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ZenGo raises $20 million for its secure crypto wallet app
ZenGo, a mobile app to manage your cryptocurrencies, has raised a $20 million Series A funding round led by Insight Partners. ZenGo is a non-custodial wallet, which means that the company doesn’t manage your crypto assets for you — you remain in control.
Other investors include Distributed Global and Austin Rief Ventures. Existing investors Benson Oak, Samsung Next, Elron, Collider Ventures, FJ Labs and others also participated in today’s funding round.
What makes ZenGo different from other wallet apps is that the company is trying to build something that is more secure than your average crypto wallet while remaining simple to use and understand. It competes with other non-custodial wallets, such as Coinbase Wallet (not Coinbase.com), Argent, etc.
In particular, ZenGo is based on multiparty computation (MPC). When you first create your wallet, ZenGo generates multiple secrets that are stored and encrypted in different ways. It means that the company can’t access your tokens directly and you can recover your wallet if you lose your phone.
Other crypto companies focused on infrastructure and enterprise clients have also opted for MPC as their security model. Fireblocks, a company that has recently raised $133 million, is one example.
But ZenGo is building a consumer app. In 2020, the company has processed more than $100 million in crypto transactions from 100,000 users. ZenGo has reached the same milestone in the first three months of 2021 and added another 100,000 users.
You can browse DeFi projects through ZenGo and access savings pools. The startup takes a cut on these investments.
With today’s funding round, ZenGo plans to expand with the same philosophy in mind. You can expect support for more chains and assets, more partnerships and options to buy cryptocurrencies and convert them to fiat money, etc.
The company recently announced plans to launch a debit card. This way, users will be able to convert their crypto assets and then spend them wherever Visa cards are accepted. In other words, ZenGo is building a crypto super app with a focus on security.
Image Credits: ZenGo
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Mobile bank Current raises $220 million Series D, triples valuation to $2.2B
U.S.-based challenger bank Current, which has now grown to nearly 3 million users, announced this morning it has raised a $220 million round of Series D funding, led by new investor Andreessen Horowitz (a16z). The funding swiftly follows Current’s $131 million Series C at the end of last year, at which point the company had doubled its user base over just six months to more than 2 million users.
As a result of the new round, the fintech company has roughly tripled its valuation in five months, to $2.2 billion.
Other participants in the round include returning investors Tiger Global Management, TQ Ventures (the fund managed by media executive Scooter Braun), Avenir, Sapphire Ventures, Foundation Capital, Wellington Management and EXPA. David George, who led the round with a16z, will become a Current board member.
Current began its life as a teen debit card controlled by parents, but later expanded to offer personal checking accounts powered by the same underlying banking technology. Like a range of modern-day “neobanks,” or digital banks, the Current app offers a baseline of standard features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, free ATMs, check deposits using your phone’s camera and more. It also last year launched a points rewards program in an effort to better differentiate its service from the growing number of competitors and became one of the first banks to transfer the early round of stimulus payments during the pandemic.
These days, Current is partnering with creators, like the recently announced MrBeast (aka Jimmy Donaldson), who said last week on his YouTube channel that he will personally send $1 to the first 100,000 people who sign up using his Creator code. MrBeast is also an investor.
Like other fintechs in its same space, Current has benefitted from the younger generation’s adoption of mobile banking apps instead of larger, traditional banks, which they feel don’t serve their interests. Its average customer age is 27, for example. Digital banks can keep costs down by not having to pay for the overhead of brick-and-mortar locations, allowing them to roll out benefits like reduced or zero account fees and other consumer-friendly protections.
Current today continues to offer teen banking, in a challenge to mobile banking app Step, which has also leveraged social media influencers to get the word out with a younger demographic. But Step today is appealing to the 13 to 18-year-old crowd directly, offering banking services and a secured card. Current, meanwhile, targets its service to the parents.
Its teen account costs $36 per year, while personal checking is available both as a free and premium ($4.99/mo) service. The company in the past has said its primary focus is the more than 130 million Americans who live paycheck to paycheck. This continues to be its main drive today, though the mission may attract a broader slice of the American population over time.
“We are still focused on onboarding people to the financial system, making sure that everyone has access to everything, and then democratizing — or going out and getting that value — in this new world that’s being rewritten and bringing it back to as many people as possible,” says Current CEO and founder Stuart Sopp. “Now, in that increase of scope and time. I think we’re going to pick up more and more people.”
Current says the new funds will be used to grow the company and its member base as it expands it range of banking products. One key area of new investment will be cryptocurrency, it says, which will involve a partnership and an educational component to help Current’s users better understand the crypto market.
As it turns out, Sopp’s background includes crypto, in addition to Wall Street trading. In fact, an early version of Current designed by Sopp and CTO Trevor Marshall involved crypto.
“A little-known fact is that Current started with Bitcoin wallet addresses and Ripple gateways,” he says. But the team realized the technology was a little too nascent at the time, and moved to mobile banking. “We have this background, and this knowledge of how it all works. Now do we need to build it ourselves? No, I don’t think we need to build it all ourselves. There’s lots of good companies out there,” he says.
Crypto fits into Current’s vision of democratizing access to financial systems to those in the U.S. who are today underserved by traditional banking and investing products and services.
