Yearly Archives: 2021

News: ‘The tortoise and the hare’ story is playing out right now in VC

• August 12, 2021
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The unprecedented liquidity entering the venture market in the past year has spurred trends that require VCs to adapt to an environment where startup founders have far more leverage than they used to.

The unprecedented liquidity that has entered the venture market in the past year has spurred several trends that require VCs to adapt to a more competitive environment where startup founders have far more leverage than they did in the past.

Structurally, there are only so many startups looking to raise capital, and even though some founders may be opportunistically pursuing deals they wouldn’t have previously, the supply of capital into venture funds has nonetheless outpaced the demand for those dollars.

This means VCs are in an unusual environment of increasing competition to get in on deals with startups, and as they jockey to win spots on cap tables they’re moving faster than ever to close deals.

What’s more, newcomers in the VC market like Tiger Global as well as a number of non-VC investment funds like PE firms with much larger pools of capital than the market has seen are aggressively pursuing enormous deals in an effort to drive faster exits and returns on their investments.

With so many investors vying for their attention, many founders are taking the opportunity to raise bigger rounds and coming back for additional funding faster than ever, which is apparent in the constant drumbeat of funding news as well as the 250 unicorns and the record $288 billion invested in startups in the first half of this year.

How can VCs adapt and be competitive?

For some, the answer may be moving faster to get in on deals. Strategies like doing more due diligence in advance of ever meeting startups and leveraging technologies like AI to supplement investors’ ability to evaluate companies can help with this. For others, it may be making larger investments and accepting smaller ownership stakes in startups than they’re accustomed to.

News: Chris Sacca’s Lowercarbon Capital has raised $800 million to “keep unf*cking the planet”

• August 12, 2021
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Lowercarbon Capital, a climate-tech focused fund founded by longtime investor Chris Sacca and his wife Crystal Sacca, has closed on $800 million in capital, Sacca announced today in a post on the firm’s site. According to Sacca, the commitments came exceedingly fast — in “just a few days.” Writes Sacca: “It turns out that raising

Lowercarbon Capital, a climate-tech focused fund founded by longtime investor Chris Sacca and his wife Crystal Sacca, has closed on $800 million in capital, Sacca announced today in a post on the firm’s site.

According to Sacca, the commitments came exceedingly fast — in “just a few days.” Writes Sacca: “It turns out that raising for a climate fund in the context of an unprecedented heatwave and from behind the thick clouds of fire smoke probably didn’t hurt. In fact, all that pollution may have lent a warm, beautifying haze to our Zoom calls. Like an Incendiary Doom Glow Insta filter.”

The interest is far from surprising given the mounting and rather stark evidence that life as humans know it is in peril, owing to rising temperatures. On the heels of a deadly floods in Western Germany and China, wildfires in Greece and California, and in advance of yet another heat wave for which people in the Pacific Northwest are currently bracing, a new report released Monday by the United Nations’ climate science research group was clear about the current state of affairs, declaring a “code red for humanity.”

Certainly, some of Lowercarbon’s backers are interested in tech that’s working to reverse some of these trends, but as Sacca notes, if they’re purely focused on the financial rewards that climate-focused tech can reap, that’s fine, too.

“We are thrilled to see how many investors understand the urgency of the climate crisis and are already dedicating their time, as well as their capital, to real solutions,” he says in his post. “However, to be frank, we were also heartened by those investors who actually don’t care that much about the planet and instead are just chasing financial returns.”

Lowercarbon’s very thesis is that “massive change will happen because these types of investments will pay off for sheer business reasons alone,” he adds.

In addition to the Saccas, Lowercarbon is being run by Clay Dumas, a Brooklyn, N.Y.-based partner who is described in his team bio as the firm’s most active investor. Though the Harvard grad hasn’t been in the venture world long — first joining up with Sacca in 2017 to join his earlier firm Lowercase Capital as a partner — he understands the world of politics in a way that few, more “traditional” VCs, might.

After opening a field office for the campaign to elect Barack Obama in 2008, he went on to serve as an aide in the White House to the-then Deputy Chief of Staff and later worked (again in the White House) for the  Office of Digital Strategy.

