Seattle-based Smartsheet (Nasdaq: SMAR) recently announced its first quarter results that failed to impress the market. Its weaker than expected billings and a similarly weak outlook sent the stock...
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We are running the Venture Deals Online Course again this summer. But before I get to that, I want to highlight a blog post from a Black colleague. Iâm getting, and reading, many of these each day. For the foreseable future, Iâll highlight and amplify one at the beginning of each post I do, in case you are interested.
Todayâs post is from Ruben Porras, who is a Techstars alum (Director of Operations at CreatorBox.) He wrote Black Lives Matter. At Work. In Life.
The country, collectively, has grieved five times in 60 years. People of color have collectively grieved five times in 2 weeks. And we carry that into work, school, our relationships, and are expected to be okayâ even if and when weâre not.
â¦
Well, white friends, white allies, Iâm done being uncomfortable alone. If youâre a white ally in racial justice, if youâre committed to being anti-racist, if you see that our peace, our harmony, our healing, and progress are bound together, then its time for you to share in this uncomfortability.
I encourage you go to read Rubenâs post Black Lives Matter. At Work. In Life.
We are running the Venture Deals Online Course from June 28, 2020 â August 21, 2020. We usually only run it twice a year (Spring and Fall), but given the Covid crisis, weâve had many requests to run it this summer.
Weâve now had over 20,000 people take it. The last cycle was particularly fun as several of the AMAs I did had around 1,000 people on it. Someone also set up a Slack channel for the course which I was active in and met a number of new friends.
Registration is open now. Please sign up if you want to take the Summer 2020 Venture Deals Online Course.
The TechCrunch crew has worked to keep tabs on this year’s startup accelerator classes. Conventional wisdom in startup land states that great companies are founded during more trying economic times. Well, a recession was declared yesterday by the National Bureau of Economic Research. We should, therefore, see some breakout startups in the next few years.
Which means it’s a good time to see what’s bubbling up. To that end, the TC team has spent time parsing the latest from startup-helpers like Y Combinator (here and here), 500 Startups (more here), Techstars (here and here), and Acceleprise, the group we’re focused on today.
Acceleprise is a startup accelerator — a company that helps groups of startups mature, grow and prepare to raise more capital; most accelerators provide some seed funds and office space — focused on the business-to-business, modern software startups. Or, what is usually called B2B SaaS.
The Acceleprise group has three accelerators: one in San Francisco, one in New York and one in Toronto. It’s the last of the three that is the most interesting; Acceleprise Toronto just went through its first cohort, while the group’s San Francisco and New York branches are on classes 12 and 4, respectively.
TechCrunch caught up with Acceleprise CEO and managing partner Michael Cardamone about the new cohorts and how his program is handling the new, COVID-19 world. After that we have notes on each of the 26 companies in the three cohorts. Let’s go!
That Acceleprise started a branch in Toronto was a bit of a surprise to your humble servant; was there enough startup activity in the city to warrant the investment? Why not Chicago? You get the idea.
So we were first curious about how Cardamone felt that the first batch of Toronto startups performed. According to the executive, the Canadian cohort “massively exceeded [his] expectations.” He went on to say that while the Acceleprise team was confident in the quality of talent in the city, what “they didn’t fully realize is how much of a funding gap there is in Toronto for the pre-seed stage.”
Funding gaps, in case you’re not familiar with the turn of phrase, are bad things. A funding gap occurs when there’s no available capital for one particular stage of a startup’s life. Some ecosystems struggle with later-stage checks, for example. Here Cardamone is saying that what Toronto required was the opposite of that — it needed tiny checks to light first fires.
Cardamone told TechCrunch in an email that the nine companies in the first Toronto cohort graduated with an aggregate $1.5 million in annual recurring revenue (ARR), meaning that the average B2B SaaS company from the group is out hunting for more pre-seed money with six-figure ARR. That feels about right.
TechCrunch asked how many from the Toronto group he expects to reach nine-figure valuations. Cardamone responded that “there are definitely companies in the cohort that are on the trajectory to be significant North America-wide businesses, and certainly have the potential to have nine-figure-plus outcomes.”
But there’s a small obstacle in the way of success for some, so let’s talk about it.
TechCrunch was curious what portion of Acceleprise startups make it to the Series A stage. Or, more simply, what percent actually raise an A? Cardamone responded that Acceleprise considers “a Series A internally as a $4 million+ institutional round.” That seems fair.
The math concerning how many startups from the group make it are not simple, however. Acceleprise is on its third fund, but only its first fund has been in-market long enough to have Series A data. Of that group, per Cardamone, “45% of companies [that Fund 1 invested in] raised a seed round, and 40% of those so far have gone on to a Series A.” That might seem like a lower resulting percentage than you’d imagine, but the calculations discount eight companies from those cohorts that were sold before they raised a Series A, and two other companies that the executive notes have reached ARR of $3 million to $5 million and skipped their A rounds. (One fund powers more than one accelerator cohort, of course.)
So what impact will COVID-19 have on Series A graduation? “While the funding market is a bit tighter right now, we haven’t seen the same level of slowdown that we thought we might when this first hit,” Cardamone said, adding that during his group’s investor week (similar to a demo day) “interest […] was as high as it’s ever been.”
