Microsoft announced today that the upcoming co-op shooter Outriders will be available on Xbox Game Pass the same day it launches on April 1.Read More

Lookout has acquired CipherCloud, a cloud-native cybersecurity startup specializing in the burgeoning SASE space.Read More

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

Ready? Let’s talk money, startups and spicy IPO rumors.

Every quarter we dig into the venture capital market’s global, national, and sector-based results to get a feel for what the temperature of the private market is at that point in time. These imperfect snapshots are useful. But sometimes, it’s better to focus on a single story to show what’s really going on.

Enter AgentSync. I covered AgentSync for the first time last August, when the API-focused insurtech player raised a $4.4 million seed round. It’s a neat company, helping others track the eligibility of individual brokers in the market. It’s a big space, and the startup was showing rapid initial traction in the form of $1.9 million in annual recurring revenue (ARR).

But then AgentSync raised again in December, sharing at the time of its $6.4 million round that the valuation cap had grown by 4x since its last round. And that it had seen 4x revenue growth since the start of the pandemic.

All that must sound pretty pedestrian; a quickly-growing software company raising two rounds? Quelle surprise.

But then AgentSync raised again this week, with another grip of datapoints. Becca Szkutak and Alex Konrad’s Midas Touch newsletter reported the sheaf of data, and The Exchange confirmed the numbers with AgentSync CEO Niji Sabharwal. They are as follows:

Present-day revenues of less than $10 million, but with ARR growing by 6x in 2020 after 10x expansion in 2019.No customer churn to date.Its $25 million Series A valued the company at $220 million, which Konrad and Szkutak describe as “exactly 10x AgentSync’s valuation from eight months ago.”

That means AgentSync was worth $22 million when it raised $4.4 million, and the December round was raised at a cap of around $80 million. Fun.

Back to our original point, the big datasets can provide useful you-are-here guidance for the sector, but it’s stories like AgentSync that I think better show what the market is really like today for hot startups. It’s bonkers fast and, even more, often backed up by material growth.

Sabharwal also told The Exchange that his company has closed another $1 million in ARR since the term sheet. So its multiples are contracting even before it shared its news. 

2021, there you have it.

Meet Conscience.vc

Also this week I got to meet Ariana Thacker, who is building a venture capital fund. Her route to her own venture shop included stops at Rhapsody Venture Partners, and some time at Predictive VC. Now she’s working on Conscience.vc, or perhaps just Conscience.

Her new fund will invest in companies worth less than $15 million, have some form of consumer-facing business model (B2B and B2B2C are both fine, she said), and something to do with science, be it a patentable technology or other sort of IP. Why the science focus? It’s Thacker’s background, thanks to her background in chemical engineering and time as a facilities engineer for a joint Exxon-Shell project. 

All that’s neat and interesting, but as we cover zero new-fund announcements on The Exchange and almost never mini-profile VCs, why break out of the pattern? Because unlike nearly everyone in her profession, Thacker was super upfront with data and metrics.

Heck, in her first email she included a list of her investments across different capital vehicles with actual information about the deals. And then she shared more material on different investments and the like. Imagine if more VCs shared more of their stuff? That would rock.

Conscience had its first close in mid-January, though more capital might land before she wraps up the fundraising process. She’s reached $4 million to $5 million in commits, with a cap of $10 million on the fund. And, she told The Exchange, she didn’t know a single LP before last summer and only secured an anchor investor last October.

Let’s see what Thacker gets done. But at a minimum I think she’ll be willing to be somewhat transparent as she invests from her first fund. That alone will command more attention from these pages than most micro-funds could ever manage.

A whole bunch of other important shit

The week was super busy, so I missed a host of things that I would have otherwise liked to have written about. Here they are in no particular order:

FalconX, a startup that powers crypto-trading on other platforms, raised $50 million this week. The round comes after the company raised $17 million last May. I wrote about that here. Tiger Global led the round, natch, as it has led nearly every round in the last month. The FalconX round matters as the company grew from what we presume was a modest trading and revenue base into something much larger. Per the company, in “less than a year” the company’s “trading volume” grew by 12x and its “net revenue” grew 46x. That’s a lot. Privacera also raised $50 million this week. Insight Partners led the round. The deal caught my eye as it promised a “cloud-based data governance and security solution.” That reminded me of Skyflow, a quickly-growing startup that I thought might have a similar product. Privacera CEO Balaji Ganesan politely corrected my confusion in an email saying that “Skyflow is like a vault for customer data. They replace customer data with tokens. Our focus is on data governance, so it is broader. We don’t store customer data within our solution.” Fair enough. It’s still an interesting space.And then there’s Woflow, which VentureBeat actually got to before I could. I chatted with the company this week, but sadly have more notes than open word count today. So let it suffice to say that the company’s model of selling structured merchant data is super cool. And the fact that it has linked up with customers in its first vertical (restaurants) like DoorDash is impressive.Its round was led by Craft Ventures, a firm that has been pretty damn active in the API-powered startup landscape in recent months. More to come on Woflow.

Various and Sundry

Closing, I learned a lot about software valuations here, got to noodle on the epic Roblox direct listing here, dug into fintech’s venture successes and weaknesses, and checked out the Global-e IPO filing. Oh, and M1 Finance raised again, while Clara and Arist raised small, but fun rounds.

Alex

When Mike Morrison left his hometown of Fredericton, New Brunswick, for Calgary, Alberta, he assumed he’d never go back except to visit.

Morrison was following a well-trodden path of Atlantic Canadians heading west to find work rom which few returned. During the mid-aughts, Alberta was booming thanks to the high price of oil. To Morrison, migrating west seemed an easy choice. “If I stayed, my options were to be a supply teacher or work in a call center.”

When he arrived in Alberta, Morrison worked three jobs. During his free time, he started a blog to tell his friends back home about his life out west, and also to recommend TV shows. Slowly, Mike’s Bloggity Blog became one of Canada’s premier entertainment sites, and Morrison found himself with a local newspaper column as well as regular television and radio appearances. He then started Social West, a Calgary-based digital marketing conference that, before long, expanded to three cities. His identity and public persona were intertwined with his adopted city.

“For a while, I would tell people that I was being paid to be a professional Calgarian.” Then, in 2021, Morrison left Calgary for Halifax, Nova Scotia, back east.

