Business News

New clinical trial data from Locus Biosciences shows promise in CRISPR-Cas3 technology

Startup News - 2021, March 8 - 10:15pm

Antibiotic resistance is one of the biggest potential threats to global health today. But Locus Biosciences is hoping that their crPhage technology might provide a new solution.

Based in North Carolina’s Research Triangle, the startup recently announced promising phase 1b clinical trial results for their use of CRISPR-Cas3-enhanced bacteriophages as a treatment for urinary tract infections caused by escherichia coli. Led in part by former Patheon executive and current Locus CEO Paul Garofolo, the startup launched in 2015 with the goal of using a less popular application of CRISPR technology to address growing antimicrobial resistance.

CRISPR-Cas3 technology has notably different mechanisms from its more well-known CRISPR-Cas9 counterpart. Where the Cas9 enzyme has the ability to cleanly cut through a piece of DNA like a pair of scissors, Garofolo describes Cas3 more like a Pac-Man, shredding the DNA as it moves along a strand.

“You wouldn’t be able to use it for most of the editing platforms people were after,” he said, noting that meant there wouldn’t be as much competition around Cas3. “So I knew it would be protected for some time, and that we could keep it quiet.”

Garofolo and his team wanted to use CRISPR-Cas3 not to edit harmful bacteria found in the body, but to destroy it. To do this, they took the DNA-shredding mechanism of Cas3 and used it to enhance bacteriophages—viruses that can attack and kill different species of bacteria. Together, co-founder and Chief Scientific Officer Dave Ousterout—who has a Ph.D. in biomedical engineering from Duke—thinks this technology offers an extremely direct and targeted way of killing bacteria.

“We armed the phages with this Cas3 system that attacks E. coli, and that sort of dual mechanism of action is what comes together, essentially, as a really potent way to remove just E. coli,” he said in an interview.

Tech’s role in the COVID-19 response: Assist, don’t reinvent

That specificity is something that antibiotics lack. Rather than targeting only harmful bacteria in the body, antibiotics typically wipe out all bacteria they come across. “Every time we take antibiotics, we’re not thinking about all the other parts of us that are impacted by the bacteria that do good things,” said Garofolo. But the precision of Locus Biosciences’ crPhage technology means that only the targeted bacteria would be wiped out, leaving those necessary to the body’s normal function intact.

Beyond offering this more specific approach to treatment of pathogens, or any bacteria-based disease, Garofolo and his team also suspect that their approach will also be extremely safe. Though deadly to bacteria, bacteriophages are typically harmless to humans. The safety of CRISPR in humans is well-established, too.

“That’s our secret sauce,” said Garofolo. “We can build drugs that are more powerful than the antibiotics they’re trying to replace, and they use phage, which is probably one of the world’s safest ways to deliver something into the human body.”

While this new technology could certainly help treat pathogens and infectious diseases, Garofolo hopes that indications in immunology, oncology, and neurology might benefit from it too. “We’re starting to figure out that some bacteria might promote cancer, or inflammation in your gut,” he said. If researchers can identify the bacteria at the root cause of those conditions, Garofolo and Ousterout think the crPhage technology might prove to be an effective treatment.

“If we’re right about that, it’s not just about infections or antimicrobial resistance, but helping people overcome cancer or delay the onset of dementia,” Garofolo said. “It’s changing the way we think about how bacteria really help us live.”

Early Stage is the premier ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, product market fit, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included for audience questions and discussion.

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Categories: Business News

Egypt’s customer engagement platform for F&B brands in MENA, Koinz, raises $4.8M seed

Startup News - 2021, March 8 - 10:00pm

As the restaurant industry across different cities was massively hit by the pandemic-induced lockdowns last year, food aggregator platforms helped by driving online customers to them.

Koinz is one such startup in Egypt. Its value for food and beverages brands before, during and after the lockdowns has bagged the startup a $4.8 million seed round.

Founded in 2018 by Hussein Momtaz, Ahmed Said, and Abdullah Al Khalidi, Koinz set out to solve two major problems in Egypt’s food aggregation industry.

The offline and online food and restaurant experience in the country are totally separate. Most food aggregators who deal with delivery tend to focus on the online customer, and there’s no sophisticated experience for the offline customer.

Next, the unit economics of the food aggregation industry is quite challenging. According to Momtaz, the startup’s CEO, the food aggregation industry usually takes about 25%-30% average commission from F&B players for business to start to make sense.

“This is not because they want to squeeze money from the hands of restaurants or brands,” Momtaz said to TechCrunch. “But the cost of acquiring customers and retaining them for the food aggregator itself is very high; that’s why they need very high commissions from the brands or restaurants.”

This is where Koinz comes in. The company developed a mobile app for takeout and delivery orders that manages offline customer experiences while delivering an engagement platform to manage loyalty programs, customer feedback and analytics about the online and offline customer base.

Abdullah Al Khalidi (CRO), Hussein Momtaz (CEO), and Ahmed Said (CTO)

Online food experience for Koinz customers is like a treasure hunt, and Momtaz claims the company’s business model has cracked the industry’s unit economics. This, alongside providing brands with insights, differentiates the platform from other aggregators and makes its customer acquisition cost and retention cost 60% less than most of them.

Here’s how the platform works. When customers visit a brand using for the first time, they collect their phone numbers and store them in the application. The customers, on the other hand, get points for making orders via text message. After various restaurant visits and making orders, they accumulate enough points. They’ll need to download the Koinz mobile application to redeem them, thereby converting these offline customers to online ones.

Furthermore, these offline customers can now discover new places to eat, read and leave reviews, and order delivery or takeout.

“None of the small or big brands in the region had something like this before. The offline customer is like a ghost. He walks into the brands, takes his orders, and leaves without the brands knowing anything about him. Koinz is changing that,” the CEO remarked.

Building its platform this way, Koinz tries to be different from other online aggregators that erode restaurant owners’ profit margins while delivering limited customer access and interaction. How? By collecting real-time data and leveraging a digital rewarding system designed to drive customers to deepen their relationship with restaurants.

Image Credits: Koinz

Brands can configure their gifts lists and determine what customers can redeem their points for. For instance, customers in an Egyptian restaurant called Buffalo Burger can exchange 68 points for a Diablo Fries Medium; or wait till they get to 160 points to get a Mozzarella Sticks Medium; or 236 points for a Double Diggler.

Similarly, every brand has its own configuration. A customer cannot get points in Buffalo Burger and redeem them at Hamburgini. Koinz charges subscriptions to the brands for its engagement and feedback platform and collects commission whenever an order is made via its platform, which varies across its markets.

Because of its original business model, Koinz had to iterate several times. Before using phone numbers to collect customers’ information, the company used QR codes and NFC tags. Momtaz says this was highly ineffective, and the move to phone numbers helped skyrocket its growth and value.

The six-man team back in 2018 is now 80, and the platform, which is basically powering the growth of restaurants in the Middle East, claims to have had up to 4 million consumers earn points on its platform. These consumers have redeemed almost 300,000 rewards, while almost 800,000 customers have left reviews.

Since launching in Egypt, Koinz has expanded to Saudi Arabia and the UAE. Like Egypt, these markets have similar dynamics and demographics. They have also witnessed one of the highest rates of new or increased users in online deliveries — restaurant products and groceries — during the pandemic.

Besides, consumers in the Middle East are outpacing the global appetite in food delivery, with 64% ordering in at least once a week compared to 40% made by global consumers. And with the fast-food industry in MENA was estimated at nearly $31 billion in 2020 and is expected to reach nearly $60 billion by 2025, there’s so much room for Koinz to grow in the region. Momtaz says the company is also considering a move to Sub-Saharan Africa in the nearest future despite them having distinct demographics.

