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News: What’s the board’s role in an early-stage startup?

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Investors often ask founders about their board: It says a lot about their character, their judgment and their willingness to be challenged.

What’s the board’s role in an early-stage startup?

Startup founders frequently ask me about the role of a board of directors. A board can be a crucial asset in an early-stage startup.

Here’s a framework for how it can help drive success at your company: Strategy, People, Image, Finance and Systems for compliance, or “SPIFS.”

What is a board of directors, anyway?

The board of directors helps with governance of the company. U.S. law requires that any company have one, though does not require how big it should be. By generic definition, the board of directors consists of elected individuals that represent shareholders. It is the governing body that provides company oversight and helps set business policy and strategy.

On a more practical level and in a startup environment, the board can aid in creating a successful business strategy, putting together the right management team, developing branding, building good financial habits, and avoiding legal and compliance issues. The needs and composition of the board will change depending on the startup’s stage, management and financing history (e.g., if there are preferred shareholders, investors that require a board seat and more).

Investors often ask founders about their board for two reasons. First, it says a lot about their character, their judgment and their willingness to be challenged. The founder can typically choose who is on their board (through careful selection of investors and advisers) and negotiate a board structure they prefer.

Typically, a healthy board will have a good balance between common shareholders, preferred shareholders and independents. It also helps investors and analysts understand who will ask critical questions and give important advice to the company’s executive management, especially when the going gets tough (it inevitably does!).

What exactly can a board help you do?

After 20 years as a venture capitalist and board member, I boiled down the value of a board into five main pieces under the acronym SPIFS: Strategy, People, Image, Finance and Systems for compliance.

Image Credits: Dell Technologies Capital

Strategy

Setting business strategy is one of the main ways that the board helps founders, especially if it’s their first time running a business. It is a valuable sounding board for validating that you have taken a sober account of the market and have the right plan to develop your product and acquire customers.

The board should ask these questions when guiding founders through setting strategy:

• How do I win?
• What problem am I solving?
• Why is my product the best to solve that problem?
• How do I differentiate against my competitors?
• Do I have the right go-to-market strategy?
  

  

News: Hubspot CEO moving to exec chairman role as company promotes Yamini Rangan to CEO

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Boston-based CRM company Hubspot announced today that co-founder and CEO Brian Halligan would be stepping into the executive chairman role and CMO Yamini Rangan would be taking over as CEO next month on September 7th. Rangan joined the company in January 2020 after stints at Dropbox, Workday and SAP. Her strong background in engineering, sales

Boston-based CRM company Hubspot announced today that co-founder and CEO Brian Halligan would be stepping into the executive chairman role and CMO Yamini Rangan would be taking over as CEO next month on September 7th.

Rangan joined the company in January 2020 after stints at Dropbox, Workday and SAP. Her strong background in engineering, sales and marketing should prove helpful as she takes over the chief executive role. It’s worth noting that Halligan suffered a snowmobile accident earlier this year, and while he has recovered now, Rangan ran the company in his absence, perhaps helping lay the ground work for this decision  Halligan wrote in a blog post announcing his decision that she is completely prepared to take on this role.

“Yamini has been overseeing day to day operations at HubSpot since March, managing Board meetings, the HubSpot earnings call, and key hiring and growth initiatives, working closely with Dharmesh and the rest of the leadership team. She’s made HubSpot better by being here, and I know that trend will continue with her as CEO.,” Halligan wrote.

Brent Leary, founder and principal analyst at CRM Essentials, who has been following the company since early days, says he isn’t surprised to see a change like this. “With the company recently hitting its 15-year anniversary it really isn’t a huge surprise that something like this is happening. And given all the success they’ve had in growing the company to this point, you have to believe they’ve been preparing for this move for quite some time,” Leary told TechCrunch.

The announcement came as the company released its Q22021 revenue, which looked to be pretty solid coming in at $310.8 million up 53% over the same period last year. The vast majority, over $300 million was subscription revenue with the remainder coming from professional services, a ratio that you would expect for a company like this. The revenue puts them on a nice run rate of over $1.4 billion.

The company was founded in Boston in 2006 by Halligan and Dharmesh Shah and raised over $100 million, according to Crunchbase data. It was an early promoter of content marketing, using quality content, often in the form of company blogs, to drive website traffic and increase sales. It’s something that’s widely accepted now, but when they started the company it was not well known and they helped bring the concept to the mainstream.

