Browsing Tag: Startups

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Earlier today, PwC and CB Insights dropped a sheaf of data concerning the global and domestic Q1 venture capital market, something we’ll be yanking data points from here and there for a few days. What matters is that our continuing hunt to understand what’s going on with VC and its investment habits (some of our recent work here and here) can take another step forward today.

We’re talking about three trends this morning: The sharp decline in Q1 U.S. seed rounds, how mega-rounds ($100 million and larger funding events) are holding up the sky for domestic venture totals, and what March might tell us about what’s going on with COVID-19 and VC activity today.

Ready? This is going to be quick and easy and fun.

So much for Seed

According to the report, domestic Seed rounds, in slow decline since peaks in 2017, have sharply fallen since Q3 2019.

Source: Tech Crunch Startups | VC activity goes upside down as seed deals fall and mega-rounds rise

There’s no doubt that the coronavirus has had a monumental impact on the way we view technology’s relationship with education. For now, students are learning from home. But what happens when they return to school?

Picking up where we left off in last week’s survey, we asked top investors in the space for their predictions on what is ahead once life resumes to its new normal. One investor mentioned how in March, they spent a third of their time in edtech. Now, they’re spending almost all their time vetting startups there. Another said that the sector has always been underfunded. Time will tell if venture capitalists become more bullish on the sector, and more importantly, if adoption from schools with strict budgets becomes more lenient.

A harsh statistic sums the dynamic of adoption and investment pretty well: according to Tetyana Astashkina and Jean Hammond of Learn Launch, less than 5% of the $1.6 trillion spent on education in the U.S. is attributed to edtech. Let’s see if other investors think that percentage will shift forward after the pandemic ceases.

• Jenny Lee, GGV
• Tetyana Astashkina, LearnLaunch
• Jean Hammond, LearnLaunch
• Marlon Nichols, MaC Venture Capital
• Mercedes Bent, Lightspeed Venture Partners
  
• Jennifer Carolan, Reach Capital
• Shauntel Garvey, Reach Capital
• Jan Lynn-Matern, Emerge Education
• Tory Patterson, Owl Capital
• Ian Chiu, Owl Capital
• Tony Wang, 500 Startups

Their responses have been edited for length and clarity.

Source: Tech Crunch Startups | Venture capitalists chat edtech’s new normal after COVID-19 

A startup that created a dedicated gadget to help ensure the safety of electrical industry workers has turned their talents to addressing the need for similar workplace protections in the face of another threat: COVID-19. Vancouver-based Proxxi is launching Halo, a wrist-worn wearable device that can provide a vibration notification to alert someone of the presence of another band within 6 feet – the recommended span of separation to ensure proper social distancing.

Proxxi explains that the device is designed to help ensure compliance with social stance guidelines while on a job site or at a workplace, where essential work might need to continue despite the ongoing global coronavirus pandemic, but where it can also be tricky to maintain proper distance between workers without a reminder system.

The wearable uses low-power Bluetooth to communicate with other bands, and the bands also retain a log of which other bands they’ve been in contact with to provide internal contact tracing capabilities in case of positive coronavirus case diagnoses. The startup says that the bands don’t include location tracking, however, and they’re not tied to any specific personal identity information for any respective employee who wears them in terms of sharing info between bands or back to Proxxi itself, for the purposes of privacy protection.

We’ve seen other similar efforts, including Estimote’s contact tracing wearable for workplace use. Proxxi’s approach differs in a couple of respects, including in that its primary focus is on active monitoring and awareness round appropriate social distancing. Estimote’s wearable is also more focused on providing a visual alert system regarding potential contacts.

Proxxi says its Halo system can be set up and implemented quickly and easily, and notes that they don’t require connection with, or setup through any kind of smartphone to operate.

Per-band pricing is set at $100, and the company will begin shipping them out on May 4. Deployment includes both mobile app and web-based dashboards for monitoring contact tracing and tracking compliance and efficacy of social distancing measures on-site.

Source: Tech Crunch Startups | Electrical worker safety startup launches a COVID-19 workplace distance and contact tracker

Stackery, a 4-year old Portland startup, wants to help development teams deliver serverless resources on AWS more easily, and today it announced several enhancements to the platform.

