Wij willen met u aan tafel zitten en in een openhartig gesprek uitvinden welke uitdagingen en vragen er bij u spelen om zo, gezamelijk, tot een beste oplossing te komen. Oftewel, hoe kan de techniek u ondersteunen in plaats van dat u de techniek moet ondersteunen.

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Which startups investors are actually first to backing the best companies? If you know this information before fundraising, you can avoid pitching investors who were always going to tell you that you’re “too early” anyway. The problem is that everyone claims credit for success, and by the time you pick through databases, investor sites, blogs, tweets and news clippings, you have no real idea who made what call when.

That’s why our solution is to just ask founders about who really made it happen. Our new product, The TechCrunch List, will feature the investors who wrote the first checks, to help any founder find the help they need when they need it. Here’s more, from Arman Tabatabai and Danny Crichton:

Over the next few weeks, we’re going to be collecting data around which individual investors are actually willing to write the proverbial “first check” into a startup’s fundraising round and help catalyze deals for founders — whether it be seed, Series A or otherwise (i.e. out of your Series A investors, the first person who was willing to write the check and get the ball rolling with other investors). Once we’ve collected, cleaned and analyzed the data, we’ll publish lists of the most recommended “first check” investors across different verticals, investment stages and geographies, so founders can see which investors are potentially the best fit for their company….

In all, The TechCrunch List will publish the most recommended “first check” writers across 22 different categories, ranging from D2C & e-commerce brands to space, and everything in between. Through some data analysis around total investments in each space, we believe our 22 categories should cover the entirety or majority of the venture activity today.

To make this project a success and create a useful resource for founders, we need your help. We want to hear from company builders and we want to hear from them directly. We will be collecting endorsements submitted by founders through the form linked here.

(Photo by Steven Damron used under Creative Commons).

Valley dealflow has continued through the pandemic

Despite much discussion about investors pulling back en masse from startup investing, a new survey out from Silicon Valley tech law firm Fenwick & West about activity in the region over April says that valuations went up, markdown rounds did not grow as a percentage of deals, and the overall pace of deals actually increased. The catch, Connie Loizos writes for TechCrunch, is that much of this was due to later-stage rounds, and of course, it is generalized across industries that have been variously propelled or pummeled by the pandemic.

Alex Wilhelm then looks at a couple additional reports for Extra Crunch, from Docsend and NFX. They appear to show ongoing investor activity growth since April, as well as growing founder optimism — but early stage did in fact appear to be more turbulent, as, ahem, one might expect if one has experience in early-stage fundraising. He separately notes that the latest tracking data sources appear to show a decline in startup layoffs. Both are, by the way, written as part of The Exchange, his new daily column about the latest trends in the startup world for EC subscribers (use code EXCHANGE to get 25% off a subscription).

Image Credits: Klaud Vedfelt (opens in a new window) / Getty Images (Image has been modified)

Beyond Valley dealflow (and its problems)

Juneteenth has been celebrated since 1866 to mark the end of slavery after the American Civil War. But this year, it is being taken up by tech companies as an official holiday to help show their concern for structural discrimination in the wake of the George Floyd killing and ensuing global protests. What does it really mean though? Here’s Megan Rose Dickey for TechCrunch:

Recognition of such a historic day is good. But the way these companies are publicly announcing their plans, seeking press as they do, suggests their need for some affirmative pat on the back. It’s perfectly acceptable to do the right thing and not get credit for it. It shows humility. It shows that a company is more interested in doing right by its workers than it is in saving face….

Instead, as Hustle Crew founder Abadesi Osunsade has said, tech companies need to go beyond one-off actions and form habits around racial justice work. Forming habits around hiring Black people, promoting Black employees, paying Black employees fairly, funding Black founders and making room for Black people in leadership positions is what will lead to concrete change in this industry.

Meanwhile, given the ongoing issues in fundraising, Delali Dzirasa of Fearless writes about other resources Black entrepreneurs can use to get their companies off the ground, including equity crowdfunding, mentor programs, 8(a) programs, SBA resources, and your local commercial banker.

