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Manufacturing startup Divergent 3D reduces staff by one-third
Divergent, the Los Angeles-based startup aiming to revolutionize vehicle manufacturing, has cut about one-third of its staff amid the COVID-19 pandemic that has upended startups and major corporations alike.
The company, which employed about 160 people, laid off 57 workers, according to documents filed with the California Employment Development Department. Founder and CEO Kevin Czinger didn’t provide specific numbers. However, he did confirm to TechCrunch that he had to reduce staff due to the COVID-19 pandemic. A core team remains, he said.
“Whenever you’re doing something that’s affecting people’s jobs — and especially in a company where I basically recruited everyone and knew everyone by face and name — it’s obviously super painful to do that under any circumstance,” Czinger said in an interview this week.
The company’s No. 1 priority was to ensure long-term financial stability and secure the core team, technology development and customer programs no matter what the scenario, Czinger said, adding that there is still enormous uncertainty surrounding the real impact and duration of the COVID-19 pandemic.
“This was about making the company as totally weatherproof as possible,” Czinger said.
Divergent 3D is essentially a Tier 1 supplier for the automotive and aerospace industry. But it can hardly be considered a traditional supplier. After resigning as CEO of the now-defunct EV startup Coda Automotive in 2010, Czinger began to focus on how the vehicle manufacturing process could become more efficient and less wasteful.
Divergent 3D was born out of that initial exploration. The company developed an additive manufacturing platform designed to make it easier and faster to design and build new cars at a fraction of the cost — all while reducing the environmental impact that traditional factories have.
The platform is an end-to-end digital production system that uses high-speed 3D printers to make complex parts out of metal alloys. This system produces the structures of vehicles, such as the full frame, subframes and suspension structures that are part of the crash-performance structure of the vehicle.
In its early years as a company, Divergent 3D was perhaps best known for Blade, the first automobile to use 3D printing to form the body and chassis. Divergent 3D made Blade — which was on the auto show circuit in 2016 — to demonstrate the technology platform.
It was enough to get the attention of investors and at least two global OEMs as customers. Divergent can’t name the customers because of non-disclosure agreements.
The company has raised about $150 million from investors that include venture capital fund Horizons Ventures, automotive and aerospace engineering services company Altran Technologies and Chinese backers O Luxe Holdings, an investment conglomerate backed by the Hong Kong-based real estate investment magnate Li Ka-shing and Shanghai Alliance Investment Limited, an investment arm of the Shanghai Municipal Government.
The latest example of Divergent’s technology is the 21C, a hypercar unveiled in March that was built using the additive manufacturing platform. The high-performance 3D-printed vehicle was produced by Czinger Vehicles. Divergent 3D and Czinger Vehicles are wholly owned subsidiaries under Divergent Technologies.
Image Credits: Czinger Vehicles
Czinger said the company is poised to navigate the pandemic and ultimately survive. Divergent 3D has two global OEMs as customers. Structures such as chassis components and subframes, for which Divergent has supply contracts, are going through various testing and validation stages, depending on the program. Those programs, which are for serial production vehicles, are moving forward, Czinger said.
There will be delays as automakers have slowed or stopped operations. Czinger is hopeful that by 2021 the company will be able to announce that its 3D-printed structures will be production vehicles.
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My experience with the CARES Act was frustrating, confusing and unfair
Suzanne is the CEO and co-founder of BadVR. She thrives at the intersection of data, art, technology and poetry.
As a small business owner, I was excited to learn about the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act that offers low-interest loans to firms impacted by the COVID-19 pandemic. However, as I read through the details and began to apply, it became clear that this legislation — while well-intentioned — may not be enough to help many SMBs and startups.
Here’s a quick recap of my experience.
Emergency Economic Injury Grants and Economic Injury Disaster Loans
First and foremost: You need to act swiftly. Emergency Economic Injury Grant and Economic Injury Disaster Loan programs included in the CARES Act function on a first-come, first-served basis, and are funded from a limited pool of resources.
