Monthly Archives: May 2021

News: Supercell likes Metacore’s games so much it just gave it another $180M credit line

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Metacore, a Finnish mobile games company, seems to have an amazing ‘relationship’ with Supercell, another (quite successful) Finnish mobile games company. Back in September 2020, Metacore raised $17.7 million in equity from Supercell and another $11.8 million line of credit, sometimes also called a debt round. That amazing relationship appears to be ongoing. Because Metacore

Metacore, a Finnish mobile games company, seems to have an amazing ‘relationship’ with Supercell, another (quite successful) Finnish mobile games company.

Back in September 2020, Metacore raised $17.7 million in equity from Supercell and another $11.8 million line of credit, sometimes also called a debt round. That amazing relationship appears to be ongoing. Because Metacore has now raised yet another debt round from Supercell, but this time for €150 million ($180 million). These guys really like each other.

The simple reason for this is two words: Merge Mansion. This game has been so spectacularly successful that Supercell clearly wants a stake in that success, and it has the cash reserves to make that bet.

The puzzle discovery game has 800,000 daily players, and an annual revenue run rate of over €45 million, so it’s really on a growth curve.

Why so successful? Well, players have really loved the idea that they can literally merge two items they pick up in the game to make a brand new thing. So for instance, you can merge two rakes and you get another kind of tool that you can then can use somewhere else. This is a very unique mechanic in mobile games.

Supercell is also enamored of Metacore’s games development strategy: it creates games with two to three person teams and only adds resources when a game takes off. This innovative approach to game development is at least part of the reason Supercell is doubling down on its investment, not just Merge Mansion itself. It’s a sort of ‘fail-fast’ approach to game-making that is clearly paying dividends.

So why this approach to the latest financing?

I spoke to CEO and Co-Founder Mika Tammenkoski who told me: “Yes, it is it is credit line. We are more about scaling up the company as we are scaling up revenue. We already have meaningful revenue, we can invest the money, and we can expect a certain kind of return on investment. So this is the cheapest investment that we can get. Equity investment would dilute us. So this makes sense from that point of view. With Supercell, we have a really great partner, backing us. They know exactly what is ahead of us. They know exactly the kind of challenges that we have, and that makes us aligned in that sense… We both think long term, we both want to scale the game as big as possible. And with Supercell we get the best terms overall.”

So there you have it. Metacore and Supercell are locked in an embrace which any other outside investor is going to have to invest in big to get a look in on the action.

News: Beyond the fanfare and SEC warnings, SPACs are here to stay

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Can SPACs still solve the funding problem for capital-intensive, deep tech startups? And will they become a permanent financing option?

The number of SPACs in the deep tech sector was skyrocketing, but a combination of increased SEC scrutiny and market forces over the past few weeks has slowed the pace of new SPAC transactions. The correction is an inevitable step on the path to mainstreaming SPACs as an alternative to IPOs, but it won’t cause them to go away. Instead, blank-check vehicles will evolve and will occupy a small and specialized — but important — part of the startup financing landscape.

The tsunami of SPAC financings sparked commentary from all corners of the capital markets community, from equity analysts and securities lawyers to VCs and fund managers — and even central bankers. That’s understandable, as more than $60 billion of SPAC deals have been announced since the beginning of 2020, plus $55 billion in PIPE capital, according to investment bank PJT Partners.

The views debated by finance experts often relate to the reasonableness of SPAC pricing and transaction structures, the alignment of incentives for stakeholders, and post-merger financial and stock price performance. But I’m not going to add another voice to the debate on the risk-reward calculus.

As the co-founder of a quantum computing software startup who worked in financial markets for two decades, I’d like to offer my perspective on two issues that I think my peers care more about: Can SPACs still solve the funding problem for capital-intensive, deep tech startups? And will they become a permanent financing option?

Keeping the lights on at deep tech startups

I believe that SPAC financings can solve a major problem for all capital-intensive technology startups: the need for faster — and potentially cheaper — access to large amounts of capital to fund product development over multiple years.

