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Main article: Venture Capital

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Gaming-focused investment firm Bitkraft closes in on at least $140 million for its second fund

04:14 | 21 February

Esports, video games and the innovations that enable them now occupy a central space in the cultural and commercial fabric of the tech world.

For the investment firm Bitkraft Esports Ventures, the surge in interest means a vast opportunity to invest in the businesses that continue to reshape entertainment and develop technologies which have implications far beyond consoles and controllers.

Increasingly, investors are willing to come along for the ride. The firm, which launched its first fund in 2017 with a $40 million target, is close to wrapping up fundraising on a roughly $140 million new investment vehicle, according to a person with knowledge of the firm’s plans.

Through a spokesperson, Bitkraft confirmed that over the course of 2019 it had invested $50 million into 25 investments across esports and digital entertainment, 21 of which were led by the firm.

The new, much larger, fund for Bitkraft is coming as the firm’s thesis begins to encompass technologies and services that extend far beyond gaming and esports — although they’re coming from a similar place.

Along with its new pool of capital, the firm has also picked up a new partner in Moritz Baier-Lentz, a former Vice President in the investment banking division of Goldman Sachs and the number one ranked esports player of Blizzard’s Diablo II PC game in 2003.

While at Goldman, Baier-Lentz worked on the $67 billion Dell acquisition of EMC and the $34 billion acquisition of RedHat by IBM.

The numbers in venture capital — and especially in gaming — aren’t quite at that scale, but there are increasingly big bets being made in and around the games industry as investors recognize its potential. There were roughly $2 billion worth of investments made into the esports industry in 2019, less than half of the whopping $4.5 billion which was invested the prior year, according to the Esports Observer.

As Ethan Kurzweil of Bessemer Venture Partners told TechCrunch last year:

“Gaming is now one of the largest forms of entertainment in the United States, with more than $100B+ spent yearly, surpassing other major mediums like television. Gaming is a new form of social network where you can spend time just hanging with friends/family even outside of the constructs of ‘winning the game.’”

Over $100 billion is nothing to sneer at in a growing category — especially as the definition of what qualifies as an esports investment expands to include ancillary industries and a broader thesis.

For Bitkraft, that means investments which are “born in Internet and gaming, but they have applications beyond that,” says Baier-Lentz. “What we really see on the broader level and what we think bout as a team is this emergence of synthetic reality. [That’s] where we see the future and the growth and the return for our investors.”

Bitkraft’s newest partner, Moritz Baier-Lentz

Baier-Lentz calls this synthetic reality an almost seamless merger of the physical and digital world. It encompasses technologies enabling virtual reality and augmented reality and the games and immersive or interactive stories that will be built around them. 

“Moritz shares our culture, our passion, and our ambition—and comes with massive investment experience from one of the world’s finest investment firms,” said Jens Hilgers, the founding general partner of BITKRAFT Esports Ventures, in a statement. “Furthermore, he is a true core gamer with a strong competitive nature, making him the perfect fit in our diverse global BITKRAFT team. With his presence in New York, we also expand our geographical coverage in one of today’s most exciting and upcoming cities for gaming and esports.”

It helps that, while at Goldman, Baier-Lentz helped develop the firm’s global esports and gaming practice. Every other day he was fielding calls around how to invest in the esports phenomenon from private clients and big corporations, he said.

Interestingly for an esports-focused investment firm, the one area where Bitkraft won’t invest is in Esports teams. instead the focus is on everything that can enable gaming. “We take a broader approach and we make investments in things that thrive on the backbone of a healthy esports industry,” said Baier-Lentz.

In addition to a slew of investments made into various game development studios, the company has also backed Spatial, which creates interactive audio environments; Network Next, a developer of private optimized high speed networks for gaming; and Lofelt, a haptic technology developers.

“Games are the driver of technological innovation and games have prepared us for human machine interaction,” says Baier-Lentz. “We see games and gaming content as the driver of a broader wave of synthetic reality. That would span gaming, sports, and interactive media. [But] we don’t only see it as entertainment… There are economic and social benefits here that are opened up once we transcend between the physical and the digital. I almost see it as the evolution of the internet.”

 


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SpaceX’s spin-outs are helping build LA’s startup ecosystem

01:42 | 21 February

During the days when Snapchat’s popularity was booming, investors thought the company would become the anchor for a new Los Angeles technology scene.