Entrepreneur and investor Justin Mateen led this seed round. Since leaving Tinder in 2014, Mateen has been an active investor in early-stage companies. Koinz is his first investment in the MENA region. According to him, Koinz’s ability to allow food and beverages brands to understand their customers’ needs and simultaneously increase their profit margins was one of the reasons he invested in the Egyptian-based startup.

“The company’s unique business model will continue to scale as the food delivery space evolves. Hussein’s drive and excitement for what the team is building are what convinced me to lead a round in the Middle East for the first time,” Mateen added.

African-focused VC 4DX Ventures and strategic angel investors from Egypt, Turkey and Saudi Arabia participated as well.

Peter Orth, co-founder and managing director of the firm, said of the investment that with restaurants in the region suffering under the traditional aggregator model, especially during the pandemic, Koinz has quickly become a win-win for both consumers and restaurant owners across the Middle East.

As the three-year-old company plans to use the capital to hire more talent and fuel its expansion across the Middle East, Mateen and Orth will join its board of directors.

Early Stage is the premier ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, product market fit, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included for audience questions and discussion.

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Categories: Business News

Swiss maker of meat alternatives Planted will expand and diversify with $18M Series A

Startup News - 2021, March 8 - 8:01pm

Planted, a startup pursuing a unique method of creating a vegetarian chicken alternative, has raised an $18M (CHF 17M) Series A to expand its product offerings and international footprint. With new kebabs and pulled-style faux meats available and steak-like cuts in the (literal) pipeline, Planted has begun to set its sights outside central Europe.

The company was a spinout from ETH Zurich and made its debut in 2019, but has not rested on the success of its plain chicken recipe. Its approach, which relied on using pea protein and pea fiber extruded to recreate the fibrous structure of chicken for nearly 1:1 replacement in recipes, has proven to be adaptable for different styles and ingredients as well.

Planted joins the meatless meat melee with its pea-protein ‘chicken’

“We aim to use different proteins, so that there is diversity, both in terms of agriculture and dietary aspects,” said co-founder Christoph Jenny.

Image Credits: Planted

“For example our newly launched planted.pulled consists of sunflower, oat and yellow pea proteins, changing both structure and taste to resemble pulled pork rather than chicken. The great thing about the sunflower proteins, they are upcycled from sunflower oil production. Hence, we are establishing a circular economy approach.”

When I first wrote about Planted, its products were only being distributed through a handful of restaurants and grocery stores. Now the company has a presence in more than 3,000 retail locations across Switzerland, Germany, and Austria, and works with restaurant and food service partners as well. No doubt this strong organic (so to speak) growth, and the growth of the meat alternative market in general, made raising money less of a chore.

The cash will be directed, as you might expect for a company at this stage, towards R&D and further expansion.

“The funding will be used to expand our tech stack, to commercialize our prime cuts that are currently produced at lab scale,” said Jenny. “On the manufacturing side we look to significantly increase our current capacity of half a ton per hour to serve the increasing demand coming from international markets, first in neighboring countries and then further into Europe and overseas.”

Image Credits: Planted

“We will further invest in our structuring and fermentation platforms. Combining structuring technologies with the biochemical toolboxes of natural microorganisms will allow us to create ultimately new products with transformative character – all clean, natural, healthy and tasty,” said co-founder Lukas Böni in a press release.

No doubt this all will also help lower the price, a goal from the beginning but only possible by scaling up.

As other companies in this space also raise money (incidentally, rather large amounts of it) and expand to other markets, competition will be fierce — but Planted seems to be specializing in a few food types that aren’t as commonly found, at least in the U.S., where sausages, ground “beef,” and “chicken” nuggets have been the leading forms of meat alternatives.

No word on when Planted products will make it to American tables, but Jenny’s “overseas” suggests it is at least a possibility fairly soon.

The funding round was co-led by Vorwerk Ventures and Blue Horizon Ventures, with participation from Swiss football (soccer) player Yann Sommer and several previous investors.

Early Stage is the premier ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, product market fit, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included for audience questions and discussion.

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Categories: Business News

Praava Health raises $10.6M to increase access to quality healthcare in Bangladesh

Startup News - 2021, March 8 - 11:00am

Praava Health founder and chief executive officer Sylvana Sinha (third from left) at one of the company’s healthcare centers

Before launching Praava Health, a company that combines telemedicine with physical clinics, Sylvana Sinha had a successful career in international law, including serving as a foreign policy advisor to Barack Obama’s 2008 presidential campaign and working for the World Bank in Afghanistan. While visiting Bangladesh in 2011 for a family wedding, however, Sinha had a “lightbulb moment” after her mother nearly died after an operation at a top private hospital.

“When I had this experience with my mom, I observed that there was really no amount of money that could afford you access to quality healthcare in Bangladesh,” she told TechCrunch.

“It really struck me that despite all the progress the country had made, and the fact that there is now a middle class of 40 million people, that there are still not really great options for excellent healthcare,” she added. “You have thousands of people traveling abroad every day and billions of dollars a year going outside the country to access better healthcare.”

Born and raised in the United States, Sinha moved to Bangladesh in 2015 to start working on Praava. Today the company is announcing a Series A Prime round that brings its total raised to $10.6 million. Praava claims to have tripled its growth every year since launching services in 2018, and now serves 150,000 patients. In 2020, it also processed 75,000 COVID-19 tests in-house.

Praava Health’s patient portal app

Praava’s backers include a list of prominent angel investors: retired United States Army General David H. Petraeus, chairman of the KKR Global Institute and former director of the Central Intelligence Agency, who also invested in Praava’s seed round; Wellville executive founder Esther Dyson; SBK Tech Ventures; Dr. Jeremy Lim, advisor of digital health to Singapore’s Agency for Science, Technology and Research; Dr. Rushika Fernandopoulle, co-founder and CEO of Iora Health; and Geoff Price, co-founder and chief operating officer of Oak Street Health.

The company has a flagship medical center in the Dhaka, Bangladesh’s capital, and a network of 40 smaller clinics throughout the city. Praava plans to open more clinics in Dhaka, before expanding into Chittagong, the country’s second-largest city.

Its “brick-and-click” model, including online consultations, also allows it to reach patients throughout the country. Virtual healthcare accounts for about 40% of Praava’s services including telemedicine and an online pharmacy.

Bangladesh is one of the fastest-growing economies in the world, but there is a critical shortage of healthcare workers for its 170 million people. The World Health Organization estimates that there are only about 3 physicians and 1 nurse for every 10,000 people, and most work in urban hospitals, even though 70% of Bangladesh’s population is in rural areas. This means people often travel long distances for consultations that may last less than a minute.

Maya, a startup focused on accessible healthcare in Asia, raises $2.2 million seed for regional expansion

“One of the things that we see telemedicine really help with is patients outside of Dhaka to figure out if they even need to make that trip,” said Sinha.

The company found that in over 80% of cases, especially primary care, its providers are able to address patient needs online. In the remaining 20% of cases, they will ask them to come into one of Praava’s clinics, which provide a wide range of outpatient services, imaging and lab diagnostics and a pharmacy.

At the beginning of the COVID-19 pandemic, about 90% of Praava’s consultations were happening virtually, though clinic visits have picked up again. Most of Praava’s doctors are salaried full-time employees and one of its goals is to create deeper provider-patient relationships, with appointments typically lasting about 15 minutes.

“I think technology is the future of health, there’s absolutely no doubt about that,” Sinha said. “But when it come to seeing a doctor and the kind of healthcare needs that we all have over the course of our lifetime, technology is not going to be able to replace that entirely.”