SPACs have created a limitless well of capital that deep tech startups are diving into. That’s because they are proving to be more attractive than other sources of financing, such as taking investments from later-stage VC funds or growth equity funds with finite fund sizes and specific investment themes.

The supply of growth capital from these vehicles has been astounding. In 2020, SPACs alone raised more than $83 billion via 248 IPOs, which is equal to a third of the total $300 billion raised by the entire global VC community. If the present rate of financings had continued, the annual amount of SPAC financings would have been on par with the total R&D expenditure of the U.S. government —  roughly $130 billion to $150 billion.

This new supply of capital can let startups keep the lights on, helping them address a practical need while they develop products that may take a decade to field. Before SPACs, any startup that wanted to remain independent had to lurch from one round of VC financing to the next. That, as well as the intense IPO process, is a major time sink for management teams and distracts them from focusing on product development.

News: GM’s Pam Fletcher is coming to TC Sessions: Mobility 2021 to talk about how to build a startup

• May 5, 2021
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GM might be best known for the millions of Buick, Cadillac, Chevrolet and GMC-branded vehicles it designs, produces, finances and sells each year. But it also has a burgeoning incubator, where a team of 600 employees are working to develop 20 new businesses with a total addressable market of about $1.3 trillion. A few of

GM might be best known for the millions of Buick, Cadillac, Chevrolet and GMC-branded vehicles it designs, produces, finances and sells each year. But it also has a burgeoning incubator, where a team of 600 employees are working to develop 20 new businesses with a total addressable market of about $1.3 trillion.

A few of the first startup fruits have already come to bear, including OnStar Guardian, OnStar Insurance, GM Defense and most recently, BrightDrop — the commercial electric vehicle delivery business that launched in January. Pam Fletcher, a veteran at GM and vice president of the company’s Global Innovation team, is at the center of this effort and helped shepherd BrightDrop from idea to startup graduate. And she’s not done.

An engineer by training, Fletcher has been given a lofty directive to turn high-potential innovative ideas into scalable business ventures that drive growth and transform the GM business model beyond traditional automotive. She’s coming to TC Sessions: Mobility 2021, a virtual event scheduled for June 9, to talk about their strategy and what’s coming next.

Fletcher’s experience is broad and global. She has held a variety of leadership positions, guiding the development of GM’s electric vehicle and self-driving portfolio and technologies. Prior to joining the innovation incubator, she was vice president of global electric vehicles at GM. The teams she directed were responsible for the development of two generations of the plug-in hybrid Chevrolet Volt and the all-electric Chevrolet Bolt EV. Her team also led the development of Super Cruise, the automaker’s hands-free highway driver assist system as well as three generations of Cruise AVs.

She also serves as a corporate director of Coherent Inc., a NASDAQ-listed company based in Silicon Valley, and is also a board member of GM Defense LLC. Fletcher was named to Motor Trend’s 2018 and 2019 Power List of auto industry leaders and was one of Fast Company’s “Most Creative People” of 2017. She serves on the board of advisers for the College of Engineering at the University of North Carolina Charlotte.

Fletcher is just one of many of the best and brightest minds in transportation who will be joining us on our virtual stage in June. Among the growing list of speakers is TechCrunch Scale AI CEO Alexandr Wang, Joby Aviation founder and CEO JoeBen Bevirt, investor and LinkedIn founder Reid Hoffman, whose special purpose acquisition company just merged with Joby, investors Clara Brenner of Urban Innovation Fund, Quin Garcia of Autotech Ventures and Rachel Holt of Construct Capital, Starship Technologies co-founder and CEO/CTO Ahti Heinla, 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.

Stay tuned for more announcements in the weeks leading up to the event. Early Bird sales end this Thursday, May 6. Be sure to book your tickets ASAP and save $100.

News: For M&A success, tap legal early and often

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Outside attorneys are experts in M&A or IPOs, but your in-house lawyers are experts in your company. Here are actionable tips on how to use that team to your advantage.

While mergers and acquisitions may be the right strategic path for many businesses, organizations tend to underestimate the role in-house legal teams play in a large-scale strategic transaction until the company is firmly entrenched in a deal.

