Author: Natasha Mascarenhas

Posted on

The debate happening inside of every VC firm

Precursor’s Charles Hudson wants to be cautious but not too cautious. The venture capitalist was at an AI confab last month, but he has not yet made a new AI investment during the current hype cycle.

He’s one of many investors who have seen an inflection point take over a sector before, bringing in boatloads of capital, new founders and, at times, speedy and FOMO-driven deals. Historically, Hudson hasn’t minded sitting out. “With crypto, for example, I was OK being at almost zero,” he said. “I don’t think I’m OK with zero as the answer for AI. The question is where and how.”

While the “ChatGPT for X” companies are certainly interesting, Hudson says that he’s out on them for now because they are just “wrapper” companies stitching together different preexisting companies. “I might regret that, but I think I would just say, my imagination didn’t provide the answer.” He said a founder recently pitched him an exciting product, but when asked how long it would take someone else to build the same tool, the entrepreneur said “two weeks.”

Hudson’s interest in crypto reflects what’s happening inside of every generalist firm right now: Are VCs backing net new startups, or are they letting their existing portfolios lead them to AI, either through seemingly magical pivots or via a shared love and validation for low-flying AI companies in the space?

For example, Jason Lemkin says he hasn’t yet invested in a pure-play AI startup. “I’m not sure there is a rush, but I could be wrong,” he said. Most of the investor’s portfolio companies are adding an AI component to their businesses. Then there is Sapphire’s Cathy Guo, who invests in late-stage startups, allowing her to take time to make her investment decisions. During a recent conversation, she described the “arms race” between big companies launching massive products and startups integrating AI to differentiate.

The debate happening inside of every VC firm by Natasha Mascarenhas originally published on TechCrunch

Posted on

Venture-backed everything for real world problems, please

Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

Mary Ann, Natasha and Alex are closing out another news-filled week full of change, and since we did have the crew for one last chat, here’s what we got into:

Equity will be back before you know it, but in the meantime, you can catch us on Twitter @EquityPod. And for the early-stage founders out there, don’t forget to apply for the Startup Battlefield 200 cohort at TechCrunch Disrupt 2023!

For episode transcripts and more, head to Equity’s Simplecast website. 

Equity drops at 7:00 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!

Venture-backed everything for real world problems, please by Natasha Mascarenhas originally published on TechCrunch

Posted on

The Mint, started by Better Tomorrow Ventures, wants to be the accelerator fintech needs

Better Tomorrow Ventures’ Sheel Mohnot landed some of his biggest wins before he ever started a venture firm. The investor previously worked as a partner at 500, previously known as 500 Startups, where he raised and ran a dedicated fintech fund as well as helped build an accelerator.

There he met his eventual founding partner at BTV – Jake Gibson – and backed a cadre of fintech startups, including Chipper and Albert, each at $2.5 million valuations. Today, Chipper is valued at over $1 billion, and Albert has raised over $175 million.

And while the firm has certainly cashed in on that early track record – raising a $225 million second fund last year – the duo behind it thinks it’s time to launch a nod toward their roots. Better Tomorrow Ventures tells TechCrunch that it is launching a fintech accelerator, this time under its own roof, called The Mint.

The Mint will be a three-month accelerator, based out of San Francisco, that cuts $500,000 checks in exchange for 10% equity in between six to ten startups. The initial cohort, which starts this upcoming August, already accepted one company, and sent a second acceptance letter out today.

“It’s something we’ve done successfully before. Our returns were crazy, crazy good from that initial fintech cohort, so I think if we can get anywhere near that again, our LPs will be happy,” Mohnot said.

The accelerator offers some standard support: a speaker series that includes founders from Mercury, Flexport and NerdWallet, office hours with experts, wellness resources, hiring support and desk space. Unlike some Zoom accelerator programs, The Mint is long San Francisco: two team members are moving to the city to help with logistics, and Better Tomorrow is leasing a new office space, outside of its Mission HQ, dedicated to the accelerator.

Better Tomorrow seems to be stepping in where it believes Y Combinator is lacking. “YC is built for scale. The advice is a lot like one size fits all,” Mohnot said. “We felt like with fintech, there are so many things that are unique about building that it makes sense to have something distinct.”