Image Credits: PipeCandy

Online winners and also-rans during the pandemic

Two marketing experts shared fresh data on what categories are winning and losing during the pandemic for Extra Crunch this week, perhaps revealing where some of the founder and investor enthusiasm is coming from? First, here’s Ethan Smith of Graphite, who provides an overview of how money is being spent online during the pandemic using data from Branch through mid-May:

The good news for vendors overall is that people are still shopping online, but they’re buying different things and in different volumes than they used to. Kid/pet-oriented mobile activity and associated purchases have skyrocketed. We’ve also seen spikes in the purchase of activewear, fashion items, shoes and arts and crafts items, as people wait out the lockdown and prepare for what they hope will be a summer of freedom.

To dig into the direct-to-consumer category in more detail, here’s Ashwin Ramasamy of PipeCandy, who uses a mix of data sources to look at subcategory trends versus what the year might have looked like without a pandemic:

Kids, cookware and kitchen tools, apparel, fine jewelry, fashion, women’s health, mattresses, furniture and skincare actually deviated negatively from the forecast. This is not to say that these categories declined. We are actually saying that these categories didn’t keep up with the growth trends they orchestrated in 2019. That said, the devil is in the details. For instance, within furniture, there is a category of D2C brands that sell shelves and office furniture. Consumers did invest in them heavily, presumably to allow participants in the Zoom call to absorb more the titles of the books stacked in those shelves than from the calls themselves. Wine/spirits, grocery, fitness, baby care, pets and nutraceuticals did better than anticipated. Basically, anything that helped numb the reality (alcohol), sweeten the reality (food), distract from the reality (baby care and pets), survive the reality (fitness) or hallucinate an alternative reality (nutraceuticals) did well. I will leave you with another interesting conclusion we arrived at, through further research that is currently underway: The spotlight category in e-commerce is not direct to consumer — it is the mid-market and large pure-play e-commerce companies. It is one segment where the compounded quarterly growth rate of active companies is better than the 2019 average.

Around TechCrunch

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Extra Crunch Live: Join Superhuman’s Rahul Vohra for a live discussion of email, SaaS and buzzy businesses

Learn how to give your brand a distinct voice from Slack’s Head of Brand Communications Anna Pickard at TC Early Stage

New sessions announced at TC Early Stage from Dell, Perkins Coie and SVB

HappyFunCorp’s Ben Schippers and Jon Evans will talk tech stacks at TC Early Stage

Across the week

TechCrunch:

Where are all the robots?

Despite pandemic setbacks, the clean energy future is underway

TikTok explains how the recommendation system behind its ‘For You’ feed works

Chris Sacca advises new fund managers to strike right now

Extra Crunch:

What’s next for space tech? 9 VCs look to the future

How Liberty Mutual shifted 44,000 workers from office to home

Superhuman’s Rahul Vohra says recession is the ‘perfect time’ to be aggressive for well-capitalized startups

Investors based in San Francisco? That’s so 2019

How Reliance Jio Platforms became India’s biggest telecom network

4 months into lockdown, Eventbrite CEO Julia Hartz sees ‘exciting signs of recovery’

#EquityPod

From Alex:

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

Your humble Equity team is pretty tired but in good spirits, as there was a lot to talk about this week…

  • Epic Games is looking to raise a huge stack of cash (BloombergVentureBeat) at a new, higher valuation. We were curious about how its lower-cut store could help it gain inroads with developers big and small. That part of the chat, the take-rate of the Fortnite parent company on the work of others was very cogent to the other main topic of the day:
  • Apple vs. DHH. So Hey launched this week, and the new spin on email quickly overshadowed its product launch by getting into a spat with Apple about whether it needs to add the ability to sign up for the paid service on iOS, thus giving Apple a cut of its revenue. DHH and crew do not agree. Apple is under fire for anti-competitive practices at home and abroad — of varying intensity, and from different sources — making this all the more spicy.
  • Upgrade raises $ 40 million for its credit-focused neobank.
  • Degreed raises $ 32 million for its upskilling platform.
  • And, at the end, our take on the current health of the startup market. There have been a sheaf of reports lately about what is going on in startup land. We gave our take.

And that’s that. Have a lovely weekend and catch up on some sleep.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.


TechCrunch

German just hit a new milestone in the space where venture capital and the burgeoning Cannabis industry meet.