I began my company’s application process by submitting our EIDL and EEIG applications through the SBA website. This was easy, if tedious. It took about two hours to complete the necessary online forms and about two seconds to click the EEIG checkbox. Submission was seamless, but I haven’t received any further communication from the SBA since completing my application, which is a bit confusing — EEIG funds are supposed to be dispersed within 3-5 days of the submission date.
However, I know there’s been a huge volume of submissions recently and this must be exceptionally difficult to handle. I look forward to any email correspondence or updates from the SBA that might give me — and other applicants — an updated estimate of the expected dispersal timeline.
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Replacing plastic with plant pulp for sustainable packaging attracts a billionaire backer
In a small suburb of Melbourne, two entrepreneurs are developing a technology that could mean big changes for the packaging industry.
Stuart Gordon and Mark Appleford are the co-founders of Varden, a company that has developed a process to take the waste material from sugarcane and convert it into a paper-like packaging product with the functional attributes of plastic.
Their technology managed to grab the attention of — and $2.2 million in funding from — Horizons Ventures, the venture capital fund managing the money of Li Ka-shing, one of the world’s wealthiest men.
It’s an opportune time to launch a novel packaging technology, as the European Union has already instituted a ban on single-use plastic items, which will go into effect in 2021. Taking their lead, companies like Nestlé and Walmart have pledged to use only sustainable packaging for products beginning in 2025.
The environmental toll that packaging takes on the earth’s habitats is already a concern for many, and the urgency to find a solution is only mounting with consumers and businesses actually producing more waste in the rush to change consumer behavior and socially distance as a result of the COVID-19 global pandemic.
“I like technologies that focus on carbon reductions,” said Chris Liu, Horizons Ventures’ representative in Australia.
A longtime tech and product executive who had stints at Intel and Fjord, a digital design studio, Liu relocated to Australia recently and has actually taken himself off the grid.
Living in Western Australia, the climate emergency was brought directly to the top of Liu’s mind when the wildfires, which raged through the country, came within two kilometers of his new home.
For Mark Appleford, it wasn’t so much the fires as it was the garbage that kept washing up on the shores of his beloved beaches.
Over beers at a barbecue he began talking to his eventual co-founder, Stuart Gordon, about the environmental problem they’d solve if they had the ability to change things. They settled on plastics.
Working in Appleford’s laundry room they started developing the technology that would become Varden. That early laundry room-work in 2015 led to a small seed round and the company’s long slog to get an initial product in the hands of test customers.
Finagling some time with the New Zealand manufacturer Fisher and Paykel, the two co-founders put together an early prototype of their coffee pods made from sugarcane bagasse, a waste byproduct of the sugar feedstock.
“We worked backwards through customers to supply chain, which led us to material selection, which was something that would allow us to create a product that people understood,” said Gordon.
The production process has evolved to fit inside a 40-foot container that holds the firm’s machine, which takes agricultural waste and converts that waste into packaging.
Instead of using rollers like a paper mill, Varden’s technology uses a thermoform to mold the plant waste into a product that has the same properties as plastic.
It removes a complicated step that’s been essential to the current crop of bioplastics, which use bacteria to convert plant waste into plastic substitutes that are then sold to the industry.
“It looks like paper… you can tear it in half and it sounds like paper when you rip it, and you can throw it in the bin,” said Appleford.
Gordon said that the company’s containers are outperforming commodity based plastics. And the first target for replacement, the founders said, is coffee capsules.
“We went for coffee because it’s the hardest,” said Appleford.
It’s also a huge market, according to the company. Varden estimates there are more than 20 billion coffee pods consumed every year.
With the new money, Varden will begin manufacturing at scale to meet initial demand from pilot customers and is hoping to expand its product line to include medical blister packs in addition to the coffee pods.
“A pilot plant on the products we’re looking at is a pilot plant that can generate 20 million units a year,” said Gordon.
Both men are hoping that their product — and others like it — can usher in a generation of new sustainable packaging materials that are better for the environment at every stage of their life cycle.
