Share Ventures, an LA-based studio for company creation, is MoviePass co-founder Hamet Watt’s next act

Nearly eight years ago, Hamet Watt and Stacy Spikes launched MoviePass, the subscription-based movie ticketing service that captured the minds and dollars of investors and brought thousands of cinephiles a too-good-to-be-true deal for all-you-can watch movie passes.

Watt, who came to MoviePass as an entrepreneur in residence at True Ventures, previously founded the brand and product placement startup NextMedium and also spent time as a board partner at Upfront Ventures. Now, the serial entrepreneur and startup investor is combining his two career paths under the auspices of Share Ventures.

“It’s what I feel like I’ve been put here to do,” says Watt. “I love solving problems with design and entrepreneurship. I wasn’t fully scratching the itch as an investor by itself.”

With $10 million in financing from a slew of investors including Upfront Ventures, Alpha Edison, the general partners and founders of True Ventures, and a Korean family office, Share Ventures will look to launch between two and four companies per year.

Watt says that the new studio will focus on what he calls “human performance”. The businesses will use a blend of technology and human interaction to create services targeting fitness, nutrition, and mental health, according to Watt.

Share Ventures’ initial focus will be on two main areas, the future of living and the future of working. Within those two areas, the company will focus on developing businesses that enable the development of individual purpose, mental and physical enhancement, and personal and professional growth, according to Watt. And

Image Credit: Share Ventures

For Watt, the studio model represents the next iteration of startup investing. “We think the studio is going to lead the way,” he says.

Rather than invest in companies and management teams that are unknown quantities, Watt thinks the studio will be able to create discrete companies much faster in the same way that companies today iterate on new products and services.

“We have aggregated tools into a company building stack,” says Watt. “These are tools that are usable that third parties have developed and internal tool stacks.”

Image Credit: Share Ventures

Watt says Share Ventures will operate as a holding company with pooled equity shared across the employees at the company. “As we work on portfolio companies and build out dedicated teams, there’s a generous pool to incentivize talent.”

In some ways, the model isn’t that different from Bill Gross’ idealab, the Pasadena, Calif.-based incubator company that’s a few miles up the road from Share Ventures Los Angeles home base. Another inspiration is @Ventures, the dot-com era company that built a number of different portfolio companies. “Our investors are getting founders takes in all the companies that we build,” Watt says.

The company has ten people on staff to help build its first slate of companies.

Watt began talking to investors in 2018 about the idea and spent the bulk of 2019 trying to build out its first few companies.

We run a lot of experiments, we generate a lot of ideas,” Watt says. “The number of shots on goal that we’re taking before we launch a company is significant.”

#entrepreneurship, #los-angeles, #moviepass, #stacy-spikes, #tc, #true-ventures, #upfront-ventures

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VCs, celebrities, and athletes are writing a new LA story to bring women’s soccer to the city

When Upfront Ventures partner Kara Nortman first met Natalie Portman a few years ago to talk about ways their non-profit organizations All Raise and Time’s Up could collaborate, she never realized they’d eventually be partners on a sports franchise.

Now the two women are co-founders of Angel City, leading a gaggle of venture capital, sports, and celebrity investors, alongside Angel City co-founder and President Julie Uhrman, in bringing a National Women’s Soccer League team to Los Angeles by the Spring of 2022.

Backing the team is Alexis Ohanian, the co-founder of Reddit and a slew of investors including his wife, tennis superstar Serena Williams (and their daughter Alexis Olympia Ohanian Jr.); the actors Uzo Aduba, America Ferrera, Jennifer Garner, Eva Longoria, and Lily Singh and former US Women’s National Team players including Julie Foudy, Mia Hamm, Rachel Buehler, Shannon Boxx, Amanda Cromwell, Abby Wambach, Lauren Cheney Holiday; social media stuntman Casey Neistat, and more.

While it might seem strange to launch a new sports league with an epidemic still raging in the United States, Nortman said that the decision to invest and bring the team to Los Angeles was simple.

“We’re venture capitalists. We’re optimists,” Nortman said.

For Nortman, the story of Angel City begins with a lifetime love of sports. Growing up in a fanatical sports family in Los Angeles, Nortman was a fan of all of the local teams: the Dodgers, the Kings, the Lakers, were constantly on television and the family evne attended the 99 Women’s World Cup game at the Rose Bowl. But it was in 2015 when she took her family to see the Women’s World Cup in Vancouver that Nortman’s private passion for soccer began to turn into a more public search to bring more attention to the sport — and the women who play it.

“I was like… ‘Hey! Why won’t you take my money?” Nortman said. Four years ago, the wildly successful women’s national team had a hard time making a living as full-time professional athletes in their chosen sport, Nortman said.

Image Credits: Angel City

The pay equity fights that the women’s team has led are still ongoing (and suffered a setback earlier this year), but Nortman and Portman saw an opportunity to chart a new course for the league with the combination of both of their support.

After a meeting to discuss Time’s Up and All Raise, the two bonded over soccer. “She said, ‘Why don’t I bring a bunch of my friends to a game and we can do for them what Jack Nicholson did for the Lakers and ‘Showtime’?” Nortman said.

So the two women started bringing their networks to soccer games and gathering momentum and support for the women’s soccer league and the sport broadly.

Those conversations and trips to watch the National team play a series of friendly games ahead of the 2019 World Cup led to talk of bringing an expansion team to Los Angeles, according to Nortman.

“Around that time Natalie started saying to me ‘Let’s go find a team’,” said Nortman. So that’s what the two women did. They held discussions with the league on buying into the franchise and began putting their investot group together.

