Yearly Archives: 2020

News: Australia’s spy agencies caught collecting COVID-19 app data

• November 24, 2020
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Australia’s intelligence agencies have been caught “incidentally” collecting data from the country’s COVIDSafe contact tracing app during the first six months of its launch, a government watchdog has found. The report, published Monday by the Australian government’s inspector general for the intelligence community, which oversees the government’s spy and eavesdropping agencies, said the app data

Australia’s intelligence agencies have been caught “incidentally” collecting data from the country’s COVIDSafe contact tracing app during the first six months of its launch, a government watchdog has found.

The report, published Monday by the Australian government’s inspector general for the intelligence community, which oversees the government’s spy and eavesdropping agencies, said the app data was scooped up “in the course of the lawful collection of other data.”

But the watchdog said that there was “no evidence” that any agency “decrypted, accessed or used any COVID app data.”

Incidental collection is a common term used by spies to describe the data that was not deliberately targeted but collected as part of a wider collection effort. This kind of collection isn’t accidental, but more of a consequence of when spy agencies tap into fiber optic cables, for example, which carries an enormous firehose of data. An Australian government spokesperson told one outlet, which first reported the news, that incidental collection can also happen as a result of the “execution of warrants.”

The report did not say when the incidental collection stopped, but noted that the agencies were “taking active steps to ensure compliance” with the law, and that the data would be “deleted as soon as practicable,” without setting a firm date.

For some, fears that a government spy agency could access COVID-19 contact tracing data was the worst possible outcome.

Since the start of the COVID-19 pandemic, countries — and states in places like the U.S. — have rushed to build contact tracing apps to help prevent the spread of the virus. But these apps vary wildly in terms of functionality and privacy.

Most have adopted the more privacy-friendly approach of using Bluetooth to trace people with the virus that you may have come into contact with. Many have chosen to implement the Apple-Google system, which hundreds of academics have backed. But others, like Israel and Pakistan, are using more privacy invasive techniques, like tracking location data, which governments can also use to monitor a person’s whereabouts. In Israel’s case, the tracking was so controversial that the courts shut it down.

Australia’s intelligence watchdog did not say specifically what data was collected by the spy agencies. The app uses Bluetooth and not location data, but the app requires the user to upload some personal information — like their name, age, postal code, and phone number — to allow the government’s health department to contact those who may have come into contact with an infected person.

Australia has seen more than 27,800 confirmed coronavirus cases and over 900 deaths since the start of the pandemic.

News: Proxyclick visitor management system adapts to COVID as employee check-in platform

• November 24, 2020
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Proxyclick began life by providing an easy way to manage visitors in your building with an iPad-based check-in system. As the pandemic has taken hold, however, customer requirements have changed, and Proxyclick is changing with them. Today the company announced Proxyclick Flow, a new system designed to check in employees during the time of COVID.

Proxyclick began life by providing an easy way to manage visitors in your building with an iPad-based check-in system. As the pandemic has taken hold, however, customer requirements have changed, and Proxyclick is changing with them. Today the company announced Proxyclick Flow, a new system designed to check in employees during the time of COVID.

“Basically when COVID hit our customers told us that actually our employees are the new visitors. So what you used to ask your visitors, you are now asking your employees — the usual probing question, but also when are you coming and so forth. So we evolved the offering into a wider platform,” Proxyclick co-founder and CEO Gregory Blondeau explained.

That means instead of managing a steady flow of visitors — although it can still do that — the company is focusing on the needs of customers who want to open their offices on a limited basis during the pandemic, based on local regulations. To help adapt the platform for this purpose, the company developed the Provr smartphone app, which employees can use to check in prior to going to the office, complete a health checklist, see who else will be in the office and make sure the building isn’t over capacity.

When the employee arrives at the office, they get a temperature check, and then can use the QR code issued by the Provr app to enter the building via Proxyclick’s check-in system or whatever system they have in place. Beyond the mobile app, the company has designed the system to work with a number of adjacent building management and security systems so that customers can use it in conjunction with existing tooling.

They also beefed up the workflow engine that companies can adapt based on their own unique entrance and exit requirements. The COVID workflow is simply one of those workflows, but Blondeau recognizes not everyone will want to use the exact one they have provided out of the box, so they designed a flexible system.

