Pear, now nearly 10 years old and with numerous hits, looks to close its biggest fund by far

Pear, a Palo Alto, Ca.-based venture firm that we’ve been tracking since its outset in 2012, looks to be closing in on its fourth fund with $410 million in capital commitments, shows a new SEC filing.

It would be a big step up from Pear’s first three funds, which closed progressively with $50 million in 2013, $75 million in 2016, and $160 million in capital commitments in 2019, including from a longtime limited partner, the University of Chicago.

Reached for comment, cofounder Pejman Nozad emailed back, “I can’t comment!”

Nozad and cofounder Mar Hershenson have long been first-stop for prominent early-stage investors that are looking to fund nascent teams, given the firm has been among the earliest backers in a notable number of companies that have gone to raise ever-bigger rounds and higher valuations, including the now publicly traded companies DoorDash and Guardant Health.

Other startups to attract capital from Pear before nearly any other firm was aware of their existence include the deep-linking startup Branch, which closed on $300 million in funding in February at a $4 billion valuation; Gusto, valued at $9.5 billion last summer when it raised $175 million in funding; and Aurora Solar, a firm that provides software services for the solar industry and was valued at $4 billion in February when it closed a $200 million round.

Like other firms, Pear is likely to see the valuations of its still-private portfolio companies slide downward — possibly by a lot — depending on how long this correction lasts.

Hershenson, who joined TechCrunch for a mobility-focused event this week, noted on stage that startups are in for a bumpy ride, given how frothy the market had grown.

Asked if the startup party is over, Hershenson answered: “Maybe for a little while it’s over . . .The problem is that the market was priced too high in 2021, and we’re all adjusting to that price change, and that changes how companies raise money.

“Everybody knows that the stock market is down a lot,” she’d said. “Software stocks are down in some cases 80%. [Meanwhile] if you’re a private company, and you were very lucky and you raised money in 2021, you may have gotten a multiple of 100x on your ARR. Today, those multiples are 10x or 20x. That means that if your company was $2 billion [at the time of your fundraise], your company is [now] worth $200 million.:

Even with a steep reset in prices, however, Pear’s success to date is undeniable. It’s also unlikely.

Nozad, very famously, was earlier a rug dealer who insisted on toting rugs to his clients’ homes, where during the course of long conversations, they would learn about the rug and he would learn about their business. He eventually became a scout for his boss, and a trusted friend to some very powerful people.

“He has a good sniffer, and I trust the guy,”  Sequoia’s Doug Leone told Forbes back in 2012. “He’s like me, from the earth.” Sequoia has, in fact, backed a number of companies that Pear has funded, including Guardant Health and DoorDash.

Meanwhile, his partner, Mar Hershenson, was also very much an outlier a decade ago. Despite founding several companies previously and though she holds an M.S. and Ph.D. degrees in electrical engineering from Stanford University, she is a native of Spain and more unusual in VC circles, she is a woman who had not previously cut her teeth at someone else’s venture firm. While that may not seem very notable today, she was in very rare company as a VC even a decade ago.

Pear hosted an invite-only demo day earlier this week, coverage of which we’ll have for readers early next week. (Unlike Y Combinator, the outfit holds a demo day each year for a comparatively limited number of companies — typically around 10.)

In the meantime, some of its other, newest checks have gone to Sudozi, a two-year-old Austin, Tex., startup that provides a SaaS platform to help enterprises improve their money management capabilities and that just this month announced a $4.3 million seed round led by Pear.

Pear also recently wrote a follow-on check to Osmind, a two-year-old, Bay Area-based startup that makes software to chart and update patient information and documents, with a focus on mental health. The outfit raised $40 million in Series B funding led by DFJ Growth, an announcement it also made earlier this month.

Correction: This story originally reported that Pear’s newest fund is closed, a fait accompli; we’ve updated the story to reflect that it is not.

Why founders should start talking now to bankers and potential buyers

Founders have gotten the memo that the ground is shifting under their feet right now. What to do about it is the question. Already, teams are making plans to scale back their spending to preserve capital. They’re making painful staff cuts toward that same end — or else instituting hiring freezes.