“The next generation of packaging will be better… there are plant-based flexibles for your salads, for your potato chips… [But] the next generation of molded packaging is us… bioplastic will ultimately go.”
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The changing face of employment law during a global pandemic
Prompted by Jeff Bezos’s plans to test all Amazon employees for the virus that causes COVID-19, we wondered whether employers can mandate employee testing, regardless of symptoms. The issue pits public safety against personal privacy, but limited testing availability has rendered the question somewhat moot.
But as the World Health Organization and U.S. Centers for Disease Control and Prevention have noted, asymptomatic COVID-19 carriers can spread the virus without realizing they’re infected. To learn more about workers’ rights in this arena, we spoke to Tricia Bozyk Sherno, counsel at Debevoise & Plimpton, who focuses on employment and general commercial litigation.
The answer, for now, is not entirely straightforward, though updates from the U.S. Equal Employment Opportunity Commission could make the situation clearer going forward as more tests are made available and state governments begin pushing to reopen businesses.
Sherno offered a fair amount of insight into the EEOC’s updated guidance and made some predictions about how things may look for both employers and workers going forward.
TechCrunch: Prior to the COVID-19 pandemic, what sorts of laws governed an employer’s ability to test employees for infectious diseases?
Tricia Bozyk Sherno: Covered employers (employers with 15 or more employees) must comply with the requirements of the Americans with Disabilities Act (ADA), which limits an employer’s ability to make disability-related inquiries or require medical examinations. (Note that certain states may also have similar statutes in place.) Generally, disability-related inquiries and medical examinations are prohibited by the ADA except in limited circumstances. A “medical examination” is a procedure or test that seeks information about an individual’s physical or mental impairments or health — so infectious disease testing would fall into this category.
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Nuvocargo, a trucking managed marketplace, raises $5.3M in seed funding
U.S. companies rely on Mexican manufacturers for goods ranging from automotive and aerospace parts, to avocados and other produce, to electronics and furniture. But the trucking system that transports these things across the border relies on an inefficient mix of paper, phone calls, faxes and too many stakeholders who drive up costs.
These snarls congesting border traffic are precisely why Nuvocargo founder and CEO Deepak Chhugani has raised a $5.3 million seed round for a managed marketplace for door to door freight transportation, serving trade routes between the United States and Mexico.
Investment came from both sides of the border. The round was co-led by Silicon Valley-based NFX and Mexico City-based ALLVP. And Nuvocargo marks the first deal for Antonia Rojas-Eing, the youngest female VC in Latin America, under ALLVP, which she joined earlier this year as a partner.
The seed round also saw participation from One Way Ventures, Maya Capital, Magma Partners, the co-founders of Rappi, the former CMO of Cabify and other angels. The total includes earlier backing from Y Combinator, when Nuvocargo existed under a different name.
Chhugani joined Y Combinator’s W18 class with a startup called The Lobby, which sought to connect job seekers to personalized coaches. He raised $1.2 million for the startup, but decided to pivot into logistics and work on Nuvocargo. The change in direction was fairly natural for the Ecuador-raised entrepreneur, who cited his family’s previous work in the Latin American logistics industry.
When the time came to pivot, Chhugani offered investors their money back. Some chose to leave, but Y Combinator elected to stay under the new promise of digitizing trucking between Mexico and the U.S. Nuvocargo says that the $5.3 million seed is its first round, and what they’ve raised to date. Investors who stayed in from The Lobby are part of this round for Nuvocargo.
Nuvocargo, which calls itself a modern managed marketplace for door to door freight transportation, has set up shop with fully bilingual teams in both New York and Mexico.
Mexico is already one of the United States’ largest trade partners, and Chhugani predicts that relationship will only strengthen in the next decade. The U.S.-China trade war shows no signs of easing and tariffs have increased buying friction. With the 2018 United States-Mexico-Canada Agreement that aims to renegotiate NAFTA and uncertainty around coronavirus, Chhugani believes Mexico will become an even more attractive trade opportunity to capitalize on with Nuvocargo.