“So the challenge was technical on one side to integrate all the systems, and afterwards to group workflows on the employee’s smartphone, so that each organization can define its own workflow and present it on the smartphone,” Blondeau said.

Once in the building, the systems registers your presence and the information remains on the system for two weeks for contact tracing purposes should there be an exposure to COVID. You check out when you leave the building, but if you forget, it automatically checks you out at midnight.

The company was founded in 2010 and has raised $19.6 million. The most recent raise was a $15 million Series B in January.

News: Mobile banking app Current raises $131M Series C, tops 2 million members

• November 24, 2020
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U.S. challenger bank Current, which has doubled its member base in less than six months, announced this morning it raised $131 million in Series C funding, led by Tiger Global Management. The additional financing brings Current to over $180 million in total funding to date, and gives the company a valuation of $750 million. The

U.S. challenger bank Current, which has doubled its member base in less than six months, announced this morning it raised $131 million in Series C funding, led by Tiger Global Management. The additional financing brings Current to over $180 million in total funding to date, and gives the company a valuation of $750 million.

The round also brought in new investors, Sapphire Ventures and Avenir. Existing investors returned for the Series C, as well, including Foundation Capital, Wellington Management Company and QED.

Current had originally began as a teen debit card controlled by parents, but expanded to offer personal checking accounts last year, using the same underlying banking technology. The service today competes with a range of mobile banking apps, offering features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, check deposits using your phone’s camera, and other now-standard baseline features for challenger banks.

In August 2020, Current debuted a points rewards program in an effort to better differentiate its service from the competition, which as of this month now includes Google Pay.

When Current raised its Series B last fall, it had over 500,000 accounts on its service. Today, it touts over 2 million members. Revenue has also grown, increasing by 500% year-over-year, the company noted today.

“We have seen a demonstrated need for access to affordable banking with a best-in-class mobile solution that Current is uniquely suited to provide,” said Current founder and CEO Stuart Sopp, in a statement about the fundraise. “We are committed to building products specifically to improve the financial outcomes of the millions of hard-working Americans who live paycheck to paycheck, and whose needs are not being properly served by traditional banks. With this new round of funding we will continue to expand on our mission, growth and innovation to find more ways to get members their money faster, help them spend it smarter and help close the financial inequality gap,” he added.

The additional funds will be used to further develop and expand Current’s mobile banking offerings, the company says.

News: 3 new $100M ARR club members and a call for the next generation of growth-stage startups

• November 24, 2020
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Time flies. It was nearly a year ago that The Exchange started keeping tabs on startups that managed to reach $100 million in annual recurring revenue, or ARR. Our goal was to determine which unicorns were more than paper horses so we could keep tabs on upcoming IPO targets. We found that Bill.com, Asana, WalkMe

Time flies.

It was nearly a year ago that The Exchange started keeping tabs on startups that managed to reach $100 million in annual recurring revenue, or ARR. Our goal was to determine which unicorns were more than paper horses so we could keep tabs on upcoming IPO targets.

We found that Bill.com, Asana, WalkMe and Druva were impressively large and growing nicely. Since then two of the four companies from that post have gone public.

GitLab, Egnyte, Braze and O’Reilly Media joined the club before 2019 was even closed, with two of those companies taking part in the recent Disrupt conference, talking about how they managed their historical growth.

In early 2020 we added Sisense, Siteminder, Monday.com and Lemonade to the club, wrote about ExtraHop’s path to $100 million ARR, Cloudinary’s epic growth sans external capital, Siteminder’s own records and BounceX reaching $100 million ARR while it rebranded to Wunderkind.

As the year rolled along, MetroMile, Tricentis, Kaltura and Diligent joined the club. As did Recorded Future, ON24 and ActiveCampaign. There were even more names: Movable Ink, Noom, Riskified, Seismic, ThoughtSpot, along with Snow Software, A Cloud Guru, Zeta Global and Upgrade.

Today we have three more names to add to the group: UserTesting, Udemy’s business arm, and Expensify. But, more than merely adding those companies to the mix — more after the jump — I wanted to shake up our radar a bit as we head into 2021.

Yes, The Exchange will keep tabs on startups and other private companies that reach $100 million in ARR, or annual run rate, as the case may be. But next year we also want to find the startups around $50 million ARR that are growing like hell. We want to go a year or two earlier in growth histories to better watch how startups scale into nine-figure revenues, instead of hearing about it after the fact.