Lowercarbon’s many dozens of bets to date include Heart Aerospace, a three-year-old, Göteborg, Sweden-based startup at work on an electric regional airliner to which the firm wrote a seed check (and more recently wrote a follow-on check); Holy Grail, a two-year-old, Mountain View, Ca.-based startup that’s prototyping a direct air carbon capture device that is modular and small (it announced seed funding in June); and Cervest, a six-year-old, London-based climate risk platform that says it provides commercial and government entities access to current, historic, and predictive views about how combined weather risks can impact the assets they own. The last raised $30 million in May.

Sacca, who became well-known for his early and outsize bets on both Twitter and Uber, was somewhat famously a judge on the popular TV show “Shark Tank” for several seasons before quitting the show — and venture capital — in 2017, saying he had always intended to retire at age 40. (At the time, he was 42.)

Sacca’s growing concern regarding climate change — and his lack of faith that politicians can make a dent in reversing it — prompted him to rethink that decision. As he told Forbes in March: “We think that markets might actually hold the key to unf***ing the planet.”

According to an Axios report from June of last year, Lowercarbon was originally structured as a family office with tens of millions of dollars to deploy. As of the middle of last year, the only outside money it had accepted was for a “few special-purpose vehicles with institutional investors from Sacca’s prior funds,” the outlet reported.

Now, with a fresh $800 million to invest, Sacca & Co. appear to be fully back to work. In fact, we’ll be talking with Sacca next month at TechCrunch Disrupt; to hear what’s top of mind for him right now, you won’t want to miss that conversation.

News: A new Senate bill would totally upend Apple and Google’s app store dominance

• August 12, 2021
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With two giants calling the shots and collecting whatever tolls they see fit, mobile software makers have long complained that app stores take an unfair cut of the cash that should be flowing directly to developers. Hearing those concerns, a group of senators introduced a new bill this week that, if passed, would greatly diminish

With two giants calling the shots and collecting whatever tolls they see fit, mobile software makers have long complained that app stores take an unfair cut of the cash that should be flowing directly to developers. Hearing those concerns, a group of senators introduced a new bill this week that, if passed, would greatly diminish Apple and Google’s ability to control app purchases in their operating systems and completely shake up the way that mobile software gets distributed.

The new bill, called the Open App Markets Act, would enshrine quite a few rights that could benefit app developers tired of handing 30% of their earnings to Apple and Google. The bill, embedded in full below, would require companies that control operating systems to allow third-party apps and app stores.

It would also prevent those companies from blocking developers from telling users about lower prices for their software that they might find outside of official app stores. Apple and Google would also be barred from leveraging “non-public” information collecting through their platforms to create competing apps.

“This legislation will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance,” said Senator Richard Blumenthal (D-CT), who introduced the bipartisan bill with Sen. Marsha Blackburn (R-TN), and Sen. Amy Klobuchar (D-MN). Klobuchar chairs the Senate’s antitrust subcommittee and Blackburn and Blumenthal are both subcommittee members.

Senator Blackburn called Apple and Google’s app store practices a “direct affront to a free and fair marketplace” and Sen. Klobuchar noted that their behavior raises “serious competition concerns.”

The bill draws on information collected earlier this year from that subcommittee’s hearing on app stores and competition. In the hearing, lawmakers heard from Apple and Google as well as Spotify, Tile and Match Group, three companies that argued their businesses have been negatively impacted by anti-competitive app store policies.

“… We urge Congress to swiftly pass the Open App Markets Act,” Spotify Chief Legal Officer Horacio Gutierrez said of the new bill. “Absent action, we can expect Apple and others to continue changing the rules in favor of their own services, and causing further harm to consumers, developers and the digital economy.”

The Coalition for App Fairness, a developer advocacy group, praised the bill for its potential to spur innovation in digital markets. “The bipartisan Open App Markets Act is a step towards holding big tech companies accountable for practices that stifle competition for developers in the U.S. and around the world,” CAF executive director Meghan DiMuzio said.

