Extra Crunch Roundup: China's Data Law, Fractional Farming & Funding

New Data Privacy Regulations in China

The initial data protection legislation of China will be enacted on November 1, 2021. Businesses must determine if they are prepared to meet the new standards.

These new rules, which are based on the EU’s GDPR, “[establish] potentially the most comprehensive collection of data privacy requirements and safeguards globally,” according to Scott W. Pink, special counsel at O’Melveny’s Data Security & Privacy practice.

He provides a detailed analysis, outlining the essential requirements and steps for compliance that U.S. companies serving Chinese customers must take.

He suggests that “U.S. companies operating within China, or those engaging with Chinese entities, should promptly evaluate the implications of this new legislation on their operations.”

Visas and Startup Founders in the U.S.

With the widespread adoption of remote work, the necessity of visas for startup founders aiming for success in the United States is being re-evaluated.

On Tuesday, September 14, at 2 p.m PT/5 p.m. ET, Managing Editor Danny Crichton and immigration lawyer Sophie Alcorn will address this topic during a Twitter Spaces discussion.

The discussion will include a question-and-answer session with the audience. Remember to follow @techcrunch on Twitter to receive a notification before the event begins.

Thank you for reading Extra Crunch. We wish you a pleasant weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Fintech's Impact on Farmland: A Timeless Asset

A frequently attributed quote to Mark Twain, “buy land, they aren’t making any more of it,” remains a resonant observation on capitalist principles.

Economic downturns, both in the past and including the current pandemic, have generated considerable instability within the commercial and residential property sectors.

However, farmland is considered “historically stable” according to Artem Milinchuk, the founder and CEO of FarmTogether.

Fintech is now playing a significant role in reshaping investment opportunities within this traditionally established asset class.

The Appeal of Farmland as an Investment

Unlike other real estate markets, farmland often demonstrates resilience during periods of economic fluctuation.

This stability stems from the consistent demand for agricultural products, regardless of broader economic conditions.

Furthermore, farmland can serve as a hedge against inflation, as agricultural commodity prices tend to rise with inflation.

How Fintech is Changing the Landscape

Traditionally, investing in farmland required substantial capital and direct involvement in agricultural operations.

Fintech platforms are now democratizing access to farmland investment through fractional ownership.

This allows investors to purchase shares in farmland properties, lowering the barrier to entry and diversifying investment portfolios.

• Reduced Capital Requirements: Investors can participate with smaller amounts of capital.
• Diversification: Portfolios can be broadened to include farmland alongside other asset classes.
• Passive Income Potential: Rental income from farmland can provide a steady stream of revenue.

FarmTogether, for example, facilitates the purchase and management of farmland investments for both accredited and non-accredited investors.

The platform handles property sourcing, due diligence, and ongoing farm management, simplifying the investment process.

This innovative approach is attracting a new generation of investors to the farmland market.

Looking Ahead

The convergence of fintech and agriculture is poised to continue transforming the farmland investment landscape.

Increased transparency, accessibility, and efficiency are expected to drive further growth in this sector.

As investors seek stable and inflation-resistant assets, farmland, facilitated by fintech solutions, is likely to become an increasingly attractive option.

Deconstructing a SPAC: A Look at Better.com’s Strategic Vision

Better.com, a digital mortgage provider, is proactively implementing significant changes even prior to the finalization of its merger with a Special Purpose Acquisition Company (SPAC). Recent reporting by Ryan Lawler details the acquisition of Property Partners, a U.K.-based company specializing in fractional property ownership.

This acquisition represents the second strategic purchase Better.com has made in quick succession. Previously, in July, the company completed the acquisition of Trussle, a digital mortgage brokerage.

According to Better CEO Vishal Garg, the company resists simple categorization. He conveyed to Ryan that expansion into conventional financial services, including auto loans and insurance, is planned for the near future.

CFO Kevin Ryan articulated the company’s ambition to become a comprehensive, integrated financial platform. He stated that their approach differs from competitors who focus on specific segments of the market.

Better.com’s “Full Stack” Strategy

Ryan explained that Better.com is striving for a “full stack” model. This means embedding all financial services within a unified, seamless customer experience.

The goal is to provide a complete range of financial products and services. This will be delivered through a single, integrated workflow for customers.