Hubspot later moved into a broader CRM platform after going public in 2014. Along with Wayfair, Hubspot is one of the big success stories to come out of the Boston startup scene and go public, helping to fuel the city’s startup ecosystem with the money the founders made on their successful IPOs. Hubspot stock was up over 2% in after market trading on the news, perhaps signaling that investors are pleased with the company’s transition plan.

News: TikTok confirms pilot test of TikTok Stories is now underway

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Twitter may have shut down its Stories features known as Fleets, but the Stories format will continue to invade other social platforms. TikTok today confirmed it’s piloting a new feature, TikTok Stories, which will allow it to explore additional ways for its community to bring their creative ideas to life. The company notes the new

Twitter may have shut down its Stories features known as Fleets, but the Stories format will continue to invade other social platforms. TikTok today confirmed it’s piloting a new feature, TikTok Stories, which will allow it to explore additional ways for its community to bring their creative ideas to life.

The company notes the new feature will be another option, in addition to its existing storytelling tools like videos, Duets, Stitch and LIVE — it’s not meant to replace them.

TikTok didn’t say how long the pilot test would run or whether it would result in a public launch. However, we understand the test has been running for several days, not weeks or months. It is available in a small handful of non-U.S. markets for the time being, with the goal of gaining insight and feedback from TikTok users.

The current set of features may or may not make it to the public product, we should warn.

The feature was discovered by social media consultant Matt Navarra, who is often among the first to find new features in social apps. In this case, he tells us that several tipsters brought screenshots of TikTok Stories to him, but it was initially unclear whether or not it was a hoax.

The timing, of course, was somewhat suspect — Twitter had just shut down Fleets in what was a fairly high-profile example of a failure to make Stories work on a social platform, despite their popularity on other popular apps, like Snapchat, Instagram, Facebook and even, as of late, Pinterest.

From the screenshots and videos of TikTok Stories in action, we see a product that appears to be, for the most part, something that looks familiar to users of Stories on other platforms.

Users can tap a camera button from the new navigation bar on the left side of the screen to create their first Story, then use common tools like those to add text or stickers, insert sounds and even use effects on their content. Like other platforms, users can either record videos or upload photos — the latter which opens up TikTok to take advantage of users’ larger camera rolls, rather than relying only on video.

Where TikTok’s version of Stories differentiates itself is that it allows users to comment publicly on the creator’s content. These comments are public, the app explains, as mutual friends can see each other’s comments. There is also another tab where you can see how many people viewed a given Story, and whether or not you’re following those users. A button will allow you to click to follow people back, if you choose.

TikTok’s Stories are also ephemeral and disappear in 24 hours, the app’s tutorial explains.

To view Stories from other creators, you can scroll through the new sidebar and tap on the creator’s avatar to watch their content. (This almost looks like a vertical version of Twitter’s Fleets bar, even down to the blue rings around creators’ profile photos.)

The addition of Stories offers TikTok users who don’t post with regularity (or at all) an easier way to start engaging with TikTok’s tools by getting started with a more comfortable and familiar format. It can also provide creators with a way to interact casually with fans in between their more polished and edited TikTok video posts.

But it also gives TikTok a much larger surface where it could eventually run advertisements, assuming it can first properly moderate the inevitable attempts at skirting its community guidelines that result from launching an “ephemeral” feature.

The feature is also a direct shot across Instagram’s bow, following the Facebook-owned app’s direct attempt to copy TikTok with Reels.

TikTok declined to say which markets, specifically, can try out TikTok Stories. Screenshots show the feature described in English and on Android phones, however.

Though Stories may have failed on Twitter, the platform isn’t known for being a home for rich, creative tools, like TikTok. Meanwhile, TikTok believes in exploring any creative tool that could allow its users to express themselves — whether that’s through video, livestreaming, interacting with others or now, through ephemeral, short-form content.