Most of Praava’s patients currently pay per visit, and its pricing is at market rate, between Bangladesh’s public healthcare system and more expensive private hospitals. It has also introduced membership plans with a flat rate for unlimited access to services.

Sinha said this is a very new type of model in Bangladesh, where only 1% of people have health insurance, primarily to cover hospitalizations.

“It’s our experiment of introducing value-based care to the region, so we’re very excited about the product, but it’s a new product and we expect it to pick up more in the coming years,” she added. “It’s already picked up a lot in the last year, because I think people are more health conscious and corporations are more willing to invest in employees’ health.”

With its new funding, Praava will focus on building a “super app” for patients, to consolidate all of its digital services into one mobile app. It also plans to open 10 more healthcare centers in Dhaka, before expanding into Chittagong. Praava’s “brick-and-click” model can scale into other emerging markets, but it plans to concentrate on Bangladesh for the next few years.

“There are 170 million people to take care of first,” Sinha said. “So we’re really focused on this market on this market for now.”

Where top VCs are investing in healthcare B2B and infrastructure

Categories: Business News

Investors still love software more than life

Startup News - 2021, March 7 - 6:00am

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.

Despite some recent market volatility, the valuations that software companies have generally been able to command in recent quarters have been impressive. On Friday, we took a look into why that was the case, and where the valuations could be a bit more bubbly than others. Per a report written by few Battery Ventures investors, it stands to reason that the middle of the SaaS market could be where valuation inflation is at its peak.

Something to keep in mind if your startup’s growth rate is ticking lower. But today, instead of being an enormous bummer and making you worry, I have come with some historically notable data to show you how good modern software startups and their larger brethren have it today.

In case you are not 100% infatuated with tables, let me save you some time. In the upper right we can see that SaaS companies today that are growing at less than 10% yearly are trading for an average of 6.9x their next 12 months’ revenue.

Back in 2011, SaaS companies that were growing at 40% or more were trading at 6.0x their next 12 month’s revenue. Climate change, but for software valuations.

One more note from my chat with Battery. Its investor Brandon Gleklen riffed with The Exchange on the definition of ARR and its nuances in the modern market. As more SaaS companies swap traditional software-as-a-service pricing for its consumption-based equivalent, he declined to quibble on definitions of ARR, instead arguing that all that matters in software revenues is whether they are being retained and growing over the long term. This brings us to our next topic.

Consumption v. SaaS pricing

I’ve taken a number of earnings calls in the last few weeks with public software companies. One theme that’s come up time and again has been consumption pricing versus more traditional SaaS pricing. There is some data showing that consumption-priced software companies are trading at higher multiples than traditionally priced software companies, thanks to better-than-average retention numbers.

But there is more to the story than just that. Chatting with Fastly CEO Joshua Bixby after his company’s earnings report, we picked up an interesting and important market distinction between where consumption may be more attractive and where it may not be. Per Bixby, Fastly is seeing larger customers prefer consumption-based pricing because they can afford variability and prefer to have their bills tied more closely to revenue. Smaller customers, however, Bixby said, prefer SaaS billing because it has rock-solid predictability.

I brought the argument to Open View Partners Kyle Poyar, a venture denizen who has been writing on this topic for TechCrunch in recent weeks. He noted that in some cases the opposite can be true, that variably priced offerings can appeal to smaller companies because their developers can often test the product without making a large commitment.

So, perhaps we’re seeing the software market favoring SaaS pricing among smaller customers when they are certain of their need, and choosing consumption pricing when they want to experiment first. And larger companies, when their spend is tied to equivalent revenue changes, bias toward consumption pricing as well.

Evolution in SaaS pricing will be slow, and never complete. But folks really are thinking about it. Appian CEO Matt Calkins has a general pricing thesis that price should “hover” under value delivered. Asked about the consumption-versus-SaaS topic, he was a bit coy, but did note that he was not “entirely happy” with how pricing is executed today. He wants pricing that is a “better proxy for customer value,” though he declined to share much more.

If you aren’t thinking about this conversation and you run a startup, what’s up with that? More to come on this topic, including notes from an interview with the CEO of BigCommerce, who is betting on SaaS over the more consumption-driven Shopify.

Next Insurance, and its changing market

Next Insurance bought another company this week. This time it was AP Intego, which will bring integration into various payroll providers for the digital-first SMB insurance provider. Next Insurance should be familiar because TechCrunch has written about its growth a few times. The company doubled its premium run rate to $200 million in 2020, for example.

The AP Intego deal brings $185.1 million of active premium to Next Insurance, which means that the neo-insurance provider has grown sharply thus far in 2021, even without counting its organic expansion. But while the Next Insurance deal and the impending Hippo SPAC are neat notes from a hot private sector, insurtech has shed some of its public-market heat.

Stocks of public neo-insurance companies like Root, Lemonade and MetroMile have lost quite a lot of value in recent weeks. So, the exit landscape for companies like Next and Hippo — yet-private insurtech startups with lots of capital backing their rapid premium growth — is changing for the worse.

Hippo decided it will debut via a SPAC. But I doubt that Next Insurance will pursue a rapid ramp to the public markets until things smooth out. Not that it needs to go public quickly; it raised a quarter billion back in September of last year.

Various and Sundry

What else? Sisense, a $100 million ARR club member, hired a new CFO. So we expect them to go public inside the next four or five quarters.

And the following chart, which is via Deena Shakir of Lux Capital, via Nasdaq, via SPAC Alpha:

Alex

 

Categories: Business News

The Product Manager asterisk

Startup News - 2021, March 7 - 4:00am

Product manager might be one of the most grey roles within a startup. However, as a company progresses and the team grows, there comes a time when a founder needs to carve out dedicated roles. Of these positions, product management might be one of the most elusive — and key — roles to fill.

Ken Norton, who recently left his job as director of product at Figma to consult rising PMs, thinks it’s easier to start with defining what they aren’t: the CEO of the product.

“Product managers need to realize that there is a lot of janitorial work that gets done in product management,” he said. “It’s not fun or glamorous, and it’s certainly not being the CEO of the product. It’s just stuff that needs to get done.” I wrote up a guide on how and when to hire your first product manager that expands on some of these insights, including how focus might be the biggest trait to interview for:

Hiring continues to be one of the hardest parts of building a startup, and those early employees can define the trajectory, culture and eventual success of it. Even during TC Sessions: Justice this past week, Precursor’s Sydney Thomas explained how startups need to make “pretty final decisions, pretty early on in what type of company you want to build.”

How and when to hire your first product manager

It’s a slight asterisk to the common narrative of how startups pivot every other day. It’s not that simple, and I’ll probably remind you of that every other week, dear Startups Weekly readers.

The rest of today’s newsletter will include notes on a hot up-and-coming edtech IPO, an exit that includes Jay-Z, and the latest in agricultural tech robots. Also, remember you can always find me on Twitter @nmasc_ or e-mail me at natasha.m@techcrunch.com.

The public markets get educated

It’s been yet another busy week for the public markets. I published a scoop earlier this week that Coursera is filing to go public soon, which would be one of the first debuts that will let us see how an education company’s finances changed, and accelerated, amid the pandemic’s impact on remote learning.

Here’s what to know: Like clockwork, Coursera’s S-1 dropped late Friday, giving us the first glance of the numbers behind the business. The startup tried to pain a picture of a path of profitability, with rising revenues as well as rising net losses. We get into the meat of it here. 

Image Credits: Fotograzia / Getty Images

What’s better than one billionaire? Two 

One of the biggest headlines of this past week was Square buying a majority stake of Tidal. A fintech and music collaboration might not seem that obvious, but the music economy remains one of the most under-tapped (and under-innovated) opportunities that remains out there.

