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Bambee founder talks about entrenched fundraising challenges facing Black founders

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Allan Jones dropped out of college and spent a decade learning how to run a startup. In 2016, that education resulted in the launch of Los Angeles-based Bambee, which helps small companies by acting as their HR department with the goal of keeping them in compliance with government rules and regulations.

But he found getting funded a challenge in spite of his background. He said that as a Black man, he had to move more carefully in the startup world.

“I think it came as part of the complexities of navigating a mostly white male ecosystem, a mostly straight cis white male ecosystem that either helps you create some skills that make you really effective at the job, or generates so much resentment that it becomes hard to be effective. […] I think that I was always one comment away from the opposite direction [I ended up going],” he explained.

Fortunately, that didn’t happen, and he kept on climbing and gaining skills and single-handedly founded his own company, one which has reached Series B and raised $33 million, a significant amount of money for any startup, but particularly for a startup run by a Black founder.

A study published by Crunchbase in February found that VC firms distributed $150 billion in venture funding in 2020. Of that, less than 1%, or around $1 billion, went to Black founders. That highlights just how difficult it has been for him to raise from such a limited pool of money in spite of having a great idea and the business skill and acumen to pull it off.

Jones got his start at the age of 20 at a startup called Helio, which targeted the youth market for multimedia services on mobile phones. It was eventually acquired by Virgin Mobile. He went on to run product at a couple of companies before landing as CMO at ZipRecruiter in 2013. He left that position after three years to launch Bambee in 2016.

In spite of all that experience, he felt that as a gay Black man in Silicon Valley that he was continually saddled with the label of “the kid with potential,” and not always taken as seriously as his straight white counterparts. “And I don’t think those intentions necessarily were bad, I think it was quite the opposite, which actually makes them almost worse because they were entrenched in a bias of how to characterize [my abilities].”

Jones launched Bambee, a startup that is going after SMBs with fewer than 500 employees, most of which are operating without an HR department, and could be out of compliance with federal mandates because they don’t have anyone in charge who is aware of the rules.

“Bambee aims to put an HR manager in every American small business. We’ve done so by building a model that allows you to hire one on our platform for $99 a month. So you pay us a flat fee and you get access to our platform and your own dedicated HR professional. […] She acts as your human resource manager and your human resource arm for your company. And our platform helps keep those companies compliant,” Jones explained.

Jones says that while he might not encounter direct bias as he builds his business, there is an unconscious bias that investing in Bambee could be riskier than investing in someone who fits the prototypical startup founder mold, and this is especially true in early-stage investing when investors are essentially betting on the entrepreneur.

“They take bets that they deem as a bit safer — entrepreneurs that look like a certain profile — white cis-gender males that come from Stanford and Harvard that match the profile of confidence and they have kind of built in an anti-bias determination around, so they automatically get the benefit of the doubt to those pedigrees, and those profiles,” Jones said.

He says that means that Black founders have to work that much harder to overcome those biases. Today Bambee has some decent metrics to show investors with revenue reaching tens of millions, growing 300% year over year with thousands of customers across all 50 states, according to Jones. With 100 employees, he plans to double that number by the end of this year.

Even with that, he says there are still barriers to entry he has to deal with. Even if it’s harder for investors to ignore the company’s numbers, he still sees a tendency to accentuate the negative.

“Building a great company with the deficit in belief in you that starts so early on in the venture process, the [obstacles] that you have to [overcome] to get here. It seems impossible with less than 1% of venture capital dollars going to Black founders, and it isn’t because Black founders don’t exist, it’s because the belief in us is not there at scale,” he said.

As Jones continues to build the company, he has learned to look for investors who believe in him and his vision for the company. If he senses that negativity from a potential investor, he moves on because he wants to work with people who want to help build the company and believe in it as much as he does. He says this won’t change when he goes to raise his C round, a stage few Black entrepreneurs reach.

“Is it going to be easier for me going forward? I don’t think so. I think the type of bias that I have to combat based on the class of entrepreneur I’m becoming, it starts to shift and change, and I’ve seen that in every round and I’m prepared for it in my Series C, as well.”

He says that the progress he’s made in the company and his belief in the business will help him find the right partners to continue on that journey, just as he has in previous rounds.

