’re more likely to say ‘yes’ and/or give me better terms.” This attitude will shut doors and cut you off from valuable partners, capital and opportunities to strategically grow your business.

Above all, stay informed as you choose whom to bring in as a partner. Ultimately, it’s your business and the responsibility to ensure that you bring in the right capital partners lies with you.

Where these 4 top VCs are investing in manufacturing

By Matt Burns

Even though it’s a vast sector in the midst of transformation, manufacturing is often overlooked by early-stage investors. We surveyed top VCs in the industry to gather their perspectives on the challenges and opportunities facing manufacturing.

Traditionally, manufacturing companies are capital-intensive and can be slow to implement new technology and processes. The investors in the survey below acknowledge the long-standing barriers facing founders in this space, yet they see large opportunities where startups can challenge incumbents.

These investors noted that the pandemic is bringing overnight change in the manufacturing world; old rules are being rewritten in the face of worker safety, remote work and the need for increased automation. According to Eclipse Ventures founder Lior Susan, “COVID-19 has exposed the systemic vulnerabilities inherent to manufacturing and supply chain and, as such, significant opportunities for innovation. The market was lukewarm for a long time — it’s time to turn up the heat.”



Lior Susan, Eclipse Ventures

What trends are you most excited about in manufacturing from an investing perspective?

Digital solutions that offer manufacturers greater agility and resilience will become major areas of focus for investors. For example, manufacturers still reliant on manual assembly were unable to build products when factories closed due to the coronavirus lockdown. While nothing would have kept production at 100%, the ability to quickly pivot and engage software-defined processes would have allowed manufacturing lines to continue building with a skeleton crew (especially important for any facility required to implement social distancing). Such systems have remote monitoring capabilities and computer vision systems to flag defeats in real-time and halt production if necessary.

Omidyar-backed Spero Ventures invests in Mexico City’s Mati, a startup pitching ID-verification

By Jonathan Shieber

Spero Ventures, the venture capital firm backed by eBay founder Pierre Omidyar, has gone to Mexico City for its latest investment, backing the identity verification technology developer Mati.

Launched in San Francisco, the two co-founders Filip Victor and Amaury Soviche, decided to relocate to Mexico because of its proximity to big, untapped markets in Mexico, Brazil, and Colombia.

“After developing the technology in San Francisco, we chose to start commercially in Latin America. It has been the perfect petri dish for us: the markets here, especially in Mexico, Brazil and Colombia, are very exciting. These countries have the highest payments fraud rates in the world, which makes their identity issues the most interesting,” said Victor in a statement.

The rise of a new generation of fintech startup across Latin America creates a unique opportunity for Mati in a number of markets — and so does a new generation of financial services regulations, the company said. “We view the fintech regulations sweeping across LatAm as an opportunity to help a lot of promising fintechs and marketplaces get to the next level”, Victor said.

Already working across three countries, with operations in Mexico City, St. Petersburg, and San Francisco, Mati is an example of the global scope that even very early stage companies can now achieve.

Identity verification is at the core of much of the modern gig economy and much of the social networking defining life during a pandemic.

The company said it will use the capital investment — it would not disclose the amount of money it raised — to continue product development and expand its geographic footprint.

The scope of the identity verification problem is what brought Spero to the table to discuss an investment, according to a statement from Shripriya Mahesh, the founding partner at Spero.

“For us, identity is foundational to scaling the vast array of gig economy, fintech, social, and commerce platforms that represent our collective future of work,” Mahesh said. “The ability to have safe and trusted interactions at an unprecedented scale, especially with people in places where national identity infrastructure is limited, will create opportunities and global connections we can’t yet even forecast.”

Scandit raises $80M as COVID-19 drives demand for contactless deliveries

By Natasha Lomas

Enterprise barcode scanner company Scandit has closed an $80 million Series C round, led by Silicon Valley VC firm G2VP. Atomico, GV, Kreos, NGP Capital, Salesforce Ventures and Swisscom Ventures also participated in the round — which brings its total raised to date to $123M.

The Zurich-based firm offers a platform that combines computer vision and machine learning tech with barcode scanning, text recognition (OCR), object recognition and augmented reality which is designed for any camera-equipped smart device — from smartphones to drones, wearables (e.g. AR glasses for warehouse workers) and even robots.

Use-cases include mobile apps or websites for mobile shopping; self checkout; inventory management; proof of delivery; asset tracking and maintenance — including in healthcare where its tech can be used to power the scanning of patient IDs, samples, medication and supplies.

