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- Most of the business community will criticize any government crackdown on Big Tech as overreach.
- But startup investor Bradley Tusk says that the FTC and other agencies are doing a service to innovation by cracking down on anticompetitive practices from Amazon and other giants.
- "If there's no rule of law, there's no future market worth betting on," Tusk writes.
The howls will begin the minute the FTC's lawsuit against Amazon hits the clerk's desk. "The FTC hates business!" "Lina Khan is a communist!" "This government is controlled by the far left!"
Of course that's what most in the business community will say. It would be novel if they didn't.
But they're wrong.
I'm an early stage venture capitalist. My fund, Tusk Venture Partners, invests in seed and Series A startups, typically in highly regulated industries – think companies like FanDuel, Coinbase, and Lemonade, Ro, Bird, Wheel, Alma, Circle, Sunday and so on.
What you don't see on that list is anything that could attempt to compete with Amazon or Meta or Apple or Microsoft or Google. Why? Because there is no way to compete if the incumbents' dominance over their respective markets is allowed to grow, completely unchecked.
When we invest, we're ultimately solving for the company's exit. Typically, that comes from an IPO or an acquisition. While IPOs generate most of the attention, acquisitions are more common. When we think through our possible exit, the first question is "Would x (the larger competitor) be more likely to buy this company or build their own version?" The second question is, "Can x squash our startup before they even get off the ground?"
Whenever we look at a startup that would directly compete with a company like Amazon, the answer to the second question is always, "yes, definitely." And we don't invest.
I don't have any animus towards Amazon. I order stuff from them all the time. I probably buy 75 books each year on Kindle even though I own an independent bookstore in Manhattan. I think Amazon is a great company. But I also think that allowing them to continue to dominate the entire retail market unimpeded is a death knell for the economy in 10 to 20 years.
Ultimately, every company, now matter how insurgent they once were, grows stagnant. They become a bureaucracy beset by internal politics and a CYA mentality. That's why the behemoths of my childhood, companies like IBM and GE, are a second thought today. Luckily, as these earlier giants started to falter, companies like Apple and Microsoft took off, and companies like Google, Amazon and Meta came along.
But would Google, for example, have gotten as far had the Department of Justice not pursued antitrust litigation against Microsoft in the late 1990s? Unlikely. Microsoft's overwhelmingly dominant market power and position would have allowed them to force computer manufacturers to use Internet Explorer instead of Google.
The same problem holds true today. Amazon, great as they are, will ultimately falter. They're subject to gravity just like everyone else. And then either one of two things will have happened: it will have been feasible to invest in potential competitors to Amazon, dozens will have emerged, a few will succeed and they're ready to replace Amazon as a major employer. Or, Amazon continued to amass so much power by controlling pricing, controlling the entire marketplace, that investors like me never felt comfortable backing a competitor and when Amazon lags, no one can fill the void.
That's where the FTC comes in. Their job isn't to wag their finger at big businesses and tell them that making money is evil (We already have AOC and Bernie Sanders for that). Their job is, yes, to protect current businesses who are forced to both advertise on Amazon and to accept far worse placement in each product search because they can't afford not to be on the platform. But it's also to look ten, twenty years into the future and see which industries may not have the openings for incredible new companies to emerge simply because the incumbents are too big to ever challenge.
When the case goes to court, Amazon will argue that none of their practices violate existing regulations. If they manage to make that case successfully, good for them. But as an early stage investor, I need to at least see that the government recognizes that new market entrants can't compete if the existing giants are allowed to deploy whatever competitive practices they want. If there's no rule of law, there's no future market worth betting on.
Whether or not FTC succeeds in court, the lawsuit's very filing shows that the agency at least recognizes that what's good for tech giants and their current investors is not necessarily what's good for tech startups and the economy's long-term needs. That's exactly the kind of regulation – and regulators – we both want and need.
Bradley Tusk is an early-stage venture capitalist.
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- Nvidia and Capital One have backed cloud data analytics startup Databricks, which is widely viewed as a top contender for an IPO.
- Revenue at Databricks rose 50% in the quarter that ended in July.
- The company has managed to avoid reducing its valuation despite a major pullback in tech stocks since its last funding round in 2021.
As some high-valued tech startups look to the long-dormant IPO market for their next funding round, Databricks is still finding investors that are happy to keep the company private, at least for now.
Databricks, which sells data analytics software, said Thursday that it raised more than $500 million in fresh capital at a $43 billion valuation.
Founded in 2013 and based in San Francisco, Databricks last announced funding during the boom market of 2021, at a $38 billion valuation. Since then, cloud software stocks have plummeted, with rival Snowflake losing 45% of its value. However, unlike fellow software IPO candidates Canva and Stripe, Databricks has managed to maintain its share price.
In the latest round, shares were sold at $73.50 a piece, roughly equal to where they were priced in 2021. The $5 billion increase in valuation is the result of new shares that CEO Ali Ghodsi said have gone to the 3,500 employees the company has hired in the past two years, as well as to investors. Headcount now sits at around 6,000.
While high interest rates and economic concerns continue to weigh on the tech market, particularly on companies that are burning cash, Databricks is capitalizing on a surge of momentum in artificial intelligence. In July, Databricks acquired MosaicML, a startup with software for efficiently running large language models that can spit out natural-sounding text, for $1.3 billion.
Nvidia is a new investor in Databricks, a notable addition as the chipmaker has been pouring cash into a host of AI infrastructure startups. Hugging Face, Cohere and CoreWeave are a few of the companies that Nvidia has backed at multibillion-dollar valuations.
Ghodsi said that he started talking to Nvidia CEO Jensen Huang "a while back," and that a strategic tie-up has become more important with both companies going deeper into AI. Databricks spends a lot of money on Nvidia's graphics processing units, largely through various public clouds, and even more now that his company owns Mosaic. He added that Nvidia and Mosaic had been in talks about a partnership before the acquisition.
"It made sense to partner more closely," Ghodsi said. "At the core, we're in complementary markets."
Equally notable is the participation of Capital One's venture arm as an investor for the first time. That's because the bank is Snowflake's largest customer. Snowflake finance chief Mike Scarpelli said at an investor event in August 2022 that Capital One was spending almost $50 million annually with Snowflake, and in November he said that the firm is its top customer and that it's "taken them 5.3 years to get where we are now."
Capital One is also a Databricks customer and uses the technology partly for fraud detection, according to a 2021 blog post.
Existing investor T. Rowe Price led Databricks' latest round, and was joined by Andreessen Horowitz, Baillie Gifford, Fidelity, Morgan Stanley's Counterpoint Global and Tiger Global, among others.
Ghodsi said that when the company started talking to investors about a potential financing round a couple of months ago, his "original guidance was no more than $100 million." That number ultimately swelled fivefold as more investors wanted to join, he said.
As for a potential initial public offering, Ghodsi said that's still on the road map, and that this funding doesn't change the company's plans. He didn't say when an IPO might happen.
Databricks will get to see how much demand there is for new tech opportunities in the coming weeks. Chip designer Arm is returning to the public market on Thursday after getting taken private in 2016. Grocery delivery company Instacart and software vendor Klaviyo filed their prospectuses last month. There hasn't been a notable venture-backed tech IPO in the U.S. since late 2021.
Many enterprise software makers have been trying to limit spending while growth rates slow because the uncertain economy has led big customers to reduce their purchasing. Databricks has stayed in growth mode and hasn't announced any layoffs.
Ghodsi said much of the cost cutting he's pursued was in his company's use of technology, particularly software subscriptions.
"We spent $30 million on 300 pieces of SaaS software," Ghodsi said. "I said, 'Let's halve that.'"
In the quarter that ended in July, Databricks said it reached a $1.5 billion annual revenue run rate, with sales growing 50% year over year. Snowflake, whose shares debuted on the New York Stock Exchange in 2020, reported 36% growth in the latest quarter to $674 million in revenue.
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In case one needed more evidence that there’s a massive appetite for generative AI, SAP, the Germany-based consulting giant, yesterday invested in three major generative AI players: Anthropic, Cohere and Aleph Alpha.
The terms of the direct investments, which weren’t disclosed, build on SAP’s $1 billion-plus commitment to back AI-powered enterprise tech startups from Sapphire Ventures, the enterprise venture capital firm. SAP also recently highlighted several internal AI efforts at its annual Sapphire conference, including a digital assistant in its customer experience tooling.
“We’re at a watershed moment, with generative AI poised to fundamentally change how businesses run,” SAP chief strategy officer Sebastian Steinhaeuser said in a press release. “SAP is committed to creating an enterprise AI ecosystem for the future that complements our world-class business applications suite and helps our customers unlock their full potential.”
All three of the investments — Aleph Alpha, Anthropic and Cohere — are very clearly aligned with SAP’s business interests. SAP provides a range of sales-, service- and commerce-oriented products, all of which stand to benefit from text-analyzing AI.
Anthropic is building an AI system, Claude, that helps with a range of business-to-business tasks, including generating answers, coding, automating workflows and processing text within the context of natural conversations. As for Cohere, it provides a generative text platform that’s accessible through an API as a managed service and can be deployed on virtual private clouds or on site to meet companies where their data resides. Aleph Alpha — which was already a SAP Partner — creates and hosts multimodal, multi-language models, meanwhile, with a focus on interoperability, data privacy and security.
Cohere’s president and COO, Martin Kon, said that working with SAP was an “obvious fit,” given their European roots and Cohere’s ambitions in Europe.
“This investment builds on our existing enterprise collaborations with Oracle, McKinsey, NVIDIA, Salesforce, Sentinel One, and others, as we bring our independent, cloud-agnostic, data-secure approach to generative AI to enterprises globally,” Kon told TechCrunch via email.
Aleph Alpha and Anthropic didn’t immediately respond to requests for comment.
SAP’s announcement comes after McKinsey said that it would partner with Cohere to help enterprises adopt generative AI — marking the firm’s first partnership with a text-generating AI model provider. And it follows a raft of other announcements from big consulting firms underlining their seriousness about generative AI as a technology.
Accenture earlier this year pledged to invest $3 billion in AI over the next three years, with the bulk to be put toward staffing. The company plans to double its AI-focused army of consultants to 80,000 through a mix of hiring, acquisitions and training.
Not to be outdone, PwC said it would spend $1 billion on AI over the same time frame to expand and scale its AI offerings. As part of the push, PwC will partner with Microsoft to create offerings using OpenAI’s GPT-4 and ChatGPT alongside Microsoft’s Azure OpenAI Service, which packages OpenAI technologies in an enterprise-friendly format.
McKinsey — which is a tad biased, granted — estimates that generative AI could add $4.4 trillion annually to the global economy, almost the economic equivalent of adding an entire new country the size and productivity of the U.K. ($3.1 trillion GDP in 2021) to the world.
But other strategists say that the AI boom won’t lead to massive profits, warning that the hype mirrors that of the tech bubble of the 1990s. Time will tell who’s right, as always.
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Founders Future is a pretty recent entrant in the French VC scene, but it has already built an interesting portfolio of tech startups over the past few years. The firm is currently in the process of raising two new funds — Founders Future II and Founders Future Expansion.
Launched in 2018 by Marc Menasé, a well-known serial entrepreneur and business angel in the French tech scene, Founders Future has invested in around 100 different companies, such as Lydia, Yuka, 900.care, Memo Bank, Waterdrop, Sharpist, Rentle, Taster, Stockly, omi studio and Audi-On.
The VC firm also used this opportunity to share some metrics about its portfolio. Overall, Founders Future-backed startup generate $268 million in revenue (€250 million). They have raised a total of $644 million (€600 million). The total valuation of portfolio companies is $5.4 billion (€5 billion). And those companies currently have 3,000 employees in total.
Overall, Founders Future currently has $216 million of assets under management (€200 million). Founders Future doesn’t have any public funding. Instead, it relies on successful entrepreneurs and family offices acting as limited partners.
And now, the firm plans to raise up to $162 million (€150 million) across two different funds. It has already reached a first close of $80 million (€75 million). Once again, Founders Future wants to back new startup at the seed stage — 60% of the amount raised will be dedicated to Founders Future II.
The rest (40%) will be put into Founders Future Expansion, a new fund that will be dedicated to post-Series A rounds for existing portfolio companies.
Founders Future doesn’t invest in a specific vertical. It wants to find disruptive companies in well-established industries, such as retail, bank, insurance, food, real estate and healthcare. It also wants to back innovative AI, climate or circular economy startups.
With Founders Future II, the firm plans to invest in 45 to 60 different startups. That represents around 12 to 15 investments per year. There will naturally be less investments with Founders Future Expansion — around 15 to 20 investments for the entire fund.
At the seed level, the firm plans to hand out €250,000 to €3 million while the later stage fund will be focused on bigger checks — from €1 million to €7.5 million.
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During the Silicon Valley Bank collapse, people in tech started to realize something: a lot of people really don’t like them.
Since the bank started to buckle late last week, tech luminaries have taken time out of their busy schedules of doing innovation to tweet about how everyone rooting against a bailout of Silicon Valley Bank simply doesn’t get it. Silicon Valley had birthed “the greatest wealth generation engine this country has had for the last 2 decades,” said Austin Federa, a spokesperson for the crypto blockchain Solana, and a bailout was essential to save a cornerstone of the American economy.
While getting ratioed in their own tweet threads, the wizards of tech seethed that so many didn’t see what they could. “The events of this weekend change things. The bank run isn’t actually the biggest thing—the reaction to it is,” tweeted Flo Crivello, a former Uber product manager who is now CEO a remote work tool company. “It’s making me and a lot of people realize that the media’s coordinated anti-tech campaign over the last 6yrs has been a lot more effective than we thought.”
Helen Min, a co-founder of a tech venture capital firm tweeted a less conspiratorial version of the same diagnosis: “VCs [are] now realizing Silicon Valley has a public image problem.” Indeed, prominent venture capitalist David Sacks, astutely noted that many were resistant to bailing out Silicon Valley Bank because it “has the name Silicon Valley in it.” If the situation were a little bit different, Sacks posited during an interview with UnHerd, people would get it; say, Sacks argued, “this was a farmers’ bank and it was 40,000 farms, small business farms that were on the hook, everybody would understand.”
Without realizing it, Sacks crystalized people’s real beef with Silicon Valley: if people felt like Silicon Valley actually improved or sustained their lives, they would defend it. More people would be up in arms about a bank for farmers collapsing because farmers make food that they like and literally need to survive. The region that once produced microprocessors, personal computers, internet search, and web browsers, kind of doesn’t really do that stuff as much as it used to, and people are noticing.
For several years, public opinion has grown increasingly critical of tech companies. In 2015, a Pew poll found 71 percent of the country had a positive view on tech, and 17 a negative one. A 2019 follow-up found only 50 percent had a positive view, with 33 percent having a negative one. A Gallup poll from 2020 put positive views of tech companies at just 46 percent and found that 57 percent of US respondents wanted more regulation. In 2022, Morning Consult found 67 percent of respondents favoring regulation, and agreeing tech’s benefits did not outweigh the power the industry had accrued.
It’s worth remembering that the conglomeration of private tech startups, the VCs that fund them, and the mega-corporations who all call themselves Silicon Valley were never as innovative as they liked to claim. In her 2013 book The Entrepreneurial State, Mariana Mazzucato observed that the real source of American innovation has always been the government. Libertarian, anti-establishment Silicon Valley owes its entire existence to the federal government, whose contracts and grants have funded its companies, and whose deep coffers have funded the research and development of technologies that Bay Area companies figured out how to profit from.
Only governments have the massive capital base and the lack of need for profit to be able to fund truly risky innovations that could either go nowhere or be the next big thing, Mazzucato notes. In the book, she sums up this history using Apple’s iPhone: its multitouch sensors, GPS, silicon-based semiconductors, LCD display, lithium ion battery, cellular technology, and micro hard drive—not mention the internet almost every app it runs uses—were all created through significant government research and funding. Steve Jobs’s team may have figured out how to deftly put them together, but the hardest parts had been worked out before he showed up.
But in the stories Silicon Valley tells, it is always some enterprising dropouts in a garage who are the innovative ones—pay no mind to the hundreds of millions of dollars and teams of researchers that preceded the suburban fantasy. It’s almost as if the real innovation was with advertising and mythmaking.
To be fair, there is value in figuring out how to apply technology, but that feels rarer all the time. So as self-proclaimed innovators rushed to defend the Valley, wits on Twitter were quick to make fun of these entrepreneurs’ inessential products:
GUY WHO INVENTED A SERVICE CALLED "BURGR" THAT USES AI TO MAIL YOU A SUBSCRIPTION BOX OF RECOMMENDED HAMBURGER TOPPINGS ONCE A MONTH AND MAKES MONEY BECAUSE IT'S HARD TO CANCEL: That's real nice how you want to stifle innovation. With your smart phone and your computer microchips— Patrick Cosmos (@veryimportant) March 13, 2023
It’s hyperbolic, but there’s truth in it. Figuring out inane ways to skim profit off people is the whole game for a lot of tech-enabled venture capital-backed companies. Harry’s Razors didn’t innovate on shaving, but it did figure out a way to lock consumers into a potentially lucrative subscription model. You could buy houseplants at the store or order them from Home Depot before San Fransisco venture capital pumped money into The Sill. Netflix is nice, but it hasn’t made our lives materially better. Genuinely useful services like Uber and Spotify (Swedish, but boosted by the Bay) made using cabs better and listening to music better, but famously did this by funneling money away from armies of cabbies and musicians, into the pockets of software developers, product managers, and, especially, people sitting in Northern California’s C-suites.
If you squint, yes, these products have changed the world—but they haven’t necessarily improved it. At best, they’ve re-sorted and spiffed-up things that already existed, making them more convenient. At worst, they’ve accelerated the process of contracting out worker-made value and contributed in creating an even more precarious gig underclass.
After all, one of Silicon Valley’s biggest innovations was a way to make powerful people feel ethical about avarice. Yes, tech titans, made banker-like money, but unlike bankers, they told themselves, they helped the world.
For a while, their customers believed it. The public response to Silicon Valley Bank’s dissolution shows that fewer and people buy the industry’s Randian delusions of personal enrichment as societal welfare. If the collapse reveals to Silicon Valley that it has a PR problem, that’s because all it ever had was PR.
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Based out of London — as one could surmise from its name borrowed from the city’s charming area — Pimlico is building the infrastructure for developers to make more user-friendly decentralized applications or dApps. The seed investment from a16z, which totals $4.2 million, came soon after Pimlico’s founder and CEO Kristof Gazso graduated from the investment firms’ Crypto Startup School.
“With Pimlico just a few weeks old, Kristof participated in our Spring 2023 cohort of Crypto Startup School in Los Angeles. Within weeks, we were blown away by the velocity at which Kristof and team shipped product and closed significant, early partnerships for Pimlico,” Sriram Krishnan, general partner at a16z focusing on crypto, wrote in a blog.
While a16z continues to invest globally, Krishnan’s team in London will have a particular focus on U.K. founders and startups, the investor told TechCrunch.
“The combination of incredible universities creating the next generation of talent, a deep capital market, the sophistication of financial regulators, and the potential for clear and practical regulation all point to the U.K.’s potential to become a hub for tech startups — but notably web3 startups,” said Krishnan, adding that his team will work closely with the Crypto Startup School, which will be hosted in London this coming spring.
With five employees spread across the world, Gazso is moving everyone to London following the funding round. Explaining the decision, the founder said: “Despite the magnetic force that you’ll see in places like Silicon Valley, and New York, London is really establishing itself as the new crypto hub in the world.”
Smart accounts for mass adoption
Despite the market downturn and unfulfilled promises of the crypto industry, a sizable number of developers remain passionately committed. That’s in part why a considerable portion of funding for the industry is currently directed toward highly technical solutions. Pimlico is one such startup.
To understand its mission, it’s necessary to mention ERC-4337, a critical technical upgrade implemented recently by Ethereum, which has the most active developers among all blockchain networks.
ERC-4337 standardizes how “smart accounts” and related pieces of infrastructure interact with each other, making it much simpler for developers to enable features such as email recovery, social logins and so-called gas fee sponsorship. For those unfamiliar with crypto, gas fees have been a major inconvenience for users who need to pay transaction fees in a network’s native tokens — Pimlico is essentially removing that hurdle for the end users.
As a result of these technical improvements, dApp developers are finally able to program functionalities that have long been standard for web2 user accounts, which the industry sees as a crucial step toward the mass adoption of self-custodial wallets. This is important because, following the implosion of FTX, which exposed the risks associated with centralized finance, there’s been a wave of users moving away from centralized exchanges towards self-sovereignty over their own assets.
Having co-authored ERC-4337 with Ethereum founder Vitalik Buterin and others, Gazso realized that to fully utilize the new standard, developers still needed to overcome many friction points, so he decided to build a set of toolings that would allow developers to easily embed account abstraction functionality. In the founder’s words, his goal is to “easily build and scale their smart accounts by relieving them of the burden of building out their own relaying and sponsoring infrastructure.”
Taking a rough web2 analogy, Pimlico strives to do what Stripe does to the digital payments industry. “You’ve had a bunch of people who wanted to allow for payments on the internet, which is one of the early promises, but there was no one out there who actually built out a very easy-to-use, very easy plug-in payments network,” the founder said.
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Plan A, a carbon accounting and ESG (environmental, social, and governance) reporting platform for corporations, has raised $27 million in a Series A round of funding led by U.S. VC giant Lightspeed Venture partners.
Technically the funding is an extension of a $10 million Series A round it announced nearly two years ago, meaning for all intents and purposes this is the closing of a $37 million Series A round, taking its total raised to $42 million across its six year history. But perhaps more notably, its latest round also includes participation from some major names from the corporate world, including Visa, Deutsche Bank, and BNP Paribas’ VC arm Opera Tech Ventures, among numerous other angel investors.
“The urgency of the climate crisis, combined with the complexity of navigating net-zero journeys for businesses, made it imperative for us to bring onboard top-tier investors now,” Lubomila Jordanova, Plan A founder and CEO, explained to TechCrunch.
Scoping out
Founded out of Berlin in 2017, Plan A (a reference to the ‘no plan B’ climate action mantra) is one of numerous VC-backed startups to emerge out of Europe with the express aim of helping companies measure (and cut) their carbon footprint. The perennial problem, it seems, is that even with the best will in the world, cutting carbon emissions can be difficult unless a company makes a real effort to discover exactly what their emissions are, and where they are in the supply chain.
A survey last year from Boston Consulting Group (BCG) found that 90% of organizations didn’t measure their greenhouse gas emissions “comprehensively.” As usual, so-called “scope 3 emissions” were identified as a major stumbling block, whereby a company fails to address emissions down through its supply chain involving partner businesses. While it’s true that scope 3s are more difficult to measure compared to scope 1 (which refers to emissions directly under a company’s control), there is growing pressure for organizations to address emissions throughout their network.
This is important for a number of reasons, but mainly because many businesses’ carbon footprint is largely made up of scope 3 emissions. For example, a Coca-Cola bottling partner — Coca-Cola European Partners (CCEP) — has previously estimated that 93% of its emissions were scope 3.
Moreover, rather than coming down, global energy-related Co2 emissions are still on the rise, growing 0.9 percent in 2022.
“As the climate crisis is defined in large part by the growth of emissions, one of the most urgent challenges, and the only economically viable choice, is to rapidly reduce the emissions curve, especially for companies,” Jordanova said.
Thus, Plan A has developed a SaaS-based sustainability platform that enables companies to self-manage their net-zero efforts — this includes collecting data, calculating emissions, setting targets, and decarbonization planning. Crucially, it includes mapping emissions data across all scope 1, 2, and 3, and aligning them with global scientific standards and methodologies, including the Greenhouse Gas Protocol and the Science Based Targets Initiative (SBTi).
While the core Plan A product is a web app, customers — which include BMW, Deutsche Bank, KFC, and Visa — can also plug directly into Plan A via API, which is useful for integrating business and emissions data from across myriad applications such as business travel software and business intelligence (BI) tools.
Today, Plan A counts 120 employees across Berlin, Paris, and London, and with its fresh cash injection Jordanova said that it plans to “double down” on that with a slew of new hires.
“The funding now heralds our next growth phase,” she said. “With the fresh capital, we will double our headcount to expand our market penetration in Europe with a strong focus on France, the U.K., and Scandinavia, as well as deepen our platform capabilities.”
Climate emergency
While the funding landscape is somewhat arid these days beyond a swath of seed stage rounds, climate-tech startups seem to have fared relatively well, though overall funding in the space is still down on last year. The data suggests this is largely due to a decline in later-stage funding from Series B onwards, with early-stage trends looking a little better.
However, ESG data startups in particular seem to be in demand. Climate data startup Persefoni last month announced $50 million in fresh funding, which follows two other European rivals Sweep and Greenly which raised $73 million and $23 million respectively, albeit last year. Elsewhere, ESG data management startup Novisto secured $20 million in Series B funding a few months back.
While funding across the startup sphere is down, it still seems that investors still view climate tech more favorably compared to many other sectors, with the overall share of VC dollars growing from 10% to 13% in the past year, according to Dealroom data. And this, according to Jordanova, is down to several factors. While other industries have suffered due to macroeconomic factors and shifting investor preferences, climate tech is thriving (relatively) due in large part to the severity of the accelerating climate emergency which is leading to more regulation and pressure being heaped on enterprises to change course before it’s too late.
“European governments have implemented policies and regulations favouring clean tech, offering incentives and subsidies to attract investors,” Jordanova said. “Large corporations are also making sustainability commitments, driving investments in startups that align with their goals.”
Lightspeed’s London partner Julie Kainz said that climate will “likely be one of the most attractive investment themes” in the coming decades. “Solving the climate challenge has firmly moved on the strategic agenda of governments, corporations and the general public; and we strongly believe that the pressure from consumers will only continue to rise,” Kainz told TechCrunch by email.
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Silicon Valley Bank Collapse Is The Biggest Failure Since 2008
Silicon Valley Bank collapsed into Federal Deposit Insurance Corp. receivership on Friday, after its long-established customer base of tech startups grew worried and yanked deposits.
(Bloomberg) -- Silicon Valley Bank became the biggest US bank failure in more than a decade, after its long-established customer base of tech startups grew worried and yanked deposits.
The move by California state regulators to take possession of the lender on Friday and appoint the Federal Deposit Insurance Corp. receiver caps a vicious fall for a Silicon Valley stalwart. It’s also the second regional lender to fold this week after Silvergate Capital Corp. announced it was voluntarily liquidating its bank, spurring a selloff in bank stocks and concerns that more firms might be headed for closure.
The FDIC said that insured depositors would have access to their funds by no later than Monday morning. Uninsured depositors will get a receivership certificate for the remaining amount of their uninsured funds, the regulator said, adding that it doesn’t yet know the amount. In announcing the takeover, the California Department of Financial Protection and Innovation cited inadequate liquidity and insolvency.
Problems mounted for the bank, known as SVB, after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to pull money from the bank. The calls followed parent company SVB Financial Group announcing that it would try to raise more than $2 billion after a significant loss on its portfolio.
Receivership typically means a bank’s deposits will be assumed by another, healthy bank or the FDIC will pay depositors up to the insured limit.
“The FDIC receivership will end the uncertainty about this particular bank,” said Saule Omarova, a law professor at Cornell University. “But I don’t think that necessarily itself stops people from feeling less safe if they have some kind of exposure to assets or they hold their own money in banks with similar risk profiles.”
“Bank runs are a lot about psychology. And at this point, it’s very rational to be nervous,” she added.
SVB was founded in 1983 over a poker game between Bill Biggerstaff and Robert Medearis, according to a statement from the bank’s 20th anniversary. Since its start, the firm has specialized in providing financial services to tech startups.
The bank had about $209 billion in total assets and about $175.4 billion in total deposits at the end of last year, the FDIC said on Friday. “At the time of closing, the amount of deposits in excess of the insurance limits was undetermined,” the regulator said.
--With assistance from .
(Updates with FDIC statement starting in third paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Editor’s note: An earlier version of this story incorrectly characterized Uber’s plans. The company is reportedly slowing hiring. Hiring freezes and layoffs are hitting the tech sector as Silicon Valley prepares for a predicted recession. The hiring impacts are hitting companies of all sizes across tech, from industry giants to more nascent startups, signaling that the industry’s growth is slowing amid rising interest rates and surging inflation. Near-zero interest rates, a booming stock market and massive consumer demand allowed tech firms to aggressively expand their workforce at the start of the pandemic. But the recent economic downturn is forcing many companies to reverse course and cut costs to shore up their reserves. “It’s the perfect storm for tech companies,” said Dan Ives, an analyst at Wedbush. “Because valuations are sky high, hiring was unprecedented and in the course of six months it’s been a 180.” Since May, tech startups have laid off nearly 27,000 workers, according to layoffs.fyi, which tracks publicly announced job cuts. That’s roughly double the total number of layoffs recorded in all of 2021. Tech companies, especially smaller ones, are “pulling back on what was probably overaggressive hiring,” said Steven Weber, a professor at the Graduate School of Information at UC Berkeley. “Even six months or a year ago the view was, in many of the smaller firms of course, ‘Profits aren’t important, we just gotta grow. We grow into profits.’ During recessions, and during valuation shifts like we’ve seen in the markets in the last couple of months, unprofitable growth companies are getting killed. Their stock prices are collapsing,” Weber said. The Federal Reserve is fighting the nation’s highest inflation in four decades by raising interest rates, a move that will curb consumer demand and likely bring down prices. But economists say that rate hikes, which make it more difficult and expensive for companies to access capital, boost the likelihood that the U.S. goes into a recession next year. The economic downturn is driving investors away from risky assets, including tech startup stocks that rarely deliver profits. The tech-heavy Nasdaq composite is down roughly 30 percent over the past year, while the big five tech stocks slid 36 percent over the same period. Uber reportedly slowed hiring, with the CEO telling employees last month it would treat hiring as a “privilege,” and Spotify said this month it is slowing hiring by 25 percent. Tesla CEO Elon Musk said Tuesday the electric car company would cut 10 percent of its workforce in the next three months. Musk, who is actively pursuing a bid to buy Twitter, last week reportedly warned employees at the social media company of potential layoffs. “It depends. The company does need to get healthy. Right now the costs exceed the revenue,” Musk said, according to a CNBC report. Last week, real estate tech companies Redfin and Compass each said they would lay off around 450 workers due to a slowdown in home buying demand sparked by interest rate hikes. That comes after insurance tech startup Policygenius laid off 25 percent of its workforce earlier this month. Online-only car retailer Carvana fired 12 percent of its workforce in May. The largest companies aren’t immune to the challenges either. Tech giants boomed during the pandemic as the global population shifted their personal and professional lives online. But as restrictions eased, that growth faltered. Now, they’re preparing for a potential recession with hiring changes. Amazon executives told analysts on an April earnings call its warehouses are overstaffed. “Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” CEO Andy Jassy said. In an internal memo reported by Insider, Facebook’s parent company, Meta, acknowledged that as “more people are spending time offline” and returning to “pre-pandemic patterns,” growth has “eased off.” “While we’re still going through our reprioritization, we know this will have an effect on hiring for the rest of the year,” Meta CFO David Wehner said in the memo sent to employees in May. Meta spokesperson Andrea Beasley said the company regularly re-evaluates hiring based on business needs and is slowing growth based on guidance for the recent earning period. Google Cloud terminated dozens of support roles in March, Insider first reported. They were given 60 days to find new positions within the company. Those who didn’t were reportedly eligible for severance. An employee on the team who was not cut during the reorganizing told The Hill that since the initial “vague” announcement, they still lack a clear picture of what triggered the decision and leadership’s vision for the future of the remaining team. “The best reassurance that I’ve been able to get is that this was planned in such a way that they would only have to do it once,” the employee said. “It’s pretty stressful. I mean, obviously, this job is how I pay my mortgage and where I get insurance. It’s a job that I like doing. I like working with my customers. I liked working with the folks who got laid off, they were good people,” the employee added. A Google spokesperson told Insider in a statement in March that the reorganization “will ensure we have the right people, partners, and systems in place to meet our customers’ needs now and into the future.” The Hill has reached out to Google for comment. Ives said that hiring freezes and layoffs are tech companies’ ways of “proactively getting ahead of” a potential recession. “This is much more [about] companies preserving their margins, giving themselves flexibility, in what looks like a Category 5 hurricane potentially on the horizon. Strategically, we’ve seen a discernible change in hiring plans, even over the last month across Silicon Valley,” he said. Still, some in the industry believe that tech will weather a potential economic downturn as it did during previous recessions. Tim Herbert, CompTIA’s chief research officer, said that for every tech company announcing layoffs, there’s another firm ramping up hiring or continuing at their current pace, suggesting that the slowdown is more company specific than industry wide. “Companies that had a business model that wasn’t designed necessarily to generate cash flow profitability, but they were really pursuing market share, those seem to be the companies that are going to run into far more problems on the hiring side,” he said. A recent CompTIA analysis of labor data found that the tech industry added 22,800 net new workers in May, even as firms announced layoffs. Herbert noted that the market for developers, data scientists and other tech jobs remains strong, as companies are choosing to keep those tech workers on staff even as they let other employees go. Updated June 23 at 11:03 a.m.
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Tech Startups
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Gusto, best known for its American payroll management software and services, is playing in the big leagues.
TechCrunch+ has exclusively learned that Gusto has surpassed a significant revenue milestone: In its most recent fiscal year (the 12 months ended April 30, 2023), it generated revenue of more than $500 million, the company said.
The company also has a key profitability benchmark within reach, anticipating reaching free cash flow positivity in the next few quarters, where it expects to stay thereafter.
Gusto has so far held details regarding its financial performance close to its chest, so these numbers are illuminating. In 2021, the company admitted to recording revenue in the nine figures, but these new details place Gusto among the largest private-market tech companies in terms of scale.
We could better nail down Gusto’s place in the private technology company hierarchy if we had, say, a fourth-quarter revenue figure that we could annualize. But given what we have, Gusto certainly ended its last fiscal year on a greater run rate than $500 million, meaning that it is far and away large enough to go public in its current form.
Gusto declined to share information relating to its recent growth rate, but CEO Josh Reeves told TechCrunch in 2021 that his company was growing around 50% per year at the time.
Reaching cash flow positivity is notable for Gusto in today’s business climate, which has many tech startups and unicorns working to conserve cash. Ending cash burn is not a simple process. “At-scale companies should have a path to be able to fund themselves,” Reeves told TechCrunch+, adding that his company has “been on a path” to cash flow positivity for the past four or five years.
Understandably, Gusto has no plans to raise more outside capital. That said, we don’t expect it to pursue a direct listing when it does go public.
Partner power
How did Gusto breach the half-billion-dollar revenue milestone? By pursuing a multi-part model. Back in mid-2021, the company launched an embedded payroll feature, which allowed other companies to offer its payroll services to their customers inside their app or service.
The work has paid off: The company told TechCrunch this week that since its launch, its embedded payroll service has grown to a partner base of 27. Those partners, in turn, support more than a half-million businesses. Gusto also said that it has agreements with a few “Fortune 250” companies, but declined to share their names.
Gusto’s efforts to offer its payroll services to other companies via an API was foreshadowing, to a degree. Reeves indicated at the time of the launch that more of Gusto’s platform would become available via an API over time. That was made possible by the company’s work to use internal APIs to power its own software.
And this prior API-related work stands to pay dividends, given that Gusto announced this morning that it is teaming up with Remote to support international hires.
Remote + Gusto
In the United States, Gusto is best known for its HRtech business, including payroll and benefits management. Remote, in contrast, helps companies hire and support full-time staff around the world.
Gusto powers its American customers’ domestic payroll and supports international contractors, while Remote allows companies to hire internationally, handling the necessary work to do so in a compliant manner.
According to Reeves, demand for Gusto to support full-time international workers was clear — in a more remote-friendly world, this is not a massive shock — which makes the Remote partnership feel contentedly logical. Gusto confirmed that the deal is a revenue-share arrangement.
But why not build instead of partnering with another company? Reeves framed his company’s choice by reaching back in time, explaining that Gusto launched only with support for California before going on to support all U.S. states over the next three years. It chose to leave revenue on the table by being methodical.
He said that Remote has taken a similar approach to international markets, “expanding country by country” by building the “right infrastructure” to do so.
That shared perspective regarding careful compliance and the chance at a quick time to market made the Remote partnership a “no brainer,” Reeves said. The two companies also share a backer in General Catalyst.
For Remote, the deal took a while to close but left both parties quite happy, its CEO Job van der Voort told TechCrunch+.
Van der Voort said that a few years ago, his company decided to offer its services through APIs, mirroring what we heard from Gusto back in 2021. The result is that Gusto customers will be able to add international talent via Remote inside of the Gusto app. There will be a button, van der Voort explained, which sounds simple enough.
To begin with,Gusto customers can start hiring via Remote in Canada, and more markets will be added shortly thereafter. Van der Voort said he wants to bring his company to as many markets as possible in time, past the 75 or so it currently supports. So, Gusto customers could have the ability to hire nearly anywhere globally when that happens. For both unicorns, that shared capability could unlock a new bloc of growth.
Before we get into the competitive considerations at play in the deal, we should note that both companies were not bowled over when we recommended that they just get it over with and do a merger.
Is Gusto’s $500M number big?
According to PitchBook data, Gusto’s most recent private valuation was around $9.6 billion, just shy of the decacorn mark. Remote is worth a flat $3 billion, according to Crunchbase. The two companies therefore represent a massive amount of private-market wealth held by dozens of investors. If this deal goes well and allows each to do more total business, it could make a lot of pockets fatter.
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Tech Startups
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Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.
This is our Wednesday show, where we niche down to a duo, think about their work and unpack the rest. This week, Natasha Mascarenhas interviewed Sam Chaudhary, CEO and co-founder of ClassDojo, and Chris Farmer, CEO of SignalFire, a venture firm that recently announced a $900 million fund to back tech startups. This interview is structured a bit differently as it was actually recorded as a TechCrunch Live session, our weekly show that focuses on helping people start better venture backed businesses.
Here’s what we got into:
- What an outsider advantage looks like in startups, per a top investor
- Why ClassDojo doesn’t see itself as an edtech company
- How Sam landed early traction with a difficult-to-capture consumer
- How both Sam and Chris are thinking through the AI question brewing in every office
As always, the full Equity crew will be back on Friday, but you can keep up with us in the meantime @EquityPod.
For episode transcripts and more, head to Equity’s Simplecast website.
Equity drops at 7:00 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!
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Tech Startups
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Two year ago, after Vlad Shipilov, a Russian immigrant, moved to Portugal, his business visa was denied because his lawyer wasn’t aware of certain requirements pertaining to visa applications originating from Russia. It ultimately took $16,000, joining immigration groups on Telegram and Facebook and the help of a Portugal-based friend to secure Shipilov his visa — and residency.
Shipilov quickly came to realize that his experience wasn’t unique.
“I found that there were many ‘handlers’ and scammers in this market,” Shipilov told TechCrunch in an email interview. “For instance, Portuguese passive-income visa consulting agencies can cost $3,000, $5,000 or even $8,000, while lawyers charge $800 to $1,000 — and none of them provide any guarantees. I believe that your immigration should inspire you, not cause stress and make you pay for nothing.”
So Shipilov, along with the friend he met in Portugal, Sergey Kotlov, started writing free guides, providing chat support and finding lawyers to deliver low-cost or free consultations for immigrants. The pair later decided to start a business — MigRun — to scale their support to new countries and immigrant cohorts.
MigRun, a participant in the Startup Battlefield 200 competition at TechCrunch Disrupt 2023, provides personalized assistance to people immigrating to another country based on similar experiences from other immigrants. MigRun collects immigration cases and layers tech and analysis on top, including free guides, instructions, deadline reminders and alerts.
“We help people feel the same level of predictability and security when moving from their country as with an expensive handler, but with a money-back guarantee, up to seven times cheaper and fully digital,” Shipilov said. “We aim to convince people from developing countries that they can handle immigration on their own, and don’t need to pay a lot of cash for basic advice based on one person’s experience just to feel safe.”
MigRun isn’t the only platform providing a way for immigrants to get in touch with experts and file applications for visas. Boundless, which recently acquired two other immigration-focused tech startups, Bridge and RapidVisa, comes to mind. So does Lawfully.
But what makes MigRun different is the breadth and depth of its platform, Shipilov asserts — and its investment in automation.
For one, MigRun provides resources targeted not only at immigrants in particular countries but at groups of people immigrating from one country to another — e.g. Morocco to Italy, Russia to Italy or Turkey to Italy. Users can chat with someone who’s gone through the same process from their home country or country of residence, or tap a conversational assistant trained on similar cases and publicly documented visa requirements.
“Our main goal is to create a network of immigration assistants who exclusively work through our platform,” Shipilov said. “We have detailed information for thousands of immigration cases, and we expect to handle tens of thousands more in the future. This data includes complete profiles of immigrants, all the documents used for visa and residence permit applications (including passports, birth certificates and bank records), chat logs of interactions between immigrants and our assistants and more. We keep this data up to date, so if consulate or immigration office requirements change, we know about it almost immediately. We also know whether an application was approved or denied and the reasons for any rejections.”
MigRun uses this data to train its conversational assistant, aptly called Virtual Assistance. Shipilov claims it can even account for bias in immigration decisions, like when an immigration officer’s read of the law differs from the standard interpretation.
“Thanks to our extensive data set, our assistant can provide very specific advice, like how to apply for a Portuguese Digital Nomad visa in Istanbul, for example,” Shipilov said. “In most cases, it’s easier to adapt your application to match the preferences of the specific officer or immigration office you’re dealing with, rather than arguing with them to prove you’re right. This can save a lot of time and money.”
That’s a lot of sensitive data that MigRun’s storing — particularly for immigrants in countries with poor human rights records. Shipilov claims that the platform keeps immigrants’ identities anonymous and that it doesn’t pass personal data to third-party service providers without explicitly saying why it’s necessary. But he acknowledges that MigRun does retain this data for some time — at least 90 days and up to a year — unless a user requests their data be deleted sooner.
Asked to clarify MigRun’s retention policy, Shipilov said: “The rule is simple for us: we don’t sell personal data.”
MigRun — which also sees immigration agencies like VisaDB and Lawfully as its competitors — has been completely bootstrapped until now. Shipilov claims that the startup has over 3,900 customers and 16,000 monthly active users.
The plan for the near term is to focus on growth. In the next year, seven-employee MigRun aims to add support for more countries, fund product development on the AI assistant and paperwork automation side and increase revenue to $3 million per year. (MigRun claims to have made $800,000 in its first 12 months.)
“Currently, we have a 50% profit margin, but we seek to increase it to 70% by the end of 2024 and 90% in 2025 through the use of AI assistants, automation, and decreasing consultants roles,” Shipilov said. “More than 100 million people from developing countries immigrate annually. Therefore, even if we capture only 3% to 5% of the total market, which is worth $12 billion, it’d mean that we can assist millions of professionals, entrepreneurs, digital nomads, talented individuals, passive income holders and families to find better places, dramatically change their lives and save them billions of dollars.”
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Tech Startups
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SAN FRANCISCO — A California state board is set to vote Aug. 10 on whether to allow tech companies Waymo and Cruise to launch a massive expansion of driverless taxi fleets in San Francisco, but the stakes are far bigger than local politics.
The scheduled vote by the California Public Utilities Commission (CPUC) is shaping up as a referendum on an array of issues related to technology, including the politics of artificial intelligence and the human workforce affected by the technology’s rapid development.
If the commission agrees, hundreds of self-driving taxis could soon be available for hire by the general public, all day every day.
Tech executives, labor unions, transit advocates, city officials and robotaxi customers are all engaged in furious last-minute lobbying to try to sway the board’s five appointed members — setting the stage for what promises to be a state-by-state battle over self-driving cars and trucks.
“This is going to be the only chance for CPUC to get this right,” said Mike Di Bene, a local truck driver and member of the Teamsters, one of the unions that’s asking the state to pump the brakes on self-driving vehicles, which include taxis and big-rig trucks.
Self-driving taxis have become the latest flashpoint for conflict in San Francisco between the city’s wealthy, assertive technologists and the anti-corporate, progressive coalition that has a deep influence on local politics.
Cruise and Waymo have courted locals with goodwill measures like sponsorships of the San Francisco Giants and the San Francisco Marathon, while the city’s transportation office is strongly opposed to the expansion, citing congestion and other issues. Some opponents have even employed a guerrilla street tactic: they have planted traffic cones on the vehicles’ hoods to confuse the software and disable them.
The clash is in many ways a microcosm of all the thorny questions that AI is raising across the economy, including, How quickly will change occur? And what will happen to workers whose jobs are lost to robots?
Cruise and Waymo have spent years running pilot programs in multiple cities and are hoping for big changes after the commission’s vote. Cruise, which is majority-owned by General Motors, has a late-night taxi service in San Francisco that it wants to expand, initially with 100 vehicles. Waymo, which shares a parent company with Google, wants to pick up paying passengers in the city for the first time with no human driver present as back-up. It said it doesn’t have a firm number of vehicles in mind, only that it has hundreds in San Francisco now for testing and that it wants to roll out the paid service incrementally.
Both want these services to operate 24/7 — a potentially major change for San Francisco’s streets, and a potential showcase for what AI can and cannot do.
Financially, the pressure is on. Cruise lost $611 million in the second quarter of this year, a rate of nearly $7 million a day, according to GM’s earnings report. Waymo’s parent company, Alphabet, does not disclose the finances of the Waymo division, but it had layoffs this year and recently scaled back its self-driving trucking project, saying it was doubling down on autonomous passenger cars.
Freight trucks won’t be affected by next week’s vote, but they face a parallel threat: A bill moving through the California Legislature would require a safety driver to be in an autonomous big rig at all times. San Francisco Mayor London Breed spoke at a Teamsters rally last month in favor of the bill.
If Waymo and Cruise lose next week, some in the tech community fear they’d leave San Francisco or at least scale back, hurting the city’s place as the center of AI technology. Robotaxis are one of the most tangible applications of AI, using similar technology to what underlies the viral chatbot ChatGPT.
“Cruise and Waymo, they’re both Bay Area-founded companies that have big offices in San Francisco,” said Lee Edwards, a tech investor who’s an active booster of autonomous vehicles on social media. “Maybe they just go to a different city,” he said.
Both companies have operations in other cities, including Austin and Phoenix.
Edwards has not invested in Cruise or Waymo, although his firm, Root VC, invests in an autonomous-trucking startup. He said he supports driverless taxis because there are so many traffic deaths involving human drivers — 43,000 nationwide in 2021, a 15-year high — and he sees AI systems as safer.
Self-driving cars tend to be ultra-cautious, obeying the speed limit and stopping at stop signs — so much so that some human drivers don’t like sharing the streets with them.
“The only thing you can complain about with a Waymo is that it drives like a nerd,” Edwards said, meaning that robotaxis follow rules when human drivers might cut corners.
The arguments for and against robotaxis break down along complicated lines. Proponents point to potential safety benefits and the ease of getting around without driving, including for some disabled people. Opponents argue the technology is unproven and makes too many errors, such as stopping at awkward times and blocking city buses or emergency vehicles.
A YouTube video getting forwarded around in tech circles aims to rally the tech community behind the cause of robotaxis. It was made by Garry Tan, the head of Y Combinator, an influential incubator for tech startups, including for Cruise in its early stages. He said next week’s vote is a test of California’s commitment to innovation.
“This is a technology built right here in San Francisco that will change the world, yet some of the most ideologically driven elected officials want to stamp it out. It’s a lesson in killing the Golden Goose,” Tan says in the video.
Waymo and Cruise are also putting together last-minute campaigns to whip up support and try to avoid defeat. They’ve taken out ads in newspapers and on social media and sent emails to customers asking them to weigh in. A new advocacy group, Safer Roads for All, popped up with the support of Waymo and a motto: “Don’t let politics block progress.”
On the other side, critics of the robotaxis are sending letters to the state utilities commission, planning in-person rallies and posting photos and videos to social media of the robotaxis making mistakes.
Lorena Gonzalez Fletcher, executive secretary-treasurer of the California Labor Federation, said the state has grown weary of tech executives rushing forward with new ideas before taking their time to examine safety. She said next week’s vote is a unique chance to slow them down.
“Let’s ask the questions now, before these companies become part of a way of life and too large, and investors have put in too much to regulate them,” she said.
Her federation is an umbrella group for 1,200 unions with 2.1 million members, and she said some of their jobs are at stake, including in areas like parcel delivery.
“Where does it go next? Could it go to delivery? Of course it could. That is an area where we have some really good union jobs, some middle-class jobs,” she said.
Cruise has countered by striking deals with two unions who will represent electrical workers and janitors at company facilities, Reuters reported Thursday. And in a newly announced paid sponsorship, a Cruise logo now appears on the sleeves of San Francisco Giants players.
Members of the California Public Utilities Commission are appointed by the governor. A spokesperson for Gov. Gavin Newsom, a Democrat, declined to comment on his position on self-driving technology.
Di Bene, the truck driver, said he doesn’t think any software could match his 29 years of experience with annual safety training.
“As a professional driver and a Teamster, I’m safe because I’m fearful and I respect my life and everyone else’s life,” he said. “A computer, a code, a truck that’s unmanned, will never have that fear because that’s not what they do.”
Cruise and Waymo, though, haven’t caused any reported deaths, and they say the safety argument is on their side. “Humans are terrible drivers,” Cruise has said in newspaper ads.
“Autonomous vehicles don’t get drunk or drowsy. They don’t text at the wheel,” Waymo co-CEO Tekedra Mawakana wrote in a column last month in the San Francisco Chronicle.
“We want our vehicles to improve road safety and to contribute to the city’s economic recovery and its Vision Zero goal of no street fatalities,” she said.