News: Uber shares fall despite revenue beat as its core operations continue to lose money

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Today after the bell U.S. ride-hailing giant Uber reported its second-quarter financial results. The company’s numbers come a day after its domestic rival, Lyft, shared its own Q2 earnings. Notably while Lyft managed to generate positive adjusted EBITDA in the second quarter, Uber did not. However, Uber did generate positive net income of $1.14 billion

Today after the bell U.S. ride-hailing giant Uber reported its second-quarter financial results. The company’s numbers come a day after its domestic rival, Lyft, shared its own Q2 earnings.

Notably while Lyft managed to generate positive adjusted EBITDA in the second quarter, Uber did not. However, Uber did generate positive net income of $1.14 billion in the quarter thanks to its investments in other companies like Didi and Aurora Innovation.

From the top, Uber’s gross bookings totaled $21.9 billion in the second quarter, up 114% compared to the year-ago period. That gross platform spend resulted in $3.93 billion in revenues at Uber, up 105% from the company’s $1.91 billion Q2 2020 results.

Its Q2 performance was enough to keep Uber on track towards its pre-tax profitability goal, with the company reiterating that it will reach adjusted EBITDA profitability by the fourth quarter, per its earnings release.

Analysts had expected the company to post revenues of $3.74 billion, and earnings per share of -$0.51, per data collected by Yahoo Finance. Shares of Uber are off 5.4% in after-hours trading, despite the company’s earnings per share besting analyst expectations.

Digging into the company’s individual business operations, in gross bookings terms, Uber’s ride business posted the largest growth in Q2 2021, growing 184% from its year-ago result to $8.84 billion. Delivery, a larger chunk of gross bookings at the company, grew 85% in Q2 2021 to $12.91 billion compared to its year-ago comparable.

Uber derives less revenue per dollar of delivery gross bookings than it does in ride-hailing, with its two businesses generating $1.96 billion and $1.62 billion in revenues, respectively, despite their massive differential in total consumer spend.

Freight, Uber’s smallest named division in revenue terms, grew 64% to $348 million. Despite its small size, Uber has been expanding the division and making strategic acquisitions and partnerships as a means to help the segment to break even on an Adjusted EBITDA basis by the end of 2022.

Last month, Uber Freight acquired Transplace for about $2.25 billion from private equity group TPG Capital. The deal involved $750 million in Uber stock with the remainder in cash.

Uber’s two key businesses were not profitable in aggregate, with the company’s ride-hailing and delivery businesses not managing to save the company from negative adjusted profits. However, Uber’s rides business did manage to post $179 million in positive adjusted EBITDA on its own — down from the company’s Q1 2021 result — while the company’s delivery business posted another quarter of negative adjusted profits, turning in -$161 million worth of adjusted EBITDA.

Recall that Uber’s ride-hailing adjusted EBITDA pales in comparison to the company’s unallocated expenses; Uber’s adjusted EBITDA for the second quarter of 2021 came to -$509 million, an improvement of 39% compared to the year-ago period, but still a long way from breakeven.

But Uber’s quarter had a highlight to share in the form of other income. Uber’s operating loss of $1.19 billion was more than ameliorated by the company earning $1.93 billion in non-operating income. That was mostly derived from $1.91 billion in unrealized gains on “debt and equity securities,” including “a $1.4 billion unrealized gain on [its] Didi investment and a $471 million unrealized gain on [its] Aurora Investments recognized in the second quarter of 2021.”

Didi went public in the second quarter.

Turning to geographic results, Uber’s fastest recovery came in the APAC region, where revenue soared 227% from $217 million in the year-ago quarter to $709 million in the company’s most recent three-month period. EMEA came in second, in growth terms, expanding top line 159% from $358 million to $929 million over the same time frame. The United States and Canada posted revenue growth of 76% from $1.13 billion to $1.98 billion, and Latin America managed a more modest 44% rebound in the quarter.

News: Venture capital undermines human rights

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VC firms’ failure to carry out adequate due diligence means that a vast majority of them are failing in their responsibility to respect human rights.

The future of technology is determined by a handful of venture capitalists. The world’s 10 leading venture capital firms have, together, invested over $150 billion in technology startups. The venture capitalists who run these firms decide which startups today will develop the new platforms and technologies that will shape our lives tomorrow.

There is a startling lack of diversity within the venture capital sector. This means that a small group of men — mostly white men — make decisions that affect all of us. Unsurprisingly, they all too often ignore the broader societal and human rights implications of these investment decisions.