Berlin startup Demecan has completed a Series A financing round of 7 million euros to expand its production facility for medical cannabis and the wholesale trade in Germany. It’s become the only German company allowed to produce medical cannabis in Germany.

This is a watershed for the country and is the first investment in this sector for btov Partners, a private investor network. The other half of the funding came from a single, named German family office, which is understood to have its roots in the consumer goods sector. Only two other companies, two of them from Canada, were awarded the contract to produce medical cannabis in Germany in May 2019.

btov Partners manages assets of €420 million and has previously invested in tech startups such as Blacklane, Data Artisans, DeepL, Facebook, Foodspring, ORCAM, Raisin, SumUp, Volocopter and XING.

The green light from Germany’s Federal Institute for Drugs and Medical Devices (BfArM), means Demecan will be able to produce at least 2,400 kilograms of dried cannabis flowers over the next four years. Demecan is also active as an importer and wholesaler of medical cannabis and can thus cover the entire value chain. Since the German government allowed cannabis to be prescribed for therapeutic purposes in 2017 demand has outstripped supply.

Jennifer Phan of btov Partners said in a statement: “Demecan operates in a very attractive market at the right time. Germany currently represents the third-largest market for medical cannabis in the world and is on a growth path. We believe that the company has a first-mover advantage in a highly regulated market environment, especially as it is the only German manufacturing and trading company in the European market”.

Dr. Constantin von der Groeben, co-founder of Demecan, added: “In recent years, we have intensively dealt with the market and reached an important milestone by winning the tender process. We are now focusing on further growth and the start of production in 2020.”


TechCrunch

Entrepreneur First (EF), the London-headquartered “talent investor” that recruits and backs individuals pre-team and pre-idea to enable them to found startups, has announced its plans to expand to Canada.

It marks the first time EF has entered North America. Along with London, EF currently operates in Berlin, Paris, Singapore, Hong Kong and Bangalore.

The new Canadian outpost, due to launch in early 2020, will be in Toronto and follows EF’s $ 115 million first closing of a new fund in February.

At the time of the fund announcement, the talent investor/company builder said it would use the capital to continue scaling globally — specifically, enabling it to back more than 2,200 individuals who join its various programs over the next three years.

This, we were told, should amount to around 300-plus venture-backed companies being created, three times the number of startups EF has helped create since being founded by McKinsey colleagues Matt Clifford and Alice Bentinck all the way back in 2011. Clearly, setting up shop in Toronto is part of the plan to achieve this.

Often – mistakingly – described as an accelerator, EF stands out from the many other startup programmes because of the way it backs individuals “pre-team, pre-idea”. This means that participants typically find their co-founder and found their respective companies on the programme, and that these startup may never have seen the light of day without EF.

It’s a new type of venture model that appears to be working so far — measured both in terms of exits and follow on funding — although question marks remain with regards to how scalable it can be, given that what works in one city and ecosystem with one set of EF staff may not be entirely replicable in another. Or, as one VC put it to me, “there’s only one Matt and Alice”.

With that said, others, such as Greylock partner and co-founder of LinkedIn Reid Hoffman, are convinced EF can scale. Greylock is an investor in EF and Hoffman previously told TechCrunch he can see there being between 20-50 cities “where Entrepreneur First is integral to creating a set of interesting tech companies in those areas.”

Cue a statement from Matt Clifford: “By launching a programme in a third continent, we’re a step closer to achieving our goal of giving the world’s most ambitious individuals the tools to build a company wherever they happen to be… Toronto is one of the fastest growing tech ecosystems in North America in terms of capital and talent, and the city represents a great opportunity for EF to encourage the next generation of ambitious founders.”


TechCrunch

If you’re a cannabis investor or a founder working on a cannabis-related startup, you’ve probably heard of Poseidon Asset Management.

The San Francisco-based investment firm is one of very few that is focused narrowly on the industry, which remains fairly insular for now. Poseidon has also been at it longer than most outfits, having begun making bets on cannabis-related companies six years ago. More, Poseidon has managed to stuff checks into some of the fastest-growing companies in the sector, including the cannabis vaporizer company Pax Labs and the e-cigarette company Juul, whose founders created the Pax vaporizer before peeling off to win over smokers. Indeed, because Poseidon has largely invested the money of high-net-worth individuals and family offices, it hasn’t been constrained by the same vice clauses — or restrictions by backers like pension funds and other institutions — that can often hamper where venture capitalists invest.