Dylan Fabris, community and policy manager for San Francisco Transit Riders, an advocacy group, said robotaxis are a distraction from what should be the priority in a congested city: getting people out of cars and onto buses, trains, bicycles and their own two feet.
“Right now, we need to be increasing ridership on transit — for the environment and for creating a city that’s actually pleasant to live in,” he said. “We need to not be adding more cars to the mix.”
Advocates for robotaxis have made no secret of their hope to replace public transit systems, and they have a playbook to follow: After Uber and Lyft began operating, public transit use fell among people with high incomes and people without children, according to a 2021 study published in the journal iScience.
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Tech Startups
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Raghav Poddar was studying computer science at Columbia University when he became intrigued by the challenges restaurant owners were facing maintaining an online presence. A self-described “foodie,” Poddar — who didn’t have much time to cook meals — was a heavy user of food delivery and pickup services in New York City.
“Many restaurants don’t have much of an online presence, but they have the ability to cook more dishes and cuisines representative of their communities,” Poddar told TechCrunch in an email interview. “There might be a broader slowdown in tech, but restaurants need to adopt and become good at technology now more than ever to protect their margins and grow their sales.”
The importance of an online footprint in the restaurant industry — and a quality one at that — can’t be overstated. According to one recent survey, 77% of diners visit a restaurant’s website before they dine in or order out from the establishment. Of that group, nearly 70% have been discouraged or otherwise deterred from visiting the restaurant because of its website.
Poddar came up with a solution in Superorder (formerly Forward Kitchens), a platform that provides websites, menus, photos and tools for order management, marketing, financial management and more to restaurants. Superorder today announced that it raised $10 million in a funding round led by Foundation Capital with participation from Y Combinator managing director Michael Seibel, Cruise co-founders Kyle Vogt and Daniel Kan, I2BF Global Ventures and others.
The crux of Superorder’s mission is helping restaurants to boost business from “off-premise” dining — that is to say, delivery and pickup services. The pandemic supercharged the growth of off-premise dining as restaurants were forced to pivot; two-thirds of adults say that they’re more likely to order takeout food from a restaurant than they were before the pandemic, Restaurant.org reports.
But Poddar argues that many restaurateurs, newly burdened by digital managerial tasks, are still leaving money on the table.
“The increased adoption of technology by restaurant owners doesn’t solve the challenges of setting up, managing and understanding how to leverage this technology,” he said. “A task as simple as changing hours on all delivery platforms (e.g. Grubhub, UberEats) for a day can take dozens of clicks and hours of time.”
Superorder attempts to streamline things by letting restaurants set up an online presence, including food delivery, where they can create multiple digital storefronts and accompanying financials and operations dashboards without having to contact each delivery platform.
Superorder also consults with restaurants, helping them to launch “virtual restaurants,” or storefronts for different brands operating within their kitchens. Poddar says that Superorder employs data science to identify in-demand dishes in a restaurant’s delivery radius and works with the restaurant to create menus and photos for that brand, which Superorder then lists on third-party delivery platforms.
It’s worth noting that virtual restaurants or “ghost kitchens,” a concept that grew in popularity during the pandemic, don’t exactly have high success rates.
Restaurants often struggle with the cost of finding additional delivery people for their virtual restaurants, affording labor and marketing a location that’s virtually invisible to the public. And some third-party delivery platforms have pushed back against virtual restaurants, accusing the restaurants creating them of spamming the platforms with repetitive listings and menus. As of March, UberEats requires virtual kitchens to maintain a high average rating — above 4.3 stars — and a low percentage of canceled orders.
But Superorder claims that it’s more thoughtful in its approach to creating virtual kitchens than its competitors. For one, the platform uses generative AI to create menus and photos for each virtual restaurant listing, similar to tools offered by restaurant tech startups Swipeby and Lunchbox. Data from Grubhub reveals that restaurants with pictures for their menu items receive at least 70% more orders and 65% higher sales than those without pictures.
Of course, one wonders how closely the AI-generated images resemble the actual menu items. Gross inaccuracies could land restaurants on the hook for lawsuits over false advertising. But Poddar brushes these concerns aside, pitching Superorder’s generative AI as a way for restaurants to provide images “close to” real food visuals without avoid having to hire a professional food photographer.
“Our competitors use the same brand across hundreds of restaurants, creating a ‘one-to-hundreds’ relationship — preventing restaurants from controlling the brand’s quality, image and relationship with their customers,” Poddar said. “With Superorder, restaurants can build a website through a search-based interface by typing in a query like ‘Build me a website for an Italian restaurant in New York’ and picking a design template. And they can create compelling food imagery assets and craft well-written, creative menu descriptions and item names with a simple click.”
Somewhat concerningly, it’s also not clear what’s powering Superorder’s generative AI features — i.e. whether the AI models were developed in-house or using a third-party API. The former could be more error-prone; we’ve asked Superorder for clarification.
But other aspects of Superorder’s platform seem unequivocally useful, like an order management module that consolidates orders from all third-party delivery platforms into a single pane of glass. Superorder also synchronizes menus across platforms while optimizing menu item prices for conversion rates and sales, automatically reconciling sales, tax, commission, marketing and fees across platforms to identify (and hopefully not introduce new) errors.
Superorder clearly has its fingers in lots of pies — and competes with lots of startups as a result. Poddar sees Nextbit, Virtual Dining Concepts and Ordermark as Superorder’s main rivals, but one could argue that the firm also goes head to head with ghost kitchen companies including MadEats, CloudEats and Lunchbox — at least on the digital asset management side.
But New York City-based Superorder is slowly but surely growing since emerging from Y Combinator’s Summer 2019 cohort. With a staff of about 70 people, it now operates in over 180 cities across the U.S. with more than 1,500 restaurant customers and has facilitated around 1.5 million orders to date.
There’s lots of money in the market besides — more than enough to go around, one would presume. A recent report estimates that the market for online food delivery will grow from $160 billion in 2022 to $483 billion by 2032.
Poddar says that the plan is to use Superorder’s new round of funding to expand the company’s operations, sales and engineering teams.
“In addition to scaling customers, we will also expand our product offering to become the full off-premise operating system for restaurants,” Poddar said. “We’re working on expanding further into the restaurant software stack and become the all-in-one software platform that gives restaurants the tools needed to drive profitability from delivery and takeout.”
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Tech Startups
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Meta today announced an AI Sandbox for advertisers to help them create alternative copies, background generation through text prompts and image cropping for Facebook or Instagram ads.
The first feature lets brands generate different variations of the same copy for different audiences while trying to keep the core message of the ad similar. The background generation feature makes it easier to create different assets for a campaign. Finally, the image cropping feature helps companies create visuals in different aspect ratios for various mediums, such as social posts, stories, or short videos like Reels.
The company said that these features are available to select advertisers at the moment and it will expand access to more advertisers in July.
“Currently, we’re working with a small group of advertisers in order to quickly gather feedback that we can use to make these products even better. In July, we will begin gradually expanding access to more advertisers with plans to add some of these features into our products later this year,” it said in a blog post.
Meta’s announcement comes after the company’s CTO Andrew Bosworth said last month that the company was looking to use generative AI tech for ads.
“[I] expect we’ll start seeing some of them [commercialization of the tech] this year. We just created a new team, the generative AI team, a couple of months ago; they are very busy. It’s probably the area that I’m spending the most time [in], as well as Mark Zuckerberg and [Chief Product Officer] Chris Cox,” Bosworth told Nikkei Asia in an interview at the time.
Meta had positive quarterly results for Q1 2023. The company beat analyst expectations and posted year-on-year revenue growth for the first time in three quarters. Mark Zuckerberg mentioned that, while the tech giant has started working on different AI tools, it remained committed to metaverse development.
While Meta is releasing some lightweight generative AI features for advertisers, some ad tech startups are heavily leaning into it. Omneky, which presented at TechCrunch Disrupt last year, used OpenAI’s DALLE-2 and GPT-3 to create ads. Movio, which counts IDG, Sequoia Capital China, and Baidu Ventures as its backers, is using generative AI to create marketing videos as well.
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In January 2023, Prime Minister Elisabeth Borne launched a six-month mission called Midy with the aim of supporting investment in startups and innovative SMEs. The mission’s goal was to present a report (Read the Midy Report) with concrete proposals for effective implementation starting in 2024, as the French government recognizes the importance of fostering the creation and financing of more startups.
President Emmanuel Macron, during his presidential campaign in 2022, highlighted the need to strengthen early-stage funding for startups, and he appointed Deputy Paul Midy to work on this issue. The plan is to make the French tax system more attractive for financing innovative companies, drawing inspiration from successful schemes implemented by neighboring countries like the United Kingdom’s EIS/SEIS.
According to the Midy Report, startups, innovative SMEs, and growing SMEs have played a crucial role in reducing unemployment over the past decade. Since 2017, these enterprises have contributed significantly to the creation of 1.5 to 2 million jobs, with several hundred thousand jobs being created by the French Tech, startups, and innovative SMEs. With the goal of reducing the unemployment rate to below 5% by 2027, the government recognizes the necessity of continuing, facilitating, and accelerating the financing of startups.
These enterprises are also essential for the country’s reindustrialization efforts. The disruptions caused by the COVID-19 pandemic and supply chain vulnerabilities have emphasized the need to relocate and rebuild production capacities, particularly in strategic sectors. France already boasts 1,800 deep tech startups, with 62% choosing to establish themselves outside of the Paris region.
Supporting startups and innovative SMEs is also crucial for the ecological transition as France has committed to achieving carbon neutrality by 2050, but nearly half of the necessary technologies to reduce carbon emissions are still under development or in the prototype stage, according to the International Energy Agency. The proposed measures in the Midy report also foster green innovation through deep tech and green tech companies, building upon the initiatives like “France Relance” and “France 2030.”
Furthermore, strengthening economic and technological sovereignty seems to be a major focus for the coming years as France is willing to guarantee its autonomy and address future strategic challenges. Investing in entrepreneurs and their companies is key to preempting future disruptive innovations as President Macron has expressed the desire for France to become Europe’s leading digital ecosystem, with the aim of developing 10 European tech giants, achieving 100 French unicorns, and creating 500 deep tech startups annually by 2030.
The proposed measures outlined in the Midy report, including the creation of a unified and simplified “Jeunes Entreprises” scheme, mobilizing large companies and institutional actors, and redirecting French savings toward startups and innovative SMEs, aim to actively supporting these enterprises as France believes it has the ressources to drive innovation, address environmental challenges, and foster economic growth.
Find out the latest Startup news on our dedicated section.
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Andrew Yang, the entrepreneur who grabbed national attention during his 2020 White House run and his 2021 New York City mayoral run, urged government intervention following the Silicon Valley Bank (SVB) collapse, warning of potential mass layoffs in the near future and a "financial contagion."
"In the absence of some kind of action you’ll see thousands of mass layoffs and defunct companies, a wiped out generation of start-ups." Yang warned.
In a series of Twitter posts, the businessman urged the California government or the U.S. Treasury Department to intervene to prevent a series of calamities that would likely affect thousands of companies and individuals, "through no fault of their own."
"I think either California or the Treasury Department should backstop Silicon Valley Bank - thousands of companies will fold or lay people off next week because of lack of access to accounts through no fault of their own," Yang wrote.
Yang argued that the collapse was not SVB clients' fault, but the managers of the previously esteemed bank.
"Take the equity and fire the managers." Yang stated. "There's a big difference between irresponsible bank managers and the thousands of customers and entrepreneurs and employees who chose to use a bank that was one of the biggest banks in the country."
"Punish one, but the other is blameless except they didn’t choose the right bank." Yang added.
Yang prophesied that layoffs would especially spread a "financial contagion" in California, where many tech startups are located and used SVB.
"[A] huge problems in CA in particular and a spreading financial contagion that will infect a host of regional banks at a minimum," Yang shared.
Yang argued that federal officials will need to be SVB's "white knight" to save the bank, since the massive bank has a "limited number of potential saviors"
"The natural white knights who could save SVB are unlikely to do so unless they get induced or a great deal. It’s a big bank with a limited number of potential saviors. Again why you probably need active leadership from officials to backstop," Yang added.
The Federal Deposit Insurance Corporation (FDIC) announced Friday that it would close Silicon Valley Bank, until then the 16th-largest bank in the U.S., marking the worst U.S. financial institution failure since the Great Recession.
The bank held a reputation as a go-to for a number of Silicon Valley industries and startups. Y Combinator, an incubator startup that launched Airbnb, DoorDash and DropBox, regularly referred entrepreneurs to them.
SVB's collapse was so quick that, hours before its closure, some industry analysts were hopeful that the bank was still a good investment. The bank’s shares had fallen by 60% on Friday morning after a similar drop the day before.
Anxious depositors rushed to withdraw their money over concern for the bank’s health, causing its collapse, which may serve as "an extinction-level event for startups," according to Y Combinator CEO Garry Tan.
The closure of SVB has spilled over into other banks, both in the U.S. and abroad, with $100 billion lost in stock revenue domestically and $50 billion in value shed by European banks over the past two days, according to a Reuters calculation.
Fox News' Aislinn Murphy contributed to this report.
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Yet another early-stage VC fund has closed in Europe this week, as Elkstone finalized a €100 million ($108 million) pot aimed at Irish startups. It comes a day after Lifeline Ventures closed a €150 million ($163 million) fund for fledgling startups in Finland, while several others have landed across the continent in the past few months.
Elkstone, a wealth management firm that for the past decade has invested privately at the seed stage in future unicorns such as Flipdish and LetsGetChecked, has launched its inaugural venture capital fund with the backing of the state’s Ireland Strategic Investment Fund (ISIF) and Enterprise Ireland (EI).
The new fund claims around 250 limited partners (LPs) in total, including a host of undisclosed business people from Ireland.
A year in the making
Elkstone first announced plans for its VC fund in January last year, initially targeting €75 million. Within three months, though, it revealed it was raising the ceiling to €100 million, with a view toward backing seed and pre-Series A startups with investments in the range of €1 million to €2 million.
Although the fund has only officially closed now, Elkstone says that it has already deployed around 10% of the cash across six startups, including Bluedrop Medical and Inclusio, with several more deals closing “imminently.”
One of the big driving forces behind the new fund was a recent legislative tweak the Irish government made to the Employment Investment Incentive Scheme (EIIS), an initiative that enables Irish startups to secure investment that are more tax efficient for the investor. The changes, which Elkstone had pushed for, mean that investors now benefit from tax relief of up to 40 percent. Up until that point, Elkstone says a fund of this size would not have been possible due to the risk/reward ratio.
“Our fund investor base, comprising both entrepreneurs and private capital alongside EI and ISIF, is a key edge in helping us bring meaningful value add to Irish founders as they look to fulfil their businesses potential and scale internationally,” Elkstone chief executive Alan Merriman said in a statement. “Whilst the macro backdrop is undoubtedly challenging, it is a good time to be investing and we are very positive on the outlook for disruption and innovation.”
It’s true that VC funding has mostly declined across all stages over the past couple of years, but data indicates that earlier-stage funding has been more resilient, particularly at the seed stage. In addition to Finland’s Life Ventures’ new fund announced yesterday, since February we’ve seen a number of early-stage VC funds arrive on the European scene. For example, the U.K.’s Amadeus Capital Partners partnered with Austria’s Apex Ventures for a €80 million ($87 million) fund aimed at deep tech startups, while in France Emblem and Ovni Capital each announced new €50 million ($54 million) funds. In London, meanwhile, Playfair Capital closed a $70 million pre-seed fund.
As for Ireland specifically, Elkstone’s new fund represents one of the largest — if not the largest — to emerge from The Emerald Isle. For comparison, Dublin’s Frontline Ventures launched a €70 million seed fund for European B2B startups back in 2021.
Having ISIF on board as an LP is a huge boon for Elkstone, and it comes at a time when Ireland is clearly doubling down on its investment ethos — just last week it revealed plans to establish a sovereign wealth fund year.
“This fund expands our reach in early-stage venture capital and gives Irish businesses a valuable new option for attracting the capital they need to grow,” ISIF director Nick Ashmore added.
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Agnikul, an Indian space tech startup developing small-lift launch vehicles, has raised $26.7 million in fresh investment as it looks to begin commercial launches using its customizable satellite rocket.
Companies — from big tech giants to startups — are looking to launch their small satellites (up to 500 kg in weight) to space to improve their existing technologies and bring new experiences, such as precise location tracking and internet connectivity for remote areas. As underlined by the European Commission, this has ramped up the demand for smaller rockets.
Small satellites have typically been launched as secondary payloads on larger launch vehicles. Existing players including Elon Musk's SpaceX have been conducting rideshare missions for small satellite launches. However, their growing demand has encouraged space companies to seek specific solutions. Astra, Virgin Orbit and Rocket Lab are some U.S. space companies that have introduced small satellite launch vehicles to cater to the growing demand. Nevertheless, the gap between the demand and supply of small launch vehicles is still quite significant by most accounts, leaving enough room for new entrants.
Agnikul is one such entrant, via its 'Agnibann' small satellite rocket. It will use a single-piece engine with no assembly or conventional manufacturing process to offer a faster production timeline and tailor-made launches. It'll instead use additive manufacturing, otherwise known as 3D printing – the same approach being taken by US-based Relativity Space. The Chennai-based startup has showcased some glimpses of its plan by launching a 3D-printed engine called Agnilet, which was successfully test-fired in early 2021.
Last year, Agnikul secured a patent for the engine and established its facility to build many such engines using end-to-end 3D printing. It also launched India's first private launchpad and mission control center at the Satish Dhawan Space Center in Sriharikota, located in the Southern Indian state of Andhra Pradesh, in November and started the integration process of its launch vehicle Agnibaan SOrTeD (Suborbital Technological Demonstrator) in August.
Srinath Ravichandran, co-founder and CEO of Agnikul, told TechCrunch that the startup looks to complement India's space agency, the Indian Space Research Organisation (ISRO), and is targeting to handle launches in the less than 300 kg payloads segment.
"When the customer looks at India for a solution, we are filling the gap not directly addressed by ISRO today," he said in an interview.
ISRO currently has its Small Satellite Launch Vehicle (SSLV) to launch satellites weighing up to 500 kilograms in a low-Earth orbit. However, the space agency intends to fully transfer the vehicle to the private sector through bidding.
Ravichandran founded Agnikul along with Moin SPM and IIT Madras professor SR Chakravarthy in 2017. In December 2020, it became the first Indian private space company to sign an agreement with ISRO. Subsequently, the startup began developing its launch service for satellites weighing up to 100 kgs using the Agnibaan rocket into a 700-kilometer (about 435 miles) Earth orbit.
"We have not yet done commercial launches; we have not entered the commercialization phase. But at the same time, today, people are able to look at what we have done with the money we have received, how efficient we have been on capital, and what technology we have been able to build," Ravichandran asserted.
Without disclosing specifics, he added that the startup has received some inbound interest from potential launch customers, mainly from companies in Europe and Japan, and also signed memorandums of understanding with a few. India also has some satellite tech startups that could become Agnikul's customers after it starts commercialization following its first test flight, which is expected sometime before the end of 2023.
The space of small satellite launch vehicles where Agnikul operates already has Indian startup Skyroot Aerospace backed by GIC, Sherpalo Ventures and Graph Ventures, among other investors. The latter has Vikram S to take 80 kg payloads to 100-kilometer altitude. Similarly, there is global competition from players including Rocket Lab, which also has the Electron rocket for small satellite launches. However, Ravichandran said the ability to customize the vehicle depending on payload requirements helps bring a cost-effective advantage to Agnikul.
"The vehicle can be tailored to whatever payload is being asked or to whatever orbit it is being asked to go to, without compromising on the cost itself," he said. "So just because you have only 30–40 kg to launch, we don't believe in pricing at a very high dollar per kg. We say between 30 to 300 kgs, anyone in that range, the dollar per kg would be still the same."
He continued that the vehicle is also being designed to be launched using mobile launchpads, and that they can be reused.
Agnikul currently has a headcount of around 225 people, predominantly in manufacturing and launch operations. It operates from four facilities and the mission control center.
With the capital infusion, the startup is looking to go beyond its first few launches and hire talent to help realize and manufacture multiple launch vehicles.
"It's about getting out of a very design-focused phase into a phase of design+production+manufacturing, with quality as a prime focus, wherein we'll be able to actually tell our customers that okay, your assets are safe with us," Ravichandran stated.
"Agnikul's pursuit of innovative space solutions aligns with our investment focus on India's leading-edge deep tech sectors," said Arun Kumar, Managing Partner at Agnikul investor Celesta Capital, in a prepared statement. "We are excited to support their pioneering vision and innovative approach to modernizing and democratizing the space industry. Their mission underscores the spirit of collaboration amongst the Indian Space Research Organization, space regulators, and entrepreneurs in driving advancements within India's vibrant space-tech ecosystem."
Agnikul sees an annual demand for about 50 tons in the less than 300 kgs satellite launch segment. Therefore, it plans to develop multiple variants of its Agnibaan rocket and increase launches from one or two per year to one or two per month over time.
"As India's answer to SpaceX, Agnikul is poised to revolutionize the space industry not just domestically but globally. Led by Srinath, Moin and Prof. Satya, the team is super passionate, and we wish them all the success in their first mission," said Sailesh Ramakrishnan, Managing Partner at Rocketship.vc, which also participated in the round.
Agnikul is one of the examples of how India's space tech industry has emerged in the last few years. The country opened its space sector for private companies in June 2020, and created the Indian National Space Promotion and Authorisation Centre (IN-SPACe) as a nodal agency to collaborate with startups. Since then, it has seen significant growth in space activities.
The South Asian nation, which currently has over 150 space tech startups, introduced its anticipated space policy in April, detailing public and private cooperation guidelines. The country also saw successful launches of missions, including its highly acclaimed moon lander mission Chandrayaan-3 and solar probe Aditya-L1. Additionally, India's growing space activities gained attention — and attracted investments — from big tech companies including Google and Microsoft.
Foreign satellite launches helped India generate $174 million, with $157 million coming in the last nine years, the government recently said in the parliament. However, the industry demands clarity on foreign direct investments in Indian space tech startups and the recently released guidelines for the private sector as it moves forward.
Equity investments in the Indian space tech startup ecosystem soared nearly 312% to $114.9 million in 2022 from $27.9 million in 2020, according to the data shared by analyst firm Tracxn. As much as $65.5 million was invested in 2023 alone.
"From our early days with Agnikul, it's been a thrilling journey," said Anirudh A Damani, Fund Manager at Artha Venture Fund. "Now, seeing them draw such esteemed investors showcases not just their current achievements but hints at the groundbreaking feats on the horizon in the space tech sector. Doubling our investment isn't merely a financial move—it's a ringing endorsement of our faith in Agnikul's prowess. We're all in, eager to see—and support—every giant leap they make in reshaping space exploration."
The all-equity Series B funding round saw participation from Celesta Capital, Rocketship.vc and Artha Select Fund. Agnikul's existing investors Artha Venture Fund, Pi Ventures, Speciale Invest and Mayfield India also participated in the round. The six-year-old startup has raised $40 million in capital to date, including the $11 million Series A round in May 2021.
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Started as a side project, JDoodle, which lets developers practice more than six dozen programming languages on one website, hit 800,000 users while being bootstrapped. Now the Sydney, Australia-based startup has set a goal of 8 million users within the next 24 months after getting $3.2 million AUD (about $2.2 million USD) in new funding. The round was led by Main Sequence, the venture firm founded by Australia’s national science agency.
JDoodle has tools aimed at software developers of all levels, ranging from students to professionals. These include zero-set up IDEs (integrated development environments) for more than 76 coding languages, including Java CloudIDE, that lets users write and run code in their browsers without having to set up local software or libraries.
Over the past year, JDoodle hit 800,000 users, including 3,000 educational institutions. JDoodle was started by software developer Gokul Chandrasekaran, who spent seven years working on it and reached 500,000 users before quitting his job to focus on it full-time. It grew out of a side project with one page and programming language that Chandrasekaran set up for $20, before spending evenings and weekends adding new features based on user feedback.
Chandrasekaran told TechCrunch that he wanted to start JDoodle because of the inefficiencies he encountered, like expensive and complicated development tools, while working on his bachelors and masters degrees in computer science.
“Those tools force every developer to waste so much of their time just getting the software environment ready for us to do our jobs. Even running one line of program is a headache,” he said. “You need sophisticated hardware and hours to set up a development environment with libraries, compilers, editors and more,” only to risk everything breaking if there’s an update to their operating systems.
For teachers and students, this means wasting time fixing development environment issues and manually verifying programming assignments. For professionals, this means time spent away from actually developing and instead used to manage their software development environments. By using JDoodle, Chandrasekaran said, they can get inexpensive access to programming environments and practice programming in a browser even on basic smartphones.
Main Sequence partner Mike Nicholls and JDoodle founder Gokul Chandrasekaran
“Software developers spend so much time setting up and managing their software development environments and focusing on small, unimportant tasks like changing the color of a button,” he said. “We need to free up developers to focus on the tasks that really matter because I’d say that organizations are currently wasting 20% of their software development budget.”
JDoodle’s growth to 800,000 users was organic, and it didn’t spend time or money on marketing until recently. “I believe the reason we’ve amassed so many users so far is because I listen to them,” said Chandrasekaran. “Over the years, I’ve taken so much feedback on board from developers and built the platform according to their needs. Every single feature in JDoodle exists as a result of a user request or feedback.”
Some examples of JDoodle’s customers include edtech Outlier, which offers accredited college courses. JDoodle’s plugins are embedded into its computer science courses, so students don’t need to switch between the class and a local practice environment. Another example is South American recruitment platform GeekHunter, which has used JDoodle since 2018 in its vetting process. Candidates pass coding exams produced by JDoodle before they are approved.
JDoodle monetizes through a freemium SaaS subscription model. Chandrasekaran said most of its revenue comes from its API and plugin solutions, which include standard and custom plans, but the startup is planning more income streams, including premium IDEs, hosting, courses, assignments and a talent marketplace.
The new funding will go toward JDoodle’s plans to scale up to 8 million users, including marketing, product development and hiring for its team in Australia.
Main Sequence met JDoodle while the startup was participating in The University of New South Wales’ 10x Accelerator Founders Program. Partner Mike Nicholls told TechCrunch about the investment that “Main Sequence has invested in more than 50 deep-tech startups and almost every one of them ends up hiring large numbers of developers and software engineers. Every startup is looking for a competitive edge and higher productivity from their software and hardware team. Essentially we want to turbocharge how companies and developers create the next generation of business systems.”
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Brinc, the Hong Kong-based accelerator backed by investors like Animoca Brands, is launching a new program for fledgling climate tech startups. The three-month program is tailored for founders who are focused on carbon dioxide removal (CDR). They will receive fundraising support, guidance on how to scale up and introductions to Brinc’s network of follow-on investors, mentors and corporates.
Janina Motter, Brinc’s Climate Tech Program manager, told TechCrunch that the accelerator has focused on climate tech for several years through its food tech vertical. “From those successes, we recognized sector specificity is key to maximize value for founders,” she said. “This is why we plan to have several different climate tech programs over time, with this new program focused on carbon removal, utilization and storage.” She added that Brinc has seen underinvestment in carbon removal relative to its climate impact.
The inaugural cohort includes four startups. Motter said “the strongest applicants understand how their approach fits into the competitive landscape and have compelling answers about ‘why them? why now?’ for the company to grow. Furthermore, for CDR in particular, it’s critical that startups have some initial understanding of how their technology fits into broader context (ecological risk, co-benefits, local communities, etc) and are willing to develop a robust framework which will help them scale responsibly.”
From the United Kingdom, Airhive is creating geochemical direct air capture (DAC) to scale carbon removal. Its DAC system is modular and based on a fluidized nano-structured sorbent.
Based in the United States, CarbonBridge captures fermentation CO2, or CO2 generated by fermenting plant matter to make beer, wine and other products, before it enters the atmosphere, and produces eco-friendly methanol through a microbial conversion process. The startup says this is a cost-effective alternative to mainstream methanol made from fossil fuels.
Hong Kong’s Formwork IO wants to reduce carbon emissions in architecture and other parts of the built environment. It does so by creating carbon-negative concrete through the use of waste carbon dioxide and materials as binders. Formwork IO is focused on the Asian market, where it says more than 70% of cement is produced.
Poas Bioenergy, based in Costa Rica, turns agricultural waste, including coffee and pineapple residue, into biochar and syngas, making waste management more efficient and giving farms a source of clean energy.
The Climate Tech Program is supported by organizations like Artesian, Carbon Business Council, CO2CRC, Direct Air Capture Coalition, PML Applications and others.
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Some U.S. Tech Investors Pledge Support To Israel Relief Efforts
Silicon Valley has long had a close relationship with Israeli tech startups.
(Bloomberg) -- Leadership of the venture capital firm Insight Partners pledged Monday to donate $1 million to humanitarian aid work in the wake of attacks on Israel, adding to a chorus of relief efforts from the US startup world.
New York-based Insight Partners, which also has overseas offices in Tel Aviv and other cities, is one of a handful of venture capital firms and investors that plan to donate money for humanitarian work. In a series of social media posts, the firm said it “has been a steadfast supporter of the Israeli high-tech ecosystem since 2004, and we are deeply saddened by the attacks that have affected our colleagues, friends, and innocent civilians.”
Another firm, General Catalyst, said in a statement that it was working with its portfolio companies based in Israel, and that it had dedicated $250,000 to humanitarian work on the ground. Individual VCs have also pledged donations — including Matthew Ocko, a co-founder at DCVC, and Erica Brescia, a managing director at Redpoint Ventures — who said publicly that they would give money to first responders in the region.
Silicon Valley has long had a close relationship with Israeli tech startups, which include many companies worth more than $1 billion. However, funding for startups in the country has slumped this year. Israeli tech startups raised $1.7 billion in the third quarter, 40% less than the year-earlier period, according to a report by the Israel-based Startup Nation Policy Institute.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Eric Schmidt says A.I. could be the military’s new nuke—but only if the Pentagon acts like a tech firm
Most of us are still toying with ChatGPT to come up with recipe ideas or do our homework, but others are already starting to think about using the artificial intelligence technology behind the chatbot for military purposes.
Innovation is often incorporated into military applications. Progress in space science and satellite technology eventually paved the way in the 1970s for the first GPS systems, which were originally designed for military use. And governments worldwide pursued the first nuclear weapons following breakthrough research in the early 20th century into the inner workings of atoms.
But critics say that the military’s adoption of tech in recent years has been lacking, and the Defense Department needs to fix the notoriously slow and cumbersome bureaucracy that has left it reliant on outdated technologies.
The key is to make the military behave more like a Silicon Valley company, Eric Schmidt, the former Google CEO and executive chairman, said in an interview with Wired published Monday. That means adopting tech more quickly, even when applied to potentially deadly weapons and despite any ethical concerns that have slowed the Pentagon down in the past.
Schmidt argued that the U.S. military cannot afford to sit back on A.I., which could be the next major technological advance that disrupts warfare.
“Every once in a while, a new weapon, a new technology comes along that changes things,” he told Wired. “Einstein wrote a letter to Roosevelt in the 1930s saying that there is this new technology—nuclear weapons—that could change war, which it clearly did. I would argue that [AI-powered] autonomy and decentralized, distributed systems are that powerful.”
From 2016, Schmidt chaired the National Security Commission on A.I. that advised Congress on how to spend taxpayer funds on private sector A.I. research, a period during which he personally invested over $2 billion in tech startups focused on A.I. Since the body was dissolved in 2021, he has continued to advise the Pentagon.
AI and warfare
Artificial intelligence may be the next tech breakthrough to become a routine part of our lives, with chatbots like ChatGPT already being used in everyday activities at home and in the office.
A.I. has been applied to military operations too. Countries including the U.S. and China are investing more every year into A.I. applications including autonomous vehicles, surveillance, and automated target recognition systems. For the past year, Russian drones equipped with A.I. software have also been stalking the skies over Ukraine.
U.S. Defense Sec. Lloyd Austin said in 2021 the military “urgently” needed to develop new A.I. technologies while announcing a $1.5 billion investment in A.I. research over the next five years. But some experts have warned that the U.S. military is acting too slowly, especially if the goal is keeping pace with China, which a 2021 report found is investing more than $1.6 billion into military-use A.I. systems and equipment annually.
Nicolas Chaillan, the U.S. Air Force’s first chief software engineer, resigned his post in 2021 after only three years on the job citing his frustration with the Pentagon’s slow adoption of new technologies compared to its biggest rival. ““We have no competing fighting chance against China in 15 to 20 years,” he told the FT shortly after resigning, mentioning China’s superior A.I. and cyber capabilities. “Right now, it’s already a done deal; it is already over in my opinion.”
To catch up, the Pentagon has tapped the private sector for former tech executives who are accustomed to moving quickly. Last year, the Pentagon appointed Craig Martell as the department’s A.I. chief after previous roles heading up A.I. and machine learning research at Lyft, Dropbox, and LinkedIn. Upon taking up the new post Martell told Bloomberg he wanted to shift the Pentagon from its “bureaucratic inertia,” adding the view shared by his predecessors including Chaillan that the U.S. military is moving too slowly on A.I. is “mostly correct.”
Former Google CEO Schmidt agreed in his Wired interview that the department had to modernize its approach to A.I., describing the military as “great human beings inside a bad system” that is slow to act when it comes to new technologies.
The private sector is set to start making even more massive leaps in A.I. technology after OpenAI’s highly successful release of ChatGPT in November pushed Big Tech companies including Google and Microsoft to double down on their A.I. research, and in Schmidt’s view, the military should follow their example.
“Let’s imagine we’re going to build a better war-fighting system,” he said. “We would just create a tech company.”
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After over ten years in operation, Tech Nation, the UK’s government-sanctioned ecosystem builder for UK tech startups and growth tech companies is to cease operations after losing its grant funding to a programme run by Barclays Bank Eagle Labs.
The team behind the non-profit, which derived the bulk of its funding from the UK government, plans now to look for new backers and a new direction, after closing its doors on 31st March 2023. Tech Nation’s visa programme will continue in the immediate term.
In a statement, Tech Nation said: “With this foundation removed, Tech Nation’s remaining activities are not viable on a standalone basis.”
However, its Chief Executive, Gerard Getch, said, Tech Nation is also “actively seeking interested parties to acquire its portfolio of assets to take forward in a new guise. We have exhaustively explored whether Tech Nation could continue without core government grant funding, but have concluded after extensive consultation that this is not an option.”
He added: “We have a portfolio of Tech Nation assets and an internationally acclaimed brand, and we have already started discussions with mission-based organisations to take these forward. We are inviting Expressions of Interest from interested parties.”
The move comes at a time when the UK government has been playing lip-service to the idea of the country as a “Science and Technology Superpower”. A recent speech by the chancellor saw him imploring entrepreneurs to move to the UK:
“If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here. I want the world’s tech entrepreneurs, life science innovators, and green tech companies to come to the UK because it offers the best possible place to make their visions happen,” he said.
However, the closure of Tech Nation and the rise of other initiatives abroad have left the UK looking pretty thin in the ‘encouraging innovation’ department.
Tech founders and investors are already being attracted by the $369bn on offer under the US Inflation Reduction Act for technology startups. In the EU, states like France are actually ramping up support for tech entrepreneurship. Indeed, state bank Bpifrance is pumping another €500m into deeptech startups.
Meanwhile in the UK, the government has cut back the R&D tax credit scheme for start-ups. And in a survey by industry body Coadec of more than 250 UK founders, the majority said the cuts made the UK significantly less attractive.
TechCrunch understands that Tech Nation had previously approached the Government, asking it to consider absorbing it as a public body but those talks went nowhere.
The Sunday Times had previously reported that government officials had been concerned that Tech Nation was “breaching state aid rules because it had failed to become self-sufficient” which led officials to put the contract out to tender earlier this year.
Tech Nation has long been embedded in the U.K. tech startup scene. Tech City UK, its predecessor, was launched in 2011 by former prime minister David Cameron and concentrated largely on the London ecosystem until 2018 when it merged with Tech North (based in Manchester). It’s since gone on to run myriad programmes connecting tech startups and scale-up with each other and with investors in the U.K. and abroad.
The organisation claims it has helped make the UK the leading digital economy in Europe. While 80% of startups fail within their first 2-5 years, over 95% of startups on Tech Nation’s accelerator programs have gone on to scale, it claims. More than a third of all tech unicorns and decacorns created in the UK have graduated from a Tech Nation program, collectively raising over £28bn so far in venture capital and capital markets. Alumni include Monzo, Revolut, Depop, Bloom & Wild, Zilch, Just Eat, Darktrace, Marshmallow, Ocado, Skyscanner, Peak AI and Deliveroo. As a government-backed organisation, Tech Nation says it delivered a £15 return on every £1 funded by the UK Government.
Critics of the government’s decision to hand the contract to Barclays say it will put it into a conflict of interest, such as needing to support startups in the fintech space which might compete with it. One said the government has “effectively handed Barclays funds to acquire new customers” and was a “potential competitor or customer of the startups it’s meant to be supporting.”
Many Northern tech leaders had previously expressed dismay that Tech Nation would lose government support at this time in the economy.
“There’s such a gap in equity for Northern funders still. Organisations like Tech Nation are effectively the connective tissue between what is ultimately still a nascent ecosystem on a global scale,” Ben Davies, group marketing director at financial services firm Praetura, told Prolific North.
Dan Sodergren, co-founder of people support platform Your FLOCK, based in Manchester said: “Without Tech Nation, we would not have the ecosystem outside of London that we have. They also were fundamental with programmes like Libra, Net Zero net or Rising Stars. These things were happening way before the rest of the market.”
“Whatever you think of them, good or bad, the death of Tech Nation is the end of an era for the startup ecosystem in the UK. The idea of Government as a provider of startup advice to founders backed by Tier 1 VCs is finished. We have to make sure any help now reflects the needs of the future not the past – that means keeping the good things like a well-known visa offer intact and making Government focus on creating the best environment for tech startups, with extra support going to those who need it most not to those who can probably find it anyway,” said Dom Hallas, Executive Director of Coadec.
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InCore Semiconductors Raises $3 Million
InCore Semiconductors is building RISC-V processor cores in India.
InCore Semiconductors has raised $3 million (over Rs 24 crore) in a funding round from Sequoia Capital India, marking the venture capital firm's second semiconductor investment this year, according to a statement on Friday.
InCore Semiconductors is building RISC-V processor cores in India, and the latest investment was announced at IT Ministry's 'SemiCon India FutureDesign Roadshow' at IIT-Delhi.
RISC-V is an open standard instruction set architecture (ISA). RISC-V is under royalty-free open-source licenses, unlike most other ISA designs.
"InCore Semiconductors, which is building RISC-V processor cores in India, has raised $3 million in a seed funding round from Sequoia Capital India", the statement said.
This is Sequoia Capital India's second semiconductor investment this year, it said, adding that earlier this year, the firm also invested in Mindgrove, an IIT Madras-incubated semiconductor startup designing innovative System on Chips (SoCs) in India, for the world.
Additional investors in this round were Speciale Invest and Whiteboard Capital.
"The semiconductor industry is going through a cycle of disruption and change that will provide strong tailwinds for India's chip ambitions. We're grateful to have an opportunity to contribute to India's nascent semiconductor industry", Mohit Bhatnagar, Managing Director at Sequoia India, said.
Bhatnagar pointed out that in the last few months, the firm has partnered with two ambitious early-stage Indian semiconductor companies innovating in RISC-V and custom silicon.
"There's a massive opportunity for deep tech startups to turn the country into a global centre for custom silicon IP (Intellectual Property) and hardware innovation", he said.
From smartphones and computers, to home appliances and electric vehicles, silicon microprocessors are at the core of every electronic device and gadget used today. These small but complex chips also power everything from CCTV cameras in government halls to defence-owned missile launchers and fighter jets.
"Capital and R&D intensive in nature, this $600 billion industry has coalesced into concentrated pockets within a highly globalised supply chain. But self-reliance on semiconductors is becoming a priority for every major nation in the world today, and India is showing early signs of becoming a leader in this space", Sequoia said.
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The Inflation Reduction Act, signed into law by President Joe Biden in August 2022, has allocated $400 billion in federal dollars for clean energy projects as the United States aims for up to a 40% reduction in economy-wide greenhouse gas emissions by 2030. And even startups are beginning to benefit.
Private investment into climate tech startups is on track to match, and likely surpass, the government’s funding, particularly as investors feel secure in a growing market for such technologies.
In the past year, more than 270 new clean energy projects have been announced, with private investments totaling around $132 billion, according to an August report from Bank of America Global Research. Of those funds, more than half went to EVs and batteries, and the rest went to renewable energy, grid storage, carbon capture, utilization and storage and clean fuels. BoA expects these investments to create more than 86,000 jobs, including 50,000 in EVs.
Capital from the IRA will mostly flow towards established companies, but private investment, like venture capital, is finding its way to startups across all stages. Many startups have cropped up to offer auxiliary services to larger industries, and investors are taking note.
Puneeth Meruva, a partner at Trucks Venture Capital, told TechCrunch he’s seen a 10% increase in the number of climate-related startups in the year since the IRA was signed, compared to the year before. The VC clocked a 65% increase in companies related to EV charging, and a whopping 72% increase in startups tackling hydrogen technologies.
Early stage vs. growth stage
“The IRA funding isn’t necessarily directly beneficial to startups because a lot of the funding is really more towards the rollout of infrastructure and products that are either well established from a technology perspective or commoditized,” said Meruva.
That doesn’t mean startups can’t use the IRA to their advantage. The incentives in the bill are more directly applicable to startup customers. Meruva says startups can use this as a tool to sell to customers.
“If you’re selling a product related to charging, then you can go to these infrastructure developers and say, ‘Hey, there’s all this IRA funding for you to roll out chargers. Let us help you with that,’” said Meruva.
At the growth stage, the IRA has increased access to debt financing, according to Cassie Bowe, partner at Energy Impact Partners. That’s in part because the IRA includes incentives for domestic manufacturing, which makes it more likely for companies to access debt that will help finance manufacturing build-outs.
The IRA also includes project-level incentives that make it easier for companies to finance clean energy projects, said Bowe.
Startup sectors affected by the IRA
Solar
Two main tax credits in the IRA relate to solar: the Solar Investment Tax Credit (ITC) and the Advanced Manufacturing Production Credit (Section 45x). The ITC already existed, but the provision in the IRA extends the 30% tax credit to the end of 2032. Section 45x is new and it gives owners of renewable energy facilities an annual credit of $26 per megawatt-hour generated.
“It’s not only the amount of the incentive, but also the increased certainty because that incentive was extended through 2032,” said Bowe. “From an investor’s standpoint, one part of it is the amount of the incentive, but the other is just having certainty over your investment horizon.”
Over the past year, close to $40 billion of private investment capital into renewable energy (which includes solar and wind) has been announced, according to BoA.
Stationary and long duration energy storage
Energy storage is crucial for operating a grid with an increasing amount of intermittent renewables.
Before the IRA, battery energy storage had to be directly connected to renewable generators for a large chunk of the year to qualify for tax credits. Now, the IRA allows standalone energy systems, or grid-scale battery systems, to qualify, whether they are connected to renewables or not.
“When we think about one of the biggest trends we see across the market, it’s the proliferation of batteries across all assets,” said Bowe. “So we’re playing that trend in a big way across everything from smaller mobile batteries to huge grid-scale ones.”
Energy transmission
EIP has also been making sizable investments into energy transmission, which refers to the delivery of generation electricity to the distribution grid in populated areas.
“Electricity demand is expected to double by 2040, and that’s a rate of increase that we haven’t seen basically since electricity was invented,” said Bowe. “In order to meet that demand and add all this new, clean generation that we need to have, we need to scale transmission considerably.”
The IRA also provides $5 billion in loans for constructing and modifying generation and transmission facilities. The goal is to speed up the development of transmission infrastructure, improve grid reliability and enable the sharing of surplus energy across regions.
Bowe said EIP will continue to invest in transmission, particularly because the firm’s strategic investor base includes a lot of utilities companies.
“If we don’t have enough investment in transmission, it’s possible we won’t realize up to 80% of the potential greenhouse gas emission savings that we could realize through the IRA,” said Bowe.
Hydrogen
The IRA includes a range of tax credits to support clean hydrogen fuel, biofuels and sustainable aviation fuel. This, said Meruva, was surprising given the investment community’s lackluster response to hydrogen technologies over the last decade.
While many investors are still wary of hydrogen and don’t even have an investment thesis around the fuel, Meruva says Trucks VC is bullish on hydrogen – particularly for any vehicle that’s larger than a van.
“For larger vehicles, we really can’t get away with just putting a battery in them, especially given the supply shortages we’re seeing for all materials and packs,” said Meruva. “There’s no way you can build a big enough pack for every truck in the world or for aviation, given how weight sensitive that is.”
Meruva said the big focus on batteries makes sense for passenger segments, but for commercial industries where uptime is critical, it’s time to start looking elsewhere.
“Charging just takes too long and you’re essentially asking to put a lightning bolt through a cable to make that happen fast enough,” said Meruva. “Hydrogen gives you really fast charging, in a sense. It’s almost the equivalent of battery swapping except it’s much easier because the canisters are lighter.”
The VC also noted, particularly in mining and construction, retrofitters are working to convert existing commercial vehicles into fuel-cell vehicles.
Carbon capture and sequestration
Carbon capture and sequestration (CCS) is an industry that has seen startup valuations skyrocket since the passing of the IRA, according to Bowe. That’s largely because of the huge push to decarbonize the industrial sector, which accounts for close to one-third of total U.S. emissions and is the most difficult to decarbonize.
In March 2023, the IRA launched a $6 billion Industrial Demonstrations Program that funds up to 50% of the cost of each project. This represents a $12 billion opportunity for early-stage commercial-scale projects.
That’s where startups like Carbon America can win. The developer is currently building two commercial CCS projects in Colorado, which it will own and operate, and has already received government funds.
Domestic EV manufacturing and supply chain
Domestic EV manufacturing has boomed due to the IRA’s EV tax credit and advanced manufacturing credit. Bowe said there has been $120 billion in investments announced over the last eight years in the EV supply chain, with half of those investments occurring since the IRA was passed.
Domestic battery production has seen a huge boost as the U.S. seeks to end its reliance on China. By our count, automakers and battery manufacturers have collectively invested and promised to invest close to $100 billion in building domestic cell and module manufacturing.
TechCrunch is tracking how many EV battery manufacturing facilities exist and have been promised. While the tax credits available for these mainly fall to large automakers and battery developers, there’s been plenty of room for battery innovators to succeed. Companies like 6K, Sila, Mitra Chem are making domestic battery materials. Others like Redwood Materials, Ascend Elements and Li-Cycle are creating battery recycling facilities on U.S. soil.
EV charging
Section 30C of the IRA offers tax credits of up to 30% per new charger installations. Yet investor insights differ when it comes to how the IRA has affected the EV charging industry. According to Bowe, the IRA is a huge catalyst, but it hasn’t fundamentally changed the sector from a year ago.
Meanwhile at the early stages, Meruva says he’s seen a lot more interest in EV charging companies. He’s also seen a drastic increase in the number of EV charging-related companies since the passage of the IRA. And many of these are focused on software.
One such startup is Stable, a Trucks VC portfolio company that developed predictive software for EV charging that covers where to install the hardware, how to forecast performance and a pricing guide.
“The types of products the market needs right now are products that work reliably and all the time,” said Bowe. “Whether it’s software or hardware models, we need EV chargers that work all the time and work with the grid. That’s what we’ve been investing in.”
Opportunities for new business sectors
Investors who spoke to TechCrunch say they’re seeing businesses sprout up to aid others in taking advantage of the new credits.
Meruva said he’s seen startups act as something akin to tax advisers to help businesses understand the complicated tax code.
Others have created a marketplace for transferable tax credits, says Bowe.
The IRA includes a transferability method of monetization for commercial and utility-scale energy projects. This allows project owners to sell tax credits to other taxpayers, which provides cash flow and project financing.
Previously, tax credits were meant to benefit energy project developers, but this left out smaller developers that didn’t pay enough in taxes to realize the credit. In the past, that credit would have simply gone to waste. Now the credit can be transferred, in exchange for financial compensation, to a company that has tax capacity.
The IRA is not overhyped
The market can often get swept away in the hype cycle, which can lead to exaggerated valuations and a misallocation of resources. Investors we spoke to say the investment provided by the IRA and as a result of the IRA is not an example of overhype.
The Congressional Budget Office forecasted the IRA would result in $400 billion in government spending, but it’s tracking to be at least three times that.
“$1.2 trillion of government spending could be viewed as a large number, but what we think about a lot is the multiples on that that will be invested by private capital managers like EIP who are deploying into this space,” said Bowe.
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- Silicon Valley Bank's collapse is likely to be felt across the technology landscape globally over the coming years.
- Investors who spoke to CNBC said there could be issues for startups trying to access their funds and credit lines to pay workers.
- Startups may also need to tighten their belts while others may collapse with little access to funding, experts said.
Silicon Valley Bank was the backbone of many startups and venture capital funds around the world. The effects of its collapse, the biggest banking failure since the 2008 financial crisis, is likely to be felt across the technology landscape globally over the coming years.
"With SVB in essence the Godfather of the Silicon Valley banking ecosystem for the past few decades in the tech world, we believe the negative ripple impact of this historical collapse will have a myriad of implications for the tech world going forward," Dan Ives, analyst at Wedbush Securities, said in a note on Tuesday.
related investing news
SVB's collapse began last week when it said it needed to raise $2.25 billion to shore up its balance sheet. Venture capital firms told their portfolio companies to withdraw money from the bank and other clients looked to get their cash before it became unobtainable. This effectively led to a bank run.
The bank had to sell assets, mainly bonds, at a massive loss.