“We will navigate this […] and I think we’ll build a really great business, and ultimately the partners we discover along this journey will be the exact right ones who we were meant to.”

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Source: https://techcrunch.com/2021/07/12/bambee-founder-talks-about-entrenched-fundraising-challenges-facing-black-founders/

AI

Blockchain Startups Raised over $4 Billion in VC Funding in Q2 2021

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Most blockchain-based startups have seen funding from venture backers, despite the current cryptocurrency market downturn, recording over $4 billion in Q2 alone.

This massive venture capital backing is in keeping with the established trend of VC funding for blockchain firms as investors look to be part of the new wave of disruption associated with decentralized finance.

VC Backers Continue to Dole Out Funding for Blockchain Startups

According to CNBC on Thursday (July 22, 2021), venture capital investors seem not to worry about the volatile nature associated with the crypto market, especially with the current slump in market prices. Bitcoin, which reached an all-time high )ATH) of over $63,000 back in April, is trading within the $33,000 range, losing over 50% of its ATH. Ether price has also suffered a slump after getting to over $4,000 in May.

Meanwhile, data from CB Insights, an analytics firm, revealed that the total funds received by different blockchain companies are $4.38 billion. The figure signals a more than 50% increase from Q1 2021, and almost a ninefold growth compared to Q2 2020.

In May, major fintech company Circle received $440 million from VC backers, making it the largest venture capital funding in a blockchain company. Meanwhile, Circle is planning to go public through an alliance with a special purpose acquisition company (SPAC) Concord Acquisition Corp. The merger, if successful, will put Circle’s valuation at $4.5 billion.


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Ledger, a cryptocurrency hardware wallet, raised the second-biggest round in Q1 2021 with $380 million. According to an interview with CNBC in December 2020, the company’s CEO Pascal Gauthier noted that the cryptocurrency market was gradually maturing, with institutional investors showing interest in the emerging industry.

Speaking to CNBC, CB Insights senior analyst, Chris Bendtsen :

“At the current rate, blockchain funding will shatter the previous year-end record — more than tripling the total raised back in 2018. Blockchain’s record funding year is being driven by the rising consumer and institutional demand for cryptocurrencies. Despite short-term price volatility, VC firms are still bullish on crypto’s future as a mainstream asset class and blockchain’s potential to make financial markets more efficient, accessible, and secure.”

Institutional Investors Seek Exposure to Crypto Industry

The record inflow of funding for blockchain firms is coming from both traditional VC funds and blockchain-focused funds alike. Some asset managers are even creating blockchain venture arms for both early and late-stage funding of projects in the industry.

As previously reported by CryptoPotato in June, venture capital giant Andreessen Horowitz announced the launch of a $2.2 billion cryptocurrency fund. According to the company, the new fund would be distributed across various crypto and blockchain startups.

Blockchain Capital raised $300 million for its Fund V LP back in May, with PayPal, Visa. hedge funds, and others participating in the capital raise.

Meanwhile, the trend is continuing in Q3 2021 with massive funding deals. Recently, major cryptocurrency derivatives platform FTX secured a record $900 million in its Series B funding, causing the company’s valuation to grow to $18 billion.

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Source: https://coingenius.news/blockchain-startups-raised-over-4-billion-in-vc-funding-in-q2-2021-10/?utm_source=rss&utm_medium=rss&utm_campaign=blockchain-startups-raised-over-4-billion-in-vc-funding-in-q2-2021-10

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Startups

Hear Startup Alley companies pitch expert VC judges on the next episode of Extra Crunch Live

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We know how much you love a good startup pitch-off. Who doesn’t? It combines the thrill of live, high-stakes entertainment with learning about the hottest new thing. Plus, you get to hear feedback from some of the smartest folks in the industry, thus learning how to absolutely crush it at your next pitch meeting with a VC.

With all that in mind, we’re introducing a special summer edition of Extra Crunch Live that’s all pitch-off, all the time.

On August 4, Extra Crunch Live will feature startups exhibiting in the Startup Alley at TechCrunch Disrupt 2021 in September. Those startups will pitch their products/businesses to a pair of expert VC judges, who will then give their live feedback.

