venture capital

A love letter to micro funds, the backbone and future of venture capital

By zebethcontrolPosted on November 19, 2022Posted in EC venture capital, fundraising, micro funds, PitchBook Data, Startups, Venture, venture capitalNo Comments

While the Sequoias and the Andreessen Horowitzes of the world continue to swell in size, their influence on venture capital may be heading in the opposite direction as micro funds increase their impact on the industry. Whether you define micro funds as below $50 million or sub-$25 million, these are truly the funds that power the future of the industry. They help venture hubs take off, bring expertise and specialization to the market, and fill a role in the venture capital ecosystem that larger firms simply can’t. They also can be credited with getting a lot of the large unicorn and public companies we know today off the ground, as many of them received some of their first dollars from a micro fund: Robinhood (Elefund), Coinbase (Initialized Capital, which was investing out of a $7 million fund at the time) and Flexport (Anorak Ventures). I’ve written about the rise of micro funds in the U.S. before, but when Sweetwood Ventures reached out to me a month ago about its new fund-of-funds strategy to back nano — sub-$15 million — funds in Israel, I was intrigued. I hadn’t realized that the explosion of micro funds extended beyond the U.S. market, but Sweetwood general partner Amit Kurz told me it was one he had been tracking for a few years now.

Drive Capital’s investors hit a fork in the road • ZebethMedia

By zebethcontrolPosted on November 19, 2022Posted in Chris Olsen, Drive Capital, Mark Kvamme, sequoia capital, Venture, venture capitalNo Comments

Drive Capital was founded by two former Sequoia Capital Partners looking to start anew in the Midwest. But investors in the Columbus, Oh.-based firm have had a bumpy ride of late, and according to our sources, they aren’t enjoying it. It’s a dramatic turn for Drive, which announced $1 billion in capital commitments back in June, a healthy amount for a 10-year-old firm whose mission it is to invest nearly everywhere in the U.S. outside of Silicon Valley. In fact, in June, the firm — cofounded by veteran VCs Mark Kvamme and Chris Olsen — seemed to be riding high, with a couple of apparent wins and news funds that brought Drive’s assets under management to more than $2 billion. Yet dating back to September — soon after we talked with Olsen about VC doubling back to California — we heard rumblings about a rift, along with separate plans that Kvamme was making. Then came the announcement last month that the team was splitting up. At first, the story was that Kvamme, who logged more than twice as many years at Sequoia than Olsen, was transitioning to “partner emeritus” because, as he told a Columbus Business First, 10 years and four funding cycles was longer than he originally planned to lead Drive Capital. (This was probably a big surprise to the investors who’d just agreed to let Drive invest their capital.) This week, the other shoe dropped. Columbus Business First reported that Kvamme, who races cars, is not zipping off to semi-retirement but instead talking with potential backers about a new fund, the Ohio Fund, which will apparently invest in multiple asset classes, including other funds, public stocks, private companies in Ohio, and infrastructure. The idea is to “focus on the future economic vitality of Ohio,” said an unnamed source to the outlet. Olsen now says that he’s surprised by this development. We obtained a letter that Drive sent out to its limited partners tonight that reads: Dear Limited Partner,This week an article was published indicating that our Partner Emeritus Mark Kvamme is launchinga new investment fund. All of us at Drive were surprised by this news, as we are sure you