U.S. regulators shut down SVB on Friday and took control of its deposits. Regulators then said Sunday that depositors at SVB would have access to their money, in a move aimed at stopping further contagion.
But the episode has the potential to impact the technology world in several ways, from making it harder for startups to raise funds to forcing firms to change their business model, according to investors and analysts who spoke to CNBC.
SVB was critical to the growth of the technology industry, not just in the U.S. but in places like Europe and even China.
The 40-year old institution had an intimate link to the technology world offering traditional banking services as well as funding companies that were deemed too risky for traditional lenders. SVB also provided other services like credit lines and lines to startups.
When times were good, SVB thrived. But over the past year, the U.S. Federal Reserve has hiked interest rates, hurting the once high-flying technology sector. The funding environment has got harder for startups in the U.S., Europe and elsewhere.
SVB's collapse has come at an already difficult time for startup investors.
"This whole Silicon Valley Bank thing is the last thing we needed and was completely unexpected," Ben Harburg, managing partner of Beijing, China-based venture capital fund MSA Capital, told CNBC.
Startups have had to tighten their belt while technology giants have axed tens of thousands of workers in a bid to cut costs.
In such an environment, SVB played a key role in providing credit lines or other instruments that allowed startups to pay their employees or ride out hard times.
"Silicon Valley Bank was very paternalistic to this sector, they not only provided payroll services, loans to founders against their illiquid credit, but lines of credit as well. And a lot of these companies were having trouble already raising equity and they were counting on those lines to extend their runway, to push out the cash burn beyond the recession we all expect." Matt Higgins, CEO of RSE Ventures, told CNBC's "Street Signs Asia" on Tuesday.
"That evaporated overnight and there's not another lender that's going to be stepping in to fill those shoes."
Paul Brody, global blockchain leader at EY, told CNBC on Monday that a crypto firm called POAP, which is run by his friend, has half of the company's money tied up in SVB and can't get it out. The amount at SVB is "more than payroll can cover." Patricio Worthalter, founder of POAP, told CNBC that the company had a "substantially high amount" of its treasury in SVB and has managed to retrieve 50%. However, payroll was "never at risk" and the company has "solid credit lines to tap into" if required, the founder added.
The SVB collapse will also likely put the focus on startups to pivot to profitability and be more disciplined with their spending.
"Companies will have to reboot the way they think about their business," Adam Singolda, CEO of Taboola, told CNBC's "Last Call" on Monday.
Hussein Kanji, co-founder of London-based Hoxton Ventures, said that over the next three years there will be more restructurings at companies, though some are holding off.
"I'm seeing a lot of 'kick the can down the road' behavior which isn't that helpful. Do the hard things and don't delay or procrastinate unless there is very good reason to. Things don't often get easier in the future simply because you wish for them to," Kanji told CNBC via email.
Wedbush's Ives said that there could also be more collapses, adding that early stage tech startups with weaker hands could be forced to sell or shut down.
"The impact from this past week will have major ripple impacts across the tech landscape and Silicon Valley for years to come in our opinion," Ives said in a note Sunday.
—CNBC's Rohan Goswami and Ari Levy contributed to this report.
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Early-stage investments inherently have a higher risk of failing, but these risks also come with potentially higher rewards — getting in at the ground floor of a startup’s journey gives VCs more negotiation clout. This is particularly true at the very early pre-seed stage, where companies might barely have a functioning product to shout about. And this is something that London-based generalist VC firm Playfair Capital knows all about, given its focus on backing super young startups that have yet to make much of a ripple in their respective industries.
In its 10 year history, Playfair has invested in around 100 companies, including well-established unicorns such as Stripe, and Mapillary, a startup that exited to Facebook back in 2020. Those specific investments were from Playfair’s inaugural fund which wasn’t focused on any particular “stage” of company. But Playfair transitioned into more of a pre-seed firm with its second fund announced in 2019, a focus that it’s maintaining for its new £57 million ($70 million) third fund, which it’s announcing today.
While many early-stage VC funds might look to make a few dozen investments annually, Playfair has kept things fairly trim throughout its history, committing to no more than eight investments each year, while ringfencing some of its capital for a handful of follow-on investments. Its latest fund comes amid a swathe of fresh early-stage European VC funds, including Emblem which announced a new $80 million seed fund last week, while France-based Ovni Capital emerged on the scene last month with a $54 million early-stage fund.
‘High conviction, low volume’
Playfair, for its part, seeks out founders “outside of dominant tech hubs,” as well as founders working on projects that may run more tangential to where the main hype and “buzzy-ness” exists. This is perhaps even more integral if its stated goal is to only invest in a handful of startups each year — they don’t have the luxury of spreading a lot of money around to increase their chances of finding a winner. “High conviction, low volume” is Playfair’s stated ethos here, and identifying true differentiators is a major part of this.
“I’d say probably half the funding in our portfolio is pre-product, pre-traction,” Playfair managing partner Chris Smith explained to TechCrunch. “And the other half have some sort of really early traction, maybe a MVP (minimal viable product) or a couple of POCs (proof-of-concepts). But we tend to invest where there’s very little in the way of traction.”
It wasn’t that long ago when autonomous automobile technology was all the rage, dominating just about every trade show and tech conference. And there was one specific event several years back, the EcoMotion mobility event in Israel, that Smith says really helps to highlight its investment ethos.
“I went in to look at the roughly 120 companies exhibiting, about 116 of the companies were doing autonomy for cars,” Smith said. “And as an investor, I look at this and think that if you’re writing tons of checks a year, you probably just invest in lots of them, and try and find a winner — but we don’t, we only do six to eight [annual investments]. So my view was, ‘I don’t want to play in that space’. The only real distinction between them was whether they were choosing LIDAR or computer vision. There just wasn’t enough differentiation.”
However, at this same conference, there were four companies doing something completely different. One of them was Orca AI which was developing a collision-avoidance system for ships, and it was this company from a sea of samey startups that Playfair ended up investing in — both in its 2019 pre-seed funding round, and its follow-on Series A round two years later.
“That’s where we like to look,” Smith said. “We like these nascent markets — I call them ‘overlooked and unsexy sectors’. That’s where we really like to get stuck in, and where I see the opportunity.”
A large chunk of early-stage deals fall apart in the due diligence phase. But if a company doesn’t have any market traction or even a fully-working product yet, how exactly do VCs go about deciding who’s worth a bet? While one of the oldest investment cliches says something about the importance of ‘investing in people rather than companies,’ that is perhaps even more true at the super early stage. And while having previous exits and success in the business world can be a useful indicator, there are many things that can ultimately determine whether a founder or founding team are intrinsically investable.
“We look for a few things, including examples of exceptional performance,” Smith said. “And I think the key thing is that it doesn’t necessarily have to be in the business world, or even in the domain they’re building the company.”
By way of example, PlayFair recently re-invested in AeroCloud, a four-year-old SaaS startup from the Northwest of England that’s building airport management software, having also invested in its seed round some two years previous. AeroCloud co-founder and CEO George Richardson had been a fairly successful professional racing driver since the age of 15, but he didn’t really have any direct experience of the aviation sector before setting up AeroCloud.
“He didn’t know anything about airports before he started the company,” Smith said. “But we thought, if someone can podium at Le Mans and exist under such enormous pressure, that’s an amazing character trait path for a founder.”
Obviously there are many other factors that go into the due diligence process, including meticulous industry research to establish the scale of a problem the startup proclaims to be solving. But some sort of successful track record, in just about anything, is a useful barometer at the early investment stage.
“If you can play a musical instrument to an incredible level, or [if you’re] a professional racing driver, or golfer or whatever it is — I do think that is quite a useful predictor of future performance,” Smith said. “But it’s [investing due diligence] a combination of spending plenty of time with the founders and getting to understand what makes them tick. Then going really deep to support the thesis.”
Insulated
A lot has happened in the world between 2019 and 2023, with a global pandemic and major economic downturn intersecting Playfair’s second and third funds. In the broader sphere of Big Tech, startups, and venture capital, we’ve seen major redundancies, plunging valuations, and delayed IPOs, but in the early-stage world Playfair inhabits, it’a been a slightly different experience.
“At pre-seed where we invest, we’re quite insulated from what’s happening in the IPO markets, or what’s happening with growth funds,” Smith said.
That’s not to say nothing has changed, though. Its third fund is more than double the size of its second fund, which reflects the size of checks it’s now having to write for companies, growing from an average of around of perhaps £500,000 previously, to around £750,000 today, thought that figure may creep up toward the £1 million mark. So what has driven that change? A combination of factors, as you might expect, including the simple fact that there is more capital around, and the economic conditions that everyone is currently facing.
“In 2021, there was this crazy peak, now it’s settled again — but rounds are still significantly higher than they were in 2018-2019,” Smith said. “We’re actually really fortunate in the U.K. to have the SEIS and EIS schemes (tax-efficient schemes for investors) because they brought in a ton of angel capital, and then also capital from funds that take advantage of the tax breaks — there’s basically just more money around. I actually think inflation has played a part too. So whilst in some senses the cost of building a startup has fallen, such as access to certain tools, at the same time salaries have gone up a lot. So, startup founders back in 2018-2019 might have paid themselves £30-40,000 [annually], you see founders now being paid maybe £60-70,000. So founders need more to be able to live comfortably while they build their company.”
This, of course, follows through to the hiring and building of teams, who will also now be expecting more money to counter the cost-of-living increases across society. Throw into the mix, perhaps, a growing understanding that a fledgling company might need a little more runway to stand a chance of succeeding, and all this might go someway toward explaining growing check-sizes in the early seed stages.
“I think that Europe has maybe learned a few lessons from the U.S., which is that there’s no point in putting really small amounts of money into companies, giving them really short runways, putting unnecessary pressure on them, and then watching them fail,” Smith said. “You want to give companies enough money so that they’ve got 18 to 24 months, time to pivot, time to figure stuff out. That increases the chances of success.”
Advantages
While not unique in the early-stage investment fray, Playfair has a sole limited partner (LP) in the form of founder Federico Pirzio-Biroli who provides all the capital, and who ran it initially as both a managing partner and LP. Smith stepped in for Federico for the second fund, and Federico has since moved to Kenya where he now has a more passive role in terms of day-to-day involvement. And having a single entity providing the capital simplifies things greatly from an investment and management perspective.
“It gives us a ton of advantages — it means I don’t spend 40-50% of my time fundraising, and I can spend my time working with our founders,” Smith said. “And I think it’s also just a huge vote of confidence.”
This “vote of confidence,” according to Smith, stems from Playfair having already returned the entirety of its first fund in cash, helped in part by several exits. This number will likely receive a major boost too, with Stripe gearing up for a bumper IPO — Playfair invested in the fintech giant at its Series C round in 2014 before it narrowed its focus to pre-seed. And for its second fund, Smith said they’ve reached somewhere in the region of 95th percentile for TVPI (total value vs paid in capital).
According to Dealroom data, some 19% of seed-stage companies raise a Series A within 36 months. By contrast, Playfair says that 75% of its fund 2 investments have now also raised a Series A investment, and in 2022 alone its portfolio companies secured $570 million in follow-on funding from various VCs.
“Success for our founders is basically the same as success for us, which is getting them from pre-seed to a successful Series A round,” Smith said.
And while Playfair does typically pass the lead-investor baton on to another VC firm for subsequent rounds, it will often lead again on the seed round, as well as participating in Series A rounds and very occasionally later. In part, this is as much about displaying confidence as it is providing capital, which is crucial as a startup is gearing up to hit the market.
“I think that’s really important, because if your existing pre-seed investor won’t lead your seed, that can be quite a difficult moment to go out to the market, when you may not have that many proof-points to try and get another external investor in,” Smith added.
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The Big Names That Got Backstop For Billions In Uninsured SVB Deposits
The FDIC, which has been selling off pieces of the bank since its failure, asked that Bloomberg destroy and not share the depositor list.
(Bloomberg) -- When federal regulators stepped in to backstop all of Silicon Valley Bank’s deposits, they saved thousands of small tech startups and prevented what could have been a catastrophic blow to a sector that relied heavily on the lender.
But the decision to guarantee all accounts above the $250,000 federal deposit insurance limit also helped bigger companies that were in no real danger. Sequoia Capital, the world’s most prominent venture-capital firm, got covered the $1 billion it had with the lender. Kanzhun Ltd., a Beijing-based tech company that runs mobile recruiting app Boss Zhipin, received a backstop for more than $900 million.
A document from the Federal Deposit Insurance Corp., which the agency said it mistakenly released unredacted in response to a Bloomberg News Freedom of Information Act request, provides one of the most detailed glimpses yet into the bank’s big customers.
The FDIC, which has been selling off pieces of the bank since its failure, asked that Bloomberg destroy and not share the depositor list, saying the agency intended to “partially” withhold some details from the document “because it included confidential commercial or financial information,” according to a letter from an attorney for the regulator. The agency subsequently declined to comment on the substance of the information in the document.
US regulators’ decision to declare a “systemic risk exception” and make all depositors at Silicon Valley Bank whole came after a white-knuckled weekend as tech founders digested SVB’s collapse on Friday, March 10. President Joe Biden described the solution as one that “protects American workers and small businesses, and keeps our financial system safe.”
Treasury Secretary Janet Yellen cast the government’s response — including backstopping all depositors — as necessary. “American households depend on banks to finance their homes, invest in an education, and otherwise improve their standards of living. Businesses borrow from these institutions to start new companies and expand existing ones,” she said at an industry conference the following week before discussing the intervention.
But the decisions that government agencies, including the FDIC, made in a frantic few days after SVB failed were immediately controversial. Some critics said that making all depositors whole at the lender and Signature Bank, which failed March 12, created a moral hazard. A fierce debate is also raging over whether the insurance limit needs to be raised for businesses.
Former Vice President Mike Pence argued that backstopping all depositors amounted to a bailout, a depiction the Biden administration has pushed back against strenuously. Pence blasted the government’s decision to insure all deposits, in part, because the move would cover Chinese companies that did business with the bank.
In May, the FDIC proposed tagging the largest banks with billions of dollars in extra fees to replenish the US government’s bedrock deposit insurance fund after it was tapped to backstop deposits above the $250,000 threshold. At the time, the regulator estimated the decision to cover all depositors at SVB and Signature cost the fund about $15.8 billion.
FDIC Chairman Martin Gruenberg has previously said that at SVB the guarantee to uninsured depositors covered small and midsize business, as well as those with very large balances, and that the bank’s top 10 depositor accounts held $13.3 billion total.
The new document underscores that in addition to serving a legion of startups and fledgling businesses, SVB was a go-to bank for tech industry giants, including some that have kept their relationships with the bank confidential.
- The $1 billion that Sequoia, the firm famous for backing iconic companies including Apple, Google and WhatsApp, had at SVB made up a fraction of its $85 billion assets under management. In addition to maintaining its own accounts at the lender, the firm also recommended every startup it backed do the same, Michael Moritz, a partner at the firm, wrote in the Financial Times. A representative for Sequoia declined to comment on the depositor list.
- Kanzhun, which had $902.9 million in deposits with SVB according to the document, didn’t respond to multiple emailed requests for comment. The company, which was heavily backed by Chinese giant Tencent before it went public on the Nasdaq in 2021, was among the largest Chinese companies to IPO in the US that year.
- Altos Labs Inc., a life sciences startup that works on cell regeneration, had $680.3 million in deposits with the bank. The privately held company has raised $3.27 billion from billionaires including Jeff Bezos and Yuri Milner, as well as Mubadala Investment Company and other investors. An Altos representative declined to comment.
- Payments startup Marqeta Inc. had $634.5 million at the bank, according to the document. In a statement, the firm acknowledged that it had “significant deposits” at SVB, but was already in the process of moving money to other banks. “While Marqeta supported the decision to guarantee all deposits at the bank, our ability to execute as a business and meet our financial obligations would not have been impacted, even if it was a longer resolution process” the firm said.
- IntraFi Network, which provides deposit services to financial institutions, had $410.9 million worth of deposits at the bank, according to the document. However, in a statement, the firm said that it didn’t actually have any of its own money with the lender, nor was it a client. The amount, rather, represents the funds of almost 2,000 different depositors whose balances were fully insured when SVB collapsed, according to IntraFi.
- Crypto stablecoin company Circle Internet Financial Ltd. previously disclosed its SVB deposits, which at the time represented 8.2% of the reserves backing its USD Coin. A spokesman said the company had no additional comment. The USD Coin, which is intended to maintain a 1-to-1 peg to the dollar, briefly drifted from that $1 level on the news of Circle’s exposure. The document listed it as SVB’s biggest depositor with a balance of $3.3 billion.
- Streaming set-top box maker Roku Inc. also previously disclosed having roughly 26% of its cash and cash equivalents parked at the bank. The document listed its balance at $420 million. A Roku spokesman declined further comment.
- Fintech company Bill.com previously disclosed it had roughly $670 million at the bank. The firm said the amount included about $300 million of its money and $370 million that belonged to customers. A company spokesman declined further comment. The FDIC document listed Bill.com’s total balance at $761.1 million.
Silicon Valley Bank and parent SVB Financial Group Inc. were also listed as having a combined $4.6 billion in deposits. SVB Financial has argued in its bankruptcy case that at least $2 billion in deposits the parent had with the bank should be returned. Federal regulators have said SVB Financial, which declined to comment on the document, must apply to the bank’s receiver for that money.
--With assistance from Steven Church and stacy-marie ishmael.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Tech Startups
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Talent is the cornerstone of any successful tech ecosystem. In the last two decades, we’ve seen a wealth of strong founders and operators emerge across Europe and Israel, building innovative products and category-defining, unicorn companies that are competing on the global stage.
This in turn has encouraged employees from some of Europe’s biggest tech success stories to take their experience working at a unicorn, use it to found the next generation of startups and win venture backing. As a result, we’re now seeing a spinning flywheel effect, in which unicorn pedigree and know-how is trickling down and fueling the next wave of ambitious entrepreneurs similar to what we have seen in the U.S. over the last few decades.
Since opening our London office 23 years ago, the Accel team has backed some of Europe’s greatest startup success stories, including Celonis, Miro, Monzo, Personio Spotify, Supercell, UiPath and Vinted.
Our recently launched Founder Factories Report explores the unicorns, or “founder factories,” now producing the largest amount of entrepreneurial talent in the region and the resulting journey from unicorn employee to tech founder.
The ecosystem is in a strong position despite current headwinds, thanks to its flywheel of inter-generational talent spawning from unicorns.
Our data paints a clear picture: the ecosystem is in a strong position despite current macroeconomic headwinds, thanks to its flywheel of inter-generational talent spawning from unicorns.
To illustrate this, let’s take a look at some key takeaways from the report:
The rise of the “founder factory”
Established juggernauts in the European and Israeli ecosystem are fast becoming hotbeds of talent. These “founder factories” are attracting and upskilling the region’s brightest tech operators – and inspiring many of them to become founders and start new ventures in the process.
Our data reveals that 221 of the region’s 353 VC-backed unicorns have fueled 1171 new tech-enabled startups through their alumni, illustrating this trend. Moreover:
- The founder factories at the top of our ranking are Sweden’s Spotify and Germany’s Delivery Hero, both of which have produced 32 startup spinoffs, followed by the likes of Criteo (31), Klarna (31) and Zalando (30). Other familiar unicorns including BlaBlaCar, Deliveroo, Glovo, N26, Revolut, Skype, Wise, Wix and Zalando, have all also produced more than 20 new tech startups each.
- However, a wave of newer founder factories is also on the rise with younger unicorns such as Babylon, Celonis, Conduit, iZettle and SumUp seeing 10 or more companies set up by former employees.
- Alumni-founded startups are attracting significant private investment, with more than half (59%) of these new startups already securing private funding. Of those, 45% (311) have raised between $1M-$10M and almost a third (30%) have raised more than $10M.
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Silicon Valley Bank’s four-decade run as the tech world’s preferred lender came to sudden end Friday after the feds shut down the embattled firm due to liquidity fears.
Founded in 1983, the Santa Clara, Calif.-based institution provided banking services and took deposits for Silicon Valley startups, venture capital firms and tech heavyweights.
Though boring by Silicon Valley’s usual standards and little-known outside business circles, the bank played a critical role in supporting the tech sector during its recent boom in valuations.
The bank was in talks to sell itself on Friday after efforts to raise outside capital failed. But by Friday afternoon, the feds had shuttered SVB entirely and placed its assets under the control of the Federal Deposit Insurance Corp.
SVB spooked investors after disclosing this week that it had taken a $1.8 billion hit from a $21 billion fire sale of its bond holdings. The bank faced a cash crunch due to surging interest rates and a recent meltdown in the tech sector led many customers to pare down on their deposits.
Shares of SVB Financial, the bank’s parent, had plunged by a whopping 60% on Thursday. The stock was down by another 60% in premarket trading Friday until being halted.
What is Silicon Valley Bank?
A prominent tech lender, SVB ranked as the 16th-largest bank in the US prior to its collapse into FDIC receivership, according to the Federal Reserve.
The bank catered primarily to tech startups and investors active in the sector.
“SVB offers financial and banking services to help, as you capitalize on business opportunities, raise capital, protect equity, manage cash flows and access global markets,” a message on the bank’s website says.
The bank had $209 billion in assets as of Dec. 31, 2022. SVB’s collapse is the second-largest bank failure in history, trailing only that of Washington Mutual Inc., and the largest of its kind since the 2008 financial crisis.
Why was Silicon Valley Bank shut down?
Regulators were forced to shut down SVB to protect its depositors after a run on the bank ensued this week. Investors scrambled to withdraw their money following warnings from Peter Thiel’s Founders Fund and other tech sector giants.
Who are Silicon Valley Bank’s customers?
Silicon Valley Bank was a favorite lender among tech startups prior to its downfall.
The firm’s website notes that SVB “bank[s] nearly half of all US venture-backed startups, and 44% of the US venture-backed technology and healthcare companies that went public in 2022 are SVB clients.”
Notable firms listed as SVB customers include Pinterest, ZipRecruiter and Shopify.
Who leads Silicon Valley Bank?
Greg Becker has served as SVB’s president and CEO since 2011. He first joined the bank in 1993 and held various leadership roles before taking the top gig, according to SVB’s website.
As The Post reported, Becker tried to quell investor concerns with a last-minute conference call on Thursday – to no avail.
“My ask is to stay calm because that’s what is important,” Becker said during a conference call with investors on Thursday. “We have been long-term supporters of you — the last thing we need you to do is panic.”
Is Silicon Valley Bank FDIC-insured?
Silicon Valley Bank is FDIC-insured. The FDIC formally took control of its assets on Friday after the bank was shut down by the California Department of Financial Protection and Innovation.
“To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB),” the FDIC said in a statement. “At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.”
Insured depositors will have access to their insured deposits by Monday morning on Feb. 13, according to the FDIC. Insurance, however, is capped at $250,000. Uninsured deposits totaled a whopping $151 billion at the end of 2022, according to public filings.
Uninsured depositors will receive an advance dividend within the next week, as well as a “receivership certificate for the remaining amount of their uninsured funds.”
“As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors,” the feds added.
Is Silicon Valley Bank’s collapse a contagion event?
It’s still unclear how SVB’s downfall will impact the broader economy. Other bank stocks slumped on word that the FDIC had taken over the firm.
“Big Short” investor Michael Burry likened SVB’s collapse to that of scandal-ridden Enron, while hedge fund billionaire Bill Ackman suggested the federal government should bail out the bank.
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Tech Startups
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Just about one month to go until TechCrunch Disrupt 2023 kicks off in San Francisco on September 19-21. If you don’t have a pass yet, here’s a painless way to attend — for free.
Volunteer at TechCrunch Disrupt 2023 for a free, three-day pass
Here’s the (tiny) catch. Simply work 8 hours over the course of Disrupt, and we’ll say thanks as we hand you a free General Admission pass (a $1,250 value).
Plus, you can attend breakout sessions and roundtable discussions — some of the most popular draws at Disrupt — hit the expo floor to meet and greet the Startup Battlefield 200 companies exhibiting their game-changing tech. And don’t forget about networking. You’ll have time and opportunity to network with prominent people and companies attending the show.
If you’re interested in tech, startups, event planning, marketing — or all of the above — apply to volunteer by September 5. It’s a great way to see what it takes to produce a world-renowned startup event.
What do volunteers do at Disrupt? Read on!
Tasks for volunteers at TechCrunch Disrupt 2023
We need you to help us wrangle more than 10,000 attendees, and volunteers handle a variety of tasks to help make this startup conference an unforgettable experience for everyone. At any given time, you might:
- Help with registration check-in.
- Assist speakers.
- Direct attendees.
- Provide customer support.
- Place signage.
- Scan badges.
- Support vendor setup.
Please note: Work-exchange volunteers are responsible for their own meals, housing and travel expenses. Plus, you must attend a mandatory orientation meeting on Monday, September 18, 2023, from 3:00 p.m. to 4:30 p.m. PDT. All volunteers work a minimum of 8 hours during the conference. Due to the high volume of applications, we will notify only the selected applicants.
TechCrunch Disrupt 2023 takes place on September 19–21 in San Francisco. Lend us a helping hand, and we’ll hand you a free ticket to the World Cup of startup conferences. Apply to volunteer by September 5 to get your free pass. We want to see you in San Francisco!
Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2023? Contact our sponsorship sales team by filling out this form.
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Tech Startups
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Tech employees who are in charge of diversity, equity and inclusion are tired. They have been talking with internal stakeholders and promoting diversity across the board. But it’s hard to prove that things have changed because they don’t necessarily have performance indicators to support their work.
That’s why a French startup called 50inTech wants to change how tech startups approach diversity, equity and inclusion (DE&I). Instead of starting with discussions and vaguely including DE&I in the company’s yearly goals, 50inTech is building a software-as-a-service product to measure diversity with concrete metrics and identify the immediate changes that can lead to improvements.
And the company recently raised an $1.6 million (€1.5 million) seed round from Inco Investissements, Evolem, Super Capital, Altalurra, AIV Ventures as well as several business angels, such as Corinne Vigreux, Florian Douetteau, Alexandre Fretti and Gimena Dia.
In particular, 50inTech has created GenderScore, a scoring system for gender diversity in the workforce. With this tool, HR managers can fill out 54 data points and get a score out of 100 to see how they fare compared to other tech companies. Eventually, 50inTech plans to integrate with human resource information systems (HRIS) to automatically calculate that score.
163 tech companies in France, the U.K. and Germany have calculated their GenderScore, such as PayFit, Believe, Axa IT and EY Technology Consulting. And the results aren’t pretty. For instance, there are only 23% of women on the boards of these companies, even though current EU directives mandate that 40% of board members should be women.
There are only 24.5% women in tech roles in these companies. This is slightly above the industry average of 22% according to a recent McKinsey study — but the gender gap is still here. 50inTech gives these 163 companies an average score of 61/100.
So how can these companies improve their ratings? According to 50inTech, retention is as important as hiring practices. And 72% of the companies that have started tracking their GenderScore still don’t track the turnover among female employees.
The startup recommends implementing a flexible work policy, a fair career path for all with unbiased promotions and, of course ,equal pay thanks to a transparent pay policy. There are some tools to reduce the pay gap, such as PayAnalytics and Figures — but few startups use those tools.
“We’ve carried out a number of studies, with Figures in particular. We’ve discovered that the unadjusted pay gap in Europe is 19%, precisely because women aren’t moving up the career ladder. And you end up with data scientists who sometimes have a €10,000 pay gap — that’s €400,000 over the course of their career,” 50inTech co-founder and CEO Caroline Ramade told me.
Companies that calculate their GenderScore a year after their initial test usually see a 6% improvement. “They usually tackle these challenges topic by topic. The first topic they tackle is work-life balance. Obviously, we’ve seen some huge changes with Covid with a remote work policy everywhere. But now, I can say for sure that we’re noticing a backlash – we’re seeing a return to the office,” Ramade said.
Reducing biases in the recruitment process
Retention is one thing, but recruitment is another important pillar in diversity. And 50inTech originally started with a recruitment tool called GenderHire. It’s an inclusive sourcing platform based on the LinkedIn data of 30,000 women.
Companies can connect their recruitment system (their ATS) to GenderHire to find potential candidates and get market data. For instance, 50inTech can tell its customers the typical gender balance of DevOps teams, cybersecurity engineers or junior software engineers.
Eventually, 50inTech hopes it can also analyze the hiring funnel to highlight issues in the recruitment process. For instance, the tool could highlight that the reason a company ends up with a lot of male candidates in the final stage of the hiring process is because of a specific business case that is biased in one way or another.
While 50inTech is starting with gender diversity, it plans to evolve to other equity and inclusion topics. Caroline Ramade told me that the company’s GenderScore may soon become the InclusionScore for instance.
50inTech’s mission is clear — now let’s see how it iterates on this mission. The company wants to give tools to track and improve DE&I metrics in tech companies. With these tools, it could create a positive feedback loop that leads to better internal policies, better hiring processes and eventually a better performance as diverse teams perform better.
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Tech Startups
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Artificial intelligence + law is a blindingly hot equation. We are proving by the week that we simply can’t look away.
Enter Harvey, today’s golden child that lives at the intersection of technology and law.
Harvey is an A.I. platform that can help lawyers perform legal tasks in areas such as due diligence, litigation, and compliance. Described as “the innovative artificial intelligence platform built on a version of Open AI’s latest models enhanced for legal work,” legaltech startup Harvey, the self-styled “generative A.I. for elite law firms,” is about to play in the big leagues.
Harvey is being rolled out for use by 3,500 lawyers in 43 offices of Allen & Overy, the seventh largest law firm in the world and part of London’s “Magic Circle.”
I’ve watched legaltech evolve from the inside for decades. Having built one of the world’s first legaltech startup accelerators that brought together tech startups, investment, and law firms, I not only lived through the first major wave of legaltech startup hype and (over)funding, I helped fuel it.
Reading the Allen & Overy press release on Harvey, it’s easy to believe that law, technology, and artificial intelligence are now inseparable.
But as the U.S. Federal Trade Commission reminded us on Monday, the claims about the abilities and benefits of artificial intelligence are out of control. In warning businesses to “keep your A.I. claims in check,” the FTC is sending a critically important message to the legal industry: While A.I. might sound intriguing to some, it won’t work in practice for most.
Part of why A.I. technologies won’t become ubiquitous is a little industry secret: One of the most difficult aspects of legal technology is the absurd sales cycles.
Harvey is counting on a collective industry fear of missing out–FOMO. The logic is that with Allen & Overy rolling out such a large technology deployment, FOMO will drive most of the other massive Magic Circle and Am Law 100 firms to follow.
These law firms are deeply competitive and want to own their breaking innovation news. Simply following Allen & Overy doesn’t get these firms the kind of PR they can hold out to clients who pay their remarkably high bills. It doesn’t scream, “we are different and better,” it mumbles, “we are okay with being joiners.”
If you don’t think that innovation PR is important, just take a look at the Allen & Overy home page–a law firm with annual revenues of over $200 billion is devoting the landing page of their site to communicating a deal with a tech startup.
But A.I. is different, right? And it’s going to replace lawyers.
No and no.
An A.I. legal technology product will not change the legal industry’s business model, at least not at the top of the pyramid. Large law firms are built on an ownership structure where partners get to share profits each year. Not only is it extremely hard to convince partners to put some of this money back into the firm in the form of research, development, and technology implementation, it’s often practically impossible, as many of these firms’ owners are close to the end of their career and don’t want to invest in anything. They want their annual share, and that’s it.
And A.I. won’t replace lawyers.
The best case scenario is that A.I. will help lawyers serve more people and be a catalyst to help more people access justice.
In 2017, an American Bar Association study highlighted that “86% of the civil legal problems reported by low-income Americans received inadequate or no legal help.” The study highlights Miami-Dade, where 80% of litigants in domestic violence cases were self-represented.
So any legal technology that helps with access to justice and actually helps a lot of people should be welcome. Maybe a technology such as Harvey can do that kind of social good if it’s not aimed at elite law firms but instead at those lawyers working with people who need the kind of help that technology-empowered lawyers can provide.
The idea that A.I. is going to take over the bulk of substantive work that lawyers do isn’t at all realistic. What’s going to happen is that Harvey is going to be used by massive, wealthy law firms to generate more profit. Harvey and whatever follows might be able to replace some of the work some entry-level lawyers do, but what corporate clients pay for is the experience, guidance, and judgment of the best lawyers. Big clients will still pay astronomical sums to have what they see as the best lawyers be responsible for the final work product.
While you and I might want do-it-yourself law, the clients of the firms that are Harvey’s target market do not.
If the technology-enabled “Uber for law” was coming to help regular people, it would be here by now. There will be more technologies that help a segment of people–but that sea-parting legaltech you’re waiting for that will replace all lawyers isn’t going to be built.
Here’s a harsh reality: Twenty years from now, almost all lawyers will practice law the way they did 20 years ago.
Nonetheless, BigTech and the legal industry share a love for hype and hyperbole. Harvey is clearly a promising new technology that has applications in the legal world, like many technologies over the past decades. It is still very early days to determine what this technology will accomplish within one large law firm, never mind an entire industry.
Aron Solomon, JD, is the chief legal analyst for Esquire Digital. He has taught entrepreneurship at McGill University and the University of Pennsylvania and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
More must-read commentary published by Fortune:
- The return to the office could be the real reason for the slump in productivity. Here’s the data to prove it
- Overconfident tech CEOs have overpaid for ‘box tickers’ and ‘taskmasters.’ Here’s why the real ‘creators’ will survive the mass layoffs
- How the Russian economy self-immolated in the year since Putin invaded Ukraine
- I am a DoorDash driver who’s been elected to the Colorado State House. Food delivery companies are gamifying your tips and making it harder for drivers to earn a living wage. Here’s what you can do about it
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
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Tech Startups
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Anyone who has followed global news events of late will have noticed the devastating floods that have engulfed pretty much every corner of the world, from the U.S. and Europe, to Africa, Australia, and Asia, where India and Pakistan have been hit by some of their worst floods in recent memory.
By pretty much all accounts, such climate change-driven disasters are only going to get worse. And while there are varying opinions on what — if anything — we can do to avert such catastrophes in the future, some companies are looking at ways to plan for this new reality, and at least go some way toward mitigating the impact of flooding.
One of these companies is 7Analytics, a Norwegian startup founded back in 2020 by a team of data scientists and geologists to reduce the risks of flooding for construction and energy infrastructure companies. With its first product, FloodCube, 7Analytics serves customers with AI and advanced machine learning techniques to calculate current surface water and where it’s flowing today (the “runoff”), then models how that will look in the future with increased rainfall.
So in effect, FloodCube is more about predicting how a flood will unfold, showing exactly where water is likely to accumulate based on various environmental factors. While it’s possible to achieve this already today through combining multiple software programs and manual calculations, FloodCube brings everything together under one roof.
FloodCube in action Image Credits: 7Analytics
Show me the data
As with just about any AI and ML-infused software, large data sets are pivotal to 7Analytics’ promise — it gathers data from openly available sources spanning digital elevation models (DEM) for terrain, satellite imaging, and climate data, then integrates these sources to make it easier for users to derive insights from. Its customers include the Municipality of Bergen where 7Analytics is headquartered, multinational construction giant Skanska, and engineering consultancy Multiconsult. And this gives a strong indication as to who 7Analytics is targeting, and who is most likely to care about predicting future flooding scenarios — protecting urban infrastructure is very much the name of the game here.
“Today, most developers and real estate owners know very little about their exposure to flood risk,” 7Analytics cofounder Jonas Toland told TechCrunch. “We close this gap with a high-precision risk tool.”
While its technology is mainly used by construction companies in Norway for now, 7Analytics is expanding into new areas such as energy infrastructure, and is currently in talks with a handful of energy companies in the U.S. To help, 7Analytics’ has partnered with StormGeo, a weather service and meteorological company that essentially tailors risk data for specific business use-cases — such as disaster management in ship-routing, or energy production sites. In short, 7Analytics is helping StormGeo “enhance” its existing offering to its oil and gas customers, which includes companies in Houston, Texas.
“Our product takes a real-time StormGeo weather forecast — for example, the risk of rainfall tomorrow — and translates it into actionable risk info, such as their site is at risk of x-inches of flooding tomorrow,” Toland explained. “This information can be used to inform them whether their staff will be able to use the parking lot, or to reroute supply trucks [for example].”
Startups to the rescue?
Recent data from reinsurance company Swiss Re suggests that extreme global weather events cost insurers $101 billion last year, apparently only the third time since 1970 this figure has surpassed $100 billion. And Hurricane Ida alone reportedly caused at least $50 billion in damages, depending on what figures we’re to believe. As such, we’re seeing all manner of climate-tech startups enter the fray, even companies that weren’t initially focused on climate at all. Yesterday, TechCrunch wrote about a six-year-old company called VRAI, which initially delivered VR simulation training to the aerospace and defence sectors, but is now expanding into renewable energy, where it will focus on helping to upskill the European workforce and support plans to increase offshore wind energy capacity in the coming decade.
Elsewhere, Australia’s FloodMapp recently raised $8.5 million to serve real-time flood forecasts, while last year we wrote about New York-based Forerunner, which is developing a flood plain management platform.
To take things to the next level now that it’s officially entered the U.S. market, 7Analytics today announced that it has raised $2.5 million in a seed round of funding led by sustainability-focused VC firm Momentum Partners, with participation from Construct Venture and Obos VC. While this funding will help 7Analytics expand both in Europe and the U.S., the company said that it eventually plans to use its technology to model for other “nature risks,” including landslides and biodiversity.
“Everything we build is rigged for global use, so we are scaling our model fast across continents,” Toland said. “At the same time, we need to consider that our cities are different both in terms of topography, climate, and how they are built. Our models are easy to adapt for new use cases which is underlined by the various customer groups we have onboarded — from construction developers to municipal caseworkers and infrastructure owners.”
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Tech Startups
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There is no question that this market is tough for tech startups. The market meltdown today can be compared to the dot-com meltdown in 2000 and the Great Recession meltdown in 2009. But even in tough markets, there are many survivors. This article explores survival tips for startups — for both operational and corporate finance. For the many companies that do survive, there will be an opportunity to grow faster since fewer competitors will fight for market share and corporate finance conditions will improve.
An excellent example of survival is Amazon, which was on the verge of bankruptcy in the dot-com meltdown in 2000. Amazon’s stock price plummeted from $106 to $10. Amazon survived by pivoting to selling internally developed technology to others — selling its e-commerce platform to other retailers through Amazon Services and selling its cloud computing technology through Amazon Web Services.
How tough is the market?
This market meltdown is tough on an historical basis:
- Venture Capital (VC): Global VC funding in Q2 2023 fell to $65 billion, down 49% compared to Q2 2022.
- Private Equity (PE): PE firms deployment is down a similar 49% in Q2 2023 from the quarterly peak reached in Q4 2021.
- M&A: The M&A market for VC-backed startups in the U.S. is on its slowest pace since 2013, as the world’s economy was coming out of the Great Recession in 2009.
- IPOs: 55 IPOs have been priced so far this year. The last time there were fewer IPOs was 2009 in the Great Recession.
Operational survival tips
For a company in survival mode, cash is king. Review a cash flow report, not a GAAP report, every day. Slow down paying vendors and require payment from customers in 30 or even 15 days. Focus sales efforts on quick wins that bring in cash, not elephants.
Cut expenses to the bone. Think Elon Musk sleeping on a couch. Review every line item. Consult with employees on areas to cut. Even small items like canceling subscriptions will change the corporate mindset from growth at all costs to a path to profitability.
Shifting the goals to a path to profitability fits with the new investor mantra, the Rule of 40 — if a company’s revenue growth rate is added to its profit margin, the total should exceed 40%.
One area to explore is using AI to perform tasks such as creating legal documents, generating key words for SEO, and writing software code. Almost 30% of new GitHub code is now written with AI assistance.
Unfortunately, terminating employees is sometimes necessary for a company’s survival. Be transparent with the employees, management, and the board. Consider furloughing employees and not terminating them to retain talent.
Finally, consider a hard pivot like Amazon in 2000. Listen to the market to determine where the demand is for a company. What other products or services can the company provide and what other market can the company serve?
Corporate finance options
If a company has a limited runway, pursue multiple corporate finance options simultaneously. Do not pursue the next VC round, run out of money, and then try to pursue M&A. The M&A process requires at least six months.
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Kale Logistics Solutions, an Indian startup offering a vertical SaaS platform to assist logistics needs, has raised $30 million in a fresh funding round, as the 14-year-old startup eyes expansion in the U.S. and Europe.
Bengaluru-based private equity fund Creaegis Advisors led the Series B round, which follows the startup raising $5 million in a Series A round in 2020. The startup’s key investors include tech-focused VC firm Inflexor Ventures, as well as founding angels Narendra Kale and Vipul Jain.
Handling logistics and shipping cargo usually requires coordination among several parties, much like an international journey for an individual. Yet, a major part of this process often entails extensive paperwork. Kale Logistics aims to eradicate paper-based processes in these activities through a suite of cloud-based software tools that facilitate digital data transfer among all stakeholders in cargo and logistics.
“We have come up with the standard solutions, with standard interfaces to airlines, customs and so on, which is what is being promoted as a platform at airports and ports level,” said Rajesh Panicker, co-founder and COO at Mumbai-based Kale Logistics, in an interview. Panicker, Amar More and Vineet Malhotra co-founded the startup in 2009.
Nearly 80% of the data exchanged among logistics stakeholders is standardized and is frequently reused throughout the cargo’s journey from source to destination, he said. To streamline this, Kale Logistics introduced their marquee solution, the Cargo Community Platform. This platform allows all participants, such as freight forwarders, ground handling agents, and customs brokers, to share their collected data without the need to manually reproduce it for distinct purposes.
In recent years, regions like India, Europe, and the U.S. have implemented stringent regulations for cross-border trade. Kale Logistics views these changes as a chance to expand its operations, especially as those involved in cross-border transactions increasingly seek digital solutions for monitoring their cargo’s movement, he said.
“There is a lot of impetus, even from external forces, to get all this automated. Fortunately, we are at the right place at the right time,” Panicker noted.
Kale Logistics is present at over 100 airports and ports worldwide, serving clients in 36 countries. Its customer base includes cargo companies, airports and seaports.
The startup began its journey in India, establishing a presence at approximately eight to ten airports and ports. It has inked deals with prominent airport infrastructure firms such as Adani Group, GMR, and Bengaluru International Airport Limited (BIAL). After its initial success in India, Kale Logistics says it broadened its horizons to the Middle East and Africa. Most recently, it has ventured into the U.S. and European markets.
Panicker told TechCrunch that Kale has expanded to 10 different airports and ports in the U.S. and 36–38 airports in Europe. The startup plans to deploy the new funding to increase its presence and hire more staff. Additionally, it’s looking to invest in research and development and enhance the product with more features.
“This is our second fundraising with an external investor, and we are happy to partner with Creaegis because of the alignment of vision for the business, their record and understanding of the SaaS and tech products space globally. We are confident they will add value to the company as we shift gears towards a faster growth trajectory,” said Vipul Jain, chairman, Kale Logistics, in a prepared statement.
The logistics tech startup market is expanding rapidly, with many new players joining the race. Airlines including Emirates also have specific solutions for their business customers, while some startups offer solutions particularly for truck slot management and tracking shipments. Nevertheless, Panicker told TechCrunch that the startup does not see significant competition in the market at the moment.
“The global logistics industry is undergoing a rapid digital disruption with a need for intelligent automation and end-to-end visibility through all nodes. This transformation is led by smart and centralized technology platforms. Kale, with its category-defining Cargo Community Platform and suite of SaaS solutions, is leading this disruption by digitizing and automating end-to-end cargo operations in airports and seaports. We are excited to support the company in their next phase of global growth and planned expansion in North America and Europe,” said Prakash Parthasarathy, Managing Partner & CEO of Creaegis.
Kale Logistics currently has offices in the UAE, Kenya, Netherlands and the U.S. — apart from India.
Logistics management has piqued investor interest in India. As per data shared by analyst firm Tracxn, equity investments in Indian logistics tech startups saw a nearly 200% surge, hitting $180.8 million in Q2 2023, up from $60.5 million in Q3 2022. Already, the third quarter has witnessed investments amounting to $42.4 million. In contrast, on the global front, funding in the logistics tech domain dipped by 14%, settling at $1.2 billion in Q2 2023 from $1.4 billion in Q3 2022, with $412.8 million invested so far in the current third quarter.
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Struggling Silicon Valley startups reportedly face a potential “bloodbath” this year as cash runs low and wary tech investors flee a major downturn in the sector.
Conditions in the tech sector have gotten so rough that many embattled startups will likely be forced to raise funds from outside investors at a lower valuation – known as a “down round” – or risk running out of money entirely, industry experts told Bloomberg in a dire report published Monday.
“We haven’t had a compression in values like this in more than 20 years. It’s an absolute bloodbath,” Cameron Lester, global co-head of technology media and telecom investment banking at Jefferies, told the outlet.
Lester added that a “down round” is better than the alternative of going out of business.
“What matters is you’re a survivor,” Lester added.
The share of startup fundraising deals that qualified as “down rounds” hit nearly 11% in the fourth quarter of 2022, according to PitchBook data cited by Bloomberg.
Preliminary data for the first three months of this year placed the share of such deals at roughly 7.5%, though the number is expected to increase as more deals are closed.
Startup founders are notoriously wary of “down rounds” because any reduction in valuation erodes the on-paper value of their shares – as well as the value of investors’ stakes. Executives fear that drops in valuation will erode confidence in their brands and hurt long-term prospects.
Bloomberg notes that several well-known firms, including tech fitness firm Tonal, payments firm Klarna and financial services firm Stripe are among those who have recently absorbed a hit to their valuations.
Overall, the number of venture capital funding deals hit a five-year low in the first quarter, with startups raising just $37 billion, according to data compiled by PitchBook and the National Venture Capital Association.
“We’re actually in one of the worst times in recent memory in venture activity,” AngelList CEO Avlok Kohli told Bloomberg. “It’s the lowest activity we’ve seen and the lowest positive activity we’ve seen.”
The tech downturn began last year as the Federal Reserve began hiking interest rates to combat inflation. Rising rates made the cost of borrowing more expensive and sent many investors to the sidelines.
Tech startups were dealt a major blow earlier this year with the rapid implosion of Silicon Valley Bank, the sector’s longtime preferred lender.
Prior to its collapse, SVB’s website declared that the firm “bank[s] nearly half of all US venture-backed startups, and 44% of the US venture-backed technology and healthcare companies that went public in 2022 are SVB clients.”
SVB’s downfall was preceded by major volatility in the cryptocurrency sector, with once-mighty FTX among the firms that fell into bankruptcy.
The tech-heavy Nasdaq stock index has plunged by nearly 9% since the start of the year as fear lingers within the sector.
Big Tech firms haven’t escaped unscathed. Several major players have conducted sweeping layoffs, including Google parent Alphabet, Facebook parent Meta and Amazon.
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- Regulators found a solution for SVB bank depositors and potentially averted a widespread regional bank run.
- But the long-term crisis for financing innovation in the wake of the Silicon Valley Bank implosion is just beginning.
- From the Rust Belt to the U.K., Egypt and Nigeria, the bank's role in financing innovation was critical to economic growth.
In the short-term, regulators have found a solution for Silicon Valley Bank depositors and, we hope, calmed the fears of a wider run on regional banks. Now, attention will shift to the longer-term crisis facing the global system for financing innovation. The much admired U.S. system for producing innovation has just received a body blow, and the turmoil that led to the death of Silicon Valley Bank isn't over.
We are here as two women working in tech and finance to call for a serious examination of the financing needs of today's innovators — in the medium-term as they struggle to survive the current turmoil, and in the long term as they develop the innovations that result in economic growth.
Silicon Valley Bank, founded in 1983, was born in a time when Silicon Valley was a synonym for "tech" and "innovation." This is no longer the case. Over the past 50 years, the tech community has evolved into a global system that supports many different kinds of innovation. SVB was the crown jewel of banks and the venture capital industry, not just in Silicon Valley, but globally.
The huge venture funds and $100-million startups based in California still get attention, but investors and tech companies around the world look far different from this stereotype. They are mainly small business owners, who are in turn often stalwart employers and supporters of their communities.
Geographically, this community is widespread. In the Midwest, former Rust Belt and Southern United States, where Silicon Valley and its bank were held up as exemplars, there are likely hundreds of companies and venture capital funds with accounts and loans at the bank, and many more at other mid-size banks. Small, specialized and mid-size banks are often better at giving small business owners financial products and introducing them to others who might help them. They can also provide more industry-specific guidance.
With a decline in overall venture capital funding, the concurrent rise in interest rates and the uncertainty of the current climate, paths to growth and expansion for small businesses will dim. The prospects today are challenging for tech entrepreneurs because their businesses are inherently risky to begin with. Market fluctuations can impact their journeys quickly and very significantly.
What the tech startup community actually looks like
Though tech startups that get millions of dollars in finance are the ones in the headlines, the vast majority of tech firms run on a shoestring budget. Collectively, they employ millions of people. Two years ago researchers at the University of North Carolina and the National Venture Capital Association found 3.8 million employees at firms that received venture investment between 1990 and 2020 — 62.5% of them were outside California, Massachusetts and New York.
Startups and venture funds that we personally know in Upstate New York and Massachusetts are depositors in SVB; these communities are far from the more famous tech communities of Palo Alto or San Francisco.
Some 2,500 venture capital firms had accounts at SVB. It's easy to picture these as large firms, and a tiny handful of famous venture firms have hundreds of employees. But the median venture firm in the United States had $56 million in assets, according to the National Venture Capital Association, investing the money in startups on behalf of wealthy individuals and funds. That median size means many firms have revenue under $1 million.
