Hustle Fund’s side hustle just helped it close a third fund

Hustle Fund, an early-stage focused venture firm built by former 500 Startups partners Elizabeth Yin and Eric Bahn, is growing into its name.

The firm has steadily grown its assets under management since first launching five years ago. Its first fund closed at $11.5 million, its second fund closed with $33.6 million, and today, it announced the close of its third fund, with $46.1 million in capital commitments.

The fund is Hustle Fund’s biggest standalone investment vehicle to date, and propels the firm’s total AUM to over $125 million. However, Bahn explained that this may be the cap for the quirky seed-stage firm. The outfit wants to keep its fund size small, since, according to its partners, small funds can more easily outperform. In other words, Hustle Fund is less about burnout and chasing after ever-bigger numbers, and more about efficiency and execution.

Hustle Fund’s future funds may hover around $50 million, closed every three years. It’s a strategy that is somewhat counterintuitive to venture at large, which is built on the notion that more is, well, more.

At the same time, there’s a lot less in management fees when you have a smaller footprint. Bahn calls it a “paradox,” but he says his team has a solution to it. Specifically, over the years, the firm has quietly built various revenue streams inside the firm. Its biggest revenue generator is Angel Squad, an initiative that is trying to get more people into angel investing through programming, community and access to the firm’s top deals. Over 902 angels have gone through the program, raising a total of $17 million in aggregate to date, according to Hustle Fund;’s website.

Other revenue streams include general startup and advice programming, merchandise, and an annual summer camp for founders.

Not all of it has worked as hoped: Bahn admits that Hustle Fund used to run a revenue based financing fund called Flywheel, but shut it down due to economics being too small. In total, these revenue streams pay many of the firm’s costs while enabling it to invest at the stage and smaller check size where it feels most comfortable.

“It feels like a bit of a cheat code. Almost like being like a featherweight boxer but pumped with anabolic steroids, in terms of being able to have the bite,” he said. “It just allows us to not do things like raise a lot of money just for the management fees.” The firm uses its existing management fees to fund salaries and general fund operations, but then uses the supplemental revenue to scale.

Today, Hustle Fund employs 24 people. The firm declined to offer specifics on how much its non-investment-related revenue totals but said that it crossed a ‘seven-figure’ threshold.

hustle fund team 2022

Image Credits: Hustle Fund

While the firm-meets-startup play gets to break new ground with its new fund, its sticking to the same strategy for investment. Hustle Fund writes $50,000 checks, up from $25,000 prior, into a lot of early-stage teams and then works with them on growth and customer acquisition projects. If “we really vibe together,” Bahn explains, the fund makes a bigger investment with its second check.

“We’re deploying capital in a fairly efficient way,” Yin said. “You want to test some initial hypothesis to see if there’s a need if there’s a need, and if there is a need, and the founder seems to be great, then we’re pouring in more capital.” In other words, she added, she’s not looking for startups who are going to pivot around with $5 million in the bank.

So far, the plan is working. Among the firm’s top bets include Webflow, which last raised at a $4 billion valuation, Nerdwallet, which went public last year, Karat, Bicycle Health and Forage. The firm has almost invested in 400 startups, with at least 30% of its investments led by women. 

Hustle Fund’s side hustle just helped it close a third fund by Natasha Mascarenhas originally published on TechCrunch

Microtraction hits $15M first close on its second fund for pre-seed investment in African startups

Microtraction, an early-stage venture capital firm that invests in African startups at the pre-seed stage, is announcing that it has reached the first close of its second fund, Microtraction Community Limited. The fund doesn’t have a set target at the moment, the founding partners told TechCrunch, but it achieved the first close at $15 million. 

Microtraction Community Limited seeks to write first checks of $100,000 for 7% into early-stage African startups with an option for a “quick top-up” of up to $350,000, “as long as they are not more than 25% of the company’s next official fundraising round,” the firm noted in its statement.

This second fund plans to invest in 60 startups and provide follow-on investment to 20% of them in their next round. It has already invested in 20 companies from its second fund. Meanwhile, the firm’s first fund wrote checks to 19 companies in four countries: Nigeria, Ghana, Kenya and Rwanda. Both funds target sectors such as fintech, health tech, SaaS, edtech, crypto, gaming and mobility. According to Microtraction, its portfolio companies have received more than $100 million in follow-on funding, collectively valued at over $750 million. A few names include Cowrywise, 54gene, Raise, Helicarrier, Bitsika and Lemonade Finance. 

Microtraction is also venturing into the web3 space by setting up a community vehicle (akin to a DAO) where social tokens will be used to incentivize and gamify the experience of members who provide value-add and support to the fund and founders. Microtraction said the DAO will operate on an invite-only basis and launch with various perks such as exclusive access to events, investment opportunities, industry deep dives and more. 

TechCrunch caught up with partner Dayo Koleowo and founding partners Kwamena Afful and Yele Bademosi, the co-founder and CEO of African web3 upstart Nestcoin. The partners take us through what’s different between the first and second fund and how the firm has evolved since launching in 2017 as the preferred source of pre-seed checks in the African tech landscape. 

TC: What was the target size of the first fund and explain what the firm hoped to achieve with it?

Kwamena Afful: Our first fund was like a proof of concept. We invested like $1 million in total over three years. It was kind of an uncapped approach. Fund one was at a time in the market when basically nobody was writing checks to young people starting companies. 

We think of Microtraction as a product, and as founders as our clients. And we ask ourselves, what do founders need us to do for them? And so five years ago, founders needed a first check more than anything else. And then they needed people that believed in them and would walk them into doors of significant African businesses that would try out their product or service. And that’s what we did. 

TC: What has changed with Fund 2?

KA: Five years later, there’s a lot of first checks available, way more than they used to be and they are in huge multiples and more. And now, the problems that founders need have changed. And we now think, well, beyond the first check, founders need a community of champions to support them in growing their business. And that community of champions can be a mix of other founders solving similar problems worldwide. And the leading investors, GPs and LPs, in essence, who have subject matter expertise in different sectors and are backing similar companies all over the world. And that’s what Microtraction version 2 is. 

