VCs reload ahead of the election as unicorns power ahead

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

It was an active week in the technology world broadly, with big news from Facebook and Twitter and Apple. But past the headline-grabbing noise, there was a steady drumbeat of bullish news for unicorns, or private companies worth $1 billion or more.

A bullish week for unicorns

The Exchange spent a good chunk of the week looking into different stories from unicorns, or companies that will soon fit the bill, and it’s surprising to see how much positive financial news there was on tap even past what we got to write about.

Databricks, for example, disclosed a grip of financial data to TechCrunch ahead of regular publication, including the fact that it grew its annual run rate (not ARR) to $350 million by the end of Q3 2020, up from $200 million in Q2 2019. It’s essentially IPO ready, but is not hurrying to the public markets.

Sticking to our theme, Calm wants more money for a huge new valuation, perhaps as high as $2.2 billion which is not a surprise. That’s more good unicorn news. As was the report that “India’s Razorpay [became a] unicorn after its new $100 million funding round” that came out this week.

Razorpay is only one of a number of Indian startups that have become unicorns during COVID-19. (And here’s another digest out this week concerning a half-dozen startups that became unicorns “amidst the pandemic.”)

There was enough good unicorn news lately that we’ve lost track of it all. Things like Seismic raising $92 million, pushing its valuation up to $1.6 billion from a few weeks ago. How did that get lost in the mix?

All this matters because while the IPO market has captured much attention in the last quarter or so, the unicorn world has not sat still. Indeed, it feels that unicorn VC activity is the highest we’ve seen since 2019.

And, as we’ll see in just a moment, the grist for the unicorn mill is getting refilled as we speak. So, expect more of the same until something material breaks our current investing and exit pattern.

Market Notes

What do unicorns eat? Cash. And many, many VCs raised cash in the last seven days.

A partial list follows. It could be that investors are looking to lock in new funds before the election and whatever chaos may ensue. So, in no particular order, here’s who is newly flush:

• $450 million for OpenView, $800 million for Canaan, $840 million for True Ventures, $950 million for Lead Edge Capital
• Something called Benson Capital Partners has put together a $50 million fund. Gayle Benson, for whom the firm is named, owns several New Orleans sports teams, per Forbes.
• Plus Venture Capital, built by two former 500 Startups Mena investors according to fundsglobalMENA, has raised $60 million.
• First Round is looking for $220 million, former Google exec Kai-Fu Lee’s Sinovation Ventures is looking for a billion, while Khosla wants a bit more.

All that capital needs to go to work, which means lots more rounds for many, many startups. The Exchange also caught up with a somewhat new firm this week: Race Capital. Helmed by Alfred Chuang, formerly or BEA who is an angel investor now in charge of his own fund, the firm has $50 million to invest.

Sticking to private investments into startups for the moment, quite a lot happened this week that we need to know more about. Like API-powered Argyle raising $20 million from Bain Capital Ventures for what FinLedger calls “unlocking and democratizing access to employment records.” TechCrunch is currently tracking the progress of API-led startups.

On the fintech side of things, M1 Finance raised $45 million for its consumer fintech platform in a Series C, while another roboadvisor, Wealthsimple, raised $87 million, becoming a unicorn at the same time. And while we’re in the fintech bucket, Stripe dropped $200 million this week for Nigerian startup Paystack. We need to pay more attention to the African startup scene. On the smaller end of fintech, Alpaca raised $10 million more to help other companies become Robinhood.

A few other notes before we change tack. Kahoot raised $215 million due to a boom in remote education, another trend that is inescapable in 2020 as part of the larger edtech boom (our own Natasha Mascarenhas has more).

Turning from the private market to the public, we have to touch on SPACs for just a moment. The Exchange got on the phone this week with Toby Russell from Shift, which is now a public company, trading after it merged with a SPAC, namely Insurance Acquisition Corp. Early trading is only going so well, but the CEO outlined for us precisely why he pursued a SPAC, which was actually interesting:

• Shift could have gone public via an IPO, Russell said, but prioritized a SPAC-led debut because his firm wanted to optimize for a capital raise to keep the company growing.
• How so? The private investment in public equity (PIPE) that the SPAC option came with ensured that Shift would have hundreds of millions in cash.
• Shift also wanted to minimize what the CEO described as market risk. A SPAC deal could happen regardless of what the broader markets were up to. And as the company made the choice to debut via a SPAC in April, some caution, we reckon, may have made some sense.

So now Shift is public and newly capitalized. Let’s see what happens to its shares as it gets into the groove of reporting quarterly. (Obviously, if it flounders, it’s a bad mark for SPACs, but, conversely, successful trading could lead to a bit more momentum to SPAC-mageddon.)

A few more things and we’re done. Unicorn exits had a good week. First, Datto’s IPO continues to move forward. It set an initial price this week, which could value it above $4 billion. Also this week, Roblox announced that it has filed to go public, albeit privately. It’s worth billions as well. And finally, DoubleVerify is looking to go public for as much as $5 billion early next year.

Not all liquidity comes via the public markets, as we saw this week’s Twilio purchase of Segment, a deal that The Exchange dug into to find out if it was well-priced or not.

Various and Sundry

We’re running long naturally, so here are just a few quick things to add to your weekend mental tea-and-coffee reading!

• This Operator Collective + @BLCKVC + @SalesforceVC mashup caught our attention.
• Accel has notes here on the EU startup scene, especially its later stages.
• Here’s a TechCrunch piece we helped put together that digs into the current state of media startups. It’s fun!
• Bytedance charts for your education and entertainment.
• Here’s where you can track the growth of DuckDuckGo as it takes on Google and Bing.
• Equity was a bundle of fun this week, so make sure to tune in if you have 30 minutes of free time.

Next week we are digging more deeply into Q3 venture capital data, a foretaste of which you can find here, regarding female founders, a topic that we returned to Friday in more depth.

