INSUBCONTINENT EXCLUSIVE:
Cities around the world have become home this decade to distributed tech teams and homegrown startup successes
Each of these additional layers of experience and specialization help to make each local community stronger, like what began happening in
Silicon Valley many decades ago.
Now layoffs are striking deep into these fragile, complex ecosystems.
Yes, companies in San Francisco and
other tech metros are seeing big cuts, as you can read all about on TechCrunch this week
But the satellite offices also seem to be taking big hits, as Natasha Mascarenhas covered
Data from Layoffs.fyi shows thousands of jobs bleeding out in places like Salt Lake City, Las Vegas and Louisville to name a few.
The
immediate reason this is particularly bad is that tech jobs have a multiplier on jobs in other local industries, particularly where there
aren&t that many tech jobs
But the bigger long-term risk is that people who might be starting the next company in your city don&t get the hands-on experience and the
connections locally and globally that come distributed teams
How long will it take many of the hubs that were going strong just a couple months ago to recover now?
Of course, the even bigger opposing
trend is remote work now that everyone is doing it
Will the future founder who was going to move to San Francisco for networking purposes just stay in Louisville, and have a local HQ or just
keep it remote-first? Will we still need all that commercial real estate in the Bay Area, actually?
TechCrunch is covering the downs-and-ups
of startup hubs during the pandemic (see Extra Crunch for more on Salt Lake City this week, actually)
Want to talk about what your city is doing to keep its startup scene strong? Email me at eldon@techcrunch.com and let discuss.
Investors
rethink consumer and edtech investing
For our first investor survey this week, Josh Constine and Arman Tabatabai talked to 17 top social
investors about the impact of COVID-19 on the category
Here Wayne Hu of SignalFire, excerpted from the full article on Extra Crunch.
There are, however, other social trends that were already
picking up steam before COVID-19 that may further accelerate now
Many of these may be newer behaviors that sound dumb or are hard to explain, but ultimately provide value
Peloton sounded silly to many before they became popular, and there are several other companies now bridging the gap between consumers,
trainers and fellow participants to bring the in-person social phenomenon of spin cycle and fitness boutiques into the living room
Tempo, a SignalFire portfolio company, is the first to offer high-intensity strength training complete with weights in the home
Beyond the convenience, 3D sensors automatically track reps and weights and users also receive targeted feedback on form from world-class
trainers aided by real-time motion tracking — something that would be too expensive for most consumers otherwise
Coronavirus will be a catalyst for many to experience this and other accelerating trends for the first time.
EC members, don&t miss their
social overview survey last week.
Next, Natasha and Arman talked to leading edtech investors for Extra Crunch about how the new coronavirus
is impacting their companies
Many startups in the category have suddenly had much brighter futures — with some new challenges
Here Tetyana Astashkina of Learn Launch:
A lot of our companies across all segments are offering their products for free
User (teacher) training has always been key to successful product adoption
All of the training happens online now which is new and needs adjustment
Also, the timelines to respond to customer inquiries are very compressed which puts pressure on companies, especially because of eternally
limited resources.
K-12 districts need to have budgets in place by the end of June for the next school year
So selling, while giving the product away for free and while supporting un-trained users is going to be a scramble
Now imagine being a cash-starved start-up trying to deal with your own homeschooling needs…
It also follows an overview edtech
survey the previous week.
The latest venture shifts in the COVID-19 era
Many VCs continue to say they are open for biz while others
say they are ‘focused on helping portfolio companies.& So here what we&re seeing on the fundraising front this week.
First, leading
seed-stage VC Y Combinator has scaled down its pro-rata program of recent years
It had taken a 7% stake in every company that has raised a priced seed or Series A round since it began the policy in 2015, totaling
hundreds of rounds in hundreds of companies
But it has also expanded its class size dramatically in recent years
Eventually, as described by CEO Michael Seibel, in a memo to companies this week obtained by Jon Shieber for TechCrunch, it couldn&t do both
So starting next month, it will be doing pro-rata for YC companies on a case-by-case basis and at a flat 4%.
This change likely would have
happened anyway, but it happens right when more startups than ever are looking for sources of cash.
Overall, seed money appears to continue
to be in sharp decline — a trend that had already accelerated before the pandemic, Alex Wilhem detailed on Extra Crunch.
The mortality
rate continues to increase across the board, too
When investors give up on selling a company, they send them to Sherwood Partners, a &restructuring firm& that acts as a sort of startup
undertaker (mainly selling off the IP and other parts)
In an interview with Connie Loizos for Extra Crunch this week, founder Marty Pichinson says they are winding down two to three companies per
day, up from two to four per week a few years ago
&We&re in companies that raised $10 million to $25 million, to companies that raised up to $1.5 billion,& he told her
&It doesn&t matter what size they are; when they come to us, they&re all broke
If we&re closing it down to clean up and monetize what we can, they are basically in the same position, whether they raised $20 million or
they were once a billion-dollar business.&
Across the week
TechCrunch
Tech for good during COVID-19: Pivots and partnerships to help people
deal
This venture firm is offering fast funding in a time of uncertainty
How I Podcast: First Draft and Track Changes& Sarah Enni
Extra
Crunch
As COVID-19 pummels global economy, 8 new companies join the $100M ARR club
Punitive liquidation preferences return to VC — don&t
do it
Traditional sales and marketing strategies won&t see you through this crisis
How Adobe shifted a Las Vegas conference to executives&
living rooms in less than 30 days
Dear Sophie: How do I extend my visa status without leaving the US?
#EquityPod
From Alex:
Turning to the
show, as has been the case every single week since we cannot recall when, we had a hell of a packed agenda.; there were new funds to talk
about, there were rounds aplenty
As the unicorn era hands the baton to the COVID-19 downturn, therestillmore than we can get through each week.
But we did manage all that
follows:
Lightspeedraised a host of new funds worth billions of dollars, including $1.83 billion in capital for later-stage deals and $1.5
billion to pour more capital into its international investments.
Andreessen Horowitzwants to put together a second crypto-focused fundworth
That more than last time, and we had questions.
Corigin Venturesraised its first institutional fund at $36 million, effectively stepping out
of complete control from its parent organization, Corigin Real Estate.
Stripe raised $600 million more, at a flat valuation to its preceding
The payments company is now worth around $36 billion
The news dropped out of nowhere, and probably means that the eventual Stripe IPO is far, far away.
Robinhood israising new capital, which
caught our eye.
Carta, which helps manage equity for startups,laid off 16 percent of its staffas detailed inan emotional memoby the company
Then, the plot thickened when news broke that it&sraising a new round of funding that would value it at $3 billion.
LucidandEveree, two
Utah-based companies raised capital this week, right after we saw Podium raise the week before.$52 million for Lucid, makers of
Lucidchart,and $10 million fo Everee, a payroll software startup with a fun twist.
But we weren&t done yet, as we had to talkabout Airbnb
new debt work; Danny made the point that it hardly cheap capital for the firm to raise, possibly adding pressure to Airbnb later on
This is another company that will not go public in 2020.
Savi raised $6 millionto help students pay student loans,while Frank raised $5
million to help students avoid racking them up.
Despite tight school budgets,Labster landed a dealwith the California Community Colleges
which tells us a bit abouthow edtech optimism is turning into actual dollars.
What we&re up to:
Extra Crunch Live: Join Aileen Lee, Ted Wang
for Q-A on 4/20 at 10:30am PT/1:30pm ET
Apply to compete in Startup Battlefield at Disrupt SF 2020
Extra Crunch members save money with
Partner Perks and event discounts
Extra Crunch is now available in Puerto Rico, Guam and American Samoa
