News: Indian health insurance startup Plum raises $15.6 million in Tiger Global-led investment

• May 31, 2021
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The vast majority of people in India, the world’s second most populous nation, don’t have health insurance coverage. A significant portion of the population that does have coverage get it from their employers. Plum, a young startup that is making it easier and more affordable for more firms in the nation to provide insurance coverage

The vast majority of people in India, the world’s second most populous nation, don’t have health insurance coverage. A significant portion of the population that does have coverage get it from their employers.

Plum, a young startup that is making it easier and more affordable for more firms in the nation to provide insurance coverage to their employees, said on Monday it has raised $15.6 million in its Series A funding to accelerate its growth. Tiger Global led the funding round.

Existing investors Sequoia Capital India’s Surge, Tanglin Venture Partners, Incubate Fund, Gemba Capital, also participated in the new round, which brings the one-a-half-year-old startup’s to-date raise to $20.6 million. TechCrunch reported earlier this year that Plum was in talks with Tiger Global for the new financing round.

Kunal Shah (founder of Cred), Gaurav Munjal, Roman Saini and Hemesh Singh (founders of Unacademy), Lalit Keshre, Harsh Jain and Ishan Bansal (founders of Groww), Ramakant Sharma and Anuj Srivastava (founders of Livspace), and Douglas Feirstein (founder of Hired) also participated in the new round.

Plum offers health insurance coverage on a B2B2C model. The startup partners with small businesses to provide health insurance coverage to all their employees (and their family members), charging as little as $1 a month for an employee.

The startup has developed the insurance stack from scratch and partnered with insurers to include additional coverage on pre-existing conditions and dental, said Abhishek Poddar, co-founder and chief executive of Plum, in an interview with TechCrunch.

(Like fintech firms, which partner with banks and NBFCs to provide credit to customers, online insurance startups have partnerships with insurers to provide health insurance coverage. Plum maintains partnerships with ICICI Lombard, Care Health, Star Health and New India Assurance.)

Poddar, who has worked at Google and McKinsey, said Plum is making it increasingly affordable and enticing for businesses to choose the startup as their partner. Most insurance firms and online aggregators in India today currently serve consumers. There are very few players that engage with businesses. Even among those that do, they tend to be costlier and not as flexible.

Plum offers its partnered client’s employees the option to top up their health insurance coverage or extend it to additional members of the family. Unlike its competitors that require all the premium to be paid annually, Plum gives its clients the ability to pay each month. And signing up an entire firm for Plum takes less than an hour. (The speed is a key differentiator for Plum. Small businesses have to typically spend months in negotiating with other insurers. Bangalore-based Razorpay has also partnered with Plum to give the fintech startup’s clients a three-click, one-minute option to sign up for insurance coverage.)

The startup plans to deploy the fresh capital to further expand its offerings, making its platform open to smaller businesses with teams as small as seven employees to sign up, said Poddar. The startup plans to cover 10 million people in India with insurance by 2025, and eventually expand to international markets, he said.

India has an under-penetrated insurance market. Within the under-penetrated landscape, digital distribution through web-aggregators today accounts for just 1% of the industry, analysts at Bernstein wrote in a recent report.

“As India’s healthcare insurance industry rapidly expands and transforms, Plum is well positioned to make comprehensive health insurance accessible to millions of Indians. We are excited to partner with Abhishek, Saurabh and the Plum team as they scale their leading tech-enabled platform to employers across the country,” said Scott Shleifer, Partner at Tiger Global, in a statement.

Plum is the latest investment from Tiger Global in India this year. The hedge fund, which has backed over 20 Indian unicorns, has emerged as the most prolific investor in Indian startups in recent months, winning founders with its pace of investment, check size and favorable terms. Last week, the firm invested in Indian social network Koo.

News: Jai Kisan, a fintech startup aimed at rural India, raises $30 million

• May 31, 2021
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Jai Kisan, an Indian startup that is attempting to bring financial services to rural India, where commercial banks have a single-digit penetration, said on Monday it has raised $30 million in a new financing round as it looks to scale its business. Hundreds of millions of people in India today live in rural areas. Most

Jai Kisan, an Indian startup that is attempting to bring financial services to rural India, where commercial banks have a single-digit penetration, said on Monday it has raised $30 million in a new financing round as it looks to scale its business.

Hundreds of millions of people in India today live in rural areas. Most of them don’t have a credit score. The professions they work on — largely farming — aren’t considered a business by most lenders in India. These farmers and other professionals also don’t have a documented credit history, which puts them in a risky category for banks to grant them a loan.

Much of the credit these people do raise ends up getting invested in unproductive usage, which leads to higher interest and default rates.

Three-year-old Mumbai-headquartered Jai Kisan is attempting to address this by treating farmers and other similar professionals as businesses instead of consumers.

The startup has developed its own system — which it calls Bharat Khata — that is helping individuals and businesses get access to cheaper financing and ensures that the money they raise is being used for agri-inputs and equipment and other income generating purposes and enablement of rural commerce transactions.

Arjun Ahluwalia, co-founder and chief executive of Jai Kisan, said financial services is crucial for these individuals as their entire economy depends on it. “The ability to buy now and pay later is how most people shop for things in India. Credit is an expectation by the Indian customer — it’s not a value added service,” he told TechCrunch in an interview.

“If there is availability of formal financing to customers, it’s not just customer who does well. The entire ecosystem that revolves around that customer benefits,” he said, pointing to the rise of Bajaj Finance, which has helped several businesses flourish in India by giving credit to customers at the time of purchase, and Xiaomi, India’s largest smartphone vendor, which sells a large number of its devices to customers on monthly instalment plans.

Ahluwalia at a conference in 2019 (India FinTech Forum)

Bharat Khata service, which was launched in April last year, captured more than $380 million of annualized GTV run-rate across over 25,000 storefronts by the financial year that ended in March this year, the startup said.

“Jai Kisan has financed over 15% of the transactions which portrays the monetizability and quality of commerce being captured. The ability to have visibility and virality of high-quality transactions has enabled Jai Kisan to scale business by over 50% in 3 months. The unprecedented growth trajectory stands testament to Jai Kisan’s capabilities to deploy capital efficiently by focusing on core customer credit needs,” the startup said.

The startup, which operates in eight Indian states in South India, is now looking to scale its presence across the country and also increase the headcount. On Monday, it said it had raised $30 million in a Series A round led by Mirae Asset, Syngenta Ventures, and existing investors Blume, Arkam Ventures, NABVENTURES, Prophetic Ventures and Better Capital.

An unspecified amount of the financing was raised as debt from Blacksoil, Stride Ventures, and Trifecta Capital.

“Jai Kisan is at the cusp of disrupting the rural financing industry and we’re glad to be a part of their growth story. Jai Kisan’s stellar growth, excellent asset quality and expanding footprint make them a highly differentiated player in the segment,” said Ashish Dave, chief executive of the India Venture Investments for the South Korean firm Mirae Asset.

“Mirae Asset has always believed in backing companies which aim to become category leaders which is evident from our other investments and we believe Jai Kisan is on the journey of doing so for rural finance,” he added.

Like most fintech startups, Jai Kisan has so far relied on its banking and other financial institutions to finance credit to businesses. The startup said it will now finance 20% of all loans by itself. Which is why it is also raising some money in debt in the new round.

News: Indian logistics giant Delhivery raises $277 million ahead of IPO

• May 30, 2021
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Delhivery, India’s largest independent e-commerce logistics startup, has raised $277 million in what is expected to be the final funding round before the firm files for an IPO later this year. In a regulatory filing, the Gurgaon-headquartered startup disclosed it had raised $277 million in a round led by Boston-headquartered investment firm Fidelity. Singapore’s sovereign

Delhivery, India’s largest independent e-commerce logistics startup, has raised $277 million in what is expected to be the final funding round before the firm files for an IPO later this year.

