Cymulate snaps up $70M to help cybersecurity teams stress test their networks with attack simulations

The cost of cybercrime has been growing at an alarming rate of 15% per year, projected to reach $10.5 trillion by 2025. To cope with the challenges that this poses, organizations are turning to a growing range of AI-powered tools to supplement their existing security software and the work of their security teams. Today, a startup called Cymulate — which has built a platform to help those teams automatically and continuously stress test their networks against potential attacks with simulations, and provide guidance on how to improve their systems to ward off real attacks — is announcing a significant round of growth funding after seeing strong demand for its tools.

The startup — founded in Tel Aviv, with a second base in New York — has raised $70 million, a Series D that it will be using to continue expanding globally and investing in expanding its technology (both organically and potentially through acquisitions).

Today, Cymulate’s platform covers both on-premise and cloud networks, providing breach and attack simulations for endpoints, email and web gateways and more; automated “red teaming”; and a “purple teaming” facility to create and launch different security breach scenarios for organizations that lack the resources to dedicate people to a live red team — in all, a “holistic” solution for companies looking to make sure they are getting the most out of the network security architecture that they already have in place, in the worlds of Eyal Wachsman, Cymulate’s CEO.

“We are providing our customers with a different approach for how to do cybersecurity and get insights [on]  all the products already implemented in a network,” he said in an interview. The resulting platform has found particular traction in the current market climate. Although companies continue to invest in their security architecture, security teams are also feeling the market squeeze, which is impacting IT budgets, and sometimes headcount in an industry that was already facing a shortage of expertise. (Cymulate cites figures from the U.S. National Institute of Standards and Technology that estimate a shortfall of 2.72 million security professionals in the workforce globally.)

The idea with Cymulate is that it’s built something that helps organizations get the most out of what they already have. “And at the end, we provide our customers the ability to prioritize where they need to invest, in terms of closing gaps in their environment,” Wachsman said.

The round is being led by One Peak, with Susquehanna Growth Equity (SGE), Vertex Ventures Israel, Vertex Growth and strategic backer Dell Technologies Capital also participating. (All five also backed Cymulate in its $45 million Series C last year.) Relatively speaking, this is a big round for Cymulate, doubling its total raised to $141 million, and while the startup is not disclosing its valuation, I understand from sources that it is around the $500 million mark.

Wachsman noted that the funding is coming on the heels of a big year for the startup (the irony being that the constantly escalating issue of cybersecurity and growing threat landscape spells good news for companies built to combat that). Revenues have doubled, although it’s not disclosing any numbers today, and the company is now at over 200 employees and works with some 500 paying customers across the enterprise and mid-market, including NTT, Telit, and Euronext, up from 300 customers a year ago.

Wachsman, who co-founded the company with Avihai Ben-Yossef and Eyal Gruner, said he first thought of the idea of building a platform to continuously test an organization’s threat posture in 2016, after years of working in cybersecurity consulting for other companies. He found that no matter how much effort his customers and outside consultants put into architecting security solutions annually or semi-annually, those gains were potentially lost each time a malicious hacker made an unexpected move.

“If the bad guys decided to penetrate the organization, they could, so we needed to find a different approach,” he said. He looked to AI and machine learning for the solution, a complement to everything already in the organization, to build “a machine that allows you to test your security controls and security posture, continuously and on demand, and to get the results immediately… one step before the hackers.”

Last year, Wachsman described Cymulate’s approach to me as “the largest cybersecurity consulting firm without consultants,” but in reality the company does have its own large in-house team of cybersecurity researchers, white-hat hackers who are trying to find new holes — new bugs, zero days and other vulnerabilities — to develop the intelligence that powers Cymulate’s platform.

These insights are then combined with other assets, for example the MITRE ATT&CK framework, a knowledge base of threats, tactics and techniques used by a number of other cybersecurity services, including others building continuous validation services that compete with Cymulate. (Competitors include the likes of FireEye, Palo Alto Networks, RandoriAttackIQ and many more.)

Cymulate’s work comes in the form of network maps that detail a company’s threat profile, with technical recommendations for remediation and mitigations, as well as an executive summary that can be presented to financial teams and management who might be auditing security spend. It also has built tools for running security checks when integrating any services or IT with third parties, for instance in the event of an M&A process or when working in a supply chain.

Today the company focuses on network security, which is big enough in itself but also leaves the door open for Cymulate to acquire companies in other areas like application security — or to build that for itself. “This is something on our roadmap,” said Wachsman.

If potential M&A leads to more fundraising for Cymulate, it helps that the startup is in one of the handful of categories that are going to continue to see a lot of attention from investors.

“Cybersecurity is clearly an area that we think will benefit from the current macroeconomic environment, versus maybe some of the more capital-intensive businesses like consumer internet or food delivery,” said David Klein, a managing partner at One Peak. Within that, he added, “The best companies [are those] that are mission critical for their customers… Those will continue to attract very good multiples.”

How to Raise First Dollars in a Difficult Market: The Venture Perspective

Raising venture capital is rarely an easy lift for startups, but 2022 is turning out to be a more challenging year than we’ve seen for some time. As venture capital continues its slowdown after an aggressive 2020 and record-breaking 2021, it’s clear that early-stage founders looking for their first dollars will require a new approach.