“There’s a ton of value being created [in crypto] and we want to make sure we have this nexus of providing safe, and trustworthy financial services in that world, as well as what we already exist in,” notes Sopp. “And then, lending, credit cards,” he adds, noting how important these moves are “done safely, in a respectful way for our demographic — because traditionally most of our members have a FICO score of 650.”
In addition, Current will use the new funds for hiring across all roles, including marketing, product, engineering, finance, customer success, fraud and risk, and, of course, crypto. The company today has 100 employees, and plans to grow to around 200 or 300 in the next 18 months.
Current’s fundraise remarkably falls on the same day that competitor Step and Greenlight, both which focus on families, also raised new rounds.
“This new generation of customers doesn’t want to bank in physical branches,” said a16z’s David George, in a statement. “We believe there will be a shift in the next 10 years to mobile and consumer-focused banking services powered by innovation in technology, and with Current’s exceptional growth over the past year, they’ve clearly demonstrated they’re at the forefront of this trend. Their product is among the best in the market, and they have proven an ability to reach customers who previously were unserved or underserved by traditional banks,” he said.
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Tellius announces $8M Series A to build ML-fueled business data query tool
Getting actionable business information into the hands of users who need it has always been a challenge. If you have to wait for experts to help you find the answers, chances are you’re going to be too late. Enter Tellius, an early-stage startup building a solution to help business users find the information they need when they need it.
Today the company announced an $8 million Series A led by Sands Capital Ventures, with participation from Grotech. Today’s investment brings the total raised to $17 million, according to the company.
CEO and founder Ajay Khanna says the company is attempting to marry two technologies that have traditionally lived in silos: business intelligence and artificial intelligence. He believes that bringing them together can lead to greater wisdom and help close the insight gap.
“Tellius is an AI-driven decision intelligence platform, and what we do is we combine machine learning — AI-driven automation — with a Google-like natural language interface, so combining the left brain and the right brain to enable business teams to get insights on the data,” Khanna told me.
The idea is to let the machine learning teams and the business analysts continue to do their thing, but provide an application where business users can put all of that to work. “We believe that to go from data to decisions, you need to know not only what happened, but why things change and how you can improve your company,” he said.
The product takes aim at three employee groups. The first is the business user, who can simply query the data with a natural language question to get results. The second is a data analyst, who can get more granular by choosing a specific model to base the query on, and finally a data scientist who can enhance the query with Python or Spark code.
It connects to various data sources, including Salesforce and Google Analytics, data lakes like Snowflake, csv files to take advantage of Excel data or cloud storage tools like Amazon S3. It comes in two versions: one that the customer can connect to the cloud infrastructure provider of choice, and one which they run as a service and manage for the customers.
Khanna says that as companies struggled to change the way they do business during the pandemic, they needed the kind of insights his company provides, and business grew 300% last year as a result.
The startup launched in 2016 after Khanna sold a previous company, which allowed him to bootstrap while in stealth. They spent a couple of years building the product and brought the first version of Tellius to market in Q3 2018. That’s when they took a $7.5 million seed round.
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Tesla wants to make every home a distributed power plant
Tesla CEO Elon Musk wants to turn every home into a distributed power plant that would generate, store and even deliver energy back into the electricity grid, all using the company’s products.
While the company has been selling solar and energy storage products for years, a new company policy to only sell solar coupled with the energy storage products, along with Musk’s comments Monday, reveal a strategy that aims to scale these businesses by appealing to utilities.
“This is a prosperous future both for Tesla and for the utilities,” he said. “If this is not done, the utilities will fail to serve their customers. They won’t be able to do it,” Musk said during an investor call, noting the rolling blackouts in California last summer and the more recent grid failure in Texas as evidence that grid reliability has become a bigger concern.
Last week, the company changed its website to prevent customers from only buying solar or its Powerwall energy storage product and instead required purchasing a system. Musk later announced the move in a tweet, stating “solar power will feed exclusively to Powerwall” and that “Powerwall will interface only between utility meter and house main breaker panel, enabling super simple install and seamless whole house backup during utility dropouts.”
Musk’s pitch is that the grid would need more power lines, more power plants and larger substations to fully decarbonize using renewables plus storage. Distributed residential systems — of course using Tesla products — would provide a better path, in Musk’s view. His claim has been backed up in part by recent studies from the Massachusetts Institute of Technology, which found that the U.S. can reach a zero-carbon grid by more than doubling its transmission capacity, and another from Princeton University showing that the country may need to triple its transmission systems by 2050 to reach net-zero emissions.
Musk is imagining a radically different electricity grid system than the one we have today, which is centrally controlled and run by grid operators, independent organizations such as the California Independent System Operator or the Electric Reliability Council of Texas. It’s a vision that is riddled with bureaucratic and logistical challenges. Utilities and regulatory policy would need to solve how to handle a large influx of so-called “distributed energy resources,” such as solar panels on residential roofs, which may run contrary to utilities’ long-established business models.
It’s important to note that whether renewables-plus-storage will be alone sufficient to decarbonize the energy grid is a contentious question. Many experts believing that the land use demands, storage requirements and intermittency issues of renewables may make their role as the country’s primary electricity generator a pipe dream. But Musk has long been bullish on the renewables-plus-storage model, tweeting last July that “physics favors electric transport, batteries for stationary storage & solar/wind for energy generation.”
