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.

Are January layoffs just a few post-WeWork jitters?

TechCrunch has found itself writing about layoffs at a few notable tech companies this week — and not just Softbank-backed ones. The focus is very much profits, as Alex Wilhelm summed up on Thursday, especially after the failed WeWork IPO and subsequent valuation and headcount decimation. We’ll be digging into the topic more soon but there does seem to be a certain consumery thread here. And perhaps some fears of negative macro trends bubbling up?

23andMe cut 16% or 100 people, citing slowing sales for DNA tests. Quora reduced an undisclosed number to focus on revenue. 

Plenty of tech investors have criticized Softbank’s approach to writing large check for large valuations, but they can’t avoid the same fears these days. So does Mozilla, which had to cut 70 people this month after struggling to build revenue products.

It still all seems sort of normal given the very high valuations and recent reconsiderations, at least so far. Layoffs may very well continue this year in a way that is necessary and even healthy in the long run.

More on TechCrunch, from Alex:

23andMe  and Mozilla are not alone, however. Playful Studios cut staff just this week, 2019 itself saw more than 300% more tech layoffs than in the preceding year and TechCrunch has covered a litany of layoffs at Vision Fund-backed companies over the past few months, including:

Scooter unicorns Lime and Bird have also reduced staff this year. The for-profit drive is firing on all cylinders in the wake of the failed WeWork IPO attempt. WeWork was an outlier in terms of how bad its financial results were, but the fear it introduced to the market appears pretty damn mainstream by this point. (Forsake hope, alle ye whoe require a Series H.)

Image: Bryce Durbin/TechCrunch

2019 venture data had soft spots, maybe

Fresh data sets are in on last year from Crunchbase, as well as PitchBook and the NVCA. Alex identified a few key takeaways: slightly lower early-stage fundings, a big global year overall, and some of the above WeWork-attributed drops already surfacing in the Q4 data over on TechCrunch.

I have to wonder what we really know right now, though. These are the best publicly-accessible funding databases out there, but many companies have stopped filing Form Ds with the U.S. Securities and Exchange Commission in recent years, as Danny Crichton has been covering in this ongoing series. That was a main data source, especially about early-stage stealth companies.

The Crunchbase report goes over the global trend for the year, and that’s another confounding factor, actually — how trackable are startup funding dollars across borders these days? And how do you account for remote teams in that mix? And how do you account for crypto…?

If you are building a company now at any stage, the financial signs out now are not in my humble opinion ones to have any fear over. Especially relative to the other problems that are almost certainly in front of you.

There is a lot of money in VC now regardless of anything else, as the Pitchbook-NVCA report notes, and there will be for a long time.

How to handle a recession

As if on cue, we had a couple guest columnists provide articles about capital efficiency and recession-proofing your company. Shin Kim has a two-parter on TechCrunch and Extra Crunch, where he breaks down why most tech IPOs are not WeWork (in a good way) and how to pace your own fundraising regardless of anything else going on

Schwark Satyavolu, meanwhile, digs into the best practices for startups in the next recession for Extra Crunch, starting with this brutal real-life intro:

I founded my first startup, Yodlee,  in a strong economy with almost 20 competitors. Ten years and a painful recession later, we were the only game in town. Critical to our success was acquiring our largest competitor, something we never could have done in a strong economy because they never would have been willing to sell. The recession made it untenable for them to fundraise, enabling us not only to buy them, but to do so without cash in an all-equity deal.

A proclamation about board diversity

Board representation is a hot topic for companies of all sizes and none other than Goldman Sachs said this week that it would only take companies public that had at least one underrepresented board member.

CEO David Solomon said that companies that had gone public in the last four years with at least one female board member did significantly better than those without, but Megan Dickey notes for Extra Crunch that’s not quite all the way towards the goal:

But the lack of people of color on boards is perhaps a more urgent issue. Late last year, a Crunchbase study found that 60% of the most funded VC-backed startups don’t have a single woman on their board of directors. But there are even fewer black people, let alone black women, on boards. A 2018 Deloitte study found that of the Fortune 100 companies, white men held 61.4% of board seats, white women held 19.1%, men of color had 13.7% of board seats and women of color had just 5.8% of board seats.