In a regulatory filing, the Gurgaon-headquartered startup disclosed it had raised $277 million in a round led by Boston-headquartered investment firm Fidelity. Singapore’s sovereign wealth fund GIC, Abu Dhabi’s Chimera, and UK’s Baillie Gifford also participated in the new round, a name of which the startup didn’t specify.

The new round valued the 10-year-old startup at about $3 billion. Delhivery — which also counts SoftBank Vision Fund, Tiger Global Management, Times Internet, The Carlyle Group, and Steadview Capital among its investors — has raised about $1.23 billion to date. The startup didn’t comment on Sunday.

Delhivery began its life as a food delivery firm, but has since shifted to a full suite of logistics services in over 2,300 Indian cities and more than 17,500 zip codes.

It is among a handful of startups attempting to digitize the demand and supply system of the logistics market through a freight exchange platform.

Research and image: Bernstein

Its platform connects consigners, agents and truckers offering road transport solutions. The startup says the platform reduces the role of brokers, makes some of its assets such as trucking — the most popular transportation mode for Delhivery — more efficient, and ensures round the clock operations.

This digitization is crucial to address the inefficiencies in the Indian logistics industry that has long stunted the national economy. Poor planning and forecasting of demand and supply increases the carrying costs, theft, damages, and delays, analysts at Bernstein wrote in a report last month about India’s logistics market.

Delhivery, which says it has delivered over 1 billion orders, works with “all of India’s largest e-commerce companies and leading enterprises,” according to its website, where it also says the startup has worked with over 10,000 customers. For the last leg of the delivery, its couriers are assigned an area that never exceeds 2 sq km, allowing them to make several delivery runs a day to save time.

Indian logistics market’s TAM (total addressable market) is over $200 billion, Bernstein analysts said.

The startup said late last year that it was planning to invest over $40 million within two years to expand and increase its fleet size to meet the growing demand of orders as more people shop online amid the pandemic.

News: For startups, trustworthy security means going above and beyond compliance standards

• May 30, 2021
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Compliance means that a company meets a minimum set of controls. Security encompasses a broad range of best practices and software that help address risks associated with the company’s operations.

When it comes to meeting compliance standards, many startups are dominating the alphabet. From GDPR and CCPA to SOC 2, ISO27001, PCI DSS and HIPAA, companies have been charging toward meeting the compliance standards required to operate their businesses.

Today, every healthcare founder knows their product must meet HIPAA compliance, and any company working in the consumer space would be well aware of GDPR, for example.

But a mistake many high-growth companies make is that they treat compliance as a catchall phrase that includes security. Thinking this could be an expensive and painful error. In reality, compliance means that a company meets a minimum set of controls. Security, on the other hand, encompasses a broad range of best practices and software that help address risks associated with the company’s operations.

It makes sense that startups want to tackle compliance first. Being compliant plays a big role in any company’s geographical expansion to regulated markets and in its penetration to new industries like finance or healthcare. So in many ways, achieving compliance is a part of a startup’s go-to-market kit. And indeed, enterprise buyers expect startups to check the compliance box before signing on as their customer, so startups are rightfully aligning around their buyers’ expectations.

With all of this in mind, it’s not surprising that we’ve witnessed a trend where startups achieve compliance from the very early days and often prioritize this motion over developing an exciting feature or launching a new campaign to bring in leads, for instance.

Compliance is an important milestone for a young company and one that moves the cybersecurity industry forward. It forces startup founders to put security hats on and think about protecting their company, as well as their customers. At the same time, compliance provides comfort to the enterprise buyer’s legal and security teams when engaging with emerging vendors. So why is compliance alone not enough?

First, compliance doesn’t mean security (although it is a step in the right direction). It is more often than not that young companies are compliant while being vulnerable in their security posture.

What does it look like? For example, a software company may have met SOC 2 standards that require all employees to install endpoint protection on their devices, but it may not have a way to enforce employees to actually activate and update the software. Furthermore, the company may lack a centrally managed tool for monitoring and reporting to see if any endpoint breaches have occurred, where, to whom and why. And, finally, the company may not have the expertise to quickly respond to and fix a data breach or attack.

Therefore, although compliance standards are met, several security flaws remain. The end result is that startups can suffer security breaches that end up costing them a bundle. For companies with under 500 employees, the average security breach costs an estimated $7.7 million, according to a study by IBM, not to mention the brand damage and lost trust from existing and potential customers.

Second, an unforeseen danger for startups is that compliance can create a false sense of safety. Receiving a compliance certificate from objective auditors and renowned organizations could give the impression that the security front is covered.

Once startups start gaining traction and signing upmarket customers, that sense of security grows, because if the startup managed to acquire security-minded customers from the F-500, being compliant must be enough for now and the startup is probably secure by association. When charging after enterprise deals, it’s the buyer’s expectations that push startups to achieve SOC 2 or ISO27001 compliance to satisfy the enterprise security threshold. But in many cases, enterprise buyers don’t ask sophisticated questions or go deeper into understanding the risk a vendor brings, so startups are never really called to task on their security systems.

Third, compliance only deals with a defined set of knowns. It doesn’t cover anything that is unknown and new since the last version of the regulatory requirements were written.

For example, APIs are growing in use, but regulations and compliance standards have yet to catch up with the trend. So an e-commerce company must be PCI-DSS compliant to accept credit card payments, but it may also leverage multiple APIs that have weak authentication or business logic flaws. When the PCI standard was written, APIs weren’t common, so they aren’t included in the regulations, yet now most fintech companies rely heavily on them. So a merchant may be PCI-DSS compliant, but use nonsecure APIs, potentially exposing customers to credit card breaches.

Startups are not to blame for the mix-up between compliance and security. It is difficult for any company to be both compliant and secure, and for startups with limited budget, time or security know-how, it’s especially challenging. In a perfect world, startups would be both compliant and secure from the get-go; it’s not realistic to expect early-stage companies to spend millions of dollars on bulletproofing their security infrastructure. But there are some things startups can do to become more secure.

One of the best ways startups can begin tackling security is with an early security hire. This team member might seem like a “nice to have” that you could put off until the company reaches a major headcount or revenue milestone, but I would argue that a head of security is a key early hire because this person’s job will be to focus entirely on analyzing threats and identifying, deploying and monitoring security practices. Additionally, startups would benefit from ensuring their technical teams are security-savvy and keep security top of mind when designing products and offerings.

Another tactic startups can take to bolster their security is to deploy the right tools. The good news is that startups can do so without breaking the bank; there are many security companies offering open-source, free or relatively affordable versions of their solutions for emerging companies to use, including Snyk, Auth0, HashiCorp, CrowdStrike and Cloudflare.

A full security rollout would include software and best practices for identity and access management, infrastructure, application development, resiliency and governance, but most startups are unlikely to have the time and budget necessary to deploy all pillars of a robust security infrastructure.

Luckily, there are resources like Security 4 Startups that offer a free, open-source framework for startups to figure out what to do first. The guide helps founders identify and solve the most common and important security challenges at every stage, providing a list of entry-level solutions as a solid start to building a long-term security program. In addition, compliance automation tools can help with continuous monitoring to ensure these controls stay in place.

For startups, compliance is critical for establishing trust with partners and customers. But if this trust is eroded after a security incident, it will be nearly impossible to regain it. Being secure, not only compliant, will help startups take trust to a whole other level and not only boost market momentum, but also make sure their products are here to stay.

So instead of equating compliance with security, I suggest expanding the equation to consider that compliance and security equal trust. And trust equals business success and longevity.