Snapchat, they hoped, would spin-off entrepreneurs and angel investors who would reinvest in the local ecosystem and create new companies that would in turn foster more wealth, establishing LA as a hub for tech talent and venture dollars on par with New York and Boston.

In the ensuing years, Los Angeles and its entrepreneurial talent pool has captured more attention from local and national investors, but it’s not Snap that’s been the source for the next generation of local founders. Instead, several former SpaceX employees have launched a raft of new companies, capturing the imagination and dollars of some of the biggest names in venture capital.

“There was a buzz, but it doesn’t quite have the depth of bench of people that investors wanted it to become,” says one longtime VC based in the City of Angels. “It was a company in LA more than it was an LA company.” 

Perhaps the most successful SpaceX offshoot is Relativity Space, founded by Jordan Noone and Tim Ellis. Since Noone, a former SpaceX engineer, and Ellis, a former Blue Origin engineer, founded their company, the business has been (forgive the expression) a rocket ship. Over the past four years, Relativity href="https://techcrunch.com/2019/10/01/relativity-a-new-star-in-the-space-race-raises-160-million-for-its-3-d-printed-rockets/"> has raised $185.7 million, received special dispensations from NASA to test its rockets at a facility in Alabama, will launch vehicles from Cape Canaveral and has signed up an early customer in Momentus, which provides satellite tug services in orbit.

 


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The rise of the winged pink unicorn

21:33 | 20 February

Claire Diaz-Ortiz Contributor
Claire Diaz-Ortiz is an angel investor and bestselling author of nine books that have been published in more than a dozen countries. An early employee at Twitter, she was called “The Woman Who Got the Pope on Twitter” by Wired and holds an MBA and other degrees from Stanford and Oxford.

Like most investors, I am a little too obsessed with unicorns.

But not just the Silicon Valley kind. As the mother of a five-year-old daughter, my interests also veer in a pink, sparkly direction. So it should not be all that surprising that I recently found myself in a dusty corner of the internet where die-hard unicorn fans go to spread their wings.

It was there, deep in the My Little Pony forums, that one question stopped me in my tracks: “is a male alicorn possible in the future?1

An alicorn, for those uninitiated to the mythological particulars, is the rare winged, female version of a traditional unicorn.

My Little Pony popularized the term, and the fan forum on which user “Green Precision” asked his question back in 2015 had some interesting answers to the particulars of this philosophical dilemma.

Shadow Stallion responded immediately, “I don’t think a male Alicorn will be possible in the future. Not because its [sic] not wanted or because its [sic] not genetically possible…but generally when male characters are introduced to a show where female characters are prominent, things get ugly.”

Malinter posited, “they probably do but given the female-to-male ratio of Equestria2 they are probably exceptionally rare. The real problem for a male alicorn is not that they exist but where is their place in the world? …Our male alicorn has some pretty big hoof prints to fill in while at the same time not make a trainwreck of established lore.”

Wind Chaser went straight from unconscious bias to conscious bias in their response: “aesthetically a male alicorn just wouldn’t look right, because their bodies are already naturally larger than females, thus the wings would cause an imbalance to the design.”

But it wasn’t all bad news.

“Until it’s proven otherwise, it’s safe to say that something like a male alicorn is possible,” responded Geek0zoid. Crysahis agreed. “Overall yes, I believe there could be a male alicorn it may just take a while to actually happen!”

It doesn’t take a PhD in philosophy from Stanford or the one lone female investing partner at Sequoia3 to posit that these same conversations were probably happening all over Sandhill Road in December of 2009, as male VCs discussed whether female unicorns could actually happen4.

As we move into 2020, though, we’re about to see a pink, winged stampede.

Just look at the recent trends. In 2019, more female-funded unicorns were born than ever before.5 And things are only looking up. (I’m looking at you, ClassPass!)

Public opinion agrees. Alongside TruePublic, where I am an advisor and angel investor, I ran a study asking if people believed we would see more female-led unicorns in the 2020s.6 At the time of this article, 68% of the 6,500 respondents said they believed we would see more, with 30% of women responding “many more” (as opposed to only 16% of men). Only 4% of women, but 9% of men, responded “no, not a chance.”7

Kaben Clauson, founder and CEO, says “to represent Gen Z, Millennials and Gen X, TruePublic needs a weighted sample of roughly one thousand Americans to represent that population of the USA.” This particular study already has 6,500 respondents, making it statistically significant.

In fact, female-founded and female co-founded companies are actually over-indexing for unicorn status despite a lack of investment dollars.

