Extra Crunch roundup: influencer marketing 101, spotting future unicorns, Apple AirTags teardown

With the right message, even a small startup can connect with established and emerging stars on TikTok, Instagram and YouTube who will promote your products and services — as long as your marketing team understands the influencer marketplace.

Creators have a wide variety of brands and revenue channels to choose from, but marketers who understand how to court these influencers can make inroads no matter the size of their budget. Although brand partnerships are still the top source of revenue for creators, many are starting to diversify.

If you’re in charge of marketing at an early-stage startup, this post explains how to connect with an influencer who authentically resonates with your brand and covers the basics of setting up a revenue-share structure that works for everyone.


Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription


Our upcoming TC Early Stage event is devoted to marketing and fundraising, so expect to see more articles than usual about growth marketing in the near future.

We also ran a post this week with tips for making the first marketing hire, and Managing Editor Eric Eldon spoke to growth leader Susan Su to get her thoughts about building remote marketing teams.

We’re off today to celebrate the Juneteenth holiday in the United States. I hope you have a safe and relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

As the economy reopens, startups are uniquely positioned to recruit talent

Little Fish in Form of Big Fish meeting a fish.

Image Credits: ballyscanlon (opens in a new window) / Getty Images

The pandemic forced a reckoning about the way we work — and whether we want to keep working in the same way, with the same people, for the same company — and many are looking for something different on the other side.

Art Zeile, the CEO of DHI Group, notes this means it’s a great time for startups to recruit talent.

“While all startups are certainly not focused on being disruptive, they often rely on cutting-edge technology and processes to give their customers something truly new,” Zeile writes. “Many are trying to change the pattern in their particular industry. So, by definition, they generally have a really interesting mission or purpose that may be more appealing to tech professionals.”

Here are four considerations for high-growth company founders building their post-pandemic team.

Refraction AI’s Matthew Johnson-Roberson on finding the middle path to robotic delivery

Matthew Johnson-roberson

Image Credits: Bryce Durbin

“Refraction AI calls itself the Goldilocks of robotic delivery,” Rebecca Bellan writes. “The Ann Arbor-based company … was founded by two University of Michigan professors who think delivery via full-size autonomous vehicles (AV) is not nearly as close as many promise, and sidewalk delivery comes with too many hassles and not enough payoff.

“Their ‘just right’ solution? Find a middle path, or rather, a bike path.”

Rebecca sat down with the company’s CEO to discuss his motivation to make “something that is useful to the general public.”

How to identify unicorn founders when they’re still early-stage

Image Credits: RichVintage (opens in a new window)/ Getty Images

What are investors looking for?

Founders often tie themselves in knots as they try to project qualities they hope investors are seeking. In reality, few entrepreneurs have the acting skills required to convince someone that they’re patient, dedicated or hard working.

Johan Brenner, general partner at Creandum, was an early backer of Klarna, Spotify and several other European startups. Over the last two decades, he’s identified five key traits shared by people who create billion-dollar companies.

“A true unicorn founder doesn’t need to have all of those capabilities on day one,” Brenner, writes “but they should already be thinking big while executing small and demonstrating that they understand how to scale a company.”

Founders Ben Schippers and Evette Ellis are riding the EV sales wave

disrupt mobility roundup

Image Credits: TechCrunch

EV sales are driving demand for services and startups that fulfill the new needs of drivers, charging station operators and others.
Evette Ellis and Ben Schippers took to the main stage at TC Sessions: Mobility 2021 to share how their companies capitalized on the new opportunities presented by the electric transportation revolution.

Scale AI CEO Alex Wang weighs in on software bugs and what will make AV tech good enough

Image Credits: Alexandr Wang

Scale co-founder and CEO Alex Wang joined us at TechCrunch Sessions: Mobility 2021 to discuss his company’s role in the autonomous driving industry and how it’s changed in the five years since its founding.

Scale helps large and small AV players establish reliable “ground truth” through data annotation and management, and along the way, the standards for what that means have shifted as the industry matures.

Even if two algorithms in autonomous driving might be created more or less equal, their real-world performance could vary dramatically based on what they’re consuming in terms of input data. That’s where Scale’s value prop to the industry starts, and Wang explains why.

Edtech investors are flocking to SaaS guidance counselors

Image Credits: Getty Images / Vertigo3d

The prevailing post-pandemic edtech narrative, which predicted higher ed would be DOA as soon as everyone got their vaccine and took off for a gap year, might not be quite true.

Natasha Mascarenhas explores a new crop of edtech SaaS startups that function like guidance counselors, helping students with everything from study-abroad opportunities to swiping right on a captivating college (really!).

“Startups that help students navigate institutional bureaucracy so they can get more value out of their educational experience may become a growing focus for investors as consumer demand for virtual personalized learning increases,” she writes.

Dear Sophie: Is it possible to expand our startup in the US?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My co-founders and I launched a software startup in Iran a few years ago, and I’m happy to say it’s now thriving. We’d like to expand our company in California.

Now that President Joe Biden has eliminated the Muslim ban, is it possible to do that? Is the pandemic still standing in the way? Do you have any suggestions?

— Talented in Tehran

Companies should utilize real-time compensation data to ensure equal pay

Two women observing data to represent collecting data to ensure pay equity.