News: So, you want to democratize venture capital

• May 29, 2021
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A venture capitalist once told me candidly that whenever you see the phrase “democratization” in tech marketing material, think of it as a red flag. Democracy, generally speaking, often comes with an ironic caveat: It disproportionately benefits white and male participants. Now, you know me well enough to know that I wouldn’t start off your

A venture capitalist once told me candidly that whenever you see the phrase “democratization” in tech marketing material, think of it as a red flag. Democracy, generally speaking, often comes with an ironic caveat: It disproportionately benefits white and male participants. Now, you know me well enough to know that I wouldn’t start off your Saturday with this dreary of an introduction normally, but I think that that reality is why a new tool, championed by tech entrepreneurs Lolita and Josh Taub, could be on to something actually innovative.

The Taubs have launched a GP-LP, or general partner and limited partner, matching tool to help underrepresented fund managers get access to the capital they need to start their fund. The match-making tool connects those looking to raise funds (GPs!) with check-writers (LPs!). The move comes on the heels of their founder-investor matching tool, which to date has generated over 1,000 introductions that they say have led to 27 checks totaling nearly $4 million in total capital.

Yes, matching LPs to GPs is a relatively simple tech and concept. And this is a relatively simple experiment. But, it couldn’t have existed five, and definitely 10, years ago. Zoom investing has changed the way that people meet and vet, and I think the GP-LP tool is a key data point in how emerging fund managers can bring optionality to their fundraising process.

Speaking of fundraising:

• Dismantling the myths around raising your first check 
• Vise CEO Samir Vasavada and Sequoia’s Shaun Maguire break down the art of the pitch 
• When to walk away from a VC who wants to invest in your startup

The tool’s explicit focus on only helping underrepresented folks — which it defines as anyone who doesn’t fit the classic Silicon Valley mold like women, LGBTQ+ folks, non-Ivy grads (or people from non-elite employers) and non-wealthy individuals — is a layer of differentiation from many other tools out there. Products like the AngelList rolling fund are great, but public, ongoing fundraising still largely benefits those who have networks to tap into in the first place — just take a quick scroll to see who has one so far.

Let me put it like this: We’ve gotten to a point in venture where there are an ample number of tools out there that help founders and investors leverage their community into checks. What’s missing, though, are the tools that help the community-less, undernetworked and underestimated access those opportunities. While there still is LP hesitancy as emerging managers raise their second and third funds, this effort is a good step in the right direction. And I’ll be tracking it to see how successfully it works.

It’s been a big week for Black and other underrepresented founders: 

• This $250M growth fund will divert half its profits to historically Black colleges and universities
• Collab Capital closes $50 million debut fund to back Black founders

Moving on, the rest of this newsletter will focus on disaster tech, Airbnb and a healthcare communications S-1 filing. You can always find me on Twitter @nmasc_.

Disaster tech is at an inflection point

Image Credits: Hiroshi Watanabe (opens in a new window) / Getty Images

Disaster tech, such as startups that use data to fight wildfires or analyze brainwaves to analyze PTSD after a traumatic event, is having a moment. Are you surprised? COVID-19 and the ongoing climate crisis have energized entrepreneurs to build proactive solutions that fight literal disaster. Our own Danny Crichton spent 12,000 words mapping out the landscape so you don’t have to.

Here’s what to know: The Equity team boiled down those 12,000 words on disaster into a 20-minute episode focused on top takeaways and highlights. As Danny explains in the show: “Cataclysms are a growth industry.”

If you’re more of a reader than a listener …

• The most disastrous sales cycle in the world
• Data was the new oil, until the oil caught fire
• When the Earth is gone, at least the internet will still be working
• The human-focused startups of the hellfire

Airbnb’s next trip

Image Credits: Getty Images

Since travel first shut down last March, all eyes have been on Airbnb, the travel and short-term rental company with global name recognition. Nearly a year ago, the company cited revenue declines and cut 1,900 jobs, roughly 25% of its workforce. Now, as digital nomadic lifestyles and long-term travel come back, it has a growth story worth sharing, too.

Here’s what to know: Airbnb CEO Brian Chesky sat down with our own Jordan Crook to talk about how his company is preparing for a faster, nimbler post-pandemic reality. Time will tell if Airbnb’s stance pans out, but getting into the head of one of the co-founders of a business pummeled, then resurrected, by this pandemic can give founders some tactical tips on how to frame conflict and what’s next.

Brian Chesky: Little did I know that a travel company in a pandemic might even be crazier than starting a company based on strangers living together. I kind of feel like I’m now 39 going on 49. It was definitely the craziest year ever.

Our business initially dropped 80% in eight weeks. I say it’s like driving a car. You can’t go 80 miles an hour, slam on the brakes, and expect nothing really bad to happen. Now imagine you’re going 80 miles an hour, slam on the brakes, then rebuild the car kind of while still moving, and then try to accelerate into an IPO, all on Zoom.

When the future of living melds with future of work:

• Airbnb doubles down on flexible search, improves the host flow in preparation for summer 2021
• Startup founders set up hacker homes to recreate Silicon Valley Energy 
• Dear Startups: Don’t repaint, reinvent

Around TC

If you haven’t heard, TC Sessions: Mobility 2021 is coming up June 9. The one-day virtual event is packed with the best and brightest minds working on — or investing in — the future of transportation. The docket is jammed with founders, investors and experts in micromobility, autonomous vehicles, electrification and air taxis.

Among the growing list of speakers are Motional President Karl Iagnemma and Aurora co-founder and CEO Chris Urmson, who will team up to talk about technical problems that remain to be solved, the war over talent and the best business models and applications of autonomous vehicles. Other guests include Zoox co-founder and CTO Jesse Levinson, community organizer, transportation consultant and lawyer Tamika L. Butler, Remix co-founder and CEO Tiffany Chu and Revel co-founder and CEO Frank Reig. There’s also Joby Aviation founder and CEO JoeBen Bevirt, investor and LinkedIn founder Reid Hoffman (whose special purpose acquisition company just merged with Joby) will talk about the future of flight — and SPACs.

And to answer your next question, yes, you can still buy your tickets here. 

Across the week

Seen on TechCrunch

• Poparazzi hypes itself to the top of the App Store
• Apple just dropped a whole bunch of OS updates and WWDC info
• Microsoft uses GPT-3 to let you code in natural language
• Nigeria’s Mono raises millions to power the internet economy in Africa

Seen on Extra Crunch 

• Doximity’s S-1 may explain why healthcare exits are heating up
• How Expensify shed Silicon Valley arrogance to realize its global ambitions
• SaaS needs to take a page out of the crypto playbook
• Develop a buyer’s guide to educate your startup’s sales team and customers
• Zeta Global’s IPO filing uncovers modest growth, strong adjusted profitability

Ok, bet,

N

News: Crypto sure requires a lot of fiat

• May 29, 2021
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Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter for your weekend enjoyment.

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

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

Hello from Friday, I presume that you are currently enjoying the long weekend. In celebration for this week’s Exchange letter we’ll try something new by being brief. 

If you are tired of hearing about cryptocurrencies, I have bad news. They are not only not going away, but it appears that the financial cannon that have helped clear the fields for their general advance are reloading with even more financial ammunition.

At least that’s what Eric Newcomer is reporting in a post out this week aptly titled “a16z Crypto Fund Balloons to $2 Billion.”

This raises a few points. First! That there is enough LP demand to fund a crypto vehicle to the tune of $2 billion. Second! That there are enough hot crypto ideas out there worth sticking $2 billion into.

I can entirely believe the former, but the latter stretches my brain a little. Not that there aren’t great companies being built in the blockchain space; Coinbase’s Q1 earnings indicate that you can make money with crypto. But it seems that the firms that have proven the most successful thus far are more a hybrid of the traditional banking world and the crypto space than entirely inhabitants of the latter.