With serverless applications, the development team outlines a set of trigger events and the cloud infrastructure vendor — in this case AWS — provides the exact amount of required resources to run the event and no more. This frees developers from having to worry about provisioning the proper amount of resources to run the application.

“Stackery is a secure serverless platform for AWS. We’re geared toward teams who are moving from laptop through production, and [we provide the tools] that they need to design, develop, and then deliver modern applications for those teams,” Stackery CEO Tim Zonca told TechCrunch.

In general, the product helps create a virtual whiteboard, where development teams can build serverless applications in a highly visual way, then it helps with testing and deployment of the app on AWS. Zonca says that the updates they are announcing today focus on building in security and governance into the platform, while offering a full set of continuous delivery tools in a modern git-driven delivery system.

“We realized that we could fill in some of the gaps [for developers] and help them take what we have developed as a set of best practices around securely delivering applications over the course of the last year, and just bake them into the product, so that those teams don’t have to think about those practices in a serverless world,” Zonca explained.

For starters, they are offering a code review for known vulnerabilities as they pop the application into their git repository, whether that’s Bitbucket, GitLab or GitHub. “We’ve introduced the ability to audit function code for known vulnerabilities, and we do this by just using common tooling out there,” he said.

The company is also helping test that code, which gets a bit tricky when ephemeral serverless infrastructure is involved. “We allow people to automate the spinning up of temporary ephemeral testing environments, and then help them plug in the automation for their system testing or integration testing or unit testing, and even provide an environment associated with this pull request for humans to go in and actually log on and do usability testing,” Zonca said.

When an application has passed all the testing, and is ready to be deployed to staging or production environments, Stackery can automatically promote that change set. Companies can then choose to do a final review before deployment or simply allow it to deploy automatically once the application passes all the contingencies the team set up.

Stackery was founded in 2016. It has raised $7.4 million, according to Crunchbase data.

Source: Tech Crunch Startups | Stackery releases slew of updates to simplify serverless app deployment

Kumu Holdings, a live streaming startup based in the Philippines, announced today it has raised about $5 million in Series A funding, earmarked for new features and growing its operations.

The round was led by Openspace Ventures, an early investor in Go-Jek, with participation from Kickstart Ventures, media conglomerate ABS-CBN, Gobi-Core Philippine Fund, and returning investors Summit Media and Foxmont Capital Partners.

With much of the country under COVID-19 lockdown or curfew orders, Kumu says usage of media and entertainment apps has increased. To address demand, the startup has launched new features over the past month to allow organizations like churches and industry groups to hold online events.

Kumu says it now has three million registered users and about 25,000 live streams broadcast each day, with average daily usage of about one hour.

Founded two years ago by Roland Ros and Rexy Josh Dorado, Kumu aspires to be a “super app” for Filipinos around the world, integrating live streaming, video chats and gaming, with plans to add online payments and e-commerce functions, too. Kumu’s upcoming features include a live commerce platform that allows users to buy items during live streams, giving content creators an additional source of revenue.

Source: Tech Crunch Startups | Filipino live streaming app Kumu raises million Series A led by Openspace Ventures

As the coronavirus crisis continues, hiring data is emerging that paints a mixed picture for U.K. tech, which, in the preceding months and years has been stuck on a growth trajectory of up and to the right. That appears to have changed almost over night.

According to numbers shared exclusively with TechCrunch from job sites Adzuna (which also powers the U.K. government’s “Find a job” service and provides data to No. 10) and WorkinStartups, tech hiring activity amongst 100 of the U.K.’s top tech companies has fallen 31% in the last month. Furthermore, over 25,000 job vacancies across the tech sector as a whole have been lost between March and April.

In addition, more than 50% of those companies have dialled back on hiring, while a number of unicorns have furloughed staff. The result is that there are now thought to be 38 job seekers on average per available job — the most competitive for each vacancy U.K. tech has been since the 2008 financial crisis.

“The biggest takeaway from the data for me, is the fact that the majority of tech companies across Europe are extremely anxious about the current economic climate and even those with ‘war chests’ of VC cash or unicorn status are laying off or furloughing employees, as well as simply not posting new vacancies,” Adzuna co-founder Andrew Hunter tells me.

