Citizen’s crime live streams are no substitute for local journalism

In May, the neighborhood crime watch app Citizen offered its user base $30,000 to track down a suspected arsonist on live video, only to discover that they’d sent a mob of civilians after the wrong guy. Now, Citizen is covertly hiring journalists to livestream on the app at crime scenes for $25 per hour through third party websites. I’m tired.

When Citizen first hit the App Store in 2016, it was called Vigilante — it marketed itself as a platform to fight injustice with transparency, which might sound good in theory, but in practice, it deliberately encouraged users to seek out crime scenes to report them. Vigilante was removed from the App Store for violating a clause in Apple’s App Developer Review Guidelines that an app shouldn’t be “likely to cause physical harm from its use.”

Surely, this would be the end for the nascent platform. But like a cockroach after an apocalypse, the app chugged on. It rebranded itself as Citizen, added disclaimers that no one should interfere with a crime scene, re-entered the App Store, and continued to raise VC funding. Now, the app is like a crowd-sourced crime blotter — as its App Store page says, “Citizen may notify you of a crime in progress before the police have responded.” But this level of hyper-vigilance can fuel panic, rather than make people feel safe — not to mention that user-reported crime incidents might be incorrect at best, and racist at worst. The app pulls data from 911 calls, but not all information in those dispatches are verified, which can be cause for false concern.

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But Citizen can only function if it has enough of a user base, and its attempts to corral civilians to use the app have gotten more and more desperate. According to SensorTower, the app hit a monthly download high in June 2020, in the wake of widespread Black Lives Matter protests. (So, as the country protested police brutality, 677,000 people responded by downloading a policing app). But the following month, just 207,000 people downloaded the app. Since then, growth has been pretty stagnant — 292,000 people downloaded Citizen in March 2020, and 283,000 people downloaded it in March 2021.

In June, the Daily Dot reported that one specific user named “Landon” was live streaming from multiple crime scenes in one day, attempting to interview witnesses and first responders — given how often he seemed to stumble upon these crime scenes, it seemed unlikely that he was just an enthusiastic app user. Yesterday, the New York Post reported on another user named “Chris” who live streamed on Citizen from six emergencies in one day. Citizen confirmed that both Landon and Chris were working for the app as members of its Street Team.

“Citizen has teams in place in some of the cities where the app is available to demonstrate how the platform works, and to model responsible broadcasting practices in situations when events are unfolding in real time. We believe these teams will ultimately help guide our users on how to broadcast in an effective, helpful and safe way,” a Citizen spokesperson told TechCrunch.

Citizen has had Street Teams since the app’s launch; a spokesperson said that they’ve never tried to hide this. But these jobs are not listed on the Citizen website. Instead, they’re listed by a third party recruiter called Flyover Entertainment on the JournalismJobs board without mention of Citizen. An NYU Journalism website shared a similar listing, which did include the Citizen name. Citizen confirmed to TechCrunch that both of these listings are for the app’s Street Team. Citizen pays $250 per day for a 10-hour shift in LA, and $200 per day for an 8 hour shift in NYC, which comes out to $25 per hour.

“Broadcast journalists have experience in broadcasting safely and responsibly. This is a requisite for our Street Team members,” said the Citizen spokesperson. When asked why these jobs were posted on third-party job boards, but not Citizen’s own website, the spokesperson reiterated that it was because Citizen specifically wanted to find journalists. However, it could presumably also find journalists on its own website.

Surveillance state vigilantism concerns aside, local news is dying, and Citizen is not built to be a substitute for neighborhood journalism. Sure, local newspapers report on crime too, and it’s not as though Citizen is doing something unprecedented by sending reporters to scope out crime scenes. But there’s a difference between reporting news and live streaming from a crime scene on a surveillance app that only discloses who is a paid worker and who is an average civilian when directly asked. For an app that is modeled on “increasing transparency,” these covert job postings don’t feel so transparent. Plus, for an infrequent freelance gig with no benefits or paid time off that requires established broadcasting skills, $25 per hour is a pretty bad rate.

Now, Citizen’s latest attempt at growth is a paid service for $19.99 per month called Protect, which lets users send their location and a livestream from their camera to a Protect Agent. Citizen says its Protect Agents include former law enforcement officers and 911 operators, who can send an “instant emergency response” in case of emergency. This sort of seems like paying to get a personal 911 operator, which, again, feels like a poor alternative to policing, an already poor system.

Maybe Silicon Valley-bred tech companies aren’t the answer to the United States’ centuries-long crises of police brutality, racial profiling, and surveillance. Maybe a better way to reduce crime is to ensure that all people have access to health care, jobs, and affordable housing. Who knows!


Source: Tech Crunch

Duolingo boosts IPO price target in boon to edtech startups

U.S. edtech company Duolingo released a revised IPO price range this morning, boosting its potential per-share value to $100 after initially targeting a range that topped out at $95 per share.

Per the unicorn’s SEC filings, Duolingo is now targeting a $95 to $100 per share IPO price range, up from $85 to $95 per share, or a gain of around 12% at the bottom and 5% at the top.

TechCrunch previously called the Duolingo debut a bellwether of sorts for the larger U.S. edtech ecosystem; if Duolingo can price and trade well, investors in private companies may be more willing to invest, given a more proven and attractive exit market. On the other hand, if Duolingo prices weakly or trades poorly, the company could place a wet blanket atop the startup edtech world.

The fact that Duolingo is raising its IPO price range indicates that we are more likely on the path for a strong offering than a weak one.