But as those ideas have been mined to increasing perfection, we should anticipate seeing money chase the more experimental crypto ideas. As I noted in the Daily Crunch yesterday, there’s a lot of money already going into those markets:

[Y]ou’ve heard of non-fungible tokens, or NFTs. If you have already digested the NBA TopShot hype wave, buckle in, because a lot of folks are still building in the NFT world. That includes Anima, which is bringing AR to NFTs and just raised new capital from Coinbase, and Infinite Objects, which just raised $6 million to help folks bring their NFTs IRL.

This is where venture investing in crypto — and that mammoth a16z fund — gets interesting.

Sure, crypto exchanges can make money. But what about the further reaches of the crypto economy? Can they build material revenues that the fiat world can understand and go public? (Do they even want to go public?)

It’s a pleasure to watch other people wager other people’s money on ideas that may fail. Heads they lose, tails we win. Not bad!

Twitter’s subscription (and media?) moment

Twitter’s “Blue” subscription product is slowly dripping its way into the market. I’m going to buy it, whatever it is.

But what I can’t get out of my head is that Twitter is very well positioned to build a sort of creator nirvana. After all, Twitter is already where many writers, journalists and artists hang out. Where we already have a following. Why not help us weirdos leverage all the time we’ve spent on the platform?

You can see how this could scale. Now that Twitter has bought startups Revue and Scroll, it could build a newsletter platform where Blue subscriber money is divvied up amongst writers for its platform. Or Twitter could buy Medium, as a friend suggested to me the other day. Medium has a huge subscriber base, which Twitter could merge into Blue and provide a sort of extra-social-network-network for writers and other creatives. Right?

If I had a few billion dollars, a few thousand engineers and a dictate from shareholders to grow, I’d go hog-wild and do some crazy shit. Let’s see what Twitter comes up with, but let’s hope that they aren’t making small plans.

Closing, you can catch up on all we wrote on The Exchange during the week here. Have a truly lovely break, we all need one.

Alex

News: The exit effect: 4 ways IPOs and acquisitions drive positive change across the global ecosystem

• May 29, 2021
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Investors who don’t recognize that the future of startups is global and diverse in nature won’t be in sync with the best opportunities — and won’t be selected by the best founders.

For many VCs, the exit is the endgame; you cash in and move on. But as we know, the startup world is evolving, and that means the impact of investment is no longer limited to how much money is made.

As investors, we’re looking further into what each investment means to human beings, at interlinking our mission with our money. And yet, one of the events that generates the most momentum for long-term impact — the successful exit of a portfolio company — is not being harnessed.

When leveraged properly, an exit can be the beginning of a firm’s true impact, especially when we’re talking about giving all founders equal opportunities and empowering the best ideas. The investment sphere is slowly shaking off its “America first” approach as foreign products take the world by storm and international businesses become the norm.

Investors will be driving forces in enabling the highest-potential companies to build products that countries everywhere will benefit from — no matter where they were conceived. The way they play the game can transform the industry into one in which a founder from across the ocean has as much of a chance to change the world as one from next door.

We know the basics of how to do this with cash: Investing in underrepresented founders is a necessary first step. But who’s talking about the power of exits to change the playing field for diverse founders? We must consider the psychological motivation of seeing a huge buyout on other entrepreneurs, what that startup’s ex-team members go on to build, and what the achievements of one citizen does for that nation’s reputation.

Last year, 41 venture-backed companies saw a billion-dollar exit, totaling over $100 billion, the highest numbers in a decade. We have an unprecedented amount of clout to do something with those power moves and four ways to turn them into a domino effect.

1. Competitor effect

When a foreign entrepreneur raises money from U.S. firms and sells to a U.S. company, other immigrants see that. Regardless of how groundbreaking their product idea might be, immigrant Americans will always be more wary of putting their eggs into the entrepreneurship basket, at least as long as 93% of all VC money continues to be controlled by white men.

This, despite research suggesting that immigrants contribute 40% more to innovation than local inventors.

What these foreign entrepreneurs most need is confidence, role models and success stories proving other people who look like them have made it, especially when those founders are making waves in the same industry as them.

So a big, well-publicized exit will create momentum in the industry for other foreign founders to give fuel to their venture and seek to take it to the next stage. Not only that, it will instill more self-assurance when it comes to fundraising, and investors will value that.

I was inspired to write this column after Returnly, a fintech founded by a fellow immigrant from Spain based in San Francisco — which, for full transparency, I invested in as an angel investor, and then for Series B and C via my fund — was acquired for $300 million by Affirm.

While there was undoubtedly a personal financial gain worth celebrating, the success of a foreign founder who persevered against the odds in such a competitive ecosystem as Silicon Valley, raised large rounds from U.S.-based investors, and was finally acquired by a U.S. company served as a moment of inspiration for other diverse founders around the world. We saw this in the amount of media attention it received in both business and mainstream press in Spain and the floods of connect requests and congratulations that followed on LinkedIn.

The impact of an exit is greater when it shows foreign entrepreneurs that there are globally minded organizations helping startups like theirs get equal access to funding. That means having VC firms that spotlight international entrepreneurship and foster global expert networks.

As investors, we can maximize the impact of our exits in the industry by highlighting the foreign origins of our founders in a big way when it comes to promoting the exit, including narrating the challenges and opportunities they encountered on their journey. We can use the victory to drive the point home to our fellow investors that diverse and international entrepreneurship is an undervalued gem. We can personally take the win to boost our brand as one that empowers foreign entrepreneurs in that niche, attracting more to seek funding with us in a positive reinforcement cycle.

2. Wealth effect

The windfall from a big exit puts all previous investors in a privileged position, and it’s unlikely that money will sit around for long. They’ll look to reinvest in other high-potential companies — probably ones that look a lot like the one that was just sold.

But in addition to those investors multiplying the positive impact in their own portfolio, they will rally other investors to behave in a similar way.

Each exit — good or bad — sets a precedent for that niche and that type of company. Other investors will follow suit if they sense that one of their peers is onto a cash cow. Because foreign and ethnic minority founders are still underrepresented in startup funding, it makes this field less competitive while harboring huge potential. VCs who have an eye out for unique opportunities will spot when an investor has made a hefty profit from an unconventional startup, especially if they continue to invest in others in that same field.

To help this along, angels and VCs who’ve been behind a recent exit and are reinvesting in similar founders should publicize those knock-on investments, explaining how their previous success motivated them to support similar ventures. They can also be vocal within their network about their decision to raise up certain entrepreneurs because they’ve seen it works.

Returnly’s founder recently offered to put some of his earnings back into our fund, enabling more foreign entrepreneurs like himself to access capital. If as investors we foster meaningful relationships with our funders and truly care about empowering diverse entrepreneurs, we’ll see more of that wealth circle back into our mission.

3. Team effect

The PayPal Mafia is a set of former PayPal executives and employees — such as Elon Musk, a South African, and Peter Thiel, a German American — who have gone on to seriously disrupt not one but multiple industries across tech. Among the companies they’ve founded are YouTube, LinkedIn, Yelp and Tesla, and they’ve even been named U.S. ambassadors. That’s just one company. Imagine what other diverse and driven teams can do with the influx of cash and inspiration that comes with a big exit. There will be a ripple effect of team members eager to start out on their own who feel empowered by the success of someone who believed in them.

Their ventures will be more likely to “pass it on” when it comes to giving equal opportunities to people regardless of origin and will generate more jobs for people with their mission. Take Thiel, who has to date backed over 40 companies in Europe alone.

As VCs, we can capitalize on this team effect by keeping our eye on any spinoff ventures that arise and supporting them when possible (with experience and contacts, if not with capital). But beyond this, you can also consider encouraging these people to join the investment sphere, maybe even within your firm. Many successful startup founders and executives go on to become investors — the PayPal Mafia has contributed to some of the most notorious funds out there today. The origin story of these former team members will make them more prone to supporting underrepresented founders they can get behind. In turn, new entrepreneurs will draw more value from their personal experiences.