Square buys majority of Tidal, adds Jay-Z to its board in bid to shake up the artist economy

Here’s what to know: Square CEO Jack Dorsey used his other company, Twitter, to share more information about the $297 million deal. As part of this transaction, Tidal owner Jay-Z got a board seat with Square, triggering conversations about the future of musical NFTs. The deal also officially confirmed that Jay-Z isn’t just a businessman, he’s a business, man.

Singer Jay-Z performs before US President Barack Obama speaks at a campaign rally in Columbus, Ohio, on November 5, 2012. After a grueling 18-month battle, the final US campaign day arrived Monday for Obama and Republican rival Mitt Romney, two men on a collision course for the world’s top job. The candidates have attended hundreds of rallies, fundraisers and town halls, spent literally billions on attack ads, ground games, and get out the vote efforts, and squared off in three intense debates. AFP PHOTO/Jewel Samad (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

Decentralized insect farming, anyone?

In this week’s Equity Wednesday episode, we brought on TC’s climate tech editor, Jonathan Shieber, to talk about the opportunities within agtech right now. We covered a lot within the 20-minute episode: from $100 million for mealworms, farm-to-grill robots and decentralized insect farming.

$100 million for mealworms

Here’s what to know: Farms have always had a compelling reason to turn to robotics to make tedious work much, much easier. We got into two different businesses and their approaches on how to serve farm robots, from SaaS leases to selling the robots one by one.

Image Credits: Fernando Trabanco Fotografía / Getty Images

Around TechCrunch

Thanks to all of you who tuned into TC Sessions: Justice this past week, it was so fun to hang — and make sure to give virtual kudos to my colleague, and showrunner, Megan Rose Dickey.

Next up is TechCrunch Early Stage, our yearly event that is all about tactical advice to help new and first-time founders navigate the Wild West world that is venture capital and startups. We just announced the judges of the pitch-off competition, and have already landed top-tier venture capitalists to share what you won’t find on Twitter: behind the scenes startup advice that is beyond 180 characters.

Announcing the Early Stage Pitch-Off judges

It’s the bootcamp you always wished you could attend, so get your tickets here.

Across the week

Seen on Extra Crunch

Understanding how investors value growth in 2021

Dear Sophie: Can you demystify the H-1B process and E-3 premium processing

11 words and phrases to cut from your VC pitch deck

Making sense of the $6.5B Okta-Auth0 deal

11 words and phrases to cut from your VC pitch deck

Seen on TechCrunch

SoftBank makes mountains of cash off of human laziness

Mary Meeker’s Bond has closed its second fund with $2 billion

The technology selloff is getting to be somewhat material

What China’s Big Tech CEOs propose at the annual parliament meeting

Mary Meeker’s Bond has closed its second fund with $2 billion

And finally…

I wanted to end by using this platform to address the rise of anti-Asian violence across our country. Conversations around how to be a more inclusive and anti-racist society need to be more loud, and more collaborative in order for change to actually happen. Intention around inclusion will impact the world we live in, the startups we create and the success of our collective. Here are some resources to donate, petition and learn.

Thanks,

N

Categories: Business News

A first look at Coursera’s S-1 filing

Startup News - 2021, March 6 - 8:07am

After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 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.

Revenue

In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same noncash, share-based compensation expenses in both years. Even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for “earnings before interest, taxes, depreciation and amortization,” EBITDA strips out some nonoperating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the noncash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

Categories: Business News

Deep Science: AI adventures in arts and letters

Startup News - 2021, March 6 - 6:31am

There’s more AI news out there than anyone can possibly keep up with. But you can stay tolerably up to date on the most interesting developments with this column, which collects AI and machine learning advancements from around the world and explains why they might be important to tech, startups or civilization.

To begin on a lighthearted note: The ways researchers find to apply machine learning to the arts are always interesting — though not always practical. A team from the University of Washington wanted to see if a computer vision system could learn to tell what is being played on a piano just from an overhead view of the keys and the player’s hands.

Audeo, the system trained by Eli Shlizerman, Kun Su and Xiulong Liu, watches video of piano playing and first extracts a piano-roll-like simple sequence of key presses. Then it adds expression in the form of length and strength of the presses, and lastly polishes it up for input into a MIDI synthesizer for output. The results are a little loose but definitely recognizable.

Image Credits: Shlizerman, et. al

“To create music that sounds like it could be played in a musical performance was previously believed to be impossible,” said Shlizerman. “An algorithm needs to figure out the cues, or ‘features,’ in the video frames that are related to generating music, and it needs to ‘imagine’ the sound that’s happening in between the video frames. It requires a system that is both precise and imaginative. The fact that we achieved music that sounded pretty good was a surprise.”

Another from the field of arts and letters is this extremely fascinating research into computational unfolding of ancient letters too delicate to handle. The MIT team was looking at “locked” letters from the 17th century that are so intricately folded and sealed that to remove the letter and flatten it might permanently damage them. Their approach was to X-ray the letters and set a new, advanced algorithm to work deciphering the resulting imagery.

Diagram showing X-ray views of a letter and how it is analyzed to virtually unfold it. Image Credits: MIT

“The algorithm ends up doing an impressive job at separating the layers of paper, despite their extreme thinness and tiny gaps between them, sometimes less than the resolution of the scan,” MIT’s Erik Demaine said. “We weren’t sure it would be possible.” The work may be applicable to many kinds of documents that are difficult for simple X-ray techniques to unravel. It’s a bit of a stretch to categorize this as “machine learning,” but it was too interesting not to include. Read the full paper at Nature Communications.

Image Credits: Asensio, et. al

You arrive at a charge point for your electric car and find it to be out of service. You might even leave a bad review online. In fact, thousands of such reviews exist and constitute a potentially very useful map for municipalities looking to expand electric vehicle infrastructure.

Georgia Tech’s Omar Asensio trained a natural language processing model on such reviews and it soon became an expert at parsing them by the thousands and squeezing out insights like where outages were common, comparative cost and other factors.

Categories: Business News

How and when to hire your first product manager

Startup News - 2021, March 6 - 4:30am

In the world of early-stage startups, job titles are often a formality. In reality, each employee may handle a dozen responsibilities outside their job description. The choose-your-own-adventure type of work style is part of the magic of startups and often why generalists thrive here.

However, as a company progresses and the team grows, there comes a time when a founder needs to carve out dedicated roles. Of these positions, product management might be one of the most elusive — and key — roles to fill.

Product management might be one of the most elusive — and key — roles to fill.

We spoke to startup founders and operators to get their thoughts about how and when they hired their first product manager. Some of the things we talked about were:

  •  Which traits to look for.
  •  Why it’s important to define the role before you look for your best fit.
  •  Whether your new hire needs to have a technical background.
  •  The best questions to ask in an interview.
  •  How to time your first hire and avoid overhiring.
Don’t hire for the CEO of a product

Let’s start by working backward. Product managers often graduate into a CEO role or leave a company to become a founder. Like founders, talented product managers have innate leadership skills and are able to effectively and clearly communicate. Similarly, both roles require a person who is a visionary when it comes to the product and execution.

David Blake was a product manager before he became a serial edtech founder who created Degreed, Learn In, and most recently, BookClub. He says that experience helped him launch the first prototype of Degreed and attract first clients.

“The must-have skill is the ability to put the team’s best wisdom in check and inform the product decisions with users and potential clients to inform what you are building,” he said. The person “must also be able to take the team’s mission and develop and sell that narrative to users and potential clients. That is how you blaze a new trail, balance risk, while avoiding building a ‘faster horse.”

