Europe wants to shape the future of virtual worlds with rules and taxes

EU lawmakers are moving in on the metaverse and making it plain that, whatever newfangled virtual world/s and/or immersive social connectivity that tech industry hype involving the term may refer to, these next-gen virtual spaces won’t escape one hard reality: Regulation.

There may be a second metaverse certainty too, if the Commission gets its way: Network infrastructure taxes.

The EU’s internal market commissioner, Thierry Breton, said today it believes some of the profits made in an increasingly immersive software realm should flow to providers of the network backbone required to host these virtual spaces — a suggestion that’s sure to trigger a fresh round of net neutrality pearl-clutching.

The Commission has been signalling for some months that it wants to find a way to support mobile operators to expand rollouts of next-gen cellular technologies — via imposing some kind of a levy on US tech giants to help fund European network infrastructure — following heavy lobbying by local telcos.

Last week, Breton revealed it plans to consult on network infrastructure cost contribution ideas in Q1 next year — as part of a wider metaverse-focused initiative, with the latter proposal coming later in the year.

More details of the bloc’s thinking on fostering development of virtual spaces and the network pipes needed to connect them has emerged today.

EU initiative on virtual worlds

In a Letter of Intent published today, setting out the bloc’s policy priorities for 2023 — and accompanying her annual State of the European Union speech — the EU’s president, Ursula von der Leyen, confirmed the Commission will put forward an “Initiative on virtual worlds, such as metaverse” next year.

The letter offers scant details on what exactly will be inside the EU’s virtual worlds package. But Breton — via a blog post on LinkedIn of all places — has picked up the baton to flesh out his views on how to deal, in broad-brush policy terms, with (the) metaverse(s) — something he couches as “one of the pressing digital challenges ahead of us”.

Breton presents his remarks as “Europe’s plan to thrive in the metaverse”. Though it remains to be (officially) confirmed whether he’s flying a little solo here — or playing advanced messenger on the direction of next year’s initiative. (We asked the Commission for more on the forthcoming virtual worlds initiative but with so much EU action today our contact warned there could be a delayed response — before pointing back to Breton’s blog, suggesting he is indeed signposting where the bloc is headed on virtual worlds.)

First up, both Breton (at length) and von der Leyen (in passing) are clear in planting a regulatory stake in virtual ground — by pointing out that would-be metaverse monopolists will have to contend with existing EU rules, such as the recent major EU digital rule reboot.

Rebooted digital rules

In her letter penned in difficult geopolitical and economic times, von der Leyen urges the bloc to stay the course on the green and digital transitions — which formed a key plank of her policy plan when she took up her mandate at the end of 2019. “This is about building a better future for the next generation and making ourselves more resilient and more prepared for challenges to come,” she writes, encouraging EU institutions to stick with the transformative push for sustainability and digitalization and implement key pieces of the plan already agreed on.

“This includes implementing the landmark agreements on the Digital Markets Act (DMA) and the Digital Services Act (DSA) which saw the EU take global leadership in regulating the digital space to make it safer and more open,” she goes on, name checking two big components of the digital reboot agreed by the EU’s institutions earlier this year — before adding a further nod to what else may be coming: “We will continue looking at new digital opportunities and trends, such as the metaverse.”

In his blog post, Breton makes it even more plain that metaverse builders are already subject to EU rules. “With the DSA and DMA, Europe has now strong and future-proof regulatory tools for the digital space,” he writes, pointedly adding: “We have also learned a lesson from this work: We will not witness a new Wild West or new private monopolies.

“We intend to shape from the outset the development of truly safe and thriving metaverses.”

This conviction was doubtless cemented by Facebook’s corporate pivot last year to Meta — a self-declared “metaverse company” — as the tech giant sought to escape years of operational scandals and reputational toxicity stuck like a barnacle to its social media brand by deploying a crisis PR rebranding tactic that implies a pivot, without it having to make meaningful reform to its business or business model.

While no one can say for sure whether the metaverse will ever exist (or merely remain an amorphous marketing label), should anything of substance actually materialize it’s pretty clear it won’t be located that far away from the kind of social connectivity Meta already monetizes through mass surveillance-based profiling and behavioural ads. So it seems a safe bet Zuckerberg is hoping to bankroll Facebook’s ‘metaverse’ future via plenty of user-profiling and behavioral ads too, at least in large part.