While the CEO and board might fully appreciate the counsel of the legal team, the ability of the legal team to earn the support of the business — from product and development to marketing and HR — is critical to a smooth, efficient closing and post-close integration process.

Having been on the inside of M&A transactions, here are a few insights that I recommend any executive team considering a major strategic transaction keep in mind when working with, and setting expectations for, the in-house legal function as the deal moves from business agreement to closing and through integration.

Is this the right transaction to move the business forward?

When you’re thinking of M&A (or any other type of strategic transaction, for that matter), it is critical to understand why you’re pursuing a deal and what the potential implications (both good and bad) may be for the business at large.

As the executive or founding team, have you agreed that doing the deal is the best way to further the overall strategic business objectives? Is the proposed deal allowing the company to scale more rapidly or efficiently? Does the transaction provide for a more diversified, complementary product offering?

After settling that the deal is the best way to achieve the overall business objective, the next focus is on execution. How will the resulting leadership bring together the two organizations? Do you have a plan on how to go from closing the transaction to successfully moving forward with the strategic purposes for doing the transaction in the first place? Is there agreement on product direction, go-to-market strategies, staffing, company culture, etc.?

These high-level discussions are important to have while evaluating a potential deal, and bringing in your internal legal leadership is critical in these early phases. You may identify during these early discussions aspects that are critical for the deal to be a success, and being sure your legal team is aware of these aspects allows the team to anticipate post-closing issues and resolve them proactively with the structure of the deal or by explicitly calling out critical obligations of each party.

Your in-house legal team should be held accountable for catching things specific to your business that outside attorneys will miss. Outside attorneys are experts in M&A or IPOs or venture financings or whatever else, but your in-house lawyers are experts in your company — that’s the true value of having an in-house team.

News: Facebook launches Neighborhoods, a Nextdoor clone

• May 5, 2021
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Facebook is launching a new section of its app designed to connect neighbors and curate neighborhood-level news. The new feature, predictably called Neighborhoods, is available now in Canada and will be rolling out soon for U.S. users to test. As we reported previously, Neighborhoods has technically been around since at least October of last year,

Facebook is launching a new section of its app designed to connect neighbors and curate neighborhood-level news. The new feature, predictably called Neighborhoods, is available now in Canada and will be rolling out soon for U.S. users to test.

As we reported previously, Neighborhoods has technically been around since at least October of last year, but that limited test only recruited residents of Calgary, Canada.

On Neighborhoods, Facebook users can create a separate sub-profile and can populate it with interests and a custom bio. You can join your own lower-case neighborhood and nearby neighborhoods and complain about porch pirates, kids these days, or whatever you’d otherwise be doing on Nextdoor.

Aware of the intense moderation headaches on Nextdoor, Facebook says that it will have a set of moderators dedicated to Neighborhoods to will review comments and posts to keep matters “relevant and kind.” Within Neighborhoods neighborhoods, deputized users can steer and strike up conversations and do some light moderation, it sounds like. The new corner of Facebook will also come with blocking features.

As far as privacy goes, well, it’s Facebook. Neighborhoods isn’t its own standalone app and will naturally be sharing your neighborly behavior to serve you targeted ads elsewhere.

News: Twitter rolls out improved ‘reply prompts’ to cut down on harmful tweets

• May 5, 2021
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A year ago, Twitter began testing a feature that would prompt users to pause and reconsider before they replied to a tweet using “harmful” language — meaning language that was abusive, trolling, or otherwise offensive in nature. Today, the company says it’s rolling improved versions of these prompts to English-language users on iOS and soon,

A year ago, Twitter began testing a feature that would prompt users to pause and reconsider before they replied to a tweet using “harmful” language — meaning language that was abusive, trolling, or otherwise offensive in nature. Today, the company says it’s rolling improved versions of these prompts to English-language users on iOS and soon, Android, after adjusting its systems that determine when to send the reminders to better understand when the language being used in the reply is actually harmful.

The idea behind these forced slow downs, or nudges, are about leveraging psychological tricks in order to help people make better decisions about what they post. Studies have indicated that introducing a nudge like this can lead people to edit and cancel posts they would have otherwise regretted.

