Shifting Mobility Trends in a Post-Pandemic World

Have you noticed an increase in pedestrian activity since the onset of the pandemic, or perhaps observed friends or family acquiring new vehicles? It's also possible you've experienced firsthand the convenience of e-bikes or scooters for short trips.

Over the past year, many individuals, including myself, have been exploring various transportation alternatives to determine the most suitable options. Maintaining safe social distancing on public transport like buses and subways can prove difficult.

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Initially requiring adjustment, I now find commuting around San Francisco via scooter or e-bike quite enjoyable. Prior to the pandemic, I was hesitant to use two-wheeled transport in a city known for its high incidence of traffic accidents, but road traffic has diminished.

COVID-19 and the Evolution of Transportation

The COVID-19 pandemic has exposed vulnerabilities within our existing transportation infrastructure. However, these rapid changes in consumer habits are generating opportunities for technologies previously deemed futuristic, such as sidewalk delivery robots and eVTOLs (electric vertical takeoff and landing vehicles).

Kirsten Korosec, our transportation editor, consulted with ten investors to gain insights “into the current state of mobility, the trends generating the most enthusiasm, and the criteria guiding their future investment decisions.”

The following individuals contributed to this report:

• Clara Brenner, co-founder and managing partner, Urban Innovation Fund
• Shawn Carolan, partner, Menlo Ventures
• Dave Clark, partner, Expa
• Abhijit Ganguly, senior manager, Goodyear Ventures
• Rachel Holt, co-founder and general partner, Construct Capital
• David Lawee, founder and general partner, CapitalG
• Sasha Ostojic, operating partner, Playground Global
• Sebastian Peck, managing director, InMotion Ventures
• Natalia Quintero and Rachel Haot, Transit Innovation Partnership/Transit Tech Lab

Thank you for taking the time to read Extra Crunch this week!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

A Small Segment of Robinhood Customers Fuels Significant Expansion

The recent House Financial Services Committee hearing concerning the GameStop trading event largely followed a predictable pattern. Many legislators primarily utilized the opportunity for public statements, with limited genuinely new information emerging.

However, Alex Wilhelm identified a noteworthy detail: a substantial portion of Robinhood’s income stems from payment for order flow (PFOF). This system involves market makers compensating the trading platform for trade execution services.

To ascertain the financial impact of Robinhood’s most active traders, an analysis of its PFOF revenue was conducted for the final quarter of 2020.

These high-volume traders, likened to “whales” in casino terminology, are responsible for the majority of the company’s revenue.

Understanding Payment for Order Flow

The PFOF model is central to Robinhood’s financial structure. Market makers effectively pay for the opportunity to execute customer orders on the platform.

This practice has come under scrutiny, raising questions about potential conflicts of interest and the best execution of trades for individual investors.

Revenue Contribution of Top Traders

Wilhelm’s calculations reveal that a relatively small number of users contribute disproportionately to Robinhood’s overall revenue.

These active traders generate a significant portion of the income derived from payment for order flow.

• The analysis focused on PFOF revenue from October to December 2020.
• Findings indicate a strong correlation between high-volume trading and overall company earnings.

The data underscores the importance of these “whale” accounts to Robinhood’s business model.

The Accelerated Growth of SaaS Companies Utilizing Usage-Based Pricing

In 2011, HubStop implemented a usage-based pricing model with the intention of improving customer retention, which at the time was around 70%.

Following its initial public offering three years later, the company’s net revenue retention rate had risen to nearly 100%. This growth occurred without negatively impacting their customer acquisition efforts.

Providing seamless onboarding experiences, dedicated customer support, and initial free credits has been demonstrated to increase user engagement and foster customer loyalty.

The central question is: what drives the faster growth observed in publicly traded SaaS companies that employ usage-based pricing?

According to Kyle Powar, VP of Growth at OpenView, these companies excel at attracting new clients, scaling alongside their growth, and maintaining long-term customer relationships.

Effectively, usage-based pricing facilitates a more dynamic and value-aligned relationship between the SaaS provider and its customer base.

