Many in the tech industry saw the threat of the new coronavirus early and responded well. Less seemed to be prepared for its aftermath, such as the exit of talented employees from expensive office buildings in expensive and troubled cities like San Francisco.
And few indeed seemed prepared for the Black Lives Matter protests that followed the death of George Floyd. It was perhaps the easiest to see coming, given the visibility of structural racism in the cities up and down the main corridors of Silicon Valley.
Today, the combination of politics, pandemic and protests almost looks like a stock market crash for the industry (except that many incomes continue to rise and right). Most companies are now fundamentally reconsidering where they will be located and who they will hire - no matter how far they fare.
Some, like Google and Thumbtack, have been caught in the delicate position of reducing diversity efforts in the context of pandemic cuts just before making statements in support of the protesters, as Megan Rose Dickey covered on ClearTipsNews this week. But it is also the pandemic that is helping to create focus, as Arlan Hamilton of Backstage Capital says:
It's like the world and the country has a place at the forefront of what black people have to witness, feel and feel all the time. And that was before they saw a part of it, but they saw it somehow protected by us. We were protecting them in a way... It's like a VR headset in which the country is forced to find itself because of COVID. It's right in front of their face.
It also puts a new look at how technology is used in policing today. This is to renew the questions of who can become a VC and who obtains funding as soon as the industry comes under further pressure to deliver. It highlights solutions that companies can do internally, like this list of BLCK VC on Extra Crunch.
As with the police reforms currently being debated at the national level, some of the most promising solutions are local. Property tax reform, housing activism and sustainable funding of homeless services are direct ways for the tech industry to cope with the long history of discrimination in which the industry technology has started, writes Catherine Bracy of TechEquity for ClearTipsNews. These changes are also what many believe will make the Bay Area a better place for everyone, including any startup and tech worker in any tech company (see: How Burrowing Owls Drive to vomiting anarchists).
Something to think about as we move on to our next topic - the continuing wave of technological SF starts.
Where will the VCs follow the founders?
In this week's staff survey, we are revisiting the first remote dislocation of the main poles of the technology industry. Danny Crichton looks at some of the places where VCs have left town and thinks it means that bigger changes are taking place:
"Are VCs leaving San Francisco?" Based on everything I've heard: yes. They leave for Napa, leave for Tahoe, and leave elsewhere where the magnificent external beauty exists in California. This does not bode well for the future of San Francisco (and indeed South Park) as a VC oasis.
But the centripetal forces are strong. VCs will come together again somewhere else because they still have the same market intelligence they always had. The new, new place may not be San Francisco, but I would be shocked given the current pattern of human migration that it is not in a remote part of the Bay Area.
And then he says this:
As for VCs - if the new central node is a Napa bar and it's the new "place to be" - it could be relatively more permanent. However, in the end, the VCs follow the founders even if it takes time to recognize the new balance of power. It took years for most VCs to recognize that the founders did not want to work in South Bay, but now almost all of the reputable companies have offices in San Francisco. Where the founders go, the VCs will follow. If this continues to be SF, its future as a startup center will continue after a brief hiatus.
It is true that another remote farming community in the region once became a hub for startups, but this one had a large research university nearby, and at the time a lot of cheap housing if you allowed you to access it. But Napa cannot be the next Palo Alto, as it is fully formed today as a glorified retirement community, Danny.
I'm already on the record to say that university cities in general will become more important in the world of technology, between continuous funding for innovative technological work and the continuing opportunity for anyone leaving big cities. But I'm going to add a secondary bet that cities will come back into fashion with the types of startup founders that VCs would like to support. As Exhibit A, I would like to introduce Jack Dorsey, who started a mail dispatch to Oakland in 2000, and studied fashion and massage therapy in the aftermath of the Internet bubble. His success with Twitter a few years later in San Francisco also inspired many founders to move.
Creative people like him are drawn to the great creative environments that cities can offer, regardless of what the business thinks. If the public and private sectors can learn from the many mistakes of the past few decades (see last element) who knows, maybe we will see a kind of more equal and resilient boom emerging in the current heart of technology.
