TechCrunch+ Roundup: SPACS, Rivian IPO, and BaaS Insights

Personal Experiences with Underrepresentation in Tech

Throughout a significant portion of my career, spent working within the startup ecosystem, I consistently found myself as the sole Black individual present. Consequently, the issue of insufficient representation within the technology sector is not merely a theoretical concern for me.

Beyond my direct experiences, I dedicate time daily to researching and discussing diversity within tech. Therefore, when presented with the opportunity to interview three founders from underrepresented backgrounds at TechCrunch Disrupt, I readily accepted.

Panelists and Their Ventures

The discussion included Hana Mohan, a transgender woman and the CEO and co-founder of MagicBell. We also heard from Leslie Feinzaig, a Latina entrepreneur and the founder of the Female Founders Alliance, and Stephen Bailey, a Black founder and CEO of ExecOnline, a platform focused on online leadership development.

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Unique Challenges Faced by Underrepresented Founders

All entrepreneurs encounter obstacles, but these founders navigate hurdles that are not typically experienced by their white, male peers.

Each panelist has successfully secured funding and access to valuable networks. However, I was also keen to explore their approaches to leadership and management, their methods for cultivating self-assurance, and the applicability of conventional startup success strategies to their individual journeys.

I extend my gratitude to the panelists for their participation. While our conversation extended slightly beyond the scheduled timeframe, it was a remarkably open exchange that revealed distinct viewpoints.

Below are key takeaways from the discussion, and a full video recording of the session is also available.

Wishing you a productive week, and thank you for reading TechCrunch+!

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

Strategic Allocation of Newly Acquired Funding

A significant number of avenues are currently available to startups seeking funding, characterized by “substantial capital availability, an emphasis on geographically diverse investment, and a greater number of early-stage investors than previously seen,” as noted by Natasha Mascarenhas.

During TechCrunch Disrupt, Henri Pierre-Jacques of Harlem Capital and Nisha Dua from BBG Ventures discussed optimal strategies for founders regarding the deployment of recently secured funds within the current economic landscape.

Dua highlighted the increased difficulty in utilizing raised capital, stating, “Securing funding is more straightforward now, but effectively spending it presents a challenge due to intense competition for skilled personnel.”

Key Considerations for Fund Allocation

The most effective allocation of resources will vary considerably, depending on the specific company and the sector in which it operates.

A one-size-fits-all approach is not suitable when determining where to invest newly acquired capital.

• Talent Acquisition: The demand for qualified individuals is exceptionally high.
• Product Development: Continued innovation is crucial for maintaining a competitive edge.
• Market Expansion: Strategic growth into new markets can yield substantial returns.

These areas represent potential investment priorities for startups, though the optimal mix will be unique to each organization.

Sila Nanotechnologies: Founder Gene Berdichevsky Discusses Scaling Battery Innovation

Rebecca Bellan recently interviewed Gene Berdichevsky, the founder of Sila Nanotechnologies, as part of a continuing series focusing on leaders in the transportation sector.

The discussion centered on Sila’s work to develop and expand production of advanced EV batteries.

A Vision for Industry Leadership

Berdichevsky articulated a clear ambition for his company. He stated that Sila aims to achieve global leadership in the energy storage sector.

His analogy to Intel highlights the strategic approach. Sila intends to emulate Intel’s impact on the personal computing revolution.

The Intel Parallel

It’s important to note that Intel didn’t dominate the entire PC ecosystem. They focused on creating the core component – the microprocessor – that significantly influenced overall system performance.

As microprocessor technology advanced, so too did computers, leading to increased adoption and widespread technological change.

Sila’s Core Strategy

Similarly, Sila Nanotechnologies is concentrating on developing key battery components. These components are designed to drive improvements in the performance of electric vehicles.

The company believes that enhancing battery technology will be pivotal in accelerating the adoption of EVs and transforming the transportation landscape.

Beyond Component Manufacturing

Like Intel, Sila doesn’t necessarily plan to manufacture every part of the battery or the vehicles themselves.

Instead, their strategy centers on providing the crucial, high-performance components that will define the next generation of energy storage.