Key Advantages of Usage-Based Pricing

This pricing structure offers several distinct benefits that contribute to accelerated growth.

• Reduced Friction: Lower initial costs make it easier for potential customers to begin using the service.
• Scalability: Revenue grows in direct correlation with customer value, creating a mutually beneficial relationship.
• Improved Retention: Customers are more likely to continue using a service they perceive as valuable and directly tied to their usage.

The ability to align pricing with actual value delivered is a significant driver of customer satisfaction and long-term loyalty.

Furthermore, usage-based pricing provides valuable data insights into customer behavior, allowing SaaS companies to refine their offerings and optimize their growth strategies.

The Rationale Behind Stripe and Coinbase Valuations

Coinbase experienced a significant valuation increase between October 2018 and the present. Its value has risen from approximately $8 billion to $77 billion.

A comparable surge in valuation is observed with Stripe. Currently, it is valued at $115 billion in secondary markets, a substantial increase from around $36 billion in mid-2023.

Alex questioned the appeal of acquiring Coinbase for $77 billion, stating he personally wouldn't pursue such a deal. However, he acknowledged the potential for public markets to demonstrate interest.

Understanding the Valuation Growth

The dramatic increase in valuation for both companies highlights the evolving landscape of the fintech sector. These figures reflect investor confidence in the future of digital currency and online payment processing.

It’s important to note that secondary market valuations don’t always translate directly to acquisition prices. Public market dynamics can significantly influence actual transaction values.

Considerations for Potential Investors

• Market Sentiment: Public market perception plays a crucial role in determining valuation.
• Growth Potential: Investors are likely factoring in future growth opportunities for both Coinbase and Stripe.
• Competitive Landscape: The competitive environment within the fintech industry is a key consideration.

While a $77 billion price tag for Coinbase or $115 billion for Stripe may seem high, the underlying growth and potential within these companies could justify such investments for certain entities.

Edtech Startups Accelerate Public Market Entry Through SPACs and Pandemic Growth

According to reporting by Natasha Mascarenhas, a number of education technology startups are utilizing special purpose acquisition companies (SPACs) to expedite their path toward becoming publicly traded.

Mascarenhas conducted interviews with Susan Wolford, who chairs the $200 million SPAC Edify Acquisition, and Chuck Cohn, the CEO of Nerdy.

Nerdy, the parent organization of Varsity Tutors, is currently undergoing a reverse merger facilitated by TPG Pace Tech Opportunities.

Cohn explained that the primary motivation isn't simply accessing public markets, but rather leveraging the transaction to aggressively pursue significant market opportunities.

The Appeal of SPACs for Edtech Companies

SPACs offer an alternative route to going public compared to the traditional initial public offering (IPO) process.

This method can be particularly attractive to edtech companies experiencing rapid growth, a trend accelerated by the pandemic.

The increased demand for online learning solutions has fueled expansion for many startups in this sector.

Insights from Industry Leaders

Wolford’s Edify Acquisition is specifically focused on identifying and merging with companies within the education and human capital development spaces.

Her firm aims to support businesses that are transforming how people learn and acquire skills.

Cohn emphasized that the merger will provide Nerdy with the resources needed to expand its platform and reach a wider audience.

Strategic Implications of the Reverse Merger

The reverse merger with TPG Pace Tech Opportunities is expected to provide Nerdy with approximately $150 million in cash.

These funds will be allocated towards strategic initiatives, including product development and marketing efforts.

Nerdy intends to capitalize on the growing demand for personalized learning experiences.

Guidance for Sweetheart: Navigating the Green Card Process for Your Spouse

Dear Sweetheart in San Francisco:

You are proactively addressing a common concern for couples where one partner is in the U.S. on a temporary visa, such as the H-1B. Planning for the green card process while your fiancé’s current status is valid is a wise approach.

The decision to postpone your wedding celebrations to include loved ones is understandable. Let's explore the typical timelines and best practices for sponsoring your fiancé for a green card as a U.S. citizen.

