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Hackers release a new jailbreak tool for almost every iPhone

Published March 1, 2021

An iPhone hacking team has released a new jailbreak tool for almost every iPhone, including the most recent models, by using the same vulnerability that Apple last month said was under active attack by hackers.

The Unc0ver team released its latest jailbreak this weekend, and says it works on iOS 11 (iPhone 5s and later) to iOS 14.3, which Apple released in December.

Jailbreaking is a cat-and-mouse game between security researchers who want greater control and customizations over their phones, and Apple, which says it locks down iPhones for security. Hackers build jailbreak tools by finding and exploiting vulnerabilities that can lift some of the restrictions that Apple puts in place, like installing apps outside of its app store, which most Android users are already used to.

In a tweet, the jailbreak group said it used its “own exploit” for CVE-2021-1782, a kernel vulnerability that Apple said was one of three flaws that “may have been actively exploited” by hackers. By targeting the kernel, the hackers are able to get deep hooks into the underlying operating system.

Apple fixed the vulnerability in iOS 14.4, released last month, which also prevents the jailbreak from working on later versions. It was a rare admission that the iPhone was under active attack by hackers, but the company declined to say who the hackers were and who they were targeting. Apple also granted anonymity to the researcher who submitted the bug.

The group’s last jailbreak, which supported iPhones running iOS 11 to iOS 13.5, was fixed in a matter of days last year. Apple works quickly to understand and fix the vulnerabilities found by jailbreak groups, since these same vulnerabilities can be exploited maliciously.

Security experts generally advise iPhone users against jailbreaking because it makes the device more vulnerable to attacks. And while keeping your phone up to date may introduce security fixes that remove the jailbreak, it’s one of the best ways of keeping your device secure.

Apple opens up — slightly — on Hong Kong’s national security law

Early Stage is the premiere “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Istanbul’s Dream Games snaps up $50M and launches its first game, the puzzle-based Royal Match

Published March 1, 2021

On the back of Zynga acquiring Turkey’s Peak Games for $1.8 billion last year and then following it up with another gaming acquisition in the country, Turkey has been making a name for itself as a hub for mobile gaming startups, and specifically those building casual puzzle games, the wildly popular and very sticky format that takes players through successive graphic challenges that test their logic, memory and ability to think under time pressure.

Today, one of the more promising of those startups, Istanbul-based, Peak alum-founded Dream Games, is announcing the GA launch of its first title, Royal Match (on both iOS and Android), along with $50 million in funding to double down on the opportunity ahead — the largest Series A raised by a startup in Turkey to date.

While Dream Games will focus for the moment on building out the audience for puzzle games with more innovative ideas, it also has its sights set on a bigger goal.

“We’re building this as an entertainment company,” CEO Soner Aydemir said in an interview, where he described Pixar as a key inspiration not just for size but for quality in its category. “What they did for animated movies, we want to do for mobile gaming. We are focusing on casual puzzle games first because everyone plays these, but we will also move forward with other genres. We want to be a huge interactive entertainment company that builds high-quality games.”

The Series A is being led by Index Ventures, with participation also from Balderton Capital and Makers Fund. The latter two backed Dream Games previously, in a $7.5 million seed round in 2019. Index, meanwhile, is a notable VC to have on board: Other successful gaming startups it has backed include Discord, King, Roblox and Supercell.

Interestingly, this is not Index’s first investment in a gaming startup founded by Peak Games alums: In December it led a $6 million round for another Istanbul mobile casual puzzle gaming startup founded by ex-Peak employees: Bigger Games.

Dream Games is not disclosing its valuation with this round.

Dream Games raising $57.5 million ahead of launching any games — or proving whether they get any traction — may sound like a risky bet, but there is some context to the story that sets up the odds in this startup’s favor.

The founding team all come from Peak Games, the Istanbul gaming startup that was so nice, Zynga bought it twice — first, in the form of one small acquisition of some specific titles, and then the whole company some years later.

Zynga acquires Turkey’s Peak Games for $1.8B, after buying its card games studio for $100M in 2017

CEO Soner Aydemir is Peak’s former director of product who built the company’s two biggest hits, Toy Blast and Toon Blast. Ikbal Namli and Hakan Saglam were Peak’s former engineering leads. And Peak product manager Eren Sengul and an ex-Peak 3D artist Serdar Yilmaz round out the rest of the founding team.

(Aydemir notes that the team left and formed Dream Games in 2019, about a year before Zynga’s full acquisition.)

The other indicators that Dream Games is on to something are its metrics for its limited test run of Royal Match.

Royal Match — in which players are tasked with helping King Robert restore his royal castle “to its former glory” by rebuilding it through a series of match-3 levels and obstacles, with new rooms, royal chambers and gardens making up the different levels of the game — was launched first as a limited test on iOS and Android in the U.K. and Canada in July leading up to this launch. In that time, Aydemir said it saw one million downloads and 200,000 daily average users.

“We think the numbers are very promising compared to previous experiences,” he said.

While Aydemir likes to describe Dream as an “entertainment” company, there is a lot of technology going into the product, from the graphics and the mechanics of the puzzles themselves through to the data science behind them.