Navigating Corporate Venture Investment Committees

While many entrepreneurs primarily target traditional private venture capital firms, significant funding is increasingly originating from corporate sources.

During the first six months of the current year, corporate venture capital (CVC) funding reached $79 billion, distributed across 2,099 transactions worldwide.

Understanding the CVC Landscape

Brian Walsh of WIND Ventures details the distinctions between CVC and conventional VC approaches in a recent TechCrunch+ contribution.

He also outlines fundamental strategies for securing approval from a corporate investment committee.

Despite presenting a unique set of challenges, Walsh emphasizes the substantial potential within this expanding investor category.

Successfully navigating the intricacies of a CVC investment committee benefits all involved parties.

Key Considerations for Securing Investment

A thorough grasp of the roles, established procedures, and methods for facilitating deal progression through a CVC investment committee (IC) is crucial.

By understanding these elements, founders can significantly improve their chances of securing funding.

The Value of CVC Funding

Corporate venture capital represents a growing and important source of investment for startups.

Understanding how these committees operate is essential for founders seeking to tap into this capital.

Evil Geniuses CEO Discusses the Growing Reach of Esports

Established in 1999, the esports organization Evil Geniuses (EG) is still considered by its CEO, Nicole LaPointe Jameson, to be operating within a developing industry.

During a discussion at TechCrunch Disrupt with Lucas Matney, Jameson highlighted the ongoing need to educate those unfamiliar with gaming.

A key challenge involves addressing misconceptions held by older generations regarding video games, many of which are unsupported by evidence.

Jameson expressed strong confidence in the views of younger demographics.

She believes that esports will not remain a specialized interest for youth audiences.

Bridging the Generational Gap

Currently, explaining the value and legitimacy of esports to some older individuals requires careful communication.

This is due to pre-existing, often inaccurate, beliefs about gaming and its participants.

Optimism for the Future

The CEO anticipates a shift in perception as younger generations mature and become more influential.

She foresees a future where esports is widely accepted as a mainstream athletic pursuit.

EG's Position in the Market

Evil Geniuses aims to be at the forefront of this evolution.

The organization is focused on expanding the reach of esports and fostering greater understanding of its potential.

• Key takeaway: The industry is still young despite its age.
• Future outlook: Esports will become more mainstream.

Jameson’s perspective underscores the potential for continued growth and acceptance of esports on a global scale.

The Growing Influence of Infrastructure as Code in DevOps

The practice of Infrastructure as Code (IaC) is experiencing increased implementation within DevOps environments. Despite this growth, challenges persist regarding the configuration and administration of data centers, presenting both difficulties and potential avenues for innovation, as noted by Karan Bhasin.

A survey was conducted among leading investors specializing in IaC companies to gather insights into current trends and future prospects.

Investor Perspectives on IaC

The following investors contributed their expertise to the survey:

• Sheila Gulati, Managing Director at Tola Capital
• S. Somasegar, Managing Director at Madrona Venture Group
• Aaron Jacobson, Partner at New Enterprise Associates
• Sri Pangulur, Partner at Tribe Capital
• Teddie Wardi, Managing Director at Insight Partners
• Tim Tully, Partner at Menlo Ventures

Their collective insights offer a valuable perspective on the evolving landscape of IaC.

The complexities inherent in data center management continue to drive the demand for more efficient and automated solutions.

Informatica's Initial Public Offering to Gauge Investor Interest in Mature Tech Companies

After being acquired by a private equity firm six years ago, Informatica has submitted its paperwork to become a publicly traded company, with estimates suggesting a potential valuation of up to $10 billion.

This substantial figure necessitates careful examination, as noted by Alex Wilhelm, who thoroughly analyzed the S-1 filing yesterday.

A valuation multiple of 7x revenue could be justifiable if investors believe the company’s subscription revenues are poised for sustained expansion.

Analyzing the Potential Valuation

Wilhelm suggests that the key to a successful IPO lies in convincing investors of Informatica’s future growth trajectory.

The company’s ability to demonstrate continued growth in its subscription model will be crucial in supporting the proposed valuation.