Among some seed stage investors, YC’s new standard deal has been met with varying degrees of weariness. Last year, YC announced that it would still offer its original deal – a $125,000 check in exchange for 7/% equity – as well as a $375,000 check at an uncapped SAFE note with a most favored nation (MFN) clause. The latter has stirred up some controversy: an MFN means that YC will get to invest $375,000 at the same terms as the investor who has the best terms in the next round. Now, YC companies are less incentivized to raise a small amount of money from angels, and more incentivized to optimize for higher valuations after Demo Day, so dilution is limited when accepting that $375,000 check.

“We think the MFN clause [that YC currently offers] can do companies a disservice. Because they end up almost having to raise at a very high valuation…you’re seeing that bite them in the ass a little bit. Because as if they don’t hit the metrics, the next round is even more challenging,” Mohnot said. While BTV’s 10% ownership is higher than other VC-spun out programs – take NextView’s $200,000 in exchange for 8% stake for an example – it’s less than what BTV usually targets for first checks, which is between 15% to 20% ownership.

Mohnot says that BTV will continue investing outside of the accelerator, but the big focus for the rest of the year in terms of net new investments will be within the program.

“I think there’s a TechCrunch article right now about fintech” pessimism, Mohnot said. “We are still really excited about the future of fintech and we liked fintech before it was cool.. At a fundamental level, financial services are 20% of GDP, and they are inherently digital, so the numbers make sense.”

We’re close to peak pessimism around fintech

The Mint, started by Better Tomorrow Ventures, wants to be the accelerator fintech needs by Natasha Mascarenhas originally published on TechCrunch

Posted on

How do you know when it’s time to shut down?


Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single person, think about their work and unpack the rest. This week, Natasha spoke to Kristen Anderson, the co-founder and CEO of Catch, an app to provide payroll benefits for people who are self employed, that recently announced it would be shutting down. We’re talking about vulnerability, shut downs, building in public and on ramps and off ramps that come with the wild choice to be an entrepreneur.

Here’s what we got into:

  • Venture capital’s role in how a founder builds
  • Making the difficult decision to shut down, and why Catch chose to do so publicly
  • We end with Anderson’s return to building, in fintech, despite what her Twitter followers wish. Seems like being close to peak pessimism in fintech is a good thing for forever builders.

As always, Equity will be back on Friday with your weekly news round up – and a big announcement – so don’t miss it! Until then, you can catch us on Twitter @EquityPod.

For episode transcripts and more, head to Equity’s Simplecast website. 

Equity drops at 7:00 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotifyand all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!

How do you know when it’s time to shut down? by Natasha Mascarenhas originally published on TechCrunch

Posted on

This app, backed by Marissa Mayer and Peter Thiel, is making texts more expressive

“The medium is the message” is the common phrase, but entrepreneur Alexis Traina believes that messages, themselves – text messages to be exact – deserve attention, too.

Traina is the CEO and co-founder of HiNOTE, an app that helps people create messages, set over personalized backdrops of anything from a tipped-over wine glass to a branded letterhead notebook page. The idea, she said in an interview with TechCrunch, is that she wouldn’t get up every day and dress up in green, blue and gray – so why do our text messages stick to those colors?

“People are looking to find new ways to connect new ways to present themselves,” Traina, who built the company with her co-founder and husband Trevor, said. “Even professionally, it’s to be able to communicate with polish and representation.”

Since launching in 2022, 1 million HiNOTES have been shared by users with over 2,000 types of notes able to be personalized on the app. The company is also working on brand and creator collaborations – think digital message drops tuned to the aesthetic of your favorite influencer – and has already done 20 deals.

Most of the users, Traina says, are women and range between the ages of 25 and 65. She listed out some of the most common traits among the early adopters: they send out 15 greeting cards a year, have Canva subscriptions and send Paperless Post invites right alongside Minted holiday cards.