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Dating app S’More bets on celebrity content with S’More TV
Dating startup S’More has launched a new feature called S’More TV, which CEO Adam Cohen-Aslatei said could give users new ways to talk to each other. It also bringing the startup closer to his goal of becoming not just a dating app, but “a lifestyle brand.”
The videos on S’More TV may be familiar to people who follow the company on Instagram, where Cohen-Aslatei has hosted dating-related interviews with celebrities like WWE stars Chelsea Green and Leah Van Dale, models Nichole Holmes and Sarah Miller and Mary Fitzgerald of “Selling Sunset.” Now, however, these videos are getting a home in the S’More app itself.
Cohen-Aslatei said this wasn’t the initial plan when he started filming videos for S’More Live, but eventually he and his team decided to do more with their “nearly 50 hours of exclusive celebrity content,” seeing them as “the first organic way to have content not related to a dating profile” in the app. He suggested that this isn’t just giving users another reason to open the app, but also a crucial conversation starter.
After all, anyone who’s had to start a conversation in a dating app will probably remember moments when you’ve struggled to come up with something better than “Hey” or “How’s it going?” — and S’More presents unique challenges on that front, since the app blurs all user photos until you’ve had some real interaction. So Cohen-Aslatei said these videos can spur a more natural conversation, allowing users to “really talk about topics that they care about.”
Image Credits: S’More
The S’More app now includes prompts directing users to watch S’More TV, where anyone can watch and comment on the videos. If you post a particularly scintillating comment, that may help to attract potential matches, and it will give them an easy starting point for the conversation.
In fact, Cohen-Aslatei claimed that since releasing S’More TV in beta testing, the app has seen Day One retention (the number of users who open the app one day after installation) increase by 15% to the “mid-60s,” while time in the app has doubled.
He also said S’More Live is quickly approaching its 100th episode, but you won’t see all of those episodes on the app right away. Instead, the company will be adding 15 new videos to the S’More app each month.
In addition, S’More has launched a new feature called cover photos. This is basically the one exception to the blurred photos rule (although it sounds like even this photo is subtly warped), allowing users to showcase a single image of their friends, their life or their personality even before they start a conversation.
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Apple’s App Tracking Transparency feature has arrived — here’s what you need to know
The latest version of Apple’s mobile operating system — iOS 14.5 — is launching today, and with it comes a much-discussed new privacy feature called App Tracking Transparency.
The feature was first announced nearly a year ago, although the company delayed the launch to give developers more time to prepare. Since then, support for the feature has already gone live in iOS and some apps have already adopted it (for example, I’ve seen tracking requests from Duolingo and Venmo), but now Apple says it will actually start enforcing the new rules.
That means iPhone owners will start seeing many more privacy prompts as they continue using their regular apps, each one asking for permission to “track your activity across other companies’ apps and websites.” Every app that requests tracking permission will also show up in a Tracking menu within your broader iOS Privacy settings, allowing you to toggle tracking on and off any time — for individual apps, or for all of them.
What does turning tracking on or off actually do? If you say no to tracking, the app will no longer be able to use Apple’s IDFA identifier to share data about your activity with data brokers and other third parties for ad-targeting purposes. It also means the app can no longer use other identifiers (like hashed email addresses) to track you, although it may be more challenging for Apple to actually enforce that part of the policy.
Image Credits: Apple
There’s been intense debate around App Tracking Transparency in the lead up to its launch. The pro-ATT side is pretty easy to explain: There’s a tremendous amount of personal information and activity that’s being collected about consumers without their consent (as Apple outlined in a report called A Day in the Life of Your Data), and this gives us a simple way to control that sharing.
However, Facebook has argued that by dealing a serious blow to ad targeting, Apple is also hurting small businesses that depend on targeting to affordable, effective ad campaigns.
The social network even took out ads in The New York Times, The Wall Street Journal and The Washington Post declaring that it’s “standing up to Apple for small businesses everywhere.” (The Electronic Frontier Foundation dismissed the campaign as “a laughable attempt from Facebook to distract you from its poor track record of anticompetitive behavior and privacy issues as it tries to derail pro-privacy changes from Apple that are bad for Facebook’s business.”)
Others have suggested that these changes could do “existential” damage to some developers and advertisers, while also benefiting Apple’s bottom line.
The full impact will depend, in part, on how many people choose to opt out of tracking. It’s hard to imagine many normal iPhone owners saying yes when these prompts start to appear — especially since developers are not allowed to restrict any features based on who opts into or out of tracking. However, mobile attribution company AppsFlyer says that early data suggests that opt-in rates could be as high as 39%.
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Crusoe Energy is tackling energy use for cryptocurrencies and data centers and greenhouse gas emissions
The two founders of Crusoe Energy think they may have a solution to two of the largest problems facing the planet today — the increasing energy footprint of the tech industry and the greenhouse gas emissions associated with the natural gas industry.
Crusoe, which uses excess natural gas from energy operations to power data centers and cryptocurrency mining operations, has just raised $128 million in new financing from some of the top names in the venture capital industry to build out its operations — and the timing couldn’t be better.
Methane emissions are emerging as a new area of focus for researchers and policymakers focused on reducing greenhouse gas emissions and keeping global warming within the 1.5 degree target set under the Paris Agreement. And those emissions are just what Crusoe Energy is capturing to power its data centers and bitcoin mining operations.