Successfully conveying this potential will be paramount to securing investor confidence.

Context of the Current Market

This IPO arrives at a time when public markets are evaluating tech companies with differing growth rates.

The offering will serve as a test case for whether investors are willing to embrace companies exhibiting more moderate expansion.

The outcome could influence future IPOs of similar businesses.

Key Considerations for Investors

• Subscription Revenue Growth: The primary driver of valuation.
• Market Position: Informatica’s standing within the data management space.
• Competitive Landscape: The presence and strength of rival companies.

Understanding these factors will be essential for investors considering Informatica’s stock.

Securing Initial Funding: Insights from Index, Sequoia and Canvas Investors

The process of securing first-round funding can be daunting for founders, as noted by Mary Ann Azevedo.

While capital is readily available, competition for it among startups is intense.

During TechCrunch Disrupt, a panel of investors offered guidance to entrepreneurs on navigating this challenge.

Their discussion focused on refining strategies, building stronger investor relationships, and establishing realistic expectations.

Investor Panel Participants

• Nina Achadijan, a partner at Index Ventures, contributed her expertise.
• Rebecca Lynn, co-founder and general partner at Canvas Ventures, shared valuable insights.
• Luciana Lixandru, partner at Sequoia Capital, also participated in the discussion.

These investors provided a comprehensive overview of the current funding landscape.

They emphasized the importance of a well-defined approach to fundraising.

The Evolving Landscape of Growth Marketing in 2021 Amidst Apple’s Privacy Changes

In April, Apple introduced App Tracking Transparency, empowering users to prevent the sharing of their behavioral data from their devices.

Further modifications within iOS 15 allowed users to choose into Mail Privacy Protection and gain increased control over application permissions.

These developments represent a positive step for consumer privacy. However, they introduce challenges and ambiguity for startups reliant on accurately measuring growth and user engagement.

To gain insights into how growth marketers are adjusting their data collection strategies, TechCrunch’s Managing Editor Danny Crichton spoke with three industry professionals at TechCrunch Disrupt.

• Jenifer Ho, the VP of Marketing at Elation Health, participated in the discussion.
• Shoji Ueki, Head of Marketing and Analytics at Point, also shared his expertise.
• Nik Sharma, the owner of Sharma Brands, contributed valuable perspectives.

The conversation focused on adapting to a new era of data limitations.

Understanding the Impact of Apple’s Changes

Apple’s privacy initiatives fundamentally altered the methods used for attribution. Previously, marketers could reliably track which channels and campaigns drove app installs and user actions.

Now, with a significant portion of users opting out of tracking, this level of granularity is diminishing. This creates difficulties in optimizing marketing spend and demonstrating return on investment.

The changes necessitate a shift towards more privacy-centric and aggregated data approaches.

Strategies for Navigating the New Reality

The experts discussed several strategies for overcoming these challenges. These included focusing on first-party data collection and leveraging modeling techniques.

Building direct relationships with customers and obtaining consent for data usage is becoming increasingly crucial. Furthermore, statistical modeling can help fill in the gaps left by incomplete tracking data.

A renewed emphasis on incrementality testing is also essential to determine the true impact of marketing efforts.

The Future of Growth Marketing

The panel highlighted that growth marketing in 2021 and beyond will require greater creativity and adaptability. Reliance on traditional tracking methods is no longer sufficient.

Marketers must embrace a more holistic view of the customer journey and prioritize building trust and transparency. The ability to analyze aggregated and anonymized data will be paramount.

Ultimately, the focus will shift from precise attribution to understanding overall marketing effectiveness.

Exploring Alternative Funding Paths for Startups

For startups, the pursuit of venture capital isn't always the optimal strategy. Founders should critically evaluate if it aligns with their needs, or if it’s simply a conventional expectation.

While venture capital remains a common funding source for nascent companies, it’s crucial to recognize that numerous alternatives exist. These include debt financing and revenue-based financing, which doesn’t involve dilution of equity.

A discussion at TechCrunch Disrupt featured three industry professionals who shared insights on diverse capital-raising methods and their suitability for different startups.