Connie Loizos, meanwhile, writes for TechCrunch that boards themselves are not all of the way towards the goal:

Let’s be real here. Directors of public companies typically meet just four times a year to review quarterly results. It’s important and necessary, sure. But beyond ensuring that strategic objectives are being met and hopefully making useful introductions to the company, these roles are assigned more importance by industry watchers than they should. (They often pay ludicrous amounts given the work involved, too.)

Even pledging that Goldman is only going to take public companies that give back — say 1% of future profits to the NAACP, as one idea — would instantly put the bank in pole position for those founders and investors who truly want to be progressive. Goldman might miss out on a lot of business in the immediate term, we realize, but we’re guessing it’s a gamble that would pay off over time.

Around the horn

Lame LPs, founder referenceability and the future of VC signaling (TC)

Why is everyone making OKR software? (EC)

Should tech giants slam the encryption door on the government? (TC)

Where top VCs are investing in adtech and martech (EC)

US mobile app subscription revenue jumped 21% in 2019 to $ 4.6B across the top 100 apps (TC)

Relativity Space could change the economics of private space launches (EC)

Can a time machine offer us the meaning of life? (TC)

#EquityPod

Alex and Danny are back on Equity this week, here’s a menu before you listen to the episode here (and if you haven’t subscribed yet, you can do that here).

  • Why Front’s latest investment (a $ 59 million Series C) is a pretty big deal. Not because of how much money it has raised — the firm has raised more in a single, preceding round — but because of who put the capital to work.

  • On the venture capital front, Danny and Alex also chewed over signaling risk in venture, and why bigger funds are writing earlier and earlier checks.

  • Also on the docket was the latest from Lambda School, which our former co-host and friend Kate Clark wrote. The gist is that regardless of how you feel about the company, your views are probably a bit too negative, or a bit too positive. (More on the company’s ilk from Extra Crunch here, and here.)

  • And three media deals, including The Athletic’s latest investment ($ 50 million), who might buy the company behind the hit podcast “Serial” and why Spotify might buy The Ringer. Which is about sports, it turns out.

    Want Startups Weekly in your inbox each week? You can sign up for this and TechCrunch’s other newsletters here.


TechCrunch

Are January layoffs just a few post-WeWork jitters?

TechCrunch has found itself writing about layoffs at a few notable tech companies this week — and not just Softbank-backed ones. The focus is very much profits, as Alex Wilhelm summed up on Thursday, especially after the failed WeWork IPO and subsequent valuation and headcount decimation. We’ll be digging into the topic more soon but there does seem to be a certain consumery thread here. And perhaps some fears of negative macro trends bubbling up?

23andMe cut 16% or 100 people, citing slowing sales for DNA tests. Quora reduced an undisclosed number to focus on revenue. 

Plenty of tech investors have criticized Softbank’s approach to writing large check for large valuations, but they can’t avoid the same fears these days. So does Mozilla, which had to cut 70 people this month after struggling to build revenue products.

It still all seems sort of normal given the very high valuations and recent reconsiderations, at least so far. Layoffs may very well continue this year in a way that is necessary and even healthy in the long run.

More on TechCrunch, from Alex:

23andMe  and Mozilla are not alone, however. Playful Studios cut staff just this week, 2019 itself saw more than 300% more tech layoffs than in the preceding year and TechCrunch has covered a litany of layoffs at Vision Fund-backed companies over the past few months, including:

Scooter unicorns Lime and Bird have also reduced staff this year. The for-profit drive is firing on all cylinders in the wake of the failed WeWork IPO attempt. WeWork was an outlier in terms of how bad its financial results were, but the fear it introduced to the market appears pretty damn mainstream by this point. (Forsake hope, alle ye whoe require a Series H.)

Image: Bryce Durbin/TechCrunch

2019 venture data had soft spots, maybe

Fresh data sets are in on last year from Crunchbase, as well as PitchBook and the NVCA. Alex identified a few key takeaways: slightly lower early-stage fundings, a big global year overall, and some of the above WeWork-attributed drops already surfacing in the Q4 data over on TechCrunch.

I have to wonder what we really know right now, though. These are the best publicly-accessible funding databases out there, but many companies have stopped filing Form Ds with the U.S. Securities and Exchange Commission in recent years, as Danny Crichton has been covering in this ongoing series. That was a main data source, especially about early-stage stealth companies.

