Minneapolis-based VC shop Bread & Butter focuses on its own backyard

While many investors say sheltering in place has broadened their appetite for funding companies located outside major hubs, one firm is doubling down on backing startups in America’s heartland.

Launched in 2016 by Brett Bohl, The Syndicate Fund rebranded to Bread & Butter Ventures earlier this month (a reference to one of Minnesota’s many nicknames). Along with the rebrand, longtime Google executive and Revolution partner Mary Grove joined the team as a general partner and Stephanie Rich came aboard as head of platform.

The growth of the Twin Cities’ startup ecosystem is precisely why The Syndicate Fund rebranded. The firm, which has $10 million in assets under management, will invest in three of Minneapolis’ biggest strengths: agriculture and food, health care and enterprise software.

Agtech interest spans the entire spectrum from farming to restaurants and grocery stores. The firm is also interested in the “messy middle” of supply chain and logistics around food, said Bohl and is interested in a mix of software, hardware and biosciences. Within health care, the firm evaluates solutions focused on prevention versus treatment, female health startups working on maternal health and fertility and software focused on the aging population and millennials.

It’s also looking at enterprise software that can serve large businesses and scale efficiently.

13 Boston-focused venture capitalists talk green shoots and startup recovery

Welcome back to the second half of our two-part Boston investor survey.

Catching you up, TechCrunch reached out to a host of Boston-area venture capitalists to get their take on the current state of their market, and what they think might be coming up in the future. More VCs than we initially anticipated got back to us, so we broke the survey into two pieces so that there was enough room to include everyone.

Today, in contrast, we’re looking a little further ahead: Are they seeing green shoots? When is a recovery likely to begin? What’s making them feel hopeful in this tenuous era? Here’s who took part:


Boston VC’s vision of tomorrow

Recovery is going to be slow, but most importantly, the comeback is not going to look like one, sole aha moment for any startup or entrepreneur. After poring through dozens of responses, we distilled that Boston-focused VCs think that recovery will favor Boston-area companies to some degree, as the areas they are working on, or the problems that they are working to solve, will still matter after COVID-19.

On the slowness of recovery, NextView’s Rob Go provided TechCrunch with the most vivid prognostication, saying that “while it’s difficult to predict” when the post-COVID recovery will begin, he anticipates “a swoosh-shaped recovery is more likely” than anything V-shaped. “The recovery is likely to be painfully slow,” the VC added.

It’s perhaps unsurprising then that green shoots and fruitful deals are thinner on the ground in Boston today than its startup community probably would have hoped. Momentum through dollars or deals will lead to more sustained recovery. Flare Capital’s Michael Greeley said that it is “still too early” to see green shoots, while other VCs noted that, on a sector-by-sector basis, there are some positive signs that give hope.

Glasswing is an AI-focused fund, making the following comment from its Rudina Seseri interesting, if niche. On the question of green shoots, Seseri said that her firm has “been surprised by the number of companies that are leveraging AI to drive automation, cost savings, optimization and higher performance.” The result of that surprise has been that “over the last five months these companies have beaten their pre-COVID budgets and forecasts for growth.”

The other side of that coin is startup areas that touch on travel or food. It’s hard to find recovery there, for obvious reasons.

The Victress Capital team put the dynamic well: “We’ve also been encouraged by the increased pace in innovation that we’ve seen across sectors where innovation has been slow in the past. From edtech to telehealth to food and beverage and more, we are seeing nimble entrepreneurs pivot or change their businesses to respond to the needs of today.”

Our broadest takeaway is that VC firms have not fully written off any sectors given today’s turbulence. The future, largely according to Boston-focused VCs, is startups that are important after the world opens again and focus on the next generation of businesses. It means that investments might look a bit like a risky game of hopscotch. They’re all trying to land on the deal that accounts for the next generation of businesses.

With that, let’s get into full questions and answers.


Lily Lyman, Underscore VC

When do you expect a startup recovery to begin?