What do early-stage founders need to know to capture VC interest, and dollars, in a challenging market? It’s a vital question, and it’s why we’ve invited three investors — who we think know their stuff — to share their insight and advice on the TechCrunch+ stage at TechCrunch Disrupt on October 18-20 in San Francisco.

We’re thrilled that Annie Case, a partner at Kleiner Perkins; Jomayra Herrera, a partner at Reach Capital; and Sheel Mohnot, the co-founder and GP at Better Tomorrow Ventures, will join us for a panel discussion called How to Raise First Dollars in a Difficult Market: The Venture Perspective.

Learn more about these investors, and you’ll understand why they’re eminently qualified to tackle this topic.

Annie Case, a partner at Kleiner Perkins, focuses on investments in consumer, healthcare and marketplaces. Before joining Kleiner Perkins, Case worked at Uber, where she supported the SVP of operations and helped scale the Uber Eats business to international markets.

As a consultant at Bain and Company, Case worked with clients in technology, private equity and education. She graduated from Stanford University with a BS in human biology and an MS in management science and engineering. 

Jomayra Herrera is a partner at Reach Capital, a venture fund focused on early-stage education technology and future-of-work companies. She is currently a board director for Workwhile and a board observer for Outschool. 

Before joining Reach, Herrera served as a principal at Cowboy Ventures, where she focused on investing in consumer internet and marketplace companies. She helped lead investments in companies like Contra and Landing. 

Prior to Cowboy, Herrera was one of the first venture investors at Emerson Collective. She worked across early- to growth-stage teams and championed investments in companies including Career Karma, Guild Education and Handshake. 

Sheel Mohnot is a co-founder of Better Tomorrow Ventures, a seed-stage venture capital fund investing in fintech companies around the world. He is also the GP of the 500 Fintech fund.

Mohnot previously served as vice president of business development at Groupon after a startup he founded, FeeFighters, was acquired by the company in 2012. In 2013, Monot co-founded Innovative Auctions, a high-stakes auction company. 

TechCrunch Disrupt is back in person on October 18-20 in San Francisco. Early action equals bigger savings. Buy your pass now and save up to $1,300. Student, government and nonprofit passes are available for just $195. Prices increase July 29.

Mavrck raises $135M, buys maker Later in creator and influencer marketing consolidation

Some believe that online marketing and advertising, as we largely think of them today, are dying a slow death and is getting replaced by something else: the rise of the influencer/creator. Today, one of the companies hoping to make a killing on that shift is announcing some funding and an M&A move to cement its place in that new economy.

Mavrck, which operates a platform for brands and media companies to source and engage with influencers for marketing campaigns, has raised another $135 million, and with that it’s scooping up Later, a startup that first made its name with a social media scheduling tool for Instagram (its original name was Latergramme), but has since diversified into other social platforms like Pinterest, TikTok and LinkedIn, a service, and analytics for the creator to track engagement and other metrics.

The service alone is an interesting asset to pick up: Linktree, a big competitor in that space, just last month raised $110 million at a $1.3 billion valuation.

Canadian startup Later hadn’t raised much money (less than $2 million, per Crunchbase) but it was already a influence in the influencer world: it’s been around since 2014, and the service (launched in 2016) has seen 2 billion+ pageviews, with nearly 7 million creators and small business using Later’s wider product suite for social content scheduling and analytics. Mavrck for its part says that it works with some 5,000 marketers across 500 consumer brands to connect with some 3 million creators, paying out over $200 million to date.

Mavrck and Later will operate independently for now but there will also be more integration: for a start, the click/engagement analytics will now appear in the Mavrck dashboard.

This latest equity investment is coming from a single investor, Summit Partners, which also was the sole investor when Mavrck raised $120 million only four months ago, in December last year. That, and Linktree’s valuation, both speak to how heated the so-called creator economy is right now, although Mavrck isn’t adding more fuel to that fire by disclosing its own valuation today.

Like it or not (and despite the viral buzz that sometimes feels inescapable, many do not) the creator economy is a fascinating force in the world of marketing, social media, and to be honest the consumer internet overall. Social media platforms, both those that are mainstream but also a lot focusing on particular interests or demographics, collectively have billions of users now (over 4.2 billion), and some argue they are the engine of the consumer internet today.

But what drives those social platforms? Sometimes it’s engaging with friends, but increasingly it’s getting a look into lives of people who you don’t really know at all, who create content that’s entertaining or thought-provoking, or annoying but engaging anyway. They become the glue for how people use services like Instagram. Your friends might not post all the time, or be that interesting, but you can always count on following some key and reliable creators to keep the timeline humming, and when you don’t have that worked out already, Instagram (or another platform) is ready and willing to suggest content and people to follow.

That in turn becomes prime real estate for marketing and advertising — not least at a time when more standard advertising and marketing formats are under the gun over how data is tracked used across the internet. People have gotten less happy about all that tracking, and regulators have followed; opting out of it all is possible in many (not all) places but that then means the format is less valuable for the ad buyers and publishers. Strategic placement of products or services with influencers, however, circumvents all that.