The reason why addressing methane emissions is so critical in the short term is because these greenhouse gases trap more heat than their carbon dioxide counterparts and also dissipate more quickly. So dramatic reductions in methane emissions can do more in the short term to alleviate the global warming pressures that human industry is putting on the environment.
And the biggest source of methane emissions is the oil and gas industry. In the U.S. alone roughly 1.4 billion cubic feet of natural gas is flared daily, said Chase Lochmiller, a co-founder of Crusoe Energy. About two-thirds of that is flared in Texas, with another 500 million cubic feet flared in North Dakota, where Crusoe has focused its operations to date.
For Lochmiller, a former quant trader at some of the top American financial services institutions, and Cully Cavness, a third generation oil and gas scion, the ability to capture natural gas and harness it for computing operations is a natural combination of the two men’s interests in financial engineering and environmental preservation.
NEW TOWN, ND – AUGUST 13: View of three oil wells and flaring of natural gas on The Fort Berthold Indian Reservation near New Town, ND on August 13, 2014. About 100 million dollars’ worth of natural gas burns off per month because a pipeline system isn’t in place yet to capture and safely transport it. The Three Affiliated Tribes on Fort Berthold represent Mandan, Hidatsa and Arikara Nations. It’s also at the epicenter of the fracking and oil boom that has brought oil royalties to a large number of Native Americans living there. (Photo by Linda Davidson / The Washington Post via Getty Images)
The two Denver natives met in prep-school and remained friends. When Lochmiller left for MIT and Cavness headed off to Middlebury they didn’t know that they’d eventually be launching a business together. But through Lochmiller’s exposure to large-scale computing and the financial services industry, and Cavness’ assumption of the family business, they came to the conclusion that there had to be a better way to address the massive waste associated with natural gas.
Conversation around Crusoe Energy began in 2018 when Lochmiller and Cavness went climbing in the Rockies to talk about Lochmiller’s trip to Mt. Everest.
When the two men started building their business, the initial focus was on finding an environmentally friendly way to deal with the energy footprint of bitcoin mining operations. It was this pitch that brought the company to the attention of investors at Polychain, the investment firm started by Olaf Carlson-Wee (and Lochmiller’s former employer), and investors like Bain Capital Ventures and new investor Valor Equity Partners.
(This was also the pitch that Lochmiller made to me to cover the company’s seed round. At the time I was skeptical of the company’s premise and was worried that the business would just be another way to prolong the use of hydrocarbons while propping up a cryptocurrency that had limited actual utility beyond a speculative hedge against governmental collapse. I was wrong on at least one of those assessments.)
“Regarding questions about sustainability, Crusoe has a clear standard of only pursuing projects that are net reducers of emissions. Generally the wells that Crusoe works with are already flaring and would continue to do so in the absence of Crusoe’s solution. The company has turned down numerous projects where they would be a buyer of low-cost gas from a traditional pipeline because they explicitly do not want to be net adders of demand and emissions,” wrote a spokesman for Valor Equity in an email. “In addition, mining is increasingly moving to renewables and Crusoe’s approach to stranded energy can enable better economics for stranded or marginalized renewables, ultimately bringing more renewables into the mix. Mining can provide an interruptible base load demand that can be cut back when grid demand increases, so overall the effect to incentivize the addition of more renewable energy sources to the grid.”
Other investors have since piled on, including: Lowercarbon Capital, DRW Ventures, Founders Fund, Coinbase Ventures, KCK Group, Upper90, Winklevoss Capital, Zigg Capital and Tesla co-founder JB Straubel.
The company now operates 40 modular data centers powered by otherwise wasted and flared natural gas throughout North Dakota, Montana, Wyoming and Colorado. Next year that number should expand to 100 units as Crusoe enters new markets such as Texas and New Mexico. Since launching in 2018, Crusoe has emerged as a scalable solution to reduce flaring through energy intensive computing, such as bitcoin mining, graphical rendering, artificial intelligence model training and even protein folding simulations for COVID-19 therapeutic research.
Crusoe boasts 99.9% combustion efficiency for its methane, and is also bringing additional benefits in the form of new networking buildout at its data center and mining sites. Eventually, this networking capacity could lead to increased connectivity for rural communities surrounding the Crusoe sites.
Currently, 80% of the company’s operations are being used for bitcoin mining, but there’s increasing demand for use in data center operations, and some universities, including Lochmiller’s alma mater of MIT, are looking at the company’s offerings for their own computing needs.
“That’s very much in an incubated phase right now,” said Lochmiller. “A private alpha where we have a few test customers… we’ll make that available for public use later this year.”
Crusoe Energy Systems should have the lowest data center operating costs in the world, according to Lochmiller and while the company will spend money to support the infrastructure buildout necessary to get the data to customers, those costs are negligible when compared to energy consumption, Lochmiller said.
The same holds true for bitcoin mining, where the company can offer an alternative to coal-powered mining operations in China and the construction of new renewable capacity that wouldn’t be used to service the grid. As cryptocurrencies look for a way to blunt criticism about the energy usage involved in their creation and distribution, Crusoe becomes an elegant solution.
Institutional and regulatory tailwinds are also propelling the company forward. Recently New Mexico passed new laws limiting flaring and venting to no more than 2% of an operator’s production by April of next year, and North Dakota is pushing for incentives to support on-site flare capture systems while Wyoming signed a law creating incentives for flare gas reduction applied to bitcoin mining. The world’s largest financial services firms are also taking a stand against flare gas with BlackRock calling for an end to routine flaring by 2025.