The Crunchbase report goes over the global trend for the year, and that’s another confounding factor, actually — how trackable are startup funding dollars across borders these days? And how do you account for remote teams in that mix? And how do you account for crypto…?

If you are building a company now at any stage, the financial signs out now are not in my humble opinion ones to have any fear over. Especially relative to the other problems that are almost certainly in front of you.

There is a lot of money in VC now regardless of anything else, as the Pitchbook-NVCA report notes, and there will be for a long time.

How to handle a recession

As if on cue, we had a couple guest columnists provide articles about capital efficiency and recession-proofing your company. Shin Kim has a two-parter on TechCrunch and Extra Crunch, where he breaks down why most tech IPOs are not WeWork (in a good way) and how to pace your own fundraising regardless of anything else going on

Schwark Satyavolu, meanwhile, digs into the best practices for startups in the next recession for Extra Crunch, starting with this brutal real-life intro:

I founded my first startup, Yodlee,  in a strong economy with almost 20 competitors. Ten years and a painful recession later, we were the only game in town. Critical to our success was acquiring our largest competitor, something we never could have done in a strong economy because they never would have been willing to sell. The recession made it untenable for them to fundraise, enabling us not only to buy them, but to do so without cash in an all-equity deal.

A proclamation about board diversity

Board representation is a hot topic for companies of all sizes and none other than Goldman Sachs said this week that it would only take companies public that had at least one underrepresented board member.

CEO David Solomon said that companies that had gone public in the last four years with at least one female board member did significantly better than those without, but Megan Dickey notes for Extra Crunch that’s not quite all the way towards the goal:

But the lack of people of color on boards is perhaps a more urgent issue. Late last year, a Crunchbase study found that 60% of the most funded VC-backed startups don’t have a single woman on their board of directors. But there are even fewer black people, let alone black women, on boards. A 2018 Deloitte study found that of the Fortune 100 companies, white men held 61.4% of board seats, white women held 19.1%, men of color had 13.7% of board seats and women of color had just 5.8% of board seats.

Connie Loizos, meanwhile, writes for TechCrunch that boards themselves are not all of the way towards the goal:

Let’s be real here. Directors of public companies typically meet just four times a year to review quarterly results. It’s important and necessary, sure. But beyond ensuring that strategic objectives are being met and hopefully making useful introductions to the company, these roles are assigned more importance by industry watchers than they should. (They often pay ludicrous amounts given the work involved, too.)

Even pledging that Goldman is only going to take public companies that give back — say 1% of future profits to the NAACP, as one idea — would instantly put the bank in pole position for those founders and investors who truly want to be progressive. Goldman might miss out on a lot of business in the immediate term, we realize, but we’re guessing it’s a gamble that would pay off over time.

Around the horn

Lame LPs, founder referenceability and the future of VC signaling (TC)

Why is everyone making OKR software? (EC)

Should tech giants slam the encryption door on the government? (TC)

Where top VCs are investing in adtech and martech (EC)

US mobile app subscription revenue jumped 21% in 2019 to $ 4.6B across the top 100 apps (TC)

Relativity Space could change the economics of private space launches (EC)

Can a time machine offer us the meaning of life? (TC)

#EquityPod

Alex and Danny are back on Equity this week, here’s a menu before you listen to the episode here (and if you haven’t subscribed yet, you can do that here).

  • Why Front’s latest investment (a $ 59 million Series C) is a pretty big deal. Not because of how much money it has raised — the firm has raised more in a single, preceding round — but because of who put the capital to work.

  • On the venture capital front, Danny and Alex also chewed over signaling risk in venture, and why bigger funds are writing earlier and earlier checks.

  • Also on the docket was the latest from Lambda School, which our former co-host and friend Kate Clark wrote. The gist is that regardless of how you feel about the company, your views are probably a bit too negative, or a bit too positive. (More on the company’s ilk from Extra Crunch here, and here.)

  • And three media deals, including The Athletic’s latest investment ($ 50 million), who might buy the company behind the hit podcast “Serial” and why Spotify might buy The Ringer. Which is about sports, it turns out.

