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See what’s new from ChargePoint, Wejo, Waymo and Planet M at TechCrunch’s mobility event next week
We’re in the final run up to TC Sessions: Mobility 2020 on October 6-7, and the great stuff just keeps on coming. We’ve stacked the two-day agenda with plenty of programming to keep you engaged, informed and on track to build a stronger business. You’ll always find amazing speakers — some of the most innovative minds out there — on the main stage, but don’t forget about the breakout sessions.
Dramatic pause for a pro tip: Don’t have a pass yet? Buy one here now, before prices go up on October 5. TIP: You can check out some of the breakout sessions, q&a sessions, startup mobility pitches and the expo when you get the Expo Ticket for just $25.
The smaller breakout sessions, led by top experts in their field, let you dig into specific topics, ask questions and make connections. A lot of excitement and startup magic can happen at the breakout sessions.
“I enjoyed the big marquee speakers from companies like Uber, but it was the individual presentations where you really started to get into the meat of the conversation and see how these mobile partnerships come to life.” — Karin Maake, senior director of communications at FlashParking.
Before we share the breakout session topics, we have another exciting bit of news. We’re hosting pitch sessions for early-stage startup founders who exhibit in the expo at TC Sessions: Mobility. Each startup gets five minutes to pitch to attendees in a breakout session. Remember, this conference has a global reach — talk about visibility! Want to pitch? Buy an Early Stage Startup Exhibitor Package before sales close on Friday.
Alrighty then…let’s look at some of the breakout sessions waiting for you at TC Sessions: Mobility 2020.
Tuesday, October 6
10:00 am -10:50 am PDT
Software Is Revolutionizing the Driver Experience and Driving Mass Electrification – Software in EVs enables a shift from buying a car to investing in an experience. Hear how it’s driving adoption, revolutionizing behavior & keeping up w/ demand. Brought to you by ChargePoint
10:25 am -10:45 am PDT
Main Stage: Driving the Mobility Revolution with Connected Car Data – Learn from Wejo’s VP of Partnerships about the future of mobility and how connected car data impacts the world of autonomous, electric and shared vehicles. Brought to you by Wejo
10:55 am – 11:15 am PDT
Main Stage: Designing Driverless: A Look into the Waymo One Experience – Waymo’s head of ux research and design gives an inside look into their fully driverless service experience and its design. Brought to you by Waymo
11:00 am – 11:15 am PDT
Q&A Session w/ Reilly Brennan, Amy Gu and Olaf Sakkers
12:15 pm – 12:30 pm PDT
Q&A Session w/ Danielle Harris, Avra van der Zee and Dmitry Shevelenko
12:30 pm -1:20 pm PDT
Mobility Startup Demo Pitch Session – Part 1
Wednesday, October 7
9:00 am – 9:50 am PDT
Mobility Startup Demo Pitch Session – Part 2
10:00 am – 10:50 am PDT
Mobility Startup Demo Pitch Session – Part 3
10:55 am – 11:15 am PDT
Main Stage: Public-Private Partnerships: Advancing the Future of Mobility – Join us to learn how the public and private entities partner together to shape the future of mobility with the next generation of transportation solutions. Brought to you by Planet M
11:00 am – 11:20 am PDT
Q&A Session w/ David Estrada, Melissa Froelich, Jody Kelman and Prashanthi Raman
12:15 pm – 12:30 pm PDT
Q&A Session w/ Ben Bear, Fredrik Hjelm
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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Brands building for scale should look to hypercultural Latinx consumers
Ilse Calderon is an investor at OVO Fund where she specializes in pre-seed investments across capital-efficient markets. Prior to OVO, Ilse spent a year at Silicon Valley Bank rotating across consumer and software teams.
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Kathleen Garcia-Manjarres (Kat Garcia) is a Growth Architect at BCG Digital Ventures (BCGDV) where she invests, invents, builds and scales startups with the world’s most influential companies.
As two female investors who themselves identify as hypercultural (HC) Latinx, we see much potential for brands and startups that invest in this demographic.
For the purpose of this article, we will focus on 13-to-25-year-old individuals who can trace their heritage to a Latin American country who have spent the majority of their lifetime in the U.S. Whether they were born in the U.S. doesn’t matter as much as how much time they have spent immersed in mainstream American culture. This is important to note because this demographic is largely defined by always having one foot in their parents’ native country and another in the United States.