It bills its software as “unmatched” in terms of speed and accuracy, as well as the ability to scan in bad light; at any angle; and with damaged labels. Target industries include retail, healthcare, industrial/manufacturing, travel, transport & logistics and more.

The latest funding injection follows a $30M Series B round back in 2018. Since then Scandit says it’s tripled recurring revenues, more than doubling the number of blue-chip enterprise customers, and doubling the size of its global team.

Global customers for its tech include the likes of 7-Eleven, Alaska Airlines, Carrefour, DPD, FedEx, Instacart, Johns Hopkins Hospital, La Poste, Levi Strauss & Co, Mount Sinai Hospital and Toyota — with the company touting “tens of billions of scans” per year on 100+ million active devices at this stage of its business.

It says the new funding will go on further pressing on the gas to grow in new markets, including APAC and Latin America, as well as building out its footprint and ops in North America and Europe. Also on the slate: Funding more R&D to devise new ways for enterprises to transform their core business processes using computer vision and AR.

The need for social distancing during the coronavirus pandemic has also accelerated demand for mobile computer vision on personal smart devices, according to Scandit, which says customers are looking for ways to enable more contactless interactions.

Another demand spike it’s seeing is coming from the pandemic-related boom in ‘Click & Collect’ retail and “millions” of extra home deliveries — something its tech is well positioned to cater to because its scanning apps support BYOD (bring your own device), rather than requiring proprietary hardware.

“COVID-19 has shone a spotlight on the need for rapid digital transformation in these uncertain times, and the need to blend the physical and digital plays a crucial role,” said CEO Samuel Mueller in a statement. “Our new funding makes it possible for us to help even more enterprises to quickly adapt to the new demand for ‘contactless business’, and be better positioned to succeed, whatever the new normal is.”

Also commenting on the funding in a supporting statement, Ben Kortlang, general partner at G2VP, added: “Scandit’s platform puts an enterprise-grade scanning solution in the pocket of every employee and customer without requiring legacy hardware. This bridge between the physical and digital worlds will be increasingly critical as the world accelerates its shift to online purchasing and delivery, distributed supply chains and cashierless retail.”

Cathay Innovation’s first investment in Germany is healthcare startup Medwing

By Rita Liao

Medwing, a German startup with an ambition to tackle Europe’s shortage of healthcare workers, said on Tuesday that it has secured €28 million ($30 million) in a Series B financing round. Global venture capital firm Cathay Innovation led the round, marking its first investment in a German company. Other participating investors include Northzone, Cherry Ventures and Atlantic Labs.

The World Bank forecasted a worldwide shortage of 15 million health professionals by 2030, with demand being highest in affluent regions like Europe with an aging labor force and an aging population in need of care.

The pressing issue inspired Johannes Roggendorf, who previously worked at Rocket Internet and Bain & Company, to launch Medwing in 2017 and later brought on his co-founder Dr. Timo Fischer. The entrepreneurs discovered that, contrary to conventional wisdom, many healthcare workers in Europe wanted to work more, not less. Part of the reason why jobs were not filled was information asymmetry that led to a mismatch between supply and demand.

“There is a group of people who are willing to work more if they can manage their schedule,” Roggendorf told TechCrunch over a phone interview. “There are many qualified workers who left the healthcare system often because of inflexible working hours.”

In a survey that Medwing conducted, 50% of those who left the healthcare system said they would return if they were given more flexible working conditions.

Medwing’s solution is an automatic job matching system connecting workers with hospitals, nursing homes and other medical institutions. Focusing on Europe, the startup has so far registered more than 200,000 workers and 2,500 partner employers — including 80% hospitals in Berlin . Employers pay Medwing a commission every time a candidate is successfully placed. Each month, the platform is adding 15,000 new applicants, placing over 100 health experts in permanent positions and filling some 2,000 individual shifts. 20% of its users are looking for non-permanent jobs, according to Roggendorf.

The platform strives to differentiate itself by “starting with the candidates,” asserted the founder. Unlike traditional staffing sites, which search for applicants based on recruiters’ criteria, Medwing does the opposite and filters recruiters according to candidates’ preferences on whether the position is flexible or permanent, part-time or full-time. It’s an approach that the founder believes can optimize worker satisfaction. In addition to matchmaking, the platform also provides career consulting services to job seekers.

To Jacky Abitbol, who oversaw the deal for Cathay Innovation, Medwing is addressing two kinds of technological innovation his fund hunts for. For one, Medwing is driving “the future of work” by giving employees more autonomy and freedom. Terminal, which lets companies build out remote engineering teams overseas, is another startup in this category that has attracted financing from Cathay Innovation.

