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News: 5 fundraising imperatives for robotics startups

• July 9, 2021
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There’s never been a better time to pursue funding for robotics startups, but you are more likely to succeed if you build a strategy marked by the same sophistication you bring to your business.

Early-stage robotics fundraising is accelerating, with funding coming from boutiques to deep-pocketed venture capital firms. For founders, getting their idea from concept to company, or developing a minimum viable product, is daunting enough, but seeking an initial fundraising round brings a complexity that can be especially challenging to manage.

So how do robotics startups best approach fundraising and secure the financing to propel their company to the next level? There are five key areas to keep in mind about fundraising for robotics startups that founders must learn and practice.

Understand the proper fit between your company’s scale and the fund’s scale

Too often, founders court venture capitalists without understanding that the company they are founding might not be the right fit for VCs. Venture capital firms generally, and ones that invest in robotics specifically, look to invest in startups that have clearly identified potential to scale exponentially.

They are not geared toward backing entrepreneurs looking for an exit under $100 million that will only realize a handful of multiples for the investor. VCs are more likely looking to fund on a much larger scale — think a $1-billion-plus exit valuation — and back a company with the potential to deliver at least a 10x return.

Usually, robotics companies are capital-intensive and require a robust revenue model compared to pure software startups, and this is not for every VC. In fact, venture capital is likened to “rocket fuel” that is dangerous if put into a car but perfect for a rocket ready to shoot for escape velocity. Smaller-scale ventures often do not interest VCs but might be perfect for angel investors.

Bottom line: Do your homework, manage expectations, and seek funding from investors working at a scale commensurate with your idea and comfortable with the unique needs of robotics companies.

Consider capital sources that fit different companies and startups at different stages of its growth

Now is a great time for starting a company, in part because there have never been more sources of financing available. Angel investors and venture capitalists are just a portion of what is available.

There is growing opportunity, especially for robotics and AI startups, in nondilutive capital, including from U.S. government sources such as Department of Energy and Department of Defense grants. There are loaded/nondilutive funding streams, such as convertible debt, available from financial institutions and angels.

Special purpose acquisition companies, or SPACs, especially for hardware and robotics companies, have become popular in recent years. Some of these might be a better fit for your company at the current (or future) stage of your organizational growth cycle.

But some sophistication is warranted. Ask yourself what constraints or potential downsides come with the specific funding model you are considering/pursuing. Government grants, for instance, might drive the pace of development or push you toward certain customer-facing directions in ways that could be ill-suited to your company.

News: Day two: Don’t miss today’s pitch-off at TC Early Stage 2021: Marketing and Fundraising

• July 9, 2021
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And just like that, it’s Day Two of TC Early Stage 2021: Marketing and Fundraising! Yesterday not only flew by in a blur — it was also certifiably off the hook. We hope you came away with new information, actionable advice that you can implement in your business right away and that you connected with

And just like that, it’s Day Two of TC Early Stage 2021: Marketing and Fundraising! Yesterday not only flew by in a blur — it was also certifiably off the hook. We hope you came away with new information, actionable advice that you can implement in your business right away and that you connected with your peers and other startup folks for support and opportunities along the way.

Pssst: Buy a ticket and tune in to today’s main event (see below).

We also hope you got a good night’s sleep because today is all about the pitch-off! Ten early-stage founders — hand-picked by the TechCrunch crew — will throw down in classic pitch-battle fashion in front these highly experienced and definitely discerning VC judges: Ben Sun of Primary Venture Partners, Leah Solivan of Fuel Capital and Index Ventures’ Shardul Shah.

Each startup team has only five minutes to pitch their company, business model and creative ideas — followed by a Q&A from our esteemed judges. When the pitch dust settles, one winner will get a feature article on TechCrunch.com, a one-year free subscription to Extra Crunch and a complimentary Founder Pass to TechCrunch Disrupt this fall.

Whether you’re at Disrupt, Early Stage or a TC Sessions, if you have a chance to see other founders pitch or watch VCs conduct a pitch deck teardown — take it. It’ll help you refine your own pitch.

I walked away with a bunch of notes to reorganize my pitch deck, and I’ve watched the pitch deck teardown videos multiple times, including side-by-side with my pitch deck. It’s a lot of work, but it’s very rewarding because now I have a clear path. Disrupt was like an authoritative instruction manual for how to finish my pitch deck. — Michael McCarthy, CEO, Repositax.