Insurance provider Lemonade files its IPO with this refreshing flavor of common stock
There are probably some amazing word games to do here, but the week has been long and the numbers speak for themselves. Lemonade sells insurance to tenants and homeowners online, and managed to reach a private valuation of $ 3.5 billion before filing to go public Monday - with common shareholders still holding the majority of the table capping.
Danny crunched the S-1 figures on Extra Crunch to generate the table, included, which illustrates this rather unusual breakdown. Usually, as you almost certainly already know, investors hold well over half at the time of a good liquidity event. "So what was the magic with Lemonade?" he thinks. "One piece of the puzzle is that the founder of the company, Daniel Schreiber, was an operator on several occasions, having previously built Powermat Technologies as president of the company. The other element is that Lemonade is built on the insurance market, which can be carefully modeled financially and gives investors a rare reproducible business model to evaluate. "
Adapting enterprise product roadmaps to the pandemic
Our investor surveys for Extra Crunch this week covered the space industry's start-up opportunities and examined how corporate investors are assessing the impact of the pandemic. Here's Theresia Gouw of Andrew Capital, explaining how two of their holding companies have refocused in recent months:
A common theme that we found when joining our founders for these strategy sessions was that many advanced and prioritized medium- and long-term projects where product functionality could better meet the needs of their customers during these periods. One such example in our portfolio is the accelerated development of Petabyte (whose product is called Rhapsody) of its software capabilities that enable veterinarians to provide telehealth services. Rhapsody has also incorporated key features that enable a contactless experience when telehealth is not enough. These include features that allow customers to check in (virtual waiting room), sign documents and make payments in the comfort and security of their car when bringing their pet (the patient!) At the vet for an in-person examination.
Another such example is PredictHQ, which provides demand-side information to companies in the travel, hospitality, logistics, CPG, and retail industries, all of which have seen significant change ( positive or negative) in demand for their products and services. PredictHQ has the most robust global dataset on real world events. Pandemics and all the restrictions that follow, and then the relaxation of the restrictions fall into the category of real-world events. The company, which also has multiple global offices, has been able to integrate dynamic COVID government responses on a hyperlocal basis, by geography, and provide information to its customers (e.g. Domino's, Qantas and First Data) that could help with planning and forecasting demand as well as understanding staff needs.
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#EquityPod
Hello and welcome to Equity, ClearTipsNews's venture capital podcast, where we unveil the numbers behind the headlines. After a pretty busy week on the series, we're here with our regular Friday episode, which means lots of venture capital tours and new venture capital funds to explore. Fortunately, we had our entire contingent on hand: Danny "Well, you see" Crichton, Natasha "Tell me about the post-pandemic Mascarenhas", Alex "Very garish" Wilhelm and, behind the scenes, Chris "The Dad" Gates. Be sure to check out our IPO-focused Equity Shot earlier this week if you haven't already, and let's move on to today's topics:- Instacart raises $ 225 million. This unexpected turn puts the start of on-demand grocery delivery at $ 13.7 billion - a huge sum, and one that should make it more difficult for the well-known company to sell to anyone except public markets. . In any event, COVID-19 has given this business a huge upwind, and it has benefited from it.
- Pando raises $ 8.5 million. We often cover equity tricks that are a bit obvious. SaaS, that kind of thing. Pando is not that. Instead, it is a business that wants to let small groups of individuals pool their advantage and allow more equal results in an economy that rewards oversized success.
- Ethena raises $ 2 million. Anti-harassment software is about as fun as the dentist today, but it may not necessarily be the case. Natasha told us about the company and its prices. I'm pretty optimistic about Ethena, frankly. Homebrew, Village Global and GSV participated in the fundraising event.
- Sell raises $ 4 million. Vendr wants to help companies reduce their SaaS bills, through its own SaaS-esque product. I tried to explain this, but maybe I got a little stuffy. It's cool, I promise.
- Facebook enters the CVC game. It shouldn't be a surprise, but we also didn't know who was going to want money on Facebook.
- And, finally, Collab Capital raises a $ 50 million fund to invest in black founders. According to our reports, the company is on track to close $ 10 million in August. We will keep an eye on how quickly the fund can reach its full goal, since it could get much more difficult much sooner.
From Alex:
