To sell or not to sell: Lessons from a bootstrapped CEO

The clock begins ticking on a startup the day the doors open. Regardless of a young company’s struggles or success, sooner or later the question of when, how or whether to sell the enterprise presents itself. It’s possibly the biggest question an entrepreneur will face.

For founders who self-funded (bootstrapped) their startup, a boardroom full of additional factors come into play. Some are the same as for investor-funded firms, but many are unique.

Put happiness at the center of the decision, and let your intuition — the instincts that made you the person you are today — be your guide.

After 18 years of bootstrapping a BI software firm into a business that now serves 28,000 companies and three million users in 75 countries, here’s what I’ve learned about myself, my company, about entrepreneurship and about when to grab for that brass ring.

Profitable or bust

Starting a software company 7,900 miles southwest of Silicon Valley requires some forethought and not a small amount of crazy. When we opened, it didn’t occur to us that one could have an idea and then go knock on someone’s door and ask for money.

Bootstrapping forced us to be a bit more creative about how we would go about building our company. In the early days, it was a distraction to growth, because we were doing other revenue-generating activities like consulting, development work, whatever we could find to keep ourselves afloat while we built Yellowfin. It meant we couldn’t be 100% focused on our idea.

However, it also meant we had to generate income from our new company from Day One — something funded companies don’t have to do. We never got into the mindset that it was okay to burn lots of cash and then cross our fingers and hope that it worked.

#bootstrapping, #column, #ec-column, #ec-how-to, #entrepreneurship, #exits, #fundings-exits, #startup-company, #startups

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SOSV’s burgeoning climate portfolio is worth nearly $6 billion as planetary health bets pay off

The burgeoning climate focused portfolio from early stage investor SOSV Investments has managed to raise nearly $2 billion in follow on financing since the startup companies graduated from the investment firm’s various accelerator programs. Taken together those companies have a collective market capitalization of nearly $6 billion.

Ahead of Earth Day this year, the early stage investor responsible for a series of accelerators including HAX, IndieBio, Chinaccelerator, and Food Labs, tallied up the results of the $89 million the firm has committed to these companies and the results, were impressive — especially considering the average age fo a company in the portfolio is only four years old.

SOSV tallied the companies into the Climate Tech 100 and divided them into categories that included startups developing technologies and services that have a direct impact on the planet and those that are adjacent to carbon removal — a further bucket was a group of startups that developed marketplaces for low carbon goods and services.

This all starts from trying to do meaningful things and purposeful things. We are trying to invest in these unstoppable forces and unstoppable trends and there has never been a more unstoppable force than climate change,” said SOSV Investments founder Sean O’Sullivan. “What we discovered we were in the right place at the right time in the climate.”

In the six years since the firm launched IndieBio with Arvind Gupta (now at the Mayfield Fund), SOSV’s life sciences accelerator had a dual focus on human and planetary health. By pursuing both areas, the firm was able to see the wave of climate tech applications in life sciences begin to rise and crest — and that’s led to early investments in companies like Perfect Day, Memphis Meats, Geltor, and MycoWorks, which are all companies using biological materials to replace traditional animal products.

Planetary health is very much our thesis here. Arvind didn’t have to talk Sean into putting $100 million at the time,” said IndieBio’s new head Po Bronson (a longtime business writer who co-authored “Decoding the World” with Gupta and partnered with him at IndieBio).

SOSV Investments founder Sean O’Sullivan

The emphasis on food, Bronson said, was because it was an area where consumers were putting pressure on companies by changing their own habits and looking for alternatives. The decision to move to plant based products is one consumer choice that can make a significant difference in planetary health — as well as their own individual health. Other systems are much harder to change without legislation or industrial support, said Bronson.

Meanwhile, the hardware group in HAX Shenzhen run by Duncan Turner is beginning to see industrial companies embrace the demands for more sustainable manufacturing practices. Indeed, the 3D printing company Formlabs is another startup that’s brought in big dollars with a process that directly impacts the carbon footprint of manufacturing.

“How we make things used to be invisible before. Every publicly traded company has to do some sort of accounting in this space,” said Bronson. “The entire manufacturing sector is being interrogated on ths front. It’s coming through and it’s driving adoption.”

Looking ahead, Bronson sees opportunities in green chemistry to move the needle beyond life sciences applications in the food space. Those new technologies include services on offer from startups like Zymochem which is making a biorecyclable material for diapers that’s better for the planet, or Pili, which is making biologically based dyes and pigments. Bronson is also looking for biological solutions that can create massive, passive systems to sequester greenhouse gases in oceans or in soil.

Meanwhile, Turner is hoping to find companies like Socure, which removes the need for a chemical separation agent for oil separation; or DivyGas, which has a method for manufacturing green hydrogen.

“Not only are the opportunities available, but this is a way people can make money,” said O’Sullivan. “Our net IRR is in the 30% plus range. You can make money in climate tech. So don’t be afraid to invest in these companies.” 

#3d-printing, #arvind-gupta, #duncan-turner, #earth-day, #entrepreneurship, #food, #formlabs, #geltor, #hardware, #head, #indiebio, #manufacturing, #mayfield-fund, #memphis-meats, #mycoworks, #perfect-day, #po-bronson, #private-equity, #sean-osullivan, #sosv, #startup-company, #tc

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Jack Ma Shows Why China’s Tycoons Keep Quiet

High-profile business leaders have been detained, sidelined or silenced as the Communist Party moves forcefully to keep companies in line. Today, the best strategy is to lie low.

#alibaba-group-holding-ltd, #alipay, #ant-financial-services-group, #china, #clark-duncan-author, #e-commerce, #entrepreneurship, #hangzhou-china, #ma-jack, #regulation-and-deregulation-of-industry, #tencent-holdings-ltd, #xi-jinping

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Dear Sophie: How can I get my startup off the ground and visit the US?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

I’m a female entrepreneur who created my first startup a few months ago.

Once my startup gets off the ground — and as COVID-19 gets under control — I’d like to visit the United States to test the market and meet with investors. Which visas would allow me to do that?

—Noteworthy in Nairobi

Dear Noteworthy:

Congratulations on founding your startup! There are many ways to engage with the U.S. startup ecosystem, and you can start now, even before you physically come to the United States.

I recommend doing some research into the programs and resources offered to entrepreneurs like you through the U.S. Embassy and Consulates near you in your home country. I recently interviewed Lilly Wahl-Tuco, a foreign service officer who has worked for the U.S. Department of State for 15 years, on my podcast.

Wahl-Tuco discussed some of the State Department resources — including programs, competitions and grants — made available by U.S. embassies and consulates for entrepreneurs living in the area.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

Serving as the first Environment, Science, Technology and Health (ESTH) officer at the U.S. Embassy in Bosnia and Herzegovina in 2015, Wahl-Tuco was tasked with energizing the entrepreneurs of Bosnia. After she traveled around the country, visiting every incubator and meeting several entrepreneurs, Wahl-Tuco said she was surprised that most of the people she talked with didn’t know about the resources that the U.S. government offers through its embassies.

She recommends that entrepreneurs reach out, network and do online research to figure out what’s offered their country or even if other foreign embassies offer resources and programs aimed at entrepreneurs.

Wahl-Tuco also suggested that entrepreneurs reach out to their local U.S. Embassy. For example, you can contact the U.S. Embassy in Kenya to find out if you can discuss your startup and business plan with an ESTH officer (if there is one) or someone else there. Connecting with embassy staff can open up many opportunities.

#africa, #column, #diversity, #ec-column, #entrepreneurship, #female-entrepreneurs, #global-entrepreneurship, #h-1b-visa, #international-entrepreneur-rule, #lawyers, #sophie-alcorn, #startup-ecosystem, #startup-visa, #startups, #verified-experts

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4 ways martech will shift in 2021

The tidal wave of growth is upon us — an unprecedented economic boom that will manifest later this year, bringing significant investments, acquisitions, and customer growth. But most tech companies and startups are not adequately prepared to capitalize on the opportunity that lies ahead.