Shelby Porges, co-founder of The Billion Dollar Fund for Women, explains: “Recent tracking has shown that female-founded companies represent 4% of all unicorns. That’s astonishing considering that in the past couple of years, they have gotten only slightly more than 2% of all venture funding.” Porges, whose group has mobilized more than 80 venture funds to pledge to invest over a billion dollars into women-founded companies, continues, “It demonstrates why we say, ‘when you invest in women, you’re in good company.’ ”

Here are the three reasons I believe a herd of winged female unicorns (OK, alicorns) is coming down the pipeline in the 2020s:

1. Women invest in women at 3x the rate of men

New data reveals that women invest in women at nearly three times the rate that men do and with the (slow) rise in the number of female investing partners at VCV firms, we are poised to see more and more gender-balanced founding teams getting funding.8 Like one male GP at one of the world’s top VC funds said to me when discussing one of the few female partners at his firm, “she always brings us parenting companies.” It might be cringe-worthy if TechCrunch hadn’t declared 2020 “a big year for online childcare” and that same female partner weren’t about to make a big chunk of cash thanks to all the upcoming parenting alicorns she was smartly funding.

Sophia Bendz, a partner at Atomico who also leads the Atomico Angel Program, said, “I’m confident we’ll see more female unicorns in the next decade because there’s a growing wave of ambitious female founders building incredible products and services. There are also more women in VC now and I’ve seen first-hand the impact having female investment partners can have on increasing the amount of investment into female-led companies. The data shows that women invest in women at three times the rate as male investment partners.”

My study at TruePublic coincided with these findings. When asked if a female investor was more likely to invest in a female entrepreneur, 64% of people responded affirmatively (64% of these individuals were women and 63% were men).9

Jomayra Herrera agrees. An investor at Cowboy Ventures (which thanks to Aileen Lee coined the term “unicorn” in the first place), and a volunteer with AllRaise, a nonprofit promoting women in VC, she says: “As the venture industry continues to diversify, especially as it relates to gender and race/ethnicity, I am optimistic that we will see more female-led and people of color-led unicorns over the next decade. We know that diverse teams not only function better, but they are able to see areas of opportunities that more homogenous teams might miss. I think the next generation of investors are more likely to question conventional wisdom, forms of pattern recognition that may lead to bias, and other structural barriers that have historically left out promising entrepreneurs.”

Camila Farani is a well-known investor in Brazil. As founder of G2 Capital, former president of Gavea Angels and a personality on Brazil’s “Shark Tank,” she says “having diverse points of view at the table makes the decision clearer and more certain. People who think differently than you and have other visions of the market, sometimes can show you what you can’t see by yourself.”

She also reminds us not to forget the impact that angel investors can have. “The investments market is still made up mostly of men, but this landscape is changing gradually. It is interesting to see that angel investing is being the most common choice for women who want to make their first investments.”

This trend of investing more in women isn’t just limited to female investors. Susana Robles has spent two decades leading the charge to invest in women in Latin America and alongside Marta Cruz of NXTP Labs is co-founder of WeXchange, a platform that connects women entrepreneurs from Latin America and the Caribbean with mentors and investors.

As Robles says, “I think the world is finally waking up to the fact that there is serious research proving that startups with women co-founders win in all aspects: profitability, as well as greater social and environmental awareness. Investors should want to have this triple win.” She continues, “women tend to return money to investors faster than men, and at the same time, they obtain higher returns. Women are in charge of 64% of all global purchasing decisions on products and services, so having women on C-level positions increases the chance that a startup [will] be highly attractive to a massive market and become a unicorn.”

It also extends to the LPs in the funds. “I also think many investors in funds (mostly DFIs [development finance institutions] but not exclusively) have become more vocal in stating that they don’t want any more to invest in teams led by an all-white, all-male cast who choose startups with all-white, all-male founders.” Jennifer Neundorfer is the co-founder of Jane VC and an investor in Kinside, a parenting app that just raised a $3 million seed round. When describing her fund’s rationale for focusing on female founders, she drops the mic: “we’re going to invest in an under-looked asset class that is overperforming.” Boom.

2. Female founders are creating new billion-dollar markets

Another reason we’ll see more female-founded “alicorns” in the 2020s has everything to do with the new markets that female founders are creating. Hunter Walk of Homebrew was one of the initial seed investors in Winnie, an online marketplace for childcare that recently raised a $9 million Series A. At the time, he saw something that others investors didn’t. Winnie co-founder Sara Mauskopf explains, “Four years ago when we started Winnie, parenting and especially child care were not hot investment areas. This has been changing. It certainly helps that more investors are women and are in the thick of their child-bearing and rearing years.”

