ORIX invests $60M in Israeli crowdfunding platform OurCrowd

Japan-based financial services group ORIX Corporation today announced that it has made a $60 million strategic investment into the Israeli crowdsourcing platform OurCrowd. In return, the crowdfunding platform will provide the firm with access to its startup network. OurCrowd also says that the two groups will collaborate to create financial products and investment opportunities for the Japanese and global market, including access to its venture funds and specific companies in the OurCrowd portfolio.

ORIX is a global leader in diversified business and financial services who will strengthen OurCrowd in many ways,” OurCrowd CEO Jon Medved said in today’s announcement. “We are enthusiastic about the potential to further transform the venture capital asset class together and provide a strong bridge for our innovative companies to the important Asian markets.”

While ORIX already operates in 37 countries, including the U.S., this is the company’s first investment in Israel. It comes at a time where Japanese investments in Israel are already surging. And earlier this year, Israel’s flag carrier El Al was about to launch direct flights to Tokyo, for example, and while the pandemic canceled those plans, it’s a clear sign of the expanding business relations between the two countries.

“We are excited about investing in OurCrowd, Israel’s most active venture investor and one of the world’s most innovative venture capital platforms,” ORIX UK CEO Kiyoshi Habiro said. “We intend to be active partners with OurCrowd and help them accelerate their already impressive growth, while bringing the best of Israeli tech to Japan’s large industrial and financial sectors.”

So far, OurCrowd has made investments in 220 companies across its 22 funds. Some of its most successful exits include Beyond Meat and Lemonade, JUMP Bike, Briefcam and Argus. ORIX, too, has quite a diverse portfolio, with investments that range from real estate to banking and energy services.

#banking, #beyond-meat, #crowdfunding, #entrepreneurship, #finance, #financial-services, #investment, #israel, #japan, #jon-medved, #ourcrowd, #private-equity, #real-estate, #united-states

0

Portugal’s Faber reaches $24.3M for its second fund aimed at data-driven startups from Iberia

Portuguese VC Faber has hit the first close of its Faber Tech II fund at €20.5 million ($24.3 million). The fund will focus on early-stage data-driven startups starting from Southern Europe and the Iberian peninsula, with the aim of reaching a final close of €30 million in the coming months. The new fund targets pre-series A and early-stage startups in Artificial Intelligence, Machine Learning and Data Science.

The fund is backed by European Investment Fund (EIF) and the local Financial Development Institution (IFD), with a joint commitment of €15 million (backed by the Investment Plan for Europe – the Juncker Plan and through the Portugal Tech program), alongside other private institutional and individual investors.

Alexandre Barbosa, Faber’s Managing Partner, said “The success of the first close of our new fund allows us to foresee a growth in the demand for this type of investment, as we believe digital transformation through Intelligence Artificial, Machine Learning and data science are increasingly relevant for companies and their businesses, and we think Southern Europe will be the launchpad of a growing number.”

Faber has already ‘warehoused’ three initial investments. It co-financed a 15.6 million euros Series A for SWORD Health – portuguese startup that created the first digital physiotherapy system combining artificial intelligence and clinical teams. It led the pre-seed round of YData, a startup with a data-centric development platform that provides data science professionals tools to deal with accessing high-quality and meaningful data while protecting its privacy. It also co-financed the pre-seed round of Emotai, a neuroscience-powered analytics and performance-boosting platform for virtual sports.

Faber was a first local investor in the first wave of Portugal’s most promising startups, such as Seedrs (co-founded by Carlos Silva, one f Faber’s Partners) which recently announced its merger with CrowdCube); Unbabel; Codacy and Hole19, among others.

Faber’s main focus is deep-tech and data science startups and as such it’s assembled around 20 experts, researchers, Data Scientists, CTO’s, Founders, AI and Machine Learning professors, as part of its investment strategy.

In particular, it’s created the new role of Professor-in-residence, the first of whom is renowned professor Mário Figueiredo from Lisbon’s leading tech university Instituto Superior Técnico. His interests include signal processing, machine learning, AI and optimization, being a highly cited researcher in these fields.

Speaking to TechCrunch in an interview Barbosa added: “We’ve seen first-time, but also second and third-time entrepreneurs coming over to Lisbon, Porto, Barcelona, Valencia, Madrid and experimenting with their next startup and considering starting-up from Iberia in the first place. But also successful entrepreneurs considering extending their engineering teams to Portugal and building engineering hubs in Portugal or Spain.”

“We’ve been historically countercyclical, so we found that startups came to, and appears in Iberia back in 2012 / 2013. This time around mid-2020, we’re very bullish on what’s we can do for the entrepreneurial engine of the economy. We see a lot happening – especially around our thesis – which is basically the data stack, all things data AI-driven, machine learning, data science, and we see that as a very relevant core. A lot of the transformation and digitization is happening right now, so we see a lot of promising stuff going on and a lot of promising talent establishing and setting up companies in Portugal and Spain – so that’s why we think this story is relevant for Europe as a whole.”

#articles, #artificial-intelligence, #barcelona, #crowdcube, #cto, #entrepreneurship, #europe, #european-investment-fund, #machine-learning, #madrid, #managing-partner, #neuroscience, #portugal, #private-equity, #seedrs, #spain, #startup-company, #tc, #valencia

0

Nigeria’s Autochek raises $3.4M for car sales and service platform

Nigeria based startup Autochek looks to bring the sales and servicing of cars in Africa online. The newly founded venture has closed a $3.4 million seed-round co-led by TLcom Capital and 4DX ventures toward that aim.

The raise comes fresh off of Autochek’s September acquisition of digital car sales marketplace Cheki in Nigeria and Ghana. It also follows the recent departure of Autochek CEO Etop Ikpe from Cars45 — the startup he co-founded in 2016, now owned by Amsterdam based OLX Group.

That’s a lot of news in a short-time for Ikpe. His new company will likely be in direct competition with his previous venture (also located in Nigeria). Still, the Nigerian entrepreneur — who built his early tech credentials at e-commerce startups DealDey and Konga — says Autochek is a new model.

“It’s different in the type of technology we’re building and that it’s asset light. I don’t have any inventory. I don’t buy cars. I don’t transact any [physical] cars. I don’t own any inspection locations. I don’t own any dealerships,” Ikpe told TechCrunch on a call from Lagos.

Autochek’s model, according to its CEO, is aimed at creating the digital infrastructure for a new system to better coordinate sales, servicing, and vehicle records of the car market in Nigeria and broader Africa.

Autochek CEO Etop Ikpe, Image Credit: Autochek

Ikpe characterizes that market as still largely informal and fragmented. “We’re basically focused on technology solutions to build the rails of [Africa’s] automotive sector to run on. We’re focusing on three foundations of the market: transactions and trading, maintenance, and financing,” he said.

Autochek’s platform — managed by a developer team in Lagos and Nairobi — is a network for consumers and businesses to buy cars, sell cars, service cars, and finance cars sales.

On the financing side, the startup launched with 10 bank partnerships in Nigeria and two in Ghana, according to Ikpe. Creating more financing options is both a big opportunity for the startup and consumers, he explained. “The used car market in Africa is a $45 billion a year market that has only a 5% financing penetration rate…so there’s huge upside for growth.”

Image Credit: Autochek

Across its core product offerings, Autochek has created a network of partners and standards. The company generates revenues through fees charged on consumer transactions and commissions paid by dealers and service shops on the platform. Consumers can sign up and use the Autochek app for free.

On the sudden departure from his previous startup, Cars45, “I left because I wanted to build something else,” explained Ikpe. There’s been plenty of speculation in local tech press as to what happened, including reports of forced exits by investors. Ikpe declined to get into the details except to say, “I’ve resigned. I’ve moved on and I’m focused on doing what I’m doing right now.”

In addition to its operations in Nigeria — Africa’s most populous nation, largest economy and top VC destination — Autochek plans to use its seed-financing to expand services and geographic scope. The startup will add associated auto related services, such as insurance and blue book pricing products. Autochek is also eying possible entry in new countries such as Ivory Coast, Senegal, South Africa, Kenya, Egypt and Algeria. More M&A could also be in play. “Acquisitions are going to be a core part of our expansion strategy,” said Ikpe.

TLcom Capital Partner Andreata Muforo confirmed the fund’s co-lead on the $3.4 million seed round. Speaking to TechCrunch on a call from Nairobi, she named Autochek’s asset light model, Ikpe’s repeat founder status, and the fund’s view of auto sales and service as an underserved market in Africa as reasons for backing the venture. Golden Palm Investments, Lateral Capital, MSA Capital, and Kepple Africa Ventures also joined the investment round.

While fintech gains the majority of VC financing across Africa’s top tech hubs — such as Nigeria, Kenya and South Africa — mobility related startups operating on the continent have attracted notable support. Drone delivery venture Zipline and trucking logistics company Kobo360 have both received backing from Goldman Sachs. In 2019, FlexClub, a South African startup that matches investors and drivers to cars for ride-hailing services, used a $1.3 million round to expand to Mexico in partnership with Uber.

#africa, #berlin, #cars45, #ceo, #entrepreneur, #entrepreneurship, #ghana, #goldman-sachs, #kenya, #kobo360, #lagos, #mexico, #nairobi, #nigeria, #private-equity, #south-africa, #startup-company, #tc, #tlcom-capital, #uber

0

Masayoshi Son, Dr. Anthony Fauci, Bill Gates and More Will Speak at the DealBook Online Summit

We have questions for Dr. Anthony Fauci, Masa Son, Senator Elizabeth Warren and more.

#biden-joseph-r-jr, #bourla-albert, #gates-bill, #larson-heidi, #mergers-acquisitions-and-divestitures, #private-equity, #son-masayoshi, #stimulus-economic, #united-states-politics-and-government

0

Taylor Swift Denounces Scooter Braun as Her Catalog Is Sold Again

The music manager acquired the rights to the pop superstar’s first six albums as part of a deal with her former label, Big Machine. Now he has sold them to the investment firm Shamrock Capital.