It is for this reason that Mavrck and companies like it believe that while some adtech and martech plays will look to incorporate more tools on their platforms, to help media buyers engage with that enconomy as part of their bigger spend, it’s likely to be a big enough opportunity financially — and operationally and culturally — to remain a salient enterprise.

“The creator economy is growing fast enough that it will be a standalone solution,” CEO and co-founder Lyle Stevens said in an interview. He noted that the overall space has grown more than 40% in the last year and that while there are some 50 million creators out in the world today, they project around 1 billion people will identify as creators by 2030. “The majority of the middle class will be creators and they will be the focal point,” he added. “For brands, [connecting with them] won’t be a nice to have but a necessity to stay relevant.” Brand spend on average has gone up by 114% since 2020, he noted, another proof point of the growth.

That will also inevitably spill out beyond social, too, which may well also find itself over time potentially also falling out of vogue. (Hard to believe but you never know.) Stevens sees currents in VR, for example, “will change the landscape dramatically.” We’ve also seen multiple startups targeting creators with the ability to build gaming experiences as another area where creators may extend their own brands and influence.

“We’ve built a phenomenal platform designed to help small businesses and entrepreneurs to manage their digital marketing, commerce, and customer relationships all in one place. Our notable scale is a result of the commitment we’ve placed on our role within that ecosystem,” said Roger Patterson, co-founder and CEO of Later, in a statement. “Later’s leading technology paired with Mavrck’s enterprise social proof platform will expand on that value even further. Together we’ll nurture a symbiotic relationship between creators and brands, helping both to drive meaningful results to grow their businesses.”

“Together, we believe Later and Mavrck can empower both sides of this ecosystem – content creators and the brands that seek to harness their influence – with solutions and at a scale not yet seen in the creator economy,” added Michael Medici, MD at Summit Partners. “We look forward to working with Lyle, Roger and the entire team in their mission to solve a significant industry pain point for creators and marketers – and ultimately drive better business outcomes for both.”

Tiger Global is earning its stripes in Africa

You can count on one hand the number of funds bigger than Tiger Global. But in terms of influence, speed and number of investments made since 2021, Tiger has led the pack alongside Sequoia.

Last year, the New York-based firm, known for its famous bets on Stripe,, Meituan and Roblox, raised $6.7 billion for its Private Investment Partners 14 fund. From that fund, Tiger Global made more private investments than any other firm last year — about 340 as of late December — roughly one investment per day, according to CB Insights.

Of this lot, five were African startups: payments unicorn Flutterwave, credit-led neobank FairMoney, open finance startup Mono, card-issuing API Union54 and SMB credit provider Float; Float’s round was announced in January but closed in late 2021.

Its lead investment in Flutterwave, which valued the fintech at $1 billion in March 2021, was a return from a long hiatus in investing in Africa.

In the aughts, Tiger Global participated in just 30 deals, according to The Generalist, a newsletter on topics around tech and crypto.

But in the next decade, Tiger Global increased its pace and deployed checks across 450 deals globally. However, Tiger Global limited its activity in Africa from 2009 to 2014. Its portfolio startups from this period include Nigerian companies — Jobberman, a job listing site; Wakanow, a travel booking platform; car marketplace Cheki; IROKOtv, a video-on-demand platform for Nollywood content — and South African e-commerce platform Takealot.

Tiger Global’s earliest portfolio investments on the continent were in consumer internet companies. “Back then, a lot of people were not on the internet, so it was really about consumer services to get people on the internet,” said Opeyemi Awoyemi, whose company, Jobberman, received $1 million from Tiger Global.

This crop of consumer internet startups targeted industries across media and services such as jobs, commerce and travel. And the bets from Tiger Global — and other investors such as Goldman Sachs, which backed Jumia in 2014, and Kinnevik AB, a Swedish firm that invested in IROKO and Konga — was that they would become big winners in the next 10 years.

But if the African tech scene has taught onlookers and participants anything, running consumer internet businesses in Africa is a bit of a nightmare — and a constant juggling act.

The likes of Jobberman and Takealot would’ve thought of themselves as winners following acquisitions by Ringier One Africa Media (ROAM) and Naspers, respectively. But it might not have felt the same to Tiger Global. The firm would’ve probably wanted its portfolio companies to dominate their respective markets over the next decade before becoming billion-dollar investments, like their contemporaries in China and India.

Wakanow underwent financial struggles and was in a midlife crisis before new leadership came to turn the tides. Cheki sold its businesses in Nigeria, Ghana, Kenya and Uganda to Autochek after slowing sales.

IROKO has had its fair share of success; however, halting its African business in 2020 to focus on its diasporan market showed worrying signs. The media company has also been on an ongoing quest to list on the London Stock Exchange at a $100 million valuation since 2019, after raising almost $40 million from investors.

While everyone might point fingers at Africa’s harsh market, Tiger Global was partly to blame because the firm didn’t make extensive follow-on checks in any of its portfolio companies after leading Takealot’s $100 million Series C in 2014, despite doing so in other markets.

It’s unclear why Tiger Global, which also led an $8 million Series D in IROKO the previous year, refrained from investing in new and existing African companies since then. Maybe it thought doing so would be unprofitable in the long run, judging by its five-year stint on the continent? Or it didn’t believe these companies could make Flipkart- and returns based on their performances and attractiveness to investors.