Part of what Walk says he recognized was the clear founder-market fit displayed by Mauskopf and her co-founder Annie Halsall. As Mauskopf says, “With Winnie, we saw an opportunity to solve the child-care crisis that other founders either did not recognize or did not care to solve. While everyone else was starting crypto and scooter companies, we were building the first-ever tech platform for $57 billion child care industry. Lack of access to quality child care disproportionately impacts women, so it shouldn’t be surprising that it took a female led team to capitalize on this opportunity.” Expanding on the concept of founder-market fit, Walk says, “I love to come away thinking, these are the absolute right founders to build this business.”10

Bendz, the Atomico partner who specializes in femtech and is also an avid angel investor, agrees. “Often I meet founders that you can tell are at the right place at the right time with the right mindset and the right team. It’s almost like all of the experiences they have had prior to launching a company have been preparing them to create that business at that time. These are the kind of founders who I know are in it for the long haul, and who are going to weather the ups and downs.” As a woman who uses the products and services she invests in, Bendz is also an example of investor-market fit, which I believe will open new markets in the decades to come.

Something else investors like Walk and Bendz believe in? Outsized opportunities. And the potential for outsized opportunities are especially ripe in untapped markets. The rise of femtech is yet another example of how the intuitive success of the concept of founder-market fit ultimately needed more female founders for certain markets to blossom. As Bendz explains, “Throughout a woman’s life there are many big events that have a big impact on our overall health — from childbirth to menopause. I know all women are tired of poor or non-existent solutions for women surrounding those life events, and that’s why we are seeing so many companies launching to better serve women’s needs. When you think about the fact that women have only had the right to vote and educate themselves for 100 years, it’s mind-blowing how long the world was operating with only 50% of the population in control. That’s reflected in the products and services we as a society have funded.”

Women’s consumer products are another area. Ornella Moraes is one of four female co-founders of Brazilian-led Sousmile, which recently raised a $6 million USD Series A led by Kaszek Ventures. “Our brand is a woman,” Moraes says of her dental beauty startup that retails throughout São Paulo. And so are the leaders of the company. At Sousmile, there are four female co-founders and two male co-founders. “More dentists in the world are women than men, so it’s been critical for our team to have more female founders,” she says. In this way, the rise of female founders and co-founders can completely change markets. “We believe this will fundamentally create a different type of product,” says Walk.

3. Emerging markets will take the lead

Finally, certain emerging markets pose a particular opportunity for female founders by over-indexing for both large IPOs and female founders. 2017 was the first year that more of the largest IPOs in the internet sector globally came from emerging markets. Nazar Yasin, founder of Rise Capital, which invests in emerging markets, says “This trend isn’t going away.” After all, most GDP growth comes from emerging markets, where most global internet users live. As he explains, “the future of market capitalization growth in the internet sector globally belongs to emerging markets.” And yet this type of innovation takes resilience. “If you’re a startup in one of these markets, it’s like trying to grow a plant in the desert.”11 In an environment that demands more daily resilience, there is a different appetite for risk and innovation. (I call this resilience innovation.)

Perhaps the easiest example of emerging market innovation fueled by resilience is fintech. Emerging markets and their often unstable economies boast a much higher number of frustratingly unbanked individuals. This brings about innovation. Hanna Schiuma, the Brazilian-born fintech founder of ElasBank, where I am an angel investor and advisor, explains how ubiquitous such fintech innovation is becoming.

“Soon all finance will be tailor-made and fintech will be common ground because all financial services will be technology-intensive.” She also argues that the nature of such an innovation allows the industry to become more innovative, and thus inclusive, which is exactly what is happening with her own women’s bank, launching in 2020. “That means great opportunities to better serve women’s financial needs to offer dedicated products, and to gather female talent to build those products from a diverse and innovative perspective.” Ultimately, “resilience is key for us to build that pool of talent and open the doors for gender balance and financial inclusion.”

Furthermore, data shows Africa and Latin America both beat global averages for percentages of startup female founders. Laura Stebbing is co-CEO of accelerateHER, a global community of leaders addressing the under-representation of women in tech through action. Raised in Southern Africa, Stebbing is passionate about Africa’s rise as a hub of female entrepreneurship.