In simplest terms: A Latinx person has origins from a country in Latin America, like Mexico or Brazil, while a Hispanic person has origins from a country where Spanish is the dominant language, such as Mexico or Spain. A Pew Research study found that one in four people who describe themselves as Hispanic or Latino have heard of the non-gendered “Latinx,” but only 3% of them use the term in everyday life.
So what makes the hypercultural Latinx so unique and worthy of pursuit? It’s not a secret that they have massive purchasing power behind them (a collective $1.9 trillion to be exact). However, they are also different from their mostly white counterparts in the way they vigorously engage with technology, their obsession with being online at all times and their unique shopping habits.
Hypercultural Latinx consumers are accustomed to being early adopters of new technology: 81% of them say they like to learn about the latest technology (overindexing their white counterparts by 36%). Latino households are filled with the latest gadgets and smart tech toys. Although we assume most Gen Zers and young millennials love technology, HC Latinx love tech at astronomical rates and shell out more dollars than their white, mostly monocultural counterparts.
This makes sense given that 60% of HC Latinx grew up in the internet age versus only 40% of their white counterparts. Across levels of HC Latinx income (or their parents’), there is always a budget for technology. In my own Mexican household (Ilse), I grew up prioritizing tech over other (sometimes more important) categories like books or vacations.
The online lives of the HC Latinx can be summed up by one statistic: 24% spend three hours or more on social media per day. compared to only 13% of their white counterparts. So much time is spent online by this Latinx youth that they are able to create a digital comunidad where they thrive socially and intellectually. This comunidad has so much influence in how the HC Latinx thinks about what they purchase and how loyal they are to the brands they buy from.
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Vista-owned backup and recovery company Datto files to go public
When Vista Equity Partners acquired backup and disaster recovery firm Datto in 2017, it was easy to think that was the end of the company’s story. It would be comfortably absorbed into the private equity portfolio continuing to make money for the firm, but that’s not really the way Vista works. It tends to build up its companies, sometimes eventually taking them public, and yesterday that’s what happened when Datto filed its S-1.
Datto has been busy since it was acquired and reports a healthy $507 million in annual recurring revenue (ARR) along with 17,000 managed service provider (MSP) customers. Among those, it has more than 1000 customers contributing over $100,000 in ARR. MSPs are service providers that act as a company’s IT department when they don’t have internal resources.
The company has included a standard $100 million placeholder for the amount they intend to raise for the event, and that will almost certainly change. In a nod to its manage service provider customer base, the company’s ticker symbol will be MSP.
When the company raised its $75 million Series B in 2015, former CEO and founder Austin McChord, said that the company was already profitable at that point, two years before Vista came knocking. “As a profitable company, Datto isn’t raising capital to fund operations, but instead, to enter new markets and build new products and technology,” he said in a statement at the time.
You can see that in the company’s financials. In the first six months of 2020, the company had subscription revenues of $234 million and a gross profit of $178 million. When sales and marketing and other costs are added in, the company had a net income of $10 million. That’s compared to $196 million in subscription revenue in the same period of 2019, a gross profit of $143 million, and a net loss of about $26 million.
In short, the company has managed to grow top-line revenue, keep its cost of revenues flat, and manage the growth of its other expenses to limit their effect on the bottom line. That swung its net income per share from -$0.19 to $0.07.
Of course, companies like Datto always try to make the numbers look good in preparation for a public offering, so the real understanding will come in the next few quarters as we see if Datto can sustain its growth and keep expenses in check.
When I spoke to Alan Cline, senior managing director at Vista last year, he said his firm tends to like high-performing startups like Datto that have built substantial companies.
“Software is the easiest place to innovate inside of technology. We see a huge advantage in terms of the productivity that it drives for the end business customer, and to us that high ROI is powerful because whether it’s an up market or a down market, if I can prove to you you’re going to make more money or save money in your own operations by using my software, you can find the budget,” Cline told TechCrunch.
Just last year another company in the Vista portfolio, Ping Identity, filed to go public for the same $100 million placeholder, eventually offering 12.5 million shares at $15 per share. Today the company is trading at $31.68 per share with a market cap of over $2.5 billion.
