Tag: venture

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DeFi giant Uniswap launches venture arm to invest in other crypto companies

Uniswap Labs, the company behind the popular decentralized finance (DeFi) protocol, has launched a venture capital arm to invest in web3 projects.

Uniswap Labs Ventures, the new division, will invest in companies across various stages and areas within web3, from infrastructure to developer tools and consumer-facing applications, according to the company. Investments will be made directly from the company’s balance sheet, The Block first reported, though the company did not share any details on how large these checks will be or how much balance sheet capital will be dedicated tot he fund.

The firm is tapping Matteo Leibowitz to head up the venture arm alongside Uniswap’s chief operating officer, Mary-Catherine Lader. Leibowitz previously worked at Uniswap as a strategy lead starting in August 2020, and prior to that, was a research analyst at The Block for nearly two years, according to Linkedin.

Before launching this dedicated venture arm, Uniswap invested in 11 companies and protocols across the web3 ecosystem, including Tenderly, LayerZero, MakerDAO, Aave, Compound Protocol, and PartyDAO, the company says. The Ethereum-native exchange appears to have largely backed other companies that are also in the Ethereum ecosystem.

Its new ventures team plans to play an active role in on and off-chain governance “when relevant,” it says. It has specifically announced plans to participate in the governance systems of MakerDAO, Aave, Compound, and Ethereum Name Service (ENS) so far.

The news comes about a week after a class-action lawsuit was filed against Uniswap Labs, as well as its founder and its own backers — Paradigm, Andreessen Horowitz (a16z), and Union Square Ventures — for allegedly engaging in rampant fraud” on the exchange. Uniswap Labs most recently raised $11 million in a Series A round in August 2020, which a16z led.

Uniswap joins a growing segment of crypto-native companies now formally dedicating resources to investing in other companies in the space, including crypto exchange FTX and DeFi protocol Cake, which both recently launched venture funds. Companies like Uniswap, which already have experience building in web3, can apply their expertise and lessons learned to other areas of the crypto market through their early-stage investments, DeFi researcher Ryan Rasmussen of Bitwise Asset Management wrote in a tweet.

The decentralized exchange is the fifth-largest in DeFi by Total Value Locked (TVL), a metric that represents the size of the assets on the protocol, according to blockchain data provider DeFi Pulse. It had $7.04 billion in TVL, around half that of the leading DeFi platform, Maker, as of April 11, DeFi Pulse shows.

A spokesperson for Uniswap told TechCrunch that the broader trend of web3 companies making venture investments represents their desire to collaborate rather than compete with one another.

“Crypto is getting strategic partners in rather than only allowing the ‘brand name’ VCs take the whole round,” the spokesperson wrote in an email.

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Startups in 2022 are indeed ‘harder, Better, Faster, stronger’

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This was our live show week! Yes, Mary Ann and Natasha and Alex got together with Grace for our Friday recording on Thursday, meaning that we gathered on Hopin and Twitter Spaces to yammer through the week’s news. It was a very busy week, with breaking news up to the minute before we recorded — including this piece from the Better.com saga.

Want more? Check out these Equity episodes

So! What did we get into? A lot:

And with that, we are back Monday morning. Chat soon!

Equity drops every Monday at 7 a.m. PDT and Wednesday and Friday at 6 a.m. PDT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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Sequoia’s Doug Leone steps down, making way for new global head Roelof Botha

Storied venture capital firm Sequoia Capital announced today that leader Doug Leone would be stepping aside from his role as “Senior Steward” to be replaced with Roelof Botha, managing partner of Sequoia’s U.S. and Europe operations.

Leone, the global managing partner of Sequoia Capital, wrote in a letter published on Twitter that he will remain a general partner in existing funds and will represent Sequoia on boards of directors.

“The spirit of growth and renewal drives our culture of generational transfer,” Leone wrote. “We are proud to be the only venture capital partnership to have successfully navigated multiple leadership transitions over five decades.” Leone and another famed Sequoia investor, Michael Moritz, were previously handed the reins from firm founder Don Valentine in the mid 1990s. Moritz stepped away from the role in 2012, citing an illness at the time, though he has remained active with the firm and sits on various boards, including that of the Stockholm-based buy-now-pay-later giant Klarna, the Turkish grocery delivery company Getir, and U.S. payments behemoth Stripe.