“Africa has both the highest proportion of women founders at 26% [Latam comes in second]12 and a $42 billion funding gap. There’s clearly no lack of talent across Africa’s 54 countries, so for the investors, corporate executives, policy makers and established founders that aren’t moved by the moral arguments for gender parity, notice the enormous business opportunity. We will start to see a higher volume of resilient, scalable companies emerge as leaders build more diverse networks and ecosystems that support women to unlock their entrepreneurial potential.” Nathan Lustig, founder of Magma Partners, a VC firm in Latin America which invests in female founders above the regional average, explains, “investing in and empowering resilient women entrepreneurs is just good business, and is one of the biggest investment opportunities, especially in emerging markets.”

I believe Latin American can have an edge. I am a Silicon Valley-born investor now living in “Silicon Aires,” where I have been thrilled to see exciting numbers of female founders in Latin America. Susana Robles agrees, and says the reason is in part due to the nature of a committed ecosystem to support one another. “It’s the sheer need that forces you to collaborate.” An ecosystem like Silicon Valley doesn’t have the same need to do so. Of Latin America, Robles says, “In 10 years, we will have created a much more collaborative market than the developed ones.” And that collaboration is leading to great female founders. 2019, in fact, saw more funding going to female co-founders in Latin America than in Europe or the USA.13

This will lead to future alicorns. Ann Williams, COO of Creditas, a Brazilian fintech currently closing in on its own unicorn status, says “the conversion funnel for unicorns works just like any other selection process. We fill the top with a bunch of great women in supporting roles in emerging market startups, these women take their experiences and found rocking new companies. A percentage of these will convert to scaleups raising Series C and D rounds with valuations at $1 billion or higher. And voila! we get women-led unicorns.” She continues, “the odds are with us and I am sure the talent is too!”

Juliane Butty, startup head at Platzi and former regional manager of Seedstars, one of the leading accelerators and investors fostering female entrepreneurship in emerging markets, joins Williams. “We have definitely seen the rise of female founders and investors in emerging markets in the last decade. One supports the other. And we know that success breeds success.”

Perhaps My Little Pony fan Malinter said it best when he suggested how a male version of the alicorn could finally emerge in such a female-dominated space: “The simplest way they could probably add one in would be to make said alicorn the ruler of a neighboring nation.” In the same way, emerging markets may just hold the key for female unicorns.

No matter the region, Robles says “if we keep opening doors to women entrepreneurs who are as ambitious as men in growing their companies, we’ll begin to see many more unicorns with gender diversified teams.” Hanna Schiuma, the Elasbank founder who just might be building the next female-founded unicorn, agrees. “The alicorns are coming. And we’re ready to fly.”


2Equestria is of course where the My Little Ponies and their assorted unicorns, alicorns and friends all live.
3Go Jess Lee!
4Yes, Aileen Lee of Cowboy VC first invented the term in her 2013 TechCrunch piece, but we’re in a unicorn-fueled time machine, people.
8“Do Female Investors Support Female Entrepreneurs? An Empirical Analysis of Angel Investor Behavior,” Seth C. Oranburg, Duquesne University School of Law, Pittsburgh PA, USA and Mark Geiger, Duquesne University School of Business, Pittsburgh PA, USA
12Forthcoming research from TechCrunch/Crunchbase
13Forthcoming research from TechCrunch/Crunchbase

 


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These specialized Africa VC funds are welcoming co-investors

08:15 | 20 February

For global venture capitalists still on the fence about entering Africa, a first move could be co-investing with a proven fund that’s already working in the region.

Africa’s startup scene is performance-light — one major IPO and a handful of exits — but there could be greater returns for investors who get in early. For funds from Silicon Valley to Tokyo, building a portfolio and experience on the continent with those who already have expertise could be the best start.

VC in Africa

Africa has one of the fastest-growing tech sectors in the world, as ranked by startup origination and year-over-year increases in VC spending. There’s been a mass mobilization of capital toward African startups around a basic continent-wide value proposition for tech.

Significant economic growth and reform in the continent’s major commercial hubs of Nigeria, Kenya, Ghana and Ethiopia is driving the formalization of a number of informal sectors, such as logistics, finance, retail and mobility. Demographically, Africa has one of the world’s fastest-growing youth populations, and continues to register the fastest global growth in smartphone adoption and internet penetration.

Africa is becoming a startup continent with thousands of entrepreneurs and ventures who have descended on every problem and opportunity.