Get comfortable wherever you are, get ready to take copious notes and get ready to watch these 10 early-stage startups bring the heat on Day Two of TC Early Stage 2021: Marketing and Fundraising.

Session 1: 9:00 a.m. – 9:50 a.m. PDT

Mi Terro (City of Industry, CA, USA) – The world’s first advanced material company that partners with food companies and farmers to create home compostable, single-use plastic-alternative packaging materials made from plant-based agricultural waste – this is a first-of-its-kind approach.

Press Sports App (Atlanta, GA, USA) – A lifelong sports social network for athletes from all levels and sports. Their deeply engaged community is creating system of record starting at the amateur level that has never been built before.

Snowball Wealth (San Francisco, CA, USA) – Provides personalized guidance to pay off debt and build wealth for the 30M women+ in America with student debt. Snowball provides users with a free student loan plan, which helps users save an average of $6K. They’re expanding to include a financial roadmap that’s community-driven and personalized so women+ can build wealth even as they pay down their debt.

My Expat Taxes (Vienna, Austria) – MyExpatTaxes is the leading U.S. expat tax software that guides users through the tax filing process faster and more affordable than any other competitor in the industry. It automates international tax treaties and expat tax benefits, helping U.S. expats stay compliant and claim thousands of dollars in refunds.

Speeko (Chicago, Illinois, USA) – AI-powered feedback on your voice in areas like pace, fillers, inclusivity, conciseness, and enunciation. Based on your speaking style, you’re matched with interactive exercises, courses, and vocal warm-ups. It’s like a gym membership for your voice, where you build muscle memory for speaking clearly and confidently.

Session 2: 10:10 a.m. – 11:05 a.m. PDT

Universal Prequal (Marlboro, NJ, USA) – Helps construction companies effectively manage risk by enabling them to find and vet qualified project teams capable of doing the work. Instead of the paper-intensive, time-consuming, expensive approach that exists throughout the industry today, our solution is online, easy-to-use, and cost-effective. Customers will know us as the national resource for managing risk based on comprehensive, reliable construction information.

T2D2.ai (New York City, NY, USA) – Provides continuous AI and computer vision-driven monitoring of buildings, bridges and other infrastructural assets. The T2D2 portal and dashboard gives asset owners and managers a detailed picture of all visible damage conditions – rank ordered by severity and geo-tagged for location information, so they can focus preventative maintenance efforts and avoid higher downstream repair costs as well as potential safety issues.

Boomerang (Sao Paulo, Sao Paulo, Brazil) – A marketplace for consumer goods rental. We connect retailers, brands, and rental stores with customers that just want to use a product instead of owning it. For suppliers, Boomerang is a plug-and-play rental platform offering logistics, insurance, and online payments solution.

Stash Global (Wilmington, DE, USA) – Turned the most damaging cyber-attack of all, ransomware, into just another business problem that can be solved with the click of a button – without paying a cent (or cyber coin) of ransom. The No Ransom Ransomware Solution does it all: restores files; prevents access of frozen file content by attackers; eliminates ransom extortion.

Vyrill (San Francisco, CA, USA) – With the most powerful AI driven, in-video search, Vyrill is a fan video discovery, insights and content marketing platform enabling brand marketers to supercharge brand awareness and revenue with fan led content such as video reviews, unboxing, how-to videos and more. Vyrill is a Google for fan video and creators, capturing who, what, where and when –inside millions of videos.”

News: Mmhmm, it’s the most ridiculous story we’ve ever heard

• July 9, 2021
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Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines. Danny and Alex were on deck this week, with Grace on the recording and edit. Natasha will be back with us starting next week. So, it was old times on the show with just two of our team to vamp on

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Danny and Alex were on deck this week, with Grace on the recording and edit. Natasha will be back with us starting next week. So, it was old times on the show with just two of our team to vamp on the news. And oh boy was there a lot of news to get into. Like, loads.