For edtech companies that have hit unicorn status — like Masterclass, Course Hero, Quizlet and Outschool — it’s good news. For reference, those companies have raised $461.4 million, $97.4 million, $62 million and $130 million, respectively, per Crunchbase data.

What’s Duolingo worth?

The terms of the company’s IPO have not changed, aside from its proposed price. So, Duolingo is still selling 3.7 million shares in its debut, and some 1.41 million shares will be sold by existing equity holders. The company’s underwriters also reserved their right to buy 765,916 shares of the company’s stock at IPO price in the 30 days following its debut.

At the upper and lower bands of the company’s IPO price, its simple valuation excluding underwriter shares now lands between $3.41 billion and $3.59 billion. Inclusive of its greenshoe offering, those numbers rise to $3.48 billion and $3.67 billion.

Recall that when private, Duolingo’s November 2020 Series H valued the company at just over $2.4 billion. So long as Duolingo prices in its range, it will provide investors with a nice bump in the value of their investment. Duolingo was valued at just $1.6 billion in mid-2020, indicating that it has more than doubled in value since that investment.


Source: Tech Crunch

How to prepare for M&A, your most likely exit avenue

Despite the plentiful headlines about mega billion-dollar M&A transactions, record IPOs and the rapid growth of SPACs, small deals will continue to be the most likely exit for the vast majority of tech startups. In the over 30 years I’ve worked on M&A at White & Case, Barclays and my current firm Ascento Capital, I have seen too many startups that are not prepared for an exit via a merger or sale. This article will provide specific recommendations on how to prepare your startup for M&A.

While it is good to strive for a billion-dollar-plus sale, a successful IPO or a SPAC deal, it is practical to prepare your startup for a smaller transaction.

Global M&A hit record highs in the second quarter with a total deal value of $1.5 trillion, but smaller transactions vastly outnumber mega billion-dollar deals. The U.S. saw a total of 16,672 deals in the year ended June 31, but only 583, or 3% of that number, were valued at more than a billion dollars (FactSet). The IPO market is healthy again, but M&A still represents 88% of exits: So far this year, there were 503 IPOs and 5,203 deals, according to the CB Insights Q2 2021 State of Venture Report. After the SEC announced in early April that it was considering new guidance on SPAC IPOs, the rate of new SPAC issuances fell by around 90%.

While it is good to strive for a billion-dollar-plus sale, a successful IPO or a SPAC deal, it is practical to prepare your startup for a smaller transaction.

Here are a few recommendations that will prepare your startup for an M&A exit:

Track M&A in your subsector

Set up an alert on Google News for M&A activity in your subsector. For example, if your startup is in the IoT subsector, search for “IoT acqui” and this will pick up news stories on acquisitions in the IoT space. Save the search so you can go to Google News on a regular basis. Also track your closest competitors on Google News, particularly to see who is selling their company.

Prepare a list of likely acquirers

Prepare a list of the companies or firms most likely to buy your startup. This list should include domestic and international companies, businesses in non-tech industries, private equity firms and their portfolio companies, as well as VC-backed companies. Track these likely acquirers on Google News as well.

Consider executing a parallel track

Consider approaching the top 10 likely acquirers when you are raising the next round of capital. If your startup gets M&A offers and VC term sheets at the same time, this will provide your board of directors choices on the path ahead. Knowing the M&A activity in your startup’s subsector and the 10 most likely acquirers will impress VCs and increase the chances of being funded.


Source: Tech Crunch

Glyphic Biotechnologies raises $6M to accelerate protein sequencing by orders of magnitude

The whole human proteome may be free to browse thanks to DeepMind, but at the bleeding edge of biotech new proteins are made and tested every day, a complex and time-consuming process. Glyphic Biotechnologies accelerates the critical but slow sequencing step, potentially cutting drug development times down by a huge amount, and the startup just raised a $6 million seed to bring its clever solution to market.

Proteins are at the heart of many new treatments and products; the ubiquitous and infinitely varied chains of amino acids twist into shapes that interact with cells, substances in the body, and other proteins, doing everything from interpreting DNA to controlling access to secure areas (“sorry, no potassium allowed”).

In the drug discovery and biotech world, proteins represent unlimited possibility — the right one could clamp onto cancer cells, facilitate natural healing processes, or prompt the creation of helpful substances. But finding and testing novel molecules is not easy — and a big part of that is sequencing, which confirms the exact makeup of the protein you’re trying to test.

Right now there are several large companies doing good business in the protein discovery world, and generally the process involves identifying the amino acid at the end of the protein chain, then snipping it off, identifying the next one, and so on until you’ve done the whole thing.

The trouble with this approach is that the protein’s shape or the molecular properties of the next amino acid in line can interfere with the process of binding to and identifying the one on the very end. As a result there’s a certain amount of uncertainty and a lack of unreliability inherent to the process.

Glyphic Biotechnologies changes that by adding a step where the target amino acid is detached first and then tethered nearby using a novel molecule called ClickP developed by one of the co-founders. A single stationary amino acid attached to a known molecule is much, much easier to identify, and when it’s done, the process repeats as before.

It’s briefly stated but the advance is significant. Current techniques in the antibody discovery space produce and inspect on the order of tens of thousands of proteins per week per (very expensive) machine. It sounds like a lot but with proteins essentially innumerable, it’s just a drop in the bucket. Even running 24/7 this rate doesn’t come close to satisfying demand.

Glyphic’s approach, utilizing ClickP and single-molecule microscopy (like that used by DNA sequencing giant Illumina), should be capable of millions to tens of millions per week, possibly climbing to billions in time. Even at the most conservative estimate you’re talking about orders of magnitude in improvement — those tens of thousands in the other techniques include lots of (perhaps mostly) repeat or junk information due to their use of B cell cultivation to produce the antibodies in question.