Alex

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Solve the ‘dead equity’ problem with a longer founder vesting schedule

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The four-year vesting schedule that the typical startup uses today is a problem waiting to happen. If one founder ends up quitting a year or two before the last cliff, they still own a large share of the cap table through many rounds to come. The departing founder might consider that fair, but the remaining founder(s) are the ones adding on the additional value — and resentment is not the only issue.

“The opportunity cost of dead equity is talent and capital,” Jake Jolis of Matrix Partners explains in a guest post for us this week. “Compensating talent and raising capital are the (only) two things you can use your startup’s equity for, and you need to do both in order for your company to grow large. If you want to build a big business, the road ahead is still long and windy, and you’re going to need every bit of help you can get. If your competitors don’t have dead equity you’re literally competing with a handicap.”

Instead, he argues that founders who are just starting out should consider doubling the vesting schedule to eight years or so. In one example he gives, a founder who leaves after two and a half years on a four-year plan could end up with 22% of the company even after a big new funding round, the creation of an employee stock option pool, and additional shares set aside for a replacement cofounder-level hire. On an eight-year plan, that would be only 11%, and there would be a lot more remaining to entice new cofounders.

The full article is on Extra Crunch, but I’m including more key parts here given the broad value:

Given the risks still ahead of the business, this level of compensation is often much more fair from a value-creation standpoint. With less dead equity on the cap table, the startup is still attractive in the eyes of VCs and well-positioned to attract a strong co-founder replacement to take the company forward. The alternative can cripple the company, and even co-founder B won’t be happy owning a larger percent of zero. While it’s better to do it when you start the company, a co-founder unit can elongate their vesting later on as well. The main requirement is that all the co-founders believe it’s in their best interest and agree to it. Most repeat founders I’ve talked to agree that four years is too short. Personally, if I started another company, I’d pick something like eight. You definitely don’t need to. You might decide four or six is better for your co-founder unit and your company.

One final thought, from my startup cofounder years. The departing cofounder should still want to see the company succeed as big as possible to maximize the value of their own shares. On the steep slope between failure and success in this business, vesting longer is a powerful way to help the company will deliver the most back to them after the hard work of the early days.

Image Credits: FirstMark

Why one successful early-stage VC firm is getting into SPACs now

SPACs are an exciting development for any type of investor, public or private, Amish Jani of FirstMark Capital tells Connie Loizos. Indeed, his firm has historically focused on writing early-stage checks, so at first it is a bit jarring to see the FirstMark Horizon Acquisition SPAC raise $360 million and head out looking for the right unicorn. But he explains it all quite well an extensive interview this week:

TC: Why SPACs right now? Is it fair to say it’s a shortcut to a hot public market, in a time when no one quite knows when the markets could shift?

AJ: There are a couple of different threads that are coming together. I think the first one is the possibility that [SPACs] work, and really well. [Our portfolio company] DraftKings  [reverse-merged into a SPAC] and did a [private investment in a public equity deal]; it was a fairly complicated transaction and they used this to go public, and the stock has done incredibly well.

In parallel, [privately held companies] over the last five or six years could raise large sums of capital, and that was pushing out the timeline [to going public] fairly substantially. [Now there are] tens of billions of dollars in value sitting in the private markets and [at the same time] an opportunity to go public and build trust with public shareholders and leverage the early tailwinds of growth.

He goes on to explain why public markets are likely to stay hot for the right SPACs far into the future.

AJ: I think a bit of a misconception is this idea that most investors in the public markets want to be hot money or fast money. There are a lot of investors that are interested in being part of a company’s journey and who’ve been frustrated because they’ve been frozen out of being able to access these companies as they’ve stayed private longer. So our investors are some of are our [limited partners], but the vast majority are long-only funds, alternative investment managers and people who are really excited about technology as a long-term disrupter and want to be aligned with this next generation of iconic companies.

Check out the whole thing on TechCrunch.

SaaS continues to boom with Databricks funding, Segment acquisition

Maybe Segment would have gone public sometime soon, but instead Twilio has scooped it up for $3.2 billion this week. The popular data management tool will now be a part of Twilio’s ever-expanding suite of customer communication products. Perhaps it’s another sign of a consolidation phase taking hold in the sector, after a Pre-Cambrian explosion of SaaS startups over the last decade? Alex Wilhelm dug into the financials of the deal for Extra Crunch and came away thinking that the deal was not too expensive — in fact he thinks Segment may have been able to hold out for a little more, especially considering the multiplication of Twilio’s stock price this year.

Databricks, meanwhile, has evolved from an open-source data analytics platform that struggled to make revenues to a run rate of $350 million. Per an interview that Alex did for EC with chief executive Ali Ghodsi, the factors in this growth included a shift to focus on more proprietary code, big customers and sophisticated features. It’s now aiming for an IPO next year.

And what about that IPO market, which was a bit quieter this week? Alex gives a letter grade to each of the 18 most notable tech companies that have gone public this year, and observes that most them are continuing to stay in positive territory from their initial prices.

Image Credits: Brent Franson for Paystack

Nigeria startup scene gets watershed exit with Paystack deal

Lagos has been building a strong local startup scene for years, and this week that translated into a win that could mark a new era for the city, country and beyond. Stripe has agreed to acquire payments provider Paystack in a deal that Ingrid Lunden hears was worth more than $200 million. With Stripe’s own aims for a massive IPO, Paystack is poised to produce ongoing returns for the company and its investors, as well as providing Nigeria with a new generation of investors, founders and highly skilled employees who are tightly interlinked with Silicon Valley and other innovation centers.

A startup hub just needs one or two of the right deals to change everything. Readers who were paying attention when Google bought YouTube almost exactly 14 years ago today will remember the ensuing surge in fundings, foundings, acquisitions and overall consumer internet industry activity that helped the Silicon Valley internet scene get back on its feet (and helped this site get on the map, too). Stripe has said it is planning more global expansion that could include additional deals like this, so more cities around the world could be getting their moments this way.