Morrison and his partner are part of a wave of skilled young people reversing Canada’s natural current of internal migration. In doing so, they’re participating in an economic revival that could change the destiny of the depressed Atlantic region.

When they return, young people like Morrison are finding that Atlantic Canadians have quietly built a robust startup ecosystem that has resulted in a dozen acquisitions to companies like IBM and Salesforce, the sum of which likely surpasses $5 billion in cash and stock.

The Atlantic Canada story may provide a blueprint for other rural regions looking to take advantage of the decentralizing impact of COVID-19 to swap resource-based economies for the knowledge economy.

If you’ve never thought of Atlantic Canada before, you’re not alone. Indeed, many Canadians refer to Toronto as “east”’ despite there being 1,900 miles between Drake and The Weeknd’s hometown and St. John’s, Newfoundland and Labrador, the easternmost point of Canada and North America. The four provinces that make up Atlantic Canada (New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador) are easy to overlook for their remoteness. Known within Canada for its sleepy seaside towns, kitchen parties, trouble-making red-headed orphans and lobster galore, Atlantic Canada has had a rough few decades.

After the collapse of the cod fishing industry in the 1990s followed by the migration of shipbuilding to Asia, Atlantic Canada defined itself as the have-not region of America’s rational northern neighbor. Despite booming from the war years onward due to its abundant natural resources, since the ’90s Atlantic Canada has watched its young people migrate west to the oil fields of Alberta for blue-collar work and to Toronto and Montreal for white-collar work.

Soon, the region’s hard-luck narrative stuck. Stephen Harper, the country’s prime minister from 2006 to 2015, famously quipped that the region suffered from “a culture of defeatism.” The narrative of the death of the coastal region became a self-fulfilling prophecy.

Then, during the pandemic, the narrative drastically changed. In September 2020, Halifax-based fitness data management company Kinduct was acquired by mCube. In November 2020, Newfoundland-based Verafin was acquired by Nasdaq for $2.75 billion in cash. In January 2021, Prince Edward Island-based ScreenScape Networks was acquired by Spectrio for an undisclosed fee, then Halifax-based storytelling platform Wattpad was acquired by Naver in a deal worth $600 million. Atlantic Canada had four major tech acquisitions in a five-month period.

Outsiders were surprised by the sudden upsurge in exits, but momentum had been building for some time. Business writer Gordon Pitts pinpoints 2011 as the game-changing year for the Atlantic startup scene. In his book “Unicorn in the Woods: How East Coast Geeks and Dreamers are Changing the Game,” Pitts recounts how in March 2011 Salesforce purchased New Brunswick-based social media monitoring company Radian6 for approximately $300 million. Then, in November of the same year, IBM purchased another New Brunswick-based startup, cybersecurity company Q1 labs, for a reported $600 million. If anyone considered the Radian6 acquisition a one-off chance event, the subsequent success of Q1 labs demonstrated there was a there there.

Under normal circumstances, one might expect the founders of Radian6 and Q1 labs to disappear into the suburbs of Cambridge or Marin Country, but that never happened. Rather than uproot their newly acquired companies, both Salesforce and IBM opened engineering offices in Fredericton. Verafin would appear to be following suit: in the press release announcing the acquisition, Nasdaq committed to keeping the company’s headquarters in Newfoundland, investing in the local university and contributing to the development of the local ecosystem.

Once lone rangers, Q1 Labs and Radian6 are now surrounded by thriving copycats in a self-sustaining ecosystem. According to Peter Moreira, founder of Entrevestor, a publication that has tracked the Atlantic Canadian startup scene since 2011, the ecosystem has attracted over a billion dollars in investment spread among 700 companies, creating more than 6,000 direct jobs. About 100 companies are created every year in fields as diverse as life sciences, cleantech and ocean tech.

VC firms have taken notice: notable investors in Atlantic Canadian startups include Breakthrough Energy Ventures, a fund supported by Bill Gates, Jeff Bezos and Richard Branson. Indeed, what’s remarkable about the string of recent exits is their diversity across industries and their inside-baseball inclinations, spanning everything from fraudulent credit card transactions to fitness data and video technology.

Sandy Bird is one of the protagonists of the Atlantic Canada tech-driven economic revival. Sandy co-founded Q1 Labs and then, after the acquisition, became the CTO of IBM’s security division. In 2017, Bird and the former CEO of Q1 Labs founded a new cybersecurity company, this one focused on public clouds, called Sonrai Security, which has since raised nearly $40 million in venture capital. Bird takes great pride in having lived his entire life within a 30-minute radius and showing the world that his prior exit was not a one-off event.

According to Bird, IBM was happy to keep an engineering division in New Brunswick because the quality of the engineers is high and employee attrition, one of the obstacles for any fast-growing company operating in the competitive labor market of the San Francisco Bay Area, is low. Atlantic Canada is a place where the idea of the “company man/woman” is still alive and thriving.

Bird noted that “thanks to our high retention, we’re able to build a company culture that makes up for any of the disadvantages of a smaller labor market.” Bird also pointed out that the Atlantic time zones are ideal, enabling effective communications with Europe as well as the rest of North America.

Bird is also honest about the region’s shortcomings. For example, airline connections to Atlantic Canada can be tricky. Getting to places like Denver can take a day and multiple connections. Sonrai Security, for example, has its core engineering team in Fredericton while sales and marketing are in New York, with regional salespeople spread out around North America.

In terms of starting a company, the local ecosystem can provide those first checks to get a company up and running, but growth from Series B onward requires tapping into U.S. venture capital. Another challenge is hiring fast enough to meet the demands of a thriving tech company. Though companies like his can recruit recent graduates and exiled Atlantic Canadians eager to return, Bird mentioned that Q1 Labs opened a parallel engineering office in Belfast, Ireland, to scale-up hiring.

So what is the playbook for other rural regions hoping to copy the Atlantic Canada model of generating tech jobs? Speaking to insiders, all cite the low cost of living and high quality of life as enabling startups to both attract and retain talent. Second, a welcoming attitude toward immigration helps. Even prior to COVID-19, Canada cheekily took advantage of anxiety around U.S. immigration policies to launch a startup visa program to attract entrepreneurs and H1-B visa holders away from the United States, and many cite that program as acting as a strategic advantage for the coastal provinces.

