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Mike Volpi on the art of board membership

17:15 | 12 February

Mike Volpi Contributor
Mike Volpi is a general partner at Index Ventures. Before co-founding the firm's San Francisco office with Danny Rimer, Volpi served as the chief strategy officer at Cisco Systems.

Much has been made about the roles and responsibilities of board members these days. This is especially true in the venture-backed startup world where there is an intimate and complex relationship between entrepreneurs and investors. With increasing scrutiny and growing pressure for accountability, the role of a board member has been thrust into the spotlight.

I was fortunate to begin my service as a board member early in my career. For the past 20 years, I’ve had the privilege to serve on boards of companies of many shapes and sizes, ranging from startups to publicly traded companies and everything in between. As I reflect on those experiences, I first have to express my deep gratitude to all the CEOs, management teams and boards that I have had the fortune to work with. I’ve certainly grown enormously through each one of those experiences.

My biggest observation is that these varied companies need very different board members. The nature of the business and the stage of the company define “value-added” as a director. That said, I have found that a board member can create value in a way that transcends the specifics of each company and its leaders. I write this post to try to abstract the essence of this very privileged role and share my experiences with a broader ecosystem. I also hope this can serve as a guide to entrepreneurs who are selecting investors and constructing boards.

In that context, it is important to realize the peculiar nature of board directors. Our role, as such, is to help the company create greater shareholder value. Some might define that as being the “CEO’s boss.” Without a doubt, that is an oversimplification, or perhaps a misconception, of a board member’s duties. We are not the CEO’s boss. The role of the collective board is to be an advisor to the CEO and the management team, which, in some corner cases, is called upon to encourage changes in that management team. But, the relationship between a board and the company’s leadership is much more subtle in nature and is worthy of deeper inspection.

Nature of the relationship

In venture communities, we often oscillate between two extreme views of the role of a board member. One view is that a board is there to be “chief cheerleaders.” That view posits that a board member is there to support the CEO and the founders of a company, to “add value” in the context of tips and advice, introductions, recruiting efforts, marketing, PR and general cheering. In extreme cases, that has even led to the abdication of voting rights and governance to the founders and CEO. While this view is tempting in an era where founders and CEOs are the decision-makers for which VCs they elect as investors in their company, it’s also a very short-sighted view of the role. There is no doubt that a director should be helpful and, as a company leader, it might feel great to have an investor “at your service.” But, is an entrepreneur simply purchasing a brand and adding a helper or are they genuinely deriving shareholder value by having a blind supporter on the board?

The opposite extreme is the view that a board member should instruct the CEO and the management team on how to run the company and ultimately be the “judge and jury” of the management team’s performance. This relationship is also fraught with risk. CEOs, founders and management teams are far more versed in the business that they are operating than any investor. They know the internal details, the nuances of the business, the products, the market and the competitive dynamics. By and large, they are far better equipped to run the business than any board member could be.

I have personally found that the healthiest relationship between a board director and the CEO is one that is peer-like. The board member’s function in that context is one where, as a good friend would, they are supportive but candid and transparent about their view on the state of the company, its challenges and its opportunities. In doing so, the dialog that occurs will be one which is genuine in nurturing the company rather than a cat-and-mouse game or a love-fest.

The mirror

One of the analogies I often use for the role of a board is that of being a “mirror” to the management team. Entrepreneurs, by their nature, live on a roller-coaster ride that is matching their startup’s journey. Their perception of the business is often an amplification of the current state of the business. The highs are often more optimistic than the business might really deserve and the lows are often much lower than they should be. The board should reflect a snapshot of the reality of the business. All businesses, both the most successful and the somewhat troubled, involve a lot of sausage-making. There are aspects that are not working well that shouldn’t be brushed aside or ignored, but should be focal points of improvement. Conversely, when things aren’t going well, entrepreneurs can often be too critical of their own business.