Extra Crunch Live is usually a combination of an interview with a founder/investor duo and an audience pitch-off. But as it’s summer, and Disrupt is right around the corner, we thought it would be fun to bring you even more pitches and even more feedback.

On August 4, our expert VC judges will be Edith Yeung from Race Capital and Laela Sturdy of CapitalG. Register here for free!

Edith Yeung started out as an investor at 500 Startups and is now a general partner at Race Capital. She’s an expert on both the China and Silicon Valley investment landscape and has made more than 50 investments, with a portfolio that includes 50 startups, including Lightyear/Stellar (valued $1.2 billion), Silk Labs (acquired by Apple), Chirp (acquired by Apple), Fleksy (acquired by Pinterest), Human (acquired by Mapbox), Solana, Oasis Labs, Nebulas, Hooked, DayDayCook, AISense and many more.

Laela Sturdy is a 10x unicorn operator-turned-investor whose investments are worth nearly $200 billion. She joined CapitalG, the investment arm of Alphabet, in 2013, and her portfolio includes Stripe, UiPath, Duolingo, Gusto, Webflow and Unqork, among many others.

As a special thank you, all attendees of this episode of Extra Crunch Live will be entered into a random drawing for a chance to win one of three free tickets to TechCrunch Disrupt 2021. Following the event, we’ll randomly select three winners and send details on how to redeem their passes. Do you need to submit any additional information to enter the drawing? Nope. All you need to do is register for Extra Crunch Live by clicking here and attend the event on August 4.

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Source: https://techcrunch.com/2021/07/23/hear-startup-alley-companies-pitch-expert-vc-judges-on-the-next-episode-of-extra-crunch-live/

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Artificial Intelligence

Extra Crunch roundup: Finding GTM, China’s edtech clampdown and how to define growth

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Early-stage startups tend to claim that their go-to-market strategy is fully operational. In reality, GTM is a stark numbers game, and even with a solid plan in place, it can be easily foiled by common problems like turf battles and poor communication.

Finding GTM fit is a milestone for any startup that includes everything from expanding the engineering team to launching your first media buy. But how do you know when you’ve reached that magic moment?

“You have to consider three metrics: gross churn rate, the magic number and gross margin,” says Tae Hea Nahm, co-founder and managing director of Storm Ventures.

High churn means customers aren’t delighted, low gross margins mean poor unit economics, and that so-called magic number?

“You can calculate it by taking new ARR divided by your marketing and sales spending,” Nahm writes. “But keep in mind that the magic number is a lagging indicator, and it may take you a few quarters to see a positive result.”


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


If you are methodical in your approach to building a larger customer base, it is not difficult to foster steady growth.

Marketers who shift with whichever way the wind is blowing — or blindly follow someone else’s idea of best practices — are less likely to be successful.

“The not-so-secret secret here is that the key to great retention is really simple,” said growth expert Susan Su recently at TechCrunch Early Stage: Marketing and Fundraising. “It is building a product that solves a real and especially persistent problem for people.”

In conversation with Managing Editor Eric Eldon, Su delved into several issues, including tips on how founders should discuss growth with investors, and her methods for developing a sample qualitative growth model.

“I firmly believe that every founder should try their hand at growth,” said Su.

Thanks very much for reading Extra Crunch this week!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

How we built an AI unicorn in 6 years

An adult wearing a unicorn mask leaps over a chain-link fence

Image Credits: Lucas Knappe/EyeEm (opens in a new window)/ Getty Images

Few startups go to market with the exact product their founders first envisioned.

Today, Tractable is known for developing tech that allows drivers to upload photos of their vehicles after a collision so its AI can assess the damage. Its first paying customer, however, used Tractable to inspect plastic pipe welds.

And as fate would have it, that customer also fired them just as the founders were raising their first round.

“We struck gold with car insurance,” says co-founder Alex Dalyac, as it was “a huge and inefficient market in desperate need of modernization.”

In an Extra Crunch guest post, he shares several takeaways from the last six years spent scaling a unicorn that have value for founders of all stripes. Step one?

“Search for complementary co-founders who will become your best friends,” advises Dalyac.