Five Key Factors Influencing Startup Growth

A compelling narrative is paramount; a substantial marketing budget will prove ineffective without a strong story to convey.

Brian Rothenberg, currently a partner at Defy and a seasoned two-time founder, emphasizes that paid marketing should complement, not replace, organic growth strategies.

He posits that paid channels are most effective when used to amplify an already established and self-sustaining growth process.

Essential Growth Components

Based on his experience as VP of Growth at Eventbrite, Rothenberg identifies five crucial elements for initiating, sustaining, and evaluating growth over extended periods.

• Product-Market Fit: Achieving a strong alignment between your product and the needs of your target market is foundational.
• Virality: The inherent capacity of your product to spread organically through user networks is a powerful growth driver.
• Retention: Keeping existing customers engaged and returning is often more cost-effective than acquiring new ones.
• Revenue Model: A clearly defined and scalable revenue stream is essential for long-term sustainability.
• LTV/CAC Ratio: Understanding the relationship between customer lifetime value and customer acquisition cost is vital for profitability.

These five factors are interconnected and must be carefully considered in tandem.

Successfully navigating these areas will significantly increase a startup’s chances of achieving sustainable growth.

Debt versus Equity: Evaluating Alternative Funding Approaches

A significant number of aspiring founders possess a strong grasp of startup financial principles, while others are still developing their understanding.

A crucial aspect of securing capital involves a thorough comprehension of the advantages and disadvantages associated with both debt and equity financing.

For founders prioritizing the retention of company control, debt financing can be an attractive option for covering capital expenditures.

However, this strategy isn't universally suitable, as noted by experienced entrepreneur David Friend, a six-time founder.

Understanding the Core Differences

The choice between debt and equity fundamentally impacts a company’s ownership structure and financial obligations.

Debt represents a loan that must be repaid, typically with interest, while equity involves selling a portion of ownership in the company in exchange for funding.

Each approach carries distinct implications for cash flow, risk, and long-term growth potential.

When Debt Financing Might Be Preferred

Debt financing can be particularly advantageous for companies with predictable revenue streams and established assets.

It allows founders to maintain full control of their business and avoid diluting ownership.

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

When Equity Financing Might Be Preferred

Equity financing is often favored by high-growth startups with significant capital needs and uncertain revenue projections.

It provides a larger influx of capital without the immediate pressure of repayment.

The trade-off is a reduction in ownership and potential control, as investors gain a stake in the company’s future success.

Factors to Consider

Several key factors should influence the decision between debt and equity:

• Stage of Development: Early-stage startups often rely on equity, while more mature companies may access debt.
• Risk Tolerance: Founders averse to risk may prefer debt, while those comfortable with sharing ownership might choose equity.
• Financial Projections: Realistic revenue forecasts are essential for assessing the feasibility of debt repayment.
• Market Conditions: Interest rates and investor sentiment can impact the availability and cost of both debt and equity.

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

Growth in Southeast Asia’s Digital Sector Attracts Increased Investment

Southeast Asian startups experienced a surge in funding last year, securing over $8.2 billion in investment.

This represents a fourfold increase in capital raised compared to the figures recorded in 2015.

The first six months of 2021 also witnessed a significant uptick in merger and acquisition (M&A) activity within the region.

Specifically, regional M&A deals rose by 83%, reaching a record total of $124.8 billion.

Increased investor interest isn’t limited to venture capital firms and major technology companies.

A notable trend is the growing involvement of family offices, as highlighted by Jungle Ventures founding partner Amit Anand.

Over 229 family offices have officially registered in Singapore since 2020.

These offices collectively manage an estimated $20 billion in assets.

Key Investment Trends

• Increased Startup Funding: A substantial rise in capital flowing to Southeast Asian startups.
• M&A Growth: A significant increase in merger and acquisition activity.
• Family Office Expansion: A growing number of family offices establishing a presence in Singapore.

The digital economy of Southeast Asia is rapidly expanding, creating numerous opportunities for investors.

This expansion is attracting a diverse range of investment sources, including traditional venture capital, large technology corporations, and family offices.

The Convergence of Edtech and the Creator Economy Through Cohort-Based Learning

A recent analysis by Natasha Mascarenhas highlights the growing similarities between the educational technology (edtech) sector and the creator economy.

Both industries experienced significant growth during the pandemic, and are now increasingly intersecting, particularly with the emergence of cohort-based courses.