By placing things in the context of other experiences, the board member should aid the entrepreneurs in “normalizing” the state of the company. Sometimes, reminding the leadership teams that they are neither the masters of the universe nor a losing locker room makes all the difference. All too often, boards have tendencies of “jumping on the pile” and accentuating the entrepreneur’s perception of the business for better or worse — which ultimately provides little value.

Context

Command of the context is one of the most important values boards can provide. While entrepreneurs have the deepest knowledge of their own business, they do not have the benefit of having seen many other companies that are like them. Especially in the startup universe where there are so many common patterns that recur regularly, the ability to provide the comparative context is very valuable. These recurring patterns exist in almost every aspect of a business. Whether it’s in strategy, go-to-market, executive hiring and firing, market adoption versus monetization, and many other attributes, there are lessons that a new business can learn, both positively or negatively, from others who have walked in their shoes earlier on. Not all of those lessons apply. Each business is a snowflake — unique in its own way. But, for the leadership of a company, being able to compare and contrast the situations with those that have come before can be of enormous value in shaping the right business decisions.

It is also incredibly important for boards to encourage long-term thinking. Most management teams think their job is to deliver the short-term quarter-by-quarter gains to appease the board. To some extent, yes, but it’s actually the board’s job to encourage and allow the company to think long-term. For company leaders, it is particularly more tricky because their own business is right there, staring them in the face. A “value-added” board should help in thinking about the longer-term implications of a company’s decisions. Not so much in just the burning issue of the moment, but in the relative impact of that decision on the company’s long-term prospects. The journey of a board member often spans many years, sometimes more than a decade. It’s important to have that in mind when dispensing advice.

My friend Peter Fenton at Benchmark is extremely effective at this. Peter will almost always leave the ultimate decisions to the CEO he’s working with, but he has a way of using compelling examples from the many successful companies he has been involved with as anecdotes to help steer the CEOs to the right decisions. The success stories have a powerful sway on the thinking of CEOs and they are rich in context because they demonstrate actual case studies rather than hypotheticals.

Network

Especially for a young business, the ability to tap into a board’s network can be of massive value. Networks exist in almost every context to help recruit the right people, to construct impactful business development relationships, to provide strategic advice or deliver customers or investors. The list of valuable networks is endless. A board member should come equipped with those networks and generously and tirelessly provide entrepreneurs with access to them. Surely, not all of these networks are equally useful but, if accessed correctly, some can have transformational effects on a company’s prospects. Board members should be able to tap into these networks at the right time (careful not to over-expose startups to networks that are premature, or useless in the moment). And, these networks should be fresh and relevant.

One of the beauties of rich networks is that they often provide access to the person that is best suited to give the best advice to the entrepreneur. Many VCs are “jacks-of-all-trades.” The best advice on specific topics should come from a true expert. The director’s job is to make sure that advice is available at the right time. With a good board, the right person is always one call away.

The master of the universe of networks is Reid Hoffman. I serve on Aurora’s board with him and no one wields a network quite like Reid. His ability to bring just the right person into the dialog at just the right moment is amazing. For the founder of LinkedIn, that’s no surprise, really. He is truly as good as they come.

What happens in between

Feedback during board meetings is actually a fraction of the ways in which board members should provide value. In fact, a board member that surfaces only at the board meetings is shirking their duties. The meetings themselves are valuable because they represent an opportunity to bring together the collective thinking and contrast views, but not to regurgitate “state of the business” information that should be disseminated and absorbed outside of that venue. It’s also the case that many of the most significant conversations between a board member and a CEO occur in private, where conversations can have continuity and consistency achievable only in the context of a 1:1.

The most effective board members have multiple conversations with their CEO and executive team in between board meetings. This allows them to be current and relevant to the company rather than getting caught up in the usual business platitudes that are commonplace in board meetings. (If I had a nickel for every time I heard the phrase “companies are bought and not sold” in a board meeting…).

The best at this was Coach — the great Bill Campbell . When he and I served on Opsware’s board, I would visit Marc and Ben from time to time in their offices. Without fail, Bill would always be there. He took context to a new level. What all that context gave Bill was an incisive ability to understand what the real issues were and how they should be addressed. He truly became a coach to the CEO.