The European VC market is so hot it may skip its summer holiday

Alex Wilhelm and Anna Heim continued their exploration of the scorching global VC market, this time taking a look at Europe.

For perspective, they analyzed data from Dealroom and spoke to four VCs about the continent’s investment climate:

  • Diana Koziarska, SMOK Ventures
  • Vinoth Jayakumar, Draper Esprit
  • Simon Schmincke, Creandum
  • Javier Santiso, Mundi Ventures

“There’s little indication that what we’ve seen thus far from Europe in 2021 will slow in Q3 or Q4,” Alex and Anna write.

“Even though Europe has a reputation for lengthy summer vacations, investors don’t expect much — if any — slowdown to come in Europe during this sun-drenched quarter.”

Startups and investors are turning to micromobility subscriptions

Image Credits: Bryce Durbin

“Amid the chaos of the COVID-19 pandemic and the murky path to profitability for shared electric micromobility, an increasing number of companies have turned to subscriptions,” Rebecca Bellan writes in a roundup about the future of micromobility.

“It’s a business model that some founders and investors argue hits the profit center sweet spot — an approach that appeals to customers who are wary of sharing as well as paying upfront to own a scooter or e-bike, all while minimizing overhead costs and depreciation of assets.”

What Robinhood’s warnings about crypto trading say about Coinbase’s near-term future

After noting that Robinhood anticipates a decline in revenue in the third quarter as a result of slowing crypto trading, Alex Wilhelm got to thinking about what that forecast means for Coinbase.

“The now-public unicorn has lived through crypto ups and crypto downs,” he writes. “A decline in consumer interest in the next few months or quarters is not a huge deal, assuming one keeps a long enough perspective and the crypto-infused future that its fans expect comes to pass.”

But will it?

Dear Sophie: Should we look to Canada to retain international talent?

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

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I handle people ops as a consultant at several different tech startups. Many have employees on OPT or STEM OPT who didn’t get selected in this year’s H-1B lottery.

The companies want to retain these individuals, but they’re running out of options. Some companies will try again in next year’s H-1B lottery, even though they face long odds, particularly if the H-1B lottery becomes a wage-based selection process next year.

Others are looking into O-1A visas, but find that many employees don’t yet have the experience to meet the qualifications. Should we look at Canada?

— Specialist in Silicon Valley

Silicon Valley comms expert Caryn Marooney shares how to nail the narrative

Caryn Marooney, right, vice president of technology communications at Facebook, poses for a picture on the red carpet for the 6th annual 2018 Breakthrough Prizes at Moffett Federal Airfield, Hangar One in Mountain View, Calif., on Sunday, Dec. 3, 2017. (N

Image Credits: MediaNews Group/Bay Area News via Getty Images (opens in a new window)/ Getty Images (Image has been modified)

Caryn Marooney, a Silicon Valley communications professional turned venture capitalist, spoke extensively on storytelling at TechCrunch Early Stage: Marketing and Fundraising.

Throughout her time in Silicon Valley, she helped companies like Salesforce, Amazon, Facebook and more launch products and sharpen their messaging. In 2019, she left Facebook, where she was VP of technology communication, and joined Coatue Management as a general partner.

Marooney uses the acronym RIBS to describe her basic strategy for startup messaging: Relevance, Inevitability, Believability and keeping it Simple.

Canada’s startup market booms alongside hot global VC investment

For The Exchange, Alex Wilhelm and Anna Heim looked at Canada’s VC market in the first half of 2021, and if you’ve been reading their work, you know what’s coming.

Canada, like the rest of the globe, was absolutely scorching in the first half.

“Canada’s venture capital results now rival those of the entire Latin American region, with exits and mega-deals coming in roughly on par in the second quarter, and a similar number of total venture capital rounds in the period,” they write.

“That caught our attention.”

Greylock’s Mike Duboe explains how to define growth and build your team

With more venture funding flowing into the startup ecosystem than ever before, there’s never been a better time to be a growth expert.

At TechCrunch Early Stage: Marketing and Fundraising earlier this month, Greylock Partners’ Mike Duboe dug into a number of lessons and pieces of wisdom he’s picked up leading growth at a number of high-growth startups, including StitchFix. His advice spanned hiring, structure and analysis, with plenty of recommendations for where growth teams should be focusing their attention and resources.