Donau City development area – Vienna, Austria

Vienna startups finding new opportunities during the pandemic

In this week’s European investor survey for Extra Crunch, Mike Butcher checks in on Vienna, Austria, which has been tallying up growth in local startup activity recently. Here’s Eva Ahr of Capital 300, which focuses on Germanic and Central Eastern European investments, regarding about the impact of the pandemic on the local markets:

Telemedicine, online education has been accelerated. We see a shift that otherwise would have taken years, especially in the relatively conservative German-speaking area. As mentioned previously, mental health solutions, hiring and employing remotely are some of the opportunities highlighted by COVID-19. Companies that are heavily exposed are those that have been serving the long tail of companies, small merchants, and local businesses that were closed down or experienced much less traffic in past months and hence are extremely sensitive around their cost base, discontinuing services that are not 110% essential.

Mike is also working on a Lisbon survey and we’d love to hear from any investors focused on the city and Portugal in general.

Around TechCrunch

Discuss the unbundling of early-stage VC with Unusual Ventures’ Sarah Leary & John Vrionis

Across the week

TechCrunch:

If the ad industry is serious about transparency, let’s open-source our SDKs

Brazil’s Black Silicon Valley could be an epicenter of innovation in Latin America

South Korea pushes for AI semiconductors as global demand grows

The need for true equity in equity compensation

Trump’s latest immigration restrictions are bad news for American workers

Extra Crunch:

How COVID-19 and the resulting recession are impacting female founders

Startup founders set up hacker homes to recreate Silicon Valley synergy

Brighteye Ventures’ Alex Latsis talks European edtech funding in 2020

Dear Sophie: I came on a B-1 visa, then COVID-19 happened. How can I stay?

What the iPhone 12 tells us about the state of the smartphone industry in 2020

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

The whole crew was back today, with Natasha and Danny and I gathered to parse over what was really a blast of news. Lots of startups are raising. Lots of VCs are raising. And some unicorns are shooting to go public. It’s a lot to get through, but we’re here to catch you up.

Here’s what we got into:

• A Media Roundup: The Juggernaut raised $2 million in a round that we found to be both cool and timely. The news of a media startup raising money was paired with rumors of an exit for email media darling Morning Brew for a price tag of up to $75 million. Undergirding each story was recent reporting concerning the revenue success that Axios is enjoying. It’s nice to report on some media news that isn’t fresh layoffs.
• A cluster of wellness startups raising capital: If you like to work out your mind and body, it was a good week of news for you. Calm is looking for new funds at a fresh, higher valuation. TechCrunch has coverage here. Coa did raise, adding $3 million to its coffers for mental health group classes. And Playbook put together $9.3 million for its fitness instructor platform.
• VCs raised lots: It’s a hot time for VCs themselves to raise money, with OpenView, Canaan, True Ventures, Lead Edge Capital, First Round and Khosla either closing rounds or announcing new fundraises.
• Also on the VC beat: Terri Burns was made an investing partner at GV.
• Finally, we got into the recent GetAround funding and turnaround story, which segued us into Airbnb’s own recovery. TechCrunch has more here.

And with that, we’re off until Monday morning. Chat soon, and stay safe.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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Three views on the future of media startups

The Equity crew this week chewed through a trio of media stories, each dealing with private companies and their successes. The Wall Street Journal recently reported that Axios was growing rapidly and near profitability. The paper also broke news that Morning Brew might exit to Business Insider for a hefty $75 million potential payout. Meanwhile, we covered the news that The Juggernaut raised $2 million for its paywalled publication focused on South Asian news.

The conversation, as a result, was a fairly indulgent and nerdy affair. It’s always fun to celebrate other journalists finding success in different ways, and this week felt like a moment for the media news landscape. Because the topic is so near to our hearts, for better or worse, we’re fitting our broader thoughts into this post about the future of media.

Our own Natasha Mascarenhas writes about how inequity in media and who gets to succeed, Danny Crichton has some pretty strong feelings about digital advertising and Alex Wilhelm writes about how the varied methods of recent media success are themselves heartening.

So this weekend let’s pause for a minute to ruminate on the upstart media world, a place where too often private capital and media economics have had a falling out.

Natasha Mascarenhas

This week, it was announced that advertising might not be a bad idea after all. Axios is reportedly expected to become profitable this year, and Morning Brew, a free newsletter about business insights, could get acquired for between $50 million to $75 million by Business Insider. Both of these media companies make money off of newsletters. And if you end the story there, it’s clear that news isn’t simply a fundamental aspect of our democracy — it makes money, too.

But, the story shouldn’t end there.

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Pear hosted its invite-only demo day online year; here’s what you might have missed

Pear, the eight-year-old, Palo Alto, Calif.-based seed-stage venture firm that has, from its outset, attracted the attention of VCs who think the firm has an eye for nascent talent, staged its seventh annual demo day earlier this week, and while it was virtual, one of the startups has already signed a term sheet from a top-tier venture firm.

To give the rest of you a sneak peak, here’s a bit about all of the startups that presented, in broad strokes:

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1. ) AccessBell

What it does: Video conferencing platform for enterprise workflows

Website: accessbell.com

Founders: Martin Aguinis (CEO), Josh Payne (COO), Kamil Ali (CTO)

The pitch: Video has emerged as one of the prominent ways for enterprises to communicate internally and externally with their customers and partners. Current video conferencing tools like Zoom and WebEx are great for standalone video but they have their own ecosystems and don’t integrate into thousands of enterprise workflows. That means that API tools that do integrate, like Agora and Twilio, still require manual work from developer teams to customize and maintain. AccessBell is aiming to provide the scalability and reliability of Zoom, as well as the customizability and integrations of Twilio, in a low code integration and no code extensible customization platform.

It’s a big market the team is chasing, one that’s expected to grow to $8.6 billion by 2027. The cost right now for users who want to test out AccessBell is $27 per host per month.