“If you want to create an iconic game, you need to combine engineering, art and data science together with high-quality user acquisition and a strong marketing approach,” he said.

He believes that when you focus on these it will inevitably lead to quality, which means you no longer have to focus on simply trying to find a hit.

“We don’t like that approach,” he said. “We don’t want to find a hit.”

That was also the mix that Index also wanted to back.

“Building iconic titles requires a harmonious mix of craft, science and flawless execution,” said Index Ventures partner Stephane Kurgan, who led the round together with Index’s Sofia Dolfe. “The Dream Games team has perfected this mix over many years of working together, and has put it on full display in Royal Match. We could not be more excited to work with them in their journey to build the next global casual champion.”

While Dream Games’ long-term ambition is to build out interactive experiences around different audiences and genres, Aydemir said that casual games, and puzzles in particular, have proven to be a huge hit with consumers.

The strength of that trend has up to now meant that puzzle games generally have proven to have more staying power than other genres in mobile games, which have soared in popularity but also somewhat fizzled out.

“Every year we see the bigger market of users growing by 20%,” he said. “It will remain for decades.”

Interestingly, the focus on casual gaming startups in Turkey seems like a perfect storm of sorts. Undeniably, the proven success of Peak has brought in more punters, but it has also shown the way to developers: You can build a successful and global consumer tech startup out of Turkey, and perhaps puzzles — which focus on shapes — are especially good at transcending different language barriers. Alongside that, Aydemir pointed out that the country is strong on engineers and developers but slim on opportunities with bigger tech companies.

“Mobile gaming is a younger industry, so that presents an opportunity,” he said.

Updated to correct that Index is not an investor in Rovio, and that the limited test had 200,000, not 200, DAUs.

Chinese mobile games are gaining ground in the US

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Autonomous drone maker Skydio raises $170M led by Andreessen Horowitz

Published March 1, 2021

Skydio has raised $170 million in a Series D funding round led by Andreessen Horowitz’s Growth Fund. That pushes it into unicorn territory, with $340 million in total funding and a post-money valuation north of $1 billion. Skydio’s fresh capital comes on the heels of its expansion last year into the enterprise market, and it intends to use the considerable pile of cash to help it expand globally and accelerate product development.

In July of last year, Skydio announced its $100 million Series C financing, and also debuted the X2, its first dedicated enterprise drone. The company also launched a suite of software for commercial and enterprise customers, its first departure from the consumer drone market where it had been focused prior to that raise since its founding in 2014.

Skydio’s debut drone, the R1, received a lot of accolades and praise for its autonomous capabilities. Unlike other consumer drones at the time, including from recreational drone maker DJI, the R1 could track a target and film them while avoiding obstacles without any human intervention required. Skydio then released the Skydio 2 in 2019, its second drone, cutting off more than half the price while improving on it its autonomous tracking and video capabilities.

Autonomous drone startup Skydio raises $100 million and launches the X2 commercial drone

Late last year, Skydio brought on additional senior talent to help it address enterprise and government customers, including a software development lead who had experience at Tesla and 3D printing company Carbon. Skydio also hired two Samsara executives at the same time to work on product and engineering. Samsara provides a platform for managing cloud-based fleet operations for large enterprises.

The applications of Skydio’s technology for commercial, public sector and enterprise organizations are many and varied. Already, the company works with public utilities, fire departments, construction firms and more to do work including remote inspection, emergency response, urban planning and more. Skydio’s U.S. pedigree also puts it in prime position to capitalize on the growing interest in applications from the defense sector.

a16z previously led Skydio’s Series A round. Other investors who participated in this Series D include Lines Capital, Next47, IVP and UP.Partners.

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Space startup Gitai raises $17.1M to help build the robotic workforce of commercial space

Published March 1, 2021

Japanese space startup Gitai has raised a $17.1 million funding round, a Series B financing for the robotics startup. This new funding will be used for hiring, as well as funding the development and execution of an on-orbit demonstration mission for the company’s robotic technology, which will show its efficacy in performing in-space satellite servicing work. That mission is currently set to take place in 2023.

Gitai will also be staffing up in the U.S., specifically, as it seeks to expand its stateside presence in a bid to attract more business from that market.

“We are proceeding well in the Japanese market, and we’ve already contracted missions from Japanese companies, but we haven’t expanded to the U.S. market yet,” explained Gitai founder and CEO Sho Nakanose in an interview. So we would like to get missions from U.S. commercial space companies, as a subcontractor first. We’re especially interested in on-orbit servicing, and we would like to provide general-purpose robotic solutions for an orbital service provider in the U.S.”

Nakanose told me that Gitai has plenty of experience under its belt developing robots which are specifically able to install hardware on satellites on-orbit, which could potentially be useful for upgrading existing satellites and constellations with new capabilities, for changing out batteries to keep satellites operational beyond their service life, or for repairing satellites if they should malfunction.