Image Credits: Rudzhan Nagiev (opens in a new window) / Getty Images

Chris Jackson, the vice president of client development at CompTrak, writes in a guest column that having a conversation about diversity, equity and inclusion initiatives and “agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.”

He lays out a data-driven proposal that brings in everyone from directors to HR to the talent acquisition team to get companies closer to actual equity — not just talking about it.

Investors Clara Brenner, Quin Garcia and Rachel Holt on SPACs, micromobility and how COVID-19 shaped VC

tc sessions mobility speaker_investorpanel-1

Image Credits: TechCrunch

Few people are more closely tapped into the innovations in the transportation space than investors.

They’re paying close attention to what startups and tech companies are doing to develop and commercialize autonomous vehicle technology, electrification, micromobility, robotics and so much more.

For TC Sessions: Mobility 2021, we talked to three VCs about everything from the pandemic to the most overlooked opportunities within the transportation space.

Experts from Ford, Toyota and Hyundai outline why automakers are pouring money into robotics

disrupt mobility roundup

Image Credits: TechCrunch

Automakers’ interest in robotics is not a new phenomenon, of course: Robots and automation have long played a role in manufacturing and are both clearly central to their push into AVs.

But recently, many companies are going even deeper into the field, with plans to be involved in the wide spectrum of categories that robotics touch.

At TC Sessions: Mobility 2021, we spoke to a trio of experts at three major automakers about their companies’ unique approaches to robotics.

Apple AirTags UX teardown: The trade-off between privacy and user experience

Image Credits: James D. Morgan/Getty Images

Apple’s location devices — called AirTags — have been out for more than a month now. The initial impressions were good, but as we concluded back in April: “It will be interesting to see these play out once AirTags are out getting lost in the wild.”

That’s exactly what our resident UX analyst, Peter Ramsey, has been doing for the last month — intentionally losing AirTags to test their user experience at the limits.

This Extra Crunch exclusive helps bridge the gap between Apple’s mistakes and how you can make meaningful changes to your product’s UX.

 

How to launch a successful RPA initiative

3D illustration of robot humanoid reading book in concept of future artificial intelligence and 4th fourth industrial revolution . (3D illustration of robot humanoid reading book in concept of future artificial intelligence and 4th fourth industrial r

Image Credits: NanoStockk (opens in a new window) / Getty Images

Robotic process automation (RPA) is no longer in the early-adopter phase.

Though it requires buy-in from across the organization, contributor Kevin Buckley writes, it’s time to gather everyone around and get to work.

“Automating just basic workflow processes has resulted in such tremendous efficiency improvements and cost savings that businesses are adapting automation at scale and across the enterprise,” he writes.

Long story short: “Adapting business automation for the enterprise should be approached as a business solution that happens to require some technical support.”

Mobility startups can be equitable, accessible and profitable

tc sessions

Image Credits: TechCrunch

Mobility should be a right, but too often it’s a privilege. Can startups provide the technology and the systems necessary to help correct this injustice?

At  our TC Sessions: Mobility 2021 event, we sat down with Revel CEO and co-founder Frank Reig, Remix CEO and co-founder Tiffany Chu, and community organizer, transportation consultant and lawyer Tamika L. Butler to discuss how mobility companies should think about equity, why incorporating it from the get-go will save money in the long run, and how they can partner with cities to expand accessible and sustainable mobility.

CEO Shishir Mehrotra and investor S. Somasegar reveal what sings in Coda’s pitch doc

Image Credits: Carlin Ma / Madrona Venture Group/Brian Smale

Coda CEO Shishir Mehrotra and Madrona partner S. Somasegar joined Extra Crunch Live to go through Coda’s pitch doc (not deck. Doc) and stuck around for the ECL Pitch-off, where founders in the audience come “onstage” to pitch their products to our guests.

Extra Crunch Live takes place every Wednesday at 3 p.m. EDT/noon PDT. Anyone can hang out during the episode (which includes networking with other attendees), but access to past episodes is reserved exclusively for Extra Crunch members. Join here.

To win post-pandemic, startups need remote-first growth teams

Growth leaders used to build key relationships across a company while working together in a real-life office. Those relationships could carry over through the pandemic, but let’s say you’re a new company and you’re remote-first.

How do you build this complex collaboration from scratch?

Growth marketer and investor Susan Su tells us that the solution is not just more software tools. In the interview below, she says that after the pandemic, startup founders will need to develop a mentality that places growth at the center of company strategy.

Consultants and agencies can be great additions to this effort, especially if they have previously solved the types of problems you face. (In fact, TechCrunch is asking founders who have worked with growth marketers to share a recommendation in this survey. We’ll use your answers to find more experts to interview.)

Su is currently the head of portfolio strategy for Sound Ventures, previously a growth leader at Stripe and the first hire at Reforge. She also shared a few thoughts on market opportunities after the pandemic in the full interview below. E-commerce is mainstream for good, she says, even as we all try to step away from screens more often. However, many social and mobile sectors are mature, and it’s going to be even harder for startups to compete as real-world activities absorb more time.

Don’t forget: Susan Su will also appear at our Early Stage virtual event on July 8 (and answer questions directly).

How are you seeing startups manage changes in user engagement as more people exit pandemic lockdowns and adjust their daily lives?

