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Daily TechCrunch Update – September 8, 2021

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A Note from the Editor

Greetings, readers!

This is the Daily Crunch for Wednesday, September 8, 2021. With Alex currently away, I will continue to manage this newsletter for the next several days. Hopefully, he is enjoying time away from digital devices, perhaps observing nature.

Alex, should you happen to be viewing this message, it is strongly recommended that you activate airplane mode on your phone and engage in a refreshing activity.

— Greg

TechCrunch's Leading Three Stories

Here's a rundown of the top three tech news items from TechCrunch today, offering insights into aviation, cybersecurity, and cryptocurrency regulation.

Wright Electric Engine Testing

Wright is currently undergoing testing of its electric engine designed for use in passenger planes. A significant hurdle in the development of electric aircraft is the weight of current battery technology, which hinders efficient takeoff and flight.

The company is focused on creating an electric engine capable of generating greater thrust while minimizing energy consumption. Initial tests are being conducted at sea level, with aspirations to reach operational flying altitudes by the following year, as reported by Devin Coldewey.

Ransomware Attack Disrupts Howard University

Howard University has been forced to suspend classes following a ransomware attack. This incident mirrors the increasing frequency of cyberattacks impacting educational institutions.

The disruption has resulted in a temporary cessation of learning activities, reminiscent of traditional school closures due to inclement weather, though in this case, the cause is a digital security breach.

SEC and Coinbase Clash Over Lending Service

A potential legal dispute is emerging between Coinbase and the U.S. Securities and Exchange Commission (SEC). The core of the disagreement centers around Coinbase’s planned launch of a crypto lending service.

This service would enable users to lend their crypto assets to a lending pool, earning interest in return. Coinbase alerted the SEC to its intentions; however, according to CEO Brian Armstrong, the SEC responded with a threat of legal action should the service be implemented.

Coinbase notes that similar services are already operational, adding complexity to the situation.

Startups & Venture Capital Updates

The adoption of credit scoring is still developing in India, reaching only a limited segment of the population.

Consequently, access to traditional credit cards remains restricted for many.

Slice, a Bangalore-based startup, is addressing this issue by offering a credit card designed to help young individuals establish credit history.

This card initially provides a credit limit of 2,000 Indian rupees, equivalent to approximately $27.

New Social Music Platform: Mayk.it

TikTok revolutionized content creation through its remixing features, enabling users to build upon existing videos.

Mayk.it, a new social application created by former TikTok and Snap employees, aims to replicate this collaborative spirit within the realm of music production.

The platform allows users to contribute to songs by adding vocals to pre-existing beats, fostering a community-driven approach to music creation.

Mayk.it recently launched and simultaneously announced the successful completion of a $4 million seed funding round.

PayPal's Acquisition of Paidy

PayPal has announced the acquisition of Paidy, a leading "buy now, pay later" (BNPL) service in Japan, for a substantial $2.7 billion.

This strategic move is intended to facilitate PayPal’s expansion into the Japanese deferred payments market.

Japan represents the third-largest e-commerce market globally, making it a key target for PayPal’s growth strategy.

The acquisition of Paidy will allow PayPal to offer a competitive BNPL solution to Japanese consumers.

Debt vs. Equity: Evaluating Alternative Funding Approaches

A significant number of aspiring founders possess a strong grasp of startup financial principles, while others are relatively inexperienced in this area.

However, a comprehensive understanding of the advantages and disadvantages of both debt and equity financing is essential when seeking capital.

For founders prioritizing the retention of company control, debt financing can be an attractive option for covering capital expenditures, though it isn't universally suitable, according to serial entrepreneur David Friend.

(Extra Crunch is a membership program designed to empower founders and startup teams. Registration is available here.)

Understanding the Core Differences

The choice between debt and equity fundamentally alters the structure of a company’s financial obligations.

Debt represents a loan that must be repaid, typically with interest, over a defined period.

Conversely, equity involves selling a portion of ownership in the company in exchange for funding.

When Debt Financing Might Be Preferred

Debt financing can be particularly advantageous for companies with predictable cash flows and established assets.

It allows founders to maintain full ownership and control, avoiding the dilution of equity that comes with attracting investors.

However, it also introduces the obligation of regular repayments, which can strain cash flow if the business encounters difficulties.

The Appeal of Equity Financing

Equity financing is often favored by early-stage startups with high growth potential but limited immediate revenue.

It doesn't require immediate repayment, providing the company with crucial runway to scale its operations.

The trade-off is the relinquishing of a degree of ownership and decision-making power to investors.

Factors to Consider

Several key factors should influence a founder’s decision:

• Stage of Development: Early-stage companies often lean towards equity, while more mature businesses may prefer debt.
• Cash Flow: Predictable cash flow supports debt repayment.
• Risk Tolerance: Founders comfortable with financial obligations may choose debt.
• Control: Those prioritizing control may favor debt over equity.

Careful consideration of these elements is vital for securing the most appropriate funding strategy.

Big Tech Inc.

Recent developments highlight ongoing innovation within major technology companies.

Microsoft's New Personalized News Platform

Microsoft has introduced Microsoft Start, a new service designed to deliver personalized news aggregation.

This platform functions similarly to Apple News and Flipboard, compiling content from user-selected news sources.

Users can refine the algorithm through feedback, indicating preferences with thumbs up or thumbs down ratings.

The service aims to provide a tailored news experience, though some may recall the functionality of the now-defunct Google Reader.

Google Workspace Feature Rollout

Google is expanding the features initially tested following the surge in remote work.

Previously known as G Suite, Google Workspace is being updated to enhance the integration of its tools.

These tools, including Gmail, Docs, and Meet, are receiving updates to improve cohesiveness and user experience.

The new features are now available to all Google Workspace users.

Twitter's Expanded Media Display

Twitter is currently evaluating a new display format for photos and videos.

The test involves showing media in a full-width format, maximizing screen real estate.

While this change is anticipated to be well-received, it is likely to generate initial criticism from some users, as is typical with design alterations on the platform.

As Taylor Hatmaker noted, such changes often prompt temporary negative reactions before being generally accepted.

TechCrunch Insights: Identifying Leading Growth Marketing Professionals

TechCrunch is dedicated to assisting startups in locating specialists who can effectively address their unique challenges. Currently, we are compiling a curated list of premier growth marketers.

Since the launch of our dedicated survey, numerous valuable recommendations for skilled growth marketers within the startup ecosystem have been submitted.

Ongoing Collection of Recommendations

We anticipate receiving further responses and are eager to analyze the incoming data. Participation in the survey can be completed at this link.

Resources on Growth Marketing

TechCrunch’s journalistic coverage of growth marketing encompasses articles authored by our internal team, contributions from industry experts, and in-depth analyses.

For example, Extra Crunch features “Use cohort analysis to drive smarter startup growth” penned by Jonathan Metrick.

• This article provides actionable strategies for startups.
• Cohort analysis is highlighted as a key technique.

We aim to provide a comprehensive resource for startups seeking to optimize their growth strategies.