Twitter’s own tests found that to be true, too. It said that 34% of people revised their initial reply after seeing the prompt, or chose not to send the reply at all. And, after being prompted once, people then composed 11% fewer offensive replies in the future, on average. That indicates that the prompt, for some small group at least, had a lasting impact on user behavior. (Twitter also found that users who were prompted were less likely to receive harmful replies back, but didn’t further quantify this metric.)

Image Credits: Twitter

However, Twitter’s early tests ran into some problems. it found its systems and algorithms sometimes struggled to understand the nuance that occurs in many conversations. For example, it couldn’t always differentiate between offensive replies and sarcasm or, sometimes, even friendly banter. It also struggled to account for those situations in which language is being reclaimed by underrepresented communities, and then used in non-harmful ways.

The improvements rolling out starting today aim to address these problems. Twitter says it’s made adjustments to the technology across these areas, and others. Now, it will take the relationship between the author and replier into consideration. That is, if both follow and reply to each other often, it’s more likely they have a better understanding of the preferred tone of communication than someone else who doesn’t.

Twitter says it has also improved the technology to more accurately detect strong language, including profanity.

And it’s made it easier for those who see the prompts to let Twitter know if the prompt was helpful or relevant — data that can help to improve the systems further.

How well this all works remains to be seen, of course.

Image Credits: Twitter

While any feature that can help dial down some of the toxicity on Twitter may be useful, this only addresses one aspect of the larger problem — people who get into heated exchanges that they could later regret. There are other issues across Twitter regarding abusive and toxic content that this solution alone can’t address.

These “reply prompts” aren’t the only time Twitter has used the concept of nudges to impact user behavior. It also reminds users to read an article before you retweet and amplify it in an effort to promote more informed discussions on its platform.

Twitter says the improved prompts are rolling out to all English-language users on iOS starting today, and will reach Android over the next few days.

News: Emerging open cloud security framework has backing of Microsoft, Google and IBM

• May 5, 2021
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Each of the big cloud platforms has its own methodology for passing on security information to logging and security platforms, leaving it to the vendors to find proprietary ways to translate that into a format that works for their tool. The Cloud Security Notification Framework (CSNF), a new working group that includes Microsoft, Google and

Each of the big cloud platforms has its own methodology for passing on security information to logging and security platforms, leaving it to the vendors to find proprietary ways to translate that into a format that works for their tool. The Cloud Security Notification Framework (CSNF), a new working group that includes Microsoft, Google and IBM is trying to create a new open and standard way of delivering this information.

Nick Lippis, who is co-founder and co-chairman of ONUG, an open enterprise cloud community, which is the primary driver of CSNF says that what they’ve created is part standard and part open source. “What we’ve been really focusing on is how do we automate governance on the cloud. And so security was the place that was ripe for that where we can actually provide some value right away for the community,” he said.

While they’ve pulled in some of the big cloud vendors, they’ve also got large companies who consume cloud services like FedEx, Pfizer and Goldman Sachs. Conspicuously missing from the group is AWS, the biggest player in the cloud infrastructure market by far. But Lippis says that he hopes as the project matures, other companies including AWS will join.

“There’s lots of security programs and industry programs that get out there and that people are asking them to join, and so some companies want to wait to see how well this pans out [before making a commitment to it],” Lippis said. His hope is that over time, that Amazon will come around and join the group, but in the meantime they are working to get to the point everyone in the community will feel good about what they’re doing.

The idea is to start with security alerts and find a way to build a common format to give companies the same kind of system they have in the data center to track security alerts in the cloud. The way they hope to do that is with this open dialogue between the cloud vendors and the companies involved with the group.

“So the structure of that is that there’s a steering committee that is chaired by CISOs from these large cloud consumer brands, and also the cloud providers, and they provide voting and direction. And then there’s the working group where all the work is done. The beauty of what we do is that we have now consumers and also providers working together and collaborating,” he said.