    Want Startups Weekly in your inbox each week? You can sign up for this and TechCrunch’s other newsletters here.


TechCrunch

Are January layoffs just a few post-WeWork jitters?

TechCrunch has found itself writing about layoffs at a few notable tech companies this week — and not just Softbank-backed ones. The focus is very much profits, as Alex Wilhelm summed up on Thursday, especially after the failed WeWork IPO and subsequent valuation and headcount decimation. We’ll be digging into the topic more soon but there does seem to be a certain consumery thread here. And perhaps some fears of negative macro trends bubbling up?

23andMe cut 16% or 100 people, citing slowing sales for DNA tests. Quora reduced an undisclosed number to focus on revenue. 

Plenty of tech investors have criticized Softbank’s approach to writing large check for large valuations, but they can’t avoid the same fears these days. So does Mozilla, which had to cut 70 people this month after struggling to build revenue products.

It still all seems sort of normal given the very high valuations and recent reconsiderations, at least so far. Layoffs may very well continue this year in a way that is necessary and even healthy in the long run.

More on TechCrunch, from Alex:

23andMe  and Mozilla are not alone, however. Playful Studios cut staff just this week, 2019 itself saw more than 300% more tech layoffs than in the preceding year and TechCrunch has covered a litany of layoffs at Vision Fund-backed companies over the past few months, including:

Scooter unicorns Lime and Bird have also reduced staff this year. The for-profit drive is firing on all cylinders in the wake of the failed WeWork IPO attempt. WeWork was an outlier in terms of how bad its financial results were, but the fear it introduced to the market appears pretty damn mainstream by this point. (Forsake hope, alle ye whoe require a Series H.)

Image: Bryce Durbin/TechCrunch

2019 venture data had soft spots, maybe

Fresh data sets are in on last year from Crunchbase, as well as PitchBook and the NVCA. Alex identified a few key takeaways: slightly lower early-stage fundings, a big global year overall, and some of the above WeWork-attributed drops already surfacing in the Q4 data over on TechCrunch.

I have to wonder what we really know right now, though. These are the best publicly-accessible funding databases out there, but many companies have stopped filing Form Ds with the U.S. Securities and Exchange Commission in recent years, as Danny Crichton has been covering in this ongoing series. That was a main data source, especially about early-stage stealth companies.

The Crunchbase report goes over the global trend for the year, and that’s another confounding factor, actually — how trackable are startup funding dollars across borders these days? And how do you account for remote teams in that mix? And how do you account for crypto…?

If you are building a company now at any stage, the financial signs out now are not in my humble opinion ones to have any fear over. Especially relative to the other problems that are almost certainly in front of you.

There is a lot of money in VC now regardless of anything else, as the Pitchbook-NVCA report notes, and there will be for a long time.

How to handle a recession

As if on cue, we had a couple guest columnists provide articles about capital efficiency and recession-proofing your company. Shin Kim has a two-parter on TechCrunch and Extra Crunch, where he breaks down why most tech IPOs are not WeWork (in a good way) and how to pace your own fundraising regardless of anything else going on

Schwark Satyavolu, meanwhile, digs into the best practices for startups in the next recession for Extra Crunch, starting with this brutal real-life intro:

I founded my first startup, Yodlee,  in a strong economy with almost 20 competitors. Ten years and a painful recession later, we were the only game in town. Critical to our success was acquiring our largest competitor, something we never could have done in a strong economy because they never would have been willing to sell. The recession made it untenable for them to fundraise, enabling us not only to buy them, but to do so without cash in an all-equity deal.

A proclamation about board diversity

Board representation is a hot topic for companies of all sizes and none other than Goldman Sachs said this week that it would only take companies public that had at least one underrepresented board member.

CEO David Solomon said that companies that had gone public in the last four years with at least one female board member did significantly better than those without, but Megan Dickey notes for Extra Crunch that’s not quite all the way towards the goal:

But the lack of people of color on boards is perhaps a more urgent issue. Late last year, a Crunchbase study found that 60% of the most funded VC-backed startups don’t have a single woman on their board of directors. But there are even fewer black people, let alone black women, on boards. A 2018 Deloitte study found that of the Fortune 100 companies, white men held 61.4% of board seats, white women held 19.1%, men of color had 13.7% of board seats and women of color had just 5.8% of board seats.