Self-expression in the form of text messages is a specific bet on people wanting more out of their digital communication styles. But it’s not too new, either. Emojis were created in the late 1990s and still remain a massive part of our lexicon today. Memes, easily whipped up on online services and even within some messaging apps like Groupme, continue to be a fun way to share a message. And, as an Indian American, I certainly can tell you how common it is to land what feels like a million photos during each holiday or life occasion with text overlaid.

As humans, we’ve been evolving away from solely bubble-based text for decades. Heck, there’s an elephant valued at $40 billion in the room: Canva.

Traina said that Canva became a valuable tool in the enterprise space because it brought simplified tools to business communications.

“What I saw about it was that it was still on the desktop, and it was often 9 to 16 taps to get your product into work,” she said. “o I understood for us, the magic would be mobile-first, easy to create and for the everyday communicator.”

Sure enough, HiNOTE requires less buy-in than an app like Canva – literally, because it is free right now.t takes a few minutes to create an account and start using personalized notes. Once you edit a note in the app, you can share it via text with one click.

Clearly, personalized messaging is popular among some, so the question for HiNOTE is more around how to seamlessly become a part of a user’s everyday behavior. Part of that involves knowing what makes sense to express via a text-overlaid image and what makes sense to send as a quick

Traina listed off a number of use cases for HiNOTE, revealing that the most popular category of notes is the “everyday note,” which offers images asking someone to give you a quick call, birthday messages with personalized sign-offs and more.

Tellingly, in our conversation, Traina only used one HiNote: to say that she was looking forward to our call. Beyond that, we stuck to texts. Clearly, as much as we enjoy a good meme, it isn’t the only way we express ourselves. Sometimes a text works. HiNOTE is in the process of finding that early product-market fit, but it’s evidently resonating with a bevy of top-tier investors.

HiNOTE has raised $1.9 million to date in previously undisclosed capital from angel investors known to be disruptors including Marissa Mayer, Dick Costolo, Marc Benioff, Yuri Milner, Peter Thiel and Sarah Kunst.

Mayer, former CEO of Yahoo and founder of Sunshine, told TechCrunch over e-mail that she loves “the intent of trying to take something ordinary (like texting) and add a richness and expressiveness to it.” She compared HiNOTE to her other angel investments, which include Uber, Square, Minted and Figma. All “solved broad consumer problems with an ecosystem approach in an elegant and simple way.”

The pre-seed round is helping the team avoid the need to monetize immediately, unlike some of its early-stage compadres.

“Like many early-stage, consumer companies, we’re focused on providing an amazing, sticky product to our users — and in the future, there are plenty of proven revenue models for consumer platforms with scale,” Traina said.

This app, backed by Marissa Mayer and Peter Thiel, is making texts more expressive by Natasha Mascarenhas originally published on TechCrunch

Posted on

Mayfield raised just shy of $1B to avoid unicorn hype

Navin Chaddha, the storied investor running Mayfield Fund, doesn’t want to be running a billion-dollar fund like many of his peers. “Everyone wants to be Sequoia or A16z,” he said, in an interview with TechCrunch. “We want to be who we are: just copying somebody else is strategy for disaster, strategy for failure.”

“We could have raised $2 billion, but what will we do if we don’t believe in it – you just need a billion to be called a unicorn VC fund? There’s no such need, “Chaddha said.

He’s getting closer to riding a unicorn, nonetheless.

Mayfield Fund announced today that it has raised a total of $955 million across two venture capital funds: a $580 million Mayfield XVII, which will back seed and Series A companies, and a $375 million Mayfield Select III, which will back Series B companies. The new capital comes after Mayfield has invested in over 550 companies across 120 IPOs and 225 acquisitions. Top investments include Poshmark, which was acquired by Naver for $1.2 billion; Mammoth Biosciences; Lyft; and SolarCity, which was acquired by Tesla.

Has the seed stage come back down to earth? It depends where you look

Despite an increase in capital, Chaddha says that Mayfield’s goal will not change – they still back roughly 30 companies per fund, and stick largely to early-stage companies. The consistency is part of why he thinks they lost no LPs in this fundraise, despite a dark economic backdrop that has some venture investors struggling to close. Today’s pair of funds closed in less than a month, with a 10% carve out allocation for new LPs.