As we exit the pandemic, I expect that we’ll see a natural and obvious spike in some consumer activity that will roll up to midsized businesses and enterprises. Just like with the onset of the pandemic, we’ll see uneven results across sectors:

E-commerce boomed during the pandemic but was really an augmentation of an already-accelerating trend towards digital commerce and streamlined logistics. I don’t think we backtrack from e-commerce because habit formation around online shopping has been building for years; we would be backtracking to an age long before 2020, and that’s not going to happen.

New social-mobile experiences also boomed during the pandemic, but there’s still a valid question around whether 15 months or so is enough time to become part of the ingrained infrastructure of daily life. We are living in an age of mature platforms, so every new service is stealing time away from an existing service. As with pre-pandemic growth, their success rests upon fast-accumulating network effects and great, sticky core product experience. Now that we have parks, friends and dinners out calling to us again, it’s a real test of how compelling some of these new value propositions really are, and whether they can continue to demonstrate their relevance in a more hybridized online-offline world.

That said, the pandemic was an enormous constraint on human society and [the] economy, and these kinds of constraints often breed innovation that doesn’t go away. We will evolve, but we can never go back. It sounds cheesy but it’s true.

Some aspects of the pandemic, like remote work, appear to have radically changed certain industries. How will these societal changes impact how the typical startup thinks about growth?

Growth will always be growth — that is, a process of iterative experimentation to identify and solve customer problems, and then scale those solutions in order to reach and convert bigger and bigger audiences. Platform changes like iOS 14 or Facebook’s periodic algorithm adjustments will have a bigger impact in the near term on the technical functioning of growth, and these aren’t specifically pandemic-related.

One area to watch is how growth teams are built and operated. Growth is a horizontal function that touches many different parts of the org, including product, engineering, marketing, comms and design. Many startup teams have already been working with collaboration tools even while they sat in the same office, but growth is about more than just using tools. The most effective growth leaders succeed by building relationships across the organization; it’s like the fable of Stone Soup — you’re creating this meal that will feed everyone, but you also need each person to bring a pinch of salt, or a dash of pepper, or one carrot, and that requires socialization and relationship-building. I’ll be very interested to see how new growth leaders onboard remote-only teams and what approaches they take to this “networking” need within the function.

From the days of growth hacking on social platforms, growth marketing is now an established part of the world. But it’s not necessarily the main expertise of a startup founder, even if it needs to be. So, how should they think about addressing growth marketing in 2021? What are the essentials they should do in their roles?

Every founder needs to have a growth mentality. They don’t need to memorize all the right buttons to push in an ads dashboard, but they need to be familiar and comfortable with the core work of gap-finding. That said, founders are by definition entrepreneurial — their company exists because they saw an opportunity that no one else did, and this is the fundamental work of growth as well.

Founders will fail if they adopt a mentality that someone else can or should do it for them. The founder’s job is to supply ambition and opinions, and then magnetize high-quality talent to come and pull the levers and bring their creative vision to life. There are many people who can do growth marketing — that is, they know how the platforms work, they understand the rules and the playbooks. But there are very few who can come up with truly visionary strategies that change the game altogether — those people become founders, and those companies become household names. So for a founder, I’d say the most important growth work is to continue to know your market and customer better than anyone else in the whole world, have an opinion about what’s missing, and work to bring the best talent to come in alongside you and be a thought partner, not just a button pusher.

With limited resources, how should early-stage companies think about what to focus on?

This is going to depend on the goals of your company. Are you planning to raise money and need to demonstrate certain KPIs? Are you bootstrapping and need to keep the lights on? Resources should always be allocated to the most strategic purposes, with the longest-term view you can afford. For some companies, this could mean forgoing revenue to focus on viral or word-of-mouth-driven user acquisition to demonstrate to future investors that there’s something special here. For other companies, perhaps in lower volume categories like enterprise, it’s about bringing a few strategic logos into the family as a signal to later customers and other stakeholders, including future employees and investors.

One thing that early-stage companies should always be focused on is building a top-shelf employer brand. You will only ever be as good as the talent you attract to your company, and interestingly growth can actually play a role in this. The best designers, engineers and product people are often flowing towards the companies that have the best growth. In that way, it’s a highly strategic role and function.

What do startups continue to get wrong?

You can’t truly outsource growth or any other core function; you can’t tack on customer acquisition after product development. At the end of the day, if you really think about it, all a company is, is a customer-acquisition engine. This needs to be core; wake up every day and think about growth, not just to hit revenue or user KPIs, but to build the company that the best people are clamoring to work at. It’s not about finding someone sufficient to solve your near-term problems; it’s about framing problems in a way that’s so compelling to the most creative, hardest working people so that they can’t get it out of their heads. Go for talent moonshots, and figure out how to close them. The rest will fall in line from there.

When should a founder feel comfortable getting help from an outside expert or agency?

Anytime. Agencies are great. They are an extension of your talent, and the best agencies aren’t selling you — they have to be sold on your problem because they have their pick of companies just like yours. That’s the agency or outside expert you want to work with, because they’ll have a priceless perspective from the other best-in-class founders and teams they’ve worked with that they can bring to your challenge. Any agency can run Facebook ads (it’s not rocket science), but you want to find the team that’s solved the gnarliest problems for your hero companies. Then you’ll get not just an ads manager, but a teacher.