But they should also be thinking a lot harder about building relationships with bankers and the larger companies that might conceivably be interested in acquiring their startup, says two attorneys who work on both the ‘buy’ and ‘sell’ side of transactions, with both large companies and venture-backed outfits, and who both have more than 20 years of experience.

Indeed, to better understand some of the options founders may have, we talked earlier today with Denny Kwon and Scott Anthony, both of whom represent the white shoe law firm Covington & Burling (where former U.S. Attorney General Eric Holder is also an attorney). They answered a range of questions that we thought startups might be wondering about right now. Our chat has been edited lightly for length.

TC: How much has the world changed in the last few weeks?

DK: There is certainly a feeling of more pressure on sellers to get deals done as quickly as possible in light of the fact that there’s a lot of market volatility right now and they don’t know how buyers may be reacting to a significant decline in their stock price. Smaller companies are also facing the prospect of a slightly more challenging fundraising market, so alternatives for them are narrowing. 

TC: Given that public shares are so volatile right now, are acquirers more or less inclined to offer equity as a component of a deal? 

DK: It’s much more challenging to price deals with a significant stock component in this market. With any volatility, you don’t get a clear sense of the inherent value of a share, so all-cash deals are much more favorable to targets.

TC: Are targets in a position right now to make demands? How much leverage does a startup with dwindling options really have?

DK: Whenever we see volatile markets, where valuations were incredibly high [and are] being reset, it always takes time for sellers expectations to reset as well, so although they may be a temporary [lull in activity] because of the market, if there’s a ‘normalization’ that’s to come, we’ll probably see M&A activity, especially where valuation expectations are reduced on both the buyer’s and the seller’s side.

My sense [right now] is that buyers may view the market correction as being potentially opportunistic but sellers may not have the same expectations because they may hope for a rebound in the near future. Once seller expectations come down and they continue to hear from VCs that funding may not be as available as it was 6 to 12 months ago, they’ll be even harder pressed to turn away acquisition offers that come in.

TC: Are you seeing deals being yanked as buyers look to reprice earlier agreements to their benefit?

DK: The pending deals I’m working on are continuing apace.

TC: We’re all hearing — and reading — about very steep valuation drops already. Do you have any sense of how much value your clients have lost in recent weeks or whether certain sectors are getting hit harder than others?

SA:There’s valuation pressure, but it’s hard to gauge [the degree]. Certainly, we have companies that were racing to close valuations [before Russia invaded Ukraine] and [that period since] has changed everyone’s expectations. I think there’s concern on the company side that investors are sitting out and that’s driving valuations down.

Companies with revenues and good prospects will weather any downturn better — they always have. Sector wise, it will depend, but the whole stablecoin [debacle] hasn’t helped the crypto stuff.

TC: How big a concern are antitrust regulators to your bigger clients? 

DK: It’s top of mind for all practitioners, but there’s a dichotomy in that some transactions are reportable and others are not. For those that are reportable — the threshold is approximately $100 million —  we’re spending an incredible amount of time analyzing the potential for regulatory issues.

TC: How long does an M&A process take, and at what point do both sides agree on a price?

DK: From that initial approach from an acquirer, the time period can vary from a few weeks if there is alignment right away, up to several months if the target company wants to see if there is other interest. A lot depends on how compelling that first offer may appear. Once you get to a handshake on a valuation, it’s usually a six- to eight-week process to get a signed definitive agreement.

SA: If the [startup] is the one that is making the decision to find a buyer, then the process – maybe they hire bankers, maybe they use board members’ connections to reach out to strategics – the process and timing can be very different depending on how quickly they need the money and how quickly they can get potential buyers interested . . . and the size of the company, but buyers are still going to run their diligence process.

TC: Let’s assume M&A will be a more significant factor, given the cooling funding environment. If you were to advise a startup on the pros and cons about proceeding, what points would you make?