The overlapping synergies between PMs and founders is part of the reason why the role is so confusing to define and hire for. Ken Norton, former director of product at Figma who recently left to solo advise and coach product managers, says companies can start by defining what PMs are not: The CEO of the product.

“It’s about not handing off the product responsibilities to somebody,” he said. “You want the founder and the CEO to continue to be the evangelist and visionary.” Instead, the role is more about day to day “blocking and tackling.” Norton wrote a piece more than 15 years ago about how to hire a product manager, and it’s still an essential read for anyone interested in the field.

Define the role and set your expectations

Product managers help translate all the jugglers within a startup to each other; connecting the engineer with marketing, design with business development and sales with all the above. The role at its core is hard to define, but at the same time is the necessary plumbing for any startup that wants to be high-growth and ambitious.

While a successful product manager is a strong generalist, they have to have the ability to understand and humanize technical processes. The best candidates, then, have some sort of technical experience as an engineer or otherwise.

Categories: Business News

Dan Siroker’s new startup Scribe automates Zoom note-taking

Startup News - 2021, March 6 - 4:03am

Optimizely co-founder Dan Siroker said the idea for his new startup Scribe goes back to a couple of personal experiences — and although Scribe’s first product is focused on Zoom, those experiences weren’t Zoom-related at all.

Instead, Siroker recalled starting to go deaf and then having an “epiphany” the first time he put in a hearing aid, as he recovered a sense he thought he’d lost.

“That really was the spark that got me thinking about other opportunities to augment things your body naturally fails at,” he said.

Siroker added that memory was an obvious candidate, particularly since he also has aphantasia — the inability to visualize mental images, which made it “hard to remember certain things.”

Optimizely hires Jay Larson as its new CEO

It may jog your own memory if I note that Siroker founded Optimizely with Pete Koomen in 2010, then stepped down from the CEO role in 2017, with the testing and personalization startup acquired by Episerver last year. (And now Episerver itself is rebranding as Optimizely.)

Fast-forward to the present day and Siroker is now CEO at Scribe, which is taking signups for its first product. That product integrates into Zoom meetings and transforms them into searchable, shareable transcripts.

Siroker demonstrated it for me during our Zoom call. Scribe appears in the meeting as an additional participant, recording video and audio while creating a real-time transcript. During or after the meeting, users can edit the transcript, watch or listen to the associated moment in the recording and highlight important points.

From a technological perspective, none of this feels like a huge breakthrough, but I was impressed by the seamlessness of the experience — just by adding an additional participant, I had a full recording and searchable transcript of our conversation that I could consult later, including while I was writing this story.

Image Credits: Scribe

Although Scribe is recording the meeting, Siroker said he wants this to be more like a note-taking replacement than a tape recorder.

“Let’s say you and I were meeting and I came to that meeting with a pen and paper and I’m writing down what you’re saying,” he said. “That’s totally socially acceptable — in some ways, it’s flattering … If instead, I brought a tape recorder and plopped in front of you and hit record — you might actually have this experience — with some folks, that feels very different.”

Best practices for Zoom board meetings at early-stage startups

The key, he argued, is that Scribe recordings and transcripts can be edited, and you can also turn individual components on and off at any time.

“This is not a permanent record,” he said. “This is a shared artifact that we all create as we have a meeting that — just like a Google Doc — you can go back and make changes.”

Image Credits: Scribe

That said, it’s still possible that Scribe could record some embarrassing comments, and the recordings could eventually get meeting participants in trouble. (After all, leaked company meeting recordings have already prompted a number of news stories.) Siroker said he hopes that’s “not common,” but he also argued that it could create an increased sense of transparency and accountability if it happens occasionally.

Scribe has raised around $5 million in funding, across a round led by OpenAI CEO Sam Altman and another led by First Round Capital.

Siroker told me he sees Zoom as just the “beachhead” for Scribe’s ambitions. Next up, the company will be adding support for products like Google Meet and Microsoft Teams. Eventually, he hopes to build a new “hive mind” for organizations, where everyone is “smarter and better” because so many of their conversations and knowledge are now searchable.

“Where we go after that really depends on where we think we can have the biggest positive impact on people’s lives,” he said. “It’s harder to make a case for personal conversations you have with a spouse but … I think if you strike the right balance between value and privacy and control, you could really get people to adopt this in a way that actually is a win-win.”

And if Scribe actually achieves its mission of helping us to record and recall information in a wide variety of contexts, could that have an impact on our natural ability to remember things?

“Yes is the answer, and I think that’s okay,” he responded. “Your brain has limited energy … Remembering the things somebody said a few weeks ago is something a computer can do amazingly. Why waste your precious brain cycles doing that?”

Wall Street needs to relax, as startups show remote work is here to stay

Categories: Business News

How Rani Therapeutics’ robotic pill could change subcutaneous injection treatment

Startup News - 2021, March 6 - 3:21am

A new auto-injecting pill might soon become a replacement for subcutaneous injection treatments.

The idea for this so-called robotic pill came out of a research project around eight years ago from InCube Labs—a life sciences lab operated by Rani Therapeutics Chairman and CEO Mir Imran, who has degrees in electrical and biomedical engineering from Rutgers University. A prominent figure in life sciences innovation, Imran has founded over 20 medical device companies and helped develop the world’s first implantable cardiac defibrillator.

In working on the technology behind San Jose-based Rani Therapeutics, Imran and his team wanted to find a way to relieve some of the painful side effects of subcutaneous (or under-the-skin) injections, while also improving the treatment’s efficacy. “The technology itself started with a very simple thesis,” said Imran in an interview. “We thought, why can’t we create a pill that contains a biologic drug that you swallow, and once it gets to the intestine, it transforms itself and delivers a pain-free injection?”

Rani Therapeutics’ approach is based on inherent properties of the gastrointestinal tract. An injecting mechanism in their pill is surrounded by a pH-sensitive coating that dissolves as the capsule moves from a patient’s stomach to the small intestine. This helps ensure that the pill starts injecting the medicine in the right place at the right time. Once there, the reactants mix and produce carbon dioxide, which in turn inflates a small balloon that helps create a pressure difference to help inject the drug-loaded needles into the intestinal wall. “So it’s a really well-timed cascade of events that results in the delivery of this needle,” said Imran.

Synthetic biology startups are giving investors an appetite

Despite its somewhat mechanical procedure, the pill itself contains no metal or springs, reducing the chance of an inflammatory response in the body. The needles and other components are instead made of injectable-grade polymers, that Imran said has been used in other medical devices as well. Delivering the injections to the upper part of the small intestine also carries little risk of infection, as the prevalence of stomach acid and bile from the liver prevent bacteria from readily growing there.

One of Imran’s priorities for the pill was to eliminate the painful side effects of subcutaneous injections. “It wouldn’t make sense to replace them with another painful injection,” he said. “But biology was on our side, because your intestines don’t have the kind of pain sensors your skin does.” What’s more, administering the injection into the highly vascularized wall of the small intestine actually allows the treatment to work more efficiently than when applied through subcutaneous injection, which typically deposits the treatment into fatty tissue.

Imran and his team have plans to use the pill for a variety of indications, including the growth hormone disorder acromegaly, diabetes, and osteoporosis. In January 2020, their acromegaly treatment, Octreotide, demonstrated both safety and sustained bioavailability in primary clinical trials. They hope to pursue future clinical trials for other indications, but chose to prioritize acromegaly initially because of its well-established treatment drug but “very painful injection,” Imran said.

At the end of last year, Rani Therapeutics raised $69 million in new funding to help further develop and test their platform. “This will finance us for the next several years,” said Imran. “Our approach to the business is to make the technology very robust and manufacturable.”