Gitai’s focus isn’t exclusively on extra-vehicular activity in the vacuum of space, however. It’s also performing a demonstration mission of its technical capabilities in partnership with Nanoracks using the Bishop Airlock, which is the first permanent commercial addition to the International Space Station. Gitai’s robot, codenamed S1, is an arm–style robot not unlike industrial robots here on Earth, and it’ll be showing off a number of its capabilities, including operating a control panel and changing out cables.

Long-term, Gitai’s goal is to create a robotic workforce that can assist with establishing bases and colonies on the Moon and Mars, as well as in orbit. With NASA’s plans to build a more permanent research presence on orbit at the Moon, as well as on the surface, with the eventual goal of reaching Mars, and private companies like SpaceX and Blue Origin looking ahead to more permanent colonies on Mars, as well as large in-space habitats hosting humans as well as commercial activity, Nakanose suggests that there’s going to be ample need for low-cost, efficient robotic labor – particularly in environments that are inhospitable to human life.

Nakanose told me that he actually got started with Gitai after the loss of his mother – an unfortunate passing he said he firmly believes could have been avoided with the aid of robotic intervention. He began developing robots that could expand and augment human capability, and then researched what was likely the most useful and needed application of this technology from a commercial perspective. That research led Nakanose to conclude that space was the best long-term opportunity for a new robotics startup, and Gitai was born.

This funding was led by SPARX Innovation for the Future Co. Ltd, and includes funding form DcI Venture Growth Fund, the Dai-ichi Life Insurance Company, and EP-GB (Epson’s venture investment arm).

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Justworks’ Series B pitch deck may be the most wonderfully simple deck I’ve ever seen

Published February 28, 2021

It may be tough to remember, but there was a time long ago when Justworks wasn’t a household name. Though its monthly revenue growth charts were up and to the right, it had not even broken the $100,000 mark. Even then, Bain Capital Venture’s Matt Harris felt confident in betting on the startup.

Harris says that, with any investment (particularly at the early stage of a company), the decision really comes down to the team and more importantly, the founder.

Two of the main reasons this deck “sings” is the line it draws to the Justworks culture and that the deck isn’t “artificially simple.”

“Isaac is a long-term mercenary, but short- and medium-term missionary,” said Harris. “The word that really comes to mind is ‘structured.’ If you ask him to think about something and respond, he’ll think about it and come back with an answer that has four pillars underneath it. He’ll create a framework that not only answers your specific question, but can prove to be a model that will answer future questions of the same type. He’s a systems thinker.”

In 2015, Justworks closed its $13 million Series B, led by Bain Capital Ventures. Harris took a seat on the board. Since, the duo have been working closely together as Justworks has grown into the behemoth it is today.

But these relationships work both ways. Oates said that one of the main things he looks for in an investor is how they’ll react when the chips are down.

“Different people behave different ways under stress,” said Oates. “And people show their values and integrity in those types of situations. That’s when these things are tested. The simple way I think about this is, will this person pick me up from the airport in a pinch?”

Though he’s never asked, he believes Harris absolutely would.

On Extra Crunch Live, Harris and Justworks CEO Isaac Oates sat down to talk through how they resolve disagreements, why Oates never changed what must be one of the most simple pitch decks I’ve ever seen in my life, and how founders should think about pricing their products.

They also gave live feedback on pitch decks submitted by the audience in the Pitch Deck Teardown. (If you’d like to see your deck featured on a future episode, send it to us using this form.)

We record Extra Crunch Live every Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT. You can see our past episodes here and check out the March slate right here.

Episode breakdown

  • Working through disagreements — 11:30
  • The Justworks Series B Deck — 15:00
  • Pricing the product — 25:00
  • Pitch deck teardown — 33:00

Working through disagreements

Despite their glowing praise of one another at the top of the episode, the founder/investor duo haven’t always seen eye to eye. But they did provide an excellent framework around how founders and VCs should wade through disagreements around the business.

Oates gave an example from 2017. He was considering putting in a dual-class stock, which would give a kind of high-vote, low-vote structure to the company. He said that it interested him because he’d seen other companies out there who were vulnerable after going public, whether it be activist shareholders or other outside forces, and that that might prevent a CEO from thinking about the long term.

Harris disagreed and gave a long list of reasons why that neither shared on the episode. However, Oates said that one of the great things to come out of that disagreement was seeing how Harris went about this decision.

Harris introduced Oates to every expert on this particular subject that he knew, asking them to have meetings and discuss it further.

In the end, Oates ultimately stuck to his guns and decided to go forward with the dual-class stock, but armed with all the information he needed to feel confident in the decision.

“I learned a lot about how Matt thinks and how he approaches decisions,” said Oates. “The process of making decisions is just as important as the content. As I’ve gotten to know him more, it means that when we find something where we don’t necessarily agree, we’re able to step back and make sure we have an intellectually rigorous way to process it.”

The story reminded me of a similar conversation with Ironclad CEO Jason Boehmig and Accel’s Steve Loughlin. They explained how much time and energy they spent early on in their investor/founder relationship talking about the “why” behind opinions and strategies and decisions, plotting out the short-, medium- and long-term plan for the company.

Ironclad’s Jason Boehmig: The objective of pricing is to become less wrong over time

“I want to know what you want the company to look like so that I can push you and we can have constructive conversations around the plan,” said Loughlin. “That way, I’m not getting a phone call about whether or not they should hire a head of customer success without any context or a true north in mind.”

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How investors are valuing the pandemic

Published February 27, 2021

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

Ready? Let’s talk money, startups and spicy IPO rumors.

Kicking off with a tiny bit of housekeeping: Equity is now doing more stuff. And TechCrunch has its Justice and Early-Stage events coming up. I am interviewing the CRO of Zoom for the latter. And The Exchange itself has some long-overdue stuff coming next week, including $50M and $100M ARR updates (Druva, etc.), a peek at consumption based pricing vs. traditional SaaS models (featuring Fastly, Appian, BigCommerce CEOs, etc.), and more. Woo! 

This week both DoorDash and Airbnb reported earnings for the first time as public companies, marking their real graduation into the ranks of the exited unicorns. We’re keeping our usual eye on the earnings cycle, quietly, but today we have some learnings for the startup world.

Some basics will help us get started. DoorDash beat growth expectations in Q4, reporting revenue of $970 million versus an expected $938 million. The gap between the two likely comes partially from how new the DoorDash stock is, and the pandemic making it difficult to forecast. Despite the outsized growth, DoorDash shares initially fell sharply after the report, though they largely recovered on Friday.

Why the initial dip? I reckon the company’s net loss was larger than investors hoped — though a large GAAP deficit is standard for first quarters post-debut. That concern might have been tempered by the company’s earnings call, which included a note from the company’s CFO that it is “seeing acceleration in January relative to our order growth in December as well as in Q4.” That’s encouraging. On the flip side, the company’s CFO did say “starting from Q2 onwards, we’re going to see a reversion toward pre-COVID behavior within the customer base.”

How COVID-19 accelerated DoorDash’s business

Takeaway: Big companies are anticipating a return to pre-COVID behavior, just not quite yet. Firms that benefited from COVID-19 are being heavily scrutinized. And they expect tailwinds to fade as the year progresses.

And then there’s Airbnb, which is up around 16% today. Why? It beat revenue expectations, while also losing lots of money. Airbnb’s net loss in Q4 2020 was more than 10x DoorDash’s own. So why did Airbnb get a bump while DoorDash got dinged? Its large revenue beat ($859 million, instead of an expected $748 million), and potential for future growth; investors are expecting that Airbnb’s current besting of expectations will lead to even more growth down the road.

Takeaway: Provided that you have a good story to tell regarding future growth, investors are still willing to accept sharp losses; the growth trade is alive, then, even as companies that may have already received a boost endure increased scrutiny.

For startups, valuation pressure or lift could come down to which side of the pandemic they are on; are they on the tail end of their tailwind (remote-work focused SaaS, perhaps?), or on the ascent (restaurant tech, maybe?). Something to chew on before you raise.

Market Notes

It was one blistering week for funding rounds. Crunchbase News, my former journalistic home, has a great piece out on just how many massive rounds we’re seeing so far this year. But even one or two steps down in scale, funding activity was super busy.

A few rounds that I could not get to this week that caught my eye included a $90 million round for Terminus (ABM-focused GTM juicer, I suppose), Anchorage’s $80 million Series C (cryptostorage for big money), and Foxtrot Market’s $42 million Series B (rapid delivery of yuppie and zoomer essentials).

Sitting here now, finally writing a tidbit about each, I am reminded at the sheer breadth of the tech market. Termius helps other companies sell, Anchorage wants to keep your ETH safe, while Foxtrot wants to help you replenish your breakfast rosé stock before you have to endure a dry morning. What a mix. And each must be generating venture-acceptable growth, as they have not merely raised more capital but raised rather large rounds for their purported maturity (measured by their listed Series stage, though the moniker can be more canard than guide.)

Five takeaways from Coinbase’s S-1

I jokingly call this little section of the newsletter Market Notes, a jest as how can you possibly note the whole market that we care about? These companies and their recent capital infusions underscore the point.

Various and Sundry

Finally, two notes from earnings calls. The first from Root, which is a head scratcher, and the second from Booking Holdings’ results.

I chatted with Alex Timm, Root Insurance’s CEO this week moments after it dropped numbers. As such I didn’t have much context in the way of investor response to its results. My read was that Root was super capitalized, and has pretty big expansion plans. Timm was upbeat about his company’s improving economics (on a loss ratio and loss-adjusted expenses basis, for the insurtech fans out there), and growth during the pandemic.

But then today its shares are off 16%. Parsing the analyst call, there’s movement in Root’s economic profile (regarding premium-ceding variance over the coming quarters) that make it hard to fully grok its full-year growth from where I sit. But it appears that Root’s business is still molting to a degree that is almost refreshing; the company could have gone public in 2022 with some of its current evolution behind it, but instead it raised a zillion dollars last year and is public now.