“What we’re excited about is building the brand and building the best athletes in the world in the city with the biggest soccer audience in the country,” said Nortman. “And can we do it in a way that we could have a female led group.”

The financial terms of the deal to bring the franchise to Los Angeles, aren’t being disclosed, but they definitely run in the tens of millions of dollars. That’s still small potatoes compared to the current valuation of some of the men’s teams like the Los Angeles Football Club that are worth upwards of half a billion dollars, according to some estimates.

For Nortman, running a franchise like Angel City was a full time job — something that she already had. So she tapped her circle of business connections to bring in a President for the group and found Julie Uhrman.

An LA native like Nortman, Uhrman had founded a gaming console business, Ouya, that was backed by Kleiner Perkins and gone on to media roles at Lion’s Gate Entertainment and Playboy Enterprises. Equally as important, Uhrman was part of a casual pick-up basketball game among women investors, entrepreneurs and their friends in Los Angeles that Nortman had helped set up.

Over the course of a few games, Nortman brought Uhrman on board to lead the Angel City efforts and the combination of three women propelled the Angel City launch.

For each of the founders, activism and community engagement is as important as the business of setting up a new sports business in Los Angeles.

So the group has partnered with the LA84 Foundation, which brings sports to underserved communities. That non-profit is also a partner with Angel City.

“In 2014, we established the Play Equity Fund, the only nonprofit focused on Play Equity as a social justice issue,” said Renata Simril, President & CEO of the LA84 Foundation. “The Play Equity Fund is committed to driving access to sports for underserved communities, including communities of color, girls, the physically challenged and developmentally disabled. We couldn’t be more excited to partner with this incredible group of women upon the launch of their new undertaking. They are dedicated to making a positive impact for those who need it most.”

The enthusiasm for owning a sports franchise is interesting given some of the longer term trends in consumer behavior and an overall decline in interest in live sports. Over the past few years interest in all of the major American sports has waned — audiences for championship events like the NBA Finals, the World Series, the Super Bowl and the Indy 500 are all declining as demographics shift and many people would rather watch Twitch streams than tournaments.

Nortman and Ohanian think they can tap into their tech savvy and come up with ways to help counteract these trends.

Our brains want to be set up to say that there’s real sport versus esports,” said Nortman. “[But] the way we think about it is brands. If you think about Manchester United and their brand it’s about more than sports… We view soccer and the physical soccer game as one expression of our brand but it may not be the first expression of our brand.”

Still, first and foremost is the Los Angeles community and getting the city to embrace the franchise and its broader mission.

“Today we take an exciting step by announcing the first women majority-owned and led ownership group. I am thrilled by the opportunity to partner with this incredible group of people to bring a professional women’s soccer team to Los Angeles. Together, we aim to build not only a winning team on the field, but also to develop a passionately loyal fan base,” said Portman in a statement. “We also hope to make a substantive impact on our community, committing to extending access to sports for young people in Los Angeles through our relationship with the LA84 Foundation. Sports are such a joyful way to bring people together, and this has the power to make tangible change for female athletes both in our community and in the professional sphere.”

#alexis-ohanian, #basketball, #casey-neistat, #co-founder, #jennifer-garner, #julie-uhrman, #kara-nortman, #kleiner-perkins, #los-angeles, #manchester-united, #national-basketball-association, #ouya, #partner, #playboy-enterprises, #reddit, #serena-williams, #soccer, #sports, #tc, #tennis, #twitch, #united-states, #upfront-ventures, #vancouver, #venture-capital, #world-cup

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Top LA investors discuss the city’s post-COVID-19 prospects

When it comes to venture capital, Los Angeles is a city on the rise.

In the past year, it’s seen one of the most profitable venture-backed exits of any tech ecosystem (with the $4 billion sale of Honey to PayPal) and investors are minting billion-dollar companies in the region at a torrid pace. It’s also the city where investors are spending the most money outside of venture capital’s big major hubs: San Francisco, Boston and New York.

While Los Angeles has a lot going for it, that also means it potentially has a lot to lose in the current economic downturn. California continues to be hard-hit by COVID-19, despite local and state officials working to reopen businesses.

TechCrunch surveyed some of the city’s leading investors in sectors like property technology and cannabis to get their take on how the city may survive — and potentially thrive — in a new era ushered in by the response to the pandemic.

From larger fund investors like Mark Suster and Kara Nortman at Upfront Ventures to Dana Settle at Greycroft Partners; to early-stage investors like Will Hsu at Mucker Capital; TX Zhuo at Fika Ventures, the responses were generally upbeat about the future opportunities for Los Angeles startups.

Even specialist fund investors like Karan Wadhera of the cannabis-focused investment firm Casa Verde Capital and Brendan Wallace at the real estate-focused firm Fifth Wall believe that Los Angeles will thrive in the post-COVID world.

As Mucker Capital co-founder Hsu writes, “There are far more great companies than there are venture dollars here in LA. Investors in other cities should continue to see LA as an underserved ecosystem with huge opportunities.”

  • Mark Suster, managing partner, Upfront Ventures
  • Kara Nortman, partner, Upfront Ventures
  • Will Hsu, Mucker Capital
  • Dana Settle, Greycroft Partners
  • Karan Wadhera, Casa Verde Capital
  • Brendan Wallace, Fifth Wall
  • TX Zhuo, Fika Ventures

LA Traffic

Image Credits: Getty Images/ROBYN BECK/AFP

Mark Suster, managing partner, Upfront Ventures

How much is Upfront focused on investing in the local LA ecosystem versus less geographically focused? 

Upfront invests about 40% of its investment dollars in the great LA market and invests about 40% split between the Bay Area and NYC. Upfront has always invested nationally and internationally with the final 20% and we have produced significant exits in Chicago, Baltimore, Paris, London and Las Vegas to name a few.