 

Extra Crunch roundup: TC Mobility recaps, Nubank EC-1, farewell to browser cookies

What, exactly, are investors looking for?

Early-stage founders, usually first-timers, often tie themselves in knots as they try to project the qualities they hope investors are seeking. In reality, few entrepreneurs have the acting skills required to convince someone that they’re patient, dedicated or hard-working.

Johan Brenner, general partner at Creandum, was an early backer of Klarna, Spotify and several other European startups. Over the last two decades, he’s identified five key traits shared by people who create billion-dollar companies.


Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription


“A true unicorn founder doesn’t need to have all of those capabilities on Day One,” says Brenner, “but they should already be thinking big while executing small and demonstrating that they understand how to scale a company.”

Drawing from observations gleaned from working with founders like Spotify’s Daniel Ek, Sebastian Siemiatkowski from Klarna, and iZettle’s Jacob de Geer and Magnus Nilsson, Brenner explains where “VC FOMO” comes from and how it drives dealmaking.

We’re running a series of posts that recap conversations from last week’s virtual TC Mobility conference, including an interview with Refraction AI’s Matthew Johnson, a look at how autonomous delivery startups are navigating the regulatory and competitive landscape, and much more. There are many more recaps to come; click here to find them all.

Thanks very much for reading Extra Crunch!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

How contrarian hires and a pitch deck started Nubank’s $30 billion fintech empire

Image Credits: Nigel Sussman

Founded in 2013 and based in São Paulo, Brazil, Nubank serves more than 34 million customers, making it Latin America’s largest neobank.

Reporter Marcella McCarthy spoke to CEO David Velez to learn about his efforts to connect with consumers and overcome entrenched opposition from established players who were friendly with regulators.

In the first of a series of stories for Nubank’s EC-1, she interviewed Velez about his early fundraising efforts. For a balanced perspective, she also spoke to early Nubank investors at Sequoia and Kaszek Ventures, Latin America’s largest venture fund, to find out why they funded the startup while it was still pre-product.

“There are people you come across in life that within the first hour of meeting with them, you know you want to work with them,” said Doug Leone, a global managing partner at Sequoia who’d recruited Velez after he graduated from grad school at Stanford.

Marcella also interviewed members of Nubank’s founding team to better understand why they decided to take a chance on a startup that faced such long odds of success.

“I left banking to make a fifth of my salary, and back then, about $5,000 in equity,” said Vitor Olivier, Nubank’s VP of operations and platforms.

“Financially, it didn’t really make sense, so I really had to believe that it was really going to work, and that it would be big.”

Despite flat growth, ride-hailing colossus Didi’s US IPO could reach $70B

Image Credits: Didi

In his last dispatch before a week’s vacation, Alex Wilhelm waded through the numbers in Didi’s SEC filing. The big takeaways?

“While Didi managed an impressive GTV recovery in China, its aggregate numbers are flatter, and recent quarterly trends are not incredibly attractive,” he writes.

However, “Didi is not as unprofitable as we might have anticipated. That’s a nice surprise. But the company’s regular business has never made money, and it’s losing more lately than historically, which is also pretty rough.”

What’s driving the rise of robotaxis in China with AutoX, Momenta and WeRide

AutoX, Momenta and WeRide took the stage at TC Sessions: Mobility 2021 to discuss the state of robotaxi startups in China and their relationships with local governments in the country.

They also talked about overseas expansion — a common trajectory for China’s top autonomous vehicle startups — and shed light on the challenges and opportunities for foreign AV companies eyeing the massive Chinese market.

The air taxi market prepares to take flight

Image Credits: Bryce Durbin

“As in any disruptive industry, the forecast may be cloudier than the rosy picture painted by passionate founders and investors,” Aria Alamalhodaei writes. “A quick peek at comments and posts on LinkedIn reveals squabbles among industry insiders and analysts about when this emerging technology will truly take off and which companies will come out ahead.”

But while some electric vertical take-off and landing (eVTOL) companies have no revenue yet to speak of — and may not for the foreseeable future — valuations are skyrocketing.

“Electric air mobility is gaining elevation,” she writes. “But there’s going to be some turbulence ahead.”

The demise of browser cookies could create a Golden Age of digital marketing

Though some may say the doomsday clock is ticking toward catastrophe for digital marketing, Apple’s iOS 14.5 update, which does away with automatic opt-ins for data collection, and Google’s plan to phase out third-party cookies do not signal a death knell for digital advertisers.

“With a few changes to short-term strategy — and a longer-term plan that takes into account the fact that people are awakening to the value of their online data — advertisers can form a new type of relationship with consumers,” Permission.io CTO Hunter Jensen writes in a guest column. “It can be built upon trust and open exchange of value.”

If offered the right incentives, Jensen predicts, “consumers will happily consent to data collection because advertisers will be offering them something they value in return.”

How autonomous delivery startups are navigating policy, partnerships and post-pandemic operations

Nuro second gen R2 delivery vehicle

Image Credits: Nuro

We kicked off this year’s TC Sessions: Mobility with a talk featuring three leading players in the field of autonomous delivery. Gatik co-founder and chief engineer Apeksha Kumavat, Nuro head of operations Amy Jones Satrom, and Starship Technologies co-founder and CTO Ahti Heinla joined us to discuss their companies’ unique approaches to the category.