For Botha, the new gig – which is in effect starting July 5, 2022 – is part of a years-long transition and was very much expected. In 2017, he was made U.S. head of the firm working under Leone. Botha then also became a “Sequoia Steward” which he previously described as having “more responsibility for strategy, for team composition, for fundraising — including spending more time with limited partners and helping decide when do we raise, the size of the funds, the composition of our LP base.”

Roelof Botha shares what Sequoia’s Black Swan memo got wrong

“Senior Steward” is a double click on that role, representing more of a global leadership role than he previously held. Botha has led investments in numerous startups that have gone on to become enormous brands, including Youtube, 23andme, MongoDB, Natera, Square and Unity.

Certainly, Botha, will be facing new opportunities, as well as new challenges, as Sequoia extends its already outsize footprint.

Sequoia has been investing far more actively in Europe in recent years, opening a regional office — in London — for the first time in its history last year. In addition to Klarna and Getir, others of its Europe-based bets include Veed, an online video editing tool and Upway, a Paris-based platform for second-hand purchases like bikes and electronics.

It has been plugging hundreds of millions of dollars into India and Southeast Asia-based startups, as readers of TechCrunch have undoubtedly noticed.

It is also begun investing in countries where it hasn’t appeared in deals before, as evidenced by a recent bet on Telda, a Cairo-based payment and money platform, and Wave, a U.S. and Senegal-based mobile money provider that raised $200 million in Series A funding last fall co-led by Sequoia.

In the meantime, the firm has an enormous financial stake in China, where under the leadership of Sequoia Capital China founder Neil Shen, it runs one of the country’s most powerful venture practices.

Leone was very much involved with Sequoia’s decision not just to head to China 17 years ago, but to stay there. (Other U.S. firms that dipped their toe in the region around the same time left.)

It proved lucrative for the outfit, whose China practice has been enormously successful over the years (and where more than half of Sequoia’s dollars were being invested back in 2018, as Leone told us at Disrupt). At the same time, funding regional startups has been made increasingly complicated by the government’s regulatory crackdown, as well as its ongoing support of and ties to Russia, which will give Botha, who grew up in South Africa, plenty to sort out in his new global role.

In the meantime, we’d expect Leone to somewhat active with the firm, even beyond maintaining his board seats. (His predecessor, Don Valentine, famously showed up for Monday partner meetings for a decade after he “stepped down” from his role.)

Certainly, he has seemed to relish advising founders too much to retire from it entirely.

Indeed, when we talked with Leone at that Disrupt show in 2018, we asked him how he would advise founders who, like himself — an Italian immigrant who pulled himself up by his bootstraps — want to succeed in business.

Said Leone: Start a company only if you “have a burning need, if you can’t go to sleep at night because you want to do something, if you happen to have some domain expertise [and] if you happen to be a great customer. So many of our great companies were founded where the founder was the customer. What the founder didn’t know, though, was that he or she was the proxy for the next billion people.”

Do not “start a company because you’re a little bored and you think it’s cool to start a company,” he’d added.

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For Freestyle’s newest fund, the growth hack is staying the same

Freestyle, a venture capital firm that has cut early checks into companies such as Airtable, Patreon, BetterUp and Narvar, has closed its sixth fund at $130 million.

The newest fund is also the firm’s largest investment vehicle to date, but still feels tiny compared to Andreessen Horowitz’s $400 million seed fund or Greylock’s $500 million seed fund. However, per general partner Jenny Lefcourt, the conservative raise was intentional: The growth hack, for the 2009-founded firm, is to stay the same despite valuation and check-size pressure from the broader early-stage market.

“Fund size ends up dictating strategy,” Lefcourt said. If Freestyle raised a $500 million seed fund, Lefcourt explained, the firm would have to flip its model, hire associates and focus on investing in more founders versus working deeper with a select few. “It’s tempting to raise a bigger fund when people want to give you money, but you could get addicted to management fees instead of carry.”