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Homer nabs $50M from Lego, Sesame Workshop and Gymboree for its early learning apps
For better or worse, tablets and smartphones have become a cornerstone of how many younger children pass the time. Today, a company that builds literacy and other educational apps to help make that time more worthwhile is announcing a large round of funding from a number of strategic backers to move into the next phase of its growth, building not just apps but a comprehensive learning platform.
BEGiN, the startup behind the Homer early learning program aimed primarily at kids between the ages of two and eight, has raised $50 million in a Series C round of funding, money that it plans to use to, in the words of CEO Neal Shenoy (who co-founded the company with Stephanie Dua), create a “systematic experience” in learning.
The startup has been around since 2013 and got its start with literacy — it says that its reading apps are currently the most popular for children under age five in the U.S. App Store — which remains its core subject area, but it has also expanded into other subject areas and plans to take that further.
“We are launching the industry’s first comprehensive early learning program,” he said in an interview. “And so from a curriculum perspective, this will extend beyond reading to include math, critical thinking, creativity, and socio-emotional learning, we will deliver this learning, these experiences, across digital, physical, tangible product, and in class mediums, we will focus on both serving the child and the parent and the relationship between them says the parent is the child’s first teacher.”
The round includes a number of strategic investors that will help bring this together. The backers include LEGO Ventures, Sesame Workshop, the principal investor in Gymboree Play & Music, 3One4 Capital, Trustbridge Partners and Interlock Partners. In addition to the $50 million, Liquidity Capital is also contributing $25 million in trajectory-based funding for further growth. The strategic backers plan to help build the curriculum, the products and the distribution for the new program, he said.
The valuation of Homer, and BEGiN itself, is not being disclosed, but the company said that it already has hundreds of thousands of subscribers and generates tens of millions of dollars in revenues.
The funding news and strategic expansion comes at a critical time in the educational industry, and e-learning in particular.
Children’s educational apps — and taking even just those focused on early learning (Age of Learning is another leader in this segment of the market) — have been around for as long as the internet itself. But they have always existed in conjunction with a host of more conventional resources, such as nurseries and schools, playgroups and other activities, and general socialization. The global health pandemic, however, has changed all that for many people: many families, kids included, are spending more time at home and away from teachers and the (real life) social networks that play a part in how they develop.
That’s put a huge emphasis on rethinking how tech-based tools, starting with gadgets like tablets and software like apps, can make up the difference, for now or maybe even for longer, to make sure that kids continue to learn, but also feel engaged and stimulated at a time when a lot of options for doing that have been reduced.
Joining up app makers with those who make educational physical objects is a not a new thing per se: “educational toys,” as any parent knows, are a dime a dozen in terms of supply (if not cost… they can be expensive). But it’s interesting to see toy makers joining up with those who build entertainment content and other products for children for an even bigger-picture approach to identifying and building to address the challenge of how best to deliver some aspects of early-years education.
Indeed, LEGO Ventures is a newish effort from the Danish modular toy maker, founded to help the company, now more than 70 years old, step into the next phase of how children learn and keep themselves entertained.
“HOMER’s vision and approach to playful learning fosters curiosity and collaboration in children that aligns closely with LEGO Ventures’ investment ethos supporting founders and companies in bringing the LEGO idea of learning-through-play to life,” said Jamie Beaumont, managing partner, LEGO Ventures, in a statement. “We look forward to working with Neal and the excellent team he has built, and supporting HOMER as they grow and scale their purposeful play offerings across hands-on, in-person and digital experiences.”
As with e-learning companies targeting other age groups, the startup has seen a huge boost in business in the last several months, with a 280% increase in annual subscriptions, 230% increase in website subscriptions, and children accessing 30% more lessons than this time last year. (Overall, the company has had 80%+ year-over-year growth since launch.)
“With its focus on research and kid-centric design, and expansion to embrace the whole child curriculum, HOMER’s approach reflects the mission of Sesame Workshop to help kids grow smarter, strong and kinder,” said Steve Youngwood, president of Media and Education, and chief operating officer of Sesame Workshop, in a statement. “We’re excited to support HOMER’s growth and to look for further ways to partner with them to give young children the best possible start at a critical time of their learning and development.”