Distinct Goals, Shared Territory

While edtech focuses on solving challenges like enhancing online STEM education with virtual reality, the creator economy centers on optimizing monetization for content creators.

Despite these differing objectives, a notable convergence has occurred over the last year.

The Rise of Cohort-Based Classes as a Common Ground

The increasing popularity of cohort-based classes represents a key area where edtech and the creator economy are merging.

These classes offer a learning experience that combines the structure of traditional education with the community and engagement often found within creator-led platforms.

Implications of the Overlap

This intersection suggests a potential for innovation and cross-pollination of ideas between the two sectors.

It also indicates a shift towards more interactive and community-driven learning experiences.

Personalization: A Novel Sustainability Approach for Retail

Have you ever experienced dissatisfaction with items purchased online, despite their appealing presentation on platforms like Instagram and within your online shopping basket?

It is a frequent occurrence that clothing or cosmetic products, after purchase, fail to meet expectations and are subsequently stored unused or even re-gifted, leading to a cycle of consumer regret.

However, this issue extends beyond mere disappointment. Significant environmental repercussions are also present. “The cosmetics sector generates more than 120 billion packaging units annually, with a very small percentage being successfully recycled.

Furthermore, approximately 92 million tons of textile waste are deposited in landfills worldwide each year,” points out Sindhya Valloppillil, founder and CEO of Skin Dossier, in a contributed article.

Valloppillil proposes that leveraging technology to create a more personalized retail experience is the key to fostering sustainability within these industries.

Key Technologies for Personalized Retail

• AR virtual try-on capabilities, including precise shade matching.
• Sophisticated virtual fitting rooms utilizing VR/AR technology for the fashion industry.
• The implementation of smart packaging incorporating IoT and distributed ledger technologies.

These innovations aim to reduce waste by ensuring a better fit and more informed purchasing decisions.

By focusing on individual needs and preferences, retailers can minimize returns and contribute to a more environmentally responsible business model.

Onyeka Akumah of Plentywaka Discusses African Startups and International Growth

Lagos, Nigeria is home to a population of twenty million individuals. A significant portion, approximately fourteen million, utilize the city’s public transportation network daily.

Commuters frequently depend on heavily populated public buses operating on congested roadways. What is expected to be a half-hour commute often extends to a three-hour ordeal. However, Treepz CEO and co-founder, Onyeka Akumah, “is focused on improving public transport infrastructure across Africa and globally,” as reported by Rebecca Bellan.

Akumah explained their core objective: “Our aim was to provide commuters with a superior travel experience characterized by reliability and predictability.”

He continued, stating, “We envisioned a system where passengers could accurately anticipate bus arrival times, be assured of a seat, and travel in comfortable, secure vehicles suitable for work.”

“These were the key areas we sought to address and transform,” Akumah concluded.

Inquiry Regarding US Work Permit Application Timing for E-3 Spouse

Dear Adaptive Aussie,

Congratulations to your husband on his new position in Silicon Valley! It’s excellent that you are proactively considering your own employment options following the relocation.

Eligibility for an E-3 Dependent Work Permit

You are correct in understanding that spouses of E-3 visa holders are generally eligible to apply for an Employment Authorization Document (EAD), commonly known as a work permit.

This allows you to pursue employment opportunities within the United States while your husband is employed under his E-3 status.

Timing of Application Submission

The timing for submitting your EAD application is directly linked to your husband’s E-3 visa status. You cannot file the application until he has officially been granted the E-3 visa and has entered the U.S. in that capacity.

Specifically, you can submit Form I-765, Application for Employment Authorization, once your husband’s E-3 visa is approved and he is admitted into the United States.

Required Documentation

When preparing your I-765 application, be sure to include the following:

• A copy of your husband’s E-3 visa approval notice (Form I-797).
• A copy of your husband’s I-94 record, demonstrating his lawful entry into the U.S.
• A copy of your marriage certificate.
• Passport photos meeting USCIS specifications.
• The appropriate filing fee.

Important Note: It is advisable to gather all necessary documentation in advance to expedite the processing of your application once your husband’s E-3 status is confirmed.

Processing times for EAD applications can vary, so it’s recommended to check the USCIS website for the most up-to-date estimates.

Wishing you both a smooth transition to the United States!