The trio discussed government regulation on autonomous driving, partnerships with big corporations like Walmart and Domino’s, and the ongoing impact the pandemic has had on interest in the space.

Waabi’s Raquel Urtasun explains why it was the right time to launch an AV technology startup

Image Credits: Waabi via Natalia Dola

Raquel Urtasun, the former chief scientist at Uber ATG, is the founder and CEO of Waabi, an autonomous vehicle startup that came out of stealth mode last week. The Toronto-based company, which will focus on trucking, raised an impressive $83.5 million in a Series A round led by Khosla Ventures.

Urtasun joined Mobility 2021 to talk about her new venture, the challenges facing the self-driving vehicle industry and how her approach to AI can be used to advance the commercialization of AVs.

As the economy reopens, startups are uniquely positioned to recruit talent

We are amidst a sprawling renegotiation between employers and employees as to the very nature of work, and no one has more leverage than skilled technologists — many of whom feel unmoored from their current jobs.

Our 2021 Technologist Sentiment Report — which in the second quarter polled technology professionals who mostly work at bigger organizations — shows 48% tech professionals expressed an interest in changing companies this year, up from 40% in the fourth quarter of 2020, and a big jump from 32% in the second quarter last year.

It’s a unique moment, one that creates an unusual opportunity for startup founders on the hunt for talent.

Fast growing upstarts have a lot of advantages. Bigger companies may be more likely to attempt to recreate the office environment of the past — especially if they have leased space and a built environment that will be difficult to unwind. Startups are often non-traditional and may be able to react to create the hybrid work environments many technologists crave as the economy reopens.

While all startups are certainly not focused on being disruptive, they often rely on cutting-edge technology and processes to give their customers something truly new. Many are trying to change the pattern in their particular industry. So, by definition, they generally have a really interesting mission or purpose that may be more appealing to tech professionals.

A migration of tech talent just as the economy is revving up would be disruptive and could also play to startup strengths. The market for tech talent is already strong: tech hiring has increased every month since November, according to our last tech jobs report released in May. Great data engineers, developers, business analysts and the like are in red-hot demand, and unemployment in tech is just above 2.4% percent, versus 5.5.% percent in the economy overall.

Extra Crunch roundup: EU insurtech, 30 years of ‘Crossing the Chasm,’ embedded finance’s endgame

This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:

  • Alex Timm, CEO, Root
  • Dan Preston, CEO, MetroMile
  • Luca Bocchio, partner, Accel
  • Florian Graillot, investor, Astorya.vc
  • Stephen Brittain, director and founder, Insurtech Gateway

Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.

According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.

“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.

Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

What do these 4 IPOs tell us about the state of the market?

Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.

So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.

Toast’s Aman Narang and BVP’s Kent Bennett on how customer obsession is everything

Image Credits: Bessemer Venture Partners / Toast

On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.

The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.

Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.

AI startup investment is on pace for a record year

Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.

“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”

But that’s not surprising. The Exchange was on it.

“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”

Their expectation is coming true: Investors reported a fierce market for AI startups.

Dear Sophie: What is a diversity green card and how do I apply for one?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.

I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?

— Technical in Tanzania

How to start a company in 4 days

Turtle (real) with a rocket on the back, a match (real flame) is about to ignite it. No turtles were harmed in the making of this stock image.

Image Credits: MediaProduction (opens in a new window) / Getty Images

Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.

“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.

Read on for guidance on how to get your business going in less than a week.

Health clouds are set to play a key role in healthcare innovation

Health clouds are important for innovation in healthcare

Image Credits: Natali_Mis / Getty Images

Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.

This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”

Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”

What SOSV’s Climate Tech 100 tells founders about investors in the space

Climate tech presents a trillion-dollar opportunity

Image Credits: MrJub / Getty Images

SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.

“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.

The fintech endgame: New supercompanies combine the best of software and financials

Image Credits: Donald Iain Smith (opens in a new window) / Getty Images

Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.

Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.

After 30 years, ‘Crossing the Chasm’ is due for a refresh

Hoover Dam area, Mike O'Callaghan, Pat Tillman bridge.

Image Credits: Grant Faint (opens in a new window) / Getty Images

Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.

“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.

Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.

Homebuying startup Flyhomes closes $150 million Series C

Amid a recent tear in residential real estate investment, venture capitalists are looking to get a piece of homebuying startup Flyhomes.

The five-year-old startup announced today that they’ve closed a $150 million Series C co-led by Norwest Venture Partners and Battery Ventures. Fifth Wall, Camber Creek, Balyasny Asset Management, Zillow’s Spencer Rascoff, and existing investors Andreessen Horowitz and Canvas Partners also participated in the round. Norwest’s Lisa Wu and Battery’s Roger Lee are joining Flyhomes’ board as part of the deal.

The end-to-end residential real estate startup says they handle “every step of the homebuying process, from brokerage to mortgage,” building financial tools that customers need throughout the process. The company has now raised some $310 million in total.

The startup is well-positioned during a historic run-up of home prices in the US that has made deals more competitive than ever for prospective buyers. A recent report by Redfin notes that more than half of US homes are selling above their asking price right now, up from 1 in 4 a year ago. A Zillow report notes that nearly half of US homes are selling within one week of going on the market.