But if the Facebook founder was betting on a little corporate rebranding exercise to get Meta ahead of pesky regulators — such as privacy watchdogs in Europe that are finally starting to land some sizeable lumps on the company — he may be disappointed to find virtual worlds aren’t an escapist paradise after all.

Out with the old growth playbook

Taken as a whole, Breton’s remarks suggest the EU will be coming with a blended ‘sow and scythe’ package for virtual worlds — offering support initiatives (to encourage development and infrastructure) but also warnings that it will step in actively to steer and shape development, to ensure any new wave of ever-more-immersive socio-digital spaces don’t just repeat the same toxic growth playbook as Facebook.

Key EU preoccupations here appear to be enforcing user-centric safety issues (such as in areas like content moderation); and ensuring platforms remain open and contestable to the whole market (via mandating interoperability standards).

“Our European way to foster the virtual worlds is threefold: People, technologies and infrastructure,” Breton writes, summarizing the planned approach. “This new virtual environment must embed European values from the outset. People should feel as safe in the virtual worlds as they do in the real one.

“Private metaverses should develop based on interoperable standards and no single private player should hold the key to the public square or set its terms and conditions. Innovators and technologies should be allowed to thrive unhindered.”

There is also a reference to launching a “creative and interdisciplinary movement” — with the goal of developing “standards, increas[ing] interoperability, maximising impact” — a movement Breton says he wants to involve IT experts, regulatory experts citizens’ organisations and youth, in a similar fashion to the new European Bauhaus initiative the EU has applied to encourage engagement with sustainability-focused ‘green deal’ goals.

This piece of the EU plan contrasts to the more single-minded focus of Meta president (and former EU lawmaker), Nick Clegg, who — in his role evangelizing metaverse for Meta — has spent a lot of words talking up the volume of developer jobs that will be needed to build the immersive future Meta is betting its corporate continuity on.

Breton’s point appears to be that the EU wants a far more diverse mix of expertise to be involved in any ‘metaverse’ development. (Or, tl;dr: ‘We all know what happens when tech worlds are built, owned and operated by too many techbros — and we sure don’t want a repeat of that!’)

Ecosystem support — and infrastructure taxes?

A second big chunk of Breton’s blog post focuses on the technologies and tech skills the Commission sees as necessary for the bloc to have the power to bend virtual world makers to “European values”.

Breton notes these span many areas — of “software, platforms, middleware, 5G, HPC, clouds, etc” — but with “immersive technologies and virtual reality” identified as being “at the heart” of the metaverse “phenomenon”. So immersive tech looks to be where the EU will direct the meatiest ecosystem support in the forthcoming virtual worlds package.

But for starters Breton has announced the launch of a VR and AR industry coalition.

“The Commission has been laying the groundwork to structure this ecosystem,” he writes. “Today, I am happy to launch the Virtual and Augmented Reality Industrial Coalition, bringing together stakeholders from key metaverse technologies. We have developed a roadmap endorsed by over 40 EU organisations active in this space, from large organisations to SMEs, and universities.”

He also gives a nod to the European Chips Act — which aims to mobilize public and private investment to drive on-shore semiconductor manufacture in a supply chain resilience and digital sovereignty drive — with the commissioner recognizing that hardware development and production is a core component for virtual worlds, underpinning its development (and, ultimately, most likely, determining whether or not immersive technologies like VR and AR remain a niche (sometimes) nausea-inducing pass-time for the geeky few or actually make the leap into a transformative mainstream medium).

“The next step will be a quantum leap from current virtual reality and other enabling technologies to a world that truly blends the real with the virtual,” pens Breton, a former telco exec, in full tech evangelist mode.

The EU commissioner saves the most controversial piece of the upcoming metaverse plan for last: A plan for infrastructure taxes to come down the policy pipe. And he confines himself to trying to tamp down any objections by laying out a case for some form of levy to fund the necessary connectivity — aka the high capacity, high bandwidth, high speed, low latency networks we’re told will be needed to sustain these hyper immersive virtual spaces we’re also told we’ll want to pause our off-line existence to spend time in.

There are no firm details on what the EU is proposing on virtual world taxes as yet — just an affirmation that a consultation is coming down the pipe.

“The current situation, exacerbated during the Covid pandemic, shows a paradox of increasing volumes of data being carried on the infrastructures but decreasing revenues and appetite to invest to strengthen them and make them resilient,” writes Breton, drawing on long-standing telco gripes about scale of network investment demanded to roll out techs like 5G vs dwindling returns.