Atlantic Canada’s recent success is owed in part to proactive government. After years of failed top-down economic development initiatives, both the provincial and the federal governments have found formulas to kickstart new companies through grants as well as repayable and non-repayable non-dilutive funding.

Entrepreneurs cite IRAP, the National Research Council of Canada’s Industrial Research Assistance Program, as key to obtaining funds that subsidize wages for staff and contractors. Another federal government agency, the Atlantic Canada Opportunities Agency (ACOA), awards funding between CA$500,000 and CA$3 million (roughly $400,000 USD to $2.4 million USD) through its Atlantic Innovation Fund (AIF). Each of the four provincial governments has its own incentive programs, which include grants and wage subsidies as well as incentives for private investors.

Despite these government programs, local entrepreneurs stress that the region’s modest success is primarily driven by the private sector. Each province tends to have a godfather/cheerleader who has championed local startups through investment, advice and connections. Notable also is the accessibility of the success stories of the region’s protagonists. In a place where ostentatious displays of wealth are avoided, successful founders are easy to get a hold of and happy to provide advice, contacts and in some cases capital. Also notable is the region’s mix of 16 public-private universities that produce graduates with varied skill sets across STEM and humanities programs.

Even with these advances, obstacles abound, and it remains to be seen whether politicians and policy-makers can match entrepreneurs with bold initiatives. While countries like Ireland and Estonia have rewritten their corporate tax codes to encourage tech companies to set up in their previously disadvantaged jurisdictions, Atlantic Canada continues to have tax rates above neighboring provinces and U.S. states. Past innovation hubs have relied on physical proximity in order to build networks of human and social capital. Atlantic Canada as a region spans 500,000 square kilometers (193,256 square miles), much of which is hard to get to and poorly connected to the rest of the world.

Having done the hard work of providing the region with a new narrative, and a newfound sense of self-belief, many entrepreneurs hope to finally transition away from a declining resource-based economic model. They want to create a world where ambitious Atlantic Canadians don’t need to choose between staying close to home and pursuing exciting careers.

There are reasons to be hopeful: With every exit, future entrepreneurs are provided the success stories that, like supernovas, explode and act as the base material for new ventures. With every VC investment, the region’s network of startups builds the social capital that can enable the next round of funding. With every innovation, the region’s breadth of knowledge deepens through newfound expertise.

And with Atlantic Canada’s traditional migratory patterns seeming to reverse themselves as workers return to seek a lower cost of living and higher quality of life in small towns with coastal views, the pool of talent has only increased.

In the post-COVID world, talent can go anywhere, proving that constant proximity is not a prerequisite to building high-performing companies. To replicate the Atlantic Canada model, however, rural areas will need to offer more than a lower cost of living, as housing prices quickly catch up to demand.

Atlantic Canada’s modest success can be summarized as the result of fomenting a highly collaborative ecosystem that includes companies, universities, investors and government to ensure that the human capital, social capital and financial capital are available to propel new companies forward. Only by building an ecosystem can we create economic models where instead of talent chasing opportunity, opportunity chases talent.

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SolarWinds is back in hot water after a shareholder lawsuit accused the company of poor security practices, which they say allowed hackers to break into at least nine U.S. government agencies and hundreds of companies.

The lawsuit said SolarWinds used an easily guessable password “solarwinds123” on an update server, which was subsequently breached by hackers “likely Russian in origin.” SolarWinds chief executive Sudhakar Ramakrishna, speaking at a congressional hearing in March, blamed the weak password on an intern.

Experts are still trying to understand just how the hackers broke into SolarWinds servers. But the weak password does reveal wider issues about the company’s security practices — including how the easily guessable password was allowed to be set to begin with.

Even if the intern is held culpable, SolarWinds still faces what’s known as vicarious liability — and that can lead to hefty penalties.

While London, Paris, Berlin and Stockholm feature regularly in tech coverage, the rest of Europe has been busy.

The Czech Republic may be better known for beer, hockey and the sights of Prague, but its entrepreneurial community is as ambitious as any. Pipedrive is an EU-based CRM company with offices in eight countries, but it has a Czech co-founder in VP of Product Martin Henk, one of several founders to emerge from the ecosystem.

Then there was Integromat, which did not raise any external capital but sold for around 2.5 billion crowns ($114 million), making its seven Czech founders into multimillionaires. Prague’s Memsource is valued at approximately 1.3 billion crowns or $59 million. But this is just the tip of the iceberg.

To unpack this rare gem of Europe’s startup scene, we spoke to eight area investors.

Among the trends they identified are startups in B2B, business automation processes, e-commerce, AI, SaaS and COVID-19-related solutions, as well as “smart” everything: factories, cities, offices, etc. Other themes included cybersecurity, AR/VR, remote work, and cybersecurity.

Saturated areas included cryptocurrency, blockchain, fintech and martech. The people we spoke to said they see travel, dating apps and other businesses traditionally based on physical interaction as weaker segments. Still, new opportunities are popping up in remote work, psychedelics and wellness.

Use discount code CZECHIA to save 25% off a 1-year Extra Crunch membership.
This offer is only available to readers in Europe and expires on April 30, 2021.

Respondents said they invest around 50% inside Czechia and 50% across Central and Eastern Europe, while some are more focused across CEE generally, with some percentage of the fund supporting startups that have scaled to the U.S.

Most said their investments hadn’t been significantly impacted by COVID-19, but future uncertainly is a concern. The advice is to “be frugal to accommodate to the new situation and roll on.”

As far as green shoots, COVID-19 has “played a role of an accelerator for innovation in many business areas and even e-government and other rigid/conservative industries,” said one. D2C startups have benefitted and “Zoom selling” now seems “totally plausible.”

We surveyed:

Petra Končelíková, partner, Nation1.vcOleksander Bondarev, associate, Credo VenturesOndrej Bartos, founding partner, Credo VenturesOsman Salih, associate, Bolt Start Up Development a.s.Lukáš Konečný, principal, Y Soft VenturesVaclav Pavlecka, managing partner, Air VenturesRoman Horacek, partner, Reflex Capital

Petra Končelíková, partner, Nation1.vc

What trends are you most excited about investing in, generally?
Innovative.

