Startups

VCs decipher the recent fintech layoffs — and why they’re happening now • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Chime, EC Fintech, EC venture capital, Fintech, Layoffs, startup valuations, Startups, stripe, tech layoffsNo Comments

Many big companies in the fintech world cut jobs in the past month. And yet Stripe’s announcement it would lay off 14% of its workforce still made a splash, proving that unicorns and decacorns are not immune to the challenging economic and fundraising conditions. The Stripe news closely follows Chime confirming this week that 12% of its employees would be laid off and Brex revealing last month that it was cutting 11% of its workforce. So what the heck is going on here? Well, according to Spiros Margaris, a fintech venture capitalist and founder of Margaris Ventures, the current layoffs by some of these larger fintech companies were “caused by the challenging geopolitical market environment and inflationary pressures. It affects the whole fintech startup industry — and globally all industries — since the prominent players have a strategic ripple effect on the smaller players.” “Laying off good employees endangers their strategy to succeed in the grand vision they initially sold to the VC.” Spiros Margaris, founder of Margaris Ventures Cameron Peake, a partner at Restive Ventures who recently invested in AiPrise, concurred, noting via email that much of what we are seeing today “were the dynamics we saw play out last year,” including all of the “large funding rounds, sunny market projections and a belief that companies needed more people to fuel their growth.” What resulted was “a lack of discipline around company fundamentals,” she added. While the frenzy was dissipating, it was then that companies “realized they were not only ahead of their skis but that they needed to cut back in order to focus more on profitability,” she said.

Emerge Career’s pre-release job training lands $3.2M seed and new state contracts • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in emerge career, Government & Policy, Startups, Y CombinatorNo Comments

Education options during and after incarceration have never been particularly extensive, despite the best intentions of educators. Emerge Career is working on changing that and its early success in putting formerly incarcerated folks to work is attracting investment from both VCs and government programs. It was only August when Emerge first appeared as it came out of Y Combinator’s latest batch, and I covered its initial ambitions and approach then. The team previously worked on Ameelio, which upended years of bad and exploitative video calling services in prisons, but also made the problem of education clear to them. Security and limited budgets at vocational and community colleges limit the amount of help they can actually offer people in the system, and courses from GEDs to trades often take a very “study by mail” approach during incarceration, or traditional brick and mortar one on release. Emerge changes that with modern video lectures and regular video call office hours with educators who specialize in the subject matter. At first the subject was strictly getting a commercial driver’s license, and that has helped numerous former inmates to find jobs soon after release in a sector hurting for labor. Now Emerge is also planning to offer nursing assistant and welding courses — two other areas where a shortage of workers means employers may not think twice about hiring someone recently out of prison. “Besides the clear labor shortage and high compensations, these are two professions that the justice-involved people we met in prisons and reentry centers across the country showed a lot of interest in,” said Emerge’s Gabe Saruhashi. “Trucking has been an exciting starting point, but we know many people cannot be away from home for prolonged periods of time, be it for personal reasons or reentry obligations. Ultimately, we want to offer training programs for individuals from all walks of life.” Co-founder Uzoma Orchingwa said the feedback from their first students has been very positive, highlighting the self-paced training (since it can be accessed piece by piece whenever is convenient), its speed (the aim is to go from zero to job in about two months), and the hands-on support they get from Emerge’s career coaches. Emerge reports that graduates from its program, who once averaged $13 an hour if they had a stable job, are pulling in an average of $78K now. It’s hoped the new programs will broaden the appeal and let the company support more students and locations. The company’s pitch pulled in local officials, a good step if you’re hoping to get into state-funded institutions, and now Emerge has landed a two-year, $845K contract (using American Rescue Plan funds) with the Connecticut Department of Labor. They also have several letters of intent, perhaps waiting on outcomes from the other programs. This early success has also brought in investment: a $3.2 million seed round led by Alexis Ohanian’s 776, with participation from the Softbank Opportunity Fund, Y Combinator, Lenny Rachitsky, and Michael Seibel. The money will be used to hire engineers and start up the new welding and nursing programs, as well as expand to three more states. Saruhashi said their ambition is to make Emerge Career the first choice for anyone in the country who has a disadvantaged background to get a second chance in the modern workforce.