“Where we view our power consumption, we draw a very clear line in our project evaluation stage where we’re reducing emissions for an oil and gas projects,” Lochmiller said.
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Facebook introduces a new miniplayer that streams Spotify from the Facebook app
Facebook announced last week an expanded partnership with streaming music service Spotify that would bring a new way to listen to music or podcasts directly within Facebook’s app, which it called Project Boombox. Today, the companies are rolling out this integration via a new “miniplayer” experience that will allow Facebook users to stream from Spotify through the Facebook app on iOS or Android. The feature will be available to both free Spotify users and Premium subscribers.
The miniplayer itself is an extension of the social sharing option already supported within Spotify’s app. Now, when Spotify users are listening to content they want to share to Facebook, they’ll be able to tap the existing “Share” menu (the three-dot menu at the upper right of the screen) and then tap either “Facebook” or “Facebook News Feed.”
When a user posts an individual track or podcast episode to Facebook through this sharing feature, the post will now display in a new miniplayer that allows other people who come across their post to also play the content as they continue to scroll, or reshare it. (Cue MySpace vibes!)
Spotify’s paid subscribers will be able to access full playback, the company says. Free users, meanwhile, will be able to hear the full shared track, not a clip. But afterwards, they’ll continue to listen to ad-supported content on Shuffle mode, just as they would in Spotify’s own app.
One important thing to note here about how all this works is that the integration allows the music or podcast content to actually play from within the Spotify app. When a user presses play on the miniplayer, an app switch takes place so the user can log into Spotify. The miniplayer activates and controls the launch and playback in the Spotify app — which is how the playback is able continue even as the user scrolls on Facebook or if they minimize the Facebook app altogether.
This setup means users will need to have the Spotify mobile app installed on their phone and a Spotify account for the miniplayer to work. For first-time Spotify users, they’ll have to sign up for a free account in order to listen to the music shared via the miniplayer.
Spotify notes that it’s not possible to sign up for a paid account through the mini-player experience itself, so there’s no revenue share with Facebook on new subscriptions. (Users have to download the Spotify app and sign up for Paid accounts from there if they want to upgrade.)
The partnership allows Spotify to leverage Facebook’s reach to gain distribution and to drive both sign-ups and repeat usage of its app just as the COVID bump to subscriber growth may be wearing off. However, it’s still responsible for the royalties paid on streams, just as it was before, the company told TechCrunch, because its app is the one actually doing the streaming. It’s also fully in charge of the music catalog and audio ads that play alongside the content.
For Facebook, this deal means it now has a valuable tool to keep users spending time on its site — a metric that has been declining over the years, reports have indicated.
Spotify and Facebook have a long history of working together on music efforts. Facebook back in 2011 had been planning an update that would allow music subscription users to engage with music directly on Facebook, much like this. But those plans were later dialed back, possibly over music rights’ or technical issues. Spotify had also been one of the first media partners on Facebook’s ticker, which would show you in real time what friends were up to on Facebook and other services. And Spotify had once offered Facebook Login as the default for its mobile app. Today, as it has for years, Spotify users on the desktop can see what their Facebook friends are streaming on its app, thanks to social networking integrations.
The timing for this renewed and extended partnership is interesting. Now, both Facebook and Spotify have a mutual enemy with Apple, whose privacy-focused changes are impacting Facebook’s ad business and whose investments in Apple Music and Podcasts are a threat to Spotify. As Facebook’s own music efforts in more recent years have shifted toward partnership efforts — like music video integrations enabled by music label agreements — it makes sense that it would turn to a partner like Spotify to power a new streaming feature that supports Facebook’s broader efforts around monetizable tools and services aimed at the creator economy.
The miniplayer feature had been tested in non-U.S. markets, Mexico and Thailand, ahead of its broader global launch today.
In addition to the U.S., the integration is fully rolling out to users in Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Israel, Japan, Malaysia, Mexico, New Zealand, Nicaragua, Panama, Paraguay, Peru, South Africa, Thailand and Uruguay.
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What the MasterClass effect means for edtech
MasterClass, which sells a subscription to celebrity-taught classes, sits on the cusp of entertainment and education. It offers virtual, yet aspirational learning: an online tennis class with Serena Williams, a cooking session with Gordon Ramsay. While there’s the off chance that an instructor might actually talk to you — it has happened before — the platform mostly just offers paywalled documentary-style content.
The vision has received attention. MasterClass is raising funding that would value it at $2.5 billion, as scooped by Axios and confirmed independently by a source to TechCrunch. But while MasterClass has found a sweet spot, can the success be replicated?
Investors certainly think so. Outlier, founded by MasterClass’ co-founder, closed a $30 million Series C this week, for affordable, digital college courses. The similarities between Outlier and its founder’s alma mater aren’t subtle: It’s literally trying to apply MasterClass’ high-quality videography to college classes. This comes a week after I wrote about a “MasterClass for Chess lovers” platform launched by former Chess World Champion Garry Kasparov.