“The current economic climate sees stagnating rewards for investment and increasing deployment costs for pure connectivity infrastructure,” he goes on. “In Europe, all market players benefiting from the digital transformation should make a fair and proportionate contribution to public goods, services and infrastructures, for the benefit of all Europeans.”

Case made, Breton ends by trailing what he couches as a “comprehensive reflection and consultation on the vision and business model of the infrastructure that we need to carry the volumes of data and the instant and continuous interactions which will happen in the metaverses” — thereby landing a second blow of his case-hammer backing metaverse infrastructure taxes.

Still, you have to admire the EU’s repurposing of the tech industry’s latest shiny new hype vehicle to truck back the other way and deliver an age-old demand for a revenue share.

 

Europe wants to shape the future of virtual worlds with rules and taxes by Natasha Lomas originally published on TechCrunch

Liquid Instruments hooks up with $28.5M to upend the engineering testing market with software-defined instrumentation

Engineering innovations are a critical cornerstone in the evolution of technology, but ironically there haven’t been as many innovations in engineers’ tooling itself. Now, a startup called Liquid Instruments that’s devised a set of software and hardware to help engineers carry out one aspect of their work — testing — more efficiently is announcing a capital injection of $28.5 million to fuel its growth. It’s been on a roll with sales up 4x this year, with customers of its devices including NASA (where the founders first worked on the concept), Google and Qualcomm, Stanford and Duke, and the U.S.’s National Institute of Standards and Technology.

Moore’s Law is alive and well here: the startup’s unique selling point is that it has built a new take on testing equipment by translating much of the process into software that sits on hardware that’s faster, many times smaller, and less costly than traditional testing equipment, and provides other kinds of flexibility, such as more dynamic visualizations, diagnostics, programability and the ability to work on the tests in the cloud.

This Series B round of equity funding, which I understand values the company at north of $100 million, will help Liquid Instruments continue to build out more hardware models, and to write more software-based more testing tools for those devices.

The company — founded originally in Australia and now officially headquartered in San Francisco — today sells three versions of its Moku hardware — the Go, the Lab and the Pro, respectively starting at $599, $3,500 and $12,000. They are part of a bigger area of software-defined test instrumentation, and Daniel Shaddock, the CEO and co-founder, first worked on a version of this tech when he was on a team building testing equipment in NASA’s Jet Propulsion Laboratory for high precision wave detection using a similar software-defined approach.

After that project was done, Shaddock said he and some 11 others would have been “scattered to the wind”, working at other space agencies or academia, so he suggested that maybe they continue working together, to see how a similar concept could be applied to building testing equipment for the engineering world and academics at large. “It was great measurement technology,” he said, “so we thought, maybe others might like it, too.”

The devices use standard input ports and are based on flexible FPGA chip architecture. Today those chips are Xilinx chips from AMD, but the company is open to using “whatever the chip du jour might be” said Shaddock. That’s because its IP is not about the chips but about how they’re used to work “at the crossroads of analogue circuitry and digital processing,” he said. “What has been done previously on analogue devices, and distributed across many chips, are now all on FPGA chips. Now that they are larger, we can slice up the chip into more functions, and have them all work together.”

Although this is bringing down the price of testing devices, it’s not exactly putting Liquid Instruments into the category electronics companies building tools for hobbyists. Its customers rather span research and education through to government labs and industrial businesses, with applications including aerospace, defense, semiconductor, LiDAR and quantum computing. And it’s finding a lot of traction in all of them, with sales up four-fold in the last year.

The investors in this round also are a testament to its traction. Led by Acorn Capital, it also includes strategics like Lockheed Martin Ventures and Powerhouse Ventures, as well as previous backers Spirit Super/ANU Connect Ventures, MA Growth Ventures, Significant Capital Ventures, and Boman Enterprises. Liquid Instruments has to date raised $50 million.

“Liquid Instruments is creating a versatile test and measurement platform that is customizable and efficient,” said Chris Moran, vice president and general manager of Lockheed Martin Ventures, in a statement. “This technology has the potential to deliver mission critical functionality that can provide value to our customer. We are excited by Liquid’s continued growth and look forward to strengthening our collaboration.”