Illustration of the Glyphic process at a molecular level.

Image Credits: Glyphic Biotechnologies

Not only that, but because the ClickP process avoids the problem of interference from the next amino acid in the chain, it has way, way higher specificity and confidence. So you wouldn’t just be sequencing a hundred or a thousand times as many proteins, you’d be far more sure about the results.

At first Glyphic would be processing samples sent to them, but ultimately their tech could live in other labs as their competitors do now. Going from service to hardware sales and support is the current roadmap.

If everything works as advertised, Glyphic could be the new standard in protein sequencing just as demand skyrockets in the biotech world. To do so, though, it needs just a bit more time in the incubator.

The process they pioneered was the result of work done by co-founders Joshua Yang (CEO) and Daniel Estandian (CTO) at the lab of MIT’s Ed Boyden (on the team as “scientific founder”).

CTO Daniel Estandian, left, and CEO Josh Yang. Image Credits: Glyphic Biotechnologies

Yang explained that what stands between them and potential industry dominance is a mere matter of chemical engineering.

“My co-founder [Estandian] developed ClickP himself. The chemistry works,” he told me. “But as a spinout of an academic lab, we didn’t develop all 20 binders, because it would have bankrupted the lab. This isn’t an ‘off-the-shelf’ molecule.”

These binders are a bit like adapters that make the process work for each of the 20 amino acids. It takes time and money to engineer them, so they decided to show the system off with a handful first in order to get the cash to make the rest. “It’s really just about putting the time into getting them out there,” said Yang.

The $6.025 million seed round should finance the company through this early stage as it builds its platform. It was led by OMX ventures (which previously invested in 10X Genomics and Twist Bioscience), with participation from Osage University Partners, Wing VC, Artis Ventures, Cantos Ventures, Civilization Ventures, and Axial VC, and has an angel investor in Mammoth Biosciences CEO Trevor Martin.

Glyphic will be making its first home at Bakar Labs, the freshly inaugurated new Berkeley biotech incubator. There it will stay until it’s ready to take the next big step, likely hardware manufacturing next year on the back of an A round to be raised then. 2022 should then also see the company’s first paid services. And the antibody market, as large as it is, is only the beginning.

“Antibodies are just a starting point, as numerous applications can benefit from protein sequencing,” Josh explained in an email after we spoke. “Another high value area is in industrial biotechnology, where protein-sequencing-based screening of evolved enzymes can help identify enhanced or novel functions (e.g., better laundry detergents, waste-water treatment). Development of diagnostic tests would also benefit because, the more proteins you can sequence and identify in a sample set, the increased likelihood you can identify rare yet important biomarkers and/or develop a robust panel of biomarkers that together can detect or predict disease.”

A company like Glyphic may seem like a perfect target to get snapped up by one of the more deep-pocketed competitors out there, but Yang said they’re confident enough to ride it out.

“The activity in this space is insane. My co-founder and I really want to be the next Illumina or 10X Genomics — we really want to be that leader in proteomics.” And unless the competition has a few cards hidden up their sleeves, Yang’s ambition seems like a distinct possibility.


Source: Tech Crunch

Amazon-backed Indian D2C beauty brand MyGlamm raises $71 million

MyGlamm, a direct-to-consumer beauty brand in India that sells most of its products through its own website, app and retail touch points, said on Monday it has raised $71.3 million in a financing round as the Mumbai-headquartered firm looks to scale its business across the South Asian market.

The startup had raised $23.5 million in its four-times subscribed Series C financing round from Amazon, Ascent Capital and Wipro in March this year. On Monday, it said it has added an additional $47.8 million as part of the round — which is now closed.

Accel led the investment in the new tranche while existing MyGlamm investors — Bessemer Venture Partners, L’Occitane, Ascent, Amazon, Mankekar family, Trifecta and Strides Ventures — also participated, Darpan Sanghvi, founder and chief executive of MyGlamm, told TechCrunch in an interview.

Sanghvi started MyGlamm in 2017 after pivoting his previous venture. He recalled the struggle he faced raising money for a direct-to-consumer brand, which were not as popular in the world’s second-largest internet market just five years ago. To make matters worse, MyGlamm was also among the last direct-to-consumer startups to kick off its journeys at the time.

MyGlamm website. Image Credits: MyGlamm

The startup today operates as a house of brands in the beauty and personal care spaces. “We operate across makeup, skincare, haircare, bath and body, and personal care. Unlike other brands, we have been able to successfully build a master brand across categories,” he said over a video call.

“The reason we have been able to build this is because we are truly direct to consumers. This allows us to communicate very directly with them,” he said, adding that most other firms in the industry are too reliant on third-party marketplaces for their sales.

He attributed the recent growth of the startup, which sells over 800 SKUs across categories (up from 600 in March), to its newfound user acquisition strategy. In August, the startup acquired POPxo, a startup that has built a community around content, influencers and commerce and serves over 60 million monthly active users.

“The content to the commerce engine has become our biggest moat,” he said. “We are acquiring 250,000 new users each month without spending any real money.”

POPxo, which is run by Priyanka Gill, engages with nearly 300,000 users each month, gathering their feedback and ideas for new products. Gill said in a video call that “in this line of business, CAC (cost of customer acquisition) is the game and POPxo has solved this problem,” she said, adding that POPxo, which is run like a fairly independent business, is on track to reach over 100 million users by March next year.