DK: Many companies at an inflection point that need to raise money to fund their growth or expansion are going to have a difficult decision to make, which is to either raise a new round where the valuation may not meet their expectations or [where they see a lot of dilution], or an M&A exit, where they see proceeds now but lose out on [potential] upside.

TC: Should startups that are open to selling be reaching out to anyone, or should they wait to see who approaches them? Some might worry their startup’s value will drop as soon as they indicate a willingness to sell.

DK:  I’d be advising startups to talk to bankers and keep relationships up with people at the larger companies they know simply because we may be in for a longer-term correction, where funding becomes even more challenging than it has been over the last couple of months.

SA: Having relationships with the bankers is prudent so if you have to check the market, you have those relationships already. Also, keeping in contact with customers and bigger strategic partners that would be natural buyers for the company could short-circuit any kind of sale process later.

Daily Crunch: South Korea’s special financial crimes unit is investigating Do Kwon

What is that we hear? Is that the Friday, May 20, 2022, on the calendar and the soft, alluring siren’s song of a weekend that’s right around the corner? Why, yes, that must be it!

Our events team is busy putting together an awesome TechCrunch Disrupt, and we are psyched about Startup Battlefield, where the winner will walk away with a $100,000 check to continue building the future it is envisioning. Here’s how to be in the running. — Haje and Christine

The TechCrunch Top 3

  • UST UGH: Terraform Labs founder Do Kwon has some ’splaining to do with South Korea’s special financial crimes unit, which has launched an investigation into the collapse of Terraform’s stablecoin TerraUSD (UST) and its sister token Luna earlier this month. Prosecutors might be first in line, but the line is growing, with investors filing a lawsuit against Kwon and his co-founder Daniel Shin over alleged charges of fraud and other financial regulation violations. Also joining are Luna Foundation Guard advisors who tell Jacquie that they have not heard from Kwon in weeks.
  • Standoff: We enjoyed reading Carly’s piece outlining what happened with Costa Rica’s ransomware attacks — the Conti gang is attempting to overthrow the government — and who could be next. As of our newsletter time, the ransom part was still going on. The deadline given was May 23.
  • Klarna konundrum: The payments company is reportedly the latest to be fine with lowering its valuation, and in its case, there is some capital attached. We think Alex sums it up well saying, “No one likes a down round. They are dilutive, messy and demoralizing. But they are also miles better than not raising money and dying, so companies raise them when required.” He goes into why Klarna taking an insider round with a cut valuation is worth it or not.

Startups and VC

Today, we got a wee bit excited about Haje’s somewhat-expletive-filled rant about Coca-Cola’s new bottle caps that don’t detach from the bottle, against a backdrop of greenwashing.

We also loved Brian’s piece about Pebble founder Eric Migicovsky’s love for small phones. “If no one else makes one I guess I will be forced to make it myself,” Migicovsky laments.

Also, Brian and Haje tag-teamed on a pair of articles about Sony’s new earbuds. Brian covers the buds themselves (“As someone who tests a lot of earbuds over the course of a year, the LinkBuds S are among the best sounding and most comfortable I’ve had in my ears”), and Haje double-clicked on the Endel soundscape-creating app.

Strap on your dancing shoes, there’s a veritable dance party of more news coming your way:

We also have a roundup of some of the awesome stories that came out of our Mobility event:

Three things to remember when diversifying your startup’s cap table

High Angle View Of Multi Colored Toys Over White Background

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

Just as a sales team builds and refines its funnel, early stage founders in fundraising mode can create an investor funnel that will help sustain their company for years to come.

Oriana Papin-Zoghbi, CEO and co-founder of women’s health startup AOA Dx, shared her investor breakdown with TC+:

  • 35% private investors
  • 34% women (female investors or female-headed funds)
  • 26% venture capitalists
  • 23% family and friends
  • 18% international investors
  • 15% angel groups

“When building an investor funnel, vocalizing what you want is crucial to finding the right investors,” says Papin-Zoghbi.

“Finding the right investors is like finding the right team members — you need to be upfront about your expectations and address what you want them to bring to the table.”