were too.While we will not send you a note each time a new article about Mark is published, we feel that, inthe spirit of being a good partner, it’s appropriate to provide you with a transparent update aboutthis situation and our relationship with Mark.After the article was published we spoke with Mark and learned that the prospect of him raising anew fund was leaked to a journalist from an unknown source. According to Mark, he has not yetdetermined what he is going to do next. Raising a new type of fund is something he is considering,along with other options in public service and personal endeavors.We have a formal separation agreement with Mark that prevents him from starting a competitivefirm or fund to Drive. Please know that this was a heavily negotiated agreement to ensure that itsubstantially protects Drive, our Limited Partners’ interests, and everything we are building towardat Drive.Again, we do not intend to communicate with you each time a new article is written about Mark,but in this instance, we thought it appropriate to provide clarification. Should you have anyquestions, please do not hesitate to reach out [contact information redacted by ZebethMedia]. Sincerely,The Drive Team Olsen declined to comment for this story; we reached out to Kvamme and did not receive a response. But it’s complicated, to say the least. According to our sources, part of the split traces to a relationship between Olsen and Yasmine Lacaillade, who was Drive’s COO for nearly seven years before leaving the firm in April to launch her own investment outfit. Asked about this, a Drive spokesman downplayed any tensions that may have arisen from a romantic relationship between the two, writing: “Yes you heard right in that Chris and Yas are in a relationship. That’s been public knowledge for some time. No comments beyond that.” Like most venture outfits, Drive also finds its portfolio in rougher shape than a year or two ago. One of Drive’s biggest exits to date has been that of Root Insurance, a now seven-year-old, Columbus, Oh.-based insurance company that specializes in automotive coverage and that staged a traditional IPO in November 2020. Though the shares performed initially, they’ve tanked since, currently priced at roughly $7 each after a reverse stock split, down from $486 per share the day the company went public. Olsen stepped off the board in November of last year. The other big star of Drive’s portfolio currently — Olive AI — is trying to overcome its own challenges. The Columbus-based healthcare automation startup, founded in 2012, has long framed its extensive history of pivots (more than 30 to date) as an inspirational story of trying, then trying again. Olive was rewarded by investors for its willingness to shift gears, too. It has raised a staggering $902 million over the years and said last year that it was valued at $4 billion. But the outfit, a robotic process automation company that aimed to take on hospital workers’ most tedious tasks, was never all that it appeared, according to a series of damning Axios pieces; and by September, the wheels began to come off. Most notably, the company’s chief financial officer and chief product officer were abruptly fired, following out the door numerous C-level executives who also left this fall, including its president, a senior director of operations, its EVP of operations and its SVP of payer product strategy. Olive AI has since said it will sell a portion of its products and services to Rotera, a company built out of Olive’s own venture studio. Limited partners aren’t happy about these developments, but as far as we’re aware, they have not talked in earnest about taking action and it seems unlikely that they will. At least, it’s exceedingly rare for limited partners to cancel their capital commitments and only slightly more common for VCs