Here’s how marketing in tech will shift — and what you need to know to reach more customers and accelerate growth in 2021.

First and foremost, differentiation is going to be imperative. It’s already hard enough to stand out and get noticed, and it’s about to get much more difficult as new companies emerge and investments and budgets balloon in the latter half of the year. Virtually all major companies are increasing budgets to pre-pandemic levels, but will delay those investments until the second half of the year. This will result in an increased intensity of competition that will drown out any undifferentiated players.

The second half of 2021 will bring incredible growth, the likes of which we haven’t seen in a long time.

Additionally, tech companies need to be mindful not to ignore the most important part of the ecosystem: people. Technology will only take you so far, and it’s not going to be enough to survive the competition. Marketing is about people, including your customers, team, partners, investors, and the broader community.

Understanding who your people are and how you can use their help to build a strong foundation and drive exponential growth is essential.

Tactically, the most successful tech companies will embrace video and experimentation in their marketing — two components that will catapult them ahead of the competition.

Ignoring these predictions, backed by empirical evidence, will be detrimental and devastating. Fasten your seatbelts: 2021 is going to be a turbo-charged year of growth opportunities for marketing in tech.

Differentiation is crucial

The explosion of tech companies and startups seeking to be the next big thing isn’t over yet. However, many of them are indistinguishable from each other and lack a compelling value proposition. Just one look at the websites of new and existing tech companies will reveal a proliferation of buzzwords and conceptual illustrations, leaving them all looking and sounding alike.

The tech companies that succeed are those that embrace one of the fundamentals of effective marketing — positioning.

In the ’80s, Al Ries and Jack Trout published Positioning: The Battle For Your Mind and coined the term, which documented the best-known approach to standing out in a noisy marketplace. As the market heats up, companies will realize the need to sharpen their positioning and dial in their focus to break through the noise.

To get attention and build traction, companies need to establish a position they can own. The “mashup method: (Netflix but for coding lessons) is not real positioning; it’s simply a lazy gimmick.

It is imperative to identify who your ideal customer is and not just who could use your product. Focusing on a segment of the market rather than the whole is, perhaps counterintuitively, the most effective approach to capturing the larger market.

#column, #ec-column, #ec-news-analysis, #enterprise, #entrepreneurship, #marketing, #product-marketing, #stripe

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Announcing our TC Sessions: SaaS virtual event happening October 27

Software-as-a-Service (SaaS) is now the default business model for most B2B and B2C software startups. And while it’s been around for a while now, its momentum keeps accelerating and the ecosystem continues to expand as technologists and marketers are getting more sophisticated about how to build and sell SaaS products. For all of them, we’re pleased to announced TechCrunch Sessions: SaaS 2021, a one-day virtual event that will examine the state of SaaS to help startup founders, developers and investors understand the state of play and what’s next.

The single-day event will take place 100% virtually on October 27 and will feature actionable advice, Q&A with some of SaaS’s biggest names, and plenty of networking opportunities. $75 Early Bird Passes are now on sale. Book your passes today to save $100 before prices go up.

We’re not quite ready to disclose our agenda yet, but you can expect a mix of superstars from across the industry, ranging from some of the largest tech companies to up-and-coming startups that are pushing the limits of SaaS.

The plan is to look at a broad spectrum of what’s happening in with B2B startups and give you actionable insights into how to build and/or improve your own product. If you’re just getting started, we want you to come away with new ideas for how to start your company and if you’re already on your way, then our sessions on scaling both your technology and marketing organization will help you to get to that $100 million annual run rate faster.

In addition to other founders, you’ll also hear from enterprise leaders who decide what to buy — and the mistakes they see startups make when they try to sell to them.

But SaaS isn’t only about managing growth — though ideally, that’s a problem founders will face sooner or later. Some of the other specific topics we will look at are how to keep your services safe in an ever-growing threat environment, how to use open source to your advantage and how to smartly raise funding for your company.

We will also highlight how B2B and B2C companies can handle the glut of data they now produce and use it to build machine learning models in the process. We’ll talk about how SaaS startups can both do so themselves and help others in the process. There’s nary a startup that doesn’t want to use some form of AI these days, after all.

And because this is 2021, chances are we’ll also talk about building remote companies and the lessons SaaS startups can learn from the last year of working through the pandemic.

Don’t miss out. Book your $75 Early Bird pass today and save $100.

#business-models, #computing, #enterprise, #entrepreneurship, #machine-learning, #private-equity, #saas, #software, #software-as-a-service, #startup-company, #tc

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Hustle Fund backs Fintor, which wants to make it easier to invest in real estate

Farshad Yousefi and Masoud Jalali used to drive through Palo Alto neighborhoods and marvel at the outrageous home prices. But the drives sparked an idea. They were not in a financial position to purchase a home in those neighborhoods (to be clear, not many people are) either for investment or to live. But what if they could invest in homes in up and coming cities throughout the U.S.?

Then they realized that even that might be a challenge considering that with all their student debt, affording a down payment would be impossible.

“There was nothing available out there besides a crowdfunding platform, which when we first signed up, took away $1,000 from our account that we didn’t have, and then our capital would be locked up for 3 to 10 years,” recalls Yousefi.

So the pair started doing research and spoke to 1,000 individuals under the age of 35. Eight out of 10 said they would like to invest in real estate but were deterred by all the barriers to entry.

“There is clearly a large demand for access to real estate,” Yousefi said. “And we wanted to give people a way to invest in it like they can in stocks, via a mobile app.”

And so the idea for Fintor was born.

Yousefi and Jalali founded the company in 2020 with the goal of purchasing homes via an LLC, and turning each into shares through a SEC-approved broker dealer. Individuals can then buy shares of the homes via Fintor’s platform. Its next step is to sign agreements with individual real estate investors or bigger real estate development firms to list their properties on the platform and give people the opportunity to buy shares.

And now Fintor has raised $2.5 million in seed money to continue building out its fractional real estate investing platform. The startup aims to “fractionalize” houses and other residential property, giving people in the U.S. access to investment opportunities “starting with as little as $5.” The company attracted the interest of investors such as 500 Startups, Hustle Fund, Graphene Ventures, Houston-based real estate investor Manny Khoshbin, Mana Ventures and other angel investors such as Cindy Bi, Skyler Fernandes, VU Venture Partners, Minal Hasan, Andrew Zalasin, Alluxo CEO and Founder Safa Mahzari, SquareFoot CEO and founder Jonathan Wasserstrum and Teachable CEO and founder Ankur Nagpal.

Image Credits: Fintor

Fintor is eying markets such as Kansas City, South Carolina, and Houston, Texas, where it already has some properties. It’s looking for homes in the $80,000 to $350,000 price range, and millennials and GenZers are its target demographic.

“Fintor can give the same return as the stock market, but at half the risk,” Yousefi said. “As two [Iranian] immigrants, we’ve seen how much this country has to offer and how real estate sits at the top of everything, yet is so inaccessible.”

The pair had originally set out to raise just $1 million but the round was quickly “way oversubscribed,” according to Yousefi, and they ended up raising $2.5 million at triple the original valuation.

Jalali said the company will use machine learning technology to filter and rate properties as it scales its business model.

“We’ll use ML to categorize neighborhoods and to come up with the price of properties to offer to potential sellers,” he added. “Our ultimate goal is to create indexes so that people can invest in multiple properties in a given city. That creates diversification right away.”

.Elizabeth Yin, co-founder and general partner of Hustle Fund, believes that Fintor is solving a generational problem with real estate.

“Retail investors have almost no access to great real estate investments today and the best opportunities are reserved for the select few,” she told TechCrunch. “Not to mention that in addition to access, retail investors often need a lot of capital in order to have a diversified portfolio or be accredited to join funds.”

Fintor’s approach to securitize real estate assets will give millions of investors who are not accredited investors access they would otherwise not have had, Yin added. 