Two back-to-back MasterClass copycats raising millions in venture capital makes me think about if the model can truly be verticalized and focused down into specific niches. After 2020 and the rise of Zoom University, we know edtech needs to be more engaging, but we don’t know the exact way to get there. Is it by creating micro-learning communities around shared loves? Is it about gamification? Aspirational learning has different incentives than for-credit learning. In order to be successful, Outlier needs to prove to universities it can use MasterClass magic for true outcomes that rival in-person lectures. It’s a harder, and more ambtious promise.
My riff aside, I turned to two edtech founders to understand how they see the MasterClass effect panning out, and to cross-check my gut reaction.
Taylor Nieman, the founder of language learning startup Toucan:
Although I do love how these models try to lean into this theme of “invisible learning” like we leverage with Toucan, it faces the same issues as so many other consumer products that try to steal time out of people’s very busy days. Constantly competing for time leads to terrible engagement metrics and very high churn. That leads me to question what true learning outcomes could occur from little to no usage of the product itself.
Amanda DoAmaral, the founder of Fiveable, a learning platform for high school students:
Masterclass is important for showing us why educational content should be treated more like entertainment. All of our bars for content quality is much higher now than it ever was before and I’m excited to see how that affects learning across the board.
For students, it’s about creating environments that support them holistically and giving them space to collaborate openly. It feels so obvious that these spaces should exist for young people, but we’ve lost sight of what students actually need. At my school, we built policies that assumed the worst in students. I want to flip that. Assume the best, be proactive to keep them safe, and create ways to react when we need to.
Anyways, that’s just some nuance to chew on during this fine day. In the rest of this newsletter, we will focus a lot on tactical advice for founders, from the money they raise to the peacock dance they might want to do one day. Make sure to follow me on Twitter @nmasc_ so we can talk during the week, too!
The peacock dance
You know when male peacocks fan their feathers to court a lover? That, but for startups trying to get acquired. As one of our many rabbit holes on Equity this week, we talk about Discord walking away from a Microsoft deal, and if that deal ever existed in the first place or if it was just a way to drum up investor excitement in the audio gaming platform.
Here’s what to know: Discord is reportedly pursuing an IPO after walking away from talks with multiple companies that were looking to acquire the audio gaming giant.
Discord aside, the consolidation environment continues to be hot for some sectors.
- To sell or not to sell: Lessons from a bootstrapped CEO
- Once VMware is free from Dell, who might fancy buying it?
Image Credits: VectorInspiration / Getty Images
Even venture capital knows that the future isn’t simply venture capital
Clearbanc, a Toronto-based fintech startup that gives non-dilutive financing to businesses, has rebranded alongside a $100 million financing that valued it at $2 billion. Now rebranded as Clearco, the startup wants to be more than just a capital provider, but a services provider, too.
Here’s what to know: The startup has been on a tear of product development for the past year, launching services such as valuation calculators or runway tools. It’s a step away from what Clearbanc originally flexed: the 20-minute term sheet and rapid-fire investment. I talk about some of the levers at play in my piece:
Many of Clearco’s newest products are still in their infancy, but the potential success of the startup could nearly be tied to the general growth of startups looking for alternatives to venture capital when financing their startups. Similar to how AngelList’s growth is neatly tied to the growth of emerging fund managers, Clearco’s growth is cleanly related to the growth of founders who see financing as beyond a seed check from Y Combinator.
- How are VCs handling diligence in a world where deals open and close in days, not months
- Clearbanc rebrands into a unicorn
- After going public, once-hot startups are riding a valuation roller coaster
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Don’t market your opportunity away
Keeping on the theme of tactical advice for founders, let’s move onto talking about marketing. Tim Parkin, president of Parkin Consulting, explained how startup founders can use marketing as a tool to stand out in the noisy environment. Differentiation has never been harder, but also more imperative.
Here’s what to know: Parkin outlines four ways that martech will shift in 2021, strapped with anecdotes and a nod to the importance of investing in influencers.
- Customer care as a service: Outsourcing can help your startup wow clients 24/7
- 5 creator economy VCs see startup opportunities in monetization, discovery and much more
- Time-strapped IT teams can use low-code software to drive quick growth
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8 investors, founders and execs predict cybersecurity, fintech will take Belfast by storm
Things have been looking up for Belfast since the end of the Troubles. The city has undergone infrastructure improvements over the past two decades, tourism has boomed thanks to attractions such as the shipyard where the RMS Titanic was built and Game of Thrones shooting locations, and employment has risen steadily in the city since 2016, according to Northen Ireland’s Department for the Economy. The city also has the famed Queen’s University and low living costs to count in its favor, and gentrification is starting to take place, which shows things are looking up for Northern Ireland’s capital.
And as far as the local startup scene goes, the U.K.’s Tech Nation found in 2018 that about 26% of Belfast’s workforce was employed in tech, and it is among cities in the country with the highest growth potential for 2021.
With that in mind, we reached out to founders, investors and executives in the city to get an inside look at the state of the current tech startup ecosystem. According to the survey, the city is strong in sectors such as fintech, agritech, hospitality tech, emerging tech, cybersecurity, SaaS and medtech. Ignite NI emerged as an important native incubator and accelerator.
Interesting startups that our respondents mentioned include: CropSafe, SideQuest, Aflo, Material Evolution, Cloudsmith, LegitFit, Continually, Gratsi, 54 North Design, Animal Manager, Kairos Sports Tech, Budibase, Incisiv, Automated Intelligence, loyalBe, Konvi, Lane 44, Teamfeepay.com, Axial3D, Neurovalens, Payhere, and Civic Dollars.
