Daily Crunch: Your Tech News Roundup

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Welcome to Daily Crunch

Greetings, and welcome to Daily Crunch, your comprehensive source for the latest news concerning startups, technology, and venture capital.

A Note from the Team

This edition represents the third compilation of this newsletter by the new team. The process has been thoroughly enjoyable, and we are committed to continuous improvement.

Your feedback is highly valued. Please don't hesitate to share your thoughts and suggestions directly with us.

Featured Story: Startup Fundraising and Gender Equality

Recent analysis has explored the factors contributing to the underwhelming progress in gender equality within startup fundraising during 2020. A detailed article examining these dynamics was co-authored by the current writer.

Today’s Top Stories

• Startup Funding: Keep abreast of the latest investment rounds and emerging trends in the startup ecosystem.
• Technology News: Stay informed about groundbreaking innovations and developments shaping the tech landscape.
• Venture Capital: Gain insights into the world of venture capital, including deals, investors, and market analysis.

Let’s now proceed to the rest of the day’s news. — Alex

Peloton Faces Setbacks

Recent reports indicate that Peloton has acknowledged safety concerns regarding its treadmill products, leading to a formal recall. Simultaneously, TechCrunch revealed a significant cybersecurity breach affecting the company. Zack led the reporting on this critical issue.

The recall announcement provoked strong reactions from investors. The financial implications, coupled with the company’s recent public disputes with consumer safety advocates, fueled dissatisfaction. Investors who previously trusted Peloton’s assessments are now facing a substantial 13% to 14% decrease in share value.

Brian has provided extensive coverage of this developing situation, offering valuable insights for those following the story on Twitter. A Power Zone Endurance ride with Matt is scheduled, offering a potential distraction from the market turbulence.

Increased Competition in the Home Fitness Market

Peloton is navigating an increasingly competitive landscape. Companies like Tonal (detailed in our EC-1 filing), Mirror (which ceased operations last year), and Ergatta – a recently funded rowing machine startup – are all vying for market share.

These competitors, backed by substantial venture capital, represent a direct challenge to Peloton’s dominance. The combination of the recall and the cybersecurity incident constitutes a particularly damaging day for the company.

The home fitness sector is attracting significant investment, with numerous startups aiming to disrupt the traditional gym model. Ergatta, for example, integrates smart technology to enhance the at-home rowing experience.

• The recall impacts consumer trust.
• The cybersecurity breach raises data privacy concerns.
• Increased competition intensifies the pressure on Peloton.

These factors collectively contribute to a challenging environment for Peloton as it strives to maintain its position in the market.

Recent Venture Capital Investments

Shifting our focus away from established corporations and their product safety concerns, let's examine some noteworthy recent venture capital deals. The following are a few that have caught my attention, including one I personally covered.

Alife Health Secures $9.5 Million Seed Funding

Alife Health is aiming to simplify the intricacies of In Vitro Fertilization (IVF). As Natasha reported, this $9.5 million seed round highlights a significant global trend: declining fertility rates. Addressing this issue presents a substantial Total Addressable Market for startup innovation.

EngineEars Receives $1M Investment with Kendrick Lamar’s Support

Brian has uncovered Kendrick Lamar’s latest venture – not a new album, but an investment in EngineEars. This marketplace connects musicians with audio engineers, receiving a $1 million funding boost. The platform facilitates professional music mixing services.

Text Blaze Attracts $3.3M for Automation Technology

I recently covered Text Blaze, a compelling startup merging automation with text creation. If you frequently compose repetitive content, this service is definitely worth investigating. Their domain, blaze.today, is notably concise and memorable.

Emergence Capital Launches New Funds Totaling Nearly $1 Billion

Despite market fluctuations, substantial capital continues to be deployed in the venture capital landscape. Early Zoom backer, Emergence Capital, has announced two new funds, collectively valued at almost $1 billion. The primary fund, their sixth early-stage vehicle, is worth $575 million.

This represents a significant increase from their fifth fund, which totaled $435 million, and their fourth, valued at $335 million, as Connie detailed. This growth reflects a clear pattern of escalating investment sizes.

This trend can be viewed as venture-style inflation. Furthermore, having dined with an Emergence Capital partner in a prosperous San Francisco neighborhood, I can attest to the financial success of some of the firm’s investments for both the company and its investors.

Insights and Assessments from Extra Crunch

A CMO’s Candid Perspective on the Contemporary Chief Marketing Position

Each executive at the C-level encounters distinct hurdles, yet the chief marketing officer arguably experiences the greatest level of vulnerability.

Marketing leans more toward an artistic endeavor than a precise science, resulting in input from all levels of an organization – from the CEO down to every employee.

This constant scrutiny can be draining. Data from management consultancy Korn Ferry indicates a CMO’s average tenure is 3.5 years, the shortest duration among all C-suite positions.

Drawing from personal experience, Daniel Incandela, CMO at Terminus, provides an insightful analysis of the expectations startups genuinely hold for their key communicators. This article is recommended reading for those seeking senior marketing positions or anyone connected to the field.

Four Approaches to Cultivating a Digital Health Unicorn

Within the Merck Global Health Innovation Fund’s investment portfolio, two companies – Preventice Holdings and Livongo – achieved unicorn status with successful exits last year.

Bill Taranto, President of the GHI Fund, anticipates a further two unicorn-level exits in 2021.

While challenging, scaling a health technology startup to a billion-dollar valuation follows a relatively predictable path, according to Taranto. He emphasizes the importance of early financial leadership, stating:

“Engaging a qualified CFO early on is crucial; relying solely on a bookkeeper or accountant can lead to difficulties when seeking funding and pursuing business development opportunities.”

(Extra Crunch is our subscription service designed to empower founders and startup teams. Registration is available here.)

Apple's Shift Towards Google's Advertising Model

The ongoing dispute between Apple and Epic Games has garnered significant attention. Whether you're following the details or not, a notable development is unfolding.

Apple is now mirroring Google's strategy by seeking to increase revenue from advertising within its own platforms. Specifically, the company is increasing the number of advertisements displayed in its app store search results.

This move raises questions about the future direction of Apple's products. One perspective suggests that those who don't heavily rely on apps may be less affected by these changes.

Beyond Apple, other major technology companies are also making headlines. Lyft recently reported earnings that exceeded expectations, and Uber is scheduled to release its financial results later today.

Further developments include Facebook launching a new platform similar to Nextdoor. Twitter is also implementing features designed to encourage users to create higher-quality posts.

A new cloud framework has also emerged, receiving positive feedback from industry giants such as Microsoft, Google, and IBM, as reported by Ron.

Discussion on Initial Public Offerings

The Equity team recently engaged in a conversation with two Chief Financial Officers (CFOs). The discussion centered on the benefits and ethical considerations surrounding companies choosing to become publicly traded.

This conversation proved to be particularly insightful and engaging for the Equity team.