“Simultaneously, it provides increased liquidity to property owners, while improving the user experience for both parties,” she said. “Effectively this becomes a new asset class, because it’s entirely turnkey and is fractionalized, which opens up many new pockets of investors.”

#ankur-nagpal, #articles, #ceo, #cindy-bi, #crowdfunding, #elizabeth-yin, #entrepreneurship, #financial-technology, #fintech, #funding, #fundings-exits, #graphene-ventures, #houston, #hustle-fund, #kansas-city, #machine-learning-technology, #ml, #palo-alto, #proptech, #real-estate, #recent-funding, #retail-investors, #south-carolina, #squarefoot, #startups, #tc, #technology, #texas, #u-s-securities-and-exchange-commission, #united-states, #venture-capital

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Scale AI founder and CEO Alexandr Wang will join us at TC Sessions: Mobility on June 9

Last week, Scale AI announced a massive $325 million Series E. Led by Dragoneer, Greenoaks Capital and Tiger Global, the raise gives the San Francisco data labeling startup a $7 billion valuation.

Alexandr Wang founded the company back in 2016, while still at MIT. A veteran of Quora and Addepar, Wang built the startup to curate information for AI applications. The company is now a break-even business, with a wide range of top-notch clients, including General Motors, NVIDIA, Nuro and Zoox.

Backed by a ton of venture capital, the company plans a large-scale increase in its headcount, as it builds out new products and expands into additional markets. “One thing that we saw, especially in the course of the past year, was that AI is going to be used for so many different things,” Wang told TechCrunch in a recent interview. “It’s like we’re just sort of really at the beginning of this and we want to be prepared for that as it happens.”

The executive will join us on stage at TC Sessions: Mobility on June 9 to discuss how the company has made a major impact on the industry in its short four years of existence, the role AI is playing in the world of transportation and what the future looks like for Scale AI.

In addition to Wang, TC Sessions: Mobility 2021 will feature an incredible lineup of speakers, presentations, fireside chats and breakouts all focused on the current and future state of mobility — like EVs, micromobility and smart cities for starters — and the investment trends that influence them all.

Investors like Clara Brenner (Urban Innovation Fund), Quin Garcia (Autotech Ventures) and Rachel Holt (Construct Capital) — all of whom will grace our virtual stage. They’ll have plenty of insight and advice to share, including the challenges that startup founders will face as they break into the transportation arena.

You’ll hear from CEOs like Starship Technologies’ Ahti Heinla. The company’s been busy testing delivery robots in real-world markets. Don’t miss his discussion touching on challenges ranging from technology to red tape and what it might take to make last-mile robotic delivery a mainstream reality.

Grab your early bird pass today and save $100 on tickets before prices go up in less than a month.

#addepar, #alexandr-wang, #articles, #artificial-intelligence, #autotech-ventures, #clara-brenner, #deliv, #economy, #entrepreneurship, #executive, #general-motors, #greenoaks-capital, #micromobility, #mit, #nuro, #nvidia, #quora, #rachel-holt, #san-francisco, #scale-ai, #starship-technologies, #startup-company, #tc-sessions-mobility, #technology, #tiger-global, #transportation, #urban-innovation-fund, #venture-capital, #wang

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Extra Crunch roundup: UiPath’s IPO filing, predicting revenue, how to pivot properly, much more

This is not a boast, but a warning: I could write a how-to article on almost any topic.

Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.

Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:

  • Pouyan Salehi, CEO and co-founder, Scratchpad
  • Rami Essaid, CEO and founder,  Finmark
  • Melonee Wise, CEO and co-founder, Fetch Robotics

The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.

Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?


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In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.

Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!

I hope you got something out of reading Extra Crunch this week. Have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Building the right team for a billion-dollar startup

Image Credits: Bryce Durbin/TechCrunch

From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.

At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.

She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.

So you want to raise a Series A

"So you want to raise a Series A" pamphlet in the style of "The Simpsons"

Image Credits: Bryce Durbin/TechCrunch

During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).

In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.

Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.

With the right tools, predicting startup revenue is possible

For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.

Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?

How we dodged risks and raised millions for our open-source machine learning startup

Image Credits: erhui1979 / Getty Images

If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.

Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.

But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.

Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.

Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting

Image Credits: Ureeka

Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.

She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.

Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.

Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best

Image Credits: Eric Millette / Scale AI

Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.

Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.

 

Ride-hailing’s profitability promise is in its final countdown

Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.

 

UiPath’s first IPO pricing could be a warning to late-stage investors

Co-founder and CEO of UiPath Daniel Dines

Image Credits: Noam Galai/Getty Images

For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.

But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.

Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?

 

How to choose and deploy industry-specific AI models

Image of flow chart on a blackboard.

Image Credits: alexsl / Getty Images

As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.

While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.

Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.

Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.

Atomico’s talent partners share 6 tips for early-stage people ops success

Photo of Talent Partners Caro Chayot and Dan Hynes

Image Credits: Atomico

In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.

However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.

Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.

5 questions about Grab’s epic SPAC investor deck

grab 1

Image Credits: Roslan Rahman/Getty Images

Southeast Asian superapp Grab is going public via a SPAC.

Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.

Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.

Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal

Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.

For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.

In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?

What’s fueling hydrogen tech?

market-maps-hydrogen-fuel-cell

Image Credits: Bryce Durbin

When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.

But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.

Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.

5 product lessons to learn before you write a line of code

Rearview shot of a young businesswoman having a brainstorming session in a modern office

Image Credits: LaylaBird / Getty Images

Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.

The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.

Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.

Inside the US’ epic first-quarter venture capital results

In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.

That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.

Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.

Dear Sophie: How can I get an H-1B without the lottery?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie:

For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.

We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?

— Soldiering on in Sunnyvale

 

Alexa von Tobel outlines how founders should manage personal finances

Alexa von Tobel

Image Credits: Alexa von Tobel

Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.

She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.

At Early Stage 2021, she gave a presentation on how founders should think about managing their own wealth. Startup founders can often put all their money into their venture and end up paying more attention to the finances of their company than their own bank account.

Von Tobel outlined the various steps you can take to stay out of debt, build credit and accumulate wealth through investments to ensure you have financial peace of mind as you take on the most stressful venture of your life: Starting a company.

How to pivot your startup, save cash and maintain trust with investors and customers

Olive CEO Sean Lane

Image Credits: Olive

A few years ago, founder Sean Lane thought he’d achieved product-market fit.

Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.

Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.

Building customer-first relationships in a privacy-first world is critical

Concept of knowledge, data and protection. Paper human head with pad lock.

Image Credits: jayk7 (opens in a new window) / Getty Images

In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.

But the truth is that the companies that champion privacy will be better-positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.

For startups choosing a platform, a decision looms: Build or buy?

Blank green arrow signs pointing in both directions on top of a metal post.

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

Founders shouldn’t be worried about starting companies that rely on other platforms.

Platforms exist to help startups get to users and customers faster and should be used as a means to an end, but everyone must get their piece.

Coinbase’s direct listing alters the landscape for fintech and crypto startups

Coinbase’s direct listing was a massive finance, startup and cryptocurrency event, and the transaction’s effects will be felt for some time in the public market, but also among the startups and capital that comprise the private market.

In the buildup to Coinbase’s flotation — and we’d argue especially after it released its blockbuster Q1 2021 results — there was a general expectation that the unicorn’s direct listing would provide a halo effect for other startups in the space.

The widely held perspective raised two questions: Will the success of Coinbase’s direct listing bolster private investment in crypto-focused startups, and will that success help other areas of financially focused startup work garner more investor attention?

Billion-dollar B2B: Cloud-first enterprise tech behemoths have massive potential

Abstract minimalist conceptual multiple coloured zig zag strip joined as one moving upwards on blue background.

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

The “billion-dollar B2B” paradigm refers to the forces shaping a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR — and achieve market capitalizations in excess of $50 billion or even $100 billion.

One of the biggest factors driving billion-dollar B2Bs is a simple but important shift in how organizations buy enterprise technology today.

How startups can ensure CCPA and GDPR compliance in 2021

Padlock in woman's hand. Data, information, property and security on the Internet concept. White background

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

Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.

Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.

Should Dell have pursued a more aggressive debt-reduction move with VMware?

Michael Dell, founder and chief executive officer of Dell Inc., speaks during the 2015 Dell World Conference in Austin, Texas, U.S., on Wednesday, Oct. 21, 2015. Dell said trimming debt for the massive deal to combine his namesake company with EMC Corp. should progress relatively quickly in the next couple of years. Photographer: Matthew Busch/Bloomberg via Getty Images

Image Credits: Bloomberg / Getty Images

When Dell announced it was spinning out VMware, the move itself wasn’t surprising; there had been public speculation for some time.

But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.

It seems Dell hopes to have its cake and eat it too with this deal: It generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned.

What we all missed in UiPath’s latest IPO filing

Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising.

Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors.

But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.

But let’s dig into the company’s quarterly results to get a clearer picture of UiPath.

The IPO market is sending us mixed messages

If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.

But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.

To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.

#applovin, #dell, #entrepreneurship, #extra-crunch-roundup, #fintech, #s-1, #startups, #tc, #uipath, #venture-capital

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Do you fit the mold for the next generation of values-driven VCs?

More individuals than ever are donning the investor cap. Almost a fifth of U.S. equity trading in 2020 was driven by mom-and-pop investors — up from around 15% in the previous year. With such impressive returns to be made, many are deciding to set up a full-fledged investment business.

With the fundraising world becoming more democratic and accessible, we should help people find the right path to setting up a venture capital firm and also make sure the right people are entering the VC sphere. Startups are changing, and any new investment manager will have to adapt to the shifting landscape. VCs today have to provide more than money to get the best portfolio, and they must have a strong focus on impact to get the best institutional investors into their funds.

Startup investors can be the financial backbone for mass disruption. That’s why, at Founder Institute, we believe in the need for more VCs with strong values: Because they will prop up the companies that will build a brighter future for humanity. We’re not the only ones — our first “accelerator for ethical VCs” was oversubscribed.

VCs today have to provide more than money to get the best portfolio, and they must have a strong focus on impact to get the best institutional investors into their funds.

So if you want to lead your own VC fund in 2021, here are the main questions aspiring investors need to ask themselves.

Are you doing this for the right reasons?

Investing in startups is not just about making money. In selecting the startups that will become future industry leaders, VCs have a lot more power than most to do good (or harm). If you’re only interested in money, you likely won’t go too far. Identifying the greatest businesses means seeing beyond their capital into the longevity of their vision, their real-life impact on society, and how much consumers will love or hate them.

After all: Most startup founders pour their blood, sweat and tears into building a business not just to make money, but also to make an impact on the world and build products that align with their mission. Any new venture capitalist looking to attract the best founders needs to think about the vision and mission of their fund in the same terms.

Although VC firms have been slow on the uptake when it comes to environmental, social and governance (ESG) goals, there are signs that times are changing. Some firms are forming a community around implementing ESG, not only because of the external impact but because it furthers their business goals. To help accelerate this trend, we asked our VC Lab participants to take The Mensarius Oath (Latin for “banker” or “financier”), a professional code of conduct for finance professionals to create an ethical, prosperous and healthy world.

What value do you bring to the table?

The number of VCs are growing and the industry is increasingly becoming concentrated. This means that simply offering large sums of money won’t get you traction with the best startups. Founders are looking for value over volume — they usually want mission alignment, connections, value-added services and industry expertise more than a blank check.

Remember that the best founders get to choose their VCs from a menu of options, not the other way around. To convince them that you’re the right match, you’ll need a proven track record in the same industry (or transferable experience from another industry) and referrals from credible people. You’ll also need a strong value proposition or niche that sets you apart from other funds. For example, Untapped Capital invests in “unexpected” and “undernetworked” founders, while R42 Group invests in AI and longevity-focused businesses.

If you don’t think you’ve got the profile to offer value to founders just yet, it’s worth taking some time to lay out exactly who you are. That is: what you hope to achieve as a fund manager, the vision you have for your portfolio companies and how you alone can help them get there.

What’s your secret sauce?

As a new VC fund without historical data points, limited partners (LPs) will naturally be cautious to invest in your fund. So, you have to build a brand that tells your story and proves your reputation.

Go back to the basics and pinpoint exactly what your strengths are. If you’re having trouble finding inspiration, use statements like, “I can get the best deal because I have X,” or, “I help grow my portfolio companies by X” to get the ball rolling. Be wary of saying that the amount of money you have is your strength — at this stage, your bank balance isn’t your competitive edge. Focus instead on what makes you unique, credible and relevant. Having a high number of strategic contacts, extensive industry experience or a backsheet of successful exits could be your secret ingredients. For extra guidance, check out this resource my team put together to help fund managers consolidate their niche in an “investment thesis.”

Once you have a list, choose your top three strengths and write a followup sentence detailing how each of them can be enriched by your network and expertise. Ideally, share these with a test group (friends, family or fellow entrepreneurs) and ask them which is the most compelling. If there’s a general consensus toward one point, you know to make that a large chunk of your VC fund’s thesis.

Do you have a solid network?

Who you know is just as important as what you know, and the most prominent VCs tend to be in the middle of a flow of information and people. Your network tells founders that you’re respected and reassures them that they will probably be brought into the fold to connect with future mentors, customers, investors or hires.

If you’re a thought leader, the alumni of a well-known company like Uber or PayPal, or if you’ve started a community around an emerging vertical, you’re more likely to form a positive deal flow. But this status and these relationships have to be established before you launch your fund — if you try to network from zero, you’ll be spinning too many plates and won’t have the social proof to back yourself up.

Don’t just rely on your gut to tell you whether your network is satisfactory. Map out your personal ecosystem, sorting people based on familiarity (close contacts or acquaintances) and defining characteristics (consumers, finance, ex-CEOs, etc.). That “map” can be as basic as an Excel sheet with a column for each category, or you could use more attractive visual tools like Canva — great for sharing with your future team and encouraging them to fill any network gaps.

What size fund do you want to launch?

A VC fund runs like any other business — you have to develop a vision, recruit a team, form an entity, raise money, deliver value and report to stakeholders. To kick things off, you need to consider what size fund you want, and then secure significant commitments from LPs — at least 10% of your total fund. LPs can be corporations, entrepreneurs, government agencies and other funds.

Also keep in mind that most LPs will want you to personally invest at least 1% of the total fund size so that you have “skin in the game.”

For that reason especially, it’s best to start small, somewhere between $5 million and $20 million, and use this “training fund” to demonstrate returns and create a launchpad for bigger raises to follow.

Can you help founders from launch to exit?

Your partnership with companies will be for the long haul, so you can’t rely just on offering value when you wire the money. Founders need consistent support across the full startup lifecycle, meaning you need to be conscious not to overpromise and fail to deliver. Think of the startups you’d most like to work with: How could you help them now? How could you help them in the future? And how could you help them exit?

You can take a skills-centric approach, where you reserve different resources and connections based on marketing, hiring, fundraising and culture-creation that can be applied as the startup grows. Alternatively, you might want to make sprint-like plans, where you check in with founders on a repeating basis and iterate the support you offer based on their progress. Whatever way you chose to structure your support, ensure that you’re realistic about what you can bring to the table, your availability, preferred involvement and how you’ll document it.

The future of VC will be driven by venture capitalists with strong values who have built funds with the new needs of founders in mind. VC may once have been exclusive and mysterious, but 2021 could be the year VC becomes a more open and fair space for businesses and investors alike.

#column, #entrepreneurship, #esg, #ethics, #finance, #money, #private-equity, #startups, #tc, #venture-capital

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Hadrian is building the factories of the future for rocket ships and advanced manufacturing

If the eight person team behind the new startup Hadrian has their way, they’ll have transformed the manufacturing industry within the next decade.

At least, that’s the goal for the new San Francisco-based startup, founded only last year, which has set its sights on building out a new model for advanced manufacturing to enable the satellite, space ship, and advanced energy technology companies to build the future they envision better and faster.

