Month: September 2020

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Zurich and Geneva will capture how those cities are faring in terms of investment, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

We’d like to know how the Zurich and Geneva startup scenes are evolving, how the tech sector is being impacted by COVID-19, and, generally, how your thinking will evolve from here.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Zurich or Geneva, but would like to take part? European VC investors can STILL fill out the survey, as we will be putting a call out to your city next anyway!

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

Yesterday during Disrupt 2020 I sat down with three investors who know the SaaS startup market very well, hoping to get my head around how hot things are today. Coming on the heels of the epic Snowflake IPO (more to come on that in this weekend’s newsletter), it was a great time for a chat.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

I’ve boiled our 40-minute discussion down to my favorite parts, getting you the goods in quick fashion.

What follows are notes on:

• how fast the SaaS investing market is today
• why Snowflake priced where it did and what that tells us about today’s market
• how SaaS companies are seeing different growth results based on their sales motion
• why some private-market SaaS multiples can get so high
• which software sectors are accelerating
• and what I learned about international SaaS.

There are more things to pull out later, like the investors’ thoughts regarding diversity in their part of the venture world and SaaS startups, but I want to give that topic its own space.

So, into today’s SaaS market with an eye on the future, guided by commentary from Canaan’s Maha Ibrahim, Andreessen Horowitz’s David Ulevitch and Bessemer’s Mary D’Onofrio.

Inside SaaS

To help us get through a good bit of the written word without slowing down, I’ll introduce an idea, share a quote and provide a little commentary. This should be good fun.

Like most of the rest of the world, COVID-19 hit the manufacturing sector by surprise. That China — which continues to comprise the vast majority of electronics manufacturing — was the first global epicenter of the virus certainly didn’t help the industry sufficiently brace for the impact of a pandemic on a scale the world has not seen for more than a century.

“Nobody had a great reaction,” Anker founder and CEO Steven Yang concedes during our Disrupt interview. “I think this all caught us by surprise. In our China office, everybody was prepared to go on vacation for the Chinese New Year. I think the first reaction was that vacation was prolonged the first week and then another several days. People were just off work. There wasn’t a determined date for when they could come back to work. That period was the most concerning because we didn’t have an outlook. They had to find certainties. People had to work from home and contact supplies and so forth. That first three to four weeks was the most chaotic.”

The impact of the earliest days of the pandemic continues to have knock-on effects that have sent shockwave throughout the global hardware industry. In early 2020, it was easy enough for many throughout the globe to write off the novel coronavirus as the latest in a string of outbreaks that didn’t move too far beyond select pockets. Ultimately, however, it would bring much of the world to a screeching halt.

Manufacturing, in particular, suffered first from a workplace depletion. Soon,  the hamstringing of its supply was outpaced in lowered demand. Economic recessions and skyrocketing unemployment have — and in many sectors continue to —torpedo consumer demand for a number of electronics. While it’s true that some categories  — like PCs — ultimately benefited for the shift in lifestyles, an overall decreasing in disposal income has had a profound impact on the industry.

On the manufacturing side, COVID-19 has served to propel existing trends. “I feel like it’s accelerated this depolarization to some extent,” Arevo CEO Sonny Vu explains. “We’re seeing across the board soft goods, hardware.” Vu, who spends much of his time in Ho Chi Minh, Vietnam, notes that the advent of COVID-19 has increased the appeal of manufacturing sites outside of China. Areas like South East Asia and India, which are continuing to increase in popularity as manufacturing hot beds, are becoming increasingly appealing for those looking to diversify sites to help prepare for similar issues in the future.

Robotics and automation is an other key category seeing increased potential acceleration, as manufacturers look toward streamline processes that can’t call in sick or increase transmission of human viruses.

“It’s our firm belief that automation will not only be efficient, but effective. We have invested heavily in robotic automation,” says Yang. “It’s to a certain point — because if you were to take a certain wire and push it through a hole, the cost of a robot that does that is still, I don’t know, 20 years of a single worker’s salary. It’s very challenging to take an entire assembly line and replace it with robots.”

The German Aerospace Center (DLR) has debuted a prototype of what it calls ‘U-Shift,’ an urban mobility vehicle designed for multiple uses. U-Shift is a fully electric vehicle, designed for autonomous operation, and could serve in a number of capacities including as an on-demand shuttle, a bus, a mobile distribution center for package delivery, or even as travelling salesroom.