Availability and relevance

Startups are real time. Issues surface every day and every moment. Leaders seek “micro-advice” in the moment, all the time. A board member should have the availability to respond to entrepreneurs when needed. Sometimes that means calls at 10 pm. At other times, that means five or 10 text messages in a day. Sometimes these “micro-advice” moments are extremely impactful: how to deal with a particular customer, how to close a candidate, whether or not to fire someone. At other times, they are not pivotal. However, they often provide the CEO with the ammunition to make a tough decision, or simply the ability to offer a moment of empathy. A director’s ability to be available in those key moments is incredibly valuable and irreplaceable. Providing that level of availability can sometimes be a challenge for board members — after all, we all have action-filled busy days. But, the board member who is able to find the time earns the right to become the proverbial “first call” for the entrepreneur. Such “micro-advice” also provides the board members with the ability to be relevant at all times to the leadership team of a company. The moments when CEOs need another perspective don’t show up neatly five times per year at pre-scheduled times.

Delivering a message that can be heard

Particularly with VC-rich boards, I have found that all-too-often we enjoy hearing ourselves talk perhaps a bit too much. Sometimes, the quantity of airtime is confused with value. A board member should recognize that their counterpart can only absorb a finite amount of insight at any given time. My rule of thumb is a board member can, at most, provide two or three key insights at a board meeting. More than that, and it’s overkill.

Furthermore, those perspectives should be conveyed in a meaningful and concise way. And, perhaps most importantly, they need to be delivered in a way that the message is heard. Entrepreneurs are very different in the way they “hear.” Some are entirely open to different perspectives, others prefer being asked intelligent questions that they can pursue. Well-thought-out questions often have the most powerful effect on shaping an executive’s thinking.

Ultimately, no one likes to be told what to do. CEOs need to “own” the issues and deal with them operationally, and every day. Ownership is much easier when the idea comes from the CEO. So, the concept of delivering a message well is often to let the CEOs come to their own conclusions rather than spelling out what they should be doing. This is often more true with experienced operational leaders. All they need is a cue. The rest they can figure out themselves.

My best mentor in this dimension is Andy Rachleff . Andy invited me to join Equinix’s board many years ago. I also served on Opsware’s board with him. Now the tables have turned and he’s the CEO at Wealthfront while I am his board director. He will frequently remind me that if a board member gives one good strategic insight per board meeting, that’s a big win. If you offer two in one meeting, you get the “star award for board members.” That is a powerful reminder that less is often more.

The subtle art

The more I serve on boards, the more I appreciate the responsibilities and demands that come from being a board director. In the modern era of venture capital, we are tempted to distill board service as a “right” or a byproduct of investing or, worse, simply a “badge of honor.” Nothing could be further from the truth. Board membership is a privilege and a nuanced responsibility that can have a transformational impact on businesses. Sometimes investors, independents and entrepreneurs forget this. Entrepreneurs should expect a great deal from their boards — not as blind supporters but as true copilots. Likewise, board members should not view board membership as a list of icons on their LinkedIn profile, but as a subtle yet massively impactful role they play in the creation of great businesses. When these relationships function properly, the two parties become true partners in the entrepreneurial journey.

 


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Show off your startup at TC Sessions: Mobility 2020

00:00 | 12 February

Remember when “mobility” meant laptops and cell phones? Those were quaint times. Now the category encompasses the future of transportation — everything from flying cars and autonomous vehicles to delivery bots and beyond. There’s no better place to explore this rapidly moving industry than TC Sessions: Mobility 2020, our day-long conference in San Jose on May 14.

And there’s no better place to showcase your early-stage mobility startup. Consider this: more than 1,000 of mobility’s brightest technologists, engineers, founders and investors will be on hand to explore the future of this rapidly evolving technology. So why not buy an Early-Stage Startup Exhibitor Package and plant your business squarely in the path of this group of enthusiastic influencers?

