(Editor's Note: Welcome to our weekly review of the news that theinformationsuperhighway and Extra Crunch startups can use. If you'd like to receive this post via email, just subscribe here.)
Why some fintech startups don't blink at customer acquisition costs
Sales channels on the Internet and beyond are becoming saturated, and in many areas of technology the cost of attracting new customers is affecting profitability. But so far, so good in the "big credit card craze" as Alex digs for extra crunch this week. It turns out that the remaining revenue opportunities combined with the current revenue from exchange fees mean that the costs remain relatively low – say some well-placed executives.
"If anything, our customer numbers are accelerating massively, even though marketing expenses have been cut," explains Brian Barnes of M1 Finance. "And I think that depends on how we positioned ourselves as a company and what influences capital efficiency, how we got where we got."
Fixed or hunger in early-stage financing
After Elizabeth Yin posted a popular Twitter thread last month about sharing fundraising results in Silicon Valley these days, we met with the co-founder of the Hustle Fund to talk more about it. "I see companies in phases A and B with 30% month-on-month growth that have been very popular before and have trouble increasing their next rounds because they are not profitable," she wrote in a guest column on theinformationsuperhighway. "The feedback they get is," Come back when you're profitable or really close. "
She also noted that although it looks like there is a lot of money available, a lot of it will repeat entrepreneurs and / or companies with a lot of growth and profitability in numbers. In an accompanying interview with Alex Wilhelm for Extra Crunch, she states: "In later phases, it is worth moving to San Francisco, because as your business grew, many more people built in San Francisco. Before there was one in San Francisco itself Lots of knowledge that I think is still inside knowledge. But I don't think that is necessary in earlier phases. "
Y Combinator Releases A Great New Series A Round Guide
Speaking of rearing these days, this new guide could help. Connie Loizos met theinformationsuperhighway with co-author and YC partner Aaron Harris in an interview. Here is an example of the nuance it covers:
We explain how an investor's due diligence request is processed. Someone could say, "Hey, can you give me a breakdown of key customers from month to month?" And we saw founders give them a full list of their customers, then the VC calls them, and if the customer has if if a bad day or (the VC) reaches the wrong person, this bad reference test can sink a lap. It is really important that founders instead ask what the VC is trying to learn from the due diligence request and then call these customers so they are ready. You also want to make sure that 15 investors don't call the same customer so that (the person or company) is not overwhelmed.
Virtual worlds are finally becoming real
Despite decades of unrealized dreams, breakout hits like Fortnite and Minecraft show the emerging opportunities for virtual worlds on the mass market. Media analyst Eric Peckham is studying the evolution of this trend in a seven-part extra crunch series that he and many others believe will gradually shape our lives. So far, he has published an overview and extra crunch articles about playing in social networks, our future of multiverse gaming and why this future is not here yet. Be curious about his articles on the emerging competitive landscape and much more.
Where top VCs invest in medical and surgical robotics
According to the Pitchbook and Crunchbase, startups of medical devices and robots raised around 600 to 700 rounds of venture capital in 2019, with most of the business done in the early stages (over 25% of the rounds were in the early stages). At this week’s event on Robotics + AI sessions 2020 in Berkeley, be sure to check out our interviews with top medical technology investors in this week’s Investor Survey on Extra Crunch.
Avoid the on-demand trap
We're trying something new here – a preview of upcoming guest columns. The following hint comes from growth strategist Chris Yeh, co-author of Blitzscaling.
Thanks to the success of companies like Uber and Airbnb, an apparently endless number of startups have become “Uber for X” or “Airbnb from Y”. So many of these startups have problems or have failed. Why? You are caught in the "on-demand" trap: the belief that the delivery mechanism (a smartphone-enabled marketplace) and not the market determines success. If you apply the on-demand model to the wrong market, you are doomed to fail. Avoid markets where the product or service A) is a low-return transaction and B) is of course suitable for long-term buyer-seller relationships to avoid the on-demand trap.
Would you like to learn more? Look for a detailed explanation of the on-demand trap that will be available soon at theinformationsuperhighway and ExtraCrunch.
In the course of the week
The board deck of Twilio 2010 gives an insight into the beginnings of the now listed company (EC).
Startup discomfort, startup ambition (TC)
For investors, late-stage fintech startups are a lucrative bet (EC).
What happens when a pandemic occurs? (TC)
Instead of IPOs and acquisitions, leaving the community is an alternative (EC).
Will our ability to forgive disappear as our photos and videos get better? (TC)
Superhuman CEO Rahul Vohra on waiting lists, freemium prices and future products (EC)
How do we connect a child to technology? (TC)
What a week. What a crazy, heartbreaking, strange and stuffy week. I'm totally exhausted. But in better news, all of this is great feed for podcasts and chats. Today's equity is okay, if I may say so.
Danny and I went through all the things we couldn't get out of our heads, like the falling markets and DoorDash's initial move towards going public. But in line with the really beating heart of equity, we also went through four venture rounds and spent some time talking about SoftBank.