“Liquid Instruments’ Australian-developed software-defined approach is the manifestation of an ambitious plan targeting a vital market that has suffered from a deficit of innovation and imagination.” added Robert Routley, CEO, Acorn Capital. “We see tremendous potential for their platform to continue to grow and evolve, benefitting more industries over time. Liquid Instruments is well positioned to execute on its expansion strategy and disrupt the test and measurement sector and lead the industry through the much-needed transition from hardware to software.”

“This injection of capital will supercharge our ability to revolutionize the test and measurement industry,” said Daniel Shaddock, CEO, and co-founder of Liquid Instruments. “Our innovative software-first approach provides clear advantages over traditional hardware-based solutions, and this funding strongly positions us to lead this critical industry transformation.”

Liquid Instruments’ Moku product line offers the world’s most powerful and flexible software-defined instrumentation platform, harnessing the processing power and reconfigurability of Field Programmable Gate Arrays (FPGAs) to combine multiple instruments into one compact and accessible device. These product offerings include the Moku:Go, a complete lab solution for engineers and students to actively test designs and projects, and the Moku:Pro, an integrated platform for the most demanding research and engineering applications.

“We are focused on enhancing cloud integration features for our products and scaling production of Moku:Go to help millions of undergraduate engineering students around the world unlock their full potential,” added Shaddock. “Moku’s will continue to receive new features via frequent over-the-air updates enabling new solutions in key commercial industries.”

Liquid Instruments hooks up with $28.5M to upend the engineering testing market with software-defined instrumentation by Ingrid Lunden originally published on TechCrunch

Nvidia the latest collateral damage in US-China tech war

Nvidia, the world’s largest maker of artificial intelligence chips, is at the heart of a new round of U.S. tech sanctions targeting China.

Nvidia noted in an SEC filing that the U.S. government had imposed new export restrictions on two of its most advanced AI chips to China, its second-largest market after Taiwan making up 26% of its revenues in 2021.

The ban could cost Nvidia as much as $400 million in potential sales to China in the third quarter, the firm said.

The export control also bars Nvidia from shipping the chips to Russia, though the company said it doesn’t currently sell to the country.

The U.S. government said the move “will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China and Russia.” But the ban is in practice crimping a wide array of businesses and organizations using the silicons beyond military uses.

The two chips in question are the Nvidia A100 and H100 graphic processing units. A100 is designed to provide high-performance computing, storage, and networking capabilities for industries spanning healthcare, finance, and manufacturing, explains Chinese e-commerce and cloud computing giant Alibaba, a user of A100.

H100 is the firm’s upcoming enterprise AI chip that is expected to ship by the end of this year and has part of its production done in China.

Nvidia’s engagement with China won’t be completely severed. The U.S. government has granted permission for Nvidia to keep manufacturing H100 in China, Nvidia said in another filing, though access by Chinese customers will still be restricted.

The ban is “sci-tech hegemony”, snapped China’s foreign ministry spokesperson Wang Wenbin in a regular press conference on Thursday. “The US seeks to use its technological prowess as an advantage to hobble and suppress the development of emerging markets and developing countries.”

The U.S.’s move to bar China’s access to its high-end technologies has in turn accelerated the latter’s pursuit of independence. Huawei has been doubling down on smartphone chip development ever since Washington put it on an export blacklist over national security concerns in 2019. A swathe of domestic semiconductor startups is netting hefty investments from VCs and government-guided funds.

While China may still be a generation behind in producing the most sophisticated chips, the country is gradually sharpening its edge in lower-end, specialized semiconductors, such as neural processing units that give phone cameras a boost. It remains to be seen what ripple effect the Nvidia ban will create.

Ford reopens order bank and raises prices for 2023 Mustang Mach-E

Ford began taking reservations for its 2023 Mustang Mach-E on Thursday after a four-month hiatus due to short supply.

The automaker also boosted the battery-electric SUV’s range and upped the price amid economic headwinds such as inflation and rising costs for battery materials. Ford closed the order bank for the 2022 model year last spring when a global semiconductor shortage stymied production.

The new pricing, which goes into effect Thursday, is “due to significant material cost increases, continued strain on key supply chains, and rapidly evolving market conditions, and will continue to monitor pricing across the model year,” the company said in a statement.

Pricing for new orders will start at $46,895 for the rear-wheel-drive base trim with standard range (about a 7% increase) and just below $70,000 for the top-of-the-line GT Extended Range edition.