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2.) FarmRaise

What it does: Unlock financial opportunities for farmers to create sustainable farms and improve their livelihoods.

Website: farmraise.com

Founders: Jayce Hafner (CEO), Sami Tellatin (COO), Albert Abedi (Product)

The pitch: Over half of American farms don’t have the tools or bandwidth they need to identify ways to improve their farms and become profitable. The startup’s API links to farmers’ bank accounts, where its algorithm assesses financials to provide a “farm read,” scoring the farms’ financial health. It then regularly monitors farm data to continuously provide clean financials and recommendations on how to improve its customers’ farms, as well as to connect farmers with capital in order to improve their score. (It might suggest that a farm invest in certain sustainability practices, for example.)

Eventually, the idea is to also use the granular insights it’s garnering and sell these to hedge funds, state governments, and other outfits that want a better handle on what’s coming — be it around food security or climate changes.

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3.) Sequel

What it does: Re-engineering life’s essential products – starting with tampons.

Website: thesequelisbetter.com

Founders: Greta Meyer (CEO),  Amanda Calabrese (COO)

The pitch: Founded by student athletes from Stanford, Sequel argues that seven out of 10 women don’t trust tampons, which were first designed in 1931 (by a man). New brands like Lola have catchy brands and new material, but they perform even worse than legacy products. Sequel has focused instead on fluid mechanics and specifically on slowing flow rates so a tampon wont leak before it’s full whether they’re in the “boardroom” or the “stadium.” The company says it has already filed patents and secured manufacturing partners and that it expects that the product will be available for consumers to buy directly from its website, as well as in other stores, next year.

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4.) Interface Bio

What it does: Unlocking the therapeutic potential of the microbiome with a high-throughput pipeline for characterizing microbes, metabolites, and therapeutic response, based on years of research at Stanford.

Founders: Will Van Treuren, Hannah Wastyk

The pitch: The microbiome plays a major role in a wide range of human diseases, including heart disease, kidney disease, liver disease, and cancer. In fact, Interface’s founders — both of whom are PhDs —  say that microbiome-influenced diseases are responsible for four of the top 10 causes of death in the United States. So how do they better size on the opportunity to identify therapeutics by harnessing the microbiome? Well, they say they’ll do it via a “high-speed pipeline for characterizing metabolites and their immune phenotypes,” which they’ll create by developing the world’s largest database of microbiome-mediated chemistry, which the startup will then screen for potential metabolites that can lead to new therapies.

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5.) Gryps

What it does: Gryps is tackling construction information silos to create a common information layer that gives building and facility owners quick, enriched and permanent access to document-centric information.

Website: gryps.io

Founders: Dareen Salama, Amir Tasbihi

The pitch: The vast size and complexity of the construction industry has resulted in all kinds of software and services that address various aspects of the construction processes, resulting in data and documents being spread across many siloed tools. Gryps says it picks up where all the construction-centered tools leave off: Taking delivery of the projects at the end of a construction job and providing all the information that facility owners need to operate, renovate, or build future projects through a platform that ingests data from various construction tools, mines the embedded information, then provides operational access through owner-centered workflows. 

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6.) Expedock

What it does: Automation infrastructure for supply chain businesses, starting with AI-Powered Freight Forwarder solutions.

Website: expedock.com

Founders: King Alandy Dy (CEO), Jeff Tan (COO), Rui Aguiar (CTO)

The pitch: Freight Forwarders take care of all the logistics of shipping containers including financials, approvals and paper work for all the local entities on both sides of the sender and receiver geographies, but communications with these local entities are often done through unstructured data, including forms, documents, and emails and can subsequently eat up to 60% of operational expenses. Expedock is looking to transform the freight forwarding industry by digitizing and automating the processing and inputting of unstructured data into various local partner and governmental systems, including via a “huan in the loop” AI software service.

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7.) Illume

What it does: A new way to share praise

Website: illumenotes.com

Founders: Sohale Sizar (CEO), Phil Armour (Engineering), Maxine Stern (Design)

The pitch: The process of thanking people is full of friction. Paper cards have to be purchased, signed, passed around; greetings on Facebook only mean so much. Using Illume, teams and individuals can download its app or come together on Slack and create a customized, private, and also shareable note. The nascent startup says one card typically has 10 contributors; it charging enterprises $3 per user per month, ostensibly so sales teams, among others, can use them.

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8.) Quansa

What it does: Quansa improves Latin American workers’ financial lives via employer-based financial care

Website: quansa.io

Founders: Gonzalo Blanco, Mafalda Barros

The pitch: Fully 40% of employees across Latin America have missed work in the past 12 months due to financial problems. Quansa wants to help them get on the right track financially with the help of employers that use its software to link their employees’ payroll data with banks, fintechs and other financial institutions.

There is strength in numbers, says the firm. By funneling more customers to lenders through their employers, for example, these employees should ultimately be able to access to cheaper car loans, among other things.

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9.) SpotlightAI

What it does: Spotlight turns sensitive customer information from a burden to an asset by using NLP techniques to identify, anonymize, and manage access to PII and other sensitive business data.

Website: hellospotlight.com

Founder: Austin Osborne (CEO)

The pitch: Data privacy legislation like GDPR and CCPA is creating an era where companies can no longer use their customer data to run their business due to the risks of fines, lawsuits, and negative media coverage. These lawsuits relating to misuse of personal data can reach billions of dollars and take years to settle. Spotlight’s software plugs into existing data storage engines via APIs and operates as a middleware within a company’s network. With advanced NLP and OCR techniques, it says it’s able to detect sensitive information in unstructured data, perform multiple types of anonymization, and provide a deep access control layer.

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10.) Bennu

What it does: Bennu closes the loop on management communication

Website: bennu.io

Founder: Brenda Jin (CEO)

The pitch: Today’s work communication is done through forms, email, Slack, and docs; the timelines are unnatural.  Bennu is trying to solve the problem with communication loops that use integrations and smart topic suggestions to help employees prepare for substantive management conversations in seconds, not hours. 