We all live in a world shaped by venture capital. As of 2019, 81% of all venture capital funds worldwide are clustered in just a handful of countries, primarily in the U.S., Europe and China, which in turn are shaping the future of technology. If you spend time on Facebook or Twitter, use Google, travel in an Uber or stay in an Airbnb, then you’ve experienced firsthand the impact of venture capital funding.

Venture capital firms, which provide equity financing for early- and growth-stage startups, play a critical gatekeeper role, deciding which new technologies and technology companies will receive funding.

All businesses — including venture capital — have a responsibility to respect human rights. In order to ensure that their investments are not undermining our human rights, it is therefore critical for venture capital firms to conduct due diligence processes before making investments.

Amnesty International recently surveyed the world’s largest venture capital firms and startup accelerators. Of the world’s 10 largest venture capital firms, not a single one had an adequate human rights due diligence process that met the standards set forth in the UN Guiding Principles on Business and Human Rights.

Unfortunately, this is true of the broader venture capital sector as well. Overall, of the 50 VC firms and three startup accelerators analyzed by Amnesty International, we found that almost all of them lacked adequate human rights due diligence policies and processes.

This failure to carry out adequate due diligence means that a vast majority of VC firms are failing in their responsibility to respect human rights.

This almost complete lack of respect for human rights among the world’s largest venture capital firms has three key impacts. First, and most immediately, it means that venture capital firms invest in companies whose products and services have been implicated in ongoing human rights abuses, such as companies that provide support to the Chinese government’s repression of the Uyghur population in Xinjiang and across China.

Second, it means that venture capital firms continue to fund companies whose business models have a significant negative impact on human rights, including our privacy and labor rights. For instance, leading venture capital firms continue to support companies that rely on app-based or “gig” workers, who often face exploitative or otherwise abusive work conditions, as well as companies whose “surveillance capitalism” business model undermines our right to privacy.

Third, the lack of human rights due diligence by venture capital firms dramatically increases the risk that they fund new and “frontier” technologies without ensuring that adequate human rights safeguards are in place.

For instance, the application of increasingly powerful artificial intelligence/machine learning (AI/ML) tools across a wide variety of sectors risks amplifying existing societal biases and discrimination. Seemingly objective algorithms can be biased by reliance on incomplete or unrepresentative training data, and/or by replicating the unconscious bias of those who developed the algorithms.

This is a critical blind spot, especially as VC-funded startups seek to disrupt such fundamental parts of our lives as education, finance and health.

The negative impacts of the VC firms’ lack of human rights due diligence — especially regarding issues like algorithmic bias — are magnified by these firms’ own lack of gender and racial diversity. For instance, women comprise only 23% of venture capital investment professionals (i.e., those involved in deciding which startups to fund).

The numbers are even worse when it comes to racial diversity — just 4% of investment professionals at VC firms in the U.S. are Latinx, and only 4% are Black. Groups like Blck VC, Diversity VC and digitalundivided have been calling attention to this issue for years, but venture capitalists have been slow to respond so far.

This lack of diversity is mirrored in the gender and racial composition of founders who receive VC funding. In 2018, all-female founding teams received just 2.2% of all U.S.-based venture funding. At the same time, Black and Latinx founders received less than 2.3% of all U.S.-based venture capital funding in 2019.

With power comes responsibility. Venture capital firms need to institute human rights due diligence processes that meet the standards set forth in the UN Guiding Principles on Business and Human Rights.

Further, they should provide support to their portfolio companies to ensure that they comply with human rights standards. Venture capital firms should also publicly commit to hiring more diverse teams, especially in investment-related positions. Finally, they should publicly commit to funding more diverse startup founders as part of their flagship funds.

VC firms have a responsibility to ensure that their investments are not causing harm. A responsibility that they have, to date, largely ignored.

News: Japanese startup ispace raises $46M to support planned moon missions

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Japanese startup ispace has raised $46 million in a fresh round of Series C funding as it looks to complete three lunar lander missions in three years. The funding will go toward the second and third of the planned missions, scheduled for 2023 and 2024. The first mission, which ispace aims to conduct in the

Japanese startup ispace has raised $46 million in a fresh round of Series C funding as it looks to complete three lunar lander missions in three years.