We view our job as to provide the world’s most efficient space and defense component factory,” said Hadrian founder, Chris Power.

Initially, the company is building factories to make the parts that go on rocket ships, according to Power, but the business has implications for any company that needs bespoke components to make their equipment.

“Let me tell you how bad it is at the moment and what’s going to happen over the next 20 years. Right now everyone in space and defense, [including] SpaceX and Lockheed Martin, outsources their parts and manufacturing to small factories across the country. They’re super expensive, they’re unreliable and they’re completely invisible to the customers,” said Power. “This causes big problems with space and defense manufacturers in the design phase, because the lead time is so long and the iteration time is super long. Imagine running software and being able to iterate on your product once every 20 days? If you can imagine a Gantt chart of how to build a rocket, about 60% of that is buffer time… A lot of the delays in launches and stuff like that happen because parts got delivered three months ago. It’d be like running a McDonalds and realizing that your fries and burger providers could not tell you when the food would arrive.”

It’s hard to overstate the strategic importance of the parts suppliers to the operations of aerospace, defense, and advanced machining companies. As no less an authority on manufacturing than Elon Musk noted in a tweet, “The factory is the product.” It’s also hard to overstate the geopolitical importance of re-establishing the U.S. as a center of manufacturing excellence, according to Hadrian’s investors Lux Capital, Founders Fund, and Construct Capital. Which is one reason why they’re investing $9.5 million into the very early stage business.

“America made massive strategic mistakes in the early 90s which have left our national manufacturing ecosystem completely dilapidated,” said Founders Fund principal Delian Asparouhov. “The only way to get out of this disaster is to re-invent the most basic input into our aerospace and defense supply chains, machining metal parts quickly and with high tolerance. Right now, America’s most innovative company, SpaceX, relies on a network of near-retired machinists to produce space-worthy metal parts, and no one in technology is. focused on solving this.”

 

Power got to understand the problem at his previous company, Ento, which sold workforce management software to blue collar customers. It was there he realized the issue of. the aging workforce and the need for manufacturers to upgrade almost every aspect of their own technology stack. “I realized that the right way to bring technology to the industrial space is not to sell software to these companies, it’s to build an industrial business from scratch with software.”

Initially, Hadrian is focusing all of its efforts on the space industry, where the component manufacturing problem is especially acute, but the manufacturing capabilities the company is building out have broad relevance across any industry that requires highly engineered components.

“The demand for manufacturing from both the large SpaceX and Blue Origin all the way to this growing long tail of companies from Anduril to Relativity to Varda,” said Lux Capital co-founder Josh Wolfe. “Most of these guys are using mom and pop machine shops… [and] those shops are horribly inefficient. They’re not consistent, and they’re not reliable. Between the software automation, the hardware, you can cut down on inefficiency every step of the process… I like to think of value creation as waste reduction… so mundane things like quoting, scheduling, bidding, and planning all the way to the programming of the manufacturing… every one of those things takes hours to tens of hours to days and weeks, so if you can do that in minutes, it’s just a no-brainer. [Hadrian] will be the cutting edge choice for all of the new and explicitly dedicated and focused aerospace and defense companies.”

Power envisions a network of manufacturing facilities that can initially cover roughly 65% of all space and defense components, and will eventually take that number up to 95% of components. Already several of the biggest launch vehicle and satellite manufacturers are in talks with the company to produce hundreds of units for them, Power said. Some of those companies just happen to be in the Construct, Lux, and Founders Fund portfolio.

And the company’s founder sees this as a new way to revitalize American manufacturing jobs as well. “Manufacturing jobs in space and defense can easily be as high paying as a software engineering job at Google,” he said. In an ideal world, Hadrian would like to offer an onramp to high paying manufacturing careers in the 21st century in the same way that automakers provided good union jobs in the twentieth.

“We haven’t built any of this. If you look at the sheer number of people that we need to train and hire on our new technology and new systems, that people problem and that training problem is part of growing our business.”

A render of Axiom’s future commercial space station design.

#aerospace, #america, #blue-origin, #co-founder, #construct-capital, #elon-musk, #entrepreneurship, #factory, #food, #founders-fund, #google, #josh-wolfe, #lockheed-martin, #lux-capital, #manufacturing, #mcdonalds, #san-francisco, #software-automation, #spacex, #startup-company, #tc, #united-states

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Pale Blue Dot aims to be Europe’s premier early-stage climate investor and has $100 million to prove it

When Hampus Jakobsson, Heidi Lindvall, and Joel Larsson, all well-known players in the European venture ecosystem, began talking about their new firm Pale Blue Dot, they began by looking at the problems with venture capital.

For the three entrepreneurs and investors, whose resumes included co-founding companies and accelerators like The Astonishing Tribe (Jakobsson) and Fast Track Malmö (Lindvall and Larsson) and working as a venture partner at BlueYard Capital (Jakobsson again), the problems were clear.

Their first thesis was that all investment funds should be impact funds, and be taking into account ways to effect positive change; their second thesis was that since all funds should be impact funds, what would be their point of differentiation — that is, where could they provide the most impact.

The three young investors hit on climate change as the core mission and ran with it.

As it was closing on €53 million ($63.3 million) last year, the firm also made its first investments in Phytoform, a London headquartered company creating new crops using computational biology and synbio; Patch, a San Francisco-based carbon-offsetting platform that finances both traditional and frontier “carbon sequestration” methods; and 20tree.ai, an Amsterdam-based startup, using machine learning and satellite data to understand trees to lower the risk of forest fires and power outages.

Now they’ve raised another €34 million and seven more investments on their path to doing between 30 and 35 deals.

These investments primarily focus on Europe and include Veat, a European vegetarian prepared meal company; Madefrom, a still-in-stealth company angling to make everyday products more sustainable; HackYourCloset, a clothing rental company leveraging fast fashion to avoid landfilling clothes; Hier, a fresh food delivery service; Cirplus, a marketplace for recycled plastics trading; and Overstory, which aims to prevent wildfires by giving utilities a view into vegetation around their assets. 

The team expects to be primarily focused on Europe, with a few opportunistic investments in the U.S., and intends to invest in companies that are looking to change systems rather than directly affect consumer behavior. For instance, a Pale Blue Dot investment likely wouldn’t include e-commerce filters for more sustainable shopping, but potentially could include investments in sustainable consumer products companies.

The size of the firm’s commitments will range up to €1 million and will look to commit to a lot of investments. That’s by design, said Jakobsson. “Climate is so many different fields that we didn’t want to do 50% of the fund in food or 50% of the fund in materials,” he said. Also, the founders know their skillsets, which are primarily helping early stage entrepreneurs scale and making the right connections to other investors that can add value.

“In every deal we’ve gotten in co-investors that add particular, amazing, value while we still try to be the shepherds and managers and sherpas,” Jakobsson said. “We’re the ones that are going to protect the founder from the hell-rain of investor opinions.”

Another point of differentiation for the firm are its limited partners. Jakobsson said they rejected capital from oil companies in favor of founders and investors from the tech community that could add value. These include Prima Materia, the investment vehicle for Spotify founder Daniel Ek; the founders of Supercell, Zendesk, TransferWise and DeliveryHero are also backing the firm. So too, is Albert Wenger, a managing partner at Union Square Ventures.

The goal, simply, is to be the best early stage climate fund in Europe.

“We want to be the European climate fund,” Lindvall said. “This is where we can make most of the difference.” 

#albert-wenger, #amsterdam, #blueyard-capital, #corporate-finance, #daniel-ek, #economy, #entrepreneurship, #europe, #finance, #food, #hampus-jakobsson, #heidi-lindvall, #investment, #joel-larsson, #london, #machine-learning, #managing-partner, #money, #oil, #pale-blue-dot, #partner, #private-equity, #san-francisco, #spotify, #supercell, #tc, #transferwise, #union-square-ventures, #united-states, #venture-capital, #zendesk

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The TechCrunch Survey of Tech Startup Hubs in England and Wales

TechCrunch is embarking on a major new project to survey European founders and investors in cities outside the major European capitals.