Where we do invest outside of LA of course we bring all of our contacts and relationships to bear, which makes us a logical choice for any startup raising capital where having access to the biggest influencers, media companies, academic institutions and medical professionals can help propel the company’s success.

How do you think COVID-19 will change entrepreneurial activity in Los Angeles?

It’s true that some startup businesses have been impacted by this pandemic but as we’re learning a few short months in, there has been much more acceleration of the trends leading toward technology growth that were already in place.

Specifically addressing some LA-based companies we can share with you the trends we see directly with demand data:

We already knew that telemedicine made sense for doctors and patients and now this trend has accelerated, regulations being lessened and cultural barriers overcome. We see a huge growth in food production and preservation (Apeel Sciences, for example) and food distribution (such as ChowNow). The need to reduce people in warehouses has propelled demand for robotics/automation for companies like inVia Robotics and the need for remote monitoring has helped LA-based DroneBase.

#casa-verde-capital, #covid-19, #dana-settle, #extra-crunch, #fifth-wall, #fika-ventures, #greycroft-partners, #investor-surveys, #kara-nortman, #karan-wadhera, #los-angeles, #mark-suster, #mucker-capital, #startups, #tc, #tx-zhuo, #upfront-ventures, #venture-capital, #venture-funding, #will-hsu

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DroneBase nabs $7.5 million in a slight down round to double down on its work in renewable energy

DroneBase, a Los Angeles-based provider of drone pilots for industrial services companies, has raised $7.5 million during the pandemic to double down on its work with renewable energy companies.

While chief executive Dan Burton acknowledged that the company was fundraising prior to the pandemic, the industrial lockdown actually accelerated demand for the company’s services.

Even with the increased demand, the company had to make some changes. It laid off six employees and refocused its business.

“In the past three months it’s become clear that this is a moment for drones as an industry,” Burton said. “We were really pushing hard as a company, certainly on revenue growth and harvesting all the investments we made in technology and having a clear, near-term view to profitability.”

The new round, which closed in May, was a slight down round, according to people familiar with the company’s business.

“We see raising a growth round later this year,” Burton said.

New investors in the company included Valor Equity Partners and Razi Ventures, who joined Union Square Ventures, Upfront Ventures, Hearst Ventures, Pritzker Group Venture Capitla and DJI.

In all, DroneBase has raised nearly $32 million in financing, according to a company statement.

The new round will enable the company to focus on its data and analytics services that it has been developing around its core drone pilot provisioning technology — and gives DroneBase more financial wherewithal to expand its European operations under the DroneBase Europe, which operates out of Germany.

“DroneBase’s expansion into renewable energy reflects our belief in the growth potential of wind and solar energy industries,” said Burton in a statement. “Since many energy companies have both wind and solar assets, we are well positioned to leverage our DroneBase Insights platform to grow our global market share in renewable energy.”  

The key application for DroneBase has been allowing wind power companies to monitor and manage their turbines, improving uptimes and spotting problems before they effect operations, the company said.

For solar power companies, DroneBase offers a network of pilots trained in infrared imaging to detect anomalies like defects or hot spots on solar panels, the company said.

“DroneBase has established themselves as the drone leader in the commercial market, and its new work in renewables will have a lasting impact on the future of energy by keeping infrastructure operational for generations,” says Sam Teller, Partner at Valor Equity Partners, in a statement. “We believe DroneBase will continue to be a valuable partner in drone operations and data analysis across a multitude of industries globally.”

#articles, #dji, #energy, #germany, #hearst-ventures, #los-angeles, #precisionhawk, #renewable-energy, #tc, #union-square-ventures, #upfront-ventures, #valor-equity-partners

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Los Angeles-based Open Raven raises $15 million from KPCB for its security tech to secure hybrid clouds

Open Raven, the Los Angeles-based security startup founded by a team of cybersecurity veterans from CrowdStrike and SourceClear, has closed on $15 million in new financing only four months after emerging from stealth and in the middle of a global pandemic. 

The company already boasted an impressive roster of investors well-versed in enterprise software and cybersecurity including Upfront Ventures; Goldman Sachs’ chief information risk officer, Phil Venables; RSA’s former chief strategy officer, Niloo Razi Howe; and the cybersecurity company Signal Sciences, whose chief executive, Andrew Peterson, is a Los Angeles native.

Now, the company has added to its haul with new capital and the cybersecurity expertise of Kleiner Perkins’ deep knowledge in the space through investors like Ted Schlein and Bucky Moore, who will be taking a seat on the company’s board of directors.

Investors’ confidence in Open Raven’s potential stems from the simple fact that a majority of all databases will be accessed from a cloud platform within the next two years, according to data from Gartner Inc. and provided by the company.

These databases may exist on several different service providers cloud computing platforms making it that much more difficult to secure and track the data as it’s accessed by different users. Put simply, data security tools weren’t built to handle this kind of data fluidity across multiple services. These instances of what Open Raven calls “data sprawl: can lead to misconfigurations that have become one of the biggest security threats, according to a study by TechCrunch’s parent company, Verizon 

“Today’s data security problem bears little resemblance to the historical challenges that drove the creation of the last generation of products,” said KPCB’s Moore, in a statement.

Co-founded by Crowdstrike’s former chief product officer, Dave Cole, and the founder of the open source code monitoring service, SourceClear, Mark Curphey, Open Raven has a tool that monitors, maps, and manages how data moves through an organization.

In the cloud-based computing environments that have become standard operating practice during the work-from-home era created by the COVID-19 pandemic, data is moving to an increasingly vast number of points outside of a centralized network.