• What’s going on with Didi? Didi’s woes have continued this week, with the company seeing its share price continue to fall. The Equity team’s view is that the era of Chinese companies listing in the United States is over.
• What’s going on with facial recognition tech? With AnyVision raising a $235 million round, Danny and Alex tangled over the future of privacy, and what counts as good enough when it comes to keeping ourselves to ourselves.
• Nextdoor is going public: Via a SPAC, mind, but the transaction had our tongues wagging about its history, growth, and how hard it can be to build a social network.
• Dataminr buys WatchKeeper: In its first-ever acquisition, Dataminr bought a smaller company to help it better visualize the data it collects. It’s a neat deal, and especially fun given taht Dataminr should go public sooner rather than later.
• Planet and Satellogic are going public: One week, two satellite SPACs. You can read more about Planet here, and Satellogic here.
• FabricNano and Cloverly raise capital: Satellites had us into the concept of climate change, so we also dug into recent funding rounds from FabricNano and Cloverly. It’s beyond neat to see for-profit companies tackle our warming planet.
• Two new venture capital funds: Acrylic has put together a $55 million fund for moonshot crypto work, while Renegade Partners has a $100 million fund for early-and-mid-stage generalist investments.
• Mmhmm is big time: And then there was mmhmm. Which now has $100 million more, and some big plans. Our question is what it will do with the money. We’ll have to wait and find out, we suppose.

News: Stumble-proof robot adapts to challenging terrain in real time

• July 9, 2021
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Robots have a hard time improvising, and encountering an unusual surface or obstacle usually means an abrupt stop or hard fall. But researchers at Facebook AI have created a new model for robotic locomotion that adapts in real time to any terrain it encounters, changing its gait on the fly to keep trucking when it

Robots have a hard time improvising, and encountering an unusual surface or obstacle usually means an abrupt stop or hard fall. But researchers at Facebook AI have created a new model for robotic locomotion that adapts in real time to any terrain it encounters, changing its gait on the fly to keep trucking when it hits sand, rocks, stairs, and other sudden changes.

Although robotic movement can be versatile and exact, and robots can “learn” to climb steps, cross broken terrain and so on, these behaviors are more like individual trained skills that the robot switches between. And although robots like Spot famously can spring back from being pushed or kicked, the system is really just working to correct a physical anomaly while pursuing an unchanged policy of walking. There are some adaptive movement models, but some are very specific (for instance this one based on real insect movements) and others take long enough to work that the robot will certainly have fallen by the time they take effect.

Rapid Motor Adaptation, as the team calls it, came from the idea that humans and other animals are able to quickly, effectively, and unconsciously change the way they walk to fit different circumstances.

“Say you learn to walk and for the first time you go to the beach. Your foot sinks in, and to pull it out you have to apply more force. It feels weird, but in a few steps you’ll be walking naturally just as you do on hard ground. What’s the secret there?” asked senior researcher Jitendra Malik, who is affiliated with Facebook AI and UC Berkeley.

Certainly if you’ve never encountered a beach before, but even later in life when you have, you aren’t entering some special “sand mode” that lets you walk on soft surfaces. The way you change your movement happens automatically and without any real understanding of the external environment.

Visualization of the simulation environment. Of course the robot would not perceive any of this visually. Image credit: Berkeley AI Research, Facebook AI Research and CMU

“What’s happening is your body responds to the differing physical conditions by sensing the differing consequences of those conditions on the body itself,” Malik explained — and the RMA system works in similar fashion. “When we walk in new conditions, in a very short time, half a second or less, we have made enough measurements that we are estimating what these conditions are, and we modify the walking policy.”

The system was trained entirely in simulation, in a virtual version of the real world where the robot’s small brain (everything runs locally on the on-board limited compute unit) learned to maximize forward motion with minimum energy and avoid falling by immediately observing and responding to data coming in from its (virtual) joints, accelerometers, and other physical sensors.

To punctuate the total internality of the RMA approach, Malik notes that the robot uses no visual input whatsoever. But people and animals with no vision can walk just fine, so why shouldn’t a robot? But since it’s impossible to estimate the “externalities” such as the exact friction coefficient of the sand or rocks it’s walking on, it simply keeps a close eye on itself.

“We do not learn about sand, we learn about feet sinking,” said co-author Ashish Kumar, also from Berkeley.