Additional reporting Natasha Mascarenhas
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Coralogix lands $25M Series B to rethink log analysis and monitoring
Logging and monitoring tends to be an expensive endeavor because of the sheer amount of data involved. Companies are therefore forced to pick and choose what they monitor, limiting what they can see. Coralogix wants to change that by offering a more flexible pricing model, and today the company announced a $25 million Series B and a new real-time analytics solution called Streama.
First the funding. The round was led by Red Dot Capital Partners and O.G. Tech Ventures, with help from existing investors Aleph VC, StageOne Ventures, Janvest Capital Partners and 2B Angels. Today’s round, which comes after the startup’s $10 million Series A last November, brings the total to $41.2 million raised, according to the company.
When we spoke to Coralogix CEO and co-founder Ariel Assaraf last year regarding the A round, he described his company as more of an intelligent applications performance monitoring with some security logging analytics.
Today, the company announced Streama, which has been in Alpha since July. Assaraf says companies can pick and choose how they monitor and pay only for the features they use. That means if a particular log is only tangentially important, a customer can set it to low priority and save money, and direct the budget toward more important targets.
As the pandemic has taken hold, he says that companies are appreciating the ability to save money on their monitoring costs, and directing those resources elsewhere in the company. “We’re basically building out this full platform that is going to be inside-centric and value-centric instead of volume or machine count-centric in its pricing model,” Assaraf said.
Assaraf differentiates his company from others out there like Splunk, Datadog and Sumo Logic, saying his is a more modern approach to the problem that simplifies the operations. “All these complicated engineering things are being abstracted away in a simple way, so that any user can very quickly create savings and demonstrate that it’s [no longer] an engineering problem, it’s more of a business value question,” he explained.
Since the A round, the company has grown from 25 to 60 people spread out between Israel and the U.S. It plans to grow to 120 people in the next year with the new funding. When it comes to diversity in hiring, he says Israel is fairly homogeneous, so it involves gender parity there, something that he says he is working to achieve. The U.S. operation is still relatively small, with just 12 employees now, but it will be expanding in the next year and it’s something he says that he will need to be thinking about as he hires.
As part of that hiring spree, he wants to kick his sales and marketing operations into higher gear and start spending more on those areas as the company grows.
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VTEX raises $225M at a $1.7B valuation for e-commerce solutions aimed at retailers and brands
Retailers and consumer brands are focused more than ever in their histories on using e-commerce channels to connect with customers: the global health pandemic has disrupted much of their traditional business in places like physical stores, event venues and restaurants, and vending machines, and accelerated the hunt for newer ways to sell goods and services. Today, a startup that’s been helping them build those bridges, specifically to expand into newer markets, is announcing a huge round of funding, underscoring the demand.
VTEX, which builds e-commerce solutions and strategies for retailers like Walmart and huge consumer names like AB InBev, Motorola, Stanley Black & Decker, Sony, Walmart, Whirlpool, Coca-Cola and Nestlé, has raised $225 million in new funding, valuing the company at $1.7 billion post-money.
The funding is being co-led by two investors, Tiger Global and Lone Pine Capital, with Constellation, Endeavour Catalyst and SoftBank also participating. It’s a mix of investors, with two leads, that offers a “signal” of what might come next for the startup, said Amit Shah, the company’s chief strategy officer and general manager for North America.
“We’ve seen them invest in big rounds right before companies go public,” he said. “Now, that’s not necessarily happening here right now, but it’s a signal.” The company has been profitable and plans to continue to be, Shah said (making it one example of a SoftBank investment that hasn’t gone sour). Revenues this year are up 114% with $8 billion in gross merchandise volume (GMV) processed over platforms it’s built.
Given that VTEX last raised money less than a year ago — a $140 million round led by SoftBank’s Latin American Innovation Fund — the valuation jump for the startup is huge. Shah confirmed to us that it represents a 4x increase on its previous valuation (which would have been $425 million).
The interest back in November from SoftBank’s Latin American fund stemmed from VTEX’s beginnings.
The company got its start building e-commerce storefronts and strategies for businesses that were hoping to break into Brazil — the B of the world’s biggest emerging “BRIC” markets — and the rest of Latin America. It made its name building Walmart in the region, and has continued to help run and develop that operation even after Walmart divested the asset, and it’s working with Walmart now in other regions outside the US, too, he added.