Angel investors and operators also banked extensively at SVB; those operations – mostly solo businesses – are much smaller.
An unknown, but probably fairly large, percentage of Silicon Valley's account holders are startups and venture funds in tech markets in other countries, where tech startups are seen as integral to prosperity and economic growth. Many venture capital funds and startups from emerging markets trusted Silicon Valley Bank with their deposits and as their lender out of a belief that their money was in a well-regulated economy with credibility. Yesterday, the CEO of a company called Chipper Cash wrote about how important Silicon Valley Bank had been in its journey.
"A little known fact is that 5 years ago when I was trying to open Chipper's first bank account, SVB was the only bank that would accept us. I know there are countless other startups all doing very important work who would say the same thing," wrote the CEO, Ham Serunjogi. Chipper Cash makes it easier to send money across borders, working on the African continent.
Even further away from Silicon Valley are tech communities in Egypt, the UK, Botswana, Kenya and Nigeria, places that depend more than ever on technology innovation. We also know founders there who are beginning to wonder about the security of the U.S. financial system. The facilities and quick action from the U.S. government helped, but entrepreneurs from emerging markets now have fewer options in an already tight funding market.
Short-term losses
SVB functioned differently than a traditional bank. Focused on the tech industry, the bank was a venue for entrepreneurs, and founders flocked to SVB for much more than startup financing. The bank provided opportunities for venture capitalists and entrepreneurs to meet, creating invisible yet vital webs of human connection. It made quick turnarounds on mortgages; larger and more traditional banks are often reluctant to approve mortgages for entrepreneurs, even experienced ones. Silicon Valley Bank's employees guided and mentored founding teams on growing businesses, invested in startups, and supported the venture capitalists who collaborated with them.
Techstars, one of the largest pre-seed investors in the world, has stakes in portfolio companies valued at $96 billion in market capitalization. The franchise has managers and founders who banked exclusively at SVB. Y Combinator, a startup accelerator, has said one-third of startups with exposure to Silicon Valley Bank used SVB as their sole bank account. Both of these investor-accelerators likely used Silicon Bank because of its specialized tools, network and knowledge.
In fact, countries around the world try to replicate the United States' innovation infrastructure. According to recent reports, the government is still trying to find a buyer for key SVB units in an auction process. If important elements of SVB aren't brought under the wing of a larger institution with that specialized knowledge of tech and finance intact, the United States will have to support rebuilding something like it, if it hopes to continue producing innovation at a high level.
Long-term effects on innovation
The United States gained an edge on innovation starting in the 1950s, when the U.S. federal government poured money into research and development following the Soviet Union's launch of Sputnik. The result was the development of the silicon chip. Venture capital (and later, seed and angel investing) sprang up as an industry to provide the particular kind of risk capital required to fund people with ideas who weren't necessarily experienced at running businesses. This entire system of finance is designed around the idea that because it is so difficult to push an innovation all the way to market, the innovators need specialized help.
This kind of finance has helped produce very large companies, including Amazon and Microsoft. Though it advertised its role in building big companies, SVB was also an important part of the finance system for deeper innovations. An estimated 12% of SVB's assets were in biotech companies, according to Crunchbase.
Financing and supporting risk-takers wherever they are is critical for the United States so the country maintains its edge and, relatedly, aids other nations deeply invested in similar, like-minded goals. It should go without saying that there are other countries eager to pick up the mantle of innovation. Rebuilding innovation finance will be part of that healthy, we hope, competition.
The ultimate cost of collapse
We don't write to absolve the bank's executives or the tech community of responsibility in this situation. There were some telltale signs the bank's assets were trailing liabilities months ago. If there has been malfeasance or gross misjudgment at the bank, those responsible should be held to account. The tech community also should focus on creating financial infrastructure that is resilient in the face of changes in the economy. Volatility is a constant in today's world.
We are heartened that regulators believe the contagion from Silicon Valley Bank will not spread to the rest of the financial system. Regulators should also consider the signal they send to innovators and entrepreneurially minded individuals worldwide. As of yesterday, SVB depositors received a backstop, a guarantee the FDIC will allow them to continue to operate their businesses and an assurance they will be made whole.
But the damage to companies and communities, and to innovation ecosystems across the world, may continue to be severe, especially in an environment where the Federal Reserve continues to hike interest rates. The immediate banking crisis is over. Now, it's time to rebuild a new system for financing innovation to meet today's needs. If the United States doesn't do it, it's likely another country will.
—By Pia Sawhney, partner and head of strategy at Armory Square Ventures (ASV), a mission-focused technology venture capital firm based in the Finger Lakes region of New York State; and Dina Sherif, executive director of the MIT Legatum Center for Entrepreneurship and Development. ASV and its portfolio companies did not have accounts at Silicon Valley Bank.
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- Silicon Valley Bank's collapse is likely to be felt across the technology landscape globally over the coming years.
- Investors who spoke to CNBC said there could be issues for startups trying to access their funds and credit lines to pay workers.
- Startups may also need to tighten their belts while others may collapse with little access to funding, experts said.
Silicon Valley Bank was the backbone of many startups and venture capital funds around the world. The effects of its collapse, the biggest banking failure since the 2008 financial crisis, is likely to be felt across the technology landscape globally over the coming years.
"With SVB in essence the Godfather of the Silicon Valley banking ecosystem for the past few decades in the tech world, we believe the negative ripple impact of this historical collapse will have a myriad of implications for the tech world going forward," Dan Ives, analyst at Wedbush Securities, said in a note on Tuesday.
related investing news
SVB's collapse began last week when it said it needed to raise $2.25 billion to shore up its balance sheet. Venture capital firms told their portfolio companies to withdraw money from the bank and other clients looked to get their cash before it became unobtainable. This effectively led to a bank run.
The bank had to sell assets, mainly bonds, at a massive loss.
U.S. regulators shut down SVB on Friday and took control of its deposits. Regulators then said Sunday that depositors at SVB would have access to their money, in a move aimed at stopping further contagion.
But the episode has the potential to impact the technology world in several ways, from making it harder for startups to raise funds to forcing firms to change their business model, according to investors and analysts who spoke to CNBC.
SVB was critical to the growth of the technology industry, not just in the U.S. but in places like Europe and even China.
The 40-year old institution had an intimate link to the technology world offering traditional banking services as well as funding companies that were deemed too risky for traditional lenders. SVB also provided other services like credit lines and lines to startups.
When times were good, SVB thrived. But over the past year, the U.S. Federal Reserve has hiked interest rates, hurting the once high-flying technology sector. The funding environment has got harder for startups in the U.S., Europe and elsewhere.
SVB's collapse has come at an already difficult time for startup investors.
"This whole Silicon Valley Bank thing is the last thing we needed and was completely unexpected," Ben Harburg, managing partner of Beijing, China-based venture capital fund MSA Capital, told CNBC.
Startups have had to tighten their belt while technology giants have axed tens of thousands of workers in a bid to cut costs.
In such an environment, SVB played a key role in providing credit lines or other instruments that allowed startups to pay their employees or ride out hard times.
"Silicon Valley Bank was very paternalistic to this sector, they not only provided payroll services, loans to founders against their illiquid credit, but lines of credit as well. And a lot of these companies were having trouble already raising equity and they were counting on those lines to extend their runway, to push out the cash burn beyond the recession we all expect." Matt Higgins, CEO of RSE Ventures, told CNBC's "Street Signs Asia" on Tuesday.
"That evaporated overnight and there's not another lender that's going to be stepping in to fill those shoes."
Paul Brody, global blockchain leader at EY, told CNBC Monday that a crypto firm called POAP, which is run by his friend, has half of the company's money tied up in SVB and can't get it out. The amount at SVB is "more than payroll can cover," suggesting it might be hard to pay employees. A spokesperson for the company wasn't immediately available for comment, and CNBC was unable to independently verify Brody's comments.
The SVB collapse will also likely put the focus on startups to pivot to profitability and be more disciplined with their spending.
"Companies will have to reboot the way they think about their business," Adam Singolda, CEO of Taboola, told CNBC's "Last Call" on Monday.
Hussein Kanji, co-founder of London-based Hoxton Ventures, said that over the next three years there will be more restructurings at companies, though some are holding off.
"I'm seeing a lot of 'kick the can down the road' behavior which isn't that helpful. Do the hard things and don't delay or procrastinate unless there is very good reason to. Things don't often get easier in the future simply because you wish for them to," Kanji told CNBC via email.
Wedbush's Ives said that there could also be more collapses, adding that early stage tech startups with weaker hands could be forced to sell or shut down.
"The impact from this past week will have major ripple impacts across the tech landscape and Silicon Valley for years to come in our opinion," Ives said in a note Sunday.
—CNBC's Rohan Goswami and Ari Levy contributed to this report.
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Unparalleled contrasts have marked the last decade and a half — from the devastating plunge of a major housing crash to the soaring heights of the longest bull market and the unforeseen havoc of a global pandemic. Amid these turbulent times, the VC accelerator industry has emerged as a stalwart player.
Fueled by a zero-interest landscape in 2020, it has surged, giving rise to an ever-growing array of funds. That said, a paradigm shift of the broader venture landscape could be on the horizon.
Starting a tech company today costs 99% less than it did 18 years ago when Y Combinator was started (today and 2005), largely due to the emergence of cloud technologies, no-code tools, and artificial intelligence. There is an unprecedented amount of information or knowledge that is now freely available to guide founders (e.g., the free YC Startup School courses).
Network effects have evolved, moving away from the traditional physical spaces to digital ones. Digital communities and social platforms such as Twitter, Signal NFX, YC’s co-founder matching, and Slack communities (e.g., Flyover Tech) have played a significant role in this shift.
At the start of 2022, there were $1 trillion in assets under management (AUM) and $230 billion in VC dry powder, figures that dwarf the prefinancial crisis AUM by a factor of five. Concurrently, the number of funds raised in the eight-year period up to 2022 was 2,700, up from 883 in 2010. Crowdfunding witnessed a 2.4x growth from 2020 to 2021.
Angel investments in 2022 equaled those from 2006 to 2011 combined. Family office investments increased by 5x, and corporate venture investments rose 6x, thus opening new capital avenues for founders who found it difficult to raise capital.
The competitive landscape also underwent significant changes. At the dawn of 2022, there were 2,900 active VC firms, marking a 225% increase since 2008. This influx of funds has propelled platform VCs to step up their game, nurturing their portfolios and winning deals more aggressively.
Finally, the talent pool for tech startups has broadened immensely. Factors such as remote work, offshore development, and the steadily growing labor pool of software engineers have enabled startups to hire additional engineering talent, adding yet another catalyst to this vibrant ecosystem.
Importantly, the traditional accelerator model has enjoyed the fruits of these potential paradigm shifts. The number of accelerators has more than doubled since 2014, while the number of accelerator-backed startups in the U.S. has nearly quadrupled in the same time period (investments from 2005 to 2015 and total investments through 2021). However, as we look into the future, founders must confront a key question: Are there too many accelerators now, and is joining an accelerator even needed anymore?
Accelerators are facing competition on all sides
The idea that accelerator funds have little value grew in popularity during the pandemic, as capital was so abundant that first-time founders began bypassing accelerators altogether. Moreover, rumors of deeply unethical behavior at accelerators are starting to surface frequently. The most notable example was allegations of fraud at Newchip, a popular virtual startup accelerator.
The liquidation of Newchip sent ripples through the startup ecosystem as perceptions of grifting at accelerators gained momentum online. Another instance of negative press involved the On Deck accelerator, which laid off 25% of its staff in 2022. The layoff came from a deal that went sour with Tiger Global, forcing On Deck to use its Series B funds to keep the lights on in the accelerator.
Founders must confront a key question: Are there too many accelerators now, and is joining an accelerator even needed anymore?
The fall of players like Newchip and On Deck are not isolated incidents. They testify to the growing realization that accelerators increasingly compete for capital and opportunity with other established, institutional VC firms. For example, when YC was founded in 2005, a “pre-seed” round did not exist, and it cost $500,000 to start a tech company. Now pre-seed rounds have surged in popularity to being the most popular round for getting your business from MVP to $1 million+ ARR. In 2022, there was 10x the amount of capital in the market than a decade ago, with hundreds of pre-seed VC funds in existence with hyper-targeted theses (e.g., psychedelics or construction).
The influx of pre-seed venture dollars in circulation has increased competition with accelerators and influenced more funds to pursue a “platform VC” model, with some even having a venture studio (e.g., building companies in-house) or incubator (e.g., long-term support at the earliest stages). In some cases, funds themselves launch “accelerators,” which in most cases are the platform support and capital extended to earlier startups, so the VC invests earlier.
Importantly, a VC firm pursuing pre-seed funding escapes the traditional stigmatized accelerator branding due to more favorable terms. Furthermore, many VCs have also built communities around their accelerator model in ways traditional accelerators fail to. Thematic platform VCs have world-class advisors for specific sectors and create cross-pollination within their portfolios. Some pre-seed VCs are focused on backing community-driven startups that have access to communities, hacking distribution and discovery.
That said, it’s not just micro VCs or emerging managers who are launching platforms; brand names are, too. For example, Sequoia Capital’s Arc or a16z’s Crypto Startup School attracts quality with favorable terms, capital, and a strong brand. The chart below shows how VCs have adapted through market cycles:
Platform VCs vary in both definition and focus depending on the logistics of the firm. For example, at Redbud VC, our team manages a VC fund plus some aspects of a studio, including support from world-class operators who have founded billion-dollar companies. In general, VCs have continued to invest earlier, with many now backing idea-stage or pre-product founders. Some firms like K9 Ventures won’t even back founders who have taken prior institutional capital. Due to the increased competition from the platform role and the hunt for untapped early-stage founders, every VC will soon have a platform or studio component.
Are accelerators giving founders what they need and want?
All this said, what is different about an accelerator versus a platform VC, strategic angel, or an early-stage VC in general? If we drill into what an accelerator does for founders, generally speaking, it can be bucketed into:
- Knowledge sharing.
- Networks.
- Resources.
- Peer groups.
- Capital.
- Events.
The value of the above is directly correlated to the level of entrepreneurial experience the founder possesses. That said, the value accelerators provide comes at a cost: time and equity. The large equity stakes and extensive work can be a repellant to quality founders. If the value is delivered, the equity can be argued, but the time cannot. Some accelerators are adding 20+ hours of programming per week and networking events that may be lackluster.
In Redbud VC’s conversations with 2,000+ founders, our team found that what is truly relevant to founders is network effects and knowledge sharing. Founders are time-strapped, so filtered feedback from successful founders can expedite years of learning, and warm intros can save months.
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- Tech companies that held deposits at SVB are wondering when they're going to be able to pay employees and their bills after the bank's collapsed.
- The FDIC was named the receiver of Silicon Valley Bank on Friday after the bank was closed by California regulators.
- "The number one question is, 'How do you make payroll in the next couple days?'" said Ryan Gilbert, founder of venture firm Launchpad Capital.
Most importantly, they're trying to figure how to pay their employees.
related investing news
"The number one question is, 'How do you make payroll in the next couple days,'" said Ryan Gilbert, founder of venture firm Launchpad Capital. "No one has the answer."
SVB, a 40-year-old bank that's known for handling deposits and loans for thousands of tech startups in Silicon Valley and beyond, fell apart this week and was shut down by regulators in the largest bank failure since the financial crisis. The demise began late Wednesday, when SVB said it was selling $21 billion of securities at a loss and trying to raise money. It turned into an all-out panic by late Thursday, with the stock down 60% and tech executives racing to pull their funds.
While bank failures aren't entirely uncommon, SVB is a unique beast. It was the 16th biggest bank by assets at the end of 2022, according to the Federal Reserve, with $209 billion in assets and over $175 billion in deposits.
However, unlike a typical brick-and-mortar bank — Chase, Bank of America or Wells Fargo — SVB is designed to serve businesses, with over half its loans to venture funds and private equity firms and 9% to early and growth-stage companies. Clients that turn to SVB for loans also tend to store their deposits with the bank.
The Federal Deposit Insurance Corporation, which became the receiver of SVB, insures $250,000 of deposits per client. Because SVB serves mostly businesses, those limits don't mean much. As of December, roughly 95% of SVB's deposits were uninsured, according to filings with the SEC.
The FDIC said in a press release that insured depositors will have access to their money by Monday morning.
But the process is much more convoluted for uninsured depositors. They'll receive a dividend within a week covering an undetermined amount of their money and a "receivership certificate for the remaining amount of their uninsured funds."
"As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors," the regulator said. Typically, the FDIC would put the assets and liabilities in the hands of another bank, but in this case it created a separate institution, the Deposit Insurance National Bank of Santa Clara (DINB), to take care of insured deposits.
Clients with uninsured funds — anything over $250,000 — don't know what to do. Gilbert said he's advising portfolio companies individually, instead of sending out a mass email, because every situation is different. He said the universal concern is meeting payroll for March 15.
Gilbert is also a limited partner in over 50 venture funds. On Thursday, he received several messages from firms regarding capital calls, or the money that investors in the funds send in as transactions take place.
"I got emails saying saying don't send money to SVB, and if you have let us know," Gilbert said.
The concerns regarding payroll are more complex than just getting access to frozen funds, because many of those services are handled by third parties that were working with SVB.
Rippling, a back office-focused startup, handles payroll services for many tech companies. On Friday morning, the company sent a note to clients telling them that, because of the SVB news, it was moving "key elements of our payments infrastructure" to JPMorgan Chase.
"You need to inform your bank immediately about an important change to the way Rippling debits your account," the memo said. "If you do not make this update, your payments, including payroll, will fail."
Rippling CEO Parker Conrad said in a series of tweets on Friday that some payments are getting delayed amid the FDIC process.
"Our top priority is to get our customers' employees paid as soon as we possibly can, and we're working diligently toward that on all available channels, and trying to learn what the FDIC takeover means for today's payments," Conrad wrote.
One founder, who asked to remain anonymous, told CNBC that everyone is scrambling. He said he's spoken with more than 30 other founders, and talked to a finance chief from a billion-dollar startup who has tried to move more than $45 million out of SVB to no avail. Another company with 250 employees told him that SVB has "all our cash."
A SVB spokesperson pointed CNBC back to the FDIC's statement when asked for comment.
For the FDIC, the immediate goal is to quell fears of systemic risk to the banking system, said Mark Wiliams, who teaches finance at Boston University. Williams is quite familiar with the topic as well as the history of SVB. He used to work as a bank regulator in San Francisco.
Williams said the FDIC has always tried to work swiftly and to make depositors whole, even if when the money is uninsured. And according to SVB's audited financials, the bank has the cash available — its assets are greater than its liabilities — so there's no apparent reason why clients shouldn't be able to retrieve the bulk of their funds, he said.
"Bank regulators understand not moving quickly to make SVB's uninsured depositors whole would unleash significant contagion risk to the broader banking system," Williams said.
Treasury Secretary Janet Yellen on Friday met with leaders from the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency regarding the SVB meltdown. The Treasury Department said in a readout that Yellen "expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event."
On the ground in Silicon Valley, the process has been far from smooth. Some execs told CNBC that, by sending in their wire transfer early on Thursday, they were able to successfully move their money. Others who took action later in the day are still waiting — in some cases, for millions of dollars — and are uncertain if they'll be able to meet their near-term obligations.
Regardless of if and how quickly they're able to get back up and running, companies are going to change how they think about their banking partners, said Matt Brezina, a partner at Ford Street Ventures and investor in startup bank Mercury.
Brezina said that after payroll, the biggest issue his companies face is accessing their debt facilities, particularly for those in financial technology and labor marketplaces.
"Companies are going to end up diversifying their bank accounts much more coming out of this," Brezina said. "This is causing a lot of pain and headaches for lots of founders right now. And it's going to hit their employees and customers too."
SVB's rapid failure could also serve as a wakeup call to regulators when it comes to dealing with banks that are heavily concentrated in a particular industry, Williams said. He said that SVB has always been overexposed to tech even though it managed to survive the dot-com crash and financial crisis.
In its mid-quarter update, which began the downward spiral on Wednesday, SVB said it was selling securities at a loss and raising capital because startup clients were continuing to burn cash at a rapid clip despite the ongoing slump in fundraising. That meant SVB was struggling to maintain the necessary level of deposits.
Rather than sticking with SVB, startups saw the news as troublesome and decided to rush for the exits, a swarm that gained strength as VCs instructed portfolio companies to get their money out. Williams said SVB's risk profile was always a concern.
"It's a concentrated bet on an industry that it's going to do well," Williams said. "The liquidity event would not have occurred if they weren't so concentrated in their deposit base."
SVB was started in 1983 and, according to its written history, was conceived by co-founders Bill Biggerstaff and Robert Medearis over a poker game. Williams said that story is now more appropriate than ever.
"It started as the result of a poker game," Williams said. "And that's kind of how it ended."
— CNBC's Lora Kolodny, Ashley Capoot and Rohan Goswami contributed to this report.
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Tech Startups
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Africa contributes less than 3% of the world’s energy-related carbon dioxide emissions but the continent will be one of the most impacted by the adverse effects of climate change. Some explanations for Africa’s vulnerability include poor diffusion of technologies and information relevant to supporting adaptation, usually provided by clean or climate tech companies.
Despite the precise role that technologies such as renewable energy, recycling and green transportation play in improving the world’s environmental footprint, raising venture capital has proved chiefly hard for the companies behind them in years past. However, investor appetite has been enhanced in recent times. In 2021, climate tech startups raised over $60 billion, about 14% of VC dollars raised that year; in Africa, clean tech accounted for 15% to 18% (about $863 million) of the total funding that venture capitalists poured into the region last year in companies such as Sun King, making clean tech second only to fintech.
Development finance institutions (DFIs), including the British International Investment (BII), FMO and Norfund, are active investors in the clean tech space, as are clean tech–focused funds such as All On, Ambo Ventures and Catalyst Fund. In the latest development, Equator, a climate tech venture capital firm focused on sub-Saharan Africa, has reached an initial close of its first fund with $40 million in commitments. Its limited partners include BII, the Global Energy Alliance for People and Planet (GEAPP), the Shell Foundation and impact investor DOEN Participaties, according to the company’s statement.
Equator backs seed and Series A startups across energy, agriculture and mobility sectors. On a call with TechCrunch, managing partner Nijhad Jamal said the firm is interested in these sectors because of numerous untapped market opportunities. He also noted that deploying capital at seed and Series A stages allow Equator to act as a bridge between startups’ earliest checks (at the pre-seed stage) and growth capital, which could come from its limited partners.
“The challenge for many of those larger funds and international investors is that they tend to come in when things have already been de-risked and proven out. At the seed and Series A stage, there is a shortage of capital and institutional investors supporting companies at that stage of their life cycle and journey,” commented Jamal. “The hope is that by investing at these stages, we can mobilize capital at Series B and growth equity stages from large regional funds, global climate tech funds, and corporations excited about the sector and region.”
Jamal, before joining Equator, had several stints with asset manager BlackRock and impact investment Acumen Fund, where he managed the firm’s clean tech group. At Moja Capital, a personal fund he founded, Jamal made seed and Series A investments across several sectors, including those central to Equator’s strategy: clean energy, agriculture and mobility. SunCulture, a Kenya-based off-grid solar tech for smallholder farmers, was one of Jamal’s investments. Equator made a follow-on investment in SunCulture and other startups backed by the firm’s operators, including Morgan DeFoort, partner at Equator and founder of Factor[e] Ventures; Apollo Agriculture; Odyssey Energy Solutions; and Roam.
According to Jamal, Equator wants to back tech-enabled ventures that bring some element of technology, whether hardware or software or business model innovation, to bear in a region where innovation might be lacking. As such, the fund will pay attention to technical founders with domain expertise who are building solutions around clean energy, agriculture and mobility, and who ultimately address the impact of climate change on income inequality in Africa.
“Climate change and income inequality are proven to be directly correlated. Data shows that the gap between the economic output of the world’s richest and poorest countries is 25% larger today than it would have been without global warming,” Jamal remarked. “So climate change has worsened global income inequality and we’re seeing that very acutely in sub-Saharan Africa. And the ventures and innovation that we’re investing in is a material component to addressing some of these challenges.”
Equator, hoping to make up to 15 investments throughout this fund’s life cycle, says it participates in round sizes of $10 million or less, which is typical for pre-Series B clean tech startups in sub-Saharan Africa. For seed stages, the clean tech VC invests between $1 million and $2 million; for Series A stages, it cut checks between $2 million and $4 million. The firm, which has teams in Nairobi, Lagos, London and Colorado, will also leverage support from Factor[e] Ventures, an organization of venture builders and pre-seed investors. While both companies operate independently, Equator and Factor[e] collaborate on sourcing deals and undertaking due diligence, and they share a post-investment support platform to provide value to portfolio companies as they scale.
“The reality is that capital alone is only part of the problem. Ventures also need highly active and engaged investors to help them reach the growth stage of their trajectory,” added DeFoort.
In all, Equator will be expecting to leverage the current shift in the global narrative about climate tech’s importance and its impact on climate change. The investments coming into the sector, despite lagging fintech by a mile, are progressively being funneled into reducing the cost of technologies such as solar systems and batteries while enabling better access for individuals and businesses with pay-as-you-go models. Jamal says these trends could make the sector more investable and, in many ways, more exciting. “We’re optimistic about the role that we have to play in this ecosystem. I hope this is the first of many funds that continue to follow in these footsteps because more capital, talent and innovation are needed to develop more holistic solutions to the challenges in the climate space.”
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According to the survey, financing for African fintech companies increased by 894 per cent in 2021 compared to the previous year. This growth rate was the highest over the previous five years and was second highest in the Middle East, Africa, and Pakistan area. As per the report, Sub-Saharan Africa received USD 1.56 billion in funding, by far the most in the area. “Startups in Nigeria accounted for a third of all money invested in fintech in 2021, making it a key fintech hub in the Middle East, Africa, and Pakistan. Fintech accounted for 71% of all venture financing in Nigeria, it stated. Global fintech funding, according to the report, increased to a new high of USD 131.5 billion in 2021. “There were 235 fintech unicorns, 34 of them were born in Q4-2021. Fintech firms now account for more than 20% of the value of all tech unicorns, up from 15% the year before, the report stated. According to the report, the fast-expanding industry includes a number of interesting sub-segments, including peer-to-peer (P2P) lending, equity crowdfunding, digital payments, e-money, international remittances, and digital money. On the demand side, it said that MSMEs have played a key role in the expansion of the fintech industry. The reports states that Kenya, Nigeria, and South Africa are among the African nations spearheading the shift to digital payments, with infrastructure and regulatory frameworks that support growth already in place or rapidly emerging. The article states that the payments segment dominates the fintech market and Nigeria is a significant player in the financing of tech startups in Africa. It stated that with 88.4% of Nigerian tech firms situated there, Lagos is one of the continent’s key startup hotspots. According to a Mastercard report, the number of fintech companies in Africa increased by 81% in 2021, with South Africa, Nigeria, and Kenya emerging as the continent’s major centres. This information was provided by Mastercard, a multinational technology corporation in the payments sector, in its latest research titled “The Future of Fintech: Rapid Growth Smart Capital” on the state of fintech in African countries. The report found that there were 311 fintech startups in Africa in 2019 and 564 in 2021. According to the report, the industry was responsible for 27% of the record-breaking volume of deals concluded and 61% of the USD 2.7 billion invested in Africa in 2021.
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Venture capital (VC) firm Lifeline Ventures today announced a fresh €150 million ($163 million) fund aimed at early-stage startups across Finland.
Founded in 2009, Helsinki-based Lifeline Ventures has invested in around 115 companies to date, with more than a dozen exits to its name including activity-tracking app Moves, which Facebook acquired back in 2014; food delivery company Wolt, which DoorDash snapped up in a $8.1 billion all-stock deal two years ago; and gaming giant Supercell, which Tencent doled out $8.6 billion for a majority stake in 2016. Lifeline Ventures has also backed unicorns such as open source enterprise infrastructure company Aiven, which hit a valuation of $3 billion last year.
Lifeline Ventures typically invests at the “angel” and seed-stage, with some follow-on investments in the Series A realm. While “angel” usually refers to wealthy individuals investing with their own cash, in this instance the company means that it sometimes backs companies at a super-early stage, before they have anything meaningful to show from a product perspective. Such investments have included mixed reality headset maker Varjo and smart ring maker Oura, which recently claimed a valuation of $2.55 billion.
“We invested in Oura ‘pre-PowerPoint’ — meaning we’ve been there before an actual product was ever made,” Lifeline Ventures founding partner Timo Ahopelto told TechCrunch.
With its new fund, the company says it will look to make investments ranging from anywhere between €150,000 and €2 million. And while the vast majority of its investments (95%, TechCrunch is informed) are aimed at domestic Finnish startups, it has been known to take stakes in companies hailing from elsewhere, including Germany, France, the U.K., and U.S. when invited to do so.
Sowing seeds
While VC funding has generally declined across all stages, data suggests that earlier-stage funding has been a little more resilient. Certainly, we’ve seen a spate of fresh early-stage funds emerging in Europe of late in the past few months alone. For example, London’s Playfair Capital closed a $70 million pre-seed fund, while France’s Emblem and Ovni Capital each announced new €50 million ($54 million) funds. Elsewhere, the U.K’s Amadeus Capital Partners partnered with Austria’s Apex Ventures for a €80 million ($87 million) fund targeted at early-stage deep tech startups.
“The early stage is the most recession-proof business, both for founders and investors, as you are likely to always grow faster than markets can go down,” Ahopelto said.
Lifeline Ventures’ latest fund represents its fifth to date, with its inaugural €29 million fund closing in 2012, followed by fund two in 2014 which amounted to €17 million; a €57 million fund three in 2016; and a €130 million fund three years later. While a lot has happened in the world since 2019, Ahopelto says that it’s pretty much business as usual from an investment perspective.
“Nothing has really changed for us in terms of investment strategy — we are still the first investors in many cases,” he said. “We’re still seeing lots of startups being founded, in Finland specifically. The ecosystem in Finland is in its early days and will grow two-to-three times in terms of quality and size during the next five to ten years. There is room for that sort of growth in Finland.”
Lifeline Ventures’ most recent investment was in Origin by Ocean, an Espoo-based startup working to rid the oceans of harmful algae by transforming it into functional goods spanning food, cosmetics, textiles, and more. And this is one area in particular that Ahopelto reckons will continue to thrive in the years ahead.
“We feel that climate startups will raise their heads even more as time passes,” he said. “Similarly, we will see more climate funds investing in the sphere.”
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A Japanese fund focused on early-stage, Asian deep tech startups is doubling down on the opportunity, despite a wider slowdown investing in moonshots globally. Tokyo-based Beyond Next Ventures is targeting up to ¥25 billion (about $168 million) for BNV Fund 3, its third fund, and today, the venture capital firm said it completed a first close of ¥10 billion (approximately $67.7 million — money it will be using to invest in deep tech startups in fields like robotics and biotech.
The firm aims to close the fund by March 2024 and plans to use the money for seed, Series A and later-stage rounds in around 25 companies, according to CEO of Beyond Next Ventures Tsuyoshi Ito. Its check size per investment is between $670,000 and $2 million, or up to $13 million across multiple rounds per company. For some context, that is about triple the maximum limit compared to the previous funds.
The Japanese VC believes the lack of later-stage funding in the country limits startups from going global, and it hampers overall valuations.
According to a 2021 report by the World Bank, the volume of later-stage investments in Japan is behind compared to Europe, North America and other countries. Ito told TechCrunch one of the reasons for the lack of later-stage funding in Japan is that limited partners like institutional investors have only recently participated in active investment in VC firms.
That means the fund size of VC firms in the country has been relatively small, so many VCs had to focus on seed and early-stage startups. Another cause is that the Tokyo Stock Exchange Growth Market allows companies with a market capitalization of several billion yen, leading many startups to early IPOs to raise funds, Ito explained.
But the funding for middle- to later-stage startups is increasing, so startups don’t hasten to go public as before, Ito noted.
To offer continuous financial support for startups on a worldwide scale, Beyond Next intends to increase later-stage investments, such as Series C and Series D, and additional follow-on investments through the latest fund. On top of that, it will extend the fund’s operational period to 11 years, one year longer than the previous fund, and add an extension of up to three years with the consent of the limited partners.
Beyond Next seeks deep tech startups emerging from universities and research institutions, which need entrepreneurial strategies to commercialize their innovative technology and science inventions. The VC firm works on matching research teams with more than 3,000 business and management experts.
Including this latest fund, it will have more than $316 million of assets under management.
Its limited partners of BNV Fund 3 include existing backers Organization for Small and Medium Enterprises and Regional Innovation, MUFG Bank, Dai-ichi Life Holdings and Tokyo Century, and new investors SMBC Nikko Securities, Mitsubishi UFJ Trust and Banking and FFG Venture Business Partners also put funds into the round.
In 2020, the VC opened its regional office in India. The firm says the startup market in India is “growing remarkably, which makes it an attractive medium- to long-term business expansion destination for Japanese portfolios,” Ito explained.
Founded in 2015, Beyond Next set up a first fund ($37 million) in 2015 and a second fund ($111 million) in 2019. It invested in nearly 80 healthcare, agri-food and deep tech companies in Japan and India. The Japan-based VC has exited some of its portfolios across Fund 1 and Fund 2 via initial public offerings (Susmed and QD Laser) and mergers and acquisitions (Repertoire Genesis and GigIndia).
>“Digital Therapeutics (DTx) is now gaining momentum in Japan,” according to Ito. One of its portfolios, CureApp, which raised about ¥7 billion ($47 million at today’s exchange rate) from Carlyle last year, has built a therapeutics app that allows users to receive medical device approval and insurance reimbursement. Susmed, which has developed a therapeutic app for patients with insomnia, is the first Japanese IPO in the digital healthcare sector, Ito noted.
Beyond Next also invested in Regional Fish Institute, a food tech startup that uses genome-editing technology to breed fish faster than usual; Elephantech, an ecofriendly print circuit boards manufacturer; and iCare, a Japanese healthcare management provider.
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The team behind HealthXCapital, which invested in and helped health tech startups scale up, has joined Singapore-based Jungle Ventures. Seemant Jauhari, who led HealthXCapital since it was founded eight years ago, is now a partner at Jungle, where he will invest in healthcare startups in Southeast Asia and India.
HealthXCapital’s portfolio includes RED.Health, Homage, Medfin and THB. The firm has fully deployed its first fund and will no longer make any further investments.
At Jungle, Jauhari will take a similar approach as he did at HealthXCapital, combining capital with strategic partners in the healthcare sector to help startups toward validation and commercialization. These partners include providers, distributors and IT system integrators.
Jauhari noted that about 30% of the global population live in India and Southeast Asia, but the regions are very underserved, with just 4% of the gross domestic product going toward healthcare. That’s where he sees an opportunity for digital healthcare and new business models to increase access to healthcare.
As an example of how Jungle has worked with healthcare startups, Jauhari said one of its portfolio companies needed to expand from five to 12 cities. Securing supply from providers was crucial to meet demand, so Jungle’s board partners worked with the startup to create a time-bound group level plan. Then, based on that plan, it used its strategic network to facilitate crucial partnerships across healthcare providers. Then an operational partner helped the startup run a unit economics optimization initiative that improved margins by almost 20% to 25%.
Jauhari added that key trends emerging in Asian health tech include large-scale adoption of digital platforms in markets like India, Singapore, Indonesia and Vietnam and specialty care growing by taking a “phygital” approach through a combination of brick-and-mortar locations and online platforms.
In terms of valuations, Jauhari said it has not been a major concern for the healthcare sector since it has been underfunded especially at venture growth stages.
“Case in point, in the last five years, of the 2000+ healthcare startups in India and Southeast Asia, less than 10% reached the venture growth stage and less than 20% of the total capital invested in the region has been invested in venture growth,” he said. “Hence, we see a clear opportunity to invest in an undercapitalized stage and region. Combining this with the resilience of the healthcare sector, we believe that sustainable and scalable businesses will drive steady valuations.”
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Dear Quartz Africa readers,
Disrupt Africa released its annual African Tech Startups Funding report showing that for the first time ever tech funding on the continent has passed the $3 billion mark. While this might not be as big a leap as in 2021, when the sector passed both the $1 billion and $2 billion mark, it’s a sign of continuous investors’ confidence in the sector’s opportunities.
The report cautions that measuring this kind of funding is not an exact science, as the definition of “African startup” itself remains controversial. “In the clearest scenario, an African startup would be headquartered in Africa, founded by an African, and have Africa as its primary market. This, however, is rarely the case,” the document states.
But tracking this one particular source of startup funding data over time shows the impressive growth of the African startup sector. When Disrupt Africa put out their first edition of the report in 2015, 125 tech startups had raised $187 million that year. Less than a decade later, the number of startups has grown by 406% and funding raised has increased by close to 1,700%.
Fintech continues to dominate funding. It accounts for 43.4% of the total raised by the continent’s startups as well as counting for some of the largest deals, but there was also growth across all sectors including in other leading sectors such as e-commerce, e-health, logistics, edtech, energy, agri-tech, and transport. The “big four” markets of Egypt, Kenya, Nigeria, and South Africa still dominate startup funding—accounting for 76% of funding this year, down from 80% last year—but other startup hubs are also starting to bloom with a record-breaking year of funding for both Ghana and Tunisia.
African startup funding overall makes up just a tiny fraction of global startup funding, but Disrupt Africa’s figures show that, despite a global downturn in investments, Africa has held its own.
—Ciku Kimeria, Africa editor
Nigeria and South Africa shone at the Grammys. Nigerian artist Tems earned her first Grammy award for her contribution to Future’s hit single Wait For U, while Jerusalema singer Nomcebo Zikode won an award together with Zakes Bantwini and Wouter Kellerman for their song Bayethe, Bonface Orucho reports.
An online platform is helping drought-stricken Somalis. Faustine Ngila speaks to founder and CEO Ahmed Mohamud Yusuf about how Mogadishu-based Hormuud Telecom is helping donors reach millions of people facing hunger and starvation.
An Egyptian fintech reached a billion-dollar valuation. MNT-Halan raked in $400 million in a hybrid equity-debt financing round, becoming Africa’s first unicorn since November 2021. Seth Onyango explores the six-year-old startup’s progress.
Senegal’s soccer success is boosting its global image. Fresh off a recent victory at the African Nations Champions, Senegal’s Teranga Lions are now the holders of Africa’s two most prestigious soccer titles, after winning Africa Cup of Nations last year. Meron Demisse writes about the larger implications for Brand Senegal.
Sendmark, a Johannesburg-based software startup tackling email impersonation issues raised $7 million in Series A funding. The funding round was led by Atlantica Ventures, with participation from Allan Gray, E-Squared Ventures, Fireball Capital, Endeavor Catalyst, 4Di Capital, Endeavor Harvest, Alpha Private Capital, and Kalon Venture Partners.
Egyptian healthtech startup, Yodawy, which provides an online pharmaceutical platform for patients and pharmacies, raised $16 million in a series B round. The funding round was co-led by Global Ventures and Delivery Hero Ventures with participation from AAIC Investment, Dallah Al-Baraka, Middle East Venture Partners (MEVP), C Ventures, and P1 Ventures.
It will be a while before the total destruction of the earthquake in Turkey and Syria comes into focus, but its impact has already been devastating.
Soon after the quake hit on Monday (Feb. 6), the United States Geological Survey estimated that there was a 47% chance that the final number of fatalities in central Turkey and northwestern Syria will land between 1,000 and 10,000. By Thursday (Feb. 9), more than 20,000 people had been reported dead.
Here are some other ways to contextualize the catastrophe.
17,500: Death toll during the last major 7.8 magnitude earthquake that hit Turkey in 1999
2000 years: Age of the Gaziantep Castle, used by Romans and Byzantines, destroyed by the quakes
30%: Chance that the loss to the Turkish economy is between $10 billion and $100 billion, per the USGS
18.85: Value of the Turkish lira against the US dollar, a new low
Zimbabwe is losing teachers and doctors to the UK. Al Jazeera’s Ashley Simango reports that more than 4,000 nurses and doctors departed Zimbabwe since February 2021, with the UK being the top destination as the former colonial power faces a dire doctor and teacher shortage.
Mali cozied up to Russia. Mali’s foreign minister’s proclamation that “Russia is here on demand by Mali” clears any doubt over rumors that Moscow is now Bamako’s preferred partner. BBC’s Beverly Ochieng explores what Russia is doing in the Sahel.
China risks causing a shortage of African donkeys. A spike in demand for ejiao, a traditional Chinese remedy made from collagen from donkey hides, is fueling an illicit trade that poses a threat to Africa, The Conversation’s Lauren Johnston writes.
Tems reflects on her night at the Grammys. From meeting her personal idol Mary J. Blige, to why she wore a Vivienne Westwood design, Tems’s interview with Vogue’s Andre-Naquian Wheeler offers a glimpse into the life of the award winner.
Get a fully-funded scholarship for your masters. The Mo Ibrahim Foundation is offering one student the opportunity to pursue a Master’s degree in development policy and politics at the University of Birmingham. Apply now. (Mar. 31)
Get recognition as a young African leader. The Kofi Annan Foundation’s Women & Youth in Democracy (#WYDE) Program 2023 for young African leaders is now open for nominations. (Mar. 10)
This week’s brief took you to 🇳🇬, 🇿🇦, 🇸🇴, 🇸🇳, 🇿🇼, 🇲🇱, 🇸🇩, 🇬🇭, 🇰🇲, and 🇪🇬
Our best wishes for a productive and ideas-filled week ahead. Please send any news, comments, suggestions, ideas, Grammy hits, and unicorns to africa@qz.com. You can follow us on Twitter at @qzafrica for updates throughout the day.
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In June, TechCrunch highlighted an under-the-radar boom happening in HR tech: With the tenacity of remote work, more and more business leaders are seeking out tech to manage remote teams — and HR tech startups are rising to the challenge.
The good news (per a GP Bullhound report cited in that piece): HR tech startups are doing better at fundraising than startups in other industries. But this also means the space is getting – and will continue to get – more crowded.
So how are the most successful HR tech startups breaking through the noise? And what can startups in any industry learn from them? For answers, I spoke to a dozen founders and marketing leaders at this year’s HR Tech Conference. In our conversations, the following five themes came up over and over.
Be bold: “Different is better than better”
Gal Fontyn, VP of global marketing at people enablement platform Leapsome, cited Sally Hogshead when asked how to stand out from the crowd: “Different is better than better,” he said. He noted that in the HR tech space, “a lot of companies use similar brand visuals and . . . the same kind of jargon that doesn’t mean anything.”
He wasn’t the only one. Jake Sorofman, CMO of people analytics platform Visier, said, “Too often, marketing suffers from compromise, defaulting to directions that are safe, expected, and conventional.” The impact? A dilutive effect on marketing investments.
The role of HR in enterprises is becoming more strategic. This means that selling effectively requires a less-aggressive approach.
“You need to have the courage to get a bit ahead of your skis from time to time,” he added.
Of course, “be different” is easier said than done. Even an article like this aims to help readers learn from — and imitate — what works. Still, that the imperative to differentiate came up so often can serve as validation for marketing leads in need of evidence to support their most exciting ideas. Go ahead and send your CEO this link. And then get to work on that quirky LinkedIn campaign you’ve been dying to try.
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Tough economic conditions and the funding slowdown for tech startups is leading to more layoffs among area companies.Pear Therapeutics, which is developing FDA-approved software treatments for addiction and other ailments, cut 25 people, or 9 percent of its workforce, according to a securities filing this week. The move comes after Pear merged with a special purpose acquisition company to go public in December, and its stock price has dropped by 85 percent. Raising additional funding from investors now is all but impossible, analysts said.Pear raised $175 million and went public by merging with a SPAC, but had planned to raise as much as $400 million. Now it is making making cuts to “extend the company’s cash runway.” The cost-cutting plan “includes external and internal cost reductions in almost all areas of the company,” Pear said in the filing.The Boston company had $137 million in cash and short-term investments on its balance sheet at the end of March, down from $175 million three months earlier. Pear is expected to report its second-quarter results in a few weeks.Get Innovation BeatBoston Globe tech reporters tell the story of the region's technology and innovation industry, highlighting key players, trends, and why they matter.When it initially filed to merge with a SPAC a year ago, Pear projected that it would have three software treatments in the market, 20 more treatments in development, and revenue of $125 million by 2023.Now, the company appears to be cutting back on that plan. Layoffs and further cost-cutting will hit “pipeline candidates, discovery programs, business development, and the company’s dual platform in order to prioritize certain of its commercial efforts,” Pear said in its filing.“Our vision for bringing dozens of [prescription digital therapeutics] to the market ... remains completely unchanged,” chief financial officer Christopher Guiffre told the Globe in an e-mail. “Our commitment to that vision caused us to take significant steps to secure our future in a very difficult period in the capital markets.”Pear could speed up future product development if the stock market recovers and the company can raise more backing, Credit Suisse analyst Judah Frommer noted in a report on Wednesday.“The difficult decision was made in the interest of preserving capital so that pipeline projects to build out the broader platform can be revisited once the balance sheet is on better footing,” Frommer wrote.Pear’s cuts followed many others around the region’s tech scene, including layoffs at fitness-tracker maker Whoop and connected exercise equipment maker Hydrow.Companies that could raise large rounds from venture capital investors for the past few years are now finding that backing is much harder to find, leading to belt-tightening across the industry. And the stock market crash among tech companies makes going public all but impossible for now. High inflation and supply chain shortages have also cut into sales at some companies.The area’s once red-hot cybersecurity industry is also making cutbacks.Snyk, which focuses on uncovering software vulnerabilities and was valued at $8.5 billion last year, cut 30 people, or 5 percent of the company, in a cost-saving move last month. The startup now plans to become cashflow-positive in 2024, a year earlier than previously targeted, chief executive Peter McKay noted in a blog post.The Boston company made the layoffs and reorganized itself “in order to fortify Snyk to be a more resilient business moving forward, better able to withstand the uncertainties thrown at us by this or any future macro environment,” McKay wrote. As recently as May, McKay was talking about adding jobs this year.Aura, which offers a cybersecurity protection service for consumers, cut 70 people, or 9 percent of its workforce in June. The layoffs came after the company cut a deal with MetLife to market its service as an employee benefit, making some of its own efforts redundant. “As a result of this realignment, we made the difficult decision to let go about 70 employees worldwide,” a spokesperson said.Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.
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Climate change impacts women and communities of color disproportionately. Over 1.3 billion people in low- and middle-income countries across the globe live below the poverty line, with 70% of those being female.
Increased exposure to heat, poor air quality, flooding and wildfires have been connected to health problems like anemia, malnutrition and pregnancy complications. Research also finds that women and girls are at a higher risk of physical, sexual and domestic violence following climate disasters.
Zoey Dash McKenzie, founding partner at Public Ventures, wants to do something about this and has launched a $100 million impact fund that seeks out nascent life science and clean tech startups, particularly in Canada, that are focused on “improving health equity and supporting climate preparedness for underserved communities.”
“Beyond just being an impact fund, we are really breaking away from conventional structures and venture capital submitted in alignment with the needs of accelerating early-stage science,” Dash McKenzie told TechCrunch. “We’ve decided to employ a waterfall structuring, make assessments on a deal-by-deal basis and then return funds back to our LPs earlier on. We’re accelerating capital velocity at the early stage, when it’s needed most, so we really sit right in the middle of government grants and traditional venture capital.”
She’s not alone: In recent years, impact funds have attracted interest from venture capital firms. Public Ventures joins the likes of Planeteer, Salesforce Ventures, Positive Ventures, and Envisioning Partners recently closing on big and small funds aimed toward positively impacting the world.
Dash McKenzie described working on the fund as coming “full circle.” She studied health and environmental sciences in college and went on to model in New York before joining the entrepreneurial ranks with a communication SaaS platform.
The fund is domiciled in the U.S. but will concentrate mainly on Canada. She explained that Canada benefits from a lot of research funding and has “some of the best hospitals and universities in the world.”
The kind of impact investing Public Ventures intends to do will also “address an issue where Canadians have a bit of a challenge in terms of scaling up the innovation,” Dash McKenzie said.
“We will be very thoughtful in terms of the types of investments that we make as opposed to sprinkling it across various verticals,” she added. “We aim to kind of stack our investments so that they have an amplified impact in the real world. We’re going to come up with a few strategies on how we can pull together a consortium of startups from all over the world to have a meaningful output.”
Meanwhile, Dash McKenzie is at the outset of the process — she says she has some interest, though hasn’t raised money yet; however, she was invited to participate in a government program where they’ve allocated over $50 million for emerging fund managers. She is waiting for confirmation on whether this will be an anchor limited partnership for the fund.
She intends to create a venture studio-like experience for startups. For example, if a female scientist or person of color has a research project that could be a breakthrough, Public Ventures can assemble a roundtable of experts, both in business and in the scientific field, to support them in building up a project that could be commercially viable.
“In some ways, that breaks down the barriers in terms of accessing capital, accelerating their innovation and then also broadening their networks,” Dash McKenzie said. “We’re aiming to do an open call for the fund in the fall so we will be ready to not only identify some really good startups outside of our current pipelines, but to invest before the end of the year.”
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- VCs and an analyst told CNBC that Silicon Valley Bank's collapse is unlikely to affect fundraising for tech startups in Southeast Asia.
- "I think it's a watch out, but I don't think that contagion spreads," said David Gowdey, managing partner at Southeast Asian venture capital firm Jungle Ventures, on CNBC's "Squawk Box Asia."
- Constellation Research analyst Ray Wang also told CNBC said that VCs will still be able to fund tech entrepreneurs.
The collapse of U.S.-based Silicon Valley Bank is unlikely to hit fundraising for tech startups in Southeast Asia, venture capitalists and an analyst told CNBC.