#big-machine-label-group, #braun-scooter-1981, #carlyle-group-lp, #pop-and-rock-music, #private-equity, #shamrock-capital, #swift-taylor

0

Which emerging technologies are enterprise companies getting serious about in 2020?

Startups need to live in the future. They create roadmaps, build products and continually upgrade them with an eye on next year — or even a few years out.

Big companies, often the target customers for startups, live in a much more near-term world. They buy technologies that can solve problems they know about today, rather than those they may face a couple bends down the road. In other words, they’re driving a Dodge, and most tech entrepreneurs are driving a DeLorean equipped with a flux-capacitor.

That situation can lead to a huge waste of time for startups that want to sell to enterprise customers: a business development black hole. Startups are talking about technology shifts and customer demands that the executives inside the large company — even if they have “innovation,” “IT,” or “emerging technology” in their titles — just don’t see as an urgent priority yet, or can’t sell to their colleagues.

How do you avoid the aforementioned black hole? Some recent research that my company, Innovation Leader, conducted in collaboration with KPMG LLP, suggests a constructive approach.

Rather than asking large companies about which technologies they were experimenting with, we created four buckets, based on what you might call “commitment level.” (Our survey had 211 respondents, 62% of them in North America and 59% at companies with greater than $1 billion in annual revenue.) We asked survey respondents to assess a list of 16 technologies, from advanced analytics to quantum computing, and put each one into one of these four buckets. We conducted the survey at the tail end of Q3 2020.

Respondents in the first group were “not exploring or investing” — in other words, “we don’t care about this right now.” The top technology there was quantum computing.

Bucket #2 was the second-lowest commitment level: “learning and exploring.” At this stage, a startup gets to educate its prospective corporate customer about an emerging technology — but nabbing a purchase commitment is still quite a few exits down the highway. It can be constructive to begin building relationships when a company is at this stage, but your sales staff shouldn’t start calculating their commissions just yet.

Here are the top five things that fell into the “learning and exploring” cohort, in ranked order:

  1. Blockchain.
  2. Augmented reality/mixed reality.
  3. Virtual reality.
  4. AI/machine learning.
  5. Wearable devices.

Technologies in the third group, “investing or piloting,” may represent the sweet spot for startups. At this stage, the corporate customer has already discovered some internal problem or use case that the technology might address. They may have shaken loose some early funding. They may have departments internally, or test sites externally, where they know they can conduct pilots. Often, they’re assessing what established tech vendors like Microsoft, Oracle and Cisco can provide — and they may find their solutions wanting.

Here’s what our survey respondents put into the “investing or piloting” bucket, in ranked order:

  1. Advanced analytics.
  2. AI/machine learning.
  3. Collaboration tools and software.
  4. Cloud infrastructure and services.
  5. Internet of things/new sensors.

By the time a technology is placed into the fourth category, which we dubbed “in-market or accelerating investment,” it may be too late for a startup to find a foothold. There’s already a clear understanding of at least some of the use cases or problems that need solving, and return-on-investment metrics have been established. But some providers have already been chosen, based on successful pilots and you may need to dislodge someone that the enterprise is already working with. It can happen, but the headwinds are strong.

Here’s what the survey respondents placed into the “in-market or accelerating investment” bucket, in ranked order:

#column, #corporate-venture-capital, #enterprise, #entrepreneurship, #internet-of-things, #mobile-technologies, #private-equity, #startups, #tc

0

Calling Dublin VCs: Be featured in The Great TechCrunch Survey of European VC

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Dublin will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

We’d like to know how Ireland’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and, generally, how your thinking will evolve from here. Obviously, most VCs are in Dublin, but we don’t want to miss out on those based elsewhere.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

https://techcrunch.com/extra-crunch/investor-surveys/

For example, here is the recent survey of London.

You are not in Dublin, but would like to take part? That’s fine! Any European VC investor can STILL fill out the survey, as we probably will be putting a call out to your city next anyway! And we will use the data for future surveys on vertical topics.

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

#corporate-finance, #dublin, #economy, #entrepreneurship, #europe, #european-union, #finance, #ireland, #london, #money, #private-equity, #startup-company, #survey, #tc, #venture-capital

0

Inside Silicon Valley’s SPAC psychology

The SPAC (special purpose acquisition company) hype is the latest financial engineering offering to quickly hit both mainstream media and the backrooms of Silicon Valley.

Wall Street is now “printing” 15 new SPAC IPOs each week while mainstream media prints 15 articles a week on the subject. Perhaps it’s time to explore the psychological motivations driving SPAC-mania.

I’m not going to cover the architecture or the mechanics of SPACs. The concept is the more familiar “reverse merger” where a public company acquires a more valuable private company to increase the public company’s valuation. With SPACs, the public company is literally a blank-check IPO company and the sole goal is for the acquired private company to become the operating public company.

SPAC IPO investors of the blank-check company also intend to include a PIPE (a third legal/financial structuring of a private investment in a public entity) to ensure that the resulting public company is fully funded for at least the next five years.

SPAC psychology

The psychology of how such hype develops and the pattern-matching that determines how it is likely to play out can be discovered through private conversations inside Sand Hill Road VC offices, in Silicon Valley boardrooms and on Wall Street. Here are the three investment themes I’m predominantly hearing:

  • New market creation and market-timing psychological forces.
  • Fear versus greed and risk rationalization psychology.
  • The FOMO flywheel effect.

Theme 1:  Wall Street and Silicon Valley created a new product for Main Street

Money, like water, finds the lowest ground and follows the path of least resistance.

Wall Street is currently awash in cash seeking a return. Effective 0% interest rates have stimulated new financial engineering ideas with relatively low risk, reviving a decades-old “financing vehicle”  known as the SPAC “blank check” IPO company. Wall Street has linked up with private markets to allow for a faster path to liquidity and higher value exits to create a tasty new investment product. Frost with a classic VC fund-like structure (2+2+20) to reduce risk for SPAC sponsors and initial investors, and the product sells like hotcakes!

Finally, put a for limited time only clock on the whole structure and the resulting rush to jump through a new IPO window before it closes creates a new investment race where there will be clear winners, laggards and losers.

As with most great new investment products, the idea is to sell this product to Main Street at a much higher valuation while creating a classic win-win-win mindset and a “buyer beware” undertone.

Notes:

  • (2+2+20) consists of a typical 2% management underwriting fee + $2 million of management operating expenses to fund the SPAC sponsors’ private company search, plus a 20% negotiated discount of the private company’s shares the SPAC is acquiring in return for taking them public at a higher valuation.
  • SPAC IPO companies are required by the SEC to find an acquisition target typically within 24 months or the structure is delisted and all remaining cash is returned to the original investors.

Theme 2:  Fear versus greed and risk rationalization psychology

#aerospace, #column, #entrepreneurship, #funding, #fundings-exits, #ma, #private-equity, #spac, #tc, #united-states, #venture-capital

0

What I wish I’d known about venture capital when I was a founder

When you’re running your own venture — especially if it’s your first — it’s unlikely you will find the time to deep dive into how venture capital firms work. Fundraising is distracting for founders and can even hurt their company in the early days. But if you only start learning about VCs when you’re already down the fundraising path, you’ll already be too late.

Founders tend to make a series of classic mistakes when raising funding. Error number one (and two) is to raise the wrong amount of money and to do it at the wrong time. This double whammy results in founders being very diluted too early or not raising enough money to reach the next funding stage.

They can also put all their eggs in one basket too early. I made that mistake. I had signed a term-sheet (a nonbinding agreement) for a €2.5 million Series A round, passed the due diligence process, and the investment committee had approved the deal. But at the very last minute, a claim from one of the angels on my cap table made the prospect investor change his mind. In a Point Nine Capital survey, founders said that the two most stressful elements of raising venture capital are not knowing where in the fundraising process they are and not understanding why VCs have rejected their proposal.

On the other hand, if you know what VCs all about, you’ll be geared up for the ride, know the kind of investor personality you’re aiming for, and crucially — you’ll optimize the value of your equity in the long run. Founders who manage to raise more VC funds end up having a greater value stake in their company when the time comes to IPO, according to statistical research. The learning curve is steep; you’re not just studying VC as an industry, but the individual investors themselves. So, I’ve decided to share the main lessons about VC that I wish I’d known when I was a startup founder chasing venture capital.

1. It’s not about raising, it’s about raising the right amount at the right time

Startups are all about reaching two milestones: (a) product/market fit and (b) a profitable, repeatable and scalable growth model. Once those two corners are turned, the risk of a startup decreases enormously, which is normally reflected in the valuation. As an early-stage founder, if you want to protect your ownership, make sure you’re raising small amounts of money while your valuations are low.

Save your cash until you de-risk your early-stage startup. Then, raise aggressively when you finally have hard evidence that you have a strong product/market fit and a clear growth model. Be sure you understand when your company reaches that stage and becomes a scaleup. You don’t want to be a founder that has successfully raised a Series A round but has very little ownership and a very long road ahead.

Sometimes, the timing is out of your hands. The price of equity in startups is governed by the supply and demand of capital. Investors themselves have to raise money from another type of investor called Limited Partners (LPs), who may hold stakes in a variety of assets. If LPs have a strong interest in VC assets, there is more supply of capital and the price of startup equity will rise. But the opposite is also true. If you take a look at the last two recessions in the United States (2000 and 2008), you will see that the stock market crash coincided with corrections to valuations in the VC market.

So, be strategic and raise when “the market” has a strong appetite for your equity; otherwise, stretch your runway and wait for the right time. Right now, it’s common to see startups postponing their next raise to 2021, looking for stronger winds.

2. Location: Tell me where you are and I’ll tell you how much you’ll raise

I see two conditions for startups to raise a large round: (a) a large market that can justify a sizable exit, and (b) a large VC fund (small funds don’t need super sizable exits to be successful).