Your exhibitor package includes a 30-inch high-boy table, power, linen, signage — and four tickets to the event. You and your team can strut your startup stuff, take advantage of hyper-focused networking and still enjoy the event’s presentations and workshops.

We’re building our agenda, and we just started announcing speakers on a rolling basis. If you know someone who should be onstage at this event? Hit us up and nominate a speaker here.

We already told you that Waymo’s Boris Sofman and Ike Robotics’ Nancy Sun will join us. And we’re thrilled that Reilly Brennan, founding general partner of Trucks VC, a seed-stage venture capital fund for entrepreneurs, will also grace our stage. Brennan’s many investments include May Mobility, Nauto, nuTonomy, Joby Aviation, Skip and Roadster.

Will your startup be his next investment? Stranger things have happened.

TC Sessions: Mobility 2020 takes place on May 14 in San Jose, Calif. Spend a full day of exploring the art and science of mobility, and don’t miss your chance to introduce your startup to influential movers and shakers. These are heady times in the mobility industry, and it’s moving faster than the race to market a viable flying car. Buy an Early-Stage Startup Exhibitor Package, and you might just transport your business to a whole new level.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

 


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TLcom Capital closes $71M Africa fund with plans to back 12 startups

12:00 | 5 February

VC firm TLcom Capital has closed its Tide Africa Fund at $71 million with plans to make up to 12 startup investments over the next 18 months.

The group —  with offices in London, Lagos, and Nairobi — is looking for tech enabled, revenue driven ventures in Africa from seed-stage to Series B, according to TLcom Managing Partner Maurizio Caio.

“We’re rather sector agnostic, but right now we are looking at companies that are more infrastructure type tech rather than super commoditized things like consumer lending,” he told TechCrunch on a call.

On geographic scope, TLcom Capital will focus primarily on startups in Africa’s big-three tech hubs — Nigeria, Kenya, South Africa — but is also eyeing rising markets, such as Ethiopia.

Part of the fund’s investment approach, according to Caio, is backing viable companies with strong founders and then staying out of the way.

“We are venture capitalists that believe in looking at Africa as an investment opportunity that empowers local entrepreneurs without…coming in and explaining what to do,” said Caio.

TLcom’s team includes Caio (who’s Italian), partners Ido Sum and Andreata Muforo (from Zimbabwe) and senior partner Omobola Johnson, the former Minister of Communication Technology in Nigeria.

Speaking at TechCrunch Disrupt Berlin in 2018, Johnson offered perspective on next startups in Africa that could reach billion-dollar valuations. “When I look at the African market I suspect it’s going to be a company that’s very much focused on business to business and business to very small business — a company that can that can solve their challenges,” she said.

Omobola Johonson

Omobola Johnson

TLcom’s current Africa portfolio reflects startups similar to what Johnson described. The fund has invested in Nigerian trucking logistics venture Kobo360, which is working to reduce business delivery costs in Africa.

TLcom has also backed Kenya’s Twiga Foods, a B2B food distribution company aimed a improving supply-chain operations around agricultural products and fast-moving-consumer-goods for farmers and SMEs.

Both of these companies have gone on to expand in Africa and receive subsequent investment by U.S. investment bank, Goldman Sachs .

Other investments for TLcom include talent accelerator Andela  — which trains and places African software engineers — and Ulesson, the latest venture of serial founder Sim Shagaya.

The firm’s close of the $71 million Tide Africa Fund comes on the high-end of a several-year mobilization of capital for the continent’s startup scene. Investment shops specifically focused on Africa have been on the rise. A TechCrunch and Crunchbase study in 2018 tracked 51 viable Africa specific VC funds globally, TLcom included.

This trend has moved in tandem with a quadrupling of venture funding for the continent over the past six years. Accurately measuring VC for Africa is a work in progress, but one of the earlier reliable estimates placed it at just over $400 million in 2014. Recent stats released by Partech peg Africa focused VC funding at over $2 billion for 2019.