As you can see from the images, the base of the U-Shift itself is pretty simple, containing the wheels, drive system and batteries. DLR envisions a modular top component that can be swapped out depending on usage needs, with various add-on units depicted, including an airy, all-glass bus, and a more barebones cargo capsule.

This modularity could help the U-Shift better address the varied needs of city-based transportation, with the flexibility to shift modes relatively easily depending on what’s going on at the time. You could easily see how a fleet like this could be repurposed for on-demand package and grocery delivery during lockdowns like the ones that have been required during the COVID-19 pandemic, when personal transportation is less needed.

[gallery ids="2048697,2048700,2048701,2048699,2048698,2048696"]

This prototype is functional, but it’s not autonomous – it’s remote-controlled instead. The top speed also isn’t that high, but it is capable of operating continuously for 24 hours when necessary. The primary purpose of this prototype is to test the system that swaps out the cargo/passenger capsules in order to chart a path towards production with companies who will be supplying those, and to study its user interface, including things like how the doors open and how accessible it is.

DLR plans to use all the information it gathers from testing of this prototype to help develop a second, fully automated version that can reach speeds of up to 60 km/h (just under 40 mph) by 2024. That next prototype should be much closer to any potential production version, and there will be more focus then on business opportunities and commercialization as well.

The German Aerospace Center (DLR) has debuted a prototype of what it calls ‘U-Shift,’ an urban mobility vehicle designed for multiple uses. U-Shift is a fully electric vehicle, designed for autonomous operation, and could serve in a number of capacities including as an on-demand shuttle, a bus, a mobile distribution center for package delivery, or even as travelling salesroom.

As you can see from the images, the base of the U-Shift itself is pretty simple, containing the wheels, drive system and batteries. DLR envisions a modular top component that can be swapped out depending on usage needs, with various add-on units depicted, including an airy, all-glass bus, and a more barebones cargo capsule.

This modularity could help the U-Shift better address the varied needs of city-based transportation, with the flexibility to shift modes relatively easily depending on what’s going on at the time. You could easily see how a fleet like this could be repurposed for on-demand package and grocery delivery during lockdowns like the ones that have been required during the COVID-19 pandemic, when personal transportation is less needed.

[gallery ids="2048697,2048700,2048701,2048699,2048698,2048696"]

This prototype is functional, but it’s not autonomous – it’s remote-controlled instead. The top speed also isn’t that high, but it is capable of operating continuously for 24 hours when necessary. The primary purpose of this prototype is to test the system that swaps out the cargo/passenger capsules in order to chart a path towards production with companies who will be supplying those, and to study its user interface, including things like how the doors open and how accessible it is.

DLR plans to use all the information it gathers from testing of this prototype to help develop a second, fully automated version that can reach speeds of up to 60 km/h (just under 40 mph) by 2024. That next prototype should be much closer to any potential production version, and there will be more focus then on business opportunities and commercialization as well.

The Commerce Department announced this morning that it will require mobile app stores to remove popular social media apps TikTok and WeChat. New users will not be able to download these apps, and while existing users will still be able to use their existing apps installed on their phones, new updates will not be allowed to be installed. In addition, the Commerce Department is also banning any payment transactions through WeChat within the United States.

The bans will go into force Sunday, September 20.

Those decisions are in line with an executive order signed by President Trump on August 6, which put ByteDance and Tencent, the respective owners of TikTok and WeChat, on notice of the government’s intention to block access to their products over purported concerns about national security.

That executive order precipitated the last few weeks of feverish dealmaking to avoid a shutdown of TikTok, discussions that remain on-going and are not finalized. As of today, Oracle and what looks like Walmart are still negotiating with the White House, Treasury Department, and ByteDance to come to a deal that will be acceptable to the president. China also has authority to approve a sale of TikTok.

Over the last few weeks, the administration has promoted a policy known as “Clean Network” designed to eliminate foreign interference in applications and cloud infrastructure that powers American technology. That policy calls for the removal of certain apps, data sovereignty to onshore American user data to the United States, mobile network infrastructure built from “clean” equipment, and a host of other measures to create a “clean” computing environment for U.S. citizens. While those policies are generally written broadly, their clear target has been China, based on speeches from administration officials.

TikTok and WeChat are not the only app removals announced over night. In India, one of the most popular payment apps in the country — Paytm — has been removed from Google’s Play Store for “repeat policy violations.” The app has tens of millions of monthly users. In late June, the country also announced a list of 59 apps developed by Chinese companies that would be banned, including TikTok.

Such national fights over the future of technology have increasingly come to a head as tech drives a larger segment of the global economy and increasingly becomes intertwined with competing national interests.