Last-mile delivery in Latin America is ready to take off

a cardboard box flies through outer space propelled by two thruster rockets

Image Credits: Erlon Silva/TRI Digital (opens in a new window) / Getty Images

Thanks to sprawling fulfillment centers, seamless logistics networks and ubiquitous internet access, consumers in many regions can now order groceries and a new set of cookware during breakfast and reasonably expect everything to arrive in time for dinner.

In Latin America, a lack of technology infrastructure makes delivery operations complex, and these supply chains are often managed with spreadsheets, paper and pen.

Algorithms that manage delivery routes or automatically dispatch drivers “are almost unheard of in the Latin America retail logistics sector,” says Bob Ma, an investor at WIND Ventures.

But thanks to growing consumer demand and expanding investment in last-mile delivery startups, Ma says the region is at a turning point.

Since Latin America’s middle class has grown 50% in the last decade and e-commerce constitutes just 6% of all retail, several unicorns have emerged in recent years, with more waiting in the wings.

China’s expected edtech clampdown may chill a key startup sector

China’s edtech industry is estimated to be worth $100 billion, but its leaders are reportedly considering a plan that would require these firms to operate as non-profits.

“When it comes to control, the Chinese government doesn’t mind wiping out a few dozen billion dollars in market cap here and there,” writes Alex Wilhelm in this morning’s edition of The Exchange.

“That’s not a great system.”

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/07/23/extra-crunch-roundup-finding-gtm-chinas-edtech-clampdown-and-how-to-define-growth/

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Crowdfunding

Pro tips from the team behind Kickstarter’s most funded app

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Here at memoryOS, we have a saying we repeat often: “Most of the Kickstarter happens before the actual Kickstarter.”

Preparation is the key. But even if you understand that most of the work is done in advance, you should still prepare yourself for some sleepless nights after the launch date. The usual startup mantra will apply to your crowdfunding campaign just as well: Measure, analyze and adjust along the way.

As you may know, crowdfunding fits some B2C products better than it does others. So to give you our product context here, memoryOS is a gamified app that teaches memorization skills with the help of virtual mind palaces and interactive microlessons taught by our co-founder, two-time World Memory Champion, Jonas von Essen.

Before becoming the most funded app on Kickstarter and getting it 6,400% funded (and carrying it further to the Indiegogo platform right after), we spent countless hours researching down the rabbit hole of crowdfunding tips and tricks. We also had calls with several top-tier crowdfunding project creators who were kind enough to answer our questions and share bits of knowledge from their experience.

We’re sharing our approach (and secrets) to building a successful crowdfunding campaign because we know just how tough it can be to launch your own product. So here is a complete 10-step guide:

Find a unique idea

You should have a unique idea for a product that would solve at least one problem for your target audience. The proven approach is to set two major hypotheses right at the start and then work on getting them tested:

  1. Does your product work and solve the problem as intended, and is it better than what’s out there? This is usually referred to as the “proof of concept” stage.
  2. Are there enough people who are willing to pay for your product for you to build a sustainable business?

You will need to build a base prototype to test the first hypothesis and, if it works, you can then work on turning it into an MVP or a short demo version for your future commercial product. You can then get people to test it for free and prepay for the full version.

Getting people to actually back their interest with their wallet means you already have customers, not merely enthusiasts, and it significantly increases the chances of a successful project.

Yes, it’s important that you get people to pay a minimum reservation deposit at this point and receive their commitment to pay the remaining amount for the full product later on. Getting people to actually back their interest with their wallet means you already have customers, not merely enthusiasts, and it significantly increases the chances of a successful project.

Get user feedback

As soon as you have something to test, conduct short surveys to better understand your customers by gathering and analyzing the reasons why and for what purpose(s) they would want your product.

Here at memoryOS, we called the first couple thousand of our leads and had many insightful conversations to help us connect to our audience on a more personal and emotional level.

Once you have a demo or prototype for the users to test, make sure to add a feedback form right at the end of their experience (or gather feedback using Google Forms for surveys, or via email inquiries).

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/07/23/pro-tips-from-the-team-behind-kickstarters-most-funded-app/

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