The Mach-E SUV’s Premium models with the Extended Range battery will be able to travel 290 miles on a fully charged battery, 13 miles longer than the outgoing model.

Ford is also adding its Co-Pilot360 Driver Assist Technology as a standard safety feature. The software will enable customers to receive future over-the-air updates for its Advanced Driver Assistance Systems (ADAS), according to Marin Gjaja, chief customer officer for Ford’s Model e division.

The automaker, which aims to sell more than 2 million EVs annually by 2026, is investing tens of billions of dollars to boost its production capacity worldwide. Ford said Monday it plans to lay off about 3,000 salary and contract workers to manage costs.

“We are eliminating work, as well as reorganizing and simplifying functions throughout the business,” Executive Chairman Bill Ford and CEO Jim Farley wrote in a letter to employees.

Earlier this month, Ford raised the price of its F-150 Lightning battery-electric pickup truck with increases ranging between $6,000 to $8,500 depending on the trim. The 2023 Lightning will start at $46,974 and top out at nearly six figures.

 

Aramco’s Prosperity7 powers AI drug firm Insilico’s $95M round

Hong Kong-based drug discovery and development company Insilico has secured fresh capital at a time that its CEO described as a “biotech winter.”

The firm has raised $35 million on the heels of its last tranche in June, bringing its total Series D investment to $95 million. The new round was “oversubscribed”, the firm’s founder and CEO Alex Zhavoronkov told TechCrunch, declining to disclose the company’s valuation.

Prosperity7, the venture capital arm of Saudi Arabia’s state oil company Aramco, led the new capital infusion. The fund has been actively scouring for opportunities in and around China that can scale globally and particularly in the Middle East.

Insilico, which operates R&D teams across Hong Kong, Shanghai, and New York, seems to be a good fit for Prosperity7.

“Prosperity7 inspired us to look into sustainable chemistry,” said Zhavoronkov. Insilico uses machine learning to identify potential drug targets and eventually create the drug. The same technology can also be applied to find novel and useful molecules for sustainable chemistry, an emerging area to which Aramco has devoted much effort, the founder explained.

Sustainable chemistry, as defined by OECD, is “a scientific concept that seeks to improve the efficiency with which natural resources are used to meet human needs for chemical products and services.” It “encompasses the design, manufacture, and use of efficient, effective, safe and more environmentally benign chemical products and processes.”

Other investors from the round include an unnamed “large, diversified asset management firm on the U.S. West Coast,” and an assortment of financial and strategic investors like BHR Partners, Warburg Pincus, B Capital Group, Qiming Venture Partners, Deerfield, Wilson Sonsini Goodrich & Rosati, BOLD Capital Partners, and Pavilion Capital.

Zhavoronkov himself also invested in the Series D financing.

When asked why the company straddles China and the U.S., the founder compared the drug discovery space to the early semiconductor industry where research was done mostly in the U.S. while hardware production happened in China.

AI drug discovery relies on a massive amount of investment in so-called contract research organizations (CROs), which provide support to pharmaceutical or medical device companies in the form of outsourcing. China, exemplified by cities like Wuxi, has in recent years emerged as a popular CRO hub for international pharma companies.

The founder was also keen to speak about the company’s new dual-CEO structure. He recently promoted GSK veteran Dr. Feng Ren to be his co-CEO, who is now overseeing Insilico’s R&D and drug business, while Zhavoronkov focuses on the firm’s AI platform.

“Ren generates a lot of proprietary data for us to train AI to do better than humans. We can use this internally for drug discovery and then export this tech to the rest of the industry,” Zhavoronkov said.

Aramco’s Prosperity7 powers AI drug firm Insilico’s $95M round

Hong Kong-based drug discovery and development company Insilico has secured fresh capital at a time that its CEO described as a “biotech winter.”

The firm has raised $35 million on the heels of its last tranche in June, bringing its total Series D investment to $95 million. The new round was “oversubscribed”, the firm’s founder and CEO Alex Zhavoronkov told TechCrunch, declining to disclose the company’s valuation.

Prosperity7, the venture capital arm of Saudi Arabia’s state oil company Aramco, led the new capital infusion. The fund has been actively scouring for opportunities in and around China that can scale globally and particularly in the Middle East.

Insilico, which operates R&D teams across Hong Kong, Shanghai, and New York, seems to be a good fit for Prosperity7.