As Cole told dot.la when his company first emerged from stealth many security breaches are just “instances where an org simply lost control of what data they had where, and it ended up on the internet. And people found it before they did.”

Open Raven offers a free version of its service to map out networks and visualize where and how data moves. The core functionality will be available for free under an Apache 2.0 license, but there’s a premium version of the product where the company will provide additional services for paying customers.

“The transition to the cloud and out of physical data centers means that data stores change more quickly than ever before – leaving numerous unanswered questions,” said Dave Cole, co-founder and CEO of Open Raven, in a statement. ec

#chief, #cloud-computing, #computer-security, #computing, #crowdstrike, #cyberwarfare, #dave-cole, #enterprise-software, #goldman-sachs, #information-age, #kleiner-perkins, #kpcb, #los-angeles, #officer, #signal-sciences, #tc, #techcrunch, #ted-schlein, #upfront-ventures, #verizon

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Pinwheel is the API platform for income verification that every fintech and neobank needs

A lot of founders start building one idea and in the process, find another one that is more alluring. Perhaps the most well-known example is Tiny Speck, a game publisher of a relatively uninteresting MMORPG where the founders grew sufficiently frustrated with their internal team communications tools that they migrated from game building to designing a chatting app known as Slack.

That’s the story of Pinwheel and its founders Kurt Lin, Anish Basu, and Curtis Lee. Lee, who formerly founded Luxe, a valet service that sold to Volvo in 2017, had hired Lin as the company’s GM. After two years of “innovating” within the confines of a massive automobile manufacturer, the two were ready to spin out and head back to the open world of startups. Meanwhile, Lee and Basu had worked together previously at social gaming company Zynga on Mafia Wars, and connected the whole group together for a new project.

The big question was what to build. They started by developing a software platform for companies to easily offer their employees pre-tax benefits like expensing transit passes and funding health savings accounts. They hit a programming wall though: there was no easy way to connect their product to the myriad of payroll providers out there.

“We had built an internal platform with integrations into payroll systems … and what we realized as we were building was that there was kind of no solution out there that both aggregated and unlocked access in payroll systems largely because they’re very old and kind of closed systems,” Lin said. As they talked with other fintech founders about how to solve the roadblock, they realized that the lack of an API that they could use for their product was actually a potential product in and of itself.

And so came the idea for Pinwheel, an API layer for payroll data that handles everything from income and employee verification to easily switching and managing direct deposit. The company officially came out of stealth today and announced that it has raised a $7 million seed round from Josh Kopelman at First Round Capital and Greg Bettinelli at Upfront Ventures, who will both join the company’s board.

Like any API platform, there are a range of users and data that they want to connect to. For consumers, the main draw is automated direct deposit control, which will allow consumers to control where their paychecks go. For instance, if they want to split a direct deposit into multiple accounts, or regularly move part of their paycheck into a savings app like Digit or Acorns, Pinwheel can help them do that easily.

But the real interesting use cases start coming with other fintech business users of the platform. Take mortgages for instance. The process to apply for a mortgage is arduous, requiring numerous documents to prove income and employment status. Some of that is now digital — you can use tools like Notarize to digitally sign documents — but few options exist to directly pull payroll data into a unified, machine-readable format for all use cases. “Even in 2020 right now, most people still have to submit a paper pay stub or tax document every time they need to substantiate [their] data,” Lin said. Pinwheel wants to be the layer to power all of this data flow.

Kopelman of First Round says that it is precisely financial applications like mortgages and lending that attracted him to the company. “You take what would happen in four weeks and [Pinwheel] turns it into four minutes,” he said.

He first learned about the company during a board meeting of one of his portfolio companies and was intrigued. As he dug in, he liked that the founders “were extremely focused on the users” and he liked the focus on payroll. “It’s the source of truth and the source of funding,” he said. He noted that First Round has invested in a variety of future of work companies like Uber and TaskRabbit, and saw firsthand the need for better options for accessing payroll data easily and securely.

According to Pinwheel, 82% of Americans get paid via direct deposit — which means that the vast majority of income data is sitting in payroll systems.

Pinwheel is not a replacement for incumbent payroll providers like ADP or upstart companies like Gusto. Instead, it layers on top of them, much in the way that, say, Plaid is a layer on top of existing banks to provide other fintech companies secure access to a user’s banking data.

With Luxe, Lin and Lee formerly built an on-demand valet service, and I was curious what they learned from that experience and how that affected their approach to Pinwheel. Lee said that the big difference was understanding what works and what doesn’t when it comes to building valuable companies. “Certain businesses are just conducive to better outcomes versus others,” he said. He noted that compared to an on-demand business like Luxe, Pinwheel’s API play was not as capital intensive, had limited marginal costs, and it’s a pure technology play, making it easier to create value for the startup.

One other change: the team moved from San Francisco where Luxe was headquartered to New York City, where Pinwheel is based.

In the company’s current roster, Lin serves as CEO, Basu as CTO, and Lee is executive chairman. Lee is also a venture partner at NYC-based Primary Venture Partners.

In addition to First Round and Upfront, Wonder Ventures participated as did angels such as Adam Nash, the former CEO of personal finance manager Wealthfront and Mike Vaughan, former COO of payment app Venmo.

#adam-nash, #anish-basu, #curtis-lee, #finance, #first-round-capital, #funding, #fundings-exits, #greg-bettinelli, #josh-kopelman, #kurt-lin, #luxe, #mike-vaughn, #pinwheel, #primary-venture-partners, #startups, #upfront-ventures, #volvo

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Venture firms rush to find ways to support Black founders and investors

As protests against police brutality and economic manifestations of systemic racism in the U.S. continue, venture capital firms are joining the chorus of technology industry advocates lending their support to the cause.

