Get In, Nerds, We’re Going to the Metaverse

The TechCrunch Exchange: Startups and Markets

Greetings, readers! This is The TechCrunch Exchange, a weekly newsletter focused on the world of startups and market trends. It draws inspiration from the TechCrunch+ daily column of the same name.

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A Moment of Reflection

I trust this message finds you in good health and spirits. Even if everything isn't perfect, remember there's always solace to be found – perhaps in a scoop of ice cream!

This Week's Highlights

This Saturday brings a few interesting updates. We'll be discussing the metaverse, a venture capital landscape I've been observing since its inception, and a noteworthy funding round for an innovative startup that briefly slipped my mind earlier this week.

Exploring Decentraland

My most engaging experience this week involved a visit to Decentraland. While attempting to avoid disrupting the editing team, I launched this social-crypto environment – essentially, a metaverse – and embarked on a virtual exploration.

Adorned with a mohawk and stylish trousers, I found myself disoriented, visited a digital NFT gallery, and was unfortunately denied entry to an arena.

Metaverse Comparisons

Currently, the metaverse in its present form bears a striking resemblance to the online game Runescape. This isn't necessarily a criticism, considering Runescape’s significant and enduring legacy within the gaming community.

However, I don’t require another MMORPG, even one that unexpectedly incorporates a stronger financial component than I typically prefer in my gaming experiences.

Remaining Open-Minded

My current stance is neutral, and I remain receptive to the possibility of the metaverse evolving into something compelling enough for daily engagement.

For now, however, certain Web 2.0 platforms that prioritize community building and social interaction appear to offer a more refined experience than what has been presented by the crypto-focused metaverse initiatives.

Amplify Partners Announces General Partner Promotion

Approximately a millennium ago, I was engaged by a company called Mattermark to establish an autonomous news division within their organization. This proved to be a valuable experience, and it also facilitated connections with individuals who would become lifelong friends. Kevin Liu, currently with TechStars, is one such example.

Sarah Catanzaro also distinguished herself during her time at Mattermark. Her contributions to the company’s data science team ultimately led to a career in venture capital, initially at Canvas Ventures, and subsequently at Amplify Partners. Amplify Partners previously declared a fund totaling $275 million in late 2020. Considering this timeline, an announcement regarding a new fund is anticipated in the near future.

Within Amplify Partners, Catanzaro progressed from the role of principal, to partner, and ultimately to general partner. Observing her advancement from an entry-level position in the venture capital landscape to a leadership role has been particularly rewarding. During a recent conversation with TechCrunch, she noted that she is the first woman to attain this level within Amplify. This serves as a reminder that career progression in the relatively nascent venture capital industry differs significantly from the rapid growth often seen in startups.

During our discussion, Catanzaro shared insights regarding her firm’s investment strategy, typical investment amounts, and the stages at which they typically invest – seed versus Series A. The new general partner observed that Series A funding rounds have increased substantially in size without a corresponding reduction in inherent risk. This aligns with a long-held suspicion of mine, which I hadn’t previously encountered articulated so directly.

Consequently, the level of risk associated with Series A investments, from a venture capital standpoint, is increasing as greater amounts of capital are deployed into early-stage companies. The financial calculations could ultimately prove successful, contingent upon a sufficient number of exceptionally large exits in the years ahead. However, given the current market downturn and the increased media attention on caution, some uncertainty remains.

Key Takeaways from the Discussion

Series A round sizes are growing.
Risk levels are not decreasing proportionally.
Venture capital promotions are slower than startup gains.
Catanzaro is Amplify’s first female general partner.

Rhode Island's Emerging Tech Scene

Despite being located outside the primary technology centers of the U.S., Rhode Island is witnessing the growth of innovative tech companies. For instance, TechCrunch recently featured Pangea, a Providence-based startup focused on creating a freelance marketplace specifically for college students.

Another Rhode Island company, The Wanderlust Group, has developed Dockwa, a software solution designed for marinas and boaters. Previously, boat slip reservation management relied heavily on traditional paper-based systems, a process Wanderlust aimed to modernize with its software platform.

Our previous coverage of the company dates back to 2020, when they secured $14.2 million in funding. At the time, CEO Mike Melillo shared with TechCrunch that the company had initially sought $7 million, ultimately receiving double that amount.

Therefore, it wasn't unexpected to learn of Wanderlust’s latest funding round. The company has now raised $30 million in a Series C round, achieving a $150 million pre-money valuation. Thursday Ventures spearheaded this funding event.

Wanderlust has also disclosed its Annual Recurring Revenue (ARR) growth for 2021, reporting a substantial increase of 71%. Notably, following the implementation of a four-day workweek, the company experienced a 100% ARR expansion between June 2020 and June 2021 – a compelling data point within the evolving landscape of workplace experimentation.

Perhaps most significantly, the company is establishing a fund. This isn't a typical corporate venture capital fund, but a unique initiative. Dubbed Wanderfund, the company is allocating $300,000 this year to support “environmental causes” at both national and local levels.

The initiative begins with a contribution to the local Boys & Girls Club, aiming to provide children with increased opportunities to engage with the outdoors.

Given that the company is currently developing a Dockwa-like product for the camping industry, the emphasis on outdoor experiences aligns perfectly with the Wanderlust Group’s core mission.

Recent Developments and Observations

The termination of the Acorns SPAC agreement is noteworthy. While not entirely unexpected considering the struggles of numerous post-combination SPACs, we were anticipating Acorns’ entry into the public market.
A review of Acorns’ S-1 filing is recommended.
The Robinhood initiative, aimed at broadening access to financial markets for individual investors through IPO participation and a democratic share structure, presents both benefits and potential drawbacks that warrant careful consideration.

This concludes our update for the present time. We will connect again next week!

Alex