What’s your latest, most exciting investment?
Snuggs.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I miss a more innovative approach.

What are you looking for in your next investment, in general?
Steady rapid growth, innovative mind.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Social media, logistics, travel.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are solely focusing on the European market, with an impact on the Czech Republic.

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Healthcare, industry 4.0.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Huge potential.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Remote work is not an issue, but the pandemic has of course huge impact on startups. They are forced to pivot and accommodate to this new world.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and gastro.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Accommodate to the new situation and roll on.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Vaccination.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.
Financial experts — financial planning, CFOs to hire as an service from agencies.

Oleksander Bondarev, associate, Credo Ventures

What trends are you most excited about investing in, generally?
Developer tools, communication apps, applied AI.

What’s your latest, most exciting investment?
Around.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Cloud CI/CD.

What are you looking for in your next investment, in general?
Great team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Martech.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Only in founders from: Czech Republic, Poland, Slovakia, Slovenia, Croatia, Romania or Hungary.

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Productboard, UiPath, Pricefx, Supernova, Spaceflow.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Maturing.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Enabling communication, transparency within the remote workforce.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Be frugal.

Any other thoughts you want to share with TechCrunch readers?
We are trying to be the most founder-friendly fund in the region. As an ex-founder (Olek) I love speaking with and advising all startups that come my way :)

Ondrej Bartos, founding partner, Credo Ventures

What trends are you most excited about investing in, generally?
Automation, AI, enabling remote, authentication.

What’s your latest, most exciting investment?
TypingDNA.

What are you looking for in your next investment, in general?
Outstanding founders tackling big opportunity.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
VR/AR has been an area with lots of investment, therefore very competitive. AI is overhyped but most AI are actually not that intelligent.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less. We focus on Central Europe as a region (if that would count as local, then more than 50%).

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Central Europe is well positioned in automation, security, developer tools and analytics. I’m most excited about UiPath, Productboard, Pricefx, TypingDNA, Spaceflow, Around (in our portfolio). Best CE founders are in my view Daniel Dines, Hubert Palan, Marcin Cichon plus Oliver Dlouhý (Kiwi.com).

How should investors in other cities think about the overall investment climate and opportunities in your city?
There are a lot of great developers in Prague, good energy and enough success stories and role models to follow. There is a lot of investment capital there (just as everywhere else I guess), not too much smart money yet, so definitely opportunity for good VCs to take a look (and they are looking).

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I have no doubts that the pandemic has been accelerating remote work, which ultimately should lead to more remote-first startups which might benefit new geos.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality seem most fragile and unpredictable due to COVID-19. Remote and enabling remote seem like the biggest opportunity; automation and enabling digital transformation are attractive as well.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy is unchanged; actually we’ll double down on it. There is a lot of opportunity for good tech startups, technology is what’s helping people and countries to get out of crises faster with less damage. Our advice to startups is still the same: Focus on your cause and try to solve problems in your space better than anybody else.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We definitely see green shoots in some of the enterprise software companies. “Zoom selling” now seems totally plausible, sales cycles shortened in some verticals as companies need to digitize and enable remote work.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
I’ve always had hope. Yes, there have been low moments especially when quarantined, but overall I haven’t lost hope for people to cope with this unprecedented situation, and for technology to play a significant role in the recovery. I still have this hope :)

Any other thoughts you want to share with TechCrunch readers?
I feel like I had been traveling too much, two- or three-day transatlantic trips make little sense and I think I won’t go back there. Also, I don’t think I’ll go back to 5+ days in the office every week, home office works fine with me and it will stay with me and the company in some capacity. That being said, it is what I feel now. I may be wrong and things may go back to “old normal” — which I would consider a big mistake and lost opportunity.

Osman Salih, associate, Bolt Start Up Development a.s.

What trends are you most excited about investing in, generally?
We are looking for synergies with our parent company O2 Czech republic and other companies under the PPF Group.

What’s your latest, most exciting investment?
IP Fabric.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We would like to see more insurtech startups in Europe.

What are you looking for in your next investment, in general?
We are looking for synergies with our partner companies rather looking into a specific branch.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Fintech is oversaturated with very low margins.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We mostly invest locally, but our most successful investment was in Taxify (now Bolt).

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Definitely security domain is best positioned. We are excited about IP Fabric (founder is ex-Cisco CEO Pavel Bykov), Whalebone (R. Malovič), Wultra (P. Dvořák).

How should investors in other cities think about the overall investment climate and opportunities in your city?
The interest is bigger, a lot of successful startups raise demand for opportunities.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
We don’t think so, local network is important. Remote work is not for everyone.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
There will be shifts in retail. This is an opportunity for startups like Pygmalios, which provide analytics for retail.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Luckily the impact is not big. Biggest worries are about difficulties with travel abroad for business meetings. Our advice is hold the runway longer :-)

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, demand for call center tools like omnichannel solution mluvii.com, which works at the home office move up significantly.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
At spring our country was “best in COVID” and now it is “worst in COVID.” Last spring thousands of people from the startup community helped and came up with brilliant ideas, apps and solutions but at the end most outcomes (like eRouška and https://koronavirus.mzcr.cz/en/) were screwed by slow or faulty decisions of government. Instead of hope I’m disappointed, but I believe that vaccination will help us to get life back on the track.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.
Patrik Juránek from Startup Disrupt community.

Any other thoughts you want to share with TechCrunch readers?
Prague is great and safe city for living — when you setup a branch in Prague you can attract people from all of the CEE region to move in.

Lukáš Konečný, principal, Y Soft Ventures

What trends are you most excited about investing in, generally?
Anything that helps businesses run smarter is something we would like to take a look at. More specifically we are interested in areas such as Internet of Things, smart factories, smart cities, smart office, cybersecurity, big data and AR/VR. And especially when there is some kind of hardware involved — that something we really love.

What’s your latest, most exciting investment?
VRgineers.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
It would be great to see more startups focusing on hardware. Admittedly, creating hardware and scaling-up a hardware-focused business is always a bigger challenge, but the opportunities are so vast and many are yet untapped.