“Medwing is also bringing digital to a more traditional sector,” Abitbol told TechCrunch on the phone. That means streamlining the recruiting process by eliminating agencies or middlemen, saving time and costs for both workers and employers.

“What sounds very logical was not done this way until today,” the investor added.

Medwing operates a team of over 200 employees from over 30 countries, many of which have been hit hard by COVID-19. The startup is providing some of its services pro bono to fight the virus, placing professionals and volunteers in hospitals, nursing homes and private households that need support. Abitbol said the impact of the health crisis on the startup’s revenue remains “slight”, as only certain facilities are designated as coronavirus hospitals and demand will return to normal as the pandemic starts to ease.

JioMart, the e-commerce venture from India’s richest man, launches in 200 cities and towns

By Manish Singh

The rationale behind the deluge of dollars flooding into billionaire Mukesh Ambani’s Reliance Jio Platforms is beginning to become more clear as his e-commerce venture JioMart starts rolling out to more people across India.

An e-commerce venture between the nation’s top telecom operator Jio Platforms and top retail chain Jio Retail, JioMart just launched its new website and started accepting orders in dozens of metro, tier 1 and tier 2 cities including Delhi, Chennai, Kolkata, Bangalore, Pune, Bokaro, Bathinda, Ahmedabad, Gurgaon, and Dehradun. A Reliance executive said the service is live across 200 cities and towns.

Before the expansion on Saturday, the service was available in three suburbs of Mumbai. The service now includes perishables such as fruits and vegetables, and dairy items in addition to staples and other grocery products as it makes its pitch to Indian households across the country.

Ambani’s Reliance Jio Platforms, which has raised more than $10 billion in the last month by selling a roughly 17% stake, has amassed over 388 million subscribers, more than any other telecom operator in the country.

The money comes as Ambani’s various companies begin entering a market already teeming with fierce competitors like Amazon, Walmart’s Flipkart, BigBasket, MilkBasket, and Grofers.

Earlier this week the American e-commerce giant entered India’s food delivery market to challenge the duopoly of Prosus Ventures-backed Swiggy and Ant Financial-backed Zomato. Amazon is making a massive hiring push in India, and is looking to hire close to 50,000 seasonal workers to keep up with the growing demand on its platform.

Meanwhile, Ambani’s Reliance Retail, founded in 2006, remains the largest retailer in India by revenue. It serves more than 3.5 million customers each week through its nearly 10,000 physical stores in more than 6,500 cities and towns.

JioMart may have Amazon and Flipkart in its sights, but in its current form, however, the company is going to be more of a headache for Grofers and BigBasket, the top grocery delivery startups in India.

Reliance Industries, the most valued firm in India and parent entity of Jio Platforms and Reliance Retail, plans to expand JioMart to more than a thousand districts in a year and also widen its catalog to include electronics and office supplies among a variety of other categories, a person familiar with the matter told TechCrunch. A Reliance Jio spokesperson declined to comment.

The expansion to more cities comes a month after JioMart launched its WhatsApp business account, enabling people to easily track their order and invoice on Facebook -owned service.

Facebook announced it would invest $5.7 billion in India’s Reliance Jio Platforms last month and pledged to work with the Indian firm to help small businesses across the country. JioMart’s WhatsApp account currently does not support the expanded regions.

Mukesh Ambani, India’s richest man and the chairman and managing director of Reliance Industries, first unveiled his plan to launch an e-commerce platform last year. In a speech then, Ambani invoked Mahatma Gandhi’s work and said India needed to fight another fresh battle.

A handful of firms have attempted — and failed — to launch their e-commerce websites over the years in India, where more than 95% of sales still occur through brick and mortar stores. But Ambani is uniquely positioned to fight the duopoly of Amazon and Walmart’s Flipkart — thanks in part to the more than $10 billion in investment dollars the company recently raised from KKR, FacebookSilver LakeVista Equity Partners, and General Atlantic. In addition to scaling JioMart, the fresh capital should also help Ambani repay some of Reliance Industries’ $21 billion debt.

“We have to collectively launch a new movement against data colonization. For India to succeed in this data-driven revolution, we will have to migrate the control and ownership of Indian data back to India — in other words, Indian wealth back to every Indian,” Ambani said at an event attended by Indian Prime Minister Narendra Modi .

3 views on the life and death of college towns, remote work and the future of startup hubs

By Natasha Mascarenhas

The global pandemic has halted travel, shunted schools online and shut down many cities, but the future of college-town America is an area of deep concern for the startup world.

