First Republic’s results are proof that the SVB meltdown was brutal for smaller banks

Shares of First Republic Bank are off 29% in early-morning trading as investors digest its first-quarter earnings results, which came out yesterday after the bell. The bank reported revenue and profit above analysts’ expectations, but for investors, other concerns outweighed the good results.

Chief among those concerns is a massive decline in the bank’s deposit base. Deposits help provide a foundation for banks to lend against and therefore derive net interest income on the difference collected on loaned capital and interest paid out to depositors.

Let’s take a look at how things have been at First Republic. The bank closed 2022 with $176.4 billion worth of deposits against $166.9 billion in loans, but by the end of Q1 2023, it had $104.5 billion in deposits against $173.3 billion in loans.

This massive decline in First Republic’s deposit base was triggered by the dramatic implosion of Silicon Valley Bank, which collapsed after a run on its own deposits, leaving the startup and venture capital worlds absolutely rattled.

First Republic came under pressure quickly afterwards, as its customers were concerned that it might follow SVB into receivership, and saw unusually large outflows from its own deposit base. The company’s share price was decimated in the process, falling from around $115 on March 8 (when SVB announced after-hours that it was making a series of financial moves, which helped precipitate the bank run) to $16 at the end of trading yesterday.

This morning, the bank’s shares are down to around $11.26 apiece.

First Republic’s results are proof that the SVB meltdown was brutal for smaller banks by Alex Wilhelm originally published on TechCrunch

As companies shift from growth to efficiency, what does it mean for tech budgets?

It seems like, in very short order, we’ve moved away from a “growth over everything” mentality to one that focuses on operational efficiency, and this is true for startups and mature companies alike.

In truth, though, the shift probably happened slowly over time as the economy got shakier (or at least a growing belief that it was shakier) and companies decided to tighten the purse strings.

We’ve seen this play out in a number of ways. The most visible is the constant onslaught of tech layoffs in recent months, with Microsoft, Alphabet, Amazon and Salesforce all announcing big staff reductions. While the pace seems to have slowed some in February, more than 100,000 people were let go in January in a massive tech company purge.

Even though companies clearly overhired during the height of the pandemic, and there are still plenty of open tech jobs, the message is clear that cost cutting is taking precedence over growth investments.

We have even seen cloud infrastructure spending take a hit, an area that has been in constant growth mode for years. But things began to slow down in a big way at the end of last year, and AWS reported at its most recent earnings call that it was seeing growth drop into the teens in January.

As we reported at the end of the year, companies are still spending on tech, but they are looking at their expenditures much more closely. CIOs we spoke to were all taking a more controlled kind of growth, where each dollar spent is facing much more scrutiny.

They don’t want to shut the door on growth, but they want to look at things like operational efficiency and cutting back without adversely affecting the company’s core priorities.

The big question is how they do that, and do the financials suggest that they’re successfully balancing what could be seen as conflicting priorities between growth and efficiency?

What CIOs are saying

The CIOs we spoke to certainly recognize there has been a shift, and as they look at their budget priorities, they want to be smart about spending. They all said they want to look at efficiencies where it makes sense, with the understanding that the tech budget drives growth, and you don’t want to overcorrect when it comes to budgeting.

As companies shift from growth to efficiency, what does it mean for tech budgets? by Ron Miller originally published on TechCrunch

As companies shift from growth to efficiency, what does it mean for tech budgets?

It seems like, in very short order, we’ve moved away from a “growth over everything” mentality to one that focuses on operational efficiency, and this is true for startups and mature companies alike.

In truth, though, the shift probably happened slowly over time as the economy got shakier (or at least a growing belief that it was shakier) and companies decided to tighten the purse strings.

We’ve seen this play out in a number of ways. The most visible is the constant onslaught of tech layoffs in recent months, with Microsoft, Alphabet, Amazon and Salesforce all announcing big staff reductions. While the pace seems to have slowed some in February, more than 100,000 people were let go in January in a massive tech company purge.

Even though companies clearly overhired during the height of the pandemic, and there are still plenty of open tech jobs, the message is clear that cost cutting is taking precedence over growth investments.

We have even seen cloud infrastructure spending take a hit, an area that has been in constant growth mode for years. But things began to slow down in a big way at the end of last year, and AWS reported at its most recent earnings call that it was seeing growth drop into the teens in January.

As we reported at the end of the year, companies are still spending on tech, but they are looking at their expenditures much more closely. CIOs we spoke to were all taking a more controlled kind of growth, where each dollar spent is facing much more scrutiny.

