Extra Crunch Roundup: VC Surveys, Tesla, Roblox & More

It’s certainly been a noteworthy week.

Rather than reviewing the recent period of disruption and ambiguity, let’s focus on three positive developments:

A Google team member, Sara Robinson, successfully merged her passions for machine learning and baking, resulting in novel, artificially intelligent dessert creations.
A significant advancement promises to enhance the efficiency of water desalination by 30% to 40%.
Bianca Smith is set to make history as the first African American woman to coach a professional baseball team.

Even with numerous diversions during our initial full week of the year, we released a comprehensive collection of articles examining various facets of business creation, capital acquisition, and investment strategies.

We have received initial responses to our analysis of subscription-based pricing structures, and a retrospective on 2020 funding and company sales within Israel’s cybersecurity sector was specifically designed for our newer members residing and operating in that region, as well as global investors exploring potential ventures.

Additionally, be sure to review our initial investor reports for 2021: Lucas Matney’s insights on the social gaming landscape, and Mike Butcher’s survey of investors based in Portugal covering a broad range of subjects.

Thank you for subscribing to Extra Crunch this week. I trust we can all anticipate a peaceful and uneventful weekend free from urgent news notifications.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Access to all Extra Crunch articles is exclusive to members
Apply discount code ECFriday for a 20% reduction on one- or two-year subscriptions

The Roblox Gambit

Roblox, the popular gaming platform, saw its valuation jump significantly from $4 billion in February 2020 to $29.5 billion following a recently announced $520 million Series H funding round.

As Alex Wilhelm points out today, while Roblox benefited from a strong performance in 2020, partially due to the impact of COVID-19, the increase in valuation from $4 billion to $29.5 billion is substantial.

Wilhelm proposes that Roblox’s choice to postpone its initial public offering (IPO) in favor of securing a large Series H investment represents a calculated strategy. He believes this move could set a precedent for how other privately held companies approach going public.

I inquired about the origin of the headline, and he explained it arose during a moment of contemplation.

He shared that the title was inspired by the popular series ‘The Queen’s Gambit,’ and he saw a parallel between the show’s strategic gameplay and Roblox’s deliberate approach to becoming a publicly traded company. He felt “gambit” aptly described Roblox’s calculated risk in its path to going public.

8 investors discuss social gaming’s biggest opportunities

To begin the year, Lucas Matney gathered insights from eight venture capitalists specializing in large-scale online games, focusing on the key developments and potential avenues for growth in 2021:

Hope Cochran, Madrona Venture Group
Daniel Li, Madrona Venture Group
Niko Bonatsos, General Catalyst
Ethan Kurzweil, Bessemer Venture Partners
Sakib Dadi, Bessemer Venture Partners
Jacob Mullins, Shasta Ventures
Alice Lloyd George, Rogue
Gigi Levy-Weiss, NFX

Daniel Li from Madrona noted that platforms such as Twitch, Discord, and Fortnite have evolved significantly, now functioning as central hubs for cultural development.

For example, Representative Alexandria Ocasio-Cortez utilizes Twitch to communicate her political views, prominent musical artists frequently host performances within Fortnite, and transactions within games resulted in revenue totaling tens of billions of dollars in the previous year.

Gigi Levy-Weiss of NFX explained that gaming represents a distinctive blend of technical expertise and creative expression, engaging both analytical and artistic skills. This unique combination is often a challenge for investors who primarily focus on technical or data-driven aspects.

How to convert customers with subscription pricing

Companies that don't fully understand their sales process often experience significant customer loss, struggle to turn potential buyers into paying customers, and find it difficult to respond to or capitalize on shifts in how customers act.

To effectively attract and keep customers, consistently highlighting the benefits you offer is crucial throughout the entire customer journey, according to Joe Procopio, the founder of Teaching Startup.

What is up with Tesla’s value?

Alex Wilhelm continued his weekly Friday series with a further examination attempting to identify a logical basis for Tesla’s exceptionally high market capitalization, which currently stands around $822 billion.

In other news, General Motors recently introduced a redesigned logo and a new brand slogan.

During the editing process, I gained new insight: a “melt up” describes a situation where investors aggressively seek to invest in a specific company driven by a strong fear of missing potential gains (FOMO).

Alex points out that delivering 500,000 vehicles in 2020 was a noteworthy achievement, and he also recognizes the company’s consistent generation of profits based on Generally Accepted Accounting Principles (GAAP). However, he suggests that “hubris often precedes a setback, and I believe this also applies to a melt up.”