Assuming the first condition is met, where can we find those large VC funds? Typically, they’ll be in locations close to large markets, with a track record of sizable exits.

#column, #corporate-finance, #economy, #entrepreneurship, #europe, #private-equity, #startups, #tc, #venture-capital, #venture-debt

0

Startup fundraising is the most tangible gender gap. How can we overcome it?

Year-in, year-out, the gender gap in venture capital investment continues to be a problem women founders face. While the gender gap in other areas (such as the number of women entering tech in general) may be on the right path, this disparity in funding seems to be stagnant. There has been little movement in the amount of VC dollars going to women-founded companies since 2012.

In fintech, the problem is especially prominent: Women-founded fintechs have raised a meager 1% of total fintech investment in the last 10 years. This should come as no surprise, given that fintech combines two sectors traditionally dominated by men: finance and technology. Though by no means does this mean that women aren’t doing incredible work in the field and it’s only right that women founders receive their fair share of VC investment.

In the short term, women founders can take action to boost their chances at VC success in the current investment climate, including leveraging their community and support network and building the necessary self-belief to thrive. In the long term, there needs to be foundational change to level the playing field for women entrepreneurs. VC funds must look at ways they can bring in more women decision-makers, all the way up to the top.

Let’s dive into the state of gender bias in VC investing as it stands, and what founders, stakeholders and funds themselves can do to close the gap.

Venture capital is far from a level playing field

In 2019, less than 3% of all VC investment went to women-led companies, and only one-fifth of U.S. VC went to startups with at least one woman on the founder team. The average deal size for female-founded or female co-founded companies is less than half that of only male-founded startups. This is especially concerning when you consider that women make up a much bigger portion of the founder community than proportionately receive investment (around 28% of founders are women). Add in the intersection of race and ethnicity, and the figures become bleaker: Black women founders received 0.6% of the funding raised since 2009, while Latinx female founders saw only 0.4% of total investment dollars.

The statistics paint a stark picture, but it’s a disparity that I’ve faced on a personal level too. I have been faced with VC investors who ask my co-founder — in front of me — why I was doing the talking instead of him. On another occasion, a potential investor asked my co-founder who he was getting into business with, because “he needed to know who he’d be going to the bar with when the day was up.”

This demonstrates a clear expectation on the part of VC investors to have a male counterpart within the founding team of their portfolio companies, and that they often — whether subconsciously or consciously — value men’s input over that of the women on the leadership team.

So, if you’re a female founder faced with the prospect of pitching to VCs — what steps can you take to set yourself up for success?

Get funded, as a woman

Women founders looking to receive VC investment can take a number of steps to increase their chances in this seemingly hostile environment. My first piece of advice is to leverage your own community and support network, especially any mentors and role models you may have, to introduce you to potential investors. Contacts that know and trust your business may be willing to help — any potential VC is much more likely to pay you attention if you come as a personal recommendation.

If you feel like you’re lacking in a strong support network, you can seek out female-founder and startup groups and start to build your community. For example, The Next Women is a global network of women leaders from progress-driven companies, while Women Tech Founders is a grassroots organization on a mission to connect and support women in technology.

Confidence is key when it comes to fundraising. It’s essential to make sure your sales, pitch and negotiation skills are on point. If you feel like you need some extra training in this area, seek out workshops or mentorship opportunities to make sure you have these skills down before you pitch for funding.

When talking with top male VCs and executives, there may be moments where you feel like they’re responding to you differently because of your gender. In these moments, channeling your self-belief and inner strength is vital: The only way that they’re going to see you as a promising, credible founder is if you believe you are one too.

At the end of the day, women founders must also realize that we are the first generation of our gender playing the VC game — and there’s something exciting about that, no matter how challenging it may be. Even when faced with unconscious bias, it’s vital to remember that the process is a learning curve, and those that come after us won’t succeed if we simply hand the task over to our male co-founder(s).

More women in VC means more funding for female founders

While there are actions that women can take on an individual level, barriers cannot be overcome without change within the VC firms themselves. One of the biggest reasons why women receive less VC investment than men is that so few of them make up decision-makers in VC funds.

A study by Harvard Business Review concluded that investors often make investment decisions based on gender and ask women founders different questions than their male counterparts. There are countless stories of women not being taken seriously by male investors, and subsequently not being seen as a worthwhile investment opportunity. As a result of this disparity in VC leadership teams, women-focused funds are emerging as a way to bridge the funding gender gap. It’s also worth noting that women VCs are not only more likely to invest in women-founded companies, but also those founded by Black entrepreneurs. In addition to embracing women and minority-focused investors, the VC community as a whole should ensure they’re bringing in more women leaders into top positions.

Gender equality in VC makes more business sense

From day one, the Prometeo team has made concerted efforts to have both men and women in decision-maker roles. Having women in the founding team and in leadership positions has been crucial in not only helping to fight the unconscious bias that might take place, but also in creating a more dynamic work environment, where diversity of thought powers better business decisions.

Striving for gender equality, both within the walls of VC funds and in the founder community, is also better for businesses’ bottom line. In fact, a study by Boston Consulting Group found that women-founded startups generate 78% for every dollar invested, compared to 31% from men-founded companies.

Here in Latin America, women founders receive a higher proportion of VC investment than anywhere else in the world, so it’s no surprise that women are leading the region’s fintech revolution. Having more women in leadership positions is ultimately a better bet for business.

Closing the gender gap in VC funding is no simple task, but it’s one that must be undertaken. With the help of internal VC reform and external initiatives like community building, training opportunities and women-focused support networks, we can work toward finally making the VC game more equitable for all.

#articles, #co-founder, #column, #corporate-finance, #diversity, #economy, #entrepreneurship, #female-entrepreneurs, #finance, #financial-technology, #funding, #gender-equality, #harvard, #latin-america, #private-equity, #sexism, #startup-company, #startups, #tc, #the-next-women, #venture-capital, #venture-capital-investment, #women-in-venture-capital, #women-tech-founders

0

MSCHF’s Push Party raises an unconventional seed round at a $200 million valuation

As part of its latest stunt, MSCHF, a venture-backed creative studio that’s smarter and more audacious than most, is poking a little fun at the venture industry itself and perhaps publications like TechCrunch too. The startup has spun out a rather simplistic app into a separate company and raised an undisclosed amount of seed funding from a very real venture capital firm at an eye-popping $200 million valuation.

For the time being, the actual completion of the legal paperwork to cement this valuation seems like a more complex hurdle than the technical challenges of building the app itself. Push Party is by all means a Gen-Z Yo, it does one thing and one thing only, allows people to push a button which sends a push notification to every user of the app. There are no friends, no groups, no influencers. It’s a big button that fires off an awful lot of notifications.

Image via MSCHF

Like everything else MSCHF does, the app is designed with virality in mind. The startup’s last application they shipped, “Finger on the App” launched a huge online contest that ended after multiple winners who spent several days with their finger sitting on their phone screen. The fun with this rollout is that there’s no telling who pushed the button especially when users can set their own user names and unsurprisingly seem keen to pick celebrity names.

If the app Push Party takes some heavy inspiration from Yo, it’s also taking a page from what helped make it famous, namely a quizzically high early valuation for a product that did almost nothing. Back in simpler times, 2014, Yo raised $1.5 million on $10 million. But fast forward to 2020 and earning a $10 million valuation for a half-baked conceptual take doesn’t mean quite as much, it’s been normalized to a degree. As a result, MSCHF upped the ante and banked a $200 million valuation for Push Party in this raise.

It used to be that a $200 million valuation was a sign of late-stage traction rather than early-stage hype, but high valuations have grown increasingly common for investors racing to win the most competitive deals. Earlier this summer, audio startup Clubhouse raised eyebrows when it banked a $100 million early valuation, and just a few months ago, Roam, a note-taking app with a cult following raised a seed round on $200 million.

Push Party’s round was financed by Founders Fund with Principal Trae Stephens driving the deal. If you’re puzzled how the MSCHF team bagged a real investor from a real firm for a dubiously real project, the mystery fades when you find Stephens is unsurprisingly a backer of MSCHF itself. Stephens is by all means, in on the joke.

In a tongue-in-cheek press release, Stephens notes that, “We were a bit concerned by the valuation at first, but I told my people to run toward gunfire for anything less than $250 million.”

Is any of this real? Well, MSCHF insists that they went through all of the legal steps of incorporating Push Party and raising this round. How much the startup actually raised is perhaps more suspect, it’s unclear whether this was a $10 million investment or $1 million or $10,000, the team wasn’t too keen to go into details there, though I did ask someone from MSCHF whether the round was more than $100, and they confirmed that it was definitely more than $100.

Though the company refused to dissect what exactly it’s trying to communicate here, I think a good part of it is just poking at the idea that in today’s climate of ridiculous valuations there’s a tendency for some fairly nebulous numbers to signal value or innovation where this isn’t quite as much. And that often times a high valuation from a prestigious firm is a vote of confidence that drives Silicon Valley watchers to drive downloads while other investors toss in checks, engineers send in job applications and, yes, journalists write stories.

#economy, #finance, #founders-fund, #money, #private-equity, #tc, #valuation, #venture-capital, #yo

0

How growth investing grew so big so quickly

It was 2013, and I’d been camping out in Uber’s San Francisco offices for weeks. Our team wanted to invest in the company on behalf of my private equity firm, but was utterly daunted by its “eye-popping” $1 billion valuation.

Back then, unicorns were a rarity and that was a far steeper price tag than we felt comfortable offering to a company in an as yet unproven market with no cash flow to speak of. After spending an additional two weeks in their offices conducting diligence sessions, the price tag rose even higher — to $3 billion. Despite our valuation concerns, we ended up making the investment. At the time, I never would have imagined that not only were we participating in the vanguard of a new industry — namely, ridesharing — but also, surprisingly, a transformation of the venture ecosystem.