To the company’s knowledge, U.S.-Mexico trucking is within the top five biggest trade lanes in the world, with 6.5 million trucking shipments going between Mexico and the U.S. every year. Notably, 80% of all the goods transported between the U.S. and Mexico move by truck.
VCs have jumped on the freight and logistics opportunity as startups like NEXT Trucking, Convoy and Flexport secure hundreds of millions dollars from investors like Sequoia and SoftBank.
Now, smaller startups like Nuvocargo that specialize on specific routes and countries are focusing in regionally to bring online these systems that rely on paper, phone calls, faxes and spreadsheets to do business.
Nuvocargo’s free software digitizes the different steps with timestamps, geo tracking and document housing in a centralized cloud-based dashboard, providing a snapshot understanding of every step of a cross border shipment. Customers can request new shipments using Nuvocargo using a WhatsApp integration, email or SMS.
The 15-person startup wants to house the entire shipping process within its tracking software, simplifying the customer experience. The customer, Chhugani says, is any company that needs to move goods between Mexico and the U.S., and he notes that Nuvocargo is working with dozens of customers ranging from beverage companies to multi-billion-dollar corporations — though he declined to specify who.
Chhugani says that in a typical U.S.-Mexico cross-border trucking transaction, up to 12 stakeholders are involved in a single shipment, and that is too many. Multiple people on the U.S. side are procuring the trucks and managing customs, FDA inspection and warehouse storage. On the Mexico side there are even more entities handling scheduling and pick up for the trucking companies and drivers.
With the new seed funding, Nuvocargo will prioritize early hires in product, operations, finance and engineering in its New York and Mexico offices on its fully bilingual team.
Chhugani says he’s especially appreciative of the truck drivers that put themselves in harms way to ensure critical items are getting to the right destination, ensuring shelves are stocked. He says that in this uncertain time, Nuvocargo is working to give drivers predictable business near their homes, and pay them faster. “All of us as a society should be more appreciative of truck drivers and the trucking industry, because this is something that really fuels the economy in both the United States and in Mexico.”
In the current age of the coronavirus pandemic, Nuvocargo says it is focusing significant efforts on working with companies that are transporting essential goods to aid in the supply crisis.
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Digits launches a free expense monitoring dashboard for small businesses, closes on $22M Series B
Digits, a fintech startup hailing from the same team that built and sold Crashlytics to Twitter, is officially launching today after two years of development. It’s also announcing a $22 million Series B round of funding led by GV, as it makes its public debut.
While the company had been fairly quiet about product details while in stealth mode, it’s today unveiling its first product: a visual, machine learning-powered expense monitoring dashboard aimed at startups and small businesses.
The dashboard, called Digits for Expenses, helps business owners track how their company is spending money, by showing things like spend by category, by identifying vendors and recurring expenses and by offering real-time alerts, among other features.
Instead of requiring business owners to make a switch from their existing financial solutions, Digits connects with the accounting software, banks, payroll providers, financial packages, sources of revenue and credit cards the business already uses — like Xero, QuickBooks, NetSuite, Citi, Bank of America or Chase, for example.
At launch, the list includes more than 9,000 banks, with support for Xero and NetSuite coming soon.
After setup, Digits will then automatically analyze the company’s spend and visualize it, in real time.
While visualizations of data may be reminiscent of personal finance startup Mint, Digits’ web-based solution is more technical in nature and offers an expanded analysis of the data on hand. Plus, as a business solution, it has to offer features like security, permissioning and collaborative workflows, which results in a more sophisticated product.
Digits also uses machine learning technology to predictively categorize transactions as they happen and the software can alert users to anomalies — like suspicious activity or unexpectedly large transactions — in real time. Business owners can use the dashboard to find out things like how quickly expenses are growing, what the cash flow looks like, where costs can be trimmed, what services are being paid for on a recurring basis and more, and can search for transactions.