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11.) Playbook

What it does: Playbook automates the people coordination in your repeatable workflows with a simple system to create, execute and track any process with your team, customers, and more.

Website: startplaybook.com

Founders: Alkarim Lalani (CEO), Blaise Bradley (CTO)

The pitch: Whether you’re collecting time cards from 20 hourly workers every week, or managing 30 customer onboardings – you’re coordinating repetitive workflows across people over email and tracking it over spreadsheets. Playbook says it coordinates workflows between people at scale by taking programming concepts such as variables and conditional logic that let its customers model any workflow, and all packaged in an interface that enables anyone to build out their workflows in minutes.

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12.) June Motherhood

What it does: Community-based care for life’s most important transitions.

Website: junemotherhood.com

Founders: Tina Beilinson (CEO), Julia Cole (COO), Sophia Richter (CPO)

The pitch: June is a digital health company focused on maternal health, with community at the core. Like a Livongo for diabetes management, June combines the latest research around shared appointments, peer-to-peer support and cognitive behavioral therapy to improve outcomes and lower costs, including through weekly programs and social networks that encourage peer-to-peer support. 

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13.) Wagr

What it does: Challenge anyone to a friendly bet.

Website: wagr.us

Founders: Mario Malavé (CEO), Eliana Eskinazi (CPO)

The pitch: Wagr will allow sports fans to bet with peers in a social, fair, and simple way. Sending a bet requires just three steps, too: pick a team, set an amount, and send away. Wagr sets the right odds and handles the money.

Users can challenge friends, start groups, track leaderboards, and see what others are betting on, so they feel connected even if they aren’t together in the stadium. Customers pay a commission when they use the platform to find them a match, but bets against friends are free. The plan is to go live in Tennessee first and expand outward from there.

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14.) Federato

What it does: Intelligence for a new era of risk

Website: federato.ai

Founders: Will Ross (CEO), William Steenbergen (CTO)

The pitch: Insurance companies are struggling to manage their accumulation of risk as natural catastrophes continue to grow in volume and severity. Reinsurance is no longer a reliable backstop, with some of the largest insurers taking $600 million-plus single-quarter losses net of reinsurance. 

Federato is building an underwriter workflow that uses dynamic optimization across the portfolio to steer underwriters to a better portfolio balance. The software lets actuaries and portfolio analysts drive high-level risk analysis into the hands of underwriters on the front lines to help them understand the “next best action” at a given point in time.

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15.) rePurpose Global

What it does: A plastic credit platform to help consumer brands of any size go plastic neutral

Website: business.repurpose.global

Founders: Svanika Balasubramanian (CEO), Aditya Siroya (CIO), Peter Wang Hjemdahl (CMO

The pitch: Consumers worldwide are demanding businesses to take action on eliminating plastic waste, 3.8 million pounds of which are leaked into the environment every few minutes. Yet even as brands try, alternatives are often too expensive or worse for the environment. Through this startup, a brand can commit to the removal of a certain amount of plastic, which will then be removed by the startup’s loal watse management partners and recycled on the brand’s behalf (with rePurpose verifying that the process adheres to certain standards). The startup says it can keep a healthy margin while also running this plastic credit market, and that its ultimate vision is to our vision is to become a “one-stop shop for companies to create social, economic, and environmental impact.”

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16.) Ladder

What it does: A professional community platform for the next generation

Website: ladder.io

Founders: Akshaya Dinesh (CEO), Andrew Tan

The pitch: LinkedIn sucks, everyone hates it. Ladder (which may have a trademark infringement battle ahead of it) is building a platform around community instead of networks. The idea is that users will opt in to join communities with like-minded individuals in their respective industries and roles of interest. Once engaged, they can participate in AMAs with industry experts, share opportunities, and have 1:1 conversations.

The longer term ‘moat’ is the data it collects from users, from which it thinks it can generate more revenue per user than LinkedIn. (By the way, this is the startup that has already signed a term sheet with a firm whose team was watching the demo day live on Tuesday.)

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Exporta

How it works: Exporta is building a B2B wholesale marketplace connecting suppliers in Latin America with buyers in North America.

Website: exporta.io

Founders: Pierre Thys (CEO), Robert Monaco (President)

The pitch: The U.S. now imports more each year from Latin America than from China, but LatAm sourcing remains fragmented and manual. Exporta builds on-the-ground relationships to bring LatAm suppliers onto a tech-enabled platform that matches them to U.S. buyers looking for faster turnaround times and more transparent manufacturing relationships.

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Via

What it does: Via helps companies build their own teams in new countries as simply as if they were in their HQ.

Website: via.work

Founders:  Maite Diez-Canedo, Itziar Diez-Canedo

The pitch: Setting up a team in a new country is very complex. Companies need local entities, contracts, payroll, benefits, accounting, tax, compliance…and the list goes on. Via enables companies to build their own teams in new countries quickly and compliantly by leveraging  local entities to legally employ teams on their behalf, and integrate local contracts, payroll, and benefits in one platform. By plugging into the local hiring ecosystem, Via does all the heavy lifting for its customers, even promising to stand up a team in 48 hours and at less expense than traditional alternatives. (It’s charging $600 per employee per month in Canada and Mexico, where it says it has already launched.)

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Daily Crunch: Twitter walks back New York Post decision

A New York Post story forces social platforms to make (and in Twitter’s case, reverse) some difficult choices, Sony announces a new 3D display and fitness startup Future raises $24 million. This is your Daily Crunch for October 16, 2020.

The big story: Twitter walks back New York Post decision

A recent New York Post story about a cache of emails and other data supposedly originating from a laptop belonging to Joe Biden’s son Hunter looked suspect from the start, and more holes have emerged over time. But it’s also put the big social media platform in an awkward position, as both Facebook and Twitter took steps to limit the ability of users to share the story.