It’s worth noting that this article retains Alex’s initial headline, though I indicated to him that I would substitute the primary image with a photograph depicting someone embodying the appearance of the “world’s wealthiest individual.”

How Segment redesigned its core systems to solve an existential scaling crisis

Enterprise reporter Ron Miller recently detailed a significant engineering undertaking at the customer data platform, Segment, known as “Centrifuge.”

The project’s primary goal was to facilitate the rapid and cost-effective transfer of data across Segment’s systems to its customers. However, as Ron explains, it was also crucial for addressing a critical challenge facing the company – the need for a more dependable and robust platform to ensure its continued operation.

Dear Sophie: Banging my head against the wall understanding the US immigration system

Dear Sophie:

With the anticipated change in administration and a potential shift towards more favorable immigration policies, I am evaluating the possibility of growing my business within the United States following the COVID-19 pandemic. I am finding it difficult, however, to make sense of the numerous and fragmented resources available online regarding different visa categories and application procedures.

Would you be able to provide a comprehensive explanation of the U.S. immigration framework and its operational mechanics? My goal is to gain a clear understanding of the system I will be working within.

— Resilient in Romania

The initial “Dear Sophie” article each month is accessible on TechCrunch without a subscription.

Revenue-based financing: The next step for private equity and early-stage investment

Founders who prefer to avoid angel investors or are not currently pursuing venture capital are increasingly turning to revenue-based investing as a viable option.

We recently released an industry report on Wednesday to provide a comprehensive analysis of the revenue-based investing environment in the United States. This report examined information gathered from 134 businesses, 57 investment funds, and 32 firms, and then detailed specific industry sectors and business structures, as well as the characteristics of companies that typically utilize this type of funding.

Lisbon’s burgeoning startup community coincides with Portugal’s potential to become a leading European technology hub

Mike Butcher is continuing his examination of European investment perspectives, with his newest report originating from Lisbon, where an emerging startup environment could experience growth as a result of Brexit.

The following venture capitalists, located in Portugal, contributed to his interviews:

Cristina Fonseca, partner, Indico Capital Partners
Pedro Ribeiro Santos, partner, Armilar Venture Partners
Tocha, partner, Olisipo Way
Adão Oliveira, investment manager, Portugal Ventures
Alexandre Barbosa, partner, Faber
António Miguel, partner, Mustard Seed MAZE
Jaime Parodi Bardón, partner, impACT NOW Capital
Stephan Morais, partner, Indico Capital Partners
Gavin Goldblatt, managing partner, Portugal Gateway

How late-stage edtech companies are thinking about tutoring marketplaces

What are the strategies for expanding online tutoring services, especially when the number of students seeking help is greater than the number of available teachers?

Recently, Chegg has decided to replace its existing tutoring marketplace, which has been in operation for seven years and connected students with human tutors, with a live chatbot system.

According to a company representative, this change is intended to “significantly distinguish our services from those of other companies and provide improved support to students.” However, Natasha Mascarenhas has highlighted two potential difficulties with automating edtech solutions.

She points out that “a chatbot may not be suitable for a student requiring specialized assistance or one who benefits from a more guided learning experience.” Furthermore, she notes that “rapid tutoring solutions are only effective for a limited range of academic disciplines.”

Decrypted: Assessing the Cybersecurity Impact of the US Capitol Breach

As events unfolded with the intrusion and destruction at the U.S. Capitol, it was apparent that the rapid evacuation of staff resulted in some computers being left active and unsecured.

A laptop was reportedly taken from the office of Senator Jeff Merkley; however, reporting from cybersecurity journalist Zack Whittaker suggests the overall impact on information security wasn’t as severe as initial concerns might have indicated.

Nevertheless, “the incident will probably create a significant workload for the Congressional IT teams, who will need to determine what data was compromised and what ongoing security vulnerabilities could affect the Capitol’s network.”

Extra Crunch’s top 10 stories of 2020

As the year came to a close, a compilation of the ten most noteworthy Extra Crunch articles from the preceding year was assembled.

The selection process was based on individual assessment; these ten articles were chosen from a large number of publications because of their practical value, which served as the primary standard for evaluating the business reporting.

While some individuals express reservations regarding subscription-based content, Extra Crunch delivers a high-quality experience, comparable to services like Netflix or Disney+. It’s acknowledged that the content may not offer the same level of entertainment as a period piece focusing on Queen Elizabeth I or a science fiction adventure, but for those involved in the startup world, Extra Crunch provides valuable insights that can aid in company development and enhance professional presentations – and that holds significant worth.