The software also supports the ability to comment on transactions, loop in a colleague to ask for clarification about a charge and upload missing receipts. Everything uses HTTPS along with TLS and certificates so data is encrypted between Digit’s services and at rest.
The original idea for Digits came from a problem that co-founders Wayne Chang and Jeff Seibert faced themselves when building Crashlytics. As they explained previously, their focus as entrepreneurs was on solving technical challenges, not on the operational side of running a business.
Many entrepreneurs also find themselves in this same space. They’re trying to solve a problem or crack a tough engineering puzzle, but instead have to redirect their time and resources to spreadsheets, financial reports, transaction records and other paperwork required to actually run the business.
“Startups and small businesses today simply don’t have the resources to manage their finances internally. Most of them still settle for spreadsheets, and the lucky ones work on an hourly basis with external accountants,” explains Seibert. “As a result, their accounting itself is seen as a cost-center, and they pay for little beyond the basic monthly financial statements — Profit & Loss, Balance Sheet, etc. By the time those statements are delivered — weeks after the end of each month — they’re already out of date,” he said.
That means things businesses need — like updates, one-off reports and new budgets — can require additional costs and longer wait times, so they get skipped.
The COVID-19 pandemic has put even more pressure on small businesses, many of which are now struggling to even survive. As a result, Digits has decided to launch the product for free to those who sign up — not a free trial, but actually free. It plans to later charge for additional products and paid upgrades to support its own business.
Digits is able to make this offer because of its now-expanded venture funding.
Already, the company had raised $10.5 million in Series A funding in a round led by Benchmark. That round had included a sizable 72 angel investors as well, including founders and CEOs from companies like Box, GitHub, Tinder, Twitch, StitchFix, SoFi and several others — entrepreneurs with an understanding of the problems Digits is aiming to solve.
Today, Digits is announcing an additional $22 million led by Jessica Verrilli at GV, who also now joins Digits’ board alongside Benchmark’s Peter Fenton. (Benchmark also participated in the new round).
“Jeff and Wayne are masterful at creating intuitive, high-utility products from complicated data,” said Verrilli about the GV investment. “I saw this up close with Crashlytics and Twitter, and I’m thrilled to partner with them on Digits as they reimagine financial software for startups,” she added.
The startup, now a team of 18 and hiring, was already offering its software solution to a group of customers ahead of today’s public launch, who effectively operated as beta testers allowing Digits to refine its product. Digits isn’t able to share its customer names, for the most part. However, it noted that Coda was one of early adopters and provided valuable feedback.
It also has over 10,000 companies who joined its waitlist over the past two years who are now being let in.
At the time of its Series A, Digits saw more than $1.5 billion in transaction value flowing across its production systems. That number has since grown to $8 billion.
The software is free starting today for U.S.-based small businesses. The company plans to add support for international markets later this year.
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Pandemic reset leads investors to focus on resilience, adaptability
Mahendra Ramsinghani founded Secure Octane Investments, which includes Demisto, CyberGRX and 16 other infrastructure and cybersecurity companies. Mahendra authored “The Business of Venture Capital” and “Startup Boards.”
For the vast majority of startup founders who were planning their capital raise in Q1 2020, the COVID-19 blow was so dramatic and sweeping, we cannot see all its effects at once.
One big question on the minds of most founders: How should we plan our next raise in terms of timing, valuation and amounts?
Sarah Guo, partner at Greylock Partners, says the fundraising environment has slowed down significantly, but founders who have built ties with VCs via informal coffee updates and check-ins are at a clear advantage. “Early-stage bets require relationship-building,” says Guo, who has been investing in seed through Series B rounds.
Ram Shanmugam, founder and CEO of AutonomIQ*, a seed-stage code and process automation company, has been strengthening his relationships. For a company that has low operating expenses and a community of 600,000 developers, he says he is not fazed. “Our automation code brings efficiencies and in fact, we have nine inbound leads in Q2. Having said that, we are being realistic at the pace at which we can close these contracts.”