The startup also has 15,000 point-of-sale touch points in the physical world across India. The physical presence, which accounts for 40% of the revenue it generates today, “has been crucial to scale in the country,” Sanghvi said.

“We believe that the time is ripe for building out digital-first CPG brands with a deep focus on content-to-commerce,” said Anand Daniel, partner at Accel, in a statement.

“COVID has only cemented this belief. The unique combination of content coupled with a compelling product line gave us the conviction to lead this round in MyGlamm. We are excited to partner with Darpan, Priyanka and the MyGlamm team and look forward to building out the next-generation CPG giant,” he said.

The startup plans to deploy the fresh funds to expand its product development, data science and technology research teams. It is also working to expand its offline presence and broadening the digital reach of POPxo.

The new investment comes at a time when Indian startups are raising record capital and a handful of mature firms are beginning to explore the public markets. Last week, Tribe Capital’s investment crowned BlackBuck as India’s 16th unicorn this year, compared to 11 last year and six in 2019. Food delivery startup Zomato made a stellar stock market debut last week and financial services firms MobiKwik and Paytm have also filed for their IPOs. Insurance aggregator service PolicyBazaar and online beauty e-commerce firm Nykaa are also expected to file their paperwork for an IPO in the coming weeks.


Source: Tech Crunch

Data-driven iteration helped China’s Genki Forest become a $6B beverage giant in 5 years

China’s e-commerce and industrial ecosystem is as different from the Western world as its culture. The country took decades to earn its reputation as the Factory of the World, but it now boasts a supply chain and manufacturing ability that few countries can match.

Creative use of the country’s networked manufacturing and logistics hubs make mass production both cheap and easy. Clothing, electronics, toys, automobiles, musical instruments, furniture — you name it and you’ll find a manufacturer in China who can turn your intangible concept into mass-manufacturable reality in mere days. And they’ll do it for cheaper than anywhere else in the world.

It was just a matter of time until an intrepid Chinese entrepreneur with a tech background decided to take on Coca-Cola and PepsiCo.

China is also home to one of the world’s largest e-commerce and tech ecosystems. Hundreds of startups dot the landscape, and the amount of money being raised and spent on innovating around the country’s industrial heft is mind-boggling.

So it was just a matter of time until an intrepid Chinese entrepreneur with a tech background decided to take on Coca-Cola and PepsiCo. The tech revolution hasn’t yet affected the bottled beverage industry quite as much as it has others. Incumbent giants therefore could lose a sizable chunk of market share if a company could just manage to weave together China’s manufacturing proficiency and agility with the modern tech startup philosophy of “moving fast and breaking stuff.”

Genki Forest, a Chinese direct-to-consumer (D2C) bottled beverage startup, is one such contender. A philosophy centered around iteration informed by data, quick turnarounds and a laser focus on taking advantage of China’s huge e-commerce ecosystem has helped this company’s revenues rise rapidly since it started five years ago. Its sugar-free sodas, milk teas and energy drinks sell in 40 countries and generated revenue of about $450 million in 2020. The company aims to reach $1.2 billion this year.

If anything, Genki Forest’s valuation has shot up even faster. It recently completed its fourth VC round that values it at a whopping $6 billion, triple the price it fetched a year earlier, and it has so far raised at least half a billion dollars.

It’s striking how closely Genki Forest’s operations resemble that of a tech startup. So we thought we should take a closer look and see what this company’s graph can tell us about the new wave of Chinese D2C entrepreneurship looking to take over the globe.

Finding a bigger wave to ride

The bottled beverage industry wasn’t what Genki Forest’s founder, Binsen Tang, initially set out to tackle. His first startup was a successful casual, mostly mobile gaming outfit known as ELEX Technology. It was nowhere near record-breaking, though — some 50 million users logged on to a few popular games in over 40 countries worldwide, including one of the first versions of Happy Farm, a predecessor to Zynga’s Farmville. But Tang wasn’t satisfied and eventually sold ELEX Technology to a publicly listed company for about $400 million in 2014.

Tang would walk away with a few important lessons. He’d learned by now that Chinese products were already competitive globally, whether people realized it or not, and that and geographic arbitrage was real, Happy Farm being the perfect example of this. Lastly, he now knew that it was far more important to choose the right “racetrack” (as Chinese investors and entrepreneurs like to put it) than to have a great product.

Picking the right race to win was perhaps the most important takeaway. It’s also an idea that sets Chinese entrepreneurs apart from their Western counterparts — the most worthwhile endeavors are in identifying the largest and most rewarding market at hand, regardless of one’s previous expertise. It was what led Zhang Yiming to create ByteDance, and Lei Jun to found Xiaomi.

That very philosophy led Tang to build Genki Forest. After selling ELEX Technology, Tang didn’t go back to the business that netted him his first pot of gold. As much as he had benefited from the rise of the mobile internet, he thought there was a far bigger opportunity building a consumer brand and applying the lessons he learned from programming to the manufacture of tangible products.

He soon set up his own investment fund, Challenjers Capital, convinced that the next big tech opportunity in China was in tech’s application to everyday consumer products. He soon began to invest in everything from ramen and hotpots to bottled beverages.

China’s quickly expanding e-commerce ecosystem and the plethora of D2C businesses flourishing on Alibaba and JD.com would also influence his decision to sell directly to his target audience rather than take the traditional route. But to truly understand his motivations, we need to take a look at the extremely unique D2C environment in China and how it has changed over the years.

What’s different about Chinese D2C?

“China doesn’t need any more good platforms,” Tang told his team in an internal email in 2015, “but it does need good products.” Tang was talking about how the age of building infrastructure for e-commerce in China was largely over; it was now time to create brands that could take advantage of the advanced distribution network that had been laid out.