Hoping to head off future regulatory headaches, Apple dropped its own fees for companies that generate less than $1 million in App Store revenue from 30% to 15% last year. Google followed suit with its own gesture, dropping fees to 15% for the first $1 million in revenue a developer earns through the Play Store in a year. Some developers critical of the companies’ practices saw those changes as little more than a publicity stunt.

Developers have long complained about the high tolls they pay to distribute their software through the world’s two major mobile operating systems. That fight escalated over the last year when Epic Games circumvented Apple’s payments rules by allowing Fortnite players to pay Epic directly, setting off a legal fight that has huge implications for the mobile software world. Following a May trial, the verdict is expected later this year.

Unlike Apple, Google does allow apps to be “sideloaded,” installed onto devices outside of the Google Play Store. But documents unsealed in Epic’s parallel case against Google revealed that the Play Store’s creator knows the sideloading process is a terrible experience for users — something the company brings up when pressuring developers to stick with its official app marketplace.

The counterargument here is that official app stores make apps safer and smoother for consumers. While Apple and Google extract heavy fees for selling mobile software through the App Store and the Google Play Store, the companies both argue that streamlining apps through those official channels protects people from malware and allows for prompt software updates to patch security concerns that could jeopardize user privacy.

Adam Kovacevich, a former Google policy executive who leads the new tech-backed industry group Chamber of Progress, called the new bill “a finger in the eye” for Android and iPhone owners.

“I don’t see any consumers marching in Washington demanding that Congress make their smartphones dumber,” Kovacevich said. “And Congress has better things to do than intervene in a multi-million-dollar dispute between businesses.”

At least in Google’s case, the counterargument has its own counterargument. Android has long been notorious for malware, but apparently most of that malicious software isn’t making its way onto devices through sideloading — it’s walking through the Google Play Store’s front door.

News: Box reports earnings early to give shareholders time to review financials ahead of board vote

• August 12, 2021
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Box has been in an ongoing dispute with activist investors Starboard Value over control of the board, an argument that is expected to come to a head on September 9th at the annual shareholder meeting. In an effort to show shareholders that the numbers are continuing to improve under the current leadership, Box took the

Box has been in an ongoing dispute with activist investors Starboard Value over control of the board, an argument that is expected to come to a head on September 9th at the annual shareholder meeting. In an effort to show shareholders that the numbers are continuing to improve under the current leadership, Box took the unusual move of releasing its earning report this morning, two weeks ahead of the expected August 25th report date.

Companies don’t normally report ahead of schedule, but perhaps Box sees the opportunity to do some lobbying, or conversely, to counter any negative lobbying that Starboard may be doing with its fellow investors ahead of the vote.

It’s also worth noting that in spite of the meeting being on September 9th, like a lot of voting these days, people will be sending in votes throughout this month, ahead of that day. Box wants to get its latest financial information out there sooner rather than later to catch those early voters before they cast their ballots.

Fortunately for Box and CEO Aaron Levie, the numbers look decent.

Earnings

It’s not hard to see why Box released its earnings early, as the numbers provide an argument for keeping the company’s current leadership in place.

In the three-month period ending July 31, 2021 — the second quarter of Box’s fiscal 2022 — the company generated $214 million in revenue, up 11% on a year-over-year basis. And, as Box is quick to point out, its second consecutive quarter of “accelerating revenue growth.” The company bested its own guidance of $211 to $212 million in revenue for the period.

It matters that Box is showing an ability to accelerate its revenue growth. First, because doing so puts wind in the sales of its stock; quickly growing companies are worth more per dollar of revenue than more slowly growing concerns, and accelerating revenue growth over time is investor catnip.

The accelerating pace of growth over the last half year also provides footing for Box’s leadership to argue that their product choices have been sound, directly supporting their positions that they should remain in charge of the company. If they made good product decisions quarters ago, and those choices are leading to accelerating revenue growth, why swap out the CEO?

Box had more quarterly good news apart from its revenue numbers to disclose. It also reported improved GAAP and non-GAAP operating margins — a key measure of profitability — better billings results than it had previously anticipated for the period. Box’s net retention rate also expanded to 106% from 103% in the sequentially preceding period.