So, if you are a startup that is expanding aggressively and will reach the $50 million revenue mark inside the next quarter or two, please say hello. I suspect a good cut of the global unicorn market could fit this bill, and therefore might provide a window into which highly-valued startups are growing into their valuations.

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

It’s going to be fun. Now, let’s quickly chat about the latest members of the $100 million ARR club.

UserTesting, Expensify and Udemy’s business arm

You’ve heard of each of our $100 million ARR companies this morning, so there’s less need for prelude and introduction. Here’s the group:

Expensify

Expensify is an expense-tracking company well-known around the technology world, so it’s no real surprise that it has reached the $100 million ARR threshold, a feat it announced yesterday.

But the company did us one better than merely dropping a single data point and racing back into the shadows. Instead, Expensify also disclosed that it has “maintained profitability for years [and] recorded its highest monthly revenue ever in October.”

News: F3, a Stories-style Q&A app for Gen Z teens, raises $3.9M

• November 24, 2020
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F3, an anonymous Q&A app targeting Gen Z teens which blends a Tinder-style swipe-to-friend gamification mechanic, Stories-esque rich media responses and eye-wateringly expensive subscriptions to unlock a ‘Plus’ version that actually lets you see who wants to friend you — has raised a $3.9M seed round, including for a planned push on the US market.

F3, an anonymous Q&A app targeting Gen Z teens which blends a Tinder-style swipe-to-friend gamification mechanic, Stories-esque rich media responses and eye-wateringly expensive subscriptions to unlock a ‘Plus’ version that actually lets you see who wants to friend you — has raised a $3.9M seed round, including for a planned push on the US market.

The Latvian team behind F3 are not new to the viral teen app game having founded the anonymous teen Q&A app Ask.fm — which faced huge controversy back in 2013 over bullying and safety concerns after being linked to a number of suicides of users who’d received abusive messages. Not that they’ve let that put them off the viral teen app space, clearly.

Investors in F3’s seed round hail from the Russian dating network Mamba (including the latter’s investor, Mail.ru Group) and a co-investor VC firm with a marketing focus, called AdFirst.

Alex Hofmann (former musical.ly president) and Marat Kichikov (GP at Bitfury Capital) are also named as being among those joining the round as angel investors.

F3, which launched its apps in 2018, has 25M registered users at this point — 85% of whom are younger than 25.

The typical user is a (bored) teenager, with the user base being reported as 65% female and 60% Europe / 20% LatAm / 20% Rest of World at this point. (They’re not breaking out any active user metrics but claim 80% of users have been on the app for more than three months at this point.)

On the safety front, F3 is using both automated tools and people for content moderation — with the founders claiming to have learnt lessons from their past experience with Ask.fm (which got acquired by IAC’s Ask.com back in 2014, given them the funds to plough into F3’s development up to now).

“We’ve been solving problem of violating content in our previous company (Ask.fm), and now at F3 we’ve used all our knowledge of solving this problem from day one. Automation tools include text analysis in all major languages with database of 250k+ patterns that is continuously being improved, and AI based image recognition algorithms for detecting violating content in photos and videos,” says the founding team — which includes CEO Ilja Terebin.

“Our 24/7 content moderation team (8 in-house safety experts and 30+ outsourced contractors) manually reviews user reports and items flagged by automation tools,” they add.

However reviews of the app that we saw included complaints from users who said they’ve being pestered by ‘pedophiles’ asking for nudes — so claims of safety risks being “solved” seem riskily overblown.

Why do teens need yet another social discovery/messaging app? On that Terebin & team say the app has been tailored for Gen Z from the get-go — “focusing on their needs to socialize and make new friends online, ‘quick’ content in the form of photos and short videos, which is true and personal”.

“Raw & real” is another of their teen-friendly product market fit claims.

F3 users get a personalized URL that they can share to other social networks to solicit questions from their friends — which can be asked anonymously or not. (F3 users can also choose not to accept anonymous questions if they prefer.)

Instead of plain text answers users snap a photo or grab a short video, add filters, fancy fonts and backgrounds, and so on to reply in a rich-media Stories-style that’s infiltrated all social networking apps (most recently infecting Twitter, where it’s called Fleets).

