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While consumer tech has matured as a startup category in recent years, many investors remain optimistic about certain trends such as online gaming, language, and platform unbundling in favor of focused social networks. This is the key finding from a survey Josh Constine and Arman Tabatabai conducted this week with 16 of the most active investors in key social product categories at Extra Crunch. Here is an extract from the answers from Olivia Moore and Justine Moore from CRV:
"Unbundling of YouTube." You can build a big business by targeting an industry within YouTube with a product that offers better features and more opportunities to monetize developers. Twitch is a good example of this! We also observe early stage companies like Supergreat (in Beauty) and Tingles (ASMR).
Voice as a social medium. Voice continues to gain importance as a podcasting medium, but we haven't seen much in social or P2P voice yet. We believe that a successful platform will take advantage of the fact that language content can be created and consumed while other things are being done. We are big fans of companies like TTYL and Drivetime who are making progress here!
Flexible digital identities. Gen Zers are constantly online, but have different platform / friendship preferences as to how they want to "show up" digitally. The rise of "Finsta" accounts is a good example of this. Companies like Facemoji are already helping users create social content using a curated digital avatar. We are excited to see what founders will build here!
Synchronous, shared mobile experiences. We are optimistic about apps that connect users in real time for a shared social experience. Most apps are now "single player", which leads to scroll fatigue. HQ Trivia was an early example on the entertainment side, while companies like Squad help users surf the Internet and watch TikTok together.
Other respondents are: Connie Chan (Andreessen Horowitz). Alexis Ohanian (initialized capital), Niko Bonatsos (General Catalyst), Josh Coyne (Kleiner Perkins), Wayne Hu (Signal Fire), Alexia Bonatsos (Dream Machine), Josh Elman (Angel Investor), Aydin Senkut (Felicis Ventures), James Currier (NFX), Pippa Lamb (Sweet Capital), Christian Dorffer (Sweet Capital), Jim Scheinman (Maven Ventures), Eva Casanova (Day One Ventures) and Dan Ciporin (Canaan).
EU subscribers please note: A second part of this survey will be conducted next week and will focus specifically on social investment in the COVID-19 era.
Invest – or hold VCs?
Speaking of funding, who is writing checks?
"I've seen a lot of VCs talk about being open to business," Eniac Ventures founding partner Hadley Harris proclaimed this week in a fundraising trend panel, "and I was pretty frank on Twitter that I was think that's mostly bullshit. " sends the wrong message to entrepreneurs. " When Connie Loizos reported on theinformationsuperhighway for us, he said instead that he had no time to speak to other founders because he was so busy helping existing portfolio companies.
Not every investor agrees with this point of view – VC Twitter offers many anecdotes about new companies that receive funding.
Let's just hope that both things are true, because it's already hard out there.
Does your startup qualify for a PPP loan? (And should you apply?)
Two debates focused on government support for startups. First, the large, messy new paycheck protection program to cover small business expenses appears to be somewhat available to startups based on revisions released by the Small Business Administration late last week. Depending on your fundraiser and your cap table, things get complicated quickly, as Jon Shieber reported for theinformationsuperhighway last weekend. Venture companies generally hold majority interests in a portfolio of companies with a total of more than 500 employees. So if such a company also has a majority stake in your startup, you may not be eligible. Even if the VC share is below 50%, preferred conditions associated with fundraising may result in your application violating the rules.
To help the founders cope with their own situations faster, startup attorney William Carleton has written a quick guide to Extra Crunch. Here he says you have to start:
Do you have a minority investor who controls the protection agreements in your articles of association or who controls a seat on the board that grants certain veto rights to decisions on the board? If the answer to either question is yes, you have almost certainly confirmed that you will need to change your charter and / or other relevant documents before proceeding with a PPP application.