Over the next few weeks, we will ask entrepreneurs in these cities to talk about their ecosystems, in their own words. For this survey we are interested in startup hubs in England and Wales. (Scotland will follow, and Northern Ireland is here).

So this is your chance to put your cities on the Techcrunch Map!

We’re like to hear from founders and investors. We are particularly interested in hearing from diverse founders and investors. These are our humble suggestions for the cities we’d most like to hear from:

Birmingham
Brighton
Bristol & Bath
Cambridge
Cardiff
Liverpool
Manchester
Newcastle
Oxford
Reading and Thames valley
York

If you are a tech startup founder or investor in one of the above cities please fill out the survey form here.

The more founders/investors we hear from in a particular city, the more likely it is that city will be featured in TechCrunch.

This is the follow-up to the huge survey of investors (see also below) we’ve done over the last six or more months, largely in capital cities.

These formed part of a broader series of surveys we’re doing regularly for ExtraCrunch, our subscription service that unpacks key issues for startups and investors.

In the first wave of surveys, the cities we wrote about were largely capitals. You can see them listed here.

This time, we will be surveying founders and investors in Europe’s other cities to capture how European hubs are growing, from the perspective of the people on the ground.

We’d like to know how your city’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and generally how your city will evolve.

We leave submissions mostly unedited and are generally looking for at least one or two paragraphs in answers to the questions.

So if you are a tech startup founder or investor in one of these cities please fill out our survey form here.

Thank you for participating. If you have questions you can email mike@techcrunch.com and/or reply on Twitter to @mikebutcher.

#articles, #business, #economy, #entrepreneurship, #europe, #private-equity, #reading, #startup-company, #tc, #techcrunch, #verizon-media, #york

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Atomico’s talent partners share 6 tips for early-stage people ops success

In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users. However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.

You need to recruit for what you need, but you also need to think about what is coming down the line.

As members of the VC’s operational support team, both work closely with companies in the Atomico portfolio to “find, develop and retain” the best employees in their respective fields, at various stages of the business. They’re operators at heart, and they bring a wealth of experience from time spent prior to entering VC.

Before joining Atomico, Chayot led the EMEA HR team at Twitter, where she helped scale the business from two to six markets and grew the team from 80 based in London to 500 across the region. Prior to that, she worked at Google in people ops for nine years.

Hynes was responsible for talent and staffing at well-known technology companies including Google, Cisco and Skype. At Google, he grew the EMEA team from 60 based in London to 8,500 across Europe by 2010, and at Skype, he led a talent team that scaled from 600 to 2,300 in three years.

Caro Chayot’s top 3 tips

1. Think about your long-term org design (18 months down the line) and hire back from there

When most founders think about hiring, they think about what they need now and the gaps that exist in their team at that moment. Dan and I help founders see things a little differently. You need to recruit for what you need, but you also need to think about what is coming down the line. What will your company look like in a year or 18 months? Functions and team sizes will depend on the sector — whether you are building a marketplace, a SaaS business or a consumer company. Founders also need to think about how the employees they hire now can develop over the next 18 months. If you hire people who are at the top of their game now, they won’t be able to grow into the employees you need in the future.

2. Spend time defining what your culture is. Use that for hiring and everything else people-related

If org design is the “what,” then culture is the “how.” It’s about laying down values and principles. It may sound fluffy, but capturing what it means to work at your company is key to hiring and retaining the best talent. You can use clearly articulated values at every stage of talent-building to shape your employer brand. What do you want potential employees to feel when they see your website? What do you want to look for in the interview process to make sure you are hiring people who are additive to the culture? How do you develop people and compensate them? These are all expressions of culture.

#diversity, #diversity-and-inclusion, #ec-future-of-work, #ec-how-to, #entrepreneurship, #europe, #hiring, #startups, #tc

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Extra Crunch roundup: StockX EC-1, Early Stage recaps, unpacking Alkami’s IPO, more

Over the last few days, we’ve published several articles recapping panels from last week’s TechCrunch Early Stage virtual conference.

Each story is based on an interview with a founder or investor who addressed some of the most common startup dilemmas. Predictably, they’re mostly focused on the how and why:

How do I get into an accelerator? When should I hire a sales team? What’s the best way to earn attention from investors?

TechCrunch reporter Natasha Mascarenhas interviewed Kleiner Perkins partner Bucky Moore to get sector-agnostic advice for founders who are ready to raise a Series A.

Their conversation isn’t a rehash of basic best practices — Moore says the pandemic has fundamentally changed the way he does business: “I actually believe that first meetings over Zoom are here to stay; I think it’s far more efficient.”

I’m looking forward to the eventual return of live TechCrunch events, but each Early Stage recap includes video and a complete transcript. As ever, full articles are available for Extra Crunch members.

Thanks very much for reading — I hope you have a fantastic weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist


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The StockX EC-1

Image Credits: Nigel Sussman

Have you ever bought a pig in a poke?

It’s a saying from medieval times: A farmer traveling on an unfamiliar road agrees to buy a baby pig in a bag from a passing stranger. Unfortunately, when the farmer gets back to their hut and opens the sack, there’s a kitten inside.

The risk of getting stuck with a counterfeit item when buying online is real, especially when it comes to sneakers, jewelry and other designer products. That’s why online marketplace StockX created a rigorous product verification and authentication process.

To date, its users have conducted more than 10 million transactions for sneakers, handbags, streetwear, watches and other high-end items that are often produced in limited quantities.

StockX’s prices are regulated and all transactional data is transparent, factors that have combined to help the platform reach a $2.8 billion valuation.

In a four-part series that dropped this week, Extra Crunch analyzes this “foundational new category of market” that began as a hobbyist’s sneaker price chart.

Will Topps’ SPAC-led debut expand the bustling NFT market?

Yes, the baseball card company is going public in a debut that could easily be read as a way to put money into the NFT craze without actually having to buy cryptocurrencies.

Digging into the Alkami Technology IPO

It appears that the slowdown in tech debuts is not a complete freeze; despite concerning news regarding the IPO pipeline, some deals are chugging ahead.

Alkami Technology joins a list that includes Coinbase’s impending direct listing and Robinhood’s expected IPO.

Texas-based Alkami Technology is a software company that delivers its product to banks via the cloud, so it’s not a legacy player scraping together an IPO during boom times.

Let’s dig into the latest SEC filing from the software unicorn.

Chinese startups rush to bring alternative protein to people’s plates

Image Credits: TechCrunch

Last year could well have been the dawn of alternative protein in China. More than 10 startups raised capital to make plant-based protein for a country with increasing meat demand. Of these, Starfield, Hey Maet, Vesta and Haofood have been around for about a year; ZhenMeat was founded three years ago; and Green Monday is a nine-year-old Hong Kong firm pushing into mainland China.

The competition intensified further last year when American incumbents Beyond Meat and Eat Just entered China.

Although some investors worry the sudden boom of meat-substitute startups could turn into a bubble, others believe the market is far from saturated.

LG’s exit from the smartphone market comes as no surprise

Image Credits: Joan Cros/NurPhoto/Getty Images

For those who follow the space, LG will be remembered fondly as a smartphone trailblazer. For well over a decade, the company was a major player in the Android category and a driving force behind a number of innovations that have since become standard.

LG continued pushing envelopes — albeit to mixed effect. But in the end, the company just couldn’t keep up.

This week, the South Korean electronics giant announced it will be getting out of the “incredibly competitive” category, choosing instead to focus on its myriad other departments.

Giving EV batteries a second life for sustainability and profit

Batteries and electric vehicles on a blackboard

Image Credits: Getty Images

Electric cars and trucks seem to have everything going for them: They don’t produce tailpipe emissions, they’re quieter than their fossil-fuel-powered counterparts and the underlying architecture allows for roomier and often sleeker designs.