And the company boosted its guidance for its fiscal year from “$845 million to $853 million” to “$856 million to $860 million.”

The counter arguments are somewhat easy to generate, however. Yes, Box’s revenue growth is accelerating, but from an admittedly reduced base; it’s not as hard to accelerate revenue expansion from low numbers as it is from higher base levels. And the company’s net retention is lower than what any business-focused SaaS company would want to report.

Will the good news be enough? Shares of Box are up around 1.5% in today’s regular trading, despite a somewhat mixed overall market. Investors now have to vote with more than just their dollars.

Boardroom context

Starboard bought approximately 7.5% of the company in 2019, and actually stayed fairly quiet for the first year, but at the end of 2020 it started making itself heard with rumors of pressure to sell the company. In what appeared to be a defensive move, Box took a $500 million investment from private equity firm KKR and gave the investor a board seat in April.

The activist investor did not take kindly to that move, writing in a letter to investors in early May, “The only viable explanation for this financing is a shameless and utterly transparent attempt to “buy the vote” and shows complete disregard for proper corporate governance and fiscal discipline.” In that same letter, Starboard made it official that it wanted to take over several board seats, outlining a litany of complaints it had about the way the company was being run. It also made clear that it wanted co-founder and CEO Aaron Levie gone or the company sold.

Box pushed back that the letter and another on May 10th did not accurately reflect the progress that the company had made. In July, Box took the battle public in an SEC filing detailing the back and forth dance that had been going between Box and Starboard since it bought its stake in the company

So far, the cloud content management company has staved off all attempts to force its hand and sell the company or fire Levie, but this is all going to culminate with the shareholder’s vote. It’s truly a battle for the soul of the company.

If Starboard convinces shareholders to give it several seats on the Box board, it would probably be able to push out Levie, take control of the company and likely sell it to the highest bidder. The early financial report released today, while not exactly stellar, shows a pattern of increasingly good quarters, and that’s what Box is hoping voters will focus on when they fill out their ballots.

News: 3 lies VCs tell ourselves about startup valuations

• August 12, 2021
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VCs need to stop engaging in self-delusion about why a valuation that is too high might be OK. Here are three common lies investors tell themselves to rationalize an undisciplined valuation decision.

I’m frequently asked by journalists whether I think venture capital valuations are too high in the current environment.

Because the average venture capital fund returns only 1.3x committed capital over the course of a decade, according to the last reported data from Cambridge Associates, and 1.5x, according to PitchBook, I believe the answer is a resounding “yes.”

So when entrepreneurs use unicorn aspirations to pump private company valuations, how can investors plan for a decent return?

At the growth stage, we can easily apply traditional financial metrics to venture capital valuations. By definition, everything is fairly predictable, so price-to-revenue and industry multiples make for easy math.

But at the seed and early stages, when forecasting is nearly impossible, what tools can investors apply to make pricing objective, disciplined and fair for both sides?

For starters, venture capitalists need to stop engaging in self-delusion about why a valuation that is too high might be OK. Here are three common lies we tell ourselves as investors to rationalize a potentially undisciplined valuation decision.

Lie 1 : The devil made me do it

If a big-name VC thinks the price is OK, it must be a good deal, right?

Wrong.

While the lead investor who set the price may be experienced, there are many reasons why the price she set may not be justified. The lead may be an “inside” investor already, committing small amounts or  —  believe it or not  —  simply not care.

Insiders are investors who have previously placed capital in the startup. They face a conflict of interest because they are rooting for the success of the startup and generally want the company’s stock price to keep growing to show momentum.

This is one of the reasons why many venture capitalists prefer not to lead subsequent rounds: Pricing decisions can no longer be objective because investors are effectively on both sides of the table at the same time.

Inside-led rounds happen all the time for good reasons  —  including making a funding process fast so that management can focus on building the business  —  but because these decisions are not at arm’s length, they cannot be trusted as an objective indicator of market value. Only a test of the open market or an independent third-party valuation can accomplish this goal.