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

Big Tech Inc.

  • Deposit 25 cents: If you’re a gamer, we presume you have some thoughts on God of War: Ragnarök. Devin’s take is that this game “may be the most accessible title yet, and that’s saying something.” It’s good to see Microsoft create a game that offers features that are customizable for people with certain specific disabilities, like a visual or hearing impairment.
  • The family that Snaps together stays together: For every parent dying to know who their teen is interacting with on Snapchat, the social media giant is close to launching its parental control feature, “Family Center.” For those of you not on Snapchat, or don’t have children, Sarah tells us this is important because it is one of the few social networks where you can’t see someone’s friend list.
  • Holy Poké Balls!: There’s now a Poké Ball reward for being both a Pokémon GO player and an Amazon Prime member.
  • Dating update: It looks like Match Group, the parent company of dating apps Tinder, Hinge and OkCupid, is on good terms with Google again. Crisis averted?

A third straight week of tech layoffs in the books

You thought the market was bad for venture capitalists, but what about the actual workers behind the tech companies they’ve backed?

Reluctantly, we’re writing a tech layoffs roundup for the third week in a row, because once again, there have been reductions across stages and sectors. Over the past month, public and private tech companies have been announcing mass layoffs across sectors. Employees from Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet and Netflix have been impacted by the workforce reductions. Some bigger companies are instituting hiring freezes, such as Twitter and Meta, or announcing a shift in strategy, such as Uber.

As has been our mantra while reporting on the layoffs sweeping the tech industry: layoffs don’t happen to companies, they happen to people. Especially for the U.S.-based tech employees, layoffs don’t just mean a loss of income — they mean a medically dangerous loss of healthcare.

Let’s take a look at which companies announced reductions this week.

Netflix layoffs continue 

After layoffs hit Netflix’s content arm Tudum a few weeks ago, 150 more primarily U.S.-based employees were let go, plus 70 other employees in the animation division.

A Netflix representative wrote in an emailed statement, “As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company.” Netflix reported revenue of $7.87 billion for the first quarter of 2022 and a significant loss of 200,000 subscribers.

Contractors were also impacted by these layoffs, but the number of affected workers in that designation is unclear. TechCrunch asked Netflix about reports that staff running diverse social channels like Strong Black Lead, Golden, Most and Con Todo were laid off, but Netflix said that the company decided not to renew contracts with certain agencies it used to recruit contractors. Still, it doesn’t feel great to see queer people and people of color losing their jobs, which helped Netflix cater to these audiences.

Picsart’s unicorn status didn’t save it 

Less than a year ago, Picsart raised $130 million from SoftBank, putting the visual creator tools startup into unicorn territory with a valuation exceeding $1 billion. A leaner, hipper version of Adobe, things seem to have taken a downturn for Picsart, which laid off 8% of its staff this week, affecting 90 people. Other SoftBank-backed companies like Cameo, which also became a unicorn last year, just conducted layoffs. When Alex Wilhelm last covered Picsart, he noted that the company was expected to go public — that still hasn’t happened, which may be a clue into what’s going on at the company to precipitate such cuts.

India’s Cars24 cuts 600 jobs

Cars24, a marketplace for used cars last valued at $3.3 billion by its venture capital investors, cut 600 jobs — or 6% of its entire workforce — this week. The Series G startup had just raised a $400 million round, making the reduction more about runway extension than lack of ability to pay the bills.

As our own Manish Singh reports, Cars24 is one of many Indian startups that fired people in the last few weeks. Employees from Vedantu, Unacademy, Meesho, OkCredit, Trell, Furlenco and Lido have also cut several roles, he says.

Marketplace startups, such as Cars24, feel especially vulnerable during a downturn. Consumer spending habits can get extremely fickle, which means that demand may decline while supply stays consistent or even grows. Balancing the two sides is the biggest art for any marketplace startup, but it becomes especially difficult to predict stability in revenue when everyone else has hit pause.