The bank served many venture capital firms and venture capital-backed startups. But last week depositors rushed to withdraw their funds as panic over the bank's financial situation spread, causing it to collapse.
related investing news
"I think [the impact on fundraising is] a watch out, but I don't think that contagion spreads," said David Gowdey, managing partner at Southeast Asian venture capital firm Jungle Ventures, on CNBC's "Squawk Box Asia" on Tuesday.
"I think Secretary Yellen and the government did a fantastic job of stepping in and taking away a lot of that risk, creating a lot of stability in the markets," he said. On Sunday, U.S. officials including Treasury Secretary Janet Yellen announced plans to backstop depositors of the bank.
Gowdey said SVB was the firm's primary bank, but added, "We pull a lot of that money into Southeast Asia, into Singapore banks. And so for us, the exposure to SVB was not large."
Golden Gate Ventures, which also invests in Southeast Asian startups, said the SVB fallout is an opportunity for the region.
"This has actually been helpful to Southeast Asia. It now looks like a golden child to U.S. investors. Investors are starting to say: I want to diversify to different bank accounts, different geographies, different currencies," Vinnie Lauria, managing partner at Golden Gate Ventures, told CNBC's "Street Signs Asia" on Tuesday.
"And this is where Southeast Asia has the time to shine, in light of the situation," added Lauria.
When asked if the situation makes fundraising more difficult, Gowdey said funds in Southeast Asia are well capitalized.
"I think it's being selective because of the macro environment. [Accessing] the capital will get harder, but the capital is there and it's getting deployed," said Gowdey.
VC firms previously told CNBC that economic uncertainties have made them pickier with investments in 2023.
"[In terms of] access to capital to tech entrepreneurs, the VCs will still be able to fund them," Ray Wang, founder and chairman of Silicon Valley-based Constellation Research, told CNBC's "Street Signs Asia" on Tuesday.
"But it's the question about taking bank loans, having operating capital, being able to actually run operations and having a bank that understands how a technology company works or biotech company works. That's really what's being lost here," added Wang.
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Tech Startups
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Great news for anyone who’s ever been told to log off and touch grass! Whether you’re a natural green thumb or not, it’s easier than ever to grow plants inside. Don’t know when to water your plants? There’s an app for that. Need a constant stream of fresh basil for all your pesto needs? Hydroponics will solve your problems. Some tech startups are even manipulating the DNA of plants to make them bioluminescent, or better at purifying the air. When it comes to techy gifts for plant lovers, the world is your oyster plant.
This article contains links to affiliate partners where available. When you buy through these links, TechCrunch may earn an affiliate commission.
I have a bit of a plant problem. I have exactly 26 plants in my one-bedroom apartment, and I can tell you that precise number because I use a plant-watering app called Greg, and I counted them all. Each of my plants has its own custom watering schedule constructed by the Greg app, taking into account numerous factors: the species of plant, the size and material of its pot, its proximity to a window, which direction the window faces, how close it is to a heater or AC unit… the list goes on. It would be pretty hard to remember the specific needs of each one of my plants, but I don’t even have to think about it. Greg tells me my Monstera is thirsty, and I listen.
But Greg can even learn from your own behaviors — for example, maybe you’ve noticed that your philodendron’s leaves are super droopy, but per Greg, you’re not supposed to water it for a few more days. Trust your intuition. That plant needs water! And when you tell Greg that you watered your plant early, it’ll learn and grow, just like your plants.
The market for plant apps is a bit saturated — I hopped on the Greg train early because I wrote about them when they first raised seed funding (yes, a plant app raised seed funding), and I fell in love with the app. But Planta is perhaps more popular than Greg, and offers similar services.
I’ve tried out Planta for the sake of comparison, and hey, it’s a good app. Unlike Greg, it has a light meter, and its watering schedules are a bit more precise, giving you alerts to mist plants or fertilize them too. But Planta operates by grouping your plants depending on which room of your house they’re in. This doesn’t quite work for me, though others might find it useful. Yeah, my snake plant is in the same room as my cacti that sit directly in a brutally hot south-facing window, but the snake plant is 15 feet back from the window, and thus needs a bit of a different watering regimen.
Each app has its own built-in community forum, where you can pose questions about your plants to a community of experts. As an anxious plant owner who still thinks that “bright indirect light” is subjective, I’ve found the forums very helpful.
Both Greg and Planta charge a monthly or yearly fee for their services — Greg costs $30 per year, while Planta costs $35.99 for the year. Whichever you buy for the plant lover in your life, you can’t go wrong.
Hydroponics: Click + Grow
Home hydroponics have been popular for quite some time, and they remain the kind of gift that keeps on giving. Every time your loved one sprinkles their homegrown cilantro on their tacos, they will think of you. For less expensive, consumer-grade growing systems, you’re going to come across AeroGarden and Click + Grow, but honestly, I just think the Click + Grow models look much more modern. Then again, my grandma has had an AeroGarden since I was a kid, and she’s happy with it, so you have options. But when I decided to buy my mom a hydroponic garden one year, I went with Click + Grow, and we’ve been pleased with the results.
Like its competitors, Click + Grow sells seed pods — perfectly sized clumps of soil with seeds in them — that you drop into the machine. Then, all you have to do is fill the water reservoir every once in a while. Most Click + Grow models aren’t app-compatible, but they have a built-in clock that’ll turn the grow lights on and off. If you really want to get precise with it, you can buy some automated plugs to customize your light schedule.
Click + Grow can grow edible veggies like tomatoes, peppers and kale, but you need to have a large system to be able to grow anything quite substantial, or else you can only enjoy the novelty of eating two or three home-grown cherry tomatoes. That’s why these systems are best used for herbs, which can spice up your meal with just a few leaves.
Though it may be more romantic to give your partner an actual bouquet of flowers, you can indeed buy flower pods for your Click + Grow. That bouquet may last a week or so, but what if you could continually grow your own petunias? (My mom, for one, has preferred to grow petunias instead of lettuce.)
Click + Grow’s least expensive model retails for about $100, but they often go on sale — at the time of writing, you can grab it 25% off. The Smart Garden 3 can only grow three pods at once, but it’s small and chic enough to sit on your kitchen counter without taking up too much space.
Indoor farming: Rise Gardens
If you’re willing to shell out a serious chunk of change to jumpstart your new life as an indoor farmer, a countertop Click + Grow or AeroGarden won’t do.
We’ve been following Rise Gardens since their seed round (again, the puns write themselves) in 2020, and after making over a million dollars in sales, they raised another $9 million round the following year. Some of these more advanced systems can cost nearly $1,000, like the Gardyn, which is absolutely beautiful, but far out of most people’s price range. Rise Gardens has some hefty machines too, but you can buy the 12-pod model for $349, giving you more bang for your buck than a Click + Grow.
Rise Gardens’ larger models can break four figures, but they’re designed to look like a living piece of furniture, made of steel and wood. If you have the money, it’s like buying a piece of artwork that you can also eat? Is that weird?
These systems are easy to maintain — just fill the water reservoir once per week — but more advanced home gardeners can up the ante if they get bored with the luxury of fresh basil on demand.
“We wanted something that would be flexible because once you have mastered a hobby, you will get bored,” said founder Hank Adams in a previous interview with TechCrunch. “You can start at one level and swap out tray lids to grow more densely. We have a microgreens kit you can add, or add plant supports for tomatoes and peppers. You can also build a trellis to vine snap peas.”
Plants that defy nature: Lightbio and Neoplants
So, maybe you want to keep things simple and buy your loved one a plant. Sure, I could tell you that a purple inch plant is an easy way to bring color into the home, or that a snake plant is really easy to keep happy (but it’s toxic to pets, so beware!). But what if you could buy a freak-of-nature, Mewtwo-esque plant that has been bioengineered to be cool as hell?
Lightbio, an Idaho-based startup, just got approval from the US Department of Agriculture to sell its glow-in-the-dark petunias. The company genetically engineered these plants to glow by using the DNA of a bioluminescent mushroom. Glowing plants aren’t a new discovery — one of the founders, Dr. Keith Wood, was part of a team that first made a plant glow in 1986, using firefly genes. But Lightbio might be the first company to make these plants more readily available for purchase.
You can sign up now to get on the waitlist to buy your very own bioluminescent plant, but the company told TechCrunch that its recent USDA approval will speed things up significantly.
If you’re more interested in clean air than a firefly-like plant, Neoplants has engineered a plant that’s designed to help you breathe easier at home. The company claims that one of their plants has the same ability to purify air as 30 normal houseplants (this is great news for me, someone who — as previously established — has precisely 26 plants).
As our own Romain Dillet explained when he interviewed Neoplants’ founder last year, these plants target a specific kind of indoor pollutant that tends to evade traditional air purifiers. While plants usually metabolize carbon dioxide, Neoplants’ Neo P1 has modified DNA that allows it to metabolize air pollutants.
You can get your very own Neoplant for $179, but you’ll need to get on a waiting list before you can get your hands on the world’s wackiest air purifier.
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Tech Startups
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Climate change is the most pressing crisis for humanity.
Startup founders and investors want to help find solutions.
Climate entrepreneurs and VCs raised $54 billion in 2022 — check out the decks they used.
Climate change is the most pressing crisis humanity is dealing with right now, and startup founders and investors are racing to build and fund solutions.
The importance of impact investing, plus friendlier legislation, has fueled the rush to climate tech both in the US and Europe. Celebrities and established venture capitalists are "greening up" their portfolios, pouring billions into a sector once regarded as niche.
Leonardo DiCaprio-backed fund Regeneration VC, for example, has handed checks to founders building everything from carbon utilization to rental companies.
That meant, as capital dried up in the wider market, climate and sustainability-focused companies continued to raise throughout last year. Venture capitalists also raised funds from limited partners to focus on investing on climate tech.
Globally, climate and clean tech startups raised $54 billion in 2022, according to PitchBook. It is a near $13 billion-drop from the record levels raised in 2021, a year flush with cash and largely considered an outlier, but almost double 2020's $28 billion. Clean tech refers to startups trying to reduce human impact on the environment, while climate tech covers those on mitigation, adaptation, and decarbonization.
The sector may not remain immune to the broader slowdown in funding, with early data showing investment activity tailing off in the first quarter of 2023 to a near three-year low.
Insider has collected 31 pitch decks that founders and investors used to raise billions in 2022.
Read the full collection below:
Food, farming, and transport
Carbon accounting and rating
The circular economy
Materials and energy
Investment funds
Read the original article on Business Insider
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Tech Startups
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Despite current culture wars turning diversity, equity and inclusion (DEI) policies into a political punching bag, most business leaders understand that they’re very good for business. Yet in a more conservative VC market, the discussions focus more on financials than on how to construct an intentional culture.
However, younger generations are bringing updated values and an expectation of DEI to the workplace, which means tech startups can’t afford to ignore how their company culture evolves.
It’s an important issue for startup success, and we’re thrilled to tell you that Joelle Emerson, co-founder and CEO of Paradigm, will join us for a fireside chat on the Builders Stage at TechCrunch Disrupt 2023, which takes place on September 19–21 in San Francisco.
Paradigm’s data-driven DEI software tools place the company at the center of this conversation, and Emerson is well-known for her perspective on corporate culture. We’re looking forward to hearing how the savviest startups are leaving old, ahem, paradigms in the rearview mirror and building for the future — despite political perceptions of inclusion.
Joelle Emerson: Paradigm co-founder and CEO
Joelle Emerson partners with leaders of some of the world’s most innovative companies to consult and advise on diversity and inclusion strategies. She has written extensively about diversity, inclusion and unconscious bias, and her work has been featured in The New York Times, The Wall Street Journal, NPR, The Harvard Business Review, Fortune and on the cover of The Atlantic. She has been named to Recode’s list of the 100 most influential people in business, Marie Claire’s New Guard list of 50 women changing the world, and The New York Times’ Groundbreakers.
Before founding Paradigm, Emerson was a civil rights lawyer. Her legal background highlighted the consequences that can result from companies failing to consider diversity and inclusion early, and inspired her to found Paradigm. She is a graduate of Stanford Law School.
You’ll find more conversations with leading experts on the Builders Stage, which features topics like operations, hiring, fundraising and more. Don’t forget to check out our six new stages for six breakthrough sectors at Disrupt.
Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2023? Contact our sponsorship sales team by filling out this form.
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Tech Startups
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Katapult, the Oslo-based global investment firm with a penchant for fostering early-stage, high-impact, climate-focused tech startups, is doubling down on its ocean and climate investments. From 2,500 applications, it picked 23 startups from 13 countries across five continents, illustrating what most of us have known for a hot minute: The global drive to combat climate change and bolster our oceans knows no borders.
But the inclusivity doesn’t stop at geography. As part of its broader initiative to champion gender diversity in the impact investment arena, Katapult is putting its money where its intentions are, with nearly 40% of the chosen startups being led by women.
The selected startups now embark on the investor’s accelerator program, which aims to nurture the startups further:
“In the Katapult 2023 accelerator program, our selected 23 startups will be meticulously equipped with practical skills and vital knowledge to enhance their impact in the Ocean and Climate technology sectors. We’re offering a structured blend of educational video modules and interactive workshops, ensuring each company not only gains essential skills but also access to a valuable network of mentors and potential investors. Our objective is straightforward: to elevate these companies by sharpening their strategy, management, and investor readiness, positioning them robustly for future success,” says Program Director Marcus Hølland Eikeland.
The diversity of problem spaces is staggering, ranging from developing mycelium-based meat production to integrating solar energy into the energy matrix and producing organic metal-like pigments, reducing microplastic from the environment and more.
The VC has a separate arm that focuses even more specifically on climate solutions aimed at the ocean.
“In our latest investment series, Katapult Ocean is honored to back 12 companies, delineating the future of the maritime and ocean technology sector. With innovations ranging from marine transport decarbonization to sustainable seaweed-based plastics and marine asset monitoring, these companies are strategically addressing vital challenges in ocean sustainability and climate resilience,” comments Jonas Skattum Svegaarden, CEO of Katapult Ocean. “We keenly anticipate collaborating with them as they profoundly impact our marine ecosystems and pave the way toward a more sustainable future for our oceans.”
A spokesperson for Katapult tells me that “Katapult Climate and Ocean have invested approximately €4-5 million in the 23 companies,” which works out to an average of around $230,000 invested per startup. The investor says that, in total, Katapult Ocean has made 25 investments in the last 12 months with €10 million invested. Katapult Climate has made 24 investments in the last 12 months with over €2 million invested.
Here is the current cohort:
Climate startups
Adamo Foods is a plant-based meat producer using precision fermentation. It offers sustainable steak and meat alternatives made from fungal mycelium.
Cirkula provides a digital platform that allows restaurants and stores to reduce their food waste — a marketplace for surplus food.
Gridio offers solutions for smart EV charging, combining energy price, energy emissions, energy storage, vehicle and battery information and more, via a consumer-facing app.
HERlab is a high-throughput AI and synthetic biology platform for screening, developing and optimizing novel non-conventional yeast hosts that would be more efficient and more scalable than currently available hosts.
Metalchemy is an operator of a nanotechnology manufacturer developing biodegradable and recyclable food packaging infused with silver nanoparticles to increase food shelf life and packaging solutions in other industries.
Over Easy Solar is building vertical bi-facil solar panels designed for flat and green rooftops that are easy to install, maintenance free and have a high energy yield.
Phoenix Carbon has developed a composite recycling solvolysis process that maintains product parity with virgin materials to unlock value from waste, reducing CO2 emissions and offering cost-effective quality alternatives to different industries.
Planboo is a carbon removal company that connects agriculture landowners with the technology to extract carbon from the atmosphere via pyrolysis (creating biochar), sharing the revenue of certified carbon removal credits with the landowners.
Solfium is a marketplace platform connecting customers to rooftop solar installers via an end-to-end app, aimed at being used from installing quotation to operation and maintenance. They work with large corporations to reduce their Scope 2 & 3 emissions by facilitating clean energy adoption.
Sparxell is developing innovative bio-inspired photonics technology that solves the pigment industry’s sustainability problems and regulatory problems by harnessing the capability to reproduce the intense color and shimmering effects displayed in nature using plant-based material.
The Tyre Collective is spearheading the capture and monitoring of tyre wear (microplastics) to accelerate the shift toward true zero-emission mobility. For that, they have developed a unique “catalytic converter for tyre wear,” leveraging electrostatic technology.
Ocean
Pascal Technologies is accelerating the transition to greener means of maritime propulsion through air lubrication technology that drastically improves the energy efficiency and range of electric, and other alternative fuel motors.
Hullbot is revolutionizing marine hull cleaning with its cost-effective, eco-friendly, fully autonomous underwater drones which can remove biofouling before it becomes an issue for the environment or the vessel’s fuel efficiency.
Mocean Energy is leading the charge for ocean wave energy adoption with its durable, scalable wave energy converter, designed to be deployed as a supplement for offshore energy projects, as well as serve as a standalone energy resource for island communities and other remote customers.
Triton Anchor provides efficient, environmentally friendly, versatile anchoring solutions to significantly lower the cost and installation time of floating wind and other offshore renewable energy, enabling greater, more rapid adoption for such projects in the process.
Syrenna is an ocean data company using cutting-edge subsea robotic solutions and AI to drastically improve ocean data collection, unlocking blue carbon markets and natural capital monitoring to enable greater restoration and conservation finance in the future.
Coral Vita has pioneered a profitable farming model to grow diverse and resilient coral in order to restore the world’s invaluable reef systems under threat from climate change and eutrophication.
Sway is a California-based clean tech startup scaling next-generation packaging made from bioplastics derived from seaweed, designed to be fully compatible with existing plastic manufacturing machinery.
WSense is enabling Internet of Underwater Things (ioUt) with “Subsea Wifi,” bringing the rapidly growing world of offshore infrastructure and other ocean assets online, and improving the versatility of such assets in the process.
Gigablue is on a mission to combat global warming through pioneering enhanced technology to improve the efficiency and viability of ocean fertilization as a means of carbon dioxide removal, addressing climate change at its roots for a sustainable future.
Vycarb is developing modular autonomous systems for precisely measuring and sequestering carbon dioxide in water via alkalinity enhancement, assisting customers to perform better MRV of their water-based systems, facilitating carbon credit generation in the process.
Newfish, by unlocking the power for microalgae to serve as a primary source of protein with its proprietary fermentation technology, is building a better way to provide people with great natural nutrition that doesn’t cost our earth and oceans.
ICODOS is de-fossilizing maritime shipping and other industries via its proprietary, scalable, low-cost and time-efficient e-methanol production which utilizes a hybrid, one-step process for carbon dioxide capture and methane synthesis.
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Insights on Google’s accelerator program for climate startups
Matt explains that Google is committed to improving the lives of as many people as possible by leveraging the power of technology, highlighting the company’s efforts to tackle climate change. To support high-potential climate tech startups, Google has launched its third climate tech accelerator, which is a 10-week digital program for climate and sustainability startups, specifically those that are using or have the potential to use artificial intelligence or machine learning in their technology. These companies should be in the Seed to Series A stage and have at least five employees. The program is currently focused on North American startups, but there is a separate program for European startups.
The accelerator includes programming in user experience, product design, tech, cloud, machine learning, growth, sales, marketing, and leadership. It is equity free and does not require startups to give any ownership in their company to participate. Google offers expert mentorship, internal routing to connect startups with helpful teams, and $200,000 in Google Cloud Credits. The program culminates in a virtual demo day to present to partners and investors.
Applications are open until January 19, 2023, and link can be found below.
The impact of Google’s previous climate accelerators & lessons learned
Google’s accelerator program has graduated 22 companies so far, which have collectively raised $120 million since participating in the program over the past 18 months. These companies have had a 100% survival rate and a combined portfolio valuation of over $200 million. Some examples of successful companies from the program include Charge Net Stations, which developed fast-charging stations for electric vehicles and partnered with taco chain Taco Bell to install their first charging station, and ChargerHelp, which provides maintenance for electric vehicle charging stations and formed a partnership with Tesla.
Google is placing a strong emphasis on mentorship in its accelerator program, believing that providing bespoke custom mentorship to startups leads to the best outcomes. The company is also looking to make its tech week more immersive and tailored for the engineering teams of participating startups, as well as finding ways to build community through in-person events and shared experiences. These efforts are in response to feedback from startup founders, who prioritize in-person interaction and community building. In the past, Google has hosted events such as Demo Day watch parties (inspired by OpenIDEO) and invited startups to events like TechCrunch Disrupt. The company is looking for new ways to foster community building among its participating startups.
Insights on CSAA’s open innovation challenge for addressing the climate crisis
Jami shares that CSAA is excited to work with IDEO to address the issue of climate change. As an insurance agency, CSAA wants to respond to the climate crisis with a sense of urgency and lead by example. CSAA sees its customers on some of their worst days, during natural disasters, and wants to invest in solutions that protect vulnerable communities from climate change-related events, particularly wildfires. CSAA is seeking organizations to join them in growing the prize pool for this open innovation challenge, in order to generate more ideas and have a greater impact. The challenge is part of CSAA’s mission to build a community of service rooted in inclusion and belonging. This challenge will be the first of its kind for CSAA.
Why climate change matters to insurance providers
Natural disasters and the impacts of climate change are being increasingly felt every year. Jami explains how the insurance industry is at the forefront of this. The US alone experiences climate change disasters causing $120 billion in damage annually, and that figure is expected to reach $2 trillion by the end of the century. CSAA’s purpose is to help people prevent, prepare for, and recover from life’s uncertainties, and climate change is one of the biggest uncertainties currently being faced.
Predictions for the climate space in 2023
Jami resonates with the message that every person can do climate work in their position and is looking to distill this across CSAA in 2023. There is a lot of momentum heading into the new year, with action at the local level, the introduction of the Inflation Reduction Act, and increased transparency around corporate goals and targets. The focus will shift from ambition to action, with a focus on achieving the many climate plans and goals that have been set. She also expects a lot of innovation in the climate space, particularly in the areas of carbage storage solutions, circular economy, and green energy transition. Jami encourages any interested companies or organizations to get in touch with Jason or herself to participate in the innovation challenge and contribute to the progress being made at CSAA.
In 2023, Matt predicts that climate tech will see deeper integration of AI and machine learning, leading to more scalable, responsive, and impactful solutions. He also hopes to see more storytelling and inspiration about the human side of climate change, as it is a key issue that affects people and particularly the poorest among us.
Resources Mentioned Google for Startups Accelerator: Climate Change
IDEO x CSAA Open Innovation Challenge – Partner Interest Form
CSAA
IDEO
Charge Net Stations
Chargerhelp
TechCrunch Disrupt Connect with Matt Ridenour & Jami Goldman Connect with Matt on LinkedIn
Connect with Jami on LinkedIn Connect with Jason Rissman On LinkedIn
On Twitter Subscribe to Invested In Climate
If you have feedback or ideas for future episodes, events or partnerships, please get in touch!
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Tech Startups
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While the global market correction is causing a decrease in valuations and job losses in the tech industry, investment in some Middle Eastern regions is rising.
The Dubai Future District Fund, established in 2021 to invest in tech startups, recently announced its goal of reaching $1 billion in assets under management by the end of 2024. The announcement was made at the fund’s first annual general meeting in the presence of important figures such as Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, and Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance of the UAE.
The meeting discussed ways to support early-stage technology businesses, help them list on the Dubai stock market, and boost their future projects through investment opportunities. The fund’s focus on deep technology aims to achieve three to five times the returns across cycles of up to 15 years, a longer time frame than the typical venture capital investment period.
“Dubai has become an international gateway for ambitious investment opportunities, a hub for future-driven project funding, and a global testbed for tomorrow’s technology and digital economy applications. The emirate provides the ideal environment for technology ventures to develop the highest standards of agility and transparency and create opportunities for individuals, organizations, and societies,” Sheikh Hamdan said in a statement issued by the Dubai Media Office.
Half of the fund’s investment will be made in locally oriented venture capital funds. The other half will be invested directly in startup businesses or through initiatives related to the Future District.
“As part of Dubai’s aim to transform itself into one of the world’s top digital economies, we continue to provide world-class regulatory frameworks and infrastructure designed to empower technology entrepreneurs and catalyze innovative smart projects, particularly those related to fintech and smart financing solutions. Thanks to these efforts, Dubai has become an attractive destination for startups, experts, tech giants, coders, digital nomads, and fintech companies seeking to list on Dubai’s stock market,” Sheikh Hamdam added.
According to him, Dubai’s approach to envisioning and constructing a sustainable future is centered on hastening emerging technology uptake across many industries. This model is essential to Dubai’s efforts to promote economic growth and carry out national objectives and strategies. It significantly improves the UAE’s ranks in terms of financial, digital, legal, and future growth indicators.
Meanwhile, by 2025, the Dubai Future District Fund hopes to have $7 billion under management and $1.7 billion in equity value in its portfolio. For the next ten years, the goal is to invest in 180 portfolio firms and 55 venture funds with a portfolio of $43 billion.
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Nordic VC firm Voima Ventures today announced its third fund with an initial closing of €90 million and a final target of €120 million, focusing on early-stage “deep tech” startups from across the science sphere.
Founded out of Helsinki, Finland, in 2019, Voima Ventures targets companies at the pre- and seed-stage, mostly involving startups emerging from university labs and related research institutions. Voima also occasionally delves into later stage investments where it involves existing portfolio companies, and its typical areas include companies working on sustainability, life science and health, and other “groundbreaking” technologies such as quantum computing.
Voima’s first two funds were launched back in 2019. Its €20 million Fund I was essentially the spin-off portfolio of state-owned technical research center VTT which remains one of the fund’s limited partners (LPs) today, while the second €60 million fund was announced simultaneously alongside the new Voima Ventures brand and a swathe of additional LPs. The first two funds have backed some 30 companies, including the likes of Solar Foods, Dispelix, Betolar, and MVision, and it has a handful of exits to its name including Minima, which was snapped up by Bosch last year.
Bright and early
Europe has been ripe for fresh early-stage VC funds lately. In the past few months alone, we’ve seen the U.K.’s Amadeus Capital partner with Austria’s Apex Ventures for a €80 million ($86 million) deep tech fund, similar to IQ Capital which launched a new $200 million fund for early-stage deep tech startups. Moonfire VC, meanwhile, closed its second fund at $115 million; Playfair Capital closed a $70 million pre-seed fund; Ireland’s Elkstone closed its first formal VC fund at $108 million; Finland’s Lifeline Ventures closed a $163 million fund; and in France Emblem and Ovni Capital both announced new €50 million ($54 million) funds.
As with its previous funds, Voima’s third pot is focused firmly on Nordic and Baltic countries, though it occasionally dips into other countries across Northern Europe, and it’s aiming for ticket sizes ranging from €200,000 to €3 million spread across roughly 25 companies.
A core defining characteristic of Voima’s fund is that in addition to its collaboration with VTT, which is among Europe’s largest research institutes, it actively collaborates with universities from across Northern Europe. Voima founding partner Inka Mero says that nearly three-quarters of its portfolio hail from the academic world, including quantum chip startup Semiqon, which VTT recently spun out as an independent entity, and Cellfion, a clean energy materials company that emerged from the Royal Institute of Technology (KTH) and Linköping University (LIU) in Sweden.
“We actively collaborate with all the Nordic and Baltic universities — we do this by visiting science teams and teams in incubation on a regular basis, hosting workshops, and coaching the most potential teams on a regular basis,” Mero told TechCrunch.
And while much has changed in the world since Voima first arrived on the scene some four years ago, from the global pandemic to major economic headwinds among other macroeconomic factors, Mero says it’s mostly business as usual in terms of what they’re looking for in startups and they’re approach to investing.
“Our investment strategy has remained the same — we continue investing in science-based and deep tech in the Nordics and Baltics,” Mero said. “With Fund III we are even more thesis-driven, and invest in companies tackling pressing global challenges.”
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Avalanche raises $40M to pursue vision of tiny nuclear fusion reactor
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Avalanche Energy, a small startup building a small nuclear fusion reactor, just notched a technical milestone that might bring this elusive technology closer to commercial generation of low-carbon power. The company also announced that it closed a $40 million venture round — no mean feat in a harrowing fundraising environment for high-risk hardware entrepreneurs.
During the 70 years that scientists have attempted to harness the awesome power of the fusion reaction, they’ve mostly built machines called tokamaks that tend toward cathedral size. Equipped with giant lasers or massive magnets, this Brobdingnagian equipment comes with a cathedral-size price tag.
By going small, Seattle-based Avalanche is aiming for a capital-efficient, downsized approach to generating commercial power from fusion. Importantly, the reactor’s “desktop” size enables fast development cycles at relatively low cost compared to the behemoth fusion devices other companies are constructing and testing.
Despite a scientific breakthrough late last year at the National Ignition Facility, even the most optimistic fusion fans say the tech is many years — if not decades — away from generating commercial power.
But a long and uncertain path to success hasn’t stopped top-tier venture investors, celebrities and the billionaire class from transferring close to $5 billion of society’s capital into fusion companies over the last few years. As Canary has reported, startups such as Commonwealth Fusion, General Fusion, Helion Energy, TAE Technologies and Zap Energy have raised astounding sums, some in billion-dollar rounds, from investors including Sam Altman, Jeff Bezos, John Doerr, Bill Gates and George Soros, all pursuing a high-risk, high-reward technology.
The cofounders of Avalanche, CEO Robin Langtry and Chief Operating Officer Brian Riordan, both worked at Bezos’ space exploration company Blue Origin for years. Langtry told Canary Media that the modular nature of Avalanche’s prototype lends itself to the “new space” rocket-design ethos of “fast-to-test” and “test-fail-fix” — most recently on display last week with the explosion of a rocket from Elon Musk’s SpaceX.
And while fusion is hard, so is closing a $40 million funding round in uncertain times. Langtry said that raising money in the summer and fall of 2022 was not easy. He said the new investment provides “enough runway to get to 2025 and make a lot of progress along the way,” as the company aims to grow its headcount from 25 to 45.
Existing investor Chris Sacca’s Lowercarbon Capital led the round along with Peter Thiel’s Founders Fund and Toyota Ventures. This Series A follows the company’s $5 million seed round in 2021, led by Azolla Ventures along with Congruent Ventures and Lowercarbon Capital. (Sacca’s firm has a $250 million fund dedicated to fusion investments.)
Fun with fusion
To achieve fusion, hydrogen must be converted into plasma, a transformation that requires million-degree temperatures, much hotter than the core of the sun. In the medium of the plasma, negatively charged electrons separate from positively charged atomic nuclei.
Fusion machines compress and confine the plasma in order to push the freed-up nuclei so close together that they overcome repellant electrostatic forces and ultimately fuse. This process releases neutrons, and it’s this energy that scientists dream of harvesting to do things like drive a conventional turbine.
The holy grail for the fusion entrepreneur is a process that creates more energy than is needed to power it, also called net energy or positive output. A number of deep-tech startups are inching closer to this dream of prodigious energy at low cost. But right now, more energy is required to catalyze fusion than results from the process — a lot more.
Many fusion startups use magnetic confinement of the plasma, where the plasma is stabilized by massive magnets and heated to extraordinary temperatures so the nuclei can fuse. Instead of magnets, Avalanche’s electrostatic approach relies on very high voltages. The startup’s prototype uses electrostatic fields to trap ions, while also employing a magnetron electron confinement technique to reach higher ion densities and increase the incidence of fusion reactions. If Avalanche can get the voltages and ion densities optimized, the resulting fusion reaction will produce neutrons that can be transformed into heat.
That’s a big if. But this week, the company said it made significant progress on one piece of the puzzle.
“For us, the metric is voltage, and we need to get to 300 kilovolts to get to the optimum fusion energy in our device. We hit 200 kilovolts in our lab, which is a big deal — getting that much voltage into a 12-centimeter-diameter tube,” said Langtry.
“The next big milestone we’re hopefully announcing in a year or two is that we are able to densify this plasma not only at the right energy, but at densities where it’s interesting for energy generation,” he added. “We’ve got a lot of work to do.”
The company emphasizes that its reactor’s component parts are already commercially available: Its magnetron is a variation of a microwave-oven component, and its electrostatic base technology is a derivative of another existing product.
Riordan contends that Avalanche’s small scale differentiates it from other larger players in the space. The company doesn’t need a billion to make progress; it can do a lot with millions.
He said the company will initially focus on hard-to-decarbonize sectors and niche uses of its tech. “We’re not trying to do grid-scale energy,” Riordan told Canary last year. “There’s a whole realm of industries that need to be decarbonized: long-distance trucking, aviation, maritime — huge carbon sources.”
As cost comes down, markets will open up, said Langtry.
“We do think space and defense is probably the first application for what we’re trying to do,” said the CEO.
Eric Wesoff is the editorial director at Canary Media.
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Tech Startups
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The interim chief executive of struggling Boston AI startup DataRobot is slashing expenses at the company. Debanjan Saha, a former Google and Amazon executive who took over last month, said the company would lay off more workers and make other unspecified cutbacks.“Like many of our peers in the tech industry, we rapidly expanded our go-to-market and business operations last year in preparation for an IPO,” Saha wrote in a post on LinkedIn. “Clearly, market realities are very different today...I’m confident these steps will position DataRobot for long-term sustainable growth.”The company declined to disclose how many jobs would be eliminated in the layoff. In May, DataRobot cut 7 percent of its roughly 1,000-person workforce.Just a year ago, DataRobot was one of the hottest tech startups in Boston and reached a valuation of $6.3 billion in a $300 million fundraising deal. But since then, the company has missed its revenue targets amid a weaker economy and a severe downturn in tech stock prices.Saha took over for CEO Dan Wright, who resigned from the top job in July amid an uproar over alleged excessive spending and insider stock sales.Several other executives Wright hired, including chief people officer Elise Cole and chief financial officer Damon Fletcher, are also leaving the company.Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.
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Tech Startups
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Paris-based VC firm HCVC just announced the final closing of its second fund simply called “Fund II”. And the team has managed to raise $75 million (€69 million) so that it can back pre-seed and seed companies in Europe and North America.
Originally focused on hardware startup investments, HCVC quickly evolved to invest in deep tech startups in general, such as companies working on climate, biotech, robotics, space, etc. Some of HCVC’s portfolio companies include electric bike maker Cowboy, nuclear fusion tech company Renaissance Fusion, Span, Caper, Automata, Radia and Augmenta.
The name HCVC itself comes from the Hardware Club, a community of hardware and deep tech companies that share knowledge and help each other through the network. There are more than 600 companies in the club.
This Hardware Club has never been a way to make money directly. HCVC isn’t an investor in every company in the Hardware Club. Since 2018, the firm has backed 50 companies with its original $50 million fund.
With HCVC’s new fund, the VC firm plans to conduct up to 40 investments, which means roughly 10 deals per year. On average, HCVC will be able to invest anything between €250,000 and €2.5 million per deal ($260,000 to $2.6 million).
“We want to back founders that create a future with more clean energy, more powerful computing, more context-aware robots, better defense tools for democracies and biomanufacturing that enables us to decarbonize food production,” HCVC founder and managing partner Alexis Houssou said in a statement.
In addition to Houssou, Jerry Yang, Aymerik Renard and Alex Flamant are the three other partners in the fund. Alex Flamant is a recent addition to the team. He was a principal at Singular, another Paris-based VC firm. He also spent some time at Notion Capital.
As for the limited partners, HCVC raised money from the European Investment Fund, Isomer Capital, Molten Ventures, as well as several individual investors, such as Albert Wenger (managing partner at USV), John Elkann (chairman of Stellantis and Ferrari) and Toto Wolff (team principal and CEO of Mercedes-AMG Petronas F1 team).
Interestingly, HCVC also says that its fund is exclusively backed by European, American and Japanese investors — unlike many U.S. VC firms, there’s no Saudi Arabian investor participation.
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Tech Startups
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Ex-Telecom Secretary Aruna Sundararajan Joins Industry Body BIF As Chairperson
Sundararajan will guide the forum in its mission of improving affordable broadband proliferation and usage access in India.
The Broadband India Forum on Monday announced that former telecom secretary Aruna Sundararajan has joined the industry body as the chairperson, with immediate effect.
Sundararajan will guide the forum in its mission of improving affordable broadband proliferation and usage access in India, according to a statement from BIF.
"BIF today welcomed Aruna Sundararajan IAS (Retd.), Former Secretary (Telecom), Department of Telecommunications, Ministry of Communications and Chairperson, Digital Communications Commission...as the chairperson of the organisation with immediate effect," it said.
Sundararajan has also served as the Secretary to Government of India in the ministries of steel, information technology and telecom. She retired as Chairperson of DCC in July 2019, the statement said.
During her tenure, she played a key role in steering various important tech policies and initiatives across the domains of telecom and hardware manufacturing, e-governance, digital payments, data protection, cyber security, and tech startups, BIF added.
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Tech Startups
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- Of Europe and Israel's 353 venture-backed unicorns, 221 have spun out 1,171 new tech-enabled startup companies with employees at these firms leaving to start up their own ventures, according to a new report from VC firm Accel.
- The biggest examples of companies whose former talent went on to establish new startups include Spotify, which spawned 32 new companies, Delivery Hero, which generated 32, and Criteo, from which 31 new startups were born.
- The development mimics the trend of startup "mafias" in the United States, where companies like PayPal indirectly helped produce huge businesses like Tesla and Palantir.
Europe and Israel mint an average of five tech startups for every venture-backed company with a valuation of $1 billion or more, according to a new report from the venture capital firm Accel.
Of the 353 "unicorn" companies in the region, 221 have spun out 1,171 new tech-enabled startup companies as employees at these firms left to start up their own ventures, Accel said, citing Dealroom data.
A similar report from the firm last year showed that, out of 344 VC-backed unicorns, 201 led to 1,018 new startups being created.
The biggest examples of companies whose former talent went on to establish new companies include Spotify, which spawned 32 new companies, Delivery Hero, which generated 32, and Criteo, from which 31 new startups were born.
Such companies are referred to in the startup world as "mafias" — and no, they're not like the mobs of the Italian-American gangster films. Startup mafias have existed for decades. These "mafias," which are firms started by employees of other tech firms, have historically led to the creation of some of the largest tech companies known today.
From U.S. fintech giant PayPal, Elon Musk went on to start electric-car maker Tesla and space exploration firm SpaceX, for example, while Peter Thiel co-founded the big data company Palantir and is now a renowned investor with his Valar Ventures and Founders Fund VC firms.
VC investors say that those entrepreneurs came from a culture of risk-taking in Silicon Valley that, for many years, hasn't existed in the same way in Europe. It began to take shape with the advent of maturing internet platforms like Skype, from which Niklas Zennstrom started VC fund Atomico and Taavet Hinrikus co-founded fintech giant Wise.
"When I got started like 30 years ago back in the Valley, I did it in the West Coast, Palo Alto. Then I'd go back to the Netherlands and my friends and my parents would say, why would you do that? Why wouldn't you go work for Shell or Unilever? That has held Europe back," Harry Nelis, partner at Accel, told CNBC.
"Now, unless you came out of university and studied in exactly the same way that I did, and you go straight into a startup — not like a raw startup but an established one where you can learn a trade and then you have your career already — it's that kind of new philosophy that will, I think, help Europe over time, and has been helping the ecosystem."
Today, the likes of Spotify, Delivery Hero, Klarna and Wise have become founder factories in their own right.
The largest cohort of newly established startup mafias comes from fintech, with almost 20% of European startups spun out of unicorns operating in the sector.
Startup employees in Europe and Israel tend to favor their own cities for setting up their new businesses, with over half of new firms founded in the same city as the unicorn they exited, according to Accel.
Tel Aviv was the largest single hub for producing startup factories, with 127 new firms being spun out from 33 unicorns, Accel said. Within Europe, London hosted the most startup factories for a single city, with 27 unicorns and 185 startups, while Berlin was close behind with its 25 founder factories and 165 startup spinouts.
More than 59% of startups that came from so-called startup mafias have already managed to raise VC funding, with 45% attracting around $1 million to $10 million of investment, and 30% receiving more than $10 million.
The data also offers insight into the journey people take to becoming founders.
It takes second-generation founders an average of 28 months before founding their own startups, according to Accel, and the average age of these entrepreneurs is 33.
Three-quarters of second-generation founders received higher education, with 60% obtaining a master's degree.
More than 59% of startups that came from so-called startup mafias have already managed to raise VC funding, with 45% pulling in around $1 million to $10 million and 30% receiving more than $10 million.
The average time taken for a startup to hit unicorn status in Europe is now just seven years, Accel said.
Nevertheless, the outlook for tech startups more broadly has darkened as interest rates have risen, putting pressure on valuations of late-stage companies in particular. The market value of firms such as Klarna has been slashed as investors reevaluate the tech sector.
Last year, more than $400 billion was wiped off the value of Europe's tech industry, according to data from VC firm Atomico.
Layoffs have also plagued the industry. Music streaming platform Spotify laid off 6% of its headcount, "buy now, pay later" firm Klarna announced cuts of 10%, while money transfer unicorn Zepz recently let go 26% of employees.
An Accel spokesperson said that the impact of layoffs on new startup generation did not feature in its report.
But despite the darkening outlook for tech, Nelis said he is hopeful for the future.
He said the numbers show that Europe's tech industry has matured to a level where employees are able to muster the courage to up and leave to start new firms of their own.
A deep pool of talent has now emerged, with employees feeling they have the skills and experience to turn their own ideas into full-fledged businesses.
"While founders and their teams are navigating a tough macroeconomic environment, the European and Israeli tech ecosystem is in a much stronger position than during the 2008/9 financial crisis due to the compounding effect of repeat entrepreneurs," Nelis told CNBC.
"With over 350 venture-backed unicorns across the continent, there's a strong foundation of talent and success that we firmly believe will be passed onto the next generation of ambitious entrepreneurs."
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We attended the Bits&Pretzels Healthtech conference for startups and VCs.
They named drug discovery and the emerging 'techbio' sector as areas of interest.
Here are the 5 key takeaways from the conference.
COVID-19 fueled huge interest in health-tech startups, with VCs pouring a record $25.1 billion into health and biotech startups in 2021.
The sector experienced a subsequent slowdown, in line with broader pall in startup funding. But in 2023, health-tech startups are faring well compared to their counterparts in fintech and climate.
We went to the Bits&Pretzels Healthtech in Munich, Germany, and spoke with investors, founders, and operators from across Europe.
Here are some of their takeaways for the future of health startups and innovation.
1. 'Techbio' is a priority
Techbio (not to be confused with its sister discipline, biotech) is the meeting point between technology and biology. The idea is to innovate the ways in which hardware and software can speed up processes such as the discovery of new drugs, or streamlining the collection of data in drug trials. While biotech is research-based, techbio focuses on the application of technology and engineering to bring this research to market.
Startups in the space are bringing new applications of tech to fields such as drug discovery, bioengineering, and patient care.
It's a pretty nascent field, but 95% of the VCs Insider spoke to had techbio on their agenda for the coming year. It points to sustained appetite for digitizing many of the processes in the pharma industry, which many investors see as an untapped opportunity.
2. VCs are still betting on drug discovery
Even though funding into drug discovery startups has significantly stalled this year, at just $126 million, startup valuations have picked up since 2022.
Drug discovery is a process which aims to develop new medications and therapeutics.
Startups have been deploying AI to streamline the development of drugs for about a decade, and the space is building up traction with investors. VCs are bullish that a well-calculated bet on certain drug discovery upstarts could generate lucrative exits and returns, especially via Big Pharma companies.
3. AI can be a game changer — but not everyone needs to deploy it
Despite the huge uptick in interest since the release of OpenAI's ChatGPT chatbot, artificial intelligence wasn't necessarily top of every investor's agenda.
Many VCs agreed that AI has potential to transform healthcare, especially in streamlining admin tasks for health workers, to speeding up the diagnostics process.
But many are also aware that any use of AI would be accompanied by stringent regulation, given the potential to misuse confidential patient data. Many of Europe's top investors were also cautious about startups applying AI for the sake of it, a time and cost-intensive process.
4. Health data is a gold mine
Clinical data has always been important, but a wave of startups have started to monetize their collection of this data — and VCs are looking to cash in. Clinical data is the umbrella term for data gathered during clinical trials, as well as during the delivery of care for patients.
One gap identified by founders is that pharma companies are struggling to acquire data on clinical trials and drug candidates.
As AI can't wholly replace the clinical trials process, startups are tapping into a potentially lucrative market, and VCs were very enthused by these emerging players.
5. Health-tech VCs won't splurge cash
While COVID-19 did give healthtech startups a chance at the spotlight, they were still overshadowed by their counterparts in fintech and software-as-a-service. Part of the reason was that health-tech VCs, by their own accord, did not splurge as lavishly as other specialist investors.
That's changing a little as early-stage healthtech startups are leading the race, nabbing $550 million — double the amount of funding as fintech startups — in 2023 so far. Still, healthtech VC say they are mostly standing by their prudent approach amid a tumultuous tech market.
Read the original article on Business Insider
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Tech Startups
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Why we write on this topic:Spin-off MicroAlign stems from the valorization strategy of the Eindhoven University of Technology (TU/e) under which a growing number scientific research cases culminate in start-ups
Nowadays, many communications applications depend not only on electricity but also on light. Photonic chips generate and process that light. Optical fibers transmit light inside a building or across a country. “Optical fibers allow data exchanges to be transmitted over long distances at greater speeds. When compared to copper wire, the signals transmit more data and with less interference,” says Simone Cardarelli founder of MicroAlign, a spin-off of TU Eindhoven. “The overall performance of a photonic system depends on how well the fibers are connected to photonic chips.”
This is a very complex and expensive operation that requires a lot of energy, according to Cardarelli. MicroAlign has invented a micropositioning systeem which is capable of aligning multiple optical fibers. This system forms the core of MicroAlign technology. It improves the quality of any optical fiber-to-chip connection for multiple optical fibers and with sub-micrometer precision. Photonics is a key technology for industries such as aerospace, automotive, food technology, telecommunications.
Feasibility study
“Energy consumption is on the increase. Look at data centers, for instance. These companies also use photonics equipment. We aim to use our technology to ensure that companies are able to make more energy-efficient equipment, so that we can cut down on our energy consumption and minimize the impact on the environment in the future.”
Cardarelli came to the Netherlands in 2014 for his doctoral research at TU Eindhoven. His research centered on the connection of optical fibers and photonic chips. The four-year project spawned the start-up MicroAlign. “The ideas that came from that have great potential. That’s why we decided to do a feasibility study aimed at its commercialization.”
A grant from the Dutch Research Council (NWO) and Metropolitan Region Eindhoven (MRE) paved the way for the feasibility study. “For us, this marked the first important step for our company,” he says. This was followed last year by a new investment by PhotonDelta and the Smart Industries TTT Fund. Since then, the start-up has been working on fine-tuning the technology, has expanded its team from three employees to nine as well as sold its first prototypes to two customers. The start-up has also exhibited at photonics trade fairs such as Photonics West in San Francisco, and Laser World of Photonics in Munich. This week, Cardarelli is attending the European Conference on Optical Communication (ECOC) in Basel.
The most interesting
“Our team is at full capacity. With three engineers, a strategic financial advisor, a business developer, an expert in intellectual property (IP) and a marketing communications position. We are keen to get as much feedback as possible to align the technological development of our product with the market.”
By doing that, the start-up is exploring which of the applications is most suitable to build a business case around. “We will complete this phase this year so that we can fully focus on the most interesting application in 2023.”
Potential customers include suppliers of testing and assembly equipment for the development of photonics equipment. “Such as suppliers who build large machinery for testing electronic devices and assembling electronic equipment. We are interested in integrating our technology into these machines.” The machines are sold to the supplier of electronic equipment. That could be a transceiver or an optical cable.
One application involves making optical transceivers for exchanging information between servers and computers in data centers. Cardarelli: “This is a high-volume market. A small improvement on such a large volume is going to reduce energy consumption.”
Simone Cardarelli
Love of science
The transition Cardarelli made from researcher to entrepreneur went gradually. “I got sucked in, so to speak. It’s such a dynamic environment with so much potential. I saw a door open so I went through it. Even though the road to achieving it is a long one, I do believe in this technology and in the people I work with. There is a lot of trust and we communicate very clearly to each other. That’s why I decided to take this path.”
His love of science persists. “That’s where I felt that first spark. The realization that this technology could really become something.” Cardarelli has numerous interests. “I like to draw, I love art, I sing and I’m in a band. If I see an opportunity to learn something new, then I go for it. I can’t just quit without knowing how it works, how it’s put together or how it plays out.”
Contact with others
By spending a lot of time talking with other people, Cardarelli is learning how to bring this technology to the market. “Fortunately, I enjoy engaging with people. That is what motivated me to go for it. Connecting with others. I’m also learning how to keep a team motivated and focused.”
He credits Chris Rétif and Frank van der Ven business developers of The Gate, the platform for tech startups from in the Brainport region, and Sonja Vos – Poppelaars, managing director TU/e Participations. “They were there when I launched the company. For starters, they helped with assessing potential “companies,” applying for patents and contacting potential investors.”
Contact with others is important to Cardarelli. “When I start something new, I surround myself with people who are already involved in that kind of work. As such, I always compare myself to a blind person who has to find his way around a hallway. Basically, all you can do is touch the walls that lead you further. I surround myself with such walls. If I suddenly realize that there is nothing left to reach out and touch, then I ask someone to act as a wall for me, so I wind up being protected in all directions.”
“I always kick off with the question: ‘What am I missing? And then: ‘Who does know?’ Also, I think it’s important to give something back. Otherwise, people will not keep on helping you.”
What Cardarelli’s ultimate goal is? “I love science and I love how science helps society. I want to see that a small invention, with some more thought, ultimately helps society to advance too.”
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Tech Startups
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European Deeptech startups get another shot in the arm this week in the shape of IQ Capital’s new $200m venture fund. The new fund takes its assets under management to more than $1bn.