TLcom’s listed in a number of the larger rounds that made up Partech’s tally.

The fund’s latest $71 million raise, which included support from Sango Capital and IFC, reversed the roles a bit for TLcom founder Maurizio Caio.

The VC principal — who usually gets pitches from African startups — needed to sell the value of African tech to other investors.

“It’s been tough to raise the fund, there’s no doubt about it,” Caio said. TLcom highlighted its past exit record and the viability of the African market and founders to bring investors on board.

“We had the advantage of showing some good exits…The emphasis was also on the gigantic size of these markets that are underserved, the role that technology can play, and the fact that the entrepreneurs in Africa are just as good as anywhere else,” said Caio.

He also referenced African startups being constrained by the social impact factors often placed on them from outside investors.

“The equation is not just about ensuring employment and inclusion, but also about the fact that African entrepreneurs have to be in charge of their own destiny without instructions from the West,” he said.

For those startups who wish to pitch to TLcom Capital, Caio encouraged founders to contact one of the fund’s partners and share a value proposition. “If it’s something we find vaguely interesting, we’ll make a decision,” he said.

 


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Three years after raising $450 million, Andreessen is back with a new $750 million life sciences fund

05:05 | 5 February

Life sciences is big business in venture capital land and firms are raising big dollars to find the companies that will lead the next healthcare revolution.

Chief among them is Andreessen Horowitz, which announced its third life sciences fund with a $750 million final close earlier today.

Andreessen went back to market less than than three years after closing its last fund, a $450 million investment firm that the firm raised in 2017. The firm’s first, $200 million life sciences fund closed in 2015.

So far, the firm, which is one of the most successful new venture firms to come on the scene since its launch nearly eleven years ago, has only had one exit from its life science portfolio — the $65 million acquisition of Jungla by the genetics testing firm, Invitae back in 2019.

Increasingly, there’s a view among investors that the life sciences and healthcare revolution borne on the back of computational biology and programmable genetics will usher in a wave innovation which will change more than just the healthcare industry.

As the firm wrote in its announcement of the new fund:

Bio is not the “next new thing”—it’s becoming everything. Software is now affecting not just how we do not just one thing—cloning DNA, or engineering genes—but how we do it all across the board, blurring lines, breaking down traditional silos, changing our processes and business models. In other words, technology today is enhancing all our existing tools and data, affecting every decision we make, from research to development to deployment—and how we access, pay for, and experience healthcare.
And it’s not just software. What is technology really? It’s principles and process. It’s a shift to an engineering mindset for relentless iteration and constant improvement; modular components that can be remixed and reused, and improvements that accrue and compound over time. Tech gives us tools beyond just software—continuous data streams to describe our health, circuits to program cells, scalpels to edit DNA, and the ability to create programmable, living medicines. Our focus is not just on the groundbreaking outputs of this shift, from novel gene and cell therapies to digital therapeutics and virtual care models, but on the underlying approach and drivers that created those breakthroughs. This is why it doesn’t work to simply tack on AI, or just insert tech into an established company. In order to re-program entire systems and re-imagine new approaches to massive challenges, whether those are biological, or man-made, you need to rethink the process from the ground up.

 


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Last chance: Only a few tickets left to Winter Party at Galvanize This Friday

19:35 | 3 February

This is it, startup fans. It’s your very last chance to scoop up the few remaining tickets to our 3rd Annual Winter Party at Galvanize — the best Silicon startup soiree bar none. If you want to join this fun gathering of 1,000+ likeminded startuppers on February 7, you’d best act quickly. Exhibitor tables have long sold out. Don’t get left behind — buy your ticket now before they’re gone for good.

A big shout out to our sponsors Calgary, Uncork Capital, Brex, Galvanize and Snap Fiesta for helping us throw this bash. You’re in for an unabashed night of fabulous food, delicious drinks and festive foolishness. Time to loosen your collar and network in a relaxed setting with some of the Valley’s brightest entrepreneurs, founders, investors — attendees span the entire startup ecosystem.