Sticking our neck out a bit, despite fellow neo-insurnace player Lemonade’s continued, and impressive valuation run, MetroMile’s stock is also softening, while Root’s has lost more than half its value from its IPO date. If the current repricing of some neo-insurance players continues, we could see some private investment into the space slow. (Fewer things like this?) It’s a possible trend we’ll have eyes on this year.

Next, Booking Holdings, the company that owns Priceline and other travel properties. Given that Booking might have notes regarding the future of business travel — which we care about for clues regarding what could come for remote work and office culture, things that impact everything from startup hub locations to software sales — The Exchange snagged a call slot and dialed the company up.

Booking Holdings’ CEO Glenn Fogel didn’t have a comment as to how his company is trading at all-time highs despite suffering from sharp year-over-year revenue declines. He did note that the pandemic has shaken up expectations for conversations, which could limit short-term business travel in the future for meetings that may now be conducted on video calls. He was bullish on future conference travel (good news for TechCrunch, I suppose), and future travel more generally.

So concerning the jetting perspective, we don’t know anything yet. Booking Holdings is not saying much, perhaps because it just doesn’t know when things will turn around. Fair enough. Perhaps after another three months of vaccine rollout will give us a better window into what a partial return to an old normal could look like.

And to cap off, you can read Apex Holdings’ SPAC presentation here, and Markforged’s here. Also I wrote about the buy-now-pay-later space here, riffed on the Digital Ocean IPO with Ron Miller here, and doodled on Toast’s valuation and the Olo debut here.

Hugs, and have a lovely weekend!

Alex

 

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How capital-as-a-service can help you get your first check in 2021

Published February 27, 2021

“A lot of founders mix up raising money with making money.”

This quote, which Career Karma founder Ruben Harris mentioned off-hand on a phone call with me, has been on my mind for months. In fact, raising money can cost you money, in the form of that sweet, sweet ownership and equity.

That’s why Clearbanc, a startup I have covered for years, has always had a compelling pitch.

The company, co-founded by Michele Romanow and Andrew D’Souza, positions itself as an alternative equity-free capital solution for early-stage founders. Flexing its “20-minute term sheet” the startup uses an algorithm to shift through a startup’s data, and if it has positive ad spend and positive unit economics, they make an investment worth anything from $10,000 to over $10 million. It makes money through a revenue-share agreement versus an equity stake.

“While we’ve invested in over 4,000 businesses using this model, we’ve also turned away over 50,000 who weren’t at this scale or level of repeatability,” D’Souza tells TechCrunch. So, the startup told me this week that they have raised $10 million to create a new product: ClearAngel.

The startup is trying to back anyone with an online business that has early revenue, but pre-broad traction. Clearbanc wants to replace friends and family money, a concept that D’Souza says is “quite elitist,” with its own version of an angel check, while also offering founder services such as supply chain analysis, introductions to networks and competitive landscape analysis.

The startup just needs to make around $1,000 in monthly revenue to qualify for cash. In return for an investment between $10,000 to $50,000, founders have to pay up to 2% of their revenue over four years.

Clearbanc’s repayment works for some startups, but for others, a traditional bank loan could work better. Its biggest hurdle, I’d argue, is that if a startup has great revenue already, you might not want to take a revenue-share agreement loan.

As for if a startup takes ClearAngel capital and doesn’t make the minimum revenue?

“Then the ClearAngel product isn’t working,” he said. “There are bound to be some companies who still can’t make it, that’s the risk we take.”

Alternative capital has pros and cons, just like venture capital has pros and cons. If the end goal is to become a billion-dollar business, what’s the best route to do that? Is taking a revenue-share agreement going to hurt your chances as a pre-seed startup trying to raise capital? Does YC care at all?

Those are some of my biggest questions, and we’ll explore all (and more!) in my alternative financing panel next week for TC Sessions: Justice. It costs $5 to attend the entire conference, and speakers include Backstage Capital’s Arlan Hamilton and Congresswoman Barbara Lee.

Remember that you can get Startups Weekly in your inbox before anyone else, if you subscribe. It’s free! As always, you can find me @nmasc_ on Twitter or e-mail me at natasha.m@techcrunch.com. That is free too!

Register for TC Sessions: Justice for a conversation on diversity, equity and inclusion in the startup world

Coinbase files to go public

After being valued at $100 billion in the secondary markets, Coinbase has finally filed to go public. The S-1, as Winnie founder Sara Mauskopf tweeted, is #goals. The crypto unicorn, as my colleague Alex Wilhelm notes, grew just over 139% in 2020, a massive improvement on its 2019 results.

Here’s what to know:

As the SPAC frenzy continues, questions arise about how much the market can absorb

Other notes:

Coinbase Co-founder and CEO Brian Armstrong

SAN FRANCISCO, CA – SEPTEMBER 07: Coinbase Co-founder and CEO Brian Armstrong speaks onstage during Day 3 of TechCrunch Disrupt SF 2018 at Moscone Center on September 7, 2018 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)

Mobility-as-a-service

I caught up with Eric Eldon, managing editor at TechCrunch and former Startups Weekly writer, about the recent work he’s been doing with Kirsten Korosec, our transportation editor.