They don’t want to shut the door on growth, but they want to look at things like operational efficiency and cutting back without adversely affecting the company’s core priorities.

The big question is how they do that, and do the financials suggest that they’re successfully balancing what could be seen as conflicting priorities between growth and efficiency?

What CIOs are saying

The CIOs we spoke to certainly recognize there has been a shift, and as they look at their budget priorities, they want to be smart about spending. They all said they want to look at efficiencies where it makes sense, with the understanding that the tech budget drives growth, and you don’t want to overcorrect when it comes to budgeting.

As companies shift from growth to efficiency, what does it mean for tech budgets? by Ron Miller originally published on TechCrunch

For Black founders and investors, ringing Nasdaq’s opening bell symbolizes progress

Nasdaq on Friday hosted the New Voices Foundation and Essence Ventures, inviting some of the most prominent Black professionals within the venture and startup space behind the podium to help open the markets.

Though this isn’t the first time Nasdaq has honored Black History Month, some who were there commented that “history was made.” And indeed, this opening bell felt different. Shila Nieves Burney, the founder of Zane Capital, told TechCrunch that the day felt like all of the Black ancestors were looking down on them and saying, “Great work.” “We rang the bell for Zane and for all the other Black and brown people who built Wall Street but were denied access to the wealth.”

For investor Tiana Tukes, the experience felt bigger than just ringing the bell. “On the surface, Friday’s ceremony was about opening the Nasdaq, but for us, the experience symbolized the opening of doors for generations now and to come,” she told TechCrunch. “As the bell tolled, I imagined someone, somewhere, who looked like us, heard its call and knew they’d one day be next, and we’d be cheering for them.”

For Black founders and investors, ringing Nasdaq’s opening bell symbolizes progress by Dominic-Madori Davis originally published on TechCrunch

Edtech reacquaints itself with fintech

Amy Jenkins left her post at Outschool, a marketplace for live online classes for kids, when the company decided to focus more on consumers and less on the enterprise — a shift that included numerous rounds of layoffs at the richly backed education unicorn.

Now, Jenkins is the COO of Meadow, a platform that aims to make it easier for college students to pay tuition and for universities to stay compliant with financial transparency requirements. Meadow recently announced that it raised $3.5 million in venture funding — a round that Jenkins said, to her surprise, came together pretty quickly over six weeks. Plus, the round was three times the size of the founding team’s original target.

Part of the startup’s win may have been in the framing of its vision beyond traditional edtech.

“I think a lot of our investors would look at us as an edtech company that is in the higher education space, and that there’s an incredible opportunity there to think about,” Jenkins said. “When students are entering college, they’re really at the beginning of their financial life. And we can support them and prepare them from the beginning.” The company’s early products help students better calculate the cost of attending college, balancing different factors like housing and financial aid.

Jenkins said that being a hybrid company, toeing the line between edtech and fintech, did help with closing investors. Many of Meadow’s investors cut checks in the fintech space, “but also consumer, and also social impact — so we were able to hit all of those themes for these investors in terms of high potential working in this fintech space but really having a consumer lens because we’re thinking so deeply about what students need.”

Meadow isn’t alone in balancing two sectors as a competitive advantage in fundraising: Once-crypto-specific companies are shifting their pitch to be more fintech-focused, and some health tech companies are leaning on well-known financial instruments as a disruptor. “Every company is a fintech company” is a common adage, but in today’s environment, the reasoning behind that shift may be more around survival and savviness than serendipity.

Edtech reacquaints itself with fintech by Natasha Mascarenhas originally published on TechCrunch

B2B sales closing and financing platform Vartana raises $12M

The software-as-a-service (SaaS) industry is facing budget constraints and reductions in headcount as a result of the pandemic and the broader slowdown in tech. Companies have tightened up their budgets for SaaS purchases, looking to keep cash on hand while growing more efficiently.

That’s why Kush Kella and Ahmed Sharif founded Vartana (which my colleague Mary covered recently). While working together at fleet management company Motive, Kella and Sharif say they dealt with the pains and problems caused by broken SaaS contract management and rigid payment infrastructure. After years watching deals falls through due to a lack of payment flexibility, they left Motive to build Vartana, aiming to equip companies with a managed platform that helps sales reps close deals.