Twitter, in particular, took a more aggressive stance, blocking links to and images of the Post story because it supposedly violated the platform’s “hacked materials policy.” This led to predictable complaints from Republican politicians, and even Twitter’s CEO Jack Dorsey said that blocking links in direct messages without an explanation was “unacceptable.”

As a result, the company said it’s changing the aforementioned hacked materials policy. It will no longer remove hacked content unless it’s been shared directly by hackers or those “acting in direct concert with them.” Otherwise, it will label tweets to provide context. As of today, it’s also allowing users to share links to the Post story.

The tech giants

Sony’s $5,000 3D display (probably) isn’t for you — The company is targeting creative professionals with its new Spatial Reality Display.

EU’s Google-Fitbit antitrust decision deadline pushed into 2021 — EU regulators now have until January 8, 2021 to take a decision.

Startups, funding and venture capital

Elon Musk’s Las Vegas Loop might only carry a fraction of the passengers it promised — Planning files reviewed by TechCrunch seem to show that The Boring Company’s Loop system will not be able to move anywhere near the number of people the company agreed to.

Future raises $24M Series B for its $150/mo workout coaching app amid at-home fitness boom — Future offers a pricey subscription that virtually teams users with a real-life fitness coach.

Lawmatics raises $2.5M to help lawyers market themselves — The San Diego startup is building marketing and CRM software for lawyers.

Advice and analysis from Extra Crunch

How COVID-19 and the resulting recession are impacting female founders — The sharp decline in available capital is slowing the pace at which women are founding new companies in the COVID-19 era.

Startup founders set up hacker homes to recreate Silicon Valley synergy — Hacker homes feel like a nostalgic attempt to recreate some of the synergies COVID-19 wiped out.

Private equity firms can offer enterprise startups a viable exit option — The IPO-or-acquisition question isn’t always an either/or proposition.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

FAA streamlines commercial launch rules to keep the rockets flying — With rockets launching in greater numbers and variety, and from more providers, it makes sense to get a bit of the red tape out of the way.

We need universal digital ad transparency now — Fifteen researchers propose a new standard for advertising disclosures.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Twitter is now allowing users to share that controversial New York Post story

Twitter has taken another step back from its initial decision to block users from sharing links to or images of a New York Post story reporting on emails and other data supposedly originating on a laptop belonging to Democratic presidential nominee Joe Biden’s son Hunter.

The story, which alleged that Hunter Biden had set up meeting between a Ukrainian energy firm and his father back when Biden was vice president, looked shaky from the start, and more holes have emerged over time. Both Facebook and Twitter took action to slow its spread — but Twitter seemed to take the more aggressive stance, not just including warning labels whenever someone shared the story, but actually blocking links.

These moves have drawn a range of criticism. There have been predictable cries of censorship from Republican politicians and pundits, but there have also been suggestions that Facebook and Twitter inadvertently drew more attention to the story. And even Twitter’s CEO Jack Dorsey suggested that it was “unacceptable” to block links in DMs without an explanation.

Casey Newton, on the other hand, argued that the platforms had successfully slowed the story’s spread: “The truth had time to put its shoes on before Rudy Giuliani’s shaggy-dog story about a laptop of dubious origin made it all the way around the world.”

Twitter initially justified its approach by citing its hacked materials policy, then later said it was blocking the Post article for including “personal and private information — like email addresses and phone numbers — which violate our rules.”

The controversy did prompt Twitter to revise its hacked materials policy, so that content and links obtained through dubious means will now come with a label, rather than being removed entirely, unless it’s being shared directly by hackers or those “acting in concert with them.”

And now, as first reported by The New York Times, Twitter is also allowing users to share links to the Post story itself (something I’ve confirmed through my own Twitter account).

Why the reversal? Again, the official justification for blocking the link was to prevent the spread of private information, so the company said that the story has now spread so widely, online and in the press, that the information can no longer be considered private.

Suspect provenance of Hunter Biden data cache prompts skepticism and social media bans

from Social – TechCrunch https://ift.tt/eA8V8J Twitter is now allowing users to share that controversial New York Post story Anthony Ha https://ift.tt/2T1ip1j
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Lawmatics raises $2.5M to help lawyers market themselves

Lawmatics, a San Diego startup that’s building marketing and CRM software for lawyers, is announcing that it has raised $2.5 million in seed funding.

CEO Matt Spiegel used to practice law himself, and he told me that even though tech companies have a wide range of marketing tools to choose from, “lawyers have not been able to adopt them,” because they need a product that’s tailored to their specific needs.

That’s why Spiegel founded Lawmatics with CTO Roey Chasman. He said that a law firm’s relationship with its clients can be divided into three phases — intake (when a client is deciding whether to hire a firm); the active legal case; and after the case has been resolved. Apparently most legal software is designed to handle phase two, while Lawmatics focuses on phases one and three.

The platform includes a CRM system to manage the initial client intake process, as well as tools that can automate a lot of what Spiegel called the “blocking and tackling” of marketing, like sending birthday messages to former clients — which might sound like a minor task, but Spiegel said it’s crucial for law firms to “nurture” those relationships, because most of their business comes from referrals.

ThoughtRiver nabs $10M to speed up deal-making with AI contract review

Lawmatics’ early adopters, Spiegel added, have consisted of the firms in areas where “if you need a lawyer, you go to Google and start searching ‘personal injury,’ ‘bankruptcy,’ ‘estate planning,’ all these consumer-driven law firms.” And the pandemic led to accelerated the startup’s growth, because “lawyers are at home now, their business is virtual and they need more tools.”

Spiegel’s had success selling technology to lawyers in the past, with his practice management software startup MyCase acquired by AppFolio in 2012 (AppFolio recently sold MyCase to a variety of funds for $193 million). He said that the strategies for growing both companies are “almost identical” — the products are different, but “it’s really the same segment, running the same playbook, only with additional go-to-market strategies.”