Here’s what he had to say: Startup employees may not be going into the office as often again — or ever. But everyone will still need to go places, or at least want to! How will they do it? What will we do? How will our altered set of needs and wants reshape cities, right as new technologies are fundamentally altering transportation, too? We’re going to be covering this topic in-depth this year, as we all figure out how to go back to work.

Other reading:

TechCrunch Mobility

Crazy ride on the night by car. Image Credits: franckreporter/Getty Images.

Spain wants startups to succeed on its soil

The Spanish government, led by Prime Minister Pedro Sanchez, has announced plans to turn itself into an entrepreneurial nation. The Startup Act is the first piece of dedicated legislation meant to help create tech innovation within Spain. The goals are to promote innovation, new capital through domestic and foreign investments, and to seed the future of Spain as a hub for new companies.

Here’s what to know: Driving innovation can start with relaxing on regulatory concerns.

Among a package of some 50 support measures, the entrepreneurial strategy makes a reference to “smart regulation” and floats the idea of sandboxing for testing products publicly (i.e. without needing to worry about regulatory compliance first).

Spain’s ten-year plan to put startups in the economic driving seat

Other news this week:

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

Some personal news

As loyal Equity listeners may have already noticed, we’ve been quietly experimenting with the concept of adding on a third show to our weekly production. This week, we told the world! Along with our current shows, which help listeners start and end the week with tech news, we’re going to bring on a Wednesday deep dive into a topic, subject area or person. Our first mid-week episode went live this week, and it was all about space (so yes, expect a lot of puns and Elon jokes).

SpaceX is really just SPAC and an ex

The show is about to celebrate its four-year anniversary, and I’m about to celebrate my one-year anniversary as a co-host. We’re all so thankful for your support, and can’t wait to bring you more laughs and learnings.

Our latest episodes:

Across the week

Seen on TechCrunch

The startup bootcamp you’ve always needed is finally here

Scoop: VCs are chasing Hopin upwards of $5-6B valuation

Lisbon’s startup scene rises as Portugal gears up to be a European tech tiger

Sources: Lightspeed Venture Partners is close to hiring a London-based partner to put down roots in Europe

Contra wants to be a community for independent workers

Seen on Extra Crunch

Ironclad’s Jason Boehmig: The objective of pricing is to become less wrong over time

As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings

4 essential truths about venture investing

4 essential truths about venture investing

And that’s the jam-packed week! As an insider tip to those that subscribe, I’m starting to cover health tech (along with edtech) for the TC team. So throw me the smartest person you know on the topic, and extra points if that’s you.

N

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Storm Ventures promotes Pascale Diaine and Frederik Groce to partners

Published February 27, 2021

Storm Ventures, a venture firm that focuses on early stage B2B enterprise startups, announced this week that it has promoted Pascale Diaine and Frederik Groce to partners at the firm.

The two new partners have worked their way up over the last several years. Groce joined Storm in 2016 and has invested in enterprise SaaS startups like Workato, Splashtop, NextRequest and Camino. Diaine joined a year later and has invested in firms like Sendoso, German Bionic, InEvent and Talkdesk.

Groce, who is also a founder at BLCK VC and helped organize the Black Venture Institute to create a network of Black investors, says that these promotions show that venture needs to be more diverse, and Storm recognizes this.  “If you think about the way our team works, that’s the way I think venture teams will need to work to be able to be successful in the next 40 years. And so the hope is that over time everyone does this and we’re just early to it,” Groce told me.

Unfortunately, right now that’s not the case, not even close. According to research by Crunchbase, just 12% of venture capitalists are women and two-thirds of firms don’t have any female investors. Meanwhile, only about 4% of ventures investors are Black.

Those numbers have an impact on the number of Black and female founders because as Groce points out the lack of founders in underrepresented groups is in part a networking problem. “In a business that’s predicated on networks if you don’t have diversity in the network, or the teams that are driving those networks, you just can’t make sure you’re seeing great talent across all ecosystems,” he said.

Storm Ventures brings on two new partners at enterprise-focused firm

Diaine, who is French and started her career by founding Orange Fab, the corporate accelerator of the European Telco Orange, has brought her international business background to Storm where they helped her tune that experience to an investor focus and supported her as she learned the nuances of the investment side of the business.

“I don’t come from the VC world. I come from the innovative corporate world. So they had to train me and spend time getting me up to date. And they did spend so much time making sure I understood everything to make sure I got to this level,” she said.

Both partners bring their own unique views looking beyond Silicon Valley for investment opportunities. Diaine’s investment include a German, Brazilian and Portuguese company, while Groce’s investments include companies in Chicago, Atlanta and Seattle.

The two partners have also developed an algorithm to help find investments based on a number of online signals, something that has become more important during the pandemic when they couldn’t network in person.

“Frederik and I have been working on [an algorithm to find] what are the signals that you can identify online that will tell you this company’s doing well, this company growing.You have to have a nice set of startup search tracking [signals], but what do you track if you can’t just get the revenue in real time, which is impossible. So we’ve developed an algorithm that helps us identify some of these signals and create alerts on which startups we should pay attention to,” Diaine explained.