The Commerce Department announced this morning that it will require mobile app stores to remove popular social media apps TikTok and WeChat. New users will not be able to download these apps, and while existing users will still be able to use their existing apps installed on their phones, new updates will not be allowed to be installed. In addition, the Commerce Department is also banning any payment transactions through WeChat within the United States.

The bans will go into force Sunday, September 20.

Those decisions are in line with an executive order signed by President Trump on August 6, which put ByteDance and Tencent, the respective owners of TikTok and WeChat, on notice of the government’s intention to block access to their products over purported concerns about national security.

That executive order precipitated the last few weeks of feverish dealmaking to avoid a shutdown of TikTok, discussions that remain on-going and are not finalized. As of today, Oracle and what looks like Walmart are still negotiating with the White House, Treasury Department, and ByteDance to come to a deal that will be acceptable to the president. China also has authority to approve a sale of TikTok.

Over the last few weeks, the administration has promoted a policy known as “Clean Network” designed to eliminate foreign interference in applications and cloud infrastructure that powers American technology. That policy calls for the removal of certain apps, data sovereignty to onshore American user data to the United States, mobile network infrastructure built from “clean” equipment, and a host of other measures to create a “clean” computing environment for U.S. citizens. While those policies are generally written broadly, their clear target has been China, based on speeches from administration officials.

TikTok and WeChat are not the only app removals announced over night. In India, one of the most popular payment apps in the country — Paytm — has been removed from Google’s Play Store for “repeat policy violations.” The app has tens of millions of monthly users. In late June, the country also announced a list of 59 apps developed by Chinese companies that would be banned, including TikTok.

Such national fights over the future of technology have increasingly come to a head as tech drives a larger segment of the global economy and increasingly becomes intertwined with competing national interests.

If venture capitalists could predict the future, why wouldn’t they just start companies themselves? That’s the question Hussein Kanji, founding partner at Hoxton Ventures, asked rhetorically at Disrupt 2020.

“If anyone says that they have predictive power in this industry and says they know where the future is gonna be, I just question the wisdom of this,” he said during a session exploring how VCs seek out new markets before they even exist. “Because if you could figure it out, you could come up with the idea, you’re capable enough to be able to put all the pieces together, why would you not found the business?”

Instead, the key to betting on the future is to learn to ask the stupid questions. “I think it’s actually perfectly fine in the venture industry to not be the smart person and to kind of train yourself to be stupid and ask the stupid questions,” said Kanji. “I think a lot of people are probably too shy to do that. And a lot of people [are] probably too risk averse to then write the check when they don’t really understand exactly what it is that they’re investing into. But a lot of this stuff is a lightbulb moment”.

One of those lightbulb moments was Hoxton Ventures’ investment in Deliveroo, the takeout food delivery service that competes with UberEats and helped turn almost every restaurant into a food delivery service. However, Kanji reminded us that the European unicorn wasn’t the first company to try takeout delivery, but new technology, in the form of cheap smartphones coupled with GPS and routing algorithms, meant the timing was now right.

“People did try delivery,” he said, “they tried it back in the 90s. Everyone forgets about that. There’s a company in New York City called Cosmo that would go off and like get you a pint of ice cream on demand. You know, it never worked because they used pagers. Like, do you remember pagers? Like, that’s how they ran the fleet. They couldn’t move the fleet around. They couldn’t get the driver to the apartment and the driver to the store in any kind of efficient way… The breakthrough for delivery, and for that whole industry, was you had smartphones, you could give smartphones to the drivers, you could track what the driver was doing, which is good because then you could route logistics, you know, with a smartphone… light bulb moment”.

Kanji said that, although they are very different businesses and markets, Hoxton’s two other unicorns, Babylon and Darktrace, involved similar lightbulb moments. Yet you don’t get that light bulb moment until someone walks in the door and explains it to you. “Then your natural question is… why now… what’s actually changed? Like, what makes this so interesting? Why didn’t someone come up with this a year ago? There’s almost always usually a reason for that kind of stuff. And then then the harder part of the job is … are you really picking number one?”

Entering or helping to create new markets is often not without controversy — which both Babylon and Deliveroo has attracted for different reasons. As real disruption inevitably creates societal consequences, it often raises ethical questions that, the Hoxton co-founder argues, aren’t always possible to anticipate early on. However, as the picture becomes clearer, he says VCs should absolutely care, along with, of course, founders and CEOs.