We thought to ourselves, let’s get all these champions together in one vehicle. And let’s make them join us on this journey of finding the best African founders. And let’s connect everybody to help each other out. So now when you get a check for Microtraction, you don’t just get it the first check, but you get a community of people who want to help you build an African unicorn. And our community might be 50 to 70-strong of investors, but you may only need three to five of them that will play a substantial role in scaling your business. 

Image Credits: Microtraction

So in summary, when we started, we were really kind of at first check and access to your first few customers. And we’re still that, but we now also provide access to your first community of champions that will help you scale your business. And we think that that community is global. We think that the community is interested in the African story. And that community is interested in backing best founders to solve Africa’s problems through their companies and that’s kind of like a quick summary of where we were and where we are today.

TC: Who is in this community?

The LPs in this community fund include 30+ venture-backed founders of African companies like Helicarrier’s Ire Aderinokun, Paystack’s Shola Akinlade, Cowrywise’s Razaq Ahmed, 54gene’s Francis Osifo, Piggyvest’s Odun Eweniyi, Paga’s Jay Alabraba, Spleet’s Tola Adesanmi, Float’s Jesse Ghansah.

Then we have GPs of global VC funds like Ribbit Capital’s Micky Malka, Hustle Fund’s Elizabeth Yin, Sebastes Capital’s Jason Fish, a16z’s David Haber, Y Combinator’s Michael Seibel, 776’s Alexis Ohanian, Bonow Ventures’ Tilo Bonow, Precursor Ventures’ Charles Hudson, Better Tomorrow Ventures’ Sheel Mohnot, Broadhaven Ventures’ Michael Sidgmore, etc.; Web 2.0 and web3 operators; local and international HNIs; sport and entertainment icons; and PAVE Investments (the anchor LP in Microtraction Fund I), which has committed $1.5 million into the community fund.

TC: In 2020, Microtraction offered $25,000 for 7%, which has been upped to $100,000 for the same stake. It almost mirrors YC’s initial deal which begs the question of why founders would pick Microtraction over YC’s for instance.

Yele Bademosi: In the last two or three years, most companies getting into YC had raised at significant multiples up to $20 million in valuation. But even now companies that don’t do YC are able to raise at those valuations before the market downturn. I think it’s actually quite interesting that the ecosystem is evolving beyond that. We have a couple of investments that we’ve done that never did YC and their valuations are past the traditional valuation.

People want to get into YC to raise money post YC. So what we’ve done with Microtraction is not just build this community of investors and LPs locally and globally. We also have like a broader network of VC funds that are now looking at the companies we’re backing, our thesis, strategy, etc. So, we’ve gone from kind of like people seeing us as a pre-YC fund or pipeline, to us investing in the best early stage companies, and then local and global investors kind of looking closely at the deals and following on where there is a fit for them.

Dayo Koleowo: I think it’s very important to highlight the last part Yele mentioned because it’s one of the reasons we have taken our approach. We speak to a lot of global investors almost every day, trying to understand the ecosystem. Many people that invest in African companies tend to go to an accelerator, Demo days, etc. Things are changing. People want direct access to Africa without having to go to accelerators.

Don’t get me wrong, accelerators like YC and 500 startups are still very good. But I think the faster you can raise your money without having to go to them and the more we see local investors give the same access that YC would give, the better for the ecosystem. And that’s why it’s important that we also improve, not just the check size that we write, but the value that we create which is what we’re doing with the second fund. For us, we’re trying to provide the same value as YC but also with a better understanding of the African market, which can help a founder raise better and build more sustainable businesses.

TC: It’s impressive to see how far the fund has come over the years as one of the go-to investors for pre-seed checks to reaching the first close of $15 million as part of a larger uncapped second fund. However, I can’t help but notice that Microtraction’s activity has dipped in the last 18-24 months or maybe I’m mistaken.

KA: You’re sort of right. When we started Microtraction, it was super innovative. It was exactly what founders needed and we got a lot of press for that. But then the market evolved, and there were loads of funds, and lots of activity. We became caught up in all that noise and I’d say for the last two years, we got approached by DFIs to start another fund.

We entertained that for a while but we couldn’t go ahead because we needed to find something different with this fund by asking ourselves what founders really wanted in this market and asking ourselves what we really wanted to do which we believed was the right thing. So the period where we seemed a bit quiet, we were kind of like rebooting and refreshing, but we were still investing by the way. In the last fund, we backed like 19 companies, and we’re about to do another 60 in this fund.

And then we really kind of redefined what we want to be next: as a product for founders. So that’s kind of why maybe we were quiet: a mixture of the market getting noisy and us kind of getting drowned by that noise and a mixture of us also focusing on what we want to do next. But we’ve been active the whole time in the background.

YC: Interesting. So how does the web3 play come in?

KA: It reiterates why we think about how founders need a community of champions around them. We wanted to create a community with transparency and create incentives for members to help each other out as they spend significant time helping out founders along that journey.

And generally speaking, blockchain technology is an excellent platform for managing communities in a transparent, efficient, and self-rewarded way. Now we don’t think it’s at the point where you can run a DAO to run a fund in the sense that people love to believe it is–it’s not there yet. But what we wanted to do was gamify the process of members of the community, which includes founders, investors, GPs, and LPs, and then subject matter experts on different topics and verticals. So we intend, in short, to launch some social tokens to gamify and incentivize the community members.

Say hello to the kickass final agenda for the TechCrunch+ stage at Disrupt 2022

TechCrunch is bringing our flagship event Disrupt back to the real world this year, which means we’re hard at work on our big October 18-20 shindig. Founders, investors, tech denizens, crypto fans, and the like: We’re making something incredible just for you.

And no portion of the event has me more excited than what we have in store for you on the TechCrunch+ stage, one of the two main stages that will be going all day, every day at Disrupt. After months of honing topics and ideas, researching panelists to invite, and wrangling more schedules than you want to know about, we are now locked in for Disrupt 2022. We’re so proud of what we have prepared for you.