The funding will go toward the second and third of the planned missions, scheduled for 2023 and 2024. The first mission, which ispace aims to conduct in the latter half of 2022, is being furnished by earlier financing.

The Series C was led by Japanese VC firm Incubate Fund, with additional investment from partnerships managed by Innovation Engine, funds managed by SBI Investment Co., Katsunori Sago, Aizawa Investments, and funds managed by HiJoJo Partners and Aizawa Asset Management. Incubate Fund’s investments in ispace stretch back to the company’s seed round in 2014.

Ispace’s total funding now stand at $195.5 million.

The company said last month it had started building the lunar landing flight module for the 2022 mission at a facility owned by space launch company ArianeGroup, in Lampoldshausen, Germany. The lander for that first mission, the Hakuto-R, will take three months to reach the moon, largely to save costs and additional weight from propellant. It will deliver a 22-pound rover for Saudi Arabia’s Mohammed bin Rashid Space Center, a lunar robot for the Japan Aerospace Exploration Agency, and payload from three Canadian companies. The lander will reach the moon aboard a SpaceX Falcon 9 rocket.

The 7.5 foot-tall Hakuto-R will also be used in the second mission in 2023, to deposit a small ispace rover that will collect data to support the company’s subsequent missions to the moon. For the final mission, the Toyko-based startup is developing a larger lander in the United States.

Ispace describes its long-term goal as being a “gateway for private sector companies to bring their business to the Moon.” The company has particular interest in helping spur a space-based economy, noting on its website that the moon’s water resources represent “untapped potential.”

News: Enterprise AI 2.0: The acceleration of B2B AI innovation has begun

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Two decades after businesses started deploying AI solutions, one can argue they’ve made little progress in achieving significant gains in efficiency relative to the hype that drove expectations.

Two decades after businesses first started deploying AI solutions, one can argue that they’ve made little progress in achieving significant gains in efficiency and profitability relative to the hype that drove initial expectations.

On the surface, recent data supports AI skeptics. Almost 90% of data science projects never make it to production; only 20% of analytics insights through 2022 will achieve business outcomes; and even companies that have developed an enterprisewide AI strategy are seeing failure rates of up to 50%.

But the past 25 years have only been the first phase in the evolution of enterprise AI — or what we might call Enterprise AI 1.0. That’s where many businesses remain today. However, companies on the leading edge of AI innovation have advanced to the next generation, which will define the coming decade of big data, analytics and automation — Enterprise AI 2.0.

The difference between these two generations of enterprise AI is not academic. For executives across the business spectrum — from healthcare and retail to media and finance — the evolution from 1.0 to 2.0 is a chance to learn and adapt from past failures, create concrete expectations for future uses and justify the rising investment in AI that we see across industries.

Two decades from now, when business leaders look back to the 2020s, the companies who achieved Enterprise AI 2.0 first will have come to be big winners in the economy, having differentiated their services, scooped up market share and positioned themselves for ongoing innovation.

Framing the digital transformations of the future as an evolution from Enterprise AI 1.0 to 2.0 provides a conceptual model for business leaders developing strategies to compete in the age of automation and advanced analytics.

Enterprise AI 1.0 (the status quo)

Starting in the mid-1990s, AI was a sector marked by speculative testing, experimental interest and exploration. These activities occurred almost exclusively in the domain of data scientists. As Gartner wrote in a recent report, these efforts were “alchemy … run by wizards whose talents will not scale in the organization.”

News: Facebook cuts off NYU researcher access, prompting rebuke from lawmakers

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Facebook shut down accounts belonging to two academic researchers late Tuesday, cutting off their ability to study political ads and misinformation on the world’s biggest social network. The company accused the academics of engaging in “unauthorized scraping” and compromising user privacy on the platform, claims that Facebook’s many critics are slamming as a thin pretense

Facebook shut down accounts belonging to two academic researchers late Tuesday, cutting off their ability to study political ads and misinformation on the world’s biggest social network.

The company accused the academics of engaging in “unauthorized scraping” and compromising user privacy on the platform, claims that Facebook’s many critics are slamming as a thin pretense for killing the transparency work.