Indeed, Freestyle stands out for sticking to its original investment strategy, even with today’s newly announced fund. The firm leads less than a dozen seed rounds per year, aims for 10% to 15% ownership and bets across all verticals. Freestyle has slightly grown its check size year over year to stay on a similar cadence, with its average bet between $1.5 million to $3 million. Despite web3 companies, which Lefcourt says they invest in despite ownership and valuation differences, Freestyle doesn’t go for “buzzy companies” with high valuations — which it considers above $20 million.

“We both felt like we’ve seen how this movie ends, and high valuations too early have actually caused trouble down the road for the vast majority of founders,” said Lefcourt, who led the firm’s investments in BetterUp, Narvar and Daily. “While the quantity in deal flow has definitely gone up, the quality in aggregate is lower.”

The firm does boast one (unfortunately) contrarian characteristic, though: ownership is split half and half between partners Jenny Lefcourt and Dave Samuel. Despite the steady rise of female check-writers, Lefcourt pointed out that within institutional firms, the title “partner” doesn’t always come with true ownership or decision-making capabilities. About 43% of portfolio companies have a historically under-represented founder and co-founder, which Freestyle defines as non-white males and women of any race and ethnicity. About 29% of current fund companies have a woman founder and/or co-founder.

Jenny Lefcourt and Dave Samuel, the general partners of Freestyle. Image Credits: Freestyle

Last year, the firm’s co-founder Josh Felser left to start another venture capital firm, this time with an explicit focus on startups tackling climate change. His new firm, Climactic, seems to be following an entirely different playbook than Freestyle: It has employed a number of consultants who have been former heads of sales and marketing at other companies, hasn’t yet raised a formal fund and participates in rounds.

The departure hasn’t seemed to hurt limited partner interest in Freestyle. The firm’s new fund came together in a month, all from existing investors, and the team was able to hire CFO Josh Gilbert from Lerer Hippeau. Despite this momentum, Lefcourt seems to know that Freestyle could use some attention, given competition from all the newer funds.

“If you go back to the earlier days, people in the industry really knew that Freestyle was an amazing seed fund,” she said. “Now, Silicon Valley is everywhere and we realize that we have to make the world know we’re here just a little bit more than maybe we’re used to.”

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Series B is the attention-seeking middle child of financing rounds

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This week our comrade Mary Ann was off, so Natasha and Alex teamed up with Grace on the dials to chat through the week’s biggest news. Here’s what our dynamic got into:

We are back next week with our full team, and a live show. So, chat you Monday, Wednesday, and Thursday live!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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If Tiger Global shows up, will there be new stripes in early-stage?

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single topic, think about a question and unpack the rest. This week, Natasha and Alex asked: Will Tiger’s second act live up to its first? 

The question comes after Natasha’s latest Startups Weekly column, where she looked into one example of how Tiger Global’s stamp of approval is coming for the early-stage. Today’s conversation is a continuation of that topic, but broadened with examples, context and, of course, some jokes as well.

  • Before digging into the question, we walked through some historical venture shakeups, looking specifically at Andreessen Horowitz, SoftBank and ultimately Tiger Global’s own jolt to the startup ecosystem. Remember when we weren’t numb to mega-funds, and due diligence was contrarian?
  • Then we get into why Tiger is turning to invest in early-stage companies, now of all times (hack: listen to our episode on market re-correction for some background).
  • We spoke about Tiger cutting a new check into AngelList, and the resulting window it gets. A new-ish AngelList fund has hella Tiger vibes, notably.
  • There’s also a conversation to be had about how Tiger’s late-stage playbook scales to the early-stage, which made us talk about due diligence, ownership and fund structures.
  • And speaking of evergreen funds, here’s an evergreen reminder to take advantage of code “EQUITY” when subscribing to TechCrunch+ for a hefty discount, and gratitude from your favorite trio of tech nerds.
  • We somehow fit YC in too, because why not.

All told, the 2022 venture capital market is shaping up to be a very different beast than what we saw in 2021, and not only because Tiger is changing up its own posture. What we saw last year might prove a high-water mark for venture for a long time to come. So, stay tuned.

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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SoftBank turns fund for diverse entrepreneurs into an ‘evergreen’ opportunity

SoftBank, a Japanese conglomerate, announced today that it has an uncapped, evergreen fund made explicitly to back Black, Latinx and Native American entrepreneurs within the United States. The commitment is a continuation of SoftBank’s $100 million Opportunity Growth Fund for underrepresented founders, which first launched in June 2020 in the “wake of increased racial justice.”