It’s not all good news, however. From his vantage point, Cardamone told TechCrunch that post-seed companies are raising more seed extensions than Series As than before. How that dynamic shakes out isn’t clear yet.
(As an aside, Acceleprise is running its next cohorts virtually, due to COVID-19. This may be the norm for accelerators until there’s a vaccine.)
Acceleprise was founded in 2012, but it was reborn when Cardamone got the name and moved the operation to San Francisco two years later. In 2014 SaaS was a growing slice of the startup market, but not yet the majority it now sometimes feels like it has become. So, the market has come to the company, in a sense.
The market has moved so far toward SaaS that public companies in the space have seen their valuations reach new peaks in recent weeks, even though the United States is now in a recession. TechCrunch was curious what impact the repricing of public SaaS revenues was having on early-stage companies that pursue the business model; was public market enthusiasm for SaaS raising to the prices that early-stage SaaS startups can charge investors for equity?
Not really, it appears. While there is a good connection between later-stage startup valuations and the public markets, it’s less clear amongst the early stages. Here’s Cardamone on the impact of rising public SaaS valuations:
It doesn’t necessarily impact valuations at the early stages but the positive view on SaaS revenue in the public markets leads to more capital allocated to early stage SaaS companies out of generalist funds, which certainly helps even our early-stage companies.
That makes pretty good sense.
Right, enough from me. Here’s the list of startups and how they describe themselves. Enjoy!
Roots Automation: Roots Automation delivers the world’s first zero integration, self-learning Digital Coworkers as a Service. Their Digital Coworkers complete common business tasks – accounts payable, employee onboarding, processing claims, to name a few – and interact with their human teammates to share progress, ask for help, and get smarter as a result.
Prophit.ai: Prophit.ai applies advanced machine learning technology to help recover the $30 billion dollars of indirect tax overpaid by US corporations every year. Their platform makes tax decisions in near real-time, with a 98% accuracy and prevents any future tax errors from occurring.
Firstbase: Firstbase is the physical OS for remote teams. Their platform lets companies supply and manage all the physical equipment remote workers need to do great work at home as a monthly subscription. Firstbase handles everything; from the deployment of goods, IT installation, maintenance, and collections.
Touchbase: The quickest way to have team discussions over live video. Chats are timed and support topics, screen sharing, and calendar integration.
Polymer: Polymer is a data platform that secures and permissions data-in-motion across decentralized tech stacks comprised of collaborative tools, data sharing services, and data stores.
Dataships: Dataships helps companies build data relationships with their users in order to build trust and comply with global data privacy laws. The automated solution saves companies time and helps them avoid large fines.
StonePaper: StonePaper is an enterprise company specializing in developing decentralized platforms for secure data management. You can send data securely to people and businesses regardless of platform.
XILO: Lemonade for mom and pop insurance agencies. Agencies build web forms on the XILO platform that help them attract new business, service existing business, and automate their processes like data entry, renewals, proposals, pdf generation and more — ultimately saving the agency 50+ hours per month. They have acquired over 100 agencies since launch in 2019.
Hoolime: Hoolime is a multi-sided marketplace that allows care coordinators to match, schedule, and connect clinicians with patients for home-based care. The company charges a fee on every successful visit or telehealth interaction.
TRYON: TRYON creates augmented reality technology for a virtual jewelry fitting. With TRYON, a jewelry company of any size can reach and attract more clients and enhance customer shopping experience, as well as strengthen its brand engagement, increase online sales and cut down on product returns.
Hubbli: Hubbli is a fast-growing SaaS company that provides private schools with a hands-free enrollment marketing solution, in addition to other business operational services. It’s like Salesforce for private schools. Hubbli empowers school leaders to focus on delivering education and build future generations with passion without the complications of technology and marketing.
StarMetrics: StarMetrics is bringing the next generation of analytics tools to the front lines of the streaming revolution. Using proprietary algorithms, StarMetrics empowers content creators, distributors and advertisers to discover the right creative talent before production to maximize the global value and reach of their content.
CFO2: CFO2 is restaurant software that helps multi-unit operators make more money. CFO2 sits on top of restaurant systems (e.g. POS), captures all the data and tells operators what to do to generate more revenue and cut costs to maximize profit.
The Main Tab: The Main Tab is the first and only highly curated wholesale website serving the $800B wholesale market. We offer a selection of coveted brands and empower ‘Main St’ boutiques to browse, discover, and place orders via our website, at any time from anywhere.
MediSeen: MediSeen is a digital health company that empowers health and wellness providers to create their own virtual practice via simple-to-use HIPAA/PHIPA-compliant software.
JiiWA: jiiWA connects nonprofits to the people they serve for simplified and efficient programming, communications and engagement in a remote environment. Think HubSpot for Social Impact.
VendorPM: Property managers spend $359B on vendors each year and still rely on word of mouth & spreadsheet. VendorPM is a SaaS tool for enterprise property management companies to centralize data and operations. This creates a lock up of supply which we leverage in a marketplace where vendors must pay a premium to access new business.
Debie: Debie is a credit ratings platform for the commercial real estate industry. 80% of commercial tenants are not rated and represent 14% of US GDP. Debie rates these businesses using real-time data, helping property owners maximize values, reduce churn and improve operations.
Equator: Equator is a creative toolkit to access the digital earth and interact, create, and collaborate in 3D space. Think Google Earth, but more, for professionals in the Architecture, Engineering and Construction (AEC) industry.
Hilo: The Hilo platform enables building operators to deliver better tenant experiences and a single point of access to smart building solutions. Rather than silo one building, our network connects people to the Hilo community in buildings, neighbourhoods and cities where they work and live.
Sote: Sote is a digital clearing and freight forwarding company for intra-continental trade in Africa – growing container volumes 100% MOM since going live in December. Flexport for Africa.
LVRG: LVRG is a supplier management and performance rating platform that helps users gain a 360-degree view of supplier performance to drive cost-savings through transparency and accountability.
Basix.ai: Basix.ai helps companies supercharge their sales efforts. Remote or in the office, their platform makes more sales conversations happen. Sales teams can get to the next prospect, follow-up, and close business, while getting smarter along the way. Basix.ai can turn your sales organization into a repeatable revenue machine!
OneBar: OneBar works on the next-generation productivity tools for teams, including a chat-driven knowledge base and Slack-first task management tool.
BurnRate: BurnRate is the capacity planning platform for revenue growth and hiring – helping founders and sales leaders know exactly how to structure their teams under different scenarios. Since COVID, they have been featured by the likes of Microsoft, Emergence Capital, Bowery Capital, and ProfitWell as a must-have tool to stay ahead in the current climate.
Upstock: Upstock.io instantly upgrades your company to the world’s best worker stock plans. Upstock.io uses visual dashboards to show equity in real-time and is backed by the same RSUs that top companies use.
DNAnexus, which provides a cloud platform for governments, universities, doctors and pharmaceutical companies to tap into DNA and other clinical data sets and collaborate on scientific research projects, is today announcing a big step ahead in its efforts to grow its reach and purpose. The 10-year-old startup, originally spun out of Stanford’s school of medicine, has raised $100 million in funding.
The round, technically a Series G, is being co-led by Perceptive Advisors and Northpond Ventures (both specialist science and biotech investors), with participation also from previous backers GV (which has been around since almost the beginning), Foresite Capital, TPG Capital and First Round Capital. DNAnexus is also picking up a new strategic backer in this round: Regeneron Pharmaceuticals — one of several companies currently working on antibody therapies for COVID-19 recovery.
Indeed, the idea will be to use the funding to continue building out that platform and the use cases around it, specifically as research has boomed around the current coronavirus global health pandemic.
“This financing drives advancement of our data science technologies benefiting our rapidly growing customer base,” said Richard Daly, chief executive officer at DNAnexus, in a statement. “The next wave of biomedical insights and treatments will be driven by large-scale clinical, multi-omics, and real-world data resulting from cross-institutional collaborations. Our customers have continued to grow during the current COVID-19 epidemic using the virtual cloud workspace we provide. The trend toward cloud-based data analysis and collaboration is accelerating, and we are at the right place at the right time to future-proof and serve our customers.”
The funding is the biggest-ever round raised by DNAnexus, which prior to this had raised about $127 million with other investors, including Microsoft and Felicis, according to PitchBook data. It’s not disclosing a valuation, but we’re asking.
As some markers of where it’s sitting as a business, however, a spokesperson says that the platform is used by eight of the top 10 clinical diagnostics companies and seven of the world’s biggest pharmaceutical companies, which use 10 million core processing hours each month and store 28 petabytes of data, a figure that has grown 70% annually in the last four years.
It has also inked some very notable partners. They include the UK Biobank — an academic-run data trove based on genomic and clinical data from some 500,000 volunteer participants, for which DNAnexus provides an interface to query the data more easily. And it is working with government groups like the Food and Drug Administration to help it run a database it uses to collaborate and work with other organizations to help track genomic variation, an essential component of DNA-based medical research.
It’s been a rocky road for DNA and how it’s viewed by consumers in recent years. Once held up as a kind of Rosetta Stone to answer all the inscrutable questions we’ve ever had about how our bodies work, where we come from and who really did it, companies that offer DNA data to average people have more recently been in the spotlight over questions of ethics and data privacy. As a business, it also seems like some of the more prominent names in the space have found interest in the area waning.
DNAnexus sits adjacent but also quite separate from those currents. The company definitely got its start around the time that others like 23andMe were popularising the idea of democratising DNA information, but it has always had its roots in the more arcane but also more serious side of the DNA business and its challenges: how best to wrangle and query what are essentially very large and unwieldy datasets in order to glean actionable insights.
It’s also more than just about DNA, working with other large and often unstructured clinical data sets to help others in the field use the data more intelligently and with the correct privacy compliance in place (which is another kind of “intelligent” use of data), part of a bigger trend to develop medicines that are more attuned to individuals rather than one-size-fits-all solutions that often miss the mark, particularly in complex pathology, such as cancer care. Tapping into AI to build out therapies, it is one of the more cutting-edge, but also lucrative, areas in medicine today.
“The Precision Medicine market is poised to exceed $119 billion by 2026. Many pharmaceutical companies and medical centers are adopting strategies rooted in human genetics because evidence shows that the odds of a drug’s clinical success doubles if associated with specific biomarkers,” said Michael Rubin, MD, PhD, founder and CEO of Northpond Ventures, in a statement. “Providing the ecosystem with a tool to analyze and gain insights from all these massive datasets is a difficult undertaking. DNAnexus has a proven product that scales.”