Ultimately the system ends up having two parts: a main, always-running algorithm actually controlling the robot’s gait, and an adaptive algorithm running in parallel that monitors changes to the robot’s internal readings. When significant changes are detected, it analyzes them — the legs should be doing this, but they’re doing this, which means the situation is like this — and tells the main model how to adjust itself. From then on the robot only thinks in terms of how to move forward under these new conditions, effectively improvising a specialized gait.

Image Credits: Berkeley AI Research, Facebook AI Research and CMU

After training in simulation, it succeeded handsomely in the real world, as the news release describes it:

The robot was able to walk on sand, mud, hiking trails, tall grass and a dirt pile without a single failure in all our trials. The robot successfully walked down stairs along a hiking trail in 70% of the trials. It successfully navigated a cement pile and a pile of pebbles in 80% of the trials despite never seeing the unstable or sinking ground, obstructive vegetation or stairs during training. It also maintained its height with a high success rate when moving with a 12kg payload that amounted to 100% of its body weight.

You can see examples of many of these situations in videos here or (very briefly) in the gif above.

Malik gave a nod to the research of NYU professor Karen Adolph, whose work has shown how adaptable and freeform the human process of learning how to walk is. The team’s instinct was that if you want a robot that can handle any situation, it has to learn adaptation from scratch, not have a variety of modes to choose from.

Just as you can’t build a smarter computer vision system by exhaustively labeling and documenting every object and interaction (there will always be more), you can’t prepare a robot for a diverse and complex physical world with 10, 100, even thousands of special parameters for walking on gravel, mud, rubble, wet wood, etc. For that matter you may not even want to specify anything at all beyond the general idea of forward motion.

“We don’t pre-program the idea that it has for legs, or anything about the morphology of the robot,” said Kumar.

This means the basis of the system — not the fully trained one, which ultimately did mold itself to quadrupedal gaits — can potentially be applied not just to other legged robots, but entirely different domains of AI and robotics.

“The legs of a robot are similar to the fingers of a hand; the way that legs interact with environments, fingers interact with objects,” noted co-author Deepak Pathak, of Carnegie Mellon University. “The basic idea can be applied to any robot.”

Even further, Malik suggested, the pairing of basic and adaptive algorithms could work for other intelligent systems. Smart homes and municipal systems tend to rely on preexisting policies, but what if they adapted on the fly instead?

For now the team is simply presenting their initial findings in a paper at the Robotics: Science & Systems conference  and acknowledge that there is a great deal of follow-up research to do. For instance building an internal library of the improvised gaits as a sort of “medium term” memory, or using vision to predict the necessity of initiating a new style of locomotion. But the RMA approach seems to be a promising new approach for an enduring challenge in robotics.

News: New York City’s new biometrics privacy law takes effect

• July 9, 2021
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A new biometrics privacy ordinance has taken effect across New York City, putting new limits on what businesses can do with the biometric data they collect on their customers. From Friday, businesses that collect biometric information — most commonly in the form of facial recognition and fingerprints — are required to conspicuously post notices and

A new biometrics privacy ordinance has taken effect across New York City, putting new limits on what businesses can do with the biometric data they collect on their customers.

From Friday, businesses that collect biometric information — most commonly in the form of facial recognition and fingerprints — are required to conspicuously post notices and signs to customers at their doors explaining how their data will be collected. The ordinance applies to a wide range of businesses — retailers, stores, restaurants, and theaters, to name a few — which are also barred from selling, sharing, or otherwise profiting from the biometric information that they collect.

The move will give New Yorkers — and its millions of visitors each year — greater protections over how their biometric data is collected and used, while also serving to dissuade businesses from using technology that critics say is discriminatory and often doesn’t work.

Businesses can face stiff penalties for violating the law, but can escape fines if they fix the violation quickly.

The law is by no means perfect, as none of these laws ever are. For one, it doesn’t apply to government agencies, including the police. Of the businesses that the ordinance does cover, it exempts employees of those businesses, such as those required to clock in and out of work with a fingerprint. And the definition of what counts as a biometric will likely face challenges that could expand or narrow what is covered.

New York is the latest U.S. city to enact a biometric privacy law, after Portland, Oregon passed a similar ordinance last year. But the law falls short of stronger biometric privacy laws in effect.