“Recovery” is hard to speak to. We’ve been evaluating different phases of behavior and how that will affect the economy and the startup ecosystem. We have been thinking in terms of (1) lockdown opening up (summer 2020); (2) period of remaining social distancing behavior, likely with intermittent periods of lockdowns (into spring 2021); and (3) new normal (spring/summer 2021). But this changes and we are constantly reassessing it. For startups, we remain believers that great companies with great leadership can not only survive but find ways to thrive in this new environment.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Again, it varies by industry. We have seen a surge in demand for players in the cloud infrastructure space such as CloudZero or for remote collaboration software (an investment not yet announced).

Tell us about the most interesting, Boston-based company you’ve invested in recently.

We are really excited about Popcart and how they are positioned as the world rapidly migrates to e-commerce. The founding team is a pair of engineer leaders from Endeca. Popcart offers consumers price and availability transparency across retail platforms (Amazon, Target, Walmart, etc.). The cross-platform capabilities are particularly unique. When COVID-19 hit, the team quickly created the Supply Finder to help consumers find goods that are in short supply and ensure they are protected against price gouging.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

I’m inspired by the great leadership I’ve seen our founders display. They’ve made hard decisions with imperfect information and managed a difficult time with both empathy and conviction.

I’m also appreciating the humanizing reality that working from home and operating in uncertainty brings that unites people. My hope is that pieces of this uniting and empathy will persist.

After losing Grubhub, Uber reportedly hails Postmates

Uber has reportedly made an offer to buy food delivery service Postmates, according to The New York Times.

According to the Times, the talks are still ongoing and the deal could fall through.

For those that have been paying attention to Uber, this appetite is not new, albeit consistent. A little over a month ago, the ride-hailing company was reportedly pursuing an acquisition of Grubhub,  another food delivery company. Grubhub was ultimately acquired by Just Eat Takeaway in a $7.3 billion deal, but only after the deal with Uber fell through over a variety of concerns.

Food delivery market has set to benefit largely from the COVID-19 pandemic, as stores remain shuttered or switch operations to takeout only. Latest earnings from the public ride-hailing company show that its ride-hailing business is slowing while its food delivery service is growing like hell. Gross bookings for Uber Eats last quarter were $4.68 billion.

So even though Uber still loses a ton of money ($2.94 billion including all costs), its Uber Eats growth is staggering. And the green shoots might be fueling some of this interest in other competitors.

Sources close to Uber told TechCrunch that regulatory concerns scuttled the company’s bid for GrubHub, but its chief executive later said the JustEat deal was better.

If regulatory concerns were an issue, Postmates may make a better fit.

With a valuation of $2.4 billion, Postmates is significantly smaller than Grubhub. And while the company filed to go public nearly 16 months ago, it held off eventually citing “choppy market” conditions.

So if Uber Eats and Postmates combined, the result would still be smaller than Doordash’s market hold, but would be competitive nonetheless. DoorDash, last valued at $13 billion, confidentially filed for an IPO nearly four months ago. 

Also, Postmates delivers more than just food.

If the merger goes through, the food delivery race would get refueled in an interesting way: Uber Eats and Postmates versus Grubhub and Takeaway versus DoorDash .

Postmates declined to comment on rumors or speculation. Uber did not immediately respond to a request for comment.

From napkin notes to term sheets: A chat with Inspired Capital’s Alexa von Tobel

The next iteration of fintech is upon us, according to Inspired Capital’s Alexa von Tobel.

“Fintech 1.0 was very much, ‘Let’s take what already exists and let’s do it better,’” she said in a recent appearance on Extra Crunch Live. Consumers are shifting away from Chase Bank and migrating to no-fee trading platforms like Robinhood; instead of booking an appointment with a tax advisor, people are registering with TurboTax.