Skillz scales back esports biz team 

Esports company Skillz laid off 70 employees, around 10% of the team, earlier this week, the company confirmed to TechCrunch. No executives were impacted by the cuts.

“We decided to reorganize our resources and investments to increase our profitable growth and further deliver against our vision of building the competition layer of the internet,” the company said in an emailed statement. “This realignment resulted in changing some of our programs and consequently people on our team as we prioritize our resourcing levels to continue to offer a great player experience and enable more game developers to bring their creations to life.”

The company’s statement is ironic; to better support its external community, it is cutting its internal community. The company says it plans to continue hiring in some areas of the business but did not mention which ones.

TechCrunch+ roundup: Construction tech survey, founder-CEO friction, diversify your cap table

The technological advances we’ve made over the last few thousand years are stunning, but the construction industry still relies on centuries-old technology.

Configuring a robot to mix cement is easy, but delivering a CementTron 3000 to a job site, training employees on its use, and keeping it maintained are not the kinds of disruptions builders are looking for, especially when margins are so thin and experienced workers are hard to find.

Even so, investors are backing startups bringing robotics, data management, automation and augmented reality into the construction process.

Many major construction firms operate their own R&D divisions, but that hasn’t substantially changed attitudes about adopting new tech: in one survey, more than one-third of respondents who worked in the industry said they are ambivalent about using new tools. Despite their reluctance, growing numbers of construction tech startups are helping builders with bidding, scheduling, modeling software, and, quite frequently, drones.

To learn more about the market forces shaping construction tech in 2022, we spoke to five investors:

  • Nikitas Koutoupes, managing director, Insight Partners
  • Heinrich Gröller, partner, Speedinvest
  • Momei Qu, managing director, PSP Growth
  • Suzanne Fletcher, venture partner, Prime Movers Lab
  • Sungjoon Cho, general partner, D20 Capital

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

TechCrunch columnist Sophie Alcorn will join a TechCrunch+ Twitter Space on Tuesday, May 24.

Image Credits: Bryce Durbin/Sophie Alcorn

On Tuesday, May 24 at 8:30 a.m. PT/11:30 a.m. ET, I’m hosting a Twitter Space with Silicon Valley immigration lawyer Sophie Alcorn, who writes the “Dear Sophie” advice column for TechCrunch+ each Wednesday. If you have questions about working and living legally in the United States, please join the conversation.

To get a reminder before the chat, follow @TechCrunchplus on Twitter.

Thanks very much for reading: I hope you have a relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch+

For better or for worse: Managing founder-CEO tension inside a startup

Hands pulling rubber band

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

Technical founders often recruit a CEO who can fill in gaps in their business experience, but if they cannot build a strong partnership, everyone suffers.

Metaphorically, imagine two people in a lifeboat arguing over which direction leads to land.

Managing potential points of tension is critical, but founders must be pragmatic: Only choose someone you respect, and be prepared to invest time and energy into cultivating a close relationship, advises Max Schireson, an executive-in-residence at Battery Ventures. Previously, the co-founders of MongoDB hired him to be their CEO.

“In the best case, a strong partnership can pioneer new models and build a lasting and impactful company,” says Schireson.

Dear Sophie: Can I do anything to speed up the EAD renewal process?

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

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’m on an L-2 visa as a dependent spouse to my husband’s L-1A.

My EAD (work permit) is expiring in May — we filed for the extension of both my visa and EAD a few months ago. How long is the current process?

Might there be anything I can do so my employment isn’t affected?

— Career Centered

The one-chart argument that tech valuations have fallen too far

As you may have heard, tech companies are having a bit of a whoopsie.

But is it possible that stock sellers have gone overboard when it comes to devaluing these startups so deeply and so quickly?

Alex Wilhelm says they have, in large part because “select tech concerns are now worth less than they were before the pandemic, despite having a few years of growth in the bank.”

To make his case, he tracked the share price for Okta and found that the identity platform’s share price has rolled back to where it was in early 2019.

“It’s also about three times as large,” writes Alex. “But it is now worth less today than it was back then. Chew on that.”