Next-gen skincare, silk without spiders and pollution for lunch: Meet the biotech startups pitching at IndieBio’s Demo Day

Categories: Business News

Address cybersecurity challenges before rolling out robotic process automation

Startup News - 2021, March 6 - 3:05am
Alan Radford Contributor Alan Radford is regional CTO of One Identity and has a passion for helping organizations solve unique challenges in the identity and access management space.

Robotic process automation (RPA) is making a major impact across every industry. But many don’t know how common the technology is and may not realize that they are interacting with it regularly. RPA is a growing megatrend — by 2022, Gartner predicts that 90% of organizations globally will have adopted RPA and its received over $1.8 billion in investments in the past two years alone.

Due to the shift to remote work, companies across every industry have implemented some form of RPA to simplify their operations to deal with an influx of requests. For example, when major airlines were bombarded with cancellation requests at the onset of the pandemic, RPA became essential to their customer service strategy.

Throughout 2021, security teams will begin to realize the unconsidered security challenges of robotic process automation.

According to Forrester, one major airline had over 120,000 cancellations during the first few weeks of the pandemic. By utilizing RPA to handle the influx of cancellations, the airline was able to simplify its refund process and assist customers in a timely matter.

Delivering this type of streamlined cancellation process with such high demand would have been extremely challenging, if not impossible, without RPA technology.

The multitude of other RPA use cases that have popped up since COVID-19 have made it evident that RPA isn’t going away anytime soon. In fact, interest in the usage of RPA is at an unprecedented high. Gartner inquiries related to RPA increased over 1,000% during 2020 as companies continue to invest.

However, there’s one big issue that’s commonly overlooked when it comes to RPA — security. Like we’ve seen with other innovations, the security aspect of RPA isn’t implemented in the early stages of development — leaving organizations vulnerable to cybercriminals.

If the security vulnerabilities of RPA aren’t addressed quickly, there will be a string of significant RPA breaches in 2021. However, by realizing that these new “digital coworkers” have identities of their own, companies can secure RPA before they make the headlines as the latest major breach.

Understanding RPA’s digital identity

With RPA, digital workers are created to take over repetitive manual tasks that have been traditionally performed by humans. Their interaction directly with business applications mimics the way humans use credentials and privilege — ultimately giving the robot an identity of its own. An identity that is created and operates much faster than any human identity but doesn’t eat, sleep, take holidays, go on strike or even get paid.

Categories: Business News

Eco raises $26M in a16z-led round to scale its digital cryptocurrency platform

Startup News - 2021, March 6 - 2:28am

‍Eco, which has built out a digital global cryptocurrency platform, announced Friday that it has raised $26 million in a funding round led by a16z Crypto.

Founded in 2018, the SF-based startup’s platform is designed to be used as a payment tool around the world for daily-use transactions. The company emphasizes that it’s “not a bank, checking account, or credit card.”

“We’re building something better than all of those combined,” it said in a blog post. The company’s mission has also been described as an effort to use cryptocurrency as a way “to marry savings and spending,” according to this CoinList article.

Eco users can earn up to 5% annually on their deposits and get 5% cash back when transacting with merchants such as Amazon, Uber and others. Next up: The company says it will give its users the ability to pay bills, pay friends and more “all from the same, single wallet.” That same wallet, it says, rewards people every time they spend or save.

After a “successful” alpha test with millions of dollars deposited, the company’s Eco App is now available to the public.

Gemini is launching a credit card with bitcoin rewards

A slew of other VC firms participated in Eco’s latest financing, including Founders Fund, Activant Capital, Slow Ventures, Coinbase Ventures, Tribe Capital, Valor Capital Group and more than one hundred other funds and angels. Expa and Pantera Capital co-led the company’s $8.5 million funding round.

CoinList co-founder Andy Bromberg stepped down from his role last fall to head up Eco. The startup was originally called Beam before rebranding to Eco “thanks to involvement by founding advisor, Garrett Camp, who held the Eco brand,” according to Coindesk. Camp is an Uber co-founder and Expa is his venture fund.

For a16z Crypto, leading the round is in line with its mission.

In a blog post co-written by Katie Haun and Arianna Simpson, the firm outlined why it’s pumped about Eco and its plans.

“One of the challenges in any new industry — crypto being no exception — is building things that are not just cool for the sake of cool, but that manage to reach and delight a broad set of users,” they wrote. “Technology is at its best when it’s improving the lives of people in tangible, concrete ways…At a16z Crypto, we are constantly on the lookout for paths to get cryptocurrency into the hands of the next billion people. How do we think that will happen? By helping them achieve what they already want to do: spend, save, and make money — and by focusing users on tangible benefits, not on the underlying technology.”

Eco is not the only crypto platform offering rewards to users. Lolli gives users free bitcoin or cash when they shop at over 1,000 top stores.

Five takeaways from Coinbase’s S-1

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.

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Categories: Business News

Early-stage investor Mayfield shows how to scale up your biotech startup at TC Early Stage in April

Startup News - 2021, March 6 - 2:21am

Founders in the earliest stages of startup life face a hefty learning curve. Just some of the core competencies you need to lock down include how to raise VC funding, recruiting the right people, finding product-market fit and building a killer go-to-market team. The list goes on and on…and on. You’ll learn about all those topics and more at TechCrunch Early Stage Operations & Fundraising taking place on April 1-2. 

Do you science? Are you inspired to use biology as technology? If your entrepreneurial interests lean toward the scientific side of the startup equation, you don’t want to miss this special session — brought to you by Mayfield — at TC Early Stage 2021 on April 1-2.

Scientist Entrepreneurs — Scaling Breakout Engineering Biology Companies 

Arvind Gupta and Ursheet Parikh, early-stage investors, company builders and Mayfield partners, along with Po Bronson, NYT bestselling author and managing director of IndieBio, will discuss scaling startups and touch upon three seminal areas that influence trajectory: fundraising, hiring and product design. Their insights draw on their experience with companies including ingredients-as-service leader Geltor (which raised a $91 million Series B in 2020); CRISPR platform Mammoth Biosciences (its dream team includes co-founder and Nobel Laureate Jennifer Doudna); and Endpoint Health (started by GeneWEAVE’s founding team and former YC Bio Partner Diego Rey).

Whether you’re a biotech entrepreneur, a researcher or a scientist tackling the daunting challenges of human and planetary health, this session will help you build a stronger, more successful startup as you take your product to market.

Mayfield will follow up this session with even more content at Disrupt 2021 in September. These sessions will reveal company-building insights from entrepreneurs, investors, industry leaders and policymakers. Mayfield invests in exceptional people whose mission in life is to create a better world — not just for our generation  but for future generations as well. If you science, don’t miss your opportunity to learn from leading investors who have partnered with iconic biotech and health IT entrepreneurs — from Amgen and Genentech to Mammoth Biosciences.

Get your ticket for the April TC Early Stage event here. Or get a dual-event ticket for the April and July events for double the knowledge across operations, marketing, recruiting and fundraising — and save up to $100.

Is your company interested in sponsoring or exhibiting at Early Stage 2021 — Operations & Fundraising? Contact our sponsorship sales team by filling out this form.

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Categories: Business News

The technology selloff is getting to be somewhat material

Startup News - 2021, March 6 - 1:22am

Tech stocks are getting hammered today, with previously high-flying shares of software companies taking even more damage.

For a sector that has enjoyed a year in the sun, recent trading sessions have punctured a period of market adoration. It is too soon to say that the market is repricing tech stocks, but the selloff has reached the point of materiality and is therefore something we need to note.