The funding was led by Eniac Ventures and Forefront Venture Partners, with participation from Revel Ventures and Bridge Venture Partners.

“In my 10 years investing I have witnessed few teams more passionate, determined, and capable of revolutionizing an industry,” said Eniac’s Tim Young in a statement. “They have not only created the best software product the legal market has seen, they have created a movement.”

$75M legal startup Atrium shuts down, lays off 100

 

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PearPop lets TikTok celebrities monetize by sharing shoutouts and screentime with fans

PearPop a new Los Angeles-based company, is on its way to racking up nearly 25,000 users in less than a month, and has already landed seed funding from the firm Rocket One Capital.

The company’s premise is simple. Allow fans to bid for shared screen time with their favorite TikTok celebrities, and it’s one that’s attracted the attention of a few of the platform’s stars with several million followers.

The company was able to hook 3,000 users with one post from Anna Shumate, a TikTok star with 6.5 million followers who goes by the handle of “annabananaxdddd,” according to the company’s founder, Cole Mason.

PearPop’s platform works by letting TikTok celebrities set a price for sharing screen time. They can accept bids and preview the content to approve to make sure it’s aligned with their persona on the platform. The payment is made through Stripe and the software verifies payment. Once paid, the celebrity posts the shared screen video.

“We built it for the influencer,” said Mason. “If you’re a fan trying to access your favorite TikTok star, then they can access them through PearPop instead of trying to contact a manager and pay for legal fees. You can simplify that and do that super easily.”

Promotional message from Anna Shumate for PearPop. Image Credit: PearPop

Mason thinks the company can rack up 100,000 users over the next three months and will head out to raise a seed round once he reaches that milestone. An Android and iOS version of the service is expected to launch in November, according to Mason

The journey to founding PearPop began on the floor of an apartment in New York City. Mason was an aspiring model and serial entrepreneur who sold homemade wooden crosses door-to-door as a child and graduated to selling gloves for gamers in high school, Mason had moved to New York when he was signed to Ford Models.

After sleeping on the floor of a friend’s apartment on St. Marks Place in Manhattan’s East Village, Mason tried to land modeling gigs but found more success as a promoter and manager of model apartments (places where young, pretty people can stay for free in exchange for making appearances at a few clubs around New York).

“I hated it,” Mason said. “I always wanted to get into stuff in tech.” 

Mason took the cash from his promotion work and turned his attention to the tech industry soon after. As a struggling model who was building a network of friends in social media, he realized that the problem with the platform was breaking through.

His initial solution was to build a platform called GramEnvy, which tried to find a way to growth hack Instagram.

“The only way to grow your own Instagram was to have people post with you or about you and leverage their huge following.” Mason said. It was something easier said than done, and it was made harder by algorithmic changes that ultimately forced GramEnvy to close.

But Mason was bitten by the entrepreneurial bug, and was inspired by the growing success of Cameo to come up with another way that would enable popular minor celebrities on social media platforms (who were working a tier below the A-listers with tens of millions of followers) to monetize their performance on various platforms.

And while Cameo is a way for celebrities to monetize their following, it doesn’t create the exposure that would-be social media stars are looking for. That’s the problem that Mason thinks he’s solved with PearPop. 

Other entrepreneurs, like Spencer Markel, the chairman of the Los Angeles-based children’s clothing and entertainment brand, CubCoats, think so too.

Markel was introduced to Mason by a mutual friend from New York and has come on as an adviser to the company since Mason began working on it roughly 10 months ago. For Markel, the potential to actually share screens via TikTok’s platform makes PearPop a potentially more lucrative option for celebrities.

“There’s a lot of different ways that this is going to address a gap in the market,” said Markel. He believes that the service should be a strong monetization opportunity for the TikTok stars who find themselves one level down from their higher-wattage peers with tens of millions of fans. 

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Crypto-driven marketplace Zora raises $2M to build a sustainable creator economy

Dee Goens and Jacob Horne have both the exact and precisely opposite background that you’d expect to see from two people building a way for creators to build a sustainable economy for their followers to participate in. Coinbase, crypto-hack projects at university, KPMG, Merrill Lynch. But where’s the art?

“Believe it or not, I used to have dreams of being a rapper,” laughs Goens. “There’s a SoundcCloud out there somewhere. With that passion you explore the inner workings of the music industry. I would excitedly ask industry friends about the advance and 360 deal models only to realize they were completely broken.”

And, while many may be well-intentioned, these deal structures often exploit artistry. In many cases taking the majority of an artist’s ownership. “I grew curious why artists were unable to resource themselves from their community in an impactful way — but instead, were forced to seek out potentially predatory relationships. To me, this was bullshit.”

Horne says that he’d always wanted to create a fashion brand. 

“I always thought a fashion brand would be something I’d do after crypto,” he tells me. “I love crypto but it felt overly focused on just finance and felt like it was missing something. Then I started to play with the idea of combining these two passions and starting Saint Fame.”

While at Coinbase, Horne hacked on Saint Fame, a side project that leveraged some of the ideas on display in Zora. It was a marketplace that allowed people to sell and trade items with cryptocurrency, buying intermediate variable-value tokens redeemable for future goods. 

“I realized that culture itself was shaped and built upon an old financial system that is systemically skewed against artists and communities,” says Horne. “The operating system of ownership was built in the 1600s with the Dutch East India Trading Company and early Nation States. Like what the fuck is up with that?” 

We have the internet now, we can literally create and share information to billions of people all at once, and the ownership system is the same as when people had to get on a boat for six months to send a letter. It’s time for an upgrade. Any community on the internet should be able to come together, with capital, and work towards any shared vision. That starts with empowering creators and artists to create and own the culture they’re creating. In the long term this moves to internet communities taking on societal endeavors.”

The cryptocurrency moment

The answer that they’re working on is called Zora. It’s a marketplace with two main components but one philosophy: sustainable economics for creators. 

