Daily Crunch: Truth Social says federal grand jury probe could block its planned SPAC merger

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Hello, friends! I’m back from being OOTO for the past week. My inbox is a hot mess, but the beach was very relaxing, and I’m still thinking of those watermelon margaritas. As you can see, my partner in crime, Haje, is still enjoying his adventures, but we have a full day of news to dive into, so shall we get started? — Christine

P.S. Want to bring a friend for free to TechCrunch Disrupt? You’re in luck because we have our July 4th two-for-one flash sale.

The TechCrunch Top 3

  • Truth Social SPAC hits a snag: A New York–based federal grand jury sent subpoenas to members of Digital World’s board, Ivan reported. That’s the special purpose acquisition company getting ready to acquire Donald Trump’s media group responsible for Truth Social. According to an SEC filing, the subpoenas are an effort to gather more information about “Digital World’s S-1 filings, communications with or about multiple individuals, and information regarding Rocket One Capital.” We’re sure there is more to the story, so stay tuned.
  • Today’s car infatuation is brought to you by the letters ID.AERO: Volkswagen has us drooling over its new concept car that, Jaclyn writes, will be the basis for the car maker’s first electric vehicle. If you can’t get enough of cars, we suggest subscribing to Kirsten’s The Station newsletter.
  • Plastic packaging be gone: Over in the UK, Magical Mushroom Company is conjuring up a replacement for plastic packages using mycelium, also known as the root structure of a mushroom, mixed with agricultural waste, Mike reports. The company raised £3 million to build a production facility that will churn out packaging that will biodegrade in 45 days. For those of you not keen on mycelium being used to make healthier meat products, you might like this use a bit better.

Startups and VC

Let’s begin with Stardust. By now you’ve heard the Supreme Court overturned Roe v. Wade. While some states had trigger laws that went into effect already, we are still trying to figure out what all of this means. That includes what to do with data from period-tracking apps, should that become an avenue for future prosecution in states that outlawed abortion. Sarah and Zack looked at one such period-tracking app, Stardust, which saw its app rise to the top of the U.S. Apple App Store following the SCOTUS decision, after the company “promised it will encrypt its users’ private data to keep it out of the hands of the government.” The story takes a look at how they plan to keep that promise.

Now let’s head over to some venture capital firm news: Eloho Omame was named partner at TLcom Capital. The move follows the first close of the firm’s TIDE Africa Fund II, which is going after $150 million in capital commitments. Tage writes that this is a strategic move on TLcom’s part to focus on pre-seed startups. This is a stage Omame knows well as co-founder and general partner of FirstCheck Africa, an early-stage firm that invests in pre-seed and seed-stage startups with at least one female founder or co-founder.

Speaking of investments in early-stage companies led by female founders, True Wealth Ventures, led by Sara Brand and Kerry Rupp, closed on $35 million in new capital for their firm’s second fund. Something cool to ponder: All of True Wealth’s investments under its first fund are still operational, which is “no small feat for a group of early-stage startups that have had to weather a global pandemic,” Anita wrote.

More ahead:

Right-size your tech stack to withstand the downturn

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

Reducing headcount is often the first place founders look for savings, but it couldn’t hurt to take a closer look at your tech stack.

Early-stage startups don’t have a formal purchasing process, which means companies growing at scale are left paying for unused software licenses or automatically renewing contracts locked in at high rates.

“The question is not whether there is waste or inefficiency, but rather how much,” says David Campbell, CEO and co-founder of Tropic. Campbell shares three ways to assess startup software spending.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

You’ll want to pin this one. A California judge ruled that a lawsuit against Pinterest could move ahead. As Ivan reports, a marketer claiming to be friends with one of the company’s co-founders said she was asked to “salvage a failed shopping app” that eventually became Pinterest. She didn’t have a formal agreement with the social media company but was expecting compensation for the rescue effort and for creating some of its features. Sorry, that’s a #pinterestfail.

Hunks of metal are being launched to the moon by Rocket Lab, but don’t worry, it is all in the name of establishing a lunar space station, Aria writes. Tune in for the launch on June 28, when the CAPSTONE will start its 6-month journey to the moon.

Over at TechCrunch+, Ron goes a bit deeper into Zendesk’s decision to sell to a group of private equity firms from last week. Tl;dr: One of Zendesk’s investors was not thrilled that the company turned down a previous buyout offer. Now Ron writes that some industry analysts are not surprised by this new move, with most suggesting “it could bring some relief to the beleaguered company.”