It’s also the case that a relatively small investment can relax pricing discipline in some firms. If a funding amount represents 1% of the fund size or less, it’s possible that the VC team may view the investment as “putting a marker down” and not worry about whether the price offers an attractive multiple. For this reason, it’s a good idea to check the lead investor’s check size against the overall size of the firm’s latest fund.

There are other reasons why investors may not care about the valuation. Some VCs are “logo hunters” who just want to be able to say they were investors in a particular company. If you outsource valuation discipline to a lead investor who doesn’t value financial results, your own returns may suffer.

Lie 2:  We are getting a deal because the price is flat from the last round

If the last round valuation was $50 million and the current round valuation is about the same, we tell ourselves it’s gotta be a good deal.

Again, this is faulty thinking, because the last round’s price might have been too high.

News: Embedded finance won’t make every firm into a fintech company

• August 12, 2021
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Starbucks offers an integrated wallet and payments within its app, and Lyft offers its drivers a debit card. But that doesn’t make them fintech companies.

A short decade after software started eating the world, along came headlines about every company becoming a fintech thanks to innovation and growth in embedded finance business models.

This narrative oversimplifies the evolution that’s happening in the financial services sector. Storing and moving money and extending credit in a regulated environment is difficult. And differentiating your offering from incumbent financial institutions requires much more than superficial tweaks.

What really makes a fintech company extends far beyond user interface enhancements and delivering financial services to end customers. It’s what’s “under the hood” — the full-stack approach that allows fintech companies to truly innovate for their customers.

Embedded finance helps companies and brands outside of the core financial sector distribute financial services. This requires varying levels of effort from the company and looks like anything from Starbucks offering an integrated wallet and payments within its app to Lyft offering a debit card to their drivers. But that doesn’t make Starbucks or Lyft fintech companies.

The fallacy behind the hype

The “every company will be a fintech” stance investors are bullish on conflates multiple approaches to inlaying financial offerings, coupling the resurgence of white-labeled financial services (which have been around for decades) with the rising banking, payments and lending-as-a-service players. The latter approach allows companies to customize their financial product experience while outsourcing many core financial services tasks. The former is simply distribution through embedded delivery.

There are four core tenets to fully operate as a financial services provider: a customer-facing product, transactional infrastructure, risk management and compliance, and customer servicing. In the case of lending, there is a fifth tenet: Companies also need to be able to manage capital. Embedded financial services help companies sidestep the majority of what it really means to be a fintech.

White-labeling versus “becoming a fintech”

While embedded finance is hot today, white-labeled financial services have been around for decades. Branded credit cards, for example, are a common paradigm for white-labeling. They quickly became a lasting way to incentivize consumer loyalty but don’t signal real effort or know-how in financial services. United and Alaska don’t run credit checks, configure billing or handle disputes for cardholding customers, nor do they assume any risk by embossing their logo on a card. The partnerships are major money makers for airlines while the risk stays on the financial institutions’ side (Chase, Bank of America and Visa). This risk can even account for significant loss on the financial side: According to American Express, 21% of its outstanding credit card loans belonged to people with a Delta credit card a few years ago.

This white-labeling approach is becoming common for other services, coming to life in forms like banking offerings from cell carriers, and it’s by design: Financial services are complex and highly regulated, so brands prefer to defer most of the work to the experts. So while United, Delta or T-Mobile offer financial services under their brand, they are definitely not becoming fintech companies.

In contrast, some corporations are seeing the opportunity to build financial services from the ground up. Walmart’s move to snag Goldman Sachs talent to lead its foray into finance (with Ribbit at the helm) shows promise for a true fintech spinout.

The investment in expertise in compliance and risk management furthers the company’s potential to build detailed and relevant infrastructure from the get-go — a significant step beyond the retailer’s many existing white-labeled financial partnerships.

The limitations of platforms as a service

Tools and turnkey solutions that help non-finance companies build financial applications more recently came into the mix: VCs are enthusiastic about new players building embedded payments, lending and, more recently, banking platform services (also known as BaaS) through APIs and backend tools.

