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And I don't mean creating an app that will add the world to short-form videos. I mean, where you build a huge company that spans the world and then turns into a political football.
Bytedance's app developer seems to be still on the way to a shutdown in the US after the already tangled talks stalled last week. As Catherine Shu elaborates, every national government seems to require local ownership of a new entity, and business partners each claim ownership. It is now a global zero-sum game for controlling data and algorithms.
On the other side of the world, Facebook quickly stated that it would not leave the European Union this week, even if it were forced to keep EU user data local, as reported by Natasha Lomas. The company clarified a recent filing that appeared to threaten something else – it doesn't want to receive TikTok.
For startups with physical supply chains, existing tensions are pushing Chimerica's operations to other parts of the world, as Brian Heater wrote on Extra Crunch this week. One founder told him the following:
Many (companies) are considering manufacturing in areas such as Southeast Asia and India. Vietnam in particular has made an attractive offer for a labor pool, says Sonny Vu from Ho Chi Minh City, CEO of carbon fiber manufacturer Arevo and founder of the deep-tech VC fund Alabaster. "We're friends with the Americans and the West in general. Vietnam, they have 100 million people, they can do things," explains Vu. "The supply chains are getting more complex. One of the problems was the below-average supply chain. It is not that deep and wide like other places like China. It's changing very quickly and people are ready to produce. I've heard from my friends who have tried to do things in China. Work is always this chronic problem. "
Danny Crichton accused US nationalist politics of undermining the country's long-term commitment to leading global free trade and threatening its competitive future in a provocative uproar last weekend. That's true, but the underlying truth is that globalization worked, it just didn't work as well as hoped for many people in the US and some other parts of the world. In addition to phenomena like China's industrial engine, these cross-border flows of money and technology have helped foster the startup ecosystem in Europe.
Mike Butcher, who has been reporting on startups for theinformationsuperhighway out of London for the past decade, is writing about a new report from Index Ventures on this trend.
It used to be that in order to be able to scale globally, European companies had to spend a lot of money on market launch in the USA in order to achieve the desired growth. That usually meant moving large parts of the team to the San Francisco Bay Area or New York. New research suggests this is no longer the case as the US has become more expensive and opportunities in Europe have improved. This means that European startups spend much less team and resources getting started in the US, but still achieve good results. Between 2008 and 2014, nearly two-thirds (59%) of European startups expanded before the Series A funding rounds or moved entirely to the US. However, between 2015 and 2019 that number fell to a third (33%).
The report also highlights the economic problem of dividing markets into political blocs. "European companies invest three-quarters (76%) less in software than their US counterparts," Butcher added. “And this is usually more compliance than innovation. This means that European startups are likely to continue looking for company exits in the US. "
The pain of not acting will come home to any government sooner or later, Danny notes. But that could take longer than your current company exists. Instead, now is the time to pick the markets that you can win and plan a world where success has a lower limit. And hey, if you're lucky, your national government might pick you as a winner!
Want $ 100M ARR? Fix your churn
This week we have summarized the most important moments of the extra crunch phase at Disrupt. Here is a key segment of a panel that Alex Wilhelm hosted with Vineet Jain, CEO of Egnyte, on making the $ 100 million ARR dream come true:
After explaining that in the early stages of building a SaaS business, it is common to focus more on adding new revenue than "plugging the holes down," added Jain that as one matures and grows More corporate focus needs to be placed on managing churn and retention. He said dollar-based retention is a key metric in the SaaS world by which startups are rated. This means that after securing a customer, your ability to sell the same account over a "defined window of time" is really important.
Considering the impact of the COVID-19 pandemic and the fact that Egnyte's bonuses are tied, he said, “I say churn management is the new revenue,” he added. “Concentrate on it disproportionately than you would only concentrate on sales growth.”…. Egnyte, Jain added, runs on just one or two metrics (net new MRR or gross MRR addition and churn). "Everything we do, we all (at Egnyte) have to be measured with this number in order to say:" How are we as a company? "" So if your startup is after Serie A, listen to Jain says about managing churn. After all, his company hit an ARR of $ 100 million, has a few tens of millions in the bank, grew 22% in the second quarter, and is EBITDA positive.
The summer of tech IPOs continues with Root, Corsair Gaming and, of course, Palantir
While public markets have been waffling on technology stocks of late, the general momentum of the Unicorn IPOs has continued.