The London and Cambridge, UK-based deep tech VC has closed its fourth Venture Fund at that amount, while also launching its second $200m Growth Fund to provide later-stage funding, primarily in its venture portfolio. The means the VC will be able to deploy capital across more funding stages.
Since its foundation in Cambridge in 2007, IQ Capital has invested in over 100 deep tech startups such as Thought Machine (banking), Nyobolt (battery charging) and Speechmatics (speech recognition). It’s also had exits to Oracle, Google, Apple and Facebook, along with a number of IPOs.
Investors in Fund IV include global institutions, funds-of-funds, family offices, and British Patient Capital, the largest LP investing in UK venture capital.
Kerry Baldwin, co-founder, Managing Partner said deep tech investment was “at the forefront of investor’s minds, topping $17bn in 2022.”
I asked her if it had been hard to raise the fund in this market: “Obviously it’s been quite hard to raise in this in market environment, putting it bluntly. But we’re doing something different.”
“We’ve raised our flagship fund for deeptech and that’s where we invest every day, in really, really deep tech. These deep tech academics actually like us to come all the way through, like we’ve done with Thought Machine, like we’ve done with Speechmatics. But yeah, it’s been an interesting funding environment.”
Given the big debate going on around Generative AI, I asked her if Europe is going to be able to compete with the major Big Tech platforms on that front.
“We’ve got exceptional talent in Europe. Generative AI has got a long way to go, but it’s not going to solve real world problems just yet,” she said.
There’s been criticisms of how University spinouts are hampered by their Alma Maters. What’s her view?
She told me: “That’s where Cambridge University has been different and obviously our roots from Cambridge and in London, and across Europe. I think it’s going to be interesting to see the results of the UK Government review that’s coming out in early September on this.”
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Tech Startups
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Building a diverse and inclusive startup is the right thing to do, both ethnically and economically. If you’re a founder who cares about equity, it begins with choosing co-founders and employees who don’t all look or think like you. But that’s just the starting point. It also means diversifying the investors in your cap table so that you spread the wealth you create fairly.
That requires intentionality, and it’s why we’re excited that Ashley Mayer, co-founder and general partner at Coalition Operators; Amanda Robson, partner at Cowboy Ventures; and Richie Serna, CEO at Finix will tackle this important topic on the Builder Stage at TechCrunch Disrupt 2023, which runs September 19–21 in San Francisco.
In a session called “How to Construct an Equitable Cap Table,” Mayer, Robson and Serna will share their insight on issues like making room for diverse investors and how to land a diverse lead investor rather than the usual suspects. We also look forward to hearing about ways to protect early investor pro rata rights to ensure that early and diverse investors can retain their overall stake in the business.
Diversifying startups and VC investment is an important issue, and we’re bound to touch on many other aspects. Don’t miss this essential conversation.
Learn more about our speakers — and their qualifications for tackling this challenging topic — below.
Ashley Mayer: Coalition Operators co-founder and general partner
Prior to co-founding Coalition Operators — an early-stage venture fund that has pioneered a new model to bring top women operators onto cap tables at scale — Ashley Mayer was VP of comms at Glossier, a New York–based beauty startup.
In Mayer’s first startup job at Box, the enterprise software company, she led communications as the company grew from a 50-person team through IPO. She then joined venture capital firm Social Capital, where she led comms and marketing, launched new capital products and helped founders tell their stories.
Mayer also serves on the board of Climate Draft, a coalition of climate tech startups and VCs, along with Mixing Board, a community of comms and marketing leaders. She lives in Brooklyn and tweets too much.
Amanda Robson: Cowboy Ventures partner
A seed investor at Cowboy Ventures, Amanda Robson focuses on software infrastructure investments. She works with companies such as Drata, Elementary Data, SVT Robotics, Mobile.dev, Mutiny and Byteboard.
Robson also co-hosts the Open Source Startup Podcast, where she’s conducted over 70 interviews with open source founders from companies like HashiCorp, Vercel, MongoDB, Kong, Chronosphere and Starburst Data. She’s also an active member of All Raise and founded the Modern Angels community of more than 250 female and nonbinary angel investors.
Richie Serna: Finix CEO
Richie Serna co-founded Finix, a startup aiming to create the most accessible financial services ecosystem in history by building the global operating system for fintech, starting with payments.
Prior to Finix, Serna served as an engineer at Balanced, the first developer-friendly payment API for online marketplaces and other P2P services. He also worked as a consultant at Booz & Company. Serna earned his BA in government at Harvard University.
You’ll find more conversations with leading experts on the Builders Stage, which features topics like operations, hiring, fundraising and more. Don’t forget to check out our six new stages for six breakthrough sectors at Disrupt.
Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2023? Contact our sponsorship sales team by filling out this form.
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Tech Startups
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- Jason Levin dropped out of college and turned his content creator side-hustle into a full-time job.
- He now makes between $2,000 and $5,000 a month by making memes and copywriting for startups and VCs.
- He writes his own newsletter and went from 1,000 subscribers to more than 7,000 in under two years.
Almost two years ago, I dropped out of college after I started making good money writing a newsletter and copy for tech startups.
I was studying English at Rutgers University in New Jersey, but I felt like I was wasting a lot of time in class. I knew I wanted to write for an online audience, but we weren't taught how to write blogs or newsletters or Twitter threads.
That's why I decided to teach myself, and I started my own newsletter in July 2021, while also taking on freelance copywriting work for startups.
I realized I was making more money than my professors
Three months later I quit college.
When I left, I had less than 1,000 subscribers to my newsletter, which focuses on content strategy. I now have 7,200. I also didn't have many Twitter followers, but in a year, that's grown to more than 10,000.
The growth came mostly from writing Twitter threads on marketing case studies and by making funny memes.
While I've had some threads go viral and get me 2,000 followers in a night, others have only generated 20 new followers. It's a matter of persevering and putting in the work.
I landed my first copywriting gig through Twitter
I saw someone post that she was looking for a freelance writer, so I sent her a message with a link to my blog. I was able to secure an assignment and since then it's been a snowball effect.
I then built up my portfolio and found new clients by cold messaging tech founders and VC firms on Twitter.
One of the clients I was copywriting for saw some of the memes I made on my Twitter account and found them funny, so he asked me to make some for their company.
—Jason Levin (@iamjasonlevin) March 8, 2023
While I made about $75 in crypto from the first few memes, I'm now earning between $2,000 and $5,000 a month from between three to five clients.
I've had a bunch of memes go viral and that led to people messaging me and asking me to do it for them too. I'm proud to say I'm a "meme lord" now, getting paid to make memes and silly content for companies.
Some of my clients are well-known tech startups and VC firms
One client is a startup called Jam, a software firm backed by Union Square Ventures.
For Jam, I posted a picture of me eating jam and said I would eat a packet for every person that followed their Twitter account.
I live-tweeted myself eating jam for the next few hours. The next day I found out the company hit an all-time high on product usage.
—Jason Levin (@iamjasonlevin) March 13, 2023
I have very high agency and almost full control of what I post from some clients' brand accounts. But I've had times where clients need to approve the content. It really depends on the client and how comfortable we are in our working relationship.
I work six to eight hours a day
My working day typically involves generating memes, writing for my clients and my newsletter — which I send out twice a week — and writing Twitter threads. I also write a startups newsletter once a week.
I also have a book coming out in October, "Memes Make Millions", which includes interviews with more than 20 people who make money through "meme marketing."
Dropping out of college was one of the best decisions in my life. I'm definitely living the dream.
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Tech Startups
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Drew Angerer/Getty Images
toggle caption
Treasury Secretary Janet Yellen arrives for a hearing on Capitol Hill on March 10. On Sunday, Yellen said the government wouldn't bail out Silicon Valley Bank.
Drew Angerer/Getty Images
Treasury Secretary Janet Yellen arrives for a hearing on Capitol Hill on March 10. On Sunday, Yellen said the government wouldn't bail out Silicon Valley Bank.
Drew Angerer/Getty Images
Treasury Secretary Janet Yellen says the U.S. government won't bail out Silicon Valley Bank as it did with other financial institutions during the 2008 financial crisis, but she noted that regulators are working to ensure people and businesses with money in the failed bank would be made whole.
"The reforms that have been put in place means that we're not going to do that again," Yellen said when asked about a bailout during a Sunday appearance on CBS's Face the Nation.
"But we are concerned about depositors and are focused on trying to meet their needs," she added.
The fate of Silicon Valley Bank, or SVB, and its customers had been up in the air over the weekend, days after federal regulators took control of the institution following a "run" on the bank by depositors.
Customers had been flooding the bank with requests to withdraw their money, and earlier last week SVB said it had to sell bonds at a steep loss in order to meet those requests. That announcement worsened the panic over SVB's financial situation and led to even more withdrawal attempts until regulators stepped in.
The collapse of SVB marks one of the largest failures of an American bank since the 2008 global financial crisis.
SVB had carved out a niche in the banking sector by lending to tech startups, but the recent financial problems facing the tech industry put a strain on the bank, and caused its stock price to tank.
Yellen said that, despite the collapse of SVB, she believes the overall American banking system "is really safe and well-capitalized" and "resilient."
The Federal Deposit Insurance Corporation said on Friday that all insured depositors would have full access to their insured funds no later than Monday morning. The agency also said it would pay uninsured depositors an "advance dividend" in the next week, and that depositors would be sent a "receivership certificate for the remaining amount of their uninsured funds."
An independent federal agency, the FDIC doesn't use taxpayer money to insure deposits, but rather is funded through premiums paid by member banks and savings associations.
Regulators in the United Kingdom were also working on a plan to ensure that customers of SVB's UK branch were paid.
The bank's collapse has left tech companies and other SVB customers in limbo, and it's even caused headaches for others not directly connected to the bank, such as Etsy sellers who were told they may see delays in receiving payments because the online marketplace uses SVB to make some payments.
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Getting overseas funding could become difficult for Israel's tech industry amid the war, experts told Reuters.
Tech accounts for 14% of jobs in Israel and generates about one-fifth of the country's GDP.
Funding this year has already been hit by the collapse of Silicon Valley Bank, global recession fears, and rising interest rates.
Israel's tech startups have already been facing a tough year attracting funding amid the implosion of a major lender for start-ups, global recession fears, and rising borrowing rates.
And now, it may get harder for companies to attract funding — at least for a few months, according to experts.
"Overseas investment will slow for the next couple of weeks and months, especially to the extent that there are still hostilities going on," Jon Medved, the CEO of OurCrowd, one of Israel's largest venture capital firms, told Reuters on Tuesday.
"Certainly, while we are in the midst of the war, it's hard to imagine major deals happening," Avi Hasson, a former venture capitalist and the CEO of non-profit Startup Nation Central, told Reuters.
Investment in Israel's tech startups has already been falling for seven straight quarters even before the war started, according to a report by the think tank Startup Nation Policy Institute, released on September 30.
Tech investment in Israel fell to $5.6 billion in the first nine months of this year — 62% lower than the $14.7 billion in the same period in 2022, according to the think tank. This drop is far steeper than the 43% decline in the US and a 48% fall in Europe.
"A large part of the decline in Israeli investment is most likely due to the global slowdown. However, declines in Israel between 2022 and 2023 were sharper, likely caused by the political instability," the institute's analysts wrote.
Despite the uncertainty, some US tech investors have pledged support for Israel.
New York-based venture capital fund Insight Partners has pledged to donate $1 million to charitable organizations in Israel and will match up to another $1 million in donations. General Catalyst, another VC firm, also pledged $250,000 for humanitarian efforts on the ground.
Tech insiders also express optimism for the industry, citing Israel's reputation as an established tech hub.
"Israeli tech has earned the confidence of investors in terms of being able to function during conflict and also recover from it," Hasson told Reuters. "So, I don't see investors losing faith in Israel so quickly."
Read the original article on Business Insider
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Tech Startups
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- Dawn Capital, one of Europe's biggest backers of business software companies, raised $700 million in two new funds, defying the odds as venture capital investment in tech startups has slumped.
- The London-based VC firm is one of the most prominent tech investors in Europe, with a portfolio that includes the likes of PayPal-owned payment firm iZettle and Visa-owned open banking startup Tink.
- The $700 million will be invested from two funds: a $620 million early-stage fund and an $80 million "opportunities" fund for growth-stage firms in Dawn Capital's existing portfolio.
Dawn Capital, one of Europe's biggest backers of business-to-business software companies, raised $700 million in two new funds — doubling down on its bid to find technology champions in the region at a time when venture capital funding for tech startups has dwindled.
The London-based VC firm is one of the most prominent tech investors in the continent, with a portfolio that includes the likes of Swedish online payments firm iZettle, which was acquired by PayPal for $2.2 billion in 2018, and Swedish open banking company Tink, which Visa acquired for 1.8 billion euros ($1.9 billion) in 2022.
Hannah Gubbins, a newly promoted partner at Dawn Capital, said raising the new funds in a time when private startup company valuations have tanked and investor sentiment toward technology has soured was far from easy — but that it came down to deep relationships with institutional investors built up over years.
"For us, the LP [limited partner] side, even those that weren't building programs in venture where lots of people felt historically, 18 months ago, they ought to be allocating a lot more to venture," Gubbins told CNBC in an interview.
"Suddenly with everything with the markets and the denominator effect, their private book was overallocated even if technically by their own benchmarks they weren't. That meant a lot of funds could only reup with existing managers or those with high convictions."
"It's the same as in those cycles where there is still capital out there, there are still investors investing. Investors are excited to be investing in this market," Gubbins added. "There's some of the best companies, some of the best vintages have come out of the dotcom [bubble], out of the global financial crisis. They know that, they sit on the data."
Dawn Capital plans to invest in 20 companies with the new funds, which is the firm's fifth to date. Dawn V will be split into two distinct funds: a $620 million early-stage fund for Series A and Series B investments, and an $80 million "opportunities" fund aimed at backing winners in Dawn Capital's portfolio that may go on to exit through an initial public offering or takeover later in their business lifecycle.
Venture capital investment has fallen off a cliff as investors reevaluate their allocations amid higher interest rates and rising inflation.
With rates at multi-year highs, innovative, growth-oriented companies that are making losses and that take longer to make a return on their investments have become less attractive. Stodgy, profitable firms with more stable revenue streams, on the other hand, are seeing greater interest.
Investors have been watching the initial public offerings of firms like U.K. chip designer Arm and U.S. grocery delivery firm Instacart for signs of a comeback in tech.
Tech boomed in 2020 and 2021 as the Covid-19 pandemic led to a surge in the use of online platforms for just about everything from shopping to remote work. Ultra-low interest rates from central banks aimed at propping up the economy also worked to ensure it was much easier to raise money. But all that has changed dramatically in the past year or so.
Gubbins said she doesn't have a crystal ball for when the IPO market will officially open up again. However, she said, Dawn Capital is following the debuts of Arm and Instacart closely as it searches for signs of when the dust will settle on the public listings front.
Gubbins stressed that an IPO isn't the only exit path available to founders. She highlighted the acquisition of LeanIX, an enterprise architecture management software company in Dawn's portfolio, by German software titan SAP as an example of European technology firms seeing successes when it comes to exits.
One area defying the declines in tech is artificial intelligence — where investment is booming. AI has had billions of dollars' worth of investments flowing into companies, particularly firms working on so-called "foundational models" capable of generating new content from written prompts, such as OpenAI, Anthropic and Cohere.
Gubbins said that AI has proven a standout part of conversations with limited partners. However, the focus for Dawn Capital, she said, remains investing in a broad range of business-to-business software companies in fields ranging from fintech to security and infrastructure.
"We're doubling down on what we've always done," she said. "AI is absolutely one of the areas we're looking at. Both investing in AI companies but also as something that's disrupting every sector and company."
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Rebecca Noble/AFP via Getty Images
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A Silicon Valley Bank office is seen in Tempe, Ariz., on Tuesday. For four decades, the company catered to tech startups.
Rebecca Noble/AFP via Getty Images
A Silicon Valley Bank office is seen in Tempe, Ariz., on Tuesday. For four decades, the company catered to tech startups.
Rebecca Noble/AFP via Getty Images
Silicon Valley Bank is now known as the biggest U.S. bank failure since 2008.
Before becoming known globally for its chaotic collapse, SVB was well-regarded among the tech community, which has a large presence around the San Francisco Bay Area.
The bank's collapse has had a unique impact on the area, said San José State University Assistant Professor Matthew Faulkner. The school is roughly 10 miles from the bank's headquarters in Santa Clara.
"We're in the middle of it. You could feel the mania and the panic and the concern and the interest. It's not uncommon to know somebody, whether you or somebody has money there, or whether their company has money there," Faulkner told NPR. He teaches in the university's accounting and finance department.
For those outside of Silicon Valley and the tech space, Silicon Valley Bank was not a household name. Many of its clients included venture capital firms, startups and wealthy tech workers.
For roughly four decades, SVB successfully competed with big name financial institutions — only to collapse in a matter of days.
Here's a brief history of the now-defunct bank.
Silicon Valley Bank was seen as a "trailblazer"
Jeff Chiu/AP
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Silicon Valley Bank first started in 1983. Forty years later, the bank collapsed. The bank's sign is shown in San Francisco on Monday.
Jeff Chiu/AP
Silicon Valley Bank first started in 1983. Forty years later, the bank collapsed. The bank's sign is shown in San Francisco on Monday.
Jeff Chiu/AP
Silicon Valley Bank was started in 1983 after being conceived by Bill Biggerstaff and Robert Medearis over a game of poker, according to the bank's own history from 2003. The founders' goal was to provide banking services to tech startups in Silicon Valley. Their first office was in San Jose.
Faulkner said the bank's focus on tech made in a "trailblazer" in that regard.
In 1987, the company began trading stock on Nasdaq. A year later it completed its IPO and raised $6 million in equity. The bank gradually expanded around Silicon Valley and then to the East Coast in 1990 with an office in Massachusetts. In the 1990s the company opened offices across the U.S.
After backing young tech startups during the dot-com bubble of the '90s, the company narrowly avoided disaster when the bubble burst and SVB's stock fell more than 50% in 2001, The New York Times reported in 2015.
SVB opened an Israel office in 2008 and a U.K. branch and a joint venture in China in 2012, according to the bank's timeline. Other offices followed in Europe and Canada in the last decade.
It even expanded to capitalize on the ties between the tech community's apparent love for California wine.
Then-SVB executive vice president Rob McMillan and SVB CEO Greg Becker told The Street in 2015 that the bank's wine business was a key part of building its brand and connecting to Silicon Valley entrepreneurs. That year, SVB's wine practice "accounted for 6% of the bank's $14.6 billion gross loan portfolio," the website reported.
By Dec. 31, 2022, SVB held $209 billion in assets and $175 billion in deposits, according to regulators. SVB said on its website at the time that "44% of U.S. venture-backed technology and healthcare IPOs bank with SVB."
It was among the top 20 largest banks in the country, but "you didn't always think of it as a bank in the way you would think of a Wells Fargo or Chase," Faulkner said.
Still, SVB was seen as an establishment bank, said Andrew Metrick, the Janet L. Yellen Professor of Finance and Management at the Yale School of Management.
"These guys have been around for a long time, they're a huge institution in Silicon Valley," Metrick said. "They're basically as old as the organized venture capital community out there."
What made SVB different?
Justin Sullivan/Getty Images
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People line up outside of a Silicon Valley Bank office to try to collect their money on Monday after SVB's collapse.
Justin Sullivan/Getty Images
People line up outside of a Silicon Valley Bank office to try to collect their money on Monday after SVB's collapse.
Justin Sullivan/Getty Images
"There was a special expertise around Silicon Valley Bank. A lot of banks may not have participated with [startups and tech companies] the same way Silicon Valley Bank did," Faulkner said.
Normally, if a person is seeking a commercial loan, a bank would request information on their company's cash flow and the available collateral, Metrick said.
"That's a challenge, though, if you are a young company that's not yet cashflow positive and you need, at the very least, banking services. You want somebody to handle your payroll, and be willing to extend you at least small lines of credit, things like that," he said.
SVB did that when other institutions didn't want to take the risk.
A 1995 article from SFGate called it "not your typical lending institution."
"While most commercial banks prefer proven clients, SVB likes to cement relationships with companies when they are economic toddlers," the article says. "It has built strong relationships with the venture capital community."
SVB was unique in really understanding and trusting their clients and building relationships with these companies, venture capitalists and entrepreneurs, Metrick said.
Those relationships meant, long-term, more referrals to other people looking to get their own startups off the ground and expanding into private banking to wealthy clients, he said.
SVB also had around 90% of its accounts with more than $250,000 in deposits, which is "higher than your typical bank," Faulkner said. This meant a majority of the bank's deposits were not insured by the government.
"This bank would seem perfectly at home in the 1920s or the 1870s: Lots of deposits and a lot of local customers," Metrick said. "The very biggest banks have much more diversified client bases, and also somewhat more diversified funding sources. So it wouldn't be as funded as much by deposits."
Starting in 2020, around the time of the pandemic, those deposits skyrocketed, as The Indicator From Planet Money explained.
In SVB's case, this ended up being a big problem when its extra billions were invested in Treasury bonds with long-term maturities and the Federal Reserve raised interest rates, which in turn hurt the value of government bonds. And with the tech sector struggling recently, more depositors took their money out.
Last week, SVB said it was forced to sell part of its bond holdings at a loss of $1.8 billion, leading to a run on the bank. Federal regulators took control of the bank on Friday.
"It's very much a shame that that bank is gone," said Faulkner.
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Here's What Silicon Valley Bank Collapse Did To The Indian Startup Ecosystem
Fintech firms have introduced quick funding options and ways of funnelling cash out of the U.S. and diversifying banking partners.
A number of emergency funding options have surfaced aimed at preempting any immediate payroll or working capital crunch, after the collapse of the Silicon Valley Bank sent jitters across the startup ecosystem.
Fintech firms such as Recur Club, GetVantage, and RazorPay Software Pvt. have introduced quick funding options, ways of funnelling cash out of the U.S., and diversified banking partners.
Recur Club, a fintech platform founded during Covid-19 pandemic in 2021, has a dedicated fund of up to $15 million to support founders. The company runs a proprietary trading platform that helps startups raise money without diluting equity. It allows companies to trade their future customer revenue at a small discount to get capital within 48 hours. Further, Recur said it would not charge any platform fees amid the crisis.
Another growth capital provider that works on non-dilutive funding, GetVantage, has offered up to $250,000 in instant funding while also assisting startups to open a new dollar bank account in GIFT City, Ahmedabad.
"Over the last three days, several founders have reached out to the company," GetVantage Founder and Chief Executive Officer Bhavik Vasa told BQ Prime. "We are focused on providing these founders access to quick working capital so they are well equipped to manage their on-going operational expenses. Moving forward, these businesses will need at least one operational U.S.-dollar bank account to be able to manage their capital, revenues, and outflows," he said.
A lot more inbounds than expected are being seen from Indian founders with Indian operations, he said, adding that about 80–90% of Delaware-incorporated Indian-origin startups have a banking relationship with SVB.
"What will get clarified in the coming days is that the FDIC will receive tens of thousands of applications from startups to release $250,000 in insurance to SVB customers. However, most startups have larger monthly expenses and need more runway," Vasa said.
Razorpay, which is based in Bengaluru, has set up an emergency desk to help Indian startups urgently move money from their U.S. banks to India.
"The ongoing SVB collapse has unfortunately landed a lot of our Indian tech startups in a soup and kept them on tenterhooks in the last more than 24 hours," a Razorpay spokesperson said. For the existing RazorpayX users, the company is offering to move their money into their Indian current account as FDI through partner banks. For non- RazorpayX users, the company is helping move money to a Nostro account.
"We also understand that this event may cause a few companies to be unable to make payroll in the next 30 days," the spokesperson said. "We’re working things out internally to see how we can help resolve it."
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After spending six years working for Goldman Sachs as an investment banker, Bjarke Mikkelsen faced a dilemma. "I had a very comfortable life, but I wasn't really feeling like I had a purpose," he told CNBC Make It."In banking, you're always in the end, an advisor. I knew I wanted to try and run a business … I wanted to do something in tech but also something that had very operational aspects because I like building things."Those aspirations brought the then 34-year-old to Pakistan, where he built an e-commerce marketplace called Daraz. "The idea was always to build something that was inspired by Amazon and Alibaba, where you have three elements. An e-commerce marketplace, logistics, and a payment infrastructure." One of the things that I love the most about e-commerce is that it's fair, it's a fantastic equalizer.Bjarke MikkelsenFounder and CEO, DarazIn 2018, three years after the business was launched, Daraz was bought by Alibaba in an undisclosed deal — as part of the Chinese e-commerce giant's efforts to expand in South Asia.Daraz is now operating in Pakistan, Bangladesh, Sri Lanka, Nepal and Myanmar, serving 40 million active customers, the company claimed. "One of the things that I love the most about e-commerce is that it's fair, it's a fantastic equalizer," said Mikkelsen."It doesn't matter if you're a man or a woman or you live in a big city or a rural area … Everybody has the same opportunity both as a seller to start a business, as a customer, you also have access to the same type of quality service."That is especially so in South Asia, according to Mikkelsen, where not everyone has the "same access to offline retail infrastructure." "The equalizing factor is actually something that really inspired me and I wanted to try and do something about this."How did this 41-year-old turn his startup into one of South Asia's e-commerce players? Mikkelsen shares his top tips with CNBC Make It.1. Do your due diligence Mikkelsen left investment banking in 2015, a time when there was "so much hype around tech startups.""It was very easy to get funding to start something."But he said it was nevertheless important to do his due diligence in assessing opportunities and finding target consumers. "I spent a lot of time really just studying the markets and understanding where's the potential," Mikkelsen said."I started looking at South Asia and I realized that it was a major part of the world and there was no e-commerce at that time. There's half a billion people — it's a pretty big opportunity that is often overlooked."Mikkelsen also moved to Pakistan, where he lived for three years and spent much of his time traveling to the rural areas to understand the people, their culture and needs. "If I came in try to build an e-commerce business that look the same way that Amazon looks in Denmark, that would not work," he added. "We need to add value so that we can also in the end build a profitable business." 2. Keeping it 100% To Mikkelsen, being able to take your business "from 90% and 100%" is where the magic happens. "You underestimate how much effort it is to launch a great product and build a great service … 90% is actually nothing, it will never fly but you have to get it to 100%." That was something he learned the hard way in Daraz's early days, given that he had no experience in building an e-commerce website. What I really practice a lot is to just slow things down, pause and know that everything is as good as it can be [even] when everybody else thinks that we're done.Bjarke MikkelsenFounder and CEO, Daraz"I didn't know what I was doing … just doing a few things 100% right was very, very challenging." Slowing down, according to Mikkelsen, is key to achieving excellence. "E-commerce is very fast-paced and people are always under pressure to get to the next project or the next target or the next campaign," he added. "But what I really practice a lot is to just slow things down, pause and know that everything is as good as it can be [even] when everybody else thinks that we're done."3. The work is never done Though Daraz is on "a path to profitability" with a positive gross margin, Mikkelsen said the work isn't done. "I used to think that at some point, once we get to a billion-dollar business … we'll have stable processes and everything. But now I realized that even for Alibaba, it's a mechanism that will always evolve," he said. "Our business model will never be done. We need to keep optimizing and changing for externalities in the markets and new trends." Mikkelsen's next focus? Making sure Daraz scales efficiently. "This year … we're slowing down a bit to focus on getting the right customers on board and building the customer value propositions for each of the [business] categories," said Bjarke Mikkelsen, CEO and founder of Daraz.Daraz"This year, we'll probably do about a billion dollars in gross merchandise volume … we're slowing down a bit to focus on getting the right customers on board and building the customer value propositions for each of the [business] categories."For now, however, Mikkelsen is content with the sense of purpose he found, of which "there is no lack of." "We have more than 40 million active customers on the app every month, and we have more than 100,000 sellers on our platform where we're really creating opportunity and making lives better," he added. 4. Sink or swimThe final piece of advice Mikkelsen has for entrepreneurs is to approach their journey with the "sink or swim" mindset. "I would really just encourage people to just try and not be afraid to fail. Sometimes you fail and that's okay," he said."Oftentimes you learn how to swim along the way and the development process is much, much faster if you do it that way." While it was "very, very scary" to move from banking to being a tech entrepreneur, Mikkelsen has no regrets. "It was the best thing I did for myself." Don't miss: Two of his startups failed. Now, this 30-year-old just bagged $32 million for his companyLike this story? Subscribe to CNBC Make It on YouTube!
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Tech Startups
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From fraud detection to agricultural crop monitoring, a new wave of tech startups has emerged, all armed with the conviction that their use of AI will address the challenges presented by the modern world.
However, as the AI landscape matures, a growing concern comes to light: The heart of many AI companies, their models, are rapidly becoming commodities. A noticeable lack of substantial differentiation among these models is beginning to raise questions about the sustainability of their competitive advantage.
Instead, while AI models continue to be pivotal components of these companies, a paradigm shift is underway. The true value proposition of AI companies now lies not just within the models, but also predominantly in the underpinning datasets. It is the quality, breadth, and depth of these datasets that enable models to outshine their competitors.
However, in the rush to market, many AI-driven companies, including those venturing into the promising field of biotechnology, are launching without the strategic implementation of a purpose-built technology stack that generates the indispensable data required for robust machine learning. This oversight carries substantial implications for the longevity of their AI initiatives.
The true value proposition of AI companies now lies not just within the models, but also predominantly in the underpinning datasets.
As seasoned venture capitalists (VCs) will be well aware, it’s not enough to scrutinize the surface-level appeal of an AI model. Instead, a comprehensive evaluation of the company’s tech stack is needed to gauge its fitness for purpose. The absence of a meticulously crafted infrastructure for data acquisition and processing could potentially signal the downfall of an otherwise promising venture right from the outset.
In this article, I offer practical frameworks derived from my hands-on experience as both CEO and CTO of machine learning–enabled startups. While by no means exhaustive, these principles aim to provide an additional resource for those with the difficult task of assessing companies’ data processes and the resulting data’s quality and, ultimately, determining whether they are set up for success.
From inconsistent datasets to noisy inputs, what could go wrong?
Before jumping into the frameworks, let’s first assess the basic factors that come into play when assessing data quality. And, crucially, what could go wrong if the data’s not up to scratch.
Relevance
First, let’s consider datasets’ relevance. Data must intricately align with the problem that an AI model is trying to solve. For instance, an AI model developed to predict housing prices necessitates data encompassing economic indicators, interest rates, real income, and demographic shifts.
Similarly, in the context of drug discovery, it’s crucial that experimental data exhibits the highest possible predictiveness for the effects in patients, requiring expert thought about the most relevant assays, cell lines, model organisms, and more.
Accuracy
Second, the data must be accurate. Even a small amount of inaccurate data can have a significant impact on the performance of an AI model. This is especially poignant in medical diagnoses, where a small error in the data could lead to a misdiagnosis and potentially affect lives.
Coverage
Third, coverage of data is also essential. If the data is missing important information, then the AI model will not be able to learn as effectively. For example, if an AI model is being used to translate a particular language, it is important that the data includes a variety of different dialects.
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- The Venture Capital Alliance (VCA), a coalition of more than 20 venture capital firms, launched Tuesday with the goal of getting the VC industry to increase its commitments to climate tech.
- The alliance has laid out guidance that its VC members and their portfolio companies must follow to ensure they meet the requirements to achieve net-zero emissions by 2050.
- Some of the world's largest VC funds, including Tiger Global, have signed up as members of the alliance.
A group of venture capital firms including Tiger Global and Union Square Ventures on Tuesday set up an alliance aimed at making private tech investing more climate-friendly.
Called the Venture Climate Alliance (VCA), the coalition of more than 20 climate tech and generalist funds seeks to get the VC industry to increase its commitments to climate tech, a branch of technology devoted to finding solutions to the climate crisis.
The alliance lays out guidance that its VC members and their portfolio companies must follow to ensure they meet the requirements to achieve net-zero emissions by 2050.
According to a statement, the VCA's stated aim is to "ensure that methodology and metrics are at the heart of how we determine what is a good climate investment, and what investment will have the greatest positive effect on the mission to build tech for a regenerative world."
Portfolio companies are given guidance on how they should decarbonize their operations, such as using emission-free data centers, deploying less energy-intensive software in their tech stack, or rebuilding supply chains around low-carbon alternatives, the statement said.
Other funds signed up to the VCA include climate VCs World Fund, 2150, and Prelude Venture. Collectively, the investment firms involved manage a combined $62.3 billion in assets, according to Dealroom figures.
Generalist VC firms will need to make routine assessments of their carbon footprint, align their early-stage startup bets with net-zero goals. For climate tech-specific investments, VC firms signed up to the alliance will have to ensure the technology they're investing in has the potential to save at least 100 megatons of carbon dioxide emissions.
It is not the first initiative to bring climate's role in startup investing to the forefront. Leaders for Climate Action launched in 2020 with specific clauses added to deal term sheets guiding how startup firms should make their operations more climate-friendly.
The VCA takes such initiatives a step further with the blessing of the United Nations. The U.N. approved the VCA as part of its Race to Zero campaign aimed at mobilizing climate action. The alliance will fall under the Glasgow Financial Alliance for Net Zero (GFANZ), a group formed during the COP26 climate conference.
Mark Carney, the former Bank of England governor and currently co-chair of the GFANZ, said investing in climate solutions was "a critical, foundational pillar of a comprehensive, economy-wide transition to net zero, and one of the four financing strategies in the GFANZ net zero transition plan framework."
"In keeping with our industry-led approach to date, we welcome the launch of the Venture Climate Alliance as a new sector-specific alliance under GFANZ, and applaud efforts by venture investors to establish workable and high-integrity standards for tracking the contributions of early-stage innovations in the transition to net zero," Carney said in a statement Tuesday.
The VCA aims to amplify efforts by tech startups and their venture backers to combat the climate crisis with new technologies. Technologists are working on a multitude of solutions ranging from carbon capture — the process of capturing and removing carbon dioxide from the air — to battery electric vehicles to tackle climate change.
While climate tech has proven to be a fast-growing area of tech, it still fails to attract the mammoth sums other sectors such as fintech and crypto have achieved. In 2022, fintech companies attracted $79 billion in venture funding, according to data from Dealroom. That was down 38% from 2021. Still, it eclipsed the $50 billion raised by the climate tech sector, which itself saw funding drop 10% in 2022.
Valuations in the climate tech space have also fallen. In 2022, the combined enterprise value of global climate tech startups dropped by 30% to $1.6 trillion, according to Dealroom data.
"The launch of the VCA is no coincidence. If you look at the last year, many generalist funds have learned that some bubbles burst in the fintech space, in the cryptocurrency space, in the e-commerce space," Danijel Visevic, founder of World Fund, told CNBC.
"I would say everything that is not solving big problems got into big trouble last year, because then suddenly it became obvious that there were valuations across the market that were not backed by the problem those startups and technologies address."
VC investment as a whole has slumped dramatically in the past year as investors have soured on technology, a sector known for its focus on cash-intensive, rapid growth. The collapse of Silicon Valley Bank, a critical player in lending to climate ventures and other startups, in March was a major blow to the sector.
"Macro conditions more broadly have likely had a bigger impact on the industry than SVB; at the moment we are seeing what looks like more of a correction in valuations than a downturn or an outright intractable market environment," Alexandra Harbour, founder and chair of the VCA and a principal at Prelude Ventures, told CNBC.
"The burden of proof on teams out raising at 2020 or 2021 valuations can be high, but it's mostly dependent on their performance over the past several quarters and whether they were able to hit critical milestones."
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- While SVB served tech startups and venture capital firms mostly located in the U.S. or have a presence in the U.S. Some VCs based in Southeast Asia — such as Jungle Ventures and Golden Gate Ventures — were also clients of SVB.
- Many VC firms in Southeast Asia could face challenges in finding another bank that offers the same product offering as the collapsed SVB, venture capital firms in the region say.
- "That's really because the local banks here aren't providing the same product and services that SVB provides," said David Gowdey, managing partner at Jungle Ventures, on CNBC's "Squawk Box Asia."
SINGAPORE — Compared to startups, Southeast Asia's venture capital firms could see a bigger impact from the collapse of Silicon Valley Bank because finding a replacement for the U.S.-based bank in the region will be challenging.
"I think from a VC firm's perspective, you will see a bigger impact here," said David Gowdey, managing partner at Jungle Ventures, told CNBC's "Squawk Box Asia."
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"That's really because the local banks here aren't providing the same product and services that SVB provides," Gowdey said Tuesday, adding that SVB was Jungle Ventures' primary bank.
While SVB served tech startups and venture capital firms mostly located in the U.S. or have a presence in the U.S. Some VCs based in Southeast Asia — such as Jungle Ventures and Golden Gate Ventures — were also clients of SVB.
The bank provided VC firms and startups access to the U.S. capital market as well as networking opportunities in the U.S.
SVB served and built a very strong product offering for VC firms, said Gowdey, adding that Jungle Ventures will now probably have to "look for a Big Four player in the U.S. to be our partner."
In terms of replacing some of the features that SVB provides in the U.S., it is "going to be hard," said Vinnie Lauria, managing partner at Golden Gate Ventures, on CNBC's "Street Signs Asia" on Tuesday.
"We were a client of SVB so we understand the value-add very well," said Lauria.
Lauria qualified that less than 1% of Golden Gate Ventures' entire portfolio had banked with SVB. For those companies backed by Golden Gate that banked with SVB, they did not engage full banking services with the U.S. bank, he said.
Only two companies in Jungle Ventures' portfolio of more than 70 startups had exposure to SVB, said Gowdey.
"That was really because [these two companies] had operations in the U.S.," he added.
While the two companies had exposure to SVB, only one had material exposure, said Gowdey, adding that the company that faced material exposure had engaged SVB for payroll services.
As for startups in Southeast Asia, VC firms say they will not likely be hit by the contagion from the collapse of Silicon Valley Bank.
"The reality is, here in Southeast Asia, a lot of the startups were really buffered. Most did not bank with Silicon Valley Bank," said Lauria from Golden Gate Ventures.
"So the reality is, Southeast Asia is already very isolated from what was happening in Silicon Valley," he said.
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Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.
Dear Sophie,
I’m a startup founder in Berlin. I just returned from a visit to Silicon Valley where I met with a new customer. On the trip, I realized I need to be based in the U.S. to grow our base with U.S. customers.
What are the best visa options for me and my family? Will any of them allow my husband to work and continue his career?
— Seeking Scale
Hey there, Seeking!
Kudos to you on your business successes so far — and for your courage to take the next big leap to relocate to the U.S.! I’m honored that you reached out as you and your family begin your journey. I’ve got you!
You may be able to avoid having to go through an in-person consular interview for L-1 or O-1 visas if you apply now because until the end of this year, the Department of State has given consular officers the discretion to waive the visa interview requirement for certain work visas if the beneficiary was previously issued a visa and has never been refused one.
Consult an immigration attorney who can guide you to the best immigration options for your and your family based on your circumstances, timing and goals. There are a variety of options that might apply to you, based on various factors such as having a co-founder in a specific role or your citizenship in certain countries, but for now let’s dive into two of the visa options for you and your family so you can compare the general pathways!
L-1A is a top option
If you have worked for your startup for at least 12 continuous months in the past three years and can document your employment through payroll slips or tax documents, your startup can file for an L-1A visa for intracompany transferee executives or managers for you to come to set up an office in Silicon Valley.
To get an L-1A visa to open a new office in the United States, your company will need to sponsor you for the visa and show that you’ve secured a physical office location. Your company may also submit business plans, growth models, and organization charts. If you’re setting up a new office in the U.S. and are approved for an L-1A, that type of visa will can be initially valid up to one year. To extend the L-1A beyond that, you need to show that your U.S. business met your growth models and that the business is viable.
If your startup applies for an L-1A on your behalf while you’re in your home country, once the petition is approved, you will need to apply for a visa at a U.S. embassy or consulate. Consular posts have the discretion to waive interviews on a case-by-case basis at least through the end of 2023.
Some people visit the U.S. first on ESTA or a B-1 business visitor visa to secure an office and meet with prospective customers. It’s crucial to keep in mind that the B-1 is not a work visa, so while working in the U.S. is not allowed, you can perform some business activities, such as participating in meetings and signing a lease or other agreements. When you have an office and meet all the other requirements of the L-1A, your startup can petition you for an L-1A.
The B-1 visa is good for six months initially (ESTA is valid for only 90 days at a time) and can be renewed once from the U.S. for another six-month period if necessary. Premium processing is available for the L-1A, which means for a fee, U.S. Citizenship and Immigration Services (USCIS) will either decide on your case or issue a request for evidence within 15 days.
If your husband wants to accompany you to the U.S. to simply apply and interview for jobs while you scout for office space, he can enter on ESTA or apply for a B-1 visa as well. The B-1 and the B-2 visitor visa for pleasure are issued together, so it’s crucial that you and your husband let the U.S. immigration officials know, particularly at the airport, that you will be conducting business while in the U.S. Failing to do so may put your ability to stay in the U.S. and any future visas and green cards at risk.
The spouse and dependent children of L-1A visa holders are eligible for an L-2 visa. As an L-2 visa holder, your husband will be eligible to work. Since 2021, individuals who have an L-2 visa no longer have to apply for or renew their employment authorization document (EAD), otherwise known as a work permit. The USCIS will issue Form I-94 listing “L-2S” when granting your husband a status change to an L-2. That’s considered equivalent to an EAD card and it’s a great benefit for families!
The maximum stay in the U.S. on an L-1A visa is seven years. The L-1A offers a path to the EB-1C green card for multinational executives and managers. The requirements for the EB-1C are similar to those of the L-1A: Your company must sponsor you, and you must have been employed in the U.S. as an executive or manager for at least one year.
O-1A is an option, but . . .
If the L-1A is not an option for you, we’ve had a lot of success helping founders get an O-1A extraordinary ability visa. But keep in mind that unlike the dependent spouse of an L-1A visa holder, the O-3 dependent spouse of the O-1A visa holder is not eligible to work. However, your husband can work if he finds a job with his own employer willing to sponsor him for a work visa.
If you pursue the O-1A, it’s easier for your company to qualify for an L-1A, but the overall bar for your accomplishments is higher. However, I often find that most startup founders with a product, perhaps some funding, and some initial traction can easily qualify. To qualify for the O-1A, you must demonstrate at least three of eight criteria, such as receiving international or national awards; exclusive, invitation-only membership in organizations; and being featured in professional, trade or major media. Check out this previous Ask Sophie column in which I dive into how to meet each of the eight O-1A criteria. Premium processing is also available for the O-1A.
Because the EB-1A extraordinary ability green card has many of the same criteria as the O-1A, the O-1A is a fairly easy reach to an EB-1A or some founders pursue an EB-2 NIW if their wait time is acceptable.
E-2 is also an option, but . . .
The E-2 treaty investor visa enables international founders whose home country has a trade and commerce treaty with the U.S. — as Germany does — to live and work in the U.S. while investing substantial capital to build a business here. (The U.S. Department of State maintains a list of treaty countries.) But keep in mind that at least half of your U.S. business must be owned by people or companies from your country of citizenship to maintain E-2 status, which gets tricky particularly if and when your startup begins raising funds.
Although the E-2 requirements don’t specify how much capital you must invest to build your U.S. business, immigration officers look for large investments in office space, equipment and inventory, somewhere in the $100,000 range. That can make it difficult — but not impossible — for startup founders to qualify for the E-2. While the E-2 does not specifically require job creation, immigration officials may consider your U.S. business to be too “marginal” without it.
Another major factor is that the E-2 visa application process occurs directly at the consulate, and there is no option for premium processing if you are seeking a multiple entry visa in your passport.
The spouse of an E-2 visa holder is eligible to apply for an EAD. Like the L-2 visa holders, E-2 dependent visa holders automatically have work authorization with their visa and will receive a Form I-94 that serves as proof they are authorized to work.
Like the O-1A, there’s no limit on the number of times the E-2 visa can be extended. However, for the E-2, immigration officials will want you to demonstrate that you still maintain a residence and ties to your home country and intend to eventually return there. This is called non-immigrant intent, and immigration officials will want to see that you do not intend to and have no desire to remain in the U.S. permanently. In contrast, the L-1A and O-1A visas allow you to pursue a green card (permanent residency).
Immigration officials heavily scrutinize both the L-1A and E-2 visa applications, so I want to gently remind you how important it is to work with an immigration attorney to present a strong case whatever route you decide to take.
Enjoy your journey!
— Sophie
Have a question for Sophie? Ask it here. We reserve the right to edit your submission for clarity and/or space.
Sophie Alcorn, founder of Alcorn Immigration Law in Silicon Valley, California, is an award-winning Certified Specialist Attorney in Immigration and Nationality Law by the State Bar Board of Legal Specialization. Sophie is passionate about transcending borders, expanding opportunity, and connecting the world by practicing compassionate, visionary, and expert immigration law. Connect with Sophie on LinkedIn and Twitter.
Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!
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Main Sequence, an Australian venture capital firm, said Wednesday it has raised the $450 million AUD (approximately $303 million) first close of its third fund.
The venture capital firm, founded by Australia’s national science agency CSIRO (Commonwealth Scientific and Industrial Research Organisation), has secured funding from new limited partners, including LGT Crestone, NGS Super, Daiwa Securities Group and the Grantham Foundation, as well as returning backers Hostplus, Temasek, Australian Ethical Investment and Morgan Stanley Wealth Management. The third fund will include CSIRO’s first half of the committed $150 million AUD investment announced by the federal Australia’s Economic Accelerator program.
Including the recent capital, Main Sequence now has more than $1 billion AUD in assets under management. The firm, which did not provide the final targeted size it expects to reach, says it will complete the third fund by the end of this year.
With the third fund, the firm plans to make approximately 25 pre-seed and Series B investments, partner of Main Sequence Gabrielle Munzer said in an interview with TechCrunch, adding that there are no specific figure amounts for minimum to maximum investment, but it could start from $100,000 AUD.
“We see incredible promise in pre-seed investments,” said Munzer. “We are continuing to harness the forces of entrepreneurship and research to address the ‘Valley of Death’ [between research and commercialization].”
The firm works closely with universities to seek out potential researchers and scientists and to build their technology from scratch through its “venture science” investment model. That means it empowers scientists to transform technology in the research stage into real-world solutions.
To boost the technology sector, the Australian government has introduced financial incentives, which have supported tech startups in fundraising, product development and market launches. Main’s involvement with government agencies, including CSIRO’s On Accelerator and Australia’s Economic Accelerator, as well as university accelerator programs like UNSW Founders’ SynBio 10x program, enables the VC firm to discover cutting-edge technology developers, the company says.
With its mission to find solutions to planetary problems like decarbonization and feeding a growing population, the new fund will zero in on decarbonization and deep tech companies.
“First, decarbonisation — we want to ensure more translation of climate research into the solutions urgently needed to address our environmental impact,” Mike Zimmerman, partner at Main Sequence, said in a statement. The firm will continue to back deep tech startups that build technologies central to Australia’s national interest, including cybersecurity, quantum computing and advanced semiconductor technology.
“Our focus remains on big, global challenges that need scientific backing, patient capital and long-term vision to solve,” said Zimmerman.
Launched in 2017, the deep tech–focused venture capital firm has supported 53 companies, mainly in Australia, creating more than 2,100 new jobs. Main Sequence previously set up two funds — the $240 million AUD original fund, CSIRO Innovation Fund 1, in 2018, and the $330 million AUD second fund, CSIRO Innovation Fund 2, in 2021. Its portfolios include companies like Regrow, Advanced Navigation, Gilmour Space, Samsara Eco, Endua, MGA Thermal, QuintessenceLabs and Q-CTRL.
“Our last fund saw the launch of five venture science startups — Endua, Eden Brew, Quasar Sat, Cauldron and Samsara Eco,” Munzer said. “We are keeping up this momentum with Fund 3, pioneering new frontiers in biotechnology and plan to continue co-founding new companies at the bleeding edge of exciting advances in food and fibers with Fund 3.”
“Deep technology (deep tech) companies have the potential to deliver strong long-term returns on behalf of our members whilst aiming to provide solutions to societal, technological or ecological problems,” Sam Sicilia, chief investment officer of Hostplus, said.