She says this data-driven approach should be helpful and augment their in-person efforts even after the pandemic is over and increase their overall efficiency in finding and tracking companies in their portfolios.

BLCK VC launches educational initiative to bring more Black entrepreneurs into investing ecosystem

 

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What the NFT? VC David Pakman dumbs down the digital collectibles frenzy and why it’s taking off now

Published February 27, 2021

Non-fungible tokens have been around for two years, but these NFTs, one-of-one digital items on the Ethereum and other blockchains, are suddenly becoming a more popular way to collect visual art, primarily, whether it’s an animated cat or an NBA clip or virtual furniture.

“Suddenly” is hardly an overstatement. According to the outlet Cointelegraph, during the second half of last year, $9 million worth of NFT goods sold to buyers; during one 24-hour window earlier this week, $60 million worth of digital goods were sold.

What’s going on? A thorough New York Times piece on the trend earlier this week likely fueled new interest, along with a separate piece in Esquire about the artist Beeple, a Wisconsin dad whose digital drawings, which he has created every single day for the last 13 years, began selling like hotcakes in December. If you evidence of a tipping point (and it’s amply available), the work of Beeple, whose real name is Mike Winkelmann, was just made available through Christie’s. It’s the venerable auction house’s first sale of exclusively digital work.

To better understand the market and why it’s blowing up in real time, we talked this week with David Pakman, a former internet entrepreneur who joined the venture firm Venrock a dozen years ago and began tracking Bitcoin soon after, even mining the cryptocurrency at his Bay Area home beginning in 2015. (“People would come over and see racks of computers, and it was like, ‘It’s sort of hard to explain.’”)

Perhaps it’s no surprise that he also became convinced early on of the promise of NFTs, persuading Venrock to lead the $15 million Series A round for a young startup, Dapper Labs, when its primary offering was CryptoKitties, limited-edition digital cats that can be bought and bred with cryptocurrency.

While the concept baffled some at the time, Pakman has long seen the day when Dapper’s offerings will be far more extensive, and indeed, a recent Dapper deal with the NBA to sell collectible highlight clips has already attracted so much interest in Dapper that it is reportedly right now raising $250 million in new funding at a post-money valuation of $2 billion. While Pakman declined to confirm or correct that figure, but he did answer our other questions in a chat that’s been edited here for length and clarity.

TC: David, dumb things down for us. Why is the world so gung-ho about NFTs right now?

DP: One of the biggest problems with crypto — the reason it scares so many people — is it uses all these really esoteric terms to explain very basic concepts, so let’s just keep it really simple. About 40% of humans collect things — baseball cards, shoes, artwork, wine. And there’s a whole bunch of psychological reasons why. Some people have a need to complete a set. Some people do it for investment reasons. Some people want an heirloom to pass down. But we could only collect things in the real world because digital collectibles were too easy to copy.

Then the blockchain came around and [it allowed us to] make digital collectibles immutable, with a record of who owns what that you can’t really copy. You can screenshot it, but you don’t really own the digital collectible, and you won’t be able to do anything with that screenshot. You won’t be able to to sell it or trade it. The proof is in the blockchain. So I was a believer that crypto-based collectibles could be really big and actually could be the thing that takes crypto mainstream and gets the normals into participating in crypto — and that’s exactly what’s happening now.

TC: You mentioned a lot of reasons that people collect items, but one you didn’t mention is status. Assuming that’s your motivation, how do you show off what you’ve amassed online? 

DP: You’re right that one of the other reasons why we collect is to show it off status, but I would actually argue it’s much easier to show off our collections in the digital world. If I’m a car collector, the only way you’re going to see my cars is to come over to the garage. Only a certain number of people can do that. But online, we can display our digital collections. NBA Top Shop, for example, makes it very easy for you to show off your moments. Everyone has a page and there’s an app that’s coming and you can just show it off to anyone in your app, and you can post it to your social networks. And it’s actually really easy to show off how big or exciting your collection is.

TC: It was back in October that Dapper rolled out these video moments, which you buy almost like a Pokemon set in that you’re buying a pack and know you’ll get something “good” but don’t know what. But while almost half it sales have come in through the last week. Why?

DP: There’s only about maybe 30,000 or 40,000 people playing right now. It’s growing 50% or 100% a day. But the growth has been completely organic. The game is actually still in beta, so we haven’t been doing any marketing other than posting some stuff on Twitter. There hasn’t been attempt to market this and get a lot of players [talking about it] because we’re still working the bugs out, and there are a lot of bugs still to be worked out.

But a couple NBA players have seen this and gotten excited about their own moments [on social media]. And there’s maybe a little bit of machismo going on where, ‘Hey, I want my moment to trade for a higher price.’ But I also think it’s the normals who are playing this. All you need to play is a credit card, and something like 65% of the people playing have never owned or traded in crypto before. So I think the thesis that crypto collectibles could be the thing that brings mainstream users into crypto is playing out before our eyes.

TC: How does Dapper get paid?