Beijing Eswin Computing Technology, a Chinese startup that supplies semiconductor designs and solutions, has raised $283 million in a new financing round at a time when the world’s most populous nation is looking to cut its reliance on the U.S. and U.K. for chipsets.
The four-year-old firm said the new round, a Series B, was led by Legend Capital, the investment arm of computer vendor Lenovo, and IDG Capital. Riverhead Capital Investment Management, Lighthouse Capital and state-backed Haining City and Zhejiang Province participated in the round.
Eswin Computing develops integrated chips and solutions focused on displays and videos, AI data processing and wireless connection. It also offers advanced packaging and testing solutions. The firm is led by Wang Dongsheng, who previously served as the chairman of BOE Technology Group, a Chinese giant that produces displays for TVs and smartphones and counts Huawei among its customers.
BOE maintains a business relationship with Eswin, according to Chinese news outlet Caixin. BOE holds 37.35% of chip-related business in Eswin, the publication said.
In a press statement, Eswin said it will spend the fresh capital on research and development, manufacturing and recruitment. That, it believes, will help spur the domestic chip production in China, which today relies heavily on U.S. and U.K. firms. Last year, the U.S. blacklisted Huawei over security concerns and trade disputes with China.
Fintech startup Klarna is launching a rewards program called Vibe this summer. If you use Klarna as your payment method, you’ll start earning points for every $1 you spend. You can then redeem your points for gift cards at Starbucks, Sephora, Foot Locker and Uber.
Klarna is best known for its buy now and pay later feature, which lets you pay over four installments with 0% interest. You can think as Klarna as a sort of credit card-alternative payment method as you don’t have to pay for things right away.
Many e-commerce websites have added Klarna as a payment option to increase sales. It can increase conversion rates for expensive purchases in particular.
Choosing Klarna during the checkout process is one way to get rewards. But the company also has a mobile app that acts as a marketplace of stores. You can browse Klarna-friendly stores directly from the Klarna app and track your orders.
It gets interesting as the startup has also developed a way to use Klarna on websites that don’t support Klarna, such as Amazon. You can open the Klarna app, browse the web interface of an unsupported store and pay with a Ghost card.
Klarna generates prepaid cards that can only be used once to process your payments on unsupported sites. You’ll also collect points with those purchases.
The rewards program could boost usage numbers over time. Some users could slowly build a habit of opening the Klarna app when they want to make an online purchase. Vibe users will also be able to participate in various sales. Once again, Klarna positions itself as an alternative to credit cards with the addition of rewards.
The new program will first launch in the U.S. in June and will then be rolled out in other markets in the coming months, starting with Germany, Australia, Sweden and the U.K. Klarna now has 8 million users in the U.S.
Sramana Mitra: Let’s get a little bit more focused on the things you do. Especially in online education, what is it that you’re doing and what is unique and special? Stephen Spahn: Because we’re...
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South Africa-based renewable energy startup Sun Exchange has raised $3 million to close its Series A funding round totaling $4 million.
The company operates a peer-to-peer, crypto-enabled business that allows individuals anywhere in the world to invest in solar infrastructure in Africa.
How’s that all work?
“You as an individual are selling electricity to a school in South Africa, via a solar panel you bought through the Sun Exchange,” explained Abe Cambridge, the startup’s founder and CEO.
“Our platform meters the electricity production of your solar panel. Arranges for the purchasing of that electricity with your chosen energy consumer, collects that money and then returns it to your Sun Exchange wallet.”
It costs roughly $5 a solar cell to get in and transactions occur in South African Rand or Bitcoin.
“The reason why we chose Bitcoin is we needed one universal payment system that enables micro transactions down to a millionth of a U.S. cent,” Cambridge told TechCrunch on a call.
He co-founded the Cape Town-headquartered startup in 2015 to advance renewable energy infrastructure in Africa. “I realized the opportunity for solar was enormous, not just for South Africa, but for the whole of the African continent,” said Cambridge.
“What was required was a new mechanism to get Africa solar powered.”
Sub-Saharan Africa has a population of roughly 1 billion people across a massive landmass and only about half of that population has access to electricity, according to the International Energy Agency.
Recently, Sun Exchange’s main market South Africa — which boasts some of the best infrastructure in the region — has suffered from blackouts and power outages.
Image Credits: Sun Exchange
Sun Exchange has members in 162 countries who have invested in solar power projects for schools, businesses and organizations throughout South Africa, according to company data.
The $3 million — which closed Sun Exchange’s $4 million Series A — came from the Africa Renewable Power Fund of London’s ARCH Emerging Markets Partners.
With the capital, the startup plans to enter new markets. “We’re going to expand into other Sub-Saharan African countries. We’ve got some clear opportunities on our roadmap,” Cambridge said, referencing Nigeria as one of the markets Sun Exchange has researched.
There are several well-funded solar energy startups operating in Africa’s top economic and tech hubs, such as Kenya and Nigeria. In East Africa, M-Kopa sells solar hardware kits to households on credit, then allows installment payments via mobile phone using M-Pesa mobile money. The venture is backed by $161 million from investors including Steve Case and Richard Branson.