Illinois, which has the Biometric Information Privacy Act, a law that grants residents the right to sue for any use of their biometric data without consent. Facebook this year settled for $650 million in a class-action suit that Illinois residents filed in 2015 after the social networking giant used facial recognition to tag users in photos without their permission.

Albert Fox Cahn, the executive director of the New York-based Surveillance Technology Oversight Project, said the law is an “important step” to learn how New Yorkers are tracked by local businesses.

“A false facial recognition match could mean having the NYPD called on you just for walking into a Rite Aid or Target,” he told TechCrunch. He also said that New York should go further by outlawing systems like facial recognition altogether, as some cities have done.

Read more:

• An internal code repo used by New York State’s IT office was exposed online
• Data breach at New York Sports Clubs owner exposed customer data
• Microsoft pitched its facial recognition tech to the DEA, new emails show
• US towns are buying Chinese surveillance tech tied to Uighur abuses

News: Kurly, the Korean grocery startup, raises $200M on a $2.2B valuation after shifting IPO plans away from the NYSE

• July 9, 2021
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Online grocery startups around the world continue to pull in major investment, underscoring how much they have all grown especially in the last year of pandemic living. In the latest development, Kurly — a startup in South Korea that provides next-day grocery delivery services across the country — has closed $200 million in funding, a

Online grocery startups around the world continue to pull in major investment, underscoring how much they have all grown especially in the last year of pandemic living. In the latest development, Kurly — a startup in South Korea that provides next-day grocery delivery services across the country — has closed $200 million in funding, a Series F valuing the company at $2.2 billion, the company confirmed.

This means the company’s valuation has more than doubled in the last year. Last April, Kurly closed a Series E of $150 million at a $780 million valuation.

This latest round is being co-led by Aspex Management, DST Global, Sequoia Capital China and Hillhouse Capital — all previous backers of the company — with new investors Millennium Management and CJ Logistics Corporation also participating. CJ Logistics is a strategic backer: it has a deal in place with Kurly to help expand its overnight delivery service to more regions across South Korea.

This latest funding comes right on the heels of a significant u-turn for the business in recent days.

Kurly had been planning an IPO in the U.S. later this year; instead it announced this week that it would instead seek to list in its home market instead.

“Kurly had explored both overseas and domestic IPO options. After reviewing detailed conditions such as its business model and stock market conditions both at home and abroad, Kurly has decided to go ahead with an initial public offering in the Korean stock market,” it said in a statement to Korea Economic Daily.

Some have reported that Chinese transport giant Didi’s rocky start as a public company on the NYSE this month gave Kurly pause on the performance of Asian companies on U.S. exchanges at the moment. Others have reported that the company was facing issues with some existing private backers wanting to cash out, concerned over the company’s growth potential — which might have hastened an IPO while also put more pressure on the company to produce better returns.

It’s worth noting too that Coupang, Kurly’s much bigger rival, is traded in the U.S. market, on the NYSE after going public earlier this year. Its market cap is currently just under $70 billion and so that might also invite unfavorable comparisons.

Whatever the reason for the shift, this latest round is an interesting signal to the market that investors are keen to continue supporting the company on the back of more market potential. Kurly said the funds will be used to build out its tech stack, talent recruitment, and to expand its coverage of its next-day services.

“This funding round is a testament to Kurly’s contributions in transforming customer’s everyday habit of conducting grocery shopping at physical stores into a more convenient way of shopping online by offering a superior selection of products through its innovative delivery service,” said Seul-A Kim, also known as Sophie Kim, the CEO and founder of Kurly, in a statement. “The Company has also been successful in bringing merchandises to the customers at a reasonable price through service technology empowered by the use of its proprietary data analytics. We are delighted to have new capital which would allow us to further invest in logistics infrastructure, people and technology to continue to innovate mobile grocery market and improve lives of consumers, producers and workers.”

The company has been growing at a strong pace, with $845 million in sales in 2020, up 124% over a year ago. It hasn’t disclosed whether it is profitable or what its operating margins are, but the theory is that — as with all e-commerce operations — as Kurly continues to scale its overnight delivery service, those margins will improve.

