Show, don’t tell: Tips for robotics startups raising a Series B during a downturn

Raising a Series B for any startup is challenging right now, with many VCs pulling back on investments — funding for Series B rounds across all sectors fell 55% in August compared to a year earlier, for example.

But raising a Series B for a hardware startup can be even tougher. It has simply always been more difficult to get venture investors to fund a robotics project compared to a software-only venture, given robotics’ high capital requirements and the greater risk.

However, the climb uphill can get much easier if a robotics startup can showcase a solid business model, measurable metrics and a plan for the next 18 months. As an investor in AI and automation companies for over 20 years, I’ve backed dozens of robotics companies, and I continue to be bullish on the space.

You need to show that customers are deriving real value from your robots — saving time, money or both.

Here are several strategies founders can use to prepare their robotics companies for a successful Series B.

Show how your robot works

Robots are inherently visual (can anyone forget that video of Boston Dynamics robots dancing?) So when you pitch VCs on your automation company, it pays to demonstrate your robots in action.

If your robots are large installations in warehouses or on manufacturing lines, invite VCs to come to see them working. If they are small enough to transport, bring them with you to the pitch meeting. And always have high-quality video available to share on a computer or tablet during in-person pitches or online for virtual meetings. Seeing your product in action is critical to getting investors excited about it.

Show customer ROI

Show, don’t tell: Tips for robotics startups raising a Series B during a downturn by Ram Iyer originally published on TechCrunch

How to make coaching work for your sales team

The advent of SaaS and cloud-based software services has all but obliterated the traditional sales model, but not many organizations are actually helping their sales teams adapt to this new world order.

Sales training statistics paint a grim picture. Even if business leaders know their employees need support, they often aren’t providing the right kind of support. Some organizations provide no sales training at all, and others simply miss the mark. According to one study, roughly 44% of sales representatives felt their training “needed improvement.”

How can sales leaders and other stakeholders improve how they train the modern sales force?

It’s important to recognize that today’s sales teams are more problem-solvers than deal-closers — soft skills are more important here than technical capabilities. They need to develop flexible ways of thinking and solving problems, become able to navigate ever-present uncertainty, manage time well, and be resilient.

Every sales team is composed of vastly different individuals who possess distinctive soft skills, behaviors and mindsets. That’s why personalized approaches to learning and development initiatives, like one-on-one coaching, can be so transformative.

A coach should design each coaching journey based on an individual’s growth and learning goals.

Personalized coaching programs meet sales professionals where they are to help them become better versions of themselves. To realize the power of personalized coaching, sales leaders and other stakeholders should create a coaching culture that supports sales professionals at every level of their career.

Here’s how:

Identify a sales coach

Generally speaking, there are two kinds of business coaches — external and internal. External coaches are typically certified third-party partners. Conversely, internal coaches work for the company and could be sales leaders, HR executives or other managers.

While both types of coaches can be effective, internal coaches face some barriers and must proactively:

  1. Commit to confidentiality: Coaches must create psychologically safe environments for employees to express concerns like professional weaknesses, interpersonal challenges and known biases. If employees fear repercussions from their coaching sessions, they won’t be honest, and the coaching won’t achieve its full potential.
  2. Prevent role confusion: Internal coaches could interact with employees outside of regular coaching sessions, so they must set clear expectations for how the coach-learner relationship differs from other professional relationships.
  3. Exercise objectivity: While internal coaches have the benefit of understanding a workplace’s cultural nuances, politics and strategy, they must avoid institutional biases and approach coaching sessions with impartiality.

Determine an employee’s vision of success

How to make coaching work for your sales team by Ram Iyer originally published on TechCrunch

Dear Sophie: Is it OK to use a visitor visa while holding an H-1B?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

I’m in Toronto, Canada, and I was approved for an H-1B, which was recently stamped in my passport. I plan to move to the U.S. next year. Can I visit the U.S. on a previous B-1/B-2 visa this November?

Would it raise any red flags if I were to visit as a visitor while holding an approved/stamped H-1B visa?

— Talented in Toronto

Dear Talented,

Congrats on your H-1B approval and stamp! Before I dive into your questions, let’s cover some basics on visa types.

Visa types

Immigration law has two broad types of visas:

  1. Non-immigrant visas — also sometimes called work visas, or visas;
  2. Immigrant visas — also known as green cards, or permanent residence.

But it’s a little tricky, because another factor in whether somebody receives a visa and is admitted for entry is their intention. The government officers are evaluating whether they think you intend to immigrate to the United States.