In Nigeria, Rensource shifted from a residential hardware model to building solar-powered micro utilities for large markets and other commercial structures.
Sun Exchange operates as an asset free model and operates differently than companies that install or manufacture solar panels.
“We’re completely supplier agnostic. We are approached by solar installers who operate on the African continent. And then we partner with the best ones,” said Cambridge — who presented the startup’s model at TechCrunch Startup Battlefield in Berlin in 2017.
“We’re the marketplace that connects together the user of the solar panel to the owner of the solar panel to the installer of the solar panel.”
Abe Cambridge, Image Credits: TechCrunch
Sun Exchange generates revenues by earning margins on sales of solar panels and fees on purchases and kilowatt hours generated, according to Cambridge.
In addition to expanding in Africa, the startup looks to expand in the medium to long-term to Latin America and Southeast Asia.
“Those are also places that would really benefit from from solar energy, from the speed in which it could be deployed and the environmental improvements that going solar leads to,” said Cambridge.
Propzy, a Vietnam-based startup that guides consumers through the entire process of a real estate transaction, announced it has raised a $25 million Series A led by Gaw Capital and SoftBank Ventures Asia, the early-stage venture arm of SoftBank Group. Other investors included Next Billion Ventures, RHL Ventures, Breeze, FEBE Ventures, RSquare and Insignia.
Instead of proptech, Propzy founder and CEO John Le prefers the term “firetech” to describe the startup, using “fire” as an acronym for financial, insurance and real estate technology. Founded in 2016, Propzy’s technology covers almost every stage of a real estate transaction, from brick-and-mortar sales centers to an online marketplace for listings, financial products like mortgage lending and, finally, enterprise software for property managers and tenants.
The company’s Series A will be used to grow its product line and provide a balance sheet for its expansion into direct mortgage financing. Most of Propzy’s current operations are in Ho Chi Minh City. It plans to expand into Hanoi through the rest of this year and 2021, before exploring other Southeast Asian markets, including potentially Thailand, Malaysia and the Philippines.
Propzy currently has 30 brick-and-mortar sales centers, with a total of 400 sales staff. Over the next 18 months, it expects to increase those numbers to 70 sales centers and 1,300 sales staff.
The sales centers complement Propzy’s online marketplace, with tens of thousands of properties pre-screened by its staff before they are entered into listings. Le said Propzy has handled more than $1 billion in property transactions since its launch, making it the largest offline-to-online real estate network in Vietnam.
Le is a serial entrepreneur and his past startups include LoanTrader, a mortgage trading platform that was backed by Goldman Sachs, Citigroup and GE Capital. In 2009, he went to Vietnam to launch an international credit bureau with TransUnion. During that time, he realized how burdensome the process of renting or buying property there can be.
In the United States, consumers benefit from listing platforms like Zillow and Trulia, licensed real estate agents and escrow offices. In Vietnam, however, Le said many listings are on classified sites, similar to Craigslist, and are often not handled by licensed agents. There is also no standardized listing data, which makes comparing multiple properties difficult for consumers.
To replicate the U.S. experience in Vietnam, “you can’t just launch a website and put properties on it,” Le said. “We built an offline agency, but you need to utilize tech to increase its efficiency and performance, so we are an offline-to-online platform. That high-touch customer service needs to go all the way, not just for property matchmaking but to help both parties successfully close and settle transactions.”
Propzy built an automated valuation model using data it has gathered over the last four years to assess homes, help recommend prices and show customers comparable properties. On the financing side, the model is also used by Propzy’s partner banks to help customers get pre-approved for loans based on property value.
After buyers move into an apartment unit, they can use Propzy’s tenant software to report issues or book maintenance services and amenities. If they decide to sell or rent the property, they can also do so through the platform.
The pandemic has put downward pressure on Vietnam’s real estate market, with a 70% reduction in Propzy’s business during the country’s nationwide lockdown in April. On the other hand, more people were doing searches online and inquiring about selling property, Le said.
“We’re carrying an all-time high pipeline of deals, as consumers start to have more confidence and know where the market will be in two to three months,” Le added. “People still need houses, so deals in the pipeline are three times over the fourth-quarter average. We expect them to close quickly, so we are on a good path to hitting our numbers at the end of the year.”
In a press statement about the investment, Gaw Capital managing partner Humbert Pang said, “Given the favorable macroeconomics exhibited by Vietnam and Gaw’s conviction in offline-to-online business models in real estate, we are excited by our investment into Propzy. We see the value proposition and steadfast vision that Propzy and its management team brings to the table and are therefore very optimistic in Propzy’s business and the market within which it operates.”
Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Nick Adams was recorded in April 2020. Nick Adams...
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While I was trying to get my soul to reset a little yesterday, I worried about short attention spans. As humans, we naturally have short attention spans that are amplified by the extremely short attention span of the media.
We are at the beginning of two new crises intermingled with multiple other crises we are dealing with as a result of Covid. The four crises that Covid has amplified (so far) are health, economic, mental health, and racial inequality. But they are not the only crises we are dealing with (anyone remember gender inequity, especially in tech, or #MeToo?)
Sustained leadership to address each crisis â over the long term â is required. Iâm committed to that and I encourage everyone else who is writing, listening, talking, and trying to affect positive change to make a long term committment.