3 things to remember when diversifying your startup’s cap table

High Angle View Of Multi Colored Toys Over White Background

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

Just as a sales team builds and refines its funnel, early-stage founders in fundraising mode can create an investor funnel that will help sustain their company for years to come.

Oriana Papin-Zoghbi, CEO and co-founder of women’s health startup AOA Dx, shared her investor breakdown with TC+:

  • 35% private investors.
  • 34% women (female investors or female-headed funds).
  • 26% venture capitalists.
  • 23% family and friends.
  • 18% international investors.
  • 15% angel groups.

“When building an investor funnel, vocalizing what you want is crucial to finding the right investors,” says Papin-Zoghbi.

“Finding the right investors is like finding the right team members — you need to be upfront about your expectations and address what you want them to bring to the table.”

Pitch Deck Teardown: BoxedUp’s $2.3M seed round pitch deck

When video production equipment rental company BoxedUp launched, it initially focused on serving corporate customers who hosted events and conferences.

And then, it pivoted: Earlier this year, BoxedUp raised a $2.3 million seed round to scale up its rental marketplace where individuals can rent high-end equipment directly to creators.

“We found a $10 billion opportunity where owner-operators are renting things out via Instagram and rental shops are still using really old websites,” said CEO and founder Donald Boone.

“Instead of spending $30,000 to buy a camera to rent out one at a time, we could instead create the platform to connect people that have that $30,000 camera,” he told TechCrunch in March.

To help other founders replicate his success with BoxedUp’s seed round, he’s shared the unreacted 22-slide pitch deck with TechCrunch+.

Match Group and Google reach an interim compromise over app payments

Match Group, the parent company of dating apps Tinder, Hinge and OkCupid, is getting along better with Google, just by a little bit.

On Friday, Match withdrew its request for a temporary restraining order against the company, which it accuses of wielding unfair monopoly power in its mobile app marketplace. Match filed an antitrust lawsuit against the search giant earlier this month over the company’s restrictions on Android in-app payments, which drive app users toward remaining in its mobile ecosystem. The company filed the temporary restraining order request a day after suing Google.

Match cited a handful of “concessions” from Google in its decision to withdraw the restraining order request, including assurances that its apps would not be rejected or deleted from the Google Play Store for providing alternative payment options. The company will also place up to $40 million aside in an escrow account in lieu of paying fees to Google directly for Android app payments that happen outside of Google Play’s payment system, arguing that those fees are “illegal under federal and state law.” The escrow account will remain in place while the case awaits its day in court.

Match’s lawsuit is the most recent example of app makers objecting to Google and Apple’s practice of extracting steep fees for in-app payments. Developer frustration around the issue boiled over two years ago when Epic Games sued Apple for antitrust violations, a case that didn’t result in a straightforward victory for either side but did force Apple to allow developers to offer their users alternative payment options.

Salty, subterranean water could relieve world’s lithium shortage

The next bottleneck in lithium-ion battery supplies isn’t cobalt, even though China has a stranglehold on the market, and it’s not nickel, either, despite nickel prices nearly doubling in the past five months. Cobalt can be partially replaced with nickel, nickel can be partially replaced with manganese, and both can be completely replaced with iron phosphate, which is cheap and plentiful. 

But there’s no substitute for one crucial component of these batteries: Lithium.

Today’s lithium mines can’t hope to meet the skyrocketing demand for the next decade and beyond. Spotting an opportunity, startups like Lilac Solutions and Vulcan Energy Resources have leaped into action with new lithium extraction processes that are more efficient and potentially better for the planet.

The crunch

As automakers have fleshed out their electrification plans, they’ve caused an unprecedented rush for lithium. Over the last six months, lithium prices have gone on an epic bull run.

It started in January, when prices jumped to $37,000 per metric ton from $10,000 a month earlier, according to Benchmark Mineral Intelligence. Then it got worse in February, with spot prices rising to $52,000 per metric ton before rising again to $62,000 in March. Things have stabilized since then, but prices are still five times above the average price from 2016 to 2020.