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TreeCard offers users a spending and money management platform tied to a debit card made from wood.TreeCardTreeCard, a climate-conscious digital money app, raised $23 million from investors in a new financing round.Founded by British entrepreneur Jamie Cox in October 2020, TreeCard is a novel concept in the fintech world. It offers users a spending and money management platform tied to a debit card made from wood.The firm uses 80% of the profits it makes from card interchange fees to plant trees through a partnership with green search engine Ecosia. TreeCard has so far planted more than 200,000 trees.The deal underscores increased interest by VC investors in companies addressing climate change. Funding for climate tech startups hit a record $111 billion in 2021, according to a report from U.K. startup network Tech Nation."There's hundreds of millions of people in the world who are changing their behavior based on the environment," Cox told CNBC in an interview. "There isn't a super app for the environment yet."Super apps act as all-in-one platforms that serve a range of user needs spanning instant messaging, banking and travel. Cox envisages TreeCard becoming a super app focused on climate — his app includes a game that lets users visualize how many trees their activity has helped produce, for example.Peter Thiel's Valar Ventures was the largest investor in TreeCard's round, while EQT, Seedcamp and climate-centric venture capital firm World Fund also chipped in. Valar is a prolific investor in fintech, having previously taken stakes in the likes of Wise and N26.The platform, which is still operating in beta testing mode, plans to use the funding for an official launch later in 2023. In addition, TreeCard will use the cash to grow its roughly 30-person team, with the aim of nearly doubling in size.TreeCard is currently only available in the U.S., with a waitlist of more than 250,000 clients. It is now gradually onboarding users. TreeCard plans to launch in the U.K. and Europe, too, "hopefully soon," Cox said. Though based in the U.K., TreeCard chose the U.S. as its launch market. The U.S. has been a tough place for rival European fintechs. Monzo pulled its application to acquire a U.S. banking license, while N26 shuttered its American operations completely.TreeCard isn't a bank itself but offers its accounts through Sutton Bank, a regulated lender.The TreeCard app includes a game that lets users visualize how many trees their activity has helped produce.TreeCardHigher rates on the fees merchants must pay every time a customer uses their card to spend make the U.S. a more lucrative opportunity than Europe, TreeCard's CEO said.But according to Cox, what European fintechs often get wrong in the U.S. is not realizing "the kind of requirements on a finance product are very different to Europe.""When finance-type companies come from Europe, they don't understand intimately the American audience," he told CNBC."Rewards are almost always front and center for especially spending products but a lot of finance products. It's more of an afterthought in Europe."TreeCard offers clients up to 3% of annualized interest on their deposits, a feature it offers through third-party vendors."The commitment there is that your funds aren't used for fossil fuel investments," Cox said.Banks have channeled massive sums of money to support fossil fuel companies down the years. Analysis from campaign groups Urgewald, Reclaim Finance and more than two dozen other NGOs found that commercial banks channeled $1.5 trillion to the coal industry between January 2019 and November last year.TreeCard's funding also defies some of the troubles being faced in the fintech sector, where firms are putting listing plans on ice and cutting back on expenses to brace for a likely recession. Klarna, the buy now, pay later firm, saw its valuation plunge 85% in July, and laid off 10% of its workforce."We will be hiring but we have to be careful," Cox said. "The environment is different from last year."He added: "The key thing is that businesses over the next year and a half probably, consumer businesses are going to have to find ways to grow that aren't just conventional, 'plow loads of money into Facebook ads and get users.' That's not going to be the sustainable model of growth."While at university, Cox founded a company called Cashew, which he described as "Venmo for the U.K." He later joined Peter Thiel's Thiel Fellowship, a two-year entrepreneurship program, where he started cloud computing startup FluidStack.
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How do you know when a market has matured?
Often, you can simply look at the usual metrics: revenue, market capitalization, customer numbers, margins, and the like. But there’s one relatively new measure that doesn’t get a ton of attention: Is there a Y Combinator-backed SaaS startup for a market?
If that’s the metric, then the market for solar installers is officially mature.
For years, solar installers have cobbled together project management workflows. For smaller companies, that often looked like a slew of spreadsheets. For larger ones, it meant hacking together something from Salesforce or Oracle to fit the unique needs of a solar installation. Altogether, they worked: The industry is still booming, as evidenced by the fact that jobs for solar installers are expected to grow 22% this year.
But though they work, these systems aren’t ideal.
Coperniq’s pitch is that its SaaS will help solar installers manage their projects better than existing solutions while also giving the companies an eye toward long-term recurring revenue. The startup was part of Y Combinator’s Winter 2023 batch, filling out part of the accelerator’s drive to invest in more climate tech startups. Since graduating, the company has been on track to increase annual recurring revenue five-fold this year, co-founder and CEO Abdullah Al-Zandani told TechCrunch+.
“We’re in the healthy spot,” he said.
A few things inspired Al-Zandani to start Coperniq along with Max Kazakov. Most recently, Al-Zandani worked for a solar company helping to manage sales and operations, which was where he realized there was a need for a better solution.
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Notable athletes, including NFL star Patrick Mahomes, NBA players Ben Simmons, DeAndre Ayton, and Kyle Lowry, are among limited partners in Andreessen Horowitz’s fund.Getty Images NFL star Patrick Mahomes and NASCAR driver Bubba Wallace joined the growing list of athletes to invest in a third fund led by venture capital firm Andreessen Horowitz. The firm, known as a16z, launched its third Cultural Leadership Fund, or CLF, that has the goal of growing Black wealth through ownership of future technology companies. The fund attracted NBA player Blake Griffin, WNBA stars Nneka Ogwumike and Maya Moore who joined Mahomes and Wallace. In addition, NFL running back Leonard Fournette, musical producer Pharrell Williams, and pop star “The Weeknd” also joined “CFL III.” CLF’s investment portfolio includes equity stakes in blockchain company Dapper Labs, video game developer Roblox, and publishing platform Substack. A16z said the fund raised over $60 million since 2018. In a statement sent to Forbes, Wallace called CLF “important work” as its purpose is to enhance “access and equity for Black communities in tech.” Diversity in the tech sector remains an ongoing issue. The U.S. Equal Employment Opportunity Commission estimates Black people make up only 7.4% of the tech workforce. White people make up 68.5% among those who participate in tech; Asians represent 14%, and Hispanics make up 7.9%. Andreessen Horowitz launched its CLF fund in 2018.Getty Images Wallace, who became the face of NASCAR’s diversity push, told Forbes that he’s witnessed “how powerful representation can be to inspire and engage future generations.” Wallace added the fund provides “a front row seat to the technology shaping our future, but also to have an impact on increasing Black representation and ownership in tech.” In 2018, A16z launched the first CLF with investors including Brooklyn Nets star Kevin Durant; hip-hop stars Sean Combs, Nas, and legendary musical composer Quincy Jones. A16z launched CLF II in June 2021.
The fund targets Black cultural influencers in sports, music, and business, and co-invests in a16z portfolio companies, including a variety of tech startups. Also, a16z said it donated more than $2.5 million in management fees and earnings associated with the CLF to nonprofit organizations with the mission of improving diversity in the tech sector. A16z says it has more than $33 billion in assets under management. That includes funds with investments in multibillion valuation companies, including crypto platform Coinbase, e-commence company Fanatics, and freight platform Flexport.
In a blog post announcing the third fund, a16z partner Megan Holston-Alexander called CLF III investors “true representations of cultural leadership” who are “excited about technology, curious about the innovation process, and want to play a role in building the future.”
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Tech Startups
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- Silicon Valley Bank was the go-to bank for startups looking to talk to bankers who understood the startup life and balance sheets, including climate tech startups.
- Specifically, Silicon Valley Bank has been the "1,000-pound gorilla in the room" of providing venture debt to startups, which means lending to startups that are still raising money from investors.
- But since SVB started, the climate space has grown up, and there are going to be lots of financiers looking to serve the climate community going forward simply because it's good business, participants in the space believe.
Silicon Valley Bank was the go-to for startups seeking bankers who understood the startup life and balance sheets. That was especially true for the cohort of startups being built and scaled to address climate change.
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Founded in 1983 specifically to help startups, SVB had a strong and established business in climate, boasting 1,550 climate tech and sustainability clients, according to its website.
"Silicon Valley Bank had a very good reputation in the energy transition space and were willing to put their money where their mouth is, unlike many of their peers," said Mona Dajani, the head of renewable energy and infrastructure law at Shearman and Sterling.
"Many clean energy companies banked with SVB because they had an established and dedicated clean energy practice and they were perceived to have more experience in the clean energy space than most regional and big bulge bracket peers," Dajani told CNBC.
But the climate space has grown up since SVB started, and that paves the way for new lenders to serve the market.
"Fundamentally, the companies that are coming out climate right now have real strength. These are foundational companies, and people are going to want to lend to them because it's good business," explained Katie Rae, the CEO of The Engine, an accelerator and venture fund focusing on tough tech, including climate startups.
"Just in the last three days, I probably have 50 emails in my inbox from different providers saying, 'Hey, I know SVB is not in good shape. We also do venture debt.' So many are going to emerge," Rae told CNBC in a phone conversation on Tuesday.
Venture-backed startups are an unusual type of business. In their early stages, they may not have cash flow, revenues, or even customers. Instead, they rely on venture funding, where investors offer cash in exchange for equity, hoping that the startups prove out their technology, find customers, and eventually grow into giants.
Providing banking to those kinds of customers requires special skills and an appetite for risk.
"I envision a startup's application getting simplify annihilated by a big bank's risk committee," Bogue told CNBC.
That was exactly Bill Clerico's experience back in May 2009. When Clerico moved to Silicon Valley with Rich Aberman to grow their fintech company, WePay, they had a Bank of America small business account, but the account didn't have the services the startup needed.
"Silicon Valley Bank understood that even though we may have only had $10,000 or so in deposits at the time, we had a lot of potential," Clerico told CNBC.
As it turned out, SVB was right to bet on Clerico. WePay was acquired by JP Morgan Chase in December 2017.
"That early investment in our relationship paid off," Clerico told CNBC. "Over time our deposit balances grew to hundreds of millions, we borrowed millions from them in venture debt, and we processed billions through their accounts."
In Jan. 2022, Clerico launched Convective Capital, a $35 million venture capital fund investing in wildfire technolog. He ardently hopes somebody can fill the gap left by SVB.
"Some folks may conflate their balance-sheet-driven meltdown with the failure of this startup-focused business model — but in fact, I think that banking startups continues to be a great business and a role that someone needs to fill," Clerico told CNBC. (Notably, Clerico is an angel investor in Mercury, a startup working to meet this need.)
"I hope SVB and their business model persists in some form," Clerico said.
In the climate tech ecosystem, SVB was especially prominent in making loans to companies with venture capital funding, known as "venture debt." It's essential for startups who are still not generating enough cash flow to be self-sustainable, especially when they are between funding rounds.
"It adds a little bit to the capital that they've raised, extends their runway a little bit and gives them more time to make progress on their business," Rae told CNBC. Venture debt can add between three to six months to the runway companies already have, Rae said.
"The concern now is that even in instances where deposits are made whole, the credit facilities for companies with SVB are likely no longer available, and this is a sector where those are critical," said Dajani.
That said, making loans to venture-backed companies is a riskier endeavor than traditional banking, Kassar told CNBC.
"I always wondered how they managed to have the regulators allow them to have such a heavy concentration of venture debt," Kassar said.
SVB was an early supporter of climate technology, helping a lot of these companies get off the ground. But as the sector has matured, participants believe other financiers will be more willing to lend to these companies.
"Silicon Valley Bank's early support and commitment to supporting climate tech startups certainly helped catalyze the enormous migration of capital that you're now seeing deployed into the sector," Adam Braun, a founder of the climate startup Climate Club, told CNBC.
For instance, SVB provided financing to 60% of community solar projects, says Kiran Bhatraju, the CEO of Arcadia, a climate technology company that, among many services, helps people connect to community solar projects.
"But renewables have come a long way in the last decade and there's now a much wider universe of potential financiers looking to get on board," Speirs said.
That's what Braun expects to see, too.
"I believe we'll see many more institutions build dedicated climate practices and funds to support startups emerging in this space," Braun told CNBC. "While SVB may have been a first mover, I don't think the events of last week will diminish the desire to finance and support the emerging companies that are leading the rapidly growing climate tech sector forward."
First Republic and JP Morgan are "increasingly making this category a priority," Chauncy Hamilton, a partner at the venture capital firm XYZ, told CNBC. "More and more banks are paying attention to climate," Hamilton said.
"Climate solutions are too powerful a force to be stopped by the failure of a bank. The need is critical and time is not on our side to find solutions. Since this is a fundamental need, it will get more backing rather than less," Casady told CNBC.
That transition will take time, however. And for companies working to combat global warming, time is the ultimate enemy.
"I do expect big banks to ultimately step up and provide the financing the industry needs to move forward — these projects are just too attractive and the promise of climate tech is too great. But it will take some time, and delays can be costly in the fight against climate change," Bhatraju told CNBC.
"With all the new investment in climate tech and the opportunities ahead afforded by the IRA [Inflation Reduction Act], there is a ton of momentum. We don't want to lose that," Bhatranju said.
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For the last decade, scoring a big round of venture capital funding has been the yardstick of success for startups across the ecosystem. After that, startups can finally get out of fundraising mode, focus on growth, reach scale and generate millions (billions?) in annual cash flows. But for many startups, venture funding isn’t necessarily the best option — for some, it’s no longer an option at all.
Now, with global venture funding in decline, bootstrapping is an increasingly important and viable way to launch and grow a startup.
Moreover, it seems like the pendulum has swung back to a time when technical innovation (as opposed to business model innovation or regulatory arbitrage) is happening in nascent spaces such as crypto, climate and generative AI. Venture capitalists may feel reluctant to invest in companies without a product they can prove is already successful with a growing customer base.
Founders of consumer tech startups can use the current market downturn as an opportunity to focus on revenue generation by building products that customers are willing to pay for.
We launched NordVPN from Lithuania in 2012. Back then, there was a lack of accessible venture capital — that year, Baltic startups merely raised $54.4 million combined compared with $2.4 billion in 2021 — which we had to factor into our corporate growth plans.
Here are three key principles bootstrapped founders should keep in mind for conceiving, launching and scaling a successful consumer product, based on our ten years of bootstrapping experience.
Double down on a key focus and do it well
When your customer is king, it usually pays to develop product thinking, which is the skill of knowing what makes a product useful to — and loved by — people. But what happens when you are building a product for a market segment that doesn’t even exist?
Use the current market downturn as an opportunity to focus on revenue generation by building products that customers are willing to pay for.
The answer: double down on a key product focus rather than explore multiple options — do one thing very well (at least initially). Your attention to detail will become a competitive advantage in time.
In the early 2000s, VPNs were mostly associated with businesses and the public sector. Consumer VPN technology was still nascent and the average online user was not familiar with it. In short, there was a lot of white space to be filled.
In 2012, it was important for us to educate people on the importance of using a VPN and why they should pay for one — and it was equally important to build a product that the ordinary internet user could, and should, use daily (addressing both functional and emotional needs).
The huge vacuum in the consumer VPN market at that point meant it was tempting to ship out any and all features, especially since the industry was still maturing then. However, our limited capital meant we had laser focus on revenue generation, which meant building a product our users loved. By prioritizing control, convenience and speed, our customer loyalty was built up over time and retention remained high in both the good and hard times.
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- Sequoia Capital is among notable venture firms that have expanded in New York, opening an office there in July.
- IPOs of companies including Datadog, MongoDB and DigitalOcean created riches that have been poured back into the New York ecosystem.
- "Today, there's absolutely no question in my mind that you can build fantastic businesses in New York," said Murat Bicer, a partner at venture firm CRV.
Albert Wang, a native Californian, moved to New York from Boston with his wife a decade ago and got a job as a product manager at Datadog, which at the time was a fledgling startup helping companies monitor their cloud servers and databases.
New York had its share of startup investors and venture-backed companies, but it wasn't a hotbed of tech activity. The San Francisco Bay Area was the dominant tech scene. On the East Coast, Boston was better known as the hub of enterprise technology.
But Datadog grew up — fast — going public in 2019, and today it sports a market cap of over $28 billion. After four years at the company, Wang left but chose to stay in New York to launch Bearworks, providing software to sales reps. The city is totally different from the place he encountered when he arrived, and you can feel it when you're out at a bar or restaurant, Wang said.
"Now it's extremely diversified — there are more people doing startups," he said. Before, "you tended to be surrounded by consultants and bankers, but more and more now, there's tech."
Datadog's initial public offering was followed less than two years later by UiPath, which develops software for automating office tasks. They were both preceded by cloud database developer MongoDB in 2017 and e-commerce platform Etsy in 2015.
None of those Big Apple companies are huge by the tech industry's standards — market caps range from $9 billion to just under $30 billion — but they've created an ecosystem that's spawned many new startups and created enough wealth to turn some early employees into angel investors for the next generation of entrepreneurs.
While the tech industry is still trying to bounce back from a brutal 2022, which was the worst year for the Nasdaq since the 2008 financial crisis, New Yorkers are bullish on the city that never sleeps.
Among the 50 states, New York was second to California last year, with $29.2 billion invested in 2,048 startups, according to the National Venture Capital Association. Massachusetts was third. In 2014, prior to the run of New York City IPOs, California was the leader, followed by Massachusetts and then New York.
Annual capital deployed in New York over the past nine years has increased sevenfold, NVCA data shows. And that's after last year's steep industrywide slump. During the record fundraising year of 2021, New York startups received almost $50 billion across 1,935 companies.
California companies raised three times that amount, and the Bay Area has its own share of startup market momentum. Following the launch of ChatGPT in November from San Francisco's OpenAI, the city has become a mecca for artificial intelligence development.
Investors have pumped over $60 billion into Bay Area startups so far this year, with half of the money flowing to AI companies, according to data from PitchBook.
Northern California has long been the heartbeat of the tech industry, but Murat Bicer remembers what it was like for New York startups before the rush. In 2012, his Boston-based firm, RTP Ventures, presented a term sheet for a funding round to Datadog but wanted one more investor to participate.
"We talked to so many firms," said Bicer, who left RTP for venture firm CRV in 2015. "So many at the time passed because they didn't think you could build an enterprise software company in New York. They said it had to be in Boston."
That dynamic challenged Olivier Pomel, Datadog's French co-founder and CEO, who had built up a local network after working in New York for a decade. Boston had the enterprise scene. The rest of tech was in Silicon Valley.
"VCs from the West Coast were not really investing outside the West Coast at the time," Pomel said.
But Pomel was determined to build Datadog in New York. Eventually, Index Ventures, a firm that was founded in Europe, joined in the funding round for Datadog, giving the company the fuel to grow up in the city. Pomel relocated the company to The New York Times building off Manhattan's Times Square.
For New York to keep the momentum, it will need to churn out a continuing string of successes. That won't be easy. The IPO market has finally shown some signs of life over the past week after being shuttered for almost two years, but investor enthusiasm has been muted and there aren't many obvious New York-based tech IPO candidates.
Startups proliferated in New York during the dot-com boom, but many disappeared in the 2000s. Datadog, MongoDB and cloud infrastructure provider DigitalOcean all popped up after the Great Recession. DigitalOcean went public in 2021 and now has a market cap of just over $2 billion.
Employees from those companies and even a few of their founders have formed new startups in New York. Google and Salesforce are among Big Tech employers that bolstered their presence in the city, making it easier for tech startups to find people with the right skills. And investors who for decades had prioritized the Bay Area have recently set up shop in New York.
Andreessen Horowitz, GGV Capital, Index and Lightspeed Venture Partners expanded their presence in the city in 2022. In July of this year, Silicon Valley's most prized firm, Sequoia Capital, which was MongoDB's largest venture investor, opened a New York office.
"Today, there's absolutely no question in my mind that you can build fantastic businesses in New York," said Bicer.
Eliot Horowitz, who co-founded MongoDB in 2007 and is now building a New York-based robotics software startup called Viam, shared that sentiment.
"The biggest difference between now and then is no one questions New York," Horowitz said.
Horowitz is among a growing group of successful founders pumping some of their riches back into New York. He backed DeliverZero, a startup that allows people to order food in reusable containers that can be returned. The company is working with around 200 restaurants and some Whole Foods stores in New York, Colorado and California.
Wainer, a co-founder of DigitalOcean, invested in collaboration software startup Multiplayer alongside Bowery Capital. He's also backed Vantage, a cloud cost-monitoring startup founded by ex-DigitalOcean employees Brooke McKim and Ben Schaechter. Vantage, with 30 employees, has hundreds of customers, including Block, Compass and PBS, Schaechter said.
Meanwhile, Wainer has moved to Florida, but he's building his new company in New York. Along with fellow DigitalOcean co-founder Ben Uretsky, he started Welcome Homes, whose technology lets people design and order new homes online. The company has over $47 million worth of homes under construction, said Wainer, who visits Welcome's headquarters every month or two.
Wainer said that companies like DigitalOcean, which had over 1,200 employees at the end of last year, have helped people gain skills in cloud software marketing, product management and other key areas in technology.
"The pool of talent has expanded," he said.
That has simplified startup life for Edward Chiu, co-founder and CEO of Catalyst, whose software is designed to give companies a better read on their customers. When he ran customer success at DigitalOcean, Chiu said finding people with applicable experience wasn't easy.
"That function, even just a decade ago, just wasn't relevant in New York City," Chiu said. "Nowadays, it is very easy to hire in New York City for any role, really."
The ecosystem is rapidly maturing. When Steph Johnson, a former communications executive at DigitalOcean and MongoDB, got serious about raising money for Multiplayer, which she started with her husband, the couple called Graham Neray.
Neray had been chief of staff to MongoDB CEO Dev Ittycheria and had left the company to start data-security startup Oso in New York. Neray told the Multiplayer founders that he would connect them with 20 investors.
"He did what he said he would do," Johnson said, referring to Neray. "He helped us so much." Johnson said she and her husband joked about naming their startup Graham because of how helpful he'd been.
To some degree, Neray was just paying his dues. To help establish Oso, Neray had looked for help from Datadog's Pomel. He also asked Ittycheria for a connection.
"I have an incredible amount of respect for Oli and what he achieved," Neray said, referring to Pomel. "He's incredibly strong on both the product side and the go-to-market side, which is rare. He's in New York, and he's in infrastructure, and I thought that's a person I want to learn from."
Last year, MongoDB announced a venture fund. Pomel said he and other executives at Datadog have discussed following suit and establishing an investing arm.
"We want the ecosystem in which we hire to flourish, so we invest more around New York and France," Pomel said.
Ittycheria has had a front-row seat to New York's startup renaissance. He told CNBC in an email that when he founded server-automation company BladeLogic in 2001, he wanted to start it in New York but had to move it to the Boston area, "because New York lacked access to deep entrepreneurial talent."
Then came MongoDB. By the time Ittycheria was named CEO of the database company in 2014, New York "was starting to see increasing venture activity, given the access to customers, talent and capital," Ittycheria said. The company's IPO three years later was a milestone, he added, because it was the city's first infrastructure software company to go public.
The IPO, he said, showed the market that people can "build and scale deep tech companies in New York — not just in Silicon Valley."
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Posted by the TensorFlow team We’ve started planning the future of TensorFlow! In this article, we’d like to share our vision.
We open-sourced TensorFlow nearly seven years ago, on November 9, 2015. Since then, thanks to thousands of open-source contributors and our incredible community of Google Developer Experts, community organizers, researchers, and educators around the globe, TensorFlow has come to define its category.
Today, TensorFlow is the most-used machine learning platform, adopted by millions of developers. It’s the 3rd most-starred software repository on GitHub (right behind Vue and React) and the most-downloaded machine learning package on PyPI. It has brought machine learning to the mobile ecosystem: TFLite now runs on four billion devices (maybe on yours, too!). TensorFlow has also brought machine learning to the Web: TensorFlow.js is now downloaded 170 thousand times weekly.
Across Google's product lineup, TensorFlow powers virtually all production machine learning, from Search, GMail, YouTube, Maps, Play, Ads, Photos, and many more. Beyond Google, at other Alphabet companies, TensorFlow and Keras enable the machine intelligence in Waymo's self-driving cars.
In the broader industry, TensorFlow powers machine learning systems at thousands of companies, including most of the largest machine learning users in the world – Apple, ByteDance, Netflix, Tencent, Twitter, and countless more. And in the research world, every month, Google Scholar is indexing over 3,000 new scientific publications that mention TensorFlow or Keras.
Today, our user base and developer ecosystem are larger than ever, and growing!
We see the growth of TensorFlow not just as an achievement to celebrate, but as an opportunity to go further and deliver more value for the machine learning community.
Our goal is to provide the best machine learning platform on the planet. Software that will become a new superpower in the toolbox of every developer. Software that will turn machine learning from a niche craft into an industry as mature as web development.
To achieve this, we listen to the needs of our users, anticipate new industry trends, iterate on our APIs, and work to make it increasingly easy for you to innovate at scale. In the same way that TensorFlow originally helped the rise of deep learning, we want to continue to facilitate the evolution of machine learning by giving you the platform that lets you push the boundaries of what's possible. Machine learning is evolving rapidly, and so is TensorFlow.
Today, we're excited to announce we've started working on the next iteration of TensorFlow that will enable the next decade of machine learning development. We are building on TensorFlow's class-leading capabilities, and focusing on four pillars.
Four pillars of TensorFlow
Fast and scalableXLA Compilation. We are focusing on XLA compilation and aim to make most model training and inference workflows faster on GPU and CPU, building on XLA’s performance wins on TPU. We intend for XLA to become the industry-standard deep learning compiler, and we’ve opened it up to open-source collaboration as part of the OpenXLA initiative.Distributed computing. We are investing in DTensor, a new API for large-scale model parallelism. DTensor unlocks the future of ultra-large model training and deployment and allows you to develop your model as if you were training on a single device, even while using multiple clients. DTensor will be unified with the tf.distribute API, allowing for flexible model and data parallelism.Performance optimization. Besides compilation, we are also further investing in algorithmic performance optimization techniques such as mixed-precision and reduced-precision computation, which can deliver considerable speed ups on GPUs and TPUs.
Applied ML
New tools for CV and NLP. We are investing in our ecosystem for applied ML, in particular via the KerasCV and KerasNLP packages which offer modular and composable components for applied CV and NLP use cases, including a large array of state-of-the-art pretrained models. Developer resources. We are adding more code examples, guides, and documentation for popular and emerging applied ML use cases. We aim to increasingly reduce the barrier to entry of ML and turn it into a tool in the hands of every developer.
Ready to deploy Easier exporting. We are making it even easier to export to mobile (Android or iOS), edge (microcontrollers), server backends, or JavaScript. Exporting your model to TFLite and TF.js and optimizing its inference performance will be as easy as a call to `model.export()`. C++ API for applications. We are developing a public TF2 C++ API for native server-side inference as part of a C++ application. Deploy JAX models. We are making it easier for you to deploy models developed using JAX with TensorFlow Serving, and to mobile and the web with TensorFlow Lite and TensorFlow.js.
Simplicity NumPy API. As the field of ML expanded over the last few years TensorFlow’s API surface also increased, not always in ways that are consistent or simple to understand. We are working actively on consolidating and simplifying these APIs. For example, we will be adopting the NumPy API standard for numerics. Easier debugging. A framework isn't just its API surface, it's also its debugging experience. We aim at minimizing the time-to-solution for developing any applied ML system by focusing on better debugging capabilities.
The future of TensorFlow will be 100% backwards-compatible
We want TensorFlow to serve as a bedrock foundation for the machine learning industry to build upon. We see API stability as our most important feature. As an engineer who relies on TensorFlow as part of their product, as a builder of a TensorFlow ecosystem package, you should be able to upgrade to the latest TensorFlow version and immediately start benefiting from its new features and performance improvements – without fear that your existing codebase might break. As such, we commit to full backwards compatibility from TensorFlow 2 to the next version – your TensorFlow 2 code will run as-is. There will be no conversion script to run, no manual changes to apply.
Timeline
We plan to release a preview of the new TensorFlow capabilities in Q2 2023 and will release the production version later in the year. We will publish regular updates on our progress in the meantime. You can follow our progress via the TensorFlow blog, and on the TensorFlow YouTube channel.
Your feedback is welcome
We want to hear from you! For questions or feedback, please reach out via the TensorFlow forum.
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News (Image credit: Intel) According to a report on Bloomberg UK Intel is getting ready to reduce its headcount as a means to reduce costs amid declining sales of PCs. The news comes from "people with knowledge of the situation" so be cautious until it can be verified. The speculated layoffs could affect thousands of people across multiple divisions, according to Bloomberg's unknown source. The company is expected to announce its decision late this month. In recent years, Intel has been hiring personnel as it tried to change the fortunes of its key business units and entered new businesses. But apparently the company needs to finally reduce its headcount of 121,000 by approximately 11% (12,000) now that PC sales are declining and the company's data center business is likely to follow suit, according to Bloomberg. Intel still has to finalize how many people it plans to layoff, but numbers are expected to be in thousands, Bloomberg reports. Some of Intel's divisions, such as sales and marketing group, could see cuts as significant as 20%, others could be luckier. Intel heavily depends on PC sales. Last quarter Intel's Client Computing Group responsible for PCs commanded about 50% of the company's revenue, so if Intel is bracing for a long decline of PC shipments, then management needs to react, which is why it is said to be cutting down its workforce. Back in July the company reported its first loss in decades and said its 2022 revenue would be up to $11 billion lower than expected. As it turns out, declines of PC sales were steeper than expected and probably the delay of the company's 4th Generation Xeon Scalable 'Sapphire Rapids' data center platform played its role, so Intel needs to adjust its costs beyond reduction of CapEx. What remains to be seen is whether Intel's layoffs will affect any of the company's ongoing projects, such as development of discrete graphics processors for PCs that are hardly competitive against higher-end GPUs by AMD and Nvidia. Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
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Don’t suffer the buffer. These WIRED-tested systems will deliver reliable internet across your home whatever your needs or budget.The humble Wi-Fi router has become an essential fixture in every home, but the one your internet service provider (ISP) sent is likely the reason your Wi-Fi sucks. There are various ways to improve your Wi-Fi, but few are as effective as upgrading your router. Benefits will extend to everything from streaming movies and online gaming to video calls. Most people can get by just fine with a single Wi-Fi router, and I've collected recommendations to suit different needs, spaces, and budgets. I tested all of these in a busy family home full of Netflix-addicted gamers. There's a mesh Wi-Fi option here too, but check out our Best Mesh Wi-Fi Routers guide for larger homes. If you're confused about terminology, our How to Buy a Router guide can help. Whatever you choose, make sure you secure your router.Special offer for Gear readers: Get a 1-year subscription to WIRED for $5 ($25 off). This includes unlimited access to WIRED.com and our print magazine (if you'd like). Subscriptions help fund the work we do every day.If you buy something using links in our stories, we may earn a commission. This helps support our journalism. Learn more. Please also consider subscribing to WIREDPhotograph: TP-LinkBest OverallTP-Link Archer AX55This affordable Wi-Fi 6 router is what I think most people should go for. The slick black finish is attractive, and there are four antennas to direct Wi-Fi to every corner (it is worth tweaking and testing different positions). Performance was solid throughout my two-floor 1,600-square-foot home but dropped off slightly in the back garden. Stability was excellent over a couple of weeks of testing, hitting the upper mid-end in my speed and range tests. This router also ticks off all the feature boxes you want (MU-MIMO, beamforming, WPA3—we explain many of these terms in our How to Buy a Router guide). It has four Gigabit Ethernet LAN ports, a single Gigabit WAN port, and a USB 3.0 port on the back, which is enough for most people.I’m a fan of TP-Link’s Tether app, where you can review traffic, split bands, create a guest network, schedule reboots, set automatic updates, and even tell the LED to turn off at night. TP-Link’s basic free HomeShield tier offers network scanning, QoS (Quality of Service) for device prioritization, and basic parental controls so you can filter and blacklist websites. If you want more perks, like time limits for apps, downtime, and real-time security protection, you'll need to upgrade to HomeShield Pro ($6 per month or $55 for the year).★ Another alternative: The TP-Link Archer AX50 ($120) is very similar to the AX55 but may be prone to overheating. The AX50 also lacks OneMesh support, which allows you to add extenders to create a mesh network with the AX55. On the other hand, the AX50 has HomeCare, a service that launched before HomeShield that includes superior parental controls without a subscription.Photograph: AsusUpgrade PickAsus RT-AX86USimple setup, silky performance, and serious speed make this Asus router a good choice for anyone prepared to spend more for smoother Wi-Fi. It sports an eye-catching red and black design with three rotatable antennas. This router had no issues covering my entire home and garden and was one of the top performers in my tests. It delivered consistently fast speeds everywhere and was stable, even with four people streaming and gaming at once. There are some handy customization options for gamers and optimizations that ensure low latency. It also has plenty of ports, including a 2.5 Gbps port configurable as WAN or LAN and two USB 3.2 ports.The Asus app is packed with options, making it very easy to tweak router settings, should you need to. Everything is covered, from comprehensive parental controls to traffic prioritization to network security. That includes AiProtection Pro (powered by Trend Micro) too, which monitors your network for malicious activity, no subscription required. This router supports AiMesh, which means you can add any other AiMesh Asus router to create a mesh network and expand connectivity in your home.Photograph: TP-LinkBest Budget RouterTP-Link Archer AX20This impressive Wi-Fi 6 router delivers reliable performance at a relatively low price. Despite the demands of four people video streaming and gaming, I rarely noticed a difference in everyday performance between this and my top pick, the AX55. However, my tests revealed some limitations on the range, and the download speed when installing a new game was noticeably slower than with the rest of our picks. I also had to reboot the system once after a dropped video call. But for most day-to-day tasks over weeks of testing, this router delivered sterling service. It matches the AX55 with four gigabit Ethernet LAN ports and one WAN but only has a USB 2.0.The Tether app is straightforward and packed with all the basic options you need, including traffic prioritization, parental controls, and a guest network. There’s no HomeShield or HomeCare support with this router, but most people don't need those extra services. If you don’t care about online gaming performance or have tons of smart home devices, and your home is 1,600 square feet or smaller, you likely don’t need to spend more than this.Photograph: AsusBest Gaming RouterAsus ROG Rapture GT-AX6000My time with the Asus ROG Rapture GT-AX6000 was refreshingly free of issues. It’s a big, loud design with four antennas and RGB lighting that screams gamer. Still, it served up speedy, unbroken Wi-Fi throughout my home and garden and didn’t flinch at four simultaneous online gaming sessions. It’s easy to prioritize gaming devices or activity, and there’s a mobile game mode, simple port forwarding, and a dedicated gaming port. Speaking of which, you get two 2.5-Gbps ports (one WAN/LAN and a LAN), four gigabit LANs, one USB 3.2 Gen 1, and a USB 2.0.Like the rest of the Asus range, the mobile app is excellent and boasts all the features you need, including guest network support, band splitting, parental controls, and anti-malware. The AiProtection Pro and parental controls are free for the device's lifetime so you don't have to make any monthly payments. Asus also offers Instant Guard free with this router, enabling it to secure your public Wi-Fi connections when you are out by running a VPN (virtual private network) server on your router at home (which also means you don’t have to share data with a VPN provider).★ Another alternative: The Asus AX6000 RT-AX88U ($300) is an excellent cheaper option that offers almost the same features. It has a slightly slower processor, lacks features like Inter-VLAN routing, and only has a gigabit WAN port (though there are eight gigabit LAN ports). If you don’t know or care what any of that means, good! Save yourself some cash and go for this model.Photograph: TP-LinkBest Budget Gaming RouterTP-Link Archer GX90 AX6600If the picks above are too expensive, the slightly more affordable TP-Link Archer GX90 (8/10 WIRED Recommends) might tempt you. It looks like a Sith spider, with a square design and eight antennas, but this gaming-focused behemoth is feature-packed. It's easy to set up and configure, and it bathed my whole home in fast Wi-Fi. There’s a game accelerator feature and prioritization, making it easy to reserve bandwidth for gaming. We had no issues with multiple simultaneous gaming sessions. It has a 2.5-Gbps WAN/LAN port, a Gigabit WAN/LAN port, three Gigabit LAN ports, and two USB ports (a 3.0 and a 2.0).TP-Link’s Tether app is very accessible and makes it easy to track traffic, set up guest networks, use parental controls, and prioritize different activities. Confusingly TP-Link offers HomeShield (powered by Avira) on some routers and HomeCare (powered by Trend Micro) on others, including this one. HomeCare includes comprehensive parental controls, a malicious-content filter, intrusion prevention, and infected-device quarantine. More importantly, it is free (no subscription necessary).Photograph: AsusBest for Large HomesAsus ZenWiFi AX XT8 (2-Pack)Consistently delivering a stable high-speed Wi-Fi connection, the Asus ZenWiFi AX XT8 mesh system tops our Best Mesh Wi-Fi Routers guide and is ideal for large homes or houses with dead spots. I like the classy, unobtrusive design in black or white. This system performed well in tests, offering great coverage and close to maximum speeds at close-, mid-, and long-range. I encountered a slight issue during setup that was resolved with a factory reset and firmware update. Over the months since, I have continued using this system hassle-free. Each versatile unit is a full router with three gigabit LAN ports, a 2.5-Gbps WAN/LAN, and a USB 3.1.Part of the appeal of Asus routers is the excellent app, packed with features for tinkerers but easy enough for anyone to navigate. All the options you need are here, from band splitting to guest networks to prioritization for specific activities like gaming or video streaming. You also get comprehensive parental controls and anti-malware protection free for the lifetime of the router. The XT8 two-pack can cover a home up to 5,500 square feet, and it supports AiMesh, meaning it's easy to add more AiMesh routers to expand your network.Photograph: FirewallaHonorable MentionsOther RoutersWe have tested some other routers we like and have several more in the queue. The one below isn't as great as the picks above but it has its own uses. Firewalla Purple for $319: This quirky portable device is perfect for people who worry about security and privacy. It offers comprehensive tools for monitoring all traffic in and out of your house, robust and detailed parental controls, ad-blocking, and enhanced security with a built-in firewall and VPN option. It serves as a router, but you will want to pair another router in access point mode for Wi-Fi in your home. It’s expensive and may prove intimidating for inexperienced folks, but it offers deep insight into your network and an impressive depth of security features without an additional subscription.Photograph: GryphonTough to RecommendYou Can Do BetterStay away from these routers. You're better off with the options above. Gryphon AX for $280: This router has a distinctive angular design and can serve as part of a mesh system. Unfortunately, it proved inexplicably slow at times until rebooted and only has one LAN port. The app lacks an easy view of traffic flow but does offer detailed parental controls. There’s an interesting option to route device traffic through your home router (providing a kind of VPN and malware detection umbrella) wherever you are, but it requires a subscription. Ultimately, if you are going to spend this much, our upgrade pick, the Asus RT-AX86U, is a much better buy.Rockspace AX1800 for $80: Rockspace's router is a lot like our budget pick, the TP-Link Archer AX20, as it's similar in price and offers most of the same functions. It had slightly better range and speed on the 2.4-GHz band in my tests but it did not perform well on the 5-GHz band. What drags it down is the trouble it caused me with setup, the clunky and limited app, and the lacking security features.What to Look forShopping for RoutersOur How to Buy a Router guide answers a lot of questions on the terminology you'll come across when shopping for a router. Still, here are a few other considerations.Make sure the router supports Wi-Fi 6. It's a relatively new standard that's growing more commonplace. All of our picks above support it, and it’s the minimum we recommend.Support for Wi-Fi 6E, an even newer standard, is still rare, and 6E routers are expensive. We will be testing several over the next few months. The extra bandwidth and speed afforded by the 6-GHz band is unlikely to make much of an impact right now, as your phones and laptops will need to support Wi-Fi 6E too. It is also short-range compared to the 2.4-GHz and 5-GHz bands.Your maximum internet speed is set by your ISP and will likely fluctuate depending on the time of day. While your router can’t provide an internet connection that exceeds that speed, it can potentially go faster when you stream from a server in your home or move files from one device on your local network to another.It’s worth checking a prospective router’s coverage and speed, but understand that your mileage may vary. Construction materials in your home, your neighbors’ activity and Wi-Fi networks, your devices, and the position of your router are just a few of the factors that will impact your Wi-Fi performance.Ethernet ports offer stable connections and are essential for some smart home setups that require a hub for lights or security cameras. Some network-attached storage for backups or media will plug into your main router via USB. Ensure the router you are considering has all the ports you need.Many router manufacturers allow you to create a mesh network by adding more routers or devices like range extenders, but check what is supported before you buy. For example, Asus AiMesh enables you to link multiple routers, while TP-Link’s OneMesh only allows you to add powerline adapters or range extenders.Simon Hill has been writing about tech for more than a decade. He is a regular contributor to WIRED, but you can also find his work at Business Insider, Reviewed, TechRadar, Android Authority, USA Today, Digital Trends, and many other places. Before writing, he worked in games development. He lives... Read more
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Advanced Micro Devices made history this year when it surpassed Intel by market cap for the first time ever. Intel has long held the lead in the market for computer processors, but AMD's ascent results from the company branching out into entirely new sectors.In one of the biggest semiconductor acquisitions in history, AMD purchased adaptive chip company Xilinx in February for $49 billion. Now, AMD chips are in two Tesla models, NASA’s Mars Perseverance land rover, 5G cell towers and the world’s fastest supercomputer. “AMD is beating Intel on all the metrics that matter, and until and unless Intel can fix its manufacturing, they’ll continue to do that,” said Jay Goldberg, semiconductor consultant at D2D Advisory.But a decade ago, analysts had a very different outlook for AMD.“It was almost a joke, right? Because for four decades they had these incredible performance problems,” Goldberg said. “And that's changed.”CNBC sat down with AMD CEO Lisa Su to hear about her company’s remarkable comeback, and huge bets on new types of chips in the face of a PC slump, fresh restrictions on exports to China and shifting industry trends.‘Real men have fabs’AMD was founded in 1969 by eight men, chief among them Jerry Sanders. The famously colorful marketing executive had recently left Fairchild Semiconductor, which shares credit for the invention of the integrated circuit.“He was one of the best salesmen that Silicon Valley had ever seen," said Stacy Rasgon, semiconductor analyst at Bernstein Research. "Stories of lavish parties that they would throw. And there's one story about him and his wife coming down the stairs of the turret at the party in matching fur coats.”AMD Co-Founder Jerry Sanders poses at the original headquarters of Advanced Micro Devices, or AMD, in Sunnyvale, California, in 1969AMDHe also coined an infamous phrase about chip fabrication plants, or fabs.“Jerry Sanders was very famous for saying, ‘Real men have fabs,’ which obviously is a comment that is problematic on a number of levels and has largely been disproven by history,” Goldberg said.As technology advances, making chips has become prohibitively expensive. It now takes billions of dollars and several years to build a fab. AMD now designs and tests chips and has no fabs.“When you think about what you need to do to be world class and design, it's a certain set of skills," Su said. "And then what do you need to do to be world class In manufacturing? It's a different set of skills and the business model is different, the capital model is different.”Back in the '70s, AMD was pumping out computer chips. By the '80s, it was a second-source supplier for Intel. After AMD and Intel parted ways, AMD reverse engineered Intel’s chips to make its own products that were compatible with Intel’s groundbreaking x86 software. Intel sued AMD, but a settlement in 1995 gave AMD the right to continue designing x86 chips, making personal computer pricing more competitive for end consumers.In 2006, AMD bought major fabless chip company ATI for $5.4 billion. Then in 2009, AMD broke off its manufacturing arm altogether, forming GlobalFoundries.“That's when their execution really started to take off because they no longer had to worry about the foundry side of things,” Goldberg said.GlobalFoundries went public in 2021 and remains a top maker of the less advanced chips found in simpler components like a car’s anti-lock brakes or heads-up display. But it stopped making leading-edge chips in 2018. For those, AMD turned to Taiwan Semiconductor Manufacturing Co., which now makes all of AMD’s most advanced chips.Catching IntelAMD only has major competition from two other companies when it comes to designing the most advanced microprocessors: Nvidia in graphics processing units, GPUs, and Intel in central processing units, CPUs.While AMD controls far less GPU and CPU market share than Nvidia and Intel, respectively, it’s made remarkable strides since moving away from manufacturing and reducing capital expenditure. Meanwhile, Intel doubled down on manufacturing last year, committing $20 billion for new fabs in Arizona and up to $100 billion in Ohio, for what it says will be the world’s largest chip-making complex. But the projects are still years away from coming online.“Intel is just not moving forward fast enough," Goldberg said. "They've said they expect to continue to lose share in next year and I think we'll see that on the client side. And that's helped out AMD tremendously on the data center side.”AMD’s Zen line of CPUs, first released in 2017, is often seen as the key to the company's recent success. Su told CNBC it's her favorite product. It’s also what analysts say saved AMD from near bankruptcy.“They were like literally, like probably six months away from the edge and somehow they pulled out of it," Rasgon said. "They have this Hail Mary on this new product design that they're still selling like later generations of today, they call it Zen is their name for it. And it worked. It had a massively improved performance and enabled them to stem the share losses and ultimately turn them around.”AMD CEO Lisa Su shows the newly released Genoa CPU, the company's 4th generation EPYC processor, to CNBC's Katie Tarasov at AMD's headquarters in Santa Clara, California, on November 8, 2022Jeniece PettittAmong the Zen products, AMD’s EPYC family of CPUs made monumental leaps on the data center side. Its latest, Genoa, was released earlier this month. AMD’s data center customers include Amazon Web Services, Google Cloud, Oracle, IBM and Microsoft Azure.“If you looked at our business five years ago, we were probably more than 80% - 90% in the consumer markets and very PC-centric and gaming-centric,” Su said. “As I thought about what we wanted for the strategy of the company, we believed that for high-performance computing, really the data center was the most strategic piece of the business.”AMD's revenue more than tripled between 2017 and 2021, growing from $5.3 billion to over $16 billion. Intel's annual revenue over that stretched, meanwhile, increased about 25% from close to $63 billion in 2017 to $79 billion last year.Geopolitical concerns and PC slumpAMD’s success at catching up to Intel’s technological advances is something many attribute to Su, who took over as CEO in 2014. AMD has more than tripled its employee count since then. Su was Fortune’s #2 Business Person of the Year in 2020 and the recipient of three of the semiconductor industry’s top honors. She also serves on President Joe Biden’s Council of Advisors on Science on Technology, which pushed hard for the recent passage of the CHIPS Act. It sets aside $52 billion for U.S. companies to manufacture chips domestically instead of overseas.“It's a recognition of just how important semiconductors are to both economic prosperity as well as national security in the U.S.,” Su said.With all the world’s most advanced semiconductors currently made in Asia, the chip shortage highlighted the problems of overseas dependency, especially amid continued tension between China and Taiwan. Now, TSMC is building a $12 billion 5-nanometer chip fab outside Phoenix.“We're pleased with the expansion in Arizona," Su said. "We think that's a great thing and we'd like to see it expand even more.”Earlier this month, the Biden administration enacted big new bans on semiconductor exports to China. AMD has about 3,000 employees in China and 25% of its sales were to China last year. But Su says the revenue impact has been “very small.”“When we look at the most recent regulations, they're not significantly impacting our business," Su said. "It does affect some of our highest-end chips that are used in sort of AI applications. And we weren't not selling those into China.”What is hurting AMD’s revenue, at least for now, is the PC slump. In its third-quarter earnings report earlier this month, AMD missed expectations, shortly after Intel warned of a soft fourth quarter. PC shipments were down nearly 20% in the third quarter, the steepest decline in more than 20 years.“It's down a bit more than perhaps we expected,” Su said. “There is a cycle of correction which happens from time to time, but we're very focused on the long-term road map.”Going customIt’s not just PC sales that are slowing. The very core of computer chip technology advancement is changing. An industry rule called Moore’s Law has long dictated that the number of resistors on a chip should double about every two years.“The process that we call Moore's Law still has at least another decade to go, but there's definitely, it's slowing down,” Goldberg said. “Everybody sort of used CPUs for everything, general purpose compute, but that's all slowed down. And so now it suddenly makes sense to do more customized solutions.”Former Xilinx CEO Victor Peng and AMD CEO Lisa Su on stage in Munich, Germany, at theAMDThat’s why AMD acquired Xilinx, known for its adaptive chips called Field-Programmable Gate Arrays, or FPGAs. Earlier this year, AMD also bought cloud startup Pensando for $1.9 billion. “We can quibble about some of the prices they paid for some of these things and what the returns will look like,” said Goldberg, adding that the acquisitions were ultimately a good decision. “They're building a custom compute business to help their customers design their own chips. It's a smart strategy.”More and more big companies are designing their own custom chips. Amazon has its own Graviton processors for AWS. Google designs its own AI chips for the Pixel phone and a specific video chip for YouTube. Even John Deere is coming out with its own chips for autonomous tractors.“If you really look underneath what's happening in the chip industry over the last five years, everybody needs more chips and you see them everywhere, right?" Su said. "Particularly the growth of the cloud has been such a key trend over the last five years. And what that means is when you have very high volume growth in chips, you do want to do more customization.”Even basic chip architecture is at a transition point. AMD and Intel chips are based on the five-decade-old x86 architecture. Now ARM architecture chips are growing in popularity, with companies like Nvidia and Ampere making major promises about developing Arm CPUs, and Apple switching from Intel to self-designed ARM processors.“My view is it's really not a debate between x86 and Arm," Su said. "You're going to see basically, these two are the most important architectures out there in the market. And what we've seen is it's really about what you do with the compute.”For now, analysts say AMD is in a strong position as it diversifies alongside its core business of x86 computing chips.“AMD should fare much better in 2023 as we come out of the cycle, as the performance gains versus Intel start to become apparent, and as they start to build out on some of these new businesses,” Goldberg said.Intel did not immediately respond to a request for comment.