TAM tough love, ‘building in public,’ 6 key SaaS metrics • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Commerce, e-commerce, EC roundup, immigration law, proptech, Startups, TechCrunch Disrupt 2022, VentureNo Comments

Are you ready to launch a bajillion-dollar startup? Before you start: Are you planning to build a centaur, a unicorn or perhaps a decacorn? Startup pitching has become an existential drama, in part because so many founders exaggerate the size of the total addressable market (TAM) in which they hope to compete. At ZebethMedia Disrupt, I spoke to three investors about how they use TAM to guide their decision-making. Everyone agreed that the number itself is far less important than the process that produced it. “The way it’s calculated and the way the founder is thinking about it tells us not necessarily about the business or its future, but about how the founder thinks about company creation,” said Deena Shakir, a partner at Lux Capital. Full ZebethMedia+ articles are only available to members.Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription. “It is almost guaranteed you’re going to be wrong,” said Aydin Senkut, the founder and managing partner of Felicis Ventures. “It’s either going to be too large or too small.” Kara Nortman, a managing partner at Upfront Ventures, said the TAM numbers given in a pitch do not control whether she’s likely to invest. “I would say [it is] more important to be able to articulate how big something can become and to show that you have a thought process around TAM, if it’s early,” she said. Choosing a mythical TAM won’t put dollar signs in investors’ eyes, as unrealistic numbers reflect unrealistic expectations, a red flag for any VC. As Senkut said, “the plan doesn’t have to be accurate — the plan has to be directionally correct.” Thanks very much for reading TC+ this week! Walter ThompsonEditorial Manager, ZebethMedia+@yourprotagonist 3 investors explain how finance-focused proptech startups can survive the downturn Image Credits: Kuzma (opens in a new window) / Getty Images How are finance-oriented property tech investors reacting to the ongoing downturn in public markets? Senior reporter Mary Ann Azevedo interviewed three VCs to learn more about how they’re counseling the companies in their portfolios, which types of startups are best positioned to weather the downturn and how they’re managing risk: Pete Flint, general partner, NFX Zach Aarons, co-founder and general partner, MetaProp Nima Wedlake, principal, Thomvest Ventures How Metafy founder Josh Fabian caught the attention of 776 by building in public Image Credits: Kelly Sullivan / Getty Images At ZebethMedia Disrupt, Josh Fabian, CEO of video game coaching platform Metafy, explained why he’s committed to “building in public,” or sharing aspects of his founder’s journey with an audience. “Consumers don’t trust corporations; I don’t trust corporations,” he said. “I don’t think any of you do, even if you’re running your own.” Katelin Holloway, a founding partner at 776 (an investor in Metafy), said Fabian’s approach was a breath of fresh air. “We were able to just engage and talk like humans, and Josh told us his story in a very different way,” she said. “Not only was it incredibly compelling from a business perspective, it was incredibly compelling from a human perspective,” she said. Is the modern data stack just old wine in a new bottle? Image Credits: Mikhail Dmitriev (opens in a new window) / Getty Images Before Ashish Kakran became a principal at Thomvest Ventures, he was a data engineer who transformed disparate consumer data points into optimized offers for consumer telecoms. “Part of my job involved unpacking encrypted data feeds, removing rows or columns that had missing data and mapping the fields to our internal data models,” he writes in a TC+ guest post. “Our statistics team then used the clean, updated data to model the best offer for each household.” Because today’s datasets contain exponentially more information, “the rules are being rewritten on how data will be used for competitive advantage, and it won’t be long before the winners emerge,” he asserts. In a deep dive, he compares modern and legacy data stacks to identify key trends for enterprises and opportunities for founders and investors. “Practitioners are spoilt for choices when building enterprise data pipelines,” says Kakran. Investor’s advice during a downturn: Don’t panic Image Credits: Kelly Sullivan / Getty Images Fewer investors are writing checks these days, but what kind of advice have they been giving their portfolio companies in recent months? Mary Ann Azevedo spoke to three executives at ZebethMedia Disrupt to learn more about the strategies they’re promoting to preserve runway and their peace of mind. Eric Glyman, CEO, Ramp Thejo Kote, CEO, Airbase Ruth Foxe Blader, partner, Anthemis “It behooves everybody to be really lucid about the macro environment that we’re entering,” said Blader. “It’s likely to be long-lived, and it’s very important to be judicious but not lose sight of your goals and the reason you founded the business in the first place.” 6 key metrics that can help SaaS startups outlast this downturn Image Credits: Andy Ryan (opens in a new window) / Getty Images The most successful companies I’ve worked at fostered parasocial relationships with customers in much the same way many of us invest emotional energy while following the lives of celebrities. During a downturn, “the goal is to pick up on warning signs early and course-correct as you go, and those signs are often hidden in the breadcrumbs,” writes Sudheesh Nair, CEO of ThoughtSpot. “Not all industries are affected equally, so don’t assume your customers will cut spending this year just because the headlines are bleak.” Tips for e-commerce brands that want to win more market share this holiday season Image Credits: Justin Sullivan (opens in a new window) / Getty Images Santa Claus makes a list and checks it twice before each holiday season. Can your e-commerce startup make the same claim? “Consumers are now living with inflation and an unofficial recession, and we can expect more selective and price-conscious shopping behavior,” writes Guru Hariharan, CEO and founder of CommerceIQ. Now that people “are feeling the squeeze on their everyday essential purchases” and the holiday shopping season is