“Vartana is a win-win for sellers and buyers of SaaS services and hardware products,” Kella told TechCrunch in an email interview. “It gives vendors new tools to close contracts and generate cash with prepaid deals while offering buyers various payment options and a simplified purchasing experience, ensuring buyers are able to purchase the best technology available to grow their business.”

Vartana today announced that it raised $12 million in a Series A round led by Mayfield with participation from Xerox Ventures, Flex Capital and Audacious Ventures., bringing its total raised to $19 million. Vartana also secured a $50 million line of credit from i80 Group, which Kella says will ensure financed deals can be managed through Vartana’s new capital marketplace.

“With the launch of the Vartana’s capital marketplace, Vartana no longer holds buyer debt in their books, ensuring a balance sheet-light business,” Kella said. “We’re focused on lean, effective growth. We’ve found strong success in the SaaS industry and we’re doubling down.”

Vartana’s platform, which Kella refers to as a “sales closing” platform, is designed to be used by sellers of business-to-business software, hardware and hardware paired with SaaS software. Vartana helps to manage tasks like contract tracking, payment terms and signature capture, accepting a range of different payment options (e.g., pay in full, deferred payment) and installment plans. Sellers can send multiple quotes at one time and give buyers the flexibility to select which payment style works for them. Once payment has been selected, the buyer can e-sign the agreement from the web or mobile, finalizing the deal.

Vartana

Image Credits: Vartana

On the capital marketplace side, Vartana-developed algorithms normalize data, rate each buyer and extend debt financing offers. The platform matches buyer loan requests to a network of banks and lenders, allowing buyers to request funds and receive quotes in real time.

“When deals are financed, either traditionally through a bank or via the Vartana platform, sellers get paid on day one,” Kella said. “New non-dilutive cash flow is acquired for the entirety of a deal, sometimes up to five years of future cash, and buyers don’t have to pay upfront, meaning they get to keep cash in their bank account and pay a monthly fee, ensuring they stay nimble and can invest cash in the areas of their business that need it most.”

Kella sees Vartana — which works with “dozens” of sales departments at companies like Verkada, Samsara and Motive and over 10,000 buyers, he claims — as competing with startups including Ratio, Cashflow and Gynger. Ratio has been particularly successful as of late, bagging $411 million in equity and credit last September. But he doesn’t see them as direct competitors, pointing out that Vartana’s model hinges on delivering financing to buyers and targeting late-stage tech companies.

On the subject, Vartana recently launched a closing platform that enables sales reps to “market” financing and deferred payments to any buyer. “This is particularly important in a world where cash is king and companies are looking for ways to keep cash on hand,” Kella explained. “Providing self-serve financing as an option to all buyers helps buyers keep hold of cash and pay for products over time while sellers get access to full contract value on day one.”

Kella didn’t answer a question about Vartana’s revenue. But he said that financing volume grew 600% year-over-year while the company’s headcount grew 4x. The plan is to increase the size of the workforce further from 40 employees to 85 by the end of 2023.

Patrick Sayler, a Mayfield partner and a Vartana investor, added via email: “In business-to-business enterprise software, time kills all deals. This is especially true in the deal closing process, where there is a shocking amount of offline back and forth between vendor, buyer and financing teams that takes weeks and causes deals to push to the next quarter or die all together. Vartana’s business-to-business enterprise sales closing and financing platform brings this to an end with a fully digital checkout platform with integrated proposals, signatures, payments and self service financing, improving conversion, sales cycles, order values and managing cashflow, obviously critical for the current economy.”

B2B sales closing and financing platform Vartana raises $12M by Kyle Wiggers originally published on TechCrunch

Amazon secures $8B loan, anticipating market headwinds

Amazon has secured an $8 billion loan in anticipation of market headwinds.

Provided by DBS Bank, Mizuho Bank and others, the loan — which will mature in 364 days (January 3, 2024), with an option to extend for another 364 days — will be used for “general corporate purposes,” Amazon said in a filing with the U.S. Securities and Exchange Commission. In a statement, an Amazon spokesperson told TechCrunch that the loan adds to the range of financing options the company has tapped in recent months to hedge against the “uncertain macroeconomic environment.”

“Like all companies we regularly evaluate our operating plan and make financing decisions — like entering into term loan agreements or issuing bonds — accordingly,” the spokesperson said via email. “Given the uncertain macroeconomic environment, over the last few months we have used different financing options to support capital expenditures, debt repayments, acquisitions and working capital needs.”

Amazon’s income dipped toward the end of 2022 as the economy took its toll. The tech giant spent billions doubling the size of its fulfillment network during the pandemic, a play that served it well initially but which proved to be short sighted.