Don Duet, a member of ONUG, who is CEO and co-founder of Concourse Labs, has been involved in the formation of the CSNF. He says to keep the project focused they are looking at this as a data management problem and they are establishing a common vocabulary for everyone to work within the group.

“How do you build a consensus on what are the types of terms that everybody can agree on and then you build the underlying basis so that the experts in your resource providers in this case, Cloud Service Providers, can bless how their data [connects] to those common standards,” Duet explained.

He says that particular problem is more of an organizational problem than a technical one, getting the various stakeholders together and just building consensus around this. At this point, they have that process in place and the next step is proving it by having the various companies involved in this test it out in the coming months.

After they get past the testing phase, in October they plan to actually demonstrate what this looks like in a before and after scenario, with the new framework and without it. As the group works toward these goals, the hope is that eventually the framework will become more established and other companies and vendors will come on board and make this a more standard way of sharing security alerts. If all goes well, they hope to build in other security information into this framework over time.

News: Despite gains, gender diversity in VC funding struggled in 2020

• May 5, 2021
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There’s no excuse for the slow pace of improvement toward greater equity in the venture capital/startup game. And we’re tired of writing dispiriting posts about it.

People have been discussing the importance of expanding opportunities for women in venture capital and startup entrepreneurship for decades. And for some time it appeared that progress was being made in building a more diverse and equitable environment.

The prospect of more women writing checks was viewed as a positive for female founders, a cohort that has struggled to attract more than a fraction of the funds that their male peers manage. All-female teams have an especially tough time raising capital compared to all-male teams, underscoring the disparity.

Then COVID-19 arrived and scrambled the venture and startup scene, creating a risk-off environment during the end of Q1 and the start of Q2 2020. Following that, the venture world went into overdrive as software sales became a safe harbor in the business world during uncertain economic times. And when it became clear that the vaunted digital transformation of businesses large and small was accelerating, more capital appeared.

But data indicate that the torrent of new capital has not been distributed equally — indeed, some of the progress that female founders made in recent years may have eroded.

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During a time of plenty, many female founders are still going without. The Exchange reached out to a number of American and European investors and founders to get their perspective on how today’s venture market treats female founders.

Recurring among the responses was a general view that more women venture capitalists would help lessen the gender gap in investments, and that VCs became more conservative due to COVID-19 and its constituent economic disruption, reverting to offering capital to repeat founders and their existing networks, both groups that are less diverse than the pool of new founders.

Our collection of founders and investors also said that women have been especially double-tasked during the pandemic to take on more domestic responsibilities in part due to sexist societal expectations, adding that that sexism more generally remains a problem that either isn’t improving or is improving too slowly.

But before we get into the core issues that prevent improvements in gender equity in venture funding, let’s check in on the data from last year and contrast it to its antecedents.

What the data show

While there have already been reports on gender disparities in funding, Nokia-backed VC firm NGP Capital made a great contribution to research on the topic with its 2021 dossier.

News: Text Blaze raises $3.3M for its speed-writing automation service

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Text Blaze, which was a part of the recent Winter 2021 Y Combinator accelerator batch, announced that it has closed a $3.3 million seed round. The company’s investment was led by Two Sigma Ventures’s Villi Iltchev and Susa Ventures’s Leo Polovets. The company’s product hybridizes two trends that TechCrunch has been tracking in recent years,

Text Blaze, which was a part of the recent Winter 2021 Y Combinator accelerator batch, announced that it has closed a $3.3 million seed round. The company’s investment was led by Two Sigma Ventures’s Villi Iltchev and Susa Ventures’s Leo Polovets.

The company’s product hybridizes two trends that TechCrunch has been tracking in recent years, namely automation and the written word. On the automation front, we’ve seen Zapier grow into a behemoth, while no-code products and RPA have made the concept of letting software boost worker output increasingly mainstream. And on the writing-assistance side of things, from Grammarly to Copy.ai, it’s clear that people are willing to pay for tools to help them writer better and more quickly.

So what does Text Blaze do? Two main things. First, its Chrome extension allows users to save “snippets” of text that they can add to emails, and other notes in rapid-fire fashion. I might save “Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines” to “/intro in Text Blaze, saving myself lots of time whenever I kick off a new podcast script.