Fast-forward a few years, and growth funds, defined as investments into companies that have achieved product-market fit and are primed to scale with further capital, have become significant forces in the tech ecosystem. They’ve invested in every major tech company that has gone public — Zoom, Slack, Uber and CrowdStrike, to name a few — as well as almost every single billion-dollar plus technology firm on its way to IPO. Given the current scale — growth funds poured $360 billion into startups in 2019 — it can be hard to comprehend that these funds were nascent only a decade ago.

Despite being relatively new to market, this investment category has quickly become one of the most active. It has also become one of the most confusing, as lines have blurred among early-stage VCs, private equity firms, hedge funds and dedicated growth-stage firms, all offering an abundance of capital and similar sounding value-add to high-growth startups. Based on my experience as a former private-equity-investor-turned-growth-stage VC, here’s a quick history on this young but massive industry, thoughts on where it’s going next, and suggestions for founders and startup executives seeking to understand the important but little understood nuances that will help them determine the right partner.

Reflecting back on any 10-year period in the capital markets can lead you to believe you’ve found new, unique, secular shifts in the way markets function. Zoom out 50 years and you’ll often find capital markets have a tendency to repeat themselves. Today, for example, later-stage funds, including those that primarily trade public stocks, are building teams to scout seed and Series A investments. Early-stage funds have assembled later-stage growth funds to double down on early-stage winners. While today lines are blurring across investment stages and funds, the reality is that private markets have seen similar trends before.

As an example, between the 1960s and 1980s, VCs moved later and ultimately invested nearly 90% of their capital in leveraged buyouts and late-stage financings before ultimately refocusing on early-stage bets in the 1990s at the dawn of the internet. As well-established funds cycled back and forth between early- and late-stage investing, “growth” emerged as a distinct asset class to target investments sitting in between early- and late-stage financings (roughly Series B to pre-IPO rounds).

This current growth cycle began in 2009 when Facebook accepted a $200 million check at a $10 billion valuation from DST. At the time, Facebook’s valuation shocked many investors, but then it went public in 2012 at a $100-billion-dollar valuation and is of course worth over $700 billion today.

But Facebook was only the start. There was also Uber and Airbnb. When I helped spearhead an investment in Airbnb in 2014, I was completely distraught over the “massive” $10 billion valuation. Of course, these big bets paid off — so much so that the entire growth category reoriented itself toward hypergrowth, capital-consumptive business models. The momentum clearly continues today.

Deciphering each firm type’s version of value-add

Companies now have a broad array of funds from which to choose when evaluating private market financings. Here are the four broad categories of funds most active in growth investing and the use cases in which they can provide the most value to their investments:

Dedicated growth firms

Funds like CapitalG came into their own in the 2010s and were built to support Series B to pre-IPO companies. These firms were created specifically to support high-velocity startups with the capital and resources to scale. Because many of these growth firms were built over the past decade, they typically have a relatively small number of funds under their purview and retain low partner-to-investment ratios, enabling each partner to focus on each company’s success.

Since companies in the growth phase tend to encounter familiar growing pains (e.g., maturing sales and customer success functions, building out new product lines and R&D centers of excellence), growth funds tend to invest heavily in in-house stage-specific marketing and sales; people and talent; and product and engineering resources in order to improve their portfolio companies’ odds of success.

#column, #early-stage, #growth-investing, #private-equity, #startups, #tc, #unicorn, #venture-capital

0

Will new SEC equity crowdfunding rules encourage more founders to pass the hat?

The flow of venture capital in 2020 has been surprisingly strong given the year’s general uncertainty, but while investors have showered plenty of dough on growth-stage companies, seed-stage startups are down 32% last quarter compared to the year before.

There have been plenty of recent conversations about alternative funding routes for founders, and one of those oft-overlooked paths has been equity crowdfunding. While crowdfunding platforms like Kickstarter push consumers to back unrealized projects in exchange for products or other services, equity crowdfunding allows consumers to actually invest cash and receive a piece of the company. It’s not a conventional path, but it can be a viable option for companies that have a close relationship with an engaged customer base.

The Security and Exchange Commission’s Regulation Crowdfunding guidelines were adopted under Title III of the JOBS Act back in 2016, but because many entrepreneurs were unfamiliar with how to participate, many of the startups that have taken advantage of it haven’t been the highest quality. The tide could be turning: This week, the SEC updated some of its guidance on crowdfunding, eliminating some ambiguities and increasing the amount of capital companies can raise from both accredited and nonaccredited investors. Additionally, companies can now raise $5 million per year using equity crowdfunding, compared to the previous limit of $1.07 million.

But life has gotten easier in other ways as well for founders pursuing this fundraising type and the platforms that seek to simplify it.

Wefunder is one of a handful of equity crowdfunding platforms that have popped up in the last few years. Before a company can raise on its platform, Wefunder vets them before allowing them to tap into their network of amateur investors who can invest as little as $100 with the median investment sitting at $250. Last month, 40 companies launched on Wefunder and collectively raised $12 million, according to Wefunder CEO Nicholas Tommarello.

#funding, #private-equity, #startups, #tc, #venture-capital

0

Do Dunkin’ and Arby’s Go Together? Private Equity Group Bets $11 Billion They Do

Inspire Brands, backed by Roark Capital, is assembling a portfolio of quick-service restaurant chains it thinks will withstand the pandemic.

#arbys-inc, #baskin-robbins, #buffalo-wild-wings, #coffee, #coronavirus-2019-ncov, #dunkin-donuts, #fast-food-industry, #inspire-brands-inc, #mergers-acquisitions-and-divestitures, #private-equity, #restaurants, #roark-capital-group, #sonic-drive-in

0

Leon Black Calls Relationship With Jeffrey Epstein a ‘Terrible Mistake’

Mr. Black, the billionaire chief executive of Apollo Global Management, said others’ continued association with Mr. Epstein had given him “misplaced comfort” in doing business with him.

#apollo-global-management, #black-leon-d, #company-reports, #epstein-jeffrey-e-1953, #finances, #museum-of-modern-art, #private-equity

0

Apollo Clients Await Inquiry’s Findings on Chief and Jeffrey Epstein

Leon Black, Apollo Global Management’s co-founder and leader, has been facing questions from investors over his ties to the convicted sex offender. One has already opted to withhold new investment.

#apollo-global-management, #appointments-and-executive-changes, #black-leon-d, #epstein-jeffrey-e-1953, #private-equity

0

Dunkin’ Brands Is Said to Be Near Deal to Sell Itself and Go Private

The parent of Dunkin’ and Baskin Robbins is in talks with a private-equity-backed company for a takeover that values the company at nearly $9 billion.

#coffee, #doughnuts, #dunkin-donuts, #mergers-acquisitions-and-divestitures, #private-equity

0

Boston startups expand region’s venture capital footprint

This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth mode, and investors back into the check-writing arena.

Boston has been an exemplar of the trend, with early pandemic caution dissolving into rapid-fire dealmaking as summer rolled into fall.

We collated new data that underscores the trend, showing that Boston’s third quarter looks very solid compared to its peer groups, and leads greater New England’s share of American venture capital higher during the three-month period.

For our October look at Boston and its startup scene, let’s get into the data and then understand how a new cohort of founders is cropping up among the city’s educational network.

A strong Q3, a strong 2020

Boston’s third quarter was strong, effectively matching the capital raised in New York City during the three-month period. As we head into the fourth quarter, it appears that the silver medal in American startup ecosystems is up for grabs based on what happens in Q4.

Boston could start 2021 as the number-two place to raise venture capital in the country. Or New York City could pip it at the finish line. Let’s check the numbers.

According to PitchBook data shared with TechCrunch, the metro Boston area raised $4.34 billion in venture capital during the third quarter. New York City and its metro area managed $4.45 billion during the same time period, an effective tie. Los Angeles and its own metro area managed just $3.90 billion.

In 2020 the numbers tilt in Boston’s favor, with the city and surrounding area collecting $12.83 billion in venture capital. New York City came in second through Q3, with $12.30 billion in venture capital. Los Angeles was a distant third at $8.66 billion for the year through Q3.

#aerospace, #boston, #entrepreneurship, #flagship-pioneering, #fundings-exits, #harvard, #private-equity, #startups, #tc, #venture-capital

0

Apollo Board Will Review Leon Black’s Ties to Jeffrey Epstein

Mr. Black, the chief executive and chairman of Apollo Global Management, asked independent board members to examine his relationship with the convicted sex offender.

#apollo-global-management, #black-leon-d, #boards-of-directors, #child-abuse-and-neglect, #epstein-jeffrey-e-1953, #human-trafficking, #private-equity, #sex-crimes, #women-and-girls

0

Marching Orders for the Next Investment Chief of CalPERS: More Private Equity

The nation’s biggest public pension fund is consistently short of the billions of dollars it needs to pay all retirees their pensions. It seeks higher returns.

#california, #california-public-employees-retirement-system, #interest-rates, #meng-ben, #pensions-and-retirement-plans, #private-equity, #states-us, #stocks-and-bonds

0

4-year founder vesting is dead

We recently invested in a team of co-founders who had voluntarily made their own vesting longer than four years. Four-year vesting is the industry standard. Why would someone voluntarily make it longer for themselves?

Their answer: “These days, with companies taking seven to 10 years to reach exit, it would make sense for founders to be on a similar schedule.”

This matters because the four-year co-founder vesting schedule frequently harms startup founders’ interests. Sometimes it damages their startup irreparably.

A growing number of founders are starting to realize this. I talked to quite a few about this over the last two years. Mostly, the “longer-than-four-years-vesting” founders share a similar story as well as logic. Almost always they are repeat, experienced founders. Often scarred by a co-founder separation in their prior startup, they are determined to set things up smarter in their next company.