The company took action against Laura Edelson and Damon McCoy, two well-known researchers affiliated with NYU’s Cybersecurity for Democracy project who have long sparred with the company. The move cuts off their access to Facebook’s Ad Library — one of the company’s only meaningful transparency efforts to date — and data on popular posts from the social media monitoring service CrowdTangle.

Facebook has a history with Edelson and McCoy. The company served the pair cease and desist letters just weeks before the 2020 election, calling on the team to disable an opt-in browser tool called Ad Observer and unpublish their findings. Ad Observer is a browser tool anyone can install that’s designed to give researchers a rare glimpse into how Facebook targets the ads that have transformed it into a trillion-dollar company.

“Over the last several years, we’ve used this access to uncover systemic flaws in the Facebook Ad Library, identify misinformation in political ads including many sowing distrust in our election system, and to study Facebook’s apparent amplification of partisan misinformation,” Edelson said on Twitter.

“By suspending our accounts, Facebook has effectively ended all this work. Facebook has also effectively cut off access to more than two dozen other researchers and journalists who get access to Facebook data through our project, including our work measuring vaccine misinformation with the Virality Project and many other partners who rely on our data.”

The incident set off a fresh round of criticism about the company’s preference for opacity over transparency when it comes to some of the more dangerous behavior that the platform incubates.

By Wednesday, Facebook’s actions had attracted the attention of some members of Congress. Sen. Ron Wyden (D-OR) criticized Facebook’s decision to punish the researchers under the pretense of protecting users in light of the company’s long history of invasive privacy practices. Wyden also called Facebook’s bluff over its claim that revoking researcher access is an effort to comply with a privacy order from the FTC that the company was issued for its previous user privacy violations.

Sen. Mark Warner (D-VA) also weighed in on Facebook’s latest controversy, calling the decision “deeply concerning.” Warner praised independent researchers for “consistently [improving] the integrity and safety of social media platforms by exposing harmful and exploitative activity.”

“It’s past time for Congress to act to bring greater transparency to the shadowy world of online advertising, which continues to be a major vector for fraud and misconduct,” Warner said.

A number of free press organizations, researchers and misinformation experts also condemned Facebook’s decision Wednesday. “Facebook’s cavalier approach to privacy enabled it to become so dominant,” The Markup’s Julia Angwin and Nabiha Syed wrote in a joint statement.

“But now, when independent researchers want to interrogate that platform and the influence it commands, Facebook is propping up user privacy as a shield to hide behind.”

News: Dear Sophie: Which immigration options allow me to launch my own startup?

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I’m appreciative that I made it through the H-1B lottery, but I’m stuck in a rut. I really want to start something of my own. Are there any immigration options that would allow me to do that?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

I’ve been working on an H-1B in the U.S. for nearly two years.

While I’m immensely appreciative of my company’s sponsorship and that I made it through the H-1B lottery and am working, I’m stuck in a rut. I really want to start something of my own and work on my own terms in the United States.

Are there any immigration options that would allow me to do that?

— Seeking Satisfaction near Stanford

Dear Seeking,

A couple of exciting immigration news updates to get us started today! In breaking startup founder news, U.S. Rep. Zoe Lofgren (D-CA) introduced the LIKE Act for startup founders in the House of Representatives last week. Below, we’ll share what this could mean for your startup aspirations. Also, U.S. Citizenship and Immigration Services (USCIS) conducted a second H-1B lottery because it didn’t receive enough H-1B petitions to meet the annual cap. So, if you or your employer were selected, be sure to file an H-1B petition by November 3.

Although job dissatisfaction and frustration on an H-1B can be normal, according to Edward Gorbis, there’s a lot you can do to take control of your U.S. immigration situation and go out on your own. I interviewed Gorbis for my podcast; he’s the founder of Career Meets World and a performance coach who works with immigrants and first-generation professionals to help them find fulfillment and thrive in their careers and life. Gorbis said that “once immigrants reach stability, they start to think, ‘Who am I, what do I value, what’s my core identity?’” It’s possible for any of us to retrain our brain for success.

Gorbis said that imagining overcoming the hurdles that stand in the way of doing the work that will fulfill you is the first step. So, here are some options that can help you imagine how to build the life of your dreams.