So, there’s an overlay between what type of visa or green card you want, and whether you have non-immigrant or immigrant intent:

Sophie’s matrix of intention

Green card Visa
Immigrant intent Required1 Cause for denial3 OR Approvable4
Non-immigrant intent Cause for denial2 Approvable5

Notes:

  1. Immigrant intent is the point of a green card, and you must have the intention to permanently immigrate to the U.S. if you want one.
  2. You’ve got to actually want to live in the U.S. to qualify for and maintain permanent residence.
  3. Many visas such as B for visitors, F-1 for students and J-1 for exchange visitors clearly require non-immigrant intent, and evidence of immigrant intent is cause for denial.
  4. Certain visas such as H-1B and L-1 are dual-intent, and your intention to stay short- or long-term is irrelevant to the adjudication.
  5. Most non-immigrant visas were initially designed for people with nonimmigrant intent.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

So for people with immigrant intent, the law provides for green cards. The whole point of obtaining permanent residence is to enable certain people to achieve their intention of staying permanently in the U.S. They can live and work in the U.S., travel abroad with few restrictions, and even apply to become U.S. citizens after fulfilling certain requirements.

However, people seeking single-intent visas or entry based on these visas that only permit non-immigrant intent, such as B in the situation you describe, must demonstrate to immigration officials that their stay in the U.S is only temporary and they intend to eventually return to live in their home country.

In general, it can be challenging to shift from a non-immigrant visa to an immigrant visa, also known as a green card. The general purpose of this immigration policy is so that people don’t abuse the system by obtaining non-immigrant visas and then overstaying without authorization.

But there is an exception: It is OK for people on dual-intent visas (which are generally non-immigrant work visas) to apply for green cards.

Multiple visas in your passport

Dear Sophie: Is it OK to use a visitor visa while holding an H-1B? by Ram Iyer originally published on TechCrunch

The unbearable lightness of being asset-light

Commerce is as old as humanity, and yet innovation in how to build better and more efficient companies not only continues, but is accelerating. Although many forms of business innovation exist, marketplaces seem simplest at first glance, but they have evolved significantly from exchanging goods in the town square to digital forms that keep growing increasingly efficient. Marketplace CEOs can reframe their thinking about marketplace structure in a way that increases the availability of popular products and enhances the customer experience while minimizing capital outlay.

The fundamental definition of a two-sided marketplace is some sort of platform through which buyers transact with sellers, or, alternately, “demand” transacts with “supply” (two-sided is considered to be the most “classic” marketplace structure, though three-sided and n-sided marketplaces exist, too). The marketplace itself can be a digital platform, technological or human middleman, or even a location, and its value is determined by how efficiently and effectively it facilitates transactions, and, if you’re an investor, how quickly the marketplace is growing, how much money the marketplace itself makes (“rake”), and how defensible it is from potentially competitive marketplaces and disintermediation, among other things.

Retailers are a familiar example of marketplaces, because they aggregate products from multiple manufacturers (“supply”) and offer the aggregation to consumers (“demand”). During this exchange, the retailers must pay upfront for the products that they subsequently mark up and sell.

In general, the heavier the model, the more control the company has over the customer experience.

In the last 15 years or so, the “sharing economy” gave rise to a new form of marketplace: the “asset-light” marketplace. Venture capitalists celebrated potentially the most valuable form of marketplace ever and funded the likes of Uber, Lyft, and Airbnb. There are key differences between an asset-light marketplaces and more traditional marketplaces. While a retailer purchases the shampoo before selling it to the consumer, and the taxi company purchases the cab, Uber does not purchase the car before making it available, and Airbnb does not purchase the house before renting it out.

Asset-light marketplaces manage to make money from things they don’t own or even fully control merely by facilitating the introduction and payment between the supply and the demand. Yet, these “asset-light” platforms own the relationship with the customer, can scale without the capital investment required by “asset-heavy” marketplaces such as retailers, and ultimately generate so much money that they can transform entire industries.

While asset-light marketplaces have proven to be a powerful innovation, the asset-light model has limitations and has led, somewhat full circle, to the development of certain asset-heavy platforms that are better suited to meeting some customer needs.

The unbearable lightness of being asset-light by Ram Iyer originally published on TechCrunch

Use predictive marketing to cut CAC at your PLG B2B startup

The rise in customer acquisition costs (CAC) is creating quite the dent in marketing budgets, placing marketing teams in a position where they have to do more with less.

When it comes to user acquisition campaigns, a few small fires need to be put out first. Many organizations’ issues stem from major premature decisions that are made based on incomplete data, and this is a problem that weighs more heavily on startups that sell to other businesses than those that sell to consumers.