Importantly, this group of founders assumes they are going to be the ones actually building the company. They created the company. They are the company. Nobody is forcing them out. I suspect founders who already believe this about their own startup will find this post most helpful.

Given the massive implications of co-founder vesting schedules, all startup founders should consider co-founder vesting lengths more carefully and then choose what makes sense for them. You make this decision around the time of incorporation but feel the effects over the lifetime of your company.

4-year vesting schedules are anachronistic

As far back as the 1980s, the standard startup vesting schedule was four or five years, with five being more prevalent on the East Coast. Nobody seems to remember a time it was anything different. The closest I’ve gotten to a logical answer on why it’s four years today stretches back to a pre-401(k) era, from before Reagan’s tax reforms in the ’80s. Prior to then, tax rules incentivized big company pension plans to have vesting periods of at least five years.

Startups didn’t offer traditional pension plans. Instead, startups offered employees stock, vesting over four years instead of five as a competitive move. That is all moot today. It has no relevance for startup founders in 2020.

More relevantly, time from founding to exit has gone from four years in 1999 to eight years in 2020. Yet founder vesting remains stuck at four. This is dangerous.

median time to exit

Exit data from U.S. startups with minimum $1 million in venture funding. Image Credits: PitchBook

Hedging against the crash of ineptitude

#andrew-chen, #column, #corporate-governance, #entrepreneurship, #paul-graham, #private-equity, #startups, #tc, #venture-capital

0

Calling Amsterdam VCs: Be featured in The Great TechCrunch Survey of European VC

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Amsterdam will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

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

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

https://techcrunch.com/extra-crunch/investor-surveys/

For example, here is the recent survey of London.

You are not in Amsterdam, but would like to take part? Or you are in another part of the country? That’s fine! Any European VC investor can STILL fill out the survey, as we probably will be putting a call out to your city next anyway! And we will use the data for future surveys on vertical topics.

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

#amsterdam, #corporate-finance, #economy, #entrepreneurship, #europe, #european-union, #finance, #london, #money, #private-equity, #startup-company, #tc, #venture-capital

0

Silverlake adds a $2 billion “longterm” hedge fund backed by Abu Dhabi to its tech finance toolkit

Silver Lake Partners, the multi-billion dollar tech-focused investment firm, is adding a longterm hedge fund backed by Abu Dhabi’s sovereign wealth fund, Mubadala, to its array of investment vehicles to finance technology companies.

The move into multi-strategy investing represents the diversification of financing vehicles that companies have at their disposal and gives the private equity firm the tools it needs to compete in a world awash with capital and new ways for companies to access public market financing.

It’s probably not a coincidence that the public-private, long-only, investment structure is happening as more tech companies are eschewing later stage financing to find cash on public markets through things like special purpose acquisition companies (SPACS).

According to a statement from the firm, the new strategy has a 25-year deployment life cycle and can be invested across structures, geographies and industries. The agreement makes the two financial entities a couple that will really span time together.

In addition to the new strategy, Silver Lake’s partnership has a new minority shareholder in the Abu Dhabi-backed sovereign wealth fund. Mubadala took a minority stake in the firm by buying up half of the 10% chunk of the firm that Silver Lake’s partners sold to Dyal Capital Partners, a subsidiary of Neuberger Berman.

“Silver Lake is a top performer for Dyal, having innovated, evolved and expanded to prudently grow its assets under management from $23 billion when we first acquired our stake to more than $60 billion today,” said Michael Rees, Managing Director and Head of Dyal Capital Partners, in a statement. “This transaction with Mubadala and their commitment to Silver Lake’s new long-term capital vehicle is a strong endorsement of Silver Lake’s differentiated, global capabilities and underscores our conviction in the ability to generate compelling returns by owning stakes in the world’s leading private investment firms.”

It’s not the first time that the two firms have hooked up. Mubadala is a co-investor alongside Silver Lake in the talent agency and entertainment giant, Endeavor; the autonomous vehicle technology developer, Waymo; and the India-based Jio Platforms.

The firm’s co-chief executives Egon Durban and Greg Mondre said in a joint statement that the new deal would allow the firm to capitalize on a wide range of investment opportunities, including ones outside of the mandates of existing funds.

“As an institution that has long seen the potential of investing in the technology sector, we are excited to partner with Silver Lake, one of the world’s most respected technology investors, to capitalize on major opportunities within and beyond the industry,” said Khaldoon Al Mubarak, Managing Director and Chief Executive Officer of Mubadala, in a statement.  “Technology is the bedrock of the global economy, and fundamental to all other sectors that are being significantly digitalized.  Our goal is to be well positioned to take advantage of this accelerated digital transformation and its potential, and we believe Silver Lake is the right partner and that this is an optimal structure for us.”

Mubadala’s tech portfolio investments kicked off in 2007 with an investment in the chip manufacturer AMD and then through the creation of the semiconductor manufacturing company GlobalFoundries. It’s also backed the medtech company PCI Pharma Services, and a number of ridesharing and e-commerce companies in Abu Dhabi and Silicon Valley, the company said.

The deal with Silver Lake could also be seen as a slap in the face for Softbank — a long time partner for Mubadala, which was an investor in the Japanese investment firm’s $100 billion Vision Fund and a $400 million European-focused investment vehicle which launched in February of last year.

#abu-dhabi, #amd, #finance, #investment, #jio-platforms, #money, #mubadala, #mubadala-investment-company, #neuberger-berman, #private-equity, #semiconductor, #silver-lake, #silver-lake-partners, #softbank, #softbank-group, #tc, #vision-fund, #waymo

0

Healthcare entrepreneurs should prepare for an upcoming VC/PE bubble

While many industries are taking a major hit due to the ongoing pandemic, the healthcare technology market continues to grow. In fact, total healthcare-related innovation funding for H1 2020 hit $9.1 billion, up nearly 19% compared to the same period in 2019, according to StartUp Health’s 2020 Midyear Funding Report.

As the virus continues to pose new challenges for the industry, investors are rushing to pump money into startups addressing healthcare sub-sectors ranging from telemedicine to patient financial engagement.

The inefficiencies and frustrations of the U.S. healthcare system make it a tempting target for disruption-oriented VCs. But here’s the hard truth: Healthcare is unlike any other industry. It has a morass of regulations that a “move-fast-and-break-things” startup can’t handle over the long term.

Healthcare is also a sensitive, personal issue. As such, patients are inherently reluctant to adapt to new technologies, even when they’re dissatisfied with the status quo. Consequently, it’s crucial that startup technology leaders in this space understand how to wade through these unpredictable waters in order to thrive and deliver a strong ROI for investors.

But here’s the hard truth: Healthcare is unlike any other industry. It has a morass of regulations that a “move-fast-and-break-things” startup can’t handle over the long term.

Entering health technology

VCs are seeing all the latest headlines about COVID-19 and spying a potential money-making opportunity to invest capital into innovative startups. However, they must overcome barriers to entry when offering patient-focused, technology-centric solutions before they can compete with legacy players. As the saying goes, “Luck is what happens when preparation meets opportunity,” and, within the healthcare startup space, COVID-19 presents an opportunity for those who stood ready to offer a solution to the market before the situation became a crisis.

Therefore, VC and PE investors should focus on the problem the potential startup is trying to solve as recent times have rapidly refashioned the need for certain solutions. Are there other key players leading the market, or is the startup a duplicative offering that is currently available? If the value proposition is unique, it may be interesting. If it’s not, investors may want to think twice.

#column, #coronavirus, #corporate-venture-capital, #covid-19, #entrepreneurship, #health, #opinion, #private-equity, #telemedicine, #venture-capital

0

Calling VCs in Rome and Milan: Be featured in The Great TechCrunch Survey of European VC

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Rome and Milan will capture how the cities are faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

We’d like to know how the startup scenes are evolving in the cities, how the tech sector is being impacted by COVID-19, and, generally, how your thinking will evolve from here.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Rome and Milan, but would like to take part? Or you are in another part of the country? That’s fine! Any European VC investor can STILL fill out the survey, as we will be putting a call out to your city next anyway!

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

#corporate-finance, #economy, #entrepreneurship, #europe, #european-union, #finance, #london, #milan, #money, #private-equity, #rome, #startup-company, #tc, #venture-capital

0

Calling Helsinki VCs: Be featured in The Great TechCrunch Survey of European VC

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Helsinki will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

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

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Helsinki, but would like to take part? European VC investors can STILL fill out the survey, as we will be putting a call out to your city next anyway!

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

#articles, #business, #corporate-finance, #economy, #entrepreneurship, #europe, #european-union, #helsinki, #london, #private-equity, #startup-company, #tc, #venture-capital

0

Spotify CEO Daniel Ek pledges $1Bn of his wealth to back deeptech startups from Europe

At an online event today, Daniel Ek, the founder of Spotify, said he would invest 1 billion euros ($1.2 billion) of his personal fortune in deeptech “moonshot projects”, spread across the next 10 years.

Ek indicated that he was referring to machine learning, biotechnology, materials sciences and energy as the sectors he’d like to invest in.

“I want to do my part; we all know that one of the greatest challenges is access to capital,” Ek said, adding he wanted to achieve a “new European dream”.

“I get really frustrated when I see European entrepreneurs giving up on their amazing visions selling early on to non-European companies, or when some of the most promising tech talent in Europe leaves because they don’t feel valued here,” Ek said. “We need more super companies that raise the bar and can act as an inspiration.”

According to Forbes, Ek is worth $3.6 billion, which would suggest he’s putting aside roughly a third of his own wealth for the investments.

And it would appear his personal cash will be deployed with the help of a close confidant of Ek’s. He retweeted a post by Shakhil Khan, one of the first investors in Spotify, who said “it’s time to come out of retirement then.”