Von Tobel, who founded financial-planning service LearnVest before joining Inspired Capital, said fintech’s future involves bringing infrastructure and support into ecosystems created by services like Robinhood and Betterment. It’s one of the many sectors that her generalist firm, which closed a $200 million debut fund last year, is interested in.

Our hour-long chat included tips on how (and when) to pitch her, breaking into VC and using vulnerability as a competitive advantage. Don’t just take it from us: Watch or listen to the entire conversation after the jump, or read some of the highlights below.

Alexis Ohanian is leaving Initialized Capital

Reddit co-founder Alexis Ohanian is leaving Initialized Capital, the investment firm he co-founded in 2011 with Garry Tan, as first reported Axios and confirmed by TechCrunch. The move comes weeks after Ohanian publicly stepped down from the Reddit board of directors, with Y Combinator president Michael Seibel taking his spot.

Ohanian launched Initialized Capital back in 2011 with a $7 million investment vehicle. Since, the San Francisco-based firm has grown immensely and made early stage bets in companies like Flexport, Instacart, Cruise, Coinbase, and Codecademy. Most recently, it closed a $225 million investment vehicle in 2018, its fourth fund to date.

Ohanian is leaving Initialized Capital to work on “a new project that will support a generation of founders in tech and beyond,” the firm said in a statement to TechCrunch. According to the Axios story, Ohanian is leaving Initialized to work more closely on pre-seed efforts. On its website, Initialized details that many teams it talks to already have launched products and have a plan to earn revenue.

“We understand that products and business models evolve, but it’s good to see in a very concrete way how teams are able to ship products and work together,” the firm wrote. If Ohanian raises a pre-seed fund, it will be interesting to see how he changes this methodology.

Ohanian did not directly respond to a request for comment.

It’s worth mentioning that partner departures in venture capital are rarely crystal clear break ups. As Initialized confirmed, Ohanian will remain involved in the firms existing investment vehicles and portfolio companies due to legal ties. It is unclear if Ohanian will remain on any board seats he is on. Ro, a company in which Ohanian has a board seat on, did not immediately respond to a request for comment.

One big question is whether Ohanian’s departure would trigger a key man clause in the firm’s limited partnership agreement. “Key man” clauses, which are typical in limited partner agreements, require that certain designated people (typically the main partners in a firm) must stay continuously employed at a firm and be active investors. When a key man clause is triggered, limited partners often have a variety of tools ranging from control over new hiring to outright ending the investing at a fund in order to protect their investment in a fund.

In this case, it would be surprising if Alexis Ohanian wasn’t a key man since he is one of the leading general partners and a founder of the firm.

Ohanian stepped away from being involved in the day to day of Reddit in 2018 and recently left his board seat at the company following protests against police brutality. The co-founder urged Reddit to fill the seat with a Black board member. Reddit ultimately selected Y Combinator CEO Michael Seibel to fill the position.

Tan, the other founding partner of Initialized, helped YC grow in its early days and helped build the famed accelerator’s internal software system and late-stage funding program. “[Tan] will continue to lead Initialized Capital into the future, finding and funding great entrepreneurs as he has done for nearly a decade,” the firm wrote in a statement to TechCrunch. “Garry and Alexis remain committed to each other as long-standing friends and business partners. The firm fully supports Alexis in his future pursuits.”

Initialized Capital currently has $500 million assets under management and has backed over 200 companies to date.

Additional reporting by Danny Crichton.

Who really benefits from reskilling?

Nearly 40 million Americans are unemployed, and a recent study that examined more than 66,000 tech job layoffs found that sales and customer success roles are most vulnerable amid COVID-19. In response, some quarters of Silicon Valley are abuzz about a long-standing technology: reskilling, or training individuals to adopt an entirely new skillset or career for employment.

As millions look for a way to reenter the workforce, the question arises: Who really benefits from reskilling technology?