Connie Loizos, meanwhile, writes for TechCrunch that boards themselves are not all of the way towards the goal:

Let’s be real here. Directors of public companies typically meet just four times a year to review quarterly results. It’s important and necessary, sure. But beyond ensuring that strategic objectives are being met and hopefully making useful introductions to the company, these roles are assigned more importance by industry watchers than they should. (They often pay ludicrous amounts given the work involved, too.)

Even pledging that Goldman is only going to take public companies that give back — say 1% of future profits to the NAACP, as one idea — would instantly put the bank in pole position for those founders and investors who truly want to be progressive. Goldman might miss out on a lot of business in the immediate term, we realize, but we’re guessing it’s a gamble that would pay off over time.

Around the horn

Lame LPs, founder referenceability and the future of VC signaling (TC)

Why is everyone making OKR software? (EC)

Should tech giants slam the encryption door on the government? (TC)

Where top VCs are investing in adtech and martech (EC)

US mobile app subscription revenue jumped 21% in 2019 to $ 4.6B across the top 100 apps (TC)

Relativity Space could change the economics of private space launches (EC)

Can a time machine offer us the meaning of life? (TC)

#EquityPod

Alex and Danny are back on Equity this week, here’s a menu before you listen to the episode here (and if you haven’t subscribed yet, you can do that here).

  • Why Front’s latest investment (a $ 59 million Series C) is a pretty big deal. Not because of how much money it has raised — the firm has raised more in a single, preceding round — but because of who put the capital to work.

  • On the venture capital front, Danny and Alex also chewed over signaling risk in venture, and why bigger funds are writing earlier and earlier checks.

  • Also on the docket was the latest from Lambda School, which our former co-host and friend Kate Clark wrote. The gist is that regardless of how you feel about the company, your views are probably a bit too negative, or a bit too positive. (More on the company’s ilk from Extra Crunch here, and here.)

  • And three media deals, including The Athletic’s latest investment ($ 50 million), who might buy the company behind the hit podcast “Serial” and why Spotify might buy The Ringer. Which is about sports, it turns out.

    Want Startups Weekly in your inbox each week? You can sign up for this and TechCrunch’s other newsletters here.


TechCrunch

We are living through one of the nation’s longest periods of economic growth. Unfortunately, the good times can’t last forever. A recession is likely on the horizon, even if we can’t pinpoint exactly when. Founders can’t afford to wait until the midst of a downturn to figure out their game plans; that would be like initiating swim lessons only after getting dumped in the open ocean.

When recession inevitably strikes, it will be many founders’ — and even many VCs’ — first experiences navigating a downturn. Every startup executive needs a recession playbook. The time to start building it is now.

While recessions make running any business tough, they don’t necessitate doom. I co-founded two separate startups just before downturns struck, yet I successfully navigated one through the 2000 dot-com bust and the second through the 2008 financial crisis. Both companies not only survived but thrived. One went public and the second was acquired by Mastercard.

I hope my lessons learned prove helpful to building your own recession game plan.


TechCrunch

The Catalyst Fund has gained $ 15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.

The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.

That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.

Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.

“We’re offering grants of up to $ 100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.

Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $ 15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.

Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.

Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.

Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.

African fintech startups have dominated the accelerator’s startups, comprising 56% of the portfolio into 2019.

That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.

The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.

By several estimates, Africa is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale finance solutions on the continent.

Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech related startups on the continent.

This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.

For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation

“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.

This take aligns with JP Morgan’s 2019 announcement of a $ 125 million, philanthropic, five-year global commitment to improve financial health in the U.S. and globally.

More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $ 2.9 billion. It’ll be worth following if the company shifts any of its income-generating prowess to business and venture funding activities in Catalyst Fund markets like Nigeria, India and Mexico.


TechCrunch

During this week’s Democratic debate, there was a lot of talk, unsurprisingly, about ensuring the future of this country’s children and grandchildren. Climate change was of particular interest to billionaire Tom Steyer, who said repeatedly that addressing it would be his top priority were he elected U.S. president.