“Prosperity7 inspired us to look into sustainable chemistry,” said Zhavoronkov. Insilico uses machine learning to identify potential drug targets and eventually create the drug. The same technology can also be applied to find novel and useful molecules for sustainable chemistry, an emerging area to which Aramco has devoted much effort, the founder explained.

Sustainable chemistry, as defined by OECD, is “a scientific concept that seeks to improve the efficiency with which natural resources are used to meet human needs for chemical products and services.” It “encompasses the design, manufacture, and use of efficient, effective, safe and more environmentally benign chemical products and processes.”

Other investors from the round include an unnamed “large, diversified asset management firm on the U.S. West Coast,” and an assortment of financial and strategic investors like BHR Partners, Warburg Pincus, B Capital Group, Qiming Venture Partners, Deerfield, Wilson Sonsini Goodrich & Rosati, BOLD Capital Partners, and Pavilion Capital.

Zhavoronkov himself also invested in the Series D financing.

When asked why the company straddles China and the U.S., the founder compared the drug discovery space to the early semiconductor industry where research was done mostly in the U.S. while hardware production happened in China.

AI drug discovery relies on a massive amount of investment in so-called contract research organizations (CROs), which provide support to pharmaceutical or medical device companies in the form of outsourcing. China, exemplified by cities like Wuxi, has in recent years emerged as a popular CRO hub for international pharma companies.

The founder was also keen to speak about the company’s new dual-CEO structure. He recently promoted GSK veteran Dr. Feng Ren to be his co-CEO, who is now overseeing Insilico’s R&D and drug business, while Zhavoronkov focuses on the firm’s AI platform.

“Ren generates a lot of proprietary data for us to train AI to do better than humans. We can use this internally for drug discovery and then export this tech to the rest of the industry,” Zhavoronkov said.

TechCrunch+ roundup: SBA startup loans, quarterly board decks, bootstrappers’ delight

Happy August! Or, as many of my neighbors are fond of saying: Happy Fogust.

San Francisco sits on a peninsula surrounded by chilly water, so when warm summer air rushes in, thick fog obscures the landscape. Some days, the blanket is so thick, visibility is just a few hundred feet.

It’s an apt metaphor for the uncertainty plaguing tech companies as we hear about layoffs, reduced valuations and more discussion of dry powder than I’ve heard in many years.

One bright light amidst the gloom: Startups that generate enough revenue to drive steady growth will find many investors willing to take their calls.

One bright light amidst the gloom: Startups that generate enough revenue to drive steady growth will find many investors willing to take their calls.

If you’re a bootstrapped company who is not yet on the treadmill, you have that kind of optionality or that ability to choose when to get on,” says Cavan Klinsky, co-founder of payments processor Healthie.


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Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.


“Once you’ve already raised a bunch of ventures, you’re kind of building a business for venture scale, whereas if you are bootstrapped … you can be really really opportunistic about what that right time is,” he told Natasha Mascarenhas.

Even so, she interviewed founders at a handful of bootstrapped startups and found that “even if they don’t want to,” some “may choose to turn to venture capital to get to the next level of sales” or keep hiring on track.

Inflation and competition with crypto salaries are just two factors driving up costs, which is leading many self-sufficient founders to reconsider going it alone.

“For a lot of bootstrapped companies, they’re not out there fundraising,” said Sketchy CEO and co-founder Saud Siddiqui.

“A lot of times it is investors approaching them, so it kind of depends on the climate, and if folks aren’t investing, maybe they’re just gonna keep chugging along.”

Thanks very much for reading TC+ this week.

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

5 tips for scaling your green startup during a funding drought

Horizontal side view of a lonely yellow flower growing on dried cracked soil; fundraising for green startups downturn

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

I’m not much of a gardener, so I chose houseplants that tolerate my forgetfulness with regard to water and fertilizer.

Startups that are trying to create scalable solutions to the slow-rolling climate disaster we’ve created for ourselves are not so resilient, however.

These companies often have lengthy, sizable fundraising rounds and years-long product development timelines, which means they’re particularly vulnerable to external market forces.

Priyanka Srinivas, co-founder and CEO of food tech startup Live Green Co., shared her advice for entrepreneurs who are focused on climate and sustainability:

“If your business activities have produced desired results and repeatable cycles — like developing a new product and distributing it through local markets — then you are ready to multiply.”