In terms of the speed at which the hiring picture appears to be changing, Hunter uses the Lenin quote “there are decades when nothing happens, and then there are weeks when decades happen,” and says the world is moving at “500 miles an hour at the moment”.

“Yes, I am surprised at how quickly the job market picture has changed in the last few weeks,” he adds. “U.K unemployment might well double this month and the number of open vacancies have halved. The compound effect of this is going to hurt”.

The study also shows significant variation in hiring behaviour company by company. For example, according to the data, Airbnb, Google, and Facebook have all evidently scaled back European hiring efforts. Other scale-ups, such as Habito, Treatwell, and Carwow appear to have paused recruitment altogether, likely reflecting the challenges that proptech and mobility is currently facing.

Two fintech unicorn outliers are TransferWise with 45 live vacancies, and Revolut with 324 live vacancies, as the two companies seem to be hiring at the same or similar levels to pre-coronavirus crisis. Unsurprisingly, subscription delivery services Gousto, Hellofresh and Oddbox are all scaling up efforts to bring on new employees after likely seeing an uptick in product demand. Amazon (1,000+ live vacancies), and Deliveroo (100+ live vacancies), have also ramped up hiring.

“My sense is that larger companies like Monzo… have furloughed staff with the view that it’s better to take action now, rather than suffer death by a thousand cuts over the coming months or be forced to take more drastic action in the summer,” says Hunter.

“The vast majority of sub 100 staff tech companies are in a very different situation. This is ‘survive or die’ territory for them – hiring freezes and furloughing are a necessity, not a luxury. Fundamentally, the complete uncertainty around how long this will last means any startup with any doubt around their funding position for the next 6-12 months is going on the offensive. Battening down the hatches and pausing non-core innovation appears to be the M.O. for the moment”.

According to the study, marketing, social media and I.T. sales jobs in tech companies have been the hardest hit, with advertised vacancies dropping over 60% month-on-month. Unsurprisingly, tech companies operating within the hospitality and travel sectors have, in the majority of cases, all but paused recruitment, according to the data.

In contrast, Engineering jobs have weathered the storm the best, with hiring for C++, Java, Ruby and PHP developers down only 20%.

“I think there are a few different factors at play and this is driving the decision making,” says Hunter. “What’s your cash runway, are you able to control your burn rate, what is the likelihood that your sector will bounce back in the next 3-6 months? etc. So funding and cash discipline certainly plays a part. If I was running a travel booking startup right now, even if I had a healthy looking bank balance, I would be planning for the worst”.

Meanwhile, Hunter points out that nobody really knows when the crisis will be over, forcing VCs, CEOs and founders to “hedge” as best as they can, and try to plan for the recovery and the likely upside that will come with it.

“This will not be a v-shaped economic recovery, but those that can be well positioned for the start of the economic comeback will likely grow the fastest and gain the most market share. That’s why we’re still seeing those who haven’t seen much immediate impact on their 1-2 year plan push on and try and take advantage of the opportunities potentially available. I think it was Ayrton Senna who said ‘You can not overtake 15 cars in sunny weather…. but you can when it’s raining’”.

Source: Tech Crunch Startups | UK tech job vacancies fall 31% in less than 4 weeks, according to job site data – so who is still hiring?

Mighty Jaxx, which makes licensed collectibles, has raised 4.5 million Singapore dollars (about $3.2 million) in funding for MightyVerse, its platform for tech-enabled figures. Led by the investment arm of KB Financial Group, one of South Korea’s largest banks, the round also included participation from Greycroft Partners’ gaming fund GC VR Gaming Tracker Fund and returning investor SG Innovate.

This brings Mighty Jaxx’s total pre-Series A funding to about $4.7 million, with part of the new capital also earmarked to develop products from its new licensing deals with Hasbro and Nickelodeon.

Founded in 2012, Mighty Jaxx’s other licensing deals including partnerships with Cartoon Network, Warner Brothers, DC Comics, Looney Tunes and Sesame Street. It raised its first round of funding last July to develop MightyVerse. Products integrated with the platform have already launched, and Mighty Jaxx’s goal is to ship five million units this year, with its next big release, a collaboration with Toei Animation’s popular anime “One Piece,” to take place within the next two months.