TAM takedown, green card layoffs, when to ignore investor advice • ZebethMedia

By zebethcontrolPosted on November 18, 2022Posted in EC roundup, Layoffs, Pitch Deck Teardown, Startups, tax laws, Total Addressable Market, Venture, venture capitalNo Comments

When the downturn began, many VCs urged founders to slash their marketing spending. On its face, that’s an effective way to extend runway while cutting costs. Several months later, we’ve since learned that cutting marketing budgets doesn’t make early-stage startups healthier, but it is a great way for VCs to reduce burn rates across their entire portfolio. As Rebecca Szkutak reported this week, SaaS startups that ignored this advice outperformed the ones that followed it. If someone offers you free business advice, it’s probably for their own benefit. In business, if someone’s offering you advice, it’s probably for their own benefit. Which is why I take investors at their word when they say most founders cannot properly assess their total addressable market (TAM). Most founders submit a slide with three concentric circles: TAM on the outside, SAM (serviceable addressable market) in the middle, and SOM (serviceable obtainable market) in the center. Full ZebethMedia+ articles are only available to membersUse discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription “When this slide appears, most investors chuckle (or weep),” writes Bill Reichert, partner and chief evangelist at Pegasus Tech Ventures. Few investors will wire funds based on how many billions you think you’ll make in year 8. Instead, founders must demonstrate that they have a directional plan and a keen understanding of prospective users. “How many customers will you acquire this year? Next year? The year after?” asks Reichert. And just as importantly, “How many can you convert? How will you reach them?” Don’t spend too much time calculating future revenue or reading Gartner studies for factoids that sound authoritative. Instead, build a bottom-up model that focuses on the size of the opportunity, not the market. “Show investors how you are going to build an ever-expanding cadre of delighted customers,” Reichert advises. “Don’t suggest that your focus is on acquiring market share in a large established market.” Have a great weekend, Walter ThompsonEditorial Manager, ZebethMedia+@yourprotagonist How to turn user data into your next pitch deck Investors might enjoy listening to a founder’s well-rehearsed story, but sharing the right customer data “can definitively power up a pitch deck,” says David Smith, VP of data and analytics at TheVentureCity. “Investors need to see that you’re not being blindsided by easy wins that can go up in smoke within weeks, but are using hard data to build a sustainable company that will endure, and thrive, with time.” SaaS startups that ignored VC advice to cut sales and marketing were better off this year Image Credits: Andriy Onufriyenko (opens in a new window) / Getty Images Many VCs advised founders to dial back their sales and marketing outlays to preserve runway this year. And, as it turns out, many VCs have been giving the wrong advice. According to data from Capchase, a fintech that offers startups non-dilutive capital, “companies that didn’t cut spending on sales and marketing were in a better financial and growth position now than those that did when the market started to dip in 2022,” reports Rebecca Szkutak. Of the 500 companies surveyed, bootstrapped firms showed the strongest growth, said Miguel Fernandez, Capchase’s co-founder and CEO. “What we have seen in this case, and what is most interesting, is that the best companies have actually cut every other cost except sales and marketing.” Dear Sophie: My co-founder’s a green card applicant who just got laid off. Now what? Image Credits: Bryce Durbin/ZebethMedia Dear Sophie, My co-founder and I were both laid off from Big Tech last week and it’s the kick we needed to go all-in on our startup. We’re first-time founders, but they need immigration sponsorship to maintain status with our startup. Do we look at an O-1A in the 60-day grace period? Thanks! — Newbie in Newark Pitch Deck Teardown: Sateliot’s $11.4M Series A deck Image Credits: Sateliot (opens in a new window) Cell phone coverage is built to serve people, which is why Sateliot is launching nanosatellites to provide IoT connectivity for ocean buoys and autonomous drones. The company shared its €10 million Series A deck with TC+, which includes all 18 slides: Cover Problem: “90% of the world has no cellular coverage” Team Solution: “To connect all NB-IOT devices from space under 5G standard” Value proposition: “Near real-time connectivity” Product: “Standard protocol” Why us: “Sateliot is the #1 satellite operator” Market size Competition Business model Traction: “MNOs engaged and technical integrations ongoing” Go-to-Market: “Early adopters program” Interstitial slide Benefit Progress NGO program Slogan Conclusion How much tax will you owe when you sell your company? Image Credits: PM Images (opens in a new window) / Getty Images Getting a startup off the ground is hard work, so asking founders to prepare for an acquisition may sound just as silly as telling them to practice their Academy Award speech in the bathroom mirror. Still: if you’re ready to launch a startup, you must also be prepared to sell one. In an explainer for TC+, Peyton Carr, managing director of Keystone Global Partners, offers a framework for calculating taxation upon an exit and lays out the differences between short-term capital gains and long-term capital gains rates. “As a founder, you’ll need to plan for your personal tax situation to optimize the opportunity set that is presented to you.”

Fund of funds Sweetwood Ventures bets big on VC’s smallest funds

By zebethcontrolPosted on November 18, 2022Posted in fund of funds, fundraising, Israel, Startups, Sweetwood Ventures, Venture, venture capitalNo Comments

