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Are startup valuations going to fall?
Hello, friends! Alex here to speak to you for a sexy second about cash. Then we’ll get into startups, venture funds, what Big Tech is around and more. I promise. But hang with me for an instant.
Tech stocks got hammered today: The tech-heavy Nasdaq dropped by over 2%. Cloud stocks endured twice the damage. What happened? The U.S. government said that it might raise interest rates. So what? Well, when prices were low, a great deal of cash which may have been invested elsewhere was rather funneled into tech stocks and VC funds that invest in startups.
Now, with the government stating that it may shake up the current state of affairs, investors are responding by selling stocks. Bessemer Venture Partners investor Byron Deeter noted that the drop, tweeting that following a”brutal few days in the clouds,” with software stocks off”~5% today and ~10% on the week,” that he was curious if valuations are”just taking a breather after a massive 2020″ or starting”a broader reset.”
Twitter doubles down on subscriptions
If you’re interested in how Twitter was going to pursue its subscription plan, the response, to some degree, is buying startups. Now Big Tweet announced it is purchasing Scroll, a startup which charges its customers a fee, providing them with an ad-free experience on several different media sites. Scroll then split its user fee with those websites.
A neat model, yeah? It is a bit like the startup named Contenture that TechCrunch coated a few days back in 2009. Just Scroll made more progress than Contenture did. And your humble servant was not a co-founder in Scroll.
Regardless, the Scroll-Twitter deal matters because the social networking company is busy rolling up startups and products into its ecosystem to craft a set of solutions which may allow it to market more effectively over the long haul. Sarah reports:
[Scroll] will become a part of Twitter’s bigger plans to invest in subscriptions, the company claims, and will afterwards be offered as one of the premium features Twitter will provide to readers. Premium subscribers will be able to utilize Scroll to easily browse their posts from news outlets and out of Twitter’s own newsletters merchandise, Revue, another recent purchase that has already been incorporated into Twitter’s service. When readers use Scroll through Twitter, a part of their subscription revenue will go to encourage both the publishers and the authors creating the articles, explains Twitter in an announcement.
Twitter vs. Substack? Yep. Twitter vs. Clubhouse? Yep. And if Twitter will help media companies better monetize and so not die? Well, then it’s Twitter versus the a16z media performance . I didn’t really expect a Jack versus Marc 2021 but am here for this all the same.
A typical day in today’s startup financing market
There was a cornucopia of startup information now on the website, so I’ve narrowed it a bit to get you exactly what you need in a rush. Also, shoutout to Mary Ann for covering half of it all by herself.
Here’s the rundown:
- HoneyBook increases $155M 1B+ valuation to assist SMBs, franchisees handle their companies — Tiger engaged in this particular Series D directed by Durable Capital. Fiscal control software is sexy!
- Persona lands $50M for identification verification after viewing 10x YoY revenue growth — You may recall that Persona increased $17.5 million last January. That is one hell of a COVID-era growth cycle.
- WorkBoard raises $75M since the OKR-focused startup bets on a developing economy, changes to business culture — The great OKR startup program boom persists. More on the upstart cohort here.
- Acronis raises $250M in a 2.5B+ valuation to double back on cyber protection providers — You may understand Acronis as a Williams F1 sponsor, but it’s also currently a multicorn with a quarter billion of capital on its own books. Maybe F1 is that expensive.
To round out our startup and venture capital notes, here are two more bits of news: Austin-based Multicoin Capital has increased a $100 million fund to”further capitalize on rampant excitement in the crypto world,” per our own coverage . Oh, and London-based seed investment finance Stride VC has increased a #100 million finance .
Advice and analysis from Extra Crunch
How to break into Silicon Valley as an outsider
There is not any magic spell that will induce an investor to meet you. As with most things in life, it all comes down to who you know and what you have to offer.
“Nothing beats building human networks,” says Domm Holland, CEO and co-founder of Fast. “That’s the way that you’re going to get this done in terms of fundraising.”
Since its founding in 2019, Fast has increased $124 million over three rounds as it lands new users and partners such as Stripe for its one-click checkout product. In this interview, Holland, a native Australian, stocks actionable guidance for other outsiders with startup visions.
“Raising money isn’t the only thing,” Holland says. “You’ve got to hire people, you’ve got to build a team, you’ve got to build customers and suppliers, and you’ve got to build entire ecosystems.
(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)
The enterprise strikes back
Before we get into the enterprise news, here’s what you want to read about: Tesla spent $3 (not a typo) to purchase patents relating to battery tech that we think could really matter.
On the enterprise front, Ron has two stories today from tech giants that matter. The first is an interview with SAP CEO Christian Klein. SAP, you will recall, spun out Qualtrics a little bit ago. What’s ahead for the software giant? Ron is on the case!
From the same pen, Box’s time in the barrel continues as some of its largest public shareholders are agitating to”inject [Box’s] board with still more new blood, taking a swipe at the Box leadership team while it was in it.” This really is a fight worth watching because it might encourage, or discourage, more unicorns from going public.
Finally from Big Tech, some great news. Namely that Instagram is working on improving its caption tech, which might help with accessibility. And our own Twitter-free Devin reports that Microsoft would like to help kids read.
We asked everyone on Twitter about their experience looking for a foreign language, and also you can weigh in here. Some of you have attempted using Duolingo (with success!) And some shockingly got through German class in junior high without learning one sentence of this language. Irrespective of your own personal expertise, provide the Duolingo EC-1 a read and learn about the way the company started, the way they figured out how to earn money and what is up next for these .