For starters, B2B startups typically have longer funnels than their counterparts because their offerings often include freemium options and free trials. As a result, these startups don’t see many conversions within the first few weeks of acquiring new subscribers. That’s not to say there won’t be more conversions — B2B startups following a product-led growth model simply need more time.

Ultimately, marketing teams at such B2Bs end up scrambling to make major campaign decisions based on early CAC or return on ad spend (ROAS) metrics that rely on historical averages. They need a little extra help in the form of predictive marketing, of which some elements can easily be done in-house.

To help you better evaluate your campaigns early on, our data science team created an Ad Group Likelihood Simulator.

Marketers can use this tool to estimate the likelihood of a campaign’s ability to yield high ROAS over time simply by entering a few numbers.

As the name implies, marketers can use this tool to estimate the likelihood of a campaign’s ability to yield high ROAS over time simply by entering a few numbers.

How to use the simulator

Step 1

Based on your historical campaign data, fill in the quality group classification, which divides your campaigns into quality cluster groups 1-5, where 5 is the best quality (with the highest probability to convert) and 1 is the least favorable (lowest probability to convert).

Naturally, campaigns have a higher probability of belonging to the latter. If you don’t have this data available, ask your BI team to extract it for you by following the instructions below:

Choose the quality cluster group average conversions. Let’s assume you have the history of 500 ad groups and you are interested in conversions that happened within 12 months.

Option 1

Take all of your 500 ad groups and calculate the 10th, 30th, 50th, 70th and 90th percentiles of the 12-month conversion rate. These are the centers of your five cluster groups’ conversion rates.

Option 2

Use predictive marketing to cut CAC at your PLG B2B startup by Ram Iyer originally published on TechCrunch

3 ways to implement a product-led sales motion to unleash PLG’s revenue potential

Product-led growth (PLG), the go-to-market strategy where product usage drives customer acquisition and expansion, is becoming increasingly common among SaaS companies of all stripes. Nearly 60% of this year’s Forbes Cloud 100 companies use a product-led strategy, and 70% of the top 50 allow users to try their product for free before buying or upgrading.

But developing and launching a product through this model doesn’t guarantee success. The traditional top-down enterprise sales model just doesn’t work with the self-serve, freemium user bases of PLG, which can see thousands of sign-ups per day. Blanket email or marketing campaigns aren’t targeted enough, and a 1:1 sales approach just won’t scale.

As PLG companies gain traction, they need to figure out how to analyze and identify which of their users can be potential paying, profitable customers. To drive revenue growth and profitability, the product-led growth model requires a different way of approaching sales: product-led sales (PLS).

Image Credits: Calixa

A PLS model involves giving sales teams product and customer data so they can prioritize users who are most likely to convert quickly and at scale. Unleashing the power of PLG via PLS requires a slightly different approach to data, leads and the role of sales. Let’s take a look at how you need to recalibrate your thinking.

Your free offering, and the features customers get when they upgrade to paid plans should both create a natural conversion path to your enterprise offering.

Rethink your data

To see the benefit of a PLG strategy, you must start by cutting through the noise and creating visibility into consolidated customer data. Data is the foundation you’ll use to uncover the buyer journey, key patterns of user behavior, and glean actionable insights. This data has to be easily accessible and intuitive for account executives, support reps and customer success managers at the same time.

Unfortunately, many sales teams lack this type of self-serve access to the data they need to inform their sales approach. It can often take weeks for a company’s central data team to respond to such requests, and even when they can provide the data, it’s often in the form of a static report that may no longer reflect the customer information needed to seize opportunities. Rethinking your data means you’ll have to move beyond fragmented data systems that are bound by manual reporting and are not informed by product usage analytics.

3 ways to implement a product-led sales motion to unleash PLG’s revenue potential by Ram Iyer originally published on TechCrunch

The case for US venture capital outperformance

We’ve seen widespread losses in global equity markets this year. After a decade-long bull run, many venture capital funds have found themselves holding overvalued shares of companies whose IPO prospects have been either eliminated or significantly delayed.

The markets have now become skittish, as evidenced by widespread correlation across asset classes. There are certainly structural factors sowing the seeds of pessimism such as severe inflation; a hawkish U.S. Federal Reserve leading a global trend of interest rate hikes; an evolving European energy crisis; the first land war in Europe in 70 years; various supply chain disruptions; an ongoing global pandemic; growing global trade tensions, and, to top-off the sundae, a slowly collapsing Chinese credit bubble.