 


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Ex-YC partner Daniel Gross rethinks the accelerator

02:01 | 20 February

Amid skyrocketing operating expenses, remote work has become an obsession for Bay Area founders looking to have it both ways, accessing Silicon Valley’s networks of capital and opportunity without paying steep premiums for talent.

Daniel Gross has a deeper understanding than most of Silicon Valley’s opportunities. The Jerusalem native was one of Y Combinator’s early successes, joining with an AI startup that, at 23, he sold to Apple (we reported the deal was between $40-60 million). Gross served as a director of machine learning at Apple before returning to YC — this time as a partner.

At age 28, his role at YC behind him, Gross is now working to revamp the startup accelerator model for a remote future with his startup Pioneer. He’s received backing from Marc Andreessen and Stripe to build a program he hopes can give founders access to funding streams and talent networks that are nearly impossible to find outside Silicon Valley.

“In the way software is eating the world, remote is almost eating earth in the sense that it may very well be the way large companies are created, but also perhaps the way that venture funding takes place,” Gross told TechCrunch in an interview. “With Pioneer, the product experiment we’re running is an attempt to build a San Francisco or Mountain View — to build a city on the internet.”

GettyImages 604311102

Marc Andreessen, one of Pioneer’s early investors.

That lofty goal has required quite a bit of tinkering on Gross’s part over the past 18 months since he launched the startup. During that time, he’s shifted the program’s structure from a Reddit-like online contest to win cash grants to what he calls a “fully remote startup generator” that can help remote founders create companies that later apply to Y Combinator or raise money from Pioneer.

“People were really taking advantage of Pioneer as kind of an online accelerator almost organically,” Gross says. “We decided to kind of operationalize that inside and focus more on funding people that are working on things that will turn into companies and potentially offer them more funding.”

Pioneer has already backed more than 100 founders, who have created solutions like remote team product There, desktop app generator ToDesktop and software search engine Metacode.

Pioneer is hoping their efforts can provide opportunities to founders in underserved geographies and regions, but like other investors in Silicon Valley, the startup hasn’t been backing nearly as many female founders as their male counterparts. From funded entrepreneurs publicly announced on Pioneer’s blog, less than 15 percent are women.

“Pioneer is an engine for finding, funding and mentoring underrated people, many of whom I suspect are female. Our minds are constantly spinning on ways to raise awareness amongst female founders and we’re working with our community to improve female representation,” Gross wrote in an email response. “The world could stand to have many more founders like Mathilde Collin (of Front) and Laura Behrens Wu (of Shippo), and we are eager to find them.”

One of Pioneer’s livestream discussions during its remote program.

Pioneer’s existence is partially the result of an advent of remote work and communication tools, but another real enabler is the competitive market for early stage investing. Mega VC funds are competing over pre-seed deals for the buzziest startups and Y Combinator’s batch sizes are ballooning, leaving little room for accelerators with similar pitches. As the world of early stage startup investing gets more crowded, investors are having to get creative. For Gross and his investors, Pioneer also represents an opportunity to scout deal flow earlier in the pipeline.

Gross has a weighty portfolio of his own angel investments including GitHub, Figma, Uber, Gusto, Notion, Opendoor, Cruise Automation and Coinbase.

An earlier structure gave Pioneer the right to invest up to $100K in startups emerging from the program if they went onto raise, but just 30% of grant awardees went on to found companies, Gross tells me. In its 2.0 form, Pioneer wants participants to give up 1% of their company to join the one-month remote program. The accelerator won’t give them cash but will help founders incorporate their startups, give them guidance via a network of experts, and toss some other substantial perks like $100K worth of cloud credits and a roundtrip ticket to San Francisco to inject a bit of face-to-face time into the process.

The biggest evolution is the more formalized investment structure for founders exiting the program. If Pioneer is excited about the progress of a particular startup, they may give it the option to raise directly from Pioneer upon completion, sticking it in one of three investment buckets and investing between $20K and $1 million.

Gross acknowledges that Pioneer will largely be making bets closer to the $20K mark as the accelerator scales its portfolio. Pioneer is relying an undisclosed amount of early funding from Gross, Andreessen and Stripe for both its investments and operating expenses. Gross says that the company has additional funding sources lined up to facilitate some of these larger investments, but that he’s reticent to raise too much too early. “This being my second rodeo, I’m well aware of the downsides of over-capitalizing and so I think we’re going to remain nimble and frugal,” Gross says.