Amazon was forced to shut down or delay plans for over a dozen facilities as e-commerce sales last year grew slower than expected. Another headwind — soaring energy prices — impacted Amazon’s business in a major way, with the company’s spending on shipping climbing 10% to $19.9 billion in Q3 2022.

To cut costs, Amazon plans to reduce its workforce in early 2023, reportedly by as much as 10,000 employees. The layoffs, which would be the largest in the company’s history, are said to be concentrated in Amazon’s human resources, Alexa and retail divisions.

In other penny-saving measures, Amazon has frozen hiring for corporate roles in its retail business, shut down its Amazon Care telehealth service, closed all but one of its U.S. call centers, and scaled back Amazon Scout, its long-running delivery robot project. Those moves haven’t been enough to prevent the company’s market cap from falling below $1 trillion for the first time since April 2020.

Amazon had about $35 billion in cash and cash equivalents and long-term debt of about $59 billion at the end of the third quarter ended September 30, Reuters reports. For the first nine months of 2022, Amazon paid $932 million in cash paid of interest on debt, up from $731 million for the same period a year earlier; the interest rate spread on the new $8 billion will start at 0.75% before increasing to 1.05% if Amazon decides to extend the loan’s maturity.

Amazon secures $8B loan, anticipating market headwinds by Kyle Wiggers originally published on TechCrunch

Consumer finance app Djamo eyes Francophone Africa expansion, backed by new $14M round

Last February, Djamo announced that it got accepted into Y Combinator, the first from Ivory Coast. Months later, the two-year-old fintech has raised $14 million in funding from the famed accelerator, as well as from three lead investors — Enza Capital, Oikocredit and Partech Africa — and other participating investors, including Janngo Capital, P1 Ventures, Axian and Launch Africa.

As with most fintechs across Africa, Djamo, launched by Régis Bamba and Hassan Bourgi last year, provides financial services for the underbanked and unbanked population. Its focus is on French-speaking markets where fewer than 25% of adults have bank accounts. One reason why this is so is that banks concentrate on affluent customers and those they deem profitable for business. But as banks slacked, mobile money from the region’s telcos filled in the gap, and in the last 10 years, their wallets have reached more than 60% of the population — proof of how many millions of French-speaking natives were hungry for financial services.

Today, this mobile money infrastructure and reach allows startups like Djamo to build upon their existing payment infrastructure to democratize financial access across banking and mobile money spheres. Djamo’s app allows for interoperability between banks and mobile money, meaning that its customers in Ivory Coast can send money from their bank accounts to mobile money wallets, and back; it has leveraged this characteristic to build a full suite of financial services.

Djamo’s first product is a Visa-powered debit card that lets users make online purchases on sites such as Amazon, Alibaba, or Netflix. Other products include virtual accounts for peer-to-peer transactions, a product to receive salaries, and an autosaving product that offers guidance into customers’ financial goals. Kuda, Telda, PiggyVest, TymeBank and Koa are a few examples of comparable products across Africa.

“Before Djamo, it was a real challenge for an average customer to receive salaries digitally because they weren’t integrated into the banking system,” CEO Bourgi told TechCrunch over a call. “We found the right partner to launch that product and any company can pay salary to employees with a Djamo account. When you look at Djamo, alongside other products, we want customers to be able to better manage their money and help them plan for their future. We’re not necessarily to digitize cash like mobile wallets. We are here to work on the personal finance side.”

Customers see so much value in the different use cases Djamo has assembled so far that the fintech still relies on word of mouth to scale across Ivory Coast, according to Bamba, the company’s chief product officer. The platform currently has registered over 500,000 customers, a more than 5x increase from the 90,000 customers Djamo had onboarded as of February 2021.

“In our region, users pay amongst the highest fees in the world but do not always receive adequate service in return and that can be extremely frustrating. The one thing that we want to achieve is to offer a product where customers get real value for their money,” said the CPO. “The app has been growing organically like crazy and to get such numbers in a market like this within a short period, is proof that we’re nailing the overall user experience and building something very relevant for users.”

While they didn’t provide an update to the 50,000 monthly transactions recorded during the February interview, the founders say the fintech platform has processed over $400 million since inception. Djamo is also experiencing a revenue growth of 20% to 25% month-on-month, spurred by an amendment to its pricing plan that includes a free option and two premium options with varying services: $2/month and $3.5/month. They say these options are 80% cheaper than other bank accounts offered by financial institutions — including microfinance banks that Djamo views as direct competition due to their adoption of digital channels to provide financial services — in Ivory Coast.