What are you looking for in your next investment, in general?
Apart from the “obvious” aspects such as innovativeness, global potential, scalability, strong team and fit with our investment thesis, we look for founders who show great strategic thinking and execution skills, who really understand the market and their customers’ needs and listen to feedback.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Considering our focus on B2B, we have better overview of this part of the economy. Lately, we have seen a huge number of startups using AI/ML for computer vision or natural language processing use cases creating very similar products, meaning it will be rather difficult for them to differentiate and outperform the rest of the competition. But that does not mean that a new revolutionary idea cannot appear.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our focus is on the Central European region — so far we have invested in the Czech Republic and Slovakia, but we are open to founders from other neighboring countries as well. The majority of our portfolio is located in the Brno/South Moravia region, where Y Soft is based. It is not an outcome of an intentional strategy, but just the reality of which startups interested us the most.

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Generally, the Czech startup ecosystem is getting more mature, especially thanks to serial entrepreneurs as well as more experienced first-time founders, and the developing business angel/VC ecosystem. It is hard to pick just one industry, as the spectrum of companies is very vast.

How should investors in other cities think about the overall investment climate and opportunities in your city?
From the investors’ point of view, the Czech startup ecosystem can provide a lot of interesting opportunities, and especially for foreign investors the investments can be a “good value for money,” even though the VC ecosystem has become more competitive in the last years due to influx of new money. The seed and partly Series A segment can be seen as rather saturated, but there is a significant potential in the larger Series A or later-stage investments.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The main Czech hubs, Prague and Brno, are probably not going to see their status weakened, as they are not only business centers, but also have the main universities where the talented people are and are hearts of the cultural life that is attractive to many. But we will see a shift toward remote woking, allowing founders to tap a wider talent pool.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We believe that after the shock caused by COVID-19 fades away, there will be more opportunities for the companies in segments we invest in, as the induced trends are only forcing businesses to run smarter. The trends most relevant to us will be those associated with accelerated digital transformation, changes in supply chains and evolution of workspaces.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has not impacted our strategy. The only changes were on the tactical level, as for a certain period of time we shifted more capacities to portfolio support. Most of our founders had to deal with a negative impact on their sales funnel, as some customers postponed or cancelled the planned deals. Some of the founders had to deal with disruptions in the distribution channels, as some of their partners’ businesses were hit rather hard, and a small number of companies had to resolve issues with their supply chain. These challenges are still, to an extent, worries to our portfolio companies, as the economic development is still uncertain. To deal with the situation, cash flow became the main focus, together with more active communication with key business partners throughout the value chains.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We have seen a lot of positive signals in retention and some green shoots regarding revenue, but the situation is still too fragile.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
It is hard to find glimmers of hope lately, as the situation in the Czech Republic is really not developing well. However, I was recently able to participate in several online events that young entrepreneurs, in some cases even high school or university students, attended to present their projects or to improve their business skills. And it was great to see people who are still deeply interested in — and invested in — the entrepreneurial path, regardless of the current situation.

Vaclav Pavlecka, managing partner, Air Ventures

What trends are you most excited about investing in, generally?
We are sector agnostic, so it’s not so much about “trends,” rather than other aspects of startups in our pipeline.

What’s your latest, most exciting investment?
Cross Network Intelligence.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Many sectors are “to-be-disrupted yet” but for example I believe that the predictive medicine (that helps you avoid the problem instead the one that is helping to solve the problem that is already there) will be one of the major trends for the near future.

What are you looking for in your next investment, in general?
Distinctive unique selling proposition, market-oriented and sales-hungry team, disruptive potential, upmarket potential.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Social networks in general are the type of services I am concerned about due to a long-term impact on one’s mental health and due to social confirmation bias and decreasing ability for a healthy unheated critical discussion in society. As for oversaturation, it is hard to generalize, since every industry still has its niches. But a top of my mind idea for an oversaturated market is the marketing technologies sector (as well as many other software products). Solutions are easily replicable (think chatbots) and successful only at the limited market.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We tend to focus on companies with the local strings (with exceptions made — e.g., Californian clothing startup Nahmias).

Which industries in your city and region seem well positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We see a huge potential of local talents in cybersecurity, industry automation (due to the fact that Czechia has one of the densest “per capita” car production in the world), gaming industry (including esports), crypto and health. As for companies I think Apiary, Beat Games, Warhorse gaming studio, Mews.com, Kiwi.com, Snuggs, Prusa Research, Productboard, Rossum, Integromat and Alheon.

How should investors in other cities think about the overall investment climate and opportunities in your city?
“Local” VCs and investors are definitely willing to make meaningful connections and co-invest. The ecosystem is more mature every year and grows stronger. Prague and the surrounding region also has its charm that attracts many talents as the city has an ideal balance between the life quality and costs in comparison to other metropolitan areas.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I believe that we will see a big “return to the good part of the old system” in the end of this year/early 2022, so I won’t expect the big shift in the sense of geographic “founder density” outside of the major cities. If, however, the COVID-19 restrictions should last more years, then many social changes can be sparked, including geographic mobility and flexibility.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
No surprise there — the whole travel industry, gastronomical industry and culture tech are in the deepest crisis in decades. Many other industries are under big pressure to increase the speed of change, e.g., the education industry, the entertainment industry. Also in general small to medium businesses are having tough times locally, since the government restrictions are not being implemented efficiently and their communication isn’t built around a sound strategy.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy is built around long-lasting principles and therefore we didn’t have to change it completely. Of course the investment appetite in sectors hit by crisis decreased significantly but other opportunities emerged. As for portfolio impact, proptech vertical was hit heavily and some of our companies had to reiterate their product offering. Our general advice to any startup in our portfolio is to boost the dialogue with their customers, learn how their needs are shifting (if so) and try to steer the wheel in the right time. If needed, we are ready to support our founders financially and also teamwise, since we are hands-on investors.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
D2C startups with a sound unit economy and their own strong distribution channels are thriving (not only locally). This includes our portfolio.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Not losing hope really. I think people were in much deeper crises and that we refer to the current situation as we do only due to lack of historical comparability. We are still living in times of prosperity and the pandemic will eventually go away thanks to the scientific progress people have achieved. So I think the beacon of positive change are all the RNA vaccines out there. I am thrilled by the restless work of scientists involved in their development and I believe they should receive much greater social credit than they do nowadays.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.
Cedric Maloux, Lubo Smid, Dita Formánková, Tomas Cironis, Ondrej Bartos.