As it happens, earlier the same day, we’d spent time on the phone with two venture capitalists who think of almost nothing else every day. The reason: they both invest in so-called deep tech, and they meet routinely with startups whose central focus is on making the world habitable for generations of people to come — as well as trying to produce outsize financial returns, of course.

The two VCs with whom we talked know each other well. Siraj Khaliq is a partner at the global venture firm Atomico, where he tries to find world-changing startups that are enabled by machine learning, AI, and computer vision. He has strong experience in the area, having cofounded The Climate Corporation back in 2006, a company that helps farmers optimize crop yield and that was acquired by Monsanto in 2013 for roughly $ 1 billion.

Seth Bannon is meanwhile a founding partner of Fifty Years, a nearly five-year-old, San Francisco-based seed-stage fund whose stated ambition is backing founders who want to solve the world’s biggest problems. The investors’ interests overlap so much that Khaliq is also one of Fifty Years’s investors.

From both, we wanted to know which companies or trends are capturing their imagination and, in some cases, their investment dollars. Following are excerpts from our extended conversation earlier this week. (We thought it was interesting; hopefully you will, too.)

TC: Seth, how would you describe what you’re looking to fund at your firm?

SB: There’s a Winston Churchill essay [penned nearly 100 years ago] called “Fifty Years Hence” that describes what we do. He predicts genomic engineering, synthetic biology, growing meat without animals, nuclear power, satellite telephony.  Churchill also notes that because tech changes so quickly that it’s important that technologists take a principled approach to their work. [Inspired by him] we’re backing founders who can make a ton of money while doing good and focusing on health, disease, the climate crisis . . .

TC: What does that mean exactly? Are you investing in software?

SB: We’re not so enthusiastic about pure software because it’s been so abstracted away that it’s become a commodity. High school students can now build an app, which is great, but it also means that competitive pressures are very high. There are a thousand funds focused on software seed investing. Fortunately, you can now launch a synthetic biology startup with seed funding, and that wasn’t possible 10 years ago. There are a lot of infrastructural advancements happening that makes [deep tech investing even with smaller checks] interesting.

TC: Siraj, you also invest exclusively on frontier, or deep tech, at Atomico . What’s your approach to funding startups?

SK: We do Series A [deals] onward and don’t do seed stage. We primarily focus on Europe. But there’s lot of common thinking between us and Seth. As a fund, we’re looking for big problems that change the world, sometimes at companies that won’t necessarily be big in five years but if you look out 10 years could be necessary for humanity. So we’re trying to anticipate all of these big trends and focus on three or four theses a year and talk as much as we can with academics and other experts to understand what’s going on. Founders then know we have an informed view.

Last year, we focused on synthetic biology, which is a becoming so broad a category that it’s time to start subdividing it. We were also doing AI-based drug discovery and quantum computing and we started to spend some time on energy as well. We also [continued an earlier focus on ] the future of manufacturing and industry. We see a number of trends that make [the latter] attractive, especially in Europe where manufacturing hasn’t yet been digitized.

TC: Seth, you mentioned synthetic biology infrastructure. Can you elaborate on what you’re seeing that’s interesting on this front?

SB: You’ve maybe heard of directed evolution, technology that allows biologists to use the power of evolution to get microbes or other biological machines to do what they want them to do that would have been impossible before. [Editor’s note: here, Bannon talked a bit about Frances Arnold, the Nobel Prize-winning chemist who was awarded the prize in 2018 for developing the technique.]

So we’re excited to back [related] startups. One, Solugen, enzymatically makes industrial chemicals [by combining genetically modified enzymes with organic compounds, like plant sugars]. Hydrogen peroxide is a $ 6 billion dollar industry, and it’s currently made through a petroleum-based process in seven-football-field-long production plants that sometimes explode and kill people.

TC: Is this then akin to Zymergen, which develops molecules in order to create unique specialty materials?

SB: Zymergen mainly works as a kind of consultant to help companies engineer strains that they want. Solugen is a vertically integrated chemicals company, so it [creates its formulations], then sells directly into industry.

TC: How does this relate to new architectures?