Poseidon is notable for yet another reason, too. It was founded by siblings Emily and Morgan Paxhia, whose parents both died of different cancers at the ages of 46 and 52, respectively. In fact, despite — or because of — being a young teenager at the time, Emily Paxhia says she can still very much remember the hospice nurse who recommended to her father that he smoke pot to ease his pain. Little did Paxhia know then that the cannabis — then a surprising and exotic concept — would later inform the career she now enjoys.

We talked about it earlier this week, as well as how Paxhia and her brother decided back in 2013 that cannabis was going to be the next big thing. If you’re curious about their path, and where they’re shopping now, read on.

TC: You grew up in Buffalo and you say your parents were entrepreneurial.

EP: Our dad restored homes in an economically depressed part of Buffalo, and our mom worked for a real estate agency. When I began running his books, voilà, we had a family business.

TC: Then he became sick when you and your siblings were young. How did that impact you?

EP: He was a dyed-in-the-wool hippy. We had Woodstock tickets in our home. He never really accepted the status quo, which I think informs the way we view the world. But yes, he became aggressively sick with cancer in 1994 and passed away in 1996, and it was this non-virtuous cycle, where they would put him on this or that medication and each had its own terrible side effects. Finally, a hospice nurse who came to our home said, “John, maybe you should smoke some pot.” She told us it would help with his appetite and reduce his anxiety and help him sleep. It was this palliative care thing that had been stigmatized but she believed was useful. I don’t know if he tried it or not, but then he passed away, and five years later, our mother, who was very healthy and ran and took care of herself, also died of cancer.

I’ve often looked back and thought that if my parents had [used cannabis at the end of their lives], they would not have suffered so greatly.

TC: How did you get from Buffalo to starting a fund in San Francisco, seemingly out of the blue?

EP: After college, I was spending time in New York and in San Francisco, working in market research, including on behalf of Amex and Viacom and Comedy Central — all companies competing in markets that were very saturated. It was hard to find white space. When I moved to California [full time], I started to see people lining up outside the doors of dispensaries and I thought, “Here are people who ordinarily wouldn’t break a law, but they’re doing something that’s federally illegal because they want cannabis. Brick-and-mortar is dying elsewhere and it’s thriving here. This is what product-market fit looks like.”

TC: At what point did you decide to partner with your brother and why?

EP: He worked for UBS during the downturn [of 2008] and then he landed in Rhode Island, working for a private registered investment advisor. And I called him, and I said, “Dude. I think the ‘thing’ of our generation is cannabis.” I actually remember where I was standing in San Francisco. We’d always thought we’d be in business together, and he took me 100% seriously, and then we couldn’t turn it off. From that point on we were figuring out “how do we participate in this?”

It was Morgan who identified that a fund made the most sense, that the industry was happening and it was very underserved from a tech and investor perspective. He knew the industry was going to need funding and that investors would need an actively managed strategy.

TC: How did you get started?

EP: It was hard. It was very hard to find attorneys to work with us, but we did. The same was true of auditors and back-office administration. Everything that’s normally a check-the-box type of process was hard.

TC: What about investors? How did you begin lining these up with out a track record?

EP: I had that qualitative consulting experience, working with brands and helping them scale; Morgan had traditional investment experience. But there were no data sets at the time. All we could do was be “in market” all the time. We traveled to be with companies. We traveled to different geographies because each has such complicated regulatory nuances to it.

Raising money was really difficult. We got laughed at quite a bit. It’s funny, many of our earliest investors were lawyers because I think they understood the real, versus the perceived, risk involved in what we were doing.

TC: Eventually, you began to assemble this evergreen-type fund and you began investing while fundraising. Were you shopping at the outset?

EP: We focused initially on the tech aspect of the industry. To us, that was where we saw the biggest gap and the biggest opportunity to potentially scale quickly. Also, those companies tended to be started by tech founders who were [secondarily] interested in cannabis.