Despite legacy venture capital firms continuing to raise bigger and bigger funds, LPs may have more luck focusing on the small stuff. Amit Kurz, a general partner at Israel-based fund of funds Sweetwood Ventures, thinks so. He told ZebethMedia that last year he started to notice more and more tiny funds he wasn’t familiar with getting on the cap tables of competitive deals. While these “nano” funds wouldn’t fit the thesis for Sweetwood’s $70 million flagship fund, he thought it was worth figuring out a way to back them. “I got really intrigued as to how can we gain exposure to that space,” Kurz relayed to ZebethMedia. “They really generate this access to the most oversubscribed rounds and they invest a small amount, which is a classic win-win situation. You aren’t competing with the main VCs, yet everyone wants you because you are bringing a ton of value.” So, Sweetwood decided to raise a fund dedicated to these investors. Now, the firm is announcing that it raised $20 million for a separate fund to cut checks of up to $2 million into funds that are $15 million in size or smaller, with a focus on funds based in Israel. Sweetwood has backed seven funds thus far. It’s also looking to essentially create nano funds by working with angel investors. For this side of the fund, Sweetwood will work with angels to match their investment into a company while also giving them carry on the money that the firm puts in. While this would mean a hit to the firm’s potential returns compared to just investing directly, they don’t take that type of stake to begin with. They’ve closed on two such deals so far. “It’s a no-brainer for these guys,” Kurz said about approaching angel investors. “[They are] doing these deals anyway and there is this external partner that doesn’t look to be a tech scout but pays them as tech scouts.” The firm started raising the nano-focused fund in the peak of 2021’s craziness and is now looking to deploy into very different market conditions where smaller and less established firms are really struggling to raise. Kurz said that while they were initially apprehensive when the market conditions started to sour, they quickly got over that fear because they realized that the funds they back will now be writing checks to companies at more reasonable valuations and will actually have time to spend on due diligence. Kurz said when evaluating these potential investments the big question they ask, since neither the angel investor nor nano funds are big enough to lead any of the rounds they are in, is, why do startups want to take their money? He said that the firm is looking for funds and individuals that fall under two categories of answers: expertise and access. For some, especially on the angel investor side, access is king. If you are a notable former tech entrepreneur that is well connected, the thinking is that you are just going to hear about more notable deals and be invited to participate over other angels just due to your background. Kurz said this can include angels that were successful or well-known former founders. On the other side, Sweetwood is looking for funds and individuals with expertise and specialization that are going to be sought out by companies to fill out rounds because they bring an outsized value add to the table compared to their check size. “Why are people giving you access? Why are people wanting you on the cap table?” he said. “It’s very much focused about the value add and ability to gain access to the deals more so than your ability to distinguish the deals or do selections on the deal.” While this nano fund is separate from the firm’s flagship series, Kurz anticipated that some of these funds will grow up to be good candidates for the flagship fund down the line. It will also help them get into companies earlier that might end up in the flagship’s fund portfolios as well. “The very small funds tend to outperform,” he said. “The smaller you are the more probable you are to generate outsized returns. I thought, this is really interesting, how do we build something for this?”

Maybe FTX was the real poster child for 2021’s startup excess • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in due diligence, EC Blockchain, EC Cryptocurrency, EC Newsletter, EC venture capital, FTX, Startups, The Exchange, Venture, venture capitalNo Comments

If someone offers you a seat on a rocket, you don’t ask which seat. So goes one of Silicon Valley’s favorite platitudes, one that you can trace back (at a minimum) to former Google CEO Eric Schmidt and former Facebook COO Sheryl Sandberg. The idea is that if you are given a shot at working on something new and big, you just say yes and sort out where you fit in the organization later. The chestnut can apply in other circumstances. For example, if I was building a Very Cool Company that was perhaps set to break out and become the Next Big Thing, you might be more concerned about getting some of your capital into the business (a seat on my business rocket ship) than precisely how the business is run (asking which seat you are buying). The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. Making a big bet on the future without knowing all the details can, per the Sandberg example, work out well. It can also … not. As with many business cliches, the rocket-seat philosophy is frequently over-applied. Instead of being reasonable advice to be bold in the face of uncertainty, it can also be used to make witless choices appear reasonable.

Index Ventures thinks new startups will emerge in the downturn and is putting $300M behind that bet • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Venture, venture capitalNo Comments