These rich media responses get made public on their feed — so if an F3 user chooses to answer a question they’re also engaging with the wider community by default (though they can choose not to respond as questions remain private until responded to).

Asked how F3 stands out in a very packed and competitive social media landscape, they argue the app’s “uniqueness” is that the Q&A is photo and video based — “so the format is familiar and close to other social networks (‘stories’ or ‘snaps’) but in a Q&A style back-and-forth communication”, as they put it, adding that for their Gen Z target “the outdated text-based Q&A just was too boring”.

“We compete for eyeballs of Gen Z with Snapchat, TikTok and Instagram. Our key strength is that through the Q&A format one can make new friends and truly get to know other people on a personal level through the prism of ‘raw and real’ content, which is not central on any of those platforms,” they also claim.

In terms of most similar competitors, they note Yolo has seen “some traction” and concede there are a bunch of others also offering Q&A. But here they argue F3 is more fully featured than rivals — suggesting the Q&A feature is just the viral hook to get users into a wider community net.

“[F3] is a fully functional social platform, built around visual communication — users have content feed where they can view posts by people they follow, they can create photo/video content using editing tools in the app itself, there’s a messenger functionality for direct chats, follow-ships, content and user discovery. So for us, the anonymous messaging/Q&A format is just an entry point which allows us to grow quickly and get the users on our platform, but then they make new connections and keep engaging with their unique social circle they have only on F3, making it a sustainable stand-alone social network.”

Again, though, user reviews tell more of a raw (and real?) story — with plenty of complaints that there’s little value in the free version of the app (while F3 Plus costs $3.99 for 7 days; $8.99 for 1 month or $19.99 for 3 months), and questions over the authenticity of some anonymous questions, as well as complaints that other users they’re able to meet aren’t nearby and/or don’t speak the same language. Other reviews aren’t wowed by more of the  same Q&A format. Others complain the app just feels like a data grab. (And the F3 ‘privacy policy‘ definitely has a detailed story to unfold vis-a-vis the tracking users are agreeing to, for anyone who bothers to dig in and read it.)

“This whole app is literally just like all the other apps. Just another copy cat that you still have to pay for,” runs one review from July 2020. “Don’t download.”

News: Altana raises $7M to protect supply chains from disruptions, child labor

• November 24, 2020
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Supply chains used to be one of those magical elements of capitalism that seemed to be designed by Apple: they just worked. Minus the occasional salmonella outbreak in your vegetable aisle, we could go about our daily consumer lives never really questioning how our fast-fashion clothes, tech gadgets, and medical supplies actually got to our

Supply chains used to be one of those magical elements of capitalism that seemed to be designed by Apple: they just worked. Minus the occasional salmonella outbreak in your vegetable aisle, we could go about our daily consumer lives never really questioning how our fast-fashion clothes, tech gadgets, and medical supplies actually got to our shelves or homes.

Of course, a lot has changed over the past few years. Anti-globalization sentiment has grown as a political force, driving governments like the United States and the United Kingdom to renegotiate free trade agreements and attempt to onshore manufacturing while disrupting the trade status quo. Meanwhile, the COVID-19 pandemic placed huge stress on supply chains — with some entirely breaking in the process.

In short, supply chain managers suddenly went from one of those key functions that no one wants to think about, to one of those key functions that everyone thinks about all the time.

While these specialists have access to huge platforms from companies like Oracle and SAP, they need additional intelligence to understand where these supply chains could potentially break. Are there links in the supply chain that might be more brittle than at first glance? Are there factories in the supply chain that are on alert lists for child labor or environmental violations? What if government trade policy shifts — are we at risk of watching products sit in a cargo container at a port?

New York-headquartered Altana wants to be that intelligence layer for supply-chain management, bringing data and machine learning to bear against the complexity of modern capitalism. Today, the company announced that it has raised $7 million in seed financing led by Anne Glover of London-based Amadeus Capital Partners.

The three founders of the startup, CEO Evan Smith, CTO Peter Swartz, and COO Raphael Tehranian, all worked together on Panjiva, a global supply chain platform that was founded in 2006, funded by Battery Ventures a decade ago, and sold to S&P Global in early 2018. Panjiva’s goal was to build a “graph” of supply chains that would offer intelligence to managers.