Image Credits: Djamo

Bourgi said 60% of Djamo customers have never used a Visa debit card before joining the platform. It’s a feat the chief executive is proud of and deems crucial in Djamo’s bid to make financial services accessible to the masses, including those outside the Ivory Coast. The $14 million in funding capital, which it claims to be the largest-ever equity round for a startup in Ivory Coast, will help the startup advance into two other countries across Francophone Africa before the end of next year and expand product offerings to include investments and lending.

Tidjane Deme, the general partner at Partech Africa, speaking on the investment, said, “Francophone Africa offers a large integrated market, with [a] fast-growing demand for frictionless services from a new cohort of digital-native young adults. We are excited to join forces with high-caliber local investors who bring sector and regional expertise to enable Djamo to unlock this opportunity.”

Consumer finance app Djamo eyes Francophone Africa expansion, backed by new $14M round by Tage Kene-Okafor originally published on TechCrunch

Noble emerges from stealth to help companies extend lines of credit to their customers

Credit lines are a lucrative product. U.S. consumers alone pay $120 billion in credit card interest and fees every year, according to the Consumer Financial Protection Bureau. Given the revenue opportunity, it’s no surprise that there’s enduring interest from both startups and established companies in delivering credit-based products. But challenges stand in the way, including — but not limited to — complying with local laws and regulations and modeling credit risk.

Enter Noble, a putative solution in the form of a platform that allows businesses to build credit-based products like credit cards and buy now, pay later services with no-code tools. Founded by WeWork veterans, Noble allows clients to connect data sources to create custom credit offerings, providing a rules-based engine to edit and launch credit models.

Noble today emerged from stealth and announced the close of a $15 million Series A round led by Insight Partners with participation from Cross River Digital Ventures, Plug & Play Ventures, Y Combinator, Flexport Fund, TLV Partners, Operator Partners, Verissimo Ventures, Interplay Ventures and the George Kaiser Family Foundation. The new cash brings the company’s total raised to $18 million, which CEO Tomer Biger tells TechCrunch will go toward opening a new office and expanding Noble’s portfolio to support additional use cases.

Noble

Connecting data sources in Noble’s admin dashboard. Image Credits: Noble

Biger and Noble’s CTO, Moran Mishan, worked together at WeWork on building underwriting infrastructure to help screen and assess the creditworthiness of tenants. Prior to WeWork, Biger was the product manager responsible for business-to-business (B2B) lender Behalf’s underwriting infrastructure, while Mishan was a software engineer at Woo.io, a job candidate sourcing platform.

“From these firsthand experiences, [we] saw how complicated it is for companies to build underwriting infrastructure and launch new credit-based products, Noble aims to change that,” Biger told TechCrunch in an email interview. “[We allow] companies to launch additional products that their end-customers want — access to credit.”

With Noble, companies can access credit bureaus, banks and income verification providers in deciding to which customers to extend credit lines (e.g. loans and cash advances). The platform’s interface lets businesses deploy workflows that automatically approve, decline or flag users for manual reviews, while on the backend customizing the experience to match a brand and auditing underwriting data from a single view.

“This increases lifetime value, boosts customer retention and ultimately can be an entirely new revenue source for companies,” Biger asserted. “Noble empowers … companies to do this quickly and efficiently without expending much internal engineering or product resources.”

Daniel Aronovitz, principal at Insight Partners, sees Noble’s primary customers as fintechs, software-as-a-service companies with financial offerings and B2B marketplaces and wholesalers. It’s early days, but he claims that the company already has “tens” of clients including major fintechs, with “millions of dollars” of loans originated through the Noble platform.

“With its strong product offerings and impressive founding team, Noble has already acquired B2B and business-to-consumer customers across use cases,” Aronovitz said in an emailed statement. “Noble has created a platform for credit underwriting infrastructure as a service, enabling any company to build proprietary credit products in-house.”

Noble

Conditional logic in Noble’s credit decisioning engine. Image Credits: Noble

But Noble isn’t unique in providing credit infrastructure. Fintech startup Alloy, which last year raised $100 million at a $1.35 billion valuation, recently expanded into automated credit underwriting. Stilt raised $114 million in March to expand its credit offerings. There are also firms like Finally, which focus on credit products for small- and medium-sized businesses.