Flyhomes’s Cash Offer lending product allows consumers purchasing homes to make more attractive all-cash offers to sellers, with the company noting that even if a buyer ends up backing out of the deal, Flyhomes will still buy the home themselves. Central to the startup’s business is sellers being more amenable to all-cash offers, allowing consumers making them to win deals even when they aren’t the highest bidders.

The company says it has bought and sold more than $2.5 billion worth of homes since launching in 2016.

How to start a company in 4 days

Running a startup can be a complicated, difficult process fraught with pitfalls and ample opportunities to make mistakes. But the logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time.

The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time.

My company, Pulley, has helped more than a thousand founders build their cap table and equity structure.

Here’s a tactical guide to get your startup running in just four days.

Day 1: Incorporate

It is now standard to incorporate your company at the seed stage itself. In the U.S., startups incorporate as Delaware C Corporations with 10 million authorized shares. This is the standard setup when you use services like Stripe Atlas or Clerky.

Post incorporation, you need to answer a few questions on how to grant equity to founders and future employees.

First, you should determine how you want to split the equity between the founders. There is no standard for doing so — some founders split shares equally, while others do 49/51 splits for control. Some founders even may have an 80/20 equity split because one founder spent an extra year on the idea.

At the end of the day, a good equity split is one that all founders find fair. If you can’t agree on a structure, you should have a deeper discussion on whether this is the right team to work with for the next decade or more.

Founders must show investors that sustainability is more than lip service

Ending years of debates over environmental sustainability, the United States officially declared a climate crisis earlier this year, deeming climate considerations an “essential element” of foreign policy and national security. After recommitting the U.S. to the Paris Agreement, President Joseph R. Biden announced an aggressive new goal for reducing U.S. greenhouse gas emissions and pushed world leaders to collectively “step up” their fight against climate change.

At the same time, consumers are increasingly looking to do business with brands that align with their growing environmental values, rather than ignoring the climate consequences of their consumption. Even without regulation as a stick, consumer demand is now serving as a carrot to increase sustainability’s impact on public companies’ agendas.

Startups have already followed suit. Investors today view sustainability as an important pillar of any business model and are looking for entrepreneurs who “get it” from the beginning to build and scale next-generation companies. Startups interested in thriving cannot treat sustainability as an afterthought and should be prepared to enter the public eye with a plan for sustainable growth.

Today, companies of all sizes are being held to a higher standard by consumers, employees, potential partners and the media.

So what exactly do founders need to put in place to demonstrate that they’re on the right track when it comes to sustainability? Here are five attributes that investors are looking for.

1. A truly customer-centric feedback loop

It’s fairly easy for any company to claim that it understands customers’ wants and needs, but it’s challenging to have the tech stack in place to prove a company actually listens to customer feedback and meets those expectations.

Investors now expect startups to have both platforms and solutions — social listening channels, relationship management tools, surveying programs and review forums — that allow them to hear and act on the needs of their customers. Without the proper communications tools and actual people using them, your eco-friendly efforts will likely appear to be merely lip service.

Take the example of TemperPack, which manufactures recyclable insulated packaging solutions for shipments of cold, perishable foods and pharmaceuticals. The direct relationship between a packager like TemperPack and the end consumer is often invisible. But as we were looking into investing in the company, some of its life sciences customers told us about comments they had received from end users — people who were receiving medicine twice per day. Another supplier’s packaging required them to visit a recycler for disposal, a real-world pain point that was causing them to consider switching to a different medication.

Revolution Growth decided to add TemperPack as a portfolio company after directly seeing its customer feedback loop in action: End-user requests informed product development, proving both a market need and customer demand on the sustainability front. This firsthand example demonstrates how an investor, a packaging maker, a life sciences company and an end user are now interconnected in one relationship while underscoring how end-user feedback can connect the dots for sustainable product development.

2. Public commitment to sustainability goals

Over the past several years, we have seen millennials and Gen Z consumers demand transparency in sustainability efforts. As these generations grow in purchasing power, investors will look for startups that make their commitments to eco-friendly goals as transparent as possible to satisfy shrewd consumer needs.

For many VCs, making public commitments to sustainability goals is a sign that your startup is working toward becoming a next-generation company. Investors will look for goals that are thoughtful, with a clear understanding of where your company will have agency and influence, and that are S.M.A.R.T (Specific, Measurable, Achievable, Realistic and Timely). They will also expect regular reports on progress.

Although a company’s management establishes these goals, its board should play a behind-the-scenes role in driving the goals forward, keeping leadership on track and setting the playing field so executives understand that they’re being evaluated on criteria transcending positive EBIDTA.

Taking these steps will ensure goals are responsible and ambitious while also holding the company accountable to consumers and stakeholders to see the initiatives through to completion.

3. Purpose-driven culture

Even the best-laid sustainability goals will go unmet without a strong culture designed to guarantee leadership and employee alignment. Sustainability must be ingrained in a startup’s culture — from the top down and bottom up — and there’s a lot at stake if it’s not.