That direct experience informs Altana’s vision, which in many ways is the same as Panjiva’s but perhaps revamped using newer technology and data science. Again, Altana wants to build a supply-chain knowledge graph, provide intelligence to managers, and create better resilience.

The difference has to do with data. “What we continually found when we were in the data sales business was that you are kind of stuck in that place in the value chain,” Smith said. “Your customers won’t let you touch their data, because they don’t trust you with it, and other proprietary data companies don’t let you work on and manage and transform their data.”

Instead of trying to be the central repository for all data, Altana is “operating downstream” from all of these data sources, allowing companies to build their own supply chain graphs using their own data and whatever other data sources they have access to.

The company sells into procurement offices, which are typically managed in the CFO’s office. Today, the majority of customers for Altana are government clients such as border control, where “the task is to pick the needles out of the haystack as the ship arrives and you’ve got to pick the illicit shipments from the safe ones and actually facilitate the lawful trade,” Smith said.

The company’s executive chairman is Alan Bersin, who is a former commissioner of the U.S. Customs and Border Protection agency currently working as a policy consultant for Covington & Burling, which has been one of the premier law firms on trade issues like CFIUS during the Trump administration.

Altana allows one-off investigations and simulations, but its major product goal is to offer real-time alerts that give supply chain managers substantive visibility into changes that affect their business. For instance, rather than waiting for an annual labor or environmental audit to find issues, Altana hopes to provide predictive capabilities that allow companies to solve problems much faster than before.

In addition to Amadeus, Schematic Ventures, AlleyCorp, and the Working Capital – The Supply Chain Investment Fund also participated.

News: Two-year-old Day One Ventures raises new $52.5M fund to invest in Valley startups

• November 24, 2020
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Back in 2018 Day One Ventures launched in Silicon Valley specifically designed to be both a VC and an investor that would also lead marketing and communications for its portfolio. Two years on, Day One has invested in numerous startups to do just that and has today filed with the SEC its new $52.5M fund.

Back in 2018 Day One Ventures launched in Silicon Valley specifically designed to be both a VC and an investor that would also lead marketing and communications for its portfolio. Two years on, Day One has invested in numerous startups to do just that and has today filed with the SEC its new $52.5M fund.

The new fund is similar to the first one: investing across industries from pre-seed to seed, with occasional series A investments (from $100K to $5M).

The fund was founded and is headed by Russian émigré Masha Drokova, who, since arriving in the US a few years ago, has been variously a PR and angel investor, but famously dumped her former life in Russia as a politician and TV reporter.

Drokova says the fund focuses on ‘day one’ companies, as defined by Jeff Bezos, which have ‘customer obsession’ in-built into their company culture.

She says the fund was raised during the pandemic over zoom with $45 million coming from LPs in the first fund. More than 30% of the capital is invested in POC founders; it has 25 female founders in its portfolio; and 33% of its capital is invested in high-growth ‘impact’ companies. Day one has frequently co-invested with Andreessen, Index Ventures, Founders Fund, and Lightspeed.

The fund has had three exits so far: Lvl5, Acquired, Feastly and has invested in Remote.com (with Index and Sequoia).

So far among its portfolio is:

• DoNotPay: British founder Joshua Browder, started a chatbot that pays your parking ticket, cancels subscriptions and gets refunds for you. This raised a $15M series A led by Coatue and Andreessen.
• Superhuman: An AI-based email client for execs founded by Brit Rahul Vohra – it has raised $35M series B from Andreessen.
• MSCHF: This creates viral and controversial products on a Supreme-drop-like model, invested with Founders Fund.
• Truebill: a personal finance & savings app.

The fund says its portfolio companies have now raised $825 million in aggregate; over 25% of its capital is in fintech companies; over 30% in AI-powered startups; and it claims to have hit over 500 media publications for its portfolio.

Speaking to TechCrunch, Drakova said “We choose startups with ‘customer obsession’ as the main focus for selection. Secondly, our value add in communications means we have people like Jack Randall who did comms for Robin Hood on our team. Not many women immigrants to the US have raised as much as this, as fast as this. So it’s a good sign for the market.”