That depends on how you look at it, said Jomayra Herrera, a senior associate at Cowboy Ventures. Reskilling for a well-networked manager looks a lot different than it does for someone who doesn’t have as much leverage, and the vast majority of people fall into the latter. Not everyone has a friend at Google or Twitter to help them skip the online application and get right to the decision-makers.

Beyond the accessibility offered by live online classes, she pointed to the difference between assets and opportunities.

“You can give someone access to something, but it’s not true access unless they have the tools and structure to really engage with it,” Herrera said. In other words, how useful is content around reskilling if the company doesn’t support job placement post-training.

Herrera said companies must give individuals opportunities to test skills with real work and navigate the career path. Her mother, who did not go to college and speaks English as a second language, is looking to pursue training online. Before she can proceed, however, she has to surmount hurdles like language support, resume creation, job search and other challenges.

All of a sudden, content feels like a commodity, regardless of if it has active and social learning components. It’s part of the reason that MOOCs (massive open online courses) feel so stale.

Udacity, for example, was almost out of cash in 2018 and laid off more than half of its team in the past two years, according to The New York Times. Now, like other edtech companies, it is facing surges in usage.

Squire balances clean fades with the coronavirus

As far as pandemic-proof businesses go, a startup for barbershops isn’t exactly the first thing that comes to mind — unless you raised millions just days before barbershops were shut down across the country.

Dave Salvant and Songe LaRon, co-founders of New York-based Squire, a back-end barbershop management tool for independent businesses they launched in 2016, raised a $34 million Series B led by CRV in early March (after raising $8 million in a Series A round led by Trinity Ventures in 2018). Days later, “everything went to zero,” LaRon recalls of their customer base: all barbershops closed.

The cash quickly went from an opportunistic raise to needed capital. Squire waived all subscription fees, created a site for information called www.helpbarbershops.com and launched a way for patrons to buy online gift cards for their favorite shops. One barbershop sold more than $30,000 in just a few days.

After weathering a hard few months, Squire is now enjoying high demand from barbershops preparing to reopen. The company provides cashless payment, a way to make appointments and is experimenting with a virtual waiting room, all features that barbershops post-pandemic are considering. It is currently live in 45 cities.

During shelter-in-place, some of us have been forced to cut our own hair, as shown by virtual haircuts done over Zoom and even a VC-hosted haircut workshop. But a DIY session won’t replace the intimacy of a barbershop.

Barbershops have long served as gathering places for Black and African American communities as a place to chat, be vulnerable and complain.

In recent years, the culture has moved more into mainstream conversation. Today, there is an entire talk show series, produced by LeBron James, where guests chat while getting a cut. In Atlanta, there’s a singular Atlanta barbershop that serves as an informal gathering ground for the city’s top politicians.

“We learned it resonated with men from all walks of life, all races, and ethnicities and was really kind of a universal experience. So we saw an opportunity for a tech company,” LaRon said.

 

Salvant and LaRon thought of barbershops as places of comfort long before they saw them as a place of business.

“Barbers are part-time therapists for guys,” LaRon said in an interview with TechCrunch.

Salvant and LaRon, friends and then-students at Columbia who were living in Harlem, saw barbershops grow in cultural relevance while the technology behind them remained largely untouched. Long wait-times, cash-only and scheduling woes continued to be problems that they themselves faced every time they got their hair cut.

Squire lets businesses schedule appointments, offer loyalty programs and install contactless and cashless payment. The team claims that barbershop operations are more complex than many other types of small businesses because there are multiple parties transacting, plus customers might check out different services from different barbers all within one service. That’s where Squire comes in — to be a point of sale to manage those confusing transactions.

“We don’t want to replace that relationship a guy had with the barber,” said Salvant. “We just wanted to take away all the annoying things about it.”

Squire makes money by charging a monthly fee based on size and needs of the barbershop, ranging from $30 to $250 per month.

A threat to Squire’s success are small and medium business payment infrastructure companies like Square. The co-founders were confident, noting that Squire is the only venture-backed business that exclusively tailors itself on barbershops, and thus will be the best solution for those businesses. Los-Angeles based Boulevard raised money in November for its salon and spa management software.