All too often creators are involved in reaping the rewards for their work only once, but the secondary economy continues to generate value out of their reach. Think of an artist, as an example, that creates a piece and sells it for market value. That’s great, but thereafter, every ounce of work that the artist puts into future work, into building a name and a brand and a community for themselves puts additional value into that piece. The artist never sees a dime from that, relying instead on the value of future releases to pay dividends on the work. 

Image Credits: Zora

That’s basically the way it has always worked. I have a little background in this as I used to exhibit and was involved in running a gallery and my father is a fine artist. If he sells a painting today for $300, gets a lot better, more popular and more valued over time, the owner of that painting may re-sell it for hundreds or thousands more. He will never see a dime of that. And God forbid that an artist like him gets too locked into the gallery system, which slices off enormous chunks of the value of a piece for a square of wall space and the marketing cachet of a curator or storefront. 

The same story can be told across the recording industry, fashion, sports and even social media. Lots of middle-people and lots of vigs to pay. And, unsurprisingly, the same creators of color that drive so much of The Culture are the biggest losers, hands down. 

The primary Zora product is a market that allows creators or artists to launch products and then continue to participate in their second market value. 

Here’s how the Zora team explains it:

On Zora, creators have the ability to set two prices: start price and max price. As community members buy and sell a token, it moves the price up or down. This makes the price dynamic as it opens price discovery on the items by the market. When people buy the token it moves the price closer to its maximum. When they sell, it moves closer to its minimum. 

For an excited community like Jeff [Staple’s], this new dynamic price can cause a quick increase in the value of his sneakers. As a creator, they capture the value from selling on a price curve as well as getting a take on trading fees from the market which they now own. What used to trade on StockX is now about to trade on a creator owned market.

There have been some early successes. Designer and marketer Jeff Staple launched a run of 30 Coca-Cola x Staple SB Dunk customs by Reverseland and their value is trending up around 234% since release. A Benji Taylor x Kevin Doan vinyl figure is up 210%. 

I have seen some other stabs at this. When he was still at StockX, founder Josh Luber launched their Initial Product Offerings, a Blind Dutch Auction system that allowed the market to set a price for an item, with some of the cut of pricing above market going back to the manufacturer or brand making the offering. The focus there was brands versus individual creators (though they did launch with a Ben Baller slide). Allowing brands to tap into second market value for limited goods is a lot less of a revolution play, but the thesis is similar. I thought that was a good idea then, and I like it even better when it’s being used to democratize rather than maximize returns. 

Side note: I love that this team is messing around with interesting ideas like dogfooding their own marketplace with the value of being in their own TestFlight group. I’m sort of like, is that allowed, but at the same time it’s dope and I’ve never seen anything like it. 

Zora was founded in May of 2020 (right in the middle of this current panny-palooza). The team is Goens (Creators and Community), Horne (Product), Slava Kim (Design), Dai Hovey (Engineering), Ethan Daya (Engineering) and Tyson Battistella (Engineering). 

Zora has raised a $2 million seed round led by Kindred Ventures, with participation from Trevor McFedries of Brud, Alice Lloyd George, Jeff Staple, Coinbase Ventures and others.

Tokenized community

But this idea that physical goods or even digitally packaged works have to exist as finite containers of value is not a given either. Goens and Horne are pushing to challenge that too with the first big new product for Zora: community tokens. Built on Ethereum, the $RAC token is the first of its kind from Zora. André Allen Anjos, stage name RAC, is a Portuguese-American musician and producer who makes remixes that stream on the web, original music and has had commercial work featured in major brand ads. 

Crypto Startup School: How to build companies by building communities    

Though he is popular and has a following in the tens of thousands, RAC is not a social media superpower. The token distribution and subsequent activity in trades and sales is purely driven by the buy-in that his fans feel. This is a key learning for a lot of players in this new economy: raw numbers are the social media equivalent of a billboard that people drive by. It may get you eyeballs, but it doesn’t guarantee action. The modern creator is living in a house with their fans, offering them access and interacting via Discord and Snap and comments. 

Image Credits: Zora

But those houses are all other people’s houses, which leads into the reason that Zora is launching a token.

The token drop serves multiple purposes: 

• It unites fans across multiple silos. Whether they’re on Intsa, TikTok, Spotify or Snapchat, they can all earn tokens. That token serves as a unifying community unit of value that they all understand and pivot around. It’s a way to own a finite binary “atom” of an artist’s digital being.
• It creates a pool of value that an artist can own and distribute themselves. Currently you cannot buy $RAC directly. You can only earn it. Some of that is retroactive for loyal supporters. If, for instance, you followed RAC on Bandcamp dating back to 2009, you’ll get some of a pool of 25,000 RAC. Bought a bit of RAC merch? You get some credit in tokens too. Future RAC distributions will be given to Patron supporters, merch purchasers, etc.
• The value stays in the artist’s universe, rather than being spun out into currency. It serves as a way for the artist to incentivize, reward and energize their followers. RAC fans who buy his mixtape get tokens, and they can redeem them for purchases of further merch. 
• It allows more flexibility for creators whose work doesn’t fall so neatly into package-able categories. Performance art, activism, bite-sized entertainment. These are not easy to “drop” for money. But if you have a circulating token that grows in value as you grow your audience, there is definitely something there. 

The future of Zora most immediately involves spinning up a self-service version of the marketplace, allowing creators and entrepreneurs to launch their products without a direct partnership and onboarding. There are many, many uncertainties here and the team has a lot of challenges ahead on the traction and messaging front. But as mentioned, some early releases have shown promise, and the philosophy is sound and much needed. As the creator universe/passion economy/whatever you call it depends on how old you are/fandom merchant wave rises, there is definitely an opportunity to rethink how the value of their contributions are assigned and whether there is a way to turn the long-term labor of building a community into long-term value. 

The last traded price of RAC’s tape, BOY, by the way? $3,713, up 18,465%. 

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