During a fireside chat held by the Slush conference, he said: “We all know that one of the greatest challenges is access to capital. And that is why I’m sharing today that I will devote €1bn of my personal resources to enable the ecosystem of builders.” He said he would do this by “funding so-called moonshots focusing on the deep technology necessary to make a significant positive dent, and work with scientists, entrepreneurs, investors and governments to do so.”

He expressed his desire to level-up Europe against the US I terms of tech unicorns: “Europe needs more super companies, both for the ecosystem to develop and thrive. But I think more importantly if we’re going to have any chance to tackle the infinitely complex problems that our societies are dealing with at the moment, we need different stakeholders, including companies, governments, academic institutions, non-profits and investors of all kinds to work together.”

He also expressed his frustration at seeing “European entrepreneurs, giving up on their amazing visions by selling very early in the process… We need more super companies to raise the bar and can act as an inspiration… There’s lots and lots of really exciting areas where there are tons of scientists and entrepreneurs right now around Europe.”

Ek said he will work with scientists, investors, and governments to deploy his funds. A $1.2 billion fund would see him competing with other large European VCs such as Atomico, Balderton Capital, Accel, Index Ventures and Northzone.

Ek has been previously known for his interest in deeptech. He has invested in €16m in Swedish telemedicine startup Kry. He’s also put €3m into HJN Sverige, an artificial intelligence company in the health tech arena.

#articles, #artificial-intelligence, #balderton-capital, #biotechnology, #business, #daniel-ek, #economy, #energy, #entrepreneurship, #europe, #forbes, #founder, #kry, #machine-learning, #northzone, #private-equity, #spotify, #startup-company, #tc, #telemedicine, #united-states

0

Entrepreneurship and investing as social good

2020 has been a year of social upheaval. Around the world, society is identifying different problems in our culture and pushing for widespread change. While there are notable steps we can all take, from altering exclusionary company policies to signing action-oriented petitions, the VC and investment world has another, often overlooked option: Investing in change-the-world startups.

Increasingly, angel investors and institutional funds have begun allocating a portion of their funds to startups focused on diversity and social good, whether focused on democratized access to healthcare and education, or larger scale issues like climate change.

Initially, shifting funds to empower social good may seem like a hefty feat, however investors can embrace this mindshift in three simple steps: (1) redistributing stagnant investments; (2) leveraging democratized access to change-making startups; and (3) identifying founders tracking toward success.

Allocating more investments to foster change

Most of the world’s money is tied up in stagnant places. Whether invested in real estate, bonds or other traditional vehicles, this capital typically often shows conservative returns to investors — and has negligible impact on society. The intent isn’t malicious.

Most family offices and private wealth managers strive to minimize losses and these sorts of uniformed portfolios are safe. Even the most seasoned investors should incorporate more variety into their portfolios, determining where they can make profitable investments that yield higher returns while advancing societal good. Investors can take small steps to get more confident in expanding their strategies.

To start, reframe your thinking into seeing the potential opportunity rather than the risk. A good way to do this: Look at how high-risk public equities performed over the last five years and compare it to ventures within tech. Investors will see a significant disparity and the opportunity to make different returns.

The idea is not to put an entire profile in a single venture. Rather, an investor should take a portion of their portfolio in a high-risk investment sector, like public equities or fund structures, and put it in a similar risk profile with a better return. Gradually increasing these increments, starting at 15% and slowly scaling up, can help investors to see outsized returns while making a difference in the process.

A world of passion at your fingertips

For startups of all sizes, democratized access to investors will accelerate the use of capital for social good. Until recently, only the world’s wealthiest people had exposure to premium capital, but crowdfunding and accelerator programs have ushered in new opportunities, forging connections that might not have otherwise been possible.

These avenues have opened new doors for investors and startups. Access to developed networks or innovation hubs like Silicon Valley are no longer make-or-breaks for those looking to raise capital. Extended global opportunity for startups also means investors have more options to find promising ventures that align with their values, regardless of their location.

But while crowdfunding and accelerators have made the world more accessible, they come with sizable challenges. Despite making early-stage investment more obtainable, crowdfunding often does not bring the most valuable investors to the table.

Crowdfunding also inundates platforms with poor-quality deal flow, making it more strenuous for investors to connect with fruitful opportunities. Meanwhile, various accelerators and incubation platforms have emerged, which have advanced global connection, but tend to be quite noisy.

To succeed, entrepreneurs need more than capital. Rather, they need strategic support from experienced investors who can help them make decisions and scale in an impactful way. With a world of ideas at their fingertips, investors should take time to sift through their options and find the ideas that move them the most, prioritizing quality deals and looking toward platforms that curate promising connections.

Empowering entrepreneurs poised for success

Now is the right time to invest in startups. People who innovate during the pandemic have triple the hustle of those who build in safer economies. But while the timing is right, it’s equally important that the fit is right. I’m a big believer in investing in potential: Ambition, unwavering tenacity and empathy are desirable qualities that can help bring game-changing ideas to fruition.

If an investor funds a passionate leader with a strong vision and ability to attract talent, then the groundwork is laid to build something meaningful. When considering the change-makers to invest in, ask: Is this the right person to be building this company? Do they have the ability to attract and lead talent? Is the market big enough, and is there a significant enough problem to build a company around?

If the answer isn’t yes to all of these questions, it’s important to gauge if you can see a theoretical exit, or if the company is pre-seed or Series A, if they have the ability to scale to a decent size.

Despite this, investing in startups, no matter how good their intentions, can scare investors. One way to overcome trepidation is to invest in larger-stage startups that seem less risky and then wade into earlier-stage startups at your own pace. Special purpose acquisition companies (SPACs) are also becoming an interesting investment option.

SPACs are corporations formed for the sole purpose of raising investment capital through an IPO. The proceeds are then used to buy one or more existing companies, an option that could decrease anxiety for risk-averse investors looking to expand their comfort zone.

Any strategy an investor chooses to embrace social good is a step in the right direction. Capital is a tangible way to fuel innovation and bring about impactful change.

Democratized access to startups yields more opportunity for investors to find ventures that align with their values while diversifying their profiles can provide tremendous results. And when that return means disrupting the status quo and empowering societal change? Everyone wins.

#angel-investor, #business-incubators, #column, #crowdfunding, #entrepreneurship, #opinion, #philanthropy, #private-equity, #social-good, #spacs, #startup-company, #startups, #tc

0

Austin-based EmPath’s employee training and re-skilling service snags seed funding from B Capital

By the time Felix Ortiz III left the Army in 2006, the Brooklyn, NY native had spent time taking classes at the City University of New York and St. John’s. Those experiences led him to found ViridisLearning, which aimed to give universities a better way to track student development to help graduates land jobs.

Now he’s taken the learnings of that attempt to reshape education into the corporate world and raised over $1 million in financing from investors including B Capital, the investment firm launched jointly by the Boston Consulting Group and Facebook co-founder Eduardo Saverin, and Subversive Capital.

The goal of Ortiz’s newest startup, EmPath, is to provide corporate employees with a clear picture of their current skills based on the work they’re already doing at a company and give them a roadmap to up-skilling and educational opportunities that could land them a better, higher paying job.

The company has an initial customer in AT&T, which has rolled out its services across its entire organization, according to Ortiz.

From starting out in a shared apartment in Brooklyn’s Sunset Park, Ortiz’s family history took a turn as his father became assistant speaker of the house in New York’s legislature and his mother operated a mental health clinic in the city.

When Ortiz enlisted in the Army at 17, he continued to pursue his education, and served as a Judge Advocate General for the Army at Fort Bragg in North Carolina. From there, Ortiz launched his first education venture, a failed startup that attempted to teach skills for renewable energy jobs online. The Green University may no longer exist, but it was the young entrepreneur’s first foray into education.

A road that would continue with ViridisLearning and lead to the launch of EmPath.

Along the way, Ortiz enlisted the help of an experienced developer in the online education space — Adam Blum.

The creator of OpenEd, the largest educational open resource catalog online, which used machine learning to infer skills from the online activity of children, and the founder of Auger.ai, a toolkit to bring machine learning and predictive modeling to skill development, Blum immediately saw the opportunity EmPath presented.

“Inferring skills for employees using their corporate digital footprint and inferring those skills for potential jobs… where you identified skill gaps using inferred skills for courses to suggest remedial resources to plug education gaps,” just makes sense, Blum said. “It was a much more powerful vision.”

Blum still holds an equity stake in Auger.ai, but considers the work he’s doing with EmPath as the company’s chief technology officer to be his full time job now. “Building this out with felix was more exciting in terms of the impact it would have,” Blum said. 

EmPath already is fully deployed with AT&T and will be adding three Fortune 1,000 companies as customers by the end of the month, according to Ortiz.

The young startup also has a powerful and well-connected supporter in Carlos Gutierrez, the former chief executive officer of Kellogg, and the Secretary of Commerce in the George W. Bush White House.

“Lacking a college degree throughout my career, I had to develop my own skills to enable my climb up the corporate ladder. The technology didn’t exist to help guide me, but in today’s world, professionals should not have to upskill blindly,” said former Commerce Secretary and EmPath co-founder Carlos Gutierrez, in a statement. “We created a technology platform that can help transform an organization’s culture by empowering employees and strengthening talent development. This technology was a game changer even before the Covid-19 pandemic, and now that corporate budgets are tighter, it is even more important for companies to accelerate skills development and talent growth.” 

#army, #articles, #att, #b-capital, #bush, #business, #chief-executive-officer, #chief-technology-officer, #co-founder, #economy, #eduardo-saverin, #entrepreneurship, #facebook, #founder, #machine-learning, #north-carolina, #private-equity, #skill, #startup, #startup-company, #tc, #white-house

0

Shift’s George Arison shares 6 tips for taking your company public via a SPAC

When startup entrepreneurs think about going public, they typically think about gearing up for an initial public offering (IPO). Going public via a special purpose acquisition company (SPAC), commonly referred to as a reverse merger process, is another route that’s becoming more popular and is also worth considering.