Green Card Processing Times for Spouses

The duration for obtaining a green card for a spouse varies considerably. Several factors influence the overall timeline, including USCIS processing times and the service center handling your case.

Currently, the process generally unfolds in two primary stages: the approval of the I-130 petition (Petition for Alien Relative) and the subsequent adjustment of status application (I-485) if your fiancé is already in the U.S.

Here’s a breakdown of estimated timeframes:

• I-130 Petition: Processing times for the I-130 can range from several months to over a year, depending on the USCIS service center.
• I-485 Application (Adjustment of Status): If your fiancé is eligible to adjust status from within the U.S., this process typically adds another 6 to 18 months to the overall timeline.

It’s important to note that these are estimates, and actual processing times can fluctuate. USCIS provides updated processing time information on its website.

Essential Tips for a Smooth Application

To maximize efficiency and minimize potential delays, consider these recommendations:

• Gather Comprehensive Documentation: Meticulously collect all required documents, including proof of your U.S. citizenship, your marriage certificate (once you have it), and evidence of a bona fide marital relationship.
• File Concurrent Petitions: If your fiancé is eligible, file the I-130 and I-485 petitions concurrently. This can significantly reduce the overall processing time.
• Maintain Accurate Records: Keep copies of everything you submit to USCIS.
• Respond Promptly to Requests for Evidence (RFEs): If USCIS issues an RFE, respond thoroughly and within the specified timeframe.
• Consider Legal Counsel: Consulting with an experienced immigration attorney can provide valuable guidance and ensure your application is properly prepared.

The expiration of your fiancé’s H-1B visa adds a degree of urgency to the process. Initiating the green card application as soon as possible is crucial to avoid any potential lapse in immigration status.

Remember to regularly check the USCIS website for updates and processing time information. A well-prepared and timely filed application will greatly increase the likelihood of a successful outcome.

Rover and MoneyLion’s Entry into Public Markets via SPACs

Observing the increasing number of startups opting for the SPAC route to become publicly traded, a question arose regarding the frequency of our coverage.

However, after reviewing Alex Wilhelm’s recent article, it became clear that his assessment was accurate. The surge in SPAC activity witnessed in 2020 appears to be evolving into a substantial trend.

This week, both Rover, a company focused on pet e-commerce, and MoneyLion, a fintech startup, revealed their intentions to launch public debuts facilitated by SPACs.

Alex reported on Monday that Lerer Hippeau Acquisition Corp. and Khosla Ventures Acquisition Co. I, II and III had submitted S-1 filings the previous week.

Alex commented that it’s reasonable to anticipate that most venture capital firms will eventually establish their own series of SPAC offerings.

Lerer Hippeau Acquisition Corp. noted:

As Alex pointed out, the prevalence of SPAC-related news could potentially dominate future reports.

The Rise of University-Driven Entrepreneurship: From Campus to Corporate

A collaborative effort has been launched by fifteen universities across the United States, resulting in the formation of the University Technology Licensing Program LLC (UTLP).

This initiative aims to streamline the process through which entrepreneurs and investors can access intellectual property (IP) with the potential to fuel innovation and business growth.

Addressing a Gap in Technology Transfer

Beyond simply facilitating IP access, the UTLP seeks to address a perceived disconnect. One participating institution described the existing relationship between universities and major technology corporations as “somewhat broken.”

The program intends to improve this interface, fostering more effective collaboration and technology transfer.

The UTLP's Core Functionality

The UTLP functions as a centralized hub for commercially available technologies developed within its member universities.

This consolidated approach offers several benefits, including reduced transaction costs and increased efficiency for both entrepreneurs seeking IP and universities looking to commercialize their research.

Benefits for Entrepreneurs and Investors

• Simplified IP Search: A single point of access to a diverse portfolio of technologies.
• Reduced Due Diligence Costs: Standardized licensing terms and processes.
• Faster Time to Market: Streamlined negotiations and quicker access to valuable IP.