Except maybe Danny slowed things down a bit for Palantir? Here are the main headlines of the week:
Given the decline in tech stocks, is insurtech startup Root poised for an IPO? (EG)
Chamath launches SPAC, SPAC and SPAC while he spices the world with SPACs SPACs
Palantir publishes a 2020 sales forecast of $ 1.05 billion, trading on September 30th
According to theinformationsuperhighway coverage, Palantir quickly removes the language and allows the founders to "unilaterally adjust their entire vocal power".
In his fifth filing with the SEC, Palantir finally admits that it is not a democracy
How did Corsair Gaming release such impressive numbers prior to going public? (EG)
More information about the best investors for you
We're making another big update to theinformationsuperhighway's list of startup investors who write the first checks and run the creepy rounds based on the thousands of referrals we've received from founders. Here's more from Danny:
Since the list started, we've seen great engagement: tens of thousands of founders have come back multiple times each to use the list to explore their next fundraiser and understand the ever-changing landscape of venture investing.
We last updated the theinformationsuperhighway list in late July with 116 new VCs based on the recommendations of the founders, but as with all venture capital, the investment world is moving fast. That said, it's already time to start another update.
To make sure we have the best information, we need founders – from new founders who may have just increased their VC rounds to seasoned founders who are adding another round to their cap tables – to make recommendations. Thankfully, our survey is pretty short (around two minutes) and the help you can give other founders fundraising is invaluable. Please submit your recommendation soon.
Since our last update in July, 840 founders have already submitted new recommendations, and we are now sitting at around 3,500 recommendations. Each referral helps us identify promising and thoughtful VCs and help founders reduce the noise of the industry worldwide and find the leads for their next reviews.
All about theinformationsuperhighway
Extra Crunch Live: Join Index Ventures VCs Nina Achadjian and Sarah Cannon on September 29 at 2 p.m. EDT / 11 a.m. PDT on the future of startup investing
TC Sessions Mobility 2020 starts in two weeks
Announcement of the final agenda for TC meetings: Mobility 2020
Discover the global markets for micromobility at TC Sessions: Mobility
Don't miss the Q&A sessions at TC Sessions: Mobility 2020
In the course of the week
Call Helsinki VCs: Be featured in the Great theinformationsuperhighway Survey of European VC
The company with the highest score in Bessemer's annual cloud report defied convention by staying private
Human Capital: The Black Founder's Burden
Thanks to Google, App Store monopoly concerns have now reached India
Free VPNs are bad for your privacy
The peloton effect
Edtech investors are looking for gold
3 founders on why they pursued alternative startup ownership structures
How Robinhood and Chime raised over $ 2 billion last year
Dear Sophie, is it possible to get through I-751 and citizenship after the divorce?
Justice: Why is Robinhood not a verb yet?
From Alex Wilhelm:
Hello and welcome back to Equity, theinformationsuperhighway's VC podcast (now on Twitter!) Where we unpack the numbers behind the headlines.
This week Natasha Mascarenhas, Danny Crichton, and your humble servant gathered to entertain yourself through a series of rounds and venture capital news for your pleasure. As a program note, I'm effectively absent next week. So look for Natasha to take the lead on Equity Monday, and then look for her and Danny to rock the Thursday show. I will miss everyone.
But on the show itself, here's what we got ourselves into:
- Zoom's earliest investors bet millions on better zoom for schools: Building on Natasha's coverage, we looked at a decent company looking to improve Zoom for the educational environment where it suddenly took center stage. Teachers need more.
- BookClub's first rule? No boring book clubs. Another Natasha story this week, this time about a startup we like something but can't decide what its market will be like. Still, the bibliophiles in your life should read this piece and get upset about the increased access to authors.
- Robinhood raised another $ 460 million and expanded its previous G Series, valued at $ 200 million, to a total investment of $ 660 million. Chime also added $ 485 million on a new valuation of $ 14.5 billion. We looked into what's wrong with the couple and why they're raising so much money.
- The short answer is hella growth, and it brings us to a question and this week's heading: Why is Robinhood not a verb yet?
- Willow, the startup that makes the portable breast pump, raises $ 55 million: Natasha talked us through some of the problems with the Femtech set before Danny explained the need for what Willow is offering. The point here is that more technology is used to help more people in more stages of life.
- Then we reached out to VC Media, which was our notes on a new venture capital game show, and a16z launched a podcast network. We also included what Casey Newton is up to in the same conversation.
Have a good trip for a week, please stay safe and don't forget to register to vote.
Equity declines every Monday at 7:00 am PDT and as fast as we can on Thursday afternoon. So subscribe to us on Apple Podcasts, Overcast, Spotify and All Casts.