But since then, while the Latin American arm of the business has continued to thrive, the company has capitalized both on the funding it had picked up, and the current global climate for e-commerce solutions, to expand its business into more markets, specifically North America, EMEA and most recently Asia.
“We are today even more impressed by the quality and energy of the VTEX team than we were when we invested in the previous round,” said Marcello Silva at Constellation. “The best is yet to come. VTEX’s team is stronger than ever, VTEX’s product is stronger than ever, and we are still in the early stages of ecommerce penetration. We could not miss the opportunity to increase our exposure.”
Revenues were growing at a rate of 50% a year before the pandemic ahead of it’s more recent growth this year of 114%, Shah said. “Of course, we would prefer Covid-19 not to be here, but it has had a good effect on our business. The arc of e-commerce has grown has impacted revenues and created that additional level of investor interest.”
VTEX’s success has hinged not just on catering to companies that have up to now not prioritized their online channels, but in doing so in a way that is more unified.
Consumer packaged goods have been in a multi-faceted bind because of the fragmented way in which they have grown. A drinks brand will not only manufacture on a local level (and sometimes, as in the case of, say, Coca-Cola, use different ingredient formulations), but they will often have products that are only sold in select markets, and because the audiences are different, they’ve devise marketing and distribution strategies on a local level, too.
On top of all that, products like these have long relied on channels like retailers, restaurants, vending machines and more to get their products into the hands of consumers.
These days, of course, all of that has been disrupted: all the traditional channels they would have used to sell things are now either closed or seeing greatly reduced custom. And as for marketing: the rise of social networks has led to a globalization in messaging, where something can go viral all over the world and marketing therefore knows no regional boundaries.
So, all of this means that brands have to rethink everything around how they sell their products, and that’s where a company like VTEX steps in, building strategies and solutions that can be used in multiple regions. Among typical deals, it’s been working with AB InBev to develop a global commerce platform covering 50 countries (replacing multiple products from other vendors, typically competitors to VTEX include SAP, Shopify and Magento, and giving brands and others a viable route to market that doesn’t cut in the likes of Amazon).
“CPG companies are seeking to standardize and make their businesses and lives a little easier,” Shah said. Typical work that it does includes building marketplaces for retailers, or new e-commerce interfaces so that brands can better supply online and offline retailers, or sell directly to customers — for example, with new ways of ordering products to get delivered by others. Shah said that some 200 marketplaces have now been built by VTEX for its customers.
(Shah himself, it’s worth pointing out, has a pedigree in startups and in e-commerce. He founded an e-commerce analytics company called Jirafe, which was acquired by SAP, where he then became the chief revenue officer of SAP Hybris.)
“We are excited to grow quickly in new and existing markets, and offer even more brands a platform that embraces the future of commerce, which is about being collaborative, leveraging marketplaces, and delivering customer experiences that are second-to-none,” said Mariano Gomide de Faria, VTEX co-founder and co-CEO, in a statement. “This injection of funding will undoubtedly support us in achieving our mission to accelerate digital commerce transformation around the world.”
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Papaya Global raises $40M for a payroll and HR platform aimed at global workforces
Workforces are getting more global, and people who work day in, day out for organizations don’t always sit day in, day out in a single office, in a single country, to get a job done. Today, one of the startups building HR to help companies provision services for and manage those global workers better is announcing a funding round to capitalise on a surge in business that it has seen in the last year — spurred in no small part by the global health pandemic, the impact it’s had on travel and the way it has focused the minds of companies to get their cloud services and workforce management in order.
Papaya Global, an Israeli startup that provides cloud-based payroll, as well as hiring, onboarding and compliance services for organizations that employ full-time, part-time, or contract workers outside of their home country, has raised $40 million in a Series B round of funding led by Scale Venture Partners. Workday Ventures — the corporate investment arm of the HR company — Access Industries (via its Israeli vehicle Claltech), and previous investors Insight Partners, Bessemer Venture Partners, New Era Ventures, Group 11 and Dynamic Loop also participated
The money comes less than a year after its Series A of $45 million, following the company growing 300% year-over-year annually since 2016. It has now raised $95 million and is not disclosing valuation. But Eynat Guez, the CEO who co-founded the company in that year with Ruben Drong and Ofer Herman, said in an interview that it’s 5x the valuation it had in its round last year.
