Coinbase launches subscription service with focus on European expansion

Coinbase, the world’s second-largest crypto exchange, is launching its subscription service, Coinbase One, in 35 countries in a bid to retain users and grow its recurring revenue streams as the crypto economy struggles through a bearish market.

Coinbase One was originally introduced in fall 2021 in beta, and will be available publicly today onwards in the U.S., United Kingdom, Germany and Ireland, the company exclusively told TechCrunch+. The company will roll the service out in 31 other European countries in the coming months.

The subscription service offers a host of features, including no trading charges, higher staking rewards, 24/7 customer support, and pre-filed tax return documents, according to Phil McDonnell, senior director of product management at Coinbase.

In the past, a lot of Coinbase’s revenue came from trading fees, especially during the bull market, but as the crypto winter drags on, the company is looking to other areas to drive growth and diversify its revenue streams.

“Maybe 18 months ago, it was very transactional,” McDonnell said. “People come in, trade, pay a fee, and that was the relationship. Through the bull market 18 months to two years ago, there was tons of growth, but we wanted customers to stay […] That was the inspiration. How do we build a longer, deeper relationship with our customers and make it a win-win?”

That strategy seems to be working, at least for now. Coinbase’s subscription and services revenue rose a whopping 138% to $361.7 million in the first quarter of 2023, from $152 million a year earlier. Overall, subscription and services revenues grew over 17x to $793 million in 2022 from less than $50 million in 2020, per the company’s Q4 2022 shareholder letter.

“We are making a trade-off with zero-fee trading to set it up so customers win, and we think we’ll win in the long term,” McDonnell said.

European focus and future plans

Coinbase is specifically focusing on expanding its presence in Europe, McDonnell said.

Coinbase launches subscription service with focus on European expansion by Jacquelyn Melinek originally published on TechCrunch

Europe could be on the cusp of a golden era in robotics. Here’s why

The United States and China have long been ahead of the pack when it comes to robotics funding. However, data from 2022 is showing that these innovation hubs may have some serious competition as the investment landscape in Europe is starting to outstrip robotics’ biggest players.

The quest for technological supremacy has often been seen as a two-horse race between the U.S. and China. Over the years, we’ve only seen this investment tug-of-war intensify as both economies have vied for dominion to become an innovation superpower. Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.

In 2022, nearly $8.5 billion in funding flowed into robotics companies worldwide — a staggering 42% less than the year prior – in line with the overall global downturn in VC investment. Yet despite the change in economic situation, with total USD investment volume into robotics falling by over 50% for both the U.S. and China between 2021 and 2022, Europe has seen a far more modest decline, only dropping 5% in the same period. Although it’s still early, we’re convinced it’s just the beginning of how Europe is finally beginning to find its place within the modern robotics ecosystem.

Europe emerges as a serious contender with a strong rate of growth

Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.

When we compare Europe’s rate of growth in investment volume within robotics to the U.S. and Chinese markets, we observe a few key trends driving the continent’s recent power play in the robotics market.

With a CAGR of 28% in the period from 2018 to 2022, Europe is already surging ahead compared to global growth figures at 2%. This growth is primarily being led by Germany, which has seen a 77% growth spurt of investment volumes into the robotic space.

Close neighbor France has seen a 54% increase in robotic investment amounts. Meanwhile, robotics powerhouses China and the U.S. have experienced a decline in growth, with robotics investment falling 5% and 2% respectively since 2018.

China and the U.S. experience a 60% slow-down in growth/late-stage funding

To better understand these market shifts, we need to take a deep dive into the funding landscape and explore the state of play by funding rounds.

Slicing our data into grants, early-stage (pre-seed to Series A) and growth/late stage (Series B and onwards), we observed a major slow-down across U.S. and China robotics funding across growth and late-stage investment rounds.

Both the U.S. and China saw a decline of growth/late-stage robotic investment volume by 60% compared to 2021. Meanwhile, looking at the European market, the total investment volume for growth and late-stage deals was only slightly less than those of 2021.

Surprisingly, China has seen an 4% uptick in early-stage investments, whilst Europe and U.S. followed a similar downward trend – a potential sign for new ventures brewing. The trends in the growth/late -stage funding environments, accounting for the lion’s share in terms of investment volume, helps understand the relative stability in Europe.

Comparison in investment volume between 2021 and 2022 across geographies.

Comparison in investment volume between 2021 and 2022 across geographies. Image: Picus Capital with data from Crunchbase

Under the surface, 2022 saw more European robotic firms consistently raise capital — 20 growth/late-stage rounds — and fewer outliers driving investment volume. By comparison, European robotics investments in 2021 were more prominently driven by outliers across 13 growth/late-stage rounds with an average round size of $108M USD. Meanwhile, the U.S. and China have seen a decline across a number of deals and mean & median investment amounts.

Growth/late-stage funding is complex. Nevertheless, we think that one dynamic influencing the change in investment volume discrepancy between U.S., China, and Europe is the shift in priorities for growth and late-stage funds – from growth to profitability. The continued funding into European robotic companies at these stages indicate that these companies are able to meet growth stage criteria better than U.S. companies. This is what we believe will also continue to be relevant throughout 2023.

Europe could be on the cusp of a golden era in robotics. Here’s why by Walter Thompson originally published on TechCrunch

Why invest in Ukrainian startups today?

The EU will invest €13.5 billion in research and innovation for 2023-2024 as part of the Horizon Europe program. For the first time in the program’s history, it will include targeted support for Ukraine. This is one of the first real steps toward Ukraine’s integration with the EU and I can’t be happier that we are becoming a part of European business and science communities.

Why is this an important sign? Ukraine has been defending itself from Russia for 11 months now. Uncertain times make investors think twice before putting their money on the line. So when such an organization scales back its rhetoric with action, it can sway hesitant minds.

And if that’s not convincing enough, I’m going to share a few more reasons why the prospects of the Ukrainian tech sector aren’t as bleak as they may seem from the outside.

The Ukrainian tech sector is adaptable and export oriented

The Ukrainian IT sector gets most of its business from Europe and the United States. While it also serves domestic needs, the majority of the sector’s revenue is from exports.

Over the last six years, export volume grew by 26.8% annually. In 2021, exports reached $6.9 billion, exceeding the forecast by $100 million, according to the National Bank of Ukraine. While it’s undeniable that the war shook up the country’s economy, the IT sector has weathered it better than most.

Another factor contributing to the sector’s resilience is its ability to adapt to new challenges. Hybrid and remote work is a local staple and has been refined over the years. So when nearly three-fourths of IT companies had to relocate because of the invasion, they quickly resumed working at max efficiency.

This experience in managing distributed teams also means that Ukrainian IT has no problems with expansions. In 2022, Ukrainian companies started going global. They opened offices in Poland, the Czech Republic, Germany and other EU countries. This let them not only bring the product closer to clients, it also further protected the sector from war’s aftershocks.

According to the statistics on the first 10 months of 2022, Ukraine’s export of IT services grew by 9.9% from a year earlier and brought in more than $6 billion in revenue, more than $542 million the revenue generated in 2021. Exports of IT services remains one of the few areas that continue to thrive despite war, per Lviv IT Cluster research.

The experts are predicting the Ukrainian economy will bounce back and that the investment made today will bring dividends for years to come.

Another study conducted by the Polish-Ukrainian Startup Bridge team in partnership with the Warsaw Stock Exchange and the Ukrainian Startup Fund reveals that more than two-thirds of startups still operating in Ukraine are basing their business on the global market. About 12% of the surveyed companies closed down operations after the Russian invasion.

In combination, these factors inoculate Ukrainian IT from the biggest problems of war. The loss of local markets and centralized office space managed to make only a slight dent in the sector’s health.

Ukrainian startups are the horse to bet on

The Ukrainian startup ecosystem has developed rapidly in the past few years. Up until 2018, there wasn’t a single unicorn from Ukraine. Today, there are at least six Ukrainian startups with a $1 billion valuation:

  • GitLab
  • Grammarly
  • Genesis
  • Bitfury
  • Firefly Aerospace

Grammarly is a highlight here. In 2021, dubbed the year of decacorns ($10+ billion valuation), Grammarly was the first Ukrainian startup to join the club.

If one unicorn is a lucky chance and two is a coincidence, Ukraine’s ability to nurture six startups to $1 billion each in three years is certainly a trend — a trend that’s demonstrating the untapped potential of the Ukrainian IT sector that the war didn’t manage to slow down.

Need more convincing? How about the fact that these startups have been looking to international markets from the very beginning.

According to the Ukrainian Startup Ecosystem Report, two-thirds of startups say they operate on the global market; 12% don’t operate in Ukraine at all; and 80% plan to be competitive in foreign markets.

In sum, these numbers suggest that Ukrainian IT wants to have a heavy presence in Western markets, not by depending on luck, but by planning for the long term. They don’t want to bind themselves to fluctuations in domestic markets. Investing in such startups is only a bad plan if you’re hedging that the EU and U.S. will stop being lucrative markets.

Ukrainian tech talent has a rock-solid foundation and experience

Ukraine is a large center for the development of IT. Its talent pool approaches a total of 200,000 software developers. In 2022, a record number of students enrolled in IT-adjacent majors.

The secret to success is a historic foundation nurtured by modern sensibilities.

On one hand, you have Ukraine’s strong engineering and academic pedigree. The tech universities of Kyiv, Lviv and Kharkiv have been at the forefront of tech development for centuries. On the other, you have IT companies setting up bootcamps in said universities, scouting for talent and supporting students with equipment and practical internships.

As a result, Ukrainian alumni aren’t just well versed in the theory of software engineering. They graduate ready to code thanks to a refined mix of theory and practice.

If you need stats to back up my claims of Ukraine’s talent being quality, then let’s turn to international accolades (N-iX report):

  • Ukraine is in the top 20 in the A.T. Kearney Services Location Index.
  • GSA calls it the “Offshoring Destination of the Year.”
  • Many Ukrainian companies are listed in IAOP’s Global Outsourcing 100 and Software 500, Inc.

With the ever-growing demand for exceptional software engineers, Ukrainian academia and IT are prepared to deliver. Thanks to our expertise and ever-refined talent pipelines, the Ukrainian talent pool will only grow.

The indomitable spirit of Ukrainian people

We tend to think ourselves rational and believe only in things that we can quantify. I disagree with that statement. The ever-elusive human factor often can tell you more than spreadsheets.

Consider that on February 24, 2022, all foreign experts prophesied that Ukraine would fall quickly. The numbers suggested that the Russian army was better equipped and had more people. Yet, 11 months in, Ukraine isn’t just guarding what it can but fighting back.

What does this have to do with the economy and investment prospects?

The numbers predicted that the Ukrainian economy would drop by 32%-33% in 2022. Yet, because of the country’s ability to adapt and overcome, these grim predictions were quickly overshadowed.

Logic dictates that mass exodus would have caused a demographic and economic crisis. Do IT Like Ukraine Research has showcased that 81.5% of IT companies that relocated abroad still plan to return to Ukraine, and 5.6% of them are already in the process of returning. Some Ukrainians have already done so. According to OpenDataBot statistics (Ukrainian service for monitoring registration data, which provides complete information about a person or company in Ukraine), nearly 9.3 million Ukrainians have crossed the border since February, about 7.4 million have returned, and more are on the way back.

These people are showing they are ready to work hard to rebuild their country.

So when the EU included Ukraine in the Horizon program, it wasn’t just charity. The experts are predicting the Ukrainian economy will bounce back and that the investment made today will bring dividends for years to come.

Ukraine needs but a helping hand to make that post-war rebound happen, so investors will find plenty of opportunities to invest and reap the benefits.

History is happening before our eyes — let’s be a part of it!

Why invest in Ukrainian startups today? by Ram Iyer originally published on TechCrunch

2022 European edtech report: Smaller rounds and fewer deals, but more angel activity

During the darkest days of the pandemic, money was no object in many developed markets.

Governments, public sector organizations and many private companies moved heaven and earth to ensure public safety and adequate supply of core services. Quite clearly, spending reached unsustainable levels.

But 2022 was the year when this “spending” slowed and was instead more widely rebranded and accepted as actually being “borrowing.” This realization justified the beginning of deep cuts in public spending compared to before and during the pandemic.

Despite these cuts, which have been always slower to implement than communicate, inflation has been rampant across Europe and beyond, partially due to supply chain issues linked to the situation in Ukraine. Wages failing to rise in line with inflation as well as cuts to public services have led to a cost-of-living crisis in many markets.

These conditions are not conducive to inducing confidence for investors or founders. Edtech, and education more broadly, usually one of the more resistant sectors during times of economic crisis, has not been immune to the downturn.

Against this background, we formed our annual review of European edtech activity for 2022. For the first time since 2014, venture capital funding to European edtech startups saw a decline year-over-year, with startups raking in $1.8 billion in 2022 compared to $2.5 billion a year earlier.

The global ecosystem has been on an upward trajectory, albeit less consistently, but the declines in new investment in 2022 were steep: globally funding declined to $9.1 billion last year from $20.1 billion in 2021. This is in line with macro trends in the public markets as well as other tech sectors (both trends were highlighted in our October report with Dealroom).

Italy was the only European market to see a hike in both funding and the number of deals.

Perceived declines in funding are being felt more acutely, given that 2021 was a boom year. Optimism that the pandemic was coming to an end and that the world was reopening extended to ambitious founders and early teams. This momentum carried through to the first half of 2022 for European edtech. Indeed, as we reported in July, European edtech funding was up 40% in the first six months of last year compared to a year earlier.

But as we now know, that momentum faltered in the second half of 2022. Optimism ebbed away, and European edtech startups raised only about $400 million in the latter six months compared to $1.4 billion in the other half of the year.

That said, the sector proved more resilient in Europe than in other major regions. It’s worth pointing out that the region saw more edtech deals happening in the second half than in the first half of 2022, but they were simply smaller and more early-stage rounds at lower valuations.

Europe fared well compared to the rest of the world, though: Edtech VC funding only declined 28% in Europe, compared to a 64% fall in the U.S., a 46% contraction in India, and a 32% decline in the rest of the world.

Funding fell the least in Europe and RoW, with the steepest drop once again in China

Funding declined across markets but Europe saw a modest decline.

Funding declined across markets but Europe saw a modest decline. Image Credits: Brighteye Ventures

In Europe, we see the UK retaining the top spot in funding and deal activity. Edtech companies in the UK secured the most funding — $583 million across 81 deals, more than $200 million ahead of the next market, Germany, where startups raised $363 million across 34 deals.

France slipped from the podium as funding and deal activity fell sharply from previous years

Edtech funding in Europe by market. Image Credits: Brighteye Ventures

Edtech funding in Europe by market. Image Credits: Brighteye Ventures

Italy was one of only few European markets to see increased funding and deal number. Italy’s tech ecosystem has been growing gradually as momentum has built relatively consistently since 2010. It’s also promising to see the capital secured being spread across a range of sectors, with some of the largest rounds raised by companies in fintech, healthtech and real estate.

As for edtech, the market has been on a steep upwards trend since 2020. Though edtech in Italy had a record year in 2019, largely driven by the large round raised by Talent Garden, it’s quite promising to see the upward trend in 2022 being driven by smaller, early-stage rounds of less than $15 million.

2022 European edtech report: Smaller rounds and fewer deals, but more angel activity by Ram Iyer originally published on TechCrunch

For immigrant founders in the UK, office hours with VCs are rocket fuel

All three of us are immigrants to the U.K. We were each greeted with the classic “catch-22” of trying to open a bank account and finding a place to live: To get a bank account, you need an address, but to rent a flat, you need a bank account.

This is just one of the (very minor) points of friction immigrants face when moving to a new country. Entrepreneurs who set up a business in a new country encounter more challenges. Lyubov’s own experiences as a Ukrainian immigrant in the U.K. gave her both great empathy for the trials immigrant founders face, and the belief that immigrants often make and build world-leading businesses.

Beyond personal experiences, academic research seems to point to an almost inverse relationship between the contributions immigrant founders make and early acceptance by the ecosystem.

Designing an international founders open office hours pilot

With personal experience as her motivation, Lyubov piloted a program that would offer a softer landing for immigrant entrepreneurs in the U.K. The pilot was an “International Founders Open Office Hours” program that would help immigrant founders boost their social networks and local know-how by meeting with VCs in the U.K.

Instead of the usual pitch format, the meetings were informal conversations that aimed to help founders build up this essential — and for immigrants, missing — social capital. The program was inspired by Playfair Capital and its Female Founders Office Hours.

The initial start was rocky, as it coincided with the Russian invasion of Ukraine. Lyubov and her Blue Lake partner, David Gilgur, were helping families and friends in Ukraine by day and drafting the program plan by night. Early on, there was the challenge of bringing VCs and partners on board. Blue Lake had been active for a few years but was still a new name in the investment ecosystem. Asking for investors’ time meant that we had to prove we could launch something impactful that key players would want to be a part of.

For immigrant founders in the UK, office hours with VCs are rocket fuel by Ram Iyer originally published on TechCrunch

How to effectively manage a remote team during wartime

Business owners always say that each company has to live through a real crisis before it becomes a real business. All big companies we know have experienced a few big crises during their lifetimes, and they are still in the game. There are a lot of studies about crisis management on the web, but none of them tell us how to manage a company during times of war.

Our company had never seen a real crisis before February 2022. However, even before we did, I always told my team: “Every company has its time in the sun and a time of crisis.”

When the Russo-Ukrainian War began on February 24, all Ukrainian businesses faced a crisis. I’ll use our example to explain how we dealt with it.

Here are six tips for effectively managing a team during a war.

Establish an emergency communication channel

In such times of upheaval, people will require a lot of up-to-date information about what is happening. When people don’t know what’s happening, there arises a vacuum that can be filled with rumors or distorted news.

To avoid this, you must establish a special communication channel that’s active around the clock. Slack notifications, for example, can be automatically turned off outside of working hours, so make sure you utilize a channel that your team uses most often so they are less likely to miss important notifications.

This might seem like an easy and pretty obvious step, but it is the most efficient way to help your team when they’re feeling lost or disoriented, which is only natural when there’s a war raging around them.

Communicate with your team twice as often

Training to manage stress, anxiety and personal finance will help your employees build the needed knowledge and respond to tough situations.

Great leaders communicate with their people, and we must all remember that “overcommunication is good communication.”

For us, this saying has never been more correct. Communicate as frequently as there are updates on the issue but not less than twice a day. Additionally, follow your usual rules for team communication: Be honest, empathetic and humane.

Finally, when there’s a serious crisis, most people’s critical thinking faculties can be hindered. In such situations, you may have to over-explain things to your team more than usual. Do not shirk this responsibility. If your team needs its hand held, be there to hold it. It’ll pay off in the long term and help you stay in control from the early days of the crisis until things calm down.

Stop investing in R&D and get people back to work ASAP

As a leader, you must save your business, as it is something people rely on in times of uncertainty. The first thing to do here is to save as much cash as you can in order to stay in business as long as you can. That often means cutting back on non-essential spending. This can be a tough decision, but it is a sacrifice you may have to make.

After our team was in safe locations, the best way forward was to get them back to work and help them calm down. It sounds strange, but this is the best way to direct the anxieties and nervous energy of war. At work, where everything is known, prescribed and straightforward, people find calmness and a continued sense of purpose.

In my experience, the first wave of crisis is the most difficult because of the high levels of uncertainty. However, once you get over that phase, there will be fewer variables, which is when you return to investing activities if they are still feasible.

Use your standard remote-work policy

When the war broke out, it was very difficult to manage the team and reestablish our business processes. So we waited to do it after our team was evacuated and relocated safely.

Proven remote policies were a lifesaver when our employees were not in their usual environments. Nobody discounts the value of team spirit, so invest in it more since people will need each other’s support at a much greater degree during times of great strife. Among online team building activities, AR activities proved to be an amazing mood enhancer.

Conduct special training to support your team

Crises, thankfully, are rare, but that also means people often do not have enough knowledge to handle the loads of unusual information they’re bombarded with in such situations.

In such situations, you should:

  • Educate people by conducting special training with the help of experts. Training to manage stress, anxiety and personal finance will help your employees build the needed knowledge and respond to tough situations. The Ukrainian Center for Strategic Communications has created a guide titled “Psychological support during the war,” explaining how to spot and assist with mental health problems.
  • Invite successful and respected people to share positive thoughts on the situation and perhaps explain how they’ve faced especially tough times. Authority bias is real and it works as a morale booster when a team needs direction and a sense that things will turn out to be fine.
  • Share relevant positive news to cheer up your team and create a vision of a better future.

Tie business goals to social initiatives

When war broke out, people wanted to help. This was good, but we realized it can affect focus on work and could eventually lead the business to an even more profound crisis. In such times, put your over-explanation tool from Step 1 to work and educate people on how your company’s success benefits society.

As a result of what your team accomplishes at work, your company can invest more resources in charity initiatives when growth or profitability is maintained or improved. As a consequence, your team can do more and have more resources to do something significant for society.

This should have no effect on your existing OKR system because your company’s goals will stay the same. However, the team perks have changed — instead of a nice barbecue, you will now invest saved money in something beneficial to the wider society. Statistics show that when a company leads with purpose, 76% of respondents are more likely to trust that company.

Volunteering has become an essential component of our team’s operations. For instance, we arranged contributions, looked for equipment, supplied soldiers and helped secure supplies for people in disaster zones.

Each company will face a crisis caused by a unique combination of factors. Still, the tips I have provided here are applicable to almost any problematic situation. Do not forget to maintain a strong leadership position and stay empathetic with your team.

How to effectively manage a remote team during wartime by Ram Iyer originally published on TechCrunch

Key issues you should consider before signing an international merger deal

Despite the war in Ukraine, accelerating inflation and increasing interest rates, the technology sector has still seen M&A happening in the United States. In the first half of 2022, large tech M&A transactions included Microsoft acquiring Activision Blizzard for $69 billion, Google buying Mandiant for $5.4 billion, and Elon Musk bidding for Twitter for $44 billion.

Private equity was also active in the tech sector, with Thoma Bravo purchasing SailPoint for $6.9 billion and Vista Equity Partners acquiring Citrix for $13 billion. Cross-border tech M&A included Deutsche Telekom’s acquisition deal with SoftBank Group and T-Mobile U.S. for $2.4 billion and Siemens acquiring Brightly Software for $1.8 billion.

European and Asian companies can compete effectively against both U.S. companies and private equity by offering greater target management responsibility post-transaction, flexible transaction structures and global distribution of the target’s products sold with the acquirer’s sales team. By understanding the key issues in cross-border tech M&A, an international acquirer can close a successful transaction and achieve its commercial objectives in the United States.

Acquisition criteria

Management teams, boards and shareholders have had time to adjust to the drop in valuations and will be more amenable to an acquisition at a reasonable price.

Prior to approaching targets, it is important to establish detailed acquisition criteria.

Acquisition criteria can include the subsector, product set, revenue, profitability and customer profile. It should also include more intangible aspects, such as vision, culture and strategy. Management team strength is also important, particularly if the international acquirer is following the private equity playbook and acquiring a platform company with the intention of acquiring smaller add-on companies later. Finally, practical criteria should be considered, such as geographical location — if the international acquirer is in Paris, a flight to the East Coast is much shorter than a flight to California.

Target research

Once the acquisition criteria are established, in-depth target research is required. This research should include target financing, capital structure, leadership and industry reputation. Research should include databases such as Capital IQ, PitchBook and Crunchbase, as well as confidential discussions with industry leaders at other companies in the subsector and industry trade groups. This industry insider knowledge can be very powerful.

Acquirer’s presentation