As we write, the tech-heavy Nasdaq Composite is off another 1.2% today after previous declines. The now-infamous ARK Innovation ETF is off 6.5% and the list of individual declines worth noting in the tech sector is very long indeed.

The change in sentiment is clear in recent results. Here’s the tech-heavy Nasdaq Composite:

  • Nasdaq Composite 52-week high: 14,175.12
  • Nasdaq Composite today: 12,561.13
  • Percent change: -11.4%

And the damage intensifies if we consider just SaaS and cloud stocks. Here’s the Bessemer cloud index:

  • Bessemer cloud index 52-week high: 2,884.23
  • Bessemer cloud index today: 2,185.62
  • Percent change: -24.2%

In more prosaic terms, the Nasdaq is in a technical correction, while SaaS stocks have reached bear-market territory. That’s quite a turnabout from recent all-time highs for both.

Not just software

Lost on the TechCrunch editing floor from late yesterday is a post we wrote noting the sharp declines in the value of insurtech stocks ahead of the impending public debut of Hippo, another neo-insurance company. The SPAC-led Hippo flotation will not touch down in a warm market. Instead, its contemporaries look like this today:

  • Lemonade 52-week high: $188.30
  • Lemonade current price: $84.72
  • Change: -55.0%
  • Root Insurance 52-week high: $29.48
  • Root Insurance current price: $12.38
  • Change: -58.0%
  • MetroMile 52-week high: $20.39
  • MetroMile current price: $10.04
  • Change: -50.8%

The damage is widespread. Hell, recent IPO success-story Snowflake announced yesterday that it grew from revenues of $88 million in its year-ago quarter to $190 million in its most recent. And its stock is off more than 7% today.

We’ll leave it to you whether the changing public valuations are just a blip or a more staid change in the winds. But it does feel different out there.

For startups, this is all somewhat poor news. Valuations for public comps were strong in 2020. To lose that halo in 2021 could crimp late-stage valuations, perhaps even reaching back to Series A and B rounds to limit some upside for growing upstarts. But such an impact will lag the public markets, so don’t expect things to change quite yet.

Still, every private investor has their eye on the exit when it comes to their deals. And if that exit is suddenly shrinking, so too might their interest in paying for quite so great a markup on their next deal.

Understanding how investors value growth in 2021

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.

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Categories: Business News

YC-backed Pangea discusses growth, fundraising ahead of demo day

Startup News - 2021, March 6 - 12:51am

Pangea, a marketplace startup that wants to connect college freelancers and companies in need of digital help, is seeing its growth rate accelerate as it races toward the impending Y Combinator demo day.

It’s traditional around this time that startups in the accelerator reach out to say hello. Provided that they are willing to chat growth metrics, we’re willing to listen.

Pangea, based in Providence, Rhode Island, is one such company. TechCrunch previously covered the company when it announced a $400,000 pre-seed round last April. Now most of the way through the YC accelerator, the company dished regarding its recent growth and the fact that it added more capital to its accounts late last year.

The Pangea team, from their shared house/office. Via the company.

On the growth side of the coin, Pangea CEO Adam Alpert told TechCrunch the company has grown its gross merchandise volume (GMV) sequentially by 35% in each of the last two months. That’s a steep pace of GMV expansion. And the growth is adding up to real numbers, with Pangea facilitating $50,000 in transactions between college freelancers and businesses in the last four weeks.

Alpert said that its year-ago number was around $3,000 or $4,000.

And the company has managed to expand its market take rate to around 25%, tinkering with how it charges for its service. The result is a model that might resonate with anyone familiar with Fiverr, and may help the company more rapidly expand its net revenue.

The company’s recent growth comes after it secured another $350,000 in November 2020 at a higher cap to its previously known pre-seed round. And, of course, it raised $125,000 from Y Combinator, funds that landed in its accounts this January.

Pangea.app raises $400K pre-seed round to help connect student workers with businesses

Pangea is now active in 600 campuses, Alpert said. And it has found where its service is most in-demand, namely among emerging brands and smaller tech startups. Those firms often need the types of services that college kids are good at — social media, design, etc. — making them a good fit.

The company was somewhat coy on upcoming product news but was clear that it’s looking for investing partners as it works toward Series A scale. Let’s see how Pangea does in a few weeks.

African countries need ‘startup acts’ more than ever to support innovation

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.

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Categories: Business News

Understanding how investors value growth in 2021

Startup News - 2021, March 6 - 12:38am

We’re not digging into another IPO filing today. You can read all about AppLovin’s filing here, or ThredUp’s document here.

This morning, instead, we’re talking about an old favorite: software valuations. The folks over at Battery Ventures have compiled a lengthy dive into the 2020 software market that’s worth our time — you can read along here; I’ll provide page numbers as we go — because it helps explain some software valuations.

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

There’s little doubt that there is some froth in the software market, but it may not be where you think it is.

The Battery report has a lot of data points that we’ll also work through in this week’s newsletter, but this morning, let’s narrow ourselves to thinking about rising aggregate software multiples, the breakdown of multiples expansion through the lens of relative growth rates, and cap it off with a nibble on the importance, or lack thereof, of cash flow margins for the valuation of high-growth software companies.

We’ll look at the changing public market perspective, and then ask ourselves if the aggregate image that appears is good or not good for software startups.

I chatted through pieces of the report with its authors, Battery’s Brandon Gleklen and Neeraj Agrawal. So, we’ll lean on their perspective a little as we go to help us move quickly. This is our Friday treat. Or at least mine. Let’s get into it.

Rising multiples

Let’s start with an affirmation. Yes, software valuations have risen to record-high multiples in recent years. Here’s the Battery chart that makes the change clear:

Page 31, Battery report. Image Credits: Battery Ventures

Categories: Business News

SoftBank makes mountains of cash off of human laziness

Startup News - 2021, March 6 - 12:00am

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another crazy week, but we did our best to get through as much of it as we could. Here’s the rundown, in case you are reading along with us!

  • Square is buying Tidal in a deal that some are skeptical of, but one about which we found quite a lot to like.
  • How capital-as-a-service can get you your first check in 2021, and a nod to Indie.VC, a pioneer in alternative financing for startups that announced it is shutting down net new investments this year.
  • Oscar Health priced its IPO above its raised range, which was good for it in terms of fundraising. However, since its debut the company has lost pricing altitude. Its declines mimic those of other public neo-insurance providers in what could be a new trend.
  • And sticking to the insurtech beat, Hippo is going public via a SPAC. Because everyone else is?
  • Compass filed its S-1, which triggered a debate on how it’s different than Opendoor.
  • Coupang’s IPO is also coming, replete with huge growth, an improving profitability picture and a massive valuation. This is one to watch.
  • There was also a whole global news circuit around grocery delivery startups, with Instacart raising at a $39 billion valuation.
  • And we wrapped with the Surreal seed round that we found to be more than a little spicy. As it turns out, commercialized deepfakes are not merely on the way; they are here.

How China’s synthetic media startup Surreal nabs funding in 3 months

And with that we are back on Monday. Have a rocking weekend!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.

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Categories: Business News

Scrum Ventures launches new program to connect startups with Japanese corporations

Startup News - 2021, March 5 - 9:00pm

Masami Takahashi, the president of Scrum Studios. Image Credits: Scrum Ventures

Headquartered in San Francisco and Tokyo, Scrum Ventures is known for its accelerator programs focused on sports, food and smart-city tech. Today it announced the launch of a new incubator program that will help startups form business partnerships with Japanese corporations.

Called Scrum Studio, it will be spun out as an independent entity from Scrum Ventures, and headed by Masami Takahashi, who was previously strategy officer and general manager for WeWork Japan. Before that, he led Uber’s operations in Japan.