SoftBank launches $100M+ Opportunity Growth Fund to invest in founders of color

The effort, which the firm says took 24 hours to spin up, has now been invested in its entirety across 70 companies. About 55% of the initial portfolio companies are Black-founded, 40% Latinx-founded and 5% Black and Latinx-founded. Still, the portfolio weighs heavily toward men: only 13% of companies in the SoftBank opportunity portfolio are founded by women of color, which is higher than national rates but still far from equal.

The opportunity fund has also had four companies valued over $1 billion and two exits; while half the portfolio has raised or is raising another round of funding post-initial investment. The momentum could be part of the reason why SoftBank is continuing its efforts. In other (unsurprising) words, it’s working.

The question remains as to why SoftBank is turning its commitment into an evergreen fund, versus dedicating a clear bucket of money, and ergo heavy signal, to back historically overlooked entrepreneurs. It doesn’t have a fear of numbers: just four months ago, SoftBank committed $3 billion more in capital to Latin American companies.

Evergreen funds have an open-ended structure with no termination date. The strategy can allow firms to recycle capital from realized returns without constraints; and invest cross-stage and perhaps even different ownership stakes. In this case, SoftBank is planning to recommit to the early-stage startup scene, similar to Tiger Global in recent weeks.

There’s no fixed amount of capital that SoftBank has committed to the cohort, which makes it tougher to understand how much of an impact the commitment will have. SoftBank told Forbes that the team plans to deploy more capital than it did in the debut fund. In an e-mail to TechCrunch, the firm said that it will make 20 to 30 investments per year with check sizes between $300,000 to $700,000, and follow-on funding between $1 million and $5 million.

Marcelo Claure, former COO of SoftBank, was the person who originally conceptualized and launched the Opportunity fund – alongside managing partner Shu Nyatta, with Paul Judge, the founder of TechSquare and chairman of Pindrop, and Stacy Brown-Philpot, CEO of TaskRabbit. Claure left SoftBank early this year over a tense dispute with the company over his compensation. Nyatta now leads the Opportunity fund’s efforts, and appointed managing partners Catherine Lenson and Brett Rochkind to join the investment committee as well.

Join the tens of thousands of people who subscribe to my newsletter, Startups Weekly. Sign up here to get it in your inbox.

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Tiger’s stamp of approval is coming for the early stage

Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox early, subscribe here.

On Tuesday, AngelList Venture closed its first tranche of institutional funding since spinning out on its own in 2020. The $100 million round was led by Tiger Global and Accomplice, valuing the business at $4.1 billion.

It wasn’t necessarily expected. The round comes just weeks after the organization’s CEO, Avlok Kohli, told me that the company didn’t need venture money, a stance that AngelList, which was founded in 2010 and split into AngelList Venture and AngelList Talent in 2020 — each with their own CEOs and boards — has long embraced. 

AngelList Venture takes on rare capital at a $4 billion valuation

Despite its business of helping other startups raise money, AngelList itself has largely resisted the siren call of venture capital and operated on what others might consider to be a shoestring budget. Indeed, prior to raising this massive new round, the larger company, pre-spin out, had raised $124 million across multiple rounds over the years — some previously unannounced. 

Likely, its views on venture funding stem in part from an earlier experience involving founder Naval Ravikant, who once felt so cheated by the sale of an earlier company he co-founded, Epinions, that he sued its powerful venture backer, Benchmark.

But also, as Kohli explained during our recent chat, AngelList’s philosophy has long been that companies that raise too much money can hamper their growth as hiring takes center stage, slowing down other aspects of the business. “If your entire focus is on shipping velocity and shipping great products, growing headcount is actually counter to that,” he said. So what changed, and inspired AngelList to pursue the Tiger stamp of approval? The hedge fund has been planting seeds in the early-stage market, making the investment all the more interesting. 

For my full take on this topic, check out my TechCrunch+ column, “AngelList Venture has a new look.” In the rest of this newsletter, we’ll talk about an inclusive and disruptive LatAm startup, community beyond capitalism and why SPACs are in the news again. As always, you can support me by sharing this newsletter, following me on Twitter or subscribing to my personal blog.