Its customers include fast-growing startups (precisely the kind of customer that not only has global workforces, but is expanding its employee base quickly) like OneTrust, nCino and Hopin, as well as major corporates like Toyota, Microsoft, Wix and General Dynamics.
Guez said Papaya Global was partly born out of the frustrations she herself had with HR solutions — she’s worked in the field for years. Different countries have different employment regulations, varied banking rules, completely different norms in terms of how people get paid, and so on. While there have been some really modern tools built for local workforces — Rippling, Gusto and Zenefits now going head to head with incumbents like ADP — they weren’t built to address these issues.
Other HR people who have dealt with international workers would understand her pain; those who control the purse strings might have been less aware of the fragmentation. All that changed in the last eight months (and for the foreseeable future), a period when companies have had to reassess everything about how they work to make sure that they can get through the current period without collapsing.
“The major impact of COVID-19 for us has been changing attitudes,” said Guez. “People usually think that payroll works by itself, but it’s one of the more complex parts of the organization, covering major areas like labor, accounting, tax. Eight months ago, a lot of clients thought, it just happens. But now they realize they didn’t have control of the data, some don’t even have a handle on who is being paid.”
As people moved into and out of jobs, and out of offices into working from home, as the pandemic kicked off, some operations fell apart as a result, she said. “Payroll continuity is like IT continuity, and so all of a sudden when COVID started its march, we had prospects calling us saying they didn’t have data on, for example, their Italian employees, and the office they were using wasn’t answering the phone.”
Guez herself is walking the walk on the remote working front. Papaya Global itself has offices around the world, and Guez is normally based in Tel Aviv. But our interview was conducted with her in the Maldives. She said she and her family decided to decamp elsewhere before Israel went into a second lockdown, which was very tough to handle in a small flat with small children. Working anywhere, as we have found out, can work.
The company is not the only one that has identified and is building to help organizations handle global workforces. In fact, just when you think the unemployment, furlough and layoff crunch is affecting an inordinate number of people and the job market is in a slump, a rush of them, along with other HR companies, have all been announcing significant funding rounds this year on the back of surges in business.
Others that have raised money during the pandemic include Deel, which like Papaya Global is also addressing the complexities of running global workforces; Turing, which helps with sourcing and then managing international teams; Factorial with its platform targeting specifically SMBs; Lattice focused on the bigger challenges of people management; and Rippling, the second act from Zenefits’ Parker Conrad.
“Papaya Global’s accelerating growth is a testament to their top-notch executive leadership as well as their ability to streamline international payroll management, a first for many enterprises that have learned to live with highly manual payroll processes,” said Rory O’Driscoll, a partner at Scale Venture Partners, in a statement. “The complexity and cost of managing multi-region workforces cannot be understated. Eynat and her team are uniquely serving their customers’ needs, bringing an advanced SaaS platform into a market long-starved for more effective software solutions.”
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Duolingo CEO explains language app’s surge in bookings
Language learning apps, like many educational technology platforms, soared when millions of students went home in response to safety concerns from the coronavirus pandemic. It makes sense: Everyone became an online learner in some capacity, and for non-frontline workers, each day became an opportunity to squeeze in a new skill (beyond sourdough).
So why not learn a new language in a low-lift way?
Language learning platforms, including Babbel, Drops and Duolingo, all have benefitted from quarantine boredom as shown by surges in their usage. However, success also depends on whether these same companies can turn that primetime interest into dollars and profit.
To figure out if the language learning boom comes with paying customers, I caught up with Luis von Ahn, the CEO of Duolingo, a popular language learning company valued at $1.5 billion.
Von Ahn tells TechCrunch that Duolingo has hit 42 million monthly active users, up from 30 million in December 2019. The surge comes as new users are spending more time on the app in aggregate, for some of the reasons explained above. Duolingo has been steadily increasing in bookings over the past few years:
This year, Duolingo will hit $180 million in bookings, von Ahn estimates. The company discloses bookings as a proxy for revenue, because when someone purchases a subscription the app it is considered a “booking” until the completion of the subscription, when it becomes revenue.
“We’re more than breaking even,” von Ahn told TechCrunch.
While this growth is impressive, the most staggering metric that von Ahn revealed is that $180 million in bookings is only coming from 3% of its current users.