As opposed to financial infrastructure services provided directly by sponsor banks or processors providing payments or ledger services, these platforms abstract the underlying infrastructure, wrap them with friendly-to-use APIs, and bundle core financial elements like risk management, compliance and servicing. While these platforms do offer some self-efficacy for companies to provide financial services, their major limitation is that they’re general purpose by design.

Fintechs found an opportunity to serve customers overlooked and underserved by traditional finance through specialization. Traditional financial institutions long applied the generalist model, carrying hundreds of SKUs and serving all segments. This strategy inevitably led banks to invest more in services for their most profitable customers, optimizing for their needs. Less profitable segments were left with stale and one-size-fits-all offerings.

Fintechs’ success with these underserved segments is derived from a relentless pursuit and laser focus on addressing core customers’ unique needs, building products and services designed for them. In order to deliver on this promise, fintechs must innovate across all layers of the stack — from the product experience and feature set to the infrastructure and risk management, all the way down to servicing.

UI is not nearly enough to differentiate, and addressing customers’ needs while minding overall unit economics is critical. One fintech’s choices on these matters may be completely different from another if they address different segments — it all boils down to tradeoffs. For example, deciding on which data sources to use and balancing between onboarding and transactional risk look different if optimizing for freelancers rather than larger small businesses.

In contrast, third-party platform providers must be generic enough to power a broad range of companies and to enable multiple use cases. While the companies partnering with these services can build and customize at the product feature level, they are heavily reliant on their platform partner for infrastructure and core financial services, thus limited to that partner’s configurations and capabilities.

As such, embedded platform services work well to power straightforward commoditized tasks like credit card processing, but limit companies’ ability to differentiate on more complex offerings, like banking, which require end-to-end optimization.

More generally and from a customer’s perspective, embedded fintech partnerships are most effective when providing confined financial services within specific user flows to enhance the overall user experience.

For example, a company can offer credit at the point of sale through a third-party provider to enable a purchase. However, when considering general purpose and standalone financial services, the benefits of embedded fintech are much weaker.

Building a product of choice

The biggest proponents of embedded finance argue that large companies and brands can be successful with finance add-ons on their platforms because of their brand recognition and install base.

But that overlooks the reality of choice in the market: Just because a customer does one facet of their business with a company doesn’t necessarily mean they want that company as their provider for everything, especially if the service is inferior to what they can get elsewhere.

While the fintech market booms and legacy brands continue to buy into the opportunity, verticalized, full-stack fintechs will trump their generic offerings time and time again. Some aspects of embedded finance and white-labeling will continue to crop up or prevail, like payment processing and buy now, pay later services. But customers will continue to choose the banks/neobanks, lenders and tools built for them and their own unique needs, bucking the “every company is a fintech” fallacy.

News: Sequoia leads $13M investment in Aalto, an online marketplace that lets homeowners sell directly to buyers

• August 12, 2021
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If you’ve ever sold a house, you know what a pain it is to go through the process of listing, showing and negotiating the sale of your home. It’s so much of a pain that many people put it off as long as possible because they don’t want to deal with it. The result is

If you’ve ever sold a house, you know what a pain it is to go through the process of listing, showing and negotiating the sale of your home.

It’s so much of a pain that many people put it off as long as possible because they don’t want to deal with it. The result is fewer homes on the market, which exacerbates existing housing shortages in already tight markets such as the San Francisco Bay Area.

In an attempt to help address the problem, one startup called Aalto has built out a new kind of homeowner marketplace. It’s a private one that doesn’t rely on the MLS, and gives sellers more control of how and when their homes are listed, shown and sold. Today Aalto is emerging from stealth and announcing that it has raised $13 million in a Series A funding round led by Sequoia Capital. 

Background Capital, Defy Partners, Maple VC and Greg Waldorf — the first investor at Trulia — also participated in the financing, which brings Aalto’s total raised to $17.3 million since its 2018 inception.

Aalto’s online marketplace, which launched in April of this year, directly connects homeowners to buyers. The company claims that a potential seller can list their home on its platform in five minutes, rather than a typical process that is closer to five weeks. Since launching in the Bay Area, Aalto has built up a network of more than 30,000 buyers and more than two dozen homes have been sold via the marketplace. Currently, about 85 homes are listed for sale on its platform, with an average of one new home being added per day. 