But the humble lithium-ion battery powering these cars and trucks leads a difficult life. Irregular charging and discharge rates, intense temperatures and many partial charge cycles cause these batteries to degrade in the first five to eight years of use, and, eventually, they end up in a recycling facility.

Instead of sending batteries straight to recycling for raw material recovery — and leaving unrealized value on the table — startups and automakers are finding ways to reuse batteries as part of a small and growing market.

How to kick the 10 worst startup habits with Fuel Capital’s Leah Solivan

Image Credits: Meg Messina

Fuel Capital General Partner Leah Solivan joined us at TechCrunch Early Stage 2021 to explain how to avoid early mistakes in building your startup.

Solivan has ample experience on both sides of the fence, as she founded TaskRabbit and led it to exit through an acquisition by Ikea in 2017. She shared a list of 10 things to avoid in total, but here are some highlights of what to watch out for.

How founders can avoid blind spots and make better decisions with EchoVC’s Eghosa Omoigui

Football Team starting match

Image Credits: miodrag ignjatovic / Getty Images

Eghosa Omoigui, the founder and managing general partner of EchoVC Partners, has helped entrepreneurs navigate the first steps of starting a company and laying the right foundation early on.

Omoigui advocates for founders to develop their own All-22 tape — a tool used by professional football coaches that allows the viewer to see all 22 players on the field at the same time. It improves a coach’s line of sight, and, most importantly, helps avoid missing a critical motion or player.

The concept of this tool can — and should — be applied in the startup world as well, Omoigui said during the virtual TC Early Stage event. He explained what it means to have an All-22 tape and the steps founders should take to develop a skill set that will allow them to see and understand the playbook from all sides.

Building and leading an early-stage sales team with Zoom CRO Ryan Azus

Image Credits: Zoom Video Communications, Inc.

This year at Early Stage, TechCrunch spoke with Zoom Chief Revenue Officer Ryan Azus about building an early-stage sales team.

Azus is perhaps best known for leading the video-calling giant’s income arm during COVID-19, but his experience building RingCentral’s North American sales organization from the ground up made him the perfect guest to chat with about building an early-stage sales team.

We asked him about when founders should step aside from leading their startup’s sales org, how to build a working sales culture, hiring diversely, how to pick customer segments and how to build a playbook.

The dos and don’ts of bug bounty programs with Katie Moussouris

Image Credits: Bryce Durbin / TechCrunch

Katie Moussouris has been in cybersecurity circles since some of the world’s biggest tech companies were startups, and helped to set up the first vulnerability disclosure and bug bounty programs.

Moussouris, who runs consultancy firm Luta Security, now advises companies and governments on how to talk to hackers and what they need to do to build and improve their vulnerability disclosure programs.

At TC Early Stage, Moussouris explained what startups should (and shouldn’t) do, and what priorities should come first.

Start your engines, TechCrunch is (virtually) headed to Detroit

Detroit City Spotlight logo over photo illustration of downtown Detroit

Join us on our next (virtual) field trip to Southeast Michigan. All lights will be shining on the Motor City.

Why Detroit? This is where StockX and Rivian call home, along with a growing stable of medical technology companies, fintech startups and security companies. The area is quickly transforming thanks to active investors, low cost of living and access to amazing universities that have a long history of supporting entrepreneurs.

If you’re interested in what’s happening in Detroit in general, are seeking out a new up-and-coming city to live in, or looking for cool companies and talented founders to invest in, then you’ll want to register and drop Thursday, April 15, on your calendar.

How to get into a startup accelerator

Image Credits: Techstars

Should you try to get your company into an accelerator? How far along should your idea and your team be before applying? When it is time to apply, how do you make your application stand out from hundreds or thousands of others? How fancy do you need to get with the application video?

For answers, we spoke with Neal Sáles-Griffin, managing director of Techstars Chicago and an adjunct professor at Northwestern University. He’s got an incredible wealth of knowledge about all things startups.

Understanding how fundraising terms can affect early-stage startups

Image Credits: Fenwick

Fenwick & West partner (and business lawyer) Dawn Belt joined us at TechCrunch Early Stage to break down some of the terms that trip up first-time entrepreneurs.

Belt has been involved in a number of key Silicon Valley moves, including EV company Proterra’s recent decision to go public via SPAC, as well as IPOs for Bill.com and Facebook. Here, she discusses key concepts like equity and the right of first refusal, and the role they play in the early stages of startup funding.

Bootstrapping, managing product-led growth and knowing when to fundraise

Image Credits: Calendly / OpenView

Product-led growth is all the rage in the Valley these days, and we had two leading thinkers discuss how to incorporate it into a startup at TechCrunch Early Stage 2021.

Tope Awotona is the CEO and founder of Calendly, which bootstrapped for much of its existence before raising $350 million at a $3 billion valuation from OpenView and Iconiq. And on the other side of that table (and this interview) sat Blake Bartlett, a partner at OpenView who has been leading enterprise deals based around the principles of efficient growth.

The two talked about bootstrapping and product-led growth, expanding internationally, when to bootstrap and when to fundraise, and how VCs approach a profitable company (carefully, and with a big stick). Oh, and how to spend $350 million.

Four strategies for getting attention from investors

Marlon Nichols

Image Credits: MaC Venture Capital

Being a successful early-stage investor is about a lot more than simply identifying trends; a successful VC needs to think several steps ahead. For MaC Venture Capital founder Marlon Nichols, it’s an ability that’s helped him spot big names like Gimlet Media, MongoDB, Thrive Market, PlayVS, Fair, LISNR, Mayvenn, Blavity and Wonderschool early on.

Nichols joined us on TechCrunch Early Stage to discuss his strategies for early-stage investing and how those lessons can translate into a successful launch for budding entrepreneurs.

Setting up a management board for success with Dave Easton

Image Credits: Generation Investment Management

Viewed from the outside, board selection and corporate governance can seem like a bit of a black box — particularly at a startup.

Generation Investment Management partner Dave Easton spoke at TechCrunch Early Stage about how to build a board as a founder, and, specifically, how to build a board you can live with. Easton’s experience serving on boards as both a full member and as an observer helped peel back the curtain on the murky topic of good governance.

Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting

Image Credits: Ureeka

Zoom-based pitch meetings became standard during the pandemic, but many investors say they intend to maintain the practice as more people are vaccinated.

In conversation with Jordan Crook, founder, investor, and business school professor Melissa Bradley offered pointers for how founders can prepare for Zoom calls, common pitfalls to avoid, and how to allocate time during the meeting.

#alkami-technology, #calendly, #detroit, #entrepreneurship, #extra-crunch-roundup, #luta-security, #private-equity, #startups, #stockx, #tc, #venture-capital

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How we dodged risks and raised millions for our open-source machine language startup

Open-source software gave birth to a slew of useful software in recent years. Many of the great technologies that we use today were born out of open-source development: Android, Firefox, VLC media player, MongoDB, Linux, Docker and Python, just to name a few, with many of these also developing into very successful for-profit companies.

While there are some dedicated open-source investors such as the Apache Software Foundation incubator and OSS Capital, the majority of open-source companies will raise from traditional venture capital firms.

Our team has raised from traditional venture capital firms like Speedinvest, open-source-specific firms like OSS, and even from more hybrid firms like OpenOcean, which was created by the founders and senior leadership teams at MariaDB and MySQL. These companies understandably have a significant but not exclusive open-source focus.

Our area of innovation is an open-source AutoML server that reduces model training complexity and brings machine learning to the source of the data. Ultimately, we feel democratizing machine learning has the potential to truly transform the modern business world. As such, we successfully raised $5 million in seed funding to help bring our vision to the current marketplace.

Here, we aim to provide insights and advice for open-source startups that hope to follow a similar path for securing funding, and also detail some of the important risks your team needs to consider when crafting a business model to attract investment.

Strategies for acquiring open-source seed funding

Obviously, venture capitalists find many open-source software initiatives to be worthy investments. However, they need to understand any inherent risks involved when successfully commercializing an innovative idea. Finding low-risk investments that lead to lucrative business opportunities remains an important goal for these firms.