“We are excited to continue to support Market Kurly with our investment,” said Hermes Li, the founder and portfolio manager of Aspex Management, in a statement. “Korea is one of the fastest growing and largest e-commerce markets globally, and Kurly has been the leader in e-Commerce innovation. They have built a consumer centric brand focused on superior product quality and user experience. We believe there is significant potential ahead of Kurly from expansion into other consumer categories and new geographies. Aspex is looking forward to many years of growth with Kurly.”

News: Firat Ileri becomes Hummingbird VC’s new Managing Partner, as the firm looks to expand

• July 9, 2021
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Seed investment firm Hummingbird VC, which previously invested in Deliveroo, Peak Games, MarkaVIP, and Kraken has a new Managing Partner. Firat Ileri, previously a Partner – who at 28 became one of Europe’s youngest VCs when he joined in 2012 – takes over from Founding Partner Barend Van den Brande, who will now take on

Seed investment firm Hummingbird VC, which previously invested in Deliveroo, Peak Games, MarkaVIP, and Kraken has a new Managing Partner. Firat Ileri, previously a Partner – who at 28 became one of Europe’s youngest VCs when he joined in 2012 – takes over from Founding Partner Barend Van den Brande, who will now take on a more strategic role at the firm.

Ileri grew up in Cyprus and went on to study electrical engineering, computer science, and operations research at MIT. At Hummingbird he has lead the firm’s first investments in Latin America and in South East Asia.

Ileri initially introduced the cofounders of Gram Games, led their first investment, and helped exit the company to Zynga for half a billion. He also led the sale process of Peak Games in 2020, which exited at $1.8Bn, making history as Turkey’s largest tech exit to date.

Founded in 2010, Hummingbird is currently on its fourth fund of $200M, raised in Q4 2020, and says it invests from Europe to India, SEA, LATAM, Turkey and more recently in the US.
 
Firat most recently led Hummingbird’s first investments in engineering biology, investing in Billiontoone, the SF-based precision diagnostics company in the prenatal and liquid biopsy space, which has raised a $55M Series B round. It’s also invested in Kernal Biologics, an mRNA 2.0 therapeutics company focused on oncology.

Van den Brande said: “From the moment Firat joined us in the very early days of Hummingbird, he hit the ground running. His eye for unique and ambitious founding teams, and unparalleled expertise in Seed investing, persistence and really understanding what Early Stage companies need has made him an invaluable asset to Hummingbird and all of the founders we work with. I’m only pleased to have Firat take on the role and lead the Hummingbird family and portfolio for years to come.”

Ileri said the firm’s thesis was to invest in stand-out founders: “We’re spending much more time trying to understand who these people are and what makes them special. In a way, we’re looking for anomalies in people, and we believe that the best companies are created with nonlinear backgrounds. So, this is the thesis.”

He said the team has expanded to drive this vision: “We used to be a boutique fund, but we have the ambition to be more and especially to look for founders who have an independent mind and huge ambitions. To be able to find more companies we’ve gone more global, in order to have a better chance of finding these special stories.”

News: Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake

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Germany is choking on bureaucracy, which threatens innovation. Bureaucratic processes slow everything down and reforms on employee stock option plans are needed so workers benefit from their startups.

The narrative suggests that Germany is lagging behind its European neighbors when it comes to building a globally competitive venture capital market. But I think that the next five years will be huge for the German venture capital sector, and that the signs for the future are very positive.

German startups raised €6.4 billion in 2020. That’s more than France, which came in at €5.7 billion. Another upside is that there is a healthy blend of local and international investment in the early-stage market. German funds dominate investments in German startups at the seed and Series A stages. As companies grow, overseas investment plays a huge part — half of the deals exceeding $50 million funding rounds are led entirely by foreign investors, while only 5% are run by German investors and 45% see a mix of foreign and domestic investors at the cap table.

I think this is where the German VC market needs to be right now. Great innovation is being sourced and backed by local funds. As these companies grow and become winners, they attract the best investors from around the globe, enabling the companies to internationalize from a German base, and the early-stage VCs reap the rewards and continue investing in local German talent. As the market matures, I am confident we will see more German VC money invested at the growth stages.

And the outlook is favorable. The German market is thriving. Even the pandemic did little to impact this fundamentally positive trend for the technology sector.

In addition to the growing level of both local and international investment into German tech, policymakers have created better conditions for startups and VC funds to thrive in Germany.