When Manish Patel, one of Shift’s board members, first suggested that I learn about SPACs back in 2019, I had no clue what he was talking about.

Now, just over a year later, we’ve almost completed Shift’s SPAC process. I hope that what we’ve learned from our experience is useful for other CEOs and founders considering a SPAC.

Shift announced its SPAC in June 2020 and is expected to complete the process of going public later this year. Here are a few of the things you and your team might want to get in order if you’ve decided that a SPAC might be a fit for you and your business:

Be prepared to become a SPAC expert

SPACs have been around for a number of years, but they have become en vogue in recent months, especially given how well the public markets have held up in the COVID-19 era. Even still, don’t expect others to understand the SPAC process right off the bat.

If you go the SPAC route, you’ll need to become an expert at financial engineering. When we first started the process, I had to spend a lot of time educating our investors and team about how SPACs work and their validity. So I’ve had to come to the table with examples of when SPACs have worked and why, with a lot of data to back up my claims. Keep in mind that going through a SPAC will likely be a new process for all of them too. Even if you’ve been through a successful IPO process, you’ll still need to educate yourself — the SPAC process and the IPO process are completely different.

#column, #coronavirus, #corporate-finance, #covid-19, #initial-public-offering, #manish-patel, #private-equity, #spac, #special-purpose-acquisition-company, #startups, #venture-capital

0

Sprinklr raises $200M on $2.7B valuation three years after last investment

Sprinklr has been busy the last few years acquiring a dozen companies, then rewriting their code base and incorporating them into the company’s customer experience platform. Today, the late-stage startup went back to the fund raising well for the first time in three years, and it was a doozy, raising $200 million on a $2.7 billion valuation.

The money came from private equity firm Hellman & Friedman, who also invested $300 million in buying back secondary shares. Meanwhile the company also announced $150 million in convertible securities from Sixth Street Growth. That’s a lot of action for a company that’s been quiet on the fund raising front for three years.

Company founder and CEO Ragy Thomas says he sought the investment now because after building a customer experience platform, he was ready to accelerate and he needed the money to do it. He expects the company to hit $400 million in annual recurring revenue by year’s end and he says that he sees a much bigger opportunity on the horizon.

“We think it’s a $100 billion opportunity and our large public competitors have validated that and continue to do so in the customer experience management space,” he said. Those large competitors include Salesforce and Adobe.

He sees customer experience management as having the kind of growth that CRM has had in the past, and this money gives him more options to grow faster, while working with a big private equity firm.

“So what was appealing in this market for us was not just putting some more money in the bank and being a little more aggressive in growth, innovation, go to market and potential M&A, but what was also appealing is the opportunity to bring someone like a Hellman & Friedman to the table,” Thomas said.

The company has 10,000 clients, some spending millions of dollars a year. They currently have 1900 employees in 25 offices around the world, and Thomas wants to add another 500 over the next 12 months, — and he believes that $1 billion in ARR is a realistic goal for the company.

As he builds the company Thomas, who is a person of color, has codified diversity and inclusion into the company’s charter, what he calls the “Sprinklr Way.” For us, diversity and inclusion is not impossible. It is not something that you do to check a box and market yourself. It’s deep in our DNA,” he said.

Tarim Wasim a partner at investor Hellman & Friedman, sees a company with tremendous potential to lead a growing market. “Sprinklr has a unique opportunity to lead a Customer Experience Management market that’s already massive — and growing — as enterprises continue to realize the urgent need to put CXM at the heart of their digital transformation strategy,” Wasim said in a statement.

Sprinklr was founded in 2009. Before today, it last raised $105 million in 2016 led by Temasek Holdings. Past investors include Battery Ventures, ICONIQ Capital and Intel Capital.

#cloud, #customer-experience-management, #enterprise, #funding, #hellman-and-friedman, #private-equity, #ragy-thomas, #recent-funding, #sprinklr, #startups

0

Interswitch CEO Mitchell Elegbe to discuss African fintech at TechCrunch Disrupt

The CEO of Pan-African fintech unicorn, Mitchell Elegbe, is set to speak at TechCrunch Disrupt 2020 on September 16. He founded the company in Lagos in 2002 to connect Nigeria’s — then — largely disconnected banking system.

Over the next decade plus, Interswitch accelerated the adoption of digital payments across Africa and now stands as one of the continent’s rare fintech unicorns. The company is poised to list on a global exchange, which would also create Africa’s next big tech IPO.

At Disrupt 2020, TechCrunch will seek Elegbe’s perspective on the continent’s fintech scene, Interswitch’s venture plans, and the economic impact of Covid-19 on African startups. This year’s event is 100% virtual, making it possible for anyone with an internet connection to sign in and learn more about Elegbe’s company and digital innovation in Africa.

If you’re a VC or founder in London, Bangalore or San Francisco, you’ll likely interact with some part of Africa’s tech landscape for the first time — or more — in the near future. When measured by monetary values, the continent’s tech ecosystem is small by Shenzhen or Silicon Valley standards.

But when you look at year-over-year expansion in venture capital, startup formation and tech hubs, it’s one of the fastest-growing tech markets in the world.

Bringing the continent’s large unbanked population and underbanked consumers and SMEs online has factored prominently. Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

As such, fintech has become Africa’s highest funded tech sector, receiving the bulk of an estimated $2 billion in VC that went to startups in 2019.

Africa Top VC Markets 2019

Image Credits: TechCrunch

Interswitch became a pioneer of building the infrastructure to digitize finance on the continent. The company pre-dates the rise of mobile money in Kenya through Safaricom’s M-Pesa product, which is one of Africa’s most recognized fintech use-cases. 

Interswitch’s path from startup to unicorn traces back to the vision of CEO Mitchell Elegbe, who was a Nigerian electrical engineering graduate before founding the firm in 2002. The company has since produced a run of product innovation and expansion, starting in Nigeria. Interswitch created the first electronic switch whereby Nigerian financial institutions could communicate and operate ATMs and point of sales operations. The company now provides much of the rails for Nigeria’s online banking system.

Interswitch has since moved into high-volume personal and business finance, with its Verve payment cards and Quickteller payment app. The fintech firm (now well beyond startup phase) has also shaped a Pan-African and global reach — selling its products in 23 African countries with a physical presence in Uganda, Gambia and Kenya . In August 2019, Interswitch launched a partnership that allows its Verve cardholders to make payments on Discover’s global network.

Interswitch Quickteller

Image Credits: Interswitch

Interswitch also launched a venture arm in 2015 called its global ePayment Growth Fund. Another milestone came in November 2019 when Interswitch achieved a $1 billion unicorn valuation after Visa took a reported $200 million minority stake in the company. Other Interswitch backers include IFC and Helios Investment Partners.

The company’s Nigerian origins and operations have become more significant as Nigeria is now Africa’s most populous nation and largest economy. The West African country has become the continent’s unofficial tech hub and fintech capital. Nigerian startups now raise the majority of Africa’s annual VC haul, according to a study by Partech.

Heading into 2020, the momentum was there and the pieces were falling in place for Interswitch to mark that next big achievement — an IPO. Where that listing stands for the firm, particularly in the wake of the Covid-19 crisis, is one of many topics TechCrunch is excited to discuss with CEO Mitchell Elegbe at Disrupt 2020.

The event runs from September 14 through September 18 and (as mentioned) is 100% virtual this year, making it possible for anyone from London to Lagos to sign in. Get your front row seat to see Mitchell Elegbe live with a Disrupt Digital Pro Pass or a Digital Startup Alley Exhibitor Package. We’re excited to see you there.

#africa, #african-business, #african-tech, #bangalore, #banking, #ceo, #disrupt-2020, #economy, #entrepreneurship, #finance, #financial-technology, #helios-investment-partners, #interswitch, #kenya, #lagos, #london, #mitchell-elegbe, #money, #nigeria, #private-equity, #safaricom, #san-francisco, #shenzhen, #startup-company, #tc, #tech-in-africa, #uganda, #venture-capital, #world-bank

0

Why established venture firms should court emerging managers

Typically, institutional investors favor managers who’ve spun out of an established firm over those who’ve broken into venture from outside. Spin-outs are seen as a lower-risk, safer bet.

On the surface, that looks like a tried-and-true tack garnering much attention, appeal and capital. However, there’s an alternative path that deserves a spotlight: Spin-ins by emerging managers who have broken into VC by raising their own funds. The experiences of emerging managers, and even their personality traits, position them to be ready to scale within an established firm.

I’ve put together a few reasons I hold this view, based largely on my own experience. In 2015, I broke into VC by embarking on the fundraising process for my own fund. As a former aerospace person, I hate the term “building the airplane as you go,” because it’s just ridiculous, but I find it warmly applicable here. At the start, although I’d spent a decade launching satellites into space, I needed a serious crash course in venture capital. I vividly remember bringing on a partner and seeing the horrified look on their face when we shared our first “call for capital,” which we’d sent as email text. We were learning on the go.

Five years later, we’ve fully deployed MiLA Capital’s first fund, built an ecosystem for founders building tech you can touch, and invested in 22 companies. I can look back with reflection and gratitude on what I’ve learned.