Pro tip: Save $1,100 when you buy your pass before September 16. Tickets start at just $99 to come to the show.

Whether you are just starting out with an idea, in the midst of early-stage growth, or looking to keep your late-stage startup ahead of the curve in a busy market, we have the information you need. Sessions include well-known startup founders, investors, and executives to help elucidate not only today’s best practices for tech entrepreneurs — a very different set of advice that we heard during the bull market that came to a close in late 2021 — but also the latest and greatest from the world of company-building itself. So, yes, we do have a session that will include the word “DAO” for all the founders out there building on the blockchain.

The full agenda follows. I can’t wait to see you there!

Tuesday, October 18

Live on Stage: TechCrunch’s Chain Reaction

Join us for a live podcast recording of Chain Reaction as we unpack and explain the latest crypto news, drama, and trends, breaking it down block-by-block for the crypto-curious.

How To Build Your Early VC Network: Turning Social Capital Into Financial Capital

with Nik Milanovic (This Week in Fintech), Josh Ogundu (Campfire) and Gefen Skolnick (Couplet Coffee)

If you haven’t heard of Nik, Josh or Gefen, where have you been? They are founders that are not only building very interesting companies but have taken a forward approach toward making noise on social media. We want to dive into how being a public person can help founders build a future public company. This should be a panel that will be not only informative but also lots of fun.

How To Secure Those Hard To Find Hires

with Chris Herd (Firstbase) and Emil Yeargin (Gusto)

Hiring is not easy even in the best of times. With a tight tech talent market and an increasingly remote-friendly — and therefore globally competitive — corporate landscape, founders have never had more places to hire from and more competitors to measure up against. So we’re going to have Chris Herd from Firstbase who is an advocate for remote work and Emil Yeargin, VP of Talent at Gusto, which is not only hiring itself but also helps other companies manage their staff. We’ll go deep on hiring today with an especial focus on hard-to-fill roles.

Winning The War On Ransomware

with Brett Callow (Emsisoft) and Katie Moussouris (Luta Security)

Ransomware attacks are escalating at an alarming rate. We’ll hear from experts about what winning the war on ransomware looks like and how startups can play their part.

How To Raise First Dollars When Investors Are More Cautious, The Founder Perspective

with Amanda DoAmaral (Fiveable), Sara Du (Alloy Automation) and Arman Hezarkhani (Parthean)

While it’s always good to hear from venture capitalists when it comes to dollars and cents, how founders are navigating the capital market is just as important. So we’re gathering Amanda DoAmaral of Fiveable, Sara Du of Alloy Automation and Arman Hezarkhani of Parthean to talk us through what worked for them and how their perspective has been updated in light of the changing economy.

Founder Fireside: Faire and Forerunner Ventures

with Kirsten Green (Forerunner Ventures) and Jeff Kolovson (Faire)

The COVID-19 pandemic brought with it a boom in e-commerce and folks working on making their homes more comfortable. This shift impacted more than just consumers, however. Faire, a marketplace that connects SMBs to wholesalers, had to navigate a market replete with evolving demand and supply chain issues. Now, with the COVID period behind us (at least from a business perspective), TechCrunch will sit down with Faire co-founder and COO Jeff Kolovson and backer Kirsten Green, a founder and partner at Forerunner Ventures, to talk through the company, its market, and where it’s heading next.

What Does Product-Market Fit Mean When Hype Tanks?

with Pali Bhat (Reddit), Avlok Kohli (AngelList), and Annie Pearl (Calendly)

Reddit Chief Product Officer Pali Bhat, AngelList CEO Avlok Kohli and Calendly Chief Product Officer Annie Pearl are coming to Disrupt to help founders hone their definitions of product-market fit. The concept, often shortened to PMF, is tricky as it’s not easily defined for all startups at once. But one thing that happens when market sentiment takes a dive is that definitions tighten. So how should founders measure PMF in a more difficult market, from both a fundraising and customer perspective? We’ll find out.

Wednesday, October 19

Live on Stage: TechCrunch’s Found

Join us for a live podcast recording of Found, a show about founders, and company-building, featuring people doing the work. We’ll interview an early-stage startup founder about how they took the plunge to begin with, and how they navigate everything from building product roadmaps, to raising funding from some of the world’s top investors – and to how they manage failure, too

Building Companies with Longer Time Horizons

with Gene Berdichevsky (Sila), Erin Price-Wright (Index Ventures), and Katie Rae (The Engine)

Not every startup can generate revenue from day one. From hardware to hard science, some startups take more time to build income streams. How can founders get around revenue concerns in a more conservative funding market? And how do investors weigh risk when it comes to bets that may take longer to pull off? For growing startup categories like robotics and climate, these are not idle questions. We’re bringing Sila’s Gene Berdichevsky, Index Ventures’ Erin Price-Wright and The Engine’s Katie Rae together to share the real nuts and bolts of early fundraising in 2022. 

How To Measure TAM Without Bullshitting Yourself

with Kara Nortman (Upfront Ventures), Aydin Senkut (Felicis), and Deena Shakir (Lux Capital)

A common refrain from venture capitalists last year was that software valuations weren’t too high, as the TAM, or total addressable market for tech companies, was simply larger than folks had originally thought. Sure, but some of those startups are now stuck comparing high burn rates with future TAM. So how should founders and their backers really think about TAM to avoid bullshitting themselves or their colleagues? Upfront Ventures’ Kara Nortman, Felicis’ Aydin Senkut and Lux Capital’s Deena Shakir will tell us.

How To Raise In 2022 If You Are Not Located In A Major Hub

with Mike Asem (M25), Rich Wong (Accel) and Elizabeth Yin (Hustle Fund)

Sure, you no longer have to be located in Silicon Valley — let alone California — to build a startup or raise money. But there are still areas where there are more venture capitalists per square mile and areas where there are fewer. To get to grips on raising outside of traditional startup hubs, we’re bringing together VCs who either live and invest, or simply invest in more up-and-coming geographies. Mike Asem of M25, Rich Wong of Accel, and Hustle Fund’s Elizabeth Yin are joining us for this particular chat. It’s going to rock.