Iâve seen many posts and a few videos from white male CEOs talking to their companies about Black Lives Matter. I thought this one, from Bryan Leach, CEO of iBotta, was spectacular.
Emmanuel Acho was even better.
Veeva was founded in 2007 to deliver industry-specific business solutions over the cloud. The COVID-19 pandemic has driven migration to its cloud-based software for pharmaceutical and biotech...
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Very interesting discussion on online methods of providing a well-rounded education to gifted kids who pursue Sports and Arts careers. Sramana Mitra: If you could introduce yourself as well as Dwight...
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This feature from The Wall Street Journal analyses the effectiveness of remote learning during the school lockdown following the pandemic outbreak. For this week’s posts, click on the paragraph...
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The tech industry has generally wished that structural discrimination would go away, while pretending that it already has. But technology can be used by anyone for anything. And so, the world has watched video after video of police brutality against Black people in a real-time stream that plays through the closing days of quarantine, culminating in the death of George Floyd and ongoing protests. As employees have left their remote offices to hit the streets, even executives at the largest tech companies —who would usually avoid such complications — have expressed their support officially, online.
What can we expect to change now? After all, diversity and inclusion programs have been getting cut during the pandemic, and stats on employee diversity and VC partner/portfolio demographics have not seemed to be improving quickly over the past decade, at least in aggregate.
First up, a group of Black tech leaders in the Bay Area, including TechCrunch’s Megan Rose Dickey, has put forward a widely-signed petition that specifies five goals including local support and accountability, and commitment to hiring and investing in Black employees and founders.
On the ground in the startup world, a considerable range of investors say they are setting aside dedicated time and resources for Black founders.
Specific proposals for changes to the status quo strike at the heart of of tech as we know it.
To address existing systemic bias, algorithmic and otherwise, contributor Will Walker writes that tech companies like Amazon, Yelp and Grubhub should find ways to feature and favor Black-owned businesses — even if that means re-writing the recommendation algorithms.
And to address systemic bias in who gets funding, Connie Loizos writes that legislation could be the best answer:
Consider that already, most VCs today sign away their rights to invest in firearms or alcohol or tobacco when managing capital on behalf of the pension funds, universities and hospital systems that fund them. What if they also had to agree to invest a certain percentage of that capital to founding teams with members from underrepresented groups? We aren’t talking about targets anymore, but actual mandates. Put another way, rather than wait for venture firms to organically develop into less homogeneous organizations — or to invest in fewer founders who share their gender and race and educational background — alter their limited partner agreements.
Perhaps tech leaders are responding so strongly today because they realize what’s at stake for them if change does not happen faster?
Meanwhile, the very nature of work as we know it is being re-evaluated. Megan caught up with top investors in a very popular investor survey for Extra Crunch this week, to better understand the problems and solutions. Here’s what Ann Muira-Ko of Floodgate Capital thinks will create unicorns, as a sample:
How do you enable solopreneurs to build businesses that are fully tech-enabled? We think of this as the ironman suit for the solopreneur. What financial products and software products can solopreneurs use to provide consumers or their customers with the tech-enabled experiences they have come to expect?How does reputation follow someone? A resume or LinkedIn profile measures where you’ve worked and for how long. With people working more jobs at varied locales, measuring expertise will become a new challenge.How does an organization maintain knowledge? If a company is reliant on its people to share its history and knowledge base, how can that be disseminated without relying on internal experts (who are on the decline)?How should productivity tools (calendars & communication) and enterprise systems (CRM, HR, Finance, etc.) adapt to a multi-modal (work from anywhere) work environment? HR is perhaps the most out-of-date, but every tool will require better integration.If you’re more interested in the cybersecurity aspects of remote work, you will want to check out security editor Zack Whittaker’s set of investor surveys this week, including this industry overview and this pandemic-focused one.
Are VCs actually open for business during the pandemic? Docsend, a key inside data source, has a new report out this week that shows investor interest has boomed in April. Here’s CEO Russ Heddleston on TechCrunch, talking about the activity on its document management platform:
After the initial decline in March, founders and VCs both bounced back fairly quickly. In fact, the next week VC interest increased 10% while the number of Founder Links Created increased by 12%. However, for the following few weeks the number of links created by founders either stayed flat or dropped. But that isn’t the case for VCs. Demand for pitch decks rose steadily all the way through the week of April 20th, which was 25% up year-over-year. In fact, seven of the top 10 best days for Pitch Deck Interest in 2020 were in the month of April.
The fundraising inactivity has been on the part of the founders! Meanwhile, in a separate article for Extra Crunch, he shares that investors are spreading themselves broadly.
In the recent weeks, as we’ve had higher than average supply and demand, we’ve watched as the average time spent reviewing a deal has declined. In fact, we’re at nearly a two-year low. The only other period when time spent dropped below where it is now was in early 2018 (which not coincidentally was also when demand was at its highest). Twice in 2018 we saw time spent go below three minutes and we’re currently at 3 minutes and 7 seconds.
In a fascinating oral history of sorts for Extra Crunch, Adam Guild explains how he helped his young brother Topper get more than 10 million followers in under five months. Here’s a free excerpt:
At first, figuring out which content would go viral seemed random. There was no correlation between likes, comments, shares or engagement rate.