“Only 3% of our users pay us, yet we make more money than the apps where 100% of their users pay them,” he said.
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9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future
Spain’s startup ecosystem has two main hubs: Madrid and Barcelona.
Most observers place Barcelona first and Madrid second, but the gap appears to close every year. Barcelona has benefitted from attracting expats in search of sun, beach and lifestyle who tend to produce more internationally minded startups.
Madrid’s startups have predominantly been Spain or Latin America-focused, but have become increasingly international in nature. Although not part of this survey, we expect Valencia to join next year, as city authorities have been going all-out to attract entrepreneurs and investors.
The overall Spanish ecosystem is generally less mature than those in the U.K., France, Sweden and Germany, but it has been improving at a fast clip. More recently, entrepreneurs in Spain have moved away from emulating success in pursuit of innovative technologies.
Following the financial crisis, the Spanish government supported the creation of startups with the launch of FOND-ICO GLOBAL, a €1.5 billion fund-of-funds in 2017, which put €800 million into the market that year. Three years later, the fastest-moving sector is tech. In 2018, Spain counted 4,115 active startups, reported 150sec. Barcelona has seen a boom in startups and support systems, with companies based there raising €2.7 billion between 2015 and 2019, almost doubling Madrid’s figure (according to Dealroom).
In the first half of a two-part survey that asks 18 Spain-based startup investors about the trends they’re tracking, we reached out to the following VCs:
- Marta-Gaia Zanchi, managing partner, Nina Capital
- Marta Antunez, director, Wayra Barcelona
- Jaime Novoa, associate, K Fund
- Andy Areitio, partner, TheVentureCity
- Christophe Primault, partner, Elaia
- Luis Gutiérrez Roy, managing partner, Telegraph Hill Capital
- Santiago Reyna, founding partner, Keith Ventures
- Carlos Trenchs Sainz de la Maza, founding partner, Aldea Ventures
- Jordi Vinas, Nauta Capital
Marta-Gaia Zanchi, managing partner, Nina Capital
What trends are you most excited about investing in, generally?
Infrastructural needs of the healthcare industry.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We see opportunities in data liquidity, in silico trials, biotech manufacturing … for which enabling technologies may already exist from the information technology and semiconductor industry.
What are you looking for in your next investment, in general?
What we always do: Great unmet need, deep understanding of healthcare stakeholder ecosystem, the right technology solution, a team we love to work with.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Telemedicine.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Local ecosystem: 10% Rest of the world: 90%.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We only invest in healthtech. So, the answer is: healthtech 🙂
How should investors in other cities think about the overall investment climate and opportunities in your city?
They all think we have a wonderful climate. After all, it’s Barcelona. Regarding the investment climate in particular, I believe too few international investors appreciate the full spectrum and significance of the opportunities that this city affords for starting and scaling a company.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really. I think most companies will continue to have HQs in the major hubs, but their teams are going to be more distributed. And hubs that were traditionally at disadvantage over the usual suspects will find themselves less so.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We are specialized healthtech investors. All our investments to date are B2B companies selling to healthcare organizations.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We decided to increase our reserves, to have more capital to support our portfolio companies in follow-on rounds. For more, see here.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
My team is amazing. With them by my side, I never lost hope.
Any other thoughts you want to share with TechCrunch readers?
I know 2020 is a tragedy but … Isn’t it something to see everyone finally engaged in the conversations that matter (healthcare, science, public health, politics, equality, diversity).
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Collective, a back-office platform that caters to ‘businesses of one,’ just landed a hefty seed round
Americans and other global citizens are increasingly self-employed, thanks to great software, the need for flexibility and because skilled services especially can pay fairly well, among other reasons.
In fact, exactly one year ago, the Freelancers Union and Upwork, a digital platform for freelancers, released a report estimating that 35% of the U.S. workforce had begun freelancing. With COVID-19 still making its way around the country and globe, prompting massive and continued job dislocation for many tens of millions of people, that percentage is likely to rise quickly.
Unsurprisingly, savvy startups see the economic power of these individuals — many of whom aren’t interested in managing anyone or anything other than the steady growth of their own businesses. A case in point is Collective, a 2.5-year-old, 20-person San Francisco-based startup that’s been quietly building back-office services like tax preparation and bookkeeping for what it dubs “business of one” owners, and which just closed on $8.65 million in seed funding.