You never know when a casual conversation could develop into a serious opportunity, and TechCrunch parties have a strong track record for making startup magic.

Here are just five of the many companies with whom you can meet and greet — talk about an opportunity to connect: Deloitte, Perkins Coie, Ceres Robotics, Samsung, Okta, Facebook. And while you’re at it, don’t miss meeting the 10 outstanding startups that will exhibit their tech and talent. More connections equal more opportunity.

Here’s the essential 411 on the party details:

  • When: Friday, February 7, 6:00 p.m. – 9:00 p.m.
  • Where: Galvanize, 44 Tehama St., San Francisco, CA 94105
  • Ticket price: $85

As always, you’ll find plenty of fun. Bust out your karaoke skills, play games, and plenty of photo ops will let you light up your Insta. You might even win one of the many door prizes including TC swag and free passes to Disrupt SF in September 2020.

The 3rd Annual Winter Party at Galvanize takes place in just three days. We have only a few tickets left, so don’t waste another minute. Buy your ticket today and come join the fun!

Is your company interested in sponsoring the 3rd Annual Winter Party at Galvanize? Contact our sponsorship sales team by filling out this form.

 


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Utah tech magnates create new Silicon Slopes Venture Fund to boost startups in the state

17:29 | 3 February

Those looking outside of Silicon Valley as a potential hub for their startup might want to take a gander at Utah — at least that’s the kind of trend the new Silicon Slopes Venture Fund hopes to create.

The newly formed fund, put together by Qualtrics co-founder Ryan Smith, Omniture and Domo founder Josh James and Stance co-founder turned Pelion Venture Partners’ Jeff Kearl, pledges to invest solely in Utah-based startups. The goal? To become every bit as notable as a16z or Sequoia Capital.

Qualtrics co-founder Ryan Smith and Domo and Omniture founder Josh James onstage at the Silicon Slopes Tech Summit.

“I grew up in the Bay Area,” Kearl told TechCrunch of the energy he feels in the state. “This feels like the 1990s in the Bay Area. You can find hundreds of open jobs up and down the Wasatch Front.”

Utah has a reputation as a mostly religious, conservative and sleepy mountain region for outdoors enthusiasts but tech has fast become the leading job sector in the state, with some salaries from companies like Adobe and Qualtrics rivaling those in Silicon Valley. The state recently pledged a push to include at least one computer science course in every high school in the state by 2022 and also just hosted a massive, 25,000 person startup festival called the Silicon Slopes Tech Summit, where it held a Utah state governor’s debate and both Steve Case and Mark Zuckerberg spoke on stage.

It’s unclear how much the fund has set aside for its mission to help Utah become a full-fledged tech ecosystem rivaling Silicon Valley but one would imagine it would have a sizable sum to invest, if, as Smith tells TechCrunch, it is to help Utah’s up-and-coming startups go all the way from seed stage to IPO.

“I want to see companies get even bigger than Qualtrics…and do it in this state,” Smith said. Qualtrics sold to SAP in 2019 for $8 billion, notably the largest private enterprise software deal in tech history.

Silicon Slopes Tech Summit 2020 Gubernatorial Debate

One of the many issues tech hubs around the world face is both the networking capabilities and the ability to invest after the seed stage or Series A. Most startups throughout the globe still find the need to travel and make connections in Silicon Valley to get them through the next step of growth. This has been true for every billion-dollar startup idea in Utah as well so far. Both Smith and James took in Silicon Valley venture for their companies, as did unicorn turned public ed tech startup Pluralsight and the recently rebranded sales platform Xant (formerly InsideSales), before making it big.

However, this new fund represents the kind of push needed to create a strong innovation ecosystem in the future, as Steve Case mentioned on stage at the summit event this last week. “Venture capitalists must look at ‘what’s happening in the Silicon Slopes’ and make sure it ‘is happening other places’,” Utah newspaper Deseret News paraphrased the AOL founder as saying.