The German Federal Government launched the €10 billion Future Fund and has committed additional funds to the Deep Tech Future Fund. Not only does this immediately inject more capital into the market at the growth stage, but it also indicates that Germany is “open for business.” It sends a clear signal to the rest of the world that Germany understands the link between innovation and tangible improvements in society. It is a powerful and welcome indicator to funds from around the world.

Germany is incredibly attractive to tech talent, in addition to investors. More and more tech workers wish to relocate to Germany, with the welfare state providing a model for the future.

The long term looks good, too. Germany is famous the world over for its manufacturing and engineering sector. Germany is one of the few countries that still generates foreign trade surpluses through local production. Manufacturing and engineering are still yet to experience a massive leap in innovation. Therefore, German startups are extremely well positioned to benefit from the increasing activity in “Industry 4.0” innovation, with talent from Germany’s manufacturing heartland poised to blend with the ever-increasing pool of tech talent in Berlin and Munich.

Share options and spinoffs are the Achilles’ heel of the German startup scene

I think German VC and the tech market are due to take off and achieve new heights. However, there are two areas that need to be substantially improved: employee stock options and the regulations around spinoffs.

Germany is choking on its bureaucracy, and that threatens innovation. Tesla’s new Gigafactory is the latest example of how bureaucratic processes can slow everything down.

For startups in Germany, reforms on employee stock option plans (ESOP) are urgently needed for startup workers to benefit from the success of their companies and for the startup ecosystem to grow on its own.

The current bill to offer better tax benefits does not reflect the needs of the industry. For example, tax relief is only available for employees in companies that are younger than 10 years. If an employee changes employers, they must pay tax on company shares beforehand, which poses a significant risk of bankruptcy. Because many startups are still not profitable after 10 years, taxes should only be due when an employee makes an actual profit from their holdings — when they sell the shares. In the end, startups simply won’t offer new ESOPs to their employees.

Another example: spinoffs. Germany has the highest number of patent applications in Europe. However, startups often are not able to turn innovative technology into product-market fit. Spinoffs from the leading German research institutes have had a hard time gaining a foothold because they have been imposed with high institutional fixed and license costs when spinning off. Here, Germany needs to be more flexible and give startups the space and funding they need.

Lower the fixed costs and the enormous bureaucracy founders face when spinning off. Investors have to render more operational and organizational support for researchers-turned-founders. Furthermore, VCs must have the courage to invest more in innovative ideas and technologies that may take a bit longer to thrive. BioNTech is the best example of how this pays off in the long run.

More German unicorns?

As it stands, 2021 has already seen numerous new unicorns from Germany — with Personio, Mambu, Sennder, Gorillas and Trade Republic achieving billion-dollar valuations — and there are almost certainly more to come.

If regulators finally cut through the red tape around stock options and spinoffs, the German tech and VC industry will achieve new heights. I look forward to positive changes and an entire roster of German unicorns being minted in the years to come.

News: Temasek, Warburg Pincus, and Bhavish Aggarwal invest $500 million in Ola

• July 9, 2021
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Temasek and an affiliate of Warburg Pincus are investing $500 million in Indian ride-hailing giant Ola, the Bangalore-headquartered startup said in a short statement Friday. Ola co-founder and chief executive Bhavish Aggarwal is also participating in the new investment, the startup said. This is the first time SoftBank-backed Ola has raised money since its Series

Temasek and an affiliate of Warburg Pincus are investing $500 million in Indian ride-hailing giant Ola, the Bangalore-headquartered startup said in a short statement Friday. Ola co-founder and chief executive Bhavish Aggarwal is also participating in the new investment, the startup said.

This is the first time SoftBank-backed Ola has raised money since its Series J two years ago, according to records on insight platform Tracxn. Ola said in a statement that the investment comes “ahead of IPO” — but didn’t elaborate.

Ola, Temasek, and Warburg Pincus didn’t share how the new investment valued the ride-hailing startup.

“Over the last 12 months we’ve made our ride hailing business more robust, resilient and efficient. With strong recovery post lockdown and a shift in consumer preference away from public transportation, we are well positioned to capitalize on the various urban mobility needs of our customers. I welcome Warburg Pincus and Temasek to Ola and look forward to collaborating with them in our next phase of growth,” said Bhavish Aggarwal, Chairman and Group CEO of Ola, in a statement.