But saving snippets and quickly inserting them into various text boxes in a user’s browser are just part of what makes Text Blaze neat. The product can also save template snippets with various boxes left open for users to fill in. So, a user could have a user-feedback snippet saved, that reserved spots for them to add in names, and other unique information quickly, while reusing the bulk of the text itself.

Text Blaze also has integrations with external services to ensure that its service can save users time. For example, the service can pull in CRM data from Hubspot into a text snippet used in Gmail. The idea is to link different services and data sources automatically, helping users shave minutes from their days, and hours from their weeks.

So far Text Blaze has run lean, according to its co-founder Dan Barak, who told TechCrunch that its staff of four will grow to around 10 this year, thanks to its new capital. Like nearly every startup that we’ve spoken to in recent months, Barak said that Text Blaze is a remote-first startup with a wide hiring lens.

Text Blaze’s model is freemium, with a consumer paid offering that costs $2.99 monthly. The key limitation in its free product, Barak, is a hard cap of 20 snippets. Past that you’ll need to pay. TechCrunch was modestly confused at the low price point, and relatively robust free feature set that the startup is offering. The co-founder explained that the company’s long-term plan is to sell into enterprises, making the pro version of Text Blaze more of a tool to generate awareness in what its service can do more than its final monetization scheme.

Some 70% of the company’s users so far have signed up using their corporate email, which could provide a wide avenue into later enterprise sales. According to the Text Blaze website, business users will pay a little more than double what its prosumer users will.

The company’s strategy appears to be working. Not only is it attracting users — its Chrome extension notes more than 70,000 users — and early revenue, but it also managed to convert Iltchev and Polovets into believers in its product. “When I first saw Text Blaze, it reminded me of the early days of Zapier which helped professionals to automate repetitive tasks, except Text Blaze provides a more approachable and easier to adopt entry point though written communications,” the Two Sigma investor told TechCrunch.

Susa’s Polovets said that he “fell in love with the [startup’s] product,” adding that he “wanted to invest as soon as I tried the product.”

Text Blaze’s round closed a few weeks ago. Let’s see how quickly it can scale with the new funds under its belt.

News: One CMO’s honest take on the modern chief marketing role

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Today’s marketing executives must bring functions and teams together. From sales and marketing alignment to product and everything in between, CMOs are the connective tissue between every function.

There’s no shortage of commentary around the chief marketing officer title these days, and certainly no lack of opinions about the role’s responsibilities and meaning within a company. There’s a reason for that. CMO is the shortest tenured C-suite role — the average tenure of a CMO is the lowest of all C-suite titles at 3.5 years.

That’s because the chief marketing officer’s role is increasingly complex. Qualifications require broad, strategic thinking while also maintaining tactical acumen across several functions. There’s a big disparity in what companies expect from CMOs. Some want a strategist with an eye for go-to-market planning, while others want a focus on close alignment with sales in addition to brand awareness, content strategy and lead generation.

Still other companies want their CMO to emphasize product marketing and management. Ask 10 CMOs how they define their role and you’ll get 10 different answers.

So, I’m sharing my honest, straight from the mouth of a tenured CMO take on what the role actually means, plus the key attributes of today’s modern CMO.

We must be the Master Builder

Hat tip to “The Lego Movie” for this analogy. Today’s marketing executives must bring functions and teams together. From sales and marketing alignment to product and everything in between, chief marketers are the connective tissue between every function. Driving alignment between these functions is table stakes.

Same goes for people teams and culture — I’ve experienced an increase in CMOs serving as the linchpin of a company’s culture. My CEO lives by the famous phrase “culture eats strategy for breakfast” and driving culture alignment now sits squarely on marketing’s shoulders.

Consistently drives new opportunities

Ah, demand generation. Driving new opportunity creation will continue to be a top priority for CMOs, of course. I’m not sharing anything new here, but the stakes are higher. CMOs either produce the numbers or we find another job. Doesn’t get any more straightforward than that. But, simply generating leads to check a box doesn’t cut it in board rooms anymore.