Back in April 8, 2021 Index Ventures, one of the very few ‘original gangsters’ of the European VC scene, said it was kind’ve going ‘back to its roots’. It announced the launch of a new $200 million dedicated seed investing vehicle dubbed ‘Index Origin’. Now, if you cast your minds back, this was during the white-heat tech bull run of last year when valuations hit the roof and startups rarely wanted for funding. Therefore, Index’s new fund name thus paid homage to the firm’s origins as a seed fund, given that in the past it had backed companies like Robinhood, Figma, Deliveroo and Wise, all at the seed stage. During the last few years – despite the pandemic, and in some ways because of it – there was a great deal of competition for cap tables at the earliest stages of startups. But with a global recession looming in the next year, a Crypto ‘nuclear winter’, and external factors like the war in Ukraine, you might think that investors like Index would be drawing in their horns. Not so. Perhaps harking back to the age-old view that the best startups are born counter-cyclically, Index is today upping-the-anti with a second “Origin Fund” which will be a $300 million Seed fund, Yes folks, that’s $100m larger than Origin I last year. With Index Origin II, Index is now investing from three funds totalling $3.2bn. Index’s other funds include early-stage fund Index Ventures XI ($900m), and growth fund Index Ventures Growth VI ($2bn). That means 75% of Index’s initial investments are Seed or Series A. The new Origin fund also appears – not unexpectedly – to be geared to the more modern environment where co-funding for startups can also come from such disparate sources as solo GPs, Angels and many current or exited entrepreneurs. Index says it hopes to repeat the success entrepreneurs such Dylan Field, for whom Index wrote his first check. As an example, Index is banking on the Macro economic downturn producing the next Airbnb, Adyen, Slack, Skype, Google and Spotify — all of those new born during wider economic slumps. It therefore plans to invest in any vertical of interest and in any geography (primarily the United States and Europe, although it’s not explicitly limited to those markets). I asked, why double-down on early stage for Index Ventures? Nina Achadjian, Index Partner based in SF told me via email: “Throughout our experience as early stage investors, we realized that there’s a need for a different kind of early stage fund. Entrepreneurs have long told us that at seed stage, they have been split between choosing well-established investors that have large resources and a big network and seed funds that only focus on seed stage.” The idea, she said, is to combine those two approaches: “With Index Origin, we wanted to make it possible for founders to get the best of both worlds – the resources they need to grow fast, combined with the early-stage expertise and hands on approach. We know it takes a village, which is why we take a collaborative approach at seed investing. We proactively bring in seed funds, solo GPs and angels to co-invest with us so that together we can provide entrepreneurs with the best possible support network and chance of success.” However, why raise a bigger fund than the previous one? “The strategy we took with Origin I when it launched last year has resonated really well with founders. Having invested in 32 companies since its launch, we decided to raise a new fund and increase the size to build on this momentum,” said Achadjian. How did Index find it raise money in this ‘downturn’ environment? Danny Rimer, Partner based in London said, (also via email): “Index is all about conviction. As a result of keeping the main thing the main thing, we’ve taken a very contrarian approach when it comes to investing in crypto and China, and so, unlike our peers, we haven’t invested in these areas. Additionally, LPs really understand the value proposition of Index Origin as a fund that offers the best of both worlds to entrepreneurs.” Is Index seeing more angels and former Entrepreneur/operators, in seed rounds in Europe and the US? “We see more experienced angels joining rounds across all geographies, and that’s a good thing. Building a company requires different expertise, and having angels of different backgrounds is a significant advantage. It’s why we’ve set up Origin II as a highly collaborative fund that’s open to working with seed funds, solo GPs and angels,” said Rimer. How is the early stage environment in the US? And in Europe? What is your prediction for next year? Rimer added: “Unlike the growth stages, where investment pace has slowed down dramatically, at early stages we are seeing healthy activity in all of our regions. In terms of areas of focus, we continue to double down on our core areas including games, marketplaces, enterprise/cloud/SaaS and vertical SaaS, AI, security, fintech & open source.” Does Index plan to do any crypto investments out of this new fund? Rimer: “I wouldn’t rule that out, but as I wrote recently, for us, the lion share of companies we’ve seen up to now in this sector are not ones we would invest in. We see blockchain for what it is: a powerful new technology, but not the new internet. Our hope is that given everything that has happened to this sector this past year, we will focus on companies that want to build real value for users, solving a real pain point rather than something speculative in nature.” In the last few months Index expanded with office opening in New York and hired a new partner in Tel Aviv.