Become a founding CEO and raise $250,000

A great new option for aspiring entrepreneurs is International Entrepreneur Parole (IEP), a new immigration program in the United States that allows CEOs, CTOs and others to live in the U.S. and run their company for 2.5 years with an option for a 2.5-year extension. Your spouse can obtain a work permit.

How to qualify? You need to own at least 10% of a U.S. company, such as a Delaware C corporation registered in California. Ideally, you’ll want to show that your company bank account has at least $250,000 raised from qualified U.S. investors, but you can use other evidence to demonstrate that your company has the potential to grow rapidly and create jobs in the U.S.

A startup visa and path to a green card may be soon on the way for entrepreneurs and their crucial employees: Last week, Lofgren introduced the Let Immigrants Kickstart Employment (LIKE) Act. The requirements for the proposed startup visa are the same as for IEP but would allow a longer stay — up to eight years total if the startup creates jobs and generates substantial revenue.

I’m very proud to have aided in drafting the LIKE Act. It’s a thrill to see how my suggestions were included, such as making Startup Green Cards not subject to the visa bulletin, clarifying that you can seek consecutive Startup Visas from different companies, how to allocate employee visas to startups, ensuring the Startup Visa is a dual intent status, and adding premium processing. It was such a joy to be able to contribute ideas to this amazing process. I look forward to supporting this bill to become a law; please reach out to me if you want to support this worthy cause.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

See yourself at another company

There is technically no limit to how many H-1B employers you can have or how many — or few — hours you work in an H-1B position. So, think about other companies.

One option would be to have concurrent H-1Bs: Keep your current H-1B job for stability and start your own company, preferably with another individual or two, and have your startup sponsor you for an H-1B. Take a look at this Dear Sophie column for what to do before embarking on this path.

Another option would be to transfer your H-1B to another employer, or your own startup if you are going to work there. Since you already went through the H-1B lottery with your current employer, you will not have to go through the lottery process again for a second H-1B whether you choose the concurrent or transfer option.

Setting up a startup that can sponsor you for an H-1B is complicated, so I suggest you work with both a corporate attorney and an immigration attorney. Keep in mind that you will not be able to do any work for your startup until an H-1B with your startup has been approved, which is why having co-founders is helpful. Another reason is H-1Bs require an employer-employee relationship between a startup and the H-1B candidate. That means a co-founder — or the startup’s board — must supervise you and have the ability to fire you. Moreover, we often advise founders that it may be best to own less than a 50% stake in the startup when applying for an H-1B.

Consider a green card

If you end up pursuing concurrent H-1Bs, consider asking your employer whether it is willing to sponsor you for a green card. If that’s not the case, your startup can sponsor you for one, or you can self-petition for a green card:

• EB-1A extraordinary ability green card
• EB-2 NIW (National Interest Waiver) green card
• EB-2 green card for professionals holding advanced degrees
• EB-2 exceptional ability green card
• EB-3 green cards for skilled workers and professionals

All EB-2 green cards — except the EB-2 NIW — and the EB-3 green card require labor certification approval (PERM) from the U.S. Department of Labor. The two green cards that allow an individual to self-sponsor are the EB-1A and EB-2 NIW.

Imagine yourself doing gigs in your field

Many startup founders qualify for an O-1A extraordinary ability visa. However, you cannot have both an H-1B and an O-1A at the same time, so if your startup sponsors you for an O-1A, you will be required to leave your current H-1B job once an O-1A is approved.

An O-1A offers more flexibility than an H-1B. You can work for a single petitioning company or on multiple gigs through an agent. However, qualifying for an O-1A is more difficult than an H-1B. Resources, such as through my firm, support people with getting qualified. The one similarity with the H-1B is that you must show your startup and you have an employer-employee relationship.

Invest in your own company

The E-2 visa for treaty investors and employees is ideal for startup founders whose home country has a treaty of commerce and navigation with the U.S. Here is a list of treaty countries. For more details on E-2 visas for founders and employees, check out this previous Dear Sophie column and podcast episode.

Although there is no minimum dollar amount that a founder must invest in a startup to qualify for an E-2, we often advise founders to invest at least $100,000 to have a strong case. You cannot have both an H-1B and an E-2, so you will need to leave your current H-1B job if your E-2 is approved.

An immigration attorney can offer additional options based on your personal circumstances and legal advice tailored to you.

Enjoy the journey of building your dreams!