What made the difference in his successful content? Topper needed to find out to maximize growth, so he went through his TikTok analytics insights and noticed a trend: his most popular videos weren’t the ones with the highest engagement rates. They were the ones with the highest average view durations.
“I wanted to test if this guess was right,” said Topper, “so I posted a few videos with a longer length and teased people in the captions to watch until the end.”
It worked; his videos started getting more views, but it wasn’t a perfect correlation. Some videos with high view durations weren’t taking off.
When Topper asked me for advice, I suggested that the key metric to nail was actually average session duration. That’s what YouTube optimizes for, so it would make sense that TikTok would do the same. This metric measures how long people actually stay on the platform — not on the video — and it can be increased by single videos.
He posted another video to test: one that encouraged viewers to rewatch repeatedly because it had a cliffhanger ending — Topper poured hundreds of Mentos into a massive container of Coke before cutting out the ending.
That video was his most viewed yet, scoring more than 175,000,000 views. He decided to use that lesson in future videos by creating content that helped get viewers addicted to TikTok while also being fun to watch.
Join us to watch five startups pitch off at Pitchers and Pitches on June 10th
Join Eventbrite CEO Julia Hartz for a live Q&A: June 11 at 3 pm EST/Noon PDT/7 pm GMT
TechCrunch:
LinkedIn introduces new retargeting tools
The coronavirus has hastened the post-human era
Zynga acquires Turkey’s Peak Games for $1.8B, after buying its card games studio for $100M in 2017
Extra Crunch:
Is Zoom the next Android or the next BlackBerry?
The IPO window is open (again)
Unpacking ZoomInfo’s IPO as the firm starts to trade
SaaS earnings rise as pandemic pushes companies more rapidly to the cloud
What grocery startup Weee! learned from China’s tech giants
From Alex Wilhelm:
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week, however, the Equity crew (Danny, Natasha, Chris, and Alex) agreed it felt silly to drum up false enthusiasm for funding rounds and startups. Instead, we talked about a more critical topic: systemic racism in the United States. Venture firms and tech executives across the country are pledging to be better following the brutal murder of George Floyd and police brutality.
Better is long overdue.
What follows are the resources we mentioned — and a few more — on the show itself. We’ll be back. Now is the time for sustained momentum and change.
Donations
The NAACP Legal Defense and Educational FundBlack Visions CollectiveThe Anti Police-Terror ProjectCommittee to Protect JournalistsThe Marshall ProjectOfficial George Floyd Memorial FundHow to be a better ally
More resources on how to support Black Lives MatterHow to make this moment the turning point for real changeFor those who can’t protest, here are ways to support the movementUnderstand the model minority mythThe social contractResources fo Non-black individuals and people of colorEquity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
I’m publishing this series on LinkedIn called Colors to explore a topic that I care deeply about: the Renaissance Mind. I am just as passionate about entrepreneurship, technology, and business, as I...
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Earlier this week, TechCrunch covered a grip of earnings reports showing that some companies helping other businesses move to modern software solutions are seeing accelerated growth. Inside the Software as a Service (SaaS) world, this is known as the digital transformation. Based on how many software companies are talking about it, the pace of change is only picking up.
But since we published that first entry, a number of SaaS companies that have posted financial results seemed to disappoint investors. Seeing some companies in the high-flying sector struggle made us sit back and think. What was going on?
Today we’re going to explore how the digital transformation’s acceleration seems real enough, but how it’s not landing equally. We’ll start by going over a short run of earnings results, talk to Yext CEO Howard Lerman about what his B2B SaaS company is seeing, and wrap with notes on what could be coming next from software shops.
We all hear about digital transformation, but it’s hard to define. Generally, it’s a broad area that includes digitization of manual processes, modern software development practices like continuous delivery and containerization and a general way of moving faster via technology — especially in the cloud.
Speaking last month on Extra Crunch Live, Box CEO Aaron Levie defined the term as he sees it. “The way that we think about digital transformation is that much of the world has a whole bunch of processes and ways of working — ways of communicating and ways of collaborating where if those business processes or that way we worked were able to be done in digital forms or in the cloud, you’d actually be more productive, more secure and you’d be able to serve your customers better. You’d be able to automate more business processes.” he said.
What we’re seeing now is that the pandemic has accelerated the rate of change much faster than many had anticipated. Efforts to slow the spread of COVID-19 and its related workplace disruptions have accelerated what would have been a normal timetable. But on its own, that doesn’t mean the market is seeing equal results across every company and industry that might be part of that trend.
Lots of SaaS companies reported earnings this week, but two sets of returns stuck out as we reviewed the results, those from Slack and Smartsheet.
If you own your home, how much do you pay for property taxes? Does it seem like too much?
If you disagree with how much you’re paying in property taxes, you can appeal the assessment. Most people don’t, though — perhaps because they are unaware they can, or because they just don’t have the time or resources to deal with the lawyers and paperwork.
TaxProper, a company out of Y Combinator’s Summer 2019 batch, has raised $2 million to simplify the process. The round was led by Khosla Ventures, backed by Global Founders Capital, Clocktower Ventures and a handful of angel investors.