News: Adobe expands customer data platform to include B2B sales

• November 24, 2020
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The concept of the customer data platform (CDP) is a relatively new one. Up until now, it has focused primarily on pulling data about an individual consumer from a variety of channels into a super record, where in theory you can serve more meaningful content and deliver more customized experiences based on all this detailed

The concept of the customer data platform (CDP) is a relatively new one. Up until now, it has focused primarily on pulling data about an individual consumer from a variety of channels into a super record, where in theory you can serve more meaningful content and deliver more customized experiences based on all this detailed knowledge. Adobe announced its intention today to create such a product for business to business (B2B) customers, a key market where this kind of data consolidation had been missing.

Indeed Brian Glover, Adobe’s director of product marketing for Marketo Engage, who has been put in charge of this product, says that these kinds of sales are much more complex and B2B sales and marketing teams are clamoring for a CDP.

“We have spent the last couple of years integrating Marketo Engage across Adobe Experience Cloud, and now what we’re doing is building out the next generation of new and complimentary B2B offerings on the Experience platform, the first of which is the B2B CDP offering,” Glover told me.

He says that they face unique challenges adapting CDP for B2B sales because they typically involve buying groups, meaning you need to customize your messages for different people depending on their role in the process.

An individual consumer usually knows what they want and you can prod them to make a decision and complete the purchase, but a B2B sale is usually longer and more complex involving different levels of procurement. For example, in a technology sale, it may involve the CIO, a group, division or department who will be using the tech, the finance department, legal and others. There may be an RFP and the sales cycle may span months or even years.

Adobe believes this kind of sale should still be able to use the same customized messaging approach you use in an individual sale, perhaps even more so because of the inherent complexity in the process. Yet B2B marketers face the same issues as their B2C counterparts when it comes to having data spread across an organization.

“In B2B that complexity of buying groups and accounts just adds another level to the data management problem because ultimately you need to be able to connect to your customer people data, but you also need to be able to connect the account data too and be able to [bring] the two together,” Glover explained.

By building a more complete picture of each individual in the buying cycle, you can, as Glover puts it, begin to put the bread crumbs together for the entire account. He believes that a CRM isn’t built for this kind of complexity and it requires a specialty tool like a CDP built to support B2B sales and marketing.

Adobe is working with early customers on the product and expects to go into beta before the end of next month with GA some time in the first half of next year.

News: India bans another 43 Chinese apps

• November 24, 2020
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India is not done banning Chinese apps. The world’s second largest internet market, which has banned over 175 apps with links to the neighboring nation in recent months, said on Tuesday it was banning an additional 43 such apps. Like with the previous orders, India cited cybersecurity concerns to block these apps. “This action was

India is not done banning Chinese apps. The world’s second largest internet market, which has banned over 175 apps with links to the neighboring nation in recent months, said on Tuesday it was banning an additional 43 such apps.

Like with the previous orders, India cited cybersecurity concerns to block these apps. “This action was taken based on the inputs regarding these apps for engaging in activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order,” said India’s IT Ministry in a statement.

The ministry said it issued the order of blocking these apps “based on the comprehensive reports received from Indian Cyber Crime Coordination Center, Ministry of Home Affairs.”

The apps that have been banned include popular short video service Snack Video, which had surged to the top of the chart in recent months, as well as e-commerce app AliExpress, delivery app Lalamove, and shopping app Taobao Live. Full list here. At this point, there doesn’t appear to be any Chinese app left in the top 500 apps used in India.

Tuesday order comes as a handful of apps including PUBG Mobile and TikTok explore ways to make a return to the country. In recent weeks, PUBG has registered a local entity in India, partnered with Microsoft for computing needs, and publicly vowed to invest $100 million in the country. Though it is yet to hear from the government.

Tensions between the world’s two most populous nations escalated after more than 20 Indian soldiers were killed in a military clash in the Himalayas in June. Ever since, “Boycott China” sentiment has trended on social media in India as a growing number of people post videos demonstrating destruction of Chinese-made smartphones, TVs and other products.

In April, India also made a change to its foreign investment policy that requires Chinese investors — who have ploughed billions of dollars into Indian startups in recent years — to take approval from New Delhi before they could write new checks to Indian firms. The move has significantly reduced Chinese investors’ presence in Indian startups’ deal flows in the months since.