The development of MightyVerse was incubated when Mighty Jaxx took part in Ubisoft’s Entrepreneurs’ Lab last year. Jackson Aw, founder and CEO of Mighty Jaxx, told TechCrunch that MightyVerse’s technology will help authenticate collectible figures, which can go for huge prices on the secondary market, by integrating technology during the manufacturing stage. The platform will also eventually include a social network for collectors.

MightyVerse collectibles are able to store information and digital assets, gamifying the collecting experience, Aw added. For example, when collectors buy a figure, “they will be able to unlock digital rewards hidden throughout the game, allowing us to create an incredibly immersive game experience in both the digital and physical worlds through the MightyVerse.”

Aw said the COVID-19 pandemic impacted Mighty Jaxx’s manufacturing and logistics, especially when factories closed in China, but partnerships with factories in other countries and companies like DHL have helped mitigate the impact, allowing its operations to return to “a level for optimum efficiency.”

Source: Tech Crunch Startups | Mighty Jaxx raises .2 million for MightyVerse, its platform for tech-enabled collectible figures

Layoffs have struck the startup world swiftly, hurting hospitality and travel startups, as well as recruitment and scooter companies. New data shows that some of those layoffs, brought on by COVID-19, might be disproportionately impacting satellite campuses.

By nature, satellite offices are secondary to a startup’s headquarters. Opening smaller offices is a strategic move when a company gets a fresh round of funding or wants to expand to a new market. We’ve seen satellite offices pop up in cities like Portland, Phoenix or Austin, which has satellite offices for Apple, Facebook and Oracle, for example.

While most layoffs are coming from companies whose headquarters are located in the main entrepreneurial hubs of the Bay area and New York, the actual staff members are located in the satellite cities, according to data from Layoffs.fyi, a tracker created by former Y Combinator grad Roger Lee.

EasyPost in San Francisco laid off 75 employees, nearly all in Salt Lake City and Louisville. U.K.-based Challenger bank Monzo laid off 165 customer support employees recently in Las Vegas.

Toast, based in Boston, laid off 1,300 employees, or 50% of its entire staff. Per Layoffs.fyi data, 12% of those layoffs were in Omaha, and another 10% were in Chicago.

KeepTruckin, based in San Francisco and last valued at $1.25 billion, laid off around 350 employees, and 33% of those employees were located in Nashville or Chicago.

These numbers are only a fraction of the total layoffs across the country, as Layoffs.fyi’s data set only includes publicly disclosed actions and tips. But even if the data is just serving as an anecdotal snapshot, it’s an important one to note.

What the data means

Once the economy does recover to a new normal, it’s unclear whether HQ cities or satellite cities will be in a better position to bounce back. We caught up with some investors in Boston, a top startup hub that has recently faced its own flurry of layoffs, to hear their thoughts.

According to Lily Lyman, a partner at Boston-based venture capital firm Underscore, satellite offices are often where a company might locate the sales, customer success and business development staff. Logistically, those roles are the most vulnerable as consumer activity slows. For a lot of businesses, there are no sales and deals to be done right now.

“[These roles are getting] disproportionately affected in [reduction of forces] as companies expect a slowdown on the commercial side,” Lyman said. “While a logical decision to extend the cash runway, it does come with the risk that this withdrawal can damage relationships with customers that may be hard to recover.”

Not everyone sees cuts hitting satellite offices the hardest. Michael Skok, another partner at Underscore, said that “in some cases, we’ve seen that satellite offices are established in emerging markets which come with cost savings, so these offices may actually be more protected in these times.” In other words, if you’re cutting costs, San Francisco employee expenses might be higher than Denver employee expenses by sheer nature of the former having exorbitantly high living costs. Revolution Ventures, which invests in startups in emerging tech scenes, said it has not heard about satellite office layoffs from its portfolio as of recently.

And finally, to put it crassly, layoffs in a non-HQ city might quell some of the negative signaling that founders and venture capitalists are trying so hard to avoid (well, most of them at least). Slimming down operations is becoming a proactive response, not a reactive strategy as the pandemic continues to evolve.

Today’s data reminds us that layoffs are rarely an isolated occurrence, and staff cuts appear to be landing harder on less robust tech ecosystems.