Large companies of all stripes have been racing to secure supplies. Automakers like Ford and Tesla have signed huge contracts, and battery manufacturers and miners are rushing to secure supplies. Last year, for example, a three-way bidding war broke out for Canadian miner Millennial Lithium, which has large reserves in Argentina, and the winning bid ended up more than 40% higher than the initial offer.

Yet, those deals probably won’t be enough to fulfill the predicted demand for lithium, based on automakers’ current plans. Benchmark Mineral Intelligence is expecting demand to grow to 2.4 million metric tons in 2030 from less than 700,000 metric tons today.

Supply won’t be able to keep up given the current pace of new lithium projects.

“By the end of the decade, where we’re at now with the pipeline, we’re going to see significant deficits starting to grow,” said Daisy Jennings-Gray, a senior price analyst at Benchmark.

Last year, lithium supply fell short of demand by more than 60,000 metric tons. Jennings-Gray’s firm predicts that the deficit will be over 150,000 metric tons by 2030. To meet demand, Benchmark says that $42 billion will need to be invested in the space by the end of this decade.

Without new lithium projects coming online, it’ll likely get worse throughout the 2030s. By 2040, the International Energy Agency expects lithium demand to be 42 times higher than it is today.

“It’s an insane number,” said Jordy M. Lee, a program manager at the Payne Institute for Public Policy at the Colorado School of Mines. What’s more, it might even be too low.

“We’ve consistently underestimated how much demand for lithium-ion batteries we’re going to have in the coming years,” he said.

As the rise in demand shows no signs of abating, startups have surged into the space, pitching novel techniques to coax the volatile metal out of the earth.

Carbon capture is headed for the high seas

Unless you live near a port, you probably don’t think much of the tens of thousands of container ships tearing through the seas, hauling some 1.8 billion metric tons of stuff each year. Yet these vessels run on some of the dirtiest fuel there is, spewing more greenhouse gases than airplanes do in the process. The industry is exploring alternative fuels, and electrification, to solve the problem for next-generation ships, but in the meantime a Y Combinator-backed startup is gearing up to (hopefully) help decarbonize the big boats that’re already in the water.

London-based Seabound is currently prototyping carbon capture equipment that connects to ships’ smokestacks, using a “lime-based approach” to cut carbon emissions by as much as 95%, cofounder and CEO Alisha Fredriksson said in a call with TechCrunch. The startup’s tech works by routing the exhaust into a container that’s filled with porous, calcium oxide pebbles, which in turn “bind to carbon dioxide to form calcium carbonate,”—essentially, limestone, per Fredriksson.

Though carbon capture has yet to really catch on for ships, Seabound is just one of the companies out to prove the tech can eventually scale. Others, including Japanese shipping firm K Line and Netherlands-based Value Maritime, are developing their own carbon-capture tech for ships, typically utilizing the better-established, solvent-based approach (which is increasingly used in factories). Yet this comparably tried-and-true method demands more space and energy aboard ships, because the process of isolating the CO2 happens on the vessel, according to Fredriksson.

In contrast, Seabound intends to process the CO2 on land, if at all. When the ships return from their journey, the limestone can be sold as is or separated via heat. In the latter case, the calcium oxide would be reused and the carbon sold for use or sequestration, per Fredriksson, who previously helped build maritime fuel startup Liquid Wind. Her cofounder, CTO Roujia Wen, previously worked on AI products at Amazon.

Seabound says it has signed six letters of intent with “major shipowners,” and it aims to trial the tech aboard ships beginning next year. To get there, the company has secured $4.4 million in a seed round led by Chris Sacca’s Lowercarbon Capital. Several other firms also chipped in on the deal, including Eastern Pacific Shipping, Emles Venture Partners, Hawktail, Rebel Fund and Soma Capital.

Beyond carbon capture, another Y Combinator-backed startup is setting out to decarbonize existing ships via a novel battery-swapping scheme. New Orleans-based Fleetzero aims to power electrified ships using shipping container-sized battery packs, which could be recharged through a network of charging stations at small ports.