Fintech brings the Tiger back

Naspers’ acquisition of Takealot for a little over $200 million across two transactions in 2017 guaranteed almost a 2x return for Tiger Global. But the deal, coupled with an increase in VC investments across Africa in subsequent years, wasn’t enough for the hedge fund to revisit the region. Until Flutterwave.

There was some build-up to this moment. A restructuring occurred in 2019 after Lee Fixel, a partner who led Tiger Global’s bull run in India, left the firm. According to The Generalist, “Fixel’s departure in 2019 seems to have coincided with a shift in approach. Rather than striking covertly and selectively, Tiger began papering a vast swath of the market.”

Tiger Global also had a solid 2020. Many of its portfolio companies, such as Stripe and Roblox, received sky-high valuations. Some went public, like Snowflake and Root Insurance, and others, such as Postmates and Credit Karma, got acquired.

These events gave the New York-headquartered firm a boost to raise its second-largest fund, at $6.7 billion, going into 2021, and it started the year with a bang, leading many mega-rounds, especially in fintechs.

Investor interest in fintech reached its peak in 2021. Of the over 430 fintech unicorns globally, 40% were created last year. Flutterwave, being at the forefront of fintech innovation in Africa, was the perfect opportunity Tiger Global — a major fintech investor in emerging markets which has backed Nubank, Cred and Groww — needed to announce its return and, in the process, mint its first unicorn on the continent.

Since then, every disclosed investment has been lead investments in fintechs: FairMoney, Mono, Union54, Float and Robinhood-esque platforms Bamboo and Thndr.

“Fintech in Africa and globally has experienced a phenomenal wave of growth in the last couple of years, so [it] makes sense [for Tiger] to focus more on it,” said Awoyemi on why Tiger Global’s new checks have gone solely into fintechs so far.

It’s not illogical for Tiger Global to choose this route. Unlike its earlier stint in Africa, where consumer startups, especially e-commerce players, were heavy favorites in receiving VC money, fintechs now command the lion’s share of investments. The firm also seems to be playing it safe, relying on local investors to de-risk investments before going in, as most of its fintech investments are from Series A and up.

“They learned their lessons and now have a different strategy. IROKO and others were a tiny play. Now, Tiger is not in it to grow Africa or anything; they are in it to be a better fund than other funds. They see a signal and follow it,” said Victor Asemota, a well-known tech figure and investor in Africa.

“VCs were already over-invested in fintech and had de-risked most things there. One good African fintech IPO will return their investment. That is why they saw an opportunity in the likes of Flutterwave, and they came in at the best time.”

However, leading seed deals in Float and Union54 and participating in Jambo’s, a Congo-based crypto startup, shows Tiger Global is willing to go lower and pick winners early.

The firm recently raised $11 billion for its latest venture capital fund. Suppose Tiger Global’s newfound interest in Africa is sustained and it continues investing at a fast pace like 2021, we should expect the fund to make more early- and growth-stage investments across fintech and other sectors following a market selloff affecting later-stage companies globally.

“If VCs de-risk other areas, Tiger will double down, too. They are the nightmare of VCs,” said Asemota.

Awoyemi shares a similar sentiment. In addition, he sees Tiger Global backing startups with fintech plays in adjacent industries.

Its latest investment in Wasoko (formerly Sokowatch) is one such example as B2B retail e-commerce players embed financial services such as credit in the offerings they provide to merchants. The sector is also subject to major investor interest, second only to fintech right now.

“Looking at Tiger’s Africa fintech portfolio, it’s clear they are focusing on resilient and infrastructural models as much as possible,” said Awoyemi, who is now the co-founder of Moneymie, a digital bank for immigrants.

“I predict Tiger will be backing other models soon as Africa approaches its India moment where an increase in smartphone adoption meets lowering costs in accessing the internet. This will cause an explosion of consumer models with or without fintech flavors and it will start to make sense for Tiger to get into that game.”

Some sources have told TechCrunch that the firm is in advanced stages to back new startups within and outside the fintech sector. Tiger Global is also doubling down on a few of its fintech investments — leading some and participating in others just as it did in Flutterwave’s recent $3 billion round.

Meanwhile, Tiger Global’s fast decision-making has largely remained intact despite changing strategy for its second stint on the continent. Awoyemi noted how the firm, in 2009, committed to investing in Jobberman on the spot, with cash coming in a month later. Jesse Ghansah, CEO of Float, also said the firm had a clear conviction when both parties met, with the deal closing within a week.

“Tiger chooses winners; they already do their due diligence before they talk to you,” said Awoyemi. “The chat with you is just to check what they already know about you.”

a16z, Avenir and Google back South African mobile games publisher Carry1st in $20M round

Carry1st, a South African publisher of social games and interactive content across Africa, has raised a $20 million Series A extension led by Andreessen Horowitz (a16z). This is a16z’s first investment in an Africa-headquartered company (the firm has previously invested in Branch and Zipline, companies with some of its operations in Africa but headquartered in the U.S).

Carry1st also received investments from Avenir and Google; it’s the latter’s second check from its Africa Investment Fund.

A couple of prominent individual investors, including Nas and the founders of Chipper Cash, Sky Mavis and Yield Guild Games, took part.