College towns have done exceedingly well with the rise of the knowledge economy and concentrating students and talent in dense social webs. That confluence of ideas and skill fueled the rise of a whole set of startup clusters outside major geos like the Bay Area, but with COVID-19 bearing down on these ecosystems and many tech workers considering remote work, what does the future look like for these cradles of innovation?

We have three angles on this topic from the Equity podcast crew:

  • Danny Crichton sees the death of college towns, and looks at whether remote tools can substitute for in-person connections when building a startup.
  • Natasha Mascarenhas believes connecting with other students is critical for developing one’s sense of self, and the decline of colleges will negatively impact students and their ability to trial and error their way to their first job.
  • Alex Wilhelm looks at whether residential colleges are about to be disrupted — or whether tradition will prevail. His is (surprise!) a more sanguine look at the future of college towns.

Startup hubs are going to disintegrate as college towns are decimated by coronavirus

Danny Crichton: One of the few urban success stories outside the big global cities like New York, Tokyo, Paris and London has been a small set of cities that have used a mix of their proximity to power (state capitals), knowledge (universities) and finance (local big companies) to build innovative economies. That includes places like Austin, Columbus, Chattanooga, Ann Arbor, Urbana, Denver, Atlanta and Minneapolis, among many others.

Over the past two decades, there was an almost magical economic alchemy underway in these locales. Universities attracted large numbers of bright and ambitious students, capitals and state government offices offered a financial base to the regional economy and local big companies offered the jobs and stability that allow innovation to flourish.

All that has disappeared, leading to some critics, like Noah Smith, to ask whether “Coronavirus Will End the Golden Age for College Towns”?

Steve Case and Clara Sieg on how the COVID-19 crisis differs from the dot-com bust

By Matt Burns

Steve Case and Clara Sieg of Revolution recently spoke on TechCrunch’s new series, Extra Crunch Live. Throughout the hour-long chat, we touched on numerous subjects, including how diverse founders can take advantage during this downturn and how remote work may lead to growth outside Silicon Valley. The pair have a unique vantage point, with Steve Case, co-founder and former CEO of AOL turned VC, and Clara Sieg, a Stanford-educated VC heading up Revolution’s Silicon Valley office.

Together, Case and Sieg laid out how the current crisis is different from the dot-com bust of the late nineties. Because of the differences, their outlook is bullish on the tech sector’s ability to pull through.

And for everyone who couldn’t join us live, the full video replay is embedded below. (You can get access here if you need it.)

Case said that during the run-up to the dot-com bust, it was a different environment.

“When we got started at AOL, which was back in 1985, the Internet didn’t exist yet,” Case said. “I think 3% of people were online or online an hour a week. And it took us a decade to get going. By the year 2000, which is sort of the peak of AOL’s success, we had about half of all the U.S. internet traffic, and the market value soared. That’s when suddenly, when any company with a dot-com name was getting funded. Many were going public without even having much in the way of revenues. That’s not we’re dealing with now.”

Venture partner Sieg agreed, pointing to the number of funds currently available in the venture capital asset class. Unlike twenty years ago when valuations were based on unsubstantiated future growth, the current crisis happened during a period of steady expansion. Because of this, funds and startups are in a better position to make it to the other side of this pandemic, she said.

Sieg pointed to one of Revolution Venture’s portfolio companies, Mint House, which aims to build a better temporary housing experience for business travelers. The company raised $15 million in May 2019, and according to Sieg, it focused on being capital-efficient from the start instead of chasing growth for its own sake. She said the company went from almost 90% occupancy to zero overnight and yet now, after a slight pivot, it’s back to a 60-65% occupancy rate by moving quickly to providing housing to healthcare workers.

The company’s strong balance sheet gave it room to pivot, she said.

And yet there are challenges. Sieg pointed out that for the first time in Revolution’s history, the firm’s funds are investing without meeting founder teams in person. It’s a longer process than the old way, she said, though noted that it levels the playing field for founders outside of the traditional circle. Investors have more time on their hands now, so she encourages founders to be persistent and keep reaching out for virtual meetings.

“I think it is important to take advantage of this time where you have people sitting around with more availability on their calendars and more willingness to engage,” Sieg said. “The nice thing about removing some of the in-person components is there’s a stronger focus on market opportunity, product and company, and the real metrics that [founders] can show. Removing some of that person-to-person noise and just focusing on the business means that a lot of these biases are going to be overcome.”