Similarly, Fred Blumer, who exited Hughes Telematics at an enviable $750 million, says he is taking a more pragmatic approach to the Series A raise for his new company, Mile Auto. “We expect to have a 5x growth in our business in 2020, even after adjusting for COVID,” he said. “Our pay-per-mile insurance is a great fit for people who are driving less.” Because so many drivers are sheltering in place, legacy insurance companies are refunding hundreds of millions of dollars to customers, which offers an advantage (and an opportunity) to a startup like his.
“But we need to be patient and mindful. While our families, health and safety are top priority, we are staying focused on our customers,” Blumer said. “Insurtech is a resilient arena, and in my past company we raised $100 million, so working with investors has never been a challenge. Keeping up with growth and perfecting the customer experience are what keep us up at night.” He said he plans to get out in the market after investor confidence returns.
Which may be a good idea, considering Jason Lemkin’s Twitter survey, where only 32% of respondents said they plan to deploy the same amount of capital as in the past. But another 30% are on the opposite end of the spectrum, deploying 40% to 60% less capital.
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Throw us your best 60-second pitch on May 13 at Pitchers and Pitches
Founders have always faced big challenges, but they pale in the face of the coronavirus pandemic. Moving your business forward will require new thinking, new tools and new opportunities along with tried-and-true essentials. We’ve got you covered on all fronts.
Case in point — catching investor attention in this climate will require a pitch par excellence. Pour yourself a cold one (or a tall glass of water because that’s great, too!) and join us on May 13 at 4pm ET / 1pm PT for Pitchers and Pitches, an interactive elevator pitch feedback session with TechCrunch editors. Get feedback that can help you take your pitch to a whole new level.
Our first Pitchers and Pitches session is free and open to the public — register now. You can let us know during registration if you want to participate and we’ll randomly select five startups to give us their best 60-second pitch. Even if you’re not selected to pitch, it’ll be a learning experience for all who attend and you can also give feedback via live polling. You’ll gain valuable insight into the art of telling your startup’s story in under a minute.
While we’ll continue with a series of content sessions, they will be exclusive to Startup Alley exhibitors — both those who exhibit onsite at Disrupt San Francisco 2020 (September 14-16) and founders who purchase a Digital Startup Alley Package.
Wait — you haven’t heard about the Digital Startup Alley? We tapped our resources and industry connections to replicate the Startup Alley experience as a truly world-class virtual event. It’s designed to help you keep momentum despite lockdowns, travel restrictions or budgetary concerns.
We don’t have a crystal ball to see how long this pandemic will remain in play. However, if it turns out you can attend Disrupt SF in person, you have the option to upgrade your exhibit package and still access the benefits of Digital Startup Alley. Value, meet add.
Startups in the age of COVID-19 will need every tool in the shed — and a few new ones — to adapt and keep moving forward. Start with exceptional coaching and sharpen your pitch to a keen edge.
Register now for our free Pitchers and Pitches session, which takes place on May 13 at 4:00pm ET / 1:00pm PT.
TechCrunch is mindful of the COVID-19 issue and its impact on live events. You can follow our updates here.
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HealthJoy launches its revamped employee benefits assistance platform
HealthJoy, a platform that helps employees get the most use out of their benefits, launched its revamped user interface and technology stack today. The startup told TechCrunch that usage has doubled during the COVID-19 pandemic. While the new platform, called HealthJoy 2.0, has been in the works for two years, it is now helping the company handle increased demand for services, including telemedicine.
Launched in 2014, HealthJoy now has more than 500 employers on its platform. It has raised a total of $53 million so far, including a $30 million Series C announced in February.
The new interface includes features that tell users expected wait times for services like its inbox and healthcare concierge, and a new benefits wallet. Last month, HealthJoy also added features to address the pandemic, including help to get testing, online consultations and a guide to nearby in-network healthcare facilities with low wait times.
Co-founder and CEO Justin Holland told TechCrunch that the platform “initially saw a huge spike in telemedicine visits as awareness of the virus grew and people started looking for ways to avoid physically visiting a doctor’s office. Usage for telemedicine has stabilized in the last couple of weeks and is now only a little bit above our baseline.”