How To Compete Without Losing Your Mind Or Runway When Cash Is Expensive

with Ruth Foxe Blader (Anthemis), Eric Glyman (Ramp), and Thejo Kote (Airbase)

We love a competitive startup category here at TechCrunch. Watching startups go head to head is fascinating and illuminating. But for startups in hot sectors with big markets, competing can be very expensive. So how should startups that have incumbents to take on, other startups to best, or both, approach the balance between growth and spend this year? We’re gathering Anthemis Partner Ruth Foxe Blader, Ramp Co-founder & CEO Eric Glyman and Airbase Founder & CEO Thejo Kote to help guide more early-stage founders.

How To Raise First Dollars In A More Difficult Market, The Venture Perspective

with Annie Case (Kleiner Perkins), Jomayra Herrera (Reach Capital), and Sheel Mohnot (Better Tomorrow Ventures)

It is clear by now that the venture market has changed this year. That means that founders looking to raise first capital for their startup can’t follow last year’s playbook and expect results. So what do founders need to know, and how can they best snag investor attention in a market where the rules are changing? We’re bringing together Annie Case of Kleiner Perkins, Reach Capital’s Jomayra Herrera and Sheel Mohnot of Better Tomorrow Ventures to share the real nuts and bolts of early fundraising in 2022.

Founder Fireside with Brex and Y Combinator

with Henrique Dubrugras (Brex) and Anu Hariharan (Y Combinator)

Brex rolled into the corporate card market with a bang, blanketing San Francisco in advertising and leveraging small-city network effects to get founders to sign up other founders. But since its launch, the corporate card space has evolved into the incredibly competitive corporate spend market. How is Brex working to stay ahead of its rivals? We’ll chat with co-founder and CEO Henrique Dubugras and one of his backers, Y Combinator’s Anu Hariharan, to learn more.

Thursday, October 20

Live on Stage: TechCrunch’s Equity

Join us for a live recording of Equity, the podcast about the business of startups. We’ll unpack the numbers and nuance behind the headlines, wade through the hype to keep you up to date on the world of business, tech and VC.

Founder Fireside: Clubhouse

with Paul Davison (Clubhouse)

Few startups had as much hype – and early consumer buy-in – as Clubhouse. Since its mega-hit introduction, however, it has seen its service copied by a host of competitors while working to expand and fine-tune its model. TechCrunch will sit down with Clubhouse co-founder and CEO Paul Davison to talk about the company’s past, present, and future.

Negotiating Your First Term Sheet

with Mandela SH Dixon (All Raise), Kevin Liu (Techstars) and James Norman (Black Operator Ventures)

It’s always a good time to sit down and chat about the mechanics of term sheets and the give and take between investors and founders. It’s an especially good time now as the balance of power between founders and investors has shifted from a period in which founders never had great ability to demand friendly terms to an era in which it feels like investors have more power than in recent history. So we’ll get the latest from All Raise CEO Mandela SH Dixon, Techstars Head of Portfolio Capital & Investments Kevin Liu and Black Operator Ventures General Partner James Norman on term sheets, negotiations and terms to help founders navigate the current climate.

How To Manage Staff In A Remote, Asynchronous Reality

with Mathilde Collin (Front), Deidre Paknad (WorkBoard), and Adriana Roche (Mural)

Companies big and small are figuring out how they are going to distribute and manage their workforces in 2022. After a few years when even the most traditional company was forced to go remote, startups are now having to choose between remote setups, hybrid teams or a return to the office. But no matter what they choose, all companies are going to have more remote staff than ever before. To help founders understand how to manage those staffers, Front’s Mathilde Collin, Mural’s Adriana Roche and WorkBoard’s Deidre Paknad are joining us to talk about what works.

Founder Fireside: Metafy and Seven Seven Six 

with Josh Fabian (Metafy) and Katelin Holloway (Seven Seven Six)

Metafy is bringing video game coaching to the masses, and it’s not only for gamers who may want to go pro. As digital gaming has become one of the most important international pastimes, consumers are more willing than perhaps ever to spend on their hobby. TechCrunch will sit down with Metafy founder and CEO Josh Fabian and his venture capital backer, Katelin Holloway of Seven Seven Six, to dig more deeply into the company, its market, and how it is working to grow even faster.

Structure, Regulation, and Markets: The Road Ahead for Crypto Startups

with Brett Harrison (FTX), Mary-Catherine Lader (Uniswap Labs), Cuy Sheffield (Visa)

From DAOs and altcoins to L2-chains, NFTs, tokens, and figuring out just what the heck a security is, the crypto market is under the spotlight — and under scrutiny. TechCrunch will sit down with FTX’s Brett Harrison, Uniswap Labs’ Mary-Catherine Lader and Visa’s Cuy Sheffield to get a better handle on how they are navigating constant evolution, the new opportunities that the blockchain economy has on offer, and where they see the future taking their market.

TechCrunch Disrupt 2022 takes place in San Francisco on October 18–20 with an online day on October 21. Grab this good thing while you still can. Buy your pass by 11:59 p.m. PDT September 16, and you can save up to $1,100.


Only four days left to snag early-bird savings on Disrupt passes

Tick tock, early-stage startup enthusiasts. TechCrunch Disrupt takes place on October 18–20 — the very height of pumpkin spice season. However, your chance to score early-bird passes (and soak up serious savings) disappears in just four short-but-sweaty days of summer.

Buy your pass before July 29 at 11:59 p.m. PT and save up to $1,300.

The TC editors are hard at work crafting a superb roster of speakers, presentations, panel discussions and roundtables, but it’s a bit early for the full agenda. Still, we can share some of the speakers and topics designed to help you build a successful startup. Check out just some of the presentations you’ll find on the TechCrunch + stage.

How to Build Your Early VC Network: Turning Social Capital into Financial Capital — with Nik Milanović (This Week in Fintech), Josh Ogundu (Heart to Heart) and Gefen Skolnick (Couplet Coffee): If you haven’t heard of Nik, Josh or Gefen, where have you been? These founders are not only building interesting companies, but they’re also taking a forward approach to making noise on social media. We want to dive into how being a public person can help founders build a future public company. This panel should be both informative and lots of fun.

How to Raise in 2022 if You Are Not Located in a Major Hub — with Mike Asem (M25), Rich Wong (Accel) and Elizabeth Yin (Hustle Fund): Sure, you no longer have to be located in Silicon Valley, let alone California, to build a startup or raise money. But there are still areas with more venture capitalists per square mile than others with far fewer. We’re bringing together three VCs — who either live and invest in or who simply invest in more up-and-coming geographies — to chat about raising outside of traditional startup hubs. We think it’s going to rock.

How to Compete Without Losing Your Mind or Runway When Cash Is Expensive — with Eric Glyman (Ramp) and Thejo Kote (Airbase):

We love a competitive startup category here at TechCrunch. Watching startups go head-to-head is fascinating and illuminating, but for startups in hot sectors with big markets, competing can be very expensive. So how should startups that have incumbents to take on, or that have other startups to best or both approach the balance between growth and spend this year? We’re gathering a few CEOs with a little bit of experience on the matter to help guide more early-stage founders.

Want to keep your fingers on the pulse of Disrupt and all TechCrunch events? Sign up here for updates, announcements and discounts.

TechCrunch Disrupt 2022 takes place in San Francisco on October 18–20 with an online day on October 21. Soak up serious savings. Buy your pass before the early-bird deal disappears on July 29 at 11:59 p.m. PT, and save up to $1,300.

Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2022? Contact our sponsorship sales team by filling out this form.


TechCrunch+ roundup: Save your equity, LatAm crypto survey, where the runway ends

Money doesn’t need to be protected from sudden vibrations or direct sunlight, so the term “dry powder” strikes me as a poor metaphor for the mounds of cash investors were dropping on startups just a few months ago.

“What’s crazy to me is that some of these companies are still in the seed stage backed by very large firms who dabbled at this stage,” said Elizabeth Yin, a general partner and co-founder at pre-seed-focused Hustle Fund.

“An extra $200,000 or $500,000 wouldn’t make a dent in a billion-dollar fund even if it went horribly.”

Rebecca Szkutak interviewed Yin and Kirby Winfield, founding general partner at pre-seed-focused Ascend, about the sudden, urgent funding requests they’ve recently received from founders with short runways.

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

“I had one cross my desk yesterday where a brand-name VC led the seed, which they are now calling a pre-seed,” Winfield told TechCrunch.

“I know this company. I know they raised a pre-seed and a seed round and are now coming back around and saying, it was pre-seed and now we are raising a seed.”

With more investors content to wait things out, a traditional three-month fundraising timeline might stretch on for six. Or even longer.

As a result, founders are stuck with potentially unwelcome options, such as marking down their valuations and/or accepting flat and down rounds.

On Monday, we’ll run columns with practical advice for exploring both of those scenarios. In the meantime, have a great weekend, and thanks very much for reading.

Walter Thompson
Editorial Manager, TechCrunch+

10 steps for managing layoffs respectfully

Wooden Jigsaw Puzzle with missing pieces; how to handle layoffs humanely

Image Credits: MirageC (opens in a new window) / Getty Images

As I’ve written previously, I decline most guest columns we receive, particularly ones that explain basic best practices. Rules are made to be broken, however.

This 10-point guide to managing layoffs with empathy and respect can help inexperienced managers find their way through the worst part of running a startup: letting people go.

“People will remember this day for the rest of their lives,” says Nolan Church, co-founder and CEO of Continuum, previously chief people officer at Carta and head of talent at DoorDash.

“They can remember it one of two ways: Either you surprised them with bad news and treated them like cattle, or you did all you could to look out for them and help them navigate to the next chapter.”

Here’s how to protect your equity if you get laid off

Take note, startup workers: The same people who welcomed you aboard when you signed your offer letter are now looking for places to save money so they can keep the company afloat.

Reducing headcount is another way for founders to claw back equity, as many workers who’ve been laid off will not have enough cash to exercise all of their vested options. Once those options expire, they’ll go back to your (former) employer.

If you work for a startup that extends the traditional 90-day post-termination exercise window, count your blessings.

If you don’t, this TC+ guest post contains useful advice for budgeting, negotiating and strategizing to save your hard-won equity.

5 investors explain why Latin America is poised to weather the crypto winter

Bitcoin Sign on snow; latin america crypto survey

Image Credits: gece33 (opens in a new window) / Getty Images

Even as a cohort of crypto companies continue their calamitous collapse, investors who back DeFi startups in Latin America are “positioning themselves for a rebound,” reports Anna Heim.

She surveyed five investors who have staked companies in the region’s crypto and DeFi sector to learn more about how their ethos has changed since winter began and why consumer adoption in LatAm is stronger than in other markets:

  • Matias Nisenson, co-founder, DeFi Wonderland
  • Christine Chang, head of corporate development and ventures, Tribal
  • Patricio Jutard, co-founder and general partner, Newtopia VC
  • Claire Diaz-Ortiz, startups committee chair, VC3; scout, Kleiner Perkins
  • Andy Areitio, general partner, TheVentureCity

Dear Sophie: Questions about green cards and EB-2 priority dates

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’ve been on an H-1B since 2011. I have an EB-2 I-140 approved with a priority date in April 2015. I’m Indian by birth, so I know I’m going to be waiting a long time to get a green card.

As an experienced cybersecurity professional, I think I could qualify to apply for an EB-2 NIW. Will there be any benefit from applying for an EB-2 NIW now?

— Idealistic from India

The experiment of force-feeding late-stage startups infinite money is wrapping up

It’s not your imagination: After a deluge, it has stopped raining venture capital.

According to CB Insights’ State of Venture Q2 2022 Report, global venture funding decreased by 23% quarter over quarter, the second-largest drop in a decade.