Gross isn’t looking to replace Y Combinator, and realizes that for founders with plenty of options, Pioneer’s investments might not be the most enticing. Y Combinator invest $150K in startups for a 7% slice of equity, by comparison, a $20K investment from Pioneer will cost founders 5% of their company plus the 1% they gave up to join the accelerator in the first place. Nevertheless, Gross hopes that plenty of founders sitting on great ideas will want to take advantage of this deal.

“I think there are a lot of great companies that instead of being listed on the S&P 500 are stuck at the phase where they’re just a Python script.”

 


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VCs to antitrust officials: We’d rather take our chances than see tech regulated

00:00 | 20 February

Last week at Stanford, antitrust officials from the U.S. Department of Justice organized a day-long conference that engaged numerous venture capitalists in conversations about big tech. The DOJ wanted to hear from VCs about whether they believe there’s still an opportunity for startups to flourish alongside the likes of Facebook and Google and whether they can anticipate what — if anything — might disrupt the inexorable growth of these giants.

Most of the invited panelists acknowledged there is a problem, but they also said fairly uniformly that they doubted if more regulation was the solution.

Some of the speakers dismissed outright the idea that today’s tech incumbents can’t be outmaneuvered. Sequoia’s Michael Moritz talked about various companies that ruled the world across different decades and later receded into the background, suggesting that we merely need to wait and see which startups will eventually displace today’s giants.

He added that if there’s a real threat lurking anywhere, it isn’t in an overly powerful Google, but rather American high schools that are, according to Moritz, a poor match for their Chinese counterparts. “We’re killing ourselves; we’re killing the future technologists… we’re slowly killing the potential for home-brewed invention.”

Renowned angel investor Ram Shriram similarly downplayed the DOJ’s concerns, saying specifically he didn’t think that “search” as a category could never be again disrupted or that it doesn’t benefit from network effects. He observed that Google itself disrupted numerous search companies when it emerged on the scene in 1998.

Somewhat cynically, we would note that those companies — Lycos, Yahoo, Excite — had a roughly four-year lead over Google at the time, and Google has been massively dominant for nearly all of those 22 years (because of, yes, its network effects).

 


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Expanding its women’s health benefits offerings for employers, Mayven raises $45 million

22:46 | 19 February

Over the past twelve months, Mayven, the benefits provider focused on women’s health and family planning, has expanded its customer base to include over 100 companies and grownits telehealth services to include 1,700 providers across 20 specialties — for services like shipping breast milk, finding a doula and egg freezing, fertility treatments, surrogacy and adoption.

The New York-based company which offers its healthcare services to individuals, health plans, and employers has now raised an additional $45 million to expand its offerings even further.

Its new money comes from a clutch of celebrity investors like Mindy Kaling, Natalie Portman, and Reese Witherspoon and institutional investors led by Icon Ventures and return backers Sequoia Capital, Oak HC/FT, Spring Mountain Capital, Female Founders Fund and Harmony Partners. Anne Wojcicki, the founder of 23andMe, is also an investor in the company.

Maven is addressing critical gaps in care by offering the largest digital health network of women’s and family health providers,” said Tom Mawhinney, lead investor from Icon Ventures, who will join the Maven board of directors, in a statement. “With its virtual care and services, Maven is changing how global employers support working families by focusing on improving maternal outcomes, reducing medical costs, retaining more women in the workplace, and ultimately supporting every pathway to parenthood.”

In the six years since founder Katherine Ryder first launched Mayven, the company has raised more than $77 million for its service and become a mother of two boys.

“You go through this enormous life experience; it’s hugely transformative to have a child,” she told TechCrunch after announcing the company’s $27 million Series B round, led by Sequoia. “You do it when your careers is moving up — they call it the rush hour of life — and with no one supporting you on the other end, it’s easy to say ‘screw it, I’m going home to my family’ … If someone leaves the workforce, that’s fine, it’s their choice but they shouldn’t feel forced to because they don’t have support.”

Some of Mayven’s partners include Snap and Bumble to provide employees access to its women’s and family health provider network. The company connects users with OB-GYNs, pediatricians, therapists, career coaches and other services around family planning.

 


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Talking cybersecurity, SaaS and early-stage valuations with ForgePoint Capital

19:05 | 19 February

Earlier today TechCrunch covered the launch of a new, $450 million cybersecurity-focused fund, the second from venture group ForgePoint Capital.