Other investors noticed as well. Albus Yu, principal at China Growth Capital, told me that his fund had stopped making investments in independent consumer-facing platforms or marketplaces for a while. “2014 might have been the last year it was economically feasible to start such a business due to the soaring cost of acquiring customers and the strength of incumbents,” he said.

Indeed, 2015 was the year when CACs began to exceed or at least rival ARPUs for Alibaba and JD.com.

In China, that distribution network was present across the digital and physical worlds. Online, there was immense market power concentrated in the hands of just two players: Alibaba and JD.com, which used to have, and still maintain, 80% or above in market share.

In fact, the dominance of Alibaba, in particular, was so overwhelming that for years, VCs invested not in D2C, but in “Taobao brands,” since that was the only channel one needed to conquer in order to make it.

Customer acquisition was therefore straightforward — throw everything into advertising on Alibaba’s Tmall platform, especially during its annual flagship shopping festival, Singles’ Day. Even today, garnering a top spot in one of the category leaderboards remains a surefire way to build brand awareness, investor interest, as well as sales records.

Physically, the Chinese market also differs greatly from much of the developed West. Years of heavy investment in logistics by the private sector, accelerated by government support and infrastructure buildout, means that delivery costs have come down significantly over the years, even dipping below $0.40 per package wholesale as of this year. Innovations such as return insurance have also sped up customer adoption.

By 2016, China was shipping 30 billion packages a year, already accounting for 44% of global shipments. That number has been doubling every three years and is expected to exceed 100 billion this year. And the low cost of delivery is one of the biggest reasons for China’s outsized e-commerce market — the largest globally and estimated to reach $2.8 trillion in 2021, more than triple that of the No. 2, the U.S.

Express parcels sit stacked at a logistic base of e-commerce giant Suning before the 618 Shopping Festival

Express parcels sit stacked at a logistic base of e-commerce giant Suning before the 618 Shopping Festival. Image Credits: VCG

Present-day China also presents another edge: Proximity to an advanced, flexible manufacturing network and supply chain for the vast majority of consumer products, and the ability to outsource almost everything to them.

The original equipment manufacturers of years past have long since evolved into original design manufacturers. An expected consequence of being “the Factory of the World” for so many years, making goods for some of the best brands in the world, is that some of the knowledge was bound to transfer.

It may be difficult for outsiders to understand just how strong China’s networked manufacturing hubs are these days. What used to take weeks now takes mere days, the lead times shortened drastically by software, robots and other advancements. For example, Chinese cross-border ultra-fast-fashion company Shein has compressed design-to-ship timelines to as little as seven days.

And it’s definitely not just for making crop tops. The turnaround can be astonishingly fast even when manufacturing completely unfamiliar goods, such as when electric vehicle maker BYD turned its factory into the world’s largest face mask plant in just two weeks when the COVID-19 pandemic struck last year.

Companies leverage this manufacturing flexibility and agility for more than just speed. Chinese cosmetics upstart Perfect Diary uses it to launch twice as many SKUs as foreign competitors. In addition, the quick turnaround allows agile brands to take advantage of that most ephemeral of IP, memes.

It’s not to say that the Chinese supply chain is inaccessible to foreign entrepreneurs. Best-selling mattress maker Zinus, for example, is founded by a South Korean, but its products are manufactured in China and sold mostly on Amazon to U.S. customers.

It’s just that very few non-Chinese companies have figured out how to tap as deeply into the supply chain as this new crop of Chinese D2C brands, which can require years of working not just alongside but physically inside the factories, building trust and know-how. Shein, for example, watches carefully what other brands are making by staying close to the factories.

The China opportunity

Before global sensations such as TikTok weakened the mantra, “copy to China” used to be a dominant characterization of Chinese startups. In December 2015, when Tang registered the Genki Forest trademark, that was still very much a relevant strategy.


Source: Tech Crunch

The DL on CockroachDB

As college students at Berkeley, Spencer Kimball and Peter Mattis created a successful open-source graphics program, GIMP, which got the attention of Google. The duo ultimately joined Google, and even personally got kudos from Sergey Brin and Larry Page. Kimball and Mattis quickly rose to prominence within the company, and then chose to leave it all behind to start what would eventually become CockroachDB. Years later, Cockroach Labs has over 250 employees and has received investments from the likes of Benchmark, GV, Index Ventures and Redpoint totaling more than $350 million, according to Crunchbase. The company is now on route to what some think is an “inevitable IPO.”

The story of CockroachDB, from its origin to its future, was told in a four-part series in our latest EC-1: 

I’m biased, but it’s a must-read that gets into tensions that any startup founder can relate to: from navigating heavyweight competitors, to growing past free tiers, to maintaining your users’ attention. It’s the eighth EC-1 we’ve published to date, which my colleague and TC Managing Editor Danny Crichton estimates puts us at 90,000 words all about startup beginnings, product development, marketing and more.

In the rest of this newsletter, we’ll get into that WeWork book, bite-sized entrepreneurship and some SPACs. Follow me on Twitter @nmasc_. Or don’t, it’s your choice!

The Cult of We

Adam Neumann (WeWork) at TechCrunch Disrupt NY 2017. Image Credits: TechCrunch

This week on Equity, Alex and I interviewed Eliot Brown, who wrote “The Cult of We” along with Maureen Farrell. Our conversation riffed on some of the book’s eyebrow-raising details and anecdotes, but mainly focused on what WeWork’s rise and fall did to the state of startups and tech journalism more broadly.