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The tech investment scene was characterized as being strong in software and life sciences, but sometimes too conservative or risk-averse. However, this seems to be changing for the better, and foreign direct investment (FDI) is an important growth factor for the ecosystem.
Although there remains uncertainty around how Brexit will affect Northern Ireland, one executive said, “If we play our cards right, we can capitalize on it. Being positioned both in the EU and U.K. markets gives us advantages that we would be foolish to waste.”
One of the founders foresees more private capital flowing into Belfast as global investors realize that “the combination of great local universities and very strong FDI has attracted some brilliant engineers.” The low cost of living is also encouraging for talent to stay put in the city, which makes for a tech scene that’s poised to take off, this founder added.
Here’s who we spoke to:
- Cormac Quinn, founder & CEO, loyalBe
- Susan Kelly, CEO, Respiratory Analytics
- Ryan Crown, co-founder, Hill Street Hatch
- Fearghal Campbell, founder, Pitchbooking
- Jack Spargo, co-founder & CEO, Gratsi
- Brendan Digney, founder, Machine Eye Technology
- Toyah Warnock, co-founder, Lane 44
- Alan Carson, CEO, Cloudsmith
Cormac Quinn, founder & CEO, loyalBe
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
We’re strong in cybersecurity and (to an arguably lesser extent) fintech. I’m excited by the droves of new startups being created here in all sorts of sectors — traditionally, Belfast hasn’t had a lot of tech startups, but I can see that changing right before my eyes, which is very exciting. I always anticipated having to leave Belfast for the U.S. to be able to start a tech company, but I’m glad this is no longer a requirement or even the standard any more.
Which are the most interesting startups in your city?
There are a few that stand out: Cloudsmith (devtools), LegitFit (scheduling), Continually (chatbots/marketing), and Automated Intelligence (data management). This is certainly not an exhaustive list of interesting startups, just a few that come to mind.
What are the tech investors like in Belfast? What’s their focus?
Investors here can be somewhat conservative and slightly traditional. If you’re raising investment north of £1 million, you would likely need to look outside the jurisdiction. There also just isn’t enough private capital at the moment, which is a shame, as Belfast has some fantastic talent combined with a very low cost of living, which means investor money tends to go further (no crazy rents, reasonable salaries, etc.). It feels we’re at the beginning of a cycle in Belfast, however — I expect to see many more local exits over the coming years, which will likely lead to new private capital inflows.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
I understand the city was growing pre-pandemic, and I believe this trend will continue once life returns to a semi-normal state. For a long time, Belfast was a city people didn’t want to live in due to historical issues, but that has been slowly changing. New developments are popping up all over the city, from student accommodation to hotels and nice apartments. 15-20 years ago, Belfast had hardly any of this.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Chris McClelland, MD of Ignite NI: He’s a mentor on the city’s top accelerator program. Co-founded BrewBot.
Ian Browne, COO of Ignite NI: Entrepreneur and another mentor to startups in the city.
Mark Dowds: Venture partner at Anthemis, co-founder at Ormeau Baths (in my opinion it’s the city’s best co-working space).
Where do you see your city’s tech scene in five years?
We’re in uncertain times due to Brexit, but I think if we play our cards right, we can capitalize on it. Being positioned both in the EU and U.K. markets gives us advantages that we would be foolish to waste. I do think we will see more private capital flowing into Belfast as global investors realize that the combination of great local universities and very strong FDI has attracted some brilliant engineers. Combine that with the fact that cost of living remains quite low, which means their capital can go much further (rather than going to landlords) and you have a tech scene that’s poised for take-off.
Can you recommend any companies that should appear in our global Startup Battlefield competition?
Cloudsmith.
Susan Kelly, CEO, Respiratory Analytics
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Cybersecurity, fintech, digital — strong medtech — needs building. Great incubator and accelerator in Ignite, but needs expansion to the Northwest where deprivation and poor infrastructure need to be addressed. Public funding supports are good, but too fragmented and hard to access.
Which are the most interesting startups in your city?
CropSafe, SideQuest, Aflo (my startup!), Material Evolution.
What are the tech investors like in Belfast? What’s their focus?
Too conservative, “stale, pale, male”, and risk-averse. But changing for the better, slowly. Legal’s far too costly. Needs to shift to a more U.S. type model. Too few women on the scene. Focus on software, which is great, but too risk-averse in hardware. Needs more experienced angel investors. Halo Business Angel Network feels staid.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
Huge shift back to Belfast and Northern Ireland in general as a result of COVID.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Ignite NI is driving the startup scene via Propel (Pre-Accelerator) and the Accelerator — doing an amazing job. Clarendon, Techstart, various angels, and Catalyst. Big Motive is a key design engine.
Where do you see your city’s tech scene in five years?
With more support from Invest NI, the whole of Northern Ireland can be an innovation hub linked to Ireland via the startup ecosystem.
Can you recommend any companies that should appear in our global Startup Battlefield competition?
CropSafe.
Ryan Crown, co-founder, Hill Street Hatch
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
We’re strong in the tech industry. We’re excited by changing how we launch hospitality ventures. Belfast is weak in investment and investors.
Which are the most interesting startups in your city?