Luminar’s Austin Russell: ‘We probably shouldn’t have existed’ but lidar will drive next-gen safety anyway

At TC Sessions: Mobility, Luminar founder and CEO Austin Russell admitted that his now successful company was founded in hubris, but that a skeptical eye during peak lidar hype helped them focus on real markets. “It’s no longer about some theoretical promise — you actually have to show real results, real deliveries, real technology and product. There’s been too many promises made out there that were broken.”

In an interview with TechCrunch transportation editor Kirsten Korosec, Russell noted that he, like pretty much everyone else, was convinced early on that self-driving cars were just around the corner. (Quotes have been lightly edited for clarity.)

“The reality is, I think that the sheer complexity of solving an end to end autonomous driving problem in urban environments was underestimated in terms of the difficulty by at least a couple orders of magnitude,” he said. “If something is at peak hype cycle, it’s something you should be skeptical about. There was just a massive disconnect between the core engineers behind the actual tech, and leadership at the time, in terms of what was possible.”

It was in 2017, he recalled that the company made the decision to pursue other applications for high-performance lidar tech: “It became very clear that the level of requirements for an R&D test platform, versus a true series production vehicle, is a completely different game altogether. The huge roof racks that you see that are $100,000 and a supercomputer in the trunk… it needs to be more like $1,000. And by the way, economies of scale are fundamentally required to be able to build a product, the cost is a significant factor at the end of the day.”

The question became not one of raw capability or even just cost, but what would consumers, and by extension OEMs, pay for? Safety. And as it turns out, even top of the line ADAS and collision avoidance tech is seriously lacking right now.

“It’s surprising to see how ineffective the current assisted driving systems are just at being able to do basic things like… not letting you smash into the thing right in front of you in your car, right? It sounds like a simple problem, like you wouldn’t even need lidar for that,” he said. “But the reality is it’s a lot more complicated, a lot more difficult than that — to even confidently understand what’s going on around you and come to a safe stop is not a solved problem.”

The company has set up numerous examples of these failures — one of which showing a small fake pedestrian being plowed down by an ADAS-equipped car went viral. The combination of robo-taxis being far further out than expected and of ADAS systems as being both desirable and incapable seems to have spurred mainstream automakers to invest heavily in something better.

“The transformation is that this is no longer about being an option on a high end, niche vehicle,” he explained. “This is something that has the opportunity to truly go mainstream, in the mass market… Nissan, they were actually showing off crash avoidance scenarios made possible by Luminar lidar; in their case they actually said they want to be able to standardize this type of tech on every vehicle they build by the end of the decade. Which I think is probably faster than any major tech adoption cycle, not for initial adoption, but full standardization across the lineup.”

There will of course be Luminar-powered cars out there sooner than that: “Within the next 12 months there’s going to be series production cars that are Luminar equipped that are out there advancing this industry forward,” Russell confirmed.

It’s funny to think, however, that a company born out of a plan to obsolete traditional vehicles has become the biggest proponent of its use in those vehicles. But an early recognition of the future of the industry made all the difference.

“We probably shouldn’t have existed,” Russell said when asked about taking part in the hype cycle he later distanced himself from. “There’s no reason why any of the Googles, Apples, all the major automakers and other stuff couldn’t have, in some theoretical world, done exactly what we did.”

“But the reason why were were able to build this company, this technology, this product and help lead the industry with it is just fundamentally because we had a completely different viewpoint. I guess what’s titled here [i.e. the name of the panel, A Contrarian View on Deploying Autonomy at Scale], the contrarian view,” he said, laughing.

As for another contrarian view, the oft-repeated jibe by Elon Musk that lidar is unnecessary and Tesla will get by without it, Russell took it in good humor as well:

“If somebody didn’t go out and say, ‘this is a fool’s errand, this shouldn’t exist, we made the right decision and we’re sticking to our guns!’… that’s the irony around all these things. It actually just calls attention to what’s important, because you only say that if you’re really self-conscious about it.”