For the past three days, technology company executives and the investors who backed them have issued statements of support for the protests and the Black Lives Matter movement. Firms like Benchmark, Sequoia, Bessemer, Eniac Ventures, Work-Bench and SaaSTR Fund founder Jason Lemkin all tweeted in support of the cause and offered to take steps to improve the lack of representation in their industry.

But some Black entrepreneurs and investors are questioning the motivations of these firms, given the weight of evidence that shows inaction in the face of historic inequality in the technology and venture capital industry.

“The way to find, hire and fund black people in the tech world is the same as finding, hiring and funding any other group. You build relationships with people in that group, you seek out thought leaders from the community and learn from them, you tell your hiring and investing teams that there’s a hole in the fund’s expertise stack and you fill it. It’s not about tokenizing one person or donating to a one time effort or writing it off as a pipeline problem,” wrote Sarah Kunst, the founding managing partner of Cleo Capital, in a text to TechCrunch. “It’s using the embarrassment of skills and resources these funds have to learn, build relationships and deploy capital.”

‘Make the hire, send the wire’

Entrepreneurs and investors say steps from investors must boil down to two main actions: hire the people and wire the investment.

In a Medium post today, the New York-based investment firm Work-Bench detailed steps it would take to make sure it is encouraging Black entrepreneurs and investors.

In addition to financial commitments to organizations, including the Equal Justice Initiative, the Southern Poverty Law Center and Color of Change, the firm is instituting new steps to ensure that its own operations also work to promote Black entrepreneurs and investors.

The firm detailed a number of other steps it will take “if there is interest,” including collating a public database of Black founders working on enterprise startups for other enterprise VCs, and working with HBCUvc and other Black VC firms.

Some firms are taking steps to go even further — including the creation of dedicated pre-seed investment funds that would focus exclusively on companies coming from historically Black colleges and universities.

These initiatives are in their early stages, and investors are not ready to disclose too much about the steps that they’re taking, but they extend far beyond dedicated funding. Investors are also looking to step up their recruitment at HBCUs and land-grant universities to focus more on diverse candidates and doing internal training from within portfolio companies to create a new generation of minority entrepreneurs through more extensive and robust entrepreneur-in-residence programs.

Firms are also looking to create benchmarks and internal surveys to monitor their progress and find out where their firms and portfolios are falling short. This could start with firms choosing to publish how many Black founders they have invested in to date, with annual follow-ups, for the spirit of transparency and accountability.

The data is accessible to investors internally, though few firms publish such statistics publicly. Initialized Capital disclosed on Monday that 7% of companies in its most recent fund are led by Black founders.

Problems with diversity extend into the funds themselves, as Backstage Capital founder Arlan Hamilton wrote in a direct message to us.

“Investors have been reaching out to me left and right asking what they can do. It’s not complicated: Invest in Black founders. You don’t have to invest in ALL Black founders. You can keep your thesis and yes even your so-called ‘standards’ and find multiple Black founders to invest in,” Hamilton wrote. “If you need help, I have 130 portfolio companies + I can introduce you to a curated list of a dozen Black investors to hire. My email address is ARLAN@BackstageCapital.com. No more excuses.”

Internal recruitment efforts for VC partners can be inherently biased. Think of it as a domino effect: if LPs only fund white GPs, then white GPs can stick to their preexisting networks for looking for other partners to bring on. Unless non-diverse VC firms break their existing networks, either through recruiters or underrepresented founders, this effect will continue.

‘And I do hope to write the check’

Partners at venture firms are committing to doing more themselves to support the community of Black entrepreneurs. 

I don’t do that many investments a year (I am a slow+quiet investor), but please email me your decks and pitches,” wrote Jason Lemkin on Twitter. “I will try to only meet/Zoom with black founders in June.”

Nihal Mehta, the founder of New York-based investment firm Eniac Ventures, announced on Twitter that he was taking no-charge appointments with Black founders via Superpeer, which sells one-to-one video calls. Within 24 hours of Mehta’s tweet, he was booked for the summer: 103 meetings with Black founders. 

“This means there is incredible demand, a large gap that needs to be filled, between Black founders and the tech community at large,” Mehta said. 

The entire Eniac Ventures team is also opening up free Superpeer consulting slots dedicated to chatting with and investing in Black founders. 

Ha Nguyen, a partner at Spero Ventures, is hosting a Black founders breakfast and AMA lunch on Friday. Nguyen also offered Black founders to reach out when they need help with the fundraising process, pitch deck and intros for their next check. “And I do hope to write the check,” Nguyen wrote in a LinkedIn post

Hustle Fund’s Elizabeth Yin encouraged founders to continue sending the firm cold inbound pitches, noting that 15% of Hustle Fund’s portfolio companies came from outside their network.

Yin also noted that the firm is working to build informal deal flow relationships with founders who have diverse networks, like the firm’s venture associate intern, Jasmin Johnson, who works with Score 3, or Lolita Taub, former principal at Backstage, and her investor-matching program. 

Taub has a Google form in her pinned tweet where she reviews startup submissions. Then, if the company is a fit for her she will reach out, and if the company is a fit for other investors (Backstage Capital, Harlem Capital, Hustle Fund, WXR Fund), Taub will connect the two parties. 

Taub has a decorated past in tech and venture capital, so her network is broad, but her investing program itself is simple. It is reproducible for any super connector out there in the Valley with a diverse network. 

‘The talent has always been there’

As the investment community rushes to voice its support for the Black community, Black investors and startup founders question their motives.

That it has taken a week of protesting and the deaths of countless Black men and women at the hands of police to wake up investors to the problems that the industry — and the country at large — faces is a sign of the depth of the problem.