The pair said they believe some companies will have a strong tailwind coming out of this crisis. Case and Sieg pointed to trends that are rapidly accelerating: e-commerce, telehealth and direct-to-consumer companies. In this new environment, Case said location will matter more than ever. While he points out there are many smart people in Silicon Valley, there’s a reason why, for example, Monsanto is in St. Louis. “Some of the smartest people around healthtech are in Minneapolis where UnitedHealth is, or Rochester, Minnesota where Mayo is, or with MD Anderson in Texas or in Ohio with Cleveland Clinic or Johns Hopkins in Baltimore.”

“There are also specific categories that resonate now more than ever,” Sieg said. “We’re investors in a company called Bright Cellars that ships wine to your house. Obviously, people are staying at home, and they’re drinking a lot more. And [Bright Cellars] has been positively impacted by [stay-at-home orders] from a revenue perspective. There’s a company like Bloomscape, which is in Detroit, Michigan, and they’ve had their challenges with keeping their supply chain up and running, but they managed to do so. People are finding a lot of comfort in gardening and taking care of plants because it is something that can be done at home and feel like you’re engaged with something that’s alive, and you see the progression when you’re stuck at home.”

Steve Case is looking at founders who are managing today, but also imagining for the future. One example is Clear, he said, which fast-tracked the development of a flight pass for healthcare workers. And now, when people start flying again, the company will return to its strong core business while having additional momentum around this new business that provides passes to hospitals and arenas. This wouldn’t have happened if it was not for this crisis, Case said.

“I think [the COVID-19 crisis] is one of those shake-the-snowglobe moments where things are being reassessed,” Case said, “and one of the areas I think it’s going to accelerate is what I’ve called the ‘third wave of the internet.'”

Case explained he wrote about this new phase a few years ago in his book, aptly titled “The Third Wave: An Entrepreneur’s Vision of the Future.” According to Case’s thesis, the first wave was when AOL and other providers were introducing and onboarding users to the Internet. The second wave was when apps and software could be created using existing infrastructure. And now, according to this thought, the internet is meeting the real world with new solutions. The current crisis is accelerating the development of telehealth, smart cities, and industries in regulated sectors.

“Perseverance is going to matter more,” Case said. “The tough problems don’t lend themselves to overnight successes. It’s going to be a slog, and kind of like AOL of a 10-year in the making overnight success.”

The dot-com bust upended a lot of startups, and the COVID-19 crisis will do the same though with different results.

“The third wave of the Internet is when the Internet meets the real world, Steve Case said. “It’s things like health care, food, smart cities, and many other areas that haven’t changed much in the first and second waves that are going to change a lot in the third wave. We believe it’s going to be a different playbook.”


Strategies for surviving the COVID-19 Series B squeeze

By Walter Thompson
Mikael Johnsson Contributor
Mikael Johnsson is a co-founder and general partner of Oxx, a venture capital firm investing in European SaaS companies at growth stage.

A generation of companies now needs to forget what it has learned. The world has changed for everyone, and nowhere is this more true than in fundraising.

I’ve been investing in technology companies for over twenty years, and I’ve seen how venture capitalists respond in bull and bear markets. I’ve supported companies through the downturns that followed the dot-com bubble and the global financial crisis, and witnessed how founders adapt to the new environment. This current pandemic is no different.

A growth company that only a few months ago was shopping for a $20 million, $30 million, or even $40 million Series B, with a choice of potential investors, must now acknowledge that the shelves may well have emptied.

VCs who were assessing potential new deals at the beginning of the year have had to abruptly adjust their focus: Q1 venture activity in Europe was under its 2019 average, and the figures for the coming months are likely to be much worse as the pipeline empties of deals that were already in progress.

The simple reason for this is that VCs are having to rapidly reallocate their two principal assets: time and capital. More time has to be spent stitching together deals for portfolio companies in need of fresh funding, with little support from outside money. As a result, funds will be putting more capital behind their existing companies, reducing the pool for new investments.

Added to those factors is uncertainty about pricing. VCs take their lead on valuation from the public markets, which have plummeted in tech, as elsewhere. The SEG index of listed SaaS stocks was down 26% year-to-date as of late March. With more pain likely ahead, few investors are going to commit to valuations that founders will accept until there is more certainty that the worst is behind us. A gap will open between newly cautious investors and founders unwilling to bear haircuts up to 50%, dramatic increases in dilution and even the prospect of down rounds. It will likely take quarters — not weeks — for that gulf to be bridged and for many deals to become possible again.

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