Amazon starts delivering layoff notices to thousands of employees • ZebethMedia

By zebethcontrolPosted on November 16, 2022Posted in Daily Crunch, Startups, Venture, venture capitalNo Comments

To get a roundup of ZebethMedia’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here. Hello, and welcome to your…checks the top right of the screen…Wednesday. Several of our ZebethMedia colleagues headed to Miami today for the TC Sessions: Crypto event tomorrow. Given the past week, it will no doubt be an interesting event. There’s still time to get tickets. Now, let’s get to some news! — Christine The ZebethMedia Top 3 Even Amazon is not immune: Instead of “no shave November,” we need a “no layoff November.” Who’s with me? Brian writes that following rumors of layoffs, Amazon started making them this week. He also has information from the company’s hardware head, who was able to provide further details. Productivity nerds, assemble!: SigmaOS raised $4 million to develop a Mac browser where you can put your tabs in groups on the left side of the screen, Ivan writes. Ultimatums never work, right?: I guess we’ll see. In Elon Musk’s case, he reportedly sent a late-night email to Twitter workers posing sort of an “Eat Me,” “Drink Me” situation related to their future employment at the social media giant, Amanda writes. One makes you larger and one makes you smaller, but it’s not clear which is the right choice. See also Alex’s story in the TC+ section. Startups and VC Venture capital firms continue to close new funds as they decide their next moves. I wrote about Fiat Ventures, which has a new $25 million fund focused on fintechs, while Connie has details about Bling Capital’s $212 million that will be essentially split between seed-stage and follow-on opportunities and two coasts. And now here’s four more for you: How to turn user data into your next pitch deck Image Credits: James Neil (opens in a new window) / Getty Images Investors might enjoy listening to a well-rehearsed founder’s story, but sharing the right customer data “can definitively power up a pitch deck,” says David Smith, VP of data and analytics at TheVentureCity. “Investors need to see that you’re not being blindsided by easy wins that can go up in smoke within weeks, but are using hard data to build a sustainable company that will endure, and thrive, with time.” Three more from the TC+ team: ZebethMedia+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription! Big Tech Inc. Having been married for 20 years, I’ve completely avoided the whole online dating scene, but I have heard from friends that it’s tough out there. Most people are looking for commitment, but hey it’s 2022, and not everyone is ready for that. Hinge, which touts itself as “the dating app designed to be deleted,” recognizes this and has added a new feature that makes it easier for those seeking non-monogamous relationships. Lauren has more. It is indeed the end of an era: Evernote, the note-taking and task management app, has agreed to be acquired by Bending Spoons, a company you probably just opened up a new tab to do a Google search on. Kyle has the details. And we have four more for you:

High-precision induction stove startup Impulse powers up with $20M Series A • ZebethMedia

By zebethcontrolPosted on November 15, 2022Posted in Daily Crunch, Startups, Venture, venture capitalNo Comments

To get a roundup of ZebethMedia’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here. Greetings on this fine Tuesday. There was a lot of news today, so I’m not going to waste time and instead will get right to what you came here for. — Christine. The ZebethMedia Top 3 Taking telehealth’s temperature: Amazon is getting back into telehealth with Amazon Clinic, a marketplace for third-party virtual consultants that will initially launch in 32 states, Ingrid reports. Yes, we know it’s been a few short months since the delivery giant shut down its Amazon Care telehealth service, but as Ingrid writes, this is the company’s chance to provide care that may be a bit more complex for the corner drugstore, but not as necessary for what could be an expensive doctor’s visit. Heating things up: Impulse isn’t able to light a physical fire under consumers to get them to try out its stovetop, but now with its $20 million cash injection, it can heat up the competition with its induction technology. Haje has more. UPI XOXO: This is the moment that India has been waiting for — Google Play finally adds United Payments Interface subscriptions, Jagmeet writes. Startups and VC Most of us live and die by our calendar, but Vimcal thinks we shouldn’t have to spend that much time creating the actual event. Ivan writes that this “nifty calendar app” will have you entering a new event and even providing scheduling options in just a few steps. Oh, and it also has a desktop version. Pucker up, robot enthusiasts! Pickle brought in $26 million in new funding to continue developing its truck unloading robots, which Brian writes is one of the “links in the chain that remains one of the least addressed.” And we have five more for you: 5 sustainable best practices for bootstrapped startups Image Credits: Getty Images / Ratchapoom Anupongpan / EyeEm For founders interested in building on their own, maintaining control and staying off the fundraising treadmill for as long as possible, investor/entrepreneur Marjorie Radlo-Zandi sets out five basic principles for bootstrapped founders in her latest TC+ article. “Don’t be tempted to hop on a plane at a moment’s notice to meet potential customers in glamorous locations or for meetings in far-flung locations,” she writes. “Your bootstrapped business likely will not survive such big, optional financial outlays.” Bootstrapped founders face longer odds, but if they can drive growth and reach product-market fit, “fundraising will be that much easier.” Three more from the TC+ team: ZebethMedia+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription! Big Tech Inc. Alibaba’s logistics arm, Cainiao, is stretching out its arms to hug Latin America, which it hopes will fill some of the gap left by a Chinese commerce slowdown, Rita reports. The e-commerce giant started delivering goods in Brazil earlier this year and has plans to boost its presence in the country over the next three years. Netflix wants to help you get someone off of your account, no matter who it is and if they know your password. The streaming company has a new feature that lets subscribers kick devices off their accounts, meaning it will forcibly log a device out of that account, Lauren writes. And we have four more for you:

Bootstrapping basics, fintech’s future, tech employers gain advantage • ZebethMedia

By zebethcontrolPosted on November 15, 2022Posted in EC roundup, Fintech, immigration law, Startups, tech layoffs, Venture, venture capitalNo Comments

Are you planning to play League of Legends during your next investor pitch? (If so, reading this probably isn’t a good use of your time.) For founders who are interested in building on their own, maintaining control and staying off the fundraising treadmill for as long as possible, investor/entrepreneur Marjorie Radlo-Zandi sets out five basic principles for bootstrapped founders in her latest TC+ article. It’s not for everyone: self-funded companies will ask more from their employees than larger operations that offer free lunches and other perks. At one bootstrapped startup where I worked, I was asked to defer part of my salary — after I was hired. Full ZebethMedia+ articles are only available to membersUse discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription Radlo-Zandi covers the basics with regard to hiring, managing expenses and shaping company culture, but she also urges self-funders to tamp down expectations and take a measured approach: “Don’t be tempted to hop on a plane at a moment’s notice to meet potential customers in glamorous locations or for meetings in far-flung locations,” she writes. “Your bootstrapped business likely will not survive such big, optional financial outlays.” Bootstrapped founders face longer odds, but if they can drive growth and reach product-market fit, “fundraising will be that much easier.” Thanks very much for reading, Walter ThompsonEditorial Manager, ZebethMedia+@yourprotagonist The power pendulum is swinging back to employers, isn’t it? Image Credits: AOosthuizen (opens in a new window) / Getty Images More than 120,000 tech workers have lost jobs so far this year, according to layoffs.fyi. And with more than a fifth of those layoffs taking place in November, many from well-capitalized public companies, it’s easy to see why Continuum CEO Nolan Church believes this is the beginning of a wave. “Over the last 12 years, the pendulum between who has power between employees and employers has drastically swung toward employees,” he said last week on the ZebethMedia Equity podcast. “Now, we’re in a moment where the pendulum is swinging back.” Answers for H-1B workers who’ve been laid off (or think they might be) Group of young adults, photographed from above, on various painted tarmac surface, at sunrise. Sophie Alcorn, an immigration law attorney based in Silicon Valley, estimates that 15% of the people recently laid off from Bay Area startups are immigrants, 90% of whom are H-1B holders. If you’re a visa holder who’s been laid off, your first priority is to “figure out your last day of employment, because that’s when you need to start counting the 60-day grace period,” says Alcorn. “You either get a new job, you leave, or you figure out some other way to legally stay in the United States, but you have to take some action within those 60 days.” Nearly 80% of venture funds raised in just two states as US LPs retreat to the coasts Image Credits: Bryce Durbin / ZebethMedia After the pandemic began, there was a lot of buzz about how venture capital was shifting away from its roots in San Francisco and New York to make inroads into the Midwest. But after an extended slump in public markets led so many investors to sit on the sidelines, data show that “most funds outside of the two largest startup hubs… are feeling the frost from potential LPs,” reports Rebecca Szkutak. “So far this year, 77% of capital has been raised in just California and New York. In 2021, those states raised 68% of the year’s totals.” Preparing for fintech’s second decade: 4 moves your firm must make now Image Credits: Emilija Manevska (opens in a new window) / Getty Images According to consultant Grant Easterbrook, fintech startups that hope to succeed over the next few years must be prepared to go up against: Major banks and financial service providers with loyalty programs and “super apps.” Emerging DeFi protocols “that can offer financial products that involve real-world assets.” Banking, invoicing, lending, payments, accounting packaged as “embedded financial products.” Multiple countries issuing their own Central Bank Digital Currency (CBDC). “Your firm will need a very strong value proposition to compete with all four types of competitors,” writes Easterbrook, who shares his ideas for navigating the next decade of fintech in a TC+ guest post.