It’s good timing: Mayfield only made six investments in 2020. Less than halfway into 2023, Mayfield has already made six this year, four of which are in AI companies. The capital, Chaddha explains, will be used to ramp up the firm’s investment cadence in a more realistic market. He also admits that Mayfieldhas missed out on a lot of opportunities because of high valuations, but that he’s okay with it.

Chaddha, who has been on the Midas List 15 times (almost as many years as he’s been running Mayfield Fund), is exuberant but in a calm, authoritative way. One of the things he asks founders during initial meetings is where they see themselves ten years from now, he tells me. “If the answer is, I’ll be in my third company, it’s a pass for Navin,” Chaddha said. Mayfield likes backing founders who think that their company will be their last job, he said.

How to find the right investors for your startup

As Chaddha described a culture at Mayfield of not wanting to get lost in “FOMO” and stay disciplined, the firm has clearly responded to higher prices and pricier valuations. Today’s duo of funds are 27% larger from Mayfield’s last pair of funds, announced back in March 2020, and up 82% from the pair before that.

Mayfield allocates 1% of fees to help sponsor students from historically-overlooked backgrounds to land internships at tech companies. The firm also has a summer fellows program. These two programs show a focus on diversity, but the firm is still behind, Chaddha admits. Mayfield doesn’t yet have a female partner, for example. “I think the diversity of age, background, and gender is very, very important. But at the end of the day, you can’t just make somebody a partner. We are behind in the last few years because of COVID. It’s been hard.” He said that Mayfield plans to hire aggressively in the next two years, including for at least one new partner role.

“History has shown that when public markets are at their peak, venture funds are the worst performing,” Chaddha said. “When public markets come low, and when you invest over those years – the period we’re in right now – those are the golden years. It’s time to lean forward.”

Mayfield raised just shy of $1B to avoid unicorn hype by Natasha Mascarenhas originally published on TechCrunch

Posted on

OpenAI’s ChatGPT is shaking up the edtech markets

Shares of edtech company Chegg fell off a cliff this week after the company reported Q1 results that bested analyst expectations.

But Q1’s results aren’t what made the company lose nearly half of its value. In its earnings call the company’s executives noted that ChatGPT was slowing its ability to add new subscribers, not only potentially slowing its growth but also throwing uncertainty into its ability to predict its future financial results.

It’s an especially tense admission of competition, given that Chegg just announced last month that it is building a chatbot with GPT-4, even quoting OpenAI CEO Sam Altman in the release. 

Chegg’s dramatic post-earnings valuation flop will not be the last time that we see new AI tooling run headlong into existing enterprises. But it is one of the most dramatic cases to date and raises more questions than simply what is ahead for Chegg itself — and edtech more broadly. AI is the elephant in every sector’s room: How are startups reacting, especially when a public company readily admits that a leading product is slowing growth?

OpenAI’s ChatGPT is shaking up the edtech markets by Natasha Mascarenhas originally published on TechCrunch

Posted on

Aaron Burr’s tech angle, blue skies, and no photos at this time

Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This week Mary Ann, Natasha and Alex got right into it – may the for……ce of tech news continue to be with us because wow we’ve never been busier!

Here’s what we got into:

  • An update on a startup banking partner collapse that wasn’t the First, and probably won’t be the Last
  • A section dedicated to sunsetting Poparazzi and a Databricks acquisition (points to whoever can guess how we transitioned from one deal to the next)
  • Next up, we spoke about Finix’s latest announcement to go head to head with Stripe, before talking more about the rise of down rounds
  • We ended with BlueSky. Although some of us feel grey about it. And regardless, this piece by Morgan Sung will have you thinking smartly about the new Twitter competitor started by the ol’ Twitter boss.

Equity will be back before you know it, but in the meantime, you can catch us on Twitter @EquityPod.

And for the early stage founders out there, don’t forget to apply for the Startup Battlefield 200 cohort at TechCrunch Disrupt 2023!

For episode transcripts and more, head to Equity’s Simplecast website. 

Equity drops at 7:00 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!

Aaron Burr’s tech angle, blue skies, and no photos at this time by Natasha Mascarenhas originally published on TechCrunch