Source: Tech Crunch Startups | Layoffs are disproportionately impacting startup satellite offices

Marty Pichinson gets called a lot of things: Silicon Valley’s undertaker, its terminator, a grave digger. These aren’t meant as slights; Pichinson is the founder of Sherwood Partners, a restructuring firm that Bay Area venture firms frequently turn to when they need someone to help sell off the assets of startups they have funded. The idea is to return at least some money to the company’s creditors and, if anything is left, to the VCs, too.

We last checked in with Pichinson almost exactly three years ago when the startup world was humming along. Even then, because of the sheer number of companies that get funded — and thus the number of startups that invariably don’t make it — Sherwood Partners was helping to wind down two to four companies a week.

Now, as he told us in conversation last week, it’s winding down two to three companies every day.

So who is shutting down, how does it all work and what can VCs expect to get in terms of a return in the age of the coronavirus?

Right now, Pichinson says the shutdowns are across verticals and across stages. “We’re in companies that raised $10 million to $25 million, to companies that raised up to $1.5 billion. It doesn’t matter what size they are; when they come to us, they’re all broke. If we’re closing it down to clean up and monetize what we can, they are basically in the same position, whether they raised $20 million or they were once a billion-dollar business.”

Source: Tech Crunch Startups | Silicon Valley restructuring veteran says his firm is winding down up to 3 startups a day

Frank, a New York-based student-facing startup, has raised $5 million in what the company described as an “interim strategic round” that Chegg, a public edtech company, took part in. According to Frank founder and CEO Charlie Javice, previous investors Aleph and Marc Rowan took part in the round alongside new investor GingerBread Capital.

The education funding-focused startup last raised known capital in December of 2017, when it closed a $10 million Series A. Frank raised a seed round earlier that same year worth $5.5 million.

According to Javice, her firm closed its round in early March, before the recent market carnage. Bearing in mind that there is always lag between when a funding round is closed and when it is announced, the new Frank round is on the fresher side of things. Most rounds are a bit more like Shippo’s recent investment (closed in December, announced in April) than Podium’s recent deal, which it started raising in mid-February of this year.

Timing aside, what Frank is doing is interesting, so let’s talk about its business, how it approached 2019 and how it’s faring in today’s changed market.

Everyone’s broke

To help keep student debt low, Frank is a bit akin to TurboTax for college money, as TechCrunch wrote when covering its Series A, helping students get through a thicket of forms and aid to collect as much aid as possible while avoiding borrowing.

American higher education is too expensive, and applying for financial help is irksome and byzantine. I can safely report that sans quoting an expert, as I had to go through it as a student and only finished paying my student loans last July.

Frank wants to help make college more affordable, with the company noting in a call with TechCrunch that there’s been a good number of companies working to help students service debt in a less expensive way after they’ve hired the money; it wants to help students avoid taking on so much red ink in the first place.

According to Javice, lots of students fail to finish signing up for federal aid programs, and some students wind up dropping out of programs before finishing them, leaving them saddled with debt but no degree. That’s a hell of a trap to wind up in, as student loans are the barnacles of the financial world — incredibly hard to get rid of.

According to Javice, Frank was a little early to rethinking its own growth/profit trade-off than the rest of the startup world, which woke up when WeWork filed to go public and was quickly booed off Wall Street. In mid-2019, Frank slowed growth to get closer to the margins it wanted. (Thinking out loud, this is probably how the startup managed to survive so long off its December 2017 Series A.)

Indeed, according to Frank’s CEO, it was in a comfortable cash position before this round, which she described as more a vote of confidence than a round of necessity.

Which brings us to today, and the new, COVID-19 world. In an email to TechCrunch, Javice said that “like everyone else,” her company is “adjusting to the new realities.” She added that college and university attendance “has typically been countercyclical” and that her company is “seeing a large demand for higher education and specifically financial aid.”

If the new economy winds up creating a little tailwind for Frank, it won’t be the only startup to accrue help; Slack and Zoom and other remote work-friendly companies have also seen their fortunes turn for the better in recent weeks. And now with $5 million more on hand, it can certainly meet new demand.

Update: An earlier version of this article listed Chegg as the round’s lead investor; it did receive a board seat in the transaction but Frank does not consider it a lead investor. The post has been amended.

Source: Tech Crunch Startups | Frank raises M more in its quest to get students max financial aid