In our experience, we found these risks fall into three major categories: market risk, execution risk, and founders’ risk. Explaining all three to potential investors in a concise manner helps dispel their fears. In the end, low-risk, high-reward scenarios obviously attract tangible interest from sources of venture capital.

Ultimately, investment companies want startups to generate enough revenue to reach a valuation exceeding $1 billion. While that number is likely to increase over time, it remains a good starting point for initial funding discussions with investors. Annual revenue of $100 million serves as a good benchmark for achieving that valuation level.

Market risks in open-source initiatives

Market risks for open-source organizations tend to be different when compared to traditional businesses seeking funding. Notably, investors in these traditional startups are taking a larger leap of faith.

#artificial-intelligence, #column, #ec-ai, #ec-column, #ec-how-to, #entrepreneurship, #machine-learning, #open-source-software, #private-equity, #startups, #tc, #venture-capital

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Bootstrapping, managing product-led growth and knowing when to fundraise

Product-led growth is all the rage in the Valley these days, and we had two leading thinkers discuss how to incorporate it into a startup at TechCrunch Early Stage 2021. Tope Awotona is the CEO and founder of Calendly, which bootstrapped for much of its existence before raising $350 million at a $3 billion valuation from OpenView and Iconiq. And on the other side of that table and this interview sat Blake Bartlett, a partner at OpenView who has been leading enterprise deals based around the principles of efficient growth.

In this interview, the two talk about bootstrapping and product-led growth, expanding internationally, when to bootstrap and when to fundraise, and how VCs approach a profitable company (carefully, and with a big stick). Oh, and how to spend $350 million.

Quotes have been edited and condensed for quality.


Bootstrapping is directly tied to product-led growth

Product-led growth is all about efficiency — spending all of a startup’s capital and time on perfecting its product to capture new users and help the most fervent customers advocate for the product with others or perhaps the managers approving their expenses. That’s directly related to bootstrapping, since by evading VC investment, a startup has to be much more tied to customers in the first place.

Tope Awotona:

With no marketing at all, Calendly began to take off. So the initial users were in higher education, and very quickly we moved to the commercial sector. And all of that was because of the virality of the product. Seeing that, we just began to invest more into virality. So the combination of self-serve, which is incredibly capital efficient, because you don’t need all of these sales people, and also the virality, instead of spending a bunch of dollars on advertising, you can really rely on the virality of the product and rely on the network of the users to really propagate and to enable distribution, just those are the two things that really allowed us to be successful. (Timestamp: 7:49)

We later discussed how the extreme focus on users can drive efficiency through product-led growth.

Blake Bartlett:

It’s the product and the distribution model, and they need to be tightly aligned. Tope spoke to some of this, but I think first and foremost, even outside of metrics, it’s just how is the business built? And on the product front, the product is built, the jobs to be done, so to speak, are oriented towards the actual user of the product, not their boss. SaaS historically was built for the boss because the boss owns the the budget for that department. So if you’re building a sales tool, build for the VP of Sales, and then hopefully the AEs will, you know, go along with it. But now with product-led growth, you’re actually building for that user. … Eventually, you can build the things on top that the boss cares about like the admin panel, and the KPIs and all that kind of stuff. (Timestamp: 29:35)


Product-led growth and international expansion

#early-stage-2021, #ec-how-to, #ec-techcrunch-early-stage, #entrepreneurship, #event-recap, #events, #startups

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Black Innovation Alliance, Village Capital team up to support founders of color

Black Innovation Alliance and Village Capital today announced Resource, a national initiative aimed at boosting the efforts of entrepreneur support organizations (ESOs) led by, and focused on, founders of color.

The motivation behind the project is straightforward. ESOs “face record demand, declining resources and are chronically underestimated, underappreciated and underfunded,” the organizations say.

Resource aims to give local accelerators and incubators support in the form of training and community.

Resource’s “ESO Accelerator” will train startup ecosystem leaders on how to build a more financially sustainable organization, as well as help connect them to potential funders. It also will provide milestone-based financial support tied to organizational development.

Resource also plans to build a national community of practice among ESO leaders of color and their funders to share best practices and “develop stronger capital and mentorship pathways” for Black, Latinx and Indigenous founders across the U.S.

Village Capital, says CEO Allie Burns, supports and invest in entrepreneurs “who have been historically sitting in historical blind spots of investors, whether that’s by the problems they’re trying to solve, the geography they’re located in or demographic factors that we have seen lead to capital being concentrated in very few people, places and problems.” Village Capital has worked with more than 100 other ESOs to help grow companies with founders from all backgrounds over the past five years.

The goal with Resource is to help ensure that incubators and accelerators focused on supporting people of color have the resources they need to flourish, she added.

“We want to make sure that those accelerators and other ESOs have the financial, social and human capital to keep their doors open and grow,” Burns said.

Black Innovation Alliance Executive Director Kelly Burton points out that these Black-led organizations are often the first line of support for Black entrepreneurs yet reap few benefits from their success over time.

“They receive very little support and very little funding,” she said. “It’s almost like they do all the heavy lifting, they plant seeds and do all the cultivation but they don’t really get to benefit once that founder and that startup has really taken off. This is an opportunity for us to stabilize these organizations to help them build their own capacities and capabilities so that that organization can be sustainable.”

Resource is supported by a national coalition of funders committed to supporting entrepreneurs of color. The initial coalition includes Moody’s, The Sorenson Impact Foundation, Travelers and UBS.

In related news, on Tuesday we covered New Jersey Governor Phil Murphy’s proposal for a $10 million allocation in the state budget to create a seed fund for Black and Latinx startups.

In that piece, we noted that there are a number of organizations out there that are committed to funding diverse founders.

In February, several national and Chicago-based organizations banded together to support early-stage Black and Latinx tech entrepreneurs through a new program dubbed TechRise. The nonprofit P33 launched the program in partnership with Verizon and 1871, a private business incubator and technology hub, among others, with the goals “of narrowing the wealth gap in Chicago, generating thousands of tech-related jobs and giving $5 million in grant funding to Black and Latino entrepreneurs,” according to the Chicago Sun Times. (Disclosure: Verizon is TechCrunch’s parent company).

Also in Austin, DivInc is a nonprofit pre-accelerator that holds 12-week programs for underrepresented tech founders. Founded in 2016 by former Dell executive Preston James, the organization aims to “empower people of color and women entrepreneurs and help them build successful high-growth businesses by providing them with access to education, mentorship and vital networks.”

#black-innovation-alliance, #business-incubators, #diversity, #economy, #entrepreneur, #entrepreneurship, #funding, #resource, #startups, #techcrunch-include, #ubs, #village-capital

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Putting Belfast on the TechCrunch map — TechCrunch’s European Cities Survey 2021

TechCrunch is embarking on a major new project to survey European founders and investors in cities outside the larger European capitals.

Over the next few weeks, we will ask entrepreneurs in these cities to talk about their ecosystems, in their own words.

This is your chance to put Belfast on the Techcrunch Map!

If you are a tech startup founder or investor in the city please fill out the survey form here.

This is the follow-up to the huge survey of investors (see also below) we’ve done over the last six or more months, largely in capital cities.

These formed part of a broader series of surveys we’re doing regularly for ExtraCrunch, our subscription service that unpacks key issues for startups and investors.

In the first wave of surveys, the cities we wrote about were largely capitals. You can see them listed here.

This time, we will be surveying founders and investors in Europe’s other cities to capture how European hubs are growing, from the perspective of the people on the ground.

We’d like to know how your city’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and generally how your city will evolve.

We leave submissions mostly unedited and are generally looking for at least one or two paragraphs in answers to the questions.

So if you are a tech startup founder or investor in one of these cities please fill out our survey form here.

Thank you for participating. If you have questions you can email mike@techcrunch.com and/or reply on Twitter to @mikebutcher.

#articles, #business, #economy, #entrepreneurship, #europe, #startup-company, #tc, #techcrunch, #verizon-media

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