He added that HealthJoy is now encouraging more employees to use the HealthJoy Employee Assistance Program (EAP), which helps them find services like mental health counseling, financial planning and child and elder care assistance.
“We’ve seen a corresponding spike in EAP utilization as people are seeking help,” he said.
HealthJoy 2.0’s improvements, which moves more processing away from local clients to the cloud and includes an updated CRM and dashboard for employers, will also make it easier for the company to implement new features in the future.
Other health benefit engagement platforms include Collective Health, League and Lumity. Holland said that HealthJoy 2.0 will help the startup better compete by “allowing for greater integration with partners, a larger collection of APIs and easier integration with third-party data.”
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Opera Event closes $5M Series A for its esports-focused influencer platform
Today Opera Event, an influencer software service, announced that it closed a $5 million Series A. The Oakland-based startup raised the capital from new lead investor Antera, with prior investors Atlas Ventures, Everblue, and Konvoy Ventures coming along.
According to Crunchbase data, Opera Event had raised at least $1.2 million before this new round.
Opera Event is starting with a focus on influencers in the esports market, a business that founder Brandon Byrne knows well. Byrne previously worked for former esports organization Curse and served as the CFO of Team Liquid; Team Liquid is an active esports organization with players in a number of games, including League of Legends and Starcraft 2.
The startup wants to help esports teams monetize, a likely welcome effort given the industry’s historical issues with revenue generation, and reward micro-influencer fans. How it intends to do that is its core software service, one that Byrne expects will in time work for other verticals and influencer sets. Let’s explore.
Opera Event in practice
It’s perhaps best to explain what Opera Event does with a hypothetical example, built off notes from an interview with Opera Event’s Byrne. Let’s say that Alex Wilhelm Super Awesome Esports (AWSAE) is a small Starcraft 2 team — it’s just big enough to attract some sponsorship, but not as much as the team would like. However, AWSAE’s Starcraft 2 players have dedicated fans, many of whom also stream on Twitch and maintain a presence on Twitter.
By using Opera Event, AWSAE’s fans that stream can join the team’s commercial world, adding its sponsors to their Twitch pages, tweeting out the same campaigns and more. Opera Event sits between the team, its community and capital sources (brands), helping make everything click. It’s a situation that works well for Alex Wilhelm Super Awesome Esports. With its community streaming under its commercial banner, its demonstrable in-market impact (tweet impressions, minutes engaged on Twitch, etc) grows sharply. Its associate small streamers and fans get to take part in in the team’s world, and can be rewarded with things like social follows and other bits of love — all while brands can better deploy capital. (Opera Event calls this “the ability to engage and manage content creators efficiently and at scale.”)
Now AWSAE can get bigger sponsors as it can offer a bigger audience, it can share revenues or provide other succor to its fanbase, and brands can get their whatnot in front of more viewers at once.
One team that Byrne detailed had about 39 members doing around 50 million engaged minutes each month on Twitch. Using his startups software to create two affiliate programs, the same team grew to over 3,000 influencers that generated north of 450 million minutes per month of viewership. The latter set of figures are far more commercially viable.
The aggregation of small streamers is more than adding up views, it turns out. Byrne told TechCrunch that smaller esports streamers have better click through rates than the entertainment categories giants, which could help team fans and other community members that sign up as part of their Opera Event network have outsized impact on sponsor results.
Opera Event takes a material cut of deals it lands through its sales team (25% to 30% per the company) and a small cut for deals that flow through its platform but originated elsewhere (2% to 3%). The model generated around $1.8 million for the startup in 2019, and Opera Event hopes to reach $9 million in revenue this year.
Particularly important in today’s changed market, Byrne told TechCrunch that Opera Event is a quarter away from breaking even. That should keep the company safe during a downturn.
In time, Opera Event wants to add more niches to its stable. Its founder mentioned yoga as an example. Where there are influencers big and small, the startup wants to show up and help facilitate influencer commerce and collaboration.
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