Why Robinhood and Coinbase gained ground after reporting earnings • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in coinbase, Crypto, EC Cryptocurrency, EC Fintech, EC Newsletter, federal reserve, Fintech, Robinhood, Startups, The ExchangeNo Comments

You’d be forgiven for expecting public fintech companies that facilitate consumer trading to be under pressure this week. And yet, after reporting earnings, the share prices of two pandemic-era highfliers gained ground. Coinbase and Robinhood up? In this economy? Yes. Of the out-of-fashion tech sectors, consumer trading has to be among the most out of favor. And yet. ZebethMedia wanted to better understand investor response to results from both Coinbase (crypto-focused) and Robinhood (equities-focused) to figure out what drove each company’s shares higher in the wake of their reports. The answers, it turns out, are partially related. The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. In an ironic twist, some of the forces that have made consumer trading less attractive are the very same impulses helping the two companies derive more revenue from a previously less-critical part of their business. The Federal Reserve taketh away, and the Fed also giveth some back.

What investors really think about the TAM slide in your pitch deck • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in EC How To, EC TechCrunch Disrupt 2022, startup fundraising, Startups, TechCrunch Disrupt 2022, Total Addressable Market, VentureNo Comments

We’re encouraged to think of pitch meetings as a trial by fire: If an entrepreneur can negotiate deadly traps and slay the doubt monsters that bedevil tech investors, they’ll be rewarded with a golden SAFE note at the end of their quest. Particularly for first-timers, the pitch has become an existential drama, which can lead to poor decisions like overlong slide decks, failing to prepare investors before a meeting, and fatally, exaggerating the size of the total addressable market (TAM) in which they hope to compete. “With TAM, it is almost guaranteed you’re going to be wrong,” Aydin Senkut, the founder and managing partner of Felicis Ventures, said at ZebethMedia Disrupt. “It’s either going to be too large or too small.” Kara Nortman, a managing partner at Upfront Ventures, said the TAM numbers given in a pitch do not control whether she’s likely to invest. “I would say [it is] more important to be able to articulate how big something can become and to show that you have a thought process around TAM, if it’s early.” According to Deena Shakir, a partner at Lux Capital, TAM, along with the associated metrics serviceable addressable market (SAM) and serviceable obtainable market (SOM), aren’t meant to be carved in stone. They’re simple planning tools that help founders show investors their company’s upside potential, while SOM and SAM help them offset risk. “If we’re taking the meeting, we all sensibly think there’s something there that’s interesting enough to be potentially venture-bankable,” she said. “The way it’s calculated and the way the founder is thinking about it tells us not necessarily about the business or its future, but about how the founder thinks about company creation. And that’s much more important at the earliest stage.” All three panelists said TAM, SAM and SOM numbers offer a window into a founder’s mindset, but they’re not determinative factors, since they already have a general understanding of the sectors in which founders hope to compete.

Why ButcherBox built two dry ice factories during the pandemic • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in ButcherBox, risk management, Startups, supply chainNo Comments

As a startup, when you’re trying to stay as lean as possible, outsourcing is the name of the game; if you can get someone else to do the work for you (and manage the team, deal with hiring and HR, etc.), that’s a win. The major exception is anything that creates core intellectual property and technology, and things that are absolutely mission-critical to the business. It turns out for ButcherBox, a company that’s shipping hundreds of thousands of boxes of meat, dry ice is one of those things. “During COVID, we ended up opening a dry ice factory, and we’ve now opened a second,” said Mike Salguero, CEO at ButcherBox, during a talk at the Baukunst Creative Technologist conference in Boston last week. There were a few macro-economic reasons for why that suddenly started making sense. The first was that in 2020, the administration passed a law that made it advantageous to finance certain types of equipment. “We bought these machines for $2 million each, on a five-year note, with 0% interest, and we were able to deduct it all in year one,” Salguero said, shaking his head. The tax and financial benefits were huge in a world where ButcherBox was making a lot of profit (the company did in excess of $440 million worth of revenue in 2021), directly related to COVID. “It was basically free. It’s like Trump paid us to buy these machines.” Mike Salguero at ButcherBox’s dry ice factory. Image Credits: ButcherBox The purchase made sense financially, but it also de-risked a hugely important part of the business. “What we do is frozen meat in the mail, which means we need dry ice. If we don’t have dry ice, we can’t ship,” Salguero said, suggesting that dry ice was the only thing that was truly mission-critical in his supply chain. “If we ran out of boxes, we could get different boxes. If we ran out of chicken breasts, we could like substitute for whatever, chicken thighs or turkey. If we run out of dry ice, we can’t ship, and we’re dead.” Especially in 2020 as the pandemic was gathering steam, this looked like a bigger and bigger risk. There was a vaccine on the way that would need a lot of dry ice to get shipped around the country, and a lot of other businesses were starting to ship as well. “We thought that that was going to get worse, and these machines were like really cheap for the amount of dry ice they could produce. Now we own our destiny as it relates to dry ice. The plant is only just coming online, but we will actually be sellers of dry ice,” says Salguero. “The real dream is that we can run these plants and make our own dry ice free because we are selling so much of it.” The first factory in Oklahoma City, opened in the summer of 2021, can make an average of 111,000 pounds of dry ice every day. A second plant in Muscatine, Iowa is spooling up as we speak.