SB: The way to think about it is that there’s a bunch of application-level companies, but as synthetic biology companies start to take off, there’s a bunch of emerging infrastructure layer companies. One of these is Ansa Biotechnologies, which has a fully enzymatic process or writing DNA. Like Twist, which went public, they make DNA to sell to customers in the biotech industry. But whereas Twist using a chemical process to make DNA, Ansa’s approach is fully enzymatic. [Editor’s note: More on the competition in this emerging space here.]

Also, if you look at plant-based alternatives to meat, they’re more sustainable but also far more expensive than traditional beef. Why is that? Well plant-based chicken is more expensive because the processing infrastructure being used is more than 10 years behind real chicken processing, where you’ll see robot arms that cut up chicken so efficiently that it looks like a Tesla factory.

[Alternative meat] companies are basically using these extruders built in the ’70s because the industry has been so small, and that’s because there’s been a lot of skepticism from the investment community in these companies. Or there was. The performance of Beyond Meat’s IPO ended it. Now there’s a rush of founders and dollars into that space, and whenever you have a space where the core infrastructure has been neglected, there’s opportunity. A former mechanical engineer with Boeing has started a company, Rebellyous Foods, to basically build the AWS for the plant-based food industry, for example. She’s using [the machines she’s building] to sell plant-based chicken nuggets, [but that’s the longer-term plan].

TC: Siraj, you say last year you started to spend time on energy. What’s interesting to you as it relates to energy?

SK: There’s been some improvement in how we capture emissions, but [carbon emissions] are still very deleterious to our health and the planet’s health, and there are a few areas to think about [to address the problem]. Helping people measure and control their consumption is one approach, but also we think about how to produce new energy, which is a shift we [meaning mankind] need to undertake. The challenge [in making that shift] is often [capital expenditures]. It’s hard for venture investors to back companies that are [building nuclear reactors], which makes government grants the best choice for early innovation oftentimes. There is one company, Seaborg, that has figured out a clever reactor. It’s not a portfolio company but it’s [compelling].

SB: We also really like what Seaborg is doing. These [fourth generation] nuclear companies have a whole host of approaches that allow for smaller, safer reactors that you wouldn’t mind having in your backyard. But Siraj put his finger on it: as an early-stage deep tech investor, we have to consider the capital plan of a company, and if it needs to raise billions of dollars, early investors will get really diluted, so early-stage venture just isn’t the best fit.

TC: There are other areas you like, though, because costs have fallen so much.

SB: Yes. Satellite telephony used to be one of those areas. Some of the satellites in space right now cost $ 350 million [to launch] and took three to four years to build, which would be really hard for any early-stage investor to fund. But now, a new generation of companies is building satellites for one-tenth of the cost in months, not years. That’s a game changer. They can iterate faster. They can build a better product. They don’t have to raise equity to build and launch either; they can raise from a debt financier [from whom they can] borrow money and pay it back over time. That model isn’t available to a company like Uber or Lyft, because those companies can’t say, ‘X is going to cost us Y dollars and it will pay back Z over time.’

TC: What of concerns that all these cheap satellites are going to clog up the sky pretty quickly?

SB: It’s a real concern. Most [of today’s satellites] are low earth satellites, and the closer to the earth they are, the brighter they are; they reflect the sun more, the more satellites we’re seeing instead of stars. I do think it’s incumbent on all of these companies to think about how they are contributing to the future of humanity. But when you connect the unconnected, educational outcomes improve, health improves, inequality decreases, and the stability of governments improves, so maybe the developed world needs to sacrifice a bit. I think that’s a reasonable tradeoff. If on the other hand, we’re putting up satellites to help people buy more crap . . .

TC: It’s like the argument for self-driving cars in a way. Life becomes more efficient, but they’ll require far more energy generation, for example. There are always second-order consequences.

SK: But think of how many people are killed in driving accidents, versus terrorist attacks. Humans have many great qualities, but being able to drive a lethal machine consistently isn’t one of them. So when we take that into perspective, it’s really important that we build autonomous vehicles.

You [voice] a legitimate concern, and often when there are step changes, there are discontinuities along the way that lead to side effects that aren’t great. That comes down to several things. First, infrastructure will have to keep up. We’ll also have to create regulations that don’t lead to the worst outcomes. One our investments, Lilium in Munich, has built an entirely electric air taxi service that’s built on vertical takeoff. It’s nimble. It’s quiet enough to operate in city environments.