The new vehicle, inventively named Fund II, will mostly focus on early-stage companies in the cybersecurity space. The fund’s timing is somewhat unsurprising. As we noted in our earlier coverage, the recent IPOs of Cloudflare (more here) and CrowdStrike (more here) have given cybsersecurity a halo, showing founders and investors alike that outsize returns are possible in the space. Such successes can’t hurt VCs looking for fresh capital.

To get a stronger grip on how ForgePoint sees the market, TechCrunch corresponded with the group, asking about fund mechanics (check sizes, investing pace), the cybersecurity sector itself (business models, valuations) and recent liquidity events (CrowdStrike in particular). ForgePoint’s

, a co-founder and managing director at the group, answered our questions.

The following interview has been lightly edited for clarity and length. Let’s have some fun:

TechCrunch: The new fund is $150 million larger than its predecessor. Why raise 50% more for the new vehicle? What is the target number of checks per year? Will it be faster than the preceding fund?

ForgePoint Capital: We were one of the first investors to focus on cybersecurity when we raised our first fund. Since then, the cybersecurity market has grown by more than 50%, driven by the constantly evolving challenges facing businesses, governments and individuals. We’ve also doubled our investment team. Our team has a singular focus on the market, driving unparalleled domain expertise and insights into emerging industry trends.

We will continue to invest in six to ten new cybersecurity companies per year, and find great opportunities with leading entrepreneurs.

Putting capital to work in “early-stage and select growth companies” is delightfully flexible. What check size range is the fund targeting, and what is the target deal size for growth-oriented deals?

We target up to $25 million for early-stage ventures throughout the life of an investment, and up to $50 million for growth-oriented companies achieving considerable revenue growth.

How much did Crowdstrike’s successful IPO boost cybersecurity-focused startup valuations and fundraising last year?

A rising tide lifts all boats. In cybersecurity, as elsewhere, the market rewards rapid growth and valuations reflect [that]. We target companies with great teams building innovative solutions that are poised for high growth. While the Crowdstrike IPO certainly boosted attention on the market, over 90% of successful cybersecurity exits are through M&A. Strategic buyers and financial sponsors pay up for companies that can scale.

 


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India’s Swiggy raises $113M led by Prosus

18:57 | 19 February

Weeks after Zomato acquired Uber’s Eats business in India, its chief local rival is bulking up some ammunition of its own.

Swiggy, India’s largest food delivery startup, announced on Wednesday it has raised $113 million as part of its Series I financing round. Prosus Ventures, the biggest venture capital for food delivery startups, led the round.

Meituan Dianping and Wellington Management Company also participated. The new round values Swiggy at about $3.3 billion, same as its previous round, according to an analysis of its regulatory filing.

Sriharsha Majety, co-founder and chief executive of Swiggy, said the startup will use the fresh capital to invest in “new lines of business” such as cloud kitchen and delivery beyond food items, and get on a “sustainable path to profitability.”

Prosus Ventures, formerly known as Naspers Ventures and Food, first wrote a check to Swiggy three years ago. Since then, it has become its biggest investor — having pumped in more than $700 million alone in the startup’s $1 billion financing round in December 2018.

“Swiggy continues to exhibit strong execution and a steadfast commitment to delivering the best service to consumers and has one of the best operational teams in food delivery globally. We are confident Swiggy will continue on a path to earn a significant place in the daily lives of Indians,” said Larry Illg, chief executive of Prosus Ventures and Food, in a statement.

The Bangalore-headquartered firm, which is operational in 520 cities, said it has witnessed a 2.5x growth in the volume of transactions in the past year. Its restaurant partners base has also grown to 160,000 and more than 10,000 are joining the platform each month.

Some analysts say that it will be very challenging for Swiggy and Zomato, both of which are spending over $20 million a month to win customers, to reach profitability.

More to follow…

 


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Fintech VC sets records in Q4 despite early-stage slowdown

17:39 | 19 February

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

Fintech is what you hear about constantly, but probably aren’t as read up on as you’d like to be. Neither am I.

Luckily we have a new report concerning fintech investing to unpack and explore. Thanks to a dataset from startup and venture data provider CB Insights, we have a fresh, deep look into the world of startup fintech investment. 

Here’s what we want to know:

  • Did fintech venture activity rise in 2019?
  • How are the various venture stages of fintech investing performing
  • Are early-stage fintech startups able to attract capital at similar velocity to their much-lauded, late-stage counterparts?

Let’s find out!

2019: A (near) record

 


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