4. Reputation effect

Although Returnly is headquartered in San Francisco, its founder is Spanish and many of its employees were based in Spain.

That means that the impact of Returnly’s exit will be felt on the other side of the Atlantic as well as among co-nationals in the United States. The same is true of other notable sales, like AlienVault, which was founded in Spain and had multiple offices there. AlienVault was acquired by U.S. telecommunications giant AT&T for $900 million. Or IPOs — earlier this month, the Spanish-origin payments company Flywire filed for an IPO that could value the company at $3 billion. One startup’s success boosts the reputation of its entire team, and with it other founders and talent with their same country of origin, background, education and drive.

It follows that investors and other stakeholders will be more inclined to back opportunities among founders from the same home country if it says something about the mission, expertise and culture they bring to their startup.

At the same time, growing startups will be more interested in hiring the talent of evidently successful teams. That doesn’t just mean hiring more foreign experts in the United States, but seeking to outsource farther afield. We’re already becoming far more comfortable with remote teams, and it’s more capital-efficient for one half of the team to be working while the other half sleeps. But founders will always gravitate more to countries where local talent and innovation is already seen to be thriving. Open up that conversation with your portfolio companies.

VCs have the power to change an industry forever, to connect startup ecosystems across continents and to see startups expand worldwide. But this is about staying relevant as an investor as much as it’s about ensuring this next stage in the startup world is a positive one.

Investors who don’t recognize that the future of startups is global and diverse in nature won’t be in sync with the best opportunities — and won’t be selected by the best founders. Rather than trying to play catchup, help build that ecosystem.

News: This Week in Apps: Poparazzi hype, Instagram drops Likes, Epic trial adjourns

• May 29, 2021
• by:   
• in:  Blog 
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Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy. The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

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Top Stories

Facebook and Instagram apps will let you hide the “Like” counts

Image Credits: Instagram

Facebook this week will begin to publicly roll out the option to hide Likes on posts across both Facebook and Instagram, following earlier tests beginning in 2019. The project, which puts the decision about Likes in the hands of the company’s global user base, had been in development for years, but was deprioritized due to the COVID-19 pandemic and the response work required on Facebook’s part. When the company tested how people felt about Like counts, it got pushback from both sides — some wanted to see this information and others felt it was leading to a negative, competitive experience.

The company decided to split the difference and put the decision in its users’ hands. Via new settings, users can choose to disable Like counts on the posts they make and those that appear when they browse the social apps’ feeds.

The decision, however, indicates not one of user empowerment, but rather one representative of a company that’s so large (and intent on remaining the largest), it declines to have its own point of view on controversial matters for fear of causing a mass exit. You can see this in other areas of the business as well, like how it wanted to downplay its responsibility with regard to the misinformation it recirculated by leaving it to fact-checkers to handle, or how it offloaded hard decisions about takedowns to an advisory board. While it’s one thing to not want to piss off a large number of users, turning every toggle and setting into a user choice is just another way at shrugging off responsibility while claiming that something has been done.

Poparazzi hypes and growth hacks to the top

Image Credits: Poparazzi

Meanwhile, a new app with its own point of view has made it to the top. Recently launched anti-selfie app Poparazzi sees itself as a referendum on the Instagram age of performative and self-obsessed social media. The app turns the “tag your friends in photos” feature from Instagram into a standalone, excellently marketed and growth-hacked app experience.

Your Poparazzi profile can only be added to by your friends, which makes the app feel more authentic as it captures casual, unpolished moments, not those you’ve rehearsed and filtered to perfection. But the viral app favors giving up some user privacy protections for network effects, which could potentially be harmful. In the end, it also overlooks why people use social media today: self-expression. Posting pictures to other profiles doesn’t fulfill that desire. That means the app either become an additive experience to be used alongside your existing preferred social app, or one that’s risking a bet on a future where people are actually less self-involved. We can only hope.

Apple-Epic trial officially adjourns

Image credit: Andrew Harrer/Bloomberg via Getty Images

As the Apple-Epic App Store antitrust trial adjourns, the judge seemed leaning more to Epic’s point of view on specific matters, including the 30% cut Apple takes and its decision to ban companies from telling their customers where they could get a better deal on an in-app purchase. (Tim Cook taking the stand only to claim ignorance of certain key aspects of the App Store business didn’t help matters, either.)

At its core, the case is about whether or not Apple is a monopoly and could set the tone for later lawsuits and government regulation. Epic believes Apple has a monopoly over distribution to the iPhone, but Apple argued there were plenty of other places for a company like Epic to sell its games — including those that Epic pays a cut to without complaint, like Microsoft and Sony. Epic, meanwhile, argued that its metaverse is more than just a game, it’s a social place to hang out.

The judge pointed out both Epic’s plain-as-day ulterior motives (hint: $$$$), but also the extent to which mobile games — games that make up the lion’s share of App Store revenue — seem to be subsidizing the platform for others. That includes apps where Apple doesn’t take a cut of IAPs.

Still, for the judge to rule for Epic, she would have to find that Apple leveraged its market power as a monopoly. And that means Apple has to actually have a monopoly in the first place. But does it? There are other places to buy apps (Google’s Android devices, e.g.) and games, like console platforms. Epic wants the definition of a monopoly here narrowed to the market for apps on Apple devices, and that may not work. Though the trial has adjourned, a decision will still be months out, so don’t worry about prepping your in-app credit card forms and PayPal buttons yet.

Weekly News

Platforms: Apple

Image Credits: Apple

Apple released its agenda for WWDC 2021, which will still be virtual. The keynote address will air June 7 at 10 AM PDT, followed by the Platform State of the Union at 2 PM PDT. The schedule also includes the Apple Design Awards on June 10 at 2 PM PDT. Plus, there will be more than 200 sessions and labs, as well as special activities and events. New this year is “Pavilions,” which will better organize event sessions, labs and activities around a given topic.

With iOS 14.6’s public launch, Apple released Apple Card Family and Apple Podcast subscriptions, Spatial Audio and lossless audio for Apple Music, added enhanced support for AirTags (you can now add emails for lost AirTags), and made Shortcuts actions run faster on both iPhone and iPad, among other features.

Apple’s watchOS 7.5 update brings the ECG app and its irregular heart rhythm notification features to more countries, as well as support for Apple Card Family, Podcast subscriptions, and more.

Apple’s new M1-powered iPad Pro can download entire iPadOS updates over cellular, a support document confirms. That means more devices will likely have new OS updates sooner than before.

Apple updated age ratings setting in App Store Connect. The Gambling and Contests setting is now split into two settings, allowing app developers to indicate these content types separately. They’re also indicated separately on the App Store. If your setting was previously yes or no, it will remain across both content types now if you don’t make any adjustments.

App Annie analyzed the top Apple SDKs by iOS installs globally following the release of iOS 14.5. The top six were all in the tools and utilities categories, indicting many developers are looking for SDKs to add functionality to create better user experiences.

ATT opt-in update. According to new data form AppsFlyer, there were 78M instances were users saw an ATT prompt and allowed tracking. The advertiser side opt-in rates remain consistent at 35%-40%. In addition, spend in iOS apps increased 20% since ATT was enforced. Android budgets, by comparison, remained mostly the same (+2%).

Apple pulled an app from the App Store that forced users to leave a good review. The scammy app was yet another that developer Kosta Eleftheriou highlighted as an example of Apple dropping the ball on App Store fraud protection, user safety and security.

Platforms: Google

Image Credits: Emojigraph

Emojigraph took a deep dive into the new emoji in the Android 12 beta and its more than 389 updated designs.

The games teams at Google announced the return of the Google for Games Developer Summit 2021 on July 12th-13th. The event will feature experts from Google who will speak about new game solutions, best practices, connecting with players and scaling your games business. The event is free and open to all game developers.