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Experts say technologies like lidar, augmented reality and artificial intelligence will play an important role in future iPhones. Zooey Liao/CNET The iPhone is 15 years old. Experts say technologies like lidar and AI will define its future. Lisa Eadicicco Senior Editor Lisa Eadicicco is a senior editor for CNET covering mobile devices. Prior to joining CNET, Lisa served as a senior tech correspondent at Insider covering Apple and the broader consumer tech industry. She was also previously a tech columnist for Time Magazine and got her start as a staff writer for Laptop Mag and Tom's Guide. See full bio 7 min read Lucy Edwards, a blind UK-based journalist and broadcaster, found it difficult to maintain a social distance in public during the height of the pandemic. That's why she tried the iPhone's People Detection feature, which uses the iPhone 12 Pro and 13 Pro's lidar sensor to detect when others are nearby. "I'm going to have to get used to it, but I'm really excited that I can be in control again," Edwards said in a BBC video from 2020 documenting her experience. Lidar, or light detection and ranging, is just one example of how the technology inside the iPhone has evolved in the last 15 years. When the first iPhone launched, on June 29, 2007, it had a 3.5-inch screen that would be considered minuscule by today's standards and a single 2-megapixel camera. Now Apple's most sophisticated phones come equipped with triple-rear cameras that are advanced enough to shoot films, sensors that help people like Edwards navigate the world, and powerful chips with billions of transistors. The iPhone often served as a catalyst for the technologies introduced within, whether it's digital assistant Siri, mobile payments or wireless charging, and helped drive the evolution of how we live our mobile lives. But in the future, the most important part of the iPhone might be everything around it. That's according to analysts who've observed the mobile industry's general trends and Apple's strategy. In the short term, we're likely to see incremental improvements like higher quality cameras and giant displays. But over the next decade, the iPhone could evolve into a hub for smart glasses and other devices. AirPods, Apple Watches and CarPlay-enabled vehicles may be just the start. The iPhone's core elements, like its display and charging systems, are also expected to get a significant boost. "The next quest for the smartphone is to figure out what it will connect to next," said Runar Bjørhovde, an analyst with market research firm Canalys. "Because the smartphone has not necessarily reached its potential yet, but as a standalone device I think the smartphone is getting closer and closer to the edge." Your iPhone at the center of everythingThere's plenty of speculation about what's next after the smartphone. The resounding consensus seems to be smart glasses, with companies like Meta, Snap and Google all working on their own version of high-tech spectacles. Apple is no exception; reports from Bloomberg indicate that the iPhone maker could debut a mixed reality headset this year or next that supports augmented and virtual reality technologies. A pair of AR-powered smart glasses could arrive later this decade, according to the report. So what does this have to do with the iPhone? Possibly everything. Even though Apple's headset is expected to function as a standalone device, the apps and services it runs would likely stem from the iPhone. Think of the Apple Watch. It doesn't need a nearby iPhone to function, but a large part of its appeal involves its ability to sync closely with Apple's phone. Many of the Apple Watch's notifications are also tied to accounts and apps that were set up on the iPhone. Whether it's a smart headset, the Apple Watch, AirPods or HomeKit-enabled appliances, analysts expect the phone to remain at the center. The iPhone will likely remain at the center of the Apple experience, serving as a hub for AirPods, the Apple Watch and possibly a pair of smart glasses one day. Scott Stein/CNET"The phone will be the anchor," said Gene Munster, managing partner for tech investment firm Loup Ventures and a longtime Apple analyst.But it isn't just about connecting to new personal tech gadgets. Apple is gradually turning the iPhone into a viable replacement for the wallet, weaving it even more tightly into the nondigital aspects of our lives. Apple has made a lot of progress on this front over the past year by rolling out new features like digital IDs for Apple Wallet and Tap to Pay, which turns the iPhone into a contactless payment terminal for merchants without additional hardware. Apple also just announced Apple Pay Later, which lets Apple Pay users split a purchase into four equal installments paid over the course of six weeks. "It's clear that there's a lot of momentum within financial services with Apple, and I think we will see further advancements there," said Nick Maynard, head of research for Juniper Research. Better lidar, more advanced AI for better spatial awarenessMaking educated guesses about Apple's general direction for the iPhone is certainly easier than pinpointing specific changes that might be coming. But analysts have some ideas based on the seeds Apple has planted in current iPhones. Lidar will likely continue to be important as the company pushes more deeply into augmented reality. Apple added lidar on the iPhone 12 Pro in 2020 to boost the performance of AR apps, enable new camera tricks and facilitate accessibility features like the aforementioned People Detection. The technology measures distance by determining how long it takes for light to reflect off an object and bounce back. Yet the iPhone's current lidar sensors might not be sophisticated enough to bring Apple's augmented reality ambitions to fruition, said Munster. "Specifically what needs to happen is the mapping of the real world needs to be more accurate," said Munster, whose firm conducts research on topics like augmented reality, autonomous vehicles and virtual reality. "And until that happens, AR isn't really going to happen." The iPhone's People Detection feature uses lidar. James Martin/CNETLidar improves the iPhone's depth-sensing skills, but it's still up to the phone's processor to make sense of all that data. Apple has leaned into artificial intelligence -- one of Silicon Valley's favorite buzzwords in recent years -- to give the iPhone and other products more context about users and their surroundings. Once again, you can look to the Apple Watch to see this approach at work. Apple's smartwatch uses artificial intelligence and data gathered from its sensors for tasks such as tracking your sleep and noticing when you're washing your hands. Hanish Bhatia, a senior analyst for Counterpoint Research, provided a hypothetical example of how AI improvements could one day manifest in upcoming iPhones. He envisions a future in which Apple's smartphone can observe a person's habits to understand whether the phone's primary user or a family member may be using the device. "The way you use your phone, at what angle your smartphone is tilted ... Do you press with a particular pressure, or do you just tap it with your nails or something like that?" he said as an example. "All of these are different types of behaviors which are very unique to a user."Bhatia's example is speculative and doesn't reflect Apple's actual plans. But with advancements in AI and technologies like lidar and ultra wideband giving the iPhone more spatial awareness, it's easy to imagine a scenario like this.Displays and charging tech could get a big changePerhaps one of the biggest questions surrounding Apple's future smartphone plans is whether the company will ever create a foldable iPhone. Samsung, Apple's biggest rival in the mobile space, has already launched several generations of phones with flexible designs. Motorola, Huawei and Microsoft have all followed suit, and Google is rumored to be working on a bendable Pixel. Shipments of foldable smartphones are said to have increased by 264.3% in 2021 compared with 2020, according to The International Data Corporation.But experts like Munster and Maynard are skeptical about whether Apple will take a similar approach. Though the tech giant has filed patents for mobile devices with flexible displays, those filings aren't always indicative of Apple's plans. Sales of foldable phones have been growing, but shipments still pale in comparison with regular smartphones. (Research firm IDC estimates that 7.1 million foldable phones were shipped in 2021 compared with 362.4 million phones shipped in just the fourth quarter of last year). And then there's the question of whether foldable devices bring anything truly new or meaningful to the smartphone experience. There are also challenges with creating a true glass screen that's foldable, says Munster. Samsung's Galaxy Z Flip has a glass screen, but that glass is also combined with "a special material" to "achieve a consistent hardness," CNET reported in 2020."The piece that's missing from my perspective is how [Apple] would actually do it," Munster said. Samsung's Galaxy Z Flip 3 can fold in half. Sarah Tew/CNETThe iPhone's charging experience is probably due for an upgrade too. Between USB-C, Lightning and MagSafe, it isn't an exaggeration to say that Apple's charging options are complicated. Maynard believes pressure from the European Union and US senators could mean a switch to USB-C might be in the iPhone's future.But more dramatic changes could also be in the pipeline. Rumors about a completely portless iPhone have swirled for years, and Maynard doesn't think it's totally out of the question. "I suspect if any vendor was going to launch a fully portless system, then it probably would be Apple," said Maynard, citing Apple's decision to remove the iPhone's headphone jack in 2016. Wireless charging has also been a focal point for Apple in recent years, further supporting the case for a port-free iPhone. There's Apple's relatively new MagSafe chargers, and many CarPlay-enabled vehicles also support wireless connections. Apple has also patented wireless charging systems that would be built directly into MacBooks, enabling Apple's laptops to charge iPhones, Apple Watches and iPads. The iPad Pro's Smart Connector also provides a quick and easy way to attach accessories to Apple's tablet without a port. "The number of systems that actually 100% must have a cable are diminishing," Maynard said. Apple's MagSafe battery pack wirelessly connects to the back of an iPhone. Patrick Holland/CNETOtherwise, analysts expect to see routine upgrades to the camera in the near term. Munster says there's room for improvement in the iPhone's front-facing camera, while Bhatia expects Apple to continue to use display size and camera quality to distinguish the regular iPhones from its Pro iPhones. It's impossible to know what's next for the iPhone without Apple's input. But experts seem certain on one thing: Apple is laying the groundwork for the iPhone's future today. Current iPhone features, like Apple's lidar-powered accessibility tools meant to help people like Edwards, could provide a clue about what's ahead. "Everything we can see that they've done over the last few years is a good hint of what's coming up next," said Bjørhovde. "Because a lot of what I think they do is setting themselves up for the systems they want to integrate the iPhone into in the years to come."
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BY Rich GrisetJuly 08, 2022, 12:53 PMA group walks by Sather Tower on the UC Berkeley campus, as seen in March 2022. (Photo by Justin Sullivan/Getty Images)When it comes to job demand, it’s hard to beat the field of cybersecurity. By 2025 there will be an estimated 3.5 million unfilled cybersecurity jobs across the globe, according to Cybersecurity Ventures, a researcher and publisher that covers the international cyber economy. And that follows a 350% growth in the number of open cybersecurity jobs between 2013 and 2021.As practically all elements of work, life and everything in between now have a digital component, the need to secure our information from cybersecurity threats has only grown. With that growth, master’s degree programs in cybersecurity have also flourished.“The job market’s insane for cybersecurity,” says Mary McHale, a career advisor for the master’s of information and cybersecurity program (MICS) at the University of California—Berkeley. The university landed the No. 1 spot on Fortune’s first-ever ranking of the best online master’s degree programs in cybersecurity. “When you look at the opportunity and demand, it’s tremendous.”Whether contending with cyber criminals who wish to turn a profit from stealing information or challenging nation-states that wish to do us harm, cybersecurity professionals are in an interesting and ever-evolving field. And UC Berkeley grads are landing jobs with starting salaries of more than $200,000 immediately after graduation. Here’s what you need to know How big is the demand for cybersecurity professionals?In June, Lakshmi Hanspal, the global chief security officer for Amazon devices and services, was the keynote speaker for Berkeley’s MICS immersion program. In her address, Hanspal said that Amazon had more than 600 unfilled cybersecurity jobs.That’s a high number, particularly given Amazon’s deep pockets. “They’re saying the demand is just going increasingly higher,” says McHale of UC Berkeley. “Once we help [students] get visibility in the job market, the amount of attention they’re getting is tremendous.”Many master’s degree candidates in cybersecurity programs take part in summer internships with companies before graduating.“Most come back with an offer of full-time employment when they finish,” says Mustaque Ahamad, a professor in the School of Cybersecurity and Privacy at Georgia Tech. “You have a job lined up, absolutely.”While a master’s degree in cybersecurity or a related subject like computer science isn’t required to work in cybersecurity, it goes a long way to inform graduates on the latest trends and happenings in the field.“A master’s degree is going to prepare you for the highest skill, top-level careers,” Ahamad says. “A master’s degree is essentially going to make a specialist in cybersecurity.”How much can you make with a master’s in cybersecurity?If you have a master’s in cybersecurity, it’s fairly common to earn a six-figure salary immediately after graduation. “It’s a profession that will pay you well,” says Ahamad. “The vast majority of [graduates] head out to the Microsofts and the Googles and the Ciscos and the Intels.”According to a UC Berkeley salary survey of alumni, graduates with a master’s degree in cybersecurity make an average salary of $214,000, not including bonuses; the median salary is $200,000. Some graduates who are now executives, such as chief information security officers (CISOs), chief information officers (CIOs), and chief technology officers (CTOs) make more than $300,000.“The CISO roles are going to be more over the $250,000, $300,000 [salary mark], closer to $400,000, depending on the company and the size of the organization,” McHale says.The median pay for computer programmers, who write, test and modify code and scripts so that applications and computers can work properly, was $93,000 in 2021, according to the U.S. Bureau of Labor Statistics. Information security analysts, who plan and carry out security measures to protect the computer networks and systems of an organization, had a median pay of $102,600. Computer network architects, who design and build data communication networks, such as Intranets, wide area networks (WANs), and local area networks (LANs), had a median income of $120,520 in 2021.Though graduates who go to work for the government generally make less money, the knowledge gained from becoming familiar with government systems that need to be secured can pay off if they eventually work for a major defense contractor.“The experience is golden,” Ahamad says. “They’re dealing with sophisticated nation-state threats, so [with] the systems and the applications and the high level of security that’s needed, once they have that experience, that really makes them first-class at cybersecurity.”McHale says that while some cybersecurity master’s graduates from Berkeley head to the public sector, most take new jobs in the private sector.“People with this professional master’s degree are now open to a path of incredible career opportunities,” McHale says. “There is an ability to apply those skills in any industry, or around the globe, because they can take that core skill and apply it to something they’re very passionate about.”
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Part 3 In A Conversation With Zoox’s Jesse Levinson getty This article is Part 3 of a three-part series from an interview on the Forbes Futures in Focus podcast featuring Jesse Levinson, CTO and founder of Zoox. Prior installments covered topics such as the current state of the automobile industry, the importance of ground up design and some of the innovative features that method has enabled. In this installment Jesse discusses some of the dependencies and impact on cities that adopt Robo-Taxi technology. He also addresses some of the expected challenges. How do you work with local and national infrastructure? What do cities need to do in order for your technology to work? Will this shift require a new road bill? Jesse Levinson: One thing we’ve always been consistent about is that we aren’t going to wait around for cities to change. Working with cities and states and the federal government — it’s slow, right? And it’s hard because they have so many different stakeholders, and it takes a lot of time to do these kinds of projects. We made the decision very early on that we aren’t going to rely on any infrastructure changes. We’re going to build a vehicle that works perfectly well with existing roads, existing infrastructure. And we’re going to do the work that we have to do to make that really plug and play with cities as they are today. That doesn’t mean we wouldn’t love cities to evolve over time and get greener and we can start replacing parking lots. There are all kinds of wonderful things for cities that this technology can improve over time, but we’re not waiting for that. We knew if we came around and said, “Hey, Cities, just do these 17 things that will cost you $10 billion,” we’d never get off the ground.
Looking beyond America, which geographies do you see that by 2030–2032 might have comfortably adopted this idea from you?
Levinson: I would hope that, by 2032, most major urban areas across the world would have adopted this type of technology. Certainly we do have global aspirations. We’d love to bring our technology to many, many countries on many continents. That will take some time — we do have to actually get these vehicles built. We won’t be able to scale at the rate that, let’s say, Uber and Lyft did, which is fundamentally with an app that the customer and the driver need to download, plus the backend infrastructure to make it all connect and run seamlessly. That’s not easy at all. But fundamentally they were not limited in their rate of scaling in the way companies that have to make physical things are. Having said that, 2032 is a decade from now, so it gives us lots of time to have several iterations of the vehicle and manufacturing strategy.
My expectation is that Zoox won’t be the only company that’s building this type of technology, especially a decade from now. My expectation is that if you live in a major city almost anywhere in the world, a decade from now this will be a primary way of getting from point to point. And again, it doesn’t mean that nobody will ever own a car, but I strongly believe that a decade from now this is going to be a very significant form of transportation in all major cities, or almost all major cities, across the globe. Some of the more obvious benefits of our technology are the safety aspects, and of course we’re deeply excited to help save lives. There’s not much that’s more inspiring than that. But getting people access to safe, affordable and clean transportation is powerful, because there are so many segments of the population that just don’t have that today. In some cases, it’s due to accessibility, and in some cases it’s due to financial considerations. If you look at cab drivers, for example, they do discriminate based both on people’s appearances and on what parts of town they’re going to in order to pick people up. If you’re in one of the parts of the town that is a little bit less privileged and you’re looking for a safe way to get around the city at two in the morning, it can be really scary for folks, genuinely — to the point that people maybe make bad decisions or don’t go places. One of the great things about our technology is it doesn’t have any of those biases. There’s no person you have to interact with. You don’t have to wonder about who your driver’s going to be. And we’re going to be able to significantly lower the cost of transportation, because today the largest portion of your Uber or Lyft bill is paying the driver.
Our driver is an artificial intelligence system, and we’re really excited about the societal implications. We’re also mindful of the fact that we’re not going to solve all things for all people right away. This is a journey. Our first vehicle has some great accessibility features, but it doesn’t do everything for everyone. Similarly, while we expect our costs to be lower due to not needing human services, it’s going to take some time to be massively less expensive. But that will happen. We’re very excited about that.
Do you foresee alleviating the issues just discussed, potentially changing behavior and having an impact on area businesses?
Levinson: Very much so. I think there are dozens of subtle and not-so-subtle changes we can look forward to in our cities over the coming decade and beyond. Sometimes it takes time to change an entire city. But it is really going to be wonderful for people to see just how much clean and empty space there is to congregate and then bike and walk. It’s kind of remarkable when you think about how many cities are designed around people owning cars and driving them. Cars were an amazing invention that helped connect people, and we’re grateful for that history, but they also have a lot of drawbacks and they’ve definitely not been strictly positive for cities or society. We think we can do better. Again, we’re not confused; this is not a panacea. It doesn’t solve everything for everyone, and any new technology creates some new challenges as well. We want to be very mindful of that, and respectful of all of the dynamics there. But overall we’re just tremendously excited about the way cities will evolve over the coming decades as a result of this type of technology being available.
Where do you think the biggest problems are going to be?
Levinson: I don’t know that there are going to be problems so much as just that it takes time to perfect and then scale the technology. For example, when you think about operating in a city, there will probably be certain intersections that are particularly poorly designed. It might make sense, from a safety perspective, for robotaxis to avoid some percent of those intersections. The cool thing about that is that I don’t actually think it will fundamentally limit the quality of the service. Worst case: Maybe you get picked up or dropped off one block away from your ideal location. I do foresee there being some issues like that. Similarly, we may see some impact from certain types of extreme weather. There could also be some scenarios when, in the early deployments — we might say for 1% or half a percent of the year — we might just not operate our fleet for those few hours. I think that’s a lot better than saying we’re going to wait to deploy this until the vehicles can handle 100% of everything. We’re not going to deploy them anywhere that’s not extraordinarily safe. But I think the fact that we get to own and operate the fleet gives us a lot of control and agency over our path to market and allows us to bring this technology quite soon to people in a measured and safe way. That’s something we’re going to have to deal with as an industry. But anytime there’s a new technology, there’s always some things you have to think about. People also ask about the displacement of workers who are currently driving vehicles around. This is going to take a long time. We’re talking many years before the actual macro trends change meaningfully. So there’s lots of time to prepare. We’re creating a whole bunch of new types of jobs that didn’t even exist, for example remote teleguidance of the vehicles. We’re very optimistic — but again, we do need to be mindful of all these different societal impacts of what we’re building.
How does that work when you present the idea to a local government? Do they want to fund it? Do they want to use it? Are they there to enable it? Levinson: It really depends on whom you’re talking to. Some folks are excited and they ask us, “What can we do to make us one of your first cities? What can we do to make this easier for you, whether it’s funding investment or changing the rules of the road so that there’s easier access for autonomous vehicles?” Then sometimes you talk to folks who are more like, “This sounds cool, but I don’t know if I really believe in it yet.” There are a lot of considerations that make this a city-by-city conversation. I will point out that our primary business model is not to sell to cities. It’s to sell rides directly to consumers.
Of course, we’re not going to just show up and not talk to the city we’re operating in. To our earlier point, we’re not actually asking for changes from the city. We’ve tried to design the vehicle and our service and business model in such a way that we don’t really need much from the city. That said, we want to be good stewards. Of course we don’t want to surprise anybody. We’re obviously going to comply with all of the local laws and regulations. But our perspective is that we should make cities more desirable by us being there and really not ask too much of the cities in return.
The conversation has been edited and condensed for clarity.
This concludes Part 3 of this three-part series. For the first two installments, visit here.
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Home News (Image credit: Moore Threads) The number of GPU startups in China is extraordinary as the country tries to gain AI prowess as well as semiconductor sovereignty, according to a new report from Jon Peddie Research. In addition, the number of GPU makers grew worldwide in recent years as demand for artificial intelligence (AI), high-performance computing (HPC), and graphics processing increased at a rather unprecedented rate. When it comes to discrete graphics for PCs, AMD and Nvidia maintain lead, whereas Intel is trying to catch up. 18 GPU DevelopersTens of companies developed graphics cards and discrete graphics processors in the 1980s and the 1990s, but cut-throat competition for the highest performance in 3D games drove the vast majority of them out of business. By 2010, only AMD and Nvidia could offer competitive standalone GPUs for gaming and compute, whereas others focused either on integrated GPUs or GPU IP. The mid-2010s found the number of China-based PC GPU developers increasing rapidly, fueled by the country's push for tech self-sufficiency as well as the advent of AI and HPC as high-tech megatrends. In total, there are 18 companies developing and producing GPUs, according to Jon Peddie Research. There are two companies that develop SoC-bound GPUs primarily with smartphones and notebooks in mind, there are six GPU IP providers, and there are 11 GPU developers focused on GPUs for PCs and datacenters, including AMD, Intel, and Nvidia, which design graphics cards that end up in our list of the best graphics cards. In fact, if we added other China-based companies like Biren Technology and Tianshu Zhixin to the list, there would be even more GPU designers. However, Biren and Tianshu Zhixin are solely focused on AI and HPC for now, so JPR does not consider them GPU developers. Swipe to scroll horizontallyPCDCIPSoCAMDBirenArmAppleBoltTianshu ZhixinDMPQualcommInnosiliconRow 3 - Cell 1 Imagination TechnologyRow 3 - Cell 3 IntelRow 4 - Cell 1 Think SiliconRow 4 - Cell 3 JingiaRow 5 - Cell 1 VerisiliconRow 5 - Cell 3 MetaXRow 6 - Cell 1 Xi-SiliconRow 6 - Cell 3 Moore ThreadsRow 7 - Cell 1 Row 7 - Cell 2 Row 7 - Cell 3 NvidiaRow 8 - Cell 1 Row 8 - Cell 2 Row 8 - Cell 3 SiArtRow 9 - Cell 1 Row 9 - Cell 2 Row 9 - Cell 3 XiangdixianRow 10 - Cell 1 Row 10 - Cell 2 Row 10 - Cell 3 ZhaoxinRow 11 - Cell 1 Row 11 - Cell 2 Row 11 - Cell 3 China Wants GPUsBeing the world's second largest economy, China inevitably competes against the U.S. and other well-developed countries in terms of pretty much everything, including technology. China did a lot to lure engineers from around the world and make it worthwhile to establish various chip design startups in the country. In fact, hundreds of new IC design houses emerge in China every year. They develop all kinds of things from tiny sensors to complicated communication chips, thus enabling the country's self-sufficiency from Western suppliers. (Image credit: Moore Threads)But to really jump on the AI and HPC bandwagon, China needs CPUs, GPUs, and special-purpose accelerators. When it comes to computing, it is impossible for Chinese companies to leave behind long-time CPU and GPU market leaders any time soon. Yet, it is arguably easier and perhaps more fruitful to develop and produce a decent GPU than try to build a competitive CPU. "AI training was the big motivator [for Chinese GPU companies], and avoidance of Nvidia's high prices, and (maybe mostly) China's desire for self-sufficiency," said Jon Peddie, the head of JPR. GPUs are inherently parallel, which means there are loads of compute units inside that can be used for redundancy, which makes it easier to get a GPU up and running (assuming that per transistor costs are relatively low and overall yields are decent). Also, since GPUs are fundamentally parallel, it is easier to parallelize them in scale-out manner. Keeping in mind that China-based SMIC does not have production nodes as advanced as those of TSMC, this way of performance scaling looks good enough. In fact, even if Chinese GPU developers lose access to TSMC's advanced nodes (N7 and below), at least some of them could still produce simpler GPU designs at SMIC and address AI/HPC and/or gaming/entertainment market. From China's perspective as a country, AI and HPC-capable GPUs may be arguably more important than CPUs too since AI and HPC can enable all-new applications, such as autonomous vehicles and smart cities as well as advanced conventional arms. The U.S. government of course restricts exports of supercomputer-bound CPUs and GPUs to China in a bid to slowdown or even constrain development of advanced weapons of mass destructions, but a fairly sophisticated AI-capable GPU can enable an autonomous killer drone, and drone swarms represent a formidable force, for instance. GPU Microarchitecture Is Relatively Easy, Hardware Design Is ExpensiveMeanwhile, it should be noted that while there are a bunch of GPU developers, only two can actually build competitive discrete GPUs for PCs. That is perhaps because it is relatively easy to develop a GPU architecture, but it is truly hard to properly implement it and to design proper drivers. CPU and GPU microarchitectures are essentially at the intersection of science and art. They are sets of sophisticated algorithms that can be developed by rather small groups of engineers, but they might take years to develop, says Peddie. "[Microarchitectures] get done on napkins and white boards," said Peddie. "[As for costs] if it is just the architects themselves, that [team] can be as low as one person to maybe three – four. [But] architecture of any type, buildings, rocket ships, networks or processors is a complicated chess game. Trying to anticipate where the manufacturing process and standards will be five years away, where the cost-performance tradeoffs are, what features to add and what to drop or ignore is very tricky and time-consuming work. […] The architects spend a lot of time in their head running what-if scenarios — what if we made the cache 25% bigger, what if we had 6,000 FPUs, should we do a PCIe 5.0 I/O will it be out in time." (Image credit: Nvidia)Since microarchitectures can take years to develop and they require talented designers, in a world where time-to-market is everything, many companies license an off-the-shelf microarchitecture or even a silicon-proven GPU IP from companies like Arm or Imagination Technologies. For example, Innosilicon — a contract developer of chips and physical IP — licenses GPU microarchitecture IP from Imagination for its Fantasy GPUs. There is another China-based GPU developer, which uses a PowerVR architecture from Imagination. Meanwhile, Zhaoxin uses a highly reiterated GPU microarchitecture it acquired from Via Technologies, which inherited it from S3 Graphics. The cost of developing a microarchitecture may vary, but it is relatively low when compared to the costs of a physical implementation of a modern high-end GPUs. For years, Apple and Intel, both companies with plenty of engineering talent, relied on Img for their GPU designs (Apple still does to a certain extent). MediaTek and other smaller SoC suppliers rely on Arm. Qualcomm used ATI/AMD for an extended period, and Samsung uses AMD after several years of trying to design their own graphics engine. Two of the new Chinese companies have hired ex AMD and Nvidia architects to start their GPU companies, and another two use Img. Time to market and learning the skills of being an architect, what to worry about, and how to find a fix is a very time consuming process. "If you can go to a company that already has a design and have been designing for a long time, you can save a boatload of time and money – and time to market is everything," said the head of Jon Peddie Research. "There are just so many gotchas. Not every GPU designed by AMD or Nvidia has been a winner. [But] a good design lasts a couple of generations with tweaks." Hardware implementation and software development are prohibitively expensive with new production nodes. International Business Times estimates that the design costs for a fairly complex device made using 5nm-class technology exceeds $540 million. These costs will triple at 3nm. "If you include layout and floor plan, simulation, verification, and drivers then the [GPU developer] costs and time skyrocket," explained Peddie. " The hardware design and layout is pretty straight forward: get one trace wrong and you can spend months tracking it down." There are just a few companies in the world that can develop a chip featuring the complexity of modern gaming or compute GPUs from AMD and Nvidia (46 billion — 80 billion transistors), yet China-based Biren could do something similar with its BR104 and BR100 devices (we speculate that the BR104 packs some 38.5 billion transistors). Thoughts Despite prohibitive costs, eight out of the 11 PC/datacenter GPU designers are from China, which speaks for itself. Perhaps we won't see a competitive discrete gaming GPU from anyone except huge American companies in the near future. That's partly because its hard and time consuming to develop a GPU, and to a large degree it requires a prohibitively expensive hardware implementation for these high-complexity GPUs. Whether or not China can field competitive entrants remains to be seen, but any failure won't stem from a lack of trying. Get instant access to breaking news, in-depth reviews and helpful tips.
Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
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Some parts of China have officially promoted metaverse development plans. Pictured here is a metaverse exhibition area at an annual services trade expo in Beijing on Sept. 1, 2022.China News Service | China News Service | Getty ImagesBEIJING — When it comes to futuristic concepts like the metaverse, JPMorgan analysts think they've found a strategy for selecting Chinese stock plays.The metaverse is loosely defined as the next iteration of the internet, existing as a virtual world in which humans interact via three-dimensional avatars. Hype around the metaverse swept through the business industry about a year ago. But in the United States at least, it isn't gaining the momentum that companies such as Facebook had hoped.The social network giant even changed its name to Meta last year. However, its shares are down more than 50% this year — far worse than the Nasdaq's roughly 24% decline.China faces the same consumer adoption problems as the United States. But the Asian country's metaverse development faces its own challenge of regulatory scrutiny, something the JPMorgan analysts pointed out in their Sept. 7 report. Cryptocurrencies, a major element of the metaverse outside China, are also banned within the country.Nevertheless, the stock analysts said some Chinese internet companies can make money from particular industry trends driven by the metaverse's development.Top picksTheir top picks in the sector are Tencent, NetEase and Bilibili. And among non-internet names in Asia, companies like Agora, China Mobile and Sony made JPMorgan's list of potential beneficiaries.That's based on the companies' competitive edge in particular aspects of the metaverse, such as gaming and social networks."Development of mobile internet and AI in the past 5-10 years suggests that a company's competitive advantage in one part of the tech ecosystem is often more important in determining long-term value creation to shareholders than which part of the ecosystem the company operates in," analyst Daniel Chen and his team said in the report.Here are two main ways that companies can make money as the metaverse develops, the analysts said.Gaming and intellectual propertyIn JPMorgan's most optimistic scenario, China's online game market nearly triples to $131 billion from $44 billion.Tencent and NetEase both have strong gaming businesses and partnerships with global industry leaders, the analysts said.For example, Tencent has a stake in virtual world game company Roblox, while NetEase has partnered with Warner Bros. for a Harry Potter-themed mobile game, the report pointed out.Digitalization of business and consumption"The metaverse will likely double digital time spent" from the current average of 6.6 hours, the analysts said. They also expect companies will be able to generate more revenue per internet user.JPMorgan estimates the total addressable market in China for business services and software in the metaverse will be $27 billion, while digitalizing the offline consumption of goods and services will make up a $4 trillion market in China.In business services, NetEase already has a virtual meeting room system called Yaotai, while Tencent operates a videoconferencing app called Tencent Meeting, the report pointed out.Tencent also has "rich experience in managing China's largest social network Weixin/mobile QQ" and can benefit from virtual item sales within those platforms, the analysts said.Similarly, Bilibili's "high user engagement will enable it to capture rich monetization potential in [value added service]/virtual item sales in the long run," the analysts said.They noted the app is the "go-to entertainment platform" for Chinese people aged 35 and below, with each user spending an average of 95 minutes a day on the platform in the first quarter.'Obstacles to overcome'But it remains unclear how practical such efforts will be from a business perspective.Without naming the companies as stock picks, the JPMorgan analysts described a number of other metaverse projects underway in China, such as Baidu's virtual XiRang world, and virtual reality development by Baidu-backed iQiyi, NetEase and Bilibili.The analysts said virtual reality devices are currently too heavy to be used for long periods of time, and cloud computing capabilities and metaverse content remain limited."We think 'perfect form' of the metaverse could take decades to achieve," the analysts said. "While we believe the [total addressable market] for the metaverse is enormous, we believe there are various technological obstacles to overcome."— CNBC's Michael Bloom contributed to this report.
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Streaming video giant Netflix is looking to hire artificial intelligence specialists, dangling one salary that pays as much as $900,000, even as Hollywood actors and writers are in the midst of a historic strike that aims to curtail AI's use.
One job posting, for a product manager of Netflix's machine learning platform — total compensation: $300,000-$900,000 —will "define the strategic vision" for the platform, "prioritize areas of investment" and "follow and assess external industry trends."
"You will be creating product experiences that have never been done before," the listing boasts.
Netflix is also on the hunt for a senior software engineer to "[develop] a product that makes it easy to build, manage and scale real life [machine learning] applications," for an annual income between $100,000 and $700,000, as well as a machine-learning scientist to "develop algorithms that power high quality localization," with a total pay between $150,000 and $750,000.
A spokesperson for Netflix declined to comment on the job postings and referred CBS MoneyWatch to a statement from the Alliance of Motion Picture and Television Producers, which is representing studios (including Paramount Global, the parent company of CBS News) in negotiations with writers and actors.
Netflix relies heavily on machine learning for its success, according to the company's website.
"We invest heavily in machine learning to continually improve our member experience and optimize the Netflix service end-to-end," the company says. While the technology has historically been used for Netflix's recommendation algorithm, the company is also using it "to help shape our catalog" and "to optimize the production of original movies and TV shows in Netflix's rapidly growing studio," according to the site.
The company is also seeking a technical director of AI/machine learning for its gaming studio, where Netflix is building a team to eventually "[build] new kinds of games not previously possible without ongoing advances AI/ML technologies." That position pays $450,000 to $650,000 annually.
Generative AI and the strike
The use of so-called generative AI, the technology underpinning popular apps like ChatGPT and MidJourney, has been at the heart of the negotiations between movie studios on one side and creators and performers on the other.
Duncan Crabtree-Ireland, the chief negotiator for SAG-AFTRA, which represents actors, has called the technology "an existential threat" to the profession. According to the union, studios have "proposed that our background performers should be able to be scanned, get paid for one day's pay, and the company should be able to own that scan, that likeness, for the rest of eternity, without consideration,".
The AMPTP, the trade group representing the studios, disputed this characterization, telling CBS MoneyWatch that the studios' proposal only permitted a company to use a background actor's replica "in the motion picture for which the background actor is employed," with other uses subject to negotiation.
Writers fear that AI will be used to reduce their pay and eliminate ownership of their work.
"The immediate fear of AI isn't that us writers will have our work replaced by artificially generated content. It's that we will be underpaid to rewrite that trash into something we could have done better from the start," screenwriter C. Robert Cargill said on Twitter. "This is what the WGA is opposing and the studios want."
Already, many media outlets have adopted the use of AI to error-ridden results. Disney is also advertising for generative AI jobs, according to The Intercept, which first reported on the job listings. And some video game studios are using AI to write characters for games., often with
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In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.The rapid shift towards digital customer engagement was already happening. Then the pandemic hit.With bricks-and-mortar locations closing or foot traffic lessoning, there were suddenly fewer ways to connect with consumers, causing companies to further accelerate that pivot to having digital engagement at the forefront of the business strategy.That's a landscape that former CNBC Disruptor 50 company Twilio has been building towards.Speaking to CNBC in 2014 when the company was named to the Disruptor 50 list for the second time, co-founder and CEO Jeff Lawson said Twilio was "migrating a 150-year-old hardware industry to its future in software," likening what it was changing about how companies were communicating with their customers to what Amazon had done for technology infrastructure and Salesforce had done for CRM.Founded in 2008, the San Francisco-based company spent its early years convincing developers to use its application programming interface to add call, voice, text, and picture messaging to their apps, among other things.Providing that level of communication enhancement gained early support from customers like Airbnb, Home Depot, Uber, and Walmart. It also helped Twilio raise nearly $240 million from investors like Bessemer Venture Partners and Redpoint Ventures, resulting in a nearly $1 billion valuation by 2016.The promise of digital customer engagement led to the company's IPO in June 2016 after being on the Disruptor 50 list four times. "It is literally day one of the conversion of communications from its legacy in hardware and physical networks to its future, which is based in software," Lawson said on CNBC's Squawk Alley on the day of the IPO. "Where software developers, if they can dream up an idea of how we can communicate better — with maybe a company that we do business with — that developer can go build off Twilio. And if it works, scale it up."The six years since have brought a massive transformation, perhaps none accelerated more by the pandemic. Speaking with CNBC's Jim Cramer on "Mad Money " in 2020, Lawson said the "trends that have already been going on in our society around digitizing those processes, streamlining them with this technology and turning so many interactions into digital ones, those trends all got accelerated by Covid."Overall, Lawson said, the pandemic accelerated digital communication strategies by about six years for businesses.More coverage of the 2022 CNBC Disruptor 50That led to a massive rally in Twilio's stock, going from trading at $99.43 at the end of 2019 to over $400 by February 2021.Lawson told CNBC in January 2021 how Nike, which uses its products, had pivoted some of its salespeople in stores to serve customers on its digital channels. "Now, when Covid came around, and those stores closed and Nike went to 100% e-commerce, that product knowledge and that way of serving customers became absolutely critical to helping customers online," he said.But as the world has reopened, there has been some skepticism if the digital economy can keep growing at that same pace, a trendline even further impacted by the rise of inflation and drop in consumer spending. Twilio, despite seeing its revenue continuing to grow, has seen its stock price decline by 74.8% in the last year.Barclays analyst Ryan MacWilliams recently wrote in a note that Twilio could be at an inflection point, perhaps embarking on a "higher profitability, lower growth path." The company had said it expected to turn an operating profit on a non-GAAP basis in 2023. Lawson, speaking on CNBC on June 6, said the company was "laser-focused" on becoming profitable.But much like Twilio is now focusing on its profits, it sees an even stronger case for that digital customer communication transformation, a world it believes offers more personalization and trust, and ultimately a better customer. Twilio research suggests that there is a 70% average revenue increase due to digital customer engagement investments."In an environment like this where every company is focused on profits right now is a period of time where understanding the ROI of your investments, looking at the bottom line – that's what every company, tech or otherwise, is focused on in an environment like this," Lawson said on June 6. "Once you acquire that customer, reengage with them through messaging and better campaigns and better marketing that is all personalized with what that customer wants – this is the equation that runs the internet."SIGN UP for our weekly, original newsletter that goes beyond the list, offering a closer look at CNBC Disruptor 50 companies, and the founders who continue to innovate across every sector of the economy.
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SummaryCompaniesThird quarter underlying sales up 0.2%Fourth quarter sales up 2.8% so farB&Q loft insulation roll sales more than doubleForecasts 2022-23 profit of 730-760 mln stgLONDON, Nov 24 (Reuters) - European home improvement retailer Kingfisher reported resilient trading in its third quarter, boosted by strong demand for energy efficient products as consumers seek savings in their energy bills to help navigate a cost-of-living crisis.The group, which owns B&Q and Screwfix in Britain and Castorama and Brico Depot in France and other markets, said on Thursday its total sales rose 1.7% in constant currency to 3.3 billion pounds ($4 billion) in the three months to Oct. 31, with like-for-like sales up 0.2%.Kingfisher (KGF.L) said it had also got off to a good start in its fourth quarter with like-for-like sales up 2.8% for the three weeks to Nov. 19. It was continuing to win market share, it said."While the market backdrop remains challenging, DIY sales continue to be supported by new industry trends such as more working from home and a clear step-up in customer investment in energy saving and efficiency," said Chief Executive Thierry Garnier.Kingfisher said across the group insulation product sales in the third quarter were up 24% year-on-year.At B&Q, loft insulation roll sales were up 108% year-on-year, while at Screwfix, sales of thermostatic radiator valves were up 33.7% and sales of central heating controls up 20.7%.Kingfisher has also launched energy-saving tools in the UK and France to help customers diagnose and access products and services to increase the efficiency of their homes.It said it had seen a very positive take-up of these services so far, with B&Q taking nearly 1,000 appointment bookings within the first three days of launch.Kingfisher, whose shares have fallen 27% this year, kept its financial guidance broadly intact, forecasting a year to end-Jan. 2023 adjusted pretax profit in the range of 730 to 760 million pounds, down from a pandemic boosted 949 million pounds in 2021-22. It previously forecast 730-770 million pounds.The guidance takes account of investment to open Screwfix stores in France as well as higher labour and energy costs."We remain confident in both the resilience of our industry and in continuing to grow ahead of our markets," said Garnier.($1 = 0.8273 pounds)Reporting by James Davey; Editing by Kate HoltonOur Standards: The Thomson Reuters Trust Principles.
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Advanced Micro Devices made history this year when it surpassed Intel by market cap for the first time ever. Intel has long held the lead in the market for computer processors, but AMD's ascent results from the company branching out into entirely new sectors.In one of the biggest semiconductor acquisitions in history, AMD purchased adaptive chip company Xilinx in February for $49 billion. Now, AMD chips are in two Tesla models, NASA’s Mars Perseverance land rover, 5G cell towers and the world’s fastest supercomputer. “AMD is beating Intel on all the metrics that matter, and until and unless Intel can fix its manufacturing, find some new way to manufacture things, they will continue to do that,” said Jay Goldberg, semiconductor consultant at D2D Advisory.But a decade ago, analysts had a very different outlook for AMD.“It was almost a joke, right? Because for decades they had these incredible performance problems,” Goldberg said. “And that's changed.”CNBC sat down with AMD CEO Lisa Su to hear about her company’s remarkable comeback, and huge bets on new types of chips in the face of a PC slump, fresh restrictions on exports to China and shifting industry trends.‘Real men have fabs’AMD was founded in 1969 by eight men, chief among them Jerry Sanders. The famously colorful marketing executive had recently left Fairchild Semiconductor, which shares credit for the invention of the integrated circuit.“He was one of the best salesmen that Silicon Valley had ever seen," said Stacy Rasgon, semiconductor analyst at Bernstein Research. "Stories of lavish parties that they would throw. And there's one story about him and his wife coming down the stairs of the turret at the party in matching fur coats.”AMD Co-Founder Jerry Sanders poses at the original headquarters of Advanced Micro Devices, or AMD, in Sunnyvale, California, in 1969AMDHe also coined an infamous phrase about chip fabrication plants, or fabs.“Jerry Sanders was very famous for saying, ‘Real men have fabs,’ which obviously is a comment that is problematic on a number of levels and has largely been disproven by history,” Goldberg said.As technology advances, making chips has become prohibitively expensive. It now takes billions of dollars and several years to build a fab. AMD now designs and tests chips and has no fabs.“When you think about what do you need to do to be world class and design, it's a certain set of skills," Su said. "And then what do you need to do to be world class In manufacturing? It's a different set of skills and the business model is different, the capital model is different.”Back in the '70s, AMD was pumping out computer chips. By the '80s, it was a second-source supplier for Intel. After AMD and Intel parted ways, AMD reverse engineered Intel’s chips to make its own products that were compatible with Intel’s groundbreaking x86 software. Intel sued AMD, but a settlement in 1995 gave AMD the right to continue designing x86 chips, making personal computer pricing more competitive for end consumers.In 2006, AMD bought major fabless chip company ATI for $5.4 billion. Then in 2009, AMD broke off its manufacturing arm altogether, forming GlobalFoundries.“That's when their execution really started to take off because they no longer had to worry about the foundry side of things,” Goldberg said.GlobalFoundries went public in 2021 and remains a top maker of the less advanced chips found in simpler components like a car’s anti-lock brakes or heads-up display. But it stopped making leading-edge chips in 2018. For those, AMD turned to Taiwan Semiconductor Manufacturing Co., which now makes all of AMD’s most advanced chips.Catching IntelAMD only has major competition from two other companies when it comes to designing the most advanced microprocessors: Nvidia in graphics processing units, GPUs, and Intel in central processing units, CPUs.While AMD controls far less GPU and CPU market share than Nvidia and Intel, respectively, it’s made remarkable strides since moving away from manufacturing and reducing capital expenditure. Meanwhile, Intel doubled down on manufacturing last year, committing $20 billion for new fabs in Arizona and up to $100 billion in Ohio, for what it says will be the world’s largest chip-making complex. But the projects are still years away from coming online.“Intel is just not moving forward fast enough," Goldberg said. "They've said they expect to continue to lose share in next year and I think we'll see that on the client side. And that's helped out AMD tremendously on the data center side.”AMD’s Zen line of CPUs, first released in 2017, is often seen as the key to the company's recent success. Su told CNBC it's her favorite product. It’s also what analysts say saved AMD from near bankruptcy.“They were like literally, like probably six months away from the edge and somehow they pulled out of it," Rasgon said. "They have this Hail Mary on this new product design that they're still selling like later generations of today, they call it Zen is their name for it. And it worked. It had a massively improved performance and enabled them to stem the share losses and ultimately turn them around.”AMD CEO Lisa Su shows the newly released Genoa CPU, the company's 4th generation EPYC processor, to CNBC's Katie Tarasov at AMD's headquarters in Santa Clara, California, on November 8, 2022Jeniece PettittAmong the Zen products, AMD’s EPYC family of CPUs made monumental leaps on the data center side. Its latest, Genoa, was released earlier this month. AMD’s data center customers include Amazon Web Services, Google Cloud, Oracle, IBM and Microsoft Azure.“If you looked at our business five years ago, we were probably more than 80% - 90% in the consumer markets and very PC-centric and gaming-centric,” Su said. “As I thought about what we wanted for the strategy of the company, we believed that for high-performance computing, really the data center was the most strategic piece of the business.”AMD's revenue more than tripled between 2017 and 2021, growing from $5.3 billion to over $16 billion. Intel's annual revenue over that stretched, meanwhile, increased about 25% from close to $63 billion in 2017 to $79 billion last year.Geopolitical concerns and PC slumpAMD’s success at catching up to Intel’s technological advances is something many attribute to Su, who took over as CEO in 2014. AMD has more than tripled its employee count since then. Su was Fortune’s #2 Business Person of the Year in 2020 and the recipient of three of the semiconductor industry’s top honors. She also serves on President Joe Biden’s Council of Advisors on Science on Technology, which pushed hard for the recent passage of the CHIPS Act. It sets aside $52 billion for U.S. companies to manufacture chips domestically instead of overseas.“It's a recognition of just how important semiconductors are to both economic prosperity as well as national security in the United States,” Su said.With all the world’s most advanced semiconductors currently made in Asia, the chip shortage highlighted the problems of overseas dependency, especially amid continued tension between China and Taiwan. Now, TSMC is building a $12 billion 5-nanometer chip fab outside Phoenix.“We're pleased with the expansion in Arizona," Su said. "We think that's a great thing and we'd like to see it expand even more.”Earlier this month, the Biden administration enacted big new bans on semiconductor exports to China. AMD has about 3,000 employees in China and 25% of its sales were to China last year. But Su says the revenue impact has been “very small.”“When we look at the most recent regulations, they're not significantly impacting our business," Su said. "It does affect some of our highest-end chips that are used in sort of AI applications. And we were not selling those into China.”What is hurting AMD’s revenue, at least for now, is the PC slump. In its third-quarter earnings report earlier this month, AMD missed expectations, shortly after Intel warned of a soft fourth quarter. PC shipments were down nearly 20% in the third quarter, the steepest decline in more than 20 years.“It's down a bit more than perhaps we expected,” Su said. “There is a cycle of correction which happens from time to time, but we're very focused on the long-term road map.”Going customIt’s not just PC sales that are slowing. The very core of computer chip technology advancement is changing. An industry rule called Moore’s Law has long dictated that the number of resistors on a chip should double about every two years.“The process that we call Moore's Law still has at least another decade to go, but there's definitely, it's slowing down,” Goldberg said. “Everybody sort of used CPUs for everything, general purpose compute, but that's all slowed down. And so now it suddenly makes sense to do more customized solutions.”Former Xilinx CEO Victor Peng and AMD CEO Lisa Su on stage in Munich, Germany, at theAMDThat’s why AMD acquired Xilinx, known for its adaptive chips called Field-Programmable Gate Arrays, or FPGAs. Earlier this year, AMD also bought cloud startup Pensando for $1.9 billion. “We can quibble about some of the prices they paid for some of these things and what the returns will look like,” said Goldberg, adding that the acquisitions were ultimately a good decision. “They're building a custom compute business to help their customers design their own chips. I think that's a very, it's a smart strategy.”More and more big companies are designing their own custom chips. Amazon has its own Graviton processors for AWS. Google designs its own AI chips for the Pixel phone and a specific video chip for YouTube. Even John Deere is coming out with its own chips for autonomous tractors.“If you really look underneath what's happening in the chip industry over the last five years, everybody needs more chips and you see them everywhere, right?" Su said. "Particularly the growth of the cloud has been such a key trend over the last five years. And what that means is when you have very high volume growth in chips, you do want to do more customization.”Even basic chip architecture is at a transition point. AMD and Intel chips are based on the five-decade-old x86 architecture. Now ARM architecture chips are growing in popularity, with companies like Nvidia and Ampere making major promises about developing Arm CPUs, and Apple switching from Intel to self-designed ARM processors.“My view is it's really not a debate between x86 and Arm," Su said. "You're going to see basically, these two are the most important architectures out there in the market. And what we've seen is it's really about what you do with the compute.”For now, analysts say AMD is in a strong position as it diversifies alongside its core business of x86 computing chips.“AMD should fare much better in 2023 as we come out of the cycle, as their performance gains versus Intel start to become apparent, and as they start to build out on some of these new businesses,” Goldberg said.Intel did not immediately respond to a request for comment.Correction: "And we were not selling those into China," said Lisa Su, AMD's CEO. Her quote has been updated to reflect a typo that appeared in an earlier version of this article.
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News (Image credit: Hermitage Akihabara) When Sony introduced the Nextorage SSD brand for its PlayStation 5 consoles about a year ago, we thought that this was a one off move to address demand for PS5 storage. As it turns out, we were wrong. Sony's Nextorage is about to enter enthusiast-grade drives in particular, client-grade SSD in general. Indeed, at its booth at the Tokyo Game Show the company demonstrated three —1TB, 2TB, 4TB — offerings aimed at PCs (you can still install most of them into a PC) , a lineup that was obviously headlined by its 1TB and 2TB SSD featuring a PCIe 5.0 x4 interface, reports Hermitage Akihabara. Certainly, Sony's Nextorage M2-2280 SSD with a PCIe Gen 5 x4 interface is an eyecatcher with its up-to 9500 MB/s reads as well as peak 8,500 MB/s writes (which is mostly determined by SLC caching on a modern mainstream SSD). If it delivers those speeds in real life, it would best the vast majority of drives on our best SSD list.The peak performance of Sony's Nextorage drives with a PCIe Gen5 interface is determined by the speed of 3D NAND SSD platform they use as well as the company's capability to procure appropriate chips, which are said to be hard to find. Sony's Nextorage division not only demonstrated a high-end PC-oriented driver at the Tokyo Game Show, but also showed off a whole family of upcoming products, which includes a 4TB SSD. Showing off a catalogue of SSDs is nothing extraordinary for a typical OEM to do, but in Sony's case, it could signal the electronics giants' commitment to the storage space.While the PlayStation 5 drive remains the most important jewel in the Nextorage crown given the owner of the brand, Sony could soon be putting drives into mainstream PCs. Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
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