Pelion Venture Partners, which operates in both Utah and Southern California, will act as a support to Silicon Slopes Venture Fund, providing organizational overhead. Each partner will still keep their day job and donate most fees to support the ongoing operation of the non-profit tech organization, Silicon Slopes, which runs the annual tech summit of the same moniker. However, the Silicon Slopes Venture Fund will be an independent fund from Pelion, with the sole purpose of investing in deal flow the three partners find through their respective networks within the state.

“I used to hate the term ‘a rising tide lifts all boats’ because I want to be the only boat,” James told TechCrunch. “But I really think it applies here for what we are trying to do [in Utah].”

 


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Being a child actress prepared me for a career in venture capital 

00:46 | 31 January

Crystal McKellar Contributor
Crystal is the Founder and Managing Partner of Anathem Ventures, and is passionate about finding and funding great teams that have developed breakthrough technology that they are pragmatically leveraging to win and own uncrowded, high-margin markets.

It takes guts to be a VC, but being a child actress prepared me well for the challenge.

In addition to the serial rejection even the most successful actors experience in audition after audition, life on set isn’t always a picnic. When I was on “The Wonder Years,” we filmed an episode called “The St. Valentine’s Day Massacre,” in which my character, Becky Slater, attempts to run over longtime foe Kevin Arnold with her bicycle.

During a dress rehearsal, as I sped up on the ancient, too-tall 1960’s-era bike, my front wheel hit a thick sound cable that hadn’t been there during a prior run-through; I went over the handlebars and spent the evening in the emergency room. A few days later, barely off crutches, I was back on set and back on the bike. We filmed the scene, and the episode was one of the series’ most successful and memorable. No one has ever accused me of timidity.

Many years later, armed with degrees from Yale and Harvard Law — plus years of experience advising companies as a lawyer and investing in them as a VC — I launched my own venture capital fund, Anathem Ventures. The grit and perseverance I first honed on studio soundstages serves me well and these are also the qualities I look for in the founders I back.

Anathem Ventures CEO/founder Crystal McKellar

 


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All eyes are on the next liquidity event when it comes to space startups

04:28 | 30 January

At the FAA’s 23rd Annual Commercial Commercial Space Transportation Conference in Washington, DC on Wednesday, a panel dedicated to the topic of trends in VC around space startups touched on public vs. private funding, the right kinds of space companies that should even be considering venture funding, and, perhaps most notably, the big L: Liquidity.

Moderator Tess Hatch, Vice President at Bessemer Venture Partners, addressed the topic in response to an audience question that noted while we’ve heard a lot about how much money will flow into space-related startups from the VC community, we haven’t actually et seen much in the way of liquidity events that prove out the validity of these investments.

“In 2008, a company called Skybox was created and a handful of years later Google acquired the company for $500 million,” Hatch said. “Every venture capitalist’s ears perked up and they thought ‘Hey, that’s pretty good ROI in a short amount of time – maybe the space thing is an investable area’ and then a ton of venture capital investments flooded into space startups, and all of these venture capitalists made one, or maybe two investments in the area. Since then, there have not been many — if any – liquidity events: Perhaps Virgin Galactic going public via the SPAC (special uprose vehicle) on the New York Stock Exchange late last year would be the second. So we’re still waiting; we’re still waiting for those exits, we are still waiting for companies to pave the path for the 400+ startups in the ecosystem to return our investment.”

Hatch added that she’s looking at a number of companies who have the potential to break this somewhat prolonged exit drought in 2020, including five who are either quite mature in terms of their development, naming SpaceX, Rocket Lab, Planet and Spire as all likely candidates to have some kind of liquidity event in 2020, with the mostly likely being an IPO.

Space as an industry was described to me recently as a ‘maturing’ startup market by Space Angels CEO Chad Anderson, by virtue of the distribution of activity in terms of the overall investment rounds in the sector. There is indeed a lot of activity with early stage companies and seed rounds, but the fact remains that there hasn’t been much in the way of exits, and it’s also worth pointing out that corporate VCs haven’t been as acquisitive in space as some of their consumer and enterprise technology counterparts.