While public markets have priced in some of these headwinds, their severity and duration remains unclear. With respect to the U.S. technology sector, the Nasdaq Composite Index is down sharply year-to-date, price-to-earning multiples are at six-year lows, and venture funding has slowed significantly. Large-cap public technology company revenue and earnings have generally held up well to date, but are expected to falter in the coming quarters as a result of Fed-induced, demand destruction.

Despite all these current and high-profile pressures, it is our view that the technology and innovation supercycle narrative remains unchanged, and many companies are poised for growth. Private technology companies are refocusing on fundamentals, and valuations are returning to reasonable levels.

It is also our view that the current economic conditions create a unique opportunity for venture capital funds holding dry powder to earn significant returns, as was the case for VCs that deployed in the 2010-2014 time period.

Despite the Fed preventing the natural three-year transition period from yield inversion to golden period, we still believe 2023/2024 vintages will indeed achieve golden period status.

A sound investment process analyzes both macro trends and fundamental data to assess the probability of various potential outcomes. We have identified two distinct potential outcomes for the U.S. private technology sector over the next 6-12 months.

Scenario 1: Additional pain before recovery

A few weeks ago, Federal Reserve Chair Jerome Powell forecast that the Federal Reserve’s efforts to contain inflation would entail a “sustained period of below-trend growth” that would “bring some pain to households and businesses.”

This implies a period of lower range-bound U.S. equity price stagnation over the next 12-24 months. Such an outcome is probable in the near term if the following negative economic and geopolitical developments were to occur:

Aggressive Federal Reserve

An overly hawkish Federal Reserve in the face of deteriorating U.S. economic conditions could trigger stagnation in the public equity markets and potentially cause another 20%-25% drop in public equity prices. Such circumstances would continue to repress price-to-earnings multiples and negatively impact top-line performance.

While certain parts of the economy remain strong, it now seems obvious that Fed Chair Powell is having a Paul Volker moment: a single-minded focus on breaking inflation’s back, no matter the consequences. Orchestrating a “soft” landing was a “hopeful” strategy that is proving increasingly elusive.

Assuming we see more interest rate hikes over the short- and medium-terms, the prospect of long-term profitability for the U.S. technology sector, perhaps counterintuitively, remains strong. A repressed market would likely lead to above-average returns for the tech sector (in particular SaaS & Cloud-enabled businesses) due to its ability to quickly scale without the additional infrastructure and supply chain ramp-ups that will be required by traditional brick-and-mortar businesses.

Higher geopolitical tensions over Ukraine

It’s been more than six months since Russia invaded Ukraine, and the economic impact of commodity price increases are beginning to percolate throughout Europe. While it is too soon to predict the military outcome of the conflict, it is clear that Europe and the U.S. are morally and financially invested in preventing Russia from successfully annexing parts of Ukraine.

Current circumstances suggest a stalemate as the best-case scenario. The Ukraine conflict resembles the Soviet-Afghan War of the 1980s, a protracted war of attrition wherein the West funds, trains and arms local combatants in an effort to stress the Russian economy and thereby force a withdrawal from the region. A threatened and cornered Russia could resort to last-ditch temper tantrums, either including nuclear threats or restricting/eliminating Europe’s access to its energy and commodities resources.

Greater geopolitical tensions around Taiwan

The case for US venture capital outperformance by Ram Iyer originally published on TechCrunch

In Latin America, founders and investors seek to balance caution and optimism

Cautious optimism” is the mood among founders and investors in Latin America today, amidst an uncertain global scenario.

In this year’s Latin America Digital Transformation Report, the investment team at Atlantico chronicles how the region leaves in its rearview mirror a decade-long boom in tech value creation. Peaking with 2021’s record $16 billion in venture funding, a nearly four-fold increase from the year prior, Latin America broke through to the world stage. But even though we saw the total funding being halved this year, the region still counts on greater investment volumes than any year prior to 2021, fueling that “cautious optimism.”

The past five years saw the birth of Latin America’s first unicorns, marking a long-awaited inflection point in the digital transformation of a region with over 650 million people.

Now, with the dust of market turbulence still settling, local players are left wondering how best to play their hand: Ignoring calls for austerity could mean squandering the gains from these golden years, yet, not capitalizing on the region’s special post-pandemic position could leave much money on the table.

In recent months, we have seen the pandemic-fueled boom in tech adoption fade away in the U.S. and other developed markets. Market darlings of the pandemic period, ranging from Shopify to Peloton, have been forced to reduce headcount as usage levels revert to the pre-pandemic historical trend line.

The persistence of Latin America’s digital gains is perhaps most clearly seen through enduring gains in e-commerce penetration.