The Black investor-led firm Precursor released a statement on Sunday:

Investors like Marlon Nichols at MaC Venture Capital and Kobie Fuller at Upfront Ventures have made the development of a diverse group of founders a priority through their own investment activities and the creation of startups like Valence — a network for African American talent.

The data on inequality in the industry is staggering, as Nichols noted in a post earlier today:

  • Blacks are underrepresented in the executive ranks of startups by 82%
  • More than 75% of all rounds raised go to all White founding teams
  • Diverse founding and executive teams generate higher median realized multiples (RMs) on acquisitions and IPOs than all White founding and executive teams (3.3x to 2.5x and 3.3x to 2x respectively)

So, if you are truly opposed to racism and discrimination, something you can start to do immediately is stop making excuses for not investing in startups and funds led by Black men and women. Instead, make the investments, extend your networks, hire us in leadership/ decision making roles, and hold us to the same standards that you do for White led startups and venture funds.

There’s still a long way for the industry to go and plenty of ways investors can improve.

“Every top MBA program has a black student organization, every top tech company has black ERGs, go recruit from those pools to start. There are very visible funds like Ulu, Precursor, my own fund Cleo Capital who are led by black tech leaders. There are very visible investors like Chris Lyons, Ken Chenault, Adrian Fenty and Megan Maloney,” Kunst wrote.

“We are all vocal about where we spend our time finding and supporting black tech people. We speak at events like Culture Shifting Weekend and Black Women Talk Tech, we support orgs like Code2040, HBCUVC and Blck VC…. Simply put, we’ve done the work and the talent has always been there. What’s left is for larger funds to follow that lead and make a real commitment to hiring black VCs as well as funding black founders and encouraging their portfolio companies to hire black people into positions of leadership.”

The efforts announced by large venture capital firms in the last few days should broaden the access that underrepresented founders have to venture capital money and decision-makers and could lead to some checks. But calendar invites and emails will not solve racial injustice. Nor will a dedicated month of talking to Black founders solve the pattern-matching that systemically sits within venture capital.

Therefore, more robust actions are needed by the venture community, because statements are only as powerful as the checks they write and hires they make.

#adrian-fenty, #arlan-hamilton, #backstage-capital, #benchmark, #cleo-capital, #diversity, #elizabeth-yin, #eniac-ventures, #harlem-capital, #hustle-fund, #initialized-capital, #jason-lemkin, #kobie-fuller, #mac-venture-capital, #marlon-nichols, #saastr-fund, #sarah-kunst, #sequoia, #superpeer, #tc, #upfront-ventures, #venture-capital-firms, #work-bench

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Nanit raises $21 million for its baby monitor, app, and new line of wearables for infants

The developer of a machine learning enhanced baby monitor, Nanit, has managed to nab $21 million in financing even amid the teeth of an epidemic that has slowed venture financing across the board.

The round came from existing investors including: Jerusalem Venture Partners, Upfront Ventures, RRE Ventures, and Rho Capital Partners, and brings the company’s total capital to $50 million.

Nanit said it would use the financing for continued product development and global expansion.

For Nanit, the social distancing required to stop the spread of the COVID-19 epidemic has proven to be a huge boost for business. Families with grandparents, aunts, and uncles make up 20 percent of the company’s active users, according to a statistic provided by Nanit.

The company didn’t even have to tap outside investors or go on a road show for its recent raise, according to chief executive Sarah Dorsett. So far, Nanit has sold over 150,000 cameras and has at least twice as many users who are accessing the company’s app for remote monitoring of newborns and one year olds.

Prices for the sleep monitoring and video device range from $299 for a wall mounted camera to $379 for one attached to a floor stand. Currently, Nanit sells its monitoring devices in the U.S., Canada and the U.K.

The company’s app is free for the first year and then costs $5 per month to connect three users to the app. Upgrades are available for $10 per month for more users or $30 per month for unlimited users. And the company’s new line of wearable breathing bands, swaddles and sleeping bags range from $19.99 to $59.99.

Nanit does more than just provide a live, shareable feed of movements. The company is getting set to launch a new feature that would capture when a baby smiles or when they begin to move around in a crib, according to Dorsett.

“The company has experienced incredible growth from 2018, and our recent funding points to the confidence and demand in the marketplace for innovative consumer products,” Dorsett, said in a statement. “Having a baby is one of the most significant life moments not only for parents but for the entire family. We are so fortunate to be able to use our technology to keep families connected and sharing in this precious new journey, no matter where they are.”

Nanit has also launched a new line of wearables called, Breathing Wear, that track their infant’s breathing motion by reading the pattern printed on the fabric without putting sensors on their skin.

“Nanit has solved the age-old problem of teaching your baby to fall asleep. The company’s products are expanding our understanding of “life in the crib” and giving families more ways to share in the joy of parenting. The company has achieved incredible product-market fit and we believe Nanit is well-positioned to address a wide range of health and wellness questions for families and physicians,” said Will Porteous, General Partner, RRE Ventures, in a statement.

#canada, #consumer-products, #general-partner, #jerusalem-venture-partners, #machine-learning, #nanit, #rre-ventures, #tc, #united-kingdom, #united-states, #upfront-ventures

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7 VCs discuss how COVID-19 is changing the media startup landscape

The world has changed dramatically since May 2019 when we last surveyed venture capitalists about the trends they were seeing in media, entertainment and gaming.

Since then, COVID-19 and the resulting physical distancing measures have created plenty of demand for companies helping to inform and entertain us as we’re stuck at home. At the same time, there’s a dramatic reduction in ad spending, making it harder to monetize that consumer attention.