US startups seeking funds shouldn’t overlook financing from the government

SBA, startups, loan

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

I know people who’ve worked with the U.S. Small Business Administration (SBA) to find funding for a food truck, a bakery and a clothing store, but I don’t know of any startup founders who’ve used this federal program to grow their companies.

Eligible startups can acquire government-guaranteed loans up to $5 million that are paid back over a decade, reports Rebecca Szkutak. That’s real money.

“The problem is that business owners oftentimes overlook pretty readily available debt capital,” said Fountainhead CEO and founder, Chris Hurn.

“They don’t have to give up any equity. [SBA loans] can oftentimes be the exact stepping stone they need to get to the next stage.”

Beyond volatility: How semiconductor companies can thrive with a focused sector strategy

microchip fabrication plant

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

Despite chip shortages that are slowing down production for everything from televisions to farm tractors, semiconductor sales shot up to $600 billion in 2021.

To keep their heads above the water in the coming years, semiconductor makers should back technologies that power other industries, such as AI/ML, digital services and micromobility, according to McKinsey partners Ondrej Burkacky and Nikolaus Lehmann.

“From a demand perspective, we expect 70% of growth up to 2030 will be driven by just three industries: automotive, computation and data storage, and wireless […] Through deep analysis of their resources and capabilities, the task for decision-makers as they ramp up capacity is to tailor their capabilities to the most promising segments.”

Build a solid deck for your quarterly board meetings

Conceptual still life with low risk and rising; build a deck for board meetings

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

Board meetings are crucial for getting feedback on your progress to date and your plans for the future, but what’s the best way to give board members the full picture?

According to Ridge Ventures partner Yousuf Khan, founders should “just ask” investors about what kind of details and metrics will make quarterly decks optimally valuable.

“Reaching out to your board not only helps provide a sense of direction, it also gives you the opportunity to build your relationship,” he says. “People appreciate the opportunity to weigh in.”

In this TC+ post, he shares seven tips for building a presentation that updates board members on progress, plans, product pipeline and financials.

Beyond volatility: How semiconductor companies can thrive with a focused sector strategy

Semiconductors are critical to the economy of almost every country in the world. However, the industry is facing significant challenges.

Even with fabs operating at full capacity, companies have struggled to keep pace with demand, pushing lead times to six months or longer. Moreover, the impact of the pandemic, a talent crunch and spiraling design complexity mean an industry that should be riding high is under increasing pressure.

Amid soaring demand, semiconductor markets have boomed, with sales growing by more than 20% to around $600 billion in 2021. However, global chip shortages have caused manufacturing slowdowns in industries from autos to agriculture, and led to debates over the reliability of an industry that is vital to the global economy.

In the U.S., the federal government has responded with a swath of legislation, including the CHIPS for America Act, which authorizes $52 billion in funding for the expansion of the domestic semiconductor industry. The new rules aim to protect industries against supply shortages and reduce their reliance on fabrication plants in Asia. Companies including Intel, Samsung, Texas Instruments and GlobalFoundries are planning on adding more capacity in the U.S., and Europe is also seeing significant investment.

The recent ramp up in productive capacity reflects the consensus that, notwithstanding the current environment, the longer-term outlook for the semiconductor industry remains positive. From domestic kitchens to the most advanced manufacturing plants, semiconductors are embedded in modern economies. Combine that with the rise in home working, and it’s not difficult to predict the industry’s direction of travel.

We estimate 6% to 8% growth per year up to 2030, amid expanding demand for digital services, the growth of artificial intelligence and machine learning (AI/ML), and mass migration to electric mobility. On that trajectory, we predict a trillion-dollar industry by the end of the decade.

Image Credits: McKinsey & Company

The passage of the CHIPS Act could launch another US startup renaissance

The U.S. Senate earlier this week approved the CHIPS Act, which includes $52 billion to subsidize domestic semiconductor production. It still has to struggle its way through the bureaucracy (here’s a quick refresher), but clearing the Senate is a huge and important step toward the American chip fabrication industry getting a serious chunk of cash.

Personally, I’m psyched that this may be happening for a few reasons. Yes, yes — supply chain problems and chip shortages have been the bane of everyone’s life for a hot minute, and onshoring some of these fabrication materials, tools, and know-how will go a long way toward making the U.S. less reliant on external manufacturing, and more resilient in general.