Here are the top seven reasons emerging managers who built their own firms make great spin-in candidates:

  1. They’ve developed a personal brand and reputation that’s inherently theirs. They didn’t have to conform to a firm’s culture or pitch; they developed their own. Their thought leadership, their tweets, their way of working with founders — it’s proprietary. Authenticity enables them to both reach founders and win deals.
  2. They practice outbound recruitment as a way of life. A press release or call for submissions likely didn’t yield them torrential deal flow overnight, and so they’ve had to establish inroads with organizations, universities and other investors as a way to evolve their access to opportunities.
  3. They’ve hustled to get their portfolio to the next stage, because, survival. In order to jump over the valley of death that is the distance from fund one to fund two, the emerging manager had to show wins from their portfolio. This means that they were likely first in line to help a founder get over their hurdles and challenges, and that they know what it takes to act as a real partner to a startup.
  4. They’re used to spending time worrying about both the big and little things, and they’ll place a high value on your ability to reduce that cognitive load. Did we pay our taxes? Our internet bill? How can we scrape together the capital to hire an intern? Let me update our web page. Launching a firm brings incredible highs along with the pettiest of tasks. But it means that, much like founders, emerging managers are used to wearing dozens of hats and performing insane tasks, like unclogging the facility toilet and making a Costco run for air freshener.
  5. They built character through the fund development process. The emerging fund manager had to hit the road with an encyclopedia under their arm. They’ve practiced, learned and unlearned answers to “why now” and “why you” in their sleep. In 2019, according to First Republic Bank’s annual count, the number of micro VCs in the United States was approaching 1,000, up about 100 every year since 2015. Yet, the managers were able to differentiate themselves enough to win the opportunity to show proof of concept. This experience adds storytelling and grit to the toolbox.
  6. They likely sacrificed a lot for a career in venture. Building a fund takes time and doesn’t provide immediate pay in exchange for the work. Someone who accepts that reality and perseveres is embodying a long-term outlook (which is good for a VC) and commitment to this industry. There are a lot of sacrifices to make, often modulating an abundance mindset against the impact of the reality of their own life, and that says something about the manager’s character.
  7. Micro VCs attract a different, diverse pool of leaders. Emerging fund managers are driven by a desire to fill funding gaps. These are often related to gender and ethnicity. They are either outsiders inspired to deliver different outcomes, or insiders who become frustrated at their inability to execute where they see opportunity. This matters because founders have increasing choice and recognition of their power to counterselect investors, and this has become a critical crux, particularly in early-stage investing.

Consuelo Valverde (SV LatAm Capital), Christine Kenna (IGNIA), Jodi Sherman Jahic (Aligned Partners), Noramay Cadena (MiLA Capital), Lisa Feria (Stray Dog Capital), Miriam Rivera (Ulu Ventures), Ariel Jaduszliwer (Brainstorm Ventures). Image Credits: Noramay Cadena

I want to expand on this last idea, because diversity and access are increasingly the disruptors in venture. Today, 80% of investment partners at venture capital firms are white, compared with only 3% Latinx and 3% Black (NVCA). Latinx and Black-owned firms manage 1% of aggregate AUM in venture capital (Knight Foundation), even though, according to the NAIC, these types of diverse-owned firms can generate superior returns. Specifically, they achieve 15.2% median net IRR versus 3.7% for all PE firms in NAIC’s portfolio.

From experience, I’ve seen that diverse fund managers tend to be concentrated in micro VCs, with a few notable exceptions, including Miriam Rivera of Ulu Ventures . These micro VCs have been heads-down focused on building sustainable inroads and foundations, and on delivering on their visions to invest differently and with a gender and diversity lens.

In a VC ecosystem that has now looked up long enough to embrace the Black Lives Matter affirmation and the diversity conversations that have followed, firms are thinking creatively about how they access investment opportunities by underrepresented talent. Sidecar funds are being launched, pitch competitions are being promoted, VC job postings are being shared more widely, intros have been bypassed and processes are being streamlined and made more transparent.

That’s a great start. For sustainable change, firms interested in how they invest post-2020 should approach the journey top down and take a long hard look at spin-ins, as former emerging managers can catalyze their evolution toward a more representative, equitable and lasting venture capital firm.

#column, #corporate-venture-capital, #diversity, #entrepreneurship, #opinion, #private-equity, #tc, #ulu-ventures, #venture-capital, #venture-capital-firms

0

The startup world needs a ‘Black Minds Matter’ awakening

I was recently part of an open forum about being Black in America, as well as in the startup space.

A white founder asked, “What can I do as the founder of a very early-stage startup?” The group gave various suggestions that included the obvious (or at least I would hope it’s obvious), “When you are growing your team, consider hiring Black team members,” or “When you are considering an investment from an investor, press them about the diversity of their current portfolio founders.”

But one suggestion really stood out, which was to make a concerted effort to find someone different from your current team’s makeup when bringing in subject matter experts. This intentional act shows your homogeneous team members that Black people, other racial minorities or genders can be experts too. It can also be applied when growing your team by making sure you interview diverse candidates whose level of expertise is often second-guessed.

This got me thinking about VC Monique Woodard’s statement that “Black founders are often overmentored and underinvested.” In June, at the height of the Black Lives Matter protests and open dialogue about anti-Blackness, we saw a slew of investors rushing to offer mentorship to Black founders. Some of the investors don’t have Black founders among their portfolio companies so to some onlookers, this rush to help Black founders was seen as insincere and a marketing ploy.

As a former founder, I can confidently say that most Black founders simply want a fair shot at presenting their startups to investors. The prevailing system of needing a warm introduction to access investors puts founders, especially Black founders, who don’t have the same networks as investors at a disadvantage. The proper mea culpa by these investors should be to make pitching more accessible for all founders. Although offers of mentorship are certainly welcome, the constant barriers Black founders tell me they struggle with are access to capital and networks, not a lack of talent or business savvy.

The quick emphasis on mentorship made me ask myself: How are the contributions of Black people (founders, investors, operators, etc.) to the startup space seen? Are we showcased as experts or as perpetual students in need of mentoring and advising? To directionally answer this question, I turned to podcasts. According to a New York Times article, “more than half the people in the United States have listened to one (podcast), and nearly one out of three people listen to at least one podcast every month.” This figure shows that podcasts are a wide-reaching medium that audiences use as a source of both entertainment and information.

I dug into the 2018 and 2019 guest lists of three of my favorite startup-related podcasts: “This Week In Startups,” “How I Built This With Guy Raz” and “The Twenty Minute VC.” These are all top-ranked podcasts with tens of millions in downloads and over half a million subscribers.

Podcast Description Typical Guest Profile
This Week In Startups Entrepreneur and angel investor Jason Calacanis brings you his take on the best, worst and most interesting stories from the world of startups. Glimpse into the boardroom during deep-dive interviews with the most innovative founders and investors. Get the experts’ hottest takes on trending topics during our news roundtables.
  • Successful Founder
  • Prominent Investor
  • Promising Founder
  • Startup Expert
How I Built This with Guy Raz Guy Raz dives into the stories behind some of the world’s best-known companies. How I Built This weaves a narrative about innovators, entrepreneurs and idealists — and the movements they built.
  • Successful Founder
The Twenty Minute VC The Twenty Minute VC takes you inside the world of venture capital, startup funding and the pitch. Discover how you can attain funding for your business by listening to what the most prominent investors are directly looking for in startups, providing easily actionable tips and tricks that can be put in place to increase your chances of getting funded.
  • Prominent Investor
  • Successful Founder

I analyzed more than 500 episodes that were aired in 2018 and 2019 across all three podcasts to get a racial and gender breakdown of guests that were featured on those episodes.

Image Credits: Kofi Ampadu (opens in a new window)

Image Credits: Kofi Ampadu (opens in a new window)

Image Credits: Kofi Ampadu (opens in a new window)

Image Credits: Kofi Ampadu

Not surprisingly, a majority of the guests featured were white men (60%). Black men and women were featured on 4% of all the episodes. A total of 15 Black (nine men and six women) unique guests were showcased as guests out of more than 400 unique guests during the two-year span. Also interesting to note that of those 15 Black guests, three were celebrities (a comedian, a TV personality and a rapper), two of whom were featured twice.

There are certainly more than 15 Black noncelebrities available who would fit the ideal guest lists of these podcasts. It is also interesting to note the percentage of Black guests decreased by 2% from 2018 to 2019 and incidentally increased by 2% for white guests during that span. The percentage of Black female guests within the female gender pool drastically decreased by 10% while white female guests increased by 21% in the two-year time period.

Conclusion

The results are a microcosm of what has been happening in the startup ecosystem: Black minds are undervalued and underappreciated. Oftentimes in the startup space, a founder is deemed a successful founder not based on how much money they collect from satisfied customers but by how much money they have raised from investors. Based on these misleading standards, Black founders will rarely be classified as successful because 1% of VC-backed founders are Black.

When it comes to the investor ranks, 81% of venture funds have no Black investors, so very often Black investors have to raise their own funds since the path to joining one is limited. Given these and other obstacles, I would argue Black people are the inspirational and relatable experts whose stories and advice need to be heard by wider audiences.

It is also worth noting that Black people are versed in varying topics and should not be exclusively invited on platforms to speak on Black issues. Black people are not a monolith and each person has their own passion and areas of expertise and outside of lived experiences not all Black people may be well-equipped to dissect Black issues.

In the spirit of not only pointing out systemic racism in the startup space, here is a list of emerging Black founders, investors and startup ecosystem builders, curated by Denisha Kuhlor and me. The talented people listed would make great guests for podcasts, conferences and any platforms that aim to amplify a diverse set of insights and experiences.


Methodology: Analyzed 484 guests across all three podcasts, the hosts of these podcasts were not included in the analysis as guests. As a result, podcast episodes that only included the host were excluded. Reaired podcast episodes were included in the analysis. If an episode had multiple guests, each guest was accounted for separately in the analysis.

The gender of guests was based on pronouns used to refer to guests on the podcast or publicly available information. The race of guests was objectively determined based on how the guest identifies or subjectively determined based on photographs, videos and publicly available information. The “Other Minorities” grouping includes Latinx, Southeast Asian and East Asian guests.

Disclaimer: This write-up is by no means written to cast aspersions on the three podcasts analyzed. They were simply chosen because I am an avid listener and they are all relatively popular in the startup space.

#column, #diversity, #entrepreneurship, #implicit-bias, #jason-calacanis, #monique-woodard, #opinion, #podcast, #podcasts, #private-equity, #racism, #startups, #tc, #venture-capital

0