• Arun Mathew, a partner at Accel, contributed to the conversation.
• Michele Romanow, co-founder and president of Clearco, offered her expertise.
• Harry Hurst, co-founder and co-CEO of Pipe, also participated in the panel.

Romanow highlighted opportunities in underfunded sectors. She emphasized the importance of aligning funding with specific expenditures, suggesting the use of more cost-effective capital for recurring operational costs.

Careful consideration of capital allocation is paramount for sustainable growth.

Chamath Palihapitiya Addresses SPAC Issues: Fees, Transparency, and Deal Quality

Investor Chamath Palihapitiya has established a minimum of 10 special purpose acquisition companies (SPACs) to date. Publications like The New Yorker have referred to him as the “Pied Piper of SPACs,” and Bloomberg designated him the “King of SPACs.”

During a discussion at TechCrunch Disrupt, Connie Loizos questioned Palihapitiya regarding the drawbacks of SPAC financing that have raised anxieties among investors, specifically concerning corporate disclosures.

Loizos stated that a significant worry surrounding SPACs is the presence of what she termed “pixie dust.”

Palihapitiya responded to this concern with a historical analogy.

Drawing Parallels to the Early Days of Social Media

He pointed out that the emergence of Facebook was followed by numerous less successful social networks that ultimately failed. He anticipates a similar pattern unfolding within the SPAC landscape.

Palihapitiya believes that a select few SPAC sponsors will distinguish themselves through consistent performance.

• They will demonstrate a commitment to delivering strong results for investors.
• They will prioritize comprehensive disclosure practices.
• They will maintain constructive relationships with regulators.
• They will effectively support the companies they acquire.

He suggests that these high-performing groups will ultimately set the standard for the industry.

The investor implied that the SPAC market will likely see a separation between successful, diligent sponsors and those who fail to meet investor expectations.

7 Key Insights from Rivian’s IPO Documentation

Kirsten Korosec, the Transportation Editor, and Alex Wilhelm analyzed Rivian’s IPO filing. They subsequently identified and discussed seven significant observations.

The development of an electric vehicle manufacturer requires substantial financial investment. To date, the company has secured approximately $11 billion in funding and maintains a workforce of around 8,000 employees.

A review of Rivian’s operational performance, dating back to 2019, revealed numerous points of interest for Kirsten and Alex. Notably absent from this analysis, however, was any significant revenue data.

Historically, Rivian has generated virtually no revenue. This is understandable, as the company is only now commencing deliveries of its initial R1T trucks – marking the beginning of revenue generation. A small amount of income is visible within the interest earned section.

Currently, Rivian’s earnings are primarily derived from the returns on its substantial cash reserves. This income, however, has been relatively modest thus far.

Securing Initial Traction: Convincing Early Adopters

The significance of a company’s first revenue is often highlighted by entrepreneurs. This initial income acknowledges both the founder’s dedication and the trust placed in them by their inaugural customer.

As Ron Miller points out, prioritizing revenue generation is crucial, even amidst fundraising and operational tasks. The core function of any business remains the successful sale of its offerings.

However, achieving this necessitates acquiring customers. The central challenge, therefore, becomes how to motivate someone to invest in a new venture.

To explore this topic, Miller conducted interviews with three experienced leaders during TechCrunch Disrupt:

• Kate Taylor, leading customer experience at Notion
• Pablo Viguera, co-CEO and co-founder of Belvo
• Vineet Jain, CEO and co-founder of Egnyte

Their insights offer valuable perspectives on early customer acquisition strategies.

The Importance of Early Customer Belief

Gaining the confidence of those first customers is paramount. It’s not simply about a transaction; it’s about establishing a foundation of trust.

These initial adopters are often willing to overlook imperfections, providing invaluable feedback that shapes the product’s development. Their willingness to take a risk is a critical component of early success.

Focusing on Core Value Proposition

Before seeking investment or refining internal processes, businesses should concentrate on delivering demonstrable value. A clear and compelling value proposition is essential.

This means identifying the specific problem the product solves and effectively communicating its benefits to potential customers. Early marketing efforts should emphasize this core value.