E-commerce + Food delivery

Instagram adds a new section called Drops in its Shopping tab that will feature current and upcoming drops — a newer type of online flash sale where sellers create buzz in advance and often only have limited quantities available for a short period of time. Users can browse drops and be notified about those of interest to them, then check out in the app at time of purchase.

Image Credits: screenshot of Drops on Instagram

Amazon’s ad revenue is now 2.4x as large as Snap, Twitter, Roku and Pinterest combined, and is growing 1.7x more quickly, a report from Loop Capital (via CNBC) found. Amazon’s “Other” unit, which is mostly its ads business, grew revenue 77% YoY to reach more than $6.9 billion in the quarter.

Amazon is shutting down its Prime Now fast delivery app, and will instead integrate the faster, two-hour grocery and household essentials delivery service into its main app.

Instacart rolls out a speedier Priority Delivery service in select markets. For smaller, less complex orders, Instacart may be able to deliver within 30 minutes for a small upcharge, it says. The app will show the faster delivery option with a lightning bolt icon.

Despite restaurants’ re-opening, DoorDash was the No. 1 food and drink app in April 2021 in the U.S., App Annie noted, and received 2.1 million new downloads, a continuation of their No. 1 ranking in Q1 2021 by downloads in the U.S.

Image Credits: App Annie

Fintech

PayPal expands its crypto plans. The company recently announced its PayPal and Venmo app users would be able to buy, hold and sell Bitcoin and other cryptocurrencies using the apps, but now it’s adding support for third-party wallets. That means users will soon be able to send Bitcoin to each other and to other platforms.

Square’s app revealed the company’s plans to offer checking and savings accounts in a future version. Code in the iOS app showed the accounts would integrate with Square’s debit card for businesses and would have no monthly service fees or overdraft fees.

Robinhood rival Public is launching its own Clubhouse-like audio programming feature in its app. Public Live, as it’s being called, won’t be a free-for-all, but will instead be moderated chats from paid hosts who will speak about financial-focused topics, like earnings. At launch, users can’t ask questions or go onstage, but can react with emoji instead.

Image Credits: Public

Social

Instagram added new Insights to its TikTok rival, Reels, as well as Instagram Live. The tools previously focused on public metrics, like views, likes or comments. Now, creators can see more detailed metrics, like Accounts Reached, Saves and Shares for their Reels, as well as Peak Concurrent Viewers for Live videos.

Instagram is exploring new ideas, including subscriptions, NFTs and a creator fund that’s similar to what YouTube and Snap are offering, reports The Information.

ByteDance’s video editor CapCut, a companion app to TikTok, rocketed to the top of the U.S. App Store and Google Play. The app allows users to access an array of features, like stickers and effects, that they can use to create videos that are published to TikTok and elsewhere. The app has increased advertising on TikTok but was benefitting from a viral trend where TikTok users used CapCut to make 3D Photos.

ByteDance rival Kuaishou, which makes the second most popular short-form video app after ByteDance’s Douyin (the Chinese version of TikTok), saw its shares tumble after livestreaming sales fell 20% — almost three times faster than a year earlier.

TikTok’s hugely popular text-to-speech voice has been changed. The voice actor involved had sued the company saying she never agreed to having her voice recordings appear in the app like this — her recordings were only authorized for translations. The new voice TikTok has now added is more upbeat, which doesn’t work as well in some videos where the point was to use a monotone.

Photos

Google Photos’ free unlimited storage tier is going away. Conveniently, the company rolled out a new feature that lets you now save photos from Gmail messages directly to Google Photos.

Dating

Tinder announced it will be using an AI algorithm to scan private messages and then compare those against messages that had previously been flagged by users for inappropriate language. If the scan determines the message may be inappropriate, the app will show users a prompt that asks them to reconsider before hitting Send.

The Biden administration is working with dating app makers to add new features that will encourage users to get vaccinated. The apps will let users promote their vaccination status and locate a nearby vaccination site, among other things. Tinder, OkCupid, Hinge, BLK, Chispa, Plenty of Fish and Badoo will be working on these efforts.

Messaging

India’s government said WhatsApp’s lawsuit challenging the new local IT ruling was a “clear act of defiance.” WhatsApp says it’s fighting rules that would allow people’s private messages to become traceable by the government authorities, and would open the app to mass surveillance.

Streaming & Entertainment

SiriusXM partnered with TikTok on a range of new initiatives. The music company will launch a TikTok channel on SiriusXM across all platforms (including mobile), will roll out hosted TikTok playlists on Pandora’s app and will stream re-airings of Pandora LIVE events on TikTok.

Clubhouse rolled out payments to all iOS users, allowing anyone to send monetary support to favorite creators. Android will soon follow. The company also this week poached a longtime Google engineer, Justin Uberti, who had been an engineering lead for Google Stadia’s cloud gaming service and led the team that made the Stadia for iOS’ web app.

Apple delayed the launch of Apple Podcast Subscriptions until June and made some tweaks to the revamped Podcasts app, following user feedback with iOS 14.6.

Gaming

Verizon began offering customers free Apple Arcade or Google Play Pass subscriptions for up to a year as part of a new promotion. The length of the deal will depend on your mobile plan.

Netflix is expanding its gaming efforts, The Information reported. The streamer has been approaching gaming industry vets about joining the company. Netflix already launches a Stranger Things game from a third-party developer, which is available across several platforms, including mobile.

The U.S. share of consumer spending in mobile gaming reached an all-time high of 28% last year, reports Sensor Tower. That’s higher than Japan (22%) and China (18%, excluding third-party Android app stores).

Image Credits: Sensor Tower

Health & Fitness

A thinly sourced report indicates Apple may be planning to sherlock MyFitnessPal in an upcoming version of iOS. Reportedly, iOS 15’s Health app may include a food tracking feature that would allow users to log food items they consume to get nutritional details and calorie tracking data.

Productivity + Utilities

Navigation app Waze gets a new CEO. The company named former Hotwire president and Carvana board member Neha Parikh as its CEO, replacing Noam Bardin, who stepped down in April after 12 years at Google.

Reading

Amazon rolled out a new feature in India that allows consumers to read magazine articles inside its shopping app. The quietly launched “Featured Articles” appeared on its shopping app and website, offering feature articles, commentary and analysis on a wide range of topics, including politics, governance, entertainment, sports, business, finance, health, fitness, books and food.

Government & Policy

The Cyberspace Administration of China (CAC) ordered 105 apps to stop improperly collecting and using people’s personal data. Among the apps listed are Microsoft’s LinkedIn and Bing, Chinese TikTok Douyin, video sharing app Kuaishou, music streaming service Kugou and apps from local search engines Sogou and Baidu.

Funding and M&A

RevenueCat raised $40 million in Series B funding for its in-app subscription platform. The funding was led by Y Combinator’s Continuity Fund and values the startup at $300 million. The company has more than 6,000 apps live on its platform, with over $1 billion in subscription revenue being managed by its tools. That’s double the number of apps that were using its service as of last August.

Newly launched Poparazzi app raised $20 million in new funding from Benchmark shortly after its app shot to the top of the App Store. The company behind the app, TTYL, is also backed by Floodgate, Dream Machine, Shrug Capital and Weekend Fund.

Yalo raised $50 million to build c-commerce services for chat apps. The company offers a suite of tools that allow businesses to better use WhatsApp to interact and sell to their customers. The Series C round was led by B Capital. Yalo counts Unilever, Nestlé, Coca-Cola and Walmart among its customers.

Indian Twitter rival Koo raised $30 million in a new round led by Tiger Global Management, valuing the startup at over $100 million. The app was launched last year and has fewer than 6.5 million MAUs.

Weight-loss app Noom raised $540 million in Series F funding in a round led by Silver Lake. The app, which has 45 million global installs, saw increased demand during the pandemic, generating $400 million in revenues in 2020.