So we checked in a variety of top VCs about the new landscape, where they’re investing and what kind of advice they’re giving their portfolio companies.

Not all of them invest directly in what (paraphrasing Betaworks’ Matt Hartman) we might call media media — the companies whose business models revolve around content creation and advertising — but each of these investors are backing startups looking to change the way we stay connected and entertained.

Here’s who we surveyed:

  • Kevin Zhang (Partner, Upfront Ventures)
  • Pär-Jörgen (PJ) Pärson (General Partner, Northzone)
  • Vasu Kulkarn (Partner, Courtside Ventures)
  • MG Siegler (General Partner, GV)
  • Jana Messerschmidt (Partner, Lightspeed Venture Partners)
  • Matthew Hartman (Partner, Betaworks Ventures)
  • Gigi Levy-Weiss (Managing Partner, NFX)

The consensus? You can’t count on the ad business to recover in the next few months, but there are still opportunities for startups exploring new formats and new business models. And there’s still plenty of excitement about gaming and esports.

You can read their full responses, lightly edited, below.

Kevin Zhang, Upfront Ventures

What (if any) media trends are still exciting you from an investing perspective?

Live and interactive formats, especially shorter form, continue to be very exciting, made even more evident in this time of shelter-in-place. What has worked in China and broader Asia has not yet translated into explosive success in the West. As interesting as celebrity live broadcasts are from their homes, the lack of real interaction and participation features hampers long-term engagement and doesn’t make up for the lack of production quality.

Modern content production technology is needed to push both production and live ops cost down while enabling more interactive and engaging formats. Game engines are one example, there’s of course the Travis Scott concert that just happened in Fortnite built on the Unreal engine, but that 15-minute, pre-rendered show took months to create, we’re only just scratching the surface of what’s possible.

One of our investments in this space is Tellie for live-action formats, another is The Wave for rendered, live formats, and we continue to look for great combinations of tech and media talent innovating on new formats.

Speaking of gaming, multiplayer games continue to grow and grow exponentially, there is a lot to unpack in popular titles from new favorite Animal Crossing to classics like World of Warcraft to indie hits like For the King. They all have social cooperation as a core part of the game loop and design. I’d love to see more teams working on cooperative play and just overall a broader diversity in multiplayer experiences beyond purely competitive ones.

#betaworks-ventures, #coronavirus, #courtside-ventures, #covid-19, #events, #extra-crunch, #funding, #gv, #investor-surveys, #lightspeed-venture-partners, #market-analysis, #matthew-hartman, #media, #mg-siegler, #nfx, #northzone, #par-jorgen-parson, #startups, #upfront-ventures, #venture-capital

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The startup cash countdown begins

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

As global startup markets enter a slowdown — more on that shortly — we’re starting to get notes on when growth-oriented firms are going to run short of cash. Of course, startups around the world are cutting staff and trying to limit costs as macro uncertainty reins, but their efforts won’t save everyone.

This morning, let’s dig into what venture’s impending investment pace may look like over the next year or two, courtesy of Upfront VenturesMark Suster. Then we’ll parse cash runway data from UK and Belgian startups. The resulting picture is one detailing falling cash accounts for a number of startups that could reach zero before venture trends are expected to recover.

Downturn

#extra-crunch, #fundings-exits, #growth-and-monetization, #investor-surveys, #jason-lemkin, #mark-suster, #market-analysis, #saastr, #startups, #steve-ohear, #techcrunch, #upfront-ventures

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New guidance on SBA loans means most startups are still excluded from $349 billion stimulus

Under new guidance issued by the Small Business Administration it seems non-profits and faith-based groups can apply for the Paycheck Protection Program loans designed to keep small business afloat during the COVID-19 epidemic, but most venture-backed companies are still not covered.

Late Friday night, the Treasury Department updated its rules regarding the “affiliation” of private entities to include religious organizations but keep in place the same rules that would deny most startups from receiving loans.

The NVCA and other organizations had pushed Treasury Secretary Steve Mnuchin to clarify the rules regarding startups and their potential eligibility for loans last week. And House Republican leader Kevin McCarthy even told Axios that startups would be covered under the revised regulations.

Apparently that didn’t happen, as Mark Suster, the managing partner of Los Angeles-based Upfront Ventures, noted in a tweet.

At its essence, the issue for startups seems to be centered on the board rights that venture investors have when they take an equity stake in a company. For startups with investors on the board of directors, the decision-making powers that those investors hold means the startup is affiliated with other companies that the partner’s venture firm has invested in — which could mean that they’re considered an entity with more than 500 employees.

“[If] there’s a startup that’s going gangbusters right now, they shouldn’t apply for a PPP loan,” wrote Doug Rand, the co-founder of Seattle-based startup Boundless Immigration, and a former Assistant Director for Entrepreneurship in the Office of Science and Technology Policy during the Obama administration, in a direct message. “But most startups are getting killed because, you know, the economy is mostly dead.”

The $2 trillion CARES Act passed by Congress and signed by President Trump was designed to help companies that are adversely affected by the economic fallout resulting from the COVID-19 outbreak in the US and their employees — whether those businesses are directly affected because their employees can’t leave home to do their jobs or indirectly, because demand for goods and services has flatlined.

While some tech startups have seen demand for their products actually rise during these quarantined days, many companies have watched as their businesses have gone from one to zero.

The sense frustration among investors across the country is palpable. As the Birmingham-based investor, Matt Hottle, wrote, “After 4 days of trying to help 7 small businesses navigate the SBA PPP program, the program went to shit on launch. I’m contemplating how many small businesses, counting on this money, are probably locked out. I feel like I/ we failed them.”