Universities Embracing Entrepreneurial Ecosystems

The creation of the UTLP reflects a broader trend of universities actively promoting entrepreneurship among their students and faculty.

Many institutions now offer dedicated resources, such as incubators, accelerators, and funding opportunities, to support the development of startup ventures.

From Dorm Rooms to Board Rooms: A Shifting Landscape

Historically, university research was primarily focused on academic publication. However, there’s a growing recognition of the economic and societal impact of translating research into marketable products and services.

This shift is driving universities to become more proactive in fostering an entrepreneurial culture, moving innovations from the laboratory to the marketplace.

The UTLP represents a significant step in this direction, demonstrating a commitment to bridging the gap between academic research and commercial application.

Four Approaches to Attracting Premier Growth Marketers for Deep Tech Businesses

A candid assessment for technical founders is this: difficulties in collaborating with growth marketers and marketing specialists often stem from a reciprocal disconnect.

According to Jessica Li, a content and growth specialist formerly with venture capital, exceptional growth professionals are inherently independent thinkers and value workplaces that actively encourage innovation.

Securing these high-caliber individuals necessitates showcasing a clearly defined team framework where a growth marketer can seamlessly integrate and flourish.

Understanding the Core Challenge

Many deep tech companies struggle to articulate the value proposition to marketers accustomed to faster feedback loops.

The extended sales cycles and complex technical details inherent in deep tech can be discouraging for those seeking rapid results.

Strategy 1: Emphasize Impact, Not Just Metrics

Focus on the broader impact of the technology rather than solely on vanity metrics.

Highlight how the technology solves significant problems and creates substantial value for customers.

Strategy 2: Showcase a Growth-Oriented Culture

Demonstrate a commitment to experimentation and data-driven decision-making.

A culture that embraces failure as a learning opportunity is particularly attractive to growth marketers.

Strategy 3: Define a Clear Growth Role

Avoid vague job descriptions; instead, outline specific responsibilities and expectations.

Clearly articulate how the growth marketer will contribute to the company’s overall success.

Strategy 4: Offer Intellectual Stimulation

Deep tech presents unique challenges that can be intellectually rewarding for marketers.

Emphasize the opportunity to learn and grow alongside a team of brilliant engineers and scientists.

Insights from 9 Investors on Challenges, Prospects, and the Role of Cloud Providers in Enterprise Data Lakes

Even before starting my day, I found myself interacting with multiple devices, each relaying information about my activities to a data lake.

It is anticipated that my reply to a recent automated message will trigger a personalized discount to be sent to my email. Proper security and cataloging of this transmitted data are, of course, essential.

Ron Miller, our enterprise reporter, conducted interviews with nine investors to gain a deeper understanding of their perspectives on the expanding data lake market.

Investors Interviewed

• Caryn Marooney, a general partner at Coatue Management.
• Dharmesh Thakker, general partner at Battery Ventures.
• Casey Aylward, principal at Costanoa Ventures.
• Derek Zanutto, general partner at CapitalG.
• Navin Chaddha, managing director at Mayfield.
• Jon Lehr, co-founder and general partner at Work-Bench.
• Peter Wagner, founding partner at Wing Ventures.
• Nicole Priel, managing director at Ibex Ventures.
• Ilya Sukah, partner at Matrix Partners.

These investors shared their insights into the current state and future trajectory of enterprise data lakes.

Felicis’ Aydin Senkut and Guideline’s Kevin Busque Discuss the Importance of Concise Pitch Decks

According to Kevin Busque, CEO of Guideline, establishing a strong, lasting connection between a founder and an investor begins with the pitch deck itself.

Last week, Busque appeared on Extra Crunch Live alongside Aydin Senku from Felicis Ventures.

Their discussion centered around a seed funding round that Senku initially passed on, and the subsequent Series B round he ultimately spearheaded.

The pair also provided constructive criticism on pitch decks submitted by viewers, aligning with the program’s updated format.

Key takeaways from the conversation, or a recording of the complete discussion, are available for review.