Surfe brings your CRM data to LinkedIn — and vice versa • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in CRM, Enterprise, revenue, sales, Startups, SurfeNo Comments

Surfe, the startup that was originally named Leadjet, is an interesting browser extension if you spend a lot of time on LinkedIn and are tired of switching between your CRM and the professional social network. When you install Surfe’s browser extension, you get some nifty syncing features between your CRM and LinkedIn. For instance, you can find leads on LinkedIn and easily export them to your CRM platform. But you can also view CRM data directly on LinkedIn profile pages. “We believe the CRM should be where the relationships happen,” co-founder and CEO David Maurice Chevalier told me. “We are just closing the gap here between these different platforms and CRMs.” Surfe works with HubSpot, Salesforce, Pipedrive and Copper. Surfe originally started as a quick export tool for LinkedIn. You install the browser extension and you can export a LinkedIn profile to your CRM without having to manually copy and paste a ton of data. But it has evolved into a more powerful tool that provides two-way syncing. Surfe injects CRM data on LinkedIn directly so that you can interact with your CRM where you already spend most of your time. When you add a LinkedIn contact to your CRM, you can fill out CRM fields from there — industry, company size, role in the company, etc. If you rely heavily on LinkedIn messages, you can also sync private conversations with your CRM. It can be particularly useful with multiple sales people. You can see if someone on the team has already contacted a specific person and the current status of the deal. All these new features create a healthier relationship with LinkedIn. “We are not a data exporter, we increase the time spent on LinkedIn,” Chevalier said. The browser extension also acts as a shortcut to your CRM. You can write notes and create tasks in just a few clicks. There’s a bigger play for Surfe. The startup wants to modernize the CRM interface. Users can open full-screen views with the deal pipeline in kanban and list views. It might not replace your CRM but it can help you push quick updates. “The CRM is more of a data platform and we think we need a new front end,” Chevalier said. There are 1,500 companies using Surfe in one way or another. Some sales people just started using it directly, while other companies have hundreds of licenses. Spendesk is a big Surfe customer for instance. Surfe competes with products like Scratchpad and Dooly. Up next, the team wants to bring CRM features to more places around the web. The company raised $4 million (€4 million) this summer in a seed round led by 360 Capital. Other participants in the round include TS Ventures and various business angels. More impressive, the team managed to reach €1 million in annual recurring revenue without any proper sales team. Now that it has raised some funding, it wants to reach the next level. Image Credits: Surfe

Most of the unicorns aren’t • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Brex, Equity podcast, Layoffs, Onward, Startups, stripe, VentureNo Comments

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Oh what a week. What a week. Things are busier than ever at ZebethMedia, where we’re coming out of our post-conference stupor and charing straight back into a packed news cycle. Sure, Musk is still making waves, but there are startup rounds to cover, layoffs to chew on, earnings coverage, unicorn reports, new data, and more. After cutting back sharply on material and still going long, here’s what Mary Ann, Natasha, and Alex got into this week: Rewind wants to help people with their memory. We talk about how the startup, which launched this week, uses recording technology to help you get what you see, hear and say at your finger tips. We talked about Onward, a startup that wants to help divorced or separated parents fight less about money and how it just raised nearly $10 million despite being pre-revenue. The somewhat odd, possible Byju’s IPO-spinoff of Aakash, a tutoring company that it bought the other year. Our views can be summarized in meme format: An edtech IPO? In this economy? Unicorns face an incredibly uphill journey to get public, which may explain in part why Byju’s is not itself going public (recall that it had had plans, but like with so many other companies those are on hold). And then there was Brex, which announced a new partnership with Techstars despite a big push into the enterprise space. Stripe revealed that it has cut 14% of its staff, or over 1,100 people, and its CEO and co-founder Patrick Collison admitting that the payments giant had “overhired for the world we’re in.” And finally, there’s a new VC ratings company in the neighborhood. How do we feel? Better than some VCs, at least. Got all that? Good. More Monday morning. Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