This is a developing story. More to follow…

News: Europe’s DN Capital launches its new $350M fund after a knock-out year for its portfolio

• July 9, 2021
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DN Capital, one of Europe’s most active VCs has launched its latest $350 million (£220m, €300m) fund off the back of a pretty stand-out year when the firm saw four of its portfolio companies hit billion-dollar-plus valuations. DN’s ‘Fund V’ will invest across Europe, the UK and the US, but with strongly European LPs, DN

DN Capital, one of Europe’s most active VCs has launched its latest $350 million (£220m, €300m) fund off the back of a pretty stand-out year when the firm saw four of its portfolio companies hit billion-dollar-plus valuations. DN’s ‘Fund V’ will invest across Europe, the UK and the US, but with strongly European LPs, DN has garnered a reputation for digging up some of continental Europe’s hottest startups from, North, Western, Central, and Eastern Europe.

Led by industry veterans Nenad Marovac (based in Europe) and Steve Schlenker (based Stateside), DN led the Series A round in Auto1, which IPO’d on the German Stock Exchange earlier this year at a $10 billion valuation and over 150x their entry price per share.

As Marovac explained: “We spend vast amounts of time with entrepreneurs understanding the market, their team, their product and to get to the heart of what they’re trying to achieve, long before we even talk about money… The launch of our fifth fund gives us further scope to uncover new entrepreneurs with the biggest, brightest global ambitions.”

Schlenker added that he thinks the “full impact of the pandemic on society, work, and behaviors is only just being understood. There are tech founders across the globe right now on critical missions to accelerate this recovery and help address the needs, and solve the biggest problems, of the post-COVID world.”

In July 2021 MrSpex, the Germany-born online eyewear retailer, IPO’d at over $1.0bn. DN Capital also counts unicorns Remitly, Jobandtalent, and GoStudent in its portfolio.

The company, which has a 20-year history, said Fund V was “substantially oversubscribed” and will focus on the funds main specialities in software, fintech, marketplaces and the consumer internet.

Schlenker said: “Europe has really come into its own now. It is competing very successfully versus the US in terms of returns to investors.”

Were they seeing more US VC in Europe, I asked?

“We’ve done deals with Sequoia with Lightspeed, with Battery. It seems like the competition is very strong in the UK market, because the Americans come over where they can speak the language first. It’s still more of a competitive landscape with the US players in the series B or C stages when you get to France, Germany, etc.” said Schlenker.

“That is changing, but it’s still mostly them following people like DN in those rounds, whereas at series A-level, which is really our sweet spot, they seem to be more combatative specifically in the UK market. And we do a disproportionate share of our investments on the continent, as opposed to the UK,” said Schlenker.

I put it to Marovac what he thought had attracted LPs back to the fund. “Honestly?” he said, “Performance. We had the auto1 IPO in February which is worth three and a half times Fund III. We just had the Mr Spex IPO last week, which is another one times Fund II. We invested in GoStudent last June, at a $20 million valuation and they just raised money at $1.4 billion.”

Before some of those events he said fundraising for the fund was going “okay” but it wasn’t going “gangbusters”. “I think since those things happened – and I guess also maybe a difference in investors perceptions or mentality in Q1 this year. But Q1 Q2 Q3 last year were tough. They weren’t easy for fundraising. But it really came about, maybe, due to changes in the market and then also the performance of the funds. They are now going into our fund three with a 3x, already,” he pointed out.

Marovac also outlined how the fund had quickly moved to support its portfolio last year when the pandemic hit: “The first thing we did when the pandemic hit was go through the portfolio and triage, making sure every company was funded for at least till the end of December 2021. Then we said we want to invest in companies that are, firstly, COVID resistant, in the short to medium term, and, secondly, companies that are going to benefit from this digital transformation since COVID accelerated things that were happening already.”

He points to the example of UiPath and software automation – the most valuable company to ever come out of Europe: “Digital payments: no one wants to touch cash anymore. And also just different forms of FinTech for digital inclusion. Remitly is probably our key example there, which does remittances for people to send money back home to emerging markets.”

Certainly, with this new $350m fund, it’s clear DN Capital is poised to power though the rest of 2021 and well into the next few years of Europe’s startup growth.