Leveraging Personal Connections

Often, the first customers are acquired through existing networks. Personal recommendations and relationships can significantly reduce the barrier to entry.

Don't underestimate the power of reaching out to individuals who understand your vision and are likely to be early champions of your product. These connections can provide crucial initial support.

Building a Feedback Loop

Early customers aren’t just sources of revenue; they are invaluable sources of information. Actively soliciting and incorporating their feedback is vital.

This iterative process of development, guided by user input, ensures the product evolves to meet actual market needs. Continuous improvement based on customer insights is key.

Reid Hoffman’s Perspective on the Changing Landscape of ‘Blitzscaling’

The term “blitzscaling,” originating with Greylock partner and LinkedIn co-founder Reid Hoffman, has evolved significantly within the technology industry.

Its meaning has often been broadened beyond its initial intent.

Understanding the Core of Blitzscaling

Hoffman emphasized during TechCrunch Disrupt that blitzscaling is not an end in itself.

Rather, it represents a specific set of trade-offs made under particular circumstances.

He clarified that the practice inherently involves accepting certain inefficiencies.

The Inherent Inefficiencies of Rapid Growth

Specifically, blitzscaling entails deliberately operating with capital and personnel in a less-than-optimal manner.

This can include a degree of uncertainty regarding the fundamental business model.

Hoffman was clear that these characteristics are not generally desirable qualities for a business to possess.

A Strategic Approach, Not a Universal Goal

The concept centers around prioritizing speed over efficiency in the pursuit of market dominance.

However, it’s crucial to recognize that this approach isn’t universally applicable or beneficial.

It’s a strategic choice made when the potential rewards of rapid scaling outweigh the risks associated with inherent inefficiencies.

The Significance of Community in Today’s Startup Ecosystem

Throughout my experience as a community manager, a notable observation emerged: definitions of “community” varied considerably across different organizations.

The role of community often sparked debate. Was it primarily a customer support function, or a marketing initiative? Should product development teams actively foster it?

Furthermore, determining effective metrics for community success proved challenging. Brian Heater posed this central question to the panelists at TechCrunch Disrupt:

• Alex Angel, the Chief Community Officer at Commsor.
• Lolita Taub, VP of Corporate Development at Catalyte, and also co-founder and General Partner of The Community Fund.
• Katelin Holloway, a Founding Partner at 776.

The core of the discussion revolved around establishing a shared understanding of what "community" represents within the startup landscape.

Diverse Perspectives on Community’s Role

The panelists explored the multifaceted nature of community building. It’s not simply about amassing a large number of users.

Instead, a thriving community is characterized by meaningful interactions and a shared sense of belonging. This requires deliberate cultivation.

Customer service, marketing, and product development all have a role to play in nurturing a strong community.

Measuring Community Impact

Defining key performance indicators (KPIs) for community success is crucial. However, traditional metrics may fall short.

Engagement rates, sentiment analysis, and the level of user-generated content can provide valuable insights. These metrics help demonstrate the community’s value.

Ultimately, a successful community contributes to increased customer loyalty and brand advocacy.

The Evolving Definition of Community

The concept of community is constantly evolving, particularly within the fast-paced world of startups.

It’s no longer sufficient to simply create a forum or social media group. A genuine community requires ongoing investment and a commitment to fostering authentic connections.

The Growing Need for BaaS Partnerships

Banking-as-a-Service (BaaS) companies are leveraging existing banking infrastructure. This simplifies the development process for tools focused on payments and money movement.

Offering a custom credit card is now more accessible than ever, as Ryan Lawler recently highlighted.

To gain deeper insight into the challenges that BaaS companies address, Ryan engaged in discussions with several founders.

Key Voices in the BaaS Space

• Itai Damti, CEO of Unit
• Roy Ng, CEO of Bond
• Peter Hazlehurst, CEO of Synctera

Hazlehurst explained that navigating the complexities of financial services independently is often impractical. The time and resources required are substantial, and favorable terms are difficult to secure without existing expertise.

For companies not already deeply involved in the financial sector, attempting to build these capabilities in-house is generally not a worthwhile investment.