General Catalyst and QED Investors co-led the round, joined by a string of renowned angel investors, including Uber cofounder Garrett Camp, Figma founder Dylan Field and DoorDash executive Gokul Rajaram.
We talked yesterday with cofounder and CEO Hooman Radfar about Collective’s mission to “empower, support and connect the self-employed community” — and what, exactly, it’s proposing.
TC: You previously founded a company and, even before it sold to Oracle in 2016, you had jumped over to VC, working with Garrett Camp at his startup studio Expa. Why shift back into founder mode?
HR: What I saw across AddThis and Expa and my angel investing is that managing finances is hard. Accounting, taxes, compliance — all that set-up as a small business is annoying.
Two years ago, [Collective cofounder] Ugur [Kaner] came into Expa and he basically pitched me on a startup-in-a-box-type program that we were talking about building from an incubation perspective, but [with more of a pointed focus on back office issues]. He’s an immigrant like me, and because he didn’t quite understand the system, he wound up having tax penalties — penalties that are even worse when you’re a freelancer. Some startups have come up with a bespoke version of what we offer, but we were like, ‘Why do they have to do it?’ These are commodities, but if you put them together in a platform, they can can be powerful.
TC: So is what you’ve created proprietary or are you working with third parties?
HR: Both. We’re an online concierge that’s focused on the back office as the core, meaning accounting and tax services. We also form an S Corp for you because you can save a lot of money [compared with forming a business as an LLC, which features different tax requirements]. So there’s an integration layer plus a dashboard on top of that. If you’re an S Corp, you need to have payroll, so we have a partnership with Gusto that comes with your subscription. We have a partnership with QuickBooks. We work with a third party on compliance. Our vision is to make this easy for you and to set this on autopilot because we understand that time is literally money.
TC: How much are you charging?
HR: For taxes, accounting, business banking and payroll, for the core package, it’s $200 a month. We are piloting bookkeeping and a fuller service package that’s probably [representative of] the direction we’ll head over time, and that will be an additional fee.
TC: How can you persuade these businesses of one that it’s worth that cost?
HR: There are almost three million people in the U.S. who [employ only themselves and] are making more than $100,000 a year and if you think about how many of these [different products] they are already using, it’s a great deal. QuickBooks and Gusto is cheaper with us. You see savings through expensing. The magic is really running your S Corp the right way. Part of that is normal income tax, but you also have a distribution and it’s taxed differently than an income — it’s taxed less. So we pull in salary data and look at expenses and across states, and say, ‘This is what we’d recommend to you based on how your cash flow is coming in, so you recognize this distribution in a compliant way.’
TC: Interesting about this useful data that you’ll be amassing from your customers. How might you use it?
HR: Our first concern is making sure the right people are seeing it [meaning we’re focused on privacy]. But there’s a lot we can do with the aggregation of that data once we’ve earned the right to use it. Among the things we could do, theoretically, includes creating a new level of scoring. If you’re a business of one, for example, it’s very difficult to get mortgages and loans, because credit agencies don’t have the tools to assess you. But if we have your financial history for years, we can represent that you’re a great person, you have a great business.
Another interesting direction as we reach more members — we’ll get to 2,000 soon — would be to use our power as a collective to get our members less expensive insurance, [help facilitate] credit, [help them with a] 401(k).
TC: There are a lot of other things you can get into presumably, too, from project management to graphic design . . .
HR: Right now, we want to make sure our core service is nailed.
Think about the transparency and peace of mind that Uber brought to ridesharing, or that Uber Eats brings to food delivery. You know when something is cooking, when it’s on its way, when it’s arriving. We’ve gotten used to that level of transparency and accountability with so many things, but when it comes to accounting, it’s not there and that’s crazy. This is your money. We want to change that.
TC: Going after “businesses of one” means you’re addressing a highly fragmented market. What kinds of partnerships are you striking to reach potential customers?
HR: We’re having those conversations now, but you can imagine neo banks make sense, along with vertical marketplaces for nurses and doctors and realtors and writers. There are a lot of possibilities.
Pictured, left to right, Collective’s cofounders: CTO Bugra Akcay, CEO Hooman Radfar and CPO Ugur Kaner.
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