Roman Horacek , partner, Reflex Capital

What trends are you most excited about investing in, generally?
B2B, business automation processes, e-commerce, AI, SaaS, COVID-19-related solutions — across verticals (remote work, conferencing, etc.).

What’s your latest, most exciting investment?
Webnode, SignageOS and some others that unfortunately cannot be disclosed yet :)

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I would like to see more AI startups (actually using AI).

What are you looking for in your next investment, in general?
Rockstar founders, existing and real market need, scalable solution with solid IP.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Cryptocurrencies, blockchain, talent marketplaces.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
As of now our portfolio is approximately 75%/25% (75% CEE and 25% USA/other).

Extra Crunch publishes a variety of article types, but how-tos are my favorite category.

For many entrepreneurs, the startup they are trying to get off the ground might be only the second entry on their resume. As a result, they don’t have much experience to draw from when it comes to basics like hiring, fundraising and growth marketing.

Last week, Natasha Mascarenhas interviewed experts who had some strategic advice for finding the right time to bring a product manager on board. This afternoon, we published a guest post by growth marketer Jessica Li with tips for “how nontechnical talent can build relationships with deep tech companies.”

We’ve also received great feedback on a recent guest post about bootstrapping options for SaaS founders written by a founder who’s actually done it.

Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.

If you have some startup-related “how” and “why” questions, please browse our Extra Crunch How To stories. They’re aimed squarely at early-stage founders and workers trying to solve long-term problems.

Thanks very much for reading Extra Crunch this week! I hope you have a relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Welcome to Bloxburg, public investors

As Roblox began to trade Wednesday, the company’s shares shot above its reference price of $45 per share. Roblox, a gaming company aimed at children, has had a tumultuous if exciting path to the public markets.

Seeing Roblox trade so very far above its direct listing reference price and final private valuation appears to undercut the argument that this sort of debut can sort out pricing issues inherent in more traditional IPOs.

4 ways startups will drive GPT-3 adoption in 2021

Trained on trillions of words, GPT-3 is a 175-billion parameter transformer model — the third of such models released by OpenAI.

GPT-3 is remarkable in its ability to generate human-like text and responses, able to return coherent and topical emails, tweets, trivia and much more. In 2021, this technology will power the launch of a thousand new startups and applications.

There have never been more $100M+ fintech rounds than right now

We are in a period of all-time record investment for so-called mega-rounds, or investments of $100 million or more inside the fintech realm.

To date, Q1 2021 is ahead and is thus guaranteed to set a new record, having already bested the preceding all-time high. What’s going on?

Global-e files to go public as e-commerce startups enjoy a renaissance

Global-e, an e-commerce platform that helps online sellers reach global consumers, filed to go public on Tuesday. Global-e’s business exploded amid the pandemic in 2020, and the company expects that the COVID-fueled shift to e-commerce will only lead to future growth.

 

Passive collaboration is essential to remote work’s long-term success

Have you ever popped into a meeting because you overheard a snippet of a conversation and wanted to share your perspective?

That’s passive collaboration — low-friction ways to invite new ideas. But it’s only when we’re able to fully realize passive collaboration virtually that we’ll have unlocked the full potential of remote and hybrid work situations.

 

Dear Sophie: What are the pros and cons of the H-1B, O-1A and EB-1A?

Dear Sophie:

I’m an entrepreneur who wants to expand my startup to the U.S. What are the benefits and drawbacks of various types of visas and green cards?

The ones I’ve heard the most about are the H-1B, O-1 and EB-1A.

— Intelligent in India

 

Proactive CEOs should prioritize European expansion

Many investors will encourage CEOs to remain U.S.-centric this year and perhaps expand their product offering or move into new market segments. But 95% of the world’s population lives outside the U.S., making an expansion into Europe your best growth lever.

 

Coupang follows Roblox to a strong first day of trading

After Roblox debuted on Wednesday, Coupang followed, with shares shooting above the South Korean e-commerce giant’s IPO price range. Quick math shows Coupang is worth around $92 billion at the moment, a huge number that nearly zero companies will ever reach.

 

How and when to hire your first product manager

Because product managers and founders often have overlapping skill sets, it can be tricky to find the right candidate.

While it’s different for every company, hiring a PM ensures companies aren’t “chasing the shiny object” but rather building the things that create enduring value for customers.

 

Deep Science: AI adventures in arts and letters

AI isn’t confined to the tech sphere; machine learning is applicable across disciplines, from music and the “computational unfolding” of ancient letters to figuring out where EV charging stations need to be built.

 

A first look at Coursera’s S-1 filing

The SEC filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year.

It paints a picture of growth, albeit one that came at steep expense.

 

Olo’s IPO could value the company north of $3B as Toast waits in the wings

Olo has a history of growth and profitability, making its impending pricing all the more interesting.

But are investors willing to pay more for profits? And, if so, how much?

 

From electric charging to supply chain management, InMotion Ventures preps Jaguar for a sustainable future

InMotion’s investment in Circulor, a company that monitors supply chains from raw material inputs to finished outputs with an eye toward sustainable sourcing, shows the firm’s dedication to backing companies across the mobility space broadly.

 

White-label voice assistants will win the battle for podcast discovery

Americans are bored, housebound and screened out, driving roughly 128 million Americans to use a voice assistant at least once a month.

This has created a golden opportunity for audio as consumers turn to podcasts, voice assistants and smart speakers.

 

Why I’m hitting pause on ARR-focused coverage

One of the first recurring features Alex Wilhelm established at Extra Crunch was the “$100M ARR Club,” ongoing coverage of startups that have reached scale.

“Forget a $1 billion valuation — $100 million in annual recurring revenue is the cool kids’ club,” he wrote in December 2019. Since then, he expanded it to cover companies that attained $50M ARR.

The concept is a useful lens for studying the market. I can say this with confidence because it’s been widely copied by other tech news outlets. But this morning, Alex surprised me — he’s shelving the ARR Club, at least for now.