For his part, Biger believes the market is robust enough that Noble isn’t at risk of getting crowded out. He’s not necessarily wrong — credit originated at the point of sale in the U.S. is projected to grow from about 7% of unsecured lending balances (i.e. without collateral) in 2019 to about 13% to 15% of balances by 2023, according to a McKinsey report. By 2023, the report projects that “pay in four” players — i.e. vendors like Klarna and Afterpay — will originate about $90 billion annually and generate around $4 billion to $6 billion in revenues.

Of course, credit products don’t guarantee profits — the buy now, pay later sector in particular has suffered steep losses and slashed valuations as of late. But Noble’s small-but-growing customer base proves that some companies, at least, are buying the sales pitch — and perhaps seeing some success.

“There are simply too many challenges that companies face when looking to build credit products including compliance, debt funding and underwriting,” Biger said. “Noble’s mission is to remove these barriers and enable the inevitable movement of lending experiences from offline to online in the same way that payment processing platforms built the new payment rails that enabled the explosive growth in online payments witnessed over the past decade.”

Noble emerges from stealth to help companies extend lines of credit to their customers by Kyle Wiggers originally published on TechCrunch

TechCrunch+ roundup: Due diligence roadmap, employment law basics, YC’s Michael Seibel

Last week, we ran an article by Gaetano Crupi, a partner at VC firm Prime Movers Lab, identifying three pillars required to support a Series B data room: a strategy memo, a pitch deck and a forecast model.

In a follow-up, he explains the next step: packaging this information for prospective investors to “create the blueprint and backbone for an in-depth Series B due diligence process.

If you’re preparing for a Series B, these articles explain exactly what investors are looking for and how each piece of content works individually and in tandem.


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


Crupi also discusses some of the less obvious aspects of Series B fundraising, such as the need for topic-specific breakout decks, a comprehensive due diligence questionnaire, and critically, how to put it all together.

If your startup still hasn’t achieved product-market fit, feel free to skip this article and get back to work. As Crupi notes:

The advice presented here will only help companies that have really good fundamentals. You have to have the goods — all the other stuff is window dressing that tips luck in your favor.

Thanks very much for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

‘Just break even’ may be the worst possible advice for startups in turbulent times

Dollar sign made out of cheese on a mousetrap; break even bad advice startups

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

A friend shared a photo on Twitter of a feral cat in NYC walking on the electrified third rail of a subway track.

It was dangerous, but as long as the animal avoided making contact with the ground and the rail simultaneously, it could very well have been the safest route to its destination.

Refusing to cut costs during a downturn is similar to walking on the third rail: Companies that can maintain this tricky balance can maintain growth that propels them to the next level, according to Igor Ryabenkiy, CEO and managing partner of AltaIR Capital.

“Founders tend to like the idea of breaking even as quickly as possible,” he writes.

“Although their company might not become a unicorn, it can now earn them a stable salary and dividends. But for an investor, this is terrible.”

4 employment law mistakes startups can stop making today

A slice of burnt toast with a sad face; employment law mistakes

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

There’s no nice way to say this: when it comes to onboarding new employees, most early stage startups are either inept or uninterested.

At that point in a company’s development, Speed and Growth are considered more important than basic paperwork. And since most first-time founders have no management experience, problems will eventually arise.

In her third article for TC+, attorney Kristen Corpion explores the risks associated with non-compliance, and describes four common mistakes that create problems down the road.

“By being proactive with addressing employment law issues early on, a startup can set itself up to scale more seamlessly,” she writes.

YC’s Michael Seibel clarifies some misconceptions about the accelerator

YC Demo Day 2022 image

Image Credits: Bryce Durbin / TechCrunch

In a conversation adapted from the Equity podcast, Michael Seibel, partner at YC and managing director of YC Early Stage, spoke about starting up during a downturn, why his accelerator is offering larger checks, diversity and other issues relevant to seed-stage startups.

In the middle of last year, we started asking the question, “What’s the revenue multiple here?” And we started seeing companies raising at 100x to 350x their revenue.

So if I have $3 million in revenue, I have a billion-dollar company. Any of us who’ve been around for longer than two seconds [knows] that doesn’t feel sustainable.

So our partners, Dalton Caldwell, Jared [Friedman] and I sat down that fall and we were like, “Let’s say that this doesn’t continue,” because that seems to be for sure. “What can we do to help YC companies in a downturn?”

TechCrunch+ roundup: Due diligence roadmap, employment law basics, YC’s Michael Seibel by Walter Thompson originally published on TechCrunch