Another Revolution Growth portfolio company, the global fintech-revolutionizing startup Tala, demonstrates how young companies can imbue their cultures with purpose-driven values. While Tala’s mission is to provide credit to the unbanked, the company believes that the consumer’s best interests should always come first. During 2019’s holiday season, Tala contrasted with businesses fueling consumption by instead urging customers in Kenya to not take out loans, protecting them from predatory unregulated lenders amid a lack of functioning credit bureaus and loan-stacking databases. This forward-looking approach ultimately safeguarded Tala’s customers and its vibrant digital lending industry.

Beyond determining what they stand for, many of our portfolio companies face challenges securing talent. People have choices about where they want to work, and those with intrinsic motivations — such as concerns about the environment — will feel uncomfortable if their employers do not share their values. Regulatory risks and customer attrition pale in comparison to the human cost of losing star performers who seek other work cultures that better align with their values.

A clear values system should embed sustainability into the decision-making process, make obvious imperatives and empower employees to follow through.

4. Accountability

Companies aren’t only judged by their own initiatives — they’re also judged by their partners. As startups build new relationships or expand to work with new suppliers, investors will be keen to know that these outside parties align with their stated sustainability philosophies.

Before becoming publicly involved with another company, a startup should gauge each new supplier’s reputation, including insights into their employment practices. Take leading Mediterranean fast-casual restaurant Cava or healthy-inspired salad-centric chain Sweetgreen, both Revolution Growth portfolio companies; neither will source proteins from farms with inhumane policies. If companies are not aware of these factors, their customers will eventually let them know, and likely hold them accountable for the oversight.

Think of it this way: If a diagram of your partnerships and supplier relationships was printed on the front page of The New York Times, would you be comfortable with what it shows the world? Today, companies of all sizes are being held to a higher standard by consumers, employees, potential partners and the media. It’s no longer possible to fly under the radar with relationships that are antithetical to a company’s sustainability goals. So take a hard look at your supplier and partner ecosystem, and make clear that you are bringing your green vision to life through every extension of your business.

5. Financial realism

Financial realism acknowledges that a company can want to do good, but unless they have the economics, they won’t survive to make an impact. For most startups, beginning with financial realism as a mindset and incrementalism as an approach will be key to success, enabling all businesses to contribute to a more resilient planet. For startups that prioritize environmentally friendly business practices alongside a product or service, this strategy can prevent goodness from becoming the enemy of greatness. Founders in this position can commit to a stage-by-stage sustainability plan, rather than expecting an overnight transformation. Investors understand the delicate balance between striving to meet green goals and keeping the lights on.

Entrepreneurs looking to build a business that not only adopts eco-friendly practices but also has sustainability at its heart may have to consider starting in a niche industry or market that is less price-sensitive and ready for a solution today. Once that solution is firmly established, the business can build upon what they’ve created, rather than going big with something that doesn’t scale — and failing fast. Without an initial set of customers that value and love what you’re doing, you won’t get to the bigger play.

As the public and private sectors continue to address the climate crisis, sustainability will increasingly become a mandate rather than an option, and funding will increasingly flow to startups that have addressed potential environmental concerns. Unfortunately, pressure for companies to meet sustainability demands has led to “greenwashing” — the deceptive use of green marketing to persuade consumers that a company’s products, aims and policies are environmentally friendly.

Greenwashing has forced investors to look beyond mere words for action. As we move toward a more sustainable future, startups pursuing VC funding will need to prove to investors that sustainability is a priority across their entire organizations, aligning their outreach, public commitments and cultures with accountability and concrete examples of sustainable activities. Even if those examples are just steps toward larger goals, they will show investors and customers that startups are ready today to contribute to a greener and better tomorrow.

Version One launches $70M Fund IV and $30M Opportunities Fund II

Early stage investor Version One, which consists of partners Boris Wertz and Angela Tran, has raised its fourth fund, as well as a second opportunity fund specifically dedicated to making follow-on investments. Fund IV pools $70 million from LPs to invest, and Opportunities Fund II is $30 million, both up from the $45 million Fund III and roughly $20 million original Opportunity Fund.

Version One is unveiling this new pool of capital after a very successful year for the firm, which is based in Vancouver and San Francisco. 2021 saw its first true blockbuster exit, with Coinbase’s IPO. The investor also saw big valuation boosts on paper for a number of its portfolio companies, including Ada (which raises at a $1.2 billion valuation in May); Dapper Labs (valued at $7.5 billion after riding the NFT wave); and Jobber (no valuation disclosed but raised a $60 million round in January).

I spoke to both Wertz and Tran about their run of good fortune, how they think the fund has achieved the wins it recorded thus far, and what Version One has planned for this Fund IV and its investment strategy going forward.

“We have this pretty broad focus of mission-driven founders, and not necessarily just investing in SaaS, or just investing in marketplaces, or crypto,” Wertz said regarding their focus. “We obviously love staying early — pre-seed and seed — we’re really the investors that love investing in people, not necessarily in existing traction and numbers. We love being contrarian, both in terms of the verticals we go in to, and and the entrepreneurs we back; we’re happy to be backing first-time entrepreneurs that nobody else has ever backed.”

In speaking to different startups that Version One has backed over the years, I’ve always been struck by how connected the founders seem to the firm and both Wertz and Tran — even much later in the startups’ maturation. Tran said that one of their advantages is following the journey of their entrepreneurs, across both good times and bad.