Whatnot raised $50 million to let people sell Pokémon cards, Funko Pops and more via livestreams. The Series B was led by Anu Hariharan of Y Combinator Continuity fund, and backed by Andreessen Horowitz, Animal Capital and a number of angels.

Bad Robot Games, raised more than $40 million in Series B funding to create cross-platform video games. The studio leverages its connection to Bad Robot’s film, animation and TV creative departments, but has not announced its first project or where and when it will be available.

Mental health app Wysa raised $5.5 million in Series A funding from Boston’s W Health Ventures, the Google Assistant Investment Program, pi Ventures and Kae Capital. The app, which claims 3 million users, leverages AI to converse with users, categorize statements and assign a type of therapy.

Investing app Acorns filed to go public in a $2.2 billion SPAC deal. The company is merging with Pioneer Merger Corp., a public blank-check company. Acorns CEO Noah Kerner and “Pioneer’s sponsor” are each giving 10% of their equity to select customers. The entity will trade on the Nasdaq under the ticker symbol OAKS.

Relationship care app Paired raised $3.6 million in seed funding led by Eka Ventures, after growing its user base to over 5,000 users in couples, who use the app for quizzes, tips from experts and relationship tracking.

Penfold raised $8.5 million for its app that offers a full stack pension to its mobile customers. The round was led by Bridford Group, the Family Office of Jorg Mohaupt, allegedly the only Angel investor in Adyen.

Greg, an app for plant lovers, raised $5.4 million in seed funding. The app uses machine learning to help people care for their plants by telling them when to water based on plant species, location, sun exposure and more.

This Week’s Downloads

Cardhop

Image Credits: Flexibits

Flexibits, the company behind the popular productivity app Fantastical, updated its contacts management app Cardhop for Mac and iOS. This second major update to Cardhop brings several new features, including business card scanning, iOS widgets for your favorite Cardhop actions, organizational charts and family trees, and improved integrations with Fantastical. For example, you can now create an event with everyone in a Cardhop group. The updated app and premium version of Fantastical is being bundled in a single Flexibits Premium subscription ($4.99/mo or $39.99/yr), but a free version with fewer features is also available.

Hoptale

Image Credits: Hoptale

Recently launched from public beta, Hoptale is ready to kick off the post-Covid summer travel season with its travel journal and discovery app. The startup uses smart technology to organize trip plans and your photos, and users metadata to create trips as well as “hops” within your trips — meaning the individual stops you made during trips at different locations. This creates a travel journal of sorts where you itinerary, points of interest, map and, optionally, your own commentary are organized for you.

You can also share trips publicly with the Hoptale community or privately with friends and family. That could make it easier for sharing your favorite recommendations with someone who wants to know what to do and see from a place you’ve already visited. The beta version had hundreds of users who cataloged thousands of trips, and the app is now open to the wider public.

Poparazzi

Image Credits: Poparazzi

Well, you have to see what all the hype is about, right? The new social app for iOS and Android offers Instagram-like photo profiles with one big difference: you can’t post pictures yourself. Instead, the app only allows users to post photos to their friends’ profiles, arguing against the self-absorbed nature of today’s social media. After a lot of pre-launch hype on TikTok, the app shot to the top of the App Store at launch where it sits poised to be the viral trendy app of the post-COVID summer.

Reading Recommendations

• Stratechery: App Store Arguments
• Motherboard: ‘FIND THIS FUCK:’ Inside Citizen’s Dangerous Effort to Cash In On Vigilantism
• Wired: How to Avoid App Store Scams

Tweets

News: 6 investors and founders forecast hockey-stick growth for Edinburgh’s startup scene

• May 29, 2021
• by:   
• in:  Blog 
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Scotland’s capital Edinburgh boasts a beautiful, hilly landscape, a robust education system and good access to grant funding, public and private investment.

Scotland is slowly but surely drawing attention in the UK’s startup space. In 2020, Scottish startups collectively raised £345 million, according to Tech Nation, and with nearly 2,500 startups, it has the highest number of budding tech companies outside London. Venture capital fundraises are also consistently on the rise every year.

Scotland’s capital Edinburgh boasts a beautiful, hilly landscape, a robust education system and good access to grant funding, public and private investment. It’s also one of the top financial centers in the U.K., making it a great place to begin a business.

So to find out what the startup scene in Edinburgh looks like, we spoke to six founders, executives and investors. The city’s tech ecosystem appears to have a robust space for machine learning, artificial intelligence, biomedicine, fintech, travel tech, oil, renewables, e-commerce, gaming, health tech, deep tech, space tech and insurtech.

Use discount code SCOTLANDSURVEY to save 25% off an annual or two-year Extra Crunch membership.
This offer is only available to readers in the UK Europe and expires on June 30, 2021.

However, the city’s tech scene is apparently lackluster when it comes to legal tech, blockchain and consumer-facing technology.

Breakout companies that were founded in Edinburgh include Skyscanner and FanDuel. Notable among the current crop are Desana, Continuum Industries, Parsley Box, Current Health, Boundary, Zumo, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, For-Sight, Vistalworks, Reath, InfraCost, Speech Graphics and Cyan Forensics.

The Edinburgh business-angel community appears to be quite strong, but it seems local founders find it difficult to get London-based investors to take an interest. Scottish investors are said to be “pretty conservative and risk-adverse” with some notable exceptions.

We surveyed:

• Wendy Lamin, managing director, Holoxica
• Andrew Noble, partner, Par Equity
• Danae Shell, co-founder and CEO, Valla
• Allan Nelson, co-founder and CEO, For-Sight
• Lysimachos Zografos, founder, Parkure
• Bertie Wilson, co-founder in stealth mode

Wendy Lamin, managing director, Holoxica

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
It’s strong in space, biomedicine, fintech/insurtech, AI.

What are the tech investors like in Edinburgh? What’s their focus?
The Scottish business-angel community is said to be the largest in Europe. It’s difficult to get London-based investors take an interest in Scotland — investors can tend to look at where companies are based. It is hard for “underrepresented founders” to get investments in Scotland and beyond.

With the shift to remote working, do you think people will stay in Edinburgh or will they move out? Will others move in?
Stay. Not always easy to get people to come and live in Scotland. Edinburgh, there are lots of prejudices, despite it being one of the best cities to live in in the whole of the U.K.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Good to see more focus on impact investing. Par Equity is one of Edinburgh’s biggest investors, whereas Archangels is one of the biggest angel investors. Poonam Malik is great for diversity and female entrepreneurs, and she is on the board of Scottish Enterprise, and is a social entrepreneur and investor. Garry Bernstein is also an investor — he leads the Scottish chapter of Tech London Advocates and Global Tech Advocates, and as such is the founder of Tech Scot Advocates.

Where do you think the city’s tech scene will be in five years?
Thriving. The government is doing its best for the tech sector. Education in tech is currently an issue, though. Hope Brexit won’t be too much of an issue.

Andrew Noble, partner, Par Equity

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in fintech, health tech, data science, deep tech. Excited by quantum computing, advanced materials, AI in Edinburgh. Weak in blockchain and consumer.

Which are the most interesting startups in Edinburgh?
Current Health, InfraCost, Speech Graphics and Cyan Forensics.

What are the tech investors like in Edinburgh? What’s their focus?
Good at seed stage up to £1 million, okay for pre-series A (£1 million to £3 million) and non-existent for Series A (£3 million-£10 million). Quality of investors is improving. Par Equity is leading the way.

With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Experiencing influx of new talent due to COVID-19. Edinburgh is a highly desirable city to live in. Recent new residents include Aaron Ross (Predictable Revenue) and Jules Pursuad (early employee at Airbnb and now VP at Omio).

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Par Equity (investor), Paul Atkinson, Alistair Forbes, Mark Logan, Lesley Eccles, Chris McCann, CodeBase.

