Tag: EC Hardware

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Charged with billions in capital, meet the 9 startups developing tomorrow’s batteries today

Ford started production yesterday on its F-150 Lightning pickup truck, a do-or-die vehicle that takes the automaker’s — and the United States’ — best-selling vehicle and swaps its gas-guzzling engines for powerful electric motors juiced by more than 1,800 pounds of batteries.

The mattress-sized pack can deliver over 300 miles of range, but if Ford wants to win over weekend warriors who tow 28-foot motor boats, it’s going to need better batteries.

While today’s batteries can store more energy than ever — they’ve improved in energy density by 5% per year for the last several years — those steady, incremental increases probably won’t be enough to make EVs a no-brainer for many consumers. Today’s cells are better in every respect than those made five years ago, but they still leave much to be desired. What’s needed are some breakthroughs.

EVs are a relatively small part of the overall market for cars and trucks, but they make up nearly 80% of the demand for lithium-ion batteries, far outpacing devices like laptops and phones. And demand is only going to increase. The world is expected to need 5,500 GWh of batteries by 2030, according to Wood Mackenzie, a 5x increase over today, thanks to changing consumer tastes and looming phase-outs of fossil-fuel vehicles.

Over the next five years, the battery world is poised to undergo a significant transformation. I’ve sifted through a long list of startups to find the nine most interesting ones that are developing technologies to make batteries weigh less, charge faster, and last longer. In the last year and a half, they’ve collectively raised $4.1 billion — some of that through special purpose acquisition companies, but the vast majority from late-stage venture and corporate rounds.

Solid-state

The battery tech that’s been getting the most attention recently is solid-state, and for good reason. Automakers are salivating at the idea of EVs with a range of over 400 miles that can be recharged in 15 minutes, which solid-state batteries have the potential to deliver.

Solid-state batteries earn their name by replacing the liquid electrolytes that shuttle ions from one side of the battery to another with solid versions. Solid electrolytes offer a few advantages. For one, they can prevent the growth of dendrites, stalactite-like spikes of lithium that can form on a battery’s electrodes. Dendrites can grow relatively easily in the liquid, so battery makers add an ion-permeable separator to prevent dendrites from bridging the gap between positive and negative electrodes.

If the separator is damaged, as happened in defective Chevy Bolt battery packs, then dendrites can cause a short circuit that can start a fire.

The other thing that solid electrolytes can enable is what’s known as a lithium-metal battery. In a typical lithium-ion battery, when lithium ions are on the anode side, they’re stored in graphite. Graphite anodes are inexpensive and stable, but they add weight to a battery. Eliminating them would help lighter batteries store more energy, but lithium-metal anodes are prone to forming dendrites. To prevent dendrites from growing long enough to short-circuit the battery, researchers are working on solid electrolytes that not only block the stalactites, but also won’t create problems with the anode’s highly reactive lithium.

Three companies in particular show promise in solid-state. One is Factorial, which has raised $253 million, including a $200 million Series D that closed in January and was led by Mercedes-Benz and Stellantis, the automaker created by the merger of the Italian-American Fiat Chrysler Automobiles and France’s PSA Group. Factorial, based in the Boston suburb of Woburn, Massachusetts, had operated in stealth mode until last April.

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About that Deel ARR number

If you rewind the clock to February of this year, Deel, a startup that helps customers hire in other countries, announced that it had built the ability to pay workers in crypto. Regardless of your view on the financial intelligence of such a move, TechCrunch covered the news because we’re keeping tabs on Deel.

Why? Because the former startup has posted rapid historical growth, with CEO Alex Bouaziz sharing in December 2021 that it had scaled to $50 million in self-described annual recurring revenue, or ARR. The executive’s tweet indicated that Deel had started the year with around $4 million worth of ARR.

Recall that the company raised $425 million at a $5.5 billion valuation last October.

Flash forward to today: Deel shared that it crossed the $100 million ARR threshold, a key moment for any technology upstart as it implies that it has reached public-market scale — and is therefore no longer a startup by any meaning of the word.

Deel’s data point regarding its historical growth comes on the heels of Firstbase, a startup that helps companies procure and provide hardware and other remote-work needs to far-flung employees, raising $50 million after posting something like 16x revenue growth since last April.

Supporting remote workers is big business, it appears.

To dive into the Deel news, TechCrunch took a scratch at the company’s pricing page to better understand its revenue milestone and asked the company a few clarifying questions. Answers were a bit vague, but we can get a little work done. Let’s talk the deal with Deel.

Deel’s revenue growth

One way that startups like to brag is to take the Bessemer chart showing historical examples of startups rapidly scaling to $100 million in ARR over a short time frame. Here’s how Deel shared its own  new milestone:

Image Credits: Deel Twitter

That got us curious.

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Latch parts ways with CFO after difficult SPAC debut

Latch CFO Garth Mitchell is leaving the company less than a year after he assumed the role and led the company’s public market debut through a special purpose acquisition vehicle, or SPAC, an accidental e-mail obtained by TechCrunch shows. The executive shakeup is still not showcased on the news portion of Latch’s website, but the company did file with the SEC, as well as release the news via a wire service.

Latch said that, “effective immediately,” Mitchell will be succeeded by Barry Schaeffer, senior vice president of finance at Latch. The executive shakeup continues with COO Ali Hussain, who will maintain his title but step down as “executive officer and principal operating officer.” Junji Nakamura, a senior VP at the company, will also assume a new role as chief accounting officer.

The SPAC boom was a failure, yeah?

“These changes are an important part of this next phase of our growth,” Luke Schoenfelder, Latch’s CEO and co-founder, said in a statement. “We look forward to continuing to deliver amazing experiences for our customers and increasing value for our shareholders through these changes.” Latch did not immediately respond to request for comment.

From SPACs attack, to attacks of the SPACs

Latch’s changes come at a cruial moment for many tech companies in the public markets, after share prices fell amid a broader recovery from pandemic-induced valuation highs. TechCrunch has covered this trend since at least December of 2021. The selloff persisted into 2022, leading to a sentiment shift amongst investors regarding the value of technology companies.

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Our favorite startups from YC’s Winter 2022 Demo Day, part 2

And that’s day two in the books!

TechCrunch once again spent much of the day watching a parade of startups present as part of Y Combinator’s Winter 2022 cohort, Demo Day part two. Yeah, that’s a mouthful. But we did learn quite a lot.

You can find all our coverage here, but what matters is that themes are emerging from the YC milieu. Southeast Asia is a huge startup target, with a host of business models building for its population. Fintech was, again, a huge category of work around the world.

There were also a few surprises. Frankly we expected more crypto (web3? blockchain?) companies to be in the mix. And while there were a number of API-first startups, there were fewer than we might have guessed. That said, we don’t know the precise monetization method of every software startup that pitched, so we could be undercounting.

As always, to cap off the day we’ve picked a few favorites from the day’s presentations. Every TechCrunch reporter has their own set of interests and topic areas, so the following are not us endorsing any particular company or declaring winners. Instead, they are faves, the company’s that caught our eye as the most interesting. A big thanks to Devin Coldeway, Mary Ann Azevedo and Christine Hall for contributing.

If you need more on demo days, Equity has you covered. And with that, we can get started!

Our favorite startups from YC Winter 2022, day two

The following list is in no particular order. Companies’ websites and authors’ Twitter profiles are linked.

Christine Hall: DimOrder

  • Details: DimOrder, a Hong Kong-based company founded in 2019, is developing a restaurant point-of-sale system for Southeast Asia. Its technology enables those in the food and beverage industry to accept online payments, market to customers, order food from suppliers and receive short-term loans.
  • Why it’s a fave: Restaurant tech is big right now, and there is a lllloooootttt of funding going into this space. DimOrder is bringing in $183,000 monthly recurring revenue and growing 13% month over month. As the daughter of a former hotel chef, I watched my father make his food ordering lists on a legal pad and call them in. I believe systems like this would have given him that time back to focus on other things.

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VCs weigh in on Europe’s future in the critical deep tech market

Writing about Europe is hard today. Russia is invading Ukraine as we write, and global markets are in freefall. This is the continent’s political and military backdrop.

Last week, this column took a look at the European technology market’s deep tech expertise. Europe’s economic future, in other words.

We could have held off a day or two to compile this follow-up piece. But as many of the comments below are positive about Europe’s future, it felt reasonable to continue.

The Exchange started its look at European deep tech with a report from Angular Ventures. Its data paint a picture of record-setting capital disbursement into companies on the continent that are working on complicated, hard-to-commercialize, fundamental technologies.

The Exchange explores startups, markets and money.

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

Today, we’re discussing responses to the data from a number of European investors, including Michael Jackson of the Cottonwood Technology Fund, Isabel Fox of Outsized Ventures, Nick Kingsbury and Andrea Traversone of Amadeus Capital Partners, and Cyril Bertrand of XAnge.

We’ll recap the data in question and then dive into differing perspectives on where European deep tech investing is going. The core views are that the pace of investment will slow some in 2022 from record highs set in 2021, that things appear stable thus far, and, finally, that this year could bring an acceleration in European deep tech investment and startup activity.

Out of fairness to our sources, it’s worth mentioning that they started drafting their answers before today. But the prospect of war was already looming, so considerations on what it might mean for private markets not immune to stock market dives, cyberattacks and other woes were already part of the conversation

On the other hand, it goes without saying that some deep tech projects will lower global – and therefore European – dependence on oil, gas and other similar fuels. There’s politics inside technology, in other words; it may be even clearer to say that technological change impacts politics.

Traversone hit on this in an email to TechCrunch, writing that “the current geopolitical situation is fuelling” a lot more interest in “healthcare and cybersecurity deep tech” and so-called “sovereign tech,” with focus sometimes landing on “strategic areas such as semiconductors, telecom equipment, and power technologies.”

Our starting point last week was Angular’s report, with an important caveat: It focused on both enterprise and deep tech investments. The pairing of the two groups makes sense in a way, as it helped detail how Europe’s venture capital market is moving its focus away from consumer tech. But for our purposes, we want to be clear about what deep tech is and is not.

Jackson argues that deep tech “can mean a lot of things … and because of how nebulous a term it’s become, it means less and less.” We agree. And while we don’t want to narrow our focus too much, especially as new disciplines continue to emerge, we want to make it clear that we too are talking about what Jackson describes as “the ‘deep’ end of the deep tech pool — robotics, semiconductors, energy transfer, medical devices, hardware, all that fun stuff!”

What’s ahead for deep tech in Europe

In the wake of a record-setting venture capital market in 2021, seeing minor declines in dollar or deal volume in 2022 would hardly be a retreat. At the same time, there are some venture investors who anticipate that the European deep tech market will accelerate further. As we explore our question, please keep in mind that those forecasting a deceleration are hardly pessimists; when we consider deep tech investment on the continent in 2019 and 2020, they are still likely anticipating bullish results.

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Why startups may want to rent hardware instead of buying it

The ability to rent all sorts of things is a logical step in the evolution of a subscription economy, but renting hardware wasn’t necessarily top-of-mind for startups until COVID-19 hit.

Pre-pandemic, a common step in the onboarding process at many VC-funded startups in the Bay Area called for new employees to visit the closest Apple Store with a company credit card so they could pick up a new laptop.

That practice stopped when offices closed, and as buildings sat empty, all those unused laptops, desktops, widescreen monitors and Aeron chairs began to look like a poor use of precious cash. At the same time, it became clear that remote work was here to stay – and that shipping devices to another country was expensive.

Working from home during the pandemic created tailwinds for hardware rental companies. But even with the perspective of a hybrid return to offices, there’s a case to be made for renting not just software, but also laptops, phones, or even furniture. What should your early-stage startup do?

OPEX versus CAPEX

“Don’t buy, rent,” reads the flyer of Emendu, a startup whose founders I recently met at an event. But with SaaS now being mainstream, why does this need to be said? Because Emendu doesn’t sell software subscriptions; it leases hardware to a range of clients, including startups.

From a financial standpoint, there’s a key difference between buying and renting: The former is a capital expense; the latter an operating expense. In some places, this makes a huge difference when it comes to the amount of value-added taxes a startup can deduct.

Add in options like credit and BNPL, and it appears that the main advantage of renting hardware may not be financial.

Emendu’s home country, Spain, is one of the locations where renting hardware is fiscally advantageous for startups. This aspect is less relevant in the U.S, certified public accountant Paul Bianco told TechCrunch. “I haven’t seen the conversation come up from a tax standpoint here,” he said.

Bianco is the CEO of Graphite Financial, which provides startups with outsourced accounting and CFO support. But most of its clients “owe little to no tax” because “VC-backed startups [are] in growth mode [and] they are not yet profitable,” he said. If renting hardware makes sense for them, it’s not for the tax deductions.

If there are financial reasons for a startup not to buy its hardware, “it would be more about cash flow management,” Bianco said. But decapitalization is only a major concern “for very early-stage companies where cash is a scarce resource” or “if the amount of hardware being purchased is material to the company.”

Add in options like credit and BNPL, and it appears that the main advantage of renting hardware may not be financial. “For companies that have raised money, it’s definitely more about [saving] time,” Bianco said

Keeping it simple

Efficiency is a key success factor for startups, and it’s also the framework through which they can examine hardware rental.

According to Emendu’s head of digital, Francisco Chaves, hardware rental starts becoming relevant around the 10-employee mark. Under that threshold, startups might find it easier to buy hardware.

Things change once the team grows, especially if it’s distributed, Chaves said, adding that Emendu is shipping devices all across Europe.

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And just like that, Peloton is experiencing a correction

It’s been a hot minute since a publicly traded hardware company experienced a valuation correction as dramatic as Peloton’s. As a former hardware founder and investor, I can’t help but feel sorry for the no-mercy hill climb the company finds itself in.

Peloton hasn’t been able to catch a break, even in an era where working out at home became a much better idea than sharing equipment at the nearest gym.

After hitting a 52-week peak of $155.52 per share, the company’s stock crashed 84% in value in just a few short months. It’s nothing short of incredible, given that it was once a darling of Wall Street and customers alike.

While it’s hard to point at a single point of failure, the company’s streak of bad luck has been so spectacular that it’s not too soon to ask if gross mismanagement might be at play, and some investors already are.

So far, the story goes like this: Peloton users’ private account data was leaked, GPS coordinates were accidentally embedded in users’ profile pictures, products were recalled after the tragic death of a 6-year-old, and two different TV dramas showed characters getting hurt while using a Peloton, followed by a textbook example of bumbled crisis management.

if you’re planning to build a $400 million factory, get a quarter of the way through and quit with nothing to show for it, it does feed the narrative of executive incompetence.

The company’s public market journey has been far from calm. Peloton filed for an IPO back in 2019, targeting a price range of $26-$29 per share for a valuation of up to $1.2 billion. Eventually, it listed at $29 per share, only to struggle alongside other hardware IPOs of the time.

Peloton built up a cult following even before we all went into lockdown, but the pandemic helped fuel a meteoric rise in value and investor adulation. But even as its stock price climbed and subscriptions soared, analysts seem to have read the writing on the wall: They gradually downgraded it from “buy” to “hold” before cutting their rating to a “sell.”

The company appears to have ultimately failed to bolster its long-term financial health during its time in the spotlight. This week, Peloton announced that longtime CEO John Foley was stepping down. Former Spotify CFO Barry McCarthy will take the helm.

McCarthy was the CFO of Netflix from 1999 to 2010, the tail end of the DVD years before the company became a streaming giant. With a resume that lists board experience at Pandora, Eventbrite, Wealthfront, Spotify and Instacart, he’s facing a hell of a ride as he tries to right the ship at Peloton.

One thing is for certain: Peloton needs a beast of a turnaround to save its bacon. Armed with a team from McKinsey to see what can be salvaged, McCarthy must pool his available resources to chart a new course for the morale-battered company. So, what happened? Let’s take a closer look.

In 2019, Peloton endured lots of bad press — deservedly so. A tone-deaf and sexist TV ad seemed to be a turning point, coming around the same time the company reported that its churn rate had doubled. In a SaaS universe where customer retention is one of the most important metrics, that’s not a good look.

Once news broke at the end of 2020 that vaccines were coming to market, fitness stocks arrested their free fall, and a few companies that saw their fortunes rise during the pandemic were left scratching their heads.

Zoom and Peloton both took a beating, and while there’s an easy case to be made for remote meetings, an exercise bike that sells for nearly $2,000 and comes with a relatively expensive subscription is not nearly as essential. As TechCrunch’s Alex Wilhelm mused in late 2020, “Companies are worth the present value of their future cash flows, so when the latter part of that equation changes, the former does as well.”

Peloton launched apps on Android TV and (much later) on Apple TV with $13-per-month subscriptions in 2020, seemingly in a bid to cash in on the pandemic home exercise boom for people who didn’t own its hardware, and rumors started swirling that it was going to offer a lower-end treadmill and a higher-end bike. It did launch both, with a $2,495 price tag each.

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Will quantum computing remain the domain of the specialist VC?

Maria Lepskaya Contributor
Maria Lepskaya is a senior associate at Runa Capital, leading investments in different branches of quantum technologies and advanced materials.

Market trends are the best indicators we have to judge the maturity of the quantum industry. While they don’t perfectly reflect technological progress, they showcase investors’ willingness to write checks for the industry.

In the next three to five years, quantum computers manufacturers are expected to generate revenue of $5 billion to $10 billion, according to Boston Consulting Group. McKinsey expects the chemical and pharma industries to be the first potential users of quantum computing, enabling the accurate simulation of larger numbers of atoms and molecules, which is not possible today using classical supercomputers.

Although many VCs seem to be new to quantum technologies, some investors foresaw this movement several years ago and are now making their first quantum exits.

Take IonQ, a U.S.-based manufacturer of ion-trapped quantum computers, for instance. The company was founded in 2015, and it went public in 2021 through a SPAC at a $2 billion valuation. Berkeley-based Rigetti will also go public through a SPAC this year, raising $458 million at a $1.5 billion valuation. The company is developing a superconducting quantum computer, which already could scale up to 80 qubits.

IonQ and Rigetti’s IPOs set the valuation benchmarks for the whole industry, which impact the valuations of all quantum deals. More importantly, these IPOs show venture capitalists could make money from the quantum industry without significant commercialization of the technology.

Today, a quantum processor is a complicated device requiring a lab environment. This makes cloud access to quantum processors preferable, which was not possible during the emergence of classical computers. As a result, quantum hardware manufacturers develop their own cloud-based operating systems. Right now, it is hard to imagine someone would build a large quantum OS company as Microsoft did in the 1980s.

“Although technology maturity will still take many years, the future winners in the quantum computing market will be determined in the next two years. We are expecting a first consolidation phase led by the 10 leading full-stack quantum hardware players,” said Benno Broer, CEO at Qu&Co. This is a path the quantum industry may follow, collecting pieces of the stack via acquisitions.

Quantum startups map, as of October 2021. Image Credits: Runa Capital