“In the end it became a pre-IPO list that was fun but not entirely educational, by my reckoning,” he told me. “The $50M ARR club evolution was supposed to help shake loose more interesting operational details, but just didn’t.”

Before putting the format on hiatus, Alex’s last ARR Club roundup looks at in-office display and kiosk startup AppSpace, data backup unicorn Druva, and Synack, which makes security software.

TC Early Stage: The premier how-to event for startup entrepreneurs and investors

From April 1-2, some of the most successful founders and VCs will explain how they build their businesses, raise money and manage their portfolios.

At TC Early Stage, we’ll cover topics like recruiting, sales, legal, PR, marketing and brand building. Each session includes ample time for audience questions and discussion.

Use discount code ECNEWSLETTER to take 20% off the cost of your TC Early Stage ticket!

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Immune intelligence startup Serimmune hopes to better understand the relationship between antibody epitopes (the parts of antigen molecules that bind to antibodies) and the SARS-CoV-2 virus.

The company’s proprietary technology, originally developed at UC Santa Barbara, provides a new and specific way of mapping the entire array of an individual’s antibodies through a small blood sample. They do this through the use of a bacterial peptide display — a sort of screening mechanism that can isolate plasmid DNA from antibody-bound bacteria in the sample. This DNA can then be sequenced to identify epitopes, which provide information about which antigens someone may have been exposed to, as well as how their immune system responded to them.

“It’s a very highly multiplexed and exquisitely specific way of looking at the epitopes found by antibodies in a specimen,” said Serimmune CEO Noah Nasser, who has a degree in molecular biology from UC San Diego and has previously worked for several diagnostics companies.

This week, Serimmune announced the launch of a new application of their core technology to help understand the disease states of and immune responses to SARS-CoV-2, the virus that causes COVID-19.

“So what we do is we take these antibody profiles we build, and we’re able to then map those back with about a 12 amino acid specificity to the SARS-CoV-2 proteome,” said Nasser. “And what we find is that antibody expression is highly correlated to disease state, so we can distinguish mild, moderate, severe and asymptomatic disease on the basis of antibodies that are present in the specimen.”

The more patient data Serimmune can collect, the better its core technology becomes at finding patterns across different antigen exposure and disease severity. Noticing those patterns sooner won’t only help physicians and researchers to better understand how the SARS-CoV-2 virus operates, but can also inform new approaches to diagnostics, treatments and vaccines for any antigen.

Serimmune’s launch of its new COVID antibody epitope mapping service is a way of making this data more accessible to customers like vaccine companies, government agencies and academic labs that have shown interest in better understanding the immune response to SARS-CoV-2.

“The key was to zero in on the information that researchers wanted to know and standardize that,” said Nasser. “We can actually now provide these results back in as few as two days from sample receipt.”

Beyond this new service, Serimmune also has plans to launch a longitudinal clinical study on immunity to SARS-CoV-2. Using a painless at-home collection kit, study participants send in small blood samples to Serimmune, which then uses its core technology to outline an individual immunity map.

“We provide their results back to them in the form of a personal immune landscape to COVID,” said Nasser. “And what we’re trying to do is to understand over time how that immune response changes, and what happens to that immune response on repeated exposure to COVID.”

The mapping technology is now so specific that it can tell whether a patient has antibodies from natural exposure to the SARS-CoV-2 virus or from a vaccine, he added.

While the primary focus for Serimmune remains these applications to the COVID-19 pandemic for now, Nasser also mentioned that the company has plans to move into personalized medicine, potentially offering their mapping service directly to interested patients.

“We believe that this has value to individual patients in understanding their immune status and what antigens they’ve been exposed to,” he said. Until then, Serimmune plans to continue growing its database with more patient samples.

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Spring may be just around the corner (in the U.S., anyway), but it’s never too early to start planning for TechCrunch Disrupt 2021, which takes place on September 21-23. This all-virtual conference allows makers, innovators, entrepreneurs and investors from around the world to connect, collaborate and grow.

Startup Alley is a huge part of every Disrupt — it’s where hundreds of innovative, ground-breaking early-stage startups showcase their tech talent, products, platforms and services. This year, we’re shaking things up a bit to help exhibiting founders make the most of a virtual environment.

What’s new and different about exhibiting in Startup Alley at Disrupt 2021? Plenty. When you apply for a Startup Alley Pass, you stand in a giant spotlight of opportunity:

Pitch it. Pitch it real good. Bring the heat, because every exhibiting startup gets a guaranteed spot to deliver a 60-second elevator pitch during a breakout feedback session. Your audience? TechCrunch staff and thousands of Disrupt attendees around the world.The Startup Alley Crawl. Every startup category will have an hour-long crawl in the agenda, where we’ll go live from the Disrupt Stage to interview a select number of founders in Startup Alley from that category.Startup Battlefield Wild Card. The Startup Battlefield is the stuff of legend. Past winners include the likes of Vurb, Dropbox, Mint and Yammer. Two Startup Alley exhibitors — chosen by the TechCrunch Editorial team — will compete in this year’s Battlefield and have a shot at the $100,000 (equity-free) cash.Startup Alley+. Every Startup Alley exhibitor is eligible, but only up to 50 companies will make the final cut to participate in Startup Alley+. These founders receive, at no additional cost, a curated experience to set them up for additional opportunities, learnings, exposure and success before Disrupt even starts. They’ll receive access to a series of founder masterclasses, take part in a pitch-off at Extra Crunch Live, and get introductions to elite investors in the TechCrunch community. Get your Startup Alley Pass soon because StartupAlley+ shifts into high gear at TC Early Stage: Marketing and Fundraising in July, where all Startup Alley+ companies get to attend this virtual event for free.

Pro Tip: Early-bird pricing to apply for Startup Alley ($199) ends May 13 at 11:59 pm (PST). The sooner you apply, the more you save.

TechCrunch Disrupt 2021 takes place on September 21-23. Don’t miss an opportunity to exhibit in all-new Startup Alley and apply now! Snag extra exposure, build your network and make connections that can alter the trajectory of your startup in the best possible way.

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

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Madrid-based TaxDown, which automates income tax filing by calculating regional deductions due to users so they don’t have to navigate complex tax rules themselves, has raised €2.4 million (~$3M) in seed funding.