Payhere, Civic Dollars, and Konvi.
What are the tech investors like in Belfast? What’s their focus?
We’re lacking proper investors in Northern Ireland.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
The cost of living and quality of life is fantastic in Northern Ireland/Belfast. COVID-19 will see a huge influx of people moving from expensive cities such as London, Manchester, or Dublin and relocating to Belfast.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Chris McClelland.
Where do you see your city’s tech scene in five years?
Booming.
Fearghal Campbell, founder, Pitchbooking
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Cybersecurity, SaaS, sportstech. Most excited by a range of early-stage tech companies — [there has been] an explosion in pre-seed and seed level companies over the past two to three years. Weaker at scaling up; relative lack of indigenous scale-up companies. Large number of foreign direct investment from U.S.-based companies into the city.
Which are the most interesting startups in your city?
In the sportstech sector, teamfeepay.com are growing fast. loyalBe are a seed-stage fintech company with big plans for reinventing retail loyalty programs that we always keep an eye on. Later-stage companies like medtech mainstays Axial3D and Neurovalens are doing great things too!
What are the tech investors like in Belfast? What’s their focus?
We have a mix of angel and institutional investors in Belfast. Hard to say a specific focus on a particular industry, but there are a couple of sectors that are strong in the city given the focus of the local universities. Medtech and cybersecurity both feature heavily in the startup scene.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
Belfast benefits from a relatively low cost of living in relation to the rest of the U.K., meaning that we are seeing an increase in startups moving here from other major cities. The support for early-stage startups has also contributed to this influx. As a city, we are well set up for moving to a hybrid way of working. You can traverse across the center of the city in 15 mins on foot, which means popping into a city center office isn’t a big undertaking.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Invest NI – Government support agency.
Ignite NI – Seed-stage accelerator program.
UlsterBank Accelerator – Early-stage accelerator program.
Aurient Investments – Angel investment group with a diverse investment portfolio.
Where do you see your city’s tech scene in five years?
I believe we will see the strongest seed-stage companies from 2017-2020 becoming established companies within our tech scene to match the influx of FDI companies from further afield.
Jack Spargo, co-founder & CEO, Gratsi
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in: Fintech, agritech, hospitality tech, and emerging tech.
Most excited by: support (financial, mentoring, etc.) is available and the cost to build and grow is low.
Weakest in: geographical barriers to rest of UK and EU.
Which are the most interesting startups in your city?
loyalBe, Konvi, and Lane 44.
What are the tech investors like in Belfast? What’s their focus?
Great — good support and intros facilitated by accelerators such as Ignite NI, Catalyst, Techstart, Ormeau Baths, etc.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
More likely to move in: low cost of living and well set up for being remote already.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Chris McClelland and Ian Browne of Ignite NI; Mark Dowds of anthemis, and Cormac Quinn of loyalBe.
Where do you see your city’s tech scene in five years?
Stronger: a tech hub for the UK and the EU.
Brendan Digney, founder, Machine Eye Technology
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Agritech and Constuction tech are industries with huge potential, particularly in Ireland and Northern Ireland, where there are traditional strengths and the opportunity to influence based upon use of AI and data.
Which are the most interesting startups in your city?
Kairos Sports Tech, Budibase, Incisiv, and Automated Intelligence.
What are the tech investors like in Belfast? What’s their focus?
There are a number of VCs/funds that are generally linked to each other and Invest NI. INI is a big support and funder. Catalyst are a not-for-profit support who are possibly the most valuable in the whole system. Investment focus is generally around software and life sciences, although other funds are around. Strong focus on foreign and inward businesses.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
[People will] move out to rural areas within an hour’s drive of the city.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Catalyst, Ormeau Baths, and Raise Ventures.
Where do you see your city’s tech scene in five years?
Significant growth in the scene, with an expansion into more later-stage businesses.
Toyah Warnock, co-founder, Lane 44
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Belfast is a growing hub of fantastic businesses and funding opportunities.
Which are the most interesting startups in your city?
Gratsi, 54 North Design, and Animal Manager.
What are the tech investors like in Belfast? What’s their focus?
SaaS.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
Belfast is inexpensive to live in. Many people will be moving in.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Ormeau Baths.
Where do you see your city’s tech scene in five years?
It will grow rapidly. Belfast is going through a period of gentrification.
Can you recommend any companies that should appear in our global Startup Battlefield competition?
Lane 44, Animal Manager, and Gratsi.
Alan Carson, CEO, Cloudsmith
Which sectors is your tech ecosystem strong in? What are you most excited by? What does it lack?
Strong in security, fintech, and medtech. Excited about devtools.
Which are the most interesting startups in your city?
Cloudsmith and Axial3D.
What are the tech investors like in Belfast? What’s their focus?
Small investor scene, but with an ambitious founder scene. Medtech and security are popular.
With the shift to remote working, do you think people will stay in Belfast? Will they move out? Will others move in?
No idea. Probably a bit of both.
Who are the key startup people in your city (e.g. Investors, founders, lawyers, designers)?
Techstart Ventures, Ignite NI, Catalyst, Clarendon Co-Fund, Denis Murphy, Colm McGoldrick, and Alastair Bell.
Where do you see your city’s tech scene in five years?
Bigger and better than ever.
Can you recommend any companies that should appear in our global Startup Battlefield competition?
VideoFirst.
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