Deal of the week

I want to give a shout-out to Mara, a startup out to “reinvent” the grocery shopping experience for the underserved in Latin America that raised $6 million this week. The startup offers supermarket items at a wholesale price, and lets folks order a basket via websites — instead of hard to access phone apps. It also has delivery points where customers can pick up and pay for their groceries.

Here’s why it’s important: Grocery delivery is a tough business, let alone one that is hoping to make it cheaper and more convenient for low-income families. That’s why I was interested in the fact that the company is avoiding the growth at all costs mindset. Mary Ann reports that Mara is adopting an approach where it focuses on one area at a time, making sure it is “gross margin break even” there before moving on to another area.

Honorable mentions:

Server-grade alternatives for CentOS 8

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

Community beyond capitalism

No buzzword should ever go unchecked, which is why I decided to dig into the true impact of community — and how capitalism both complicates and changes its connotation within startups. Bringing people together to rally behind a product and idea isn’t a new phenomenon, after all.

Here’s why it’s important: After much attention, we’re starting to see which community efforts amount to actual impact. This week, Lolita Taub launched her own venture capital firm, powered by and from the community that she has aggregated over her past decade in startups. Ganas Ventures, her pre-seed and seed-stage firm, is even raising the rest of its debut fund from Taub’s followers.

Followers are friends, not food:

Image Credits: Lolita Taub

SPAC is a four-letter word (again)

On Equity Live this week, we came to the conclusion that SPAC is a four-letter word again. The route to going public is no longer in vogue, with companies such as Better.com and Kin tossing aside their plans (and Acorns raising lots more capital after pausing its interest in them).

Here’s why it’s important: The IPO window is pretty much closed at this point. While I’d expect to see startups staying private longer as a result, the late-stage market is softening. Uh oh. Late-stage companies that need more capital may not be able to access some if they don’t have rock-solid business models. Expect pivots to continue.

2022 feels different than 2020:

Image Credits: Bryce Durbin / TechCrunch

Across the week

We get to hang out in person! Soon! Techcrunch Early Stage 2022 is April 14, aka right around the corner, and it’s in San Francisco. Join us for a one-day founder summit featuring GV’s Terri Burns, Greylock’s Glen Evans and Felicis’ Aydin Senkut. The TC team has been fiending to get back in person, so don’t be surprised if panels are a little spicier than usual.

Here’s the full agenda, and grab your launch tickets here.

​​Also, follow our newest producer for Equity: Maggie Stamets!

Seen on TechCrunch

Uganda in the spotlight as country’s startups captivate YC, Google

Stripe gets friendly with crypto, again

Touch ID forever, Face ID never

Better.com employees learned of layoffs when severance checks appeared in payroll app

Fintechs clamor to give student loan borrowers relief options

Seen on TechCrunch+

6 technologists discuss how no-code tools are changing software development

How to calculate your startup’s TAM, SAM and SOM

A rough draft of the teetering startup landscape heading into Q2

As war escalates in Europe, it’s ‘shields up’ for the cybersecurity industry

Until next time,

N

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AngelList Venture has a new look

On Tuesday, AngelList Venture closed its first tranche of institutional funding since spinning out on its own in 2020. The $100 million round was led by Tiger Global and Accomplice, valuing the business at $4.1 billion.

It wasn’t necessarily expected. The round comes just weeks after the organization’s CEO, Avlok Kohli, told me that the company didn’t need venture money, a stance that AngelList, which was founded in 2010 and split into AngelList Venture and AngelList Talent in 2020 – each with their own CEOs and boards – has long embraced.

Despite its business of helping other startups raise money, AngelList Venture itself has largely resisted the siren call of venture capital and run on what others might consider a shoestring budget. Indeed, prior to raising this massive new round, the larger company, pre-spin out, had raised $124 million across multiple rounds over the years — some previously unannounced.

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SPACs are a four-letter word again

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This was saw Equity back on the live-taping game, with Mary Ann, Natasha, and Alex gathering with Grace and the TechCrunch video team (shoutout Julio and Yashad!) to chat through the week’s news. Naturally we had to cut like all hell, but we had a simply terrific time traipsing through the following items:

We do live tapings every two weeks, so come to the next one! This time, we gave away a SXSW ticket, next time, who knows!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.