US-based FJ Labs has joined TaxDown’s investment board as it closes the seed round. It says all its previous investors participated in the round, including James Argalas (Presidio Union); Abac Nest, Abac’s venture capital business; Baldomero Falcones, the former Chairman at Mastercard; and the founders of Jobandtalent, Juan Urdiales and Felipe Navío (another Madrid-based startup).

For the past three years TaxDown been offering a service in Spain but is now eyeing international expansion, as well as further growth in its home market.

Last year, it says it managed more than €29M in taxes for users — delivering savings of €4M+ to users.

Its target is to hit 500,000 users in Spain this year. While international expansion is planned for the second half of 2021, with TaxDown saying it’s focused on other European and Latin American markets.

“From the beginning, our ambition has been to help people fill in their taxes all over the world. That is why we developed our proprietary software/tax language that allows a tax expert with no coding capabilities to translate the tax law into calculation and logic that can be interpreted by our backend seamlessly,” says Enrique García, CEO and co-founder. “This tax language allowed us to launch in Spain in 4 months with only one tax consultant. We are confident that we can launch a new country in only 6 months.”

“The tax filing process is far from being simple,” he goes on, explaining how its tech simplifies income tax filing in Spain. “Currently, when using the Spanish Tax Agency tax-filling tool, taxpayers need to manually apply deductions on their tax forms. The problem is, with national regional deductions being different in each region in Spain, taxpayers often do not even know they’re entitled to those deductions. Thus, by not applying them to their tax form, they lose money. What TaxDown does is leverage the advanced Spanish Tax Agency technology, which offers an API to request the financial data related to a taxpayer — always with prior authorization from the user — with 2.000+ datapoints.

“Once we have that, our algorithm ‘RITA’ is capable of understanding the user’s personal and financial data, select the optimum questions that the user needs to answer — an average of 9 over a database of 3.000+ – and precisely calculate the tax return, with no errors.”

“Technology is the heart of TaxDown,” he adds. “Besides our algorithm RITA that has been trained with over 40.000+ tax returns, today we also use AI to help our ‘taxers’ with tips on how to lower future tax bills, and we have started working on live income tax simulation for our users throughout the entire year.”

García says TaxDown calculated more than 42,000 tax returns last year with a team of just two in-house tax experts — thanks to proprietary internal tools which allow them to handle this scale (by being “80x more efficient than the Spanish average”, as he puts it). He adds that further efficiency gains are expected.

“We have developed a machine-learning tool that flags the tax returns that need to be reviewed before filing based on historical data. Thus, we continuously increase the percentage of tax returns that are automatically submitted with no manual intervention,” he tells TechCrunch, adding: “Thanks to this feature, we expect to improve our efficiency at least 5x versus last year.”

According to García, TaxDown has never had any filings rejected for inaccuracies because he says its algorithms continually run tests and validate the information with the authorities. “Furthermore, our technology can flag errors in real time in case that there is a discrepancy, so our tax experts can manually check the tax return form if needed,” he adds.

Its business model — currently — is a sort of twist on freemium, in that it will only charge users if the income tax savings it calculates for them exceed €35.

García says that so far an average of three out of 10 users see financial savings from using its tool — but he suggests it’s not only savings that motivate users; he says they also want reassurance that they are taking “the best approach with their taxes: doing them effortlessly, correctly, with all the guarantees, tapping for experts’ live help at any time, ensuring the best result they can get, and of course knowing that we have their backs in case of an audit”.

Given that wider relationship it’s building with users, TaxDown sees potential to evolve its business model by expanding to offer additional fintech services, such as financial advice, in the future.

“Our vision goes far beyond income tax return preparation, we believe that tax data is becoming one of the most valuable data assets for people (take Trump’s tax returns for example), and we want to assess our ’taxers’ based on the best and more qualitative information that we can get,” says García. “Therefore, in the future we want to be a trusted financial advisor not just for taxes, but for personal finances as well. We believe we are well positioned to be an intermediary between our users and financial institutions.”

 

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As 2021 kicked off, I reformulated a series of posts we published last year focused on startups that had reached the $100 million ARR (annual recurring revenue) mark. In our refreshed effort, we cut the target in half and dug up companies around the $50 million ARR threshold. The goal was to figure out what those firms were going through as they reached material scale, not after they had achieved effective pre-IPO status.

And the results were a bit medium.

While it was fun to chat with OwnBackup, Assembly, SimpleNexus and PicsArt, ultimately we were getting similar notes from each company: Hiring is incredibly important as a company scales, founders have to cede decision-making, and as startups grow from $30 million ARR to $50 million or more, they must harden internal systems and build business infrastructure.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

All that made sense, but it wasn’t entirely scintillating. I meant to keep the project going; I had publicly made noise about the effort and had a few interviews in the bag that were collecting dust (and emails from various PR folks).

But they wound up in the Google Docs graveyard as the news cycle somehow managed to keep accelerating, meaning that the time required to execute the somewhat effort-intensive series dried up as I held on for dear life as the early, middle, late and IPO-stage startup market stormed.

And so after some reflection, it’s time to admit defeat.

For now, I’m hitting pause on the $50 million ARR series and whatever might have come from the $100 million ARR legacy effort. I may bring it back at some point, but for now, there are just more pressing and interesting things to work on.

What follows is what I believe to be the remainder of my notes from interviews that never saw the light of day. So, one last time, let’s discuss some big startups that are scaling quickly: Appspace, Synack and Druva. We’ll proceed in alphabetical order.

Appspace

The Exchange caught up with Appspace a bit ago, chatting with a few of its executives, including CMO Scott Chao and CEO Brandon Miles. It’s an interesting company that sells a software platform that powers in-office displays and kiosks. You’ve seen office sign-in screens at a welcome desk, screens outside conference rooms showing how booked they are, or company messaging and the like on various large screens? That’s what Appspace’s software does.

And the company has an interesting vibe. Unlike nearly every other startup I’ve met, Appspace doesn’t think it is saving the world. In our chat, the company joked that its culture is to move quickly, but with the cognizance that they aren’t curing cancer.

Such modesty might feel odd, but it was actually refreshing. Appspace’s job is to white-label itself, let its customers speak to their workers through its various apps (including mobile) and services, and simply feature rock-solid uptime.