Google Hangout users, it’s time to move it, move it on over to Chat. If you used Hangouts today from your mobile device, you may have seen a notification that you need to start using Chat in Gmail or the Chat app. Aisha writes that Chat was provided better functionality, making it easier for consumers to use. You may remember Chat was more of a business feature before. Better get started transferring your data before Hangouts hangs up on you.

TLcom Capital appoints Eloho Omame as partner to back more pre-seed and female-led startups

Africa-focused venture capital firm TLcom Capital has appointed Eloho Omame as a partner six months after announcing the first close of TIDE Africa Fund II, its $150 million second fund (it expects to reach a second close later this year, according to its partners). appoints

TLcom Capital is known for investing from seed to Series B. Some of the deals from its portfolio in this category include uLesson, Ajua, Ilara Health, Kobo360 and Twiga. However, the venture capital firm has been flexible with its deal-making processes, registering a few later stages deals in Andela’s Series C and much earlier stages like Autochek’s pre-seed deal.

Taking a more proactive approach, the firm, which has offices in Lagos, London and Nairobi, intends to place more emphasis on the pre-seed stage and Omame’s appointment is critical to this objective. She is the co-founder and general partner of FirstCheck Africa, an early-stage firm that invests in pre-seed and seed-stage startups with at least one female founder or co-founder. Before FirstCheck Africa, Omame was the founding managing director of Endeavor Nigeria, leading a community of high-impact founders on the continent.

It’s still very early in the African tech ecosystem. However, some say it reached an inflection point last year as startups received over $5 billion in venture capital funding. Though foreign capital from global investors in the U.S. and Europe has driven much of this growth, local and Africa-focused investors are pulling their weights, raising small to medium-sized funds to support innovation.

Only a handful of these firms have an arsenal of over $100 million to deploy in Africa and they have typically made bets from seed to Series C for years. But firms like TLcom Capital are increasing their appetite for much earlier deals—it’s identical to how firms that back IPO-ready companies such as Tiger Global and Softbank move for seed deals as valuations of later-stage companies take a beating and IPO stalls.

TLcom Capital realizes that to access or generate deal flow, it needs to catch founders early in their journies. And from a diversity perspective, the firm is also keen on backing more female-led companies at this stage (an example is its sole investment in Okra’s $1 million pre-seed round). According to partner Ido Sum, the Africa-focused firm is dedicating “a few million dollars” from its fund to these two early-stage strategies. The first is to back gender-neutral startups early with small check sizes and a low-touch approach and create a pipeline to later stages. The other is a $2 million co-investment commitment for female-led startups at the pre-seed stage, managed by FirstCheck Africa.

Omame’s background and hands-on experience are suited to handle these strategies, said the partners. “We’re doing this not to alter our investment strategy, but to make sure that our deal flow generation strategy covers all the possibilities,” commented Maurizio Caio, the general partner at TLcom Capital, during a TechCrunch interview with the partners. “We chose Eloho because when we interacted with her on different occasions, her background and way of thinking about entrepreneurs made her a great fit.”

On the call, Omame said she hopes to embed herself more deeply into Africa’s startup ecosystem even as she shares her time between the firms. As a TLcom partner, Omame will be responsible for following entrepreneurs early in their journeys (specifically at pre-seed) through later stages. As a general partner at FirstCheck Africa, she is raising a dedicated pool of capital (a $10 million debut fund) for female founders on better terms.

A debut fund of $10 million is an ambitious pursuit considering FirstCheck Africa only launched last January. It’s unclear where the firm is currently in its fundraising journey but the VC firm—led by Omame and Odunayo Eweniyi, the co-founder and COO of Piggyvest, a Nigerian fintech startup—has made impressive progress with resources at its disposal. So far, it has backed eight startups, most of which have at least one female founder—and others with female CEOs like Jumba and Healthtracka.

Omame, who has always been vocal about female representation in the startup and VC worlds, said FirstCheck Africa’s co-investment opportunity with TLcom is exciting for female founders. Less than 1% of all VC dollars went toward startups with one or more women founders last year, according to The Big Deal, which details investments in Africa. From the female founders’ perspective, they benefit from a female-first investor committed to their long-term success plus more capital than would have been made available under its initial target.