The other aspect is, of course, whether startups should apply for it at all. The Congress broadly intended to use the money for small and medium-sized businesses, most of which would never be considered for a business. Shieber's article is full of comments on the subject if you feel like complaining …
The commercial real estate comeuppance
If you are like me and have started businesses in the Bay Area and are having trouble finding office space you can afford, enjoy this piece of Claims Woman as you plan your future. Because after many, many years of looking for a rental in the Silicon Valley Tech Economy (and everyone else), the commercial real estate industry is facing an existential crisis.
Connie has been exploring this exploding topic with a number of startups, investors and CRE agents in a great feature for theinformationsuperhighway this week. An analyst "expects the market to shrink" at least 10%, and probably 20% to 30%, "after San Francisco commercial real estate prices have risen to $ 88 per square foot over several years, according to CBRE 2 million square meters that will be launched in the city as soon as possible – space that companies want to remove from their books. "
It is quite possible to imagine even larger declines, since most of the possible tenants also burden their budgets. Who knows, maybe this whole process will even help make the Bay Area and other wealthy metros a little more affordable again.
According to investors, Edtech is getting hot again
After a lot of money and a lot of struggle in the past ten years, edtech is suddenly hot again thanks to the pandemic. Natasha Mascaranhas recently reported on the trend and conducted a large investor survey on the extra crunch category this week.
“An investor spent a third of his time dealing with edtech companies and devoted almost all of his time to the sector,” she tells me. “Another person who has been optimistic about edtech for years says that the business is as usual for them, but this competition can arise. A fund focused on Ed-Tech believes the sector has been underfunded for some time, so the moment of settlement has started. "
- Jenny Lee, GGV
- Tetyana Astashkina, LearnLaunch
- Jean Hammond, LearnLaunch
- Marlon Nichols, MaC Venture Capital
- Mercedes Bent, Lightspeed Venture partner
- Jennifer Carolan, Reach Capital
- Shauntel Garvey, Reach the capital
- Jan Lynn-Matern, Emerge Education
- Lesa Mitchell, tech stars
- Tory Patterson, Owl Ventures
- Ian Chiu, Owl Ventures
- Tony Wang, 500 startups
In the course of the week:
Economists have not yet thrown away the models (but they will)
Five CEOs on their development in the femtech area
Equity Monday: Hunt for green shoots amid the start dates
How SaaS startups should plan a turbulent second quarter
Fintech's uneven new reality has helped some startups and harmed others
Rapidly changing regulations give startups of virtual care the opportunity to use the moment
Jeff Lawson, CEO of Twilio, on relocating a company with 3,000 employees to a completely distant company
Amidst unicorn layoffs, Boston startups reflect the future
We started with a look at Clearbanc and its runway expansion program, which can help startups survive when money runs out. Natasha covered it for theinformationsuperhighway. Most of us are familiar with Clearbanc's revenue-based financing model. That is a turn. However, it is good to see that companies are working on adapting their products to ensure the survival of other startups.
Next, we talked about a couple of rounds Danny covered, which was Sila's $ 7.7 million investment to develop technologies that could take over the venerable and fragile ACH, and the $ 4 million increase Cadence to aid in securitization. Even better, according to Danny, are both companies that use blockchain. And they are useful! Blockchain has finally done some cool things while looking elsewhere.
We stuck to our fintech theme – the show was very fintech-heavy, which was an accident – and turned to SoFi's huge $ 1.2 billion deal to buy Galileo, a Utah-based payment company that had a big one Drives part of the UK-based fintech. SoFi enters the B2B fintech world after attacking the B2C realm for the first time. We expect other financial technology companies to follow suit if this could make the move.
Natasha and Alex clean up all fintech stories and work to find out who is doing poorly in the fintech industry, who is hiding for the time being and who is crushing them in the new economic reality.
Next we addressed layoffs in general, layoffs at Toast, AngelList and not LinkedIn – for now. According to their plans, they have no plans for layoffs. You will find out.
And in the end we got good news from Thrive and Index. Unfortunately we didn't come to Shippo. Next time!
Listen to the whole thing here!