MadKudu lands $18M led by Felicis for its lead scoring platform • ZebethMedia

By zebethcontrolPosted on November 15, 2022Posted in felicis, product-led growth, Venture, venture capitalNo Comments

It’s hard to get ahead when you’re just trying to stay afloat. But startups weathering the downturn with fewer employees and a smaller budget are finding ways to survive and move forward by relying on a 15-year-old twist on software adoption called “bottoms-up” SaaS. The idea, dating back to the enterprise social network Yammer, is that new software tools can find their way into a company by landing first in the hands of employees. In a financial downturn especially, the model is attractive because it doesn’t rely on a massive (expensive) salesforce but rather a groundswell of interest. Yammer, a kind of social network for enterprises, kicked off the wave when it was founded in 2008. Something similar is happening now, though the wave has been renamed “product-led growth” or PLG, and one startup that fits the mold is MadKudu, an eight-year-old, Paris- and New York-based company behind a customer data platform product. Founded by Sam Levan and Francis Brero, who met at a since-acquired predictive marketing platform, they realized more data science was needed to help sales reps sift through thousands of product users to identify who is ready to buy. According to the company, Levan was able to show soon after that growth teams could double their free-to-paid conversion rate within weeks and got to work on developing tech that would give other organizations “data science superpowers” to discover revenue opportunities, including those with severely limited engineering resources, which, these days, is a lot of startups. Asked for metrics in an interview with ZebethMedia last week, Levan declined to share anything concrete but said that MadKudu has been growing its numbers by “5x over the last 12 months.” He also mentioned a lot of customers whose brands readers will recognize, including Dropbox, Cloudera, Amplitude, Plain, Unity, and Miro. Levan also said the traction the company is seeing led to a flurry of term sheets recently that resulted in a new $18 million Series A round that the early-stage firm Felicis led, joined by BGV, Alven, Techstars, and numerous individual investors. (The company has now raised $27 million altogether.) Niki Pezeshki, a general partner at Felicis who led the deal, meanwhile suggested that he would have been remiss not to notice MadKudu. “I think in the span of a week or two, we had two separate board meetings where the go-to-market head or the CRO said that they had just implemented MadKudu and that it was making a really, really positive change for their go-to-market strategy, especially around PLG. And when you hear that from two different members of high-performing companies, you definitely take notice.” Indeed, for now, MadKudu remains very focused on lead scoring that helps salespeople understand which leads are valuable and which would be a waste of time to chase. Levan claims that by analyzing the product usage data of its customers to find patterns in their users’ activity, MadKudu now has the “largest PLG data set in the world.” Going forward, Levan said last week, the idea is to use its fresh capital to triple its 35-person team by next year — including to beef up on customer success and support staff — and to invest more time and attention into improving the user experience. That includes spending time on creating educational programs that can help market leaders better understand what PLG is all about and how to fully realize the potential of MadKudu’s product specifically. “We already have the best technology out there,” said Levan, without sounding completely obnoxious. Now he just wants more people to use it. Pictured above, from left to right, MadKudu founders Sam Levan and Francis Brero.