Here’s what to know: Not much has changed. Jokes aside, Brown shared his notes on how the current boom in startup financings has a worrisome air of frenzy and fluff. He also chatted about how sometimes the most illuminating question can be a simple one: What makes you a tech company?

More money, more problems?

TikTok what again?

tiktok glitch

Image Credits: TechCrunch

TikTok kept popping up throughout the week. Index Ventures, for example, noted how the firm’s TikTok account has amassed an impressive following and is a channel to talk to the younger generations. Nothing like some short-form videos to stay hip and relatable while raising $3 billion in one go. 

Here’s what to know: While TikTok has certainly changed the world, I worry when I see the allure of bite-sized content get edtech’d. Bite-sized content can be a nifty way to spread content, but it isn’t one-size-fits-all. Duolingo, which priced its IPO this week, still struggles to show meaningful learning outcomes and optimizes more for motivation than comprehension. This tension is a key note for companies like Numerade and Sololearn, which both raised this week, to not overly TikTok learning materials.

Other edtech content for your eyes:

So, SPACs

hands signing check 1

Image Credits: Bryce Durbin / TechCrunch

It’s been awhile since I’ve used that acronym in Startups Weekly. That said, special purpose acquisition vehicles are still very much a thing and are still very much worth paying attention to.

Here’s what to know: Lucid Motors’ SPAC merger was just approved. Reporter Aria Alamalhodaei  writes that the move came after executives extended the deadline to vote to merge by one day after not enough investors showed up. “The issue is unusual but could become more common as more companies eschew the traditional IPO path to public markets and instead merge with SPACs,” she writes.

Also special:

Around TC

If you haven’t already, please fill out TC’s ongoing growth marketing survey. We’re using these recommendations of top-tier growth marketers around the world to shape our editorial coverage and to build out TechCrunch Experts.

Across the week

Seen on TechCrunch

Seen on Extra Crunch

Same time, same place next week? Bring a friend!

N


Source: Tech Crunch

Should we be worried about insurtech valuations?

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by what the weekday Exchange column digs into, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here.

Hello everyone, I hope you had a lovely week. I turned 32 after experiencing sleep-destroying heartburn. So, a little good and a little bad. But that didn’t stop the markets. Nope. Not a bit. Which means we have a lot to talk about, including falling insurtech stocks and what the situation might mean for startups, and a raft of IPOs. This will be fun!

Before we get into the nitty-gritty of our chats with newly public companies Kaltura, Couchbase and Enovix, let’s talk insurtech.

In the last year or so we’ve seen a number of insurtech startups go public, including Root (auto insurance), Metromile (car insurance), and Lemonade (rental insurance). Here’s a quick digest of how their performance looks today:

  • Root: $7.72 per share, 71.4% down from its $27 per share IPO price.
  • Metromile: $7.26 per share, down 64.4% from its post-combination highs.
  • Lemonade: $86.97 per share, up 199.9% from its IPO price of $29 per share.

Recall that Root and Metromile began to trade after Lemonade, so their declines are not over a longer time horizon, but a shorter interval. Which makes the situation all the more interesting.

What’s going on? Well, two of the three insurtech public offerings (SPACs, IPOs, etc.) are sharply underwater. That doesn’t bode incredibly well for Hippo, which is pursuing its own SPAC-led combination that should be wrapping up in short order. The huge declines don’t seem bullish for insurtech startups, who will have to answer private-market investor doubts concerning their value.

Does Lemonade’s strong post-IPO performance allay concerns? It’s tricky. The company has been busy expanding into new markets, including auto insurance. The company did take a somewhat material hit from the Texas freeze earlier this year — per its most recent earnings report — but past those two data points it’s not entirely clear what the company is doing that the other two are not. But investors are stoked about Lemonade, and not Root and Metromile. Figuring out why that’s the case, and why their startup is more Lemonade than the other two, is going to be key for the many insurtech startups still scaling toward their own IPOs.

It’s IPO season

The Exchange has been busy on the phones these last two weeks, talking to CEOs of companies going public to try and learn from their recent experiences. So, what follows are notes from calls with folks at Kaltura, Couchbase and Enovix. Enjoy!

Kaltura

  • Reminder: Online-video-focused Kaltura filed to go public earlier this year before delaying its IPO and taking another run at the funding event.
  • The Exchange spoke with Kaltura CEO Ron Yekutiel, who said that the company’s IPO’s timing was impacted by the early-2021 public market turmoil. That was not a surprise, but it was good to get confirmation regardless.
  • That freeze was partially caused by the Archegos implosion, per Yekutiel. That makes sense, but was news to us.
  • Yekutiel said that his company wasn’t thrilled about the delay — going public is the only fundraise that you pre-announce, he noted — but added that investors his company had already spoken to the first-time around were still enthused about Kaltura on its second run at an IPO.
  • Per the CEO, Kaltura’s preliminary Q2 results showed investors that what it was talking about earlier in the year was coming true. He also stressed uptake in new products as key to the company’s continued growth.
  • The CEO was happy with how his company priced and traded during its first day, snagging a flat 20% uptick in value upon trading. He noted that more would have been excessive, and less would have been un-good.
  • Regarding the lower valuation that Kaltura priced at compared to its March-era IPO price range, Yekutiel said that you don’t get a third chance to make a first impression and that his company wanted to get the offering done. So they did. Points for not getting lost in their own head.
  • Kaltura is up 17.5% from its $10 per-share IPO price as of the time of writing.