The round — which is an extension of the Series A Carry1st raised last May from Riot Games, Konvoy Ventures, Raine Ventures and TTV Capital — also saw the same investors double down on their investments in the company. 

Andreessen Horowitz general partners David Haber and Jonathan Lai will join Carry1st’s board as observers. 

Cordel Robbin-Coker, Lucy Hoffman and Tinotenda Mundangepfupfu founded Carry1st in 2018. The South Africa-based company, which currently has a team of 37 people across 18 countries, wants to use this additional capital to scale interactive content across Africa.

The company started as a game studio where it conceptualized, developed (from system designs to artwork and engineering), and launched mobile games. Over time, it switched to a hybrid model, adopting a publishing role and handling distribution, marketing and operations.

Carry1st co-founder and chief executive Robbin-Coker told TechCrunch that Carry1st has mainly focused on its publishing arm since it went hybrid.

The three-year-old company has signed publishing deals for seven games from six studios globally, including Tilting Point, publisher of Nickelodeon’s SpongeBob: Krusty Cook-Off, which Carry1st recently launched in Africa. Others include CrazyLabs and Sweden’s Raketspel, a studio with over 120 million downloads across its portfolio.

Carry1st said it provides a full-stack publishing solution, handling user acquisition, live operations, community management and monetization for its partners.

“We have a full-suite service that starts with distribution and partnerships. We help them create bespoke marketing materials from short-form advertising videos to statics, and we customize their content to resonate with individuals in different countries,” said Robbin-Coker.

“And then we operate the game and we also monetize. So we’ve built out our monetization engine to allow users to be able to pay for content that they want more easily across Africa.”

It also enhances monetization in the region through its embedded payments solutions, where customers can pay via a range of local payment options, including bank transfers, crypto and mobile money.

L-R: Tinotenda Mundangepfupfu, Lucy Hoffman and Cordel Robbin-Coker

Shortly after closing its Series A round, Carry1st launched its online marketplace for virtual goods. On this marketplace, called Carry1st Shop, users of a Carry1st game can purchase virtual goods such as airtime, mobile data, entertainment vouchers, grocery store vouchers and gaming currency.

Games revenue has increased 90% month-on-month since the second half of last year, the company said. It’s not unexpected considering the astonishing growth of games in terms of quantity and revenue (gaming apps accounted for nearly 70% of all App Store revenue last year) on both Apple and Google stores since the pandemic.

The company’s online marketplace is noticing even faster growth, said Robbin-Coker, especially among users in South Africa and Nigeria.

Carry1st will use this funding to expand its content portfolio, grow its product and engineering teams, and obtain “tens of millions” of new users on the back of this revenue growth in its games and marketplace products.

In a statement, the company said it intends to acquire more users by expanding into game co-development with studios. It is also eyeing the possibility of developing infrastructure to support play-to-earn gaming in Africa, thus venturing into web3.

Cryptocurrency tokens such as SLP, AXS and MANA are used in play-to-earn games. They can be withdrawn to a crypto wallet and traded for another cryptocurrency like bitcoin or ultimately sold for fiat cash to be used in the real world. Carry1st wants to create on- and off-ramps (platforms that convert fiat into crypto and back) and accept crypto at point-of-sale in its marketplace.

“When we think about Carry1st, we want to be the leading consumer internet company in the region. And we think that the best kind of wedge would be able to do that is a combination of gaming and micropayments and online commerce,” the CEO said.

“These industries are being pretty significantly disrupted or augmented with web3 and crypto. And as more gaming content starts to integrate with NFTs and cryptocurrencies, we think there’s a really big opportunity to partner with those studios the same way we partner with free-to-play studios.”

Africa is the next major growth market for gaming globally. The rapid tech adoption from its 1.1 billion millennials and GenZs is a significant driver for this. Carry1st released a report last year with Newzoo showing that the number of games in sub-Saharan Africa will increase by 275% in the next decade. Gaming revenues are projected to see a 728% increase in the same period.

These stats present a much bigger addressable market than what Carry1st envisioned when it launched four years ago. And with the company’s converging at the intersection of gaming, fintech and web3, there is a broader set of opportunities (which we can see in other emerging markets) to go after in Africa. It’s one factor that piqued a16z’s interest in the company.

“We are delighted to be making our first investment in an Africa-headquartered company in Carry1st, a next-generation mobile games and fintech platform,” Haber said in a statement. “We see immense opportunity for the company to mirror outstanding successes we’ve seen in markets like India, China, and Southeast Asia. We couldn’t be more thrilled to partner with founders Cordel, Lucy, Tino, and the Carry1st team on their mission to build the Garena of Africa.”

Carry1st was seemingly intentional about the investors it brought into this round, especially as it looks to move deep in gaming, web3 and fintech across Africa.

As one of the largest crypto-centric funds, at over $3 billion, a16z brings unmatched expertise in gaming and web3. Google, via its products and phones, will help Carry1st deepen penetration and engagement in Africa. At the same time, Avenir continues to make a big push in African fintech following its big-sized check in Flutterwave.

As for the individual investors, Nas has been fairly prolific with his crypto investments, and Axie Infinity founders own the world’s biggest web3 gaming company.