Takahashi told TechCrunch that Scrum Studio is currently focused on the startups in its current accelerator programs (Sports Tech Tokyo, SmartCityX and Food Tech Studio), but plans to launch new programs in the future that also center on specific verticals. Through Scrum Studio, startups will be able to establish subsidiaries in Japan, or form joint ventures with Japanese companies.

The future of sports tech: Here’s where investors are placing their bets

Scrum already has more than 50 Japanese corporate partners, including Aioi Nissay Dowa Insurance, energy company Idemitsu Kosan Co and East Japan Railway Company for Smart City X, and Fuji Oil Holdings, Nissin Food Holdings and ITO EN for Food Tech Studio.

“We are looking to work with startups and technology that can help solve some of the challenges that our society faces today,” Takahashi said in an email. “These include, but are not limited to, sustainability, health, safety, waste reduction, and efficiency of cities and their people.”

Cross-border investments aren’t dead, they’re getting smarter

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.

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Categories: Business News

How Pariti is connecting founders with capital, resources and talent in emerging markets

Startup News - 2021, March 5 - 6:22pm

According to Startup Genome, Beijing, London, Silicon Valley, Stockholm, Tel Aviv are some of the world’s best startup ecosystems. The data and research organisation uses factors like performance, capital, market reach, connectedness, talent, and knowledge to produce its rankings.

Startup ecosystems from emerging markets excluding China and India didn’t make the organisations’ top 40 list last year. It is a known fact that these regions lag well behind in all six factors, and decades might pass before they catch up to the standards of the aforementioned ecosystems.

However, Pariti, a Kenyan B2B management startup founded by Yacob Berhane and Wossen Ayele wants to close the gap on three of the six factors — access to capital, knowledge, and talent.

These issues, specifically that of access to capital, is heightened in Africa. For instance, only 25% of funding goes to early-stage startups in Sub-Saharan Africa compared to more than 50% in Latin America, MENA, and South Asia regions.

“We wanted to build a solution that will help startups be successful that otherwise would not have been able to get the resources they needed,” said CEO Berhane to TechCrunch. “This problem is especially acute in Africa because it’s particularly nascent, but this platform is designed for founders across emerging markets. So basically anywhere that doesn’t have a mature, healthy startup ecosystem.”

So, how is the team at Pariti setting out to solve these problems? Ayele tells me that in one sense, Pariti is like an unbundled accelerator.

In a typical accelerator, founders will need to go through an intense program where they are loaded with information on all the things a startup will likely need to know at some point in their growth. Whereas with Pariti, founders get the needed information or resources that are immediately relevant to helping them get to the next stage of the business.

A three-way marketplace

When a founder joins Pariti, they run their company through an assessment tool. There, they share pitch materials and information about their business. Pariti then assesses each company across more than 70 information points ranging from the team and market to product and economics.

After this is done, Pariti benchmarks each company against its peers. Companies in the same industry, product stage, revenue, fundraising are some of the comparisons made. The founder gets a detailed assessment with feedback on their pitch materials, the underlying metrics that they can use to develop their business and, their ability to raise capital down the line.

“This approach gives us an extremely granular view of their businesses, its strengths, weaknesses and allows us to triage the right resources to the founder based on their particular needs.”

It doesn’t end there. Pariti also connects the founders for one-on-one sessions with members of its global expert community. Their backgrounds, according to Ayele, run the gamut from finance and marketing to product and technology across a range of sectors. Pariti also provides vetted professionals for hire from its community if a founder needs more hands-on support building a product.

Ayele says founders can continue to go through this process multiple times, getting assessed, implementing feedback, and connecting with resources and talent.

On another end, Pariti allows investors to sign up on its platform, thereby collating data on their preferences. So once a startup wants to raise capital, the platform matches them with investors based on their profile and preferences.

“We’ve built an algorithm-based matching platform where we curate relevant deals to VC investors. We also simplify the investor reach-out process for founders, which is a huge pain point — especially in this ecosystem.”

Pariti’s investor platform

In a nutshell, Pariti helps founders connect with affordable talent, access capital and develop their businesses. Professionals can find interesting opportunities to mentor startups and get paid gig opportunities. They also get more exposure to the early stage ecosystem while tracking their progress, verifying their skills and increasing earning potential. Investors can run extremely lean operations with access to proprietary deal flow, automated deal filtering and on-demand experts to support due diligence, research and portfolio support.

According to the COO, the company has seen a tremendous amount of value built through the platform so far. A testament to this is an experience shared by Kiiru Muhoya, founder of Kenyan fintech startup Fingo Africa with TechCrunch, on how the platform helped him raise a $250,000 pre-seed round.

He said that after going through Pariti’s assessment ahead of a planned fundraiser, he realized that the market he was targeting was too small. Also, he needed to learn more about what VCs were looking for to be successful.

Muhoya decided to switch to being at the other end of things. Joining the expert platform on Pariti, he began to review companies and provided feedback to other founders. This led him to take some months off to pivot his business based on Pariti’s first feedback and what he had learned from the expert platform. He took his startup through another assessment on the platform and thus closed the round.

The company has made significant strides since launching in 2019. It has over 500 companies across 42 countries, 100 freelance experts, and 60 investors using its platform. Berhane also adds that five funds currently use Pariti’s operating system for their deal management.

“For us, I think we’re building the rails for how ventures are built and scaled in emerging markets. We have partners in place across emerging markets, including Latin America and India. We also have a strong interest in the United States, where we see a real need for our platform.” Berhane said.

It charges a subscription model for investors, but Berhane wouldn’t disclose the numbers. He says that Pariti will begin to charge a subscription fee for founders as well. Another revenue stream comes when investors or founders pay a certain transaction fee when using Pariti’s freelance experts for projects. The same happens when there’s any fundraise executed from the platform.

Talking about fundraising, the company recently secured an undisclosed pre-seed capital from angels and VCs like 500 Startups, Kepple Africa and Huddle VC.

But it hasn’t been smooth sailing for Pariti as one issue that has stood out in dealing with founders and investors is trust. Berhane says founders have shared some horror stories about engaging with investors, while investors have shared trust concerns about founders reporting false numbers.

Pariti tries to address this by providing NDAs for both parties where the company will not share founders data with investors until they want it to be.  And investors won’t get deals that Pariti hasn’t thoroughly vetted.

Both founders of East African descent — Berhane from Eritrea and Ayele from Ethiopia — crossed paths a couple of times but took different routes to be where they are now.

Wossen Ayele (COO) and Yacob Berhane (CEO)

Ayele started his career at a consulting shop with offices across East Africa before moving back to the U.S. for law school. There, he got his first exposure to the early-stage startup world and worked with an emerging markets-focused VC fund.

“I could see how technology and innovation could play a role in helping communities – whether it’s through financial inclusion, access to essential goods and services, connecting people at the base of the pyramid to markets,” he said.

Upon graduation and completion of his legal training, Ayele headed back to Nairobi to get involved with its growing African startup ecosystem, where he and Berhane founded the company.

The CEO who studied finance and investment banking in the U.S. moved back to Africa to start a pan-African accelerator in Johannesburg, South Africa. While he has worked in managerial positions for companies like the African Leadership University and Ajua, Berhane spent most of his time brokering deals for them which ultimately led him to start Pariti. 

“After helping businesses raise more than $20m and seeing how that money led to job creation and upward mobility for employees, I knew there was a path I could have that would be meaningful within finance. I continued to think about the growing asymmetry of access to capital, talent and knowledge in the startup ecosystem and the lack of infrastructure addressing it. Pariti was how we wanted to solve it.”

Categories: Business News

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