Where do you think the city’s tech scene will be in five years?
One to two new unicorns. Promising number of high-growth tech companies. A much more sophisticated investor scene in the Series A space.

Danae Shell, co-founder and CEO, Valla

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Edinburgh is strong in fintech because of our proximity to so many financial services companies and banks. Also, there are some exciting games tech companies because of our history of games companies. We’re pretty weak in law tech, Valla’s area.

Which are the most interesting startups in Edinburgh?
Vistalworks for consumer tech; Sustainably for fintech; Reath for sustainable tech.

What are the tech investors like in Edinburgh? What’s their focus?
As a rule, Scottish investors are pretty conservative and risk-averse. The only real exception is Techstart Ventures, in my experience.

With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
I think more people will come to Edinburgh from London because the quality of life and cost of living are both so much better here.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Calum Forsyth and Mark Hogarth at Techstart Ventures; Janine Matheson at CodeBase; Jackie Waring from the Investing Women angel syndicate; Jim Newbury is a very well-respected developer and coach, and my co-founder Kate Ho is also well known. Also Danny Helson who runs the EIE event with the Bayes Centre.

Where do you think the city’s tech scene will be in five years?
We’ve had a few exits in the past few years (Skyscanner, FreeAgent), which means that talent is spreading out across the ecosystem here and we’re getting some fantastic new startups kicking off. In five years, that first crop should be coming into the Series A stage so we could see a lot of super exciting businesses!

Allan Nelson, co-founder and CEO, For-Sight

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in fintech, travel tech, health, oil, renewables, e-commerce, gaming (both video game and gambling tech). Excited by all bar oil (great driver of revenue, but not the future).

Which are the most interesting startups in Edinburgh?
Boundary, Parsley Box, Appointedd, Criton, Mallzee, TravelNest, TVSquared, Care Sourcer, Stampede, For-Sight.

What are the tech investors like in Edinburgh? What’s their focus?
Big fintech scene here. Travel tech is growing too, with Skyscanner’s influence strong.

With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Most will stay, as it’s a very attractive city to live and work in. It’s a globally recognized and unique city. Very international flavor as evidenced by the makeup of our team.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Ex-Skyscanner people including Gareth Williams, Mark Logan, etc. Ian Ritchie, Alistair Forbes, the FanDuel’s founders and the CodeBase founders.

Where do you think the city’s tech scene will be in five years?
A lot bigger, as tech is a key growth target of the Scottish government and is underpinned/influenced/inspired by Skyscanner and FanDuel.

Lysimachos Zografos, founder, Parkure

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in machine learning/AI/digital. Weak in deep tech discovery, especially in biotech/therapeutics. Excited by the rise in adoption of AI in drug discovery — all these ideas that were sci-fi 20 years ago are now adopted in £B deals.

Which are the most interesting startups in Edinburgh?
Pheno Therapeutics.

What are the tech investors like in Edinburgh? What’s their focus?
Conservative angels and a few tech seed VCs.

With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
Move in.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Investors: Archangels, Techstart Ventures and Epidarex.

Where do you think the city’s tech scene will be in five years?
Growing.

Bertie Wilson, co-founder, “Stealth mode”

Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
I don’t think there are any sectors that stand out — it’s fairly evenly split. A good strength of the city is the talent that comes from the universities. There are some really good engineers that come from Edinburgh, Heriot Watt and Edinburgh Napier. The main weakness is that the ecosystem doesn’t favor the most ambitious founders. Most investors in the region are angels and aren’t interested in finding outliers that could grow 1000x and are more interested in backing companies that are less risky but might 5x their money. If you want to find investors that will back risky (but very ambitious) plans, it’s easier to find that elsewhere.

Which are the most interesting startups in Edinburgh?
Desana, Continuum Industries, Parsley Box, Current Health, Boundary, Zumo.

What are the tech investors like in Edinburgh? What’s their focus?
I would say it’s getting better, but there are still a lot of issues with the ecosystem. It is being helped in Scotland by the likes of Techstart investing at the earliest stages with high conviction and term sheets that are more similar to London VCs. Outside of this, though, it’s easy for founders to end up with a messy cap table due to the number of angels and lack of VCs looking for VC-type returns — the messiness of these cap tables can then make it hard to raise venture funding down the line. This is fine for a lot of companies that aren’t aiming for a venture-scale return (which admittedly is a lot), but it can hurt those that are.

With the shift to remote working, do you think people will stay in Edinburgh, or will they move out? Will others move in?
I imagine and hope others will move in. It is a great place to live with a very high quality of life, and this should be a natural attraction for people who want a good standard of living but want to remain in a city.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
SEP (investor), Techstart Ventures (investor), Gareth Williams (founder/investor), MBM Commercial (lawyers), Pentech, Bill Dobbie (investor), Jamie Coleman.

Where do you think the city’s tech scene will be in five years?
Optimistically, I hope that there will be a good number of companies that are at the Series B/Series C stage, which will invite a lot more interest from investors outside of Edinburgh (London, Berlin, Paris, New York, San Francisco, etc.) to start investing more actively in the city at the earliest stages as well as these stages.

News: Alibaba is making its cloud OS compatible with multiple chip architectures

• May 29, 2021
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Alibaba’s cloud computing unit is making its Apsara operating system compatible with processors based on Arm, x86, RISC-V, among other architectures, the company announced at a conference on Friday. Alibaba Cloud is one of the fastest-growing businesses for the Chinese e-commerce giant and the world’s fourth-largest public cloud service in the second half of 2020, according

Alibaba’s cloud computing unit is making its Apsara operating system compatible with processors based on Arm, x86, RISC-V, among other architectures, the company announced at a conference on Friday.

Alibaba Cloud is one of the fastest-growing businesses for the Chinese e-commerce giant and the world’s fourth-largest public cloud service in the second half of 2020, according to market research firm IDC.

The global chip market has mostly been dominated by Intel’s x86 in personal computing and Arm for mobile devices. But RISC-V, an open-source chip architecture competitive with Arm’s technologies, is gaining popularity around the world, especially with Chinese developers. Started by academics at the University of California, Berkeley, RISC-V is open to all to use without licensing or patent fees and is generally not subject to America’s export controls.

The Trump Administration’s bans on Huawei and its rival ZTE over national security concerns have effectively severed ties between the Chinese telecom titans and American tech companies, including major semiconductor suppliers.

Arm was forced to decide its relationships with Huawei and said it could continue licensing to the Chinese firm as it’s of U.K. origin. But Huawei still struggles to find fabs that are both capable and allowed to actually manufacture the chips designed using the architecture.

The U.S. sanctions led to a burst in activity around RISC-V in China’s tech industry as developers prepare for future tech restrictions by the U.S., with Alibaba at the forefront of the movement. Alibaba Cloud, Huawei and ZTE are among the 13 premier members of RISC-V International, which means they get a seat on its Board of Directors and Technical Steering Community.

In 2019, the e-commerce company’s semiconductor division T-Head launched its first core processor Xuantie 910, which is based on RISC-V and used for cloud edge and IoT applications. Having its operating system work with multiple chip systems instead of one mainstream architecture could prepare Alibaba Cloud well for a future of chip independence in China.

“The IT ecosystem was traditionally defined by chips, but cloud computing fundamentally changed that,” Zhang Jianfeng, president of Alibaba Cloud’s Intelligence group, said at the event. “A cloud operating system can standardize the computing power of server chips, special-purpose chips and other hardware, so whether the chip is based on x86, Arm, RISC-V or a hardware accelerator, the cloud computing offerings for customers are standardized and of high-quality.”

Meanwhile, some argue that Chinese companies moving towards alternatives like RISC-V means more polarization of technology and standards, which is not ideal for global collaboration unless RISC-V becomes widely adopted in the rest of the world.