Sophie

Have a question for Sophie? Ask it here. We reserve the right to edit your submission for clarity and/or space.

The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!

News: Match Group to add audio and video chat, including group live video, to its dating app portfolio

• August 4, 2021
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Dating app maker and Tinder parent, Match Group, said during its Q2 earnings it will bring audio and video chat, including group live video, and other livestreaming technologies to several of the company’s brands over the next 12 to 24 months. The developments will be powered by innovations from Hyperconnect, the social networking company that

Dating app maker and Tinder parent, Match Group, said during its Q2 earnings it will bring audio and video chat, including group live video, and other livestreaming technologies to several of the company’s brands over the next 12 to 24 months. The developments will be powered by innovations from Hyperconnect, the social networking company that this year became Match’s biggest acquisition to date, when it bought the Korean app maker for a sizable $1.73 billion. 

Since then, Match Group has been relatively quiet about its specific plans for Hyperconnect’s tech or its longer-term strategy with the operation, although Tinder was briefly spotted testing a group video chat feature called Tinder Mixer earlier this summer. The move had seemed to signal some exploration of social discovery features in the wake of the Hyperconnect deal. However, Tinder told us at the time the company had no plans to bring that specific product to market in the year ahead.

On Tuesday’s earnings, Match Group offered a little more insight into the future of Hyperconnect, following the acquisition’s official close in mid-June.

According to Match Group CEO Shar Dubey, who stepped into the top job last January, the company is excited about the potential to integrate technologies Hyperconnect has developed into existing Match-owned dating apps.

This includes, she said, “AR features, self-expression tools, conversational A.I., and a number of what we would consider metaverse elements, which have the element to transform the online meeting and getting-to-know-each-other process,” Dubey explained, without offering further specific details about how the products would work or which apps would receive these enhancements.

Many of these technologies emerged from Hyperconnect’s lab, Hyper X — the same in-house incubator whose first product is now one of the company’s flagship apps, Azar, which joined Match Group with the acquisition.

Dubey also noted that the work to begin these tech integrations was already underway at the company.

By year-end, Match Group said it expects to have at least two of its brands integrated with technologies from Hyperconnect. A number of other brands will implement Hyperconnect capabilities by year-end 2022.

In doing so, Match aims to transform what people think of when it comes to online dating.

To date, online dating been a fairly static experience across the industry, where apps focus largely on profiles and photos, and then offer some sort of matching technique — whether swipes or quizzes or something else. Tinder, in more recent years, began to break out of that mold as it innovated with an array of different experiences, like its choose-your-own-adventure in-app video series, “Swipe Night,” video profiles, instant chat features (via Tinder’s product, Hot Takes), and others. But it still lacked some the real-time elements that people have when meeting one another in the real world.

This is an area where Match believes Hyperconnect can help to improve the online dating experience.

“One of the holy grails for us in online dating has always been to bridge the disconnect that happens between people chatting online and then meeting someone in person,” Dubey said. “These technologies will eventually allow us to build experiences that will help people determine if they have that much elusive chemistry or not… Our ultimate vision here is for people to never have to go on a bad first date again,” she added.

Of course, Match Group’s positioning of the Hyperconnect deal as being more interesting because the innovation it brings — and not just the standalone apps it operates — also comes at a time when those apps have not met the company’s expectations on revenue.

In the second half the of 2021, Match Group said it expects Hyperconnect to contribute to $125 to $135 million in revenue — a financial outlook that the company admits reflects some pullback. It attributed this largely to Covid impacts, particularly in the Asia-Pacific region where Hyperconnect’s apps operate. Other impacts to Hyperconnect’s growth included a more crowded marketplace and Apple’s changes to IDFA (Identifier for Advertisers), which has impacted a number of apps — including other social networking apps, like Facebook.

While Match still believes Hyperconnect will post “solid revenue growth” in 2021, it said that these new technology integrations into the Match Group portfolio are now “a higher priority” for the company.

Match Group posted mixed earnings in Q1 with revenue of $707.8 million, above analyst estimates, but earnings per share of 46 cents, below projections of 49 cents a share. Paying customers grew 15% to 15 million, up from 13 million in the year-ago quarter. Shares declined by 7% on Wednesday morning, following the earnings announcement.