Distinctively, Latin America has not suffered through this hangover from digital adoption. Instead, a seemingly permanent two- to three-year gain can be observed in a wide range of indicators of tech adoption: E-commerce penetration, grocery delivery volumes, and usage of digital banking and telemedicine all have continued to grow rapidly beyond 2020’s step-function gains.

Online share of retail vs. pre-pandemic trend, US vs. Brazil.

Online share of retail vs. pre-pandemic trend, U.S. versus Brazil. Image Credits: Atlantico

Caution in an uncertain world

Uncertainty is still the order of the day in markets across the globe as tech companies and investors try to figure out how to weather the storm. After a long period of excess liquidity and low interest rates, inflation finally showed up to the party, leading Central Bankers to step on the brakes.

In Latin America, founders and investors seek to balance caution and optimism by Ram Iyer originally published on TechCrunch

What the CHIPS and Science Act means for the future of the semiconductor industry

This year is proving to be momentous for U.S. semiconductor manufacturing. During a global chip shortage and record inflation, U.S. President Biden signed into effect the CHIPS and Science Act, the greatest boon to U.S. semiconductor manufacturing in history, with $52 billion in subsidies for chip manufacturers to build fabrication plants in the U.S.

The CHIPS Act seems like a green light for domestic manufacturing. However, a presidential executive order (Improving the Nation’s Cybersecurity) published earlier in the year may be a stumbling block for semiconductor design shops eager to serve national security projects.

Rolled out several months before the CHIPS Act was signed, this executive order defines parameters that will force U.S.-based software companies to change long-established development and design processes if they want to comply with federal regulations regarding information sharing between the government and the private sector.

Let’s take a look at how these two measures relate, what they mean for semiconductor companies, and why the highs and lows of American semiconductor manufacturing boil down to one thing: Security.

With most of today’s manufacturing happening overseas, the DoD has had major challenges executing its national security-related projects.

The CHIPS Act

The CHIPS and Science Act of 2022 provides $52 billion in subsidies for chip manufacturers to build fabrication plants in the U.S. To put that into perspective, consider that currently only 12% of all semiconductor chips are made in the U.S.

This Act comes amidst a global economic downturn, with lawmakers hoping that American-made chips will solve security and supply chain issues. In short, this is something the U.S. needs to reassert its historical influence on semiconductor manufacturing.

One of the biggest considerations, and benefits, for domestic-made semiconductors is national security. Recent geopolitical instability has caused concern over potential IP leakage and theft. For the U.S. Department of Defense (DoD), it is imperative to have a secure and trusted ecosystem for the design and manufacture of semiconductors.

But with most of today’s manufacturing happening overseas, the DoD has had major challenges executing its national security-related projects.

What the CHIPS and Science Act means for the future of the semiconductor industry by Ram Iyer originally published on TechCrunch

When it comes to startup board participation, VCs and CEOs must do their jobs

Was anyone else as appalled as I am by the contents of Connie Loizos’ recent article, Coming out of COVID, investors lose their taste for board meetings? The stories and quotes in the article about investors reducing their interest and participation in board meetings, not showing up, sending the junior associate to cover, etc. are eye-opening and alarming.

The reasons cited are logical, such as overextended investors, Zoom fatigue and newbie directors. Connie’s note that “privately, VCs admit they don’t add a lot of value to boards” is pretty funny to read as a CEO who has heard a ton of investors talk about how much value they add to boards (although the good ones do add a lot of value!).

For the most part, everything about the substance of this article just made me angry.

Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone. If the world has truly become a place where the board meeting is nothing more than a distraction for CEOs and investors think it’s a tax they can’t afford, then it’s time to hit the reset button on boards and board meetings.

Here are four things that need to happen in this reset:

Investors need to do their job well or stop doing it

Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone.

The argument that investors did too many deals in the pandemic so now they don’t have any time is a particularly silly one, since the pandemic reduced the amount of time VCs needed to spend on individual board meetings as well. I used to have four in-person board meetings each year with directors who were traveling for the meetings, having dinners, spending time with the team and sitting in on committee meetings.

Today, boards are lucky to have one in-person meeting a year (more on that later). And as everything else takes less time, and there’s little transit, any given VC should have doubled the time they spend on board meetings.

Serving on a board post-investment is central to an investor’s role. They have obligations to the founders they back and to the LPs they represent, as their primary function is to “find deals, execute deals and manage the portfolio.”

If they no longer have time for the third job, they need to admit that to both founders and LPs before stepping down. If a VC can’t be bothered to focus on minding their investments and adding value, they should work with the company to find their replacement.

CEOs need to take their job as leader of the board seriously

When it comes to startup board participation, VCs and CEOs must do their jobs by Ram Iyer originally published on TechCrunch