But Squire thinks barbershop subculture is niche enough that salon technology doesn’t do the job. Barbers want to partner with businesses that are as passionate as they are.

“They don’t look at it as a job, they look at it as a life calling,” LaRon said.

The high bar is precisely why a healthy chunk of Squire’s early days were defined by LaRon and Salvant sitting in barbershop chairs and asking a lot of questions. In fact, Salvant says he got his haircut by nearly 600 different barbers.

Songe LaRon and Dave Salvant, the co-founders of Squire (Image Credit: Squire).

“Part of them trusting you and you trust them happens if you sit down and get a haircut,” Salvant said. By and large, the feedback the co-founder got from barbers was that they needed a solution for the entire shop, as opposed to Squire’s original product aimed at a customer or individual barber. It gave them the faith to go for a vertical solution versus assuming a horizontal solution such as Square would do the job.

Reid Christian, an investor at Charles River Ventures (CRV) who was part of the Series B, said that he knew Squire would be a success when he experienced the product at Rust Belt Barbering in Buffalo, New York. Christian compared Squire to a “Venmo-like experience” with transactions. He estimates billions of dollars in men’s grooming spend.

When shops broadly reopen, Squire is in a good, timely spot to be adopted by the masses. For the co-founders, the incoming wave of interest was affirmed a long time ago.

Last year, the duo attended the Connecticut Barber Expo. It was an aha moment, as they witnessed over 15,000 pilgrimage over to Connecticut to learn about the industry.

“Most people don’t know about it, most people wouldn’t believe it until they saw it,” Salvant said. “It serves as a reminder how powerful it is.”

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

Eventbrite is in the unique club that nobody wants to be in,” says CEO and co-founder Julia Hartz. “Which is the first affected and one of the most directly affected businesses of the COVID-19 era.”

Hartz, who co-founded the company with her husband Kevin Hartz and Renaud Visage, joined ExtraCrunch Live recently to discuss moving forward when your core business isn’t just threatened, but wiped out completely.

“You never as a founder — at least I never — ever wondered what would happen if the whole basis of our mission was tested,” she said.

The events world was one of the first industries to feel the pandemic’s impacts and will likely be among the last to be restored. For Eventbrite, which was built on a core business of in-person events and event ticketing, it meant making swift decisions to stay afloat.

External data show some bright spots. According to an operational update from Eventbrite, paid ticket volume on its platform increased 33% in May compared to April 2020. Eventbrite is down 82% in paid tickets in May 2020 compared to the same month year ago.

“A massive market and industry dislocation and disruption. I mean, we’re a living example of that,” she said. “It’s not a victory lap. Certainly, we’re seeing some really exciting signs of recovery, but it’s still very sobering.”

Hartz offered founders at all levels advice on how to work on culture during a crisis and offered tips on communication and transparency.

We also chatted about how open consumers are to paying for virtual events, how the company curates and moderates political events and how Eventbrite plans to address racial injustice beyond, in Hartz’s words, “episodic outrage.”

We pulled out a couple of highlights for you to peruse.

How she sees events changing in the next 18 months

Structurally, events are pivoting to in-person. So it’s not just pivoting online. A good example is the Beanstalk Music Festival in Colorado, a two-day music festival that pivoted to an in-person drive-in night concert. They were wildly successful in selling tickets to this new format.

It was a testament to the strength of their community and the pent-up demand to get together and listen to great music. But what we’re seeing beyond sort of those really creative uses of new types of space and venues that are outdoors are smaller events. Classes, workshops, seminars, small meetups are starting to come back. I think that as creators start to think about how to bring their community back in person, there’s a huge element of trust that exists in this new world.

We’re helping our creators establish that trust and be very upfront about what their event goers and attendees can expect in that moment as you bring yourself together in-person again.