One anecdote, if I may. Kaltura won an early TechCrunch40 — the precursor to the TechCrunch50 event, itself a predecessor to today’s TechCrunch Disrupt conference series — thanks to a single vote cast via physical token. Yekutiel still has that token, and showed it to us during our chat. Neat!

Couchbase

  • The Exchange spoke with noSQL database company Couchbase’s CEO Matt Cain. Couchbase priced at $24 per share, above its $20 to $23 per-share IPO price range.
  • Today it’s worth $33.20, rising 9.2% in today’s trading as of the time of writing.
  • Cain was talking from a pretty strict script — a pretty standard situation amongst newly public CEOs worried about fucking up and going to jail — so we didn’t get the precise answers we were looking for. But we still managed to learn a few things, including that Couchbase was yet another company that found the meeting density made possible by remote roadshows to be accretive.
  • The CEO was focused on discussing the scale of the opportunity ahead of Couchbase, namely the world of operational databases. It’s hard to find a bigger market, he argued, which made investors excited about what his company might be able to accomplish. Our read here is that there’s probably plenty of surface area for startups in the database world, if the market is as big as Cain reckons it is.
  • We wanted to learn a bit more about how public-market investors view open-source powered companies, but didn’t get too much from him on the matter. Still, the company’s IPO is a pretty damn strong one, implying that being OSS-built isn’t exactly a detriment to a company hoping to exit.

Enovix

  • The Exchange wanted to chat with newly public company Enovix because it debuted via a SPAC. Why does that matter? Because there are other battery-focused companies looking to go public via SPACs. So, the chat was good background for later work.
  • And we love talking to public companies. Who doesn’t?
  • Asked if combination-and-trade-under-new-ticker-symbol day was like an IPO to his firm, Rust said that it was. Fair enough.
  • The company’s combination date for its SPAC slipped from Q2 to Q3, we noticed. Why was that? Some SEC changes regarding accounting, in short. Not a big deal was our impression from the chat, but one that did cause a slight delay to Enovix’s trading date.
  • Why go public via a SPAC? Cash, but also the particular sponsor of their combination, which Rust said was a key resource in terms of operational knowledge. The company has also hired from its SPAC sponsor’s network, which felt notable. (Hey look, actual investor value-add!)
  • Asked why his company is worth less than the impending SES SPAC, another battery company that has yet to generate revenue, Rust said that the value of his company in its SPAC deal was a negotiation, and that if the company is successful, whether it was valued at $1.1 billion or $1.4 billion wouldn’t really matter.
  • What’s fun about Enovix is that it is not starting with its impending battery tech aimed at EVs. Instead, it’s targeting high-end electronics. Why? Quick cycles to get batteries into hardware and possible pricing power. It does intend to get into EVs in time, however.
  • The company is worth $17.33 per share, giving it what Yahoo Finance describes as a $2.5 billion valuation. That’s a good markup from what it expected and could bode well for SES’s own, future debut.

Yo, that was a lot. Thanks for sticking with me. And thanks for reading The Exchange’s little newsletter. You can catch up on all our work here if you want some long-form reads on the global venture capital market, edtech and other topics. Stay cool!

Your friend,

Alex


Source: Tech Crunch

China Roundup: Kai-Fu Lee’s first Europe bet, WeRide buys a truck startup

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

Despite the geopolitical headwinds for foreign tech firms to enter China, many companies, especially those that find a dependable partner, are still forging ahead. For this week’s roundup, I’m including a conversation I had with Prophesee, a French vision technology startup, which recently got funding from Kai-Fu Lee and Xiaomi, along with the usual news digest.

Spotting opportunities in China

Like many companies working on futuristic, cutting-edge tech in Europe, Prophesee was a spinout from university research labs. Previously, I covered two such companies from Sweden: Imint, which improves smartphone video production through deep learning, and Dirac, an expert in sound optimization.

The three companies have two things in common: They are all in niche fields, and they have all found eager customers in China.

For Prophesee, they are production lines, automakers and smartphone companies in China looking for breakthroughs in perception technology, which will in turn improve how their robots respond to the environment. So it’s unsurprising that Xiaomi and Chinese chip-focused investment firm Inno-Chip backed Prophesee in its latest funding round, which was led by Sinovation Venture.

The funding size was undisclosed but TechCrunch learned it was in the range of “tens of million USD.” It was also the first investment that Kai-Fu Lee has made through Sinovation in Europe. As Prophesee CEO Luca Verre recalled:

I met Dr. Kai-Fu Lee three years ago during the World Economic Forum … and when I pitched to him about Prophesee, he got very intrigued. And then over the past three years, actually, we kept in touch and last year, given the growing traction we were having in China, particularly in the mobile and IoT industry, he decided to jump in. He said okay, it is now the right timing Prophesee becomes big.

The Paris-based company wasn’t actively seeking funding, but it believed having Chinese strategic investors could help it gain greater access to the complex market.

Rather than sending information collected by sensors and cameras to computing platforms, Prophesee fits that process inside a chip (fabricated by Sony) that mimics the human eyes, a technology that is built upon neuromorphic engineering.

The old method snaps a collection of fixed images so when information grows in volume, a tremendous amount of computing power is needed. In contrast, Prophesee’s sensors, which it describes as “event-based,” only pick up changes in the environment just as the photoreceptors in our eyes and can process information continuously and quickly.

Europe has been pioneering neuromorphic computing, but in recent years, Verre saw a surge in research coming from Chinese universities and tech firms, which reaffirmed his confidence in the market’s appetite.