“One of the constant criticisms in the tech industry is, I think the maturity of our industry… we behave more like teenagers. And it’s great to be libertarian, it’s great to be free markets and say markets are gonna sort it out. But you’re gonna have touch points with a lot of other places in society. You’ve got to figure out, and I think, get ahead in terms of…what the impact is going to be, and be more responsible”.

The backlash against vaping in the United States has not deterred a Chinese challenger from entering the world’s largest vaping market.

Relx, one of China’s largest e-cigarette companies, is seeking to submit its Premarket Tobacco Product Application to the U.S. Food and Drug Administration by the end of 2021. Upon completion of a review process that will take no longer than 180 days, the FDA will take “action”, which could be marketing authorization, a request for more information, or denial.

The vaping startup has requested a pre-submission meeting with the FDA and is expected to meet with the regulator in October, said Donald Graff, the two-year-old startup’s head of scientific affairs for North America, appearing in a video during a press event this week in Shenzhen.

Graff had a brief stint at Juuls Labs as its principal scientist after a 13-year streak at clinical research company Celerion where he oversaw tobacco studies. He’s now spearheading Relx’s PMTA application.

PMTA is an extensive, meticulous, costly bureaucratic process for vaping products to establish that they are “appropriate for the protection of public health” before being marketed in the U.S. Relx, headquartered in the world’s e-cigarette manufacturing hub Shenzhen, has set up a team to work on the application process, including hiring third-party consulting services and clinical partners to generate data from tests that are necessary for the submission.

All e-cigarette companies currently on the U.S. market needed to submit their PMTA application by September 10 this year. To date, no products have received marketing authorization by the FDA.

The high costs of PMTA keep many small players from entering the U.S. market, but Relx has the financial prowess to bear the costs — it estimates the entire process will cost it more than $20 million. A Nielson survey Relx commissioned showed that the company had a nearly 70% share of China’s pod vape market.

As the risks associated with e-cigarettes continue to draw attention from regulators around the world, Relx has ramped up its research investments to examine vaping’s impact on public health. At this week’s event, its chief executive Kate Wang, a rare female founder of a major tech company in China, and previously the general manager of Uber China, repeatedly highlighted “science” as a key focus of the startup.

Recently unveiled is the company’s Shenzhen-based bioscience lab, which is measuring the effects of Relx vapors through in vivo and in vitro tests, as well as conducting pre-clinical safety assessments.

Despite its ongoing efforts to prove the benefit of switching from smoking to vaping, Relx alongside its rivals faces regulatory uncertainties across various markets. The Trump administration banned flavored vape products last year (Relx plans to submit unflavored products for PMTA review) and India banned e-cigarettes citing adverse health impacts on youth.

When asked how the startup plans to cope with changing policies, a Relx executive said at the event that “the company keeps a good relationship with regulators from various countries.”

“You can’t make conclusions on something that is still in the process,” said the executive, referring to the early stage of the vaping industry.

Google has pulled Indian financial services app Paytm from the Play Store for repeatedly violating its policies. Paytm is India’s most valued startup and claims over 50 million monthly active users. Its marquee app, which allows users to exchange money with one another, disappeared from the Play Store in India earlier Friday.

On Friday, Google said that Play Store prohibits online casinos and other unregulated gambling apps that facilitate sports betting in India, a day before the popular cricket tournament Indian Premier League is scheduled to kick off.

The Android-maker, which maintains similar guidelines in most other markets, additionally noted that if an app leads consumers to an external website that allows them to participate in paid tournaments to win real money or cash prizes is also in violation of its Play Store policies.

Previous seasons of IPL, which last for nearly two months and attract the attention of hundreds of millions of Indians, have seen a surge in apps that look to promote or participate in sports betting. Today’s announcement is Google’s attempt to remind developers about its Play Store guidelines and crack down on future sketchy practices, TechCrunch understands.

Sports betting is banned in India, but fantasy sports where users select their favorite players and win if their preferred team or players play well is not illegal in most Indian states.

A person familiar with the matter told TechCrunch that Google has also asked Disney+ Hotstar, one of the most popular on-demand video streaming services in India, to display a warning before running ads for fantasy sports apps.

“We have these policies to protect users from potential harm. When an app violates these policies, we notify the developer of the violation and remove the app from Google Play until the developer brings the app into compliance,” wrote Suzanne Frey, Vice President, Product, Android Security and Privacy, in a blog post.

“And in the case where there are repeated policy violations, we may take more serious action which may include terminating Google Play Developer accounts. Our policies are applied and enforced on all developers consistently,” she added.

More to follow…