Ironically, Aalto founder and CEO Nick Narodny is the son and brother of real estate agents. He concedes that the startup’s platform could be seen as a threat to the industry, but notes the trade-off is that more homes end up on the market, which helps minimize the region’s affordability crisis, and sellers see higher returns.

Currently, 5-10% of total available inventory listed in competitive markets like Dublin, Fremont, Mill Valley and Milpitas are listed on the Aalto platform. And, Narodny said, the company is on its way to bring more homes to market, sooner.

“Buying or selling a home is one of the biggest events people will ever experience, but it’s also a tedious, outdated process,” he said. 

Image Credits: Nick Narodny / Aalto

Aalto aims to double the number of homes on the market in the Bay Area by streamlining the way homeowners can list, without the third-parties or contracts required elsewhere. This dramatically lowers the bar to sell, according to Narodny, bringing homes to market an average of four and a half months earlier than traditional real estate processes.

The platform offers a preview listing feature that allows sellers to list with no commitment. They can also build a waitlist of qualified buyers for their home while they consider a sale. 

“We pull the tax record and info to make it super easy and ask the seller to fill out a Q&A,” Narodny said. After filling out that info, sellers can then see interested buyers and those that are prequalified or that can make all cash offers.

The process is also less intrusive, Narodny said, by giving the seller more of a say in who sees their home and when. For example, sellers can also line up virtual or in-person showings on their own schedule. And they can sell the homes on their timelines — whether it be in a few weeks, or few months.

For example, a San Francisco-based hand surgeon recently listed his home on the Aalto platform with the desire of moving at the end of October. More than two dozen people were interested and he allowed a few people to tour the home. He was able to sell the house based on a timeline that was more beneficial for him.

“People can sell totally on their terms and are much more connected in the process,” Narodny said. Busy professionals such as the surgeon with director and above titles and growing families so far are among the most common sellers on the platform.

Image Credits: Aalto

Also, there is an economic benefit. By removing a middleman, or agent, from the process, sellers can make an average of $44,000 more on their home sale, according to Narodny. The startup charges a 1% fee, compared to the 2-2.5% commission that an agent charges. But if a seller requires help “with the hard stuff,” Aalto has “expert, licensed” people available.

Sellers can also craft descriptions of their homes in a way that comes across as more personal than if an agent does it, according to Narodny.

“We have them tell their own story of their home,” he said.

It also gives them more privacy. For example, an MLS will show when a home was listed and any price reductions. A home listed on Aalto won’t include any of that information. Also similar to Airbnb, the seller’s exact address is not shared, just a radius. 

The benefit for buyers — besides having more options — is the ability to set up instant alerts, join waitlists and schedule showings in one easy-to-use platform. They can also “anonymously prequalify and share that with a seller,” Narodny said.

Bryan Schreier, partner at Sequoia Capital, believes that real estate is “one of the last giant industries with a 1900s experience.”

“It’s a painful process where the seller has limited visibility and the buyer is holding their breath after every bid,” he said. “Aalto is the first company to reinvent how homes are bought and sold by putting the consumer first. It goes far beyond a listing site and reinvents every aspect of the experience to be customer oriented rather than realtor oriented.”

Looking ahead, the company plans to expand beyond the Bay Area to other major metropolitan real estate markets in California and across the country. It also plans to use its new capital to continue improving its technology.

Meanwhile, Narodny insists that while the platform may be seen as a threat by some agents, it’s not a malicious thing.

“My family and I are very close. It’s something that I talk about with them quite a bit,” he told TechCrunch. “I believe Aalto truly is additive. We still work with them every day and will continue to…It’s not like agents are totally being replaced.”

News: Foxconn plans to build EV factories in the US and Thailand in 2022

• August 12, 2021
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Foxconn is getting more serious about its electric vehicle ambitions. The company told investors during an earnings call that it plans to build EV factories in the US and Thailand in 2022.

Editor’s note: This post originally appeared on Engadget.