TC: How were you drumming up deal flow?

EP: It was going into stores, seeing what they were using in terms of tech, talking with retail associates about what people were buying, going to industry events and to cannabis job fairs to see who was hiring, then starting to build relationships with those companies. We knew as entrepreneurs ourselves that being as founder-friendly as possible would be the key to our deal flow. And we started having founders bringing us other founders. We’ve now led 20 rounds at this point, and our best deal flow has come from the founders themselves.

But it’s also been a matter of getting out there and walking up to people and saying, “Have you thought about raising capital? If so, let’s keep talking.”

TC: Do you feel like you now recognize founders you shouldn’t back?

EP: What 100% does not work in this industry is hubris. In other areas of business, a certain level of confidence bodes well for founders. But this is not a move-fast-and-break-things industry. There are so many regulatory challenges that you really need to know the lay of the land. I’ve seen people come in and bounce right out again because of their attitude.

Founders also need to understand the extra costs in time and money that come with running these businesses and to model accordingly; otherwise, projections are off and valuations are off and you’re facing a potentially down round later in time.

TC: You were able to return money to investors in January, after Juul distributed a special dividend. Is that your biggest exit to date?

EP: That was a big one, but we’ve had other big exits out of [an earlier] pair of funds through [several investments in Canadian companies], including [medical marijuana company] Aphria [which went public last October] and Canopy Growth [which went public in 2014, is Canada’s second-largest grower and is currently valued at roughly $ 15 billion]. Canada is a very different market. You can order cannabis from the government and it will arrive in the postal mail. It’s very top-down unlike in the U.S., where the market is very bottom-up and state by state.

There’s a lot of investment going on [across U.S. and Canada]. It’s very permeable at this point. I was in Toronto last week, and licensed producers there want to invest more in California. We’re meanwhile looking at Latin America and Europe.

TC: That’s interesting. Where in Latin America and why?

EP: The cost to produce cannabis in Colombia is extremely low. Cannabis grows on a 12-hour cycle very well and the equator runs through the country’s southern sector [making its warm climate conducive to the plant’s growth]. Local companies can export the products at a lower cost than in Canada and Europe. [Operators there] also have distribution relationships with European markets [that are buying medical marijuana].

Mexico is also expected to roll out its medical program in the fourth quarter of this year, which is exciting.

TC: Obviously these places have been home to drug cartels for years. Do you worry that these same organizations will take an interest in what’s being built legally in their backyards?

EP: We’ve gotten comfortable with both places. I think the cartels have begun to pivot to other places, like meth. I also don’t think it’s worth it to the cartels to get involved with legal government channels. And the groups that we focus on are themselves focused on medical cannabis and distribution to other medical touch points globally [and not the same places into which cartels are trying to move goods].

TC: I’ve read that Poseidon is trying to raise a new, $ 75 million fund. How far along are you?

EP: We have capital commitments for half the fund and hope to close it this summer. We want to be able to deploy [more capital] before legalization is [more widespread] and we have to compete with bigger funds.

TC: What is your pacing like? Relatedly, how fast do you have to move on these investments, or do you have all the time in the world right now?

EP: We expect to invest this new fund in 15 companies over two years. We’ve funded five startups with it since November, but we were in diligence on one of those for months. I’d say the average deal takes 60 to 90 days to pull together right now. We start our own diligence before the company is considering a Series A, which is where we invest. We want to help structure the round, to lead it, to have a board seat — to demonstrate our value add.

TC: Are you seeing many, or any, particularly frothy deals?

EP: Valuations are not going crazy, but the more popular a deal gets, the harder it becomes, as with any investment. We’re wrestling over a term sheet right now, because other groups got a look at it and want us to lead it, but we’re also getting negotiated against a little bit.

TC: Any parting words for investors who want to jump into the industry? Any advice?

EP: I’d say to go to events and walk the floor to see who and what stands out.

I went to MJBizCon [the Marijuana Business Conference and Expo] that happens annually every winter. The first few years that we went, there were a few hundred schlubby guys walking the floor. The year before last, there were 3,000 people in attendance, looking a lot less schlubby. Last year, I think there were 27,000 people, which I took as an indicator that there’s some interest in this space. [Laughs.]


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