Once you’ve punched in your address, TaxProper’s algorithm looks at the assessments of similar homes in your surrounding area, looking at things like size, number of rooms, construction materials, etc.
If the algorithm determines that you’re paying more than your share, they generate the required paperwork and send it off to the county. The company estimates that their part of the process takes 3-5 minutes (after which you’re waiting on the county’s response, which they say takes 6-8 weeks).
They’re offering up two different pricing models, charging either a $149 up-front fee or 30% of total first-year tax savings. If their algorithm says your taxes can’t be lowered, you don’t pay — nor do you pay if the appeal gets denied. The company tells me they’re currently seeing an average per customer savings of around $700.
TaxProper’s two co-founders have a good bit of experience in the space of taxes and government. Geoff Segal was previously an actuarial statistician and research analyst for State Farm, while Thomas Dowling was a municipal finance advisor for Chicago Mayor Lori Lightfoot.
One thing to note: TaxProper is only up and running in select areas right now, as the company tests different strategies and makes sure they’re doing everything right region-by-region. It’s currently available in Chicago and the surrounding Cook County area, with plans to roll out “in the coming months” in New York and Texas.
A startup called Portobel is working to help food producers shift their businesses so they can support direct-to-consumer deliveries.
Portobel is backed by Heroic Ventures and led by Ranjith Kumaran, founder or co-founder of file-sharing company Hightail (acquired by OpenText) and loyalty startup PunchTab (acquired by Walmart Labs).
Kumaran told me that he and his co-founders Ted Everson and Itai Maron started out with the goal of improving the delivery process by using low-cost, internet-connected devices to track each order. As they began testing this out — primarily with dairy companies and other producers of perishable goods — customers started to ask them, “Hey, you can monitor these things, can you actually deliver these things, too?”
So last year, the company started making deliveries of its own, which involved managing its own warehouses and hiring its own drivers. Kumaran said the resulting process is “a machine that turns wholesale pallets into direct-to-consumer deliveries.”
He also emphasized that the company is taking safety precautions during the pandemic, ensuring that all of its warehouse workers and drivers have masks and other protective equipment, and that the drivers use hand sanitizer between deliveries.
Image Credits: Portobel
Portobel currently operates in the San Francisco Bay Area and Los Angeles/Orange County. Kumaran said the COVID-19 pandemic has only accelerated the demand for the startup’s services, with the number of households it serves tripling since April.
That might sound a little surprising, since supermarkets were basically the one store that customers are still visiting regularly. Plus, there are a range of grocery delivery options.
However, Kumaran suggested that the D2C model is better for both producers and consumers. Producers get recurring orders for larger packages of food. And for consumers, “If you buy straight from the wholesale producer … everything’s in stock.”
As for delivery, he said that when you buy your groceries online, things are being packed and dispatched at your local store.”
“All those things about selection and availability, put those aside — the modern grocery store is not set up for efficient e-commerce delivery,” he added. “They need to block the aisles to pick up product, there’s no dedicated place to dispatch deliveries. That’s kind of why, if you’ve tried [grocery delivery], there are unpredictable delivery windows. It’s a challenge for these guys to scale online.”
Portobel’s customers include San Francisco-based grocery company Moo Cow Market. In a statement, Moo Cow founder Alexandra Mysoor said, “The pandemic has propelled retail as we knew it into a new wave, blending and merging all past and current forms of commerce. That’s where companies like Moo Cow Market enter and can scale and grow thanks to services like Portobel.”
One of the earliest disruptions created by the novel coronavirus manifested in the form of event cancellations. Some of the world’s biggest tech conferences, like F8 and Google NEXT, got postponed and others turned to digital options to still connect. Even Disrupt is going digital this year.
It is an unprecedented time for the events world, so we are bringing someone right in the center of it to our Extra Crunch Live stage: Eventbrite CEO Julia Hartz. In fact, Extra Crunch members can ask their own questions directly to the CEO and are encouraged to do so live on the call.
Hartz is leading the publicly traded company as it grows more popular than ever with hundreds of millions of dollars in revenue. At the same time, the global slowdown of in-person event ticketing due to COVID-19 has had a material impact on Eventbrite’s business. What does that mean for employee morale? Collaboration with other companies? And overall culture at the business?
Eventbrite has swiftly transitioned to virtual events, with thousands of listings across categories like professional events, classes, health and wellness, science and tech, community and culture and more. Hartz also told Billboard that the company remains committed to serving independent music venues, which have been hit hard by the global health crisis, and hinted that Eventbrite may shift to a self-service ticket model.
The company reported that, since enhancing its online events service in 2019, and in the midst of social distancing, Eventbrite users are posting nearly 20k online events every day, with a 2,000+ percent year-over-year increase of online events taking place in April 2020 compared to April 2019. This announcement came after Eventbrite said it would cut $100 million in costs, which included layoffs.
We’ll talk with Hartz about how she is leading her company through a crisis and what the future holds for bringing people together. We’ll also discuss how widespread layoffs may impact the future of diversity in our workforces.
Hartz will also be asked to weigh in on advice for other founders hoping to emerge from COVID-19 from fundraising to strategy. As always, EC subscribers are invited to log onto the call to ask questions live.
Details are below for Extra Crunch subscribers; if you need a pass, get a cheap trial here.
Chat with you all in a week!
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