That’s all good and well, but let’s be honest: $52 billion isn’t exactly a sachet of coppers and nickels, but chip manufacturing is expensive. The last planned chip factories I can remember are the $19 billion plant Intel is building in Germany and the $20 billion plant the company is building here in the U.S. If that’s the price tag of a factory, the subsidy builds two and a half plants. That means jobs, but it doesn’t exactly turn the U.S. into a chip-fab juggernaut overnight.

Far more than new factories, I’m most excited about the possibility of history repeating itself. Intel’s choice to build a $20 billion chip fabrication facility in Columbus, Ohio, along with the more recent news of the potential cash injection into the industry, could set the stage for a startup ecosystem boost.

Senate passes CHIPS Act to subsidize domestic semiconductor production

The United States Senate today approved the CHIPS Act, with a 64-33 vote, following yesterday’s cloture passage. The bill, which includes $52 billion to subsidize domestic semiconductor production, now moves onto the House for debate. The current bill bears more than a passing resemblance to the United States Innovation and Competition Act, which also passed through the Senate before petering out in the lower congressional chamber.

The bill is a reaction to the on-going global chip shortage, itself a result of a confluence of international crises, including the pandemic, tense U.S.-China relations, extreme weather phenomena and the on-going Russia-Ukraine War. Those factors, combined with the manufacturing’s concentration in Asia (specifically Taiwan), have led to shortages in the chips that power everything from phones to cars.

President Joe Biden has been a staunch supporter of the bill, meeting with virtually meeting with several CEOs earlier this week, due to his Covid-19 diagnosis. Earlier this morning, the President tweeted, “Semiconductor chips are the building blocks of the modern economy – they power our smartphones and cars. And for years, manufacturing was sent overseas. For the sake of American jobs and our economy, we must make these at home. The CHIPS for America Act will get that done.”

“We are moving forward on the Senate CHIPS bill,” Senate Majority Leader Chuck Schumer said in a statement tied to the vote. “It’s going to take aim at the national semiconductor chip shortage, lower costs for American consumers, and boost scientific innovation and jobs.”

In a recent interview, Commerce Secretary Gina Raimondo suggested the results of not passing the bill could be dire. “If you allow yourself to think about a scenario where the United States no longer had access to the chips currently being made in Taiwan, it’s a scary scenario,” she told interviewers. “It’s a deep and immediate recession. It’s an inability to protect ourselves by making military equipment. We need to make this in America. We need a manufacturing base that produces these chips, at least enough of these chips, here on our shores because otherwise we’ll just be too dependent on other countries.”

U.S. Labor Secretary Marty Walsh also championed the bill in a recent interview with TechCrunch, noting it “will allow us to bring more manufacturing jobs to America. These are going to be factories built from scratch.”

Republican Congressman Michael McCaul cited security concerns connected to tense U.S.-China relations as the key to his support. “It’s been a long process, but this national security legislation will ensure we manufacture semiconductors — the brains behind everything from cell phones to fighter jets — right here in America. NOT China.”

Along with bi-partisan support, the bill has also received criticism from both sides of the aisle. In a recent statement, Bernie Sanders accused the bill of promoting “crony capitalism.” The Vermont Senator noted,

The five biggest semi-conductor companies that will likely receive the lion’s share of this taxpayer handout, Intel, Texas Instruments, Micron Technology, Global Foundries and Samsung, made $70 billion in profits last year. Does it sound like these companies really need corporate welfare?

Republican Utah Senator, Mike Lee, echoed the sentiment, noting, “The poorer you are, the more you suffer. Even people well-entrenched in the middle class get gouged considerably. Why we would want to take money away from them and give it to the wealthy is beyond my ability to fathom.”

Intel CEO Pat Gelsinger pushed back on the notion that his industry was “looking for handouts” at the recent Aspen Ideas Festival, adding that a delay would push chipmakers to move to other non-U.S. locales, such as Europe. “The rest of the world is moving rapidly despite the inability of Congress to get this finished,” the executive said.

Earlier this week, Intel inked a deal with MediaTek that will diversify the geographical production of the Taiwanese company’s chips. That news comes after Intel delayed the groundbreaking of its $20 billion chip plant outside of Columbus, Ohio in what some have called a “stunt” designed to pressure Congress into passing the CHIPS Act.

The President, newly recovered from Covid, watched the passage from the White House, before calling on the House to pass the legislation “ASAP.”