Is the modern data stack just old wine in a new bottle? • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in cloud infrastructure, Column, data observability, data stack, EC Cloud and Enterprise Infrastructure, EC Column, EC Enterprise Applications, Enterprise, StartupsNo Comments

Ashish Kakran Contributor Ashish Kakran, principal at Thomvest Ventures, is a product manager/engineer turned investor who enjoys supporting founders with a balance of technical know-how, customer insights, empathy with challenges and market knowledge. More posts by this contributor Here’s where MLOps is accelerating enterprise AI adoption Remember the cable, phone and internet combo offers that used to land in our mailboxes? These offers were highly optimized for conversion, and the type of offer and the monthly price could vary significantly between two neighboring houses or even between condos in the same building. I know this because I used to be a data engineer and built extract-transform-load (ETL) data pipelines for this type of offer optimization. Part of my job involved unpacking encrypted data feeds, removing rows or columns that had missing data, and mapping the fields to our internal data models. Our statistics team then used the clean, updated data to model the best offer for each household. That was almost a decade ago. If you take that process and run it on steroids for 100x larger datasets today, you’ll get to the scale that midsized and large organizations are dealing with today. Each step of the data analysis process is ripe for disruption. For example, a single video conferencing call can generate logs that require hundreds of storage tables. Cloud has fundamentally changed the way business is done because of the unlimited storage and scalable compute resources you can get at an affordable price. To put it simply, this is the difference between old and modern stacks: Image Credits: Ashish Kakran, Thomvest Ventures Why do data leaders today care about the modern data stack? Self-service analytics Citizen-developers want access to critical business dashboards in real time. They want automatically updating dashboards built on top of their operational and customer data. For example, the product team can use real-time product usage and customer renewal data for decision-making. Cloud makes data truly accessible to everyone, but there is a need for self-service analytics compared to legacy, static, on-demand reports and dashboards.

Spend management startup Pleo lays off 15% of its workforce • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in corporate spend, Fintech, Layoffs, pleo, StartupsNo Comments

Danish startup Pleo has announced that it plans to lay off around 15% of the company’s workforce. As the company currently has nearly 1,000 employees, it could affect up to 150 people. Pleo develops expense management tools for SMBs around Europe. “I’ll be honest. Pleo today, at the point of almost 1,000 employees and with our focus across 16 different countries, feels so different than just 12 months ago,“ co-founder and CEO Jeppe Rindom wrote in a blog post. “Yet the world has changed and our next chapter will look different. We’re no longer operating under a ‘growth first’ mandate but rather a reality of ‘growth through focus and efficiency’. Focus on the many markets we now serve and focus on driving efficiency in everything we do. And what got us here, is not what will get us there,” he added later. As a reminder, Pleo raised $150 million in July 2021 — and then another $200 million in December 2021. Following this Series C round, the company reached a $4.7 billion valuation. It became one of Europe’s most valued fintech company. “We’ve made our priorities and set our strategy for the coming year. And sadly this is impacting 15% of our roles, up to 150 of our colleagues may have to leave. Each and every one has played an instrumental role in making Pleo what we are today. And I’d like to believe that Pleo is more than just any place of work. Pleo is about people. […] And that makes this decision extra hard and emotional. It’s difficult. Yet needed,” Rindom wrote. Pleo grew at a rapid pace. Last year, the company had 20,000 customers across six countries — Denmark, Sweden, Germany, Spain, Ireland and the U.K. The company now operates in 16 different countries. Pleo competes with Spendesk and Payhawk. The startup issues company cards with individual and team spending limits. When an employee buys something, they can attach the receipt of the expense in Pleo directly. The platform also supports out-of-pocket expenses in case you have to pay in cash and get reimbursed later. Finally, Pleo syncs expenses with accounting tools, such as Sage, Xero and Quickbooks. The company also offers an invoice management product to replace your existing accounts payable solution. The idea is that Pleo can help you automate many of the processes that come with spending your company’s money. And yet, Pleo may have grown too quickly. It is going to be difficult to raise more money at the same valuation. Pleo now has a longer runway, but some employees will have to leave the company, unfortunately.