We see Chinese OEMs (original equipment manufacturers), particularly Xiaomi, Oppo and Vivo pushing the standard of quality of image quality to very, very high … They are very eager to adopt new technology to further differentiate in a way which is faster and more aggressive than Apple. Apple is a company with an attitude which to me looks more similar to Huawei. So maybe for some technology, it takes more time to see the technology mature and adopt, which is right very often but later. So I’m sure that Apple will come at certain point with some products integrating event-based technology. In fact, we see them moving. We see them filing patents in the space. I’m sure that will come, but maybe not the first.

Though China is striving for technological independence, Verre believed Prophesee’s addressable market is large enough — $20 billion by his estimate. Nonetheless, he admitted he’d be “naive to believe Prophesee will be the only one to capture” this opportunity.

WeRide bought a truck company

One of China’s most valuable robotaxi startups has just acquired an autonomous trucking company called MoonX. The size of the deal is undisclosed, but we know that MoonX raised “tens of millions RMB” 15 months ago in a Series A round.

While WeRide is focused on Level 4 self-driving technology, it is also finding new monetization avenues before its robotaxis can chauffeur people at scale. It’s done so by developing minibusses, and the MoonX acqui-hire, which brings the company’s founder and over 50 engineers to WeRide, will likely help diversify its revenue pool.

WeRide and MoonX have deep-rooted relationships. Their respective founders, Tony Han and Yang Qingxiong, worked side by side at Jingchi, which was later rebranded to WeRide. Han co-founded Jingchi and took the helm as CEO in March 2018 while Yang was assigned vice president of engineering. But Yang soon quit and started MoonX.

Han, a Baidu veteran, gave Yang a warm homecoming and put him in charge of the firm’s research institute and its new office in Shenzhen, home to MoonX. WeRide’s sprawling headquarters is just about an hour’s drive away in the adjacent city of Guangzhou.

AI surveillance giant Cloudwalk nears IPO

Cloudwalk belongs to a cohort of Chinese unicorns that flourished through the second half of the 2010s by selling computer vision technology to government agencies across China. Together, Cloudwalk and its rivals SenseTime, Megvii and Yitu were dubbed the “four AI dragons” for their fast ascending valuations and handsome funding rounds.

Of course, the term “AI dragon” is now a misnomer as AI application becomes so pervasive across industries. Investors soon realized these upstarts need to diversify revenue streams beyond smart city contracts, and they’ve been waiting anxiously for exits. Finally, here comes Cloudwalk, which will likely be the first in its cohort to go public.

Cloudwalk’s application to raise 3.75 billion yuan ($580 million) from an IPO on the Shanghai STAR board was approved this week, though it can still be months before it starts trading. The firm’s financials don’t look particularly rosy for investors, with net loss amounting to 720 million yuan in 2020.

Also in the news

  • Speaking of the torrent of news in autonomous driving, vehicle vision provider CalmCar said this week that it has raised $150 million in a Series C round. Founded by several overseas Chinese returnees in 2016, CalmCar uses deep learning to develop ADAS (Advanced Driver Assistance System) used in automotive, industrial and surveillance scenarios. German auto parts maker ZF led the round.
  • Baby clothes direct-to-consumer brand PatPat said it has raised $510 million from Series C and D rounds. The D2C ecosystem leveraging China’s robust supply chains is increasingly gaining interest from venture capitalists. Brands like Shein, PatPat, Cider and Outer have all secured fundings from established VCs. Founded by three Carnegie Mellon grads, PatPat counts IDG Capital, General Atlantic, DST Global, GGV Capital, SIG China and Sequoia China among its investors.


Source: Tech Crunch

Sequoia’s Mike Vernal outlines how to design feedback loops in the search for product-market fit

Sequoia’s Mike Vernal has worn many hats. He was VP of product and engineering at Facebook for eight years before getting into investment. His portfolio includes Houseparty, Threads, Canvas, Citizen, PicsArt and more, and he continues to invest in companies across a broad spectrum of stages and verticals, including consumer, enterprise, marketplaces, fintech and more.

Vernal joined us at TechCrunch Early Stage: Marketing and Fundraising earlier this month to discuss how founders should think about product-market fit, with a specific focus on tempo. He covered how to organize around the pace of iteration, how to design with customer feedback loops in mind and how Sequoia evaluates companies with regard to tempo.

Be explicit and be greedy at every single step along the way about getting feedback.

What is tempo?

Vernal breaks down tempo into two separate ingredients: speed and consistency.

It’s not just about going fast (which can often lead to some recklessness). It’s about setting a pace and staying consistent with that pace.

One of the very best compliments an angel can bestow on a founding team and include in an introduction to us is, “They’re just really fast,” or “She’s a machine.” What does that mean? It doesn’t mean fast in the kind of uncontrolled, reckless, crashing sense. It means fast in a sort of consistent, maniacal, get-a-little-bit-better-each-day kind of way. And it’s actually one of the top things that we look for, at least when evaluating a team: how consistently fast they move. (Timestamp: 2:26)

Vernal went on to say that tempo is directly correlated to goals and objectives and key results (OKRs). Building a feedback loop into those OKRs and determining the tempo with which to attack them is critical, especially during the process of finding product-market fit.

Finding product-market fit is not a deterministic process. Most of the time, it requires iteration. It requires constant adaptation. My mental model is that it’s actually just a turn-based game with an unknown number of steps, and sometimes either the clock or the money or both run out before you get to finish the game. It’s kind of like a game of chess. So what is your optimal strategy? (Timestamp: 4:25)

Feedback is your friend

As Vernal explained, finding product-market fit is all about feedback, and that must be an ongoing, built-in part of the process. He outlined how founders can go about designing with that in mind.


Source: Tech Crunch