More to follow…

News: 5 top investors in Dutch startups discuss trends, hopes and 2020 opportunities

• November 24, 2020
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The Netherlands’ ecosystem has been flourishing; more than $85 million was invested in regional startups in 2019 alone. The nation’s proximity to the U.K., Belgium, France and Germany makes Amsterdam a natural gateway to those markets. Long ago the savvy Dutch realized this, and built up Schiphol to become the world’s twelfth-busiest airport. Indeed, Amsterdam’s

The Netherlands’ ecosystem has been flourishing; more than $85 million was invested in regional startups in 2019 alone. The nation’s proximity to the U.K., Belgium, France and Germany makes Amsterdam a natural gateway to those markets. Long ago the savvy Dutch realized this, and built up Schiphol to become the world’s twelfth-busiest airport. Indeed, Amsterdam’s logistical and social connectedness is ranked number one in DHL’s Global Connectedness Index.

Plenty of good funding rounds, a highly skilled workforce and a strong entrepreneurial culture have given Amsterdam a booming startup ecosystem. And Brexit is helping: The Dutch are highly proficient in English and Dutch law is similar to English law, which means U.K.-based tech founders are welcomed with open arms.

In 2020, the venture industry continued to invest in startups, despite the COVID-19 crisis. According to a study by KPMG and and NL Times, startups raised $591.2 million in the third quarter, more than double the $252.4 million raised in the quarter before.

For obvious reasons, this year has seen more cash go into companies that were able to adapt to the pandemic. KPMG found that while the total amount of investment increased in the past six months, the number of overall investments decreased. New startups pulled in fewer investments, KPMG sees this trend continuing and likely leading to consolidation amongst startups in similar sectors.

According to a report by Dealroom.co and StartupAmsterdam, there are 1,661 tech companies in Amsterdam, while the city ranked fifteenth in Startup Genome’s 2019 report “Global Startup Ecosystem Report,” moving up four places since 2017. The median seed round is $500,000 (above the global average of $494,000) and a median Series A round for a startup is $2.4 million. The average salary for a software engineer is around €54,000.

Amsterdam has tech industry “schools” such as Growth Tribe, The Talent Institute and THNK for educational courses, as well as accelerators like Rockstart, Startupbootcamp and Fashion for Good. Co-working is well-catered for with TQ, Startup Village and B.Amsterdam, and workers can cycle everywhere in minutes.

While taxes are high, entrepreneurs won’t find the staggering income inequality so often seen in cities like San Francisco and New York. In Amsterdam, rich people take public transport, not private buses.

During COVID-19, the Dutch government has also announced support packages such as tax deferrals, temporary employment bridging schemes and other initiatives. It also launched a national program, TechLeap.NL, to boost the ecosystem with more international investor visibility. StartupDelta, a Dutch startup lobby group, keeps the pressure on the politicians.

The Netherlands’ most famous unicorns include Booking.com, Adyen, Virtuagym, MessageBird, Swapfiets, Backbase, Picnic and Takeaway, among several others.

Adyen launched in 2006, and in June 2018, it was listed as one of Europe’s largest tech IPOs with a value of €7 billion. Booking.com started in 1996 and was later acquired by Priceline Group (now called Booking Holdings) in 2005. Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, was another gangbuster IPO in 2018.

For this survey, we interviewed the following Amsterdam-focused investors:

• Janneke Niessen, partner, CapitalT VC

• Stefan van Duin, partner, Borski Fund

• Nick Kalliagkopoulos, partner, Prime Ventures

• Bas Godska, founder, Acrobator Ventures

• Renaat Berckmoes, partner, Fortino

Janneke Niessen, partner, CapitalT VC

What trends are you most excited about investing in, generally?
Digital health, education, B2B SaaS.

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

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More overlooked founders than opportunities.

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

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

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
NL seems well-positioned for fintech, deep tech. I am really excited about Tracy Chou and Diane Janknegt, two incredible founders.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very positive. Lots of innovation, great infrastructure, good talent.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think startups have always been there, investors just don’t tend to look at them. I think the opportunity is more that they now will.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
None. We look at digital health, education and SaaS and they all thrive in this climate. Of course an economic crisis will have an impact on spending in general.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
It has confirmed our approach. We have a data-driven approach to teams, which is great when people cannot meet.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We invest so early that companies are growing regardless.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
When I explained to my little boy what racism is and he answered: Mummy that is just really weird. That gives me hope that the generations after us might do better.

Stefan van Duin, partner, Borski Fund