DP: We get 5% of secondary sales and 100% minus the cost of the transaction on primary sales. Of course, we have a relationship with the NBA, which collects some of that, too. But that’s the basic economics of how the system works.

TC: Does the NBA have a minimum that it has to be paid every year, and then above and beyond that it receives a cut of the action?

DP: I don’t think the company has gone public with the exact economic terms of their relationships with the NBA and the Players Association. But obviously the NBA is the IP owner, and the teams and the players have economic participation in this, which is good, because they’re the ones that are creating the intellectual property here.

But a lot of the appreciation of these moments — if you get one in a pack and you sell it for a higher price — 95% of that appreciation goes to the owner. So it’s very similar to baseball cards, but now IP owners can participate through the life of the product in the downstream economic activity of their intellectual property, which I think is super appealing whether you’re the NBA or someone like Disney, who’s been in the IP licensing business for decades.

And it’s not just major IP where this NFT space is happening. It’s individual creators, musicians, digital artists who could create a piece of digital art, make only five copies of it, and auction it off. They too can collect a little bit each time their works sell in the future.

TC: Regarding NBA Top Shot specifically, prices range massively in terms of what people are paying for the same limited-edition clip. Why?

DP: There are two reasons. One is that like scarce items, lower numbers are worth more than higher numbers, so if there’s a very particular LeBron moment, and they made 500 [copies] of them, and I own number one, and you own number 399, the marketplace is ascribing a higher value to the lower numbers, which is very typical of limited-edition collector pieces. It’s sort of a funny concept. But it is a very human concept.

The other thing is that over time there has been more and more demand to get into this game, so people are willing to pay higher and higher prices. That’s why there’s been a lot of price appreciation for these moments over time.

TC: You mentioned that some of the esoteric language around crypto scares people, but so does the fact that 20% of the world’s bitcoin is permanently inaccessible to its owners, including because of forgotten passwords. Is that a risk with these digital items, which you are essentially storing in a digital locker or wallet?

DP: It’s a complex topic,  but I will say that Dapper has tried to build this in a way where that won’t happen, where there’s effectively some type of password recovery process for people who are storing their moments in Dapper’s wallet.

You will be able to take your moments away from Dapper’s account and put it into other accounts, where you may be on your own in terms of password recovery.

TC: Why is it a complex topic?

DP: There are people who believe that even though centralized account storage is convenient for users, it’s somehow can be distrustful — that the company could de-platform you or turn your account off. And in the crypto world, there’s almost a religious ferocity about making sure that no one can de-platform you, that the things that you buy — your cryptocurrencies or your NFTs. Long term, Dapper supports that. You’ll be able to take your moments anywhere you want. But today, our customers don’t have to worry about that I-lost-my-password-and-I’ll-never-get-my-moments-again problem.

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Daily Crunch: Facebook launches rap app

Published February 26, 2021

Facebook unveils another experimental app, Atlassian acquires a data visualization startup and Newsela becomes a unicorn. This is your Daily Crunch for February 26, 2021.

The big story: Facebook launches rap app

The new BARS app was created by NPE Team (Facebook’s internal R&D group), allowing rappers to select from professionally created beats, and then create and share their own raps and videos. It includes autotune and will even suggest rhymes as you’re writing the lyrics.

This marks NPE Team’s second musical effort — the first was the music video app Collab. (It could also be seen as another attempt by Facebook to launch a TikTok competitor.) BARS is available in the iOS App Store in the U.S., with Facebook gradually admitting users off a waitlist.

The tech giants

Atlassian is acquiring Chartio to bring data visualization to the platform — Atlassian sees Chartio as a way to really take advantage of the data locked inside its products.

Yelp puts trust and safety in the spotlight — Yelp released its very first trust and safety report this week, with the goal of explaining the work that it does to crack down on fraudulent and otherwise inaccurate or unhelpful content.

Startups, funding and venture capital

Newsela, the replacement for textbooks, raises $100M and becomes a unicorn —  If Newsela is doing its job right, its third-party content can replace textbooks within a classroom altogether, while helping teachers provide fresh, personalized material.

Tim Hortons marks two years in China with Tencent investment — The Canadian coffee and doughnut giant has raised a new round of funding for its Chinese venture.

Sources: Lightspeed is close to hiring a new London-based partner to put down further roots in Europe — According to multiple sources, Paul Murphy is being hired away from Northzone.

Advice and analysis from Extra Crunch

In freemium marketing, product analytics are the difference between conversion and confusion — Considering that most freemium providers see fewer than 5% of free users move to paid plans, even a slight improvement in conversion can translate to significant revenue gains.

As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings — With buy-now-pay-later options, consumers turn a one-time purchase into a limited string of regular payments.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

Jamaica’s JamCOVID pulled offline after third security lapse exposed travelers’ data — JamCOVID was set up last year to help the government process travelers arriving on the island.

AT&T is turning DirecTV into a standalone company — AT&T says it will own 70% of the new company, while private equity firm TPG will own 30%.

How to ace the 1-hour, and ever-elusive, pitch presentation at TC Early Stage — Norwest’s Lisa Wu has a message for founders: Think like a VC during your pitch presentation.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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