“TLcom runs the most credible, super well attended and organized female founder summit every year,” said Omame referencing the pan-African VC’s summit for female founders. “So there’s always been that commitment and in my view, what’s happening here is how the firm wants to step that up a notch. Part of that is in committing actual and meaningful amounts of capital to be co-invested by FirstCheck Africa and saying how do we then connect that to a broader pipeline and strategies around the ecosystem as a whole? So in many ways, there’s lots of synergy happening here.”

More from the gender-lens perspective, TLcom Capital is one of the very few VC firms with more female partners on the team. With the new addition, TLcom’s senior leadership is now 60% female (Eloho, Omobola Johnson and Andreata Muforo).

Eloho’s track record in early-stage investing will prove vital as TLcom plans to expand its current portfolio from 13 companies to 30 with ticket sizes ranging from $500,000 to $15 million. The firm, which has made most of its investments in West and East Africa (Nigeria and Kenya to be precise), also intends to start backing companies in North Africa.

FirstCheck Africa, on the other hand, can now make more investments due to this co-investment plan. The firm—which manages both pools of capital and makes all the investment decisions—plans to invest up to $250,000, including follow-ons largely tied to TLcom Capital’s deal flow. “We’re allocating this pool and intend to generate a fairly wide pipeline in terms of a spectrum of business models,” said Sum. “I also think we are fully aligned on the sectors and verticals we would like to support for follow-on rounds.”

These investors want to back ‘ridiculously early’ female-led African startups

In 2019, female-led companies received less than 5 percent of the global venture capital. Bringing it to Africa, only 10 percent of the West African startups that cumulatively raised $1 million had at least one female co-founder in the past decade.

There are many stats to back up the underrepresentation of women in starting a company, raising money and general involvement in technology where the global tech workforce comprises 28.8% women.

In a male-dominated space, programs geared toward supporting female entrepreneurs have emerged to close the gap on all fronts. However, for those centered around female founders, most are quick to offer mentorship and training but tend to ignore the importance of raising money.

FirstCheck Africa, a female-focused angel fund that launched yesterday, is hoping to address this challenge. According to the fund, “fixing capital access for female tech entrepreneurs in Africa needs an intentional, female-led approach.”

FirstCheck Africa was founded by Eloho Omame and Odunayo Eweniyi. Omame is the MD of Endeavor Nigeria, a program for high-impact entrepreneurs, and Eweniyi is the co-founder and COO of Piggyvest, a Nigerian fintech startup.

Omame’s experience working with founders and managing a VC firm (Amari Ventures) and Odunayo’s as a founder will prove vital to what FirstCheck Africa hopes to achieve: Making it easy for African women to raise capital and invest in tech.

The fund will provide between $15,000 to $25,000 in six women this year in exchange for modest equity. FirstCheck Africa plans to see each woman or female-led team through the ideation stage to a significant pre-seed round within 12 months.  

“We know we can generate solid long-term returns by investing in women, so we’ll write female founders’ first checks and be their earliest believers. We’re not afraid to invest ridiculously early in great women,” an excerpt in the statement read.

The fund also specifies that it is open to investing in mixed co-founder teams, with at least one woman. But the caveat is “only where it’s clear that the woman is a true partner and decision-maker, with a significant, equitable split of the founder equity.”

Already, FirstCheck has received over 600 applications from African female-led startups, Omame told TechCrunch. But she iterates that while only six will be selected, FirstCheck is in no hurry to announce the deals when asked how soon the firm expects to write its first check.

“We’ve been transparent with our investment goal as we’re backing up to six women-led, technology-driven businesses this year,” she said. “Outside that, there’s little interest from Odun or me to rush to announce deals. The work we’re doing is important and necessary, but it will take time.”

When you think about it, backing six startups in its first year is an impressive goal. For context, Microtraction, an already established early-stage VC firm, invested in seven startups last year. To achieve that, FirstCheck will need to garner support from local and international investors that are intentional about closing the gender funding gap on the continent. Without providing specifics around how much the fund is looking to raise, Omame says this is already happening.

That said, FirstCheck will be building a female-led investor community for women interested in backing startups by writing smaller checks. The notion behind this is to create opportunities for women around the continent to invest at more comfortable levels. And for African female entrepreneurs who need pre-seed and seed funding, the launch of FirstCheck is a plus to their selection pool.

The firm now joins Rising Tide Africa and SA-based Dazzle Angels among others as one of the few angel funds targeted to African female-led startups.