On roads, cars are constrained by 2D terrain and buildings, but [in the air] if you can do dynamic air traffic control, it opens up far much efficient transport. If you can get from downtown London to Heathrow [airport] in five minutes versus 50 minutes in a Tesla? That’s far more energy efficient.


TechCrunch

I love music. Seriously, it’s one of the few things that brings solace in this cold, lonely world. Want to go deep on Joni Mitchell, William Onyeabor or Pablo Casals? I’m game. Yes, I worked at multiple record stores years before TechCrunch. Yes, I will always be that guy. What I will never be, however, is a musician, professional or otherwise.

I’m resolved to this fact at this point in my life. I’ll never be a rock star like I’ll never be a professional baseball player — both facts I’ve mostly made peace with. We don’t need to go into the two years of junior high when I played the trombone, or the decade and a half I attempted to master the guitar. All you need to know is I had absolutely zero aptitude for either.

It’s not for lack of desire to make music. It’s just a straight-up, good-old-fashioned lack of talent. For precisely this reason, I view any new piece of musical equipment with great interest. There’s a ton of money to be made for the startup that can truly unlock the potential of music making for those lacking the basic skills to do so.

Roli has long been of interest to me for this reason. I was one of the first people to cover the Seaboard when it debuted at SXSW a number of years ago. It’s a fascinating instrument, letting users bend notes courtesy of a soft material makeup, but mastering it — or, really, making any music at all — requires some ability to play piano.The company’s modular block system, announced a few years ago, was even more compelling, but similarly failed to scratch that itch.

Last week at CES, the fine folks at Kickstarter introduced me to the founders of a trio of crowdfunding companies that fit the bill to some degree. French startup Joué actually went on to win top prize at our CES pitch-off this year, with its modular MIDI controller of the same name.

The device operates on a similar principle as the Sensel Morph we’ve covered before, with silicone skins that overlay atop a touch surface to offer a variety of different controllers. Joué’s take is more music-focused than Sensel’s ever was. And besides, based on a conversation with Sensel at the show, I think it’s pretty fair to say that the company is turning most of its focus away from that device, in favor of compelling touch components it’s working to build into third-party handsets.

The Kickstarter project is an impressive one, as evidenced by the brief demo. It’s extremely versatile, requiring just a new skin and sound pack for the system to take on completely different aural qualities. The company also discussed the potential for customized sound packs. Joué brought NWA founder Arabian Prince in to perform at its both all week. An odd fit for CES, to be sure, but an interesting example of the kinds of artists such a product might be able to draw. It’s easy to see musicians expressing interest in a customized pad.

That said, while the company seems to be positioning the product as perfect for beginners, I do expect there’s a reasonably large learning curve here. That seems removed somewhat from Rhythmo. The Austin-based startup’s project combines music making with a guided dip into the maker world.

It’s a MIDI controller drum kit that you make out of a cardboard box. It ships with all of the pieces, and putting it together offers a nice connection into the process of creating a musical instrument. Founder Ethan Jin let me take a constructed model for a spin on the CES floor. The demo was a little glitchy for various reasons, but it was fun. The kit features large arcade buttons that can be mapped to a variety of sounds. You can use the Rhythmo app or interface with your music software of choice in iPad, desktop, etc. It’s a fun entry into that world.

Artiphon, however, is probably closest to fulfilling my very specific desires. The company is best known for its massively successful Kickstarter project, Instrument 1. That racked in a mind-boggling $ 1.3 million with the promise of delivering a guitar, violin, piano and drum machine all in a single device.

The newer Orba ($ 1.4 million this time), however, really caught my eye. The puck-shaped device is a pocket synthesizer/looper/MIDI controller that requires little if any musical knowledge to get up and running. After a conversation with founder Mike Butera, I’ve come to regard it at a very base-level as a sort of musical fidget spinner.

That is to say, it’s simple enough that you can use it absentmindedly to make music while you pace around your apartment, trying to come up with a half-decent headline for the story of crowdfunded music projects at CES you’ve been writing (a purely hypothetical example that in no way reflects my life).

Of the three, that’s the one I’m most key to review, in hopes of finally scratching that musical itch.

CES 2020 coverage - TechCrunch


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