“We get to learn,” she said. “It’s so cool to watch these companies scale […] we get to see how these companies grow, because we stick with them. Even the smallest things we’re just constantly thinking about— we’re constantly thinking about Laura [Behrens Wu] at Shippo, we’re constantly thinking about Mike [Murchison] and David [Hariri] at Ada, even though it’s getting harder to really help them move the needle on their business.”

Wertz also discussed the knack Version One seems to have for getting into a hot investment area early, anticipating hype cycles when many other firms are still reticent.

“We we went into crypto early in 2016, when most people didn’t really believe in crypto,” he said. “We started investing pretty aggressively in in climate last year, when nobody was really invested in climate tech. Having a conviction in in a few areas, as well as the type of entrepreneurs that nobody else really has conviction is what really makes these returns possible.”

Since climate tech is a relatively new focus for Version One, I asked Wertz about why they’re betting on it now, and why this is not just another green bubble like the one we saw around the end of the first decade of the 2000s.

“First of all, we deeply care about it,” he said. Secondly, we think there is obviously a new urgency needed for technology to jump into to what is probably one of the biggest problems of humankind. Thirdly, is that the clean tech boom has put a lot of infrastructure into the ground. It really drove down the cost of the infrastructure, and the hardware, of electric cars, of batteries in general, of solar and renewable energies in general. And so now it feels like there’s more opportunity to actually build a more sophisticated application layer on top of it.”

Tran added that Version One also made its existing climate bet at what she sees as a crucial inflection point — effectively at the height of the pandemic, when most were focused on healthcare crises instead of other imminent existential threats.

I also asked her about the new Opportunity Fund, and how that fits in with the early stage focus and their overall functional approach.

“It doesn’t require much change in the way we operate, because we’re not doing any net new investments,” Tran said. “So we recognize we’re not growth investors, or Series A/Series B investors that need to have a different lens in the way that they evaluate companies. For us, we just say we want to double down on these companies. We have such close relationships with them, we know what the opportunities are. It’s almost like we have information arbitrage.”

That works well for all involved, including LPs, because Tran said that it’s appealing to them to be able to invest more in companies doing well without having to build a new direct relationship with target companies, or doing something like creating an SPV designated for the purpose, which is costly and time-consuming.

Looking forward to what’s going to change with this fund and their investment approach, Wertz points to a broadened international focus made possible by the increasingly distributed nature of the tech industry following the pandemic.

“I think that the thing that probably will change the most is just much more international investing in this one, and I think it’s just direct result of the pandemic and Zoom investing, that suddenly the pipeline has opened up,” he said.

“We’ve certainly learned a lot about ourselves over the past year and a half,” Tran added. “I mean, we’ve always been distributed, […] and being remote was one of our advantages. So we certainly benefited and we didn’t have to adjust our working style too much, right. But now everyone’s working like this, […] so it’s going to be fun to see what advantage we come up with next.”

6 career options for ex-founders seeking their next adventure

Hey, founders between gigs: What now?

If you exited your last company for airplane money and are now independently wealthy, congratulations! If you want to build another company, just self-fund. If you want outside capital, VCs will chase after you to invest.

Unfortunately, most founders are not in that position: nine out of 10 startups fail. Even if you achieve a high valuation, you might end up like FanDuel’s founders: Their investors got the benefit of a $465 million exit; the founders got zero.

As someone with “founder” on your resume, you face a greater challenge when trying to get a traditional salaried job. You’ve already shown that you really want to lead a company and not just rise up the ladder, which means some employers are less likely to hire you. One research paper found:

[F]ormer founders receive fewer callbacks than non-founders; however, all founders are not disadvantaged similarly. Former founders of successful ventures receive even fewer [emphasis added] callbacks than former founders of failed ventures. Through 20 interviews with technical recruiters, we highlight the mechanisms driving this founder-experience discount: concerns related to the applicant’s capability and ability to fit into and remain committed to the wage employment and the hiring firm.

At my prior firm, ff Venture Capital, we invested in a company co-founded by Nate Jenkins, who had a successful exit, but not quite enough to buy a private plane. He’s now researching his next opportunity and interviewing for some jobs. At the end of a recent interview, the interviewer summarized, “I’ll hire you, but is this what you really want to do?”

That said, Samuel Sabin, CEO of HireBlue, observed, “Some founders who work better with more resources at their disposal may be tapped for intrapreneurship roles. Also, some companies value a self-starter mentality.”

So what should you do? Especially if your life partner and/or bank account are burnt out on the income volatility of startups?

I’ve been in this situation myself when I shut down one startup and exited two others. I think you have six main options:

Full-time initiatives

  1. Launch a new company.
  2. Get a job.

Part-time activities

  1. Angel investing, venture capital and mentoring.
  2. Consulting.
  3. Sell information products.
  4. Education and self-improvement.

At Versatile VC, our new VC fund, we’re creating an online community just for founders who are in transition, Founders’ Next Move. We hope you will join us!

Full-time initiatives

Launch a new company

If you want to work on your startup idea, the bar for starting a company should always be very high. VCs have a diversified portfolio and most of their investments die. You don’t have a diverse portfolio and so you’re taking far more risk than the VCs. For free resources to help research your ideas, see What startup will you build? Identifying market white space.