“It’s a heavyweight group. We’re excited, and we think that their combination will be beneficial for us. Hopefully, it’s a sign that we’re on the right track and this helps drive strategic partnerships for us in the future,” said Robbin-Coker.

VCs are racing to pay more to get smaller pieces of less profitable companies

It’s data season, with groups like Silicon Valley Bank (SVB), CB Insights, PitchBook and Crunchbase News putting out data sets that we’re having fun exploring. This morning, we’re adding one more to our arsenal.

The Exchange spent some time this week diving into the SVB “State of the Market” report for the fourth quarter. As is common from the bank’s publications, it’s a dense riff of charts and notes, ranging from economic data and trade figures to venture capital statistics.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

While perusing the collected information, we found an interesting pattern: Venture capital investors are racing to pay more to buy smaller pieces of startups that are less profitable than before.

While that may sound somewhat rude, it isn’t. Instead, the capital crush that we’ve seen overtake startups around the world, the round preemption that has become common, the rising valuation marks that have become the entry price to hot startups’ cap tables and investments into growth have all come together to create a venture capital market unlike any that I can recall.

SVB gave The Exchange permission to share a few charts, so what follows is a graphical dig into the data, proving that I am not a brat for claiming that venture investors are getting a rawer deal than usual but merely sharing what the data indicates.

Less for more

First, let’s examine how the time between funding rounds has fallen. SVB data shows a useful 2020 versus 2021 differential, with an aggregate chart tracking the same data over a longer time period on the right:

Image Credits: SVB

As you can see in both charts, venture capitalists are accelerating the pace at which they make successive investments into startups. This is what we meant by faster.

Riot Games and Konvoy Ventures back games publisher Carry1st in $6M Series A

Africa is the last frontier for basically anything. Mobile gaming is no exception. For a continent that is home to more than 1 billion millennials and Gen Zers, mobile gaming has never really picked up, despite the continent witnessing rapid economic growth and smartphone adoption.

Two issues have proved detrimental to this growth: distribution and payments. With fragmented and unresolved distribution and digital payments ecosystems, game studios have found it difficult to serve African consumers and make a ton of money doing so. Carry1st is a mobile games publishing platform fixing this problem, and today it is announcing the close of its $6 million Series A round.

This month last year, we reported that the company had just raised a $2.5 million seed investment. CRE Ventures led that round, but this time, the company, which has offices in Cape Town and New York, brought in a blue-chip group of investors spanning gaming, media and fintech.

U.S. VC firm Konvoy Ventures led the Series A round. The firm is known for its investment in the video gaming industry’s infrastructure, technology, tools and platforms. Riot Games (developer of League of Legends), Tokyo’s Akatsuki Entertainment Technology Fund (the company behind Dragon Ball Z), Raine Ventures and fintech VC TTV Capital participated.

Carry1st was founded by Cordel Robbin-Coker, Lucy Hoffman and Tinotenda Mundangefupfu in 2018. The company started as a game studio, developing and launching its own mobile games. But a projection on what it could be in the long run made the company switch tactics.

Instead of the studio model (quite popular among gaming companies in Africa), Carry1st sought to become a regional publisher, thereby opening the continent to international studios. Also, the company helps local studios that find it difficult to create games with a global appeal by pairing them with strong operators.

“We learned that African users don’t need their own games; they want to play the best games in the world,” CEO Robbin-Coker told TechCrunch.

COO Hoffman said that the company provides a full-stack publishing platform for its partners. It also handles localization, distribution, user acquisition, monetization, customer experience for studios and licenses their games on exclusive, long-term contracts.

“We fund user acquisition so that the games are played by as many users as possible, and then send our partners a royalty in return for the ability to leverage their IP,” Hoffman said.  


L-R: Cordel Robbin-Coker (CEO), Lucy Hoffman (COO) and Tinotenda Mundangefupfu (CTO)

This is somewhat akin to how Tencent-backed Sea Limited (parent company of Garena) took off. The company was the publisher of League of Legends across Southeast Asia but launched its own game, Free Fire. Now, the company has built out the largest consumer payments and e-commerce platform in the region, which is now worth over $130 billion. Carry1st aspires to do the same for Africa.

Although there aren’t many details about its e-commerce activity, Carry1st is tackling payments and difficult monetization issues by partnering with some fintechs like Paystack, Safaricom, and Cellulant. These partnerships have been pivotal to developing its in-house payments platform Pay1st, which allows customers to pay in their preferred way. “For global studios, this is the difference between making money and not,” Robbin-Coker added

Demand for Carry1st has grown rapidly. Since its seed round last year, the company has signed seven games with well-known mobile gaming studios. They include Sweden’s Raketspel (the company has more than 120 million downloads across its portfolio), Cosi Games and Ethiopia’s Qene Games.

All these signups happened in 2020 and the catalyst for this growth has pandemic-induced lockdowns written all over it. The African mobile gaming market has always pointed toward a strong growth market, but being forced indoors surely skyrocketed mobile usage and gaming.

People who might not have previously needed a mobile phone have now come to rely on them to keep in touch with family and friends. For the average user using a smartphone for the first time, there’s a natural tendency to explore the fun things available on their device.

Typically, the first things people do when they get their first smartphone is to chat with friends and play games. This is the same all over the world — Africa is no different. For that reason, we are seeing more and more mobile gamers across Africa,” remarked Robbin-Coker.

The company has also grown its team from 18 to 26 across 11 countries with recruits from Carlyle, King, Jumia, Rovio, Socialpoint, Ubisoft and Wargaming — a testament to the company’s global ambitions to be a top gaming publisher. 

Expanding the team, which cuts across product, engineering and growth departments, is one way Carry1st will put the new investment to use. The company also plans to secure new partnerships with global gaming studios while launching and scaling its existing games like Carry1st Trivia and All-Star Soccer.


User playing a Carry1st game

With this investment, Carry1st has raised a total of $9.5 million. On the caliber of investors brought on, Robbin-Coker said their investment in the company would put them in a place to “delight millions of users across Africa and the globe.”

Carry1st is Konvoy Ventures first foray into the African gaming market (same can be said for Riot Games), and representatives from both teams (Konvoy managing partner Jackson Vaughan and Riot Games head of corporate development Brendan Mulligan) believe the company is unequivocally solving the continent’s distribution and gaming experience problems. Vaughan will also join the company’s board.

Africa’s gaming industry has lacked innovation in times past. While we’ve seen companies try to change the narrative, most have operated as studios. Carry1st is one of the few companies to operate a hybrid model, but the endgame for the company really is to be one of the region’s dominant consumer internet companies. 

We think social games and payments is the best first step to doing so, but we have very large ambitions. If we execute this, we will catalyze massive growth in the digital ecosystem across the region, creating tons of high-quality jobs in the process. We think all of the ingredients are in place — we want to be the catalyst,” Hoffman said. 

Ex-General Catalyst and General Atlantic VC announces $68M debut fund

As of 2019, the majority of venture firms — 65% — still did not have a single female partner or GP at their firm, according to All Raise.

So naturally, anytime we hear of a new female-led fund, our ears perk up.

Today, New York-based Avid Ventures announced the launch of its $68 million debut venture capital fund. Addie Lerner — who was previously an investor with General Catalyst, General Atlantic and Goldman Sachs — founded Avid in 2020 with the goal of taking a hands-on approach to working with founders of early-stage startups in the United States, Europe and Israel.

“We believe investing in a founder’s company is a privilege to be earned,” she said.

Tali Vogelstein — a former investor at Bessemer Venture Partners — joined the firm as a founding investor soon after its launch and the pair were able to raise the capital in 10 months’ time during the 2020 pandemic.

The newly formed firm has an impressive list of LPs backing its debut effort. Schusterman Family Investments and the George Kaiser Family Foundation are its anchor LPs. Institutional investors include Foundry Group, General Catalyst, 14W, Slow Ventures and LocalGlobe/Latitude through its Basecamp initiative that backs emerging managers. 

Avid also has the support of 50 founders, entrepreneurs and investors as LPs — 40% of whom are female — including Mirror founder Brynn Putnam; Getty Images co-founder Jonathan Klein; founding partner of Acrew Capital Theresia Gouw and others.

Avid invests at the Series A and B stages, and so far has invested in Alloy, Nova Credit, Rapyd, Staircase, Nava and The Wing. Three of those companies have female founders — something Lerner said happened “quite naturally.”

“Diversity can happen and should happen more organically as opposed to quotas or mandates,” she added.

In making those deals, Avid partnered with top-tier firms such as Kleiner Perkins, Canapi Ventures, Zigg Capital and Thrive Capital. In general, Avid intentionally does not lead its first investments in startups, with its first checks typically being in the $500,000 to $1 million range. It preserves most of its capital for follow-on investments.

“We like to position ourselves to earn the right to write a bigger check in a future round,” Lerner told TechCrunch. 

In the case of Rapyd, Avid organized an SPV (special-purpose vehicle) to invest in the unicorn’s recent Series D. Lerner had previously backed the company’s Series B round while at General Catalyst and remains a board observer.

Prior to founding Avid, Lerner had helped deploy more than $450 million across 18 investments in software, fintech (Rapyd & Monzo) and consumer internet companies spanning North America, Europe and Israel. 

When it comes to sectors, Avid is particularly focused on backing early-stage fintech, consumer internet and software companies. The firm intends to invest in about 20 startups over a three-to-four year period.

“We want to take our time, so we can be as hands-on as we want to be,” Lerner said. “We’re not looking to back 80 companies. Our goal is to drive outstanding returns for our LPs.”

The firm views itself as an extension of its portfolio companies’ teams, serving as their “Outsourced Strategic CFO.” Lerner and Vogelstein also aim to provide the companies they work with strategic growth modeling, unit economics analysis, talent recruiting, customer introductions and business development support.

“We strive to build deep relationships early on and to prove our value well ahead of a prospective investment,” Lerner said. Avid takes its team’s prior data-driven experience to employ “a metrics-driven approach” so that a startup can “deeply understand” their unit economics. It also “gets in the trenches” alongside founders to help grow a company.

Ed Zimmerman, chair of Lowenstein Sandler LLP’s tech group in New York and adjunct professor of VC at Columbia Business School, is an Avid investor.

He told TechCrunch that because of his role in the venture community, he is often counsel to a company or fund and will run into former students in deals. Feedback from numerous people in his network point to Lerner being “extraordinarily thoughtful about deals,” with one entrepreneur describing her as “one of the smartest people she has met in a decade-plus in venture.”

“I’ve seen it myself in deals and then I’ve seen founders turn down very well branded funds to work with Addie,” Zimmerman added, noting they are impressed both by her intellect and integrity. “…Addie will find and win and be invited into great deals because she makes an indelible impression on the people who’ve worked with her and the data is remarkably consistent.”

End-to-end operators are the next generation of consumer business

At Battery, a central part of our consumer investing practice involves tracking the evolution of where and how consumers find and purchase goods and services. From our annual Battery Marketplace Index, we’ve seen seismic shifts in how consumer purchasing behavior has changed over the years, starting with the move to the web and, more recently, to mobile and on-demand via smartphones.

The evolution looks like this in a nutshell: In the early days, listing sites like Craigslist, Angie’s List* and Yelp effectively put the Yellow Pages online — you could find a new restaurant or plumber on the web, but the process of contacting them was largely still offline. As consumers grew more comfortable with the web, marketplaces like eBay, Etsy, Expedia and Wayfair* emerged, enabling historically offline transactions to occur online.

More recently, and spurred in large part by mobile, on-demand use cases, managed marketplaces like Uber, DoorDash, Instacart and StockX* have taken online consumer purchasing a step further. They play a greater role in the operations of the marketplace, from automatically matching demand with supply, to verifying the supply side for quality, to dynamic pricing.

The key purpose of being end-to-end is to deliver an even better value proposition to consumers relative to incumbent alternatives.

Each stage of this evolution unlocked billions of dollars in value, and many of the names listed above remain the largest consumer internet companies today.

At their core, these companies are facilitators, matching consumer demand with existing supply of a product or service. While there is no doubt these companies play a hugely valuable role in our lives, we increasingly believe that simply facilitating a transaction or service isn’t enough. Particularly in industries where supply is scarce, or in old-guard industries where innovation in the underlying product or service is slow, a digitized marketplace — even when managed — can produce underwhelming experiences for consumers.

In these instances, starting from the ground up is what is really required to deliver an optimal consumer experience. Back in 2014, Chris Dixon wrote a bit about this phenomenon in his post on “Full stack startups.” Fast forward several years, and more startups than ever are “full stack” or as we call it, “end-to-end operators.”

These businesses are fundamentally reimagining their product experience by owning the entire value chain, from end to end, thereby creating a step-functionally better experience for consumers. Owning more in the stack of operations gives these companies better control over quality, customer service, delivery, pricing and more — which gives consumers a better, faster and cheaper experience.

It’s worth noting that these end-to-end models typically require more capital to reach scale, as greater upfront investment is necessary to get them off the ground than other, more narrowly focused marketplacesBut in our experience, the additional capital required is often outweighed by the value captured from owning the entire experience.

End-to-end operators span many verticals

Many of these businesses have reached meaningful scale across industries:

All of these companies have recognized they can deliver more value to consumers by “owning” every aspect of the underlying product or service — from the bike to the workout content in Peloton’s case, or the bank account to the credit card in Chime’s case. They have reinvented and reimagined the entire consumer experience, from end to end.

What does success for end-to-end operator businesses look like?

As investors, we’ve had the privilege of meeting with many of these next-generation end-to-end operators over the years and found that those with the greatest success tend to exhibit the five key elements below:

1. Going after very large markets

The end-to-end approach makes the most sense when disrupting very large markets. In the graphic above, notice that most of these companies play in the largest, but notoriously archaic industries like banking, insurance, real estate, healthcare, etc. Incumbents in these industries are very large and entrenched, but they are legacy players, making them slow to adopt new technology. For the most part, they have failed to meet the needs of our digital-native, mobile-savvy generation and their experiences lag behind consumer expectations of today (evidenced by low, or sometimes even negative, NPS scores). Rebuilding the experience from the ground up is sometimes the only way to satisfy today’s consumers in these massive markets.

2. Step-functionally better consumer experience versus the status quo

CRV’s Saar Gur wants to invest in a new wave of games built for VR, Twitch and Zoom

Saar Gur is adept at identifying the next big consumer trends earlier than most: The San Francisco-based general partner at CRV has led investments into leading consumer internet companies like Niantic, DoorDash, Bird, Dropbox, Patreon, Kapwing and ClassPass.

His own experience stuck at home during the COVID-19 pandemic spurred his interest in three new investment themes focused on the next generation of games: those built for VR, those built on top of Twitch and those built for video chat environments as a socializing tool.

TechCrunch: We’ve been in a “VR winter,” as it’s been called in the industry, following the 2014-2017 wave of VC funding into VR drying up as the market failed to gain massive consumer adoption. You think VR could soon be hot again. Why?

Saar Gur: If you track revenues of third-party games on Oculus, the numbers are getting interesting. And we think the Quest is not quite the Xbox moment for Facebook, but the device and market response to the Quest have been great. So we are more engaged in looking at VR gaming startups than ever before.

What do you mean by “the Xbox moment,” and what will that look like for VR? Facebook hasn’t been able to keep up with demand for Oculus Quest headsets, and most VR headsets seem to have sold out during this pandemic as people seek entertainment at home. This seems like progress. When will we cross the threshold?