And although the rules around whether or not many startups are eligible remain unclear, it’s probably wise for companies to file an application, because, as the program is currently structured, the $349 billion in loans are going to be issued on a first-come, first-served basis, as Suster flagged in his tweets on the subject.

General Catalyst is advising its companies that are also backed by SBIC investors to apply for the loans, because that trumps any other rules regarding affiliation, according to an interview with Holly Maloney Burbeck, a managing director at the firm.

And there’s already concerns that the money could run out. In a tweet, the President announced that he would request more money from Congress “if the allocated money runs out.”

“Congress saw fit to allow Darden to get a forgivable small business loan—actually a taxpayer-funded grant—for like every Olive Garden in America. But Congress somehow neglected to provide comparable rescue measures for actual small businesses that have committed the sin of convincing investors that they have the potential to employ a huge number of people if they can only survive,” Rand wrote in a direct message. “The Trump administration has full authority to ride to the rescue, and they did… but only for large religious organizations.”

#america, #co-founder, #congress, #entrepreneurship, #finance, #general-catalyst, #investment, #kevin-mccarthy, #los-angeles, #managing-partner, #mark-suster, #money, #president, #private-equity, #seattle, #startup-company, #steve-mnuchin, #tc, #trump, #trump-administration, #united-states, #upfront-ventures, #venture-capital

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This startup got a meeting with Mark Suster by getting clever with Google ads

Startups have done some wild things to get the attention of VCs. In fact, Instacart founder Apoorva Mehta sent YC partner (at the time) Garry Tan a six-pack of beer through the service after missing the deadline for Y Combinator by two months.

Yesterday, the ingenuity of startups struck again.

Tadabase.io, an enterprise startup that offers no-code tools to help businesses automate their processes, has had an ad running that was… well, hyper targeted.

ProductHunt founder and WeekendFund investor Ryan Hoover discovered the ad and shared it on Twitter.

Hoover told TechCrunch he was Googling Mark Suster to facilitate an introduction between Suster and one of Hoover’s portfolio companies. Instead, he found a Google ad directed squarely at Suster from Tadabase.io.

“Mark Suster, you haven’t invested in nocode” read the paid listing. “Therefore, we put this ad here to get your attention. If you’re not Mark, please don’t click here and save us some money.”

I reached out to Suster, managing partner at UpFront Ventures, to see what he thought of the ad. He told me he “loved it” and has already contacted the CEO to set up a call for next week.

Whether this clever Google ad will result in an actual investment is yet to be determined. Also unclear: will Ryan Hoover get in on the deal?

I reached out to Tadabase founder and CEO Moe Levine via email to ask about the ad, how they went about targeting, and how he feels about his upcoming phone call next week. He hasn’t responded yet. I’ll update if/when he does.

#enterprise, #mark-suster, #startups, #tc, #upfront-ventures, #venture-capital

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Pragma is a back-end toolkit for gaming companies, so game developers can focus on games

These days, most of the games developed need to be social, multi-platform and extensible, but there are only a few developers with the expertise to bring those toolsets to the profusion of new games that crop up every year.

Well, now those development studios can turn to Pragma, which is building the back-end toolkit for gaming companies so their developers can focus on what they do best — making games.

It’s basically taking a page from the application development playbook where off-the-shelf toolkits can reduce by months the time it takes to get an app into the market, according to Pragma chief executive Eden Chen. In the game industry, a game can stay in beta for years as developers work out the kinks.

In the game world, because of the necessity to build multiplayer, the length to launch a game has gotten way, way, way, way longer. Games are taking five to 10 years to launch out of beta,” Chen said. 

Founded by Chen and former Riot Games engineering lead Chris Cobb, Pragma is offering a “backend as a service,” according to the company, selling a toolkit that includes accounts, player data, lobbies, matchmaking, social systems, telemetry and store fulfillment.

In a way it’s a complement to the front-end game engines from companies like Epic, the creator of Fortnite.

Indeed, Epic had announced plans to create a back-end system for game developers of its own, but Chen sees the benefits of having an independent operator doing the work — not a potential competitor.

Pragma’s investors agreed. The company raised $4.2 million in funding from a clutch of high-quality firms and individual investors, led by the Los Angeles-based Upfront Ventures with participation from Advancit Capital and angel investors Jarl Mohn, president emeritus at NPR and former Riot Games board member; Dan Dinh, founder of TSM; and William Hockey, founder of Plaid. 

“In a world where gaming studios have long used third-party engines to power their front-end development, it makes no sense for the same studios to spend millions of dollars to build their own custom back-end,” said Kevin Zhang, partner at Upfront Ventures and board member at Pragma, in a statement. “This broken system has lasted for so long because creating a reusable, platform-agnostic backend is not just extremely complex but rarely prioritized compared to the game.” 

The gaming industry is a $139 billion behemoth that in some ways lags behind its technologically-savvy peers in creating off-the-shelf tools to speed production. They’re combinations of social media platforms like Facebook and Snap, and big, high-budget movie productions, but lack any tools to simplify the process of development or ensure that persistence, scale and feature complexity don’t lead to downtimes. And downtimes could mean millions in expenses and lost revenues, Pragma said.

“Creating online multiplayer games is increasingly complex and expensive. Studios are hindered by the need to not just create compelling games, but also to build custom server technology to operate their game,” Chris Cobb, the company’s chief technology officer, said in a statement.  

The company currently has one customer on its platform and will launch to an exclusive set of beta users in late 2020.

#advancit-capital, #developer, #facebook, #game-engine, #gaming, #los-angeles, #online-multiplayer-games, #partner, #plaid, #player, #pragma, #riot-games, #social-media-platforms, #tc, #upfront-ventures, #william-hockey

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