The panel touched on a lot more apart from liquidity, which actually only came up towards the end of the discussion, which included panelists Astranis CEO and co-founder John Gedmark; Capella Space CEO and founder Payam Banazadeh and Rocket Lab VP of Global Commercial Launch Services Shane Fleming. Both Gedmark and Banazadeh addressed aspects of the risks and benefits of seeking VC as a space technology company.

“Not every space business is a venture-backable business,” said Banazadeh earlier in the conversation. “But there are a lot of space businesses that are specifically going after raising venture money, and that’s dangerous for everyone – because at the end of the day venture is looking at high risk, high return. The ‘high return’ comes from being able to get substantial amount of revenue in a market that’s big
enough for those revenues to be coming from. But if your idea is to go build, maybe, some very specific part in a satellite, then you have to make the case of why you’ll be able to make those returns for the investors, and in a lot of cases, that’s just not possible.”

Banazadeh also concedes that doing any kind of space technology development is expensive, and the money has to come from somewhere. Gedmark talked about one popular source, government funding and grants, and why that often isn’t as obviously a positive thing for startups as it might seem.

“Small government grants can be great, and obviously a fantastic source of non dilutive capital,” Gedmark said. “But there is a little bit of a trick there, or something to be aware of: I think people are often surprised how much time is spent in the early days of a startup refining the exact idea and the product, and if you’re not certain that you have the that product market fit […] then, the government grant can be extremely dangerous, because they will fund you to do something that is sort of similar to what to what you’re doing, but it really prevents you changing your approach later; you’re going to end up spending time executing on the specific project of the program manager on the government side and you’re executing on what they want.”

VC funds, on the other hand, come with the built-in expectation that you’re going to refine and potentially even change direction altogether, Gedmark says. Depending on the terms of the public funding you’re seeking, that flexibility may not be part of the arrangement, which ultimately could be more important than a bit of equity dilution.

 


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Catalyst Fund gets $15M from JP Morgan, UK Aid to back 30 EM fintech startups

08:09 | 20 January

The Catalyst Fund has gained $15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.

The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.

That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.

Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.

“We’re offering grants of up to $100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.

Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.

Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.

Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.

Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.

African fintech startups have dominated the accelerator’s startups, comprising 56% of the portfolio into 2019.

That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.

The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.

By several estimates, Africa is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale finance solutions on the continent.

Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech related startups on the continent.

This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.

For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation

“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.

This take aligns with JP Morgan’s 2019 announcement of a $125 million, philanthropic, five-year global commitment to improve financial health in the U.S. and globally.

More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $2.9 billion. It’ll be worth following if the company shifts any of its income-generating prowess to business and venture funding activities in Catalyst Fund markets like Nigeria, India and Mexico.

 


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Trucks VC general partner Reilly Brennan is coming to TC Sessions: Mobility

04:00 | 17 January

The future of transportation industry is bursting at the seams with startups aiming to bring everything from flying cars and autonomous vehicles to delivery bots and even more efficient freight to roads.

One investor who is right at the center of this is Reilly Brennan, founding general partner of Trucks VC, a seed-stage venture capital fund for entrepreneurs changing the future of transportation.

TechCrunch is excited to announce that Brennan will join us on stage for TC Sessions: Mobility.

In case you missed last year’s event, TC Sessions: Mobility is a one-day conference that brings together the best and brightest engineers, investors, founders and technologists to talk about transportation and what is coming on the horizon. The event will be held May 14, 2020 in the California Theater in San Jose, Calif.

Brennan is known as much for his popular FoT newsletter as his investments, which include May Mobility, Nauto, nuTonomy, Joby Aviation, Skip and Roadster.

Stay tuned to see who we’ll announce next.

And … $250 Early-Bird tickets are now on sale — save $100 on tickets before prices go up on April 9; book today.

Students, you can grab your tickets for just $50 here.

 


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