News: Seth Rogen is coming to TechCrunch Disrupt to talk about the weed business

• August 12, 2021
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TechCrunch is thrilled to announce Seth Rogen is coming to TechCrunch Disrupt this September. The movie-star-turned-pot-businessman is speaking on his latest venture: Houseplant, his privately funded entrée into the cannabis business. Houseplant made a big splash when it launched in 2021, and it continues to get a lot of attention in the noisy world of

TechCrunch is thrilled to announce Seth Rogen is coming to TechCrunch Disrupt this September. The movie-star-turned-pot-businessman is speaking on his latest venture: Houseplant, his privately funded entrée into the cannabis business.

Houseplant made a big splash when it launched in 2021, and it continues to get a lot of attention in the noisy world of cannabis. But, of course, having Seth Rogen involved helps keep the company relevant.

You know Seth. Seth Rogen is one of the biggest stars in the entertainment world and isn’t shy about his use of cannabis — the plant is nearly a co-star in each of his movies. And now he’s selling different strains and lifestyle house goods, too.

Houseplant quickly gained a large following. As a result, we have a lot of questions. First, we want to know about Houseplant’s trajectory and its involvement with the cannabis giant, Canopy Growth. And then there’s Houseplant’s use of social media, which is instrumental in the company’s success. How can other cannabis companies learn from Houseplant’s strategies? And then there’s the celebrity angle, too. How can a brand net a high-profile spokesperson or investor, and at what cost?

Houseplant isn’t just a variety project for co-founders Seth Rogen and Evan Goldberg. This company can become a significant player in the cannabis world, and we’re thrilled to have Seth on our stage, answering questions and giving advice.

Passes are now available for the virtual show and there’s a handful of pass options with discounts for founders, students and non-profits. Get your ticket soon though, prices more than double on September 20. We hope to see you online.

News: New York City’s enterprise tech startups could be heading for a super-heated exit wave

• August 12, 2021
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All told there were 22 venture rounds for New York City enterprise startups worth $100 million or more in H1 2021. How did they raise so much?

We lied when we said that The Exchange was done covering 2021 venture capital performance. Yesterday, we dug into preliminary Q3 data for the Chinese startup market. This morning, we’re looking back at just what startups in New York City managed in the first half of the year.

Some startups, at least. We paged through a report from New York City-based Work-Bench, a venture capital group focused on enterprise technology. The firm ran the numbers on Q1 and Q2 venture performance in their target market. What emerged from the data is a startup market busy accelerating its ability to raise capital, mint unicorns and, increasingly, generate outsized exits.

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Gone are the days when the New York startup ecosystem, perennially in Silicon Valley’s shadow, was more hype than substance. (In recent news, Work-Bench recently raised a new $100 million fund.)

There’s a lot to chat through, so we got Work-Bench partner Jonathan Lehr — one half of a founding pair that includes Jessica Lin — to answer our questions. Let’s explore just how large the New York City venture capital market has grown, where the funds are flowing in enterprise-startup terms, and discuss the pace at which the city is minting new unicorns — can it find enough exits for so many $1 billion startups?

That final question is one that we have about essentially every startup hub in the world. Perhaps New York City will provide a blueprint for how to think about an ever-larger unicorn stable that seems to have a wider entrance than exit.

A venture bonanza

At a state level, New York had a huge start to 2021. As with many startup ecosystems, there was far more venture capital activity in the state during the first half of 2021 than in the same period of 2020.

CB Insights data paints a clear picture: In the first half of 2020, New York-based startups raised $7.6 billion across 667 rounds. In the first half of 2021, however, those numbers swelled to $22.4 billion from 847 deals.

Enterprise venture funding saw similar gains. Per the Work-Bench report, enterprise startups in New York City raised $6.7 billion in the first and second quarters of this year, up 146% from the first half of 2020, when $2.7 billion was raised. Even more notable, Work-Bench reports that venture funding of enterprise startups in its city was up 12x in H1 2021 compared to a full-year 2014 tally.

In a nutshell, the figures detail the rise of New York’s key startup market in the last decade.