When she knew the business would be materially impacted  —  and what she did next

Extra Crunch Live: Join Eventbrite CEO Julia Hartz today at 2pm EDT / 11am PDT for a live discussion on leadership in the era of COVID-19

Through tickets and event organizing, Eventbrite empowers the experiences that we all enjoy. Yet with the advent of COVID-19, concerts have been canceled, trade shows shuttered, and industry talks dispersed all in the name of safety.

We’ve seen the nearly complete shutdown of the physical event economy, so how do you reorient an entire company’s thinking when the fundamental notion of “experience” is undergoing seismic change? How do you lead and maintain a culture when your staff is now remote?

Today, Eventbrite CEO and cofounder Julia Hartz will join us on Extra Crunch Live to talk about this and more at 2pm EDT / 11am PDT / 6pm GMT. Login details are below the fold for EC members.

We’ll have plenty of questions to ask, and EC members will be able to ask questions as well. We’re going to focus in on how Hartz came to terms with what the novel coronavirus meant for Eventbrite, and how she and her team built a new operating plan going forward. We’ll talk about the tradeoffs that involved, and how Eventbrite is pushing on virtual events today. We’ll also touch on the company’s new guidelines published today on running in-person events in the COVID-19 era. Eventbrite is publicly-traded, and so we’ll also discuss with Hartz how she navigated communicating to investors in a wildly chaotic time.

Hartz has been a big believer in using Eventbrite’s platform to connect people and power social change (for example, the company has curated a virtual gay pride parade for today). In a world where police brutality, particularly against Black Americans, has taken a spotlight and LGBT rights are still being decided in real-time by the U.S. Supreme Court, what is the responsibility of a tech leader today to work on these issues and what tools do leaders have to move these issues forward?

Plus, of course, as many of your questions as you are willing to ask.

So come join us today and learn more about the skills it takes to lead a business in 2020. We look forward to seeing you there. And if you aren’t an Extra Crunch member, join now and then join us later.

Login Details

To login, please use the details below later today.

Extra Crunch Live: Join Eventbrite CEO Julia Hartz today at 2pm EDT / 11am PDT for a live discussion on leadership in the era of COVID-19

Through tickets and event organizing, Eventbrite empowers the experiences that we all enjoy. Yet with the advent of COVID-19, concerts have been canceled, trade shows shuttered, and industry talks dispersed all in the name of safety.

We’ve seen the nearly complete shutdown of the physical event economy, so how do you reorient an entire company’s thinking when the fundamental notion of “experience” is undergoing seismic change? How do you lead and maintain a culture when your staff is now remote?

Today, Eventbrite CEO and cofounder Julia Hartz will join us on Extra Crunch Live to talk about this and more at 2pm EDT / 11am PDT / 6pm GMT. Login details are below the fold for EC members.

We’ll have plenty of questions to ask, and EC members will be able to ask questions as well. We’re going to focus in on how Hartz came to terms with what the novel coronavirus meant for Eventbrite, and how she and her team built a new operating plan going forward. We’ll talk about the tradeoffs that involved, and how Eventbrite is pushing on virtual events today. We’ll also touch on the company’s new guidelines published today on running in-person events in the COVID-19 era. Eventbrite is publicly-traded, and so we’ll also discuss with Hartz how she navigated communicating to investors in a wildly chaotic time.

Hartz has been a big believer in using Eventbrite’s platform to connect people and power social change (for example, the company has curated a virtual gay pride parade for today). In a world where police brutality, particularly against Black Americans, has taken a spotlight and LGBT rights are still being decided in real-time by the U.S. Supreme Court, what is the responsibility of a tech leader today to work on these issues and what tools do leaders have to move these issues forward?

Plus, of course, as many of your questions as you are willing to ask.

So come join us today and learn more about the skills it takes to lead a business in 2020. We look forward to seeing you there. And if you aren’t an Extra Crunch member, join now and then join us later.

Login Details

To login, please use the details below later today.