Mega-rounds larger than $100 million took a nasty hit: In Q4 2021, they accounted for six of every 10 dollars invested in private-market capital. In Q2 2022, that fell to 47%.

“That is a swoon for the ages,” writes Alex Wilhelm.

Pivoting your startup in a bear market: Become undeniably fundable

Group of paper airplane in one direction and with one individual pointing in the different way, can be used leadership/individuality concepts.( 3d render )

Image Credits: Eoneren (opens in a new window) / Getty Images

Every founder is searching for ways to conserve cash at the moment, but a laser-focus on saving money instead of creating efficiencies will only delay the inevitable.

In July 2022, investors will not back companies that can’t demonstrate proficiency in five basic KPIs, according to Kraig Swensrud, founder and CEO of Qualified.

“We’re not going back to the sugar high of the past decade anytime soon, but with integrity, strong leadership and operational efficiency, we can not only survive, but thrive.”

Pitch Deck Teardown: Forethought’s $65M Series C deck

Last month, enterprise reporter Ron Miller spoke to Forethought CEO Deon Nicholas about the pitch deck his company used to nab a $65 million Series C round in 2022.

This week, Forethought shared 23 slides with us for analysis, including an eye-catching advisor/investor slide that includes Gywneth Paltrow, Sean “Diddy” Combs and Robert Downey, Jr.

Cast your votes for roundtable topics at TechCrunch Disrupt

Heading to TechCrunch Disrupt on October 18-20 in San Francisco? Great, we can’t wait to see you! In the meantime, take a few minutes right now and head to the polls. And by that we mean go to the Audience Choice voting site and let us know which roundtable topics you want to see at Disrupt.

Roundtables are 30-minute, expert-led discussions with 15-20 attendees, and they’re the most popular sessions at Disrupt. The smaller group format encourages interactive, in-depth conversations. Attendees can learn, contribute and network with other folks interested in the same topic.

This is the first time we’ve asked for your input on programming content at Disrupt, and we can’t wait to see the results.

Audience Choice voting is open now, but the polls close at 11:59 p.m. (PDT) on Friday, July 15.

When you land on the voting site, you’ll find a list of potential roundtable sessions along with the number of votes that have been cast for each one at that point. Choose the topics you’d like to participate in the most, and share your thoughts or feedback in the comment box.

Here’s an early look at just some of the speakers who will join us on the Disrupt main stage and the TechCrunch+ stage.

RJ Scaringe, founder and CEO of EV automaker, Rivian, will join us in person for a wide-ranging interview. We’ll explore the startup’s early failures and successes, as well as its progress in the quest to become a vertically integrated company. We’ll ask Scaringe about his plans for the future and get his take on the wave of EVs coming to market, battery tech and automated driving.

Don’t miss this trio of investors — Mike Asem, general partner, M25; Rich Wong, partner, Accel and Elizabeth Yin, co-founder and general partner, Hustle Fund VCs — as they tackle an important topic: How to raise funding when you’re not in a major tech hub.

Of course, we’ll announce many more speakers and topics in the coming months. Be among the first to know — sign up for updates on the latest events and discounts.

Don’t miss your chance to vote on the roundtable sessions you want to see at Disrupt. Voting ends on July 15 at 11:59 p.m. (PDT). Head on over to the Audience Choice site, tell us which topics interest you most and then register to join us at TechCrunch Disrupt in San Francisco on October 18-20 (with an online day on October 21).

Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2022? Contact our sponsorship sales team by filling out this form.

Early-stage fundraising is a tale of two planets

If you follow mainstream tech media, you could be forgiven for thinking that venture capital is a founders’ market today after two years of record round sizes and outcomes.

There is some truth to this: VC had its biggest year in 2021, more than doubling from 2020, which was already a record year for investments. Almost 400 new companies surpassed a $1 billion valuation in 2021, increasing total unicorn count by 69% in just a year.

Stories abound of massive rounds materializing quickly for companies at even the earliest stages. Wing VC, which tracks financings by Silicon Valley’s most “elite” VC funds, reports that the median Series A financing by these firms grew by 38%, and corresponding pre-money valuation by 71%, both off previous record highs recorded in 2020.

But hidden under the headlines is another story: Higher valuations are accompanied by a much larger variance among companies. As Hustle Fund’s Elizabeth Yin tweeted recently, round sizes and valuations haven’t grown for all companies across the board; rather, they have bifurcated.

This tracks with my experience investing in companies founded by women, most of whom were first-time founders and disconnected from mainstream VC. For every story I hear about a huge round that came together in two weeks, I meet 20 great founders who hustle for months and can’t raise a penny.

A fund known for leading huge rounds in pre-revenue, pre-launch, pre-everything companies told a founder in my portfolio that they want to see her reach $1M+ annualized revenue before considering her pre-seed.

The experience among founders varies so greatly, they might as well be living on different planets. Founders who are experienced, pedigreed, smooth or well connected — or some combination of these — live in a planet of big, buzzy, competitive early rounds, which we’ll call “Planet Flush.”

Founders who are outsiders, don’t generally fit the pattern and are not connected to sources of capital live in a planet where fundraising is extremely difficult and unlikely, necessitating very scrappy execution to even get a chance to grow. Let’s call this one “Planet Scrappy.”

At the risk of stating the obvious, investor behavior is completely different in Planet Flush and Planet Scrappy. In Planet Flush, at the earliest stages when there’s no tangible traction to evaluate, investors are comfortable making a bet on the size of the market and the perceived caliber of the founders.

Ventures Platform, Hustle Fund back Nigerian fintech Brass in $1.7M round

Small and medium enterprises make up more than 95% of all businesses in Nigeria. But despite their sheer size and importance, a majority of them are underserved by financial institutions and lack the full suite of financial services needed to scale their operations.

Aside from full-stack financial needs, including credit, small and medium businesses require other essential resources to understand their financial operations.

Brass is a Nigerian fintech tackling these challenges by providing banking services to small and medium businesses. The company has secured a $1.7 million funding round to scale its offerings for “local entrepreneurs, traders and fast-growing businesses.”

Sola Akindolu and Emmanuel Okeke founded Brass in July 2020. Before Brass, CEO Akindolu was the head of product at YC-backed Kudi, while CTO Okeke was an engineering manager at Stripe subsidiary Paystack.

Akindolu’s work at Kudi opened his eyes to the problems small and medium businesses face in Nigeria. He explained that he found out how hard it was for these businesses to have seamless financial operations and cash-flow support services integral to tracking vendor payments, money movement and overall business health.

But why start Brass when there are existing products in the Nigerian market that SMEs and entrepreneurs can use? Sparkle, for instance, offers both personal and business banking services (with more priority on the latter). Consumer neobanks Carbon and Kuda are in varying stages of offering business features to SMEs. Prospa, a YC-backed company that doesn’t like to think of itself as a neobank, also provides software and banking services to microbusinesses and freelancers.

Akindolu believes that while these products have their entry points into the SME market, they do not capture the entire banking needs of businesses like Brass.

“There are many ways money can get out of the business, be it payroll, vendor payment, invoicing. We want to support businesses’ cash flow; we want to support them in those areas to make sure that money keeps running and they can keep growing their business,” Akindolu said, describing Brass’ application. “So that’s, for the most part, what we’re doing with Brass today: financial operations and cash flow support.”

Brass offers a suite of products — credit and payment services, payroll and expense management, API support, cash-flow analytics, team and contact management, other core business services such as POS, debit and credit cards — all wrapped around a business bank account. 

Of all these features, Brass is betting big on credit with Brass Capital, a space already heating up with other platforms such as Float, which provides working capital and software services to businesses. That said, Brass Capital has done quite well in a short amount of time; the cash-flow financing service claims to have disbursed more than $2 million in credit after being used for six months by two dozen Brass customers in private beta.

Akindolu told TechCrunch that the company would make the service available to the public soon.

Brass says that many of its clients use the platform as their default money-operation service provider. The fintech makes money from providing credit and API calls on its regular product offering, said the CEO.

It has over 5,000 customers ranging from schools and malls to restaurants and fintechs such as Eden and Mono, which use its complete banking solution. And unlike other platforms, Brass is trying to optimize its platform for different levels of businesses with varying needs at the same time.

“What we’ve set out to do is to build stacks of financial operation services. We may be overkill for a micro business; they might not find us useful, so we’re more concerned about small and medium-sized businesses.”

The mission to make banking work for small businesses was one reason why pan-African VC firm Ventures Platform invested in the company, according to its founder and general partner, Kola Aina.

Other investors include Flutterwave CEO Olugbenga “GB” Agboola, Paystack co-founder Ezra Olubi, Hustle Fund, Acuity Ventures and Uncovered Fund.

Previous backers include Olumide Soyombo of Voltron Capital, Leonard Stiegler and Fola Olatunji-David.

“We are excited to back Sola and the Brass team, who are providing critical financial technology to Africa’s businesses, starting with Nigeria’s approximately 41.5 million businesses,” said Elizabeth Yin, the general partner at Hustle Fund.

It’s not just in Nigeria that access to comprehensive banking solutions services continues to be one of the most significant constraints for SMEs — it’s most major economies in Africa. Indeed, the continent’s formal SME sector has an annual financing gap of over $136 billion, although they account for over 80% of employed people.

For this reason, Akindolu affirmed that Brass would use part of the financing to take its business to Kenya and South Africa by next year (it has finalized incorporation in the former). Integral to driving its expansion plans across Africa is a partnership with Flutterwave, the one-year-old company said in a statement. Brass also plans to diversify its customer base by launching more product categories, especially around credit in its markets.

Hustle Fund wants to help spawn a new generation of angel investors

Kara Penn is the mother of four daughters and owner of Mission Spark, a management and strategy consulting company.

And now, thanks to Hustle Fund, she is also an angel investor.

Hustle Fund is coming out of stealth today with Angel Squad, a new initiative aimed at making angel investing more accessible to more people. To more people like Colorado-based Penn.

We believe that in order to increase diversity in the startup ecosystem, one thing that we must do is increase diversity — whether it be in regard to gender, race or geography — amongst angel investors,” said Hustle Fund co-founder and general partner Elizabeth Yin.

Via Angel Squad, Hustle Fund specifically aims to build an inclusive investor community, make minimum check sizes low and accessible (think as little as $1,000), provide “angel education” and give investors a way to invest alongside Hustle Fund.

“There’s been this misnomer, or at least I had this incorrect assumption that in order to become an angel investor, you have to be super rich and write $25,000 checks,” Yin told TechCrunch. “But the reality is actually in Silicon Valley, there are all these people running around investing $1,000 checks…and that’s something that’s a lot more accessible than then most people might think. And, part of the value of having this group is then we can accumulate a bunch of smaller checks to then write one larger check for a company.”

So far, Penn has invested in five startups across a range of sectors including real estate, food, apparel and finance. 

She describes herself as “a complete novice” in angel investing, and so far, she’s loving the experience.

I love Hustle Fund’s perspective that great hustlers can look like anyone and come from anywhere,” Penn told TechCrunch. “I’ve enjoyed being in a supportive community with differing levels of expertise, but where every question is welcomed.”

The experience is also broadening her exposure to technology and AI, the collection and use of data and the creation of new marketplaces in ways she never would have been exposed to before.

“As someone whose own company focuses exclusively on strategy in social impact organizations, I am also looking for how founders identify and bring to market creative solutions to complex problems, as well as exposure to a network of innovative people looking to solve hard issues in smart ways,” Penn said. “This exposure is helping me begin to think about applications of these approaches to difficult social problems.”

For some context, Hustle Fund is a venture firm founded by Elizabeth Yin and Eric Bahn, two former 500 Startups partners, with the goal of investing in pre-seed software startups. The firm has traditionally operated by investing $25,000 in a company, usually with a minimum-viable product, and then works with the team to help them grow. It does around 50 investments per year, according to its website. 

It recently closed on $33.6 million for a new fund.

“One of the things most important to us is this bigger mission of wanting to change the way the startup ecosystem is,” Yin said. “I noticed both as an entrepreneur and while running an accelerator, if you have a certain resume, went to certain schools, or were a certain race or gender, you have advantages in starting a company and getting funding. For many people, if you don’t tick those boxes, it can be very challenging. That’s why we’re investing in a lot of founders from all walks of life.”

Hustle Fund Venture Partner Brian Nichols had started a syndicate of Lyft alumni on AngelList. After doing a few deals, he opened up the syndicate to people outside of AngelList.

“I found there was a wide range of people looking to diversify into private markets, from all over the world with all types of backgrounds,” he said. “Hustle Fund and I had similar taste in companies I was investing in and I built a relationship with them in co-investments.”

Today, he’s helping run the fund’s Angel Squad initiative. So far, it has had two cohorts with over 150 investors total and true to the fund’s mission, those investors have been more diverse than typical angel syndicates: 46% of the members are female, 9% are underrepresented minorities and 32% are people who work outside of tech with professional roles such as lawyers, doctors and artists. Just one-third are based in Silicon Valley.

Every week, Angel Squad hosts an event which ranges from networking to a peek behind the curtain at opportunities at Hustle Fund is considering investing in to talking through why or why not to take a meeting with a founder.

“Imagine starting from zero, and if you could skip a bunch of steps and have Elizabeth (Yin) tell you how to do this before you lose a bunch of money in the process of evaluating a startup,” Nichols told TechCrunch. “Angel Squad is exactly what I wish had existed three or four years ago when I became interested in investing.”

Silicon Valley, Yin acknowledges, can be intimidating but the reality is that no one is an expert in everything.

“We’re trying to cultivate an environment where people are very kind — we have a no asshole rule, and that is a safe space where people can learn and feel like they can ask questions, and not have to know everything about angel investing. The reality is most people don’t. And we want to bring new people into this system.”

Besides not being an a-hole, other criteria in becoming a Squad Member include being able to add value and being an accredited investor.

“With rounds as competitive as they are today, we are looking for people who want to be actively supportive of the portfolio companies we’re investing in,” Nichols said. “Every person who wants to join the program is interviewed by someone from our team, who asks questions such as ‘What can you help a founder with?’ We are not looking for passive capital. That’s not super helpful at this point in the ecosystem.

Hustle Fund backs Fintor, which wants to make it easier to invest in real estate

Farshad Yousefi and Masoud Jalali used to drive through Palo Alto neighborhoods and marvel at the outrageous home prices. But the drives sparked an idea. They were not in a financial position to purchase a home in those neighborhoods (to be clear, not many people are) either for investment or to live. But what if they could invest in homes in up and coming cities throughout the U.S.?

Then they realized that even that might be a challenge considering that with all their student debt, affording a down payment would be impossible.

“There was nothing available out there besides a crowdfunding platform, which when we first signed up, took away $1,000 from our account that we didn’t have, and then our capital would be locked up for 3 to 10 years,” recalls Yousefi.

So the pair started doing research and spoke to 1,000 individuals under the age of 35. Eight out of 10 said they would like to invest in real estate but were deterred by all the barriers to entry.

“There is clearly a large demand for access to real estate,” Yousefi said. “And we wanted to give people a way to invest in it like they can in stocks, via a mobile app.”

And so the idea for Fintor was born.

Yousefi and Jalali founded the company in 2020 with the goal of purchasing homes via an LLC, and turning each into shares through a SEC-approved broker dealer. Individuals can then buy shares of the homes via Fintor’s platform. Its next step is to sign agreements with individual real estate investors or bigger real estate development firms to list their properties on the platform and give people the opportunity to buy shares.

And now Fintor has raised $2.5 million in seed money to continue building out its fractional real estate investing platform. The startup aims to “fractionalize” houses and other residential property, giving people in the U.S. access to investment opportunities “starting with as little as $5.” The company attracted the interest of investors such as 500 Startups, Hustle Fund, Graphene Ventures, Houston-based real estate investor Manny Khoshbin, Mana Ventures and other angel investors such as Cindy Bi, Skyler Fernandes, VU Venture Partners, Minal Hasan, Andrew Zalasin, Alluxo CEO and Founder Safa Mahzari, SquareFoot CEO and founder Jonathan Wasserstrum and Teachable CEO and founder Ankur Nagpal.

Image Credits: Fintor

Fintor is eying markets such as Kansas City, South Carolina, and Houston, Texas, where it already has some properties. It’s looking for homes in the $80,000 to $350,000 price range, and millennials and GenZers are its target demographic.

“Fintor can give the same return as the stock market, but at half the risk,” Yousefi said. “As two [Iranian] immigrants, we’ve seen how much this country has to offer and how real estate sits at the top of everything, yet is so inaccessible.”

The pair had originally set out to raise just $1 million but the round was quickly “way oversubscribed,” according to Yousefi, and they ended up raising $2.5 million at triple the original valuation.

Jalali said the company will use machine learning technology to filter and rate properties as it scales its business model.

“We’ll use ML to categorize neighborhoods and to come up with the price of properties to offer to potential sellers,” he added. “Our ultimate goal is to create indexes so that people can invest in multiple properties in a given city. That creates diversification right away.”

.Elizabeth Yin, co-founder and general partner of Hustle Fund, believes that Fintor is solving a generational problem with real estate.

“Retail investors have almost no access to great real estate investments today and the best opportunities are reserved for the select few,” she told TechCrunch. “Not to mention that in addition to access, retail investors often need a lot of capital in order to have a diversified portfolio or be accredited to join funds.”

Fintor’s approach to securitize real estate assets will give millions of investors who are not accredited investors access they would otherwise not have had, Yin added. 

“Simultaneously, it provides increased liquidity to property owners, while improving the user experience for both parties